Showing posts with label Paul Krugman. Show all posts
Showing posts with label Paul Krugman. Show all posts

Sunday, April 20, 2014

In Your Face, Tomasky

While commenting on Paul Krugman's academic salary, which is lower than one might expect, Michael Tomasky uses the salaries at the University of Michigan Law School to make a point about Krugman's compensation:
While researching something else, I took a glance at the salaries given to faculty at the University of Michigan Law School. Nearly three-dozen faculty members there make more than Krugman’s $225,000. Fourteen are north of $500,000. Well, that’s law school, you might argue, they have to pay more. Maybe. But I can promise you you’ve never heard of them (except maybe Catharine MacKinnon, at $297,000).
I've actually heard of quite a few of them. (Is it cheating that, a couple of decades ago, I attended UM Law School?)

The funny thing is, the lesson I draw from the UM salary figures is that both salary bloat and the Peter Principle are alive and well. For some of the names on the list, compensation figures seem low -- but, like Krugman, the professors who seem underpaid have other, often substantial income streams from their publications and consulting work. Some of the numbers seem... wrong. As much as I respect the man, by way of example, I find it very difficult to believe that Judge Timothy Connors pulls in over $600K per year as an adjunct lecturer. David Lat publishes a different set of figures here, the top paid UM professors from 2012 to 2013, and although lecturers aren't technically professors... I just don't see it. If anybody can shed light on the peculiar figures (e.g., Judge Rhodes, a brilliant bankruptcy jurist, listed as receiving a salary of $566,666.68 as a "LEO Intermittent Lecturer") I would love to hear the explanation -- and to get tips on how to get that sort of compensation while moonlighting as a lecturer.

I have personal experience with some of the professors who are unquestionably paid a greater salary than Krugman. One is a brilliant man who, regrettably, could make a fortune if only he could bottle his lectures and sell them as an insomnia cure. Two are among the worst professors I've ever endured, one having demonstrated little interest in preparing for class and making casual, absurd statements during her lectures, and another being both intellectually lazy, and prone to narcissistic outbursts when corrected in class. (The lesson is: Don't correct him. You will pay.) One is among the hardest working, exacting people I've ever encountered in any sphere of my life. Another is brilliant within his field, with an encyclopedic grasp of his subject and an amazing ability to make it accessible to his students. One is probably the nicest people I've encountered in academia, with a dedication to teaching that seems too often absent from the classrooms of an elite law school. One, who I know only by reputation, was remarkable in her ability to draw her students into her philosophy of law. There are a few others who I know by reputation.

I know a few of the names of people who earn less than Krugman, as well. It's interesting to see how the compensation for certain clinical professors has risen -- I expect that comes from the increased emphasis on clinical law programs over the past twenty years, with an associated increase in demand for professors skilled enough to lead an effective, attractive law clinic. Some of the clinical professors date back to when I was at UM, and I worked with a couple of others when I was at ICLE. One of them graduated from UM a year before me, and I also remember him from classes (where he was obviously brilliant). A person from what is sort of my law school class (being a "summer starter", I fall between two years of regular graduates) is doing quite well as an administrator. A couple of others, I can count on meeting at my child's school events, as they're the parents of one of her classmates.

At the end of my review of those names and numbers, I was left with the feeling that the salaries of law school faculty reflect less of a meritocracy than would likely be achieved on a more open market. Part of that results from the absurd increases in law school tuition, funding lavish facilities (and boy, has UM Law upgraded its facilities from back in my day, when they already seemed pretty darn nice) and increased salaries. But for the better members of the faculty, I don't begrudge them their salaries. They are people who could earn as much or more (and sometimes already do earn as much or more) outside of academia. Where I find myself a bit annoyed is with the number of professors who I doubt have any greater interest in teaching than when I suffered through their lectures, and who I know haven't gotten any smarter, who seem to have floated through the years with ever-increasing salaries, praise be to tenure.

I suppose for those unfamiliar with Krugman, save for by reputation as a left-wing bogeyman, there might be a similar feeling. They might not be expressing, "That's too much money", in the sense of it's being too much to pay a high profile economist to teach at an elite university, but in the sense of, "I don't like Krugman, so he shouldn't make that type of money." As I understand it, Krugman's ability as a columnist parallels his ability as a professor, and he's capable of communicating difficult, abstract, complex topics in a way that his audiences (be they the readers of his columns or those who sit through his lectures) can understand. I think UM would do well to trade a few of its highly-paid but dubious talents to Princeton or CUNY, in exchange for Krugman as a professor for its law and business schools. But then, if Krugman were primarily focused on chasing the dollar in his academic career, it's difficult to believe he hasn't had offers on the table significantly in excess of his starting salary at CUNY.

Sunday, March 16, 2014

Robert Samuelson Fudges More Numbers

Robert Samuelson is expressing skepticism about the success of the stimulus:
There’s the puzzle: monster stimulus, midget recovery.

How to explain the contrasting stories?
If Samuelson, an economics commentator, actually followed his subject, he would be aware that the stimulus was not so big in relation to the gap it needed to cover. Dean Baker has been addressing this issue for years.
The arithmetic on this is straightforward. With the collapse of the bubble, we suddenly had a huge glut of unsold homes. As a result, housing construction plunged from record highs to 50-year lows. The loss in annual construction demand was more than $600 billion. Similarly, the loss of $8 trillion in housing equity sent consumption plunging. People no longer had equity in their homes against which to borrow, and even the people who did would face considerably tougher lending conditions. The drop in annual consumption was on the order of $500 billion.

The collapse of the bubble in nonresidential real estate cost the economy another $150 billion in annual demand, as did the cutbacks in state and local government spending as a result of lost tax revenue. This brings the loss in annual demand as a result of the collapse of the bubble to $1.4 trillion.

Compared with this loss of private sector demand, the stimulus was about $700 billion, excluding some technical tax fixes that are done every year and have nothing to do with stimulus. Roughly $300 billion of this was for 2009 and another $300 billion for 2010, with the rest of the spending spread over later years.

In other words, we were trying offset a loss of $1.4 trillion in annual demand with a stimulus package of $300 billion a year. Surprise! This was not enough.
It's not as if Dean Baker is alone in his opinion. Paul Krugman seems prescient in describing Samuelson's form of analysis:
So why does everyone — or, to be more accurate, everyone except those who have seriously studied the issue — believe that the stimulus was a failure? Because the U.S. economy continued to perform poorly — not disastrously, but poorly — after the stimulus went into effect.

There’s no mystery about why: America was coping with the legacy of a giant housing bubble. Even now, housing has only partly recovered, while consumers are still held back by the huge debts they ran up during the bubble years. And the stimulus was both too small and too short-lived to overcome that dire legacy.

This is not, by the way, a case of making excuses after the fact. Regular readers know that I was more or less tearing my hair out in early 2009, warning that the Recovery Act was inadequate — and that by falling short, the act would end up discrediting the very idea of stimulus. And so it proved.
But, you know, Samuelson found an economist you've probably never heard of before, and the guy has a position at a brand name university and a blog, so why research any more deeply into the subject? Samuelson's primary argument is that we should live in fear of dire consequences that never materialized, and thus that the government should do nothing more to stimulate the economy. Fortunately for him, the Republican Party is on his side so we're apt to see the painfully slow recovery continue to inch along. If another recession hits soon, Samuelson may discover out that the phrase, "an economy in eclipse," has more significance than as a parting shot taken at those who actually understand the subject.

Tuesday, August 27, 2013

Apple and the Decline of Microsoft

If the take-away is that big companies can sometimes lose track of how to compete effectively with smaller, nimbler, more innovative successors, there's nothing new to that story - it bears repeating, it's something companies should try to remember as they get big, and it's something most companies seem to forget given enough time, success, and/or an unfortunate choice of leadership. Paul Krugman argues that Apple could follow Microsoft into decline, and that it's situation could potentially be worse as it sells consumer products and thus isn't as insulated from market forces as Microsoft, which benefits from having lazy IT departments refuse to support Apple products. But that makes Apple more like Hewlett-Packard, a once great and innovative company that produced quality products, then lost its way under incompetent, bean-counting management that slashed its research budget and didn't care about quality. For that matter, you could compare the future theoretical decline of Apple to the past, actual decline of Apple, where bad decisions by Steve Jobs and his successor all-but-destroyed the company before Steve Jobs returned from NeXT with a much improved vision for the company. But for Apple's reinvention of itself, odds are that we wouldn't be fretting over whether the next iPhone will be only incrementally improved over the prior model and that Android would still be a Blackberry clone. Let's recall, Apple's big profits come not from software, but from hardware.

Krugman writes,
The story of how that state of affairs arose is tangled, but I don’t think it’s too unfair to say that Apple mistakenly believed that ordinary buyers would value its superior quality as much as its own people did. So it charged premium prices, and by the time it realized how many people were choosing cheaper machines that weren’t insanely great but did the job, Microsoft’s dominance was locked in.
On the contrary, I think Apple is painfully aware of the fact that many consumers, particularly those at the low end of the market, are choosing Android devices. Although Apple still suffers more than a bit from the Steve Jobs attitude of, "We know what you want better than you do" (an attitude Krugman notes in a blog entry on the subject) - and in fairness to Steve Jobs, at least during his second tenure at Apple he was often correct - they don't market their most profitable products in the manner that Krugman suggests. They're not trying to convince you to buy a $599 iPhone versus a bottom-of-the-market $100 Android phone. They're trying to get you to sign up for a two year contract with your phone carrier, with much of the purchase price being built into your service contract and your nominal purchase price being not much different from a low-end phone.

In terms of quality and pricing, for quite some time Apple's computers have stacked up quite well, feature-for-feature, with the diminishing pool of well-constructed PC's. But it has been my impression from the lack of development of their desktop market that they aren't interested in trying to make a huge - or even a modest - push for market share within that diminishing market. Not surprisingly, they like to manufacture products that are profitable, something that very few cell phone manufacturers do. They and Samsung presently sell cellular phones at a profit. Thanks to the increased quality of competing products, I suspect that Samsung will soon find itself facing a commoditized market for higher-end cell phones and Apple will be the last cell phone company that makes a significant profit from its hardware. Then, barring the unlikely event that we get something as disruptive to the industry as another iPhone, Apple will no longer be able to sell its cell phones for an appreciable premium over the commodity price - and the entire industry will have to glean its profits elsewhere. Apple is trying to establish a reliable ecosystem - hardware and software that work well together, allow most products that remain in service to be upgradable to the current operating system, and are easy and reliable platforms upon which third party software and hardware developers can manufacture apps and iOS-compatible products. Despite Android's quality, the fragmentation of its operating system and the fact that many phone manufacturers don't care if a two-year-old handset can be upgraded will impair its ability to offer the same opportunities. Apple intends to make money, even in a commoditized market, from app sales and licensing fees.

Krugman appears to be focusing on major disruption rather than modest innovation, even as he brings Yahoo! and Marisa Mayer into the discussion. If the resurgence of Yahoo! is a story to be believed... and I'm a skeptic... its resurgence will be the result of improvements at the margins. And that story would not be atypical. The biggest fortunes tend to be made not by the person who comes up with a concept or invents the early version, but with the person who comes up with an upgraded version of the product - something that ships better, something that's easier to manufacture, something that's easier to use. When Steve Jobs saw early versions of a window-based operating system and mouse at HP's then-famous labs, he saw the potential to transform them and turn them into products for a mass market. Jobs wasn't the inventor of the cell phone, display panel or touch screen - but he and his company came up with an innovative way to combine them.

Microsoft committed some odd, oversized errors over the past couple of decades that have contributed to its downward slide. As Krugman notes, they didn't see the potential of the iPhone, but more than that they didn't see the potential of the Internet. As Krugman noted, a lot of Microsoft's past success was built on its monopoly power, but its best and most profitable products were not major innovations. Windows built upon work that Microsoft performed for Apple, in developing the operating system for the Macintosh. It's office suite built upon software products that offered similar functionality, perhaps with modest improvement (but often without, or with 'innovative' features that you couldn't wait to turn off), and became dominant through bundling. Its browser became dominant through bundling, leading to the decline of Netscape, but it lost interest in developing a cutting edge browser pretty much the moment it no longer perceived Netscape as a threat.

Contrary to Krugman's inferences, having never been a user of Apple products, Apple did not always have a quality advantage over Microsoft or its associated hardware developers. Windows 95 incorporated some features that it took Apple years to emulate, and after Jobs left Apple's hardware quality plummeted. For that matter, for all of its innovative features, the early Macintosh suffered from having too few programs and too little RAM, as well as the odd design compromises that came from Steve Jobs' disdain for internal fans. Microsoft's present plight emerges from its failure to effectively enter new markets as the old ones faded - as operating systems became "good enough" that companies felt no need to upgrade every year or two, and as its Office suite became "good enough" that any changes it made from year-to-year were not likely to bring new sales, and as its customers tired of its game of modifying Word files such that you had to jump through hoops to save a document that would open on an older version of its software. In that sense we're back to the legitimate fear for Apple as a hardware company - that unless it comes up with a remarkable hardware innovation it's looking at a future where its products are commoditized and while, despite some people sticking with the company due to their library of iOS apps, many customers come to see little reason not to change platforms. Apple is trying to look beyond that day, and Google is struggling to convince Android developers to follow standards that will allow it to keep up.

Apple's biggest problems seem to come from copyright law, and entrenched monopolies and oligopolies. It is having difficulty coming up with a television product because of the difficulty of licensing content from media companies. Its products rely on Internet bandwidth, with many customers obtaining that bandwidth from cable monopolies. The iPhone demonstrated how you can create a breakthrough, profitable product in a tired, commoditized market, but without content there's no apparent room for a similar move in television. Also, most televisions these days would qualify as reasonably powerful computers, so it's not clear that Apple could offer a disruptive product that would not quickly be emulated, perhaps less artfully, by its competitors. People talk about an iWatch, and I think it is inevitable that Apple will produce a wearable device of some sort... although I don't think it is likely to be a watch in the sense that we have traditionally used that word, either in how it's worn or what it does, but all we can do at this point is speculate.

Google is, in a sense, playing Microsoft to Apple's iOS, offering a version of highly similar software for free, Microsoft Internet Exploder vs. Netscape's browser. I sometimes wonder if Google will continue to provide free operating system development for the world, or at least if it will be as quick to make its greatest innovations part of the core as opposed to part of a proprietary add-on, particularly as it attempts to spin Motorola up into a dominant manufacturer of Android phones. As with all of this stuff, time will tell.

Saturday, August 17, 2013

Conventional Wisdom and Structural Unemployment

I saw this argument from Paul Solman, who I can't help but believe should have known better,
Liberal economist and much-respected friend Dean Baker, co-director of the Center for Economic and Policy Research, where he keeps the Beat the Press blog, has appeared on PBS NewsHour often over the years, and recently on these pages in "Don't Blame the Robots." He appeared here again Wednesday, decrying what he called the media's "mindless" budget reporting.

But when he wrote on his blog on Aug. 3 that "[t]he PBS Newshour won the gold medal for journalistic malpractice on Friday (Aug. 2) by having David Brooks and Ruth Marcus tell the country what the Friday jobs report means," he seemed curiously harsh and patently partisan.
I don't think it's either, actually, save in the sense that we're supposed to tiptoe around the fact that a lot of the analysis offered by "serious" news shows revolves around talking heads who know little about the subjects that they are discussing, but get more and more air time by virtue of their past history of being talking heads, and that it's thus "curiously harsh" to note that this phenomenon represents a manifestation of the Peter Principle. Had they invited Jenny McCarthy on to discuss the science behind vaccines, I suspect that Solman would have taken issue both with the invitation and with the implication that she had special expertise. Yet that is exactly what shows like PBS Newshour do when they present as authorities non-economists who pontificate on the economy despite a long, documented history of having paid very little attention to what actual economists have to say.
"Brooks and Marcus got just about everything they said completely wrong," Baker continued. "Starting at the beginning, Brooks noted the slower than projected job growth and told listeners: 'Yes, I think there's a consensus growing both on left and right that we -- the structural problems are becoming super obvious...'"

But, Baker insisted, "It's hard to know what on earth Brooks thinks he is talking about. There is nothing close to a consensus on either the left or right that the economy's problems are structural, as opposed to a simple lack of demand (i.e. people spending money). This is shown clearly by the overwhelming support on the Federal Reserve Board for its policy of quantitative easing."
Solmon notes that Paul Krugman agreed with Baker, then observed that while Brooks and Marcus aren't in fact describing an economic consensus their argument demonstrates how "Washington conventional wisdom... has clearly swung to the view that our high unemployment is 'structural', not something that could be solved simply by boosting demand".

If I took umbrage at those statements, my first response would be to explore whether or not there was a consensus among economists as to whether the economy's problems are structural. I would also wonder why David Brooks, who occasionally takes ill-informed potshots at his New York Times colleague, Paul Krugman, is not aware of Paul Krugman's years of argument on this subject. But instead....
Look, folks, there may indeed be no "consensus growing on left and right" about the predominance of structural unemployment, as David Brooks alleged. Just look at how vigorously Krugman and Baker took the other side. But I rather doubt Krugman's assertion that there is an "actual economic consensus" on the unemployment debate that favors his cyclical explanation to the exclusion of the structural. Unless, of course, Krugman means a consensus among economists he agrees with.
Why assume anything? Why not call other economists and ask?
A confession: Brooks is a friend for whom I have great respect, as I do for Ruth Marcus.
Well, that explains it... just not in a manner I find satisfactory.
Unlike Krugman and Baker, my main job for 36 years now has been to interview not only economists like them, but hirers and hirees, firers and firees. I've done so through both recessions and recoveries alike. I wheedled soundbites out of the drearily downhearted high tech-workers of the late 1970s and spoke to the happily hopeful hires of the late 1990s.
Then, friendship or no, there's really no excuse for the assumption. Solmon did find "A 2011 paper from the San Francisco Fed attributed 60 percent of long-term unemployment to cyclicality and 40 percent to structural factors," which is at best tepid support for Brook's' assertion that the issue is structural, but that two-year-old paper seems to be the best support he could find for Brooks' claimed consensus.

I'll admit, when I looked at the unemployment data, the fact that many workers displaced by the great recession were never again going to earn the sort of wage they had previously enjoyed, and the downward pressure on the middle class, my initial reaction to "This isn't a structural issue" was "Say way?" But in fact what Krugman and Baker are discussing is something else - the notion that there has been a seismic change in the economy such that we have to simply accept a higher unemployment rate than we have historically seen. Baker, Krugman and others have rebutted that "structural change" argument repeatedly and convincingly, to the point that if you're a business and economics reporter and are only just now taking note of it it's safe to say that you've chosen not to pay attention to material you should be covering. But Solmon seems mostly interested in the issue as a left-right political debate, and thus seems to think it's enough to circle back to Brooks as an authority.

Solmon gets partial credit for allowing Dean Baker to refute the "structural" argument, but he loses points for a response in which he changes the subject,
Baker's may be the best possible summation of the cyclicalist argument. Moreover, he may well be right: throw enough money at the economy, and at some point, everyone will be employed.

But if economics teaches us anything, it's that every decision has both benefits and costs. What might be the cost of Baker's Keynesian "Trillion-Dollar Solution"?
Baker, of course, didn't argue that the only way back to full employment was a $trillion stimulus, he simply described a theoretical means by which the economy could be brought to full employment. When you introduce an idea with, "Imagine someone found a $1 trillion bill in the street and decided that, as a public service, she would spend the money over the next 12 months to boost the economy", it's pretty obvious that you're not describing something you believe is likely to occur. Solmon then speculates about how productive newly created jobs would be, an argument that is in no way tied to the present time or economy. Solmon argues,
If the cyclicalists are right, spend a trillion dollars and new jobs will eventually emerge, as they indeed regularly have throughout American (and world) history. If the structuralists are right, however, history is in the process of changing and the government jobs will last only as long as the trillion dollars.
But the discussion was about consensus, right? And Solmon has completely abandoned the pretense that the consensus described by Brooks exists on either the left of the right. Solmon closes by offering a comment from his prior thread, in which a tech graduate describes being heavily recruited, with generous wage offers and stock options,
Those opportunities, however, are out there only for those with a set of specialized skills. If the structure of the U.S. economy is changing to employ those who have such skills and disemploy those who don't, the structuralists have a point.
But again, same as it ever was. When changes in technology and the economy led to the demise of the livery stable and blacksmith's shop, even as blacksmiths and stable hands struggled to find new work, other people were entering the job market with a very different set of skills and with far better job and income prospects. When the domestic garment industry collapsed in favor of offshore production, medical school graduates were doing better than ever. The fact that wages or opportunities in one corner of the economy are reduced even as opportunities exist "for those with a set of specialized skills" is not new - it's history repeating itself.

Friday, June 28, 2013

Fake Presidential Scandals, Then and Now

Paul Krugman suggests an explanation for why the Clinton-era fake scandals kept on going, while similar efforts to build fake scandals involving the Obama Administration seem to be fizzling:
Maybe the news media have actually learned something; maybe they’re effectively disciplined, this time around, by the blogosphere. Anyway, the narrative of a scandal-ridden presidency seems to be evaporating as we speak.
I don't credit the media or blogosphere. I think there are two important distinctions, one relating to the Presidents themselves and the other relating to the scandals.

First, the Clintons had a history of engaging in activity that, although never determined to be anything but lawful, didn't always pass the smell test. The remarkable success of Hillary Clinton's one-type foray into commodities trading, for example, continues to strike me as the sort of investment opportunity that would not have been made available to her were she not the governor's wife. At the same time many of the accusations made against the Clintons were truly unfair, and one of Mike Huckabee's most tragic decisions as governor may have its roots in his acceptance of a ridiculous conspiracy theory.

I don't want to discount the role of public perception, or the media's role in building and perpetuating public perception. But in no small part Clinton himself fed the public perception that was willing to play fast and loose with the facts - his claim that he never broke the drug laws of the United States, that he did not have 'sexual relations' with 'that woman', "it depends on what the definition of 'is' is", etc. - so while "slick Willie" may have been something of a caricature Clinton himself kept throwing fuel on the fire.

In contrast, although various efforts have been made to suggest that Obama is guilty by association for his relationship with Tony Rezko, or "pals around with terrorists" because of his relationship with William Ayers, the overall picture is pretty clear: President Obama has spent his adult life conspicuously avoiding anything that smacks of corruption. While certain right-wing partisans nonetheless scream from the top of their lungs that the Obama Administration is "the most corrupt ever", the facts say pretty much the opposite.

In fairness, that distinction could affect the media - covering a fake Clinton scandal was likely to turn up a colorful character or two, a colorful statement from the President, and perhaps just enough smoke to justify the coverage. Some of the allegation were so absurd ("Clinton murdered Vince Foster") that, even if not taken seriously, they were frequently referenced by those who most hated Clinton (and thus did not particularly care if the allegation was credible) and his supporters (who could use that type of allegation to depict Clinton's attackers, sometimes quite accurately, as loonies). There's no excitement in chasing a typical fake Obama scandals. The only person who can maintain enthusiasm about trying to concoct a direct connection between the actions of some low-level IRS agents and the President seems to be Darrell Issa.

Second, as I just intimated, the Obama scandals are largely boring. The Republicans got quite a bit of mileage out of Benghazi because it involved conspicuous violence and some tragic deaths, but they've run out of "revelations" so the media and public are losing interest. Ken Starr knew how to build a rolling scandal - "Nothing to Whitewater? Then how about we look under these other stones to see what we find." That only works, though, if you find stones that you can turn over, and that scandal seems to be fresh out of stones.

The IRS non-scandal is boring. Complaining that the President was spying on Americans only goes so far when half of the Republican Party is asserting that the present NSA program is a vindication of Bush, and various fire-breathing Republicans (including Michele Bachmann, Steven King, Jeff Flake and Ted Cruz) as well as various Republican "older statesmen" (including Orrin Hatch, Lindsey Graham and Saxby Chambliss) knew exactly what was happening and did not lift a finger to stop the programs. While you do see somewhat comical statements from people like Jim Sensenbrenner ("Whodathunk the USA PATRIOT Act could be used to support this type of monitoring?") the Republicans are at a disadvantage - their most prominent spokespersons knew about the monitoring, did nothing to stop it, and even now have no intention of doing anything to significantly curtail it. "It's horrible that the Obama Administration did this thing that we knew about, didn't stop, and are allowing to continue."

Further, although it's easy enough to engage in fiery rhetoric about how the programs "were illegal" when you actually start looking into the law the discussion becomes rather arcane and the Administration's position starts to look like it was narrowly tailored to fit within established law and precedent. It's the sort of argument that only a lawyer could love, in part because it's somewhat arcane, and in part because if you're not a lawyer or a close follower of the Supreme Court you're unlikely to have the context to participate in a debate and (because you are likely to find it boring) even if you can find a media account that attempts to explain the background in understandable terms you're unlikely to read it. So it devolves into a series of exchanges in which each side pounds the table for a while, with anti-monitoring activists refusing to acknowledge the legal framework for the monitoring, and Administration defenders asserting the lawful nature of the program while avoiding the implications of such programs, until people lose interest.

There's a media angle to that, as well, in that the media wants to generate readers and viewers, and you don't draw an audience by boring them. But that's less a matter of having learned from past mistakes and becoming more disciplined, and more a matter of being less concerned with the story than with its appeal to the masses. A responsible media might bore us a bit with the legal stuff, then engage in a debate over the margins of privacy, how we can protect and value privacy in the modern era, and how to balance privacy and security. If you looked hard enough you could find that sort of discussion back in the Clinton era and you can find it now - but it's not the sort of information the mainstream media actively promotes so you can expect to have to work to find it.

Wednesday, March 13, 2013

Ruth Marcus, Susceptible to Self-Satire

Ruth Marcus appears amused that some of her peers can't recognize obvious satire,
The item was too delicious to resist: New York Times columnist Paul Krugman, he of the don’t-worry, be-happy approach to the federal deficit, had been forced to declare personal bankruptcy.

Except it wasn’t true. The tidbit was satire, from a Web site called the Daily Currant. The Currant’s “tell” was obvious to anyone who took introductory economics: Krugman, it said, had attempted, like a good Keynesian, to “spend his way out of debt,” after “racking up $84,000 in a single month . . . in pursuit of rare Portuguese wines and 19th-century English cloth” — a wink-wink reference to the classic examples of comparative advantage in international trade.
The piece would be stronger, of course, if it didn't open with Marcus caricaturing Krugman's views, or even if it were clear that Marcus knew what she was doing. It would have taken even the more credulous of her peers mere seconds, minutes at most, to determine the source of the Krugman satire, or that Krugman had not declared bankruptcy. So what's Marcus's excuse for not knowing the views of an economist who has been anything but a wallflower on these issues?

Here's Krugman on debt:
Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest....

So yes, debt matters. But right now, other things matter more. We need more, not less, government spending to get us out of our unemployment trap. And the wrongheaded, ill-informed obsession with debt is standing in the way.
And more recently:
Bear in mind that the budget doesn’t have to be balanced to put us on a fiscally sustainable path; all we need is a deficit small enough that debt grows more slowly than the economy. To take the classic example, America never did pay off the debt from World War II — in fact, our debt doubled in the 30 years that followed the war. But debt as a percentage of G.D.P. fell by three-quarters over the same period....

So we do not, repeat do not, face any kind of deficit crisis either now or for years to come.

There are, of course, longer-term fiscal issues: rising health costs and an aging population will put the budget under growing pressure over the course of the 2020s. But I have yet to see any coherent explanation of why these longer-run concerns should determine budget policy right now. And as I said, given the needs of the economy, the deficit is currently too small.
In simple terms, Krugman is explaining that deficits matter, but that if they're at a sustainable level they're not a threat to the economy, and that the time to worry about balancing the budget is when the economy is booming in part so that you can avoid self-destructive austerity measures and afford sufficient stimulus spending when the economy is faltering. It doesn't seem that hard to understand... unless, as it seems, you're a Beltway pundit or a Republican partisan.

Do you remember who actually took the position that "deficits don't matter"? A guy whose administration used the Clinton surplus as an excuse to slash taxes for the rich, ran up huge deficits during a period of economic recovery, and crashed the economy on its way out of town. Did Marcus ever so much as whisper a word of criticism? If so, I missed it.

But, oh, something seems familiar about Marcus's quip. "Don't-worry, be-happy." Oh, right, the time Marcus humiliated herself by trying to take on Krugman in public. (Do I give her and her peers too much credit by assuming she's been introduced to at least one take-down of that piece? Mark Thoma: "Ruth Marcus Tries to Show Her Beltway Badge of Seriousness"; Brad Delong piles on. Krugman commented primarily to point out that Marcus didn't understand the statement that she had used as the centerpiece of her attack.)

I really think it's time for Marcus to do the tiny bit of work that she recognizes would have saved her colleagues from embarrassment, and take the few seconds to read what Paul Krugman is actually saying about the economy and deficits, even if it's more fun to believe the satire.

Sunday, December 23, 2012

Politcs vs. Economics and the "Fiscal Cliff"

Paul Krugman hopes that the President doesn't believe in "invisible bond vigilantes",
But here’s a passage that bothered me:
On Dec. 13, Mr. Boehner went to the White House at the president’s request, joking he was going to the woodshed.

The president told him he could choose one of two doors. The first represented a big deal. If Mr. Boehner chose it, the president said, the country and financial markets would cheer. Door No. 2 represented a spike in interest rates and a global recession.
Oh, dear — does the president still believe that failure to reach a Grand Bargain will cause an attack by the invisible bond vigilantes, and that this is the reason we should fear the fiscal cliff?
Here's the thing: Thanks to the Republican Party's inability to get its act together - it's a lot easy to be unified when your entire approach to policy is obstructionism than when you actually have to make viable policy proposals - we're going over the cliff.

What the President is doing is hanging the responsibility for any economic fallout around the neck of the Republican Party.

Also, let's not forget that we have real (government) bond vigilantes - rating agencies with a history of blessing any piece of garbage they're paid to rent as "AAA", who could potentially try to re-establish their reputations by downgrading treasuries. Will that affect interest rates or the ability of the country to sell its debt? Probably not. Call them, "The bond vigilantes who can't shoot straight."

If the quote is accurate, the rhetoric seems somewhat telling. If we see a global recession, we're not likely to see a spike in interest rates. And as Krugman has argued for a long time, a spike in interest rates is not something we're likely to see in isolation. So really, it sounds like "These are the worst two things that could happen and, should they happen, I'm going to blame you. And should other bad things happen or should the economy continue to struggle, I'm going to take credit for my policies preventing the global recession and interest rate spike that the people already expect to result from going over the 'fiscal cliff'."

Tuesday, December 04, 2012

Hard Reality: The Republicans Don't Want to Balance the Budget

You would think that our national experience would teach us something: The Republicans are very good at cutting taxes and spending money, but have demonstrated next to no actual interest in balancing the budget. Still, the snake oil sells and a huge percentage of Americans believe that we can easily and painlessly balance the budget by cutting "welfare", funding for the arts and "foreign aid".

Diane Rehm interviewed Grover Norquist and a Republican Congressman-elect, and the incoming Congressman, Ted Yoho, insisted upon taking a principled stand: He was not going to sign Norquist's anti-tax pledge.
I made a pledge and a promise to the people that I'd go up to Washington and do the very best I could for our district and our country. And signing a pledge wasn't going to solve the problems our nation faces fiscally. You know, and I made a pledge to, you know, two things: one is to our country, I pledged allegiance. And I made a pledge to my wife to be the best husband I could be.
But as Yoho explained his philosophy toward taxes and the budget, Norquist had to be smiling. Why would he need Yoho to sign the pledge when Yoho has already internalized Norquist's "drown it in the bathtub" philosophy of government?
You know, we don't have a revenue problem in this country. You know, our debt is going to kill us, and the biggest part of our debt is our spending. We have got to get our spending under control. And if you look back where Canada was back in the 1960s when they had a real liberal congress or parliament and they put in all the entitlement programs and, you know, tax and spend more, you know, it killed their economy. And they're at the brink of disaster.
Yoho seems sincere, but "the biggest part of our debt is our spending" is an odd statement. Canada has a pretty good track record for balancing its budget, strong per capita income and growth, and its people have a good standard of living. He thinks Canada is at the brink of disaster because of its Medicare program? What's actually going on in Canada...
The report's outlook for the world is decidedly bleaker than for Canada, pointing out that after five years of crisis the global economy is again weakening and risks proliferate.

"The risk of a new major contraction cannot be ruled out," said Pier Carlo Padoan, the OECD's chief economist, citing the ongoing recession in the euro area, a below-par economy in the U.S. and a slowdown in many emerging markets.
That is, the biggest threats to Canada's economy are external.
In fact, the OECD anticipates the U.S. economy will speed up faster than Canada's next year at two per cent and in 2014, at 2.8 per cent growth.

Because the U.S. is starting from further behind, Canada will still maintain an advantage in the recovery over its southern neighbour, however. For instance, the organization projects Canada's unemployment rate will fall below seven per cent by 2014, while in the U.S., it is expected to remain close to eight per cent.
Yoho's positions on Canada are, to be blunt, divorced from reality. Yoho continues to present the Republican / Tea Party line:
This has been, you know, over the course of the last 15, 20 years, bad policies and people not dealing with it. It's time for us to stop talking about it and putting another Band-Aid on it. These are going to be some tough decisions that are going to be -- have to be made. And this is the year we need to do it because if we don't make these decisions, we're going to be in the same place where Greece or Spain was.
Except here's the thing: The Republican Party is not interested in making those tough decisions. They claim to have a budgetary genius in Paul Ryan who, after years of careful thought and collaboration with presidential nominee Mitt Romney, was able to specify a desire to cut funding for PBS. They have a leader in budget negotiations in the form of John Boehner who, building on last year's negotiations and Ryan's budgetary proposals, tosses out numbers that are neither supported by specific budgetary proposals nor sufficient to balance the budget. That's not leadership - it's a continuing display of cowardice.

And why are these Republican leaders such cowards? Because they know what Yoho will find out if the budget is balanced through cuts - the people who have been buying that snake oil will howl when they find out that the Republican approach to balancing the budget necessarily involves inflicting serious pain upon them. It's not that Boehner couldn't propose specific cuts to government programs, including Social Security and Medicare, it's that he doesn't want to face the political consequences. He hopes to trick the Democrats into proposing the cuts so he can argue, "I only voted for them because I'm fiscally responsible, but the cuts that hurt you came from the Democratic Party. I had no choice."

Paul Krugman has reproduced a graph I have at times shared, illustrating that it's Republican policies that have created the present "deficit crisis". Here's the thing: If you and your party are unable to actually identify budget cuts, if you and your party are the ones primarily responsible both for revenue shortfalls and for the unfunded expenditures that drive up the deficit, you owe the voters a moment of honesty. You need to either admit that you don't care about balancing the budget, and that the entire debate is a pretext for your long-standing goals of cutting Medicare and Social Security to the bone, or you need to admit that although you would like to see the deficit reduced you would prefer to have out-of-control deficits and spending growth if the alternative is to raise taxes or risk losing the next election.

Perhaps I underestimate Yoho, but if I do, what are the implications of this:
Rehm: But let me just ask, Congressman Yoho, would you be more willing to raise taxes on upper-income Americans, more willing to do that than to allow us to go over the cliff?

Yoho: No, ma'am.
If you care about balancing the budget, you balance the budget. Once you figure out how to balance revenues and expenditures, you can take a deeper look at the numbers, figure out where you can or should cut, where various taxes and tax rates might be adjusted or tweaked, etc., all without throwing the budget out of balance.

If you protect low tax rates for the wealthiest Americans despite budgetary consequences that you insist threaten the health and future of the nation, can't we be honest about it? You might not mind it if somebody else did the hard work and took the political risks necessary to balance the budget, but you have other priorities.

Thursday, July 12, 2012

Responsible Demagoguery

Paul Paul Krugman argues,
The truth is that predictions of am imminent fiscal crisis made no sense, and would have been considered irresponsible demagoguery if the people making the predictions weren’t so Serious.
I have to disagree. By the definition of "demagoguery" applied in modern political and economic debate, decrying budget deficits and predicting imminent crises are definitionally excluded. In fairness, yes, there are still a few hold-outs who would define such statements as responsible demagoguery, but they really need to get with the times.

I'm not sure what dictionary Krugman's using, but it's probably reality based. [Scoff]

Wednesday, May 16, 2012

Americans Elect and the Disconnect Between Policy and Politics

A few weeks ago when I read Thomas Friedman's editorial, "Down With Everything", there was a lot to like. There was an overt recognition that our nation's political problems arise in large part from structural problems, particularly with the U.S. Senate, and (although omitting discussion of the problems that would result from trying to diminish the input and influence of special interests) how powerful special interests have an undue influence on policy. Friedman also acknowledges the role of government and regulation in creating the nation's economic success.

The editorial, though, reflects Friedman's (dare I say) anti-democratic tendencies. He loves magic men - individuals he perceives as able to transform governments, institutions and popular movements - and there's virtually nothing that he doesn't seem to believe could be improved by finding a Steve Jobs or a Nelson Mandela to bring about reforms that Friedman himself cannot articulate - but which we are to assume would fix (or perhaps, more modestly, significantly improve) whatever is wrong. He has shied away from proposing a "magic man" solution to the problems of the United States, perhaps because in his heart he realizes that such an approach is inherently anti-democratic, or perhaps because he recognizes that "magic man" arguments work best when people don't know much about either the proposed leader or the organization or movement he would supposedly transform. But he does love his super committees:
If we are to get out of our present paralysis, we need not only strong leadership, but changes in institutional rules,” argues Fukuyama. These would include eliminating senatorial holds and the filibuster for routine legislation and having budgets drawn up by a much smaller supercommittee of legislators — like those that handle military base closings — with “heavy technocratic input from a nonpartisan agency like the Congressional Budget Office,” insulated from interest-group pressures and put before Congress in a single, unamendable, up-or-down vote.
Filibuster reform has never been high on Friedman's list of priorities. But supercommittees and "up or down votes"? He loves them. Even if it means pretending that a committee has succeeded when it failed... that is, if a report that comes from the committee's leaders accords with Friedman's own notions of good policy.

On one hand, you might think that Friedman is suggesting that the problem is institutional, and that what we really need to do is to find a way to get our government to focus less on politics and more on policy. The problem with that argument, it would seem, is that Friedman's own policy goals (which are most commonly articulated in the form of massive cuts of Medicare and Social Security) are impeded less by factionalism and more by democracy. George W. Bush's (terribly misguided) proposal to partially privatize Social Security failed not because he couldn't have mustered enough votes, but because too many Senators recognized that they would not be reelected if they supported the changes.

Simply put, an era of supercommittees would do little to insulate Congress from wealthy and powerful special interests. Those interests would help define the scope and power of the supercommittees and limit the scope of their authority. What they would do is allow Members of Congress to tell their constituents, "It's not my fault that these cuts went through - I didn't vote for them." Such an approach does nothing to remedy the institutional problems that, in Friedman's view, necessitate the foisting off of every difficult issue to such a committee, nor do they do anything to educate the public as to why reforms - even reforms that are unpopular or that will detrimentally affect the voter - represent good or even necessary policy. It does little, perhaps nothing, to reduce the power of the special interests that so heavily influence government, instead creating a context in which special interests will battle to influence the supercommittee process. And to the extent that it allows the government to move forward even when a majority of legislators are not willing to act responsibly, it effectively divorces their decision-making from the goals, priorities and interests of their constituents. Also, as with the committees that currently exist in Congress, powerful voices on supercommittees will themselves become targets for lobbying.

Friedman also makes the assumption that supercommittees will always work for good - by which I mean that they will always advance the policies that Friedman personally supports. Although some, at times most, Members of Congress may demagogue about the importance of issues that Friedman regards as inconsequential, or advocate policy reforms that Friedman regards as misguided, Friedman seems to believe that they will never be able to either control the creation of a supercommittee on one of those issues or that a majority of a supercommittee's members will focus on irrelevancies or advance bad policy.

To some degree, Friedman's wishful thinking is borne of a history in which supercommittees have been created to address a specific, genuine problem, with members selected in a manner that makes it pretty clear whether the committee will succeed and what its conclusions will be. But the less consensus there is for any given policy solution, and the more supercommittees you create to bypass the normal legislative process, the more examples of incompetence, outside influence, and even corruption you will find. It's a simple truth of bureaucracy - open, democratic processes are apt to seem messy and disorganized, whereas closed, non-democratic processes are apt to be more efficient but less responsive. As we move in the direction of "every important decision shall be decided by supercommittee", we move toward a closes, non-responsive, non-democratic form of government.

Friedman seems to recognize the importance of having a government that can form good policy, although he shares the natural human tendency to define "good policy" as "policies I, personally, think are good." But to the extent that his proposed solutions to political gridlock aren't anti-democratic, they tend to focus on introducing more politics into the equation. I'm sure Friedman believes that by introducing third parties with additional ideas - ideas he once again assumes will correspond with his own - their ideas will resonate with the public, cause the other political parties to see the light, and cause powerful special interests who have kept those policies from being implemented to fade into the woodwork. Having lived in a couple of nations with multiple political parties, and having seen the political processes of many others, I think that concept of how a third party would work is naive.
Here is how [Americans Elect] will work.... First, anyone interested in becoming a delegate goes to the Americans Elect Web site and registers. As part of that process, you will be asked to fill in a questionnaire about your political priorities: education, foreign policy, the economy, etc. This enables Americans Elect to put you in contact with others who share your views so you can discuss them and organize together. Then you will be invited to draft a candidate or support one who has already been drafted and to contribute to the list of questions that anyone running on the Americans Elect platform will have to answer on the site.

“The questions, the priorities, the nominations and the rules will all come from the community, not from two entrenched parties,” said Ackerman.

Any presidential nominee must conform to all the Constitutional requirements, as well as be considered someone of similar stature to our previous presidents. That means no Lady Gaga allowed. Every candidate will have to post in words or video his or her answers to the platform questions produced by the Americans Elect delegates. In April 2012, the candidate pool will be reduced to six through three rounds of voting. The six, assuming they all want to run, will then have to name their running mates. The only rule is that a Democrat must run with a Republican or independent, and a Republican with a Democrat or independent.

“Each presidential candidate has to pick a running mate outside of their party and reaching across the divide of politics,” said Ackerman.
So the idea was not truly to open up the nomination process to non-traditional candidates - somebody you might want to run the nation but who had eschewed politics - for fear of a "Lady Gaga"-type nomination. And bipartisanship was fetishized to the point that a Presidential candidate would have to pick somebody from the other political party - presumably again somebody with a sufficient political résumé to be firmly associated with the other of the two major political parties - a policy that demonstrates no apparent understanding of the history of the Presidency and why we moved away from having a separately elected Vice President. And these Republican-Democratic teams would stand as something unique and apart from the Republican and Democratic teams they would be running against because... bipartisanship!

Commenting on the failure of Americans Elect, Daniel Larison observes,
Americans Elect failed because it stood for almost nothing, and what it did stand for (bipartisanship, mindless “centrism”) are things that the people who vote for third party candidates dislike or don’t value as something desirable in itself. Americans Elect is a financially opaque, unaccountable organization that pretends to be a vehicle of transparency and political accountability. It has no program or agenda, and it cannot identify substantively where the government has gone wrong under the current two-party system. All that it is capable of doing is complaining that members of the two parties are insufficiently chummy and collaborative, and it has presented this message at a time when there is not much confidence in either major party.

Successful third party candidacies have to tap into discontent with something specific about the incumbent, or they have to represent a more radical challenge to both parties. To the extent that it has a political position, it is the opposite of radical, and it has floundered because its backers don’t really disagree with Obama about very much in terms of policy. It an organization of Tom Friedmans with ballot access.
I think Larison is on to something about the circumstances under which third parties can emerge, particularly in the context of our system which is structured toward two dominant parties. But I think it's also fair to note that it's naive to posit that adding a third political party to an election is going to reduce the level of politics in government, any more than the panoply of Republican candidates in the recent nomination contest helped that party focus on key policy issues. The idea that a Presidential ticket split between two political parties is going to be the least politically contentious of the three (presumably) leading partnerships is interesting. I personally can't see how you could have two candidates who were more than nominally aligned with the two major political parties who would not be doing more explaining away of policy differences than elucidation of shared policy goals throughout the campaign and in the debates.

Fundamentally, adding another pairing of candidates to the presidential race (even if you assume that they will resonate to a greater extent than any of the other third party candidates who already appear on the ballot) does not seem to me to be an opportunity to shift the focus of the race from politics to policy. I don't share Friedman's certitude that the best policy decisions are reached by compromise between the two parties - that reflects, to me, Friedman's mistaken bifurcation of political views into two dominant camps, never mind how fractured those camps often are, and a mistaken belief that the two major parties are so completely correlated with and representative of conservative and liberal ideology that any compromise they fashion will be acceptable to both groups. Frankly, if it were that easy we wouldn't need supercommittees to protect elected politicians from being responsible for the actions of Congress. To me, Friedman seems to be among those who focus on the political horse race, assume that the campaigning and demagoguery are about policy formation not political victory, and thus believe that adding more politics to the fray will somehow lend itself to better policy formation. I would expect that, at best, the third party Friedman envisions might not make things worse, but better? I see no reason to expect that.

Paul Krugman has a criticism of Americans Elect that isn't entirely fair to its proponents:
So why Americans Elect? Because there exists in America a small class of professional centrists, whose stock in trade is denouncing the extremists in both parties and calling for a middle ground. And this class cannot, as a professional matter, admit that there already is a centrist party in America, the Democrats — that the extremism they decry is all coming from one side of the political fence. Because if they admitted that, they’d just be moderate Democrats, with no holier-than-thou pedestal to stand on.
Although perhaps Obama's proposed "grand bargain" on the deficit, rejected by the Republicans, should have established his crediblity with this particular group, the reason why "professional centrists" don't see themselves as Democrats, and see the Democratic Party as a part of the propblem, is that they tend to advocate both balancing the budget (now!) and the position that it's impossible to do so without massive cuts to Social Security and Medicare. Although for entitlement reform, when push comes to shove the Republican Party is more words than action, the Democratic Party is the primary defender of both Social Security and Medicare. (Never mind that, just as last time, you could get the Democratic Party to sign on to the modest reforms necessary to stabilize Social Security for the indefinite future, and that only the Democrats have introduced serious cost-cutting measures to Medicare as opposed to the Paul Ryan "unlikely to ever happen" privatization plan.)

When President Obama took office, the Democratic Party had a golden opportunity to demonstrate that it was a mature, capable and responsible political party, able to implement sound solutions to serious problems. Instead, just as it did during Clinton's early years, it proved fractious, unwilling to boldly tackle the big issues, and susceptible to extortionate demands from a handful of legislators who held deciding votes. When you hear prominent Democrats talk about healthcare reform you do not hear explanations of how they might have achieved a better bill - you hear complaints that the issue should have been deferred or abandoned. Extremism may not be the problem among Democrats, but opportunism, avarice and politics remain.

Still, that's not problems you're going to resolve by introducing a third "bipartisan" party.

Krugman optimistically expresses,
Americans Elect was created to appeal to this class of professional centrists — which meant that it was doomed to go nowhere. Because outside that class, the large number of people who believe in all the good stuff the centrists claim to favor are, you know, going to vote for Obama. The large number of people who don’t believe in any of that are going to vote for Romney.
The problem here is that a lot of centrists don't believe that President Obama is going to advance the policy goals they favor. They may not have any more confidence in Romney, perhaps less, but if they believe that entitlements are out of control they have seen three years of Democratic inaction on Social Security and cost-saving measures for Medicare that, at present, remain theoretical. As much as they may believe that President Obama would implement some sound policy reforms if presented with a blank slate, they recognize that he is at heart very conservative in his approach to reform. His most dramatic reform, the Affordable Care Act, is a modest echo of ideas of the Heritage Foundation and of his Republican opponent in the coming election. I think there would be appeal to voters who want to see the formation and implementation of good policy, to have a third party candidate who they believed could deliver what they want - what the country needs.

The problem for Americans Elect is that there is no reason to believe that they would deliver. That serious candidates would sign on, that the forced pseudo-bipartisanship of the ticket would be either genuine or helpful. That the contribution to an election would be anything more than adding more politics, more sound and fury, instead of bringing more attention to the most serious policy issues and the most credible responses to those issues. Were the focus on issues, not politics, Americans Elect could do something very different - attempt to articulate the issues, propose solutions, and ask candidates from across the nation to endorse those solutions. It could then articulate which candidates it most supported in any given race based upon the candidates' response. But alas, that would be a lot more work, a lot less fun, and may serve to highlight how it's less a matter of partisanship between the parties that's impeding progress, and more a matter of voters wanting to derive significant benefits from government without having anybody be asked to pay the bill.

It sounds like much more fun to create a website through which we'll supposedly find ourselves a magic man and call that a solution.

Friday, May 11, 2012

Can You Keep Up With the New Economy?

Paul Krugman has done a good job refuting the notion that the rise in unemployment over the course of the latest recession reflects a structural change, and that lends credence to his argument that efforts to stimulate the economy and get people back into the workforce are a viable response to the slow rebound of the employment market. That said, and with due credit to his argument that the comments of self-described "structuralists" like David Brooks echo claims made in the 1930's that history has proved to be wrong, there are some significant differences between "now" and "then".

Krugman has noted that increases in worker productivity reflect a healthy economy, are to be expected, and thus don't support the thesis that we will never again need as many workers. But the increases in worker productivity over the past century have made it considerably more difficult to create work for large numbers of people. Thanks to significant improvement in technology, infrastructure projects that once would have employed hundreds or thousands usually can now be completed by relatively small crews. Also, a century ago, lower-skilled manufacturing jobs could not be outsourced to foreign nations, nor could phone banks, data centers, and other lower- and moderately skilled service jobs be similarly outsourced. Globalization is not the reason for the loss of jobs during the recession, but it may be part of why the return of jobs is so slow, and I think it is pretty clear that it plays a role in shrinking wages for low- and moderately-skilled workers, and for the general flattening of middle class incomes. That is, even if not the cause of the problem, globalization complicates recovery.

Further, as technological change accelerates, workers can find that if they aren't constantly updating their skills their talents can become obsolete. And even if they are updating their skills there's no guarantee that they will have an easy career path, that their skills will continue to be relevant as new technologies come online, or that their jobs won't be outsourced, Many of the workers who are part of the chronically unemployed during the present recession will not return to the workforce, or will never again enjoy the level of income that they enjoyed before losing their jobs. I think it's a valid concern that we'll see the same pattern occur in future recessions and, for that matter, in smaller numbers even during the "good times". I'm not arguing that this is a new phenomenon, but (while hoping I'm proved wrong) that worker obsolescence is occurring and likely to continue to occur on a larger scale than we've seen in the past.

When you look at the big numbers, I agree with Krugman that there is no structural reason why we could not return to a level of unemployment roughly the same as that which we saw before the recession began. But I think that there are structural reasons why middle class wages are stagnating, why it will become more and more difficult for lower-skilled workers to enjoy middle class lifestyles, for reduced mobility between socio-economic classes, and for the increased difficulty workers are likely to face maintaining their skills and wages over the course of a career.

Tuesday, May 08, 2012

David Brooks and the Hollow Man

As is his wont, David Brooks is telling us that there are two types of people - in this case, stupid people, and people like him. The type of person who doesn't think like Brooks?
Many people on the left are having a one-sided debate about how to deal with a cyclical downturn. The main argument you hear from these cyclicalists is that the economy is operating well below capacity. To get it moving at full speed, the government should borrow and spend more....

Unlike the cyclicalists, we structuralists do not believe that the level of government spending is the main factor in determining how fast an economy grows. If that were true, then Greece, Britain and France would have the best economies on earth.
Dean Baker calls Brooks out on his hollow man argument - his creating an opponent who does not actually exist, in order to more easily swat down an argument that nobody is actually making:
I don't know anyone who looks like cyclicalists that Brooks writes about. It would be good if he could toss out a few names for readers so that we know such people actually exist in the world and are not just Brooks' hallucinations.Since the views Brooks attributes to the cyclicalists are sufficiently bizarre, it is hard to believe that such people exist.

For example, he tells us that the cyclicalists believe:
"the level of government spending is the main factor in determining how fast an economy grows."
I have never come across anyone who had a view anything like this. I do know many economists, who argue that in a downturn more stimulus will lead to more economic growth, but this is nothing like the view that Brooks attributes to the cyclicalists. Does Brooks really think it is the same thing to say that more stimulus leads to more growth in a downturn and saying that government spending is the main factor determining growth in general? This is scary.
But we all know who Brooks is attacking in his column, don't we? Even if he doesn't name the name (or present either an honest or accurate summary of his argument)? In a stunning display of the Dunning-Kruger effect, he's going after Paul Krugman. Whether or not it's official policy that New York Times columnists aren't supposed to disparage each other on the Times' own pages (print or virtual), there's been quite a bit of back-and-forth between Brooks and Krugman, and Brooks seems to be chafing at the fact that he always comes out on the losing end of the argument. By not naming Krugman, Brooks gets another advantage - he can caricature and misrepresent Krugman's arguments and then, as an ostensible defense, claim he was speaking more broadly... you know, about the other unnamed people who aren't actually making this argument.

Meanwhile, Paul Krugman has published a note to (cough) himself, pointing out the absurdity of the structuralist argument that Brooks endorses. Krugman observes,
Anyone who says something like “If deficit spending were the route to prosperity, Greece would be in great shape” should be immediately considered not worth listening to. People in my camp have repeated until we’re blue in the face that the case for fiscal expansion is very specific to circumstance — it’s desirable when you’re in a liquidity trap, and only when you’re in a liquidity trap. I know that some people like to project their own crudity onto others, but what they’re actually demonstrating is their own ignorance.
Brooks identifies three structural problems that he believes are impeding the economic recovery:
  1. Productivity Increases: "Hyperefficient globalized companies need fewer workers. As a result, unemployment rises, superstar salaries surge while lower-skilled wages stagnate, the middle gets hollowed out and inequality grows." The first argument is ridiculous - Brooks thinks this is the first time in history that technology has improved or worker efficiency has increased? Or that it's somehow different from all the other times when exactly the same thing happened? And who are the "superstars" Brooks imagines to be making out like bandits? The rent-seekers he later describes - because it really seems like the biggest gains have been by those who have manipulated the system or who have survived their own incompetence by the grace of government handouts.

  2. A Lack of Skilled Workers: "The United States, once the world’s educational leader, is falling back in the pack. Unemployment is high, but companies still have trouble finding skilled workers." Brooks presents no evidence in support of this claim. The actual problem appears to be that companies aren't hiring, and those that are hiring want to get "skilled workers" at bargain rates. I've seen little evidence that jobs offering competitive wages aren't getting plenty of qualified applicants. It's fair to also note that huge numbers of jobs have been lost domestically due to the availability of cheap unskilled overseas labor - it's not that domestic workers can't do those jobs, it's that the jobs are no longer in this country.

  3. Rent-Seeking: "Over the decades, companies and other entities have implanted a growing number of special-interest deals into the tax and regulatory codes, making it harder for politically unconnected, new competitors, making the economy less dynamic." Which is, of course, the result of policies endorsed by David Brooks and the Republican Party.

Brooks also complains that "Running up huge deficits without fixing the underlying structure will not restore growth", which is not the argument anybody is actually making. What somebody who actually cares about the problem might observe is that the economy can benefit if the government demonstrates fiscal responsibility when the economy is strong and engages in deficit spending when the economy is weak - and positions itself to stimulate the economy that is up against the zero bound. The overt policy of the Republican Party and of David Brooks is the opposite - engage in absolute fiscal recklessness, running up huge deficits when the economy is strong, and leaving the nation unable to afford to fix the mess created by those policies during recessionary periods.

Stimulus spending would not fix the problem, but it can soften the blow. It's a bit like using raw eggs to seal holes in your radiator when you break down in the middle of the desert - you know it's not idea, you know it's not a permanent fix, but it can get you out of a bad situation much more quickly and with much less harm than is otherwise likely to result. More stimulus spending that prevented layoffs at the state level could have had a significant impact on the unemployment rate, and with more people working and consuming the rest of the economy was more likely to rebound. Although Brooks seems to find these concepts to be elusive, they're actually quite obvious. Dean Baker points to history:
...Brooks gives us the line freshly drawn from the 1935 Washington Post:
"Then there are the structural issues surrounding the decline in human capital. The United States, once the world’s educational leader, is falling back in the pack. Unemployment is high, but companies still have trouble finding skilled workers."
If you think you have seen this one before, that's because you've seen it before, and heard it repeated endlessly in all sorts of contexts. Here's the Washington Post in 1935:
"unemployment may run into the millions, but as the iron, steel, and metal-working industries improve, a scarcity of skilled workmen is developing, states the magazine Steel this week."
There are clear market signals of the sort of mismatch of jobs and skills that Brooks describes. We should see sectors of the economy where there are large numbers of job openings relative to the number of unemployed workers. We should see sectors where the average workweek is increasing rapidly. The logic is that firms who cannot find additional workers make the existing workforce work longer. And most of, we should sectors of the economy where wages are rising rapidly.

People who believe in markets would look for this evidence before making bold assertions about employers being unable to find qualified workers. By contrast, Brooks just makes this assertion with no evidence whatsoever.

Our economy has some structural problems, particularly in terms of health care costs, and many states have only addressed serious problems with their budgeting in the face of economic catastrophe. Structural problems exist and can be addressed. But Brooks' "structural" issues are, for the most part, as vaporous as the "cyclicalists" he imagines oppose him. Where do Brooks and his "structuralists" stand on the Affordable Care Act, the most serious legislation this nation has ever passed to try to address healthcare inflation?

Brooks attempts the Beltway version of "reasonableness", which is to say that our nation should prioritize dismantling the social safety net in the interest of... I guess that would be justifying the next round of tax cuts for the rich. Although Brooks states,
Mitt Romney and Representative Paul Ryan understand the size of the structural problems, but their reform plans are constrained by the Republican Party’s single-minded devotion to tax cuts.
The criticism is less of the focus on tax cuts and more of their unwillingness to actually state the social spending cuts they would make. Brooks' argument is inherently dishonest, first because Romney has run away, screaming, from any suggestion that he be specific with his actual plans, and second because Ryan's "plan" is an economic catastrophe in the making - if the structural problem is that our deficits are too large, Ryan's plan makes things worse. If Brooks is going to pretend that he cares about education and allowing the unwashed masses to get a sufficient education to compete with his elite rent-seekers "superstars" for decent jobs, Ryan should not be his hero. Ryan's beholden to the rent-seekers.

Dean Baker responds,
Finally Brooks concludes by telling us:
"make no mistake, the old economic and welfare state model is unsustainable."
This should prompt a really big, "huh?" Brooks had just been touting the German model. Germany certainly has a much more generous welfare state than the United States, even if it has been rolled back somewhat in the last decade. We could also look to Netherlands and the Nordic countries, all of whom have much more generous welfare states than the United States, yet don't in any obvious way appear to be on an unsustainable growth path. It's not clear what point Brooks thinks he is making.
Krugman comments on the absurdity of trying to fix the long-term economy instead of focusing on the short-term, pulling out Keynes' famous observation, "In the long run we are all dead".
Anything along the lines of “we need long-run solutions, not short-run fixes” may sound sophisticated, but it’s actually just the opposite.
He's right - particularly in our political system. Brooks cannot reasonably claim that our government is so beholden to special interests that it harms the economy and then pretend that those special interests will disappear from the political scene the moment that the budget is balanced. We know exactly what happened the last time we had a budget surplus, don't we? As long as the present Congress cannot bind future sessions of Congress to follow its budgets and policies, the only budget that matters is the next one.

When people claim we need some sort of overarching budgetary plan that extends over decades, and that nothing short of that is sufficiently "serious" to address our nation's economic woes, they're betraying an ignorance of even recent history - the manner in which the G.W. Bush Administration squandered the surplus with an express attitude of "deficits don't matter", and the manner in which events that are outside of our control, whether in the form of a terrorist attack, a war, a global economic meltdown, or something else, can throw a monkey wrench into the most carefully constructed long-term economic plan. They're also displaying abject ignorance of how our political system functions (some might say malfunctions). Yes, long-term plans and projections are helpful, but if you care about fixing things you need to look at what is happening right now, and any actual, observable trends.

I'll note in closing that Brooks' distinction between "cyclicalists" and "structuralists" is a false dichotomy. You won't find a single person conversant with economic issues who cannot identify structural problems in the economy, and (other than, perhaps, Brooks) you won't find a single such person who emphasizes structural problems as the root cause of our economic malaise who doesn't recognize that economies go through cycles.

Tuesday, April 10, 2012

Paul Ryan, Mediocrity and Politics

Let's say you're a mediocre Member of Congress. You've served for ten or more years, your seat is safe, and by virtue of your tenure you have some decent committee assignments - but you have no legislative accomplishments, no national name recognition, no real agenda, no fire in your belly. Half the people in your district can't recall that you represent them, and many of those who do see you as having essentially bought your way into Congress based upon an inherited name and inherited money. You've been a reliable vote for whatever the presidents of your party wanted, but being a "yes man" can only carry you so far. Do you ride out the rest of your career in relative obscurity? Or do you look at some of the nut jobs who have managed to hitch their dimly lit stars to various reactionary movements and causes and say, "I can do that, too."

Now let's imagine that one of the positions you've gained is that of Chairman of the House Committee on the Budget. You are approached by the leaders of your party with a budget plan that is quite radical. They tell you, "Put your name on this plan, push it forward, and we'll stand squarely behind you. We'll line up commentators and columnists who speak of you in glowing terms." You might ask, "What's in it for me" - but you already know what's in it for you: the potential to be nationally known and recognized, the potential to escape your mediocrity. You might ask, "What's the downside", but you know that as well: really, nothing. The worst that happens is that your plan is rejected, the party says, "That was his idea, not ours," and you are left with some favors you can call in. Perhaps you can use those favors to attach your name to a significant bill, and at least seem less mediocre. You're not signing onto anything so radical that you're putting your seat in danger. Really, you can't lose.

There's nothing new in such a story. Change a detail here or there and you can find examples from pretty much any era, pretty much any country, pretty much any form of government. But in the modern era of 24-hour news coverage (take an hour's worth of news and stretch it to the point of breaking, add mediocre commentary and what passes for analysis, and call it a 24-hour news network), it's perhaps easier than ever to parlay a contrived alliance into at least short-term political fortune - as demonstrated by the mediocre candidates who were taken seriously during the Republican primary season, and the eagerness of the media to continue to cover a "race" that has for all practical purposes been over for quite some time.

Paul Ryan seems to be pretty much a classic example of this phenomenon. The problem from a policy standpoint is that the elevation of partisan mediocrity clouds the issues and harms the public debate. Actually, that's only a problem for the other side - that's your goal. When your party and the pundits and news commentators aligned with your party consistently misrepresent your plan as being some sort of stroke of genius, and the larger media goes along for the ride (or prefers to cover the horse race instead of the facts) the facts become irrelevant to the public debate.
Enter Mr. Ryan, an ordinary G.O.P. extremist, but a mild-mannered one. The “centrists” needed to pretend that there are reasonable Republicans, so they nominated him for the role, crediting him with virtues he has never shown any sign of possessing. Indeed, back in 2010 Mr. Ryan, who has never once produced a credible deficit-reduction plan, received an award for fiscal responsibility from a committee representing several prominent centrist organizations.

So you can see the problem these commentators face. To admit that the president’s critique is right would be to admit that they were snookered by Mr. Ryan, who is the same as he ever was. More than that, it would call into question their whole centrist shtick — for the moral of my story is that Mr. Ryan isn’t the only emperor who turns out, on closer examination, to be naked.
Fascinating, isn't it, how the spin applied to "your plan" can turn you from an example of Congressional mediocrity into somebody ballyhooed as fiscally responsible, an idea man, one of the most influential politicians in the nation (begging the question of exactly who it is that you are influencing).

There's another aspect to politics that has, over time, come to complicate the lives of politicians: A long history in which you lie to voters about your beliefs, lie to the media, and even maintain a consistent voting record consistent with your public image, while you work behind closed doors with other politicians (many of whom are as publicly dishonest as you are) to broker a deal based. You and politicians like you create a toxic public atmosphere around certain issues, but make sure that there are enough votes to pass a compromise bill. You may even prefer to make more concessions to the other side as a matter of sound public policy, but first and foremost your job as a Member of Congress is to get reelected, so if there are enough votes to pass the bill you helped craft you may even publicly denounce it and vote against it. If your vote is needed, you'll give a duplicitous speech about how the merits of the bill and needs of the country forced you to support a bad bill, and how you hope that parts can be repealed or will be overturned by the courts.

Think back to Evan Bayh, lamenting the "good old days" when Senators would socialize together, putting aside their partisan differences at night. That's easier when everybody understands that the public performance is largely an act, that at the end of the day everybody wants to get reelected - and to do that you need to pander to special interest groups and donors. The problem is that changes in the media, along with the rise of unofficial information channels (websites, blogs, Youtube), both help true ideologues rise to power and make it more difficult for politicians to ever deviate from their party's claimed orthodoxy, and easier for people to find and emphasize points of past deviation (even if, at the time, you were being a good foot soldier for your party). The parties continue to hold sufficient influence over the media and political commentators, perhaps especially the beltway types who love to think of themselves as powerful and well-connected, wise and influential.

If you're a media darling, though, with no real accomplishment, it's pretty easy for your party's leaders to shift the spotlight elsewhere. Had the spin of Ryan and his plan not worked, he would be long forgotten. Just another mediocre Member of Congress who voted for (can you believe it) Medicare Part D and TARP? His budget? Now spun as a stunt that his party never supported, just one guy trying to cover up his own voting history. How could somebody like that possibly be taken seriously as a fiscal conservative with that record, right? For all the talk about Ryan's influence it seems largely to be an illusion - it's not clear that he has actually influenced anything.

This much is clear:
  • The budget with Ryan's name attached won't ever become law, and even if it did his party would soon run, screaming, from the implications of everything but the tax cuts for the rich.

  • The only budget you can take seriously is the present budget, because in a year or two you're going to have a new Congress with a new agenda - and you can't bind them.

Warren Buffett offers a genuine solution to budget deficits - not necessarily wise on policy, but one that would unquestionably be effective:

If Congress wanted to balance the budget, Congress would balance the budget. The rest is a show.

Friday, March 30, 2012

So Much for Social Security Privatization?

Paul Krugman makes a good point,
Indeed, conservatives used to like the idea of required purchases as an alternative to taxes, which is why the idea for the mandate originally came not from liberals but from the ultra-conservative Heritage Foundation. (By the way, another pet conservative project — private accounts to replace Social Security — relies on, yes, mandatory contributions from individuals.)

Monday, February 13, 2012

Ross Douthat's Weak Take on Charles Murray

Does the AEI Throw Really Good Parties? I ask because, except for the guy we know doesn't get invited1 to their shin digs, "moderate conservative" commentators seem to be lining up to a man to say, "Charles Murray wrote a great book with the wrong solutions, and liberals are idiots." Recall David Brooks, grafting his high school sociology onto Murray's notion of a "class divide" between high and low income whites. Now we have Ross Douthat lavishing praise on Murray for producing "a brilliant work", even though he thinks all of Murray's proposed solutions are dead wrong.

In a sense I should be grateful for the Times, and its pundits' tenth grade quality book reports - they read the book so I don't have to. I just wish they were more... capable when it comes to analysis.2 By way of contrast, within a few paragraphs Frum pretty much shatters the notion that there's anything brilliant about Murray's book,
Murray is baffled that a collapse in the pay and conditions of work should have led to a decline in a workforce's commitment to the labor market.

His book wants to lead readers to the conclusion that the white working class has suffered a moral collapse attributable to vaguely hinted at cultural forces. Yet he never specifies what those cultural forces might be, and he presents no evidence at all for a link between those forces and the moral collapse he sees....

This trend toward inequality varies from country to country—more extreme in the United Kingdom, less extreme in Germany. The subsequent destabilization of working-class social life likewise varies from country to country. But if the trend is global, the cause must be global too. Yet that thought does not trouble Murray.
Frum also notes that Murray cherry-picked a starting date in order to support his conclusions, whereas other starting dates destroy his argument. I argued in response to Brooks' piece that Brooks (and by implication Murray) ignored prior history. Frum points out that they also ignore subsequent history.
Let me instance another example of the unwillingness. In the first long quoted passage from Coming Apart, I asterisked one of Murray's statistical claims, a claim stating that wages have stagnated for the bottom 50% of the white work force. That claim is true if you draw your line, as Murray does, beginning in 1960. But put your thumb on the left side of the chart, and start drawing the line beginning in 1970. Then you notice that median wages have stagnated for the whole bottom 75%—and that the median wage only begins to show significant improvement over time when you look at the top 5%.

That number points in a very different direction from the one in which Murray would like to lead his audience. And this kind of polemical use of data is one—but only one—of the things that discredits Coming Apart as an explanation of the social trouble of our times.
Douthat offers a knee-jerk reaction to Murray's proposal to reinvent the existing social safety net in the form of a "universal guaranteed income":
Murray argues that our leaders should embrace his own libertarian convictions, scrap all existing government programs (and the dependency and perverse incentives they create) and replace them with a universal guaranteed income. This is a fascinating idea; it’s also fantastically impractical, and entirely divorced from American political realities. Which means that it’s divorced from any possibility of actually addressing the crisis that Murray so vividly describes.
Particularly when you're talking about pushing massive reform bills through Congress, it's always difficult to change an entrenched status quo. But is that the end of Douthat's analysis? "It would never pass, so it will never work"? It's fair to suggest that Murray should have offered a few realistic proposals along with a Gingrichian, "We'll change everything to be the way I want and then everything will work!" But Douthat seems to be saying, "Change is hard, so unless you show me an easy path to implementing solutions I would just as soon do nothing."

Par for the course, Douthat goes right into a hollow man argument about liberals, fabricating an argument that few to none actually hold, but which he pretends is representative and, of course, is easy to bat down.
Murray’s critics accuse him of essentially blaming the victim: the social breakdown he described may be real enough, they allow, but it’s an inevitable consequence of an economic system that Republicans have rigged to benefit the rich. In the liberal view, there’s nothing wrong with America’s working class that can’t be solved by taxing the wealthy and using the revenue to weave a stronger safety net.3
That invites the usual challenge: Okay, Ross, name one liberal outside of the irrelevant fringe who actually takes that position. You can't? Then why are you pretending it's representative of liberal views.4 A dose of reality from the unapologetic liberal, Paul Krugman, a guy whose column can't be particularly difficult for Douthat to locate,
So we have become a society in which less-educated men have great difficulty finding jobs with decent wages and good benefits. Yet somehow we’re supposed to be surprised that such men have become less likely to participate in the work force or get married, and conclude that there must have been some mysterious moral collapse caused by snooty liberals. And Mr. Murray also tells us that working-class marriages, when they do happen, have become less happy; strange to say, money problems will do that.
His position, of course, bears no resemblance to Douthat's fictional liberal. The problem Krugman identifies isn't that we're not taxing the rich - it's that the pool of jobs available at the blue collar end of the job market is drying up and the jobs that remain offer lower wages and fewer benefits. Economic stress.

Douthat's proposed solutions to the plight of lower wage workers are, well, insipid. After telling us that we cannot afford to sustain our present entitlements, even if taxes are increased on the rich, Douthat argues,
The current tax-and-transfer system imposes a tax on work — the payroll tax — that falls heavily on low-wage labor, and poor Americans face steep marginal tax rates because of how their benefits phase out as their wages increase. Both burdens can and should be lightened. There are ways to finance Social Security besides a regressive tax on work, and ways to structure benefits and tax credits that don’t reduce the incentives to take a better-paying job.
Okay, Ross, please describe exactly how we are going to fund Social Security if we reduce FICA taxes, and how will your plan do anything but add to the hysterical debate, driven by your political party, that Social Security is running out of money and must be slashed or abolished? And which benefits and tax credits do you imagine are keeping people out of higher wage jobs?

Is Douthat a child of privilege? It seems pretty clear that he has never worked a low-wage job - the type of job where a raise of twenty-five or thirty cents per hour is a big deal. Who does Douthat imagine is turning down pay raises because of the unidentified "benefits and tax credits" he imagines are a deterrent to seeking higher wages? I will grant that there's an uncomfortable period when you're earning well into the six figures, when you lose a great many tax credits and benefits available to lower wage earners, are hit by the alternative minimum tax, and pay an effective tax rate higher than people who earn vastly more than you do. But that's a problem for the top 10%, not the bottom 30%, and people who have worked their way to the top 10% don't appear to be giving up on work.

Douthat also argues that the best way to increase wages for the working poor is... to take more parents out of the workplace. Because nothing raises the living standard of a two-income family like having one parent lose a job.
Second, if we want lower-income Americans to have stable family lives, our political system should take family policy seriously, and look for ways to make it easier for parents to manage work-life balance when their kids are young. There are left-wing approaches to this issue (European-style family-leave requirements) and right-wing approaches (a larger child tax credit). Neither is currently on the national agenda; both should be.
Did you get that? Right after telling us how horrible it is that we "structure benefits and tax credits" in a manner that reduces "the incentives to take a better-paying job", Douthat argues in favor of benefits (extended paid maternity and paternity leave) and tax credits ("a larger child tax credit") that are intended to temporarily or permanently remove one parent from the workforce. Did you also catch that this proposal crashes head-on into Douthat's criticism of Murray - the type of subsidy that would improve or even sustain the living standards of working class families while one or both parents took extended parental leave or one became stay-at-home are "entirely divorced from American political realities".

I know Douthat doesn't like to hear this, but another way that people at the bottom of the labor pool can position themselves to advance is by deferring parenthood while they get established, and having smaller families. Douthat appears to be the sort of man who is deeply disturbed4 by the idea that women might have active sex lives without becoming pregnant.

I'll agree that our nation has implemented a maze of policies, primarily relating to eligibility for public assistance or and taxes, that create a disincentive to marry. It's fair to argue that we should revisit some of those policies, even if it means that some marginal households receive additional benefits due to the continuation of benefits based upon individual earnings instead of reducing or eliminating benefits based on family earnings following marriage, but the balance isn't easy to find and even if you found it you would likely have Douthat arguing that the best solutions are "fantastically impractical, and entirely divorced from American political realities".

Douthat next argues that the nation "shouldn't be welcoming millions of immigrants who compete with" low-wage workers. He pretends that while society as a whole gets some benefits from immigration, "it can lower wages and disrupt communities" and that we're effectively "ask[ing] an already-burdened working class to bear these costs alone." By this point I am not sure that Douthat understands anything about immigration, taxation or payment for public services. Douthat then endorses the strategy of "the leading Republican candidates" to "welcome more high-skilled immigrants" (I guess they don't compete for jobs?) and "mak[e] it as hard as possible for employers to hire low-skilled workers off the books" - something his party talks about from time to time, but generally obstructs.

Note also how Douthat sidesteps the issue of illegal immigration, as if there's a huge pool of legal immigrants fighting for minimum wage jobs as opposed to a huge pool of undocumented workers who are often willing to work for less than minimum wage. If we are talking about illegal immigration, Douthat needs to address the reality that people in his economic class or above (e.g., Mitt Romney or Walmart) utilize illegal immigrant labor on a routine basis, because it's cheap, they don't want to maintain their pools, lawns and tennis courts themselves - and it's not a problem as long as they maintain plausible deniability. When states have been effective in, say, keeping farmers from utilizing undocumented workers to harvest crops, we've had problems with crops rotting in the fields. I'm not sure what population of legal immigrants Douthat imagines are preventing citizens from getting near-minimum wage jobs.

Douthat's final argument is,
Finally, if we want low-income men to be marriageable, employable and law-abiding, we should work to reduce incarceration rates. Prison is a school for crime and an anchor on advancement....
Except the principal barriers to employment for an ex-offender are a lack of job skills and a criminal record. Reducing the number of people we incarcerate could offer other social benefits, but it's not going to transform a population of marginal workers into highly desirable, employable workers. In case Douthat didn't notice, crime rates tend to go up in communities that have higher unemployment rates and fewer government services. It's great to talk about "larger police forces", but given the budget crises that are particularly acute in high crime communities and how Douthat's own party demagogues on the subject of government employment, that doesn't seem particularly realistic. And recall, at least when other people's ideas are on the table, Douthat is quick to declare that if it's not politically easy "it's divorced from any possibility of actually addressing the crisis".

The idea of prison being a "school for crime" is interesting, given that over the years I've represented a number of people who have been in prison. It wasn't my observation that they were becoming better criminals due to their periods of incarceration. It was more that the smarter criminals don't get caught (at least not as often), insulate themselves from the most visible aspects of their criminal enterprises (e.g., supplying cocaine to the street dealers as opposed to doing the actual dealing), or find "legal" ways to steal money. (Conrad Black, for example, continues to fume over his incarceration for what he and his lawyers contend was a perfectly legal looting of his corporation.)

If Douthat wants to get on board with the tiny but growing population of prominent conservatives who are finally taking note of the extreme cost and limited benefit of our 'prison nation', and join with the left to fashion, implement and fund community-based policing and penalties that should, over time, help maintain and even reduce our presently low crime rates and allow states to realize cost savings through the closing of prisons, great. But I won't hold my breath waiting for him to get started.

Fundamentally, Douthat makes the same mistake as Murray and Brooks, believing that the solution to wage stagnation and a loss of job opportunities is "to make it easier for working-class Americans6 to cultivate the virtues that foster resilience and self-sufficiency." Working class white Americans, that is. Krugman notes,
Back in 1996, the same year Ms. Himmelfarb was lamenting our moral collapse, [sociologist William Julius] Wilson published 'When Work Disappears: The New World of the Urban Poor,' in which he argued that much of the social disruption among African-Americans popularly attributed to collapsing values was actually caused by a lack of blue-collar jobs in urban areas. If he was right, you would expect something similar to happen if another social group — say, working-class whites — experienced a comparable loss of economic opportunity. And so it has.
I guess it's easier for people like Murray, Brooks and Douthat to ignore history and to imagine that society's troubles come from a sudden transformation of human nature from what we saw in the decades and centuries preceding 1963, but no. Human nature hasn't changed. The opportunities and incentives available to low-wage earners have changed.

And speaking of incentives, I suspect that it's more than just AEI parties. If as a conservative pundit you don't pimp the right books, candidates and ideas - even when they're bad - you don't get the book contracts, speaking fees, invitations, and celebrity treatment that gilds your life. If you don't believe me, ask David Frum.
1. Via mythago.

2. Or is it a question of honesty?

3. Douthat also argues, "It was globalization, not Republicans, that killed the private-sector union and reduced the returns to blue-collar work." It's fair to say that globalization was not exclusively a Republican idea or priority, but Douthat appears to believe that it happened in a vacuum, and appears to be ignorant of how nations like Germany took a different approach to globalization with a much different effect on its manufacturing base and wages.

4. Stupid or lying? Fool or fraud?

5. Per that article,
[Douthat] first gained attention for Privilege, a bittersweet 2005 memoir of his years at Harvard, where the drinking, partying, and hooking up left him feeling alienated. Of one alcohol-fueled fling, he wrote: "Whatever residual enthusiasm I felt for the venture dissipated, with shocking speed, as she nibbled at my ear and whispered—'You know, I'm on the pill.'...On that night, in that dank basement bedroom, she spoke for all of us, the whole young American elite. Not I love you, not This is incredible, not Let's go all the way, but I'm on the pill."
It's more than reasonable to infer that Douthat didn't want to make a baby - but it completely ruined the mood when he found out that the girl expressing interest in him had taken precautions.

6. Douthat appears to be following Murray's thesis here, such that he actually means "white Americans." If he doesn't see this as a racial issue, he should distance himself from that aspect of Murray's thesis.