Kevin Drum - May 2012

Greece Has No Options But to Live With German Austerity

| Mon May 7, 2012 9:51 AM EDT

Last night I mentioned briefly that Socialist François Hollande had most likely won the French presidential election not because the French public had suddenly lurched left, but because incumbents usually lose when the economy is in bad shape. In Greece, however, the mainstream parties have all banded together in a government of national unity. So how do you vote against the incumbents when every major party is an incumbent? Like this:

Greece was plunged into political uncertainty on Sunday after voters bolstered the far left and neo-Nazi right in a wave of protest that saw the crushing defeat of the dominant political parties they blame for Greece’s economic collapse.

The center right party got 19% of the vote and the Socialists got 14% of the vote. That's only a third of the total. The radical left got 17% of the vote and the far right got 7%. A couple of dozen other parties split the rest. What happens now is anyone's guess, but Matt Yglesias makes a good point that Greece, unlike some of the other troubled countries in Europes, lacks any real options:

Greece, which lied to qualify for the Euro and then kept on borrowing money by fudging the numbers, is receiving cold hard cash as part of a failed earlier effort to avoid "contagion" to other European countries. If Greece tried to exit the [euro]—or more likely was forced out by Spain or Italy cutting the cord—they'd be in for a dose of much more severe austerity. Think about Greek living standards converging with Serbia and Bulgaria. Many ills can be laid at the doorstep of the fundamental conceptual flaws in the Euro and many others can be laid at the feet of the leaders of the European Central Bank. But Greece's basic problem really does come down to the fact that the Greek state doesn't have nearly as much money as it said it had, and there's absolutely no politically or socially appealing way to acknowledge those losses.

Greece really is a ward of the European state at this point, and no matter how angry the voters get, that's not going to change. If Greece decided to default completely on its debt and exit the euro, it would be faced with even more crippling austerity than it's facing now. It's still possible that this would be the right thing to do in the long run, but make no mistake: in the short run it would have devastating consequences. Greece would be completely unable to borrow on global markets, would be cut off from European aid, and would have to slash spending even more than the Germans are demanding right now. It would be a debacle.

Italy and Spain are in a different position. In theory, they could default on their debt, exit the euro, and be in relatively good shape. "Relatively" is doing a lot of heavy lifting in that sentence, but still, it would probably be less than a total catastrophe. But that's not true for Greece. They're just plain and simply screwed, no matter how mad voters are at Germany for rubbing their noses in the fact. They might not like the austerity program forced on them by Europe's technocrats, but right now they don't have much choice except to hold their noses and put up with it.

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France is in a Bad Mood, Dumps Sarkozy

| Sun May 6, 2012 1:09 PM EDT

Apparently the Socialist François Hollande has beaten incumbent Nicolas Sarkozy to become the next president of France. Does this demonstrate that the French, like so many in Europe, are tired of austerity politics and are in a mood for rebellion? Maybe. More than likely, though, it's just the one zillionth data point demonstrating that when the economy sucks, incumbents are in big trouble. Sarkozy is merely the latest victim.

Joe Biden "Comfortable" With Same-Sex Marriage

| Sun May 6, 2012 12:21 PM EDT

The latest on gay marriage from the executive branch:

Vice President Joseph R. Biden said on Sunday that he was “comfortable” with same-sex marriages, a position that appeared to go beyond the “evolving” views that President Obama has said he holds on the issue. “I am absolutely comfortable with the fact that men marrying men, women marrying women and heterosexual men and women marrying one another are entitled to the same exact rights, all the civil rights, all the civil liberties,” Mr. Biden said in an appearance on NBC’s “Meet the Press.”

....Mr. Biden prefaced his remark in his NBC interview by saying, “The president sets the policy,” and his aides later indicated that the views he expressed were his own. The White House immediately suggested on Sunday that the vice president had articulated no change in the administration’s official position on same-sex marriage. But gay rights advocates said that Mr. Biden’s remarks seemed to convey unmistakable support for their biggest cause.

Like a lot of liberals, I don't believe that Obama really opposes same-sex marriage. He just considers it politically expedient to keep pretending otherwise.

If that's true, it's an interesting case study in the way the media has changed politics. In the past, presidents (and presidential candidates) had an easier time with this kind of tricky issue. They could say one thing to one audience and another thing to another. Or they could say one thing in public but then wink in the other direction in private. Those in the know understood what was going on, and often there was sort of a tacit agreement to keep the president's "real" view private. It was a game, since the president might actually be scamming the insiders rather than the rubes, but it was a well-worn game.

But you can't do that anymore. The internet and 24-hour news networks make it flatly impossible to say different things to different audiences. You can take a slightly different tone with different audiences, but that's it. And even winking and nodding to insiders is dangerous. There's simply no tacit agreement to keep this stuff private anymore, so your best bet is maintain iron self-discipline and never give anyone a peek behind the curtain. You stay on your talking points at all times and in all places.

And Barack Obama, whatever else you think about him, seems to have cast iron self-discipline. In that sense, he really does represent the future of politics. You can decide for yourself whether you like that future much.

Did Jesus Exist?

| Sun May 6, 2012 11:45 AM EDT

Via Andrew Sullivan, I just read a month-old post by Jerry Coyne about a fight between two academics over the question of the historical existence of Jesus. Coyne comments:

I have been a bit baffled about why this matter evokes such strong feelings, especially among atheists. Since we all admit that there’s no evidence that Jesus was the son of God, did miracles, was resurrected or born of a virgin, and died for our sins, does it really matter so much if he’s based on a historical person? Why does this evoke such strong feelings, and such acrimonious arguments, from atheists?

Perhaps some of our concern comes from this: if we can show that there’s no historical Jesus, then the myth of Christianity tumbles down. That is, it’s no so much about convincing ourselves about the non-historicity of Jesus as convincing Christians.

Regardless of anything else, I don't think Coyne's argument holds water. Surely there can't be too many atheists foolish enough to think they're likely to convince their Christian friends that Jesus didn't exist, no matter what the evidence is or isn't? That would require a pretty severe detachment from reality.

But why even go there? I wasn't aware that this question evokes strong feeling among nonbelievers in the first place. Sure, it evokes strong feelings among academics who study this question. Academics always have strong feelings about the stuff they study. Beyond that, practically any historical question will generate a small band of obsessives who consider it the most important issue ever. I imagine Coyne is keenly plugged into the chat rooms and listservs that host the small band of obsessives on the Jesus question.

But more generally? I've seen no evidence that nonbelievers really care all that much. Did Jesus exist? I'd guess so, just on the grounds that it's more likely for a story like this to be exaggerated after repeated retellings than it is to be made up out of whole cloth. But I don't really care all that much, and I pretty strongly suspect this isn't just ennui on my part. Most of us non-religious types probably don't even think about this stuff much, let alone have strong feelings about it. The ones who do may make a lot of noise, but that doesn't mean there's really all that many of them.

Supermoon Over Southern California

| Sun May 6, 2012 12:22 AM EDT

While Will Femia was busy trying to figure out if he could get a picture of tonight's supermoon rising along 42nd Street, I decided that here in Southern California it would be appropriate to get a picture of the supermoon rising over a freeway. In the end, it turned out that the angle was off by a couple of degrees, so I couldn't quite do it with the shape of the San Diego Freeway in my neck of the woods, but it was close!

And here it is a few minutes later, rising over the treetops. It no longer has the lovely red color that the haze near the horizon gave it, but since I'm not shooting from a freeway overpass, it's a little bit sharper. Tradeoffs are everywhere.

Friday Cat Blogging - 4 May 2012

| Fri May 4, 2012 1:53 PM EDT

Today we have cats flopped on the ground. On the left, Domino enjoys the sunshine while Marian does Sudoku on the porch. On the right, Inkblot looks majestic. As always. Enjoy the weekend, everyone!

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Chart of the Day: The Obama Record on Jobs

| Fri May 4, 2012 12:21 PM EDT

In case you're interested, here's the basic Obama jobs record. His first full month in office was February 2009, and employment bottomed out a year later. Since then, employment has increased steadily and is now above the February 2009 level. That's a pretty slow and disappointing level of employment growth, but it is what it is. Employment is now officially higher than it was when Obama took office.

Russia Amps Up the Bluster over Missile Defense

| Fri May 4, 2012 11:13 AM EDT

Here's the latest on stalled talks between NATO and Russia regarding a European missile defense system:

Russian Chief of General Staff Nikolai Makarov, in a sign of the tension between Russia and the United States over the missile defense plans, said during an international conference that a strike by his country might be possible. "A decision to use destructive force preemptively will be taken if the situation worsens," Makarov said.

....Russian officials Thursday showed a computerized version of imaginary strikes by Russian nuclear missiles on imaginary targets on the U.S. East Coast.

This doesn't seem to be attracting a lot of attention, so maybe it's just a minor escalation of the usual bluster. But, um, really? Russia is threatening a preemptive air strike against a NATO base in Poland? And hauling out maps of Russia raining down nukes on New York City? WTF?

Generational Armageddon Possibly Set for 2042

| Fri May 4, 2012 10:09 AM EDT

Alex Tabarrok links this morning to a VoxEU piece that blames America's low savings rate on our growing level of transfers from young to old. In one way, this makes intuitive sense: the more confident you are that Social Security and Medicare will take care of you in your old age, the less motivated you are to save for old age. The authors then take this further, suggesting that low savings rates have cratered net domestic investment, and therefore economic growth. Maybe. But over the past couple of decades there's been more than enough money available for domestic investment. That hasn't been a problem. The problem has been finding useful real-world things to invest it in.

In any case, the whole piece lost me when the authors reported on the results of a simulation that looks at transfers from young to old and forecasts "how long it takes for the economy to reach 'game over' — the point where current policy can no longer be maintained":

The policy is simple. The government takes (using whatever language it wants) a fixed amount each period from the young and hands it to the old, independent of the state of the economy, given by the size of the capital stock and the level of multifactor productivity. When the hit on the young exceeds their earnings, the game is over, with the government either extracting all the income of the young and terminating the economy or switching to a new policy regime, which leaves the young with something to eat.

Our simulations, based on an “overlapping generations” model calibrated to the US economy, produce an average duration to game over of roughly one century, with a 35% chance of reaching the fiscal limit in roughly 30 years.

Say what? Their simulation projects a 35% chance that by 2042 the U.S. government will be confiscating 100% of the income of the non-elderly? This suggests to me less that the U.S. is facing a crisis and more that they might want to recalibrate their simulation.

In any case, whenever I hear this stuff, I always think back to Dean Baker reminding me that net national savings is always equal to the trade surplus. It's an accounting identity. So if we're running a big trade deficit — and we are — then either we run a big federal budget deficit or we have very low private savings. Or both. There's no way around it.

Everything in an economy is related to everything else, so there are no simple answers here. From a macro point of view, I think our key long-term policy problem is addressing the trade deficit, and since OPEC is a big and growing chunk of that, that means reducing our reliance on foreign oil. From a more prosaic budgetary point of view, our intergenerational problem can be summed up in one word: healthcare. If we rein in the growth of healthcare spending, we'll be OK. If we don't — well, there's really no "don't" here. Eventually, we'll have no choice, and that's going to happen long before any kind of generational Armageddon overtakes us.

So: focus on domestic energy production, especially renewable resources. Rein in the trade deficit. And focus like a laser on reining in healthcare spending. That's the right way to look at this stuff.

Another Anemic Jobs Report for April

| Fri May 4, 2012 9:30 AM EDT

I was going to write a post last night promising not to make too big a deal out of today's job numbers, no matter what they turned out to be, but I forgot. But I promise anyway.

As it happens, new jobs clocked in at 115,000 last month, only 25,000 above the number needed to keep up with population growth. The headline unemployment rate went down to 8.1%, but only because discouraged workers are leaving the labor force, so they aren't counted in the official jobless numbers anymore. All in all, a pretty anemic report. My usual chart showing net new jobs is below.

On the bright side, employment numbers for February and March were revised upward by 53,000. This doesn't change anything dramatically, but it's certainly better than nothing. Bottom line: it's only one month, but it sure looks like we're living through an economy that just can't quite pull itself into a serious recovery. Since the start of 2011, average net job growth has been 75,000 per month, with only a few months rising above that figure. That's just not enough to make up for the staggering job losses of the Great Recession anytime soon.