Relevant and even prescient commentary on news, politics and the economy.

Moving to Opportunity: Katz, Ludwig, Chetty and Hendren — discussant Bruce Springsteen

This very important paper “Moving to Opportunity” is well summarized by the discussant.

Baby this town rips the bones from your back
It’s a death trap, it’s a suicide rap
We gotta get [them] out while [they]‘re young
`Cause tramps like us, baby we were born to run
[regressions]

As noted by the discussant, the authors find that the benefits for young children of moving out of high poverty areas are very large. In contrast moving in ones teens helps girls but not teenage boys many of whom have already begun “steppin’ out over the line” & are harmed by increased access to “suicide machines”.

As noted, the paper is excellent and important, but I think the more striking fact is that the discussant has managed to summarize it so briefly and accurately while rhyming and playing a guitar.

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$ 2.1 trillion here $ 2.1 trillion there and soon you’re talking real money

I didn’t think they could shock me. Then I read that the Trump OMB made a $2,000,000,000,000 arithmetic mistake

Jon Chait explains “One of the ways Donald Trump’s budget claims to balance the budget over a decade, without cutting defense or retirement spending, is to assume a $2 trillion increase in revenue through economic growth. This is the magic of the still-to-be-designed Trump tax cuts. But wait — if you recall, the magic of the Trump tax cuts is also supposed to pay for the Trump tax cuts. So the $2 trillion is a double-counting error.”

Amazing, I thought. Also Chait is much better at snark even than Paul Krugman who made it sound boring “@paulkrugman
It appears that Trump budget involves two scoops of voodoo economics: faster growth *and* tax cuts without a fall in revenue as % of GDP”

But I was wrong. Chait and Krugman are discussing two different errors (3 scoops of voodoo). Mulvaney et al both counted 2.1 trillion twice *and* assumed tax cuts don’t cause any reduction in the ratio of tax revenues to GDP.

Binyamin Applebaum explains.

One example of the budget-ledger legerdemain: Mr. Trump has pledged to end estate taxation. His budget, however, projects that the government will collect more than $300 billion in estate taxes over the next decade. Indeed, the Trump administration projects higher estate tax revenue than the Obama administration did because it expects faster economic growth.

Mr. Trump, in other words, is proposing to balance the federal budget in part by simultaneously increasing estate taxation and eliminating estate taxation.

Then later and separately explains another error.

The budget’s presentation of the benefits of the administration’s economic policies also raised questions. White House officials said that tax cuts and other changes, like reductions in regulation, would push annual economic growth to 3 percent by 2020, well above the 2 percent annual average since the recession. The budget projects that the increase in economic growth will produce $2.1 trillion in additional federal revenue.

The Trump administration appears to be counting this windfall twice. It needs the money to offset the cost of the tax cuts, but in the budget, the $2.1 trillion is also recorded as a separate line item above and beyond the steady growth of tax revenues.

They are into deep Voodoo.

See also Larry Summers

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Did Recep Tayyip Erdogan Make War on the USA ?

I assume the reader is familiar with the recent violence at the Turkish embassy & Turkish ambassador’s residence in Washington DC. “Body guards” (really thugs) brought by Turkish president Recep Tayyip Erdogan attacked peaceful demonstrators. It is clear how the fight started, a rather thin not too tall man in a suit attacked. He has a receeding hairline, a mustache and wore a black suit and a dark blue tie.

Phillip Bump (of the Washington Post) says this is the moment it started.

The striking thing is that seconds earlier someone in the back seat of the car in which Erdogan was sitting said something to a middle aged man who leaned over to hear. That man said something to a young thin man with a receeding hairline and a mustache who was wearing a black suit and a dark blue (or purple) tie. That young man nodded twice and walked off briskly to the demonstration just before the fight started.

He returned a minute later and said something to Erdogan (who had gotten out of the car).

Is this man who takes instructions from someone who took them from Erdogan the man who started the brawl ?
ymm3

The brawl starts with a man in a suit punching a man wearing a blue t-shirt.

ymwm

The assailant has a receeding hairline and a mustacheymwm

Here @pbump shows the order coming from the car

Here a longer clip shows the young man with a mustache get some instruction, walk briskly towards the demonstration then return and report to Erdogan in person.

Here notice that the man who started the brawl by punching the man in a blue t-shirt leaves (heading generally in the direction of Erdogan) while the brawl continues. Cowardice or mission accomplished ?ymm4

These stills are from this youtube video

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Burning a Source ?

Who thinks that Trump is “in the grip of some kind of paranoid delusion” ? That is the very hottest quote in the must read Phllip Rucker “analysis” of what is very wrong with the President.

I immediately tried to guess who had told Rucker that. The source is “One GOP figure close to the White House “. My first guess was Newt Gingrich (who can be relied upon to stab everyone close to him in the back). However, I now think Rucker made it very clear who is the “GOP figure”.

Later in the article I read

Robert M. Gates, a former defense secretary who informally advised Trump during the transition, criticized his handling of Comey’s ouster.

“Not terribly well done,” Gates told John Dickerson in a CBS News interview scheduled to air Sunday on “Face the Nation.”

Hmm Gates is a GOP figure close to the White House who Rucker might have asked to supply additional cutting comments.

The second to last paragraph in the article is

“Trump is so unsophisticated about government, and he lacks even basic knowledge about how the government functions, of what the unwritten but very important rules and traditions are. His attitude toward all those things is they don’t matter: ‘I’m going to drain the swamp!’ ” said a veteran of past Republican administrations who is close to the Trump White House and spoke on the condition of anonymity to candidly critique the president.

That anonymous source is virtually identified as Gates (to the extent that I searched for the quote by searching for “Gates” and had to scroll down and find it by hand to remind myself that the name wasn’t, quite, spelled out.

In other transparent anonymity I read “a third person denied that Bannon first learned Comey had been fired from television news reports and said that he had actually counseled Trump to delay his decision to lessen the political backlash.” Uh what “third” person could be the one who claims that Bannon wasn’t out of the loop, is familiar with Bannon’s thoughts, and notes that they were prescient ?

How about Patrick Caddell (the most hacktacular hack in the world) later identified as “Pollster Patrick H. Caddell, a longtime confidant of Bannon who served in Jimmy Carter’s White House,”? Rucker couldn’t find a Republican to Ballance the general view that Trump is destroying his presidency, so he had to go to old reliable Caddell for the Democrats in disarray distraction.

It’s like reliving the Carter administration on steroids,” Caddell said. “This is an outsider administration being surrounded by Apache knives. Every inch of the political class and both parties are going after him. The president can’t afford in this type of environment to not execute these kinds of announcements better.”

Look at how far down the hack depth chart Rucker (et Costa et Paletta) had to go to find someone willing to say anything sympathetic about the Trump administration. Does anyone (but me) even remember who Caddell was 40 years ago when he was a somebody ?

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Welfare Reform Horror in Mississippi

Bryce Covert and Josh Israel report

Last year, 11,717 low-income residents of Mississippi applied to get a meager government benefit to help them make ends meet. The state’s welfare program, part of federal Temporary Assistance for Needy Families (TANF), gives a maximum of just $170 a month to a family of three. These applicants had applied hoping to get at least that crumb of cash assistance.

But out of the pool—more than 11 thousand—only 167 people were actually approved and enrolled in the program, according to state data obtained by ThinkProgress. Every other applicant was denied or withdrew, resulting in an acceptance rate of just 1.42 percent. Statistically speaking, it’s more like a rounding error.

Read their whole post (which also notes that 20% of single mothers in the USA have zero cash income).

I don’t have anything to say. Clearly nothing can be done to address this horror while Republicans are in power in Mississippi and the Federal Government.

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I haven’t read the Bret Stephens Column on Climate Change

and I’m not afraid to admit it.

I have read more than 700 words of tweets about it.

I have two thoughts on the meta discussion.

First Jonathan FBD Weisman is a remarkably unpleasant person.

In this twitter comment thread he repeatedly typed “you didn’t read the column” in response to criticisms of his criticism of critics of the column. He accused people he didn’t know of intellectual dishonesty based on his reading of their tweets.

He is a reporter. His claims of fact are supposed to be based on evidence. I think his certainty based on nothing demonstrates that he can’t do his job. This aside from the fact that he is being very very rude to customers.

Oddly, I have found Weisman’s reporting to be credible and interesting (I keep track of my thoughts on him because of his profane quarrel with Brad). I am alarmed to find I have trusted the claims of fact of someone who makes claims of fact with reckless disregard. I guess his editors restrain the recklessness which twitter allows. I will continue to treat his reporting as normal NY Times reporting (which I tend to trust).

Second Jonathan Chait is very very hard on conservatives (yeah a shocker). He wrote

… an approach that makes sense if your highest priority is limited government, and you are attempting to reason backward through the data in a way that makes sense of a policy allowing unlimited dumping of greenhouse-gas emissions into the atmosphere. That is a tic of American conservative-movement thought — the conclusion (small government) is fixed, and the reasoning is tailored to justify the outcome. Nearly all conservatives argue this way, and if the Times is going to have conservative columnists — which, in my opinion, it should — they’re going to engage in this kind of sophistry.

I note that the conclusion doesn’t follow. If “Nearly” all but not all conservatives argue this way, the New York Times could probably hire one of the few who doesn’t. My problem (which I posed to myself before reading Chait’s post) is to name a conservative who doesn’t argue that way. If not Bret Stephens who ?

Can you think of a non sophist conservative ? Is there anyone who draws conclusions based on reasoning and evidence (rather than choosing reasoning and evidence based on the conclusion) who is a conservative in good standing with the conservative movement ? I can’t come up with a name.

Now I haven’t read anything by Bret Stephens. Maybe he is the one. But the discussion of his first NY Times column makes me think I should look elsewhere. But where ? I repeatedly have the sense that I have found a reasonable and reasonably honest conservative, but then he* breaks with the movement (sometimes because he was fired for heresy).

*yes all of them are men: Bruce Bartlett, Josh Barro, John Cole.(others I have forgotten).

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Democrats Win One

The US Federal Government isn’t shutting down. Also it seems that Republicans almost totally caved to Democrats in the deal

Kelsey Snell at the Washington Post

Schumer and House Minority Leader Nancy Pelosi (D-Calif.) boasted that they were able to force Republicans to withdraw more than 160 unrelated policy measures, known as riders, including those that would have cut environmental funding and scaled back financial regulations for Wall Street.

Democrats fought to include $295 million to help Puerto Rico continue making payments to Medicaid, $100 million to combat opioid addiction, and increases in energy and science funding that Trump had proposed cutting. If passed, the legislation will ensure that Planned Parenthood continues to receive federal funding through September.

Manu Raju and Ted Barrett at CNN

In the proposal, there are no cuts to funding for Planned Parenthood, a demand from Democrats.
Funding for the National Institute of Health is increased by $2 billion and there is additional money for clean energy and science funding.

Negotiators also agreed to make a permanent fix for miners health insurance and to provide $295 million for Puerto Rico Medicaid. There is also disaster aid package that includes funding for California, West Virginia, Louisiana, North Carolina. There is increased funding for transit infrastructure grants and to fight the opioid epidemic, and year-round Pell Grants were restored.

Also no money for the wall.

Note that Democrats fought (and won) for the people Trump falsely claimed he would represent — for miners, Opioid adicts (now very many are rural Whites) Louisiana, West Virginia and North Carolina. Republicans, who are only populists during election campaigns, tried to deregulate Wall Street.

This looks like a (half year) budget better than I could have hoped.

Bullies fold when challenged, and Donald Trump is a pathetic negotiator.

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Waldmann Vs Waldman (finally)

I am generally very very impressed by Paul Waldman at the Plum line blog (for one thing I admire the lack of Ego he demonstrates by writing for a blog subtitled “Greg Sargent’s take from a liberal perspective). Waldman is reliably brilliant (so is Sargent).

Now finally I find something he wrote with which I disagree. In the generally excellent “President Trump Appoints Tax Fairy to Key Economic Post” Waldman wrote

The point isn’t that tax increases help the economy and tax cuts hurt it, but rather that tweaking the tax code has very little effect at all. You might get a modest economic bump from tax cuts, but it won’t ever create enough growth to pay for them, as Republicans always insist their next tax cut will do. Democratic economists know this, which is why they don’t think changing the tax code — even in a progressive direction — is a particularly urgent priority.

He is demonstrably wrong. I am a Democratic economist and I think that changing the tax code in a progressive direction is a particularly urgent priority.

I think this is just a case of sloppy writing (yeah I know, look who’s typing). By “economists” Waldman means “economists thinking about GDP growth”. This is unfair to economists. Very few of us are obsessed with GDP and, I think, almost none of us are sincerely indifferent to the distrubution of national income (I am guessing that people who claim they are do so because they know their view that the rich should be richer is unpopular).

Many economists who work in public finance are obsessed with the income distribution and, obviously consider changing the tax code their life’s work. There are excellent reasons to suspect that a more progressive tax code would cause dramatically higher welfare.

I have another objection (after the jump)

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7 Islands and 3 Branches

Jeff Sessions said “I really am amazed that a judge sitting on an island in the Pacific can issue an order that stops the President of the United States from what appears to be clearly his statutory and constitutional power,”

There has been considerable discussion of the phrase “an island in the Pacific”. With that phrase, Sessions made it clear that he considers Hawaii to be a second class state — not a real American state like Alabama. I have no doubt at all that he believes this largely because a majority of residents of Hawaii aren’t white. Our Attorney General is deeply racist and only sometimes able to hide this fact.

A Justice Department spokesperson added insult to insult by saying that Hawaii is indeed an island in the Pacific. This is true. Also Bora Bora is an Island in the Pacific. But Judge Watson didn’t issue his order while sitting on Bora Bora or the Island called Hawaii. he was sitting on Oahu, not Hawaii. The US State of Hawaii is an archipelago including 7 large islands only one of which is the island called “Hawaii” in the Pacific.

Sessions personally displayed spectacular geographic ignorance saying “I wasn’t diminishing the judge or the island of Hawaii, that beautiful place, give me a break.”

None of this is very important. What is important is that Sessions challenges the authority of a judge to declare an executive order to be unlawful. ““I was just making the point that’s very real: one judge out of 700 has stopped the President of the United States from doing what he believes is necessary to protect our safety and security.” Sessions has abandoned his claim that his view of what appears statutory and constitutional should count for more than a judges — that an attorney should be able to over rule a judge. Now he claims that the President’s judgement should count more than any (single) judges view of what the law says.

Judicial proceedings start with a single judge (whose judgments can be appealed). Plaintiffs do not have direct access to panels of judges. As noted by Hobbes roughly 370 years ago, the law without a judge amounts to mere ink on paper. Sessions’ clearly stated view is that the President should not be subordinate to any law or statute whatsoever. If no single judge can even temporarily stop him, the law can’t stop him. If no single judge can issue a preliminary injunction or a decision, then no panel of judges can hear the case.

Sessions declares that the USA is, and should be, an absolute monarchy.

He is an enemy of the constitution.

However, he has not committed treason (which requires making war not just declaring it) and has not committed another impeachable offence (he did commit perjury during his confirmation hearings and, of course, should be impeached, convicted, removed from office and, I think, disqualified “to hold and enjoy any Office of honor, Trust or Profit under the United States”).

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The Blood of Christ

I recently saw a rather alarming poster advertizing a blood drive

bloodofchrist

The title is “donate blood and follow your artistic inclinations” which, given the image, I interpreted as “donate blood and faint, so that you are inclined head down just like the recently crucified Christ. You will be resurrected too (by some fluids not the holy spirit).”

Oddly, it seems the advertizing agency didn’t notice the potentially alarming relationship between the image and a (rather rare) side effect of blood donation. They also didn’t consider the literal meaning of “inclinazione” when writing about an extremely inclined figure.

Closer reading reveals that The One True Catholic and Apostolic Church is, in a sense, paying for blood. “Donors” receive discounts on tickets to the vatican museums.

This raises an issue related to economic theory and justifies an AngryBear post. “Tranfused Blood, Serum Hepatitis, and the Coase Theorem” is a fundamentally important article about market failure in the presence of asymmetric information. The authors noted that it is much cheaper to buy blood than to convince people to give it. But the bought blood isn’t as good, being more likely to contain hepatitis virus. The point is that if someone gives with the intent to help, they care about the quality of their gift, and follow instructions to not donate if, for example, they self inject drugs. People who sell include many who care only about the money. Since the donor (or seller) knows more about the donor’s behavior and risk of hepatitis infection than the blood collectors, the market fails.

This is a really important article (or an early cite of an earlier really important article — Google Scholar gets weak going back to 1974).

But, it seems to me, that the One True Catholic and Apostolic Church has found a trick — a way to pay and select. The point is that intravenous drug addicts etc may be desperate for money and eager to sell blood for cash, but they are not so desperately eager to get discounts on tickets to art museums to be willing to lie and endager others to get them. Even the relatively art loving heroin addict will probably want to save the money rather than buy even discounted tickets to an art museum.

So paying with a “merit good” (don’t ask me to define or even type without scare quotes) can be a rational strategy to use the market even in this case of asymmetric information.

I do not have a rationale for bringing up crucifixion, when trying to convince people to let other people stick sharp things into them.

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