Elections are about choices, and 2012 looks to be a big one.
It's not just a philosophical debate over the proper size and role of government. It's an economic one about stimulus versus austerity. President Obama thinks we need to make smart investments -- just don't call it stimulus! -- to get the economy moving again. Governor Romney thinks we need a smarter tax code -- just don't ask what deductions he'd eliminate -- and less spending to get the economy moving again.
In other words, Romney seems to subscribe to the doctrine of "expansionary austerity" -- that prosperity is just a few spending cuts around the corner. It's an idea that has failed rather spectacularly in Europe the past few years. And it's one that even the orthodox International Monetary Fund has warned against, at least for now.
But that seems to be news to Mitt Romney's top economic advisers. Glenn Hubbard, a professor at Columbia University and a veteran of the Bush administration, recently took to the pages of the Financial Times to apparently argue that trimming the deficit will spur growth. Emphasis on apparently. Here's what Hubbard said:
Gradual fiscal consolidation may also be stimulative in the short term. Research by Hoover Institution economists concludes that reducing federal spending relative to GDP to pre-financial crisis levels over a decade would increase GDP in the short and long term. This outcome reflects lower future tax rates and the boost from lower interest rates to investment and net exports.
Plentyof people considered this a loud (and perhaps wise) defense of austerity. It's not.
How would less government spending translate into more spending overall? The question answers itself: If the other parts of the economy subsequently spend more. Those other parts of the economy are the private sector and net exports. And what would make them spend more? Answer: Lower interest rates. When borrowing costs are lower, the private sector is --tautology alert -- more willing to borrow and invest. Think about it this way. If the cost of capital is low, the return on capital doesn't have to be that high for companies to want to invest. Lower interest rates also tend to mean a weaker dollar -- and a weaker dollar is good for trade.
That leaves one big question. Why would interest rates fall when the government spends less? There are two stories here. First, there's less "crowding out". When the government competes with the private sector to borrow money, the private sector ends up paying more to borrow. Less competition from the government means paying less to borrow. And second, the Federal Reserve might be more likely to do more if Congress does less. There are plenty of examples of this kind of austerity working -- like the United States in the 1990s.
But there's a problem. Interest rates have neverbeenlower. Cutting spending won't lower interest rates any further. For one, there isn't any crowding out now. The private sector would rather sit on cash than borrow. For another, the Fed isn't likely to do all that much more given its current paralysis. Austerity will shrink the economy in the world we live in now.
Hubbard is smart. He knows that austerity won't work without lower interest rates. And he knows that interest rates couldn't be much lower than they already are. In other words, he knows that cutting the deficit too much too soon would be a very bad idea today.
Don't let the rhetoric confuse you. Romney might say he's an austerity candidate, but his top economic advisors quietly admit that this might not be wise.
It's almost like Romney might flip flop on this if he wins.
New presidents often err by either trying to impose their will on Congress or being too hands-off. Trump is on course to commit both errors on his top two legislative priorities.
Mucking up an interaction with Congress is a rite of passage for every new president—usually on health care, and especially for those with limited experience in Washington.
The twin pitfalls for a new president are the same ones the great Tommy Lasorda described in his approach to baseball: “I believe managing is like holding a dove in your hand. If you hold it too tightly you kill it, but if you hold it too loosely, you lose it.” A president can try to push his vision aggressively on Congress, risking backlash from members—let’s call that the Bill Clinton approach. Alternatively, he can try to hang back and let Congress act, risking the chance that without presidential leadership, members will come up with something he doesn’t like, or even worse that they can’t pass. We’ll call that the Barack Obama approach.
The MIT economist Peter Temin argues that economic inequality results in two distinct classes. And only one of them has any power.
A lot of factors have contributed to American inequality: slavery, economic policy, technological change, the power of lobbying, globalization, and so on. In their wake, what’s left?
That’s the question at the heart of a new book, The Vanishing Middle Class: Prejudice and Power in a Dual Economy, by Peter Temin, an economist from MIT. Temin argues that, following decades of growing inequality, America is now left with what is more or less a two-class system: One small, predominantly white upper class that wields a disproportionate share of money, power, and political influence and a much larger, minority-heavy (but still mostly white) lower class that is all too frequently subject to the first group’s whims.
In 1985, Neil Postman observed an America imprisoned by its own need for amusement. He was, it turns out, extremely prescient.
Earlier this month, thousands of protesters gathered at Washington’s National Mall to advocate for an assortment of causes: action against global climate change, federal funding for scientific research, a generally empirical approach to the world and its mysteries. The protesters at the March for Science, as scientists are wont to do, followed what has become one of the established formulas for such an event, holding clever signs, wearing cheeky outfits, and attempting, overall, to carnivalize their anger. “Make the Barrier Reef Great Again,” read one sign at the March. “This is my sine,” read another. “I KNEW TO WEAR THIS,” one woman had written on the poncho she wore that soggy Saturday, “BECAUSE SCIENCE PREDICTED THE RAIN.” Three protesters, sporting sensible footwear and matching Tyrannosaurus rex costumes, waved poster boards bearing messages like “Jurassick of this shit.”
Will you pay more for those shoes before 7 p.m.? Would the price tag be different if you lived in the suburbs? Standard prices and simple discounts are giving way to far more exotic strategies, designed to extract every last dollar from the consumer.
As Christmas approached in 2015, the price of pumpkin-pie spice went wild. It didn’t soar, as an economics textbook might suggest. Nor did it crash. It just started vibrating between two quantum states. Amazon’s price for a one-ounce jar was either $4.49 or $8.99, depending on when you looked. Nearly a year later, as Thanksgiving 2016 approached, the price again began whipsawing between two different points, this time $3.36 and $4.69.
We live in the age of the variable airfare, the surge-priced ride, the pay-what-you-want Radiohead album, and other novel price developments. But what was this? Some weird computer glitch? More like a deliberate glitch, it seems. “It’s most likely a strategy to get more data and test the right price,” Guru Hariharan explained, after I had sketched the pattern on a whiteboard.
“Somewhere at Google there is a database containing 25 million books and nobody is allowed to read them.”
You were going to get one-click access to the full text of nearly every book that’s ever been published. Books still in print you’d have to pay for, but everything else—a collection slated to grow larger than the holdings at the Library of Congress, Harvard, the University of Michigan, at any of the great national libraries of Europe—would have been available for free at terminals that were going to be placed in every local library that wanted one.
At the terminal you were going to be able to search tens of millions of books and read every page of any book you found. You’d be able to highlight passages and make annotations and share them; for the first time, you’d be able to pinpoint an idea somewhere inside the vastness of the printed record, and send somebody straight to it with a link. Books would become as instantly available, searchable, copy-pasteable—as alive in the digital world—as web pages.
Protesters entered parliament after lawmakers elected an ethnic-Albanian politician as speaker.
Protesters entered the parliament in the former Yugoslav republic of Macedonia following the election of an ethnic-Albanian lawmaker as speaker. Reuters described the protesters as nationalists angered by Talat Xhaferi’s election as the country’s first ethnic-Albanian speaker.
Video from the scene showed Zoran Zaev, the leader of the Social Democrats (SDSM), and other lawmakers bleeding after a fistfight. His party allied with ethnic Albanians to elect Xhaferi.
Here’s video of what happened:
Video of masked men breaking into Macedonia's parliament. Demonstrators now occupying chamber after the opposition elected a new speaker. https://t.co/QmJ75lJARe
Macedonia declared independence following the breakup of Yugoslavia in the 1990s. The country was wracked by unrest in the early 2000s following an armed insurrection by ethnic Albanians, who make up about a quarter of the population. A peace agreement, brokered by NATO, ended with the government agreeing to provide more rights to the minority and ethnic Albanians saying they will abandon their goal of a separate state. But tensions have lingered since then. Macedonia hasn’t had a functioning government since 2015 when the government led by the nationalists of the VMRO-DPMNE were brought down by a wiretapping scandal. The country has been in a political stalemate since last December’s parliamentary elections. VMRO DPMNE, the governing center-right party, won 51 of the 120 seats while the SDSM won 49. The rest went to ethnic Albanian parties. President Gjorge Ivanov, who is from the VMRO DPMNE, asked Nikola Gruevski, his fellow party member and outgoing prime minister, to form a new government, but Gruevski was unable to secure the 61 lawmakers needed to do so. The ethnic Albanian parties instead allied themselves with the SDSM.
Princeton freshman Tal Fortgang was right that "privilege" is a problem, but not about why.
Poor Tal Fortgang. (Well, perhaps “poor” isn’t the right word.) Not long ago, the Princeton freshman’s white male privilege was known only to those in his life. Then he published an essay about this privilege in a conservative student publication, arguing that because his ancestors had struggled, he personally doesn’t benefit from unearned advantage. If he’s not privileged, no one should be asking him to check his privilege, right? After all, some of his advantage was earned; he just doesn’t happen to be the one who earned it.
Because “privilege” is clickbait, Fortgang’s piece made the rounds, culminating in the New York Times interviewing his classmates about his privilege and whether he had, in fact, checked it. The consensus is that he did not. Fortgang’s privilege has now been checked not only by his classmates and Facebook friends but by the entire Internet.
The author of a new book explains the science behind the cringeworthy feeling—and how to overcome it.
It’s when a fist bump unwittingly meets a high-five. It’s when Ben Carson tries, unsuccessfully, to walk onto a stage. It’s trying to introduce an acquaintance to someone else at a party and then realizing you don’t actually remember their name. It’s awkward, and like so many other things, you know it when you see it.
We all experience awkwardness, of course, but some people seem chronically susceptible to it. In his new book, the appropriately titled Awkward, the writer and psychologist Ty Tashiro explores why certain people seem more prone to these cringe-inducing moments, and what they can do about it. I recently interviewed Tashiro; an edited transcript of our conversation follows.
Olga Khazan: Do you consider yourself awkward? What are some of the awkward things you do or used to do?
The most comprehensive review of evidence on health consequences of caffeine use has just been published.
That’s what a Los Angeles news anchor said earlier this month, in response to the announcement that “the world’s strongest coffee” is now available in the United States. The product is called Black Insomnia, a playful nod to apotentially debilitating medical condition that can be caused by the product.
The anchor’s tone took a dramatic decrescendo as she read from the teleprompter: “The site Caffeine Informer says Black Insomnia is one of the ‘most dangerous caffeinated products.’” Her smile faded. “Oh. I’ll have to have this one sparingly.”
Black Insomnia is actually in competition for the title of “world’s strongest coffee.” Another, similar purveyor sells coffee grounds called Death Wish. They come in a black sack with a skull and cross bones. On its Amazon page, Death Wish claims to be “the world’s strongest coffee” and promises its “perfect dark roast will make you the hero of the house or office.”
Recent border battles have once again redrawn the lines of the metro area.
On the Saturday before Election Day last November, Jason Lary, a former insurance executive, crouched on a rough patch of grass at the center of a busy intersection 20 miles outside of Atlanta in DeKalb County. Lary was holding a hammer, and he tapped carefully on the thin wire base of a campaign sign. “My hand is like Fred Flintstone’s right now because I banged my hand in the night,” he said, noting his latest sign-related injury. This hazard, though, was worthwhile: “If you don’t start [the sign] with your hand, it will bend. It takes longer—guys are 10 times faster than I am. But my sign’s still gonna be up.”
This was a non-trivial advantage for Lary, who for the past month had begun most mornings with a kind of ground-game whack-a-mole. He would put up signs under the cover of night, only to have his opponents dislodge them by hand or, when that failed, run over them with their cars. Nevertheless, Lary was feeling good. “My opposition? Worn down,” he told me. “They don’t even have any more signs. And I kept a stash, knowing this time was coming. This is not my first picnic with nonsense.”