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 blunt power of the gatekeeper is the ability to enforce not just artistic, but also financial, exile.
When the Harvey Weinstein story broke, I thought of something my mother told me when I was a little girl. She said: To be a free woman, you have to be a financially independent woman. She wasn’t wrong. I studied economics in college and went to New York to become an investment banker.To be blunt, I wanted the freedom money can buy.
I had a sudden change of heart while working at Goldman Sachs as a summer analyst. I decided that if the world required me to sell the hours of my life in exchange for access to what had long ago been free—food, water, shelter—I wanted to at least be doing something that stirred my soul. This is, granted, a privileged position. But as a young woman that was the conclusion I came to.
The country’s elites are desperate to figure out what they got wrong in 2016. But can they handle the truth?
It was the hippies who drove Nancy Hale over the edge. She had spent three days listening respectfully to the real people of Middle America, and finally she couldn’t take it any longer.
She turned off the tape recorder and took several deep breaths, leaning back in the passenger seat of the rented GMC Yukon. The sun had just come out from behind a mass of clouds, casting a gleam on the rain-soaked parking lot in rural Wisconsin.
Hale, who is 65 and lives in San Francisco, is a career activist who got her start protesting nuclear plants and nuclear testing in the 1970s. In 2005, she was one of the founders of Third Way, a center-left think tank, and it was in that capacity that she and four colleagues had journeyed from both coasts to the town of Viroqua, Wisconsin, as part of a post-election listening tour. They had come on a well-meaning mission: to better understand their fellow Americans, whose political behavior in the last election had left them confused and distressed.
Find the right environment, and very little effort is necessary.
Happiness is an active process, not something you get by sitting back and waiting. It’s something to be grabbed by the horns or more vulnerable areas and then conquered. At least, this is the gist of the message from Tony Robbins and gurus of his ilk.
Many also say happiness is not something we can buy, or steal, or work too hard to acquire. If you work too hard at it, you end up obsessing over your own state of mind—Am I happy? ... Really though? And like love, if you have to ask, the answer is no.
So what’s the right way to think about effort and happiness? Should I be trying for “happiness” per se—or something more magnanimous, like purpose or meaning?
Or money? Is happiness actually all about money? That would be a real twist.
The president reescalated the ongoing debate over his condolences to Gold Star families by contradicting the widow of a fallen Special Forces sergeant.
“You know, when I was a kid growing up, a lot of things were sacred in our country,” White House Chief of Staff John Kelly said Thursday. Among those were Gold Star families: “I just thought—the selfless devotion that brings a man or woman to die on the battlefield, I just thought that that might be sacred.”
But Kelly acknowledged that might no longer be true: “Gold Star families, I think that left in the convention over the summer.”
Then on Monday morning, Kelly’s boss decided to prolong a feud with the widow of a fallen American soldier:
I had a very respectful conversation with the widow of Sgt. La David Johnson, and spoke his name from beginning, without hesitation!
First came the denials. Then came the apologies. Now, the mogul is claiming “a different recollection of the events.”
“Brit Marling is a super talented actress and writer. Mr. Weinstein has a different recollection of the events.’’
That was Harvey Weinstein’s spokesperson, Sallie Hofmeister, offering a statement to The Atlantic in response to Marling’s essay that shares her experience—an invitation to shower, an offer of a massage, in a form now eerily familiar—of a 2014 encounter with Weinstein.
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.”
Emma Perrier was deceived by an older man on the internet—a hoax that turned into an unbelievable love story.
Emma Perrier spent the summer of 2015 mending a broken heart, after a recent breakup. By September, the restaurant manager had grown tired of watching The Notebook alone in her apartment in Twickenham, a leafy suburb southwest of London, and decided it was time to get back out there. Despite the horror stories she’d heard about online dating, Emma, 33, downloaded a matchmaking app called Zoosk. The second “o” in the Zoosk logo looks like a diamond engagement ring, which suggested that its 38 million members were seeking more than the one-night stands offered by apps like Tinder.
She snapped the three selfies the app required to “verify her identity.” Emma, who is from a volcanic city near the French Alps, not far from the source of Perrier mineral water, is petite, and brunette. She found it difficult to meet men, especially as she avoided pubs and nightclubs, and worked such long hours at a coffee shop in the city’s financial district that she met only stockbrokers, who were mostly looking for cappuccinos, not love.
When Chris Lowe first saw the buck stoop to lick the small, silver-speckled fox, he thought his eyes might be playing tricks on him. He’d just gotten back from a run on Santa Catalina, a remote Southern Californian island where he studies sharks, and came upon the two animals in the scrub. Mule deer and island foxes, the rascally miniature descendants of gray foxes, are everyday sights on Catalina’s grassy hills. But to see them nuzzling was downright weird.
Was the buck simply nibbling on a plant behind the fox? Had the fox happened to hop in front of the buck’s face? Lowe dashed into his apartment to grab his camera, and made it to the window to catch the deer taking another lick. The fox, docile in the shade of its antlered friend, wasn’t just tolerating the apparent cleaning, Lowe realized. “It looked like it was actually enjoying this,” he says.
Catalonia and Kurdistan show demands for self-determination aren’t enough.
What is a country? Is it a place like the United States that is recognized by all other countries and is a member of the United Nations? Is it, like Kosovo, a place that is recognized by most of the world’s powers but isn’t a UN member? Where does Taiwan, which has its own government and its own military despite being claimed by China, fit? And where does all this leave places like Catalonia and Iraqi Kurdistan, many of whose citizens have voted to secede over the objections of the countries they’re currently part of?
“Really, when we’re talking about a country, we’re talking about a political territory with a population, a government, and legally recognized boundaries that indicate or grant sovereignty,” Rebecca Richards, a lecturer in international relations at Keele University in the U.K., said in an email. “They are the legally determined shapes on a map.”
As college professors get older, institutions are using corporate strategies to get employees to retire.
OBERLIN, OHIO—The term “gray-haired professor” may seem like a cliché, but there’s some truth to it. Academia has long had a disproportionate number of employees older than 65, and the average American professor is getting even older.
The share of people older than 65 teaching full time at American colleges and universities nearly doubled between 2000 and 2010. College professors are now among the oldest Americans in the workforce. Job satisfaction, job protection due to tenure, and concern about their retirement nest eggs are all reasons they cite for sticking around longer. And while their experience is valuable in its own way, the cost of paying senior professors in an era of rising expenses and shrinking endowments has led universities to borrow a budget-cutting strategy from the corporate world: buyouts.