Eric Levitz writes about the strange habits of President-elect Donald Trump:

Donald Trump won't content himself with the standard-issue presidency—he's going to have his customized. Daily intelligence briefings are out, along with the norms that prohibit the appearance of corruption. "Victory rallies" are in—as is the private security force that policed dissent at Trump's events throughout his campaign.

Wait. What? I knew about this other stuff, but Trump is keeping his private security force? Isn't that what the Secret Service is for? Ken Vogel explains what's happening:

The arrangement represents a major break from tradition…But Trump—who puts a premium on loyalty and has demonstrated great interest in having forceful security at his events—has opted to maintain an aggressive and unprecedented private security force, led by Keith Schiller, a retired New York City cop and Navy veteran.

…In interviews with about a dozen people who interact with Trump, they said even as the president-elect's Secret Service detail has expanded significantly since the election, he remains most comfortable with Schiller and his team…The Trump associates say Schiller is expected to become a personal White House aide who would serve as the incoming president's full-time physical gatekeeper.

Every time we learn more about Trump, we learn what a total whack job he is. He's like a walking encyclopedia of neuroses. But maybe that's not so bad. Maybe this means he's perfect for America, since we seem to be a national encyclopedia of neuroses these days. I predict a land office business in Xanax over the next four years.

In the LA Times today, Jim Puzzanghera writes that "a small U.S. trade surplus with Mexico of about $1.7 billion in 1993 has ballooned into a large deficit — $61 billion last year." Here's the accompanying chart:

This does indeed give the impression of an ever-widening gap. But it's badly misleading because it doesn't take account of inflation and economic growth. Here's a better chart that shows the trade gap directly:

The US trade deficit with Mexico did indeed rise in the first decade after NAFTA. But for the past 15 years it's been flat. In 2002 it was 0.338 percent of US GDP. In 2015 it was 0.336 percent of GDP.

You can't look at stuff like this in nominal dollars. You have to account for economic growth (about 25 percent since 2002) and inflation (about 30 percent since 2002). Once you do that, you can see that, in fact, our trade deficit with Mexico hasn't changed at all for the past 15 years.

According to an article in JAMA Internal Medicine, Medicare patients who are hospitalized fare differently depending on whether their doctor is male or female:

The biggest difference is in the two sickest groups of patients: there's a distinctly higher rate of death among male doctors. And while the difference may look small, it suggests that male doctors are responsible for 32,000 more deaths per year among Medicare patients. The Washington Post helpfully points out that this poses a rather stark contrast to the fact that male doctors are paid an average of $20,000 more than female doctors.

The sample size of this study is very large—about 1.5 million patients—and the authors claim to have controlled for everything under the sun. I'll let others judge that. In the meantime, remember to always ask for a female doctor and never start a hospital stay on a Friday. If you don't have a choice—and you probably won't—then all I can do is wish you well.

For some reason, I've been thinking lately about news memes that I'm tired of hearing about. For example, I'm tired of hearing about how containers revolutionized shipping. I'm tired of hearing about Van Halen's brown M&Ms. And I'm tired of hearing endlessly about how US allies are supposedly worried because we haven't started a war over something. According to the New York Times, the latest sign of America's worrisome restraint is President Barack Obama's response to China's seizure of one of our research drones near the Philippines:

Across Asia, diplomats and analysts said they were perplexed at the inability of the Obama administration to devise a strong response to China’s challenge. It did not even dispatch an American destroyer to the spot near Subic Bay, a former American Navy base that is still frequented by American ships, some noted.

…The end result, analysts said, is that China will be emboldened by having carried out an act that amounted to hybrid warfare, falling just short of provoking conflict, and suffering few noticeable consequences. "Allies and observers will find it hard not to conclude this represents another diminishment of American authority in the region," said Douglas H. Paal, the vice president for studies at the Carnegie Endowment for International Peace.

Who knows? Maybe this kind of thing really does worry our allies. But if that's the case, maybe our allies need to settle down. Not everything is worth a military response. Not everything is even worth a sternly worded note. These kinds of penny-ante provocations are usually designed precisely to evoke a response, and it's usually best just to ride them out. That's especially true when there's nothing much we can do in the short term anyway, which means that any kind of aggressive response would almost inherently end up looking weak and incompetent.

Anyway, I have a feeling that if Donald Trump starts responding more belligerently, we'll start getting stories about how our allies are worried that America is stirring up trouble and they're the ones who will have to pay the price. They should be careful about what they wish for.

The fourth and final part of our series of charts from the Economic Report of the President has no theme. It's just three unrelated charts that I felt like posting. First up, here is the IMF's forecast of global growth over the six years since the end of the Great Recession:

Every year they think the decline in growth is over and the global economy will pick up again. And every year they're wrong. Now they're forecasting the same thing in 2016. Next year we'll find out if they're finally right.

Next up is a chart that shows how oil prices affect national economies in the Middle East:

Kuwait can balance its budget with an oil price of $50 per barrel. Saudi Arabia needs about $70. Bahrain needs $90. And Libya needs to start spending less.

Finally, here's a chart I've put up in various forms several times over the years:

We've grown used to thinking of health care costs as spiraling out of control, but that wasn't a regular fact of life until the early 80s. Then, for the next 20 years, health care inflation ran way higher than overall inflation. However, the gap started narrowing as early as the mid-90s. Here's a chart of my own that shows the gap directly:

Using a 10-year rolling average helps smooth out the spikes so we can focus on the trend instead. Medical inflation was fairly moderate in the late 50s and then declined fairly steadily to even lower levels until the early 80s. Then it skyrocketed, and this is the era we're most familiar with. But by the early aughts it had fallen back to its previous level in the 60s and 70s, and it's stayed there for the past 15 years.

The authors of the report try to make a case that the subdued medical inflation of the past few years is due to Obamacare, but they try too hard. Obamacare has likely had some effect, but basically it just had the good luck to go into effect at a time when medical inflation was already pretty low.

What this all shows is that we should change how we think of medical inflation. Most of us think of it as something that's out of control, and we hope that the recent slowdown isn't just a blip. Instead, we should think of the period from 1980-2000 as a blip. Except for those two decades, medical inflation has run steadily at about 1.5 percent above overall inflation, and there's no special reason to think this will change. That's the normal rate for the postwar era.

The Electrical College is set to vote tomorrow. There is a (likely doomed) effort underway to get Republican electors to vote for someone other than Donald Trump.

Last night, SNL aired a skit about this. To me, it is perfect.

Alec Baldwin also came back to 30 Rock to play President-Elect Donald Trump in this cold open about how he is stupid, which I'm sure the real Trump loved.

For more smart, fearless coverage of Love Actually, please read this 2,800 story about how it is great.


Part three of our series of charts from the Economic Report of the President is all about banking. Mostly, it's a trip down memory lane. Here's a look at the worldwide market in derivatives over the past couple of decades:

The volume of derivatives went from $10 trillion to $35 trillion in two years starting right before the market crashed. Here's another perspective on that:

In 1990, shadow banking was about the same size as the traditional banking sector. By 2007 it was more than twice as big. Just before the crash, shadow banking comprised two-thirds of the entire banking industry and it was almost entirely unregulated. This is why I was happy that Hillary Clinton at least mentioned shadow banking during the campaign.

Here's how all this affected traditional banks:

In 2007, losses from trading amounted to about $30 billion. By 2009 that had skyrocketed to about $100 billion—and that's in addition to about $40 billion in traditional loan losses. This is what happens when you start with a housing market that's already in bubble territory and then egg it on with insane levels of rocket science derivatives, most of them unregulated bastard offspring of the shadow banking sector.

So what's happened since then? We had a huge crash, the Fed instituted higher capital ratios for "systemically important financial institutions," and we passed the Dodd-Frank reforms. Here's what banks look like now:

Before the Great Recession, the biggest banks (green line) had Tier 1 equity ratios of about 7 percent. That's why they couldn't weather the crash. Today they're above 12 percent. Is that enough? Maybe not. But it's a helluva lot better than it used to be.

Finally, here's an intriguing chart that shows one of the specific consequences of Dodd-Frank:

Most single-name derivatives are now cleared through a central clearinghouse, which makes it easy for traders to cancel out mirror-image positions they hold. This is called "compression," and it reduces the total volume of derivatives and increases the safety of the financial system. Today, derivatives worth $200 trillion (notional) are compressed out of existence each year.

Needless to say, Republicans are hellbent on repealing Dodd-Frank. Sure, it makes the banking system safer and helps protect consumers, but big banks don't like it, so that's that. The party of Donald Trump, the working man's president, will do whatever Wall Street tells them to do. Funny how that works, isn't it?

Bernie Woulda Lost

Andrew Gelman takes issue with my claim that Bernie Sanders would have been a sure loser if he'd run against Donald Trump:

My guess would be that Sanders’s ideological extremism could’ve cost the Democrats a percentage or two of the vote....But here’s the thing. Hillary Clinton won the election by 3 million votes. Her votes were just not in the right places. Sanders could’ve won a million or two votes less than Clinton, and still won the election.

....The 2016 election was just weird, and it’s reasonable to say that (a) Sanders would’ve been a weaker candidate than Clinton, but (b) in the event, he could’ve won.

I won't deny that Sanders could have won. Gelman is right that 2016 was a weird year, and you never know what might have happened.

That said, I really don't buy it. This sounds like special pleading to me, and it relies on a truly bizarre scenario. We know that state votes generally follow the national vote, so if Sanders had lost 1-2 percentage points compared to Clinton, he most likely would have lost 1-2 percentage points in Wisconsin, Michigan, and Pennsylvania too. What's the alternative? That he somehow loses a million votes in liberal California but gains half a million votes in a bunch of swing states in the Midwest? What's the theory behind that?

And lucky me, this gives me a chance to bring up something else: the assertion that Sanders might very well have won those Midwestern swing states that Clinton lost. The argument is that all those rural blue-collar whites who voted for Trump thanks to his populist, anti-trade views would have voted for Sanders instead. After all, he also held populist, anti-trade views.

But this is blinkered thinking. It focuses on one positive aspect of Sanders' platform while ignoring everything else. Take all those white working-class folks who have sucked up so much of our attention lately. Sure, many of them voted for Trump. And sure, part of the reason was his populist economics. But it wasn't just that. They also liked the fact that he was anti-abortion and pro-gun and wanted to kick some ass in the Middle East. Would they also have voted for a guy who opposed TPP but was pro-abortion and anti-gun and non-interventionist and in favor of a gigantic universal health system and promoted free college for everyone and was Jewish? A guy who is, literally, the most liberal national politician in the country?

Sure, maybe. But if that's what you're counting on, you might want to rethink things. It's absolutely true that Hillary Clinton ran 5-10 points behind Obama's 2012 numbers in the Midwest. It's also true that Obama was the incumbent and Mitt Romney was a pro-trade stiff who was easy to caricature as a private equity plutocrat who downsized working-class people out of their jobs. Was there more to it than that? Perhaps, and that's something for Democrats to think about.

Whatever the case, though, Sanders would have found it almost impossible to win those working-class votes. There's no way he could have out-populisted Trump, and he had a ton of negatives to overcome. And that's not even taking account of how Trump would have attacked him. Sanders hasn't had to run a truly contested election for a long time, and he flipped out at the very mild attacks he got from Hillary Clinton. I can't even imagine how he might have reacted to Trump's viciousness.

But I will take this chance to clarify one thing. American politics is so polarized that both parties are pretty much guaranteed about 45 percent of the two-party vote. So when I say Sanders would have lost in a landslide, that's all I mean. Instead of Clinton's 51-49 percent victory in the popular vote, my guess is that Sanders would lost 47-53 or so. In modern presidential politics, that's a landslide.

Part two of our series of charts from the Economic Report of the President is all about higher education. First off, here's the college premium over time:

When I graduated from my local state university in 1981, I had no debt because attending public universities was practically free. On the other hand, my earning prospects were only about 20 percent higher than a non-college grad. Today, college grads often have tens of thousands of dollars in debt, but their earning prospects are 70 percent higher than non-college grads. So who got the better deal? That's not entirely obvious.

Next up is a different measure of the value of a college education:

This helps answer the question, "How high can university costs go?" The answer is, "Pretty high." Even with higher tuition, college is still a great deal. A bachelor's degree, on average, pays off nearly 10:1. That means there's a lot of room to raise tuition and still provide enough of a bargain that anyone who's qualified will be willing to pay. Treating higher education this way may be a bad idea, but nevertheless, this chart suggests that states can continue to raise prices if they want to.

The first two charts have been all about nonprofit schools: community colleges, state universities, and private universities like Harvard and Morehouse. But for-profit institutions—which are typically trade schools—have exploded over the past three decades:

The number of trade schools has skyrocketed since 1987, from about 300 to well over a thousand. And that brings us to our final chart:

At first glance, this chart seems odd: the students with the smallest debt have the highest chance of defaulting. There are multiple things going on here, but the biggest one is that a lot of these students attended trade schools for a semester or a year and then dropped out. Their debts aren't the biggest, but with not even a trade school certificate they can only get low-paying jobs that make it very hard to pay back their loans.

Too often, for-profit schools cajole people into signing up with promises that the government will pay for everything. Unfortunately, a lot of their students just aren't suited for further schooling, so they drop out and end up with less than nothing: no certificate, and a big chunk of debt. The trade schools themselves don't care much, since they get paid whether anyone graduates or not, but it's a helluva bad deal for the students who end up broke. This is why President Obama's recent crackdown on the worst offenders among for-profit trade schools is so welcome.

ERP? Yes indeed. That's what the cool kids call the Economic Report of the President. The 2017 edition is out, so this weekend I'm going to highlight a few of the charts that caught my eye. These are not necessarily the most important topics in the report. They just happened to strike me as interesting and worth sharing more widely. I'm mostly going to present them without much commentary.

In previous times, I would have called this a series of blog posts. Today I suppose I should call it a blogstorm. Gotta keep up with the lingo, after all. Our first topic is income inequality. Here's the impact of the 2009 stimulus bill and the Making Work Pay tax credit:

And here's the impact of changes in tax policy (primarily the effects of the "fiscal cliff" negotiations, which renewed the Bush tax cuts for all but high-income taxpayers):

And finally, here it is all put together: stimulus, tax changes, and Obamacare:

The lowest-income folks saw their after-tax income increase by about 18 percent. The after-tax income of the top 1 percent declined by about 5 percent and the top 0.1 percent declined by about 10 percent.

Not bad. Sadly, nothing infuriates Republicans more than reducing income inequality, and they will do everything they can to reverse this and then some over the next four years. The rich can never be too rich and the poor can never be too poor in GOP land.