Jeffrey Lacker Says Real Wages are Going Up. Is He Right?

| Thu Nov. 12, 2015 11:11 AM EST

Binyamin Applebaum asks inflation hawk Jeffrey Lacker why inflation hasn't risen if labor markets are tight, as he believes:

....There’s this confusion about real and nominal that I think infects the discussion, particularly of wages and slack. Real wages have accelerated over the last year because inflation has fallen and the rate of gain in nominal wages hasn’t changed much. The wage pressures we’ve been hearing about, they show up in the macro data as real wage pressures.

And the historical evidence suggests that there’s some lag before things accelerate as you reduce slack significantly. In 1966-67, we had unemployment at 5 percent, we pushed it to 4, and it was 1967 and 1968 when inflation took off. So there was a significant lag in the way that relationship seems to have worked in the past.

That got me curious: have real wages risen over the past couple of years? My preferred measure is production and nonsupervisory wages, and it looks like Lacker is right. Compared to CPI, the general trend is upward. It doesn't look to me like it's accelerating, but it does seem to be going up.

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What's Up With Jeb Bush's Weird, Wonky, Totally Wrong Riff on Dodd-Frank?

| Wed Nov. 11, 2015 11:21 PM EST

Jeb Bush said a peculiar thing last night:

What we ought to do is raise the capital requirements so banks aren't too big to fail. Dodd-Frank has actually done the opposite, totally the opposite, where banks now have higher concentration of risk in assets and the capital requirements aren't high enough. If we were serious about it, we would raise the capital requirements and lessen the load on the community banks and other financial institutions.

The is peculiar for two reasons. First, it's unlikely that most viewers had the slightest idea what he was talking about. Second, he has things exactly backward. In fact, Dodd-Frank mandates higher and safer capital levels, and it does so largely because of a Republican amendment to the act.

Basically, Dodd-Frank instructed the Fed to issue new capital rules, which it did in 2013. These rules took into account both the new Basel III requirements as well as Dodd-Frank's changes, and specifically mandated higher capital requirements for big banks than for smaller community banks. In 2015, the Fed went even further, creating capital surcharges for the nation's largest banks. Here's the result:

Not all of this increase in capital is a consequence of Dodd-Frank, but much of it is. And certainly it's completely untrue that Dodd-Frank has done "totally the opposite." I wonder what Bush was thinking? This is hardly a big conservative hot button. In fact, most people have never heard of bank capital and have no idea what it means, which means there's hardly any point in making up stuff about it. And if the only goal was to criticize Dodd-Frank, there are far better ways to do it.

If Bush had wanted to argue that Dodd-Frank didn't go far enough, and we needed even higher capital requirements for big banks, I would have cheered him on. But that's not what he said. Very strange.

Here's Why Other Candidates Are Giving Ben Carson a Pass

| Wed Nov. 11, 2015 2:29 PM EST

Why didn't any of the other candidates go after Ben Carson last night? He's a frontrunner, isn't he?

Yeah, he is. Here's my guess: when you see a guy digging himself into a hole, why get in the way? More and more, as the stress of the campaign gets to him, Carson is freely exposing himself as an honest-to-God crackpot. Not just a hardcore conservative like Ted Cruz or an ego-driven windbag like Donald Trump, but a true Glenn Beck/Michele Bachmann/Alex Jones type who really and truly believes in fever swamp conspiracy theories. Criticize his past and he goes full frontal on every bit of listserv crankery about Barack Obama—and he does it pretty fluently, too. He obviously knows this stuff cold. Push him on his odd world view and he starts spouting off about how "secular progressives" are destroying America and probably trying to kill him. Ask him about his theory that the pyramids were built by Joseph to store grain, and he doesn't blink. Sure he still believes that. Put him in a friendly setting and he'll give you the full nine yards about how political correctness is responsible for everything from drug addiction to persecution of Christians to Marxist tyranny and gun confiscation.

This is a guy who's set to implode all by himself, so why waste energy attacking him? Eventually he'll suggest that the pope is actually Satan or something, and then he'll be forced to slink back to the rubber-chicken circuit—with a higher speaking fee to soothe his pain. In the meantime, better to worry about the folks who might actually pose a real threat.

Aziz Ansari Just Hilariously Burned Television's Diversity Problem to Stephen Colbert

| Wed Nov. 11, 2015 1:59 PM EST

There's just no stopping Aziz Ansari.

The comedian reached another level of hero status on Tuesday, appearing on the Late Show to promote his brilliant new Netflix series Master of None. Just seconds after settling into his guest seat, Ansari wasted no time calling out Hollywood's problems with diversity.

"Stephen's the first late night host from South Carolina and the bajillionth white guy," he said, responding to Colbert's comment that the two of them hailed from the same state. "Very interesting measure of progress."

When Colbert jokingly asked if his spot on the show counted as a show of progress, Ansari replied, "It's really diverse right now. It's 50 percent diverse. It's like an all-time high for CBS." Colbert couldn't contain his admiration and shook Ansari's hand.

The appearance comes on the heels of rave reviews for Ansari's new show, which explores everything from romance and the first-generation immigrant experience, to the insidious racism still preventing people of color from securing top-billed acting roles.

On Tuesday, viewers also had a chance to hear from Ansari's real father, who also plays the father of Ansari's character on the show. After their appearance together, Ansari posted the following Instagram:


My dad took off most of his vacation time for the year to act in Master of None. So I'm really relieved this all worked out. Tonight after we did Colbert together he said: "This is all fun and I liked acting in the show, but I really just did it so I could spend more time with you." I almost instantly collapsed into tears at the thought of how much this person cares about me and took care of me and gave me everything to give me the amazing life I have. I felt like a total piece of garbage for all the times I haven't visited my parents and told them I wanted to stay in New York cause I'd get bored in SC. I'm an incredibly lucky person and many of you are as well. Not to beat a dead horse here and sorry if this is cheesy or too sentimental but if your parents are good to you too, just go do something nice for them. I bet they care and love you more than you realize. I've been overwhelmed by the response to the Parents episode of our show. What's strange is doing that episode and working with my parents has increased the quality of my relationship to my parents IN MY REAL LIFE. In reality, I haven't always had the best, most open relationship with my parents because we are weirdly closed off emotionally sometimes. But we are getting better. And if you have something like that with your family - I urge you to work at it and get better because these are special people in your life and I get terrified when my dad tells me about friends of his, people close to his age, that are having serious health issues, etc. Enjoy and love these people while you can. Anyway, this show and my experiences with my parents while working on it have been very important in many ways and I thank for you the part you all have played in it.

A photo posted by @azizansari on

Chart of the Day: Republican Tax Plans for the Middle Class

| Wed Nov. 11, 2015 1:14 PM EST

Of the five leading candidates, four have released semi-detailed tax plans. We're still waiting on Ben Carson's tithe-based plan. Still, I thought everyone ought to get a look at how their plans affect the middle class vs. the rich. After all, we liberals keep nattering on about how these guys all want to "cut taxes on the rich," so let's see the evidence.

Well, the Tax Foundation is a right-leaning outfit, so you have to figure they're going to give Republican plans a fair shake. And their distributional analysis of Rubio, Bush, Trump, and Cruz shows that their tax plans are all pretty similar: tiny after-tax gains for middle-income workers and huge gains for the top 1 percent. I've used the Tax Foundation's static analysis, since it's the most tethered to reality, but even if you use the magic dynamic estimates you get roughly the same result: the rich make out a whole lot better than the middle class.

That said, you really have to give Ted Cruz credit. When it comes to giving huge handouts to the rich, he's the true Republican leader.

The Minimum Wage Took a Beating Last Night

| Wed Nov. 11, 2015 12:28 PM EST

Nobody was in favor of raising the minimum wage last night:

Trump: Taxes too high, wages too high, we're not going to be able to compete against the world....People have to go out, they have to work really hard and have to get into that upper stratum.

Carson: My first job working in a laboratory as a lab assistant, and multiple other jobs. But I would not have gotten those jobs if someone had to pay me a large amount of money....I would not raise it. I would not raise it, specifically because I'm interested in making sure that people are able to enter the job market and take advantage of opportunities.

Rubio: If I thought that raising the minimum wage was the best way to help people increase their pay, I would be all for it, but it isn't. In the 20th century, it's a disaster. If you raise the minimum wage, you're going to make people more expensive than a machine.

So we have a billionaire who says people just have to suck it up and work harder; a neurosurgeon who doesn't realize he got paid minimum wage for his jobs as a kid; and a senator who thinks it's still the 20th century. But one thing is for sure: they're in favor of cutting taxes on the rich and keeping wages low for the poor. Sweet.

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John Kasich Wants to Slash Everything Except the Pentagon

| Wed Nov. 11, 2015 11:38 AM EST

How would John Kasich cut spending? Answer: his father was a mail carrier blah blah blah. OK, but did you want to name any specific steps, sir? Why certainly:

We would move the Medicare system from a 7 percent growth down to about a 5 percent growth. And I have a whole series of ways to do that. In Ohio, we reduced Medicaid funding for the poor from 10 percent to 2.5 percent, didn't cut one benefit or didn't take anybody off the rolls. Why? Because we're innovators. I've been an innovator my entire career. And I really don't care what special interests or lobbyists have to say. I have a job to do when I take over a public office. Now, we freeze non-defense discretionary for eight years. We also put an increase in defense spending. Our tax cuts balance out. And at the end of the day, we will get to a balanced budget.

So here is Kasich's plan: cut Medicare, cut Medicaid, cut domestic discretionary spending, and increase defense spending. And we already know he wants to cut Social Security. So his plan is to cut every single aspect of domestic spending and increase defense spending. And this guy is the moderate in the field.

Trump, Carson Duel For Title of Least Prepared Commander-in-Chief

| Wed Nov. 11, 2015 11:27 AM EST

One of the highlights of last night was watching the outsiders talk about foreign policy. Gerard Baker asked Ben Carson if he approved of President Obama's decision to send special ops teams into Syria. Here's his answer, in all its glory:

Well, putting the special ops people in there is better than not having them there, because they — that's why they're called special ops, they're actually able to guide some of the other things that we're doing there. And what we have to recognize is that Putin is trying to really spread his influence throughout the Middle East. This is going to be his base. And we have to oppose him there in an effective way.

We also must recognize that it's a very complex place. You know, the Chinese are there, as well as the Russians, and you have all kinds of factions there. What we've been doing so far is very ineffective, but we can't give up ground right there. But we have to look at this on a much more global scale. We're talking about global jihadists. And their desire is to destroy us and to destroy our way of life. So we have to be saying, how do we make them look like losers? Because that's the way that they're able to gather a lot of influence.

And I think in order to make them look like losers, we have to destroy their caliphate. And you look for the easiest place to do that? It would be in Iraq. And if — outside of Anbar in Iraq, there's a big energy field. Take that from them. Take all of that land from them. We could do that, I believe, fairly easily, I've learned from talking to several generals, and then you move on from there.

Translation: I have no idea what to do in the Middle East. And even though I've been running for president for a year, I'm too lazy to learn even the first thing about it.

Then there was Donald Trump's even more gloriously ADD response to a question about how he'd handle Russia:

Well, first of all, it's not only Russia. We have problems with North Korea where they actually have nuclear weapons. You know, nobody talks about it, we talk about Iran, and that's one of the worst deals ever made. One of the worst contracts ever signed, ever, in anything, and it's a disgrace. But, we have somebody over there, a madman, who already has nuclear weapons we don't talk about that. That's a problem.

China is a problem, both economically in what they're doing in the South China Sea, I mean, they are becoming a very, very major force. So, we have more than just Russia. But, as far as the Ukraine is concerned, and you could Syria — as far as Syria, I like — if Putin wants to go in, and I got to know him very well because we were both on 60 Minutes, we were stablemates, and we did very well that night. But, you know that.

But, if Putin wants to go and knock the hell out of ISIS, I am all for it, 100%, and I can't understand how anybody would be against it....They blew up a Russian airplane. He cannot be in love with these people. He's going in, and we can go in, and everybody should go in. As far as the Ukraine is concerned, we have a group of people, and a group of countries, including Germany — tremendous economic behemoth — why are we always doing the work?

I'm all for protecting Ukraine and working — but, we have countries that are surrounding the Ukraine that aren't doing anything. They say, "Keep going, keep going, you dummies, keep going. Protect us..." And we have to get smart. We can't continue to be the policeman of the world. We are $19 trillion dollars, we have a country that's going to hell, we have an infrastructure that's falling apart. Our roads, our bridges, our schools, our airports, and we have to start investing money in our country.

....I don't like Assad. Who's going to like Assad? But, we have no idea who these people, and what they're going to be, and what they're going to represent. They may be far worse than Assad. Look at Libya. Look at Iraq. Look at the mess we have after spending $2 trillion dollars, thousands of lives, wounded warriors all over the place — who I love, OK? All over.

We have nothing. And, I said, keep the oil. And we should have kept the oil, believe me. We should have kept the oil.

Translation: Russia! North Korea! Iran! Ukraine! Syria! ISIS! Germany! Ukraine again! Assad! Libya! Iraq! Oil! Keep the oil! But we should let other people handle all this because our roads are falling apart.

Republicans can't seriously be thinking about nominating either of these guys, can they?

University of Missouri Police Name Suspect Accused of Social Media Threats Against Black Students

| Wed Nov. 11, 2015 10:38 AM EST

After a night of confusion and fear on the Columbia campus of the University of Missouri, police announced on Wednesday morning that they had arrested a suspect, Hunter M. Park, for "making a terrorist threat" against black students and faculty on the anonymous social media platform, Yik Yak:

Police said the person was not on or near university grounds when the threats were first published online.

The uptick in campus-wide concern came just a day after University System President Tim Wolfe and Chancellor R. Bowen Loftin announced they would step down amid pressure from students, a hunger strike, and a boycott from the Missouri football team in response to a flurry of racially charged incidents that have plagued the campus in recent weeks.

Shortly before 8 p.m. on Tuesday, a notice was sent out on the university alert system noting that authorities were "aware of social media threats" and that officials were beefing up security. At 10 p.m., MUPD announced the threats were under investigation. MUPD Maj. Brian Weimer told the Maneater, a student newspaper: "We're aware of it and we're looking and trying to identify who it is."

The posts in question were widely shared on social media Tuesday night, and sparked panic on campus. "Some of you are alright," one message read. "Don't go to campus tomorrow."

While representatives from the university's student government urged administrators to cancel classes on Wednesday "due to the nature of threats on campus," an alert sent late Tuesday by the university cautioned against spreading rumors and added that there was "no immediate threat to campus." University Provost Garnett Stokes told reporters a decision on class cancelation would be made in the early morning on Wednesday.

As of Wednesday morning, most classes were scheduled to take place as normal.

This isn't the first time university police had to deal with threats on the anonymous social network. Last December, in the wake of student demonstrations over racial tensions on campus, commenters took to Yik Yak to post a flurry of racist and insensitive anonymous notes. One yak noted: "Lets burn down the black culture center & give them a taste of their own medicine."

Carly Fiorina Creates Whole New Debate Technique

| Wed Nov. 11, 2015 10:31 AM EST

This was my favorite moment of the debate last night:

BAKER: In seven years under President Obama, the U.S. has added an average of 107,000 jobs a month. Under President Clinton, the economy added about 240,000 jobs a month. Under George W. Bush, it was only 13,000 a month. If you win the nomination, you'll probably be facing a Democrat named Clinton. How are you going to respond to the claim that Democratic presidents are better at creating jobs than Republicans?

FIORINA: [Looks like a deer in headlights.] Well, first of all, I must say as I think about that question, I think about a woman I met the other day. [blah blah blah, playing for time, hoping everyone will forget the question.] Yes, problems have gotten much worse under Democrats.

This is a brand new technique. Normally, when candidates are faced with a tough question, they ignore it and answer a different question. Fiorina tried to do this at first. But then she decided on a new tack: answer the exact opposite question. Baker cites numbers to show that Democrats are great at job creation, so Fiorina acknowledges that yes, he's right, things have gotten much worse under Democrats.

Will this bold ploy catch on? Baker certainly didn't challenge her on it. I expect to see other candidates give this a shot in future debates.