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.
With the candidate flailing in the polls, some on the right are wondering if a better version of the man wouldn’t be winning. But that kinder, gentler Trump would’ve lost in the primaries.
Last week, Peggy Noonan argued in the Wall Street Journal that an outsider like Donald Trump could’ve won handily this year, touting skepticism of free trade and immigration, if only he was more sane, or less erratic and prone to nasty insults:
Sane Donald Trump would have looked at a dubious, anxious and therefore standoffish Republican establishment and not insulted them, diminished them, done tweetstorms against them. Instead he would have said, “Come into my tent. It’s a new one, I admit, but it’s yuge and has gold faucets and there’s a place just for you. What do you need? That I be less excitable and dramatic? Done. That I not act, toward women, like a pig? Done, and I accept your critique. That I explain the moral and practical underpinnings of my stand on refugees from terror nations? I’d be happy to. My well-hidden secret is that I love everyone and hear the common rhythm of their beating hearts.” Sane Donald Trump would have given an anxious country more ease, not more anxiety. He would have demonstrated that he can govern himself. He would have suggested through his actions, while still being entertaining, funny and outsize, that yes, he understands the stakes and yes, since America is always claiming to be the leader of the world—We are No. 1!—a certain attendant gravity is required of one who’d be its leader.
A dustup between Megyn Kelly and Newt Gingrich shows why Donald Trump and the Republican Party are struggling to retain the support of women.
The 2016 presidential campaign kicked off in earnest with a clash between Megyn Kelly and Donald Trump over gender and conservatism at the first GOP debate, and now there’s another Kelly moment to bookend the race.
Newt Gingrich, a top Trump surrogate, was on Kelly’s Fox News show Tuesday night, jousting with her in a tense exchange stretching over nearly eight minutes. Things got off to a promising start when Gingrich declared that there were two “parallel universes”—one in which Trump is losing and one in which he is winning. (There is data, at least, to support the existence of the former universe.) After a skirmish over whether polls are accurate, Kelly suggested that Trump had been hurt by the video in which he boasts about sexually assaulting women and the nearly a dozen accusations lodged against him by women since. Gingrich was furious, embarking on a mansplaining riff in which he compared the press to Pravda and Izvestia for, in his view, overcovering the allegations.
Hillary Clinton and Donald Trump prepare for the final sprint to Election Day.
It’s Wednesday, October 26—the election is now less than two weeks away. Hillary Clinton holds a lead against Donald Trump, according to RealClearPolitics’ polling average. We’ll bring you the latest updates from the trail as events unfold. Also see our continuing coverage:
Trump’s greatest gift to the GOP may be the distraction he’s provided from other party meltdowns.
Even though 2016 appears to be the year of painful, public disqualification from higher office, you may be forgiven for not noticing the extraordinary implosion of New Jersey Governor Chris Christie. After all, the Trump surrogate and White House Transition chair has benefitted from his early endorsement of the Republican presidential nominee in unusual fashion: Christie’s power in the Grand Ole Party has decreased, rather than increased. The likelihood of a plum position in the Trump administration—Attorney General, perhaps, since Christie was spurned as the Republican running mate—is decidedly dim, what with the presently apocalyptic predictions about November 8.
Instead, Trump’s gift to Christie has been shadow: the top Republican’s national meltdown has obscured that of the one-time rising Republican star and sitting New Jersey governor. But make no mistake—Christie’s is a fall of epic proportions, precipitated by an unfathomably petty revenge plot. The contrast of the two, the top-heavy-ness of the fallout compared to the insignificance of the initial transgression, would be comic, were it not so tragic. Remember that in November of 2012, Governor Christie had a 72 percent approval rating. Today, it stands at 21 percent.
A century ago, widely circulated images and cartoons helped drive the debate about whether women should have the right to vote.
It seems almost farcical that the 2016 presidential campaign has become a referendum on misogyny at a moment when the United States is poised to elect its first woman president.
Not that this is surprising, exactly.
There’s a long tradition of politics clashing spectacularly with perceived gender norms around election time, and the stakes often seem highest when women are about to make history.
Today’s political dialogue—which often merely consists of opposing sides shouting over one another—echoes another contentious era in American politics, when women fought for the right to vote. Then and now, a mix of political tension and new-fangled publishing technology produced an environment ripe for creating and distributing political imagery. The meme-ification of women’s roles in society—in civic life and at home—has been central to an advocacy tradition that far precedes slogans like, “Life’s a bitch, don’t elect one,” or “A woman’s place is in the White House.”
Evangelicals at the school are tired of politics—and the party that gave them Trump.
LYNCHBURG, Va.—When Jerry Falwell founded Liberty University in 1971, he dreamed of transforming the United States. As heput it, “We’re turning out moral revolutionaries.”
Forty-five years later, the school formerly known as Liberty Baptist College has become a kingmaker and bellwether in the Republican Party. Politicians routinely make pit stops in Lynchburg; Ted Cruz even launched his ill-fated presidential campaign from Liberty’s campus in March of 2015.
That’s why it was such a big deal when, two weeks ago, a group of Liberty students put out a letter explaining why they’re standing against the Republican presidential nominee. Jerry Falwell Jr., who has run the school since his father died in 2007, announced his support for Donald Trump back in January, and he has since spoken on the candidate’s behalf in interviews and at events. “We are Liberty students who are disappointed with President Falwell’s endorsement and are tired of being associated with one of the worst presidential candidates in American history,” the students wrote. “Donald Trump does not represent our values and we want nothing to do with him.”
Services like Tinder and Hinge are no longer shiny new toys, and some users are starting to find them more frustrating than fun.
“Apocalypse” seems like a bit much. I thought that last fall when Vanity Fair titled Nancy Jo Sales’s article on dating apps “Tinder and the Dawn of the ‘Dating Apocalypse’” and I thought it again this month when Hinge, another dating app, advertised its relaunch with a site called “thedatingapocalypse.com,” borrowing the phrase from Sales’s article, which apparently caused the company shame and was partially responsible for their effort to become, as they put it, a “relationship app.”
Despite the difficulties of modern dating, if there is an imminent apocalypse, I believe it will be spurred by something else. I don’t believe technology has distracted us from real human connection. I don’t believe hookup culture has infected our brains and turned us into soulless sex-hungry swipe monsters. And yet. It doesn’t do to pretend that dating in the app era hasn’t changed.
In the 1970s, a new wave of post-Watergate liberals stopped fighting monopoly power. The result is an increasingly dangerous political system.
It was January 1975, and the Watergate Babies had arrived in Washington looking for blood. The Watergate Babies—as the recently elected Democratic congressmen were known—were young, idealistic liberals who had been swept into office on a promise to clean up government, end the war in Vietnam, and rid the nation’s capital of the kind of corruption and dirty politics the Nixon White House had wrought. Richard Nixon himself had resigned just a few months earlier in August. But the Watergate Babies didn’t just campaign against Nixon; they took on the Democratic establishment, too. Newly elected Representative George Miller of California, then just 29 years old, announced, “We came here to take the Bastille.”
A society that glorifies metrics leaves little room for human imperfections.
A century ago, a man named Frederick Winslow Taylor changed the way workers work. In his book The Principles of Scientific Management, Taylor made the case that companies needed to be pragmatic and methodical in their efforts to boost productivity. By observing employees’ performance and whittling down the time and effort involved in doing each task, he argued, management could ensure that their workers shoveled ore, inspected bicycle bearings, and did other sorts of “crude and elementary” work as efficiently as possible. “Soldiering”—a common term in the day for the manual laborer’s loafing—would no longer be possible under the rigors of the new system, Taylor wrote.
The principles of data-driven planning first laid out by Taylor—whom the management guru Peter Drucker once called the “Isaac Newton … of the science of work”—have transformed the modern workplace, as managers have followed his approach of assessing and adopting new processes that squeeze greater amounts of productive labor from their employees. And as the metrics have become more precise in their detail, their focus has shifted beyond the tasks themselves and onto the workers doing those tasks, evaluating a broad range of their qualities (including their personality traits) and tying corporate carrots and sticks—hires, promotions, terminations—to those ratings.
Biology textbooks tell us that lichens are alliances between two organisms—a fungus and an alga. They are wrong.
In 1995, if you had told Toby Spribille that he’d eventually overthrow a scientific idea that’s been the stuff of textbooks for 150 years, he would have laughed at you. Back then, his life seemed constrained to a very different path. He was raised in a Montana trailer park, and home-schooled by what he now describes as a “fundamentalist cult.” At a young age, he fell in love with science, but had no way of feeding that love. He longed to break away from his roots and get a proper education.
At 19, he got a job at a local forestry service. Within a few years, he had earned enough to leave home. His meager savings and non-existent grades meant that no American university would take him, so Spribille looked to Europe.