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

Shootings by Police Officers: Self-Control and More

I stumbled on a recent paper in the Police Quarterly entitled “Quick on the Draw: Assessing the Relationship Between Low Self-Control and Officer-Involved Police Shootings.”

The authors are Christopher M. Donner, Jon Maskaly, Alex R. Piquero, and Wesley G. Jennings from Loyola, U of Texas at Dallas, U of Texas at Dallas and U of South Florida, respectively.

Quoting from the paper:

While the extant literature on police use of deadly force is voluminous, it is fairly limited with regard to the influence of officer characteristics. Moreover, this is the first known study to explore an individual-level criminological theory(i.e., self-control) in the context of police officer-involved shootings. In building on previous studies linking low self-control to negative police behavior more generally (Donner et al., 2016; Donner & Jennings, 2014), this study uses data from a sample of 1,935 Philadelphia police officers to investigate the extent to which Gottfredson and Hirschi’s (1990) general theory can predict officer-involved shootings specifically.

Based on theory and related research, it is hypothesized that officers with lower levels of self-control will be more likely to have used deadly force because police shooting incidents would provide low self-control officers (those who are more impulsive, self-centered, short-sighted, thrill-seeking, and easily provoked) with an opportunity to engage in a behavior that it is often spontaneous, can provide immediate gratification, is adrenaline-inducing, and can provide an outlet for frustration.

Data and Sample
In this study, we use data collected by Greene et al. (2004) for an National Institute of Justice (NIJ)-sponsored study on police integrity in the PPD. The initial collaboration between Temple University and the PPD began in an effort to help create an information system that would assist the PPD with integrity oversight. To aid this process, baseline information concerning possible predictors of negative police behavior was needed. The data set includes background files, academy training records, and personnel information for 2,094 police officers across 17 academy classes from 1991 to 1998. Due to missing files and incomplete academy training among some officers, the final sample of cases included 1,935 officers. Additional methodological details may be found in Greene et al. (2004).

On average, the sample was almost 27 years of age (range: 18–55), and approximately two thirds of the sample was male. There was virtually equal representation among White (44.5%) and Black (46.0%) officers, and the sample included a smaller number of Hispanic (7.4%) and other race or ethnicity (2.1%) officers. The average education level and length of service was 13 and 3 years, respectively. About one fifth (21%) of the sample was married and one tenth (10.9%) had a parent who served in law enforcement. Additional descriptive statistics may be found in Table 1.

The paper goes on:

Dependent Variable
Greene et al. (2004) were granted access to various databases maintained by the PPD Internal Affairs Division and Police Board of Inquiry. Specifically, these databases contained information relating to, among other things, citizen complaints, officer-involved shootings, other internal investigations, and depart-mental disciplinary actions. These data were collected in the Year 2000; thus,officers in the sample had been out of the police academy for roughly 2 to 9 years. The outcome variable of interest in this study, police shootings, is measured dichotomously (0 = No; 1 = Yes) and reflects whether an officer had ever been involved in a police shooting in which they discharged their firearm.

The primary independent variable, low self-control, was constructed from selected behavioral indicators contained within an officer’s Personal Data Questionnaire (PDQ).2 Individuals, who apply to be a Philadelphia Police Officer and pass the entrance examination, are referred to the Background Unit of the police department. Here, qualified applicants are given a PDQ.The PDQ collects self-reported background information, including among other things the applicant’s identifying information, family background, residence history, educational history, employment history, credit history, military record, motor vehicle history, adult and juvenile criminal history, and drug-use history. This information is validated through an interview with a background investigator, a full background investigation, and subsequently a polygraph examination.

Rules to Write By

by Mike Kimel

Rules to Write By
Cross posted at the Presimetrics blog.

Things to keep in mind, especially when posting here or writing me letters:

1. I don’t cite authority as proof, and I ask that you have the courtesy to not do the same to me. Its bad enough when you cite Paul Krugman. After all, you could be quoting him incorrectly, or out of context. Additionally, Krugman, like the rest of us, could simply be wrong. Its even worse when you cite someone who is paid to have a specific opinion. Cut out the middle man and make the argument yourself.

2. Get your data from a reputable source. In general, that means whatever government agency generates the data though there are exceptions. A think tank which pushes a specific point of view is not one of those exceptions. When it comes to international data, either get it from the government agencies in countries you are looking at, or the World Bank, IMF, UN, CIA, Statistical Abstract of the US or Penn World Tables.

3. If you want to compare economic growth across time periods, adjust for inflation or the size of the economy or both.

4. If you want to compare economic growth across countries, adjust for inflation as well currency differences.

5. If you want to compare growth rates of anything, be consistent with your starting and ending points.

6. If you want to compare any two samples, be consistent in how you assign points between the samples.

7. Do not argue by assertion.

8. Economics is not complicated. If you require assumptions you cannot explain or which do not pass the giggle test when stated in plain English to the average person in order to show a given effect, that effect does not exist.
9. Do not try to impress me with big words. Especially when they are statistical terms.

10. If you haven’t tried applying data to your model, your model is probably worthless.

11. If most or all of the observations in your sample are a special case to your model, your model is worthless.

12. One anecdote does not make a rule.

13. Use as much data as is available, or follow a consistent rule for how much data to use and how to deal with it. Do not cherry pick.

14. No magic lags. Be consistent in your use of lags. If your analysis says that Reagan is responsible for growth during the Clinton administration, he better be responsible for growth during the Bush 1 administration too. And if Reagan is responsible for events that happened four to twelve years after he left office, explain why he isn’t responsible for events that happened 13 years after he left office. Also, explain why some predecessor of Reagan’s isn’t responsible for growth during Reagan’s administration.

15. In economics, time moves in a single direction. For some reason a lot of people write to tell me about how growth during the Kennedy administration only picked up after the so-called Kennedy tax cuts. But those tax cuts occurred in 1964, and Kennedy was assassinated in 1963. And growth was very rapid during the Kennedy administration. (I.e., quite a bit faster than under Reagan.) I also get a lot of people informing me that growth sucked under FDR until WW2 began. But… if you consider growth during FDR’s term only through ’38 or only through ’40, it is still faster than under any other President.

16. Correlation does not imply causality. Sadly, it is impossible to prove causation in the real world when you’re talking about economics. However, if X leads to Y using a variety of different types of data, looked at a variety of different ways, it is certainly strongly suggestive.

17. Lack of correlation does imply lack of causality. If you cannot show that economic growth or tax revenues are negatively correlated with tax rates, then please don’t argue that lower tax rates lead to faster economic growth.
18. Before you insist that paying taxes cannot possibly help the economy, either explain why building roads, funding basic research and fighting epidemics harms the economy or explain why there will be a more optimal provision of such services should the government ceases providing them.

19. Regardless of what you want to believe, real economic growth during the Reagan administration was slower than real growth during the FDR, JFK, LBJ and Clinton administrations. Two of these administrations raised marginal tax rates and one cut them. What these administrations had in common was a vision for expanding the role of government.

20. In the U.S., monetary policy is conducted by the Fed, not by the President. Inflation is caused by printing too much money. Do not attribute the inflation of the 1970s to Carter (or Nixon, for that matter). Do not attribute the end of that inflation to Reagan. One can reasonably state that the Fed reacted badly to something the President did and that caused inflation. One cannot reasonably state that the President caused inflation.

21. If your example of a libertarian paradise is a city state whose government owns much of the productive capacity of that city state, drop it and come up with something that actually does look like a libertarian paradise. That is to say, a place with a very small, very non-intrusive government that does little more than setting and enforcing a very limited number of rules. I can come up with several I am sure you can come up with several too.

22. If you believe Hong Kong has a flat tax, I suggest you inform the Hong Kong Inland Revenue Department that they are in error. Bonus points if you tell them you found out about their mistake from a friend.

23. Please do not tell me I do not understand the private sector. Yes, I was an adjunct professor for five years, but that does not make me an academic by trade. When I was an adjunct, my primary profession was as a consultant, working for myself. I also have never worked directly (i.e., not as a consultant) for any government. That is to say, I have been in the private sector my entire professional career. And yes, I still have a day job with a Fortune 500 company. This is the second Fortune 500 company for which I have worked. I have also worked for a (then) Big 6 Accounting firm.

24. Please do not tell me I do not understand the entrepreneurial mentality. My wife and I own a small business we started from scratch. My wife is a serial entrepreneur. My sister is a serial entrepreneur. Two of my three closest friends are serial entrepreneurs. I also note that tax considerations have never been a big driver for myself, for my wife, for my sister, or for my buddies when starting a business.

25. Social Security is more than a retirement fund – it is also an insurance fund.

26. If someone (whether the government or the private sector) offers you a financial incentive to shoot your own foot, it is still your own #$%@ fault if you pull the trigger.

27. Birds of a feather flock together.

28. Ignore the catch-up effect at your peril.

29. Have a clue about your data sets. The BEA did not estimate GDP before to 1929. The BLS did not estimate unemployment before to 1948. Estimates for those series prior to those dates were produced decades after the fact by others, using more limited information, and sometimes an agenda. So if you use Lebergott’s unemployment statistics for the 1930s, don’t be surprised if you’re asked why we should trust figures that classified a few million people working for the WPA and the CCC as unemployed. If you tell me about economic growth in 1870, tell me where the data you are using originates and why I should consider it to be credible.

30. I used to write posts looking at the effect of the tax burden on economic growth, and people would write to tell me I should use marginal tax rates. Lately I’ve been focusing on the effect of marginal tax rates on growth, and people write to tell me I should use tax burdens. (In two cases, a person who had the first complaint also had the second complaint.) I cannot repeat every single thing I’ve ever written in every post every time I write a new post. Before you decide to berate me for ignoring your favorite hobby horse or tell me that results would be different if I used A instead of B, look through the archives at Presimetrics or Angry Bear to see if I really haven’t covered that material already.

I’ll be putting this list of rules somewhere permanent on the Presimetrics website, and expanding it as things come to me. Feel free to suggest other things people should keep in mind.

Hey anti socialist! You really don’t want to sit on UHC, Cigna, Microsoft, Walmart, Koch brother’s, GE, Boeing or Buffet’s corporate boards?

By Daniel Becker

Just thought, being the new year, we might want to start it off with some actual new thinking about how to make our economic system better. I have been meaning to purchase the book: Were you born on the wrong Continent. I’m just a very slow reader though and have to finish what I have. So, I found this Book TV interview to satisfy my “should I buy it” meter. Yes I should, and will.

Here in this country, it’s unthinkable that you would have a high school graduate on the corporate board of a major corporation. And there it happens, I don’t want to say routine, it happens a lot. You know, at least in terms of the supervisory board.

My favorite example, which I give in the book is, is this ah, nascent global bank which was just starting up and I asked a young banker there about co-determination, how it worked and he said well ah, “I’ll tell you how it works. The guy who brought us the plants, around the bank building, he’s on the corporate board.” Well what do you think about? “Well I think it’s very funny.” He said “the other thing I think about, is that they can’t hold the meetings in English” which is the global language … because this guy only speaks German. Everybody has to go at the pace of the gardener on the… corporate board.

Imagine that! Mr. Smith actually does go to Washington. As a lobbyist.  Daily even, if he were a German citizen.

The author, Mr Geoghegan goes on to say that Germany was punished for the conception and implementation of co-determination by the boycott of international capital. The Financial Times, the Economist all editorialized against it. Thus, their people have to be on guard for those who want to bring it down. However, he notes that the post 1945 constitutions that were adopted came out of the New Deal, consequently they have in stone rights to healthcare, employment and education. Things our New Deal could not get constitutionally in-scripted. Under their constitution the courts have to look at whether the law will help or hurt the family. Is education free or not free?

Ultimately, Mr. Geoghegan sees Germany having an advantage in their system because the people are pulled into the system and thus are responsible for the results of their decisions. He notes that in the US we have no real power (at least as it relates to economic outcomes via labor) which allows one to talk irresponsibly about power. Remember that gardener? He is at the table of economic policy decisions. Kind of makes you realize just what we’re about to experience now that the Tea Party is calling some major shots. All of a sudden a group of people who have been able to sit on the outside in their own circle of reality is at the table of the worlds circle of reality. Think there is not going to be some major crashes? Even Carl Rove understood the danger in O’Donnell’s limited understanding of power because of lack of exposure and all it experiences. The issue we should all have with Rove et al though, is that he does not want to helper her learn about real power and thus truly be able to make decisions that enhances her life and reduces the risk of living.

In Germany, because of their system that makes it hard for even the least educated to sit on the outside, and the most powerful to ignore or leverage the least knowledgeable for their own gain, they have a better chance of surviving those who would create the world in their own vision.

 One caution when asked what the down side is of the German system? The least knowledgeable being employed. Here, we have a service economy as the solution. That is personal service to those who have the where for all to buy personal service. This leads to a crack in the foundation of an egalitarian mind set and thus the policy that follows.  

Truth is, not everyone is born to go and get a traditional BS type college education.  Germany obviously is going to struggle as we have with making sure the lowest common denominator and not the highest is the the standard for acceptable earning capacity.  Sure, promote being the best you can be.  Great as an individual motto, but not as a minimum standard for policy setting.  We need to understand that the best for some is simple manual labor.  If we don’t, then we are only left with welfare policy, which I have no problem with if that is what we choose.  One way or the other, people who for what ever luck in life they have or have not been blessed with have to be able to receive enough money to live in the society we have set up.  Either we allow this to happen by assuring “living wages” for the lowest work society needs accomplished or we do it by welfare.  Preferably not the penal kind of welfare we seem to be choosing.  It cost the most to society and not just in money.

Besides, is it not what made us the model for and the envy of the world that we had created an economy which allowed such capacity to be considered valuable enough to earn the basic American Dream of a house, car, education and retirement without being broke or broken?

Do watch the interview.

The Class war summed up in quotes

By Daniel Becker

I just want to lay out the debate going on in our economy right now. There are 4 debaters. President Obama/Geithner et al, President Obama 2008, the rich (or capitalist, those who make their money from money) and the rest of us.

From President Obama’s 60 Minute interview:

PRESIDENT OBAMA:…And it turns out that actually the people who are most likely to use that money and spend that money are actually people of more modest means, and if what we’re concerned about is how we can grow the economy, there are more efficient ways to recirculate dollars out there and get people to spend.

PRESIDENT OBAMA:…But probably the biggest uncertainty right now for a lotta companies is there gonna be enough demand out there for the products, and we’ve gotta make sure that we’re workin’ with them to try to improve that.

KROFT: You’ve got a situation right now that banks have not significantly loosened up credit in spite of all the money that they’ve received, in spite of the fact that they’re quite profitable right now. And you’ve got manufacturing companies that haven’t replaced many of the jobs or hired back the people that they’ve cut. How do you get the banks to loan money, and how do you get businesses to hire people back?

PRESIDENT OBAMA: Well, it starts with businesses wanting to hire people back because they see customers out there. And so everything that we can do to expand consumer confidence, everything that we can do to get businesses to invest in plants and equipment through the tax code, through accelerated depreciation, through keeping taxes on middle class families where they are, as opposed to having them spike up — all that can make a difference. The more companies are doing well, the more likely they are to go to banks and say, “We need to borrow.”

The two Obama’s are struggling to have it both ways and thus the lack of action on issues such as easing unionization while going to South Korea for a trade deal ala NAFTA.

However, the other 2 parties in this debate have been very clear for years now. I present “Other People’s Money” 1991

The Capitalist represented by Lawrence Garfield:

“Ah, but we can’t,” goes the prayer. “We can’t because we have responsibility, a responsibility to our employees, to our community. What will happen to them?” I got two words for that: Who cares? Care about them? Why? They didn’t care about you. They sucked you dry. You have no responsibility to them. For the last ten years this company bled your money. Did this community ever say, “We know times are tough. We’ll lower taxes, reduce water and sewer.” Check it out: You’re paying twice what you did ten years ago. And our devoted employees, who have taken no increases for the past three years, are still making twice what they made ten years ago; and our stock – one-sixth what it was ten years ago. Who cares? I’ll tell you. Me. I’m not your best friend. I’m your only friend. I don’t make anything? I’m making you money. And lest we forget, that’s the only reason any of you became stockholders in the first place. You want to make money! You don’t care if they manufacture wire and cable, fried chicken, or grow tangerines! You want to make money! I’m the only friend you’ve got. I’m making you money. Take the money. Invest it somewhere else. Maybe, maybe you’ll get lucky and it’ll be used productively. And if it is, you’ll create new jobs and provide a service for the economy and, God forbid, even make a few bucks for yourselves. And if anybody asks, tell ’em ya gave at the plant. And by the way, it pleases me that I am called “Larry the Liquidator.” You know why, fellow stockholders? Because at my funeral, you’ll leave with a smile on your face and a few bucks in your pocket. Now that’s a funeral worth having!

The rest of us represented by Andrew Jorgenson:

“…The entrepreneur of post-industrial America, playing God with other people’s money. The robber barons of old at least left something tangible in their wake- a coal mine, a railroad, banks. This man leaves nothing. He creates nothing. He builds nothing. He runs nothing. And in his wake lies nothing but a blizzard of paper to cover the pain. Oh, if he said, “I know how to run your business better than you,” that would be something worth talking about. But he’s not saying that. He’s saying, “I’m gonna kill you because at this particular moment in time, you’re worth more dead than alive.” Well, maybe that’s true, but it is also true that one day this industry will turn. One day when the yen is weaker, the dollar is stronger, or when we finally begin to rebuild our roads, our bridges, the infrastructure of our country, demand will skyrocket….God save us if we vote to take his paltry few dollars and run. God save this country if that is truly the wave of the future. We will then have become a nation that makes nothing but hamburgers, creates nothing but lawyers, and sells nothing but tax shelters. And if we are at that point in this country, where we kill something because at the moment it’s worth more dead than alive, well, take a look around. Look at your neighbor. Look at your neighbor. You won’t kill him, will you? No. It’s called murder, and it’s illegal. Well, this, too, is murder, on a mass scale. Only on Wall Street, they call it maximizing shareholder value, and they call it legal. And they substitute dollar bills where a conscience should be. Damn it! A business is worth more than the price of its stock. It’s the place where we earn our living, where we meet our friends, dream our dreams. It is, in every sense, the very fabric that binds our society together. So let us now, at this meeting, say to every Garfield in the land, here, we build things, we don’t destroy them. Here, we care about more than the price of our stock. Here, we care about people. Thank you.”

Unfortunately, the President appears to be debating parallel to the real debate.  Capitalist vs the rest of us.  Time to get engaged sir

Macroeconomics: en route

The Institute for New Economic Thinking (INET) hosted its inaugural conference this weekend at King’s College Cambridge, an experiment of sorts. I had the pleasure of attending the conference, my first time to Cambridge. John Maynard Keynes wrote his *General Theory* at King’s College. And as if that wasn’t enough, I dined with blogging legends, Mark Thoma and Yves Smith! The photo was taken at the conference by another attendee, Pierpaolo Barbieri: “Lord Skideslky, easily Keynes’ finest biographer”.

The conference was a spectacular fireworks display of economic panels, featuring experts across a broad spectrum of applied macroeconomic theory and policy, including banking and development. (You can see the speaker list, presentations, and video here). Definitely read other conference pieces by Marshall Auerback, Mark Thoma, and Yves Smith.

Through INET, George Soros is funding a vision: that new and innovative macroeconomic theory prevent, rather than fuel, future “Superbubbles”. INET’s goal is the following:

“to create an environment nourished by open discourse and critical thinking where the next generation of scholars has the support to go beyond our prevailing economic paradigms and advance our understanding of the economic system as a tool to meet social objectives.”

That’s a tall order, and likely not the intended output from the inaugural conference. But what Rob Johnson, Executive Director of INET, probably did have in mind was something of a declaration of war against outdated, disproved, or even deleterious macroeconomic policy and research. And there, I believe that he succeeded.

There was no shortage of criticism at the INET conference.

  • Joseph Stiglitz reiterated the sharp divergence between representative agent models and reality.
  • James Galbraith went the even more aggressive route by suggesting that REH (rational expectations hypothesis), EMH (efficient markets hypothesis), RAM (representative agent models), and DSGE (dynamic stochastic general equilibrium models) be buried beneath a bed of garlic below Keynes’ quarters with guards standing atop the burial site. (This was not a direct quote but very close.)
  • Simon Johnson pressed the need for more action to relieve the systemic pressures coming from the still top-heavy US banking system.
  • Dominique Strauss-Kahn charged global policymakers of being complacent with monetary and fiscal policy over the last decade. They were lured in by ostensibly stable growth, when in fact the financial foundation was crumbling below (after, of course, he was disrupted by a globalization protest with the catch phrase “the IMF is the Problem not the solution”).

In my view, the fact that economists were in some sense accepting blame for policy ignorance is a step in the right direction. So what’s the next step? What will it take to move macroeconomic theory and policy in a truly innovative and novel direction? I don’t know; but I do see two issues that will likely drag the process.

Problem #1: the financial crisis has rendered much empirical and theoretical research obsolete; clearly, this is a solid chunk of what I refer to as the “aggregate Curriculum Vitae”. There’s a host of refereed and published literature with now documented spurious results, or entire literature reviews citing papers with theses that tread water at best.

It’s going to take time to break through the concrete wall of neo-classical macroeconomic denial (among other types of denials). This is the “old boys club”, where careers and prestige are on the line. It’s the true sense of economics as a falsifiable science: some disproved and obsolete macro theory remains ingrained in the profession as some academics, some policymakers, and some politicians cling to their reputations. This “enables” bad economic policy.

The good thing, though, is with funding and support from Institutes like INET, this enabling behavior cannot last forever. The aggregate may enable the profession now; but if the foundation starts to crack, i.e., the next wave of graduate students and new tenure track researchers break the mold, the profession will rebuild. I hope.

Problem #2. Talented researchers, early in their tenure careers or currently registered in Ph.D. programs, need incentives and professional support to publish alternative views in top journals. It’s so easy to be shunned from the academic community; just take on an unorthodox research agenda, and bang, you’re bright and shiny career may be over before you know it. So what’s the incentive to rock the boat before establishing tenure? If tenure, by definition, is conditional on top-journal peer-refereed publications?

The new thinking must come from within the Ph.D programs. Building a base of new and sometimes controversial macroeconomic research that is accepted within the top academic community requires funding, but more importantly, a shift in the construct of the labor force. Macro Ph.D. programs across the world need restructuring and innovative teaching that includes an even stronger collaboration between student and adviser than existed before.

They say that lightning never strikes twice. Let’s hope that the economics profession avoids the second strike…this time around.

Rebecca Wilder

Place your bets, the recession predictions are in

by divorced one like Bush

Come on, step right up, don’t be afraid. Lay that money down.

3 and 1/8 economist out of 4 say
the dastardly deed is done or ending by next month.

After months of uncertainty, economists are finally seeing a break in the clouds. Forecasts were revised upward for every period, with 27 economists saying the recession had ended and 11 seeing a trough this month or next.”

A better-than-expected employment report for July, where employers cut 247,000 jobs and the jobless rate fell for the first time in 15 months, suggests the worst is over.
Whatever the Fed decides, the economists expressed some confidence that the central bank will be dealing with how to manage a recovery, not another recession. They expect GDP growth to remain above 2% at an annualized rate through the first half of next year, and they put the chances at just 20% of a “double-dip” second downturn before 2010.

All in everyone, you don’t want to be left out of the next bubble do you? Or do you?

4) To be sure, the drop in the unemployment rate was a surprise, but it was all due to the slide in the labour force — the employment-to-population ratio gives a more accurate picture of the slack in the labour market and the hidden secret in today’s report was that this metric slid to a 25-year low of 59.4% from 59.5% in June and 61.0% at the turn of the year. Of those unemployed, 33.8% of them have been unemployed now for over 27 weeks — a record amount (was at 29.0% in June and was at 17.5% at the start of this recession).

The Labor Department said Tuesday that the American work force produced, at an annual rate, 6.4 percent more of the goods they made and services they provided in the second quarter of this year compared to a year ago. At the same time, “unit labor costs” — the amount employers paid for all that extra work — fell by 5.8 percent. The jump in productivity was higher than expected; the cut in labor costs more than double expectations.

Data released on Wednesday show the US still facing strong economic headwinds, as retail sales unexpectedly fell, weekly jobless claims unexpectedly rose, and foreclosures continue to roil the housing market.
US retail sales fell 0.1 per cent in July from June, compared with analysts’ estimates of a 0.8 per cent gain.
Excluding auto sales, which were boosted by the popular cash-for-clunkers programme, US retailers fared even worse, dropping 0.6 per cent, compared with expectations of a 0.1 per cent gain on the month, on a seasonally-adjusted basis.
Foreclosure activity in the US hit a new record in July, setting its third monthly record in five months, RealtyTrac reported on Thursday.
Foreclosure filings, which include default notices, scheduled auctions and bank repossessions, hit 360,149, an increase of 7 per cent from June and 32 per cent on the year. One in every 355 US homes received a foreclosure notice in July, according to the online marketplace for foreclosure properties.
The release comes the day after the National Association of Realtors reported that an increase in foreclosure sales led to a record 15.6 per cent decline in median home values to $174,100 in the second quarter from the year before. About 36 per cent of transactions in the second quarter were distressed sales, either foreclosures or short sales.

We never did broaden the discussion.

We haven’t answered the question: How are we going to fix the money from money economy. Yes, we had to stabilize the banks. That we did is not of issue, how we did it is. The approach only reinforced the money from money economy. We are pledged to $23.7 trillion. (BTW, try to go get a loan and see if they don’t ask what you have co-signed onto along with what you personally have borrowed). Our GDP as of 2000 was 1.9% of the financial turn over and the Fed thinks nothing of swapping 1/2 trillion dollars. The issue is not whether it was necessary, it is the casualness with which it was done. You know, that billion here, billion there, soon we are talking real money?

We have not produced any policy that will reverse these trend lines which show that personal consumption has out passed the share of income to the bottom 99% since 1996. A trend that lasted at least 13 years from the depression and was 10 years where my chart ends in 2005 and we hadn’t had the big one yet. We were almost 3 more years past that when this recession started. But hey, the recession is ending.

A Response to Megan McArdle, Again (by cactus)

by cactus

Megan McArdle responds to a post I wrote:

So Obama doesn’t count because he’s not really a Democrat. But Bill Clinton was. But Richard Nixon–the chap who implemented price controls and massively expanded Social Security and Medicare–was definitely a Republican. Jimmy Carter, who deregulated like mad: definitely a Democrat.

What are these policies that neatly define Democrats to exclude only the ones who happen to have crappy growth? On what metric does Barack Obama register as farther to the right than Bill Clinton? Because from what I remember of the 1990s, I spent most of the decade listening to my genuinely left-wing friends weep that he’d betrayed them. Remember Edelman’s resigning in protest of welfare reform?

I thought it was unnecessary at this point to explain the one thing I’ve pointed out time and again differentiates Republicans from Democrats. I think the first time was here. (I tend not to break out JFK from LBJ, or Nixon from Ford because JFK and Ford only served a short time, but the post that is attached is illustrative of behavior, not performance.)

The difference is the tax burden – that is, the percentage of people’s income that gets collected in taxes. Not the marginal rate – the amount people actually pay divided by the amount they make. And there is a difference, a big difference. As an example: George Herbert Walker Bush famously raised marginal rates. It might have cost him an election. But GHW Bush also quietly lowered the tax burden. He did it through the people he appointed to the IRS, through the degree of compliance he sought, through the way his IRS interpreted existing rules and regulations and through how the body of tax rules and regulations changed while he was in office.

Going back to 1952 at least, every Democrat, every single one, has increased the tax burden. Every single Republican raised lowered [h/t Bruce Webb] them. The data in the attached post is from the IRS and goes back only to 1952, but one can wander over to the BEA’s NIPA Table 2.1 and compute the tax burden ourselves with National Income data going back to 1929, and whaddaya know, the rule also works for Hoover, FDR, and Truman. Just barely for Truman… but then he is the exception on performance too, right?

Now, I doubt you could find a single person on the right of the political spectrum who would tell you that taxes don’t affect economic growth. They all believe taxes affect growth. Of course, the story they tell is that cutting taxes produces faster economic growth. The fact is, however, the Presidents who cut tax burdens tended to produce slower economic growth than those who raised taxes. (I’ve discussed why in a number of other posts, and I don’t feel like rehashing or looking for those posts now. I also note this isn’t just true of Presidents. My fellow Angry Bear, Spencer, once pointed out that there are a lot of people out there who seem to think we’d all be better off if the country was Alabama than if it was Massachussetts.)

Unfortunately, tax burden data, like any other bit of real world data, fluctuates somewhat from year to year, so its really going to be a while before we know what direction they’re really headed over O’s administration. As in, several years. And most of us are impatient. So we’d like to have some leading indicators, so to speak, of what Obama is going to do, of where he’s going to fall on the one R v. D divide that really matters. And right now, he’s behaving like the folks who have cut tax burdens in the past. He’s also talking like them. His bail-out is identical to GW’s, and when he talks about taxes, it doesn’t sound like Clinton, it sounds like GW. So its reasonable to wonder whether he’s going to stick to the R v. D rule. And the next test coming up is healthcare; a D would be putting his political capital on the public option right now. An R wouldn’t. What’s it gonna be, we’ll soon see.

More below the fold.

Now, in Megan’s post, she refers to “Cactus and his merry band of madmen.” I’m not sure the merry band of madmen over here truly have a leader, much less that I’m the one (Dan is the official grand poobah in charge of the blog, after all!!) but I’m guessing you aren’t a part of that merry band of madmen if any of the following apply to you:

  1. You do not believe that since 1929 at least, every single D has increased the tax burden and every single R has decreased the tax burden, despite the fact that the data shows precisely this, and despite the fact that it fits the caricature of Ds and Rs to a T, so to speak.
  2. You do not believe that since 1929, Ds have generally outperformed Rs when it comes to real economic growth, despite the fact that the data shows precisely this.
  3. You do not believe that administrations that cut the tax burden have also generally been the administrations that grew more rapidly, despite 1. and 2.
  4. You do not believe that the tax burden could possibly have anything to do with growth.

If you do believe these things, if you believe what the data shows , I’m sorry to say but you’re one of us, one of the merry band of madmen. On the other hand, if you fit these rules, there are a whole lot of folks out there, Megan McArdle included, who would consider you sane.

Possibly a Great Paper.

I subscribe to too many RSS blog feeds. So everyone once in a while one pops up and I think, “Should I drop this”?

And so it is with Evolutionary Economics, which occasionally seems like a self-parody of what would happen if you recited Economics 101 cant with an added, even-less-scientific, “evolutionary psychology” glean to it.

However, they occasionally publish interesting work, such as this.

And then there’s the paper they describe as “in Japanese.” Unfortunately, they mean Hiragana script, which thoroughly defeated my efforts in the early 1990s. And while Babel Fish is willing to try, the result is less than encouraging:



…[a]nd others the philosopher and the administrator were released. In addition, according to revelation preference theory, if selection of the individual is observed, the use function where that kind of conduct is led exists. The circumstance where comparison between the individuals of use does not become problem

which has a few verb problems, I suspect.

Anyone want to read and translate and do a guest-post about this one?

The Best and the Brightest Meme — Eight Years Too Late?

Ken Houghton

CR beat me to commenting on this Mankiw whine post, partially because I couldn’t think of anything reasonable to say about it. (CR could. That’s why he gets the big bucks.)

But now that CR has done the heavy lifting, let’s look at the other aspect: Mankiw’s standard:

Based a standard ranking of economists’ academic accomplishments as of October 2008…[emphasis mine]

    11. Larry Summers
    21. Greg Mankiw
    35. Ben Bernanke
    99. Eddie Lazear
    132. Glenn Hubbard
    249. Harvey Rosen
    391. Christy Romer*
    653. Austan Goolsbee

[emphases Mankiw’s; Bush administration officials]

Leaving aside whether the ranking used makes sense, we ask the next question: What does this have to do the performance of the individual in a government role?

So I realised we’ve been thinking about the Obama Administration in exactly the wrong way.

Several people are referencing the late David Halberstam’s The Best and the Brightest, a biography of the Kennedy Administration’s well-educated pedigree and their policy missteps. Krugman used it as a cautionary phrase in the exact post about which Mankiw whimpered. As John McCain once wrote:

The term “best and brightest” has become an insult, not an accolade, thanks largely to Halberstam’s magnificent, scabrous epic about the policymaking blunders that swept the United States into Vietnam. This classic work is part of the Vietnam canon, but it is not really about Vietnam; it is very much a Washington book, focused on the surety of the hawks stateside rather than the misery and warfare in Indochina. [italics mine]

But look at (most of*) Obama’s picks:

    Orszag – Currently at the OMB. Prior experience at CEA, and then as a Special Assistant to the President during the Clinton Administration.
    Summers – veteran of the Clinton Administration
    Geithner – veteran of the Clinton Administration
    Paul Volcker – veteran of the Carter and Reagan AdministrationsModule Water Slide best, named Chair of the Federal Reserve by Carter.
    Melody Barnes – Eight years as Chief Counsel to Senator Kennedy on the Senate Judiciary Committee
    Heather Higginbottom – Eight years as legislative director for Senator Kerry

The list goes on, but what is notable is that—with the exceptions of the Advisors Goolsbee and C. Romer—all have extensive government policy experience.

Let’s look at the Bush people:

    Mankiw – columnist for Fortune, textbook author. As Bruce Bartlett noted in 2003, “Mankiw endorsed the election of George W. Bush because, unlike Al Gore, he would cut taxes, reform Social Security and antitrust policy, and try to implement school choice.” Spent one year as a CEA staff member—twenty years prior to being named CEA Chair.
    Lazear – No policy-making experience prior to being named to the CEA.
    Hubbard – No policy-making experience prior to being named Chair of the CEA.
    Harvey S. Rosen – Deputy Assistant Secretary (Tax Analysis), Department of the Treasury, 1989-91, then no government experience again until named to the CEA in 2003. (Fairness note: the interim is largely a Democratic Administration. No indication what he did from 1991 to 1993, save possibly returning to Princeton to teach). Note that he officially did exactly that in 2005, though he had warned that might happen.

Comparing the actual policy experience of the two Administrations, references to Halberstam’s work are much more applicable to the Bush Administration than the incoming Obama Administration.

Despite having a relative disadvantage in looking for people with policy-making experience (eight years with a Democrat in the executive branch over the past 28 years v. Bush’s twelve of the previous twenty), the Bush Administration’s combined highlights list has less total experience in policy-making than Summers alone.

Knowing how to make sausage is a Comparative Advantage when one is working in a sausage-making environment. Otherwise, you just end up with a “hack.”

*Mankiw uses Greg and Ben and Eddie as well, so I assume the use of “Christy” is not meant to pejorative. Firedoglake’s mileage may vary.
**Goolsbee is the notable exception, and he is in a Senior Advisory role, specifically the Economic Recovery Advisory Board, where he will be working with Paul Volcker.