Kevin Drum

All of Our Negotiating Partners Think the Iran Deal Is Just Fine

| Tue Aug. 25, 2015 6:18 PM EDT

The New York Times reports that the Iran deal is just a big yawn in Europe:

The matter is settled, according to Camille Grand, director of the Strategic Research Foundation in Paris and an expert on nuclear nonproliferation. “In Europe, you don’t have a constituency against the deal,” he said. “In France, I can’t think of a single politician or member of the expert community who has spoken against it, including some of us who were critical during the negotiations.”

Mr. Grand said the final agreement was better than he had expected. “I was surprised by the depth and the quality of the deal,” he said. “The hawks are satisfied, and the doves don’t have an argument.”

No arguments? I got your arguments right here. 24 days! Self-inspections! $150 billion! Death to America! Neville Chamberlain!

If the Europeans have no arguments against the deal, they aren't even trying. They should try calling the Republican Party for a set of serious, detailed, and principled talking points.

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CBO: Slow Growth Is the New Normal

| Tue Aug. 25, 2015 3:26 PM EDT

Here's something that ought to be good news: according to the CBO, the output gap—the difference between actual GDP and potential GDP—should disappear by the end of 2017. This depends on the recovery continuing, of course, but still. It's nice to see that the economy will probably be running at full steam within a couple of years.

Except that the news isn't so rosy once you understand why the CBO thinks the output gap will shrink to zero. It's not because GDP growth is great. It's because potential GDP growth is kind of sucky:

CBO projects that real potential output over the 2020–2025 period will grow by 2.1 percent per year, on average. That figure is substantially lower than the agency’s estimate of the rate of growth that occurred during the business cycles from 1981 to 2007—3.1 percent per year, on average....According to CBO’s estimates, the recession and the ensuing slow recovery have weakened the factors that determine potential output (labor supply, capital services, and productivity) for an extended period.

....The main reason that potential output is projected to grow more slowly than it did in the earlier business cycles is that CBO expects growth in the potential labor force (the labor force adjusted for variations caused by the business cycle) to be much slower than it was earlier. Growth in the potential labor force will be held down by the ongoing retirement of the baby boomers; by a relatively stable labor force participation rate among working-age women, after sharp increases from the 1960s to the mid-1990s; and by federal tax and spending policies set in current law, which will reduce some people’s incentives to work.

CBO is basically buying into the secular stagnation theory here. The recession, along with demographic factors, has caused a permanent slowdown in the potential capacity of the US economy. Slow growth is the new normal.

What Would It Take to Engineer a 4% Inflation Rate?

| Tue Aug. 25, 2015 2:09 PM EDT

If interest rates are 0 percent but inflation is running at 2 percent, then your real interest rate is -2 percent. It's easy to see how this works. If you borrow $100 for one year, then not only do you pay no interest on the loan, but you get to pay it back with dollars that are worth less. That's a bargain.

But maybe it's not enough of a bargain. If the economy is in really weak shape, even -2 percent might be high enough to make you think twice before borrowing to build a new factory that could end up laying idle and costing you a bundle. Maybe it would take -4 percent to get you off your butt.

But how do you do that? You'd need negative interest rates to go along with your 2 percent inflation. The answer is more inflation. If you keep interest rates at zero, but inflation is running at 4 percent, then voila! You have an interest rate of -4 percent. But not everyone agrees that this would be a good idea. Here is Brad DeLong:

I...find myself disturbed by a division in the ranks of those of us economists who I think have some idea of what the elephant in the room is. Some of us—Rogoff, Krugman, Blanchard, me—think our deep macro economic problems could be largely solved by the adoption and successful maintenance of a 4%/year inflation target in the North Atlantic. Others—Summers, Bernanke—do not. They appear to think that a strongly negative natural real safe rate of interest (there's at mouthful!) will cause significant problems even if 4%/year inflation allows a demand-stabilizing central bank to successfully do its job without hitting the zero lower bound.

Generally speaking, I'm in DeLong's camp. But here's my question: what makes him think that the Fed can engineer 4 percent inflation right now? And what would it take?

I ask this because it's conventional wisdom that a central bank can engineer any level of inflation it wants if it's sufficiently committed and credible about it. And that's true. But my sense recently has been that, in practice, it's harder to increase inflation than it sounds. The Bank of Japan has been trying to hit the very modest goal of 2 percent inflation for a while now and has had no success. Lately it's all but given up. "It's true that the timing for achieving 2 percent inflation has been delayed somewhat," the BOJ chief admitted a few months ago, in a statement that bears an uncomfortable similarity to the emperor's declaration in 1945 that "the war situation has developed not necessarily to Japan's advantage."

So I'm curious. Given the current state of the economy, what open market operations would be required to hit a 4 percent inflation goal? How big would they have to be? How long would they have to last? What other extraordinary measures might be necessary? I've never seen a concrete technical analysis of just how much it would take to get to 4 percent. Does anybody have one?

Hispanics Really, Really Hate Donald Trump

| Tue Aug. 25, 2015 12:57 PM EDT

Gallup posted a pretty dramatic chart today. It shows net favorability among Hispanics for the Republican presidential candidates, and for 16 of them it ranges from +11 (Jeb Bush) to -7 (Ted Cruz). That's a fairly narrow band. But for Donald Trump, net favorability clocks in at -51.

-51! For Hillary Clinton, net favorability is +40.

How much does this matter? Potentially a lot. Between 2012 and 2016, the Hispanic share of the US population will increase by about 2 percentage points. That doesn't sound like a lot, but recent elections have all been close calls. If the Hispanic share of the population grows and they vote in ever greater numbers for Democrats, that could easily make a difference of 1 or 2 percentage points. And that could end up being the difference between victory and defeat.

And it could be even worse than that. In some swing states like Florida and Nevada, the Hispanic share of the population will increase by 3 percentage points between 2012 and 2016. Those states will soon be out of reach for Republican candidates if Hispanics flock to the Democratic Party in ever greater numbers.

"Amateurs talk strategy, professionals talk logistics." There's a lot of blather right now about how Trump is appealing to populism, appealing to the disenfranchised, appealing to all the anger out there. But that's strategy. If you're smart, you'll let the amateurs keep blathering while the professionals look at the cold realities of demographic trends and voter turnout. On that score, Trump is doing nothing but damage to the GOP.

"Accident" vs. "Crash": Round 2

| Tue Aug. 25, 2015 12:03 PM EDT

I never thought I'd be writing about this a second time, but here goes: Round 2 on "accident" vs. "crash." Here's a sample of Twitter reaction to my post on the subject yesterday morning:

@emilymbadger: advocates would say this [i.e., drivers are rarely punished for killing pedestrians] is one consequence of a culture of "accidents": http://t.co/dJVUnJNcKi

@DroptheAword: 30k people die on US roads each yr. Acceptance of this as inevitable come from the “accidents happen” mindset.

@jakekthompson: Calling a crash an "accident" takes blame away from the cause, and removes incentive to fix the problem.

The problem is that these are just assertions, not arguments. There doesn't appear to be any evidence at all to back them up. I myself doubt that the word "accident" has any significant effect on how people view traffic safety, but then, I don't have any evidence either.

Now, it's not as if everything in the world demands a battery of rigorous studies. There's nothing wrong with just trying to persuade people. But in this case, a lot of energy and attention will be spent on this that could be spent on other campaigns to improve road safety, so it would be nice to have at least a little bit of research that's on point. It wouldn't be too hard to get a start on this, either. Read this paragraph:

A teenager from Smithville is in critical condition after a Monday morning accident in Jonesville that is being investigated as a hit and run. The teen's car was struck from behind by an Oldsmobile and then crossed into the northbound lane, where it was struck in the side by a Chevrolet Silverado pickup truck. The driver of the Oldsmobile left the scene of the accident, and his or her identity has not been determined.

Now read this one:

A teenager from Smithville is in critical condition after a Monday morning collision in Jonesville that is being investigated as a hit and run. The teen's car was struck from behind by an Oldsmobile and then crossed into the northbound lane, where it was struck in the side by a Chevrolet Silverado pickup truck. The driver of the Oldsmobile left the scene of the crash, and his or her identity has not been determined.

Does this alter your perception of what happened? Social scientists do this kind of research all the time, showing random subsets of subjects slightly different write-ups and then asking follow-up questions to see if the changes make any difference. This would hardly be conclusive, but it's relatively easy to do and would provide at least a bit of evidence one way or another.

So: are there any enterprising grad students out there who want to take a crack at this? Or, better yet, someone who's already done it?

Republicans Will Survive Their Destruction Derby Primary Just Fine

| Tue Aug. 25, 2015 11:04 AM EDT

I would like to highlight two common claims about presidential primaries that I see a lot:

  • Having lots of candidates and a long race is a big problem. When the Republicans have finished beating each other up this year, the eventual winner will be too exhausted to win in November. All that Hillary Clinton will have to do is roll the tape of her opponent being slagged by fellow Republicans, and she'll waltz into the White House.
  • Having no competition is a big problem. Democrats would be much better off if Hillary Clinton had some serious challengers who sharpened her campaign skills and took a little bit of the spotlight off her.

As near as I can tell, there is zero evidence for either claim. Off the top of my head, I'd say you can very occasionally make the claim that a primary battle matters—the 1968 Democratic race comes obviously to mind—but most of the time the candidate who emerges at the end seems to be unhurt by either too much or too little competition.

Does anyone know of any backup for either of these claims? I've never seen any. Republicans are putting the first one to a kind of destruction test this year, but even so I'll bet the eventual winner is in pretty normal shape by Labor Day.

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Jeb Bush Gives Away the Game on "Anchor Babies"

| Mon Aug. 24, 2015 6:33 PM EDT

Jeb Bush wants us all to chill out about his use of the term "anchor babies":

What I was talking about was the specific case of fraud being committed. Frankly it’s more related to Asian people coming into our country, having children, and....taking advantage of a noble concept, which is birthright citizenship.

Um....no. Bush initially used the term in a radio interview with Bill Bennett. The conversation was entirely about Donald Trump's immigration plan, securing our southern border, and dealing with our third-largest trading partner. In other words, it was all about Mexico. Bush was very definitely not talking about Asians.

And if he was, there's already a perfectly good term to use: birth tourism. It's well known, well documented, and clearly a growing phenomenon. There's no need to describe it using a term that many people find offensive, since there's already one available.

Basically, Bush is tap dancing here. But he's also doing us a favor. In my tedious discussion of "anchor babies" on Saturday, I concluded that its offensiveness depended on whether it was an actual problem in the first place. Bush is pretty much conceding that it's not—at least as it refers to illegal immigration from Mexico. But if it's rare or nonexistent, then you're imputing offensive behavior to immigrant mothers for something they don't do. And that does indeed make it offensive.

It's Now Open Season on China

| Mon Aug. 24, 2015 5:56 PM EDT

In the midst of Trumpmania, it's good to see that some things never change. Here is Scott Walker today:

Americans are struggling to cope with the fall in today's markets driven in part by China's slowing economy and the fact that they actively manipulate their economy....massive cyberattacks....militarization of the South China Sea....economy....persecution of Christians....There's serious work to be done rather than pomp and circumstance. We need to see some backbone from President Obama on U.S.-China relations.

China bashing is the little black dress of presidential campaigns: always appropriate, always in style.

Of course, Donald "China is killing us!" Trump got there before Walker. And more than that: he not only bashed China, but was able to claim that he'd been warning of this all along. If only we'd sent Carl Icahn over there from the start, things would be OK today.

"Crash" vs. "Accident" Doesn't Seem Like It Matters Very Much

| Mon Aug. 24, 2015 3:18 PM EDT

Emily Badger passes along news of a group trying to get us all to stop talking about traffic "accidents":

An "accident" is, by definition, unintentional. We accidentally drop dinner plates, or send e-mails before we're done writing them. The word also suggests something of the unforeseen — an event that couldn't have been anticipated, for which no one can be blamed. That second connotation is what irks transportation advocates who want to change how we talk about traffic collisions. When one vehicle careens into another or rounds a corner into a pedestrian — call it a "crash," they say, not an "accident."

"Our children did not die in 'accidents,'" says Amy Cohen, a co-founder of the New York-based group Families for Safe Streets. Her 12-year-old son was hit and killed by a van on the street in front of their home in 2013. "An 'accident,'" she says, "implies that nothing could have been done to prevent their deaths."

I remember this from my driver's ed class 40 years ago. Our instructor told us endlessly that they were "collisions," not accidents. But we're still talking about accidents 40 years later, so apparently this is a tough habit to break.

And the truth is that I didn't really get it back then. I still don't. "Accident" doesn't imply that something is unforeseeable, or that no one can be blamed, or that nothing could possibly have been done to prevent it. Here's the definition:

noun. an undesirable or unfortunate happening that occurs unintentionally and usually results in harm, injury, damage, or loss; casualty; mishap.

"Unintentional" is the key word here. If you drop the dinner dishes, it's unintentional unless you're pissed off at your family and deliberately threw the dishes at them. Then it's not an accident. Ditto for cars. If you deliberately run over someone, it's not an accident. If it's not deliberate, it is.

Nearly all "accidents" are foreseeable (lots of people drop dinner dishes); have someone to blame (probably the person who dropped the dishes); and can be prevented (stop carrying the dishes with one hand). The same is true of automobile collisions. Driving while drunk, or texting, or speeding are all things that make accidents more likely. We can work to prevent those things and we can assign blame when accidents happen—and we do.

I have a tendency to use the word "collision" because I was brainwashed 40 years ago, but it's hard to see that it makes much difference. Here is Caroline Samponaro, deputy director at Transportation Alternatives:

"If we stopped using that word, as individuals, as a city, in a national context, what questions do we have to start asking ourselves about these crashes?" says Caroline Samponaro, deputy director at Transportation Alternatives. How did they happen? Who was to blame? An erratic driver? A faulty vehicle? A perpetually dangerous intersection?

I'm mystified. We already do all that stuff. Collisions are routinely investigated. Fault is determined. The NTSA tracks potential safety problems in vehicles. Municipal traffic departments make changes to intersections. We pass drunk driving laws. We suspend the licenses of dangerous drivers.

So it doesn't seem to me that use of the word "accident" is either wrong or perilous. If we had a history of ignoring automobile safety because it was common to just shrug and ask "whaddaya gonna do?" you could make a case for this. But we don't.

Good Stuff on the Intertubes Today

| Mon Aug. 24, 2015 1:26 PM EDT

Everyone is writing about my pet topics today!

  • Aaron Carroll busts the myth that you should drink eight glasses of water every day.
  • Kiera Butler sings the praises of food irradiation.
  • Dylan Matthews writes that Intuit and H&R Block continue to oppose any effort to make taxes easier to file.
  • Larry Summers makes the case for continued low interest rates because "the global economy has difficulty generating demand for all that can be produced."

Go read them all.