Kevin Drum

Non-Chart of the Day: Where's the Austerity?

| Sat Jan. 10, 2015 7:00 PM EST

Tyler Cowen passes along the following chart, a modified version of one Matt Yglesias used to show the trend of total government expenditures (federal + state + local) and declare "2014 is the year American austerity came to an end":

This comes from Angus, who comments incredulously: "From this graph I concluded one of two things must be true depending on one's definition of austerity. Either austerity means nominal cuts and we never had any of it, or austerity means cuts relative to trend and we are still savagely in its grasp."

Oh come on. There's an obvious third option. Let's take a look at this chart done right:

This is real per-capita government expenditures (using 2014 dollars). I used CPI, but it looks the same no matter which inflation measure you prefer (PCE, GDP deflator, % of GDP, whatever).

Austerity is all about the trajectory of government spending, and this is what it looks like. You can argue about whether flat spending represents austerity, but a sustained decline counts in anyone's book. The story here is simple: for a little while, in 2009 and 2010, stimulus spending partially offset state and local cuts, but by the end of 2010 the stimulus had run its course. From then on, the drop in government expenditures was steady and significant. It was also unprecedented. If you run this chart back for 50 years you'll never see anything like it. In all previous recessions and their aftermaths, government spending rose.

Finally, in 2014, the spending decline stopped. Austerity was over, and now we're even starting to see a small uptick in government spending. At the same time, the economy started to pick up.

This is not bulletproof evidence that austerity is bad for the economy, or that government spending helps it. But it's certainly consistent with the hypothesis, and it's really not hard to see.

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Chart of the Day: Vaccinate Your Kids!

| Sat Jan. 10, 2015 2:02 PM EST

Via the LA Times from a few months ago, here's the rise in "personal belief" exemptions from state-mandated vaccinations among kindergartners in California:

And here's where it's happening:

In Los Angeles County, the rise in personal belief exemptions is most prominent in wealthy coastal and mountain communities, The Times analysis shows. The more than 150 schools with exemption rates of 8% or higher for at least one vaccine were located in census tracts where the incomes averaged $94,500 — nearly 60% higher than the county median.

....At Santa Cruz Montessori in the small coastal community of Aptos, about 7% of kindergartners in 2007 got belief exemptions. Last fall, that rate was 22.6%. Principal Kathy Rideout said the school has tried different approaches to encourage parents to immunize children. They asked a doctor to talk with fellow parents. They produced handouts emphasizing the importance of immunizations and asked parents seeking belief exemptions to get counseling from a healthcare practitioner. A state law that went into effect this year makes this a requirement. But none of it made much difference, Rideout said.

...."We have schools in California where the percent of children who exercise the personal belief exemption is well above 50%," said Dr. Gil Chavez, deputy director of the California Department of Public Health's Center for Infectious Diseases. "That's going to be a challenge for any disease that is vaccine preventable."

There are times when it's appropriate to be skeptical of authority. This really isn't one of them. "Big Vaccine" is not an issue in American life. Childhood vaccination is just a matter of public health that no one has any real motivation to lie about. Please don't get sucked into this maelstrom. Get your kids vaccinated.

Defending Free Speech Doesn't Require Solidarity With the Speech Itself

| Sat Jan. 10, 2015 1:28 PM EST

A couple of days ago, I had in mind a follow-up post about the point that defense of free speech doesn't necessarily demand "solidarity" with the speech itself. This is obvious. If an extremist gay rights lunatic murdered a dozen members of the Westboro Baptist Church, would we all start showily plastering "God Hates Fags" on our websites? The question answers itself. There might a few photos showing WBC members sporting the phrase because there's some news value in making it clear what sparked the attacks, but that would be it.

Anyway, I didn't do it. The only way to make the point was to choose something deliberately and revoltingly offensive, so I backed off. But Glenn Greenwald didn't:

This week’s defense of free speech rights was so spirited that it gave rise to a brand new principle: to defend free speech, one not only defends the right to disseminate the speech, but embraces the content of the speech itself. Numerous writers thus demanded: to show “solidarity” with the murdered cartoonists, one should not merely condemn the attacks and defend the right of the cartoonists to publish, but should publish and even celebrate those cartoons. “The best response to Charlie Hebdo attack,” announced Slate’s editor Jacob Weisberg, “is to escalate blasphemous satire.”

Some of the cartoons published by Charlie Hebdo were not just offensive but bigoted, such as the one mocking the African sex slaves of Boko Haram as welfare queens....But no matter. Their cartoons were noble and should be celebrated — not just on free speech grounds but for their content. In a column entitled “The Blasphemy We Need,” The New York Times’ Ross Douthat argued that “the right to blaspheme (and otherwise give offense) is essential to the liberal order” and “that kind of blasphemy [that provokes violence] is precisely the kind that needs to be defended, because it’s the kind that clearly serves a free society’s greater good.” New York Magazine’s Jonathan Chait actually proclaimed that “one cannot defend the right [to blaspheme] without defending the practice.”

....It is self-evident that if a writer who specialized in overtly anti-black or anti-Semitic screeds had been murdered for their ideas, there would be no widespread calls to republish their trash in “solidarity” with their free speech rights....When we originally discussed publishing this article to make these points, our intention was to commission two or three cartoonists to create cartoons that mock Judaism and malign sacred figures to Jews the way Charlie Hebdo did to Muslims. But that idea was thwarted by the fact that no mainstream western cartoonist would dare put their name on an anti-Jewish cartoon, even if done for satire purposes, because doing so would instantly and permanently destroy their career, at least. Anti-Islam and anti-Muslim commentary (and cartoons) are a dime a dozen in western media outlets.

I don't agree with everything Greenwald says in his post. In particular, I think he really does downplay the disparity in both the number and virulence of terrorist attacks by radical Islamic groups compared to other groups. Like it or not, that makes a difference. He also would have been well-served by reprinting more than just anti-Semitic cartoons. Nonetheless, he makes his point vigorously, as usual, including a refresher of the evidence that terrorist violence is hardly limited to radical Islamists.

I am, I confess, conflicted about this. There is value in solidarity in the face of such a hideous attack. Still, although refusing to publish out of fear is plainly wrong—this is hardly a controversial point—letting a terrorist attack provoke an overreaction is a dubious response as well. For this reason, Greenwald's piece is worth reading in full even if, in the end, you think he's wrong. Maybe even especially if you think he's wrong.

Unemployment Is Low, But It Can Still Go a Lot Lower — And It Should

| Sat Jan. 10, 2015 10:25 AM EST

Justin Wolfers makes a good point today. There's a concept in economics called NAIRU, which rather awkwardly stands for the Non-Accelerating Inflation Rate of Unemployment1. Basically it means that there's a "natural" rate of unemployment in the economy2, and if you go below it then inflation will start to accelerate. When that happens, the Fed raises interest rates to slow down growth before inflation gets out of hand.

But what's the actual value of NAIRU? Based on past experience, most economists think it's around 5.5 percent or so—which happens to be where we are now. And yet, inflation is still very low, and definitely not accelerating. This could be just a temporary phenomenon as we recover from a huge balance-sheet recession, or it could be something more permanent. For two reasons, my guess is that it's mostly the latter. First, inflation has been steadily dropping for 30 years in the US, and there's some reason to think that it's the 70s that were a high-inflation anomaly, not the rest of the low-inflation 20th century. Second, there's reason to think that the headline unemployment rate is not measuring quite the same thing as it used to. If you look at long-term unemployment, marginally attached workers, and the decline of the labor force participation ratio—which has been falling for 15 years now—it appears that a headline rate of 5.5 percent probably implies more slack in the economy than it used to. Here's Wolfers on the natural rate of unemployment:

The problem, though, is that no one really knows what that rate is. Our uncertainty is even greater today than it normally is, because no one knows the extent to which those workers who dropped out of the labor force in response to the financial crisis will return when jobs become plentiful. By this view, today’s most important macroeconomic question is what the natural rate actually is.

The latest jobs report helps answer this question. The unemployment rate has fallen to 5.6 percent, and there are still no signs that wage inflation is rising. Indeed, with wage growth running at only 1.7 percent, the economy is telling us that we still have the ability to bring many more of the jobless back into the fold without setting off inflation.

It is only when nominal wage growth exceeds the sum of inflation (about 2 percent) and productivity growth (about 1.5 percent) that the Fed needs to be concerned that the labor market is generating cost pressures that might raise inflation. So the latest wage growth numbers suggest that we are not yet near the natural rate. And that means the Fed should be content to let the recovery continue to generate more new jobs.

There's one more thing to add: Even when unemployment falls to around 4 percent, we should remain cautious. We've tolerated an inflation rate that's under the Fed's 2 percent target for the past five years. There's no reason we shouldn't tolerate a catch-up inflation rate that's a little over the Fed's target as we begin to recover. If inflation runs at 3-4 percent for the next five years, it's probably a good thing, not a bad one.

1Obviously economists could have used a branding expert to help them with this. On the other hand, if they'd done that we might have ended up with Xarelxo or JobsMax™. In any case, we're stuck with it for now.

2The idea here is that even a thriving economy has a certain amount of natural unemployment as people leave their jobs and move to new ones—because new sectors pop up, old companies go out of business, etc. That's a good thing and a perfectly natural one in a competitive economy that's producing lots of innovation. Trying to push unemployment lower than the natural rate is basically fruitless.

Friday Cat Blogging - 9 January 2015

| Fri Jan. 9, 2015 2:44 PM EST

Here's Hopper in the sewing room, surrounded by sewing paraphernalia. That look in her eye suggests either that her brother was somewhere nearby or that she was just about to gallop across all of Marian's stuff and make a huge mess. Or maybe both. Making a mess is a favorite pastime around here these days.

President Obama Starts to Focus on the Middle Class

| Fri Jan. 9, 2015 2:04 PM EST

One of the hot topics of conversation in progressive circles these days is the middle class. Democrats support plenty of programs that provide benefits to the poor (Medicaid, minimum wage, SNAP, etc.), but what about programs that benefit the middle class? What do Democrats do for them?

By coincidence, this week provides a couple of examples of programs that are targeted more at the middle class than the poor. First up is President Obama's proposal to fund two years of free community college for everyone. As Libby Nelson explains, Pell Grants already make community college free for most low-income students:

The most radical part of Obama's free community college proposal isn't that it's free — it's that it's universal....So the best way to look at the Obama free college plan is as a promise to the middle class. Families who earn too much for federal financial aid but aren't wealthy enough to afford thousands of dollars of college bills are rightly feeling squeezed as tuition prices rise.

This might not be the most effective way to spend federal money. But it's politically smart. To see why, look at pre-K. Most of the research on pre-kindergarten effectiveness is about whether it helps poor children catch up to their peers from wealthier families. But in 1995, Georgia decided to use lottery winnings to make free pre-K available not just to the poor, but to any family who wanted to join.

Two decades later, Georgia's universal pre-K program is very popular, championed by liberals and conservatives alike. And the reason it's managed to stay relatively apolitical and noncontroversial is that it's universal, Fawn Johnson wrote in National Journal last year. A program just for the poor "would be about class warfare," one Georgia Republican told her.

Elsewhere, Greg Sargent notes that new rules governing overtime wages could benefit middle-class workers:

Obama will soon announce a rules change that governs which salaried workers will get time-and-a-half over 40 hours under the Fair Labor Standards Act....“The spotlight is now on raising wages,” [AFL-CIO president Richard Trumka] told me. “Raising wages is the key unifying progressive value that ties all the pieces of economic and social justice together. We think the president has a great opportunity to show that he is behind that agenda by increasing the overtime regulations to a minimum threshold of $51,168. That’s the marker.

....A lower threshold could exclude millions. In raising his voice, Trumka joins Sherrod Brown, Elizabeth Warren, and other progressive Senators who have urged a threshold of $54,000, and billionaire Nick Hanauer, who is urging $69,000. The Economic Policy Institute estimates that raising the threshold to a sum approximating what the liberal Senators want could mean higher overtime pay for at least 2.6 million more people than raising it to $42,000. EPI says setting it at over $50,000 could mean over six million people, or 54 percent of salaried workers, are now covered.

Both of these proposals would primarily benefit middle-class workers which makes it unlikely that either of them will get any support from Republicans or from the business community. But they're worth pursuing anyway. At least they let everyone know whose side each party is on.

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The Agriculture Department Has Advice In Case You're Ever Kidnapped

| Fri Jan. 9, 2015 12:07 PM EST

In an apparent effort to prove that you can write an explainer about anything, Alex Abad-Santos writes one today about the Taken movies. So how good is Liam Neeson's advice in those movies to the various family members of his that get abducted? Here is Abad-Santos:

According to the a safety protocol guide on the USDA's website, it's recommended that you....

Wait. The USDA? As in the Department of Agriculture? WTF?

Anyway, yes: it turns out the United States Department of Agriculture has a Personnel and Document Security Division, and they have a handy web page called "Kidnapping and Hostage Survival Guidelines." Sadly, it turns out not to really be a USDA document. It's part of a security program developed for the Defense Security Service Academy by the Defense Personnel Security Research Center. The security awareness cartoons were provided by the Information and Personnel Security Office, Chief of Naval Operations. From there, the whole package was distributed to other government agencies, including the USDA.

Still, it has a quiz! If you'd like to test your knowledge of proper security procedures for government employees, click here.

I've Never Gotten an Annual Physical. How About You?

| Fri Jan. 9, 2015 11:17 AM EST

Ezekiel Emanuel passes along the results of research about the value of getting an annual physical exam:

The unequivocal conclusion: the appointments are unlikely to be beneficial. Regardless of which screenings and tests were administered, studies of annual health exams dating from 1963 to 1999 show that the annual physicals did not reduce mortality overall or for specific causes of death from cancer or heart disease. And the checkups consume billions, although no one is sure exactly how many billions because of the challenge of measuring the additional screenings and follow-up tests.

How can this be? There have been stories and studies in the past few years questioning the value of the physical, but neither patients nor doctors seem to want to hear the message. Part of the reason is psychological; the exam provides an opportunity to talk and reaffirm the physician-patient relationship even if there is no specific complaint. There is also habit. It’s hard to change something that’s been recommended by physicians and medical organizations for more than 100 years. And then there is skepticism about the research. Almost everyone thinks they know someone whose annual exam detected a minor symptom that led to the early diagnosis and treatment of cancer, or some similar lifesaving story.

This is a funny thing. I've never had an annual physical. This isn't for any specific reason. It just never occurred to me, and none of my doctors has ever recommended it. I've probably had half a dozen different primary care physicians over my adult life, and not one of them has ever suggested I should be getting an annual physical.

I'm not sure what this means. Is the annual physical something that doctors only do if their patients ask? Or have I just had an unusual bunch of doctors over the years? What's your experience with this?

And as long as I'm noodling about stuff like this, here's a thought that passed through my brain the other day. I was thinking about the fact that one of the indicators of the multiple myeloma that I was diagnosed with comes from blood tests. So why not test routinely for the markers of multiple myeloma? The answer is obvious: you'd be performing millions of blood tests every year with a vanishingly small chance of finding anything. What's more, there are lots of different cancers. Are you going to draw a few pints of blood every year and test for all of them at a cost of tens of thousands of dollars? That makes no sense in otherwise healthy people.

But this got me thinking about that new blood testing technique I wrote about a few months ago. In a nutshell, it requires only a tiny amount of blood, and the tests themselves are super cheap. If this works as advertised—and presumably gets even cheaper with time—does it open up new possibilities for an annual physical that actually makes sense? Would it be possible to draw no more than a standard vial of blood once a year, and then perform a huge variety of tests at a cost of a few hundred dollars? The odds of finding anything would still be small, but it might nonetheless be worth it if the cost both in time and money was also small.

Of course, there are still problems with false positives and so forth, even if the cost of this regimen was small. So maybe it would be a lousy idea regardless of its feasibility. I really have no idea. But it's an intriguing possibility.

Chart of the Day: Net New Jobs in December

| Fri Jan. 9, 2015 10:12 AM EST

The American economy added 252,000 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 162,000 jobs, which is not quite as good as last month but still not bad. Virtually all of this growth was in the private sector, yet another sign that the recovery is finally motoring along at a steady if unspectacular rate.

But the news was not all good. The headline unemployment rate fell from 5.8 percent to 5.6 percent, but this was mostly because of people dropping out of the labor force. Wage growth was also disappointing. Last month's wage increases, which I was skeptical about, were entirely washed away. Earnings for nonsupervisory workers actually dropped to slightly below their October levels.

Overall, this jobs report is decent news, but hardly great. Until we start to see steady employment growth and steady wage growth, the labor market still has a lot of slack no matter what the headline unemployment rate is. Given this, in addition to possible headwinds in the rest of the world, the Fed needs to continue to keep interest rates low for quite a while longer. It's not yet time to tighten.

Net Neutrality Might Be a Step Closer to Reality

| Thu Jan. 8, 2015 9:20 PM EST

Net neutrality got some new momentum yesterday from FCC Chairman Tom Wheeler:

Speaking here at the 2015 International CES tech trade show, Wheeler repeatedly hinted he favors reclassification of broadband as a public utility, which would subject Internet providers to some of the same rules that govern old phone companies. The approach is already drawing heavy fire from Republicans and telecom giants who warn it will lead to burdensome regulation.

....Back in Washington, Sen. Dean Heller (R-Nev.) quickly slammed Wheeler’s comments, urging him to defer to Congress. And Senate Commerce Committee Chairman John Thune (R-S.D.) separately on Wednesday said he’s pushed the FCC to delay its new rules until lawmakers have a chance to come up with their own solution. He expressed early interest in legislation that would specify new consumer protections without going as far as reclassifying broadband

We think a legislative route is a better way to go, and we’ve developed some language that we think addresses a lot of the concerns that Democrats have raised — but does it without that heavy regulatory approach,” the senator said.

The best solution to the problem of net neutrality would be the introduction of genuine competition among ISPs. Your local cable company might still want to discriminate against rivals in the video business—or maybe team up with one of them and degrade the others—but they'd have a hard time doing that if Google was providing great quality for every web-based video service and customers could easily switch if they got tired of poor Netflix streaming. More generally, competition would put a ceiling on all sorts of bad behavior. If your prices are high, or your service is poor, or you have a habit of playing favorites with certain sites, then you're going to lose customers unless you get your act together. True competition would make heavy regulation of broadband mostly unnecessary.

But we don't have true competition and we're not likely to get it anytime soon. So we do what we always need to do when corporations enjoy monopoly positions: we regulate them. And given the noises that ISPs and other broadband suppliers have occasionally made in candid moments, strict regulation requiring equal treatment for everyone is probably in order.

This means that Wheeler's announcement is good news. In theory, so is John Thune's. That's because I agree with him: the best net neutrality solution would be a legislative one. It would allow more flexibility than the FCC has under its existing Title II telephone regulations, and it would almost certainly be less vulnerable to court challenges.

But is Thune really serious about addressing "a lot of the concerns that Democrats have raised"? I guess I'm skeptical. Part of the reason is that I've never really understood exactly why Republicans are so dead set against net neutrality regulations. This isn't something that would stifle competition, after all, nor is it a simple matter of siding with corporate interests that Republicans are traditionally sympathetic to. Rather, net neutrality is basically a battle between corporate behemoths: in general, content providers are for it and ISPs are against it. I've never quite figured out why the GOP has so steadfastly taken the side of the broadband providers in this battle.

This makes me wonder what forces are driving Thune, and whether he's really able and willing to make substantive compromises on net neutrality. Without something to prod him, my guess is that he'd prefer doing nothing, so if Wheeler's actions provide that prod, then three cheers for Title II regulation. It might not be ideal, but it might be just the incentive Republicans need to get serious about introducing legislation good enough to get support from both President Obama and enough Democrats to pass the Senate. We'll see.