Rubio's call for a single mandate for the Federal Reserve is a dangerous, and potentially disastrous, idea. Unless that single mandate is targeting nominal GDP instead of inflation.
Marco Rubio wants to be president, and unfortunately for him that means he's supposed to have an opinion about everything. I say unfortunately because Rubio has had a hard enough time figuring out the age of the earth, let alone one of the great mysteries like what the Fed should be doing now. The latter came up during Rubio's acceptance speech at the Jack Kemp foundation, and, as Dave Weigel of Slate reports, it did not go well. Hey, he's not a central banker, man.
A long time ago in an administration far, far away, the Republicans were the party of Milton Friedman. It was 2004. As Paul Krugman points out, then-chairman of the Council of Economic Advisers Greg Mankiw advocated aggressive monetary policy as a way to mitigate recessions. This was economic boilerplate, but it was only boilerplate because of Friedman. After the Great Depression, economists didn't think central banks could do much to revive the economy if interest rates fell to zero -- the so-called liquidity trap -- and monetary policy consequently took a backseat to fiscal policy when it came to demand management. Friedman reversed this. He and Anna Schwarz argued the Great Depression was only so great because the Fed's inaction made it so. In other words, central banks were only powerless if they thought they were. They could do plenty, even in a liquidity trap, if they just printed money and promised to keep printing money -- what we rather prosaically call "quantitative easing" nowadays. It was a message conservatives could, and did, love. The government didn't need to spend more to stabilize the economy during a downturn as long as the Fed did its job.
And then the Great Recession happened.
With interest rates stuck at zero and the economy stuck in a growth slump, we're very much back in Friedman's world. But now conservatives aren't so sure about that "aggressive monetary policy" thing anymore. Zero interest rates just seem wrong, and quantitative easing must be a big government bailout on the road to Zimbabwe -- at least that's what they've told themselves, despite stubbornly low inflation. Of course, some conservatives claim inflation is "really" much higher than the government says, but, as Ramesh Ponnuru of National Review points out, this conspiracy theory doesn't withstand much more than two seconds of scrutiny.
This paranoid style in monetary policy has inspired a rather odd political crusade -- the crusade against the Fed's dual mandate. Most central banks are only tasked with worrying about inflation, but the Fed is tasked with worrying about inflation and unemployment. (Or, in Fed-speak, fostering the maximum level of employment consistent with price stability). This has become a bête noire for conservatives, because they think that were it not for the Fed caring about unemployment -- the horror! -- then it wouldn't have expanded its balance sheet so much, and that this expanded balance sheet will inevitably mean higher inflation down the road. Apparently Marco Rubio is one of these conservatives who sees the stagflationary 1970s around every corner. Here's what he said to say about the Fed.
Sound monetary policy would also encourage middle class job creation. The arbitrary way in which interest rates and our currency are treated is yet another cause of unpredictability injected into our economy. The Federal Reserve Board should publish and follow a clear monetary rule -- to provide greater stability about prices and what the value of a dollar will be over time.
Translation: Repeal the dual mandate and replace it with a single mandate for inflation only. This is all kinds of uninformed. As we have pointed out before, inflation has been lower with over four times less variance since Congress gave the Fed its dual mandate in 1978. And with inflation mostly undershooting its 2 percent target since Lehman failed, it's not as if the Fed even needed the dual mandate to justify easing -- a sole inflation mandate would have been enough.
But Rubio is right that the Fed needs a better, clearer monetary rule nowadays. That's not to say that Fed policy has been arbitrary, but just that its rule needs some modernizing. For most of the so-called Great Moderation, the Fed followed something close to a Taylor rule, setting policy based on inflation and unemployment, and it served the Fed well. Greg Mankiw has his own simple version of a Taylor rule, which Paul Krugman tweaked slightly, that gives us a good idea of how the Fed thought then, as you can see below.
You can see why the Great Moderation gave way to the Great Recession. Our Taylor rule says the Fed should have made interest rates negative in late 2008, but the Fed can't make interest rates negative. Well, at least not nominal rates. The Fed can increase inflation, which reduces real rates, to get borrowing costs to where they "should" be -- which is what Ben Bernanke has done, in fits and starts, the past four years. You can see all these fits and starts in the chart below that compares our same Taylor rule to Fed policy since 2006. It's not easy to get real rates down to -7 percent.
There have been far too many fits and not nearly enough starts since 2008. Yes, the Fed tried unconventional easing in late 2008, early 2009, late 2010, late 2011 and late 2012, but it should have been easing this whole time. The Taylor rule has been negative this whole time, which means that the Fed should have been cutting interest rates, and cutting them a lot, this whole time. Instead, we got zero rates. Because inflation hasn't been that far off target, Bernanke has had a hard time convincing the rest of the FOMC to go along with quantitative easing -- so easing has been far less quantitative than the situation calls for. In other words, policy hasn't quite been arbitrary as much as ad hoc, with the unhappy result being an era of tight money.
Imagine the Fed had a single mandate, but not for inflation. Imagine instead the Fed had a single mandate for the total size of the economy, which goes by the unwieldy name of nominal GDP (NGDP). During the Great Moderation, NGDP grew about 5 percent a year, but it's only grown about 2.85 percent a year since 2008. If the Fed had an NGDP target of 5 percent a year, and was supposed to make up for any over-or-undershooting, it would have been aggressively easing the entire time since 2008. It's a dual mandate that doesn't get confused by low inflation and low growth.
The staggering scope of the country’s infrastructure initiative—and what it means for the international order
The Pakistani town of Gwadar was until recently filled with the dust-colored cinderblock houses of about 50,000 fishermen. Ringed by cliffs, desert, and the Arabian Sea, it was at the forgotten edge of the earth. Now it’s one centerpiece of China’s “Belt and Road” initiative, and the town has transformed as a result. Gwadar is experiencing a storm of construction: a brand-new container port, new hotels, and 1,800 miles of superhighway and high-speed railway to connect it to China’s landlocked western provinces. China and Pakistan aspire to turn Gwadar into a new Dubai, making it a city that will ultimately house 2 million people.
China is quickly growing into the world’s most extensive commercial empire. By way of comparison, after World War II, the Marshall Plan provided the equivalent of $800 billion in reconstruction funds to Europe (if calculated as a percentage of today’s GDP). In the decades after the war the United States was also the world’s largest trading nation, and its largest bilateral lender to others.
Ivana Trump’s new book is a parenting memoir—and an ode to being better than everyone else.
There’s a story Ivana Trump tells in Raising Trump, her new memoir of parenting, work, and marriage. It was New Year’s Eve, 1977; she and Donald Trump were together in the hospital room after their first child had been born, discussing the matter of what name to give their new infant. Ivana suggested that the son should be named after the father: Donald Trump Jr. Donald, however, balked at this.
“What if he’s a loser?” he said.
Ivana got her way, in this instance as in many she describes in Raising Trump, which begins and ends with the premise that none of the three children Ivana and Donald Trump created together have been consigned to a life of loserdom. The book may be a parenting memoir; it may feature practical tips about punishments and allowances and the compulsory writing of thank-you notes; it may even feature a curated selection of awkward family photos and treasured family recipes; but it is about parenting, as most people practice it, in only the most superficial sense. By virtue of its core characters—a man who becomes the American president, a daughter who becomes his advisor, a son-in-law who becomes responsible for criminal justice reform and opioid crisis managementand bringing peace to the Middle East—Raising Trump is less a straightforward memoir than it is a teasing exploration of the workings of the presidential family. Here are the oft-discussed “Trump family values,” as explained by the woman who helped to create them.
We spend two full years of our lives washing ourselves. How much of that time (and money and water) is a waste?
12,167 hours of washing our bodies.
That’s how much life you use, if you spend 20 minutes per day washing and moisturizing your skin and hair (and you live to be 100, as we all surely will).
That adds up to nearly two entire years of washing every waking hour.
Not to mention water usage and the cost of cosmetic products—which we need, because commercials tell us to remove the oil from our skin with soap, and then to moisturize with lotion. Other commercials tell us to remove the oils from our hair, and then moisturize with conditioner.
That’s four products—plus a lot of water and time— and few people question whether it’s anything short of necessary.
It’s not just the fault of advertising, but also because most of us know from personal experience that if we go a few days without showering, even one day, we become oily, smelly beasts.
In the media world, as in so many other realms, there is a sharp discontinuity in the timeline: before the 2016 election, and after.
Things we thought we understood—narratives, data, software, news events—have had to be reinterpreted in light of Donald Trump’s surprising win as well as the continuing questions about the role that misinformation and disinformation played in his election.
Tech journalists covering Facebook had a duty to cover what was happening before, during, and after the election. Reporters tried to see past their often liberal political orientations and the unprecedented actions of Donald Trump to see how 2016 was playing out on the internet. Every component of the chaotic digital campaign has been reported on, here at The Atlantic, and elsewhere: Facebook’s enormous distribution power for political information, rapacious partisanship reinforced by distinct media information spheres, the increasing scourge of “viral” hoaxes and other kinds of misinformation that could propagate through those networks, and the Russian information ops agency.
More comfortable online than out partying, post-Millennials are safer, physically, than adolescents have ever been. But they’re on the brink of a mental-health crisis.
One day last summer, around noon, I called Athena, a 13-year-old who lives in Houston, Texas. She answered her phone—she’s had an iPhone since she was 11—sounding as if she’d just woken up. We chatted about her favorite songs and TV shows, and I asked her what she likes to do with her friends. “We go to the mall,” she said. “Do your parents drop you off?,” I asked, recalling my own middle-school days, in the 1980s, when I’d enjoy a few parent-free hours shopping with my friends. “No—I go with my family,” she replied. “We’ll go with my mom and brothers and walk a little behind them. I just have to tell my mom where we’re going. I have to check in every hour or every 30 minutes.”
Those mall trips are infrequent—about once a month. More often, Athena and her friends spend time together on their phones, unchaperoned. Unlike the teens of my generation, who might have spent an evening tying up the family landline with gossip, they talk on Snapchat, the smartphone app that allows users to send pictures and videos that quickly disappear. They make sure to keep up their Snapstreaks, which show how many days in a row they have Snapchatted with each other. Sometimes they save screenshots of particularly ridiculous pictures of friends. “It’s good blackmail,” Athena said. (Because she’s a minor, I’m not using her real name.) She told me she’d spent most of the summer hanging out alone in her room with her phone. That’s just the way her generation is, she said. “We didn’t have a choice to know any life without iPads or iPhones. I think we like our phones more than we like actual people.”
The director is blaming the critical aggregator for dooming more complex films, but the deeper problem is studio neglect.
Last weekend, Professor Marston and the Wonder Women, a drama about the creator of the famed comic-book character, became the latest mid-budget casualty. It was marketed on the back of its connection with Wonder Woman, one of the biggest hits of the year. It received a moderately wide release and got strong reviews, but its three-day box-office total was just $736,883—a flimsy average of $600 per theater, which essentially doomed any future chance of success. Critics and industry insiders alike have lamented for years the decline of modestly budgeted movies aimed at grownups, the sort of film that was once the backbone of Hollywood.
Professor Marston would likely have at least one sympathizer in Martin Scorsese, who recently wrote an op-ed for The Hollywood Reporter on how many good, artistic movies are struggling to find receptive audiences in this new era for the industry. “Box office is the undercurrent in almost all discussions of cinema, and frequently it’s more than just an undercurrent,” said the Academy Award-winning director, who also works tirelessly in the field of film preservation. Indeed, in most cases, a movie is judged a flop or a hit within the first few days of its release. Box-office prognosticators can predict a film’s final grosses almost immediately, and there’s very little chance for word-of-mouth to help build up hype, except in the cases of certain smaller independent works.
About 10 years ago, after I’d graduated college but when I was still waitressing full-time, I attended an empowerment seminar. It was the kind of nebulous weekend-long event sold as helping people discover their dreams and unburden themselves from past trauma through honesty exercises and the encouragement to “be present.” But there was one moment I’ve never forgotten. The group leader, a man in his 40s, asked anyone in the room of 200 or so people who’d been sexually or physically abused to raise their hands. Six or seven hands tentatively went up. The leader instructed us to close our eyes, and asked the question again. Then he told us to open our eyes. Almost every hand in the room was raised.
The last seventy-five years of American foreign policy are not the story of a country consistently pursuing democratic ideals, only to see them undermined now by a fearful “blood and soil” isolationism.
Being a liberal in the Donald Trump era is tricky. On the one hand, you’re grateful for any conservative who denounces the president’s authoritarian lies. On the other, you can’t help but notice that many of the conservatives who condemn Trump most passionately—Bill Kristol, Bret Stephens, Michael Gerson, Jennifer Rubin—remain wedded to the foreign policy legacy of George W. Bush. And in criticizing Trump’s amoral “isolationism,” they backhandedly defend the disastrous interventionism that helped produce his presidency in the first place.
The godfather of this brand of hawkish, anti-Trump conservatism is John McCain. Sure, McCain—being a Republican Senator—doesn’t condemn Trump as forthrightly as his “neoconservative” allies in the press. But the terms of his critique are similar.
A small group of programmers wants to change how we code—before catastrophe strikes.
There were six hours during the night of April 10, 2014, when the entire population of Washington State had no 911 service. People who called for help got a busy signal. One Seattle woman dialed 911 at least 37 times while a stranger was trying to break into her house. When he finally crawled into her living room through a window, she picked up a kitchen knife. The man fled.
The 911 outage, at the time the largest ever reported, was traced to software running on a server in Englewood, Colorado. Operated by a systems provider named Intrado, the server kept a running counter of how many calls it had routed to 911 dispatchers around the country. Intrado programmers had set a threshold for how high the counter could go. They picked a number in the millions.
The foundation of Donald Trump’s presidency is the negation of Barack Obama’s legacy.
It is insufficient to statethe obvious of Donald Trump: that he is a white man who would not be president were it not for this fact. With one immediate exception, Trump’s predecessors made their way to high office through the passive power of whiteness—that bloody heirloom which cannot ensure mastery of all events but can conjure a tailwind for most of them. Land theft and human plunder cleared the grounds for Trump’s forefathers and barred others from it. Once upon the field, these men became soldiers, statesmen, and scholars; held court in Paris; presided at Princeton; advanced into the Wilderness and then into the White House. Their individual triumphs made this exclusive party seem above America’s founding sins, and it was forgotten that the former was in fact bound to the latter, that all their victories had transpired on cleared grounds. No such elegant detachment can be attributed to Donald Trump—a president who, more than any other, has made the awful inheritance explicit.