Quote of the Day: Debt? What Debt?

From Donald Trump, on his plans to run up the deficit in order to rebuild infrastructure:

I’ve borrowed knowing that you can pay back with discounts. I’ve done very well with debt....Now we’re in a different situation with the country, but I would borrow knowing that if the economy crashed, you could make a deal. And if the economy was good it was good, so therefore, you can’t lose.

There you have it. If Trump crashes the economy, he'll just default on our sovereign debt. Easy peasy. Why is everyone so worried?

POSTSCRIPT: This is a pretty good example of the Trump Dilemma™. Do you ignore this kind of desperate plea for attention? Or do you write a long, earnest piece about just why it's a very bad idea indeed? You can hardly ignore it since it's now coming from the Republican Party's presidential nominee. But giving it oxygen just gives Trump the free media he was angling for in the first place. In this case, I'm semi-ignoring it. Josh Marshall takes the opposite tack here. Decisions, decisions.

In the New York Times Magazine this week, David Samuels has a long profile of Ben Rhodes, the chief messaging guru for foreign affairs in the White House. Generally speaking, Rhodes seems like my kind of guy, but what's most interesting about the profile isn't really Rhodes himself, but his take on modern journalism. For example:

It is hard for many to absorb the true magnitude of the change in the news business — 40 percent of newspaper-industry professionals have lost their jobs over the past decade....Rhodes singled out a key example to me one day, laced with the brutal contempt that is a hallmark of his private utterances. “All these newspapers used to have foreign bureaus,” he said. “Now they don’t. They call us to explain to them what’s happening in Moscow and Cairo. Most of the outlets are reporting on world events from Washington. The average reporter we talk to is 27 years old, and their only reporting experience consists of being around political campaigns. That’s a sea change. They literally know nothing.

Or this on how to spin the news:

Ned Price, Rhodes’s assistant, gave me a primer on how it’s done. The easiest way for the White House to shape the news, he explained, is from the briefing podiums, each of which has its own dedicated press corps. “But then there are sort of these force multipliers,” he said, adding, “We have our compadres, I will reach out to a couple people....And I’ll give them some color,” Price continued, “and the next thing I know, lots of these guys are in the dot-com publishing space, and have huge Twitter followings, and they’ll be putting this message out on their own.”

....In a world where experienced reporters competed for scoops and where carrying water for the White House was a cause for shame, no matter which party was in power, it was much harder to sustain a “narrative” over any serious period of time. Now the most effectively weaponized 140-character idea or quote will almost always carry the day, and it is very difficult for even good reporters to necessarily know where the spin is coming from or why.

Or this:

[Rhodes] developed a healthy contempt for the American foreign-policy establishment, including editors and reporters at The New York Times, The Washington Post, The New Yorker and elsewhere, who at first applauded the Iraq war and then sought to pin all the blame on Bush and his merry band of neocons when it quickly turned sour. If anything, that anger has grown fiercer during Rhodes’s time in the White House. He referred to the American foreign-policy establishment as the Blob. According to Rhodes, the Blob includes Hillary Clinton, Robert Gates and other Iraq-war promoters from both parties who now whine incessantly about the collapse of the American security order in Europe and the Middle East.

....Barack Obama is not a standard-issue liberal Democrat. He openly shares Rhodes’s contempt for the groupthink of the American foreign-policy establishment and its hangers-on in the press. Yet one problem with the new script that Obama and Rhodes have written is that the Blob may have finally caught on.

The Blob "catching on" means that a lot of members of the foreign policy establishment have decided that maybe they don't like Obama so much after all. He's just too unwilling to send in the military when there's a problem somewhere. At least, that seems like their big complaint to me.

Anyway, the whole thing is worth a read—not so much for what it says about Rhodes or Obama, but for what it says about the news business circa 2016. In a way, nothing has changed: presidents always try to shape the news, and they use whatever tools are at hand in their particular era. But in another way, everything has changed. It's not just the tools that have changed this time, it's the entire press corps.

Chart of the Day: Net New Jobs in April

The American economy added 160,000 new jobs last month, 90,000 of which were needed to keep up with population growth. This means that net job growth clocked in at a sluggish 70,000 jobs. The number of workers in the labor force declined, but the number of unemployed also declined, which means the headline unemployment rate stayed steady at 5.0 percent. Public sector employment decreased by 11,000 jobs.

Hourly earnings of production and nonsupervisory employees were up at an annual rate of about 2.9 percent compared to last month, which is only slightly higher than the rate of inflation. However, weekly hours worked were up, which means weekly earnings increased at a healthy annual rate of 6.7 percent.

Bottom line: not horrible but nothing to write home about. The economy is growing, but overall we seem to remain mired in a great stagnation.

It's a truism of American politics that candidates run to the left or right during primaries but then "pivot" toward the center for the general election. And the quality of the pivot is a topic of endless discussion. It has to be done smoothly and delicately. Voters won't put up with a brazen flip-flop.

Or will they? Here is the Washington Post on Donald Trump's pivot:

The New York real estate tycoon, who frequently boasted throughout the primary that he was financing his campaign, is setting up a national fundraising operation and taking a hands-off posture toward super PACs.

He is expressing openness to raising the minimum wage, a move he previously opposed, saying on CNN this week, “I mean, you have to have something that you can live on.”

And Trump is backing away from a tax plan he rolled out last fall that would give major cuts to the rich. “I am not necessarily a huge fan of that,” he told CNBC. “I am so much more into the middle class, who have just been absolutely forgotten in our country.”

Trump has been rewriting the rules for the past year, so maybe this rule is going by the wayside as well. It will be especially easy for Trump since (a) he doesn't have an ideological fan base that cares much about his positions, and (b) the press will just shrug and say it's Trump being Trump. Can you imagine what would happen if Hillary Clinton tried to pull a stunt like this?

Are voters really angry this year? The Associated Press says no:

All that talk of an angry America?

An Associated Press-GfK poll finds that most Americans are happy with their friends and family, feel good about their finances and are more or less content at work. It’s government, particularly the federal government, that’s making them see red.

Hmmm. People are generally pretty happy with their finances and their personal lives, but they're really pissed off at the federal government. We've seen this dynamic before. Here's a long-term look at polling data from the Washington Post:

Anger toward the federal government has been on a steady upward trend ever since 2003 (though voters in 2016 are less angry than they were in 2014). And this trend is notably unaffected by economic conditions. Anger didn't spike during the 2000 dotcom bust and it didn't spike during the 2008 crash. So what's going on? The obvious culprits are:

  • Fox News and the rest of the conservative outrage machine
  • The Iraq war, which explains why anger started to rise in 2003
  • The tea party, which explains the spike in 2010
  • The election of Barack Obama, which would explain a spike beginning around 2008 (there's no data between 2004-2010)

Take your pick. Maybe it's a combination of things. But the bottom line seems fairly simple: there's voluminous data suggesting that, in general, Americans are fairly happy with their personal finances and fairly happy with their lives in general. As happy as they've ever been, anyway. But they're pretty pissed off at the federal government. If there's anything interesting to be said about voter anger, this is the puzzle to focus on.

Driverless Taxis By 2017?

Here's the latest on the driverless car front:

General Motors Co. and Lyft Inc. within a year will begin testing a fleet of self-driving Chevrolet Bolt electric taxis on public roads, a move central to the companies’ joint efforts to challenge Silicon Valley giants in the battle to reshape the auto industry.

This is all in addition to a whole bunch of companies claiming they'll have fully autonomous vehicles commercially available by 2020. If this really happens, it's impressive as hell. I'm a longtime optimist on artificial intelligence, but even I figured it would take until 2025 for truly driverless cars to become a reality. Will I have to pull in my prediction of 2040 for full-on strong AI too? Maybe. The next few decades are going to be very interesting indeed.

I think everyone is badly misinterpreting this tweet from Donald Trump:

This is not an awkward and embarrassing outreach to Hispanics. It's not aimed at Hispanics at all. It's aimed at white people. This is the kind of thing that Trump's base—the white working class—views as a perfectly sincere appreciation of Mexican culture. It says, "Yes, I want a wall, and yes, I want to deport all the illegal immigrants in the country. But that doesn't mean I hate Mexicans." It's basically an affirmation to Trump's voters that they aren't racists.

Plus it gets a ton of attention, and it also induces loads of mockery from overeducated PC liberals who don't understand a compliment when they see one. It's really a genius tweet.

Does everyone understand now? Trump is playing this game at a higher level than most of his critics.

How do Americans feel about the economy? Here is Pew Research:

Americans are now more positive about the job opportunities available to them than they have been since the economic meltdown....Today’s more upbeat views rank among some of the best assessments of the job market in Pew Research Center surveys dating back 15 years.

There's no significant partisan difference in views of the job market. However, older, poorer, and less-educated folks all report less optimism about employment than younger, richer, and better-educated respondents.

Here's Why OxyContin Is So Damn Addictive

Why has OxyContin become the poster child for opioid abuse? The LA Times has a long investigative piece today which suggests that a big part of the blame should be laid at the feet of Purdue Pharma, the makers of the drug. When OxyContin was launched, it was billed as a painkiller that would last 12 hours—longer than morphine and other opioids. That 12-hour dosing schedule was critical to its success. Without it, Oxy didn't have much benefit. Unfortunately, it turned out that it wore off sooner for a lot of people:

Experts said that when there are gaps in the effect of a narcotic like OxyContin, patients can suffer body aches, nausea, anxiety and other symptoms of withdrawal. When the agony is relieved by the next dose, it creates a cycle of pain and euphoria that fosters addiction, they said.

OxyContin taken at 12-hour intervals could be “the perfect recipe for addiction,” said Theodore J. Cicero, a neuropharmacologist at the Washington University School of Medicine in St. Louis and a leading researcher on how opioids affect the brain.

Patients in whom the drug doesn’t last 12 hours can suffer both a return of their underlying pain and “the beginning stages of acute withdrawal,” Cicero said. “That becomes a very powerful motivator for people to take more drugs.”

But Purdue refused to accept shorter dosing schedules, since that would eliminate its strongest competitive advantage. Instead, they launched a blitz aimed at doctors, telling them to stick with the 12-hour dosing but to prescribe larger amounts. Sometimes this worked and sometimes it didn't, and when it didn't it increased the chances of addiction:

In the real world practice of medicine, some doctors turned away from OxyContin entirely. San Francisco public health clinics stopped dispensing the painkiller in 2005, based in part on feedback from patients who said it wore off after eight hours. The clinics switched to generic morphine, which has a similar duration and costs a lot less.

“What I had come to see was the lack of evidence that it was any better than morphine,” Dr. Mitchell Katz, then head of the San Francisco public health department, said in an interview.

The whole piece is worth a read. Purdue has known from the start that 12-hour dosing didn't work for a significant number of patients, but they relentlessly focused their marketing in that direction anyway. Why? Because without it, Oxy wouldn't be a moneymaker. As for the danger this posed, that was mostly suppressed by keeping documents under seal in court cases "in order to protect trade secrets." Welcome to the American pharmaceutical industry.

The CFPB has proposed a new rule that would prevent big companies from forcing their customers to accept mandatory arbitration in place of an actual trial in an actual court. Iain Murray is unhappy:

Like most of the CFPB’s rules, this may sound good at first hearing. In fact, it will be a disaster for the average consumer who enters into contracts like credit-card or mobile-phone service agreements....The inefficiency of the legal system has to be budgeted for, and so without arbitration, fees will go up and some people just won’t be offered a service at all.

....Those won’t be the only ways the consumer will suffer — those who are currently “denied their day in court” will as well. Because arbitration services are much cheaper, companies that use them generally pay all the fees for the consumer as well as their own. That’s not the case in court, where the consumer bears a considerable cost. If you are lucky enough to get a contract after this rule goes into effect, you’d better budget something for your day in court, because you’re going to have to lawyer up. Of course, there’s always the chance that you’ll be asked to participate in a class action lawsuit, which this rule is primarily designed to facilitate.

Fair enough. As it turns out, corporations all offered their services quite widely back in the dark ages before arbitration clauses, but it's true that arbitration does indeed have some benefits. Still, we're all free marketeers around here who believe in contracts freely arrived at without undue coercion. Right? So here's what I propose: my bank and my cell phone company should offer me the choice of accepting arbitration or not when I first sign up. If I accept, they offer me a discount. The CFPB's only role will be to ensure that the discount is reasonably in line with the actual cost savings from arbitration. Deal?

No? I guess there must be something else going on. I wonder what?