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.
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?
The Vermont senator’s revolutionary zeal has met its moment.
There’s no way this man could be president, right? Just look at him: rumpled and scowling, bald pate topped by an entropic nimbus of white hair. Just listen to him: ranting, in his gravelly Brooklyn accent, about socialism. Socialism!
And yet here we are: In the biggest surprise of the race for the Democratic presidential nomination, this thoroughly implausible man, Bernie Sanders, is a sensation.
He is drawing enormous crowds—11,000 in Phoenix, 8,000 in Dallas, 2,500 in Council Bluffs, Iowa—the largest turnout of any candidate from any party in the first-to-vote primary state. He has raised $15 million in mostly small donations, to Hillary Clinton’s $45 million—and unlike her, he did it without holding a single fundraiser. Shocking the political establishment, it is Sanders—not Martin O’Malley, the fresh-faced former two-term governor of Maryland; not Joe Biden, the sitting vice president—to whom discontented Democratic voters looking for an alternative to Clinton have turned.
During the multi-country press tour for Mission Impossible: Rogue Nation, not even Jon Stewart has dared ask Tom Cruise about Scientology.
During the media blitz for Mission Impossible: Rogue Nation over the past two weeks, Tom Cruise has seemingly been everywhere. In London, he participated in a live interview at the British Film Institute with the presenter Alex Zane, the movie’s director, Christopher McQuarrie, and a handful of his fellow cast members. In New York, he faced off with Jimmy Fallon in a lip-sync battle on The Tonight Show and attended the Monday night premiere in Times Square. And, on Tuesday afternoon, the actor recorded an appearance on The Daily Show With Jon Stewart, where he discussed his exercise regime, the importance of a healthy diet, and how he still has all his own hair at 53.
Stewart, who during his career has won two Peabody Awards for public service and the Orwell Award for “distinguished contribution to honesty and clarity in public language,” represented the most challenging interviewer Cruise has faced on the tour, during a challenging year for the actor. In April, HBO broadcast Alex Gibney’s documentary Going Clear, a film based on the book of the same title by Lawrence Wright exploring the Church of Scientology, of which Cruise is a high-profile member. The movie alleges, among other things, that the actor personally profited from slave labor (church members who were paid 40 cents an hour to outfit the star’s airplane hangar and motorcycle), and that his former girlfriend, the actress Nazanin Boniadi, was punished by the Church by being forced to do menial work after telling a friend about her relationship troubles with Cruise. For Cruise “not to address the allegations of abuse,” Gibney said in January, “seems to me palpably irresponsible.” But in The Daily Show interview, as with all of Cruise’s other appearances, Scientology wasn’t mentioned.
On “Back to Back Freestyle” and “Charged Up,” the rapper forgoes the high road in his beef with Meek Mill.
Once upon a time, Drake made a vow of silence. “Diss me, you'll never hear a reply for it,” he said on “Successful,” the 2009 song in which the Toronto rapper correctly predicted he’d soon be superwealthy. This week, Drake has broken his vow twice over, a fact about which he seems conflicted. “When I look back,” he says on the new track “Back to Back Freestyle,” “I might be mad that I gave this attention.”
“This” is the beef started by the 28-year-old Philadelphia rapper Meek Mill, who recently tweeted accusations that Drake doesn’t write his own material. Depending on who you talk to or how you look at it, this is either a big deal or no deal at all. On Instagram, Lupe Fiasco had a good take: “Ghostwriting, or borrowing lines, or taking suggestions from the room has always been in rap and will always be in rap. It is nothing to go crazy over or be offended about unless you are someone who postures him or herself on the importance of authenticity and tries to portray that quality to your fans or the public at large. Then we might have a problem.”
After the video contradicted his account, a campus cop in Cincinnati is charged in the fatal shooting of an unarmed black motorist.
On July 19, 2015, a 43-year-old Cincinnati man named Samuel DuBose was pulled over by a University of Cincinnati police officer, Ray Tensing. Tensing was white. Dubose was black. His car was stopped for missing its front license plate.
Minutes later, Tensing shot DuBose in the head, killing him.
What happened between getting pulled over and DuBose’s death?
After the two men briefly exchange words, DuBose's vehicle is seen to roll forward. Tensing then shoots him in the head. Tensing was indicted Wednesday on charges of murder and voluntary manslaughter.
“This is without question a murder,” said Joe Deters, the prosecutor for Hamilton County, Ohio, at a news conference Wednesday. “He didn’t do anything violent toward the officer. He wasn’t dragging him. And [Tensing] pulled out his gun and shot him in the head.”
A newly discovered artifact buried with one of Jamestown’s most prominent leaders suggests he could have been a crypto-Catholic.
After 400 years in the Virginia dirt, the box came out of the ground looking like it had been plucked from the ocean. A tiny silver brick, now encrusted with a green patina and rough as sandpaper. Buried beneath it was a human skeleton. The remains would later be identified as those of Captain Gabriel Archer, one of the most prominent leaders at Jamestown, the first permanent English colony in America. But it was the box, which appeared to be an ancient Catholic reliquary, that had archaeologists bewildered and astonished.
“One of the major surprises was the discovery of this mysterious small silver box,” said James Horn, the president of the Jamestown Rediscovery Foundation. “I have to say, we’re still trying to figure this out. You have the very strange situation of a Catholic reliquary being found with the leader of the first Protestant church in the country.”
Educators seldom have enough time to do their business. What’s that doing to the state of learning?
It’s common knowledge that teachers today are stressed, that they feel underappreciated and disrespected, and disillusioned. It’s no wonder they’re ditching the classroom at such high rates—to the point where states from Indiana to Arizona to Kansas are dealing with teacher shortages. Meanwhile, the number of American students who go into teaching is steadily dropping.
A recent survey conducted jointly by the American Federation of Teachers and Badass Teachers Association asked educators about the quality of their worklife, and it got some pretty harrowing feedback. Just 15 percent of the 30,000 respondents, for example, strongly agreed that they’re enthusiastic about the profession. Compare that to the roughly 90 percent percent who strongly agreed that they were enthusiastic about it when they started their career, and it’s clear that something has changed about schools that’s pushing them away. Roughly three in four respondents said they “often” feel stressed by their jobs.
A new video imagines what the world would look like.
At the end of the summer, teachers across the country will return to work. They’ll clean off old desks in poorly lit classrooms, filled with supplies paid for with their own paychecks. Soon after, kids will arrive, rambunctious from weeks of break but happy to see friends again.
Somehow, I’ll bet those teachers will show their kids this video.
The comedians Keegan-Michael Key and Jordan Peele have produced a pitch-perfect parody of ESPN’s Sports Center, with a twist—it’s not about professional athletics, but about professional educators. The plea that Americans care more about sports than civics is a common one, as Aisha Harris writes at Slate, yet Key and Peele have managed to make it seem fresh through their sheer enthusiasm and attention to detail.
An off-duty Medford, Massachusetts, cop threatened a motorist during a traffic stop. His colleagues seemed unperturbed by his behavior.
Three years ago in Medford, Massachusetts, narcotics detective Stephen LeBert calmly told the brother of a man he was arresting, “He’s selling drugs illegally. What they should do is just take him up to the railroad tracks and tell him to lay down.” He knew he was being recorded as he made the comment, as moments earlier, the footage shows him licking his finger and wiping saliva on the citizen’s lens. Medford Police Chief Leo Sacco says that he was counseled after the incident.
After watching that video, it comes as no great surprise that Detective LeBert was suspended earlier this week for another instance of misbehavior recorded by a citizen:
The footage, captured by the dashboard camera on a motorist’s vehicle, begins shortly after the driver got confused at a roundabout in an unfamiliar neighborhood and wound up briefly driving on the wrong side of the road (an error for which he would repeatedly apologize). At first, the motorist is terrified and starts to flee because Detective LeBert, who is driving an unmarked pickup truck and plainclothes, does not identify himself as a police officer, even as he is upset that the motorist doesn’t defer to him. “I’ll put a hole right through your fucking head,’’ LeBert says. “Pull your car over. I’ll put a hole right in your fucking head. I’ll put a hole right through your head.’’ The motorist begins to cooperate as soon as a badge is produced.
Why a pro-life Twitter hashtag—like the larger campaign to defund Planned Parenthood—is terrible for public health
Following the release a series of pro-life sting videos targeting Planned Parenthood, Republican senators are threatening to defund the family-planning provider. A vote on their bill to strip Planned Parenthood of federal funding—which accounts for 40 percent of the organization’s budget—could come as early as Monday.
On Twitter, pro-life advocates are trying to help it along, popularizing the hashtag #UnplannedParenthood on Wednesday. Many of the tweets come from people who purport to have been, or have had, accidental children.
My mom was young and single. The church took her in and helped her choose life. And here I am. #UnplannedParenthood