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

Read Seth Cotlar

@sethcotlar has a very excellent thread asking never Trump conservatives what really changed with Trump. He says he is willing to be convinced that Trump isn’t just letting the mask drop and saying the quiet parts out loud, but that they haven’t made a case that Conservativism was ever worth anything.

Zack Beauchamp fair used it over at

It is devastating and brief (Twitter is evil but it does prevent prolixity — might be the only medium for concise historians not named Tacitus).

I fair use squared the following which I consider to be a very important insight


30. This points to another thread in the history of conservatism that dates all the way back to Bill Buckley…conservatism has often defined itself largely AGAINST a phantom “left” that doesn’t really exist as they think it does.


31. Not only do conservatives tend to see that “left” as monolithic, they also see it as posing an existential threat to “western civilization” or “our way of life.”

32. Without the slippery slope argument, conservatism loses much of its rhetorical punch. Want Medicare? You’re secretly a commie. Support gay right? You hate the nuclear family! Support the rights of transgender people? There’s no biological truth anymore!


33. This is not just a rhetorical device conservative politicians deployed to gin up votes. It’s also been an essential piece of conservative intellectual thought as well. “Standing athwart history yelling stop,” and such.

Yes yes yes. Partly, this is an example of an error of thought which is more common than any other error of thought or any valid method of thought, the false dichotomy. Setting up and knocking down straw men is irresistably tempting. But I think it is important that the seem to actually believe this.

American Conservatism largely defined itself as anti-Communism. I don’t think they evern managed to get over the end of the USSR. One of the central tenets was that of the “Clear and Present Danger” of Communist world conquest. The collapse of the USSR demonstrated that they were totally utterly wrong. But Reagan and Bush were Presidents at the time, so they declared that everything which showed they were wrong, showed they were right.

To an extraordinary extent, Conservatives reject compromise by arguing that compromise is impossible, that any concessions are steps out onto the slippery slope to serfism.

A bit more fairusing below.

Comments (1) | |

Grinding Old Axes II : This Time It’s Personal

So there wasn’t the groundswell of interest in my old axes in comments, so all continued grinding after the jump. Just to recall I stopped after 3 on a list which continued

4) John Kerry is much too stubborn. He won’t admit it when he is wrong. He should be more willing flip flop
5) Al Gore is a bearer of inconvenient truths who deserves much of the credit (or blame) for the existence of the internet
6) Bill Clinton is an ultra wonk who is relatively honest.
7) Walter Mondale was sharp as a knife and had charisma
8) Jimmy Carter is a visionary.
9) George McGovern was the only US politician willing to try to prevent horrible Communist crimes.

Comments (14) | |

Market oriented solutions to the problem of too many guns

There are too many guns in the USA. If you don’t agree, no need to bother reading on. The market oriented solution is obvious, has no Constitutional problems, and is simple.

1) tax gun production and imports. They don’t grow on trees. A tax of $ 5000 per gun would be useful. Better a higher tax on semi-automatics and a lower tax on shot guns. I don’t give a damn about the risk of depriving poor people of an easy way to kill themselves and each other.
2) Higher tax on alcohol too. Basically most gun deaths involve alcohol. This is obvious.
3) Pay list price for a new gun + the tax for guns and melt them.

So the tax is just a don’t kill someone before you sell this gun back deposit.

The solution is simple. People respond to prices. Yes gun nuts might decide to become super rich people instead.
Fine by me.

Comments (29) | |

Grinding Old Axes

This post is self therapy and probably not worth your time. Outline before the Jump
1) Hillary Clinton is very honest. Too honest
2) Mitt Romney is extremely dishonest. He lies often and without shame. Also he made his money conning ex friends.
3) John McCain was a major flip-flopper
4) John Kerry is much too stubborn. He won’t admit it when he is wrong. He should be more willing flip flop
5) Al Gore is a bearer of inconvenient truths who deserves much of the credit (or blame) for the existence of the internet
6) Bill Clinton is an ultra wonk who is relatively honest.
7) Walter Mondale was sharp as a knife and had charisma
8) Jimmy Carter is a visionary.
9) George McGovern was the only US politician willing to try to prevent horrible Communist crimes.

OK so I skipped Obama who was treated fairly by the mainstream media. Oh yeah, Dukakis, uh I got nothing.

Comments (6) | |

Free Market Government

This post will be especially confused. I am thinking about cash bail and how it is unacceptable that richer people have more liberty than poorer people. For some reason my thoughts turned to Jeffrey Epstein currently held without bail, because of course. Now he hasn’t been convicted yet, and I do support the 5th and 6th amendments, so I have a problem. I will try to solve the problem.

I’m going to start with Hobbes, Locke, Mill and Nozick (which one here is not like the others ?). I don’t believe that the moral law contains an article about private property — I think private property is a very useful even necessary social institution, but not a transcription of objective moral truth (this is following Michael Walzer sometimes colleague of Robert Nozick). But for this post, I will assume there are natural rights to private property (following Locke). And, like the listed guys, I will pretend that there is an actual social contract and that people are bound only by contracts they accept. I will go for 3 out of 4 and say they can’t be accepted under the threat of force. The guy who’s not like the other is Hobbes who was an absolutist and claimed that signatures extracted by force counted (his example not mine was armed robbery).

I conclude two things. One is that the maximum morally acceptable tax rate is roughly 100%. The other is that I can set bail for Epstein. Granting Locke, Mill, Nozick and von Hayek all they can imagine demanding, I end up concluding that they have (almost) nothing. I will discuss this after the jump.

But here I will try to focus on financial bail. The problem isn’t that people can buy temporary liberty with private property. The problem is the cash part, which favors the non liquidity constrained, and also the incorrect application of equality under the law. People must be treated equally. Dollars must not be treated equally. It’s one or the other. Bail should be set as a fraction of the defendant’s wealth (including human wealth that is future labor earnings). Currently, the idea is that bail is a number of dollars possibly adjusted for wealth. There is no way to get to justice starting with the idea that all dollars are, more or less to first approximation, equal.

Also high bail. With no liquidity constraint problem, there is no reason to have bail proportional to anything. I think the rule is simple, show up or any correct spelling of your name is a legally valid signature. You don’t play by our rules (showing up for your trial) and there will no longer be any concept of forging your signature. Everyone has the right to sign for you (especially including the Bailiff who will write checks to the state worth the balance of every known account in your name). Any future claim that you have exclusive ownership of anything will not be enforced. And by exclusive that means your claim that you own something any more than I do.

Epstein might still run away, but he would be running barefoot (someone would have taken his private jets, automobiles, and shoes). Natural rights do not include a natural right to have the state prosecute someone for forging your signature.

Now the dollar value of everything you own bail would be greater the richer the defendant. This is fair and equal. It implies discrimination against some dollars, which is no problem.

Comments (3) | |

Rick Wilson, His Former Party and 1984

I really enjoy Rick Wilson’s thoughts on the Republican Party, his former party until 3 years ago. I don’t know which part of his latest Washington Post Op-ed I like most but here goes:

As the saying goes, you had one job, Republicans. Now? Your job really isn’t representing your districts. It’s backfilling and wallpapering over your president’s latest excesses, outrages, racial arson and verbal Twitter dysentery. Every day is a new crisis, and every day demands their complete attention. When he eventually tweets that he was the first person to arrive at Ground Zero or that he invented the question mark that one summer in Yangon, count on his congressional footmen and the Fox News Ministry of Truth to find a new way to spin it.

For Republicans, it’s an endless summer of crying themselves to sleep at Newspeak immersion camp.

My bolding of references to 1984. Ouch that’s going to leave a mark.

However, like many never Trump Conservatives, Wilson insists that conservative doublethink, duckspeaking and blackwhite are new things. He also has the trait typical of those who recently emerged from the Conservabubble of assuming that universal values are conservative values and that leftists are mirror images of conservatives rejecting what the principles they claim. So I can’t resist fisking his column which I will fair use after the jump.

Before the jump I will just note that it is not clear how much of the following description of Trumpian lunacy is covered by “when it comes to articulating anything close to traditional GOP beliefs, he’s as likely to sound like the lifelong Democrat he was until Republicans tell him what to think.” I don’t think he was ever a sincere Democrat anymore than I think he is now a sincere Republican. He is and was a Trumpian.

But more importantly, Wilson refuses to recognise just how far the GOP had already strayed from its declared principles or any standards of reason, logic or decency long before Donald Trump descended the elevator escalator. He describes Trumps typically Republican actions as betrayals of a tradition that has long since been abandoned (I date the betrayal November 1876 but your mileage may differ).

Comments (12) | |

On Yglesias on the Dramatic 0.25% Rate Cut

Monetary policy is roughly the only issue on which I regularly disagree with Matt Yglesias. So it is boring to note that I agree with almost everything he wrote in his Vox article on the recently announced 0.25% Federal Funds target rate cut.

His main assertions are:
– it is a very reasonable move even though Trump advocated it and it will help Trump’s 2020 campaign.
– The previous stance of normalizing interest rates because normal interest rates are normal made no sense
– The argument that higher interest rates are good because there is more room to cut interest rates if there is a recession makes no sense.
– It is too bad that it sure looks as if the Fed Open Market Committee (FOMC) bowed to pressure, but it is not worth doing something stupid just to prove your independence.

As I said, I agree with all of that. There is no reason not to cut interest rates if inflation is persistently below target (also I think the target should be 4% not 2% because that would actually leave more room to cut real interest rates if there is a recession).

I do have three criticisms. One is he praises Trump’s asseesment that interest rates were too high starting January 20 2017. Come on. Trump said they were much too low until November 8 2016. He knows what is good for Trump in the short run. Pretending he has any views on economics except that anything bad for foreigners is good for the USA and therefore good is silly.

The second is he does not explain correctly how interest rates affect demand. He wrote ” Lower rates mean it’s cheaper to finance investments in home renovations, business equipment, and other expensive durable goods. ” The word “equipment” is particularly silly. In fact, the user cost of equipment is mostly depreciation (now at least mostly due to technological obsolescence). If the price of your equipment declines by 30% a year (like the price of the laptop on which I type) an additional 0.25% a year of interest is almost entirely irrelevant. In fact, non residential fixed capital investment barely responds to interest rates except through the effect of interest rates on final demand which affects the return on capital and free cash flows.

Nor are home improvements all that important. The main channel of the transmission of monetary policy is through the mortgage interest rate which affects house sales and house prices which affects construction of new houses. Krugman (as usual) explained this very well. The data speak clearly.

Finally, he said QE was ended because it was fiercely criticized as likely to cause hyperinflation. It was, but the fact that, after QE1 during the financial crisis, further QE had no detectable effects on much of anything might have had something to do with it. It remains an article of faith to him that monetary policy is very important also at the zero lower bound. But the data speak clearly about that too.

Still I 99% agree with him on current monetary policy and I’m glad to get to 99.999999% agreement overall.

Comments (6) | |

Interest Rates and the Hack Gap.

Kevin Drum notes conservative hackitude. I’m just going to fair use the whole post

(please click the link so I don’t feel guilty)

I would like to offer a comment on the hack gap this morning:

It’s remarkable the number of liberal economists who continue to favor an interest rate cut from the Fed. They are displaying intellectually honesty here: with inflation low, there’s no reason not to take out an insurance policy that could keep the current economic expansion going for a while longer, despite the fact that it would help Donald Trump politically.

Conservative economists, by contrast, have almost universally changed their opinions, favoring high interest rates when Obama was president and now favoring low rates when Trump is president.

I’m too lazy to create an actual list of liberal and conservative economists to see whose positions have changed and whose haven’t. Maybe someone can do it and prove me wrong. But I doubt it.

After the jump I report on some googling.

But now I would like to discuss Fresh Water views on interest rates. After the jump, I say that academically prominent macroeconomists who work near great lakes are so far out into theory that they can barely communicate with policy makers or ordinary people.

Then I thought of the interesting case of Narayana Kocherlakota who, as chairman of the Minnesota economics department (a major center of fresh water macro) then the Minneapolis Fed (*the* main center of freshwater macro now that Chicago has gone brackish). I will discuss his academic work on money and interest rates. But the interesting thing is that soon after becoming a policymaker (serving on the Fed Open Market Committee) he pretty much repudiated all of it, the repudiated the mainstream of academic macro, turned into an interest rate dove (not a hack he went from hawk to dove during the Obama presidency). Dramatic and honest, demonstrating integrity (and brilliance in both periods).

But back in the day, he did work (published in top journals) which would have puzzled his colleagues on the FOMC. First in standard fresh water monetary models there is always full employment. There is no role for monetary stimulus. Second, the models typically give an optimal nominal interest rate i of 0. This is not extremely loose monetary policy, because typically the optimal inflation rate is negative giving a market clearing real interest rate. Over in the real world, it has been noted that negative inflation rates are strongly correlated with great depressions. Partly, this is because only extremely high unemployment can cause workers to accept lower nominal wages. Such downward nominal rigidity is absolutely alien to new classical (freshwater) macroeconomics and almost entirely alien to New Keynesian DSGE (mainstream) macro. The fact that it is blatantly obvious to anyone who looks at micro data is irrelevant. But also negative inflation causes an increase in the real value of debts which causes huge trouble. This is because debt contracts are written in dollars or euros and not indexed to the CPI. There is no reason why creditors and debtors both bet on inflation and face risk which they could avoid. Therefore such contracts don’t exist, because over there they agree with Hegel that only that which is rational is real.

The point is that if one argues for moderate real interest rates, zero nominal interest rates, deflation and notes that one assumes all markets clear, one will have some difficulty being a hack. Also one will have trouble making policy. Kocherlakota demonstrated that he is not only brilliant but also serious. He flip flopped because of evidence. It is a pity this is so rare that I think it’s worth a post.

OK I hunt hacks after the jump. I’m not sure I found any. I think the hacks are conservative “economists” not conservative economists.

Comments (6) | |

The Strange Anti Inflation Coalition

Why is the 2% inflation target sacred ? A very strong case can be made that a higher target would be better, because it would mean normal nominal interest rates are further from the (near) zero lower bound. DeLong and Summers made this point in the 90s . AEA President and former IMF head economist OJ Blanchard made it in 2010. Yet it gets nowhere. The 2% target is the gold standard of the 21st century. There is no historical or theoretical basis for it, yet gigantic sacrifices are made in its name. Really you should not push this crown of thorns about the head of labor and crucify mankind on a Keynesian cross at 2%.

I think the secret is an alliance between the extremely sophisticated (who don’t let mere data interfere with their theories) and the extremely unsophisticated (who assume nominal wages are exogenous). I’m going to talk about a debate in a mythical world in which Milton Friedman is right– there is a natural rate of unemployment and actual unemployment does not deviate from this rate for long or on average. It can briefly when inflation accelerates, because people have adaptive expectations so accelerating inflation is unexpected inflation. The argument also works in a mythical world were output is determined by a Lucas supply function.

Now there are three classes of agents. One is made of sophisticated and sensible people who understand the economy and care about the general well being (read me and my friends). Another is made of unsophisticated people who look at what happens and don’t understand the dynamics behind it. So they are boundedly rational and use ad hoc estimates based on something like regressions of the outcome of interest on what’s going on at the time to decide what to do. Finally there are sophisticated fanatics who understand the dynamics but are determined to prove that the government should just protect property rights and leave the market alone. This third groups also includes ordoliberals who claim to remember the German hyperinflation but not the suffering under Bruening during the Great Depression which was long ago and irrelevant to Europe (the Europe which matters because it doesn’t touch the Mediterranean) in the 21st century. The third group includes people who think inflation is theft, who think real interest rates should be high because thrift is a virtue and debt is a synonym for sin etc.

In this imaginary world and in the real world , an alliance of the unsophisticated and the fanatical determine policy making. Analysis after the jump.

Comments (22) | |

Rep Liu got Mueller to say it

Also the MSM noticed. Bump is a Washington Post reporter.

The point is that this implies that Mueller thinks Trump was guilty and that he would have a reasonable chance of convincing a jury that there is proof beyond reasonable doubt of Trump’s guilt.

The other answer was “that was a sufficient reason to not indict Trump which doesn’t imply that it was a necessary condition. As written in the report I don’t think it is fair to discuss the question of

update: in the afternoon, Mueller took it back

When he appeared before the Intelligence Committee in the afternoon, Mueller clarified this exchange, noting that it was not solely because of the Office of Legal Counsel opinion that he did not charge Trump with a crime. Instead, he said, “we did not reach a determination as to whether the president committed a crime.”

This is inconsistent with his exchange with Liu. The key word is “the” in “the reason”. Liu asserted that there was only one reason and Mueller agreed. But in any case, the bottom line is that he took it back.

Comments (11) | |