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February 4, 2013

Latest Posts from Economist's View


Latest Posts from Economist's View


Posted: 28 Jan 2013 12:33 AM PST
Republicans are trying to improve their image and appear less extreme, but their actual policies are moving in the opposite direction:
Makers, Takers, Fakers, by Paul Krugman, Commentary, NY Times: Republicans have a problem. ... In the 2012 election,... the picture of the G.O.P. as the party of sneering plutocrats stuck, even as Democrats became more openly populist than they have been in decades.
As a result, prominent Republicans have begun acknowledging that their party needs to improve its image. But here's the thing: Their proposals for a makeover all involve changing the sales pitch rather than the product. When it comes to substance, the G.O.P. is more committed than ever to policies that take from most Americans and give to a wealthy handful. ...
Why is this happening ... now, just after an election in which the G.O.P. paid a price for its anti-populist stand?
Well, I don't have a full answer, but I think it's important to understand the extent to which leading Republicans live in an intellectual bubble. They get their news from Fox and other captive media, they get their policy analysis from billionaire-financed right-wing think tanks, and they're often blissfully unaware both of contrary evidence and of how their positions sound to outsiders.
So when Mr. Romney made his infamous "47 percent" remarks, he wasn't, in his own mind, saying anything outrageous or even controversial. He was just repeating a view that has become increasingly dominant inside the right-wing bubble, namely that a large and ever-growing proportion of Americans won't take responsibility for their own lives and are mooching off the hard-working wealthy. Rising unemployment claims demonstrate laziness, not lack of jobs; rising disability claims represent malingering, not the real health problems of an aging work force.
And given that worldview, Republicans see it as entirely appropriate to cut taxes on the rich while making everyone else pay more.
Now, national politicians learned last year that this kind of talk plays badly with the public, so they're trying to obscure their positions. Paul Ryan, for example, has lately made a transparently dishonest attempt to claim that when he spoke about "takers" living off the efforts of the "makers"...
But in deep red states like Louisiana or Kansas, Republicans are much freer to act on their beliefs — which means moving strongly to comfort the comfortable while afflicting the afflicted.
Which brings me ... to Mr. Jindal, who declared ... "we are a populist party." No, you aren't. You're a party that holds a large proportion of Americans in contempt. And the public may have figured that out.
Posted: 28 Jan 2013 12:06 AM PST
Posted: 27 Jan 2013 10:58 AM PST
I think of Robert Stavins as being on the optimistic side when it comes to action on climate change, but even he seems discouraged despite Obama's mention of this issue in his inaugural address:
The Second Term of the Obama Administration, by Robert Stavins: In his inaugural address on January 21st, President Obama surprised many people – including me – by the intensity and the length of his comments on global climate change.  Since then, there has been a great deal of discussion in the press and in the blogosphere about what climate policy initiatives will be forthcoming from the administration in its second term. ...
Although I was certainly surprised by the strength and length of what the President said in his address, I confess that it did not change my thinking about what we should expect from the second term.  Indeed, I will stand by an interview that was published by the Harvard Kennedy School on its website five days before the inauguration (plus something I wrote in a previous essay at this blog in December, 2012).  Here it is, with a bit of editing to clarify things, and some hyperlinks inserted to help readers. ...
Q: In the Obama administration's second term, are there openings/possibilities for compromises...?
A: It is conceivable – but in my view, unlikely – that there may be an opening for implicit (not explicit) "climate policy" through a carbon tax. At a minimum, we should ask whether the defeat of cap-and-trade in the U.S. Congress, the virtual unwillingness over the past 18 months of the Obama White House to utter the phrase "cap-and-trade" in public, and the defeat of Republican Presidential candidate Mitt Romney indicate that there is a new opening for serious consideration of a carbon-tax approach to meaningful CO2 emissions reductions in the United States.
First of all, there surely is such an opening in the policy wonk world. Economists and others in academia, including important Republican economists such as Harvard's Greg Mankiw and Columbia's Glenn Hubbard, remain enthusiastic supporters of a national carbon tax. And a much-publicized meeting in July, 2012, at the American Enterprise Institute in Washington, D.C. brought together a broad spectrum of Washington groups – ranging from Public Citizen to the R Street Institute – to talk about alternative paths forward for national climate policy. Reportedly, much of the discussion focused on carbon taxes.
Clearly, this "opening" is being embraced with enthusiasm in the policy wonk world. But what about in the real political world? The good news is that a carbon tax is not "cap-and-trade." That presumably helps with the political messaging! But if conservatives were able to tarnish cap-and-trade as "cap-and-tax," it surely will be considerably easier to label a tax – as a tax! Also, note that President Obama's silence extends beyond disdain for cap-and-trade per se. Rather, it covers all carbon-pricing regimes.
So as a possible new front in the climate policy wars, I remain very skeptical that an explicit carbon tax proposal will gain favor in Washington. ...
A more promising possibility – though still unlikely – is that if Republicans and Democrats join to cooperate with the Obama White House to work constructively to address the short-term and long-term budgetary deficits the U.S. government faces,... then there could be a political opening for new energy taxes, even a carbon tax. ...
Those who recall the 1993 failure of the Clinton administration's BTU-tax proposal – with a less polarized and more cooperative Congress than today's – will not be optimistic. ... The key group to bring on board will presumably be conservative Republicans, and it is difficult to picture them being more willing to break their Grover Norquist pledges because it's for a carbon tax.
Here's the surprising part (to me anyway), some optimism after all:
What remains most likely to happen is what I've been saying for several years, namely that despite the apparent inaction by the Federal government, the official U.S. international commitment — a 17 percent reduction of CO2 emissions below 2005 levels by the year 2020 – is nevertheless likely to be achieved!  The reason is the combination of CO2 regulations which are now in place because of the Supreme Court decision [freeing the EPA to treat CO2 like other pollutants under the Clean Air Act], together with five other regulations or rules on SOX [sulfur compounds], NOX [nitrogen compounds], coal fly ash, particulates, and cooling water withdrawals. All of these will have profound effects on retirement of existing coal-fired electrical generation capacity, investment in new coal, and dispatch of such electricity.
Combined with that is Assembly Bill 32 (AB 32) in the state of California, which includes a CO2 cap-and-trade system that is more ambitious in percentage terms than Waxman-Markey was in the U.S. Congress, and which became binding on January 1, 2013. ...  In other words, there will be actions having significant implications for climate, but most will not be called "climate policy," and all will be within the regulatory and executive order domain, not new legislation. ...
Posted: 27 Jan 2013 08:21 AM PST
Gavyn Davies gives an update on where monetary policy in the UK is likely headed when Mark Carney takes over as governor of the Bank of England:
Carney rejects King and supports the Fed doves, by Gavyn Davies: Mark Carney 's comments on monetary policy at Davos, though not specifically about the UK, opened a wide gap between his thinking and that of outgoing Governor Sir Mervyn King (see this earlier blog). The latter expressed doubts last week about the ability of monetary policy to boost the economy further, given his concerns about the UK supply-side, and his related worries about the 2% inflation target.
At Davos, Mark Carney showed very little sympathy for any of this, arguing that there is plenty of scope for monetary policy to boost the developed economies further... Mr Carney said that it might be acceptable for inflation to exceed the government's 2% target for a fairly lengthy period, especially in the context of fiscal consolidation. ... But it is not clear how this approach can be made compatible with the Bank of England's current mandate, which has always been interpreted by the MPC as requiring a return to a 2% inflation target over roughly a two year horizon. ...
Mr Carney seems to think that he can just about square his remarks yesterday with this "flexible inflation target" mandate, but in spirit his remarks are more in keeping with a nominal GDP target, or a twin inflation/employment mandate of the Fed variety. If policy is to shift in this direction, which means placing a greater weight on unemployment within a Taylor rule framework, then many members of the MPC might prefer the government to reduce confusion by changing the official mandate. ...
Without a change in the mandate, there is some doubt about whether the majority of the current MPC would support Mark Carney's approach. ...

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