Friday Cat Blogging - 10 June 2016

Marian bought a new pod a few days ago. Apparently it's supposed to look like a rock, but I'd say it looks more like Jetsons-retro. All it needs is an antenna to complete the look. It's now upstairs in the sewing room, where both cats compete for it off and on.

In other news, Palmerston the Foreign Office cat is learning Japanese.

I commented briefly yesterday on the CBO's latest report about the distribution of household income, but I didn't get a chance to show you the main event: Income growth since the Reagan era. Here it is:

The nice thing about the CBO income estimates is that they're pretty comprehensive. This one, for example, shows market income, which consists of labor income (including cash wages, health insurance, and the employer’s share of Social Security, Medicare, and federal unemployment insurance payroll taxes), business income, capital income (including capital gains), and retirement income. Other CBO income measures include government transfers, so you can get a good sense of how incomes are affected by social welfare programs.

As you can see, the market incomes of the rich bounce up and down a fair amount because they rely on volatile income sources like stocks and other investments. 2013 was not a good year for them—though we already know that they made up some of this ground in 2014 and 2015.

But for the unrich—which is, roughly speaking, everyone making less than $100,000 per year—nothing ever changes. During a period when real GDP per capita increased 77 percent, the income of the unrich has increased only 18 percent. That's about half a percent per year, and all of it came from a single decade: 1993-2003. The rest of the time there's been literally zero growth in the income of the unrich.

Economic anxiety may not be the real motivation for angry voters in this election, but it sure ought to be.

A new Pew report says that Hispanics are pretty optimistic about the future. Ben Casselman comments:

Hispanics’ optimism seems to fly in the face of one of the dominant narratives of this year’s presidential campaign: voters’ economic anxiety. Despite an economy that has, by most conventional measures, improved by leaps and bounds since President Obama took office, Donald Trump and, to a lesser degree, Bernie Sanders have successfully tapped into a deep well of anger and fear about the country’s economic direction. But that anger is concentrated among whites; many minority voters, as the Pew survey shows, are far more optimistic.

A few months back, I argued that voters’ anger stems more from longer-run anxiety than from concern over their immediate economic prospects....Gallup in recent months has shown a divergence between Americans’ relatively positive assessment of their current economic conditions and their increasingly pessimistic outlook.

But for many non-whites, the pattern is the opposite: They are concerned about the present but optimistic about the future....40 percent said their finances were in good shape, compared with 43 percent for the public at large — but they see brighter days ahead. More than 70 percent expect their children to be better off than they are.

If you insist on continuing to look at this year's election through an economic lens, you'll never figure out what's going on. Overall, middle-class incomes have been pretty stagnant over the past couple of decades: up during the dotcom boom, down during the Great Recession, and ending up pretty close to where they were in 1994. That's obviously a source of frustration. But it's not as if this only affected whites while blacks and Hispanics have been kicking ass:

"Economic anxiety" as a campaign issue has always been a red herring. And even if you back off a bit and try to limit it solely to the notion that whites are losing ground to minorities, the evidence still doesn't back you up. You can cherry pick here and there if you want to make that case, but it's tough sledding. Basically, everyone's been in the same boat, and blacks and Hispanics haven't really made up any ground versus whites.

So white anger isn't really about blacks and Hispanics taking their jobs. Or about blacks and Hispanics making more money and leaving whites behind. Nor do whites have any special economic reason to be more pessimistic about the future than blacks and Hispanics.

If you want to get to the root of this white anxiety, you have to go to its roots. It's cultural, not economic. It's demographics, not paychecks. It's about not being the boss anymore. It's about lower-class white communities now exhibiting pathologies—drug abuse, low marriage rates, etc.—that were once reasons for them to look down on blacks.

Really, we just need to give up on the whole "economic anxiety" argument. When something only affects whites and lacks any real economic motivation, race is a whole lot more likely to explain things than jobs. Let's not keep looking around the economic lamppost just because the light is better there.

Karin Lang, a State Department official responsible for records management, testified yesterday about Hillary Clinton's email practices:

Lang, a career employee who in July 2015 became director of the Executive Secretariat staff, which is responsible for records management, said that while a unit responsible for FOIA requests was told that Clinton had no government email account when she took office in January 2009, no one in the unit ever asked whether she used a personal account to conduct business before she stepped down in 2013.

"Prior to Secretary Kerry, no secretary of state used a email address," said Lang, supporting an explanation given by aides to the presumptive Democratic nominee for president that her email setup while at State was not unusual.

…Lang said that the FOIA office did not begin to search for records in response to Judicial Watch's 2013 request for information concerning Abedin's employment until after the group sued, and that at the unit chief's direction, the FOIA office searched only human-resources records, not emails.

Apparently the head of State's FOIA unit "grew curious" about Hillary's email arrangement when that famous picture of her using a BlackBerry first appeared. It just goes to show that fame has both its ups and downs.

But now a question. This is probably going to expose an embarrassing lack of knowledge, but I finally have to ask. After Vice News1 filed its lawsuit against Hillary, a judge eventually ordered State to release every single email she had sent and received as secretary of state. Another judge recently ordered a similar broad release in a different case brought by the Republican National Committee.

What's the deal with this? Has any cabinet officer ever been ordered to release the entirety of his or her correspondence—either hard copy or digital—before? Is a broad FOIA request all that's required? Or does this kind of thing only happen to Hillary Clinton?

1Or Judicial Watch? Or someone else? I can't keep all 35 suits demanding the release of Hillary's emails straight.

Thursday Egyptian Goose Blogging

Still no sightings of the baby geese. Soon, I'm going to be reduced to posting pictures of seagulls. But not yet! Today we have a lovely Egyptian Goose. Which is actually a duck. But as you've probably figured out, I'm pretty casual about types of waterfowl, so this doesn't bother me. In my book, they're all ducks anyway.

Under Obamacare, employers are required to either provide health insurance to their full-time employees or else pay a fine. In 2015, this mandate went into effect for companies with over 100 employees. In 2016 it went into effect for companies with over 50 employees.

A "full-time" employee is one who works 30 hours per week or more, so it makes sense that some small companies might have cut the hours of their full-time employees in order to avoid having to pay for health insurance. But did that actually happen?

This is a surprisingly hard question to answer. There's some anecdotal evidence from small business owners who say they've done exactly that, but only a little. Nor is there much from workers. But really, we'd prefer quantitative evidence anyway. If there are a lot of employers doing this, it should show up in the numbers.

But which numbers? Ideally, we'd like to see evidence of workers getting their work week cut to exactly 29 hours. That would be strong evidence that Obamacare was at fault. But we don't have those numbers. Alternatively, we could compare adjoining regions with and without the mandate, and compare their rate of part-time workers. If one region stayed steady and the other increased right around 2015 and then again in 2016, Obamacare would be the likely culprit. But the mandate is nationwide, so we can't do that.

So what can we do? Well, we could create a model of part-time workers that fits the past, and then see how it well it predicts what happened after Obamacare went into effect. A Goldman Sachs economist did just that, and came up with these charts for the food-service and retail industries, the ones that have always been the most resistant to providing their workers with health insurance:

The model says the number of workers who are part-time involuntarily should have followed the green dashed line, but in reality the number only went down as much as the solid blue line. This gap suggests that we have more involuntary part-time workers than we should, which led conservative sites to report that Obamacare is "forcing hundreds of thousands of people into part-time work." But Michael Hiltzik of the LA Times notes that the author of the report is considerably more circumspect. You can read about it here.

But I think there's a bigger problem here. The aftermath of the Great Recession has been unique in a lot of ways, which means that models of previous recessions probably aren't very reliable forecasters. That's especially true when you're dealing with very small numbers, as we are here.

And then there's a yet bigger problem: I don't think Goldman's economist even used the right numbers in the first place. His model relies on the number of people who report that they're working "part-time for economic reasons," but there are two kinds of these workers. The first are those who can't find full-time work because the economy is bad. That's not what we're looking for. The second are workers who report that they "could find only part-time work." That's what we're after: People who want to work full-time, but have been put on part-time status for reasons other than slack labor conditions.

So did Obamacare cause a change in that number? We don't have a model, but we don't need one—at least, not for starters. The first step is much simpler: just look at the trendline and see if there's any kind of inflection point when the mandate went into effect. Here's the chart:

I don't see anything. The 2015 mandate was pretty weak, and I wouldn't expect that it had much effect. But the 2016 mandate was more serious and applied to more businesses, so I would expect to see something there. And yet...there's nothing. The trendline doesn't show any change at all—and certainly nothing like 200-300,000 workers. That would be a big spike on a chart that only goes from 2 million to 2.7 million in the first place.

This is all kind of peculiar. I never bought the conservative arguments of part-time Armageddon, but it makes sense that some employers would try to save money by reducing their number of full-timers. Looking at the data, though, I'm hard pressed to see any effect. If I squint real hard, maybe I can convince myself that the trendline took a jump in Q3 of last year and never fully recovered from it. Or, who knows: maybe that spike in May of 2016 will continue—though it's not clear why a mandate beginning in January would suddenly cause employers to react five months later.

In any case, those are both nits. As it stands, the evidence suggests almost no effect at all. And that's something I'd like to understand better. The interesting question here isn't why part-time employment spiked, it's why part-time employment didn't spike. It seems like it should have. Once again—as it's done before—Obamacare is working even better than I would have expected.

Elizabeth Warren Just Endorsed Hillary Clinton

In an interview with the Boston Globe this evening, Sen. Elizabeth Warren formally endorsed presumptive Democratic presidential nominee Hillary Clinton:

“I’m ready,” said Warren in an interview with The Globe Thursday evening. “I’m ready to jump in this fight and make sure that Hillary Clinton is the next president of the United States and be sure that Donald Trump gets nowhere near the White House.”

Earlier in the evening, Warren gave an "I'm going to light you on fire and burn you to the ground" speech attacking Donald Trump at the American Constitution Society of Law and Policy.

The Massachusetts senator (who also happens to be the left's secret internet girlfriend) is supposed to appear tonight on The Rachel Maddow Show (Maddow is also a secret internet girlfriend of the left) to talk about why she didn't endorse the left's secret internet boyfriend, Bernie Sanders. (The left gets around…in secret…on the internet.) I'll update this with video when that happens.

UPDATE: Wow, that was a really powerful interview Warren just gave on The Rachel Maddow Show.

Here's a clip from it. I'll post the rest as soon as MSNBC posts it.

Conservatives crack me up sometimes. Here is NR's newest writer, Dan McLaughlin:

Now that President Obama has formally endorsed his former Secretary of State for President, it’s no longer possible for him — or a Justice Department directly answerable to him — to rule impartially on whether she or her close associates should be indicted over her mishandling of classified emails....The problem of an Administration investigating itself is an intractable one, and we should not want a return to the unconstitutional, abusive runaway prosecutorial system that existed under the Independent Counsel statute during the Carter, Reagan, Bush and Clinton years.

So what's the answer? To appoint a special prosecutor, of course.

This is transparent special pleading. Obama has always supported both Hillary and Bernie. He's a Democrat. Nothing in his official endorsement of Hillary today changes that. Nor does the nonpartisanship of the FBI change in any way. If their investigation produces evidence of lawlessness but Loretta Lynch decides not to prosecute Hillary regardless, that would be far more damaging than anything a special prosecutor could ever do.

But appointing a special prosecutor does accomplish one thing: it stretches out the investigation. So how does that work out? We elite blogger types are fond of pseudo-sophisticated stuff like "explaining" things in terms of game theory, so let's give that a try. Here's a simple game theory matrix that shows the possible outcomes of the email investigation:

The thing to note is that the DOJ investigation is clearly better for Republicans if the current FBI investigation indicates that Hillary is guilty. Either she's indicted and her campaign is over, or Loretta Lynch refuses to file charges and produces a massive backlash that almost certainly wrecks Hillary's campaign. By contrast, a special prosecutor produces very little that would harm Hillary during the campaign.

But if Hillary is innocent, then the special prosecutor is a better choice because there's no prospect of a clear exoneration during the campaign. Regardless of the evidence, a special prosecutor would stretch things out for many more months, leaking lovely tidbits along the way.

In game theory terms, then, a DOJ investigation is the dominant conservative strategy if Hillary broke the law. A special prosecutor is the dominant conservative strategy if Hillary did nothing illegal. (Dumb, maybe, but not illegal.) So the fact that conservatives like McLaughlin want a special prosecutor is pretty good evidence that they know perfectly well she's innocent. If they really thought she was guilty, they'd be salivating over the upcoming FBI report and utterly opposed to anything that might delay it.

Max Ehrenfreund passes along the latest from the Congressional Budget Office today:

Here’s proof President Obama really did reduce inequality

Income inequality declined abruptly in 2013 after President Obama and Congress negotiated an increase in taxes on the wealthiest Americans, according to new federal data. The legislative changes resulted in the most onerous federal tax system for the rich in almost 20 years. As a result, 2013 was an unusual year for the economy, one of only a handful of years in recent decades in which inequality has decreased, outside recessions.

The CBO report is here. The reduction in inequality from the tax change is the blip at the very end of the chart:

I'd take a couple of lessons from this. First: yes, taxes can affect inequality. CBO estimates that the reduction in GINI attributable to federal taxes got bigger (i.e., more negative) after the Clinton tax increase; got smaller after the Bush tax cuts; and got bigger again after the Obama tax increase. Second: these effects usually seem to wash out after a few years, reverting to the mean. Third: taxes matter, but not nearly as much as spending. Inequality reductions from government spending (Social Security, SNAP, Medicaid, etc.) are more than double those from taxes.

If you want to increase taxes on zillionaires, I'm with you. But if you really want to make a dent in inequality, you should also be eager to raise taxes across the board and then spend the money on things like pre-K, health care, and so forth. That's probably where you'll get the biggest bang for the buck.

Finally, for your enjoyment, here's a chart of increasing GINI (i.e., increasing income inequality) in the United States since 1967 as measured four different ways. There's really no good reason to include it here. However, I thought I had a point to make before realizing, after I'd finished, that I didn't.1 There's no good reason to waste a perfectly good chart, though, so here it is.

1This pretty much describes my entire morning, by the way.

I was taking a look at something else this morning, and then decided to put it off because I wasn't sure I was measuring the right thing. But along the way I happened to take a look at one of my favorite wage series, the one for production and nonsupervisory workers. I think of this as basically measuring "blue-collar wages."

Anyway, it turns out to be a bracing example of how important seemingly arcane technical points can be. How have blue-collar workers done over the past half century? Well, if you measure inflation via the Consumer Price Index (brown line), they've gone nowhere. Literally. They're making exactly as much today as they did in 1970. But if you measure inflation via the Personal Consumption Expenditure Index (red line), their wages have gone up nearly 30 percent. That's not spectacular—real GDP per capita has increased 121 percent since 1970—but it's a lot better than zero.

So which is it? You can make a case for both, and it has a big impact on how you view the economy of the past half century and what kinds of policies you support. Which one do you think is more accurate?