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.
The most personally moving, and most fundamentally patriotic, moment of the Democratic National Convention was the appearance by the bereaved parents of Army Captain Humayun Khan, and the statement about the meaning of their son’s life and death, and about the Constitution, by Mr. Khizr Khan.
After Khizr Khan spoke, politicians and commentators on most networks said they were moved, humbled, inspired, choked up. (Commentators on Fox did not say these things, because their coverage cut away from the Khans for Brit Hume and Megyn Kelly, plus a Benghazi ad.)
How the election looks to backers of the Republican nominee
Perhaps the hardest thing to do in contemporary American politics is to imagine how the world looks from the other side. I’ve made no secret of why, as a Republican, I oppose Donald Trump and what he stands for. But I’ve also been talking to his supporters and advisors, trying to understand how they see and hear the same things that I do, and draw such very different conclusions. What follows isn’t a transcription—it’s a synthesis of the conversations I’ve had, and the insights I’ve gleaned, presented in the voice of an imagined Trump supporter.
“You people in the Acela corridor aren’t getting it. Again. You think Donald Trump is screwing up because he keeps saying things that you find offensive or off-the-wall. But he’s not talking to you. You’re not his audience, you never were, and you never will be. He’s playing this game in a different way from anybody you’ve ever seen. And he’s winning too, in a different way from anybody you’ve ever seen.
Not the people—the term. How generational divisions have driven down voter turnout over the last century of American politics.
Throughout the 2016 U.S. presidential election, pundits and activists have debated how to get more Millennials involved in politics, always stressing their distinctive character. But it was actually this tendency to slice up the electorate into unique generations that drove young people from politics in the first place.
In the 19th century, children, youths, and adults “mingled freely together” at rowdy campaign rallies, lured by the holy trinity of booze, barbecue, and bonfire. Older citizens introduced young people to politics, helping to drive voter turnouts to their highest levels in U.S. history. “It’s the ‘big fellow,’” observed the Republicans canvassing in pool halls and saloons in the 1880s, who does the best job getting “the ‘little fellow”’ into politics.
Last night, in her overall very successful acceptance speech, Hillary Clinton said with ruthless precision about her opponent:
Ask yourself: Does Donald Trump have the temperament to be Commander-in-Chief?
Donald Trump can't even handle the rough-and-tumble of a presidential campaign.
He loses his cool at the slightest provocation. When he's gotten a tough question from a reporter. When he's challenged in a debate. When he sees a protestor at a rally.
Emphasis added, as it was in her delivery:
Imagine—if you dare, imagine—imagine him in the Oval Office facing a real crisis. A man you can bait with a tweet is not a man we can trust with nuclear weapons.
I can’t put it any better than Jackie Kennedy did after the Cuban Missile Crisis. She said that what worried President Kennedy during that very dangerous time was that a war might be started—not by big men with self-control and restraint, but by little men—the ones moved by fear and pride.
Narcissism, disagreeableness, grandiosity—a psychologist investigates how Trump’s extraordinary personality might shape his possible presidency.
In 2006, Donald Trump made plans to purchase the Menie Estate, near Aberdeen, Scotland, aiming to convert the dunes and grassland into a luxury golf resort. He and the estate’s owner, Tom Griffin, sat down to discuss the transaction at the Cock & Bull restaurant. Griffin recalls that Trump was a hard-nosed negotiator, reluctant to give in on even the tiniest details. But, as Michael D’Antonio writes in his recent biography of Trump, Never Enough, Griffin’s most vivid recollection of the evening pertains to the theatrics. It was as if the golden-haired guest sitting across the table were an actor playing a part on the London stage.
“It was Donald Trump playing Donald Trump,” Griffin observed. There was something unreal about it.
The World Well-Being Project uses Facebook updates to correlate language with personality traits.
Do our Facebook posts reflect our true personalities? Incrementally, probably not. But in aggregate, the things we say on social media paint a fairly accurate portrait of our inner selves. A team of University of Pennsylvania scientists is using Facebook status updates to find commonalities in the words used by different ages, genders, and even psyches.
“Governments have an increased interest in measuring not just economic outcomes but other aspects of well-being,” said Andrew Schwartz, a UPenn computer scientist who works on the project. “But it's very difficult to study well-being at a large scale. It costs a lot of money to administer surveys to see how people are doing in certain areas. Social media can help with that.”
A collection of books recommended by The Atlantic’s editors and writers
The Atlantic’s editors and writers share their recommendations for summer reading—new titles, old favorites, and others in between.
By Yaa Gyasi
In her first novel, Yaa Gyasi cleverly weaves the intergenerational tale of a family through a series of short, but interrelated stories set in what’s now Ghana during the mid-18th century. The two women at the center of the novel, Effia and Esi, are half-sisters who wind up on vastly different paths. One is captured during a battle between tribes, sold, and winds up on a slave ship bound for the U.S. The other—separated from her village and married off to a British slaver—ends up living on top of the dungeons that hold her own kin and hundreds of others who would also become slaves. The novel traces the lineage of these women through the tales of their children, and their children’s children, and so on—up until the present day.
Learning how to bond with my daughter, who found comfort in the familiarity of being alone, has come through understanding reactive attachment disorder.
My hands hover over the computer keyboard. They are trembling. I hold down the shift key and type the words with intention, saying each letter aloud: “R-e-a-c-t-i-v-e A-t-t-a-c-h-m-e-n-t D-i-s-o-r-d-e-r.” The words “reactive attachment disorder” are memory beads I gather into a pile and attempt to string along on a necklace.
I think back to when Judith, my neighbor who is a psychiatrist, offhandedly threw out the term the first time she met Julia. We were talking about babies who start their lives in orphanages, and she mentioned the disorder. She wasn't suggesting that my daughter Julia showed any signs, but she’d said it was a well-known problem with children who’d been adopted from Romanian orphanages in the '80s and '90s. I remember nodding my head and thinking, Shut up, Judith. We got Julia young. It shouldn't be an issue.
Physicists can’t agree on whether the flow of future to past is real or a mental construct.
Einstein once described his friend Michele Besso as “the best sounding board in Europe” for scientific ideas. They attended university together in Zurich; later they were colleagues at the patent office in Bern. When Besso died in the spring of 1955, Einstein—knowing that his own time was also running out—wrote a now-famous letter to Besso’s family. “Now he has departed this strange world a little ahead of me,” Einstein wrote of his friend’s passing. “That signifies nothing. For us believing physicists, the distinction between past, present, and future is only a stubbornly persistent illusion.”
Einstein’s statement was not merely an attempt at consolation. Many physicists argue that Einstein’s position is implied by the two pillars of modern physics: Einstein’s masterpiece, the general theory of relativity, and the Standard Model of particle physics. The laws that underlie these theories are time-symmetric—that is, the physics they describe is the same, regardless of whether the variable called “time” increases or decreases. Moreover, they say nothing at all about the point we call “now”—a special moment (or so it appears) for us, but seemingly undefined when we talk about the universe at large. The resulting timeless cosmos is sometimes called a “block universe”—a static block of space-time in which any flow of time, or passage through it, must presumably be a mental construct or other illusion.
It’s a staple in American homes, but at what environmental cost?
As Hurricane Katrina raged through New Orleans in 2005, neighborhood after neighborhood collapsed from flooding. Of the houses that stood, many still had to be bulldozed due to mold within the walls. But one building, a plantation-home-turned-museum on Moss Street built two centuries before the disaster, was left almost entirely unscathed.
“The Pitot house was built the old way, with plaster walls,” says Steve Mouzon, an architect who helped rebuild the city after the hurricane. “When the flood came, the museum moved the furniture upstairs. Afterwards, they simply hosed the walls—no harm done.”
The other houses weren’t built the old way. “All the homes around the Pitot house were lost because they were built with drywall,” says Mouzon.