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.
Orr: “It’s a pleasure to meet you, Your Grace. My name is Tyrion Lannister.”
At last! I know I speak for quite a few book readers when I say that pretty much the only thing that kept me going through the eleventy thousand discursive, digressive pages of George R. R. Martin’s fifth tome, A Dance With Dragons, was the promise of Tyrion finally meeting up with Daenerys Targaryen. And, of course, after eleventy thousand pages, it never happened. So on behalf of myself and everyone else who sacrificed sleep, work, family, and friends waiting for this moment, let me say thank you, David Benioff and D. B. Weiss. Bonus points for what seemed to be a cameo by Strong Belwas (a book character who was written out of the show) as the nameless fighter who freed Tyrion from his chains.
New research confirms what they say about nice guys.
Smile at the customer. Bake cookies for your colleagues. Sing your subordinates’ praises. Share credit. Listen. Empathize. Don’t drive the last dollar out of a deal. Leave the last doughnut for someone else.
Sneer at the customer. Keep your colleagues on edge. Claim credit. Speak first. Put your feet on the table. Withhold approval. Instill fear. Interrupt. Ask for more. And by all means, take that last doughnut. You deserve it.
Follow one of those paths, the success literature tells us, and you’ll go far. Follow the other, and you’ll die powerless and broke. The only question is, which is which?
Of all the issues that preoccupy the modern mind—Nature or nurture? Is there life in outer space? Why can’t America field a decent soccer team?—it’s hard to think of one that has attracted so much water-cooler philosophizing yet so little scientific inquiry. Does it pay to be nice? Or is there an advantage to being a jerk?
Some fans are complaining that Zack Snyder’s envisioning of the Man of Steel is too grim—but it’s less a departure than a return to the superhero’s roots.
Since the official teaser trailer for Batman v Superman: Dawn of Justice debuted online in April, fans and critics alike have been discussing the kind of Superman Zack Snyder is going to depict in his Man of Steel sequel. The controversy stems from Snyder’s decision to cast Superman as a brooding, Dark Knight-like character, who cares more about beating up bad guys than saving people. The casting split has proved divisive among Superman fans: Some love the new incarnation, citing him as an edgier, more realistic version of the character.
But Snyder’s is a different Superman than the one fans grew up with, and many have no problem expressing their outrage over it. Even Mark Waid, the author of Superman: Birthright (one of the comics the original film is based on), voiced his concern about Man of Steel’s turn toward bleakness when it came out in 2013:
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.
Changing neighborhoods may be a class issue, but in America, that means it's also a racial one.
Ask city-dwellers to describe what, precisely, gentrification is you’ll get an array of answers. The term is a murky one, used to describe the many different ways through which money and development enter poorer or less developed neighborhoods, changing them both economically and demographically.
For some, gentrification and gentrifiers are inherently bad—pushing out residents who are often older, poorer, and darker than the neighborhood’s new occupants. For others, a new group of inhabitants brings the possibility of things residents have long hoped for, better grocery stores, new retail, renovations, and an overall revitalization that often eludes low-income neighborhoods.
Rebel groups that employ terror in civil wars seldom win or gain concessions—but they tend to prolong conflicts, a new paper finds.
Nearly 14 years into the war on terror, there are signs of terrorism all around us, from Memorial Day tributes to the victims of the wars in Iraq and Afghanistan to the raging congressional debate over reauthorizing the Patriot Act.
Yet some of the most basic information about terrorism remains surprisingly elusive. For example: Does it work?
There have been some attempts at answering the question, but many of them are either largely anecdotal or geographically constrained. Other studies have focused on international terror. But as political scientist Page Fortna of Columbia University notes, the vast majority of terrorism isn’t transnational—it’s localized, utilized in the context of civil wars and fights for territorial control. Many of the intractable conflicts the U.S. is involved in today fit this definition: the fighting between ISIS, Jabhat al-Nusra, and other groups in Iraq and Syria; the Boko Haram insurgency in Nigeria; al-Shabab’s terrorism in Somalia and Kenya; Yemen’s civil war; the Israel-Palestinian conflict. Is terrorism an effective tool when used in those conflicts?
In an interview, the U.S. president ties his legacy to a pact with Tehran, argues ISIS is not winning, warns Saudi Arabia not to pursue a nuclear-weapons program, and anguishes about Israel.
On Tuesday afternoon, as President Obama was bringing an occasionally contentious but often illuminating hour-long conversation about the Middle East to an end, I brought up a persistent worry. “A majority of American Jews want to support the Iran deal,” I said, “but a lot of people are anxiety-ridden about this, as am I.” Like many Jews—and also, by the way, many non-Jews—I believe that it is prudent to keep nuclear weapons out of the hands of anti-Semitic regimes. Obama, who earlier in the discussion had explicitly labeled the supreme leader of Iran, Ayatollah Ali Khamenei, an anti-Semite, responded with an argument I had not heard him make before.
“Look, 20 years from now, I’m still going to be around, God willing. If Iran has a nuclear weapon, it’s my name on this,” he said, referring to the apparently almost-finished nuclear agreement between Iran and a group of world powers led by the United States. “I think it’s fair to say that in addition to our profound national-security interests, I have a personal interest in locking this down.”
Advocates say that a guaranteed basic income can lead to more creative, fulfilling work. The question is how to fund it.
Scott Santens has been thinking a lot about fish lately. Specifically, he’s been reflecting on the aphorism, “If you give a man a fish, he eats for a day. If you teach a man to fish, he eats for life.” What Santens wants to know is this: “If you build a robot to fish, do all men starve, or do all men eat?”
Santens is 37 years old, and he’s a leader in the basic income movement—a worldwide network of thousands of advocates (26,000 on Reddit alone) who believe that governments should provide every citizen with a monthly stipend big enough to cover life’s basic necessities. The idea of a basic income has been around for decades, and it once drew support from leaders as different as Martin Luther King Jr. and Richard Nixon. But rather than waiting for governments to act, Santens has started crowdfunding his own basic income of $1,000 per month. He’s nearly halfway to his his goal.
The former secretary of state jettisons sweeping rhetoric, and focuses on specific policies.
Hillary Clinton has been an official candidate for president for five weeks, and she still hasn’t done the thing most candidates do on day one: given a speech laying out her vision for America. Nor is she planning on doing so anytime soon. Politicoreports that Hillary’s “why I’m running for president,” speech, initially scheduled for May, has now been delayed until June, or even later.
There’s a reason for that: The speech is unlikely to be very good. Soaring rhetoric and grand themes have never been Hillary’s strengths. That’s one reason so many liberals found her so much less inspirational than Barack Obama in 2008. And it’s a problem with deep roots. In his biography, A Woman in Charge, Carl Bernstein describes Hillary, then in law school, struggling to articulate her generation’s perspective in an address to the League of Women Voters. “If she was speaking about a clearly defined subject,” Bernstein writes, “her thoughts would be well organized, finely articulated, and delivered in almost perfect outline form. But before the League audience, she again and again lapsed into sweeping abstractions.”