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.
The second reason is subtler, but perhaps equally significant. To pay for a permanent tax cut on corporations, the plan raises taxes on colleges and college students, which is part of a broader Republican war on higher education in the U.S. This is a big deal, because in the last half-century, the most important long-term driver of wage growth has arguably been college.
There’s a manifest need to lower corporate tax rates—but instead of building consensus, the GOP is pursuing a bill that’s likely to be rolled back even if it passes.
America badly needs corporate tax reform.
The United States pretends to tax corporations heavily. But those heavy tax rates are perforated by randomly generous rules such that many tax-efficient firms pay nothing at all, or even receive money back from the U.S. Treasury. The result is heavy unfairness between industries and firms, an unfairness that many economists believe systematically distorts investment decisions. U.S. productivity growth has been sluggish since the Great Recession—and had actually turned negative by the beginning of 2016.
At the same time, the corporate share of the federal-tax burden has dwindled over the years and decades. More and more of the cost of government now falls upon the payroll tax, which weighs most heavily on low- and middle-income wage earners. These Americans are suffering stagnating incomes, very probably because of the poor productivity growth of the past half-decade.
The mass murderer, who died on Sunday at 83, turned one following into another.
“All of us are excited by what we most deplore,” Martin Amis wrote in theLondon Review of Books in 1980, reviewing Joan Didion’s The White Album. In the title piece in that collection, Didion’s second, the essayist recalls sitting in her sister-in-law’s swimming pool in Beverly Hills on August 9, 1969, when the phone rang. The friend on the line had heard that across town there had been a spate of murders at a house rented by the director Roman Polanski, on Cielo Drive. Early reports were frenzied, shocking, lurid, and incorrect. “I remember all of the day’s misinformation very clearly,” Didion writes, “and I also remember this, and wish I did not: I remember that no one was surprised.”
The killings orchestrated that summer by Charles Manson, who died on Sunday at the age of 83, after spending the past 48 years in prison, occupy a unique space in the American cultural psyche. All of the elements of the Tate–LaBianca murders, as they came to be known, seemed designed for maximum tabloid impact. There was the actor Sharon Tate, luminously beautiful and eight months pregnant, who was stabbed to death with four others at a rental home in Hollywood. There were the killers—young women,Manson acolytes corrupted by a sinister cult figure. There were the drugs, abundant both on the Manson Family ranch and at the house on Cielo Drive. There was the nebulous chatter about satanism and witchcraft and race wars ready to erupt. And, as Didion captured, there was a sense that something was rotten from the Hollywood Hills to Haight-Ashbury—that the Summer of Love had long since curdled into paranoia and depravity.
How did Andrew Anglin go from being an antiracist vegan to the alt-right’s most vicious troll and propagandist—and how might he be stopped?
On December 16, 2016, Tanya Gersh answered her phone and heard gunshots. Startled, she hung up. Gersh, a real-estate agent who lives in Whitefish, Montana, assumed it was a prank call. But the phone rang again. More gunshots. Again, she hung up. Another call. This time, she heard a man’s voice: “This is how we can keep the Holocaust alive,” he said. “We can bury you without touching you.”
When Gersh put down the phone, her hands were shaking. She was one of only about 100 Jews in Whitefish and the surrounding Flathead Valley, and she knew there were white nationalists and “sovereign citizens” in the area. But Gersh had lived in Whitefish for more than 20 years, since just after college, and had always considered the scenic ski town an idyllic place. She didn’t even have a key to her house—she’d never felt the need to lock her door. Now that sense of security was about to be shattered.
Audience fatigue has clearly set in for the once-bankable novelty of the franchise team-up.
When The Avengers opened in theaters in May 2012, it was a genuinely unusual offering for viewers—a film that both was and wasn’t a sequel, uniting the characters of various Marvel movies (Iron Man, Thor, Captain America) for a new story about them functioning as a team. The novelty was such that box-office sales far outstripped previous efforts: The Avengers opened to a stunning $207 million, far above the previous Marvel Studios record ($128 million for Iron Man 2).
Since then, that’s been the sales plan for any “cinematic universe,” the comic-book storytelling template that Marvel applied to its films and that other studios have since scrambled to copy: Invest in big blockbusters that introduce your stars, then spend even more on the movie that sees them all sharing the same screen. That’s why Warner Bros. invested a reported $300 million in Justice League, making it one of the most expensive films ever shot. Here, finally, fans could see all of DC’s famous superheroes—Batman, Superman, Wonder Woman, plus new faces like The Flash and Aquaman—hanging out with one another.
The Facebook founder has discussed "community" more than 150 times in public. A close reading reveals his road map for the platform’s future.
There’s a story that Mark Zuckerberg has told dozens of times over the years. Shortly after he’d launched Facebook in February 2004, he went to get pizza with Kang-Xing Jin, a coder friend who would become a Facebook executive, at a place around the corner from his dorm.
In one telling, Zuckerberg says he was thinking, “this is great that we have this community that now people can connect within our little school, but clearly one day, someone is going to build this for the world.”
But there was no reason to expect that this kid and his group of friends would be the people who would build this for the world. “It hadn’t even crossed my mind,” he said in 2013. They were technically gifted, but as Zuckerberg tells it, they had basically no resources or experience at a time when there were already massive technology companies trying to create social networks from MySpace to Microsoft, Google to Yahoo.
Feminists saved the 42nd president of the United States in the 1990s. They were on the wrong side of history; is it finally time to make things right?
The most remarkable thing about the current tide of sexual assault and harassment accusations is not their number. If every woman in America started talking about the things that happen during the course of an ordinary female life, it would never end. Nor is it the power of the men involved: History instructs us that for countless men, the ability to possess women sexually is not a spoil of power; it’s the point of power. What’s remarkable is that these women are being believed.
Most of them don’t have police reports or witnesses or physical evidence. Many of them are recounting events that transpired years—sometimes decades—ago. In some cases, their accusations are validated by a vague, carefully couched quasi-admission of guilt; in others they are met with outright denial. It doesn’t matter. We believe them. Moreover, we have finally come to some kind of national consensus about the workplace; it naturally fosters a level of romance and flirtation, but the line between those impulses and the sexual predation of a boss is clear.
Babies might understand language better than scientists thought.
No matter how many words you can define, your vocabulary isn’t like a dictionary. Your mind stores language not as a list of words, but as a network of categories, properties, and meanings, with stronger connections between related words, like newspaper and magazine, than unrelated ones, like wallet and avalanche.
At six months old, a baby probably doesn’t know what wallet or avalanche means—but even at such a young age, months before children start talking, they do understand some basic nouns, like ball and dog. And a new study suggests that the few words infants know are structured in their minds the same way as an adult’s vocabulary, in a complex web of related concepts. The evidence: When words have similar meanings, babies can get confused. That confusion hints that babies know more about language, at a younger age, than scientists have found before.
From the moment that LiAngelo Ball—UCLA basketball player, son of LaVar, and brother of NBA rookie Lonzo—was arrested in China for shoplifting from a Louis Vuitton store in Hangzhou, a collision between LaVar Ball and Donald Trump, two of the most outrageous, larger-than-life, and controversial figures in the contemporary United States, neither of whom can ever just let anything go, seemed inevitable. Now it’s erupting just in time for Thanksgiving break, ensuring that neither sports nor politics is safe family-conversation material, and again showing how Trump conflates himself and the American state.
A nonprofit helping wealthy young progressives become active philanthropists has gained new life under the Trump administration.
When Emily Kirkland, a self-described climate-change activist, was attempting to come to terms with the fact that she has what she describes as “direct access” to a trust fund worth hundreds of thousands of dollars, she did what many of us would do: She turned to the internet.
And that was how she discovered Resource Generation, the almost 20-year-old nonprofit that works with wealthy people between the ages of 18 and 35 to encourage them to devote a portion of their financial assets to left-wing causes including addressing the economic divides between the haves and the have-nots, and race and gender discrimination.
“[Before] I found Resource Generation, I felt deep confusion about how to align my values around social justice, equity, political equality with the resources I have access to because of my family’s wealth,” says Kirkland, 26, who grew up in New York and California, and now lives in Phoenix where she works in communications for progressive causes. “It never crossed my mind that such an organization could exist.”