The welfare state is dead. Long live the welfare state!
It's getting hard to keep track of which countries aren't Greece anymore.
First, Ireland wasn't Greece. Then it kind of was. Then it was Portugal's turn to not be Greece. Then it was Portugal's turn to be Greece. Next, Spain wasn't Greece. But now it might be. At the very least it's Ireland. Although Uganda looks like it's in the clear. It's not Spain, which could be Greece. That's better than Cyprus can say. They're pretty much Greece. And, of course, Greece is almost certainly Greece. That goes without saying.
But there's one country that definitely isn't Greece. That's the United States.
Let's step back. What makes a country "Greece"? It's become shorthand for wild government overspending -- especially on entitlements. Paul Ryan says we don't have long to avoid the same fate. Neither does the terrifyingly successful investor Michael Burry. They think that absent drastic reform -- read: cuts -- to the social safety net, we'll end up in penury like the Greeks.
It's a scary story. But it's just a scare story. Yes, we have a long-term healthcare spending problem. But that doesn't make us Greece. Heck, Greece isn't even Greece. At least not the "Greece" that's become such a political football. The evidence -- or lack thereof -- is in the chart below. It compares each country's average social spending since 1999, via the OECD, against its current borrowing costs. See the pattern?
There is none. Europe's biggest social spenders don't have any problems. And Europe's biggest problem countries don't spend that much on social programs. The death knell of the welfare state this is not.
Here's the dirty little secret of the euro debt crisis. There is no euro debt crisis. There is a euro crisis. The debt is a symptom of the crisis of the common currency.* Europe's bailed out countries all saw piles of capital pour in during the boom, only to pour out during the bust. They were left with inflated, uncompetitive wages -- and that's sent them into deep slumps. That's been despite lower social spending than their northern euro neighbors. Germany, Austria, Finland, Finland, the Netherlands, Belgium and -- at least for now -- France have all been able to sustain more generous safety nets thanks to the magic of competitive wages.
It's the same story for Europe's non-euro nations. Sweden, Denmark, Norway, Switzerland and the Czech Republic are all lucky enough to not be passengers on the Titantic members of the common currency. (Denmark has pegged its krone to the euro, but they still have their own central bank). Most of them spend more on social programs than the so-called PIIGS, but all of them can borrow for almost nothing. Investors are actually paying the Swiss and Danish governments for the privilege of lending to them short-term. Think about that. What's going on? Well, if things ever get rough, they can just print money or devalue their currencies. In other words, they can never run out of money.
But Greece can. Being in the euro means never being able to print your own money. And that turns each euro country into a bank. Imagine a bank run. Fear becomes self-fulfilling. Depositors try to pull their money out before everyone else because they're worried the bank will collapse -- which, of course, causes the bank's collapse. Very Oedipal -- minus the parent love. It's the same with Greece. Investors worry that Greece will run out of euros. That's a very rational fear right now. So they try to sell-off their bonds, which pushes up Greece's borrowing costs -- and makes it more likely that Greece will run out of euros. This kind of panic is why Italy -- which has a primary surplus! -- is flirting with trouble too. Only the ECB can stop this.
Notice that I didn't talk about debt at all in the previous paragraph. The PIIGS have too-high wages, too little growth, and face crippling crises of confidence. Austerity won't cure any of that. It'll make things worse. It has. It kneecaps growth. And investors are more worried about growth right now than they are deficits.
Also notice that none of this applies to the United States. We never have to worry about self-fulfilling prophesies of bankruptcy because we can never run out of dollars. As the Boomers retire, we'll spend more on entitlements. That's not the end of the world. Unless you think Sweden is the end of the world. Yes, we need to rein in healthcare inflation, and, yes, we need to raise some more revenue. The former might already be happening. The latter is a political choice. Neither makes us Greece.
So don't believe the rumors of the welfare state's death. They're greatly exaggerated.
* Caveat: Greece is sui generis. They really did just spend too much money. They're not pictured here, because their 10-year bond yield is -- wait for it -- off the chart. Fitting their 27 percent borrowing costs onto this graph makes it too hard to see anything else. But Greece's average social spending is only 21.4 percent of GDP.
In the name of emotional well-being, college students are increasingly demanding protection from words and ideas they don’t like. Here’s why that’s disastrous for education—and mental health.
Something strange is happening at America’s colleges and universities. A movement is arising, undirected and driven largely by students, to scrub campuses clean of words, ideas, and subjects that might cause discomfort or give offense. Last December, Jeannie Suk wrote in an online article for The New Yorker about law students asking her fellow professors at Harvard not to teach rape law—or, in one case, even use the word violate (as in “that violates the law”) lest it cause students distress. In February, Laura Kipnis, a professor at Northwestern University, wrote an essay in The Chronicle of Higher Education describing a new campus politics of sexual paranoia—and was then subjected to a long investigation after students who were offended by the article and by a tweet she’d sent filed Title IX complaints against her. In June, a professor protecting himself with a pseudonym wrote an essay for Vox describing how gingerly he now has to teach. “I’m a Liberal Professor, and My Liberal Students Terrify Me,” the headline said. A number of popular comedians, including Chris Rock, have stopped performing on college campuses (see Caitlin Flanagan’s article in this month’s issue). Jerry Seinfeld and Bill Maher have publicly condemned the oversensitivity of college students, saying too many of them can’t take a joke.
As the vice president edges toward a presidential run, is he banking on further public disclosures to discredit the frontrunner?
As Joe Biden edges closer to a presidential run, there’s no shortage of theories as to what he’s up to. Former secretary of state Hillary Clinton has built a commanding lead in the national polls, giving Biden little apparent space to gain traction. Perhaps he’s counting on the early-primary state of South Carolina to provide a critical boost. He might be banking on appearing as a stronger general-election candidate than any of his potential rivals in the primary race. Maybe after spending the past 42 years of his life running for elective office, he just can’t stop.
But there’s one intriguing theory that has so far garnered little attention: What if Biden knows something about Democratic frontrunner Hillary Clinton that the rest of us don’t?
The drug modafinil was recently found to enhance cognition in healthy people. Should you take it to get a raise?
If you could take a pill that will make you better at your job, with few or no negative consequences, would you do it?
In a meta-analysis recently published in European Neuropsychopharmacology, researchers from the University of Oxford and Harvard Medical School concluded that a drug called modafinil, which is typically used to treat sleep disorders, is a cognitive enhancer. Essentially, it can help normal people think better.
Out of all cognitive processes, modafinil was found to improve decision-making and planning the most in the 24 studies the authors reviewed. Some of the studies also showed gains in flexible thinking, combining information, or coping with novelty. The drug didn’t seem to influence creativity either way.
In 1998, Toni Morrison wrote a comment for The New Yorker arguing that “white skin notwithstanding, this is our first black President. Blacker than any actual black person who could ever be elected in our children’s lifetime.” Last week the New York Times, implicitly cited Morrison’s piece, and claimed the author was giving Clinton “a compliment.” This interpretation of Morrison’s claim is as common as it is erroneous.
The popular interpretation of Morrison’s point (exhibited here) holds that, summoning all of her powers, the writer gazed into the very essence of Clinton, and found him sufficiently soulful. In fact, Morrison’s point had little to do with soul of any kind. She was not much concerned with Clinton’s knowledge of Ebonics, his style of handshake, nor whether he pledged Alpha or Q. Morrison was concerned with power.
It is not too late to strengthen the Iran deal, a prominent critic says.
It appears likely, as of this writing, that Barack Obama will be victorious in his fight to implement the Iran nuclear deal negotiated by his secretary of state, John Kerry. Republicans in Congress don’t appear to have the votes necessary to void the agreement, and Benjamin Netanyahu’s campaign to subvert Obama may be remembered as one of the more counterproductive and shortsighted acts of an Israeli prime minister since the rebirth of the Jewish state 67 years ago.
Things could change, of course, and the Iranian regime, which is populated in good part by extremists, fundamentalist theocrats, and supporters of terrorism, could do something monumentally stupid in the coming weeks that could force on-the-fence Democrats to side with their Republican adversaries (remember the Café Milano fiasco, anyone?). But, generally speaking, the Obama administration, and its European allies, seem to have a clearer path to implementation than they had at the beginning of the month.
A new study finds an algorithmic word analysis is flawless at determining whether a person will have a psychotic episode.
Although the language of thinking is deliberate—let me think, I have to do some thinking—the actual experience of having thoughts is often passive. Ideas pop up like dandelions; thoughts occur suddenly and escape without warning. People swim in and out of pools of thought in a way that can feel, paradoxically, mindless.
Most of the time, people don’t actively track the way one thought flows into the next. But in psychiatry, much attention is paid to such intricacies of thinking. For instance, disorganized thought, evidenced by disjointed patterns in speech, is considered a hallmark characteristic of schizophrenia. Several studies of at-risk youths have found that doctors are able to guess with impressive accuracy—the best predictive models hover around 79 percent—whether a person will develop psychosis based on tracking that person’s speech patterns in interviews.
A new study shows that the field suffers from a reproducibility problem, but the extent of the issue is still hard to nail down.
No one is entirely clear on how Brian Nosek pulled it off, including Nosek himself. Over the last three years, the psychologist from the University of Virginia persuaded some 270 of his peers to channel their free time into repeating 100 published psychological experiments to see if they could get the same results a second time around. There would be no glory, no empirical eurekas, no breaking of fresh ground. Instead, this initiative—the Reproducibility Project—would be the first big systematic attempt to answer questions that have been vexing psychologists for years, if not decades. What proportion of results in their field are reliable?
In the United States and Israel, a heated debate about whether to accept the nuclear deal with Iran continues. In the rest of the world, Iran’s reintegration is already underway.
The survival of the Iran deal seems more likely by the day; for past assessments of what that might mean for the Middle East, the United States, and beyond, please see the items grouped here.
Two weeks ago, as part of a collection of notes from readers in Israel, I quoted Samuel J. Cohen, who is originally American but has lived and worked in Israel since the 1970s, on the possibility that “Obama and Netanyahu are both right.” That is: President Obama is right that ending Iran’s pariah status will overall be good for the United States, and Prime Minister Netanyahu is right that the same change may be overall bad for Israel, even if Iran never develops a nuclear weapon. Thus the interests of the two nations genuinely diverge.
Yanis Varoufakis on Grexit, the media, and economics
When Yanis Varoufakis was elected to parliament and then named as Greek finance minister in January, he embarked on an extraordinary seven months of negotiations with the country’s creditors and its European partners.
On July 6, Greek voters backed his hardline stance in a referendum, with a resounding 62 percent voting No to the European Union’s ultimatum. On that night, he resigned, after Prime Minister Alexis Tsipras, fearful of an ugly exit from the euro zone, decided to go against the popular verdict. Since then, the governing party, Syriza, has splintered and a snap election has been called. Varoufakis remains a member of parliament and a prominent voice in Greek and European politics.