Repackaging the Bush agenda, just with austerity, is not the path to prosperity.
Romney economic adviser Glenn Hubbard apparently has a very short memory.
In a Wall Street Journalop-ed making the case for Romney's economic agenda, Hubbard presents a strikingly ahistorical account of the past few years -- not to mention sprinkling in one big questionable assumption. Let's take a tour of some of the lowlights.
"We are currently in the most anemic economic recovery in the memory of most Americans."
Does the memory of most Americans go back a decade? If it does, then they can remember a more anemic recovery -- at least when it comes to jobs. The post-2001 recovery had the slowest job growth of any postwar recovery. It also had the slowest private sector growth of any postwar recovery. It's puzzling that Hubbard doesn't remember this, considering that he was the chair of President George W. Bush's Council of Economic Advisors from 2001 to 2003.
Now, the economy did grow faster then than it has now. But that's because the government grew as much as it did then; it's shrinking now. Really. So why does this weak recovery feel weaker than that weak recovery? Well, the tech bubble recession was much milder than the housing bubble recession -- in other words, we're in a deeper hole this time around. All else equal, we would expect a better recovery from a worse recession, but all else is not equal. As Harvard professor Kenneth Rogoff has shown with over 800 years of data, recoveries from financial crises are long, slow slogs. It's doubtful that recycling Bush-era policies will get us out of this ditch faster. It didn't ten years ago.
"[U]ncertainty over policy--particularly over tax and regulatory policy--slowed the recovery and limited job creation. One recent study by Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago found that this uncertainty reduced GDP by 1.4% in 2011 alone."
Well, that certainly sounds bad. When did all of this uncertainty peak? Let's look at the paper. August of 2011. Hmmm. What happened in August of 2011? Oh, that's right. The debt ceiling debacle. Why don't we let the authors speak for themselves. Here's why they said uncertainty was so elevated in 2011:
A series of later developments and policy fights - including the debt- ceiling dispute between Republicans and Democrats in the summer of 2011, and ongoing banking and sovereign debt crises in the Eurozone area - kept economic policy uncertainty at very high levels throughout 2011.
In other words, a debt crisis the Republicans manufactured and a debt crisis the Europeans manufactured drove uncertainty in 2011. Granted, tax uncertainty has been bad -- but so has monetary policy uncertainty. And have you noticed what we haven't talked about yet? The authors conclude that healthcare and financial regulation uncertainty were "much less pronounced" than all of the above questions.
And according to the Congressional Budget Office, the large deficits codified in the president's budget would reduce GDP during 2018-2022 by between 0.5% and 2.2% compared to what would occur under current law. [...]
The governor's plan would reduce federal spending as a share of GDP to 20%--its pre-crisis average--by 2016. This would dramatically reduce policy uncertainty over the need for future tax increases, thus increasing business and consumer confidence. [...]
The Romney plan would reduce individual marginal income tax rates across the board by 20%, while keeping current low tax rates on dividends and capital gains. The governor would also reduce the corporate income tax rate--the highest in the world--to 25%. In addition, he would broaden the tax base to ensure that tax reform is revenue-neutral.
Hubbard says that 1) Medium-run deficits are bad for medium-run growth, 2) Romney will cut public spending, which will increase private spending, and 3) Romney will lower tax rates and eliminate tax loopholes while keeping tax revenues the same. Individually, these might make sense. Together, they're the economic equivalent of saying two plus two equals five.
Let's unpack this fiscal mess. Romney wants to cut taxes, but he also wants to cut medium-run deficits too. That's a problem. His answer: He won't cut taxes, but tax rates -- while cutting spending too. But this creates new problems. For one, it means his tax plan will raise taxes on the bottom 95 percent, while cutting them for the top 5 percent. For another, it leaves Romney stuck embracing spending cuts that will hurt the economy.
Expansionary austerity is a myth, at least in the short-term. That was the conclusion the IMF reached in a 2011 paper that examined 173 cases of fiscal retrenchment over the past 30 years. On average, cutting the deficit by 1 percent of GDP led to a 0.5 percentage point increase in unemployment -- with private spending falling in tandem with public spending. Austerity can work over the longer-term, as long as interest rates or the currency falls to offset the fall in government spending. But interest rates are already at zero, and Republicans aren't too keen about quantitative easing or that whole "dollar depreciation" thing. That leaves the Romney camp with one final reason why cutting government spending would lead to more spending overall: Ricardian equivalence. It's the idea that the private sector spends less when the public sector borrows more, because households know that eventually the government will have to raise taxes to pay for that borrowing. The empirical evidence on this is mixed -- after all, few households 1) know enough about the deficit to predict what will happen to their taxes, or 2) have enough disposable income or access to borrowing to smooth their lifetime spending. That's not to say that there isn't something to it, but that it's a flimsy hope for the catch-up growth we need.
I don't mean to pick on Glenn Hubbard. He has plenty of good ideas about how to get the economy moving again -- like mass refinancing for mortgages owned by Fannie and Freddie. But repackaging the Bush agenda, just updated with austerity, is not the path to prosperity.
The number of American teens who excel at advanced math has surged. Why?
On a sultry evening last July, a tall, soft-spoken 17-year-old named David Stoner and nearly 600 other math whizzes from all over the world sat huddled in small groups around wicker bistro tables, talking in low voices and obsessively refreshing the browsers on their laptops. The air in the cavernous lobby of the Lotus Hotel Pang Suan Kaew in Chiang Mai, Thailand, was humid, recalls Stoner, whose light South Carolina accent warms his carefully chosen words. The tension in the room made it seem especially heavy, like the atmosphere at a high-stakes poker tournament.
Stoner and five teammates were representing the United States in the 56th International Mathematical Olympiad. They figured they’d done pretty well over the two days of competition. God knows, they’d trained hard. Stoner, like his teammates, had endured a grueling regime for more than a year—practicing tricky problems over breakfast before school and taking on more problems late into the evening after he completed the homework for his college-level math classes. Sometimes, he sketched out proofs on the large dry-erase board his dad had installed in his bedroom. Most nights, he put himself to sleep reading books like New Problems in Euclidean Geometry and An Introduction to Diophantine Equations.
This wasn’t terribly surprising. When Streep was asked, last year, in the course of promoting her extremely feminist film Suffragette, whether she is herself a feminist, the actor replied that, no, she isn’t. Instead: “I am a humanist,” she said. “I am for nice, easy balance.”
Women in their 20s are told they're too young to settle down. Then, seemingly overnight, they start hearing they're spinsters. What gives?
Women in their 20s are told they're too young to settle down. Then, seemingly overnight, they start hearing they're spinsters. What gives?
Heterosexual women today, in certain milieus, find themselves placed into one of two categories: too young to settle down, and too old to find a man. There is a window of opportunity to get married, but it is ephemeral almost to the point of non-existence. It falls at a different age according to region, or the idiosyncratic biases of one's circle, but hovers around 27. "Too young" refers not to teen marriage, but to any commitment entered into by a grown woman deemed still a child by those around her.
Here's how it works: A young woman hears from friends and family that she needs to focus on her career or education, not some guy. She is warned of certain dangers: unsolicited male attention; unintended pregnancy, as if intended pregnancy were also a thing; and the desire hardwired into all straight men to turn their girlfriends into 1950s housewives. To entertain the possibility of it being difficult to find a husband, to even utter the expression "find a husband," is to regress to another era. And this advice is incredibly appealing, a rejection of the quaint notion that female heterosexuality is the desire not for men, but for a white picket fence.
And why stopping it requires that governments get out of the way
As it stands, the international coalition is far from winning the information war against the Islamic State. Its air strikes may be squeezing the group in Iraq and Syria and killing many of its leaders, but that has not halted the self-proclaimed caliphate’s ideological momentum. Indeed, at the end of 2015, it was estimated that the number of foreigners travelling to join militant groups in Iraq and Syria—predominantly the Islamic State—had more than doubled in the course of just 18 months. What’s more, while these figures may be striking, sheer numbers are less important than intent when it comes to the organization’s actual threat to the world. As we have already seen, it takes a very small number of people to unleash great terror, whether in Iraq, Syria, or elsewhere.
Today’s empires are born on the web, and exert tremendous power in the material world.
Mark Zuckerberg hasn’t had the best week.
First, Facebook’s Free Basics platform was effectively banned in India. Then, a high-profile member of Facebook’s board of directors, the venture capitalist Marc Andreessen, sounded off about the decision to his nearly half-a-million Twitter followers with a stunning comment.
“Anti-colonialism has been economically catastrophic for the Indian people for decades,” Andreessen wrote. “Why stop now?”
After that, the Internet went nuts.
Andreessen deleted his tweet, apologized, and underscored that he is “100 percent opposed to colonialism” and “100 percent in favor of independence and freedom.” Zuckerberg, Facebook’s CEO, followed up with his own Facebook post to say Andreessen’s comment was “deeply upsetting” to him, and not representative of the way he thinks “at all.”
How those three little words sound around the world
I love saying “I love you.” I’ll say “love ya” to my parents when I’m about to get off the phone with them, and “love you!!” to my wife as she’s heading out the door for work (“love you???” on Gchat means I’ve gotten myself into trouble with her and I’m searching for a way out). I tell my son I love him, and he doesn’t even get it—he’s an infant. I’ve been known to proclaim that I love sushi and football and Benjamin Franklin (I mean, how could you not love Ben?).
Many people in this world would find my behavior rather strange. That’s because Americans are exceptionally promiscuous when it comes to professing their love. In the United States, “I love you” is at once exalted and devalued. It can mean everything ... or nothing at all. This is not universally the case.
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.
Einstein’s gravitational waves rest on a genuinely radical idea.
After decades of anticipation, we have directly detected gravitational waves—ripples in spacetime traveling at the speed of light through the universe. Scientists at LIGO (the Laser Interferometic Gravitational-wave Observatory) have announced that they have measured waves coming from the inspiral of two massive black holes, providing a spectacular confirmation of Albert Einstein’s general theory of relativity, whose hundredth anniversary was celebrated just last year.
Finding gravitational waves indicates that Einstein was (once again) right, and opens a new window onto energetic events occurring around the universe. But there’s a deeper lesson, as well: a reminder of the central importance of locality, an idea that underlies much of modern physics.
Two hundred fifty years of slavery. Ninety years of Jim Crow. Sixty years of separate but equal. Thirty-five years of racist housing policy. Until we reckon with our compounding moral debts, America will never be whole.
And if thy brother, a Hebrew man, or a Hebrew woman, be sold unto thee, and serve thee six years; then in the seventh year thou shalt let him go free from thee. And when thou sendest him out free from thee, thou shalt not let him go away empty: thou shalt furnish him liberally out of thy flock, and out of thy floor, and out of thy winepress: of that wherewith the LORD thy God hath blessed thee thou shalt give unto him. And thou shalt remember that thou wast a bondman in the land of Egypt, and the LORD thy God redeemed thee: therefore I command thee this thing today.
— Deuteronomy 15: 12–15
Besides the crime which consists in violating the law, and varying from the right rule of reason, whereby a man so far becomes degenerate, and declares himself to quit the principles of human nature, and to be a noxious creature, there is commonly injury done to some person or other, and some other man receives damage by his transgression: in which case he who hath received any damage, has, besides the right of punishment common to him with other men, a particular right to seek reparation.
Across China, where new developments are keeping pace with the rapidly growing economy, reports continue to surface so-called "nail houses."
Across China, where new developments are keeping pace with the rapidly growing economy, reports continue to surface of so-called "nail houses." These properties, standing alone amid the ruins of other buildings, belong to owners who have stood their ground and resisted demolition. Defiant property owners say the compensation being offered is too low. Some of them have remained in their homes for years as their court cases drag on and new construction continues all around them. A few homeowners have won their fights, but most have lost. Meanwhile, these nail houses have become powerful symbols of resistance against the world's fastest-growing major economy.