Government borrowing doesn't always crowd out private borrowing
Four years after the end of the presidency that must not be named, Republicans are no closer to figuring out what went wrong or what comes next.
Sure, the GOP has decided Bush spent too much, but there's been little other reckoning (outside of wonks like David Frum, Reihan Salam, and Ross Douthat). After all, it's hard to see what fiscal profligacy had to do with stagnant median incomes, rising healthcare and college costs, and a fragile financial system -- and harder still to see what remedies the Republicans have to offer. When it comes to policy, the GOP is stuck in 1980: lower taxes, less regulation, and more drilling for oil are always and everywhere the answer, no matter the question. (No, really).
Even Obama's reelection hasn't been enough to wake the Republicans from their Reagan von Winkle slumber. The GOP has chosen re-branding over rethinking. In other words, they think they have a messenger, not a message, problem -- and that's where Marco Rubio comes in. As Jonathan Chait of New York explains, Rubio offers the party an appealing, young salesman for its same, old policies, immigration aside. It was no accident his response to the State of the Union was so devoid of anything resembling new thinking. It was the point. Indeed, Rubio just rounded up the usual talking points, saying, among other things, that the government was a major cause of the housing bubble (it wasn't), and that Washington needs a balanced budget amendment (it very much does not). These are certainly cringe-worthy mistakes, but Rubio's biggest one is even more fundamental. He doesn't think the government can create jobs, except when it does.
Every dollar our government borrows is money that isn't being invested to create jobs. And the uncertainty created by the debt is one reason why many businesses aren't hiring.
Rubio has fallen victim to one of the classic economic blunders. It's called Say's Law, and it's not, in fact, a law. It's more like a guideline. The idea is that supply creates its own demand, which is true enough during booms, but not so during busts. The underlying logic here -- producing goods gives you the income to buy other goods -- makes sense, but only as long as you don't include money. Then everything falls apart. We'll return to why money is the root of all depressions in a second, but first, let's think about what it would mean if Say's Law were true. It would mean a world where demand can never lag supply; where unemployment is either voluntary or transient (when people switch jobs); and where government spending can never help the economy. After all, public borrowing has to come from somewhere, and a dollar the government borrows is a dollar the private sector doesn't. In other words, government borrowing "crowds out" private borrowing, pushing up interest rates as it competes for funds.
But this is terribly wrong. In the real world, people are out of work because they can't find work, not because they don't want it; the Great Recession has not been a Great Vacation. Supply doesn't always create its own demand, because demand for money might increase. In other words, people might hoard money. Now, "hoard" probably brings to mind people frantically stuffing money into mattresses, but it's a bit different than that today. It means households don't want to spend, and businesses don't want to invest, and banks don't want to lend. There's an excess of desired savings over desired investment -- or, as it's more commonly called, a recession. The Fed can make hoarding less appealing by cutting interest rates to inject money into the economy, but it can't do so now, at least not easily. Interest rates are already at zero, and unconventional money-printing hasn't been quite as effective. In short, the Fed hasn't been able to get us to stop hoarding right now.
That leaves two options: depression or deficits. In other words, either nobody borrows the unborrowed money, or the government does. If nobody does, the economy will contract by as much as isn't borrowed; if the government does, the economy will (at least) stabilize. As Matthew Yglesias of Slate points out, it's easy enough to tell the government is borrowing money that otherwise wouldn't be today, since interest rates have fallen despite big deficits. There has been no crowding out.
But it turns out we are actually all Keynesians now, even Marco Rubio. At least when it comes to military spending. (Though he's hardly alone with this cognitive dissonance). Here's what he told HispanicBusiness.com last September about the upcoming sequester cuts set to hit the Pentagon:
Thousands of jobs in defense-related enterprises have been lost already, with many more projected to go if the sequester crisis is not averted. These defense cuts hurt innovation, medical research and thousands of small businesses who subcontract for defense-related work.
Rubio is actually a pretty ambitious Keynesian! Not only does he think the government can create jobs, but he also thinks those jobs create other jobs -- that is, there's a multiplier on government spending.
A new anatomical understanding of how movement controls the body’s stress response system
Elite tennis players have an uncanny ability to clear their heads after making errors. They constantly move on and start fresh for the next point. They can’t afford to dwell on mistakes.
Peter Strick is not a professional tennis player. He’s a distinguished professor and chair of the department of neurobiology at the University of Pittsburgh Brain Institute. He’s the sort of person to dwell on mistakes, however small.
“My kids would tell me, dad, you ought to take up pilates. Do some yoga,” he said. “But I’d say, as far as I’m concerned, there's no scientific evidence that this is going to help me.”
Still, the meticulous skeptic espoused more of a tennis approach to dealing with stressful situations: Just teach yourself to move on. Of course there is evidence that ties practicing yoga to good health, but not the sort that convinced Strick. Studies show correlations between the two, but he needed a physiological mechanism to explain the relationship. Vague conjecture that yoga “decreases stress” wasn’t sufficient. How? Simply by distracting the mind?
City dwellers spend nearly every moment of every day awash in wi-fi signals. Homes, streets, businesses, and office buildings are constantly blasting wireless signals every which way for the benefit of nearby phones, tablets, laptops, wearables, and other connected paraphernalia.
When those devices connect to a router, they send requests for information—a weather forecast, the latest sports scores, a news article—and, in turn, receive that data, all over the air. As it communicates with the devices, the router is also gathering information about how its signals are traveling through the air, and whether they’re being disrupted by obstacles or interference. With that data, the router can make small adjustments to communicate more reliably with the devices it’s connected to.
No one will ever find a closer exoplanet—now the race is on to see if there is life on its surface.
One hundred and one years ago this October, a Scottish astronomer named Robert Innes pointed a camera at a grouping of stars near the Southern Cross, the defining feature of the night skies above his adopted Johannesburg. He was looking for a small companion to Alpha Centauri, our closest neighboring star system.
Hunched over glass photographic plates, Innes teased out a signal. Across five years of images, a small, faint star moved, wiggling on the sky. It shifted just as much as Alpha Centauri, suggesting its fate was intertwined with that binary system. But this small star was closer to the sun than Alpha. Innes suggested calling it Proxima Centauri, using the Latin word for “nearest.”
The dim red star soon entered the collective imagination, inspiring dreams of interstellar travel. Gravity has linked the star to the Alpha Centauri system, but our culture of science and storytelling has linked it to the solar system. Today, that link will grow stronger, when an international team of astronomers announces that this nearest of stars also hosts the closest exoplanet, one that might look a whole lot like Earth.
Do mission-driven organizations with tight budgets have any choice but to demand long, unpaid hours of their staffs?
Earlier this year, at the encouragement of President Obama, the Department of Labor finalized the most significant update to the federal rules on overtime in decades. The new rules will more than double the salary threshold for guaranteed overtime pay, from about $23,000 to $47,476. Once the rules go into effect this December, millions of employees who make less than that will be guaranteed overtime pay under the law when they work more than 40 hours a week.
Unsurprisingly, some business lobbies and conservatives disparaged the rule as unduly burdensome. But pushback also came from what might have been an unexpected source: a progressive nonprofit called the U.S. Public Interest Research Group (PIRG). “Doubling the minimum salary to $47,476 is especially unrealistic for non-profit, cause-oriented organizations,” U.S. PIRG said in a statement. “[T]o cover higher staffing costs forced upon us under the rule, we will be forced to hire fewer staff and limit the hours those staff can work—all while the well-funded special interests that we're up against will simply spend more.”
A recent scholarly paper on “microaggressions” uses them to chart the ascendance of a new moral code in American life.
Last fall at Oberlin College, a talk held as part of Latino Heritage Month was scheduled on the same evening that intramural soccer games were held. As a result, soccer players communicated by email about their respective plans. “Hey, that talk looks pretty great,” a white student wrote to a Hispanic student, “but on the off chance you aren’t going or would rather play futbol instead the club team wants to go!!”
Unbeknownst to the white student, the Hispanic student was offended by the email. And her response signals the rise of a new moral culture America.
When conflicts occur, sociologists Bradley Campbell and Jason Manning observe in an insightful new scholarly paper, aggrieved parties can respond in any number of ways. In honor cultures like the Old West or the street gangs of West Side Story, they might engage in a duel or physical fight. In dignity cultures, like the ones that prevailed in Western countries during the 19th and 20th Centuries, “insults might provoke offense, but they no longer have the same importance as a way of establishing or destroying a reputation for bravery,” they write. “When intolerable conflicts do arise, dignity cultures prescribe direct but non-violent actions.”
Finally, an explanation for Bitchy Resting Face Nation
Here’s something that has always puzzled me, growing up in the U.S. as a child of Russian parents. Whenever I or my friends were having our photos taken, we were told to say “cheese” and smile. But if my parents also happened to be in the photo, they were stone-faced. So were my Russian relatives, in their vacation photos. My parents’ high-school graduation pictures show them frolicking about in bellbottoms with their young classmates, looking absolutely crestfallen.
It’s not just photos: Russian women do not have to worry about being instructed by random men to “smile.” It is Bitchy Resting Face Nation, seemingly forever responding “um, I guess?” to any question the universe might pose.
This does not mean we are all unhappy! Quite the opposite: The virile ruler, the vodka, the endless mounds of sour cream—they are pleasing to some. It’s just that grinning without cause is not a skill Russians possess or feel compelled to cultivate. There’s even a Russian proverb that translates, roughly, to “laughing for no reason is a sign of stupidity.”
This much is obvious: Young people don’t buy homes like they used to.
In the aftermath of the recession and weak recovery, the share of 18- to- 34 year olds—a.k.a.: Millennials—who own a home has fallen to a 30-year low. For the first time on record going back more than a century, young people are now more likely to live with their parents than with a spouse.
It’s become en vogue to argue that young people’s turn against homeownership might be a good thing. After all, houses are not always dependable investment vehicles, a lesson the country learned all too painfully after the Great Recession. Without being anchored to any one city from their mid-20s and into their 30s, young people who don’t own are free to roam about the country in search of the best jobs. What’s more, given the copious advantages of a college degree in this economy, perhaps many young people could be commended for investing in their intelligence, professional networks, and abilities rather than devote that same income to a roof, floor, and furniture.
Donald Trump’s campaign manager says he’s actually winning, thanks to “undercover” supporters. Plenty of past presidential hopefuls have mistakenly believed the same.
A candidate or operative on a campaign that's losing has three options: despair; accept what’s happening and try to fix it; or deny. Right now, the Donald Trump campaign is exhibiting all three.
For despair, there are the staffers who are reportedly “suicidal” inside Trump Tower, and those who have simply quit. For acceptance, Trump himself has admitted he’s in trouble. But newly promoted campaign manager Kellyanne Conway is taking the denial route.
“Donald Trump performs consistently better in online polling where a human being is not talking to another human being about what he or she may do in the election,” she told the British outlet Channel 4. “It’s because it’s become socially desirable, if you’re a college educated person in the United States of America, to say that you’re against Donald Trump.”
A team of doctors across the world is helping the only two medical professionals left in one besieged town in Syria—via cell phone.
Earlier this year, a Syrian American orthopedic surgeon was shopping with his two toddlers at a Walmart in Grand Rapids, Michigan, when he heard the familiar ping of a notification from WhatsApp, the encrypted messaging service: A teenager had been shot in the leg and the bullet had passed straight through his tibia. The fractured bone punctured his skin like a spear. Although it was the surgeon’s day off, he took the call—as an expert in complex bone operations, this was his specialty.
But this was no ordinary case. His patient was over 6,000 miles away, awaiting care in a makeshift medical clinic in Madaya, a town in Syria some 28 miles from Damascus. The clinic is only a 45-minute drive from Damascus Hospital, but it might as well be on the other side of the world. Madaya, a rebel-held town controlled by the Islamist group Ahrar al-Sham, has been held under siege by Hezbollah, which is fighting on behalf of the Syrian government, since last July. Hezbollah won’t let anything in or out of the town; it was a Hezbollah fighter, locals say, who shot the teenager in the leg.