Kevin Drum

Wait? The Robots Aren't Coming After All?

| Mon Jul. 27, 2015 11:58 AM EDT

Over at Vox, Matt Yglesias laments that, contrary to scare stories in the media, robots aren't taking away our jobs. In fact, productivity has dropped steadily over the past few decades. That wouldn't be true if automation were taking away work while producing more goods and services.

True enough. But what about the future?

Of course, all this might change. The power of Moore's Law — which states that the power of computer chips doubles roughly every two years — is such that the next five years' worth of digital progress will involve bigger leaps in raw processor power than the previous five years. It's at least possible that we really will have a massive leap forward in productivity someday soon that starts substantially reducing the amount of human labor needed to drive the economy forward.

But robots are never going to take all the jobs.

I have one question: Why not?

There are a couple of possible answers to that question. The first is that we'll never manage to invent true AI, which will prevent robots from ever being able to perform a wide range of tasks that humans perform easily. The second is that we will invent AI, but....something something something. I don't really understand the second answer. I'll grant that humans might continue to be CEOs and legislators and a few other things just to make sure that we're still ultimately in charge of the world ourselves. And who knows? We might even decide that we prefer human art even if we can't tell the difference, the same way an original Rembrandt is worth a lot more than even a perfect copy.

But that would still mean robots taking over 99 percent of the jobs. If you don't believe AI is coming anytime soon, then I understand why you think this will never happen. But if you do accept that AI is coming in the medium-term future, then why won't robots take essentially all the jobs? What exactly is it that they won't be able to do?

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China's Stock Market Back In Trouble

| Mon Jul. 27, 2015 11:07 AM EDT

Thanks to government support, the Shanghai stock index has rallied for the past few weeks after a month of losses. Today it plummeted again, apparently due to the government withdrawing its support. From the Wall Street Journal:

Authorities may want to “test whether the market has recovered its resilience,” said Fu Xuejun, a strategist at Huarong Securities. “The government wants to use state funds to stabilize the market, not to prop it back to 5000 points overnight.”

Well, I guess that test didn't work. According to the Journal, Monday's drop came as a big surprise. "I am positive that we will see state support emerging again in the next two days," said Jacky Zhang. Maybe so. But if the fundamentals aren't there, even the Chinese version of government support can't keep things propped up forever. It's only a matter of time until we see the market plummeting again.

Donald Trump Explained in Four Words

| Sun Jul. 26, 2015 12:02 PM EDT

If you want to understand Donald Trump—and I wouldn't blame you if you don't—this paragraph from the Post should do it:

“Finally, I can attack!” Trump said at a packed rally at Oskaloosa High School. “Wisconsin’s doing terribly. It’s in turmoil. The roads are a disaster because they don’t have any money to rebuild them. They’re borrowing money like crazy. They projected a $1 billion surplus, and it turns out to be a deficit of $2.2 billion. The schools are a disaster. The hospitals and education was a disaster. And he was totally in favor of Common Core!”

In a private email, Walker supporter Gregory Slayton wrote, "As you've seen Gov Walker is now well ahead of everyone not named DumbDumb (aka Trump) in the national polls." The Wall Street Journal made the email public, and that was that. Finally, Trump could attack.

This is what he lives for. But only if he can pretend that the other guy started it. John McCain called his supporters crazies. Lindsey Graham called Trump a jackass. And now a Walker fundraiser called him DumbDumb. Finally! It must have been killing Trump to hold back on Walker until he had the appropriate casus belli.

That's Trump. He lives for the fight. And despite being worth $10 billion (or whatever) he always manages to feel like he's the aggrieved party. If this reminds you of any particular bloc of voters, now you know why he's doing so well in the polls.

Health Update

| Sat Jul. 25, 2015 8:54 PM EDT

This has come up in comments a few times recently, so here's a quick update.

Short answer: I'm fine.

Slightly longer answer: As I mentioned a few weeks ago, I didn't respond to the stem cell transplant, so we're trying a new chemo med. The good news is that I don't seem to be suffering any side effects so far. But it often takes more than a month for these things to show up, so we're not out of the woods yet. As for whether it's working, it will be several more months before we know.

All that aside, I feel pretty good these days. Not totally back to normal, but 80-90 percent of the way there. I still have a bit of mild stomach nausea periodically, and my neuropathy shows no signs of going away, but my energy level is pretty good and I'm eating enough for two people. At the moment, my only real problem is that I'm tired from not getting enough sleep. But that's nothing to worry about. I've been taking sleep meds for the past six months, and wanted to wait until I was feeling better to get off them. That time has come, so I'm tapering off under my doctor's instructions. It's actually going better than I expected, but there's still a price to pay. Until my body gets back into the habit of falling asleep and staying asleep on its own, I'm going to be a little short on shuteye. With any luck, this will only last a few more weeks.

Republicans Is Weird, Summer 2015 Edition

| Sat Jul. 25, 2015 12:29 PM EDT

No, this isn't about Donald Trump. It's about Sen. Mike Lee of Utah—who plans to offer yet another amendment to repeal Obamacare, but this time with a special super-duper secret sauce added to the upcoming highway funding bill:

Lee said he will try to re-offer the Obamacare repeal as a special amendment that is directly related to highway funding. Under Senate rules, amendments that are directly related, or germane, to the underlying legislation can pass with just 51 votes.

Lee knows that the chair of the Senate is likely to reject his logic that Obamacare repeal is germane to highway funding, so he plans to use the nuclear option. That means he will formally object to the ruling of the chair, which requires a 51-vote simple majority — then he plans to move on to the coveted simple majority vote.

....If his plan works, Lee gets to tell his supporters that he’s responsible for a major vote to kill the health care law he reviles. The House voted to repeal the law in February, so the two chambers could then theoretically conference the bills — leaving it up to Obama to veto a bill to kill his own signature policy achievement.

So the plan is simple: have Republicans declare ex cathedra that repeal of Obamacare is germane to highway funding, and then pass Lee's amendment with 51 votes. It's brilliant! All that's missing are the sharks with lasers attached to their heads!

Aside from being mind-numbingly stupid1, it also won't work. Democrats will just filibuster the entire highway bill, or else they'll vote for it and then Obama will veto the entire mess. Result: Obamacare stays in place but our highways continue to crumble into dust. Nice work, Senator! It's good to see that the Republican Party remains committed to the sober, responsible kind of leadership that makes our great nation the envy of the world.

1It's times like this that I regret the recent banishment of "retarded" from polite conversation. Because I think we all know that it's the word that really fits here.2

2Though I suppose there's no reason to insult the developmentally disabled by comparing them to Mike Lee.

Friday Cat Blogging - 24 July 2015

| Fri Jul. 24, 2015 2:45 PM EDT

Hopper and Hilbert like to (a) play-wrestle with each other, and (b) jump up on the fireplace mantel. Here they are doing both. Hopper has lately been taking control of these affairs, finally realizing that she's the real alpha cat in the household even if her brother is bigger. As she's finally figured out, being alpha is more about will and energy than about size, and she's got both. Nonetheless, you can see in this picture about how seriously she takes it.

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Cigna-Anthem Merger Might Not Be a Bad Deal for Consumers

| Fri Jul. 24, 2015 2:08 PM EDT

There used to be five big health insurance companies in the US. If the proposed Anthem-Cigna merger goes through, we'll be down to three. Is this a good thing? Wonkblog's Carolyn Johnson reports:

The effect on premiums are hard to predict, but are likely to be bad.

The question of how the mergers will affect card-carrying members is more complicated than it might seem. In general, consolidation in an industry leads to less competition and higher prices. Indeed, the few studies that have been done suggest that fewer insurers in the marketplace will mean higher prices.

...."The premise of the merger for both of these transactions is that they can achieve cost savings and economies of scale, and they of course maintain that will lead to their ability to price even more competitively," said Richard Zall, chair of the health care department at Proskauer, a law firm. "It will take some time to see: 1) can they implement the mergers and achieve those savings and 2) is there still sufficient competition in the various markets that it won’t lead to price increases?"

Actually, it's not this simple. There are several things that make it hard to predict how this will shake out:

  1. Health insurers do compete with each other, but even more they compete with providers (doctors, hospitals, drug companies, etc.). If there are multiple small insurers in, say, Kansas, then hospitals there have a lot of pricing power. If an insurer refuses to do business with a particular hospital, that puts them at a big disadvantage compared to their competitors and limits their leverage to negotiate lower prices. But if there are only one or two big insurers, it's the hospitals that are at a disadvantage since they can't afford to be out of their networks. In this case, insurers have much more leverage to negotiate lower prices.
  2. Unlike, say, diet colas, which are available everywhere, even big health insurers tend to be somewhat regional. This means there are some areas where there's literally only one insurer available. This obviously could put consumers at a disadvantage.
  3. However, Obamacare mandates a minimum "medical loss ratio" of 80 percent. Even if there's only one insurer in a county, they have to spend at least 80 percent of their premium dollars on actual health care. That number goes up to 85 percent for large group plans. So there's a hard limit on how much insurers can charge no matter who controls the market.
  4. Generally speaking, we liberals would prefer a system in which there was only one insurer: the federal government. There are various reasons for this, but one of them is that a single nationwide insurer would have enormous pricing power. This is sort of the ultimate version of item #1. Medical costs are overwhelmingly set by providers, not by insurers, and the more leverage insurers have, the lower prices are for consumers.

In other words, while I'd normally be opposed to such severe consolidation in an industry, it's a little trickier in this case. There are plenty of horror stories about health insurers, but when it comes to pricing, a smaller number of bigger insurers is probably a good trend. In the health care industry, the thing to be worried about is consolidation on the provider side. That would be bad for medical costs.

Hillary Clinton Takes Aim at Capital Gains Taxes for the Rich

| Fri Jul. 24, 2015 11:43 AM EDT

The Wall Street Journal reports that Hillary Clinton's tax plan is starting to take shape:

Hillary Clinton will propose a sharp increase in the capital-gains tax rate for the highest earners for investments held only a few years, a campaign official said Friday. Under the Clinton plan, investments held between one and two years would be taxed at the normal income-tax rate of 39.6%, nearly double the existing 20% capital gains rate.

....The rate for top-bracket taxpayers would be set on a sliding scale, with the lowest rate applied to investments held the longest. To qualify for the existing 20% rate, one would have to hold an investment for at least six years.

This change would apply only to high-income taxpayers and only to short-term investments. Lower-income workers would continue to get a break on capital gains taxes compared to the rate they pay on ordinary income. This is mostly for show, however: low-income workers barely have any capital gains income in the first place. The chart on the right from the Tax Policy Center shows the breakdown. Anyone making less than a six-figure income pays virtually no capital gains taxes, so changing their rates serves no purpose. It's only at the high end of the income spectrum that the preferential capital gains rate matters.

Hillary's proposal will enrage conservatives, who are convinced that capital gains rates are the magic key to prosperity. Since there's virtually no evidence linking capital gains rates to economic growth, the cynical among you might think that what really motivates their tireless advocacy of low rates is that it benefits the rich enormously. But that's only for the cynical among you.

In any case, folks who make more than a million dollars a year are going to be pretty exercised about this, even though Hillary's proposal allows them to keep a modestly preferential rate for investments held longer than two years and the current super-preferential rate for investments held for six years or more. Still, details aside, the rich account for virtually all the capital gains taxes paid, and raising that rate in any way would hurt them considerably. These are also the folks who are donating vast sums to the Republican candidates, so you can be sure they'll be insisting that their favored candidate goes after this proposal hammer and tongs. But Hillary is right. There's little evidence that higher capital gains rates do much harm, and a fair number of reasons to actively prefer a higher rate. Jared Bernstein has more here.

Here's How to Stop Covering Donald Trump: Stop Covering Donald Trump

| Fri Jul. 24, 2015 11:00 AM EDT

Message to everyone: You don't have to cover Donald Trump's every move. Honest. If you're going to whine and complain about how he's sucking all the oxygen out of the race, then stop covering him unless he does something genuinely newsworthy. Which actually isn't all that often.

For God's sake, how hard can this be? If clickbait is all that matters to you, fine. But don't pretend you're being journalists if that's all that's driving you.

Hillary vs. the Press, Round One Million: The Times Screws Up a Scoop

| Fri Jul. 24, 2015 10:25 AM EDT

Hillary Clinton's email travails are a genuine problem for her. At best, relying solely on her own server to handle email while she was Secretary of State shows bad judgment, and at worst it might have violated government rules. There's not much question this is going to dog her going into next year's election.

That said, Jonathan Allen points out that the press is back to its old bad habits as well:

The Clinton rules are in full effect again. This case would fall under the umbrella of No. 3: The media assumes that Clinton is acting in bad faith until there's hard evidence otherwise. The New York Times, which got the scoop, rewrote its original story and is taking a beating from political observers and other media outlets for it. The first version said the inspectors general want a criminal investigation into Clinton's actions specifically, while the revised copy says they want the Justice Department to open a probe, more broadly, into whether the email was mishandled. It may turn out that Clinton is responsible for mishandling sensitive material, but the inspectors general didn't ask for an investigation into her, as the first version of the Times story said.

Here are the two versions of the Times lede:

Two inspectors general have asked the Justice Department to open a criminal investigation into whether Hillary Rodham Clinton mishandled sensitive government information....

 Two inspectors general have asked the Justice Department to open a criminal investigation into whether sensitive government information was mishandled....

The second one is correct. [See update below.] The request is a very generic one, asking whether the State Department misclassified some documents, and criticizing it for "its reliance on retired senior Foreign Service officers to decide if information should be classified, and for not consulting with the intelligence agencies about its determinations." Aside from the fact that the buck stops at the top, there's nothing here that's specifically about Clinton. And yet, the Times writers originally made their lede all about Hillary, almost as if on autopilot.

The feud between Hillary and the press is sort of like the Hatfields and McCoys: it's now so old, and so deeply ingrained, that it's almost impossible to tell who's more at fault. The press learned to deeply mistrust the Clintons during the 90s, sometimes with cause, and the Clintons learned to deeply mistrust the press at the same time, also sometimes with cause. The result is that Hillary does everything she can to shield herself from the press, and the press assumes that everything she does has some kind of sinister motive. Meanwhile, Republicans sit back and fan the flames, just as you'd expect them to.

It's gonna be a grim 2016 campaign if this keeps up.

UPDATE: Actually, even the second one is wrong. It's not a criminal investigation. From Politico: "In an attempt to clarify reports, a Justice Department official said on Friday, 'The Department has received a referral related to the potential compromise of classified information. It is not a criminal referral.' "