Repackaging the Bush agenda, just with austerity, is not the path to prosperity.
Romney economic adviser Glenn Hubbard apparently has a very short memory.
In a Wall Street Journalop-ed making the case for Romney's economic agenda, Hubbard presents a strikingly ahistorical account of the past few years -- not to mention sprinkling in one big questionable assumption. Let's take a tour of some of the lowlights.
"We are currently in the most anemic economic recovery in the memory of most Americans."
Does the memory of most Americans go back a decade? If it does, then they can remember a more anemic recovery -- at least when it comes to jobs. The post-2001 recovery had the slowest job growth of any postwar recovery. It also had the slowest private sector growth of any postwar recovery. It's puzzling that Hubbard doesn't remember this, considering that he was the chair of President George W. Bush's Council of Economic Advisors from 2001 to 2003.
Now, the economy did grow faster then than it has now. But that's because the government grew as much as it did then; it's shrinking now. Really. So why does this weak recovery feel weaker than that weak recovery? Well, the tech bubble recession was much milder than the housing bubble recession -- in other words, we're in a deeper hole this time around. All else equal, we would expect a better recovery from a worse recession, but all else is not equal. As Harvard professor Kenneth Rogoff has shown with over 800 years of data, recoveries from financial crises are long, slow slogs. It's doubtful that recycling Bush-era policies will get us out of this ditch faster. It didn't ten years ago.
"[U]ncertainty over policy--particularly over tax and regulatory policy--slowed the recovery and limited job creation. One recent study by Scott Baker and Nicholas Bloom of Stanford University and Steven Davis of the University of Chicago found that this uncertainty reduced GDP by 1.4% in 2011 alone."
Well, that certainly sounds bad. When did all of this uncertainty peak? Let's look at the paper. August of 2011. Hmmm. What happened in August of 2011? Oh, that's right. The debt ceiling debacle. Why don't we let the authors speak for themselves. Here's why they said uncertainty was so elevated in 2011:
A series of later developments and policy fights - including the debt- ceiling dispute between Republicans and Democrats in the summer of 2011, and ongoing banking and sovereign debt crises in the Eurozone area - kept economic policy uncertainty at very high levels throughout 2011.
In other words, a debt crisis the Republicans manufactured and a debt crisis the Europeans manufactured drove uncertainty in 2011. Granted, tax uncertainty has been bad -- but so has monetary policy uncertainty. And have you noticed what we haven't talked about yet? The authors conclude that healthcare and financial regulation uncertainty were "much less pronounced" than all of the above questions.
And according to the Congressional Budget Office, the large deficits codified in the president's budget would reduce GDP during 2018-2022 by between 0.5% and 2.2% compared to what would occur under current law. [...]
The governor's plan would reduce federal spending as a share of GDP to 20%--its pre-crisis average--by 2016. This would dramatically reduce policy uncertainty over the need for future tax increases, thus increasing business and consumer confidence. [...]
The Romney plan would reduce individual marginal income tax rates across the board by 20%, while keeping current low tax rates on dividends and capital gains. The governor would also reduce the corporate income tax rate--the highest in the world--to 25%. In addition, he would broaden the tax base to ensure that tax reform is revenue-neutral.
Hubbard says that 1) Medium-run deficits are bad for medium-run growth, 2) Romney will cut public spending, which will increase private spending, and 3) Romney will lower tax rates and eliminate tax loopholes while keeping tax revenues the same. Individually, these might make sense. Together, they're the economic equivalent of saying two plus two equals five.
Let's unpack this fiscal mess. Romney wants to cut taxes, but he also wants to cut medium-run deficits too. That's a problem. His answer: He won't cut taxes, but tax rates -- while cutting spending too. But this creates new problems. For one, it means his tax plan will raise taxes on the bottom 95 percent, while cutting them for the top 5 percent. For another, it leaves Romney stuck embracing spending cuts that will hurt the economy.
Expansionary austerity is a myth, at least in the short-term. That was the conclusion the IMF reached in a 2011 paper that examined 173 cases of fiscal retrenchment over the past 30 years. On average, cutting the deficit by 1 percent of GDP led to a 0.5 percentage point increase in unemployment -- with private spending falling in tandem with public spending. Austerity can work over the longer-term, as long as interest rates or the currency falls to offset the fall in government spending. But interest rates are already at zero, and Republicans aren't too keen about quantitative easing or that whole "dollar depreciation" thing. That leaves the Romney camp with one final reason why cutting government spending would lead to more spending overall: Ricardian equivalence. It's the idea that the private sector spends less when the public sector borrows more, because households know that eventually the government will have to raise taxes to pay for that borrowing. The empirical evidence on this is mixed -- after all, few households 1) know enough about the deficit to predict what will happen to their taxes, or 2) have enough disposable income or access to borrowing to smooth their lifetime spending. That's not to say that there isn't something to it, but that it's a flimsy hope for the catch-up growth we need.
I don't mean to pick on Glenn Hubbard. He has plenty of good ideas about how to get the economy moving again -- like mass refinancing for mortgages owned by Fannie and Freddie. But repackaging the Bush agenda, just updated with austerity, is not the path to prosperity.
A scientist and a monk compare notes on meditation, therapy, and their effects on the brain
Can training the mind make us more attentive, altruistic, and serene? Can we learn to manage our disturbing emotions in an optimal way? What are the transformations that occur in the brain when we practice meditation? In a new book titled Beyond the Self, two friends—Matthieu Ricard, who left a career as a molecular biologist to become a Buddhist monk in Nepal, and Wolf Singer, a distinguished neuroscientist—engage in an unusually well-matched conversation about meditation and the brain. Below is a condensed and edited excerpt.
Matthieu Ricard: Although one ﬁnds in the Buddhist literature many treatises on “traditional sciences”—medicine, cosmology, botanic, logic, and so on—Tibetan Buddhism has not endeavored to the same extent as Western civilizations to expand its knowledge of the world through the natural sciences. Rather it has pursued an exhaustive investigation of the mind for 2,500 years and has accumulated, in an empirical way, a wealth of experiential ﬁndings over the centuries. A great number of people have dedicated their whole lives to this contemplative science.
The GOP succeeded in delivering on many of its promises. But the new code, which Congress will vote on this week, will not be as lasting, or as simplified, as they’d hoped.
The legislation congressional Republicans finalized on Friday and are likely to enact next week delivers on many of the party’s—and President Trump’s— promises for a landmark overhaul of the tax code. But the rush to pass the bill through a narrow Senate majority and without Democratic support forced the GOP to sacrifice some of their long-held aspirations for tax reform.
The final bill permanently reduces the corporate tax rate all the way from 35 percent to 21 percent, nearly matching the 20 percent goal House Republicans set in their 2016 campaign plan (though not as low as the 15 percent Trump ran on). It cuts taxes sharply for business owners, and companies will be able to write off costly purchases of new equipment and buildings.
Breitbart is peddling holiday goods. But whatever happened to peace on earth and good will?
Surveying America back in 2013, I concluded that “Christmas Is Kicking Ass in the War on Christmas,” noting the open-air Nativity scenes in the secular progressive enclave of Santa Monica; the 76-foot Christmas tree uncontroversially erected in the heart of New York City; the choir publicly singing "Happy birthday, Jesus! Happy birthday, Lord!" in Washington, D.C., and more.
This affection for the holiday that marks the birth of Jesus Christ extended all the way to the White House, where President Barack Obama recorded videos wishing the nation “Merry Christmas” in 2009, 2010, 2011, 2012, 2013, 2014, 2015, and 2016. “This is such a wonderful time of year,” Michelle Obama added one year, “a time to honor the story of love and redemption that began 2,000 years ago, to see the world through a child’s eyes and rediscover the magic all around us, and to give thanks for the gifts that bless us every single day.”
Companies are going to be able to save a ton of money by locating factories abroad.
Despite Donald Trump’s “America first” rhetoric, many suspected that the tax plan he would support would actually increase the incentives for U.S. multinationals to move both profits and operations overseas. I wrote about this inevitability a few weeks ago, before the details of the Trump-GOP tax plan emerged.
Now that the bill is advancing, it’s clear that things aren’t as bad as many feared. They’re worse.
As discussed in the previous piece, Trump administration economic officials argue that by lowering the corporate tax rate from 35 percent to 20 percent and moving to what is called a territorial system—mainly, companies pay taxes on foreign earnings only to the foreign nation where those profits are booked and never owe anything to the U.S. no matter how low the foreign nation’s tax rate is—would lead to more jobs and profits staying in or coming back to the United States.
Unlike most entries in the Star Wars saga, Rian Johnson’s film actually explores the systemic oppression the Resistance is fighting against—and the movie is all the more fascinating for it.
This article contains major spoilers for Star Wars: The Last Jedi.
For 40 years, the Star Wars saga has largely been one of good guys and bad guys, of the Rebels and the Empire, of the Light Side and Dark Side of the Force. Those straightforward, elemental stakes were crucial to George Lucas’s original pitch for the space-opera series. J.J. Abrams said that when he began devising the story for Star Wars: The Force Awakens—the long-awaited seventh episode of the franchise that came out in 2015—he quickly realized the film had to return to that good-versus-evil dynamic, even though Return of the Jedi (a.k.a. Episode VI) had ended with the downfall of the Empire.
“We very consciously tried to borrow familiar beats so the rest of the movie could hang on something that we knew was Star Wars,” Abrams said after the film’s release. A bold group of Rebels doing battle against a monolithic Empire was thus recast as an independent Resistance fighting off the new threat of the First Order, with both sides consciously styling their look and their tactics after their forbears. Abrams’s decision was simple almost to a fault—but forgivably so, given how much additional work the director had to do in terms of setting up the film’s new characters.
How Iris Chang tried to bridge the gap between a fading memory and a horrific lived reality
The book case in my childhood bedroom contained worlds far from my own. There was my volume of folk tales from the Childcraft encyclopedia series, along with an illustrated Bible. Sandwiched between them was the blood-red spine of Iris Chang’s The Rape of Nanking. The book had awoken the mainstream Western consciousness to the truth of the Japanese military’s horrific massacre of Chinese soldiers and civilians prior to World War II. Unlike many historians, Chang thrust stories and photographs of rape, disfigurement, killing contests, and live burials in front of her readers, forcing them to choose either to shudder and remember or look away in complicity.
While Chang faced a barrage of attacks from other historians, as well as from the publisher contracted to translate her book into Japanese, the debate over what happened in Nanking from December 1937 to January 1938 had been raging before the publication of her book. Japan, for instance, remains divided over the number of Chinese killed in Nanking during those six weeks. The massacre camp generally supports the Tokyo War Crimes Trials figure of “upwards of 100,000” deaths; skeptics claim 15,000 to 50,000, while others venture only up to 10,000. Outside of Japan, James Yin and Shi Young, whose work Chang frequently cited, place the minimum death toll as high as 369,366.
David Bentley Hart’s text recaptures the awkward, multivoiced power of the original.
In the beginning was … well, what? A clap of the divine hands and a poetic shock wave? Or an itchy node of nothingness inconceivably scratching itself into somethingness? In the beginning was the Word, says the Gospel according to John—a lovely statement of the case, as it’s always seemed to me. A pre-temporal syllable swelling to utterance in the mouth of the universe, spoken once and heard forever: God’s power chord, if you like. For David Bentley Hart, however, whose mind-bending translation of the New Testament was published in October, the Word—as a word—does not suffice: He finds it to be “a curiously bland and impenetrable designation” for the heady concept expressed in the original Greek of the Gospels as Logos. The Chinese word Tao might get at it, Hart tells us, but English has nothing with quite the metaphysical flavor of Logos, the particular sense of a formative moral energy diffusing itself, without diminution, through space and time. So he throws up his hands and leaves it where it is: “In the origin there was the Logos …”
Most of the country understands that when it comes to government, you pay for what you get.
When I was a young kid growing up in Montreal, our annual family trips to my grandparents’ Florida condo in the 1970s and ‘80s offered glimpses of a better life. Not just Bubbie and Zadie’s miniature, sun-bronzed world of Del Boca Vista, but the whole sprawling infrastructural colossus of Cold War America itself, with its famed interstate highway system and suburban sprawl. Many Canadians then saw themselves as America’s poor cousins, and our inferiority complex asserted itself the moment we got off the plane.
Decades later, the United States presents visitors from the north with a different impression. There hasn’t been a new major airport constructed in the United States since 1995. And the existing stock of terminals is badly in need of upgrades. Much of the surrounding road and rail infrastructure is in even worse shape (the trip from LaGuardia Airport to midtown Manhattan being particularly appalling). Washington, D.C.’s semi-functional subway system feels like a World’s Fair exhibit that someone forgot to close down. Detroit’s 90-year-old Ambassador Bridge—which carries close to $200 billion worth of goods across the Canada-U.S. border annually—has been operating beyond its engineering capacity for years. In 2015, the Canadian government announced it would be paying virtually the entire bill for a new bridge (including, amazingly, the U.S. customs plaza on the Detroit side), after Michigan’s government pled poverty. “We are unable to build bridges, we're unable to build airports, our inner city school kids are not graduating,” is how JPMorgan Chase CEO Jamie Dimon summarized the state of things during an earnings conference call last week. “It’s almost embarrassing being an American citizen.”
Progressive clergy are pushing a new movement that’s unapologetically political—and deeply rooted in textual traditions.
Since Donald Trump was elected one year ago, I’ve heard from a number of rabbis who feel caught. They’re not sure how to speak into this moment of intense partisan division, nasty rhetoric, and outrage; how to console and advise those who are devastated while not alienating congregants who support the president. This conundrum is sharpest in the Orthodox world, where a strong majority of Jews lean Republican. But even liberal Jewish leaders—those in the Reconstructionist, Reform, and Conservative movements—many feel hemmed in by board members, funders, or their own sense of clerical propriety.
Sharon Brous does not agree. The senior rabbi at IKAR, a non-denominational spiritual community in Los Angeles, believes this is not a normal moment in American politics, and Jewish leaders need to speak out. The models of Jewish movement-building are also changing, she says: Gone are the days when the president of the Union of Reform Judaism or the Conservative movement’s Rabbinical Assembly are the only voices who can speak for American Jews. A new generation of rabbis, working outside of traditional, hierarchical structures, are building followings and defining a new, often politicized, way of expressing Judaism.