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 challenge based on four words of the law amounts to little more than politics dressed up as a legal argument.
The Supreme Court is about to decide another blockbuster case arising under the Affordable Care Act (ACA). The specific issue is whether federal-tax subsidies are available to people who purchase health insurance from exchanges operated by the federal government or instead whether such subsidies are available only from exchanges established by the states. A decision in favor of the plaintiffs in King v. Burwell would most likely cripple the ACA in over thirty states and deprive millions of people of health insurance.
That the Supreme Court even agreed to hear the case is the result of an improbable conjunction of events. Two committed opponents of the ACA seized upon four words of the law out of almost 1000 pages, and through their persistent and energetic work, created a powerful soundbite that appealed to die-hard opponents of the ACA. They then took that sound bite and dressed it up in highly technical arguments about statutory interpretation that might well change how healthcare is paid for in the United States. But the soundbite is inaccurate, and the technical window dressing shouldn’t obscure the fact that the argument is based on a faulty reading of the text of the entire law as well as a misleading account of how and why the law was passed. At bottom, King v. Burwell is a political challenge to the ACA dressed up in legal garb.
Some spoiler-y speculation on the final three episodes
With only three episodes left to go, Game of Thrones looks as though it once again has a lot of ground to cover before wrapping up a season. And so, for the curious and impatient among you, I’ll do my best to offer some quasi-informed speculation about what we might reasonably expect in these final weeks.
Note: I haven’t seen any of the remaining episodes, but I have read the books. The first five items below are spoiler-y, but the predictions in them do not derive from the George R. R. Martin novels. Rather, they’re guesswork based on what’s already happened on the show and on tidbits scattered across the web: a behind-the-scenes photo here, a close-read of a trailer there. (They could all, of course, turn out to be completely wrong.) The last four items, however, are based at least in part on events that take place in A Feast for Crows and A Dance with Dragons, so non-book-readers may want to skip them. And obviously anyone, book-reader or not, who’d prefer to go into these final episodes without preconceptions—who doesn’t want to know at least some of what will (probably) happen—should stop reading now.
People look to Amy Schumer and her fellow jokers not just to make fun of the world, but to make sense of it. And maybe even to help fix it.
This week, in a much-anticipated sketch on her Comedy Central show, Amy Schumer staged a trial of Bill Cosby in “the court of public opinion.” Schumer—her character, at any rate—played the role of the defense. “Let’s remind ourselves what’s at stake here,” she argued to the jury. “If convicted, the next time you put on a rerun of The Cosby Show you may wince a little. Might feel a little pang. And none of us deserve that. We don’t deserve to feel that pang.”
Her conclusion? “We deserve to dance like no one’s watching, and watch like no one’s raping.”
Ooof. This is the kind of thing that gets Inside Amy Schumer referred to as “the most feminist show on television,” and her act in general called, in a phrase that reveals as much about her craft as about Schumer herself, “comedy with a message.” But while Schumer’s work is operating at the vanguard of popular comedy, it’s also in line with the work being done by her fellow performers: jokes that tend to treat humor not just as an end in itself, but as a vehicle for making a point. Watch like no one’s raping.
We're all going to die and we all know it. This can be both a burden and a blessing.
In the heart of every parent lives the tightly coiled nightmare that his child will die. It might spring at logical times—when a toddler runs into the street, say—or it might sneak up in quieter moments. The fear is a helpful evolutionary motivation for parents to protect their children, but it's haunting nonetheless.
The ancient Stoic philosopher Epictetus advised parents to indulge that fear. “What harm is it, just when you are kissing your little child, to say: Tomorrow you will die?”he wrote in his Discourses.
Some might say Epictetus was an asshole. William Irvine thinks he was on to something.
“The Stoics had the insight that the prospect of death can actually make our lives much happier than they would otherwise be,” he says. “You’re supposed to allow yourself to have a flickering thought that someday you’re going to die, and someday the people you love are going to die. I’ve tried it, and it’s incredibly powerful. Well, I am a 21st-century practicing Stoic.”
To be far from home in a major, diverse metropolis such as New York or Los Angeles is one thing. But those who have landed in small cities across the Midwest face a whole other sort of isolation.
CINCINNATI—When they were deciding where to settle down and raise a family, Lorena Mora-Mowry, a lawyer from Venezuela, and her husband Paul, a mechanical engineer from California, performed extensive research. Based on reports they read in magazines and brochures, they decided that Cincinnati, with its low cost of living, access to arts and the outdoors, and strong schools, would be a good place to live. They moved here in 1995.
It was a difficult transition from (relatively) open-minded, Latino-heavy Southern California to Cincinnati, where just about everybody was either white or black, and where immigrants were a rarity. Mora-Mowry tried to speak to people in stores, but they could never understand her accent, and she hated the long, cold winters.
Caves and tunnels have always been part of human life.
Caves and tunnels have always been part of human life. We've grown more adept at shaping these underground shelters and passages over the millennia, and today we dig for hundreds of reasons. We excavate to find both literal and cultural treasures, digging mines and unearthing archaeological discoveries. We use caverns for stable storage, for entertainment, and for an effective shelter from natural and man-made disasters. And as the planet's surface becomes ever more crowded, and national borders are closed, tunnels provide pathways for our vehicles and for smugglers of every kind. Collected below are more recent subterranean scenes from around the world.
The danger of uploading one’s consciousness to a computer without a suicide switch
Imagine a supercomputer so advanced that it could hold the contents of a human brain. The Google engineer Ray Kurzweil famously believes that this will be possible by 2045. Organized technologists are seeking to transfer human personalities to non-biological carriers, “extending life, including to the point of immortality.” My gut says that they’ll never get there. But say I’m wrong. Were it possible, would you upload the contents of your brain to a computer before death, extending your conscious moments on this earth indefinitely? Or would you die as your ancestors did, passing into nothingness or an unknown beyond human comprehension?
The promise of a radically extended lifespan, or even immortality, would tempt many. But it seems to me that they’d be risking something very much like hell on earth.
Can a political system be democratically legitimate without being democratic?
The flaws in China’s political system are obvious. The government doesn’t even make a pretense of holding national elections and punishes those who openly call for multiparty rule. The press is heavily censored and the Internet is blocked. Top leaders are unconstrained by the rule of law. Even more worrisome, repression has been ramped up since Xi Jinping took power in 2012, suggesting that the regime is increasingly worried about its legitimacy.
Some China experts—most recently David Shambaugh of George Washington University—interpret these ominous signs as evidence that the Chinese political system is on the verge of collapse. But such an outcome is highly unlikely in the near future. The Communist Party is firmly in power, its top leader is popular, and no political alternative currently claims widespread support. And what would happen if the Party’s power did indeed crumble? The most likely result, in my view, would be rule by a populist strongman backed by elements of the country’s security and military forces. The new ruler might seek to buttress his legitimacy by launching military adventures abroad. President Xi would look tame by comparison.
The former speaker of the House is charged with lying to federal agents and evading financial reporting requirements in what appears to be a case of blackmail.
Former House Speaker Dennis Hastert has been indicted on charges of lying to FBI agents and evading federal financial-reporting requirements.
Hastert, an Illinois Republican, was speaker from 1999 to 2007. BuzzFeed’s John Stanton, who first reported on the indictment, notes that there were several high-profile congressional scandals in those years. Illinois is also a notorious hotbed for political corruption, as Roland Burris, Rod Blagojevich, George Ryan, and Jesse Jackson Jr. can attest.
But reading between the lines of the indictment against Hastert suggests a darker story than political corruption. In or about 2010, according to the indictment, Hastert—a former high-school teacher and coach—met with an unnamed individual from Yorkville, Hastert’s hometown. They “discussed past misconduct by defendant against Individual A that had occurred years earlier.” In effect, Hastert fell victim to blackmail, the indictment alleges: He “agreed to provide Individual A $3.5 million in order to compensate for and conceal his prior misconduct against Individual A.” (Since leaving the House, Hastert has become a highly paid lobbyist.)
There are two types of people in the world: those with hundreds of unread messages, and those who can’t relax until their inboxes are cleared out.
For some, it’s a spider. For others, it’s an unexpected run-in with an ex. But for me, discomfort is a dot with a number in it: 1,328 unread-message notifications? I just can’t fathom how anyone lives like that.
How is it that some people remain calm as unread messages trickle into their inboxes and then roost there unattended, while others can’t sit still knowing that there are bolded-black emails and red-dotted Slack messages? I may operate toward the extreme end of compulsive notification-eliminators, but surveys suggest I’m not alone: One 2012 study found that 70 percent of work emails were attended to within six seconds of their arrival.
This has led me to a theory that there are two types of emailers in the world: Those who can comfortably ignore unread notifications, and those who feel the need to take action immediately.