You've heard of an international market for superstar soccer players. We need an international market for superstar central bankers.
[ Reuters ]
Great Britain gets a lot of things wrong, like food and spelling. But here's something they get right: They're willing to poach the best central bankers from around the world for the top spots at the Bank of England.
The UK is hardly alone on this. They're just particularly aggressive about it. Their latest target is Mark Carney, the current chief of the Bank of Canada. Before that, though, they snatched up American economist Adam Posen -- an expert on Japan's lost decade -- to serve on their monetary policy committee. You've heard of an international market for superstar soccer players and Olympic coaches. This is an international market for superstar central bankers.
It got me thinking: How much is a good central banker worth? Consider this chart. The blue line shows where our economy could, and should, be if it had kept growing at its long-term trend since 2008. The red line shows where we actually are. The difference between the two is the so-called output gap. (Note: These dollar figures are not adjusted for inflation).
We're in about a trillion-dollar hole. And that's a trillion dollars every year. Even if we get "Morning in America: The Sequel" and the economy rapidly reverts to its long-term trend, we'll forever be $4 trillion poorer than we would have otherwise been.
Let's try a thought experiment. Say that Lars Svensson -- one of the world's top monetary economists and the current deputy governor of Sweden's central bank, the Riksbank -- could get our economy back to trend in half the time Ben Bernanke could. It's actually plausible-ish. Like Bernanke, Svensson spent his academic career championing unconventional monetary policy as a "foolproof" way to escape a liquidity trap. (Coincidentally, they were colleagues at Princeton). But unlike Bernanke, Svensson's Riksbank has been much more willing than Bernanke's Fed to experiment with these kind of heterodox policies. Perhaps unsurprisingly, Sweden's recovery has been the envy of the developed world. So I ask again: How much is a good central banker worth? Put simply, how much cash should we throw at Svensson to steal him away from Sweden?
That's another way of asking how long it will take the economy to return to trend. Here's where things get really depressing. According to Fed Vice Chair Janet Yellen, we won't get back to full employment until after 2018. If we assume the output gap will steadily shrink until then, that leaves us with roughly another $4 trillion in lost income. Maybe more. If Svensson really could double our recovery speed, he'd be worth $2 trillion to us. Even if that's being wildly optimistic, something on the order of hundreds of billions of dollars probably isn't. Tell me that wouldn't be worth paying Svensson a billion dollars a year. Maybe more.
The above suggestion is obviously a bit tongue-in-cheek ... but not completely. Right now, central bankers are paid almost entirely in prestige. Ben Bernanke is making just $199,700 this year. That's not to say that we need to pay central bankers more to attract the best ones. We don't. Economists really care about prestige.
This doesn't necessarily lead to the most efficient allocation of monetary economists. As Matt Yglesias pointed out, we'd ideally have economists prove their central banking chops in smaller countries before moving up to the big leagues of the Fed or the ECB or the Bank of England. Put a bit less diplomatically: Sweden is important, but it's a relative waste of Svensson's talents not to have him running a bigger central bank. (Not that I have anything against Sweden). Here comes the "to be sure" sentence: It wouldn't be enough just to import Svensson. As L.A. Galaxy fans can tell you, bringing in one (albeit, overrated) superstar like David Beckham doesn't help much if his teammates are only mediocre. We'd need to create a Federal Reserve board equivalent of the Super Friends for Svensson to make the biggest difference. We might even find out that we already have a superstar in Bernanke in that scenario.
Central banking should be a superstar profession. The difference between a top central banker and an average one can be astronomical, particularly when conventional policy is impotent. An efficient market would pay them accordingly. If the United States spent $10 billion assembling a central banking fantasy lineup of Lars Svensson, Stanley Fischer, Adam Posen, and Christina Romer, it would probably be a phenomenal investment. It'd pay for itself many, many times over. The biggest challenge is changing the norms around central banking. We shouldn't just consider the top American economists for the top spots.
We're a nation of immigrants. The Federal Reserve should reflect that.
It’s a paradox: Shouldn’t the most accomplished be well equipped to make choices that maximize life satisfaction?
There are three things, once one’s basic needs are satisfied, that academic literature points to as the ingredients for happiness: having meaningful social relationships, being good at whatever it is one spends one’s days doing, and having the freedom to make life decisions independently.
But research into happiness has also yielded something a little less obvious: Being better educated, richer, or more accomplished doesn’t do much to predict whether someone will be happy. In fact, it might mean someone is less likely to be satisfied with life.
That second finding is the puzzle that Raj Raghunathan, a professor of marketing at The University of Texas at Austin’s McCombs School of Business, tries to make sense of in his recent book, If You’re So Smart, Why Aren’t You Happy?Raghunathan’s writing does fall under the category of self-help (with all of the pep talks and progress worksheets that that entails), but his commitment to scientific research serves as ballast for the genre’s more glib tendencies.
Nearly half of Americans would have trouble finding $400 to pay for an emergency. I’m one of them.
Since 2013,the Federal Reserve Board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
“A typical person is more than five times as likely to die in an extinction event as in a car crash,” says a new report.
Nuclear war. Climate change. Pandemics that kill tens of millions.
These are the most viable threats to globally organized civilization. They’re the stuff of nightmares and blockbusters—but unlike sea monsters or zombie viruses, they’re real, part of the calculus that political leaders consider everyday. And according to a new report from the U.K.-based Global Challenges Foundation, they’re much more likely than we might think.
In its annual report on “global catastrophic risk,” the nonprofit debuted a startling statistic: Across the span of their lives, the average American is more than five times likelier to die during a human-extinction event than in a car crash.
Partly that’s because the average person will probably not die in an automobile accident. Every year, one in 9,395 people die in a crash; that translates to about a 0.01 percent chance per year. But that chance compounds over the course of a lifetime. At life-long scales, one in 120 Americans die in an accident.
A professor of cognitive science argues that the world is nothing like the one we experience through our senses.
As we go about our daily lives, we tend to assume that our perceptions—sights, sounds, textures, tastes—are an accurate portrayal of the real world. Sure, when we stop and think about it—or when we find ourselves fooled by a perceptual illusion—we realize with a jolt that what we perceive is never the world directly, but rather our brain’s best guess at what that world is like, a kind of internal simulation of an external reality. Still, we bank on the fact that our simulation is a reasonably decent one. If it wasn’t, wouldn’t evolution have weeded us out by now? The true reality might be forever beyond our reach, but surely our senses give us at least an inkling of what it’s really like.
There’s a common perception that women siphon off the wealth of their exes and go on to live in comfort. It’s wrong.
A 38-year-old woman living in Everett, Washington recently told me that nine years ago, she had a well-paying job, immaculate credit, substantial savings, and a happy marriage. When her first daughter was born, she and her husband decided that she would quit her job in publishing to stay home with the baby. She loved being a mother and homemaker, and when another daughter came, she gave up the idea of going back to work.
Seven years later, her husband told her to leave their house, and filed for a divorce she couldn’t afford. “He said he was tired of my medical issues, and unwilling to work on things,” she said, citing her severe rheumatoid arthritis and OCD, both of which she manages with medication. “He kicked me out of my own house, with no job and no home, and then my only recourse was to lawyer up. I’m paying them on credit.” (Some of the men and women quoted in this article have been kept anonymous because they were discussing sensitive financial matters, some of them involving ongoing legal disputes.)
Garry Marshall's patronizing 'holiday anthology' film boasts a star-studded ensemble, but its characters seem barely human.
It’s hard to know where to begin with Mother’s Day, a misshapen Frankenstein of a movie that feels like it escaped the Hallmark headquarters halfway through its creation and rampaged into theaters, trying to teach audiences how to love. The third in Garry Marshall’s increasingly strange “holiday anthology” series, Mother’s Day isn’t the rom-com hodge-podge that Valentine’s Day was, or the bizarre morass of his follow-up New Year’s Eve. But it does inspire the kind of holy terror that you feel all the way down to your bones, or the revolted tingling that strikes one at a karaoke performance gone tragically wrong.
While it’s aiming for frothiness and fun, Mother’s Day is a patronizing and sickly sweet endeavor that widely misses the mark for its entire 118-minute running time (it feels much longer). The audience gets the sense that there are many Big Truths to be learned: that family harmony is important, that it’s good to accept different lifestyles without judgment, that loss is a natural part of the circle of life. But its overall construction—as a work of cinema—always feels a little off. One character gets a life lesson from a clown at a children’s party, and departs with a hearty “Thanks, clown!” Extras wander in the background and deliver halting bits of expositional dialogue like malfunctioning robots. Half of the lines seem to have been recorded post-production and are practically shouted from off-screen to patch over a narrative that makes little sense. Mother’s Day is bad in the regular ways (e.g. the acting and writing), but also in that peculiar way, where it feels as though the film’s creator has never met actual humans before.
The latest (very funny and very political) episode of the performer’s sketch show doubles as a call to arms.
Last night came the airing of Amy Schumer’s long-anticipated show about gun-control. Things kicked off with “Welcome to the Gun Show,” which found Schumer playing the role of an HSN-style stuff-seller, all smarm and schlock and pseudo-mullet. First, she and her co-stuff-seller hawked Steve Irwin commemorative coins. But, then, they moved on to guns. They sold the virtues of guns—“make perfect stocking stuffers,” “they’re great for every age group,” etc.—and pointed out that anyone can get a gun on the Internet or at a gun show. (Even a guy with “several violent felonies” and “a suspected terrorist on the no-fly list.”) Act fast: don’t think about it, a chyron encourages.
The U.S. president talks through his hardest decisions about America’s role in the world.
Friday, August 30, 2013, the day the feckless Barack Obama brought to a premature end America’s reign as the world’s sole indispensable superpower—or, alternatively, the day the sagacious Barack Obama peered into the Middle Eastern abyss and stepped back from the consuming void—began with a thundering speech given on Obama’s behalf by his secretary of state, John Kerry, in Washington, D.C. The subject of Kerry’s uncharacteristically Churchillian remarks, delivered in the Treaty Room at the State Department, was the gassing of civilians by the president of Syria, Bashar al-Assad.
In Trump’s aftermath, his enemies on the right will have to take stock and propose a meaningful alternative vision for the GOP’s future.
Donald Trump’s big victories in the Mid-Atlantic primaries don’t represent quite the end of the ballgame—but they come damn close.
And now Donald Trump’s many and fierce opponents in the Republican Party and the conservative movement face the hour of decision. Trump looks ever more certain to be the party nominee. Yet not perhaps since George McGovern in 1972 has a presumptive nominee so signally failed to carry the most committed members of his party with him.
So what happens now to those who regard themselves as party thought-leaders? Do they submit? Or do they continue to resist?
Resistance now means something more—and more dangerous—than tapping out #NeverTrump on Twitter. It means working to defeat Trump even knowing that the almost certain beneficiary will be Hillary Clinton.
Congress delayed the fight to fund the virus—a decision that comes at the cost of public health and potentially billions for the U.S. economy.
In all likelihood, Congress was never all that close to finding a way to push past factional politics and fund efforts to fight Zika. Lawmakers have adjourned for recess after a failure to find common ground on the issue, and as my colleague Nora Kelly notes, the divide comes mostly over the same political issues that hold up any congressional productivity. Despite ample evidence of the virus’s severity, Republicans balk at the idea of expanding public-health funding and executive spending, or they propose “poison-pill” measures—such as raiding the Ebola fund—as counterproductive solutions. Congress seems relatively lukewarm about finding a solution, but that inactivity could cost it much more in the long run.