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

Justice Stevens Shoots At Gun Decision

Justice Stevens Shoots At Gun Decision

Former Supreme Court Justice John Paul Stevens, now 99 years old, has written a book, The Making of a Justice: My First 94 Years. Apparently he considers the  District of Columbia versus Heller decision to be the worst of all those that was made during his time on the Supreme Court, that one on  a 5-4 vote.  That decision upended the interpretations of the Second Amendment that had been in place since the amendment was adopted, with Stevens noting that in fact this longstanding interpretation reflected gun laws from even the colonial era.  That interpretation allowed for gun control legislation for civilians as it was always assumed that the opening phrase about “maintaining a militia” (by state governments) meant that the second phrase about “the right to bear arms shall  not be ingfringed” only applied to those in the military.  The Heller decision undid that, making the right to bear arms disconnected from the business about militias and essentially absolute.

Clearly Stevens feels guilty about what has happened since then, most clearly the epidemic of mass murders with high-powered weapons that were actually banned for civilian use for a decade after 1994, during when such mass murders happened at a lower rate than before or after.  That law was allowed to lapse, when instead the US should have extended it and followed a policy more like what Australia did by buying up outstanding such weapons, which was followed by a dramatic decline in gun-related homicides.   As it is, the US now has a far higher rate of per capita gun ownership than any other nation, more than twice as many as Serbia, the nation with the next highest such rate.

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Who Needs Critical Thinking?

Who Needs Critical Thinking?

Apparently not the US military.

“Critical thinking” has long been a buzz phrase of US higher education.  There was a time when I could not hear a speech by a higher administrative person at my or other higher ed institutions that did not tout critical thinking as a really important goal of higher ed.  We were all supposed to be teaching it all the time.  I got a bit tired of these incessant speeches, but in fact I agreed with that and continue to. I have not heard these speeches for some time, but critical thinking remains officially a goal in widespread statements in writing throughout higher ed.

However this may be changing in a disturbing part of higher ed.  I was at a dinner in Washington last evening.  Attending this was someone who teaches at the National Defense University who reported on what I consider a disturbing development there.  Apparently this commonplace of having critical thinking being a goal of higher ed was in place officially at the NDU. However, after “Mad Dog” Mattis resigned, the Chair of the Joint Chiefs replaced the Commandant of the NDU.  The new Commandant has made a big deal of getting rid of this goal and replacing it with an emphasis on training for “war execution.”

Apparently the push on this from the new Commandant has been so intense that it led to a large pushback from the faculty at the NDU.  Aside from stated dissenting views, apparently 15 members of the NDu faculty have resigned over this in protest (not including my interlocuter, who nevertheless sides with those resigning over this).  So our military is now to be trained just to fight wars, but without doing any thinking about it.

Something making this more important is that there have been large cuts in the budget of the State Department, with a large reduction in diplomatic personnel.  This means that the military increasingly will be performing diplomatic functions.  But rather than being trained for that or any sort of peacemaking or, well, thinking, the military is being pushed towards mindless war fighting.

Barkley Rosser

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Two Recent Studies, Children of Incarcerated Parents and the Long Run Effects of Student Debt

Two Recent Studies, Children of Incarcerated Parents and the Long Run Effects of Student Debt

Amid the blooming flowers of May, each year sees the arrival of the Papers and Proceedings volume of the American Economic Review, containing short and sometimes punchy gleanings from the previous ASSA meetings.  Here are two abstracts of interest.  I haven’t gone through the papers themselves, so I can’t vouch for their methodologies, but the results they claim to have found are politically important.

Title: Student Debt and Labor Market Outcomes
Authors: Gerald Eric Daniels Jr. and Andria Smythe

We study the impact of student debt on various labor market outcomes, namely, income, hourly wages, and hours worked. Using the NLSY97 and a difference-in-difference approach, we find statistically significant differences in labor market outcomes for individuals who received a student loan versus those who received no student loan. We find that the difference in post- versus pre-college income is 8-9 percent higher for individuals that received a student loan relative to individuals who received no student loan. Further, we find evidence that this higher income is due to higher work hours.

Title: The Child Left Behind: Parental Incarceration and Adult Human Capital in the United States
Author: Laura E. Henkhaus

Exposure to parental incarceration is particularly prevalent in the United States, where about 7 percent of children have lived with a parent who was incarcerated. In this paper, I use nationally representative US data and apply partial identification methods to bound the likely effects of parental incarceration on education and labor market outcomes. Findings suggest that parental incarceration leads to substantially higher rates of high school dropout. Results provide some support for negative effects on likelihood of college degree attainment and employment in young adulthood. This work has important implications for criminal justice policy and social policies toward children.

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We Already Passed a Constitutional Crisis into Presidential Autocracy

I don’t think we have entered a constitutional crisis. I think for all intents and purposes we are already past it, because of the ineffectual response to Trump’s autocratic behavior.

On February 15, he brazenly abrogated Congress’s appropriations power with this diversion of funds for his “border wall.” Presidential Proclamation on Declaring a National Emergency Concerning the Southern Border.

On March 15, he vetoed Congress’s downvote of that emergency. Trump Issues First Veto After Congress Rejects Border Emergency.

On March 26, the House failed to override Trump’s veto: House fails to override Trump veto on Southern Border Emergency.

The House did not file suit until April 5. It requested an injunction to stop the President from acting unilaterally. SCOTUS did not “fast-track” the request for injunction. Trump responded to the House’s request last week asking the court to reject the House Lawsuit. Trump Administration Urges Judge to Reject House Lawsuit on Border Wall.

We are now three months past the emergency declaration and action to stop Trump is on the proverbial slow boat to China. By the time the Supreme Court rules, the 2020 election will probably have already passed.

So, tell me, exactly why should any President whose party controls at least 1/3 of either House of Congress simply bypass any Congressional opposition to anything by declaring states of emergency?

Future democratic Presidents might still refrain from doing so, but it is crystal clear to me that, the precedent having been set, future GOP Presidents will pursue this route at will. Such actions are what makes up an autocracy.

We also have the specter of GOP Senators openly telling a witness to ignore a subpoena issued BY ONE OF THEIR OWN PARTY’S SENATORS. Graham Tells Don Jr. To Ignore Senate Intel Subpoena: “You Don’t Need To Go.”

And, of course, Trump is simply refusing to honor any subpoena issued by the House.

Again a future democratic President might play nice; but once again the precedent having been set, future GOP Presidents will simply employ this strategy across the board.

Bottom line we are not “approaching” a crisis, we are in crisis. The precedents for future GOP Presidential autocracy have already been set and they will be followed. We are passing out of the Constitutional rule of law right now.

The burden may rest with John Roberts who cares about his legacy as Chief Justice and has shown such in previous decisions. He will have to decide whether he wants to go down in history as the Chief Justice who cast the deciding vote to de facto end the American Republic.

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What if Trump does not leave If He Loses in 2020?

There is a number of comments and commentary about the 2020 election and what if Trump refuses to leave. I put up a few and also a good article from Vox.

– A comment (ken_lov) stolen from another site I frequent and read from time to time:

“From time to time on other websites I’ve outlined a scenario where the Supreme Court agrees with Trump that the 2020 election was irreparably tainted by fraud and interference from abroad, and consequently issues an injunction ordering the electoral college not to meet. The constitution provides no guidance about what should happen in such a situation. Trump would therefore be free to act more or less as he saw fit, especially if Republicans had a majority in at least one chamber of Congress and resolved that he was the lawful president.

It’s disappointing how many liberals refuse to take this seriously, based on nothing more than faith in American institutions. I would have thought the last 19 years should have shaken that faith beyond repair. It’s terrifying that the survival of constitutional government may depend on Ruth Bader Ginsburg’s ability to live another 18 months.”

The comment does raise unanswered questions in how a nation would react to Trump defiance and a right-leaning SCOTUS might decide. The issue is whether the left as Ken_lov suggests takes this scenario seriously. Pelosi has already commented on the topic. Perhaps, we have answers or know better?

Vox’s Aaron Rupar:

Trump joked about serving “10 or 14 years” during his rally in Panama City Beach, Florida, on Thursday. It wasn’t the first time he said something like that during a speech.

Trump: “This was an illegal coup attempt on the President of the United States.” Dan Bongino on @foxandfriends True!

Trump: “The election is absolutely being rigged by the dishonest and distorted media pushing Crooked Hillary – but also at many polling places – SAD”

Trump: “This election is a total sham and a travesty. We are not a democracy!”

The ground work appears to have been laid by Trump.

– Pelosi: “We have to inoculate against that, we have to be prepared for that,” Citing her concern as a reason Democrats should strive to “own the center left and own the mainstream” during their 2020 campaigns. And forgo the Green Deal and Medicare-For-All.

“If we win by four seats, by a thousand votes each, he’s not going to respect the election. He would poison the public mind. He would challenge each of the races; he would say you can’t seat these people. … We had to win. Imagine if we hadn’t won — oh, don’t even imagine. So, as we go forward, we have to have the same approach.”

Are we too naïve and trusting?

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The Psilocybin Referendum In Denver

The Psilocybin Referendum In Denver

This is one of the last things I was expecting to see happen; that a referendum in Denver would effectively decriminalize magic mushrooms or more specifically the main constituent component of them, the psychedelic drug, psilocybin.  But this has happened in the Mile High City, if by a narrow margin.  I largely welcome this.  After all, it has always been sort of ridiculous to arrest someone for owning a naturally growing mushroom, especially one known to grow especially in cowpies.

This gets personal.  I had my first psychedelic experience 55 years ago from ingesting a completely  legal, and still legal, substance, morning glory seeds, certain brands  of which (Heavenly Blue and Pearly Gates) containing LSD-6, a weaker form of LSD-25, the usual form of “acid” that people take, which is a Schedule 1 drug  along with marijuana, illegal for half a century here in the US, asi is psilocybin also.  As it is, psilocybin has long been known to be much milder than other psychedelics, especially LSD.  That long-ago experience massively changed me and my view of the world, I think mostly for the  better.

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Credit Card Interest Rates

Marquette Nat. Bank of Minneapolis v. First of Omaha Service Corp., 439 U.S. 299 (1978). In a unanimous U.S. Supreme Court decision, the court held states anti-usury laws regulating interest rates unenforceable against nationally chartered banks based in other states.

Justice William Brennan: It was the intent of Congress when it passed the National Banking Act, nationally chartered banks would be subject only to federal regulation by the Comptroller of Currency and the laws of the state in which they were chartered, and that only Congress or the appropriate state legislature could pass the laws regulating them.

This was one of the more important decisions by SCOTUS as it allowed banks chartered in one state to have the same interest rates in other states, offer credit cards nationally, and beat out the bank competition in other states who might be subject to stricter regulations.

At the time Justice Brennan felt congress would act to allow states to have more freedom in regulating banks within their borders by changing the National Banking Act. “This impairment may in fact be accentuated by the ease with which interstate credit is available by mail through the use of modern credit cards,” he allowed. “But the protection of state usury laws is an issue of legislative policy, and any plea to alter [the law] to further that end is better addressed to the wisdom of Congress than to the judgment of this Court.”

Of course, it did not happen. And who said Congress had any wisdom or care for their constituents?

Perhaps, someone can point to another time when Congress has altered the National Banking Act. The only other time I can recall was when Congress repealed Glass-Steagall and altered the National Banking Act to allow Sandy Weil’s Citibank to acquire Travelers Insurance and move into investing on Wall Street.

More recently, Bernie Sanders has introduced new legislation. In the past, Bernie had introduced legislation in 2009 to cap interest rates which went “no-where” quickly. There are probably other Senate or House members who have also attempted to cap interest rates and ran thee banking gauntlet opposing any such change to their usurious interest rates and other charges.

In a joint statement;

“The American people are sick and tired of being ripped off by the same financial institutions they bailed out ten years ago. If we are going to create a financial system that works for all Americans, we have got to stop financial institutions from charging outrageous interest rates and fees.”

Both Senator and Presidential Candidate Bernie Sanders (I-VT) and Congressional Representative Alexandria Ocasio-Cortez (D-NY) are teaming up on a bill to cap credit card and payday loan interest rates at 15%. In some cases, this is 50% lower than what is being offered today for what is termed as riskier loans or short term payday, etc. types.

Moving on and considering other presidential candidates who may have a difference of opinion than Sanders. It is no secret Delaware Senator Joe Biden has been a big supporter of banks since the seventies and has sponsored and helped to put into play many new laws which prevented students from getting relief or declaring bankruptcy to them from the signature loans made to them. When then President Obama spoke out against credit-card lenders calling them “‘outrageous’ and ‘looked forward to reviewing additional legislation that caps interest rates,'” VP Joe Biden was silent on the issue. Joe knew which side his bread was buttered on then and for that matter today also. Constituents can expect no help from Joe Biden.

When a similar bill capping credit card interest rates at 15% was introduced, half of the Democrats joined Republicans in 2009. It lost 60 to 33. This gives you an idea of how deep the politics run between Banks and the conservative Republicans and Democrats. Consider for a moment how long it took for either party to make this an issue or at least one party. Since 1978 . . .

In particular, I am eager to see how Joe Biden responds to Bernie Sanders proposal to cap interest rates. “Biden is more reliant on the kinds of big donors and high dollar events Democratic primary voters frown upon.”

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Top 100 economic blogs

 

Econospeak (Barkley Rosser, pgl, Peter Dorman, Tom Walker) is in the financial section along with  Bonddad blog (New Deal democrat) and  Capital Ebbs and Flows (Joseph Joyce), and I am proud to say have a direct connection to Angry Bear (under general blogs…).

Dear Dan,

I wanted to let you know that your blog, Angry Bear Blog has been featured in the Top 100 Economics Blogs of 2019

One of the significant changes this year has been the removal of newspaper blogs such as Bloomberg View and Real Time Exchange to focus on more niche blogs. The lack of female economist (and bloggers) has been a common criticism of this list. I’ve made an effort to include more female bloggers, but if you have any suggestions, I can consider them for the 2020 list.Economics Blogs 2019

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Iran: An Unfortunate Anniversary And Getting Worse

Iran: An Unfortunate Anniversary And Getting Worse

It was a year ago today that President Trump removed the United States from the JCPOA nuclear agreement with Iran as well as Russia, China, UK, France, Germany, and the EU, under the auspices of the UN Security Council.  According to IAEA inspectors, Iran was fulfilling its part of the agreement, and it has continued to do so up until now as well, despite this unwarranted action by the US, although that may be about to change.  The other signatories have strongly opposed the US action, although it has been supported by Israel, Saudi Arabia, UAE, Bahrain, and Egypt somewhat less enthusiastically.  Nevertheless, the nations opposing this US action have been ineffectual in blocking US actions following up on this.

These actions have involved reintroducing economic sanctions on Iran. Oil exports from Iran have fallen by half since then and are likely to fall further as the US ended waivers on May 2 for a set of nations from the oil sanctions, although reportedly at least China and maybe Turkey will ignore these sanctions.  The decision to end these waivers has been followed by increased volatility in world oil prices.  The sanctions have also been imposed on any businesses operating in Iran, with many large European companies such as Total in France withdrawing from Iran, even as their governments oppose the US actions.  Efforts have been made to establish alternative payment systems, but so far the US effort has had a large effect on reducing foreign economic activity in Iran.  The upshot has been to increase economic problems in Iran, with GDP down by at least 6 percent in the last year as well as the inflation rate rising.

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U.S. Consumers Have Borne the Brunt of the Current Trade War

The National Bureau of Economic Research has highlighted two studies. (hat tip Spencer England)

U.S. Consumers Have Borne the Brunt of the Current Trade War

Recent tariff increases are unprecedented in the post-World War II era in terms of breadth, magnitude, and the sizes of the countries involved.


In 2018, the United States imposed tariffs on a variety of imported goods, and other countries responded with tariffs on imports from America. Two new NBER working papers analyze how this “trade war” has affected U.S. households and firms.

The recent tariffs, which represent the most comprehensive protectionist U.S. trade policy since the 1930 Smoot-Hawley Act and 1971 tariff actions, ranged from 10 to 50 percent on about $300 billion of U.S. imports — about 13 percent of the total. Other countries responded with similar tariffs on about $100 billion worth of U.S. exports.

In The Impact of the 2018 Trade War on U.S. Prices and Welfare (NBER Working Paper No. 25672), Mary AmitiStephen J. Redding, and David Weinstein find that the costs of the new tariff structure were largely passed through as increases in U.S. prices, affecting domestic consumers and producers who buy imported goods rather than foreign exporters.

Pablo D. FajgelbaumPinelopi K. Goldberg,Patrick J. Kennedy, and Amit K. Khandelwaladopt a different methodological approach to address the welfare effect of recent tariffs. They also find complete pass-through of U.S. tariffs to import prices. In The Return to Protectionism (NBER Working Paper No. 25638), they estimate that the new tariff regime reduced U.S. imports by 32 percent, and that retaliatory tariffs from other countries resulted in an 11 percent decline of U.S. exports.

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