It's time to put down Ayn Rand and pick up Milton Friedman
Paul Ryan is worried about the Federal Reserve. He is worried the Federal Reserve will try to bring unemployment down. There's a word for this. I can't print it, because this is a family publication.
For the past four years, Ryan has repeatedly warned about the real menace threatening the economy: inflation. Forget that long-term unemployment has surged to levels not seen since the Great Depression, and prices have barely risen -- Ryan is scared of the inflation monster under his bed, and thinks you should be too. He thinks that trying to bring down unemployment will unleash the inflation monster -- and that's why he wrote an op-ed in the Wall Street Journal back in May of 2008 calling on Congress to revoke the Fed's dual mandate to target both low inflation and low unemployment. He wants the Fed to only worry about the former and not the latter.
Ryan is pushing bad economics, and worse history. The chart below looks at core PCE inflation -- the Fed's preferred measure -- since Congress passed the Humphrey-Hawkins Act in 1978 that gave the Fed its dual mandate. After spiking due to the second oil shock, inflation has been on a steady downward trajectory for the past 30 years.
It takes a vivid imagination to interpret this as evidence that Humphrey-Hawkins has caused an inflation problem. Reality says the opposite. Actually, it's much, much worse for Ryan -- the Fed has gotten much, much better at maintaining price stability since the advent of the dual mandate. We don't have data on core PCE inflation before 1959, but we do have numbers for CPI inflation -- that is, including food and energy costs -- going back to 1914. Which period looks like the nirvana of price stability to you in the chart below? (Note: the yellow dot shows when Humphrey-Hawkins became law).
There was 4.4 times more variance in prices before the dual mandate than after it. And those first 20 years came under the gold standard -- which its advocates today claim would "cure" inflation! This last point is crucial because Ryan has something of a soft spot for goldbugs. Now, Ryan doesn't want to bring back the gold standard itself, but he does want to create a commodity standard -- in other words, tie the value of the dollar to a basket of commodities. This is a distinction without much of a difference. The Fed would have to raise interest rates when commodity prices go up, regardless of the state of the economy. This is all kinds of crazy. Commodity prices have shot up the past decade as developing nations have developed -- unrelated to inflation here. It makes no sense to make our economy worse because China's economy is getting better.
Where did Paul Ryan get such a truly nutty idea? It's not from the hero of conservative economic thought, Milton Friedman. Republicans have abandoned Friedman -- at least when it comes to monetary policy. (Although libertarians and conservatives like Scott Sumner, David Beckworth, and Evan Soltas still carry the Friedman torch). Friedman's insight was that low interest rates don't necessarily mean that Fed policy is easy -- usually the reverse -- and that the Great Depression wouldn't have been quite so great if the Fed had printed money to prevent the banking collapse. Ryan hasn't just ignored Friedman; Ryan is the anti-Friedman. He has sharply criticized Fed Chairman Ben Bernanke for printing money, and issued melodramatic (and incorrect) predictions about "currency debasement." Why is Ryan so out of step with what conservatives used to believe about monetary policy? Because he takes his cues on the Fed from a fiction writer instead of a Nobel laureate.
Back in 2005, Ryan explained that one person informed his thoughts on monetary policy: Ayn Rand. In a great catch by Dave Weigel of Slate, Ryan said that he "always goes back to" Francisco d'Anconia's speech from Atlas Shrugged when he thinks about the Fed. The speech in question consists of a rant against paper money and an ode to gold -- in other words, it's just a hop, skip, and a jump from this to Ryan's championing of a commodity-backed dollar. But even that makes more sense than Ryan's suggestion in a 2010 interview with Ezra Klein that the Fed should raise rates to help the economy. As Mike Konczal of the Roosevelt Institute points out, making credit more expensive does not lead to more growth. Now, long-term interest rates do rise when growth goes up, but that doesn't mean that growth will go up when the Fed raises short-term interest rates. The opposite, actually. It was a disaster when the Fed tried that in 1931. Or when the ECB did in 2008. Or when the ECB did in 2011. It's curious that Ryan isn't aware that his ideas have been tried, and failed spectacularly.
Paul Ryan is a true believer. Back in 2009 he invested in commodity and TIPS funds -- in other words, he really does think the inflation monster is about to jump out from under the bed. But Ryan keeps getting it wrong because he has a wrong understanding of monetary policy. He needs to put down the Ayn Rand and pick up the Milton Friedman.
“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 host read these words for the audience, and when she finished she turned to the subject of my body, although she did not mention it specifically. But by now I am accustomed to intelligent people asking about the condition of my body without realizing the nature of their request. Specifically, the host wished to know why I felt that white America’s progress, or rather the progress of those Americans who believe that they are white, was built on looting and violence. Hearing this, I felt an old and indistinct sadness well up in me. The answer to this question is the record of the believers themselves. The answer is American history.
As the world frets over Greece, a separate crisis looms in China.
This summer has not been calm for the global economy. In Europe, a Greek referendum this Sunday may determine whether the country will remain in the eurozone. In North America, meanwhile, the governor of Puerto Rico claimed last week that the island would be unable to pay off its debts, raising unsettling questions about the health of American municipal bonds.
But the season’s biggest economic crisis may be occurring in Asia, where shares in China’s two major stock exchanges have nosedived in the past three weeks. Since June 12, the Shanghai stock exchange has lost 24 percent of its value, while the damage in the southern city of Shenzhen has been even greater at 30 percent. The tumble has already wiped out more than $2.4 trillion in wealth—a figure roughly 10 times the size of Greece’s economy.
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.
Defining common cultural literacy for an increasingly diverse nation.
Is the culture war over?
That seems an absurd question. This is an age when Confederate monuments still stand; when white-privilege denialism is surging on social media; when legislators and educators in Arizona and Texas propose banning ethnic studies in public schools and assign textbooks euphemizing the slave trade; when fear of Hispanic and Asian immigrants remains strong enough to prevent immigration reform in Congress; when the simple assertion that #BlackLivesMatter cannot be accepted by all but is instead contested petulantly by many non-blacks as divisive, even discriminatory.
And that’s looking only at race. Add gender, guns, gays, and God to the mix and the culture war seems to be raging along quite nicely.
A new book by the evolutionary biologist Jerry Coyne tackles arguments that the two institutions are compatible.
In May 1988, a 13-year-old girl named Ashley King was admitted to Phoenix Children’s Hospital by court order. She had a tumor on her leg—an osteogenic sarcoma—that, writes Jerry Coyne in his book Faith Versus Fact, was “larger than a basketball,” and was causing her leg to decay while her body started to shut down. Ashley’s Christian Scientist parents, however, refused to allow doctors permission to amputate, and instead moved their daughter to a Christian Science sanatorium, where, in accordance with the tenets of their faith, “there was no medical care, not even pain medication.” Ashley’s mother and father arranged a collective pray-in to help her recover—to no avail. Three weeks later, she died.
Former Senator Jim Webb is the fifth Democrat to enter the race—and by far the most conservative one.
In a different era’s Democratic Party, Jim Webb might be a serious contender for the presidential nomination. He’s a war hero and former Navy secretary, but he has been an outspoken opponent of recent military interventions. He’s a former senator from Virginia, a purple state. He has a strong populist streak, could appeal to working-class white voters, and might even have crossover appeal from his days as a member of the Reagan administration.
In today’s leftward drifting Democratic Party, however, it’s hard to see Webb—who declared his candidacy Thursday—getting very far. As surprising as Bernie Sanders’s rise in the polls has been, he looks more like the Democratic base than Webb does. The Virginian is progressive on a few major issues, including the military and campaign spending, but he’s far to the center or even right on others: He's against affirmative action, supports gun rights, and is a defender of coal. During the George W. Bush administration, Democrats loved to have him as a foil to the White House. It’s hard to imagine the national electorate will cotton to him in the same way. Webb’s statement essentially saying he had no problem with the Confederate battle flag flying in places like the grounds of the South Carolina capitol may have been the final straw. (At 69, he’s also older than Hillary Clinton, whose age has been a topic of debate, though still younger than Bernie Sanders or Joe Biden.)
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.”
For centuries, experts have predicted that machines would make workers obsolete. That moment may finally be arriving. Could that be a good thing?
1. Youngstown, U.S.A.
The end of work is still just a futuristic concept for most of the United States, but it is something like a moment in history for Youngstown, Ohio, one its residents can cite with precision: September 19, 1977.
For much of the 20th century, Youngstown’s steel mills delivered such great prosperity that the city was a model of the American dream, boasting a median income and a homeownership rate that were among the nation’s highest. But as manufacturing shifted abroad after World War II, Youngstown steel suffered, and on that gray September afternoon in 1977, Youngstown Sheet and Tube announced the shuttering of its Campbell Works mill. Within five years, the city lost 50,000 jobs and $1.3 billion in manufacturing wages. The effect was so severe that a term was coined to describe the fallout: regional depression.
On Sunday, citizens will vote on how to move forward in the country's financial crisis.
On Sunday, the people of Greece will help decide the financial future of their country. With the nation already in default and capital controls in place to prevent a run on the banks, it’s up to Greece’s citizens to decide what road the country will take from here.
The referendum—which asks Greeks to either vote yes or no to a current proposal from Eurogroup leaders to extend financing to the deeply indebted country— was called for by Greek Prime Minister Alexis Tsipras amid meetings of Eurozone leaders as they tried to come up with a deal that would allow the country to avoid default. The call for a vote effectively ended discussions.
Opponents of thecurrent proposal from the Eurogroup feel that the austerity measures put forth by the Eurogroup’s leaders—which would includes things like tax hikes, pension cuts, and reductions in government jobs—are overly harsh and punitive, and could hurt Greeks more than help them.
An attorney who helped players file a gender-discrimination lawsuit over artificial turf in the World Cup proposes a way forward for the sport.
On Sunday, players from the U.S. and Japan’s women’s soccer teams will step onto the field in Vancouver to compete for the sport’s greatest achievement: the World Cup. But perhaps the bigger battle—one that started well before the final match and will continue well after—isn’t about a trophy or national glory. Women’s soccer teams have long fought for recognition and respect not just from the public, but also from the male organizers of the sport, and it’s a struggle symbolized by the very fields they’ve been playing on.
The co-hosts of the World Cup—FIFA and the Canadian Soccer Association—failed to stage this year’s tournament to be played on real grass like every other World Cup previously, mandating that it be played on artificial turf instead. This is despite the dangers and inconveniences plastic turf poses. The synthetic pitches bake in the sun, with surface temperatures sometimes reaching 120 degrees. Clouds of rubber pebbles fly into players’ eyes, and the turf makes it difficult for the women to gauge the way the ball will bounce.