Kevin Drum - July 2010

Where are the Liberal Hacks?

| Mon Jul. 5, 2010 4:03 PM EDT

Last Friday, following the release of some pretty lousy employment numbers, the White House tried its best to provide some positive spin about the state of the economy ("signs of gradual labor market recovery....private sector employment has increased....continued signs of healing"). Liberal economists were having none of it, however, and Jonathan Bernstein wants to know why:

My question, which I've asked before: where are the hack liberal economists? One would think that there's a real market niche here that someone would fill. I can think of two possible reasons that it's not happening. Perhaps there is no such niche — that is, there are few Democrats out there in the nation eager to buy the product of anyone basically cheerleading for the White House. Or, perhaps the market exists, but liberal economists all have too much integrity to fill it, and insist on saying whatever they believe is true (or whatever they believe suits their policy goals), regardless of whether it rewards them with appearances on MSNBC talk shows and healthy book contracts.

Hmmm. There are, I'd say, more hacks among conservative economists (and economic hangers-on) than there are among liberals, so Jonathan's question is a good one. Still, I don't think that's the primary explanation here. I think it's simpler. Generally speaking, conservative economists like tax cuts. They like them all the time, but they especially like them as a stimulus measure, and that's exactly what they got from George Bush following the 2001 recession. Liberal economists, conversely, think increased spending is the best stimulus during a deep recession, and they aren't getting it from Obama. You can argue about whether this is Obama's fault or the Senate's fault or just the way things are, but still: Obama doesn't seem to be fighting very hard for the policy response that liberal economists want to see.

To the extent that Obama has done what they want, though, I'd say that liberal economists have reacted about the same way that conservatives did during the Bush era. Back then, conservatives spent a lot of time explaining how, if you looked at the numbers right, the Bush tax cuts were improving the economy. Today, liberal economists spend a lot of time explaining how, if you look at the numbers right, the 2009 stimulus bill is improving the economy. Likewise, in 2002 conservatives were insisting that we needed more tax cuts and today liberals are insisting that we need more stimulus.

So....there's not as big a difference as it seems. If Obama and Congress were giving liberal economists what they want, they'd probably be cheerleading as much as Larry Kudlow was during the Bush administration. I don't think they'd be deliberately twisting the numbers the way conservatives seem all too happy to do, but they'd still be cheerleading.

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Photoshopping the News

| Mon Jul. 5, 2010 1:28 PM EDT

Need a picture of a pensive and lonely Barack Obama stewing over the BP oil spill? Just create one! Jeremy Peters of the New York Times explains:

There was President Obama on the cover of the June 19 issue of The Economist, standing alone on a Louisiana beach, head down, looking forlornly at the ground.

The problem was, he was not actually alone. The photograph was just edited to make it look that way.

The unaltered image, shot on May 28 by a Reuters photographer, Larry Downing, shows Adm. Thad W. Allen of the Coast Guard and Charlotte Randolph, a local parish president, standing alongside the president. But in the image that appeared on The Economist’s cover, Admiral Allen and Ms. Randolph had been scrubbed out, replaced by the blue water of the Gulf of Mexico.

An Economist editor responds with some examples of obvious image alteration they've used in the past, but then falls down trying to explain why they did some pretty nonobvious alteration this time around:

I asked for Ms. Randolph [the woman next to Obama] to be removed because I wanted readers to focus on Mr. Obama, not because I wanted to make him look isolated. That wasn’t the point of the story. “The damage beyond the spill” referred to on the cover, and examined in the cover leader, was the damage not to Mr. Obama, but to business in America.

The Economist has a history of using photos more as illustrations than as objects of straight news, but this still crosses a line that a news magazine shouldn't cross. Hell, I wouldn't do something like this on my blog, let alone on the cover of the Economist. But decide for yourself. The full transformation is illustrated below — and yes, I used Photoshop to create it.

The Political Passive Voice

| Mon Jul. 5, 2010 12:34 PM EDT

Jay Newton-Small:

Remember how Jim Bunning blocked those unemployment benefits in March and everyone was outraged? Then when Tom Coburn did it in April, the outrage was a little less? With voter worries about deficit spending mounting, Republicans are now seeing benefits to blocking the extension of unemployment benefits unless they are paid for. Meanwhile, the GOP "obstructionism" continues to ignite the Democratic base. But while both parties see political gains ahead of the midterm elections, 1.3 million people are losing their only source of income this Independence Day.

It's easy to see how Republicans gain from this, and it really has little to do with "voter worries about deficit spending mounting." Last night we had some friends over for the 4th and I got to talking with one of them about politics. He's a conservative-leaning guy, but he was pretty upset about the unemployment situation. "Congress just took off for the holidays leaving this mess behind," he stewed. We went on to agree that everyone hates Congress. Its approval rating is somewhere between that of pedophile priests and Osama bin Laden.

But that's as far as it went: Congress. Not Republicans. Just "Congress." And that's why obstructionism works so well for them. Partisans are partisans and are going to hate the other party no matter what. But then there's the vast middle ground of people who lean one way or the other but don't spend all day reading blogs or listening to talk radio. And as long as they view the problem as "Congress," that's bad news for whoever's in charge at the moment.

Ben Nelson aside, there's not much question which party is holding up unemployment benefits. You know it, I know it, reporters know it, and political junkies of all stripes know it. But lots of people don't. They see a headline that says "Congress Adjourns Without Acting on Unemployment" and they don't read much further. Every time that happens, it's a big win for the GOP. And it happens a lot.

Is Our Kids Studying?

| Mon Jul. 5, 2010 11:23 AM EDT

An MIT professor emailed me a Boston Globe story this morning about how lazy college students have become lately. Here's the nut of the thing:

According to time-use surveys analyzed by professors Philip Babcock, at the University of California Santa Barbara, and Mindy Marks, at the University of California Riverside, the average student at a four-year college in 1961 studied about 24 hours a week. Today’s average student hits the books for just 14 hours.

The decline, Babcock and Marks found, infects students of all demographics. No matter the student’s major, gender, or race, no matter the size of the school or the quality of the SAT scores of the people enrolled there, the results are the same: Students of all ability levels are studying less.

Aha! The internet is sapping our precious bodily fluids. Tivo and 500 channels of TV are sucking up all our kids's time. Facebook and Twitter have made it impossible for them to concentrate. Except....hold on a second:

According to their research, the greatest decline in student studying took place before computers swept through colleges: Between 1961 and 1981, study times fell from 24.4 to 16.8 hours per week (and then, ultimately, to 14).

Hmmm. The drop from 16.8 to 14 over the past 30 years is pretty trivial. This change happened almost entirely about 40 years ago, so this has nothing at all to do with growing up in the digital age. Babcock and Marks, it turns out, agree, and they also say that neither changing demographics nor changing employment patterns are to blame. So what is it? Their answer, basically, is that professors have gotten lazy and don't really feel like going to the trouble of challenging their students. After all, this gets them nothing but grief: lots of work to grade, unhappy students, and lousy teacher evaluations. Why bother?

My MIT correspondent doesn't think much of this theory — though from his email it's unclear if he disagrees about students studying less or if he disagrees about blaming professors for this state of affairs — and I, of course, don't have a clue since I'm neither a recent student nor a professor. My own experience isn't instructive: when I was at Caltech in the late 70s, I'd guess that I probably did indeed study 20-30 hours a week. When I left and transferred to Cal State Long Beach — about as far away from Caltech on the quality spectrum as you can get — I very much doubt that I studied more than 10-15 hours a week. That's hardly surprising, of course. And it tells us nothing.

So then: comments? This isn't Crooked Timber, but I know I have plenty of professors and current students who read this blog. If you're a student, how much studying do you do? If you're an instructor, does this seem to have changed much in the recent past? Let's gather some data, people.

Long-Term Deficit Posers

| Mon Jul. 5, 2010 10:17 AM EDT

Via Matt Yglesias, Adam Ozimek has a question:

Here is something I don’t understand about austerity now proponents: is cutting short term spending a second best alternative to fixing the long-term budget problem? Or does the optimal policy response include BOTH short-term spending cuts and a long-term budget fix? If the answer is the latter, then I want to know what problems aren’t solved by fixing the long-term budget problems that also require short term cuts?

I'm not in favor of short-term budget cuts, but just for the sake of conversation I thought I'd take a crack at providing the best answer I can think of to this. But then I clicked the link, and it turns out Ozimek already did it:

I think the best case against short term stimulus is to say that the government can’t be trusted to combine a serious long-term budget fix with a short term stimulus package. This means that no matter what they promise they will really pass a stimulus package without long-term cuts, which it will signal to the market that they are even more cowardly with respect to addressing the long-term problems than we first thought, and thus the fiscal position just got worse vis-a-vis politicians ability to handle it.

I'm more sympathetic to this argument than Ozimek himself is, but the real problem with it is simple: it assumes the austerity crowd is sincerely in favor of long-term budget cuts in the first place. They aren't. They say they are, of course, but the reality is that long-term cuts mean essentially one thing: cuts to Medicare. Conservatives don't want to cut defense spending; they can't cut interest payments; domestic discretionary cuts are too small to have much impact; and Social Security contributes only modestly to our long-term budget problems. It's true that long-term cuts to domestic spending (if the promises could be made credible) and to Social Security would make a difference. They just wouldn't make a big difference.

So Medicare it is. If you're serious about long-term deficits being a threat to the country and you're unwilling to raise taxes, then you have to support big-time cuts in Medicare. But the Republican Party just spent the past year loudly demonizing even the most modest cuts in Medicare as death panels and intergenerational treason. They plainly have no intention of tackling this.

So then: The austerity crowd doesn't actually care about long-term deficits. What they care about is appealing to their tea party base and winning the November election. If the Republican leadership wants to prove me wrong by releasing a detailed plan for serious cuts in Medicare spending this summer, then I'll happily eat some crow. I'm pretty sure that won't be on the menu anytime soon, though.

Bonus July 4th Cat Blogging

| Sun Jul. 4, 2010 1:32 PM EDT

So what is it exactly that makes this into July 4th catblogging? It's a stretch, I admit. But there was some parade-like activity going on outside our house earlier this morning, and Domino got alarmed enough about the whole thing to retreat to the kitchen and jump up on the refrigerator for safety. So that's the excuse.

But really, you don't need an excuse for bonus catblogging anyway, do you? Enjoy the 4th everyone!

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John Boehner's Rich Fantasy Life

| Sun Jul. 4, 2010 12:44 PM EDT

I really enjoyed Dan Balz's piece on John Boehner in the Washington Post last night. Balz wanted to know what Boehner would do if Republicans won the House in November and Boehner became Speaker. Aside from a ritual call for repeal of healthcare reform, it turns out Boehner was none too eager to say:

First, he said, was a renewed commitment to fiscal discipline — a test his party badly flunked the last time it was in the majority. Second, he said, was to engage in "an adult conversation with the American people" about the need to rein in entitlement spending. And third, he wants to increase bipartisan cooperation in the House.

....Beyond saying Republicans would scrub the budget for wasteful spending, a pledge regularly made and ignored by politicians of both parties, he offered no examples of what programs Republicans would actually cut. Nor did he seem eager to tip his hand on the terms of entitlement reform. In his interview with the Tribune-Review, Boehner volunteered that the Social Security retirement age might need to be raised to 70 for younger workers but he would go no further.

Asked whether partial privatization of Social Security, which Republicans pushed unsuccessfully in 2005, would be part of a GOP agenda, he twice replied, "I have no idea." Later, he called back to clarify, saying that what he meant to say was that, until Republicans complete their process of soliciting ideas from the American people, there will be no answer to that question. "We're not going to prejudge what's going to come out of this listening project."

That hardly sounded like a politician eager to provoke an adult conversion with the American people.

Italics mine. You'd think that, by now, the GOP might have a decent idea of what it wants to accomplish without soliciting further ideas from the American people, but apparently not. They're still trying to figure it out.

In any case, to summarize, Boehner wants to restore fiscal discipline — even though he's never done it before and has no idea how to do it this time around. He wants to have an "adult" conversation with the American people about entitlements — even though the GOP has never done this before and he refuses to give even a hint about what this difficult conversation might entail. And most hilariously, Boehner insists that what he really wants to do if he becomes Speaker is restore a sense of civility and bipartisanship on Capitol Hill — even though he's been the GOP's point man for crude obstructionism from the day Barack Obama was sworn in. "Skeptics will doubt Boehner's sincerity or capability," Balz said dryly, and indeed they might. But points for chutzpah.

Michael Steele Finally Goes Too Far

| Sun Jul. 4, 2010 12:14 PM EDT

Browsing through the news today, I see that RNC chairman Michael Steele is now being attacked from pretty much all corners. No one — not a single person — is defending him anymore. Which is interesting, no? It turns out that a Republican party chairman can survive calling Rush Limbaugh "ugly"; can survive calling abortion an individual choice; can survive an admission that the GOP has followed a racist strategy for the past 40 years; can survive accepting money for political speeches; and can survive a scandal over RNC spending at a lesbian bondage club. Sure, Steele had to apologize each time, but he survived.

But speaking out against a war? That, it turns out, is finally something that every faction of the Republican Party can agree on. For that, they're unanimously demanding Steele's head on a platter. Pretty interesting party, isn't it?

Lack of Growth Due to Lack of Customers

| Sun Jul. 4, 2010 11:43 AM EDT

Don Lee of the LA Times presents yet more pessimistic news about our anemic economic recovery:

In every recession over the last three decades, it has been America's small businesses — those Lilliputian companies with fewer than 100 employees — that stepped forward, began hiring and pulled the country out of the mire.

Not this time....A host of factors — some well-recognized and others seemingly unnoticed in the national debate over economic policy — are converging to restrain small-business owners from hiring. Among them:

  • Near-stagnant demand for goods and services as a result of consumers' reluctance to return to their free-spending ways.
  • A disturbing falloff in the creation of new small businesses.
  • The devastation of the real estate market.
  • Uncertainty about the economic outlook at home and abroad.

....The fact that many small firms are seeing little increase in demand for their services and products is decisive for Scott George, owner of Mid-America Dental & Hearing Center, which employs 55 people in the southwestern Missouri town of Mount Vernon.

"I'm not having any trouble getting money," said George, who recently got a $250,000 loan to renovate one of his buildings. But he's not hiring more workers because of little or no growth in sales.

As it happens, I've read conflicting evidence about whether or not it's really small businesses that are usually the engines of job creation when the economy comes out of a recession. It seems to vary with the recession, and in any case the net difference between job creation in small vs. large businesses appears to be modest. Still, most of what Lee says here applies to large businesses too: lack of expansion right now is due less to credit woes than to simple lack of demand. Until consumers start spending again, economic growth is going to be weak. But what's going to get consumers spending again?

Jobs and Workers: A Note From the Field

| Sat Jul. 3, 2010 1:18 PM EDT

In comments to yesterday's post about firms having trouble finding qualified workers even with millions of unemployed to choose from, Bob offers this:

My day job is with a regional Workforce Investment Board and I might be able to offer some additional clarification based on what we are seeing in this job market.

There are indeed some jobs that remain vacant because employers cannot find workers with the right skills. You correctly noted that this problem was MUCH worse mid-decade when the economy (at least here) was doing well. At that time employers were willing to hire people as long as they had very basic employability skills (work ethic, attendance, hygiene, etc). They would train for job specific skills.

Today, I would break "the problem" into several problems.

  • First, there is a significant fraction of the unemployed who are reluctant to re-train. The reasons behind this are: (1) Early on in their unemployment, some feel they cannot afford to take time to go back to school — even if it is government financed like we provide. They need money today and figure looking is their best choice because they've "always been able to find a job." As unemployment lingers they start to broaden their horizons but can afford it even less. As background, one must be unemployed, through no fault of one's own, when applying for training. However, we will continue to pay for training if the client finds a job. In fact, we encourage and assist people in finding employment to pay for basic needs while training. (2) They were poor students and/or hated school the first time around. The idea of going back, sometimes after decades, is extremely intimidating.
  • Employers who once would take any warm body are becoming more choosy and, at the risk of overstating it a bit, feel they can find over qualified workers at bargain basement prices. It seems like this is what is happening with the pharmaceutical company in the NYT article.

    I read the issue a bit differently than you are. The 9th grade reading and math test, which a "significant" proportion failed (is that 25%, 50%, more, less???) is a floor. It is likely the company is looking for much more than that, a point that is alluded to by the disappointment with local training programs. Moreover, per the article, the company is paying 60-67% of the going rate for skilled workers. Workers who were living check to check before the recession will be reluctant to take a 30-40% pay cut. Also, many with professional backgrounds forget that factory work pay scales are pretty rigid. A worker who accepts a position 40% less that what they were making will likely never make up the difference. That is a tough nut to swallow.

    Here is where the right wingers have a partial point. Unemployment insurance (UI) is a cushion that has a tendency to delay that point at which such a worker as described above gets desperate enough to take anything. For my part, I don't think this is bad. When the economy rebounds, underemployment is a drag on growth. Fitting people to the best employment for which they are qualified is the optimal solution. To the extent that UI helps this, it is a good thing.

My region is quite diverse in that we cover urban, suburban and rural areas. Each brings its own challenges. Recently, a large paper mill closed in the rural part of our region putting 1,200 out of a job in the space of 4 months. Over 200 have found jobs, in manufacturing, with a local private shipyard. This company has been willing to take skilled machine operators and put them through an extensive, and expensive apprenticeship program. The vast majority of the workers leaving the paper plant have no more than a high school diploma yet the shipyard willingly took them on as trainees. In this instance, the shipyard is paying a decent apprenticeship wage, with the opportunity of moving into a more lucrative career path AND providing a "blue chip" training experience.

One could argue that this is "government funded" because the shipyard is a 100% Navy contractor and that other employers cannot profitably offer that same deal. However, the workforce investment system is able to provide on the job training funds to employers willing to hire and put workers through a legitimate training experience. Each workforce investment board is able to set its own policies. In our case we will pay up to 50% of a trainee's salary for up to 6 months. The primary requirements are that the newly hired employee does not displace an existing employee; the trainee gains measurable skills over the course of the training period; and the trainee's salary increases after the training period ends (commensurate with the increase in skills).

The system is flexible enough to accommodate the great variety of situations present in individual local job markets. Both employers and prospective employees need to be aware of the services and willing to take advantage of them.