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

Score one for the economic insecurity theory of Trump . . .

From the WAPO:

Despite her outward signs of success, Ryan had struggled financially for years. She was still paying off a $37,000 lien for unpaid federal taxes when she was arrested. She’d nearly lost her home to foreclosure before that. She filed for bankruptcy in 2012 and faced another IRS tax lien in 2010.

Nearly 60 percent of the people facing charges related to the Capitol riot showed signs of prior money troubles, including bankruptcies, notices of eviction or foreclosure, bad debts, or unpaid taxes over the past two decades, according to a Washington Post analysis of public records for 125 defendants with sufficient information to detail their financial histories.

The group’s bankruptcy rate — 18 percent — was nearly twice as high as that of the American public, The Post found. A quarter of them had been sued for money owed to a creditor. And 1 in 5 of them faced losing their home at one point, according to court filings.

. . .

“I think what you’re finding is more than just economic insecurity but a deep-seated feeling of precarity about their personal situation,” said Cynthia Miller-Idriss, a political science professor who helps run the Polarization and Extremism Research Innovation Lab at American University, reacting to The Post’s findings. “And that precarity — combined with a sense of betrayal or anger that someone is taking something away — mobilized a lot of people that day.”

When Trump was elected in 2016 there was a big debate over whether victory reflected economic or cultural factors. A lot of the initial research downplayed the influence of economic factors, although subsequent research shows a more complicated picture. This article shows how difficult economic and social factors are to disentangle . . .

Three cheers for child benefits!

Let’s discuss something worth getting really excited about, the Biden/Romney child tax credit/child allowance proposals.  These proposals would make life much better for poor children and their parents.  A lot better.  Neither proposal goes as far as I would like, but they would be a real improvement and could be made more generous over time.

I will briefly describe the proposals and then discuss the political changes that may have paved the way for a major shift in social policy.

What the proposals do

To see just how exciting these proposals are, it helps to remember what is wrong with our current system of support for families with children, which is centered on a partly refundable Child Tax Credit (actually, two credits) and the Earned Income Tax Credit.  Matt Bruenig emphasizes these difficulties with the current system:

  • Our Child Tax Credit is not fully refundable, which means that children in the poorest households do not benefit from it.  
  • The Earned Income Tax Credit is only available to families with significant labor market income.  This again excludes the poorest households.
  • The current child tax credit and the Earned Income Tax Credit are paid to families once a year, when they file their taxes.  This makes it hard for families to budget.
  • With the EITC, many eligible families (around 22%) do not apply, presumably because of the complex eligibility rules.  It is likely that the same is true for the child tax credit.

The Biden and Romney proposals make full payments available to families without any labor market income.  They would reduce the number of children living in poverty by a third, and reduce deep child poverty by 50%.  They also pay families every month.  For further discussion of the proposals see this from Hammond and Orr or this by Bruenig.

The politics of child payments

Part of the reason these proposals are so exciting is that they reflect a sea change in how we think about poverty, work, government.  The poorest families were excluded from the CTC and EITC intentionally.  The purpose was (depending on your point of view) to create incentives for poor people to work, to punish the non-working poor, to avoid giving the undeserving poor an incentive to have children, and, of course, to do all these things to poor Black people, especially women.  A secondary factor in the structure of the current system was the tendency to run cash benefits through the tax code, to disguise them as tax cuts rather than just admitting they are benefits.  These ideas and impulses have shaped our thinking and limited our options for decades, yet today we may be ready to send monthly checks to poor parents – often single mothers – who do not work. 

Why might we be ready to give modest amounts of unconditional cash to poor families today, assuming we are?  What changed?  I can only guess, but here are some ideas.


Dear Judy,

I just want to let you know that I’m here for you on your problem with bipartisanship, and to apologize for not being there for you when you were struggling so with your problem with her emails.

As far as I’ve been able to determine, to date: Partisans were a subspecies of humans found mostly in the forests of middle-europe during the mid-twentieth century. I did use were, but, to be honest, it isn’t known for certain whether or not they are extinct. Skeletal remains of both male and female adults, and partial skeletal remains of what are thought to be teenagers, are still being found today. Here’s the thing, breeding pairs of partisans were known as bipartisans. Isn’t that exciting? There is no historical record, at least none that I could find on Google, of how and where they reared their young. So, this remains an unknown at this time.

I hope this helps. Again, my apologies for letting you down on the her emails thing.

Sincerely yours,

A. Viewer

Karl Marx/Benjamin Franklin Mashup

Karl Marx/Benjamin Franklin Mashup

Capital itself is the moving contradiction, in that it presses to reduce labour time to a minimum, while it posits labour time, on the other side, as sole measure and source of wealth. Remember that time is money. Hence it diminishes labour time in the necessary form so as to increase it in the superfluous form; hence posits the superfluous in growing measure as a condition – question of life or death – for the necessary. 

He that can earn ten shillings a day by his labour, and goes abroad, or sits idle one half of that day, though he spends but sixpence during his diversion or idleness, ought not to reckon that the only expense; he has really spent or rather thrown away five shillings besides. On the one side, then, it calls to life all the powers of science and of nature, as of social combination and of social intercourse, in order to make the creation of wealth independent (relatively) of the labour time employed on it. On the other side, it wants to use labour time as the measuring rod for the giant social forces thereby created, and to confine them within the limits required to maintain the already created value as value. In short, the way to wealth, if you desire it, is as plain as the way to market. It depends chiefly on two words, industry and frugality.

The IMF and the Coronavirus

by Joseph Joyce

The IMF and the Coronavirus

A global threat such as the coronavirus should be met with a global response. National governments, however, have generally not coordinated their efforts, with the exception of those that belong to the European Union, and even there the distribution of vaccines has not gone smoothly. International agencies, on the other hand, such as the International Monetary Fund have responded more quickly. Moreover, the IMF has shown a willingness to play an active role in preparing for the post-pandemic world and to take on issues outside its usual remit.

The IMF’s past attempts to resolve financial crises have not always been successful (for an account see here). The IMF’s policy prescriptions at the outset of the East Asian crisis of 1997-98 included contractionary fiscal policy conditions for the governments that adopted IMF programs, as well as higher interest rates. There were  also structural conditions that dealt with the privatization of government-owned enterprises. While such policies may have been appropriate for a crisis that was due to expansionary macroeconomic policies, fiscal and monetary measures did not precipitate the East Asian crisis. Capital inflows had fueled bank lending and asset prices had soared, while central banks were committed to fixed exchange rates. Once foreign investors became alarmed about the exposure of private borrowers to currency and maturity mismatches, they began to exit, provoking a “sudden stop” of capital and currency devaluations.

Impeachment: What’s the Message?

Impeachment: What’s the Message?

The mantra of the moment is that impeachment is not a trial and shouldn’t be governed by the same rules that apply to a court of law.  True, but that means it’s really a political event, where the verdict matters less than the message.

What’s coming through the media reporting is “Trump incited a riot.”  Well, he did, more or less, but that just means he’s a bad person.  It’s not news that Trump is a pretty nasty role model, and I fear the reaction of many people will be that the campaign to impeach him for it is just more of the same.

I would have preferred a different message: America needs to protect its democracy from the refusal of political leaders to accept defeat.  Around the world we see many countries where elections settle nothing.  Defeated parties routinely claim the election was rigged and only they have the right to hold power.  Street violence accompanies voting.  Military coups occur regularly to impose temporary stability.  The reason we should impeach Trump is to draw a line against this development in the US.

Information or propaganda? More Cowen on minimum wages

Today Tyler Cowen posted this:

Remember the proposals for a $15 federal minimum wage?

Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s average estimate…

That is from the new CBO report.

Here is a bit more context:

In an average week in 2025, the year when the minimum wage would reach $15 per hour, 17 million workers whose wages would otherwise be below $15 per hour would be directly affected, and many of the 10 million workers whose wages would otherwise be slightly above
that wage rate would also be affected. At that time, the effects on workers and their families would include the following:
Employment would be reduced by 1.4 million workers, or 0.9 percent, according to CBO’s average estimate; and
The number of people in poverty would be reduced by 0.9 million.

We can debate whether to raise the minimum wage, how far, whether to use wage subsidies or a negative income tax, etc. But debate is difficult when one side refuses to participate in good faith. Furthermore, when right-wing economists spread obvious half-truths to bolster the case for their preferred but unpopular policies they undermine trust in the economics profession as a whole. This makes it more difficult for economists to get a hearing when they have something important to say. I really don’t know what Cowen thinks he is accomplishing by doing this.

Prior post here.

Pushing Back For Democracy Around The World

Pushing Back For Democracy Around The World

 Given the massive impetus the presidency of Donald Trump gave to authoritarian and anti-democratic forces around the world, it is worth seeing that his defeat in a democratic election, despite his efforts to illegally overturn it, seems to have been followed by some outbursts of pro-democratic demonstrations in parts of the world, even as we saw a major setback for democracy in Myanmar with the military coup there.

Indeed, one of those pushbacks has been in Myanmar, where various groups have gone into the streets to protest this coup. I fear they will not succeed in reversing it, at least not immediately. But the generals have not gotten away with doing this without pushback and clearly will have their hands full hanging on to power.

Run-up to the Impeachment Trial February 9th

Boston College History Professor Heather Cox Richardson continues her dialogue “Letters from an American” with coverage of events leading up to the Senate trial of a former president and the passage of a much needed economic rescue of the nation’s citizens caught up in an epidemic.

“Historians are fond of saying that the past doesn’t repeat itself; it rhymes.

To understand the present, we have to understand how we got here.”

The news today centers on the Senate impeachment trial for the former president, which begins tomorrow, and the Democrats’ maneuvering to pass a $1.9 trillion coronavirus relief package.

Both of these issues deal with vital immediate questions. Will there be consequences for Trump’s refusal to accept the results of the 2020 election, a refusal that led to a coup attempt? And will the government help out those suffering from the economic dislocation caused by the pandemic? Behind those immediate questions, though, is a larger question: what direction will the nation take in the years to come?

In both of these issues, Trump supporters on the one hand, and Democrats on the other, appear to be very aware they will be making an appeal to voters in the future based on their actions today. Trump’s lawyers are teeing up the idea that the former president is a victim of Democratic obsession and that the Democrats are wastrels. The Democrats are setting up the idea that the Republicans are a danger to the nation and its people.

Today Trump’s lawyers submitted a 78-page trial brief to the Senate, arguing that it is unconstitutional to try a former president on articles of impeachment, that Trump’s speech at the January 6 rally urging his supporters to “fight” was rhetorical, and that the former president was well within his First Amendment rights to speak as he did. It blames the attack on the Capitol not on Trump’s incitement of violence over time—as the article of impeachment does—but on “a small group of criminals.”