Well, there it is: the supercommittee has failed. Supposedly, this means that $1.2 trillion worth of automatic "sequesters" will kick in. But as PJ O'Rourke remarked about a similar budget-balancing attempt, the storied Gramm-Rudman-Hollings act, "this is like trying to quick smoking by hiding your cigarettes from yourself--and leaving a note in your pocket reminding you where you hid them." What Congress did, Congress can undo, any time it wants. And indeed, rumor has it that they're already looking for ways "around" the sequester.
We're obviously nowhere near Italian levels of debt. But the inability to make even quite small changes in our levels of taxes or spending should worry the hell out of everyone. Yes, yes, I know--the other side is evil and intransigent and you don't trust them anyway. The fact remains that we're married to those jerks in the other party, and there's no prospect of divorce. "Stick to your guns, dammit!" is not a workable policy agenda for either side . . . and no, I don't really care how much better things could be if we were more like Europe/19th century America. Given events in Europe, this doesn't really seem like a good time to be talking up the virtues of larger welfare states or a weak central bank.
In a modern democratic state, two things are true of any policy agenda:
1. You eventually have to pay for it, with actual money.
2. You have to get those bastards on the other side to agree to it.
We seem to have an electorate who believes neither of these things, and the political class has followed them. We passed a giant health care entitlement "paid for" with cuts to existing services that should have gone towards deficit reduction, if they can be done at all . . . and with a structure that risks failing spectacularly and making everything worse if the cost projections are wrong, or the necessary changes prove politically unsustainable. When I pointed this out, I was told "it's not our fault if the Republicans fuck it up," as if it were somehow reasonable policy analysis to assume away the existence of anyone who disagrees with you.
Stop snickering conservatives: you didn't pay for your tax cuts at all, and you tried to get through an equally enormous entitlement change (remember Social Security reform) without funding it in any way, even a stupid and likely-to-fail one.
At some level, I wonder if our legislators understand that this matters. Sure, our debt-to-GDP ratio is only in the mid-fifties--but it was in the mid-thirties just a couple of years ago. And the best forecasts I've seen have it heading into the mid-eighties in a very short time.
For several years, as our debt has swelled by nearly 10% of GDP per year, the deficit hawks have panicked and the doves have told them to chill the hell out because, hey, look at how low interest rates are!
In November 2009, Paul Krugman--who ridiculed those who worried about "invisible bond vigilantes"--posted this graph and comment:
Why, people ask, would I want to compare us to Belgium and Italy? Both countries are a mess!
Um, guys, that's the point. Belgium is politically weak because of the linguistic divide; Italy is politically weak because it's Italy. If these countries can run up debts of more than 100 percent of GDP without being destroyed by bond vigilantes, so can we.
Now it looks like Italy and Belgium maybe can't actually run up such debts without being, well, destroyed by bond vigilantes . . . so what does that imply for us?
Well, Krugman has attempted to walk this back a little, pointing out that the euro is precipitating this crisis. While this is, of course, entirely true, I believe that Italy's membership in the euro had been fairly well-publicized by 2009; it's not new information.
Every time a crisis happens you can pick out the reasons that you aren't anything like those yahoos over there, who don't even have their own currency, ferchrissakes, or maybe they aren't a democracy, or they caught a dose of crony capitalism, or they had this huge balance-of-payments problem . . .
Well, never mind about that last one.
It is absolutely true that the specifics of this crisis involve the special problems of borrowing in another currency. Inflation is in some ways a kinder means of default, because you can inflate just a little bit, and see how things go, while nations that default tend to err on the side of a nice, spectacularly large default, because they don't want to have to do it more than once. So theoretically, at least, inflation can be better for both government and creditors.
But it is not true that loads of debt is just fine as long as you're borrowing in your own currency, except in the trivial sense that a government which borrows in its own currency can always resort to hyperinflation. This is rather like saying, "Don't worry about that cancer--you can always shoot yourself!" If you take too much advantage of the benefits of borrowing in your own currency, pretty soon you have trouble borrowing in your own currency, which means that practically, the distinction is not necessarily as strong as some people pretend.
Regardless of the folly of currency pegs, fundamentally, debt adds risk. It does so even if you borrow in your own currency (Greece has been in default for roughly half its life as a modern independent nation). It does so even if the stuff you spent the money on is really, really great--tax cuts, stimulus, shiny new infrastructure. Unless those things are self funding (the former two are not, and infrastructure only sometimes), then they make your government more financially fragile than it was before you borrowed the money. Every time debt grows faster than GDP, the risk of financial crisis inches up.
Conservatives can make fun of Italy all they want, but they're not the ones running deficits that flirt with double digits--and loudly proclaiming that it's better to run those deficits than to raise a dollar in new tax revenue.
In fact, debt adds risk even if you don't call it debt. Any unfunded obligation that is very, very hard to get out of without a great deal of political and economic pain is a debt, whether you call it a "long term lease" or "social security". Every time we add to these obligations we give future citizens less flexibility to deal with future economic conditions.
That doesn't mean that we need aim for zero debt, or zero long-term obligations. But we should understand that every additional dollar we promise in the future is not simply one less dollar that future taxpayers get to spend on themselves--but also one more dollar of risk added to a rapidly growing mountain.
More and more Americans found this out about their own personal finances the hard way. Unfortunately, this painfully acquired knowledge does not seem to have filtered through to our legislators.
In the United States, when an unmarried man has a baby, his partner can give it up without his consent—unless he happens to know about an obscure system called the responsible father registry.
Christopher Emanuel first met his girlfriend in the fall of 2012, when they were both driving forklifts at a warehouse in Trenton, South Carolina. She was one of a handful of women on the job; she was white and he was black. She ignored him at first, and Emanuel saw it as a challenge. It took multiple attempts to get her phone number. He says he “wasn’t lonely, but everybody wants somebody. Nothing wrong with being friends.”
Emanuel, who is now 25, describes himself as a non-discriminatory flirt. He was popular in high school and a state track champion. According to the Aiken High School 2008 yearbook, he was voted “Most Attractive” and “Best Dressed.” Even his former English teacher Francesca Pataro describes him as a “ray of sunshine.” Emanuel says he’s “talked”—euphemistically speaking—with a lot of women: “Black, Puerto Rican, Egyptian, and Vietnamese.” But before he met this girlfriend, he says, he had never seriously dated a white girl.
“Here is what I would like for you to know: In America, it is traditional to destroy the black body—it is heritage.”
Last Sunday the host of a popular news show asked me what it meant to lose my body. The host was broadcasting from Washington, D.C., and I was seated in a remote studio on the Far West Side of Manhattan. A satellite closed the miles between us, but no machinery could close the gap between her world and the world for which I had been summoned to speak. When the host asked me about my body, her face faded from the screen, and was replaced by a scroll of words, written by me earlier that week.
The banking industry needs more than regulation. It needs a new culture.
The call came from another trader near midnight one night in ‘95. I assumed it was about a crisis in the financial markets, something bad happening in Asia. No, it was about a strip club. “Dude, turn on the TV news. Giuliani is raiding the Harmony Theater.”
The Harmony Theater was a two-level dive club in lower Manhattan, popular among Wall Streeters because it bent rules. It was a place where almost anything, including drugs and sex, could be bought in the open.
When I turned on the TV I saw a swarm of close to a hundred police, many in riot gear, escorting handcuffed strippers and sad-looking clients into waiting police vans. No traders, or at least none that my friends or I knew, were arrested that night.
As the Vermont senator gains momentum, Claire McCaskill rushes to the frontrunner’s defense.
Obscured by the recent avalanche of momentous news is this intriguing development from the campaign trail: The Hillary Clinton campaign now considers Bernie Sanders threatening enough to attack. Fresh off news that Sanders is now virtually tied with Hillary in New Hampshire, Claire McCaskill went on Morning Joe on June 25 to declare that “the media is giving Bernie a pass … they’re not giving the same scrutiny to Bernie that they’re certainly giving to Hillary.”
The irony here is thick. In 2006, McCaskill said on Meet the Press that while Bill Clinton was a great president, “I don’t want my daughter near him.” Upon hearing the news, according to John Heilemann and Mark Halperin’s book Game Change, Hillary exclaimed, “Fuck her,” and cancelled a fundraiser for the Missouri senator. McCaskill later apologized to Bill Clinton, and was wooed intensely by Hillary during the 2008 primaries. But she infuriated the Clintons again by endorsing Barack Obama. In their book HRC, Aimee Parnes and Jonathan Allen write that, “‘Hate’ is too weak a word to describe the feelings that Hillary’s core loyalists still have for McCaskill.”
Most adults can’t remember much of what happened to them before age 3 or so. What happens to the memories formed in those earliest years?
My first memory is of the day my brother was born: November 14, 1991. I can remember my father driving my grandparents and me over to the hospital in Highland Park, Illinois, that night to see my newborn brother. I can remember being taken to my mother’s hospital room, and going to gaze upon my only sibling in his bedside cot. But mostly, I remember what was on the television. It was the final two minutes of a Thomas the Tank Engine episode. I can even remember the precise story: “Percy Takes the Plunge,” which feels appropriate, given that I too was about to recklessly throw myself into the adventure of being a big brother.
In sentimental moments, I’m tempted to say my brother’s birth is my first memory because it was the first thing in my life worth remembering. There could be a sliver of truth to that: Research into the formation and retention of our earliest memories suggests that people’s memories often begin with significant personal events, and the birth of a sibling is a textbook example. But it was also good timing. Most people’s first memories date to when they were about 3.5 years old, and that was my age, almost to the day, when my brother was born.
New data shows that students whose parents make less money pursue more “useful” subjects, such as math or physics.
In 1780, John Adams wrote a letter to his wife, Abigail, in which he laid out his plans for what his children and grandchildren would devote their lives to. Having himself taken the time to master “Politicks and War,” two revolutionary necessities, Adams hoped his children would go into disciplines that promoted nation-building, such as “mathematicks,” “navigation,” and “commerce.” His plan was that in turn, those practical subjects would give his children’s children room “to study painting, poetry, musick, architecture, statuary, tapestry, and porcelaine.”
Two-hundred and thirty-five years later, this progression—“from warriors to dilettantes,” in the words of the literary scholar Geoffrey Galt Harpham—plays out much as Adams hoped it would: Once financial concerns have been covered by their parents, children have more latitude to study less pragmatic things in school. Kim Weeden, a sociologist at Cornell, looked at National Center for Education Statistics data for me after I asked her about this phenomenon, and her analysis revealed that, yes, the amount of money a college student’s parents make does correlate with what that person studies. Kids from lower-income families tend toward “useful” majors, such as computer science, math, and physics. Those whose parents make more money flock to history, English, and performing arts.
In 1992, the neuroscientist Richard Davidson got a challenge from the Dalai Lama. By that point, he’d spent his career asking why people respond to, in his words, “life’s slings and arrows” in different ways. Why are some people more resilient than others in the face of tragedy? And is resilience something you can gain through practice?
The Dalai Lama had a different question for Davidson when he visited the Tibetan Buddhist spiritual leader at his residence in Dharamsala, India. “He said: ‘You’ve been using the tools of modern neuroscience to study depression, and anxiety, and fear. Why can’t you use those same tools to study kindness and compassion?’ … I did not have a very good answer. I said it was hard.”
The Islamic State is no mere collection of psychopaths. It is a religious group with carefully considered beliefs, among them that it is a key agent of the coming apocalypse. Here’s what that means for its strategy—and for how to stop it.
What is the Islamic State?
Where did it come from, and what are its intentions? The simplicity of these questions can be deceiving, and few Western leaders seem to know the answers. In December, The New York Times published confidential comments by Major General Michael K. Nagata, the Special Operations commander for the United States in the Middle East, admitting that he had hardly begun figuring out the Islamic State’s appeal. “We have not defeated the idea,” he said. “We do not even understand the idea.” In the past year, President Obama has referred to the Islamic State, variously, as “not Islamic” and as al-Qaeda’s “jayvee team,” statements that reflected confusion about the group, and may have contributed to significant strategic errors.
Gentrification is pushing long-term residents out of urban neighborhoods. Can collective land ownership keep prices down permanently?
AUSTIN, Tex.—Not long ago, inner cities were riddled with crime and blight and affluent white residents high-tailed it to the suburbs, seeking better schools, safer streets, and, in some cases, fewer minority neighbors.
But today, as affluent white residents return to center cities, people who have lived there for years are finding they can’t afford to stay.
Take the case of the capital city of Texas, where parts of East Austin, right next to downtown, are in the process of becoming whiter, and hip restaurants, coffee shops, and even a barcatering to bicyclists are opening. Much of Austin’s minority population, meanwhile, is priced out, and so they’re moving to far-out suburbs such as Pflugerville and Round Rock, where rents are affordable and commutes are long.