Now Less Than Ever

Over the weekend I flagged a blog post from Adam Ozimek called "Now Less Than Ever," but didn't get around to responding to it. Adam's post is framed around this assertion from economist Russ Roberts:

[Paul] Krugman is a Keynesian because he wants bigger government. I’m an anti-Keynesian because I want smaller government. Both of us can find evidence for our worldviews.

Before I get to Adam, I just want to add a comment about this. Krugman has already defended himself in the usual way — liberals aren't ideologically in favor of big government the same way conservatives are ideologically in favor of small government, and Keynesianism has never been about big government anyway — but I want to make another point. To the extent that Keynesianism has informed the liberal response to the financial meltdown of 2008, it's prompted support for temporary spending increases. But this is not something that liberals are generally for. It's just not. Outside of a recession, when was the last time you heard a bunch of lefties demanding a temporary increase in some program or another? Pretty much never. Various stripes of liberals may be in favor of various kinds of programs — national healthcare, carbon taxes, universal preschool, etc. — but the people who favor them want them to be permanent. Temporary globs of cash are very seldom on the liberal agenda.

For that reason, stimulus spending during a recession really isn't a matter of liberals taking advantage of a crisis for liberal ends. If we're going to allocate temporary piles of money, then sure: liberals would just as soon allocate it to stuff we support. But generally speaking, temporary spending just isn't, and has never been, part of the liberal agenda.

Now, on to Adam. It's easy to use a crisis like the current recession as an excuse to argue for stuff you've wanted all along (tax cuts, healthcare reform), but what about stuff you don't like? "Help prove Russ Roberts’ cynicism wrong," he says. "Tell us what favorite policies of yours we need Now Less Than Ever. These can be things that either would be downright harmful now, or that we simply shouldn’t be focusing on and aren’t as important as actual recession cures." Sure. Here's an example. A couple of months ago I proposed fighting the recession with a trillion-dollar infrastructure plan. But:

That's the jobs plan. A trillion dollars to make us into a first-world country again. And as part of the enabling legislation, ask for emergency powers to temporarily streamline the regulatory red tape, interagency approval processes, environmental-impact statements, and labor rules that might otherwise keep the money from being put to work speedily.

As a mainstream liberal, I normally wouldn't favor watering down either environmental impact reviews or labor rules, even temporarily. But the problem with infrastructure as a stimulus is that it's slow. If we genuinely favor spending a lot of money on bridges and dams and schools to boost the economy now, we need a way to get these programs started quickly. That means making some compromises we'd normally hate.

How about you? What dearly held priorities would you be willing to (temporarily) give up in order to get the economy moving again?

Aside from the fact that Barack Obama did not, in fact, send troops to Uganda in order to "kill Christians," what should we think about the fact that he sent troops to Uganda in the first place? Needless to say, I'm far more hesitant about sending U.S. troops anywhere than I was a decade ago, but let's look at the circumstances:

  • The Lords Resistance Army is as worthy a target of being wiped out as any band of murderous fanatics in the world. We can't go after everyone, but the United States has been committed for some time to the integrity of both Uganda and the newly created South Sudan. If we're going to go after anyone, the LRA surely deserves to be near the top of the list.
  • It's a very small deployment. Sending a hundred trainers and advisors isn't in the same category as a full-scale commitment of troops and U.S. military power. And with the LRA now cut off from Khartoum, there's a realistic chance of getting rid of them for good at fairly low cost.
  • Unlike Libya, this deployment was authorized by Congress last year in the LRA Disarmament and Northern Uganda Recovery Act. This, combined with the small scale of the operation, makes it constitutionally benign.
  • Finally, there's the question of whether this deployment will remain small as time goes by. On this score, I think Obama deserves the benefit of the doubt. The Libya operation may have been constitutionally suspect, but operationally Obama demonstrated that he was capable of putting limits on what the United States was willing to do and then sticking with it even under considerable pressure from our allies. And although he has escalated in Afghanistan, the escalation wasn't a matter of caving in to pressure from the military. It came only after very detailed discussion and planning, and it was consistent with everything he had been saying about Afghanistan for the previous two years.

Put this all together and I'm pretty much OK with this operation. I'd love to see the LRA cleansed from the face of the earth, and I think there's a decent chance of being able to do it now. This mission is, obviously, being done with the cooperation of the Ugandan government, it's small and focused, and there's every reason to think it will remain small and focused. This is not Iraq 2.0.

Michael O'Hare recounts his childhood growing up on Third Avenue in Manhattan and compares it to the big-box-big-business environment of today:

The big stores that sell me stuff cheap have even figured out a way to imitate the unrehearsed social intercourse of family-scaled retail. At the local Safeway, and Fry’s, and Best Buy, staff who are complete strangers greet me walking down an aisle with “Hi! How are you doing?” in a creditable imitation of the way people who know each other enough to care about the answer interact....Of course the effect of this robotic pseudo-friendliness is exactly the opposite of Mr. Fabrizio’s bending the comic book rule. The “hi’s” and eye contact at Best Buy are actually uglier; this distasteful little fakery is put on because it has been shown that people are less prone to shoplift if someone has made eye contact with them and uttered some sort of greeting. I have started reassuring these folks “don’t worry, I’m not planning to steal anything!” but they don’t seem pleased to hear it; indeed some give me an unmistakable fish eye. Odd.

The whole post is worth a read. When you're done, check out Paul Waldman's meditation on the value of a small-town upbringing in American politics. Growing up in a small town supposedly instills down-to-earth values and enduring virtues, but as Paul says, "The most important thing to understand about Perry's relationship to Paint Creek may be this: He got out." Indeed. They always do, don't they?

An Economics Bleg

A few days ago, Neil Irwin wrote in the Washington Post that the economy has gotten so bad that it really doesn't have much room to fall any further. In particular, housing and cars almost have to rebound at this point:

It is the simple math of recession. Consider housing, which is typically a major factor in recessions. At the peak of the last boom, Americans were spending $813 billion a year on residential investment. That figure bottomed out last year at only a $327 billion....Since hitting its low ebb, residential investment spending has rebounded only slightly, to a $336 billion annual rate this past spring. That means that, mathematically, it would be impossible for a new housing downturn to be as powerful an economic drain now as it was over the past several years; there isn’t $500 billion worth of housing activity left to vanish.

....The same dynamic applies in other areas. Americans bought more than 16 million cars and light trucks in 2006, before the economic downturn. That fell to about 10 million in 2009. The 6 million fewer cars that were sold that year was another major factor in the economic contraction, costing hundreds of thousands of jobs at automakers and their suppliers. But auto sales have rebounded to only about 13 million a year, meaning that there is not as much room to fall if waning consumer confidence again leads Americans to become ultra-cautious.

This is an argument that several other people have made in somewhat different form. Brad DeLong frequently points out that housing has been underbuilt since 2006 far more than it was overbuilt in 2000-05. So there should be a lot of pent-up demand for new housing. Likewise, Karl Smith has pointed out that the U.S. auto fleet is aging, and as old cars get scrapped more people will be forced into both the used and new car markets. So the auto market is likely to pick up.

This all makes sense, with one caveat: no matter how much they want them, people will buy new houses and new cars only if they have the money. If they don't, they won't — at least, not in the same dollar volume as they did in the past.

So how do we know if people have enough money to start buying stuff? Well, for most of us there are three basic sources of money:

  • Cash income, mostly from wages and investments.
  • Credit, mostly from auto loans, HELOCs, and credit cards.
  • Savings. You have more money if you draw down savings, and less if you boost your savings rate.

So what's the size of each of these components? The answers are pretty easily available from public sources, though not always as quickly as we'd like. But there's a problem: I don't think it makes much sense to look at the overall aggregates. You need to know the distribution. The top 10% of wage earners make so much that fairly small changes in their supply of money can swamp fairly large changes in the bottom 90%, and that can be badly misleading. Why? Because changes in the top 10% don't matter that much: their spending on ordinary consumer goods doesn't change a lot when their incomes go up or down by modest amounts.

So what I'd like to know is the size of those three components solely for the bottom 90%, the segment of the population that's more sensitive to changes in their supply of money. For wage income that's fairly easy to come by, but I don't know if it's available for the other pieces. So here's my question to the economic community: Are these numbers available? If they are, how do they compare to 2000-07? And what does the trend look like?

Or, alternatively, am I overthinking this? Are the gross aggregates actually perfectly good indicators of the spending power of the American consumer? I think that looking just at the bottom 90% would be useful, but maybe I'm wrong. Anyone care to weigh in?

I don't usually engage in too much back-and-forth blogging, since this rarely results in more light than heat. However, my Saturday post responding to James Fallows was so badly misconstrued in comments that I obviously expressed myself poorly. Let me take another crack at it.

Fallows was annoyed at a Washington Post story about the defeat of Obama's jobs bill which (a) implied that No votes from two Democrats were somehow more important than unanimous opposition from Republicans, (b) didn't mention that the bill was filibustered, (c) treated a cloture vote as if it was a vote on the bill itself, and (d) rather laughably suggested that the two Democratic No votes had somehow given cover to Republicans who might otherwise have voted Yes.

I'm on board with all of these items except for (c). The current reality of American politics is that cloture votes are, for all practical purposes, not mere "procedural votes," they're votes on the bill itself. The current reality is that bills require 60 votes to pass the Senate. But in comments to the original post, Fallows says this:

The more important point, which I tried to stress, is that nowhere in the WaPo piece did the writer explain why a bill would "fail" with 51 Yes votes, how it had happened that 60 votes were required, that this was a filibuster-threat, or that we were dealing with a historically new situation. Yes, reporters should reflect the reality of a changed situation. But they should mention that it has changed, as this story did not.

This is a legitimate complaint, and it's one I've made a number of times myself. But now I think we should go further. Unfortunately, I prefaced my disagreement with Fallows by saying "I'm on the Post's side." This led a whole bunch of people to think that I was pulling some kind of "reasonableness" schtick and suggesting that Fallows was being a little too radical. That's exactly the opposite of what I intended.

So let me try again. What Fallows is suggesting is that the Post story should have explained that the bill was filibustered, it should have explained that this was why it failed with 51 votes, and it should have explained that routine use of the filibuster is a historic anomaly instituted by Republicans a few years ago. And that's fine. But it's no longer enough.

These aren't filibusters in the heroic Mr. Smith Goes to Washington sense, which is how most people react to the word. So rather than tediously explaining the evolution of the filibuster in every story, something that probably isn't really practical anyway, I think the American news audience simply needs to be repeatedly exposed to the plain fact that the Senate is now a 60-vote body. Maybe then they'll start wondering why.

So: Cloture votes should be treated as if they were votes on the bill itself because, in practice, they usually are. And news stories should explain that nowadays it takes 60 votes to pass a bill. This doesn't require a longwinded explanation in every story about a Senate vote, it just requires a short and simple statement.

Whether you agree or disagree, this is, I think, more extreme than Fallows's position. It's time to stop pretending that each vote is some kind of historical aberration. News consumers simply need to be exposed, over and over, to the simple reality that the Senate is now a 60-vote body. Maybe this will get them fired up, maybe it won't. But it's more accurate than the current practice and, I think, more accurate and more practical than Fallows's suggestion.

Sunday Tech Talk

I have three questions for the hive mind:

  1. What's the best service out there for syncing up folders? DropBox? SugarSync? Or, since I'm a Windows-only user and only have a few gigabytes of stuff that I care about, should I just use Microsoft's free service? Are there nonobvious pitfalls to watch out for?
  2. What's the best travel site these days? I'm embarrassed to admit that I still creak along with Expedia. What things do other sites do better?
  3. For all you Gmail users: what client do you use? Does everyone just use Gmail's web client, or is there something better out there?

And finally, a tech success story, just because they seem so rare these days. A couple of weeks ago the power went out here, and when it came back up my email database had been corrupted. After diddling around a bit I gave up and figured I'd take another run at it later in the day. But when I got back from lunch, there was an alert on my computer telling me that my RAID drive had finished repairing itself. Sure enough, I rebooted and everything was fine. So the extra few dollars I spent getting a RAID array when I bought my new box a couple of years ago actually paid off. And it worked completely automatically in the background, just like it's supposed to. I guess it says something about modern computing that I'm a little shocked at this.

James Fallows is once again unhappy over the media's reporting of Senate dysfunction. Today's target is a story (and a headline) about the recent jobs bill that, instead of focusing on the fact that all 47 Republicans voted against it, focuses on the fact that a grand total of two (2) Democrats voted against it. There's unquestionably a fairy tale quality to the piece, especially its fantastical suggestion that those Democratic defections somehow gave cover to wavering Republicans who were unsure how they were going to vote. That's just laughable. However, Fallows also registers this complaint about the story:

It reflects so thorough an absorption of the idea that the filibuster-threat is normal business that it describes the latest cloture vote as a vote on the bill itself: "Democratic Sens. Ben Nelson (Neb.) and Jon Tester (Mont.), who are both up for reelection next year, took to the Senate floor and delivered a sizeable blow to the bill's prospects by voting against it." No, they voted against the cloture measure, which they knew had zero chance of getting the necessary 60 votes.

Here, I'm on the Post's side. Like it or not, the reality of congressional politics has changed. The Senate is now a 60-vote body, and it's the vote on a cloture motion that's the important vote. For all practical purposes, the cloture vote is the vote on the bill. So my complaint would be just the opposite of Fallows's. Instead of insisting on a Schoolhouse Rock version of reporting, I'd prefer it if the media routinely reported on the actual reality of legislation today. If you want to report accurately, you should (a) report the cloture vote as a vote on the bill itself, (b) you should make clear that 60 votes are required to pass a bill, and (c) you should report the partisan breakdown of the voting — something that used to be routine but now only occasionally appears in reports of legislative activity.

Bottom line: The real-life practice of politics in America has changed over the past decade. Reporting should change along with it.

I have no real excuse for posting this picture. But it's pretty, isn't it, and that's excuse enough. Besides, maybe it will help to relieve the stench of the post just below.

From Rush Limbaugh, shortly after his berserk hatred of Barack Obama led him to publicly accuse the president of sending troops to Uganda to "wipe out Christians":

Is that right? The Lord's Resistance Army is being accused of really bad stuff? Child kidnapping, torture, murder, that kind of stuff? Well, we just found out about this today. We're gonna do, of course, our due diligence research on it. But nevertheless we got a hundred troops being sent over there to fight these guys — and they claim to be Christians.

Due diligence? A quick scan of Wikipedia would have been plenty. The character of the LRA is not exactly a state secret. In fact, it's so not a state secret that the Bush administration declared them a terrorist organization in 2001 and the hyperpartisan 111th Congress passed the LRA Disarmament and Northern Uganda Recovery Act unanimously last year. That is, unanimously in both houses. Every single Democrat and every single Republican, moderates and tea partiers alike, supported it in both the House and the Senate. Every single one. Jesus.

Yesterday the Obama administration finally abandoned the CLASS Act, a program to subsidize long-term elderly care that was part of the healthcare reform bill. Conservatives are in full war whoop mode over this, and I suppose I don't blame them. The budget forecasts for CLASS were always dodgy, and conservative concerns about this have now been vindicated.

But they should contain themselves anyway. What happened here is that government worked exactly the way it ought to. The CLASS Act was passed in a fog of rosy estimates and emotional appeals (it was one of Ted Kennedy's longstanding priorities), and the Department of Health and Human Services immediately began the detailed work of writing the implementing regulations to get it up and running. And guess what? They did their work honestly and conscientiously. Even though it was a liberal program promoted by a longtime liberal icon, HHS analysts eventually concluded that its conservative critics were right and the program as passed was flawed. So they killed it. And most of the liberal healthcare wonks that I read seem to agree that, unfortunately, HHS was right.

This is how we all want government to work. And it turns out that Obama agrees. This is apparently how he wants government to work too, and it's a pretty clear demonstration that Obama isn't the kind of hyperpartisan extreme lefty that conservatives like to paint him as. He's a guy who wants government to function well and honestly, and if it doesn't, he's willing to shut down a program that doesn't work even though it upsets his own party and provides campaign fodder to his opponents. When was the last time a Republican president did anything like that?