Rubio's call for a single mandate for the Federal Reserve is a dangerous, and potentially disastrous, idea. Unless that single mandate is targeting nominal GDP instead of inflation.
Marco Rubio wants to be president, and unfortunately for him that means he's supposed to have an opinion about everything. I say unfortunately because Rubio has had a hard enough time figuring out the age of the earth, let alone one of the great mysteries like what the Fed should be doing now. The latter came up during Rubio's acceptance speech at the Jack Kemp foundation, and, as Dave Weigel of Slate reports, it did not go well. Hey, he's not a central banker, man.
A long time ago in an administration far, far away, the Republicans were the party of Milton Friedman. It was 2004. As Paul Krugman points out, then-chairman of the Council of Economic Advisers Greg Mankiw advocated aggressive monetary policy as a way to mitigate recessions. This was economic boilerplate, but it was only boilerplate because of Friedman. After the Great Depression, economists didn't think central banks could do much to revive the economy if interest rates fell to zero -- the so-called liquidity trap -- and monetary policy consequently took a backseat to fiscal policy when it came to demand management. Friedman reversed this. He and Anna Schwarz argued the Great Depression was only so great because the Fed's inaction made it so. In other words, central banks were only powerless if they thought they were. They could do plenty, even in a liquidity trap, if they just printed money and promised to keep printing money -- what we rather prosaically call "quantitative easing" nowadays. It was a message conservatives could, and did, love. The government didn't need to spend more to stabilize the economy during a downturn as long as the Fed did its job.
And then the Great Recession happened.
With interest rates stuck at zero and the economy stuck in a growth slump, we're very much back in Friedman's world. But now conservatives aren't so sure about that "aggressive monetary policy" thing anymore. Zero interest rates just seem wrong, and quantitative easing must be a big government bailout on the road to Zimbabwe -- at least that's what they've told themselves, despite stubbornly low inflation. Of course, some conservatives claim inflation is "really" much higher than the government says, but, as Ramesh Ponnuru of National Review points out, this conspiracy theory doesn't withstand much more than two seconds of scrutiny.
This paranoid style in monetary policy has inspired a rather odd political crusade -- the crusade against the Fed's dual mandate. Most central banks are only tasked with worrying about inflation, but the Fed is tasked with worrying about inflation and unemployment. (Or, in Fed-speak, fostering the maximum level of employment consistent with price stability). This has become a bête noire for conservatives, because they think that were it not for the Fed caring about unemployment -- the horror! -- then it wouldn't have expanded its balance sheet so much, and that this expanded balance sheet will inevitably mean higher inflation down the road. Apparently Marco Rubio is one of these conservatives who sees the stagflationary 1970s around every corner. Here's what he said to say about the Fed.
Sound monetary policy would also encourage middle class job creation. The arbitrary way in which interest rates and our currency are treated is yet another cause of unpredictability injected into our economy. The Federal Reserve Board should publish and follow a clear monetary rule -- to provide greater stability about prices and what the value of a dollar will be over time.
Translation: Repeal the dual mandate and replace it with a single mandate for inflation only. This is all kinds of uninformed. As we have pointed out before, inflation has been lower with over four times less variance since Congress gave the Fed its dual mandate in 1978. And with inflation mostly undershooting its 2 percent target since Lehman failed, it's not as if the Fed even needed the dual mandate to justify easing -- a sole inflation mandate would have been enough.
But Rubio is right that the Fed needs a better, clearer monetary rule nowadays. That's not to say that Fed policy has been arbitrary, but just that its rule needs some modernizing. For most of the so-called Great Moderation, the Fed followed something close to a Taylor rule, setting policy based on inflation and unemployment, and it served the Fed well. Greg Mankiw has his own simple version of a Taylor rule, which Paul Krugman tweaked slightly, that gives us a good idea of how the Fed thought then, as you can see below.
You can see why the Great Moderation gave way to the Great Recession. Our Taylor rule says the Fed should have made interest rates negative in late 2008, but the Fed can't make interest rates negative. Well, at least not nominal rates. The Fed can increase inflation, which reduces real rates, to get borrowing costs to where they "should" be -- which is what Ben Bernanke has done, in fits and starts, the past four years. You can see all these fits and starts in the chart below that compares our same Taylor rule to Fed policy since 2006. It's not easy to get real rates down to -7 percent.
There have been far too many fits and not nearly enough starts since 2008. Yes, the Fed tried unconventional easing in late 2008, early 2009, late 2010, late 2011 and late 2012, but it should have been easing this whole time. The Taylor rule has been negative this whole time, which means that the Fed should have been cutting interest rates, and cutting them a lot, this whole time. Instead, we got zero rates. Because inflation hasn't been that far off target, Bernanke has had a hard time convincing the rest of the FOMC to go along with quantitative easing -- so easing has been far less quantitative than the situation calls for. In other words, policy hasn't quite been arbitrary as much as ad hoc, with the unhappy result being an era of tight money.
Imagine the Fed had a single mandate, but not for inflation. Imagine instead the Fed had a single mandate for the total size of the economy, which goes by the unwieldy name of nominal GDP (NGDP). During the Great Moderation, NGDP grew about 5 percent a year, but it's only grown about 2.85 percent a year since 2008. If the Fed had an NGDP target of 5 percent a year, and was supposed to make up for any over-or-undershooting, it would have been aggressively easing the entire time since 2008. It's a dual mandate that doesn't get confused by low inflation and low growth.
Paul faced danger, Ani and Ray faced each other, and Frank faced some career decisions.
This is what happens when you devote two-thirds of a season to scene after scene after scene of Frank and Jordan’s Baby Problems, and Frank Shaking Guys Down, and Look How Fucked Up Ray and Ani Are, and Melancholy Singer in the Dive Bar Yet Again—and then you suddenly realize that with only a couple episodes left you haven’t offered even a rudimentary outline of the central plot.
The winners of the 27th annual National Geographic Traveler Photo Contest have just been announced.
The winners of the 27th annual National Geographic Traveler Photo Contest have just been announced. Winning first prize, Anuar Patjane Floriuk of Tehuacán, Mexico, will receive an eight-day photo expedition for two to Costa Rica and the Panama Canal for a photograph of divers swimming near a humpback whale off the western coast of Mexico. Here, National Geographic has shared all of this year’s winners, gathered from four categories: Travel Portraits, Outdoor Scenes, Sense of Place, and Spontaneous Moments. Captions by the photographers.
What if Joe Biden is going to run for the Democratic nomination after all?
Most Democrats seem ready for Hillary Clinton—or at least appear content with her candidacy. But what about the ones who who were bidin’ for Biden? There are new signs the vice president might consider running for president after all.
Biden has given little indication he was exploring a run: There’s no super PAC, no cultivation of a network of fundraisers or grassroots organizers, few visits to early-primary states. While his boss hasn’t endorsed Clinton—and says he won’t endorse in the primary—many members of the Obama administration have gone to work for Clinton, including some close to Biden.
But Biden also hasn’t given any clear indication that he isn’t running, and a column by Maureen Dowd in Saturday’s New York Times has set off new speculation. One reason Biden didn’t get into the race was that his son Beau was dying of cancer, and the vice president was focused on being with his son. But before he died in May, Dowd reported, Beau Biden tried to get his father to promise to run. Now Joe Biden is considering the idea.
Even when they’re adopted, the children of the wealthy grow up to be just as well-off as their parents.
Lately, it seems that every new study about social mobility further corrodes the story Americans tell themselves about meritocracy; each one provides more evidence that comfortable lives are reserved for the winners of what sociologists call the birth lottery. But, recently, there have been suggestions that the birth lottery’s outcomes can be manipulated even after the fluttering ping-pong balls of inequality have been drawn.
What appears to matter—a lot—is environment, and that’s something that can be controlled. For example, one study out of Harvard found that moving poor families into better neighborhoods greatly increased the chances that children would escape poverty when they grew up.
While it’s well documentedthat the children of the wealthy tend to grow up to be wealthy, researchers are still at work on how and why that happens. Perhaps they grow up to be rich because they genetically inherit certain skills and preferences, such as a tendency to tuck away money into savings. Or perhaps it’s mostly because wealthier parents invest more in their children’s education and help them get well-paid jobs. Is it more nature, or more nurture?
Put simply: Climate change poses the threat of global catastrophe. The planet isn’t just getting hotter, it’s destabilizing. Entire ecosystems are at risk. The future of humanity is at stake.
Scientists warn that extreme weather will get worse and huge swaths of coastal cities will be submerged by ever-more-acidic oceans. All of which raises a question: If climate change continues at this pace, is anywhere going to be safe?
“Switzerland would be a good guess,” said James Hansen, the director of climate science at Columbia University’s Earth Institute. Hansen’s latest climate study warns that climate change is actually happening faster than computer models previously predicted. He and more than a dozen co-authors found that sea levels could rise at least 10 feet in the next 50 years. Slatepoints out that although the study isn’t yet peer-reviewed, Hansen is “known for being alarmist and also right.”
A new EPA rule is designed to withstand legal challenges from Republicans while convincing world leaders to follow suit.
President Obama’s plan to reduce greenhouse-gas emissions is aimed at three major constituencies. First, there’s the plan’s immediate goal: significant decreases in the emissions in the U.S. between now and 2030. Second, the rule arrives as the world gears up for global emissions talks in Paris in December, and American action is seen as necessary to convince other countries to act. And third, Obama views the fight against climate change as an essential part of his legacy, alongside the Affordable Care Act.
“We’re the first generation to feel the impact of climate change, and the last generation that can do something about it,” Obama said at a press conference at the White House on Monday, repeating a line he’s used before. The president emphasized the moral case for reducing emissions throughout the speech, invoking Pope Francis’s call for action, and scolding “cynical” critics who charged his plan would hurt minorities and the poor. “If you care about low-income minority communities, start protecting the air they breathe and stop trying to rob them of their health care.”
And last year, Ypsilanti, Michigan, got a brief flare-up of Internet fame whenGawker reported on a scatological scofflaw who had been repeatedly pooping on local playground slides. A city-council member told MLive the acts were “weird and deliberate.” The manhunt launched a hashtag (#YpsiPooper), and an advertising company put up messages on a billboard it owned over the highway, urging residents to say something if they saw something: "Help us flush the pooper,” “Do your civic doody, report the pooper,” and “Help us catch the poopetrator.” The culprit—a resident of a nearby halfway house—was eventually identified and warned, which seemed to do the trick.
For physicians who treat sick children, professional “masks,” such as white coats and detached demeanors, can be both a help and a hindrance.
Nancy Hutton, an associate professor at the medical school of Johns Hopkins University, has one of the hardest jobs in medicine: She specializes in pediatric hospice and palliative care. She sees the sickest children—the ones with severe neurological problems that cause profound developmental delays, or with cancers slowly ravaging their bodies, or severe organ failures.
The worst, though, is when she doesn’t know exactly what’s wrong with a child. “That's even harder,” she said. “When you can't give something a name.”
Sometimes her job is to keep her patients comfortable: helping them keep food down without vomiting or easing their physical pain.
But other times, the child is dying. In those cases, it falls on Hutton to counsel the family.
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.
Writing used to be a solitary profession. How did it become so interminably social?
Whether we’re behind the podium or awaiting our turn, numbing our bottoms on the chill of metal foldout chairs or trying to work some life into our terror-stricken tongues, we introverts feel the pain of the public performance. This is because there are requirements to being a writer. Other than being a writer, I mean. Firstly, there’s the need to become part of the writing “community”, which compels every writer who craves self respect and success to attend community events, help to organize them, buzz over them, and—despite blitzed nerves and staggering bowels—present and perform at them. We get through it. We bully ourselves into it. We dose ourselves with beta blockers. We drink. We become our own worst enemies for a night of validation and participation.