The essence of Paul’s argument is that the economy of the Great Depression was in a liquidity trap, which implies that the AD curve is vertical, which in turn implies that policies that adversely shift the AS curve do not affect equilibrium output in the short run. Thus, a policy that under normal circumstances would be bad, such as cartelizing the supply of labor, is not bad under the extraordinary circumstances of the 1930s. (See Gauti Eggertsson for a more sophisticated version of this line of argument.)
[...]
Even staying within the AD-AS model, it seems possible to argue the opposite point of view. Imagine you are a manager of a firm considering a long-term investment project. The President has just announced a policy to encourage your workers to form a cartel. How does that influence your decision to proceed with the project? Very likely, it deters you. Investment spending, however, is part of aggregate demand (in fact, one of the most volatile components). Thus, the policy could shift the AD curve, as well as the AS curve, in a contractionary direction.
As a general matter, the state of aggregate demand depends on an amorphous variable called confidence. Anything that threatens to screw up AS in the long run most likely reduces confidence and AD in the short run. The textbook separation of AD and AS is useful for focusing discussion in the undergraduate classroom, but events in the real world are rarely so clean.
And all of this discussion ignores the issue of rent seeking. Once you tell labor organizations that they can act as a cartel and charge what are, in effect, monopoly prices and possibly even enforce such an edict with the full coercive power of the government how do you take back such a nice juicy bit of pork? The labor organization is going to love such a move and will lobby to protect such rents. At the same time corporations will lobby to remove such rents. All that lobbying is not going to help produce goods and services.
And lets keep in mind, when a cartel charges a higher price it does so by restricting output which in this case would be the number of people working. Driving up wages might be a good thing in the current economy, but you also have to think beyond the current situation and the problems you are creating for yourself down the road. Think of it like medicine to some extent. Yeah the patient in pain and needs surgery. But at the same time if you aren’t careful with the pain medication you use you could create and addict who ultimately destroys himself. And government programs, laws, and regulations have a tendency to stay around well past their desired expiration date.
And lets look at another post on Prof. Mankiw’s website,
Economists Mark Bils of the University of Rochester and Pete Klenow of Stanford say we should cut the payroll tax to stimulate the economy. They email me their rationale:
As part of a temporary fiscal stimulus, we would argue for subsidizing the payroll tax (employer and employee portions) out of general revenue over some sustained period, say calendar year 2009. It has some distinct advantages:
(1) Like previous stimulus efforts, it has the standard demand side impact (same as cutting checks). But it also stimulates employment directly by reducing the tax penalties for working and for hiring workers. Related, it works under all business cycle models (even including those obeying Ricardian Equivalence).
(2) It targets domestic production better than sending out checks (or a sales tax cut).
(3) It targets lower income households, due to the cap on social security taxes. These households may respond more in both their consumption and employment decisions.
Now, it does not target the unemployed. But, in combination with extension of unemployment benefits, those with labor force attachment are still covered. In fact, it helps limit the damaging effects of extending the duration of unemployment benefits in terms of distorting reentry and job creation decisions.
Basically this would raise the after tax wage, which is precisely what Krugman is arguing for when he talks about creating a labor cartel, but this one probably wouldn’t face the same rent seeking problems as creating a labor cartel. Why? Voters are a diverse disorganized group, whereas a labor cartel and corporations are not, as we can see when we look at how taxes.
Bernard Finel, to say the least a fan of neither the Bush Administration nor the Iraq War, throws cold water on the Bush Lied, People Died meme that refuses to die:
I’d like to urge folks to think through what standards should be applied to inherently ambiguous information. Here is what we knew in 2002:
(1) Saddam had a WMD program in the early 1990s.
(2) Saddam had not fully cooperated with weapons inspectors from 1991-1998.
(3) Inspectors had been expelled from the country from 1998 to 2002.
(4) When the inspectors returns, they found no evidence of a WMD program.
(5) Saddam was either unable or unwilling to provide a full accounting of what had happened to the program.
[...]
Finally, we can talk about cherry picking all we want. But then you need to address the Bob Gallucci/David Kay issue. These guys were inspectors as well. They knew the intel. They’d been on the ground. They thought Saddam had a program and stockpiles. Do we just want to dismiss them as dupes? Because we certainly can’t call them Bushie ideologues.
Now, as a supporter of both the Iraq War and the Bush Administration, I’ve long since come to the conclusion that the Iraq WMD evidence was indeed cherry picked, in the sense that they 1) genuinely believed Saddam had a WMD program and that it was unacceptable in a post-9/11 context and 2) rejected any evidence pointing the other way as outlier. I also think they played fast and loose with the evidence on Saddam’s ties to al Qaeda — mostly by omission rather than commission — to the end of propagandizing for a war they genuinely believed necessary. But the idea that Bush and company simply manufactured a war for reasons other than sincere belief that it was in America’s security interests have no evidence.
Jim Press, Chrysler’s vice chairman, said the U.S. automakers were “down to months left,” as industry officials ratcheted up a fierce lobbying push to persuade Congress to approve as much as $34 billion in emergency aid.
“We’re on the brink with the U.S. auto manufacturing industry,” Press told The Associated Press in an interview. “If we have a catastrophic failure of one of these car companies, in this tender environment for the economy, it’s a huge blow. It could trigger a depression.”
This kind of hysteria and fear mongering is rather despicable. We are told this time and again with each industry. If you don’t save the XYZ industry the sky will fall. If you don’t save the ABC industry, the sky will fall. Each one of these companies is angling for savior after making bad decisions.
Burkhard Bilger explores the rise of craft beers for The New Yorker.
“When you’re trying to create new brewing techniques and beer styles, you have to have a certain recklessness,” Jim Koch, whose Boston Beer Company brews Samuel Adams, and who coined the term “extreme beer,” told me. “Sam has that. He’s fearless, but he’s also got a good palate. He doesn’t put stuff into beer that doesn’t deserve to be there.”
The debate goes back, in one form or another, nearly five hundred years. According to the Bavarian Reinheitsgebot, or Purity Law, of 1516, beer can be made with only three ingredients: water, hops, and barley. (Yeast was left off the list because brewers didn’t know it existed; beer was naturally fermented, like sourdough bread.) German brewers still observe a version of the Reinheitsgebot, but Belgian brewers, just across the border, have cheerfully renounced it. Their krieks, wits, lambics, and gueuzes are among the world’s most remarkable beers, yet they’re often made with fruits or spices, or fortified with sugar, to become as potent as wine.
In America, brewers have long followed the German model: our major industrial breweries were all founded by German-Americans. But Calagione and others have lately wandered over to the Belgian side—and kept on going. “I’d probably be arrested, tarred and feathered, if I stepped off a plane in Berlin,” Calagione told me. Extreme brewers have helped turn American brewing into the most influential in the world. But they’ve also raised a basic question: When does beer cease to be beer?
A recent Esquire article on award winning chili recipes revealed the author’s discovering that, despite having grown up with very strict rules as to what constituted chili (no beans, etc.), “it’s all chili, and it’s all good.” The same’s basically true of beer.
Gordon Biersch, a national brewery chain with at least two locations in the DC area, has a range of terrific brews made according to the German purity laws, including an outstanding German-style hefeweitzen. But those Belgian Wits and blondes and abbey ales are terrific, too.
The original referred to Biersch as a “local” brewery chain but, in fact, it began twenty years ago in Palo Alto, CA and is available nationally. I’d never encountered them before stopping in their DC location.
Kathleen Parker seems vaguely annoyed by the Twitter phenomenon.
Shorter than a blog posting, a “tweet” consists of a concise sentence or two and essentially answers the question: What are you doing?
[...]
On Planet Facebook, nothing in one’s life is not worth mentioning. To what end, one can only surmise. I am, therefore I am, therefore I am. But what are friends for, if not to feign interest in what’s not the least bit interesting?
Serious twitter subscribers expect more than a mood update, I’m told, and presumably won’t stick around long for less. Or will they? I recently created an account at Twitter.com. Nary a tweet have I posted thus far, yet already I have a dozen subscribers.
Parker’s mildly famous and says interesting things; a handful of subscribers are just a sign that people are curious. I’ve had a Twitter account for months, which I use mostly to push OTB and New Atlanticist posts and have 357 followers.
I’m only following 95 people but, in all honestly, am “following” them in the same sense that I’m quite sure a sizable number of my “followers” are “following” me: Not very closely. Here’s what they’re saying right now:
nprpolitics NPR.org will have a live stream of Obama’s introduction of Bill Richardson as his Commerce Secretary nominee in about 10 minutes. @acarvin4 minutes agofrom web
It turns out that, by very carefully chosing whom one “follows,” there’s a sizable amount of good information available. At least half those tweets have info worth my checking out and about half the rest are mildly interesting.
Still, like Steven Taylor, I only “half-get” Twitter myself. While I check email too often, I just haven’t made it a priority to check my tweets with any regularity and I’ve made a couple of concerted efforts to be more engaged in the community and found it not worth the tremendous time investment. Steven’s also right that mainstream coverage of these technological “revolutions” are ridiculously overblown.
We still don’t know for certain yet why the attacks in Mumbai took place or who the perpetrators were and we may not know for quite a while if ever. There are lots of speculations and accusations but precious little hard data. We don’t even know for certain how many were in the group that attacked Mumbai last week. The Indian government says ten, presumably because nine were killed and one captured. Among the things we do know are that
They were Muslims or wanted us to believe they were Muslims. There are enough first-hand reports of the attackers screaming “Allaho akbar” that it’s a reasonable conclusion. Whether they were Islamist radicals, Indian or Pakistani, members of this group or that is getting ahead of the data.
They used the techniques of what John Robb has called “open source warfare”:
THEIR battle fatigues are jeans, T-shirts and trainers. They are the new breed of terrorist – using everyday technology as a weapon of war.
Among their arsenal of weapons are bags of almonds and BlackBerry mobile phones – almonds to keep their energy up, and the mobile internet connections to stay one step ahead of police and the military.
They are the new breed of terrorist – using everyday technology as a weapon of war.
[…]
One of the rucksacks carried by one of the terrorists, later recovered by commandos, contained a Mauritian national’s identity card, Chinese-made grenades, seven ammunition magazines, 400 spare rounds of ammunition, seven credit cards from different banks, dry rations and thousands of dollars in cash.
However amid the arsenal of military hardware, it was the use of humble mobile phones and internet technology that proved a key weapon – one which caught the anti-terrorist forces by surprise.
The use of BlackBerrys by the terrorists to monitor international reaction to the atrocities, and to check on the police response via the internet, provided further evidence of the highly organised and sophisticated nature of the attacks.
The gunmen were able to trawl the internet for information after cable television feeds to the two luxury hotels and office block were cut by the authorities.
The physical evidence and first-hand reports are enough to draw this conclusion.
The urgency of the cyber threat and the extent to which readily available technology is being used against us to heinous effect presents serious challenges to the nation and to our community. Not to mention, the difficulties we face in countering these tactics by providing useful information quickly and down to the lowest levels of the chain of command.
In his column this morning David Ignatius warns of the possibility of a Mumbai-like attack being mounted on one of our cities:
What would happen if roving gunmen infiltrated U.S. cities and started shooting? Most U.S. police departments aren’t well prepared to deal with such “active shooters,” as they’re called. Police are trained to cordon off an area that’s under attack and then call in a paramilitary SWAT team to root out the gunmen. But what if the attackers keep moving and shooting? The response can be haphazard, as was clear in such disparate incidents as the 2002 Beltway sniper attacks in the Washington area and last year’s massacre at Virginia Tech.
“Mumbai is a worst-case ‘active shooter’ problem,” says a former CIA officer who helped organize a DHS pilot program on the subject last summer for police chiefs. “It had multiple shooters, multiple locations, mobile threats, willingness to fight the first responders and follow-on SWAT/commando units, well-equipped and well-trained operatives, and a willingness to die. Police department commanders in America should be scratching their heads and praying.”
What, if anything, should we be doing to foreclose such attacks? Are we doing enough? Too little? Too much?
I’d appreciate your thoughts and suggestions in the comments. I’ve put a few more thoughts of my own over at The Glittering Eye.
A new USA Today/Gallup poll shows that Americans think Barack Obama is handling the transition well and picking an outstanding team. Gallup’s Jeffrey Jones:
Americans widely approve of Barack Obama’s decisions, announced on Monday, to name Hillary Clinton secretary of state and to ask Robert Gates to stay on as secretary of defense.
[...]
During the recent period of speculation that Obama would appoint his chief rival for the Democratic presidential nomination as his secretary of state, a Gallup poll conducted Nov. 18 found a majority of Americans (57%) in favor of him making that choice. Now that he has officially named Clinton as the nation’s top diplomatic official, the percentage that supports the move has risen closer to 70%.
Support for the Gates appointment is higher than for the Clinton selection primarily because Republicans are much more likely to approve of Gates serving as secretary of defense than they are of Clinton as secretary of state. That, no doubt, reflects the fact that Gates has served under Republican presidents in the past, including both George W. Bush and George H.W. Bush. Democrats are slightly more likely to approve of the Clinton choice, but think highly of both choices.
[...]
At a more basic level, 78% of Americans approve of the way Obama is handling his presidential transition, with only 13% disapproving. A majority of Democrats (94%), independents (79%), and Republicans (57%) say they approve.
That overall 78% approval rating compares favorably to the reaction Americans had to George W. Bush’s transition, for which an average of 63% approved in January 2001, and Bill Clinton’s transition, when an average of 66% approved from November 1992 through January 1993.
Two things to keep in mind here. First, Bush came into office much less popular. He’d narrowly lost the national popular vote and won the Electoral College after a bitter, drawn out battle that went all the way to the Supreme Court. Obama, by contrast, won, by modern U.S. standards, a landslide victory.
Second, the average American has no idea whether any of these people are qualified beyond what they’re told in the press. That’s not meant as an insult, simply that the vast majority of these appointees operate outside the daily limelight. Only wonks, for example, have ever heard of Timothy Geithner or Eric Holder or Susan Rice. Only wonks and Marines have likely heard of Jim Jones. Even Bob Gates is much less well known than his predecessor. Only Hillary Clinton is truly well known to the public.
So, what this poll tells us is that people like Barack Obama and that he’s getting good press coverage for his picks. Which we knew before the survey was taken.
Now, I happen to agree with the conventional wisdom. Obama has handled his transition with extreme professionalism and competence and assembled his key team members in record time.
On the economic side, I’m only ahead of the general public in that I read more than most. Summers and Geithner are undoubtedly brilliant and qualified. Summers, though, presided as Treasury Secretary over much of the deregulation that is now being widely condemned (unjustly, I think) and Geitner is the head of the Federal Reserve Bank in New York, seat of the collapse of the financial system. Since I fully expect the U.S. economy to recover in short order regardless of who’s in charge, I suspect that they’ll be feted as geniuses when the business cycle rebounds.
On national security, where I have substantial experience, I’m quite pleased. I’ve got concerns about Clinton at State but she’s undeniably smart, hard working, and networked. I couldn’t be happier with his pick of Jones as National Security Advisor and think keeping Gates on as SECDEF is both wise public policy and shrewd politics.
Election judges Willy Lee (L) and Joanne Caspersen recount marked ballots cast for the 2008 Minnesota U.S. senate race between former Saturday Night Live comedian Al Franken (DFL-MN) and incumbent Norm Coleman (R-MN) at an elections warehouse in Minneapolis November 19, 2008. REUTERS/Eric Miller (UNITED STATES)
Since the initial counting of ballots on Election Day, caches of new Al Franken ballots have been mysteriously discovered on a regular basis. Yesterday, a few more turned up.
The U.S. Senate recount took two abrupt turns Tuesday, both boosting the prospects of DFLer Al Franken.
Franken unexpectedly picked up 37 votes due to a combined machine malfunction and human error on Election Day that left 171 Maplewood ballots safe, secure but uncounted until Tuesday’s final day of recounting in Ramsey County. Secretary of State Mark Ritchie’s office immediately asked county officials to explain what had happened, and U.S. Sen. Norm Coleman’s campaign said it sent its own experts to Ramsey County to review the situation and said it was “skeptical about [the ballots'] sudden appearance.”
About three decades ago, then-Saturday Night Live writer and personality Al Franken jokingly asked people who weren’t itemizing their taxes to send him all their receipts since, as a TV personality, pretty much everything counted as a “business expense” for him. Now, apparently, they’re sending him ballots.
Either that, or Bock Fest started early this year and the state’s election officials are too drunk to do their jobs.
Regardless, in the addition to the mysterious appearance of ballots a month after the election, we’ve got this:
The day’s other news — which Franken’s campaign quickly described as a “breakthrough” — came when Ritchie’s office asked local election officials to examine an estimated 12,000 rejected absentee ballots and determine whether their rejection fell under one of four reasons for rejection defined in state law. The Secretary of State’s office asked that ballots that were rejected for something other than the four legal reasons be placed into a so-called “fifth category.” The fifth category, Ritchie’s office said, could also include absentee ballots rejected for reasons that were “not based on factual information.”
The “Featured Comment” at the page right now is rather salient:
This is a joke. I have gotten to the point where I have zero confidence in the way this state conducts itself when counting ballots. They have found missing ballots all over this state and I think its shameful. We are turning into a bigger embarrasement than Florida ever was. How about all the other races? Did you all count them wrong too?
It’s a fair question. In extremely close elections, we may simply not be able to get the count 100 percent right. That’s especially true when human judgment has to be applied as to whether a particular ballot is properly marked. But the continued discovery of new Franken ballots and second guessing of initial decisions mostly going Franken’s way naturally raises suspicion of foul play, even though it’s likely just a case of imperfect officials trying to do their job. Either way, though, the process is an embarrassment.
Georgia Senator Saxby Chambliss easily won his runoff against Democrat Jim Martin, 57.4 to 42.6 according to the current uncertified totals. NYT notes,
Senator Saxby Chambliss and his wife, Julianne, celebrating his victory on Tuesday in Atlanta. (Erik S. Lesser for The New York Times)
The margin was far greater than the three percentage points that separated the two men in the Nov. 4 election, when neither won the required 50 percent. Many of the Democrats who turned out last month in enthusiastic support of Barack Obama apparently did not show up at the polls on Tuesday. “For a lot of African-American voters, the real election was last month,” said Merle Black, an expert in Southern politics at Emory University. “The importance of electing the first African-American president in history generated enormous enthusiasm. Everything else was anticlimactic.”
A little more than two million people voted in the runoff, compared with 3.7 million on Nov. 4. In heavily black Clayton County, just south of Atlanta, Mr. Martin’s vote was less than half what it was in the earlier election. Only 9.2 percent of registered Georgians cast early votes in the runoff, compared with 36 percent in the general election.
Mr. Chambliss, 65, a pro-business conservative, campaigned in the runoff on a platform of limiting Mr. Obama’s ability to pass legislation in a Democratic-controlled Congress. Calling himself the “41st senator,” he told a cheering crowd of supporters in his victory speech that the runoff was the first race of 2010, signaling a new wind for Republicans. “You have delivered tonight a strong message to the world that conservative Georgia values matter,” he said. “You have delivered a message that a balance of government in Washington is necessary, and that’s not only what the people of Georgia want but what the people of America want.”
Well, that’s a stretch. After all, Americans voted for a Democratic president and to extend the Democratic majority in the House and the Senate. I’m dubious that even swing voters in tight Senate races were generally swayed by the need to prevent Democrats from invoking cloture.
Electing Saxby Chambliss, though, is very much what Georgians wanted. They only failed to do so last month because a third party candidate took away enough votes to keep him under a majority. The fact that Georgians had to spend a substantial amount of money to re-run an election that most of them weren’t interested in participating in, though, is a pretty good case for instant runoff voting. The outcome would have been the same in this case but the numbers would have more accurately reflected the will of the state’s voters. And they’d have saved a lot of money.
Nate Silver adds, “Obama is looking fairly smart for staying away from the state.” True enough, given the margins. This, after all, is a state he lost. If, however, it had been razor close, he’d have come under sharp criticism for staying away and failing to rally African American turnout.
Phillip Goetz demonstrates out that voting is both dangerous and irrational:
According to a recent study, on the day of a US presidential election there are, on average, an extra 24 auto-accident fatalities. The study covered the past 32 years, not including this year.
The number of times that a single vote has affected the outcome of a US presidential election is, so far, zero.
[...]
So, the odds of your dying in a traffic accident on your way to vote would at first seem to be 24 * (1000/4) = 6000 times the odds of your vote changing the outcome of the election. (Probably much higher. Those are the odds they would be if one person’s vote had swung the election once.) The odds of your being disabled in a traffic accident on your way to vote would, similarly, seem to be 800*(1000/4) = 200,000 times higher than the odds of your vote swinging the election.
Of course, there are utilities to voting beyond the negligible chance you’ll alter the result. A sense of civic responsibility, satisfaction from participation, catharsis, and so forth also factor in.
Further, there’s no reason to think that all of the additional 24 fatalities are people on their way to vote. Rather, they’re owing to increased traffic and other systemic factors. So, really, they’re in exchange for democracy itself, not 24 insignificant votes.
