• Friday Cat Blogging – 16 August 2019

    How about if we feature a red-blooded American cat this week? That would be Hilbert, named after a German mathematician but still an all-American boy. In this picture he is sitting in his favorite box but has gotten distracted by a gray-and-white cat wandering through his field of vision. Obviously that demands a good, long stare.

  • How Worried Are People About Climate Change?

    I was on the phone with my editor yesterday and we happened to get on the topic of public opinion about climate change. I thought that concern about climate change had peaked around 2006-08 after Al Gore’s Inconvenient Truth tour, while she thought it was peaking now. Gallup has a series of questions about climate change that they’ve polled for the past couple of decades, so I headed over there. Here’s what they show:

    It turns out we were both right. Concern about climate change did peak after Al Gore’s tour and then slumped during the Great Recession. But it began picking up again when the economy improved and is currently at about the same level as the post-Gore peak. Now here’s a look at where climate change ranks compared to other environmental issues. This is the percentage of people who said they worried “a great deal” about each of the listed problems:

    Climate change hangs out in the middle with four other issues that poll at the same level. Put these two charts together and it’s clear that people are thinking more about climate change these days, but without a ton of urgency.

  • Democrats Need to Get Smart on Immigration

    Peter Shuck thinks Democrats are right to favor legal status for millions of undocumented workers, including Dreamers. He also believes we should legally admit “many more” than the 1.1 million we do now. He also wants to raise refugee admissions to 75,000. But he also thinks Democrats should take enforcement of immigration laws more seriously:

    Effective interior enforcement means mandating that all employers use an improved, pre-hiring E-verify status check, and occasionally using well-targeted work site audits and arrests to enforce employer sanctions, which have been on the books since 1986. No administration, Republican or Democratic, has made that a priority. But it could be a winning issue for a smart Democratic candidate appealing to American working-class and union voters.

    I agree with all of that except for the “occasionally” part. This doesn’t have to be like a plague of locusts descending on America’s farms and slaughterhouses, but it needs to be routine enough that employers know it’s a real risk. It also needs to be focused 100 percent on businesses. Workers should be left entirely alone except insofar as they need to be questioned to confirm employer records.

    Think of what this accomplishes. ICE is no longer in the business of raiding panicked workers in fields and sweatshops. They are dealing exclusively with fellow American citizens. The fines should be big enough to genuinely deter employers and to fund the agency. Over time, illegal immigration would steadily and humanely be reduced simply because the prospect of a job in El Norte would steadily be reduced.

    Now add a national ID card to the mix and you’re really in business.

  • LA Democratic Party Turns On One of Its Own

    Ronen Tivony/SOPA Images via ZUMA

    Last month I wrote about LA County’s newly-elected sheriff, Alex Villanueva, whose top priority since taking office has been a project to reinstate deputies who were fired for things like domestic violence, using unreasonable force, lying, and so forth. Earlier this week, even the Democratic Party had finally had enough:

    Tuesday, the Los Angeles County Democratic Party passed a resolution calling on Villanueva to restore trust in his department. It asks him to adhere to recommendations on hiring practices by the Sheriff Civilian Oversight Commission, to end inmate transfers to federal immigration agents and their contractors, and to reverse all decisions by a panel that reinstated a deputy fired for violating department policies regarding domestic abuse and lying. The resolution also expressed concern that Villanueva’s son was admitted into the Sheriff’s Department academy despite a history of driving under the influence.

    Party leaders said it was highly unusual — if not unprecedented in recent memory — for the organization to publicly express sharp disapproval of an official so soon after endorsing him. “We felt really misled, almost conned, by the difference between Villanueva’s rhetoric and the things he has done since he was elected,” said Damian Carroll, member-at-large of the Democratic Party of the San Fernando Valley, who authored the resolution.

    You can never perform enough due diligence, folks.

  • In Big Non-Surprise, Trump Turns on Labor Unions

    Jim West/ZUMA

    Back in 2016, North America’s Building Trades Unions endorsed Hillary Clinton for president. Once Donald Trump won, however, they responded warmly to his promise to be the Builder-in-Chief. Trump told them he planned to spend $1 trillion on infrastructure. Maybe $2 trillion! Here is Trump speaking to the group early in his presidency:

    I know these people well, you wouldn’t believe it. I know them too well. I know them too well. They cost me a lot of money. (Laughter.) I spent a lot of money, but I love them, and they’re great, and their people are fantastic.

    …..The fact is you take pride in every part of your work — every joist, bolt, and rivet. You’re not only builders, but you’re artisans, very talented people. A lot of people don’t understand, you’re very talented people — enriching our cities and landscapes with works of great beauty. And just as you take pride in your work, our nation takes great, great pride in you, believe me. And it’s time that we give you the level playing field you deserve.

    ….Washington and Wall Street have done very, very well for themselves. Now it’s your turn. And you’re going to be also sharing the wealth.

    As we all know, the whole infrastructure thing never happened. Hell, it became the butt of a joke. Then the Trump administration proposed new rules for apprenticeship programs that would be governed by industry, not unions. NABTU’s president, in an inspiring display of worker solidarity, said that would be fine as long as NABTU was excluded from the proposal. Labor Secretary Alex Acosta assured him it would be.

    Well, as we all know, Acosta was forced out of office due to Epstein program related activities, and his chief-of-staff was already gone due to his management philosophy of “profanity-laced tirades and belittlement of subordinates.” So now Mick Mulvaney is running the show and he’s not the kind of guy who’s sympathetic to carve-outs for organized labor. They are the enemy, after all. So now, two years later, NABTU’S partnerhip is in tatters:

    Now the two sides are on the brink of war, endangering a key bloc of Trump’s support in Midwestern swing states in 2020. At issue is a deal gone bad between Trump and North America’s Building Trades Unions over a Labor Department apprenticeship initiative, the politics of which have grown more complicated since last month’s ouster of Secretary Alexander Acosta. Leaders of the union federation worry that the final version will undermine their own job-training programs and create a supply of cheap labor for developers, undercutting high-skilled construction workers who rely on prevailing-wage jobs to make ends meet.

    “It’s an existential threat to the Building Trades,” said a former administration official with knowledge of the discussions. And it has the powerful group — a union federation that represents millions of construction workers across the U.S. — seeing early signs of a member-driven revolt against Trump in 2020.

    I know this analogy gets used too often, but it really is like the frog who agreed to carry a scorpion across a river. Halfway across, the scorpion stung the frog and they both drowned. But why? “It’s what I do,” the scorpion shrugged.

    Donald Trump may have the knack of talking to blue-collar workers, and I suppose union leaders need to do their best to work with whoever’s in the White House. But as Trump said to them about unions, “they cost me a lot of money.” That part was real. The little laugh that followed wasn’t. Unions cost Trump and the rest of the business class a lot of money, and they’ve spent the last 50 years conducting a scorched-earth campaign to destroy them. So when, one way or another, it turned out there was no Trump infrastructure bill and never would be; and Trump started whittling away at public sector union rights; and Trump repealed the “overtime” rule put in place by President Obama; and Trump’s NLRB overturned a couple of key labor rules; and Trump appointed Eugene Scalia to be the next Labor Secretary; and Trump said not a peep when Boeing workers tried to organize in South Carolina; and Trump’s trade war started hurting union jobs—well, you’d be foolish to wonder why he did all that. The answer is simple. He’s a Republican. It’s what he does.

    Any union that supports Trump’s White House and Mitch McConnell’s Senate deserves whatever they get. Any union that backs a Trump initiative that screws other unions as long as they themselves are exempted should hardly be surprised when that exemption is suddenly in danger.

    Organized labor is down for the count in America. The odds against their revival are daunting, but they do have one last chance: organize for 2020 like never before. Make it clear that social issues don’t matter anymore and that every single union member in the country should vote against the Republican Party for every office that’s open. Do this regardless of what happens to the apprenticeship program. In turn, Democrats should unanimously agree to put labor reform front and center if they win. That’s it. It’s a prick of light at the end of the tunnel for unions and a return to genuine blue-collar roots for the Democratic Party.

    So far, to my surprise, none of the Democratic candidates has sold herself as the “labor president.” They mostly all support the usual stuff (card check, worker safety, etc.) but it’s been pretty low-key. The “can you top this” approach to border security that’s swept the field is a bad idea, but a “can you top this” approach to reviving labor would be great. I mean, whose side are you on?

  • Wealth Taxes Are a Dying Breed

    For those curious to learn more about wealth taxes, Brad DeLong recommends a primer written a few months ago over at Equitable Growth. It’s a good introduction, but in the end the most important takeaway is probably this:

    Most countries have given up on wealth taxes because the game wasn’t worth the candle. There are lots of intricacies to a wealth tax, and in the end it amounted to only about 1 percent of total tax revenues in most countries (with Switzerland as a bit of an outlier). In the United States, total tax receipts for all levels of government come to roughly $5 trillion, so 1 percent would amount to $50 billion per year.

    In round numbers, you could get the same amount of revenue by creating a new tax bracket at $1 million and increasing the top tax rate from 39 percent to 42 percent. There may be advantages to a wealth tax even if it raises the same amount as a millionaire-bracket income tax, but on the other hand the increased income tax is very simple, very well-understood, hits pretty much the same people, and is unquestionably constitutional. Given all that, a wealth tax would probably need to have some pretty convincing benefits to be worth the effort of creating it.

  • Colombia Diary — Friday

    On Friday it was time to come home. I accidentally drove up a street reserved for buses in order to connect to the highway to the airport, but that was all. Not bad for Bogotá!

    The drive to El Dorado Airport was uneventful, but once I got there I found no signs telling me where to return my car. Very odd. I made a second loop and still didn’t see anything. So I pulled into a parking lot and left my Renault in the exact same spot I picked it up from. Then I went in and told the guy at the Avis counter what I had done. I assured him I had left the keys in the car and he looked up my name on their list. “No problem,” he said cheerily, “have a nice flight.” I guess it all worked out since I haven’t yet received a phone call from Avis Colombia asking why I stole their car.

    You may think that this is about it for my Colombia diary. Far from it. In fact, I was sorry to board the plane because the weather and the clouds were so stunning on Friday. But things have a way of working out. I had a seat in row 2, in front of the wing, and for perhaps the first time ever, a window that was pretty clean. This all conspired to produce my biggest haul of great airplane photos ever. Naturally I’ll share them with you. In order to follow along, here’s our departure path from the airport:

    The westbound departure pattern from Bogotá’s El Dorado Airport.

    First up is the airport’s control tower as the plane taxied into position for takeoff.

    The control tower at El Dorado Airport.

    A few seconds after wheels up we passed the Fontibón neighborhood on the right side of the plane. You can see a soccer pitch on the bottom right of the photo.

    The Fontibón neighborhood of Bogotá.

    Next we passed the Parque de Ventas La Felicidad.

    The Parque de Ventas La Felicidad.

    As we turned west we came up on the Tintala neighborhood, with what looks like a reservoir on the middle right.

    The Tintala neighborhood of Bogotá.

    Continuing west, we flew over a quarry near the town of Fute.

    A quarry about 15 miles west of Bogotá.

    Are we done yet? By no means! I won’t torture you with all of the 453 pictures I took from the window of the plane, but I don’t want you to miss out either. And who else is going to look at them? A couple of hours into the flight we were over Central America and the cloud cover was mesmerizing. Here’s a towering cumulus cloud formation from 40,000 feet.

    A cumulus cloud over Central America somewhere.

    This is the jet turbine of our 787 shot at 1/32000th of a second.

    A jet engine shot at high shutter speed.

    Below, these strange markings over Mexico only make sense from the air. Surely they can’t be the work of man?

    Footsteps of the gods?

    After three hours over Mexico we crossed the border near San Diego and then flew past Oceanside. Almost home! A few minutes later we got a great view of Orange County.

    South Orange County from the air.

    At the bottom of the picture you can see Lido Isle (left) and Balboa Island (right) protected by the Balboa Peninsula. The waterway snaking up from between them is Back Bay. John Wayne Airport is at center left. My neighborhood in Irvine is dead center in the photo.

    About 30 miles further along we got a nice view of downtown LA. That’s the 710 freeway on the right and the San Gabriel mountains in the background behind the haze.

    Downtown Los Angeles with the San Gabriel mountains in the distance.

    The approach to LAX goes over Inglewood, home of the new multibillion-dollar sports palace being built for the Rams and the Chargers. The Fabulous Forum, former home of the Lakers, is just above it.

    The new Rams/Chargers stadium under construction in Inglewood.

    A few seconds later we touched down at LAX, and by 8 pm I was home. It was August 9, 2019. My passport expires on August 19. Time for a new one.

  • Lunchtime Photo

    Today is flower day, and I’ve got loads of flower pictures from all over the world to choose from. Marian, however, is quite taken with the bearded iris that’s blooming in our backyard right now, so here it is, with its beard front and center. The color is a little off for some reason, though. My camera’s white balance is set to automatic as usual, but it nonetheless produced more blue than I see in real life. I’m not sure why.

    August 14, 2019 — Irvine, California
  • The Great Yield Curve Inversion of 2019

    Yesterday the yield curve inverted: the interest rates on 10-year treasury bonds were briefly lower than the interest rates on 2-year bonds. But that’s not a curve. It’s just two points. So why is it called a yield curve? Here’s why:

    If you plot the interest rates for all the different US treasury bonds, you get a curve. The chart above shows the yield curve for the start of the year vs. yesterday.

    The first thing you notice is that interest rates are lower across the board than they were in January. This is largely because investors expect inflation to decline in the future. The second thing you notice is that at the start of the year interest rates for long-term bonds were generally higher than short-term bonds. That’s normal, but today it’s no longer the case. These things bounce around a bit, but the 5-year rate dropped permanently below the 1-year rate in late January, for example. That is, it “inverted.”

    Now, for reasons I don’t entirely understand, the key metric in all this is the 10-year rate vs. the 2-year rate. I’m not sure why those two are more important than all the others, but there you have it. They are. So even though a big chunk of the yield curve has been inverted for months, it was a big deal yesterday when the 10-year rate briefly dropped below the 2-year rate. (It rose slightly at the end of the day and is now a hair higher than the 2-year rate.)

    Roughly speaking, treasury rates tell you what investors think interest rates will be in the future. When the yield on long-term rates is lower than the yield on short term rates it means they think interest rates will be relatively lower in the future than they are now. But why would they be lower? All sorts of reasons: lower inflation, rate cuts from the Fed, reduced demand, etc. All of these have one thing in common: they are associated with a weak economy. So when the yield curve inverts, it means a lot of investors are putting their money on the line to bet that the economy will be weaker in the future than it is now.

    Are they right? Maybe! Or maybe not. However, yield-curve inversion has a track record of predicting recessions pretty well, which is why people pay attention to it. The good news, such as it is, is that there can be a long time between yield curve inversion and the start of a slump. For example, the last yield curve inversion began in February 2006. The Great Recession started in December 2007. That’s 22 months. So even if the yield curve inversion is truly telling us something this time around, it might still be a while before we see the economy go south.

  • Retail Spending Remains Totally Boring

    The Wall Street Journal reports that US shoppers “splurged” in July:

    American shoppers gave the U.S. economy a solid boost in July, a counter to weakness in the manufacturing sector and Wall Street jitters about faltering growth….The robust report—the strongest reading since March and a sign that American consumers remain a source of fuel for the economy—is a positive signal for the U.S. amid warning signs of a global economic slowdown. U.S. stocks stabilized after release of the sales figures.

    That’s good news, I suppose, but you might want to keep your excitement under control after you see July’s increase in context:

    Retail spending has been almost eerily rock steady for years. There was a brief drop in late 2018 and then a brief uptick in the spring to get back on track, and that’s about it. Retail spending in July was precisely where you would have predicted back in 2015 if you just drew a straight line. It’s good that consumer spending didn’t plunge or anything, but July’s figures were hardly a sign of a US-led splurge.