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February 17, 2013

Latest Posts from Economist's View

Latest Posts from Economist's View

Posted: 15 Feb 2013 12:24 AM PST
Marco Rubio is spouting revisionist, fallacious, scary, zombie-type ideas:
Rubio and the Zombies, by paul Krugman, Commentary, NY Times: The State of the Union address was not, I'm sorry to say, very interesting. ... On the other hand, the G.O.P. reply, delivered by Senator Marco Rubio of Florida, was both interesting and revelatory. ... Mr. Rubio is a rising star... What we learned Tuesday, however, was that zombie economic ideas have eaten his brain. ...
Start with the big question: How did we get into the mess we're in?
The financial crisis of 2008 and its painful aftermath ... were a huge slap in the face for free-market fundamentalists. ... Instead of learning from this experience, however, many on the right have chosen to rewrite history. ... Every piece of this revisionist history has been refuted in detail. No, the government didn't force banks to lend to Those People...; no, government-sponsored lenders weren't responsible for the surge in risky mortgages...
But the zombie keeps shambling on — and here's Mr. Rubio Tuesday night: "...In fact, a major cause of our recent downturn was a housing crisis created by reckless government policies." Yep, it's the full zombie.
What about responding to the crisis? Four years ago, right-wing economic analysts insisted that deficit spending would destroy jobs ...and ... send interest rates soaring. The right thing, they claimed, was to balance the budget, even in a depressed economy.
Now, this argument was obviously fallacious... Sure enough, interest rates, far from soaring, are at historic lows — and countries that slashed spending have also seen sharp job losses. You rarely get this clear a test of competing economic ideas, and the right's ideas failed.
But the zombie still shambles on. And here's Mr. Rubio: "Every dollar our government borrows is money that isn't being invested to create jobs. And the uncertainty created by the debt is one reason why many businesses aren't hiring." Zombies 2, Reality 0.
In fairness to Mr. Rubio, what he's saying isn't any different from what everyone else in his party is saying. But that, of course, is what's so scary.
For ... one of our two great political parties has seen its economic doctrine crash and burn twice: first in the run-up to crisis, then again in the aftermath. Yet that party has learned nothing; it apparently believes that all will be well if it just keeps repeating the old slogans, but louder.
It's a disturbing picture, and one that bodes ill for our nation's future.
Posted: 15 Feb 2013 12:03 AM PST
Posted: 14 Feb 2013 04:31 PM PST
At first I thought wow, even the NRO has a sensible position on the balanced budget amendment -- it is opposed. But in the end it's mostly the same old stuff, the fear that it might interfere with tax cuts, spending cuts, etc:

Against a BBA, Again, by The Editors: Senate Republicans are again set to mount a fight for a balanced-budget amendment (BBA). ... The amendment would cap federal spending at 18 percent of GDP and require supermajorities for tax hikes and new borrowing.
First question. When income is growing and doubles every 30 years or so, as it does, wouldn't we want to spend more on social insurance? Who said 18 percent is the right amount at any time, let alone always and forever? Anyway, moving on:
Passage of a BBA is not just implausible; it also ... enshrines partisan policy priorities in the founding document of the republic, which was meant to structure the democratic process, not rig its outcome in advance.
I can agree with that, no reason to enshrine Republican dogma in the constitution, especially when it's this harmful. And I can agree with this too, the courts shouldn't be involved in setting fiscal policy:
It would invite a hyperactive judicial intervention in the budget-making process that would throw the separation of powers completely out of balance. ... This means the judiciary might well attempt to set specific levels for every category of spending or otherwise shape budget priorities in an effort to enforce the Constitution. Such a perversion of republican government would raise the stakes of inter-branch hostility and distrust to unprecedented levels.
And Congress would have strong incentives to evade the spirit of such a law. If you think the official scoring of budget proposals is torturously politicized now, wait until constitutionality is at stake. Be prepared for a radical reimagining of just what phrases such as "gross domestic product" and "taxes" mean. And though the amendment includes provisions for exception — waiving spending limits in the case of a declared war, for instance — they are all but certain to prove unequal to reality and subject to abuse (think wars of fiscal choice).
Yes, I can think of a Party that says it doesn't believe in fiscal (Keynesian) policy, but every time there's a recession that same Party argues that we need to cut taxes to cure it. A balanced budget amendment might interfere with this game of lowering taxes to fight recessions, refusing to ever allow them to go up again, and then using the resulting deficit to claim spending is out of control.
But now we get to the real reason for the opposition, it might make it harder to reduce spending and cut taxes:
Moreover, the amendment's very strictness in pushing for conservative priorities in 2013 could make it harder to realize conservative priorities in the future. Tax rates are lower today than they were in 1980, but could Reagan have slashed Carter-era rates under a constitutional regime that demanded such tight coordination between revenue and spending and erected massive hurdles to their decoupling?
There is no constitutional shortcut to the arduous task of reining in spending. ...
And there is also no constitutional shortcut to "the arduous task" raising taxes to support the programs we want to have either. Glad the editors at the NRO are against the amendment, even if it is for a lot of wrong reasons.
Posted: 14 Feb 2013 02:20 PM PST
Not sure why this made me chuckle, but it did:
Trolls win: Rude blog comments dim the allure of science online, EurekAlert: The trolls are winning. Pick a story about some aspect of science, any story, scroll down to the blog comments and let the bashing begin:
  • Wonder how much taxpayer cash went into this 'deep' study?
  • I think you can take all these studies by pointy headed scientists, 99 percent of whom are socialists and communists, and stick them where the sun don't shine.
  • Yawn. Climate change myth wackos at it again.
  • This article is 100 percent propaganda crapola.
  • Speaking of dolts, if you were around in the 70s, when they also had scientists, the big talk then was about the coming ice age. And don't give me any of that carbon emission bull@!$%#.
Such nasty back and forth, like it or not, is now a staple of our news diet, and in the realm of online science news, the diatribes, screeds and rants are taking a toll on the public perception of science and technology, according to a study by researchers at the University of Wisconsin-Madison. ...
UW-Madison science communication researcher Dominique Brossard reported the results of a study showing the tone of blog comments alone can influence the perception of risk posed by nanotechnology, the science of manipulating materials at the smallest scales. ...
While the tone of blog comments can have an impact, simple disagreement in posts can also sway perception: "Overt disagreement adds another layer. It influences the conversation," she explains.
UW-Madison Life Sciences Communication Professor Dietram Scheufele, another of the study's co-authors, notes that the Web is a primary destination for people looking for detailed information and discussion on aspects of science and technology. Because of that trend, "studies of online media are becoming increasingly important, but understanding the online information environment is particularly important for issues of science and technology."
Posted: 14 Feb 2013 11:14 AM PST
Doglas Holtz-Eakin has learned nothing from his own failed predictions, nothing from the failed predictions of his cronies, and nothing from the experience in Europe (which makes the appearance of this op-ed in British rather than a US newspaper all the more odd):
We have to get US government spending under control, by Douglas Holtz-Eakin, Commentary, ...Spend more, perhaps much more. Could this really be the best for America? As incredible as it may sound, this has become the new pundit orthodoxy. Confronted with over $16tn in federal debt, a half-decade of roughly $1tn annual deficits, and a Congressional Budget Office projection of $7tn in deficits over the next 10 years, their advice ranges from stand pat to (as Dean Baker argued for the Guardian last week) "double down".
The sad truth is that while the debt is as plain as day, there's still a long way to go in convincing some people of the problem. I'm happy to give it a shot.
The debt hurts the economy already. The canonical work of Carmen Reinhart and Kenneth Rogoff and its successors carry a clear message: countries that have gross government debt in excess of 90% of Gross Domestic Product (GDP) are in the debt danger zone. Entering the zone means slower economic growth...
Waiting to fix the debt is risky. ... The bad news scenario involves a financial crisis and severe recession. After the suffering, the US would face – you guessed it – an even worse debt problem than it had originally. ...
Debt reduction produces jobs and better economic growth.
Again, reading that last line, he has learned nothing from the failure of the confidence fairy to appear. Waiting ot fix the debt -- a problem driven mainly by health care cost escalation that won't become severe for many years -- is not risky, but his advice certainly is. Continuing:
The orthodoxists will trot out the usual fears of austerity and the need to spend to prop up the economy. Just remember that the intellectual foundation for this view is rooted firmly in an alternate universe. We listened to this advice in the 1960s and 1970s, and the political class translated it into chronically high unemployment and chronically high inflation. Economists learned nothing and continue to peddle the same backboard-based remedies.
Down with the orthodoxy. It is time to get the deficit under control.
The notion that we are responding in the same way as in the 60s and 70s, and that we faced the same type of shock (that require the same types of policies) -- an oil price shock and other large supply-side disturbances from demography that we faced then -- is wrong and he ought to know that (added note: plus, it was monetary, not fiscal policy that was the main problem back then).
The headline today for Europe -- where countries have followed the advice of the Holtz-Eakin types, is (remember his claim above about austerity and growth?):
Eurozone economy falls short of forecasts, FT: Europe's brittle economies shrank at their fastest rate since the collapse of Lehman Brothers four years ago, official data for the fourth quarter of 2012 showed on Thursday, with both strong and weak countries falling short of expectations....
The "pundit orthodoxy" his disses is from Paul Krugman. Kind of funny, given how wrong Holtz-Eakin has been relative to Krugman (and Dean Baker too), but Krugman can speak for himself, and has, on how wrong the "we're about to become Greece!!!" crowd has been. There is, however, one thing he is correct about. Holtz-Eakin is right to say we shouldn't listen to some pundits, especially those like himself who have been so wrong about how events would unfold at every step along the way.
Posted: 14 Feb 2013 10:12 AM PST
Here is a rebuttal to something I posted not too long ago on potential harm from banning plastic bags (via Tim Taylor):
San Francisco plastic-bag ban associated with 46% increase in foodborne-illness deaths — Not!
The post at The Berkeley Blog is not very informative -- I'd recommend clicking through to the actual response:
My full memo is here: SF-Health-Officer-MEMO-re-Reusable-Bag-Study_V8-FIN
The Klick study I read is here: SSRN-id2196481

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