Mattschm

Alan Jacobs tells it:

All I can say in my defense is that I never hurled a stone at him, or shouted abuse. But I stood by, many a time, as others did those things, and I neither walked away nor averted my eyes. I never held anyone’s cloak, but then I was never asked to. I watched it all, gripping a rock in my hand as though I were preparing to use it — so that no one would turn on me with anger or contempt — and I always stood a little behind them so they couldn’t see that I wasn’t throwing anything. I was smaller and younger than the rest of them, and they were smaller and younger than him. In my memory he seems almost a full-grown man; I suppose he was eleven or twelve.

We called him Nigger Jeff. I have never doubted that Jeff was indeed his name, though as I write this account I find myself asking, for the first time, how we could have known: I never heard any of the boys speak to him except in cries of hatred, and I never knew anyone else who knew him. It occurs to me now that, if his name was Jeff, there had to have been at least a brief moment of human contact and exchange — perhaps not even involving Jeff, perhaps one of the boys’ mothers talked to Jeff’s mother. But we grasp what’s available for support or stability. It’s bad to call a boy Nigger Jeff, but worse still to call him just Nigger. A name counts for something.

Continued here.

Lots of commenters tell me that the left is better than the right on monetary policy. Yes, they doubt the effectiveness of monetary stimulus at the zero bound (so the argument goes) but a least they favor monetary stimulus.

But do they? What makes anyone think that Fed policy over the past four and a half years is different from the policy Obama favored? Six of the seven board members are Obama appointees, and the last Bush appointee leaves next month. It’s Obama’s board, and he never showed the slightest interest in money policy, even when the GOP had no ability to block his picks. Why shouldn’t we blame Obama for current Fed policy? And let’s not forget that Larry Summers was Obama’s chief economic advisor.

The only people who ever dissent in favor of a less contractionary policy are regional Fed presidents like Bullard and Evans. The Obama appointees NEVER dissent.

And now we have Massachusetts Senator Elizabeth Warren endorsing Paul Volcker for Fed Chairman. Seriously.

Yes, Paul Krugman favors additional monetary stimulus. But does the left agree with him? I’d like to see the evidence.

BTW, over the past five years the market monetarists have been the strongest supporters of monetary stimulus; no other group even comes close.

PS. Evan Soltas also did a post on John Williams’ recent article. I like Evan’s take better than my own.

HT: Yichuan Wang, TravisV

The techno geeks are buzzing about Tesla founder Elon’s Musk’s plan for a hyperloop between Los Angles and San Francisco. Sample designs

have popped up on twitter, this one from @john_gardi

I could be way off base but I am going to go for the obvious and say that first he wants to use an Inductrack.

This is a new-ish but highly sensible technology that uses permanent magnets placed on the train. The coils of wire in the track. It turns out that if you line everything up correctly, the permanent magnets will induce a repulsive magnetic field in the wires sufficient to lift a train into the air. Neither the wires nor the train need to have electric power to make this work.

Instead you simply have to get the train moving and the motion of the train will cause induction, which will turn the wires into an electromagnet, which will lift the train. At that point the train will keep sailing along accept to the extent that it is slowed down by air resistance.

So, to get rid of the air resistance you can put the train in a vacuum tube. Now, of course, people can’t be exposed to the vacuum so when the train comes into the station it has to go into a pressurized chamber. But – and this is the nifty part – the pressurized chamber can be used to push the train, as follows:

Train goes into pressurized station. Picks up passengers. Train doors lock. Doors to the pressurized station open and the air whisks into the tube carrying the train with it. Now, the train is moving and the inductract takes over lifting the train off the tracks. Since, the pressure gradient is declining all the way along the route, the train doesn’t slow down until it is caught by the opening of the doors at the (partially pressurized) end station.

You have the problem of maintaining the vacuum but again this can be put to good use. Suck the air out of the top of the tube all along the route. This will not only maintain the vacuum but lift the train into the air when it first gets going. The air in the pressurized station will flow out into the tube faster along the top where the vacuum is coming from and so there will be a net upward force on the train.

Neat thing about using an induct track for lift and pressure gradient for impulse is that if the tube ruptures or so other major failure the train just glides slowly down on to the track and the tube goes to normal atmospheric pressure. You can then just step out. No crash and burn.

Oh, I hate when this happens. Henry Farrell not only beat me to an obvious response, but came up with exactly the XKCD strip that goes with it.

I suppose I should back up. This is about a Megan McArdle item this morning...actually, two items, but the relevant one is a follow-up in which she defended her assertion of a 70% chance of unified Republican government after the 2016 elections. Why? Because there's only been one time since World War II that a president has been elected to replace a same-party president. Henry nails it:

Human beings are cognitively predisposed to perceive patterns in the world. Many, likely most of these patterns are garbage. Without good theories, and good ways of testing those theories, we’ll never be able to tell the garbage patterns from the real ones.

Okay, but what we need is an intermediate step. I mean, sure, political scientists can look at election results carefully (that is, using the well-developed information we have about how US elections work in general) and get a general sense of which patterns to test for, and then design sophisticated tests to get that final step. But that's not available on the fly to lots of people who are still going to want to figure out what to do with a pattern they find. So what can we recommend?

Here's a three-step test to check to see if the pattern you've noticed is worth tossing into a blot post or not.

First of all, look at how many times the pattern has recurred. In McArdle's case, we're talking about times when a president stepped aside (making a same-party succession possible). That happened in 1952, 1960, 1968, 1988, 2000, and 2008. So her pattern, to begin with, is one out of six. That's perhaps something...but it's not exactly an Iron Law of Politics, is it? 0 for 10, or 1 for 50, would be a lot stronger.

Then, next, we can check the qualifiers to see if they're making the pattern look stronger. In this case, there's one: postwar. If we put that aside and go with "20th century," then we add 1908, 1920, and 1928 -- and get two hits, with TR/Taft and Coolidge/Hoover. Is there some special reason that the postwar era should be different? Not that I can think of, and if we include those the pattern drops to three in nine -- hardly something to get worked up about. Note that the more qualifiers you toss in, the more likely you are to be creating the pattern that you're seeing, so this is an important test.

What's next? Well, are the cases you are using strong evidence of something, or weak? Here, out-party replacements by Ike in 1952 and Obama in 2008 were both pretty solid...but so was George H.W. Bush's counter-pattern win. The rest were toss-ups: Nixon/Kennedy, Humphrey/Nixon, and Bush/Gore, with the latter of course counting the other way on the national vote. Overall, that seems a lot closer to a coin-flip than an Iron Law.

Actually, I suppose that this suggests a simple rule of thumb for presidential general election patterns: if the pattern depends on how one scores Bush/Gore, it's probably not a pattern worth caring very much about.

But of course, as Henry suggests, this kind of thing comes up all the time, and it's going to; we are pattern-finders. And yet it's unfair to say that reporters and pundits should rigorously test every pattern they notice. In this case, it is in fact probably true that extra terms in the White House make electoral defeat more likely...but to the extent that kicks in after two terms, it's going to be a fairly small effect.

So, go ahead and pattern-spot. Just be aware that (as Henry says) most patterns are garbage, so be careful -- and do a quick self-exam of your pattern before you invest any meaning in it at all.

“I see those six ladies in the jury putting themselves on that rainy night, in that housing complex that has just been burglarized by three or four different groups of black youngsters from the adjacent community. So it’s a dark night, a 6-foot-2-inch hoodie-wearing stranger is in the immediate housing complex. How would the ladies of that jury have reacted? I submit that if they were armed, they would have shot and killed Trayvon Martin a lot sooner than George Zimmerman did. This is self-defense,” – Geraldo Rivera, Fox News.

That’s a staggering statement, effectively giving white people the right to kill anyone above 6′ 2″ in a hoodie. I haven’t been able to watch the cable coverage of this, but readers tell me that Fox is race-baiting in hysterical, reckless fashion. If Rivera’s understanding of “self-defense” is correct, then it’s open, hunting season on African-American men.

Some people who advocate large-scale cuts in government programs that assist low-income families are not in fact motivated by callous disregard for the welfare of poor families. Some of them are driven by a principled dislike of government programs. The 216 House Republicans who voted for today's agriculture bill, however, are not in that group. In the wake of last month's legislative shenanigans the GOP leadership decided to move a bill that exclusively funds farm subsidies with no food stamps component at all.

And 216 Republicans voted for it.

Because they don't have a problem with spending $195 billion over ten years, they just want to make sure it goes to the right people. Not poor people, in other words. Farmers. Farmers who, on average, are richer than the typical American.

You know where this man is coming from when he dismissed the organization SNAP – Survivors Network of those Abused by Priests – as having “no credibility“. The records from his old diocese in Milwaukee show he authorized pay-offs to child-rapist priests to encourage them to leave the ministry. (In the Catholic hierarchy, you don’t report rapists to the police; you eventually offer them financial incentives to leave.) Nonetheless, at the time, Dolan insisted that these charges were “false, preposterous and unjust,” whatever the records or even the spokesman for his old diocese said. Now, in another piece of stellar reporting, Laurie Goodstein, adds more context to this man’s record:

Files released by the Roman Catholic Archdiocese of Milwaukee on Monday reveal that in 2007, Cardinal Timothy F. Dolan, then the archbishop there, requested permission from the Vatican to move nearly $57 million into a cemetery trust fund to protect the assets from victims of clergy sexual abuse who were demanding compensation.

Cardinal Dolan, now the archbishop of New York, has emphatically denied seeking to shield church funds as the archbishop of Milwaukee from 2002 to 2009. He reiterated in a statement Monday that these were “old and discredited attacks.”

However, the files contain a 2007 letter to the Vatican in which he explains that by transferring the assets, “I foresee an improved protection of these funds from any legal claim and liability.” The Vatican approved the request in five weeks, the files show.

So, twice now, we have been forced to choose between his words and our lyin’ eyes, when it comes to questions of how he handled and cosseted child-rapists under his jurisdiction in Milwaukee. We now know he deliberately sequestered church assets so he could argue he had no more funds to compensate those raped by his subordinates. He was once again putting the institutional church’s interests above those of the raped. And he seems to be able to lie about all of it – in the face of massive evidence – with nary a flicker of hesitation.

(Photo: New cardinal Timothy Michael Dolan, Archbishop of New York, receives the biretta cap from Pope Benedict XVI in Saint Peter’s Basilica on February 18, 2012 in Vatican City, Vatican. By Franco Origlia/Getty Images.)

A few weeks ago I wrote about the role of the safety net to catch folks buffeted by market failure.  I argued that the evidence showed that programs like Unemployment Insurance and food stamps (now called SNAP) performed well in this regard, ramping up to meet the increased need induced by the great recession.

That’s a short-term, “counter-cyclical” argument: when the economy goes down, we should unapologetically expect the safety net goes up (and vice-versa).  But new research from poverty scholars Hilary Hoynes and Diane Schanzenbach provides evidence of important impacts that go well beyond the business cycle:

SNAP likely pays significant long-term health and economic dividends for children who have access to its benefits. While some policymakers suggest that we have failed to appreciate the long-run harm to beneficiaries and taxpayers from SNAP and other safety net programs, our research suggests that, if anything, the opposite may be true: we have failed to appreciate the long-run benefits to participants – particularly children – and to the taxpayer from SNAP and other safety net programs.

The researchers take advantage of the natural experiment generated by the fact that when it was introduced in the 1960s, the food stamp program was gradually phased in across the nation.  Thus, they can compare various outcomes among kids who received nutritional benefits with those who did not.

We find that in the short-run access to the Food Stamp program improved infant health. In particular, pregnant women who had access to this safety net program during her third trimester gave birth to babies with higher average birth weights. The increases in birth weight were largest at the bottom of the birth weight distribution and in counties with the highest rates of baseline poverty.

Since higher birth weight and improved infant health are associated with better adult outcomes, the research asked how the kids who got food support did as adults compared to similarly situated kids that did not.

…we found that adults’ health…was markedly improved if they had access to the safety net during childhood. In particular, we found that access to food stamps mattered most in early childhood, through ages three to five.

There were also able to examine other outcomes, finding that early food stamp receipt for girls (though not for boys) was later associated with greater educational attainment, higher earnings, and—note this one—less reliance on the safety net.

This last finding is important. Our results suggest rather than the Food Stamp program creating an inter-generational “welfare trap,” the reverse is more likely true. Providing benefits to children at important stages of their development allows them to grow in ways that may help enable them to escape poverty when they reach adulthood.

Finally, this finding regarding food stamps long-run impact is not as sui generis as you might think–the authors link to other studies showing longer-term benefits from the earned income credit and housing vouchers as well.  See also, toward the end of this piece by my CBPP colleagues, a review of  this literature on longer-term benefits associated with safety net receipt.

Since Reagan, conservatives have been remarkably successful in putting defenders of the safety net on the defensive, often on the basis of mythical, or at least highly exaggerated, unintended consequences.  In reality, compelling evidence points the other way.  It’s time we move to offense.

This is now getting hilarious:

“[T]he idea of me calling this guy a ‘queen’ and that being something that people thought is homophobic … a queen to me has a different meaning. It’s somebody who’s just above. It doesn’t have any necessarily sexual connotations. To me a queen… I know women that act queeny, I know men that are straight that act queeny, and I know gay men that act queeny. It doesn’t have to be a definite sexual connotation, or a homophobic connotation. To me those are people who think the rules don’t apply to them. This guy could blatantly lie, I mean blatantly lie about my wife on the internet and there are just no rules that apply to him, but that’s outrageous to me.”

He somehow hasn’t come up with an explanation for why he desired to sodomize the dude with his boot, but decided not to because the dude would enjoy it too much. But we’ll wait. This raging bigot will surely come up with some reason for using that analogy that has nothing to do with homosexuality at all.

Again: the double standards for a liberal are simply astounding. Let us just stipulate that if Alec Baldwin is not a homophobe, then Mel Gibson must also now be cleared of any insinuation that he is an anti-Semite. And at least Gibson was drunk. What excuse does Baldwin have? Oh, I forgot, this one:

His rant, he said, was not “a call for violence against a specific person because they’re gay, it’s a call for violence against a person who lied about my wife.”

Seriously, bragging about calling for violence against someone is now exculpatory? Only in Hollywood …

M0re Dish on this douche here and here.

One hundred years ago today, Gavrilo Princip assassinated Archduke Franz Ferdinand and his wife, setting off a series of events that led to World War I.* One year ago today, Matthew Yglesias looked at that historical moment and what it does and doesn't say about Germany, which assumed much of the blame for the war. The post is reprinted below.

I've been meaning for a while to have it out with Jonathan Chait on the subject of German responsibility for World War I, and since today is the 99^th anniversary of the assassination of Archduke Franz Ferdinand of Austria, I thought today would be the day to do it.

My basic recommendation would be to read Christopher Clark's great recent book, The Sleepwalkers: How Europe Went to War in 1914, which is an amazing narrative history of the crisis and the larger context. For the purposes of historiographical ax-grinding, though, I would reconstruct his argument this way. From the standpoint of, say, 1960 or 1980, it was easy to look at World War I overwhelmingly through the lens of World War II and say that this was just another example of Germany's quest for continental hegemony and that European peace has only ever been achieved by German disunity. But from the present day, things look different. After the breakup of Yugoslavia and the massacres at Srebrenica and elsewhere, it's a bit harder to regard Serbia's irredentist agenda in the early 20^th century as so benign. After 9/11 and the American wars in Iraq and Afghanistan, it's a bit easier to regard a terrorist attack as very genuinely being a cause of large-scale political outcomes even if the broader geopolitical context is always relevant. Last and by no means least, after the Lisbon Treaty, it's quite a bit harder to regard the Habsburg dynasty's multi-ethnic Central European polity as inherently doomed and outdated. With Croatia's accession to the European Union, virtually all the Habsburg lands are now once again part of a loose but substantial political federation and it's not totally crazy to imagine the relevant territory having evolved in that direction without passing through the veil of world wars and communist dictatorships.

So Clark's viewpoint, I would say, is that we should take things a little bit more at face value. Serbia and its Russian superpower sponsor were genuinely trying to destroy the Habsburg empire. Franz Ferdinand's assassins really did have ties to the Serbian state. He was assassinated in part because he was known to be a moderate who favored further decentralization of imperial authority and concessions to the interests of South Slavs, and Serbian nationalists thought his rise to power would undermine their effort to incorporate Bosnia, Croatia, and Slovenia into Serbia.* The authorities in Vienna and Berlin had a legitimate interest in pushing back against the attempted dismemberment of the Habsburg state. And then things got nasty in no small part thanks to French politicians having persuaded themselves that a Balkan crisis would be the best possible shot at teaming up with Russia to wage a war against Germany and take back Alsace and Lorraine. Nobody is blameless in the whole affair, but it's much much more complicated than "Germans be starting wars." The Entente powers were essentially sticking up for a state sponsor of terrorism.

This is all worth bringing up, I think, because the specter of German war guilt very much continues to haunt European affairs and in a sense the global economy. Nobody discusses it aboveboard, but part of the subtext of a huge amount of European Union politics is a constant kind of checking over the shoulder to see if those dastardly Germans are trying to conquer the continent again. But while Germany certainly did make one effort to conquer Europe, how you think about World War I really drives the question of whether there's a pattern of German aggression or not. After all, Germany is hardly historically unique in terms of having once waged genocidal war in search of living space, but present-day American foreign policy initiatives aren't typically read through the lens of the expropriation of Native Americans.

I've been very critical of many of Angela Merkel's initiatives over the past few years, and agree with those who think Germany needs to show more leadership on the continent. But part and parcel of that is that they can't be constantly snarked at (or worse) every time they try to wield influence. And the best starting point there is to start getting the history right and not getting so sucked into what's now practically century-old wartime propaganda. There was plenty wrong with Wilhelmine Germany, but it's not as if the vast colonial empires of France and Britain or Woodrow Wilson's drive for white supremacy and Southern redemption were flawless models of democratic liberalism either.

* Correction, June 28, 2013: An earlier version of this post described Serbia's territorial ambitions as including Slovakia when in fact their goal was to incorporate Slovenia. (Return.)

*Correction, June 30, 2014: A recycled version of this post misspelled the first name of Gavrilo Princip. (Return.)

Immigration bill passes. On to the House. Not optimistic, though people I respect think otherwise.

Whatever one thinks about the immigration issue in its totality, I think my Asshole Test is pretty good. If you think people who were brought here by their parents as kids should be deported to a country they've never really experienced and where they don't even speak the language, you pass!

Local economic development theory argues that it’s usually a bad idea for cities to offer special incentives to try to attract businesses. These incentives weaken the fiscal position of the city, but often provide freebies for location decisions that the businesses would have taken anyway. So why do cities do it? In a new paper, Nate Jensen, Edward Malesky and Matthew Walsh argue that these bad decisions are driven by voters. Voters know enough to want to vote for politicians who take active steps to attract business to the city, while not knowing enough to realize that the costs of these active steps often outweigh the benefits. Jensen et alia argue that this theory is supported by evidence of real differences between cities run by elected mayors, and cities run by managers responsible to a council. They argue that managers are more insulated from electoral politics than mayors, and hence less likely to take wasteful decisions to offer incentives.

We test the impact of electoral institutions on a dataset of over 2,000 project-level incentives (icaincentives.com 2013), finding significant support for our electoral pandering hypothesis. Elected mayors: offer 14% more money than council-managers overall and 20% on a per-firm basis($822,000 on the average project); are 16% more likely to offer an incentive to an individual firm; and are 7.6% less likely to have an oversight program in place for the use of investment incentives. The larger generosity of elected mayors is facilitated by the fact that they face less oversight in the targeting of incentives and requirements on the size of incentives than comparable cities subject to council-manager systems.

A celebratory Jäger at Stonewall.

Really the crucial part of Greg Mankiw's recent paper "Defending the One Percent" is his attack on what he rather loosely terms "utilitarianism." In essence, Mankiw wants to say that redistributive taxation is morally wrong even if redistributive taxation increases human welfare. After all, forcible kidney donations might increase human welfare and nobody endorses that, so why should forcible transfers of money from the rich to the middle class be any different?

An alternative to the social insurance view of the income distribution is what, in Mankiw (2010), I called a “just desserts” perspective. According to this view, people should receive compensation congruent with their contributions. If the economy were described by a classical competitive equilibrium without any externalities or public goods, then every individual would earn the value of his or her own marginal product, and there would be no need for government to alter the resulting income distribution. The role of government arises as the economy departs from this classical benchmark. Pigovian taxes and subsidies are necessary to correct externalities, and progressive income taxes can be justified to finance public goods based on the benefits principle. Transfer payments to the poor have a role as well, because fighting poverty can be viewed as a public good (Thurow 1971).

I think the right issue to ask about this is what's the basis for the Pigouvian taxation and public goods provision supposed to be? In a traditional economics class paradigm you're taught that these things are necessary because these are cases where interventions into the marketplace increase human welfare. After all, the mere fact that something is a public good isn't a sufficient case for subsidizing it. Fireworks displays, for example, are public goods, but that observation isn't enough to answer the question of how much should be spent on them. The standard approach would be to make a utilitarian appeal to the idea of balancing between the amount of public benefit and the amount of public cost. And when assessing the amount of public benefit, you want to take a broad population average notwithstanding the fact that any given level of fireworks investment will be too high for many people and too low for many others.

It's the same with externalities. The appropriately priced "social cost" of air pollution is going to be a kind of average across the whole range of personal private costs. The standard justification for setting a price that will be too high for half the population and too low for the other half is a utilitarian one.

Last but by no means least, the competitive equilibrium. Going back to Adam Smith, at least we have economists warning about the evils of cartels, and the problem of noncompetitive markets is much more severe in our time than in Smith's because we have so many utility-ish industries like broadband Internet and mobile phone networks. The competitive equilibrium is the one that maximizes total welfare—which is desirable on utilitarian grounds.

All of which is to say that I think Mankiw has hit upon a deeper issue than he realizes. Utilitarian and utilitarianish ideas are woven very deeply into the fabric of classical and neoclassical economics, and these linkages often do not receive adequate care or scrutiny. The "right-wing" version of this problem is to do what Mankiw does and appeal to enough utilitarianism to get something resembling a modern capitalist economy off the ground and then want to get off the train when it starts endorsing broad economic redistribution. A frequent related fallacy on the left, I would say, is to draw the boundaries of concern along national or temporal boundaries, to get the result "the greatest good for the greatest number of currently eligible voters" rather than treating all people as equal. Alternatively, perhaps Mankiw is right and utilitarianism is bunk. I don't think it is, but many people do. But if you want to completely reject utiltiarian thinking, you have to dig deeper into the foundations of orthodox economic thought than Mankiw seems willing to go.

Without wanting to offer too many spoilers, the new film World War Z portrays a zombie apocalpyse and efforts by world governments to fight against it. The war is, naturally, a total war. And, like any serious contemplation of a total war scenario, it illustrates some important points about economics that tend to get lost in a lot of workaday discussion.

For example, socialism beats capitalism in terms of organizing efficient production. The problem with planned economies isn't so much that they "don't work" as that they require a high level of political consensus about what you want to achieve. In the event of a zombie apocalypse or an attempted Nazi conquest of Europe, this is pretty easy. And indeed, the Soviet Union was very good at things like building subways and launching things into outer space. The problem is that absent an imminent disaster, this kind of consensus is not going to be forthcoming and it's much better to let markets aggregate the diverse preferences of a broad population than to try to have everyone reach a collective decision about what color pants people should be wearing or about whether a Doritos taco or a Fritos burrito is more delicious.

On the other hand, socialism is not particularly egalitarian. Allocating resources through a political process rather than a market exchange process doesn't equalize the resources available; it means that resources are allocated according to political clout. The emerging society of naval flotillas and refugee camps is very much not a classless utopia—it's a place where your living standards are determined by your political clout and perceived usefulness to the powers that be.

We also see that poverty doesn't cause unemployment. There's been a remarkable tendency since 2008 to conflate things that make countries poor with things that elevate the unemployment rate. But while a zombie apocalypse is obviously an enormous negative shock to humanity's wealth, it doesn't cause unemployment. If anything, annual hours worked per adult seem to be skyrocketing. The constant toil is part of the overall collapse in living standards. You need to hustle constantly for food, shelter, survival, and to earn your keep in a place of refuge. It's not "man, we're much poorer than we were pre-apocalypse so I guess there's nothing useful for you to do."

Last but by no means least, money is irrelevant. A society on a total war footing is not a society that's free of resource constraints. On the contrary, binding resource constraints are crucial. There is only so much jet fuel, only so many bullets, only so many trained virologists, only so much food, and so forth. But one constraint that never binds is lack of money. In fact, due to the digitization of banking and then the zombie-induced collapse of the global communications grid, it appears that nobody has any financial resources at all. But such state authorities that manage to function don't fail to mobilize resources due to a perceived lack of money. They simply mobilize the resources by fiat. Historically speaking, nation states committed to a capitalist ideology have tended to maintain a skein of monetary transactions even during wartime emergencies. But these transactions take place against a backdrop of rationing, quasi-coerced loans ("war bonds"), suspensions of gold convertibility, and of course conscription of soldiers.

I've been in a long and winding multi-front Twitter exchange over the question of Senator Rand Paul and race. The specific impetus was my assertion that Paul's opinion that democracy "gave us Jim Crow" relates to his white supremacist inclinations. Inclinations that I think are evidenced by, for example, his previous stated opposition to key provisions of the Civil Rights Act. That prompted a debate with some competing strands of conservative punditry, with Charles C.W. Cook taking the view that Paul is right and the Civil Rights Act is bad while David Freddoso thinks that the Civil Rights Act is good but associating Civil Rights Act opponents with racism is slander.

So to return to the beginning, there's no plausible meaning of "democracy" in which democracy gave us Jim Crow.

Even if you take democracy to relatively narrowly mean majoritarian voting procedures this doesn't work. In the periods between the Civil War and World War II, African-Americans were a majority in quite a few southern states and would have been a large—and potentially decisive—voting bloc in the others. If, that is, they were allowed to vote. But instead of voting, African-Americans were disenfranchised via a systematic campaign of terrorist violence. The same campaign that gave us the Jim Crow social system. The point of the Civil Rights Act, including its provisions regulating private businesses, was to smash that social system. And it succeeded. It succeeded enormously. The amazing thing about retrospective opposition to the Civil Rights Act is that we know that it worked. It didn't lead to social and economic cataclism. In fact, the American south has done quite a bit better since the smashing of white supremacy than it was doing previously.

I think the Cook/Paul view that we should somehow regret this and pretend that everything would have worked itself out on its own is bizarre.

But it's not only bizarre. It seems to me that it necessarily has to stem from not taking the interests and history of African-Americans seriously to even be comprehensible. The "respectable" thing to say about people like Paul or the late Barry Goldwater, I suppose, is simply that they are ideologues rather than people driven by some kind of racial animosity. But I think it's selling free market ideology short to suggest that government regulations meant to undue the outcome of a century long campaign of terrorist violence is just a straightforward consequence of a general support for free enterprise. You need to combine that ideology with a sincere indifference to black people's welfare to reach that conclusion, just as you need to combine Paul's ideology with genuine indifference to the history of race in America to reach Paul's conclusion about democracy's relationship to Jim Crow.

If you thought that recent good news about the federal budget deficit would calm elite clamoring for cuts to Social Security and Medicare, the US Chamber of Commerce has other news for you. Today Bruce Josten, their executive VP for government affairs, delivered a speech and launched a new initiative around the urgent need to cut these programs.

The basic issue, as the Chamber sees it, is that the improving deficit picture and waning political interest in a grand bargain requires them to double-down on this subject.

Even though I disagree with the Chamber I'm heartened in some ways to see them doing this since they're confirming what I've said about why new budget facts won't change the debate and why the powers that be will always hate Social Security. A perception of concern about budget deficits is a nice entry point into a politics that's built around cutting federal spending on retirement programs, but its people loafing around on the dole and not anything to do with the budget as such that drives the conflict. Simply put, from a business viewpoint there's nothing worse a government can do than pay people to not work. And yet that's the whole point of federal retirement programs! Their existence depresses savings and labor force participation.

It just happens to be a functional and popular way of ensuring that elderly people get to have nice lives. I'd say that's a worthy aim. The leaders of the American business community disagree. But it'd be great to have that debate out there in the open. There's no unique right answer to this question. Paul Krugman says "France has made it much too attractive to retire at 55" even while strongly opposing efforts to make it less attractive to retire at 65 in the USA. I'd say the fact that labor force participation among older people is increasing even during a terrible labor market is evidence that we don't need a change in this regard. But I do think it's a good debate to have, and it's an especially good debate to have outside the context of a farcical debate over an alleged short-term debt crisis.

In general, when you have hotels in a location with a strong seasonal demand peak the existence of the peak season subsidizes guests during the off-peak season. The availability of windfall peak season profits induces construction of hotel capacity, and then since the marginal cost of hosting a hotel guest is low off-peak prices are really cheap. That said, the normal problem with off-peak vacation travel is that you don't want to go someplace in the non-peak season. Costal Maine is lovely at the height of summer, but in March—meh.

But in my recent trip to Europe, I discovered an amazing vacation bargain opportunity provided to you by the waste and dysfunction of European Union institutions. It's all about Strasbourg, France.

Strasbourg is a really nice small European city. Its historic core is beautiful and the entire area has been proclaimed a UNESCO World Heritage Site. It sits right by the Franco-German border and historically has been much-contested territory. That gives you nice wines, good beer, some of the best sausages I've ever had, and an awful lot of pretzels. Neat town. But attractive towns in Western Europe tend to be very expensive to visit. And here's where the European Parliament comes in.

The vast majority of the time, the European Parliament is located in Brussels with the rest of the major EU institutions. But as a sop to France and to history, twelve times a year it holds a four-day plenary session in Strasbourg. And the European Parliament is a big institution with well over 700 members. So approximately once a month, thousands of MEPs and staffers and others assorted hangers-on (journalists, European Commission staff, people from national governments, lobbyists) need to decamp to Strasbourg for a three night hotel stay. This is a huge waste of everyone's time and money. But for our purposes, the important thing is that it creates insane week-to-week price swings in the hotel hotel market, because Strasbourg is not a large place. The hotel my group stayed at charges literally double during plenary sessions.

Many people's instincts is to look at that kind of pricing scheme and see the high on-peak charge as "gouging" and the low off-peak charge as the "real" price, but it's important to see that that's not the case. Hotels have high fixed costs (you need to build them) and low marginal costs (it's just a little extra housekeeping). The ability to charge sky-high prices during plenary sessions encourages the construction of lots of hotel capacity. That leaves the town with massive excess capacity when parliament isn't in town. That means prices that should be real bargains compared to what would be charged in a comparably appealing city that doesn't host a wandering parliament. Consider checking it out next time you want to go somewhere. Just make sure to pay attention to your calendar and go in a week when parliament isn't in session. 

Brad Plumer reports that the incarceration rate for youths has plummeted 32 percent over the past decade:

Some of the drop has been driven by the general decline in crime and arrests across the country. But not all. Importantly, another chunk of the drop is due to the fact that nine states — including California, New York and Texas — have been experimenting with new policies to keep kids who commit minor offenses out of jail.

....Take California. Since 2007, the state began to close some of its detention facilities to save money. At the same time, the legislature outlawed confinement for kids who had only committed minor, non-violent offenses. And the state poured some of the savings into alternative programs (which can include drug treatment, home monitoring, or mental-health services).

This is good news. And loyal readers know one of the reasons, right? Our old friend lead. If lead is partially responsible for crime rates, then what you'd expect to see when lead density goes down is (a) a drop in crime, (b) followed a bit later by a drop in youth incarceration, (c) followed by a drop in adult incarceration. And that's exactly the pattern we've seen. Violent crime peaked in 1991 and then started dropping. Youth incarceration rates peaked and started dropping about a decade later. And now, a decade after that, adult incarceration rates are peaking and will almost certainly fall steadily in the near future.

If kids are fundamentally less violent than they used to be, there are fewer to lock up. And the ones who are locked up can often be held in different kinds of facilities. Eventually this will run its course as youth crime rates bottom out, but it probably has another decade or so to go. That's pretty good news.

The CBO says: the Senate immigration bill lowers the deficit (see also a nice explainer from pro-immigration analyst Matt Yglesias).

Liberals who support immigration reform have been having fun since yesterday afternoon pointing out that Republicans who oppose immigration are hypocrites because they will surely ignore or dismiss that effect on what is supposedly one of their main priorities. Well, yes -- but I have very little problem with hypocrisy in general, and even less on this "gotcha" kind. Truth is that immigration policy is terribly important to determining what kind of nation you're going to have; if it increases or decreases the deficit a bit, that's really no reason to support or oppose the policy. And $200B or so over ten years is really nothing to get all excited about. It's more the other way around: anyone who claims to care about deficits would have some obligation to change the bill if the estimates had come back the other way; finding that there's a bit of deficit reduction certainly doesn't oblige people otherwise concerned about deficits to support the bill.

Ah, but there's one group which really should weigh in: the professional deficit scolds. Alan Simpson and Erskine Bowles, for example. That is, they should weigh in if they really want people to take them seriously.

First of all, they (and anyone else whose primary political project is deficit reduction) should be out there backing up the CBO estimates. It's not their job to say that anyone who cares about deficit reduction should vote for the immigration bill, but it is their job -- if they really care about deficit reduction -- to do whatever they can to establish the idea that CBO projections are real, and should be treated as real.

(That's assuming, of course, that they agree with CBO; if not, it's their obligation to do a serious nonpartisan critique).

Second, they should be quick to praise those who propose major legislation that helps the deficit. Not the bill itself; again, even deficit scolds shouldn't be suggesting that people support or oppose major substantive legislation because of relatively minor deficit reduction. But there's little reward out there for what deficit scolds certainly should be thinking of as acting responsibly -- the difference, in other words, between Bush-era Medicare expansion and Obama-era ACA. Indeed, that could be especially helpful for deficit-scolds who oppose a bill: "I'm against this, but the authors deserve considerable credit for doing it in a fiscally responsible way."

In fact, however, most deficit scolds typically do no such thing. Which is why no one should take most of them seriously on deficits. And why many who otherwise would be sympathetic to their supposed cause wind up thinking that their real goals have little to do with deficits and debt.

There was some good conversation in comments yesterday about Daniel Patrick Moynihan's The Negro Family: A Call For National Action, on the black family, and some of the resulting pushback. Horde Legionnaire Socioprof offered this link to a 2009 issue of Annals of the American Academy of Political and Social Science. In it, Moynihan's legacy is re-assessed from several perspectives. 

I am just beginning to go through the volume. But the first essay argues that Moynihan was unfairly tarred as a racist by people who had not read the report. Apparently portions of it were leaked early, many of them taken out of context. I have my own critiques of The Negro Family. I think the slavery portion doesn't hold up as well as some of the other portions of the report. I also think anyone considering its arguments about slavery should check out Herb Gutman's The Black Family in Slavery and Freedom.

But Moynihan's argument differs substantially from the kind of ahistorical shaming you see from people who attack black culture as the font of the race problem. The opening chapter is written by Douglass Massey and Robert Sampson. I'm not very familiar with Sampson, but I know Massey's work well. He is a pioneer in understanding the continuing effects of segregation and the piracy of black wealth that characterized mid-20th century domestic policy. Here are their thoughts on what Moynihan was actually trying to accomplish:

The key to arresting the alarming rise in family instability, he felt, was a dedicated federal effort to provide jobs for black men. He was, after all, assistant secretary in the Department of Labor, not in the Department Health, Education, and Welfare; his purview was the workforce and not the family. The crisis in the black family was his justification for a federal jobs program. Along with education, training, and apprenticeship programs that would enhance the employability of black men, he favored a major public works effort that would guarantee jobs to all able-bodied workers. If full employment for black males -- especially young black males -- could be achieved, he thought, then family stability could be restored and government would be in a better position to attack more entrenched problems such as discrimination and segregation.

I tend to think that it would be really hard to separate out segregation from employment and family stability. That's a subject worthy of debate. But Moynihan didn't get a debate. He got condemnation:

Perhaps a major effort to generate employment for low-income, minority workers was never in the cards. Even LBJ was skeptical of government work programs. But something else also transpired to seal the fate of Moynihan, his report, and its emphasis on federal employment programs. Immediately after the president's speech at Howard University, someone leaked the Moynihan Report to journalists, who naturally published the florid language and incendiary prose that was meant to stir passions within the administration while ignoring the more prosaic but critical structural analysis embedded in the report.

Soon, headlines blared that Moynihan was calling the black family pathological and blaming it for the problems of the ghetto, which suggested that he was laying the onus of black educational failure, joblessness, and criminality on female matriarchs. Moynihan-bashing quickly became a boom industry in the liberal press, led by the journalist William Ryan, who in The Nation coined the term "blaming the victim" to describe the report (Ryan 1971).

Moreover, in the context of an emergent black power movement, Moynihan s emphasis on humiliated black men could not have been less timely, and in the context of a coalescing feminist movement, his pairing of matriarchy and pathology could not have been less welcome. Young black militants and newly self-aware feminists joined in the rising tide of vilification, and Moynihan was widely pilloried not only as a racist, but a sexist to boot.

A great irony is that few of his vociferous critics had actually read Moynihan's report. It was still an internal document with a very limited number of copies. Most people had only read selective extracts published in columns and stories about the report, which when combined yielded a bowdlerized version of its arguments. One wonders, for example, whether critics who claimed Moynihan was racist had read even the first page of the report, where it was claimed that "the racist virus in the American blood stream still afflicts us." The report was not actually "published" and widely distributed until 1967, when Rainwater and Yancey included a facsimile in their analysis of "the politics of controversy."

By then, of course, it was too late; Moynihan's report had been consigned to the netherworld of the politically incorrect, where it would remain for decades. One can only imagine the even more vociferous reaction that would have ensued had the Moynihan Report been leaked in the technological world of today, with its capacity for instantaneous and frenzied distribution the world over.

Perhaps. There's also an argument that the Moynihan Report actually would have done better today -- a two-year lag-time in publication is unthinkable. Moreover, in 1967 the tools of publication were only in a few hands. Today they belong to anyone with an Internet connection.

But there would be no Moynihan report today. The liberal consensus has shifted too far to the right. And so we have people who were influenced by Moynihan's thoughts on the importance of family, neglecting to heed his lessons on how to solve those problems.*

Moynihan powerfully believed that government could actually fix "the race problem." He probably believed this because he knew that government had, at best, stood aside while the problem was created and, at its worse, actively contributed to the problem. This is not a line that liberals in politics generally advocate for today.

*Note that this pose is much less risky, politically. There's no real political cost to telling people to get married. (Everyone loves a wedding.) Telling them that there should be a jobs program that makes more men marriage-material is different.

Sir Paul of Beatles was on Colbert last night. An occasion to do the math and think about how the kids today might relate to the Beatles. I didn't really know anything about them until I was 15 or so, 1987. I'm not saying I'd never heard of them or never heard their music - of course I had - I mean... I knew there was this band that sang Twist and Shout and Yesterday and Love Me Do, but I didn't have any sense of their place in musical or cultural history until I was well into high school. And that was a time when there was a 60s revival thing going on (MTV, etc., promoting) so I went from knowing not much to knowing a reasonable amount.

Doing the math, the Beatles ended 1970 or so. 17 years before I was 15. Going 17 years back from today brings us to... 1996.

No deep point. Just perspective from an old guy. Get the fuck off my lawn.

Pentagon: Top West Point Official 'Misused His Position To Obtain Cat Care'

Just for fun I thought I’d illustrate my previous post using a service on the web that allows you to make your own Venn diagram:

Yeah, yeah, I know it could be done better (both in the content and the visuals) but I wanted to give it a shot.

I found this gem in a post by Christopher Mahoney:

Why is aggregate demand so weak?

[Mario Draghi] “You have a quite broad weakness in domestic demand and consumption, particularly because of the high levels of unemployment.”

So the unemployed are the cause of unemployment. QED. 

BTW,  Mahoney gives Ambrose-Evans Pritchard and the late Christopher Hitchens a run for the money in doing “moral indignation.”  Here’s a sample:

The ECB is not to blame for zero growth and high unemployment: that is the fault of the defective countries and their lazy people:

“You also have to ask yourself why these countries were not competitive. Why did they have to rely for growth in the good times, or “fairyland” times, on the protected sectors that were shielded from international competition?”

It appears that there is more than a bit of Savonarola in Mr. Draghi. Although a Roman Catholic, he has a Puritan heart. He is truly a man of the world, highly educated, highly intelligent, with a resume intimidating in its excellence: MIT, Harvard, World Bank, Brookings, Institute for Advanced Studies, Goldman Sachs, Bank of Italy, ECB. Whatever Draghi’s problem is, it is not intellectual ignorance or a low IQ.

A bit of psycho-biography: Draghi has spent his entire professional life apologizing for Italy. Imagine his life, traveling around the world in order to explain and excuse his country’s medieval politics and ungovernability. Try to imagine for a moment the depths of Draghi’s contempt for Italian politicians (and voters), with their Byzantine disinterest in anything but power, family and money.

Could Draghi be unconsciously (or even consciously)  seeking revenge on his country’s unmodern political culture, the succession of Andreottis, Fanfanis and Berlusconis and all of their satraps and corrupt henchmen? Does he perhaps think, like Lincoln, that only by going through a cauldron of fire can his country atone for its sins and enter the modern era? Does he, in other words, think that his utopian ends justify his brutal means?  Certainly the tone of his monthly Q&A would suggest impatience if not contempt for the complaints of those who would question his disastrous policies.

Miles Kimball has a new post entitled:

Should We Have Tight Monetary Policy in Order to Help Virtuous Savers?

Unfortunately, there doesn’t seem to be a post, just a title.  So I’ll provide the post.

1.  Tight money does not raise interest rates, at least over the relevant time frame for welfare considerations.  Interest rates in the eurozone today (0.5%) are almost certainly lower than they would have been had the ECB not adopted a tight money policy in 2011, raising rates from 0.75% to 1.25%.  That policy drove the eurozone deeper into recession, pushing rates even lower. The same thing happened in America in 1937-40.  That’s right, low rates can reflect tight money.  Even low real rates.  The low real rates in America today partly reflect the recent recession, which was caused by ultra-tight monetary policy in 2008-09.

2.  Savers might also be helped by a lower rate of inflation.  In practice, savers are hurt more by the drop in RGDP (and real interest rates) associated with tight money, than they are helped by the lower inflation.  Economics is not a zero sum game.  A smaller pie hurts both savers and borrowers.

3.  Tight money hurts saving nations in other ways.  For instance, the ECB policy that caused eurozone NGDP to grow by 2.7% over the past 5 years (instead of the normal 22%), has dramatically worsened the sovereign debt crisis.  As a result of this crisis, savers and taxpayers in high saving countries like Germany will suffer enormous losses.

4.  Thus the central bank should not help virtuous savers, nor should it try to help non-virtuous savers.  But the tax authorities should help both groups, by eliminating all taxes on investment income.

I've been writing out some notes for a piece about the starkly different reactions different people are having to the Snowden story and what different assumptions we bring to it. But first I wanted to flag a couple other points. We're going to be doing a lot of reporting on Snowden's pre-leak career, trying to piece together and confirm what we can about his background, what if anything doesn't match up between his account and what we can find out from other sources and so forth. So that's coming. One of the basic questions I'm interested in is whether Snowden really had quite the level of access and power he claimed in his interview with the Guardian.

In part this is just because it's worth knowing the credibility and motives of someone at the center of such a major story. But there are two other reasons I'm particularly interested in this.

In his video interview, Snowden suggested that he basically had access to everything - knew where all the intel stations were around the world, could tap people's communications at will. Even the President if he'd wanted to. Some level of poetic license might be expected in such a case. But if that's really the case it raises some pretty serious issues about how things are structured at the NSA. Any intelligence agency wants to be able to share information to make sure you don't have one wing of your organization having one piece of the puzzle but unable to put it together with that other part fo the puzzle another wing of the organization has. Remember, that was the part of the critique post-9/11. Different parts of the US government had most of the pieces of the puzzle. They just weren't communicating with each other.

On the other hand there's compartmentation. Intelligence agencies want to protect their secrets. And because of that basically no one within the agency is treated as above suspicion. They work on something like a need to know basis. So that if someone goes rogue and turns spy or just releases a lot of information to the press, there's a limit on the potential damage since they shouldn't have access to everything.

Then there's a second part of the equation. It's been widely discussed that one key reason Republicans are having such a hard time on the information technology front is that the people who work in the field - the techies and hackers, whatever you want to call them - basically aren't Republicans. Even that sort of understates much of the issue. The tech culture mindset - and by this I mean, the people doing cutting edge web applications and social networking start-ups - has very few points of contact with the modern GOP.

But here's another point. The world also has a very high degree of overlap with the sort of radical transparency philosophy that Snowden (and many others) seems to espouse. Think about Aaron Swartz and all the techie subcultures on Reddit. When you figure how dependent the national security apparatus is becoming on system administrators and high-end programmers, you have to ask: Is Snowden not a one off but a more structural problem the national security apparatus is going to face?

There've been lots of interesting announcements in today's WWDC Keynote address, but from a business strategy point of view the most interesting one is something Eddie Cue glossed over quickly: Apple's new and improved Siri will feature Bing search results.

Bing? Yes, that's Microsoft's search engine. And of course it makes perfect sense. Bing is, qua technology, a totally fine search engine. I'm not sure it's exactly as good as Google search, but it isn't obviously worse either. And yet while Google web search is a profit machine, Bing loses money. Basically Microsoft needs to get more people to use Bing, since if they started using it they'd likely find it satisfactory. And at the same time, Bing's competitor is made by Google which is Apple's main competitor in terms of smartphone operating systems. So an Apple/Microsoft alliance via Bing is perfectly natural. And yet it still feels awfully weird.

I'm reminded of the Diplomatic Revolution of 1756 when Britain stopped collaborating with Austria and started allying with Prussia. For now, though, Google still gets a ton of mobile search by being the default search engine on Mobile Safari. The Siri switch to Bing seems to foretell a future in which that deal isn't renewed.

Apropos of nothing in particular, I thought that if you had some spare time this weekend you might be interested in the excellent 2007 German film The Lives Of Others about surveillance in the German Democratic Republic. Now you might think that the bad thing about DDR surveillance was that East German Communism was a bad political and economic system, and surveillance was a highly effective way for the state security services to prevent dissidents from overthrowing the system.

What's fascinating about the film, however, is the way it shows that surveillance wasn't just a tool for repressing the good guys; it was just a generally powerful tool in the hands of the Stasi. Insofar as the people in charge really wanted to crack down on dedicated opponents of communism, it was helpful for that. But insofar as they wanted to pursue personal agendas, it was helpful for that, too. Individual members of bureaucracies often have objectives that are at odds with nominal institutional missions, and no system—whether capitalist or communist, public sector or private sector—has ever been devised to fully solve these principle-agent problems. Exacerbating the issue is, of course, that the DDR was a very closed society where the operations of the Stasi were shielded from media scrutiny and dissent was generally unwelcome. So insofar as state resources were being misused to try to set up a sexual liason with a married woman rather than to pursue bona fide subversion, there was little risk of detection and heightened conditions for malfeasance.

All in all, both a well-made film and an intriguing look at a political system that's fortunately been left long in the past.