The Tentacles of the Fed

You've heard of "regulatory capture," right?  This is the phenomenon in which interest groups end up running the government agencies originally designed to rein them in.  So farm interests dominate the USDA, Wall Street interests dominate the SEC, corporations dominate the NLRB, etc.

Today, Ryan Grim suggests that exactly the opposite has happened with the Federal Reserve.  The field of monetary economics is relatively small, and a startling number of its practitioners either currently work for the Fed or have at one time.  So if you want to get ahead in the field, it pays not to be too critical of the Fed:

The Federal Reserve's Board of Governors employs 220 PhD economists and a host of researchers and support staff, according to a Fed spokeswoman. The 12 regional banks employ scores more.

....It's fair to [estimate] that there are something like 1,000 to 1,500 monetary economists working across the country. Add up the 220 economist jobs at the Board of Governors along with regional bank hires and contracted economists, and the Fed employs or contracts with easily 500 economists at any given time. Add in those who have previously worked for the Fed — or who hope to one day soon — and you've accounted for a very significant majority of the field.

....Affiliations with the Fed have become the oxygen of academic life for monetary economists. "It's very important, if you are tenure track and don't have tenure, to show that you are valued by the Federal Reserve," says Jane D'Arista, a Fed critic and an economist with the Political Economy Research Institute at the University of Massachusetts, Amherst.

....The Fed [also] keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank's money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.

"Try to publish an article critical of the Fed with an editor who works for the Fed," says [Jamie] Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.

Read the whole thing.  Even Paul Krugman gets into the act, claiming that ever since he began criticizing Alan Greenspan a few years ago, he's been blackballed from the Fed's annual Jackson Hole get-together of everyone who's anyone.

Overall, though, this is more a sociological critique than a claim that the Fed uses its raw power to stifle dissent.  Rather, you pull your punches a bit knowing that the editor of the journal you're submitting to used to work for Greenspan.  You dial it down a notch because someday you might want a job at the Fed yourself.  You stay within the mainstream because that's the safest place to be when upwards of half your profession depends on the largesse of the Fed to feed their families.

Is this true?  I don't know, but it certainly sounds plausible — and the circle of monetary economists really is startlingly small.  And from a journalistic point of view, the great thing about this story is that it's nonfalsifiable: the more economists who pooh pooh your theory, the more proof you have that they've all been captured by the Fed.  And you have to admit, it sure explains a lot about what happened over the past decade or so.  Did 98% of the profession really believe that there was no housing bubble in 2004?  Or did they just decide that staying quiet was a better career move?  The latter seems rather more likely, doesn't it?

(Via Tim Fernholz.)

Joe Wilson Wins Nativist Vote

Rep. Joe Wilson may have apologized for heckling the president during his speech to Congress Wednesday, but plenty of people apparently wish he hadn't, most notably, Rush Limbaugh. But his outburst has earned him support among another fringe of the right-wing: immigration foes, who were thrilled to hear Wilson vocally challenge Obama on his claim that health care reform would not cover illegal immigrants. Today, the Americans for Legal Immigration PAC (ALI-PAC) came to Wilson' defense, urging supporters to speak out online and on talk radio to support the South Carolina Republican.

"It is a real shame that the rest of Congress was not on their feet pointing out the President's lie about illegal aliens in his Health Care plans along with Joe Wilson," said William Gheen, the group's executive director. "Joe Wilson yelled out what millions of Americans were thinking during Obama's speech. We agree with what Joe Wilson said, even if we did not, we would defend his right as an American to speak his mind."

Gheen became a media phenom in 2005 after fighting a North Carolina bill that would have allowed some non-citizens to qualify for in-state tuition at some of North Carolina's public colleges and universities. A talk radio host, he is a prominent promoter of the reconquista conspiracy theory, believing that Mexicans are plotting to seize American territory. He has close ties to the Minutemen and other anti-immigration factions that the Southern Poverty Law Center has deemed hate groups. Wilson may have disgraced his party last night, but for guys like Gheen, Wilson is a bona fide hero.

Ted Kennedy's Letter to Barack Obama

In his address to Congress, President Barack Obama quoted a letter that Senator Ted Kennedy wrote him after he learned he was soon to die. It's worth reading the whole note:

May 12, 2009

Dear Mr. President,

I wanted to write a few final words to you to express my gratitude for your repeated personal kindnesses to me – and one last time, to salute your leadership in giving our country back its future and its truth.

On a personal level, you and Michelle reached out to Vicki, to our family and me in so many different ways. You helped to make these difficult months a happy time in my life.

You also made it a time of hope for me and for our country.

When I thought of all the years, all the battles, and all the memories of my long public life, I felt confident in these closing days that while I will not be there when it happens, you will be the President who at long last signs into law the health care reform that is the great unfinished business of our society. For me, this cause stretched across decades; it has been disappointed, but never finally defeated. It was the cause of my life. And in the past year, the prospect of victory sustained me-and the work of achieving it summoned my energy and determination.

There will be struggles – there always have been – and they are already underway again. But as we moved forward in these months, I learned that you will not yield to calls to retreat - that you will stay with the cause until it is won. I saw your conviction that the time is now and witnessed your unwavering commitment and understanding that health care is a decisive issue for our future prosperity. But you have also reminded all of us that it concerns more than material things; that what we face is above all a moral issue; that at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.

And so because of your vision and resolve, I came to believe that soon, very soon, affordable health coverage will be available to all, in an America where the state of a family’s health will never again depend on the amount of a family’s wealth. And while I will not see the victory, I was able to look forward and know that we will – yes, we will – fulfill the promise of health care in America as a right and not a privilege.

In closing, let me say again how proud I was to be part of your campaign- and proud as well to play a part in the early months of a new era of high purpose and achievement. I entered public life with a young President who inspired a generation and the world. It gives me great hope that as I leave, another young President inspires another generation and once more on America’s behalf inspires the entire world.

So, I wrote this to thank you one last time as a friend- and to stand with you one last time for change and the America we can become.

At the Denver Convention where you were nominated, I said the dream lives on.

And I finished this letter with unshakable faith that the dream will be fulfilled for this generation, and preserved and enlarged for generations to come.

With deep respect and abiding affection,

Ted

It really is too bad that Kennedy won't be at the signing ceremony. And, yes, I am assuming there will be one.

You can follow David Corn's postings and media appearances via Twitter.

The Evolution of the Blogosphere

Scott Payne of the League of Ordinary Gentlemen has posted an interview with me about how the political blogosphere has evolved over the past seven years.  If this seems like the most gruesome topic possible, don't click the link.  Do not click the link.  If it sounds like a decent excuse to avoid work for a few minutes, however, go ahead.  Click away.  It's short, and Scott had the good taste to illustrate it with the best photograph ever taken of me.

Another Million Uninsured

Can we please please please not talk about Joe Wilson anymore?  Haven't we glorified enough assholes already this summer?  Via email, Bruce Bartlett says probably not:

No doubt, right wing publishers like Regnery and Crown will be beating down Wilson's door today to sign a book deal that will put him at the top of the New York Times bestseller list along with drivel from the likes of Michelle Malkin, who has probably already started writing her biography of Wilson, titled, "The Man Who Spoke the Truth."  By the end of the day a Wilson for President web site will be fully functioning if it isn't already.  Watch for the announcement on Glenn Beck’s show this afternoon.

OK, but we don't have to talk about it.  Instead, let's talk about this:

The U.S. Census Bureau said the number of uninsured Americans increased in 2008 to 46.3 million, compared to 45.7 million in 2007.

The poverty rate also increased to 13.2%, and the median family income declined to $50,303.  These are all worth far more discussion than the mentally unbalanced antics of yet another GOP congressman.

New Census Data: More Poor Kids, More Uninsured

The Census Bureau did a big data dump this morning, releasing its findings on poverty, income and health insurance coverage from 2008. The results aren't pretty, but there is some good news: The number of uninsured children has fallen from 8.1 million in 2007 to 7.3 million in 2008. Despite the recession, the number of uninsured children in the U.S. is the lowest it's been since 1987, a success largely attributable to the federal SCHIP program (whose expansion was twice vetoed by President Bush and heavily opposed by Republicans in Congress). But the rest of the report is truly dismal. The highlights:

The number of people without health insurance jumped from 45.7 million to 46.3 million. The number of people who get insurance from employers is still falling, while 87.4 million people got health insurance from the government, up from 83 million in 2007.

The official poverty rate jumped from 12.5 percent in 2007 to 13.2 last year, leaving nearly 40 million people in dire straits. That's the highest it's been since 1997. In a telling sign about the recession, the poverty rate among married-couple families is up significantly, jumping from 4.9 percent to 5.5 percent in 2008, while single parents remained steadily poor. And 19 percent of kids under 18 were living below the poverty line in 2008, up a full point from the previous year.

Finally, real median income tanked, falling 2.6 percent for white households and a whopping 5.6 percent for Hispanic families. People in the South took an especially bad beating, with median incomes there falling nearly 5 percent. No wonder those Southern Republicans are so pissed off.

 

 

Eco-News Roundup: Thursday September 10

Blue Marble-worthy stories from our other blogs, and around the net.

Health and Taxes: A tax reform vet gives his take on the healthcare debacle.

BPA Ban?: California is voting on banning bisephenol A from baby bottles. [LA Times]

Smart Human Tricks: Sen. Franken has an incredible geographic mind, draws nearly perfect map of US free-hand.

Single White Male: A new study shows who jumps from the Golden Gate Bridge, and ponders why. [San Francisco Chronicle]

 

A U.S. Soldier talks to a civilian at the control point outside a medical facility before a combined medical mission with Iraqi soldiers in Baghdad, Sept. 1, 2009. The U.S. Soldiers are assigned to the 1st Cavalry Division's 30th Heavy Brigade Combat Team. (U.S. Army photo by Pfc. Benjamin Boren.)

Today's must reads think Barack Obama is a LIAR!

  • "My Advice Is He Apologize Immediately" (WaPo)
  • David Corn: Obama's Speech: The Doctor Is In (MoJo)
  • E.J. Dionne: Obama Fires Back On Health Care Reform (WaPo)
  • Jim Ridgeway: Good Speech, Muddled Politics (MoJo)
  • We're Really Not Kidding: The Supreme Court Is Probably Going to Allow Unlimited Corporate Donations In Federal Elections (MoJo)
  • US Says Iran Has Ability To "Expedite" Nuke (NYT)
  • Black Sea Port a Flashpoint for Georgia and Russia (NYT)
  • Google Plans to Help Newspapers Charge for Content (NYT/Bits Blog)
  • Great War Reporting From McClatchy's Jonathan Landay (McClatchy)
  • What Birthers Believe (YouTube)
  • GOP Lawmaker's Graphic Sex-Bragging Caught On Tape (TPM)
  • How Medicare Is Communist—Really! (The Economist)

I post items like these throughout the day on twitter. You should follow me, of course. David Corn, Mother Jones' DC bureau chief, also tweets. So do my colleagues Daniel Schulman and Rachel Morris and our editors-in-chief, Clara Jeffery and Monika Bauerlein. Follow them, too! (The magazine's main account is @motherjones.)

Joe the Congressman

Joe Wilson's most recent tweet: (Monday)

Happy Labor Day! Wonderful parade at Chapin, many people called out to oppose Obamacare which I assured them would be relayed tomorrow to DC.

(To view cartoon in a larger format, go here.)