Kevin Drum

There's More to the Oil Collapse Than Just Shale

| Fri Jan. 2, 2015 2:37 PM EST

Bloomberg provides us today with the following chart of oil prices over the years:

James Pethokoukis has a complaint:

There is one major factor affecting oil prices that somehow got left out. Really, nothing on fracking and the shale oil revolution? Granted, it’s not an event easy to exactly date (though somehow the accompanying article manages the trick), but neither is China’s economic takeoff, and that got a shout-out.

It's a fair point—but only up to a point. Keep in mind that US shale oil production has been growing steadily for the past five years, and during most of that time oil prices have been going up. It's only in the past six months that oil prices have collapsed. Obviously there's more going on than just shale.

James Hamilton, who knows as much about the energy market as anyone, figures that about 40 percent of the recent oil crash is due to reduced demand—probably as a result of global economic weakness. Of the remainder, a good guess is that half is due to shale oil and half is due to the OPEC price war in Bloomberg's chart.

In other words, although US shale oil production is likely to have a moderate long-term impact, it's probably responsible for a little less than a third of the current slump in oil prices. The rest is up to OPEC and a weak economy. So give shale its due, but don't overhype it. It's still responsible for only about 5 percent of global production.

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Supreme Court Set to Devastate Millions of Lives Later This Year. But Will They Pull the Trigger?

| Fri Jan. 2, 2015 1:15 PM EST

Greg Sargent notes that the future of Obamacare is one of the big political unknowns of the new year:

One of the big, looming questions of 2015 is this: Will the Supreme Court really gut Obamacare subsidies in the three dozen states on the federal exchange, potentially depriving millions of health coverage at a moment when the law, now heading into its second year, is clearly working as intended?

One thing to watch as we approach the SCOTUS hearings on King v. Burwell this spring is how many people are newly qualifying for subsidies in those states as this year’s enrollment period continues....We could be looking at a lot of people who would lose subsidies in the event of a bad SCOTUS ruling, perhaps more overall than previous estimates of around four million. And the enrollment period still has six weeks to go.

I've guesstimated previously that around 6 million would be affected in 2016 if the Supreme Court kills subsidies on the federal exchange later this year. Charles Gaba figures it's somewhere around 5-6 million this year. That's a lot of people who would face one of two things: (a) an increase of maybe $2-5,000 in their health care premiums, or (b) an end to health care coverage completely because they flatly can't afford the unsubsidized premiums.

Will this affect the court's thinking? It's hard to think of a comparable case where a ruling would have had such an immediate, devastating effect on millions of ordinary people. If anything, that gives me hope. Will John Roberts and Anthony Kennedy really be willing to inflict that kind of real-world pain, regardless of their ideological convictions? Maybe not. At least, I hope not, because I've basically given up on the idea that the Supreme Court is anything other than crudely results-oriented these days. Especially on the conservative side of the aisle, they simply don't seem to care much about law or precedent or common sense anymore. They like what they like and they hate what they hate, and they shape their opinions to match.

Maybe that's just the despair of a liberal who's seen a lot of cases go against him over the past few years. Maybe. But I guess we're going to find out later this year.

Our Obsession With Mass Incarceration May Finally Be Ebbing

| Fri Jan. 2, 2015 12:01 PM EST

Atrios has a New Year's wish:

My hope is that the tide continues to turn (it has, I think, if slowly) against the mass incarceration project this country has been engaged in for decades. It isn't that I wasn't aware of it as a problem before, it's that I now have a much greater sense of how it's the nexus of a whole system of racist horror. Let's fix it.

This is a very reasonable wish. It's important to realize that the huge boom in prison construction and mandatory sentencing laws of the 70s and 80s was a response to a real thing: the massive increase in violent crime during the 60s and 70s. It's almost a certainty that we overreacted to that rise in crime and incarcerated too many people in response. Still, it wasn't just an irrational panic. Violent crime really did skyrocket during that era, and fear of victimization was both palpable and legitimate. That made a big increase in the prison population inevitable.

Needless to say, that's changed. Violent crime has plummeted by an astonishing amount in the past two decades. It takes a long time for public perception to catch up to changes like this, but it does catch up eventually—and as the fear of crime eases, the lock-em-up mentality of 40 years ago has started to ease along with it. In addition, there are simple demographics at work: if there's less crime and fewer arrests, there are simply fewer criminals to lock up. Long sentences from an earlier era have kept prison populations high despite this, but eventually even that has begun to fade away.

In other words, in the same way that mass incarceration surged because of a real thing, it's finally starting to ebb because of a real thing: the actual, concrete decline in violent crime that started in the early 90s and which appears to be permanent. America is simply a safer place than it used to be, and looks set to stay that way.

Our prison population is still gigantic by any measure, and there are vast inequities in who gets locked up and how they get treated. But for those of us who'd like to see this problem addressed, at least there's a decent tailwind helping us out. It's not crazy to think that the next decade could see some real changes in the American attitude toward the mass incarceration society we've constructed.

Why Did the Enclosed Mall Die?

| Fri Jan. 2, 2015 11:00 AM EST

Alex Tabarrok links today to a BBC piece on the death of the American shopping mall. But it's really about the death of the enclosed American shopping mall. So why did enclosed malls go the way of the dodo starting in the early 90s? Here's the author's crack at an explanation:

When the 35-year-old Cloverleaf Mall in Chesterfield, Virginia, closed in 2007, the Chesterfield Observer noted that while it had been a popular hangout for families in the 1970s and '80s, “That all changed in the 1990s. Cloverleaf’s best customers, women, began staying away from the mall, fearful of the youth who were beginning to congregate there. People [said a former Cloverleaf manager] started seeing kids with huge baggy pants and chains hanging off their belts, and people were intimidated, and they would say there were gangs.”

OK.  How about Amy Merrick in the New Yorker earlier this year? What does she think?

As any cubicle dweller knows, people like natural light and fresh air and, when deprived of them, feel oppressed. So are people alienated by those older malls, with their raw concrete, brutalist architecture and fretful, defensive air? Developers have a shorthand for this style: the “classic graybox.” In his talk, [Rick] Caruso flashed grim photos of their façades. He lingered on a picture of a deserted food court; you could practically smell the stale grease. “Does this look like the future to you?” he asked.

Here's Neil Howe in USA Today:

There is a generational story behind what's happening to shopping malls. And if you want to know how it will end, you have to pay attention to each generation's role....What most impressed the G.I.s (and the Silent Generation who succeeded them) about malls was their enormous efficiency....Then came suburban Boomers, who grew up with these newly minted malls as kids. As they matured, many Boomers soured on what they regarded as the soulless and artificial consumerism of malls and began to champion what business author Joseph Pine calls the "experience economy" — turning stores and restaurants from mere retail outlets into places that mean something (think Rainforest Cafe or Build-a-Bear Workshop or L.L. Bean). That thinking not only inspired more stores to include a "tourism" component, but it also drove the surging popularity of lifestyle centers in the early 1990s.

....But Xers soon changed the mall scene. This strapped-for-cash generation helped popularize "category killers" and was the first to adopt online shopping. Millennial teens who arrived in the late 1990s began to show less interest in malls in part because their parents deemed malls too dangerous.

The lack of reasonable explanations suggests that nobody really knows the answer. It certainly remains a mystery to me. There's no question that shopping spaces of all kinds have been hurt in recent years by the rise of online retail, and that mall development in particular was hurt by the Great Recession. But the switch away from enclosed malls began in the 90s, and it wasn't because people were tired of shopping. Nor was it because suburbs started to die. It was because enclosed malls were replaced by outdoor "power centers" and "lifestyle centers."

But why? I still don't know. Is it due to the decline of traditional department stores, which served as anchors for enclosed malls? Are stores like Target and Best Buy simply unsuited to be anchors for enclosed malls? Is it cheaper to build outdoor malls? Was it really because people started to see malls as dangerous, as two of the stories above imply?

And how does this play out in less temperate climes than Southern California? No new enclosed mall has been built near me since (I think) 1987. That's not too big a deal, since even in winter it's no chore to shop at an outdoor shopping center. But what about in the suburbs of Chicago? Or Detroit? Or Kansas City? Do people really want to shop at outdoor lifestyle malls when it's ten below zero? Do enclosed malls make a sudden comeback when the weather is bone-chillingly cold and then die again in the spring? Or what?

Perhaps this is just one of those mysteries: consumer tastes changed in the early 90s, and they changed because that's what consumer tastes do. Radio Shack used to be pretty popular too.

Still, it's an interesting mystery. I wish there were a good explanation, not just a few obvious guesses that amount to little more than a shrug of the shoulders. Why did enclosed malls die? Somebody needs to come up with a definitive answer.

POSTSCRIPT: One thing I should note is that although few (no?) new enclosed malls are being built, older malls that have been shut down don't all turn into the infamous dead malls that have gotten so much attention lately. A fair number of them are renovated and reopened. I'm not sure what, if anything, that means. Just thought I'd mention it.

Happy End of the Year!

| Wed Dec. 31, 2014 8:44 PM EST

For many reasons—some that you know about, others that you don't—2014 has been, let's say, a less than ideal year in the Drum household. So nobody here is bidding 2014 a fond farewell. More like a kick to the curb, with the hope that 2015 can hardly help but be better.

So that's that. Goodbye 2014. Don't let the door hit you on the way out. And in fairness, it wasn't all bad, as the photo below shows. This is what our new furballs do to cardboard scratching pads. For 2015, perhaps we'll buy them a nice fresh one to shred to pieces.

NYPD Slowdown Not Likely to Tell Us Much About Broken Windows

| Wed Dec. 31, 2014 2:19 PM EST

As long as we're talking about crime today, the New York Times reports that the NYPD's slowdown in citing people for minor violations doesn't appear to be doing any harm:

In the week since two Brooklyn officers were killed by a man who singled them out for their police uniforms, the number of summonses for minor criminal offenses, as well as those for parking and traffic violations, has decreased by more than 90 percent versus the same week a year earlier, and felony arrests were nearly 40 percent lower, according to Police Department statistics.

....Yet reports of major crimes citywide continued their downward trajectory, falling to 1,813 from 2,127 for the week, a nearly 15 percent drop, according to Police Department statistics.

Mike the Mad Biologist thinks this might be a useful natural experiment:

Here’s the thing: this might not be like the sanitation workers strike. Then, it was obvious what the consequences were—mounds of rotting garbage. But what happens if, after a couple weeks of slowdown, there’s no uptick in violent or property (i.e., breaking and entry) crime? That would undermine the current policing philosophy of the NYPD (and many other cities)....If violent crime doesn’t increase, then arresting people for minor violations doesn’t seem like a good strategy.

Helluva experiment. Let’s see what the outcome will be.

Unfortunately, I doubt that this will tell us anything at all. The timeframe is too short and there are too many other things going on at the same time. Crime statistics have a ton of noise in them, and it's hard to draw any conclusions even from a full year of change. You need years of data, preferably in lots of different places. A few weeks of data in one place is basically just a null.

So....yes, it's potentially an interesting experiment. In real life, though, it's not. It's just a howl of protest from the police that will tell us little about anything other than the state of relations between City Hall and the NYPD.

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Quote of the Day: Obama's Clean Record Is Evidence of How Corrupt He Really Is

| Wed Dec. 31, 2014 12:39 PM EST

From Jonah Goldberg, explaining the "culture" that causes Hillary Clinton's supporters to attack 2016 primary opponent Jim Webb even if she hasn't asked them to:

She’s created an infrastructure. The incentives are in place. The culture exists. It’s a bit analogous to Lois Lerner at the IRS. She didn’t need to be told by the White House to target conservative groups. She simply knew what she had to do.

I guess this is where we are. Even Darrell Issa's committee report—Darrell Issa's!—was forced to concede that whatever the IRS did or didn't do in its targeting of nonprofit political groups, there's no evidence the White House was involved in any way. This creates a real pickle. What's a good conservative to do?

Answer: simply declare that the White House was involved—in fact, so deeply involved that there was no need for actual marching orders. The very lack of evidence is the best evidence we have of massive, deep-seated corruption in Obama's inner circle. Case closed!

UAB Faculty Senate Considers Vote Against All That Annoying Faculty Stuff

| Wed Dec. 31, 2014 12:06 PM EST

Earlier this month, Ray Watts, the president of the University of Alabama at Birmingham, announced that UAB would be dropping its Division I football program, the first university to do so in 20 years. I haven't paid much attention to the fallout, but today the LA Times summarizes the swift reaction:

Watts said the decision was strictly financial: After spending $20 million each year subsidizing an unsuccessful team, it was time for UAB to cut its losses and put academics before athletics.

....These are fighting words in Alabama. After announcing his decision Dec. 2, Watts needed police officers to escort him through a crowd of angry fans outside Legion Field, the school's outdated off-campus stadium, where he met with Blazer players and coaches.

....All of a sudden, almost everyone is a football cheerleader: The City Council passed a motion in support of UAB football; the university's Faculty Senate drafted a resolution of no confidence in Watts.

Look, I get that the football players are angry. I even get that all the boosters who hadn't stepped up before are now swearing that they would have donated millions of dollars to keep the program alive if only Watts had asked them. But the Faculty Senate? At a bare minimum, shouldn't they have had the back of a president who wanted to stop draining money from academics into football, even if no one else did? Yeesh.

Anyway, the gist of the story is that without a consistently losing football program to rally around, UAB is now certain to wither away and die. Why would anyone want to be be a student there, after all? What's left?  A bunch of hoity toity classes and labs and stuff? What a waste of some perfectly nice property in the middle of town.

UPDATE: Apparently my reading comprehension is weak today. As the Times story says, the Faculty Senate is considering a no-confidence motion in Watts, but hasn't actually voted on it yet. That won't happen until January 15.

Is Broken Windows a Broken Theory of Crime?

| Wed Dec. 31, 2014 11:10 AM EST

The "Broken Windows" theory suggests that tolerance of small acts of disorder creates an environment that leads to rising amounts of serious crime. So if police crack down on small offenses—petty vandalism, public lewdness, etc.—crime reductions will follow. George Kelling was one of the originators of the theory, and NYPD police commissioner Bill Bratton is one of its strongest proponents. Here's what they write about it:

New York City’s experience has suggestively demonstrated the success of Broken Windows over the last 20 years. In 1993, the city’s murder rate was 26.5 per 100,000 people....While the national murder rate per 100,000 people has been cut in half since 1994, the rate in New York has declined by more than six times.

....Broken Windows–style policing was pivotal in achieving these results. Left unchecked, street corners can degenerate into criminogenic environments. The bullies take over. They drink alcohol and take drugs openly, make excessive noise, intimidate and shake down honest citizens....By cracking down on low-level offenders, the police not only made neighborhoods more orderly....In the next four years, annual shootings fell by nearly 3,300 incidents—or about two fewer shootings per day.

....Current crime levels don’t stay down by themselves because of some vaguely defined demographic or economic factor. Crime is actively managed in New York City every day.

So here's the thing: this is almost certainly wrong. Not even controversial. Just wrong: broken windows policing may well have been helpful in reducing New York's crime rate, but there's flatly no evidence that it's been pivotal. It's true that crime in New York is down more than it is nationally, but that's just because crime went up more in big cities vs. small cities during the crime wave of the 60s through the 80s, and it then went down more during the crime decline of the 90s and aughts. Kelling and Bratton can dismiss this as ivory tower nonsense, but they should know better. The statistics are plain enough, after all.

Take a look at the two charts on the right. The top one shows crime declines in six of America's biggest cities. As you can see, New York did well, but it did no better than Chicago or Dallas or Los Angeles, none of which implemented broken windows during the 90s. The bottom chart is a summary of the crime decline in big cities vs. small cities. Again, the trend is clear: crime went up more during the 80s in big cities, but then declined more during the 90s and aughts. The fact that New York beat the national average is a matter of its size, not broken windows.

Now, none of this is evidence that broken windows doesn't work. The evidence is foggy either way, and we simply don't know. My own personal view is that it's probably a net positive, but a fairly modest one.

But this gets us to the core of the issue. Kelling and Bratton write that the "academics who attribute crime drops to economic or demographic factors often work with macro data sets and draw unsubstantiated, far-fetched conclusions about street-level police work, which most have scarcely witnessed." Why such contempt? Because Kelling, and especially Bratton, want to believe that the things they do affect crime. After all, if crime has declined because of demographics or gasoline lead or the end of the crack epidemic, then all of Bratton's work—along with that of the cops he manages—is pretty much useless. He's just been spinning his wheels while huge, impersonal forces have been acting invisibly.

Nobody wants to believe that. What's more, we don't want people to believe that. Police officers, like all of us, work better if they think that they're having an impact. And their bosses, if they want to keep their trust, had damn well better insist that this is the case. When Bratton says that broken windows works, he's not just saying it because he believes it. He's saying it because he has to. If he doesn't, he'd lose the trust of his officers.

Still, the truth is almost certainly more complicated than Bratton says. Crime is down for multiple reasons, and if I had to guess I'd say about 70 percent is due to big, impersonal forces and 30 percent is due to changes in policing, including broken windows. That may not be a very satisfying explanation, but it's most likely the true one.

POSTSCRIPT: By the way, did you know that the link between gasoline lead and crime was the "trendiest crime decline hypothesis in 2014"? I didn't. But that's kind of cool. You can, of course, read more about that here.

2015 Shaping Up To Be an Annoying Year in Tech

| Tue Dec. 30, 2014 6:49 PM EST

The Wall Street Journal is running a feature today called "The Tech That Will Change Your Life in 2015." Sounds great. I'm ready to hear about my future. Sock it to me:

Virtual Assistants You Won’t Want to Fire

“You have an 8:30 a.m. meeting with your supervisor. Last time you met, your heart rate was high. Go to bed early tonight, don’t drink coffee before the meeting and leave home early—traffic will be heavy.”

That’s how much smarter predictive personal assistants like Google Now and Microsoft’s Cortana will begin to get....

Seriously? This is what my smartphone will allegedly be doing in the new year? Just kill me now.

As for the rest of the list, call me underwhelmed. Apple watches, Windows 10, yet more fitness trackers, e-credit cards, and an endless procession of "Uber for ____" apps? What happened to my flying cars?