Grasping Reality on TypePad, by Brad DeLong

...the Supreme Court voted in another case from Texas to permit the state’s voter ID law, the strictest in the country, to take effect... prevent as many as 600,000 Texans, 4.5 percent of all those registered, from voting next month. The impact, Judge Nelva Gonzales Ramos found, would fall disproportionately on black and Latino Texans. She ruled that the law violated Section 2 of the Voting Rights Act of 1965.... The six justices who let the stay remain in effect didn’t bother to explain themselves beyond the word ‘denied.’

That left it to Justice Ruth Bader Ginsburg and two others, Justices Sonia Sotomayor and Elena Kagan, to explain in dissent what was wrong with that outcome.... ‘The greatest threat to public confidence in elections in this case,’ Justice Ginsburg said, ‘is the prospect of enforcing a purposefully discriminatory law, one that likely imposes an unconstitutional poll tax and risks denying the right to vote to hundreds of thousands of eligible voters.’ A law, in other words, that in the full glare of publicity and on the verge of a highly polarized election, threatens destruction to the social fabric in the most dangerous way, by shutting thousands of citizens out of the democratic process of choosing their leaders.

‘There is no right more basic in our democracy than the right to participate in electing our political leaders,’ Chief Justice John G. Roberts Jr. wrote for the court in April of this year. His subject then was the right to spend money in politics, not the right to vote. If people conclude that the current Supreme Court majority cares more about the first than the second--surely a logical inference--the court will have entered a dangerous place. And so--as a conservative justice once realized in another context--will the country.

an object lesson on how not to run an advanced economy.... Western economists were scathing in their criticisms.... I was one of those critics; Ben Bernanke... was another. And these days, I often find myself thinking that we ought to apologize.... Our economic analysis... look[s] more relevant than ever now that much of the West has fallen into a prolonged slump very similar to Japan’s experience.... In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan’s problems, we would respond much more effectively than the Japanese had. But we didn’t, even though we had Japan’s experience to guide us....

Start with government spending. Everyone knows that in the early 1990s Japan tried to boost its economy with a surge in public investment; it’s less well-known that public investment fell rapidly after 1996 even as the government raised taxes, undermining progress toward recovery. This was a big mistake, but it pales by comparison with Europe’s hugely destructive austerity policies, or the collapse in infrastructure spending in the United States after 2010.... Or consider monetary policy. The Bank of Japan, Japan’s equivalent of the Federal Reserve, has received a lot of criticism.... That criticism is fair, but Japan’s central bank never did anything as wrongheaded as the European Central Bank’s decision to raise rates in 2011.... And even that mistake is trivial compared with the awesomely wrongheaded behavior of the Riksbank....

As for why the West has done even worse than Japan, I suspect that it’s about the deep divisions within our societies. In America, conservatives[']... general hostility to... a government that does anything to help Those People. In Europe... the German public is intensely hostile to anything that could be called a bailout of southern Europe.... Japan used to be a cautionary tale, but... [now] it almost looks like a role model...

...to end deflation was losing steam, Bank of Japan Gov. Haruhiko Kuroda Friday fired off a fresh round of ammunition from his famed money-spewing bazooka, shocking markets with a big increase in the central bank’s stimulus program. The impact was immediate, with the Nikkei Stock Average soaring more than 4% and the yen dropping sharply to a near-seven-year low against the dollar.... In sharp contrast to Mr. Kuroda’s first major easing announcement in April 2013, shortly after he took office, the central bank’s policy board was deeply split. Last year, he managed to get a 9-0 vote in favor of a policy that broke sharply with his more cautious predecessor. This time, the board voted 5 to 4.... Earlier in the day, the government had announced that the most closely watched gauge of inflation had fallen to 1% in September, having decelerated sharply from the 1.5% peak in April. That’s well below Mr. Kuroda’s 2% target, and showed the limited impact of the stimulus program to date....

Behind the surprise may also lie a broader strategy of economic policy coordination with the government. Before the BOJ announcement, Japanese stocks were up sharply in anticipation of an announcement planned for later in the day that the giant government pension fund would reallocate its portfolio.... And, looming for Mr. Abe is a decision on whether or not to go forward with a plan to raise the sales tax next year to 10% from the current 8%. It was the boost earlier this year... that slowed Japan’s economy and seemed to derail Mr. Kuroda’s earlier success in battling deflation. Mr. Kuroda has been a staunch and public advocate that Japan needs to go forward with the tax hike in order to curb its mammoth sovereign debt. Friday’s move, by providing at least a short-term dose of growth, will likely make it easier for Mr. Abe to take that step.

...pushing Wall Street to a record and Tokyo stocks to a seven-year peak, battering the yen while boosting the US dollar, and hammering gold to its cheapest in more than four years.... The yen is slumping 2.6 per cent versus the buck to Y112.04, its weakest since January 2008.... The Nikkei 225 jumped 4.8 per cent to its best level since early November 2007.... In New York, the S&P 500 is up 19 points to 2,013, leaving it on course to close a volatile month at a new record. The FTSE Eurofirst 300 is climbing 1.6 per cent after both Shanghai and Hong Kong added 1.2 per cent. 'So much for the end of QE! The Bank of Japan’s announcement today that is stepping up its asset purchases is a timely reminder that not everyone has to follow the Fed', said Julian Jessop, chief global economist at Capital Economics. The impact of the BoJ move is rippling through other asset classes. The most notable victim is gold... [which] does not like a strong buck... $1,163 an ounce, a four-year low.

...and the stock market has exploded to the upside. The one thing the policy bears may not have counted on was that someone else would cover the Fed’s back as it walked away. That someone else is the Bank of Japan, which shocked the markets this morning with an $80 trillion yen QE program that aims to triple the amount of Japanese equity ETFs and REITs it is buying on the open market. In addition, there is continued talk that the ECB will follow the Fed and the BoJ’s lead with a QE program of its own before too long. I can’t tell you what these programs will do for the economies of these countries or for the wages and spending of their constituent workers. But it’s pretty clear what happens to their stock markets.... While QE is over for now in the US, it is just getting warmed up around the developing world in many respects...

My Lords, and Gentlemen,

Nothing could have afforded Me so much satisfaction as to have been able to inform you, at the opening of this session, that the troubles, which have so long distracted my colonies in North America, were at an end; and that My unhappy people, recovered from their delusion, had delivered themselves from the oppression of their leaders, and returned to their duty. But so daring and desperate is the spirit of those leaders, whose object has always been dominion and power, that they have now openly renounced all allegiance to the crown, and all political connection with this country. They have rejected, with circumstances of indignity and insult, the means of conciliation held out to them under the authority of our commission: and have presumed to set up their rebellious confederacies for independent states. If their treason be suffered to take root, much mischief must grow from it, to the safety of my loyal colonies, to the commerce of my Kingdoms, and indeed to the present system of all Europe. One great advantage, however, will be derived from the object of the rebels being openly avowed, and clearly understood. We shall have unanimity at home, founded in the general conviction of the justice and necessity of our measures.

...they often elicit the unsympathetic retort that they should shut up and praise the ghost of Jane Jacobs for the cultural vibrancy of their neighborhoods, the lucrative jobs, and the artisanal pizza: 'Living in a great city is a consumption good, you whinging ninnies — you SHOULD have to pay for it! Why do you think you’re entitled to live wherever you want?' Hey, fair enough. But there’s a difference between grumblings about $5 cinnamon macchiatos and the more useful outrage about meaningful troubles that can be solved — a difference between #firstworldproblems and the healthier expression of annoyed patriotism towards one’s habitat: 'I like living here and want to keep living here, which is why the problems I complain about aren’t enough to push me out. I’d rather stick around and see the problems solved. But those problems suck, so let’s start doing something about them.' To complain that rents, for instance, could and should be lower isn’t always a sign of yuppie entitlement. Nor is it mutually exclusive with appreciating the wonderful aspects of city life. Sometimes the gripe really is legitimate...

...key papers... maths and rational expectations... member of Sweden’s equivalent of the Monetary Policy Committee from 2007 to 2013.... Svensson... argued that there was still plenty of slack in the economy, and raising rates would be deflationary, so that inflation would fall well below the central bank’s target of 2%. By the end of 2012 inflation had indeed fallen to zero, and since then monthly inflation has more often been negative than positive. It was -0.4% in September. This week the Swedish central bank lowered their interest rate to zero.... Deviating from what mainstream macroeconomists in general advocate (and what one in particular recommended) has proved a costly mistake. (Svensson estimates it has cost 60,000 jobs.)... I am certainly not claiming that mainstream macroeconomics is without fault, as regular readers will know (e.g.) However it is important to recognise the achievements of macroeconomics as well as its faults. If we fail to do that, then central banks can start doing foolish things, with large costs in terms of the welfare of its country’s citizens...

The Fed dismissed the decline in market-based inflation expectations. They clearly believe financial markets over-reacted to the decline in oil prices, and that that decline would ultimately prove to be a one-time price shock rather than the beginning of a sustained disinflationary process. This is why we watch core-inflation. And note that the Fed sent a pretty big signal... they do not hold market-based measures of inflation expectations as the Holy Grail. Especially with unemployment below 6%, pay more attention to survey-based measures. And recognize they will discount even those if they feel they are unduly affected by energy prices....

I have trouble imagining a scenario in which the Fed is content to watch unemployment fall below 5.5% without at least beginning the rate hike cycle. Remember that they think that even as they increase rates, they believe that policy will continue to be accommodative. In other words, they do not fear raising rates as necessarily a tightening of policy. They will view it as a necessary adjustment in financial accommodation in response to a decline in labor market slack. Hence the line:

The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run...

...after massive QE tends to suggest that QE just doesn't work. In 2010 it was possible to argue that massive purchases of long term treasuries would have an effect similar to reductions in the Federal Funds rate. Now not so much. READ MOAR

...the Fed's latest round of bond-buying, or QE3, is officially over. What did it get us?... The best answer is what it didn't get us: a recession in 2013.... 'Fiscal cliff', 'sequester', and 'debt ceiling' might be hazy memories from a time when [the Republican House] Congress[ional Caucus] was doing its most to sabotage the recovery, so here's a refresher.... There's been an awful lot of austerity the last few years. Enough that the economy should have slowed down quite a bit.... But that's not what happened.... QE... is the Fed's way of printing its money where its mouth is when it says rates will stay low for a long time. That's why, as economist Michael Woodford argued, QE works better when it's used with forward guidance that makes the Fed's promises about future policy more explicit. The question, then, is what message the Fed is sending now...

...The state operated Medicaid before Obamacare. The state can continue to operate Medicaid after Obamacare. There were online health insurance marketplaces before Obamacare. There are several non-Obamacare insurance sales websites now that are not part of Obamacare. There can be online insurance sales without Obamacare. Obamacare did not create the ability to buy insurance online—people have been doing that for years. Obamacare did not create Medicaid. Medicaid has been available for nearly (50) years...

...a moderate, wrote that Yellen is now ‘in danger of becoming a partisan hack.’... The parties don’t merely disagree about the merits of inequality, they disagree about the merits of even acknowledging it.... Remember Mitt Romney conceding that inequality should only be discussed in ‘quiet rooms’?... Merely by stating facts about inequality in public, even without taking a stand on it, Yellen has placed herself on one side of a partisan divide. It's like saying 'Jehovah.'

What Strain does not mention is that Yellen is hardly alone among Federal Reserve chairs.... Hardly a week went by without Greenspan interjecting himself into the political debate. And Greenspan, a former follower of Ayn Rand with staunchly conservative views, had none of Yellen’s careful reserve.... Is the new rule here that, starting now, the Federal Reserve chair has to stay completely out of partisan politics? Or is the rule that they need to stay out of politics unless they’re conservative?

...a group of prominent academics and hedge fund managers urged the central bank to stop its bond purchases known as quantitative easing.... With the Fed set to end its bond-purchase program today, it is clear those warnings were wrong.... The critics also argued the QE programs distort financial markets. It is hard to prove or disprove that point. Stock market price-to-earnings ratios look stretched by some measures, but not so stretched by others. Junk bond and leveraged loan issuance has taken off, but corporate balance sheets relatively healthy.... But it is easy to see what didn’t happen. Inflation hasn’t taken off and there has been no currency debasement. Perhaps it will happen someday, but the Fed has been experimenting with QE since 2009 and it clearly hasn’t happened yet. At some point, you need to declare the debate over...

...skyrocketing CEO pay and Wall Street lucre.... They are, however, extremely at home talking about... single mothers.... In that vein, the American Enterprise Institute has released a new report.... I’m... skeptical... turn[ing] the inequality debate toward single mothers and absent fathers.... As Timothy Noah wrote in Slate years ago, the biggest changes in American family structure took place in the '70s and '80s, and they help explain why, for instance, the ratio between the 90th percentile of earners and 10th percentile is higher than it was 30 years ago. But the shift away from two-parent households doesn't really factor into the concentration of wealth among the 1 percent. And the rise of the 1 percent, and the 0.1 percent for that matter, is the real story when it comes to how income inequality is evolving today...

READ MOAR

The three of us jumped into the Pacific Ocean, holding on to a two-man life raft while Japanese ships followed the slowly moving OS2N Kingfisher. We hoped!

Thirteen hours earlier, 29 October 1944, the USS Iowa was on rescue duty. Carrier based planes from a Task Force of the Third Fleet were attacking the Manila Bay Area in the Philippines. The V-Division crew had prepared Iowa's two planes for catapulting which were to be flown with empty back seats minus parachutes to increase space. Ensign Ace Riggins, assigned to the Division two months before, was standing by to pilot one of the aircraft while I was checking Iowa's position relative to the Manila area and monitoring any information concerning downed aircraft. About 1500 we were informed by the carrier USS Hancock, code name Bingo Base, that two of her men were in a life-raft about ten miles East of Luzon. Their SB2C Scout Bomber had been shot down over the island and friendly fighters were now flying over head to protect them from enemy planes in the area. We were informed by Bingo Base that two of her F6F Hellcats would fly protection for the floatplanes if we would undertake the mission.

...eighty miles south of Rome... founded in 529 by St. Benedict of Nursia.... Generations of scribes labored in the abbey’s library to copy texts and preserve artifacts.... From November, 1943, to May, 1944, the hill on which the abbey stood was at the center of one of the largest and bloodiest battles of the Second World War. Monte Cassino was a crucial part of the Gustav Line... ‘fortress strength.’... The Allied command, believing that the Germans were using the abbey as a garrison and ammunition dump, made the controversial decision to bomb Monte Cassino. On February 15, 1944, American B-17s, B-25s, and B-26s dropped more than four hundred tons of explosives on the monastery....

...frustrated by the central bank's insistence on raising rates despite the deflationary dangers. His former employer has just tacitly admitted that the economist was right. The Riksbank earlier this morning cut its benchmark interest rate to an unprecedented zero per cent, and markedly moved out its forecast for when it will lift rates again until mid-2016, in an attempt to ease the deflationary forces gripping the Swedish economy. The Riksbank should arguably have listened more closely to its former deputy governor sooner...

...and then regaining it for people with chronic conditions.... $240 per member per month for Medicaid members in the mid-2000s is a massive number.... I am speculating that a decent chunk of the cost growth slowdown and differential for Expansion states compared to non-Expansion states is a more streamlined set of care.... In 2013, a person who made a few dollars too many, or had been on a program for a month too long would be dropped from Legacy Medicaid, and previously manageable conditions could become unmanaged. In 2014 in expansion states, that person would be dropped from Legacy Medicaid and instantly re-enrolled into Federally funded Expansion Medicaid. The only difference they would see in most expansion states was a different ID card in the mail three weeks later...

...thanks to the disastrous consequences of his deep tax cuts, the Wall Street Journal has published an apologia for Brownback.... You know you’re in for a real doozy when Allysia Finley, a member of the Journal’s editorial board and the piece’s author, begins by comparing Brownback’s tax cuts with the 19th-century struggle against slavery. “During the 1850s,” Finley writes “Kansas turned into a battleground for a proxy war between abolitionists and slavery supporters. Today, Kansas has become the flash point in another national debate, this one over government’s role in promoting growth.” Well then. Unlike Brownback, whose theory is that his policies will soon start working )any day now!) but the liberal media is determined to create the impression that they’ve already failed, Finley assures us that Kansas’ tax cuts are working right now...

Howe remained at Scarsdale until the morning of October 28, when his forces marched toward White Plains, with British troops on the right under General Henry Clinton, and primarily Hessian troops on the left under General von Heister. While Washington was inspecting the terrain to determine where it was best to station his troops, messengers alerted him that the British were advancing. Returning to his headquarters, he ordered the 2nd Connecticut Regiment under Joseph Spencer out to slow the British advance, and sent Haslet and the 1st Delaware Regiment, along with Alexander McDougall's brigade (Rudolphus Ritzema's 3rd New York Regiment, Charles Webb's 19th Continental Regiment, William Smallwood's 1st Maryland Regiment, and the 1st New York Regiment and 2nd New York Regiments) to reinforce Chatterton Hill.

...over the last 500 million years... provides a stark warning. Human activity is producing greenhouse gases, and as a consequence global temperatures and ocean heat content are rising. Such trends raise the risk of tipping points. Economic analysis offers a number of ideas, but a key problem is that distributions of climate variables can shift, invalidating stationarity-based analyses, and making action to avoid possible future shifts especially urgent...

On Tuesday evening I attended the rally at the Hotel Willard sponsored by the District of Columbia Democratic Central Committee and the Servicemen's Wives to Re-elect Roosevelt. An original song, dedicated to the President, was sung, and I received an armful of red roses which was one of the most beautiful I have seen in a long time.

...as we’re sure you have, Wonketteers, for his latest video to drop. Now that we’ve had a chance to see the highlight reel of O’Keefe’s Rocky Mountain Mustache Caper,  purporting to show Democratic Sen. Mark Udall’s ‘advocates’ standing by while an army of fraudulent voters gear up to steal the election, we have to say we’re a little disappointed. We are sure our dear readers will be shocked to learn that the actual product of O’Keefe’s investigation, despite being edited to O’Keefe’s maximum advantage, lacks any evidence of voter fraud and instead appears to show O’Keefe talking about all the crimes he can’t wait to commit, along with a couple of specific instances of stupidity by people who have no power over the electoral process and who consistently show an alarming lack of motivation to engage in fraud themselves. Before heading into the wilds of Boulder, O’Keefe sits for a Very Serious Interview with Colorado Secretary of State Scott Gessler, a frustrated voter suppressionist who worried at a recent voter suppression luncheon hosted by the Heritage Foundation.... Having failed in their attempts to get staff at Colorado Democratic field offices and campaign events to endorse plans to Fraud The Vote, O’Keefe’s crew apparently started moving down the ladder of political relevance until arriving at the office of Work for Progress, a hiring firm that fills low-level positions for environmental campaigns....

[O'Keefe] says Hicks is ‘approving my proposition to falsify ballots.’... O’Keefe doesn’t show that part on video. And no, he won’t release the raw unedited footage because....

Project Veritas Action does not release raw or unedited tapes or reporters’ notes of investigations....

Rep. Salazar’s office sent us this message expressing his gratitude to James O’Keefe for revealing the un-American fraud-enabler running his campaign:

Right wing operatives who seemed hell bent on committing voter fraud tried to rope my campaign manager Nicole into their scheme, and failed. Nicole did nothing wrong and simply referred them to the Adams County Clerk and Recorder’s office so they could have their questions answered. I believe this stunt actually proves that our new elections law is airtight, as they never once showed anyone actually committing voter fraud in any way, shape, or form. In fact, the only thing that this video showed was Mr. O’Keefe’s multiple attempts to commit voter fraud himself, and I hope he’s held accountable for this misguided and ridiculous stunt.

We’re not sure that James actually committed any crimes here (though that mustache is probably a misdemeanor offense in some jurisdictions), but he and his friends are standing closer to illegality than anyone else who appears in this video...

...the stakes are not debatable at all. The Catholic Church was willing to lose the kingdom of England, and by extension the entire English-speaking world, over the principle that when a first marriage is valid a second is adulterous, a position rooted in the specific words of Jesus of Nazareth. To change on that issue, no matter how it was couched, would not be development; it would be contradiction and reversal...

...Loukas Karabarbounis and Brent Neiman... show that the gross labor share and the net labor share move in the same direction when the shift is caused by a technological shock... point out that the gross and net elasticities are on the same side of 1.... Rognlie’s point about these two elasticities being lower than 1 doesn’t hold up if capital is gaining due to a new technology that makes capital cheaper...

...relative to the returns they generate for shareholders. ‘Another driver of low returns on assets and equity is the fact that banks’ pay bill has not adjusted to the smaller returns banks are now earning,’ he said. ‘Put simply, shareholders have gone from getting 60 cents for every dollar in pay for staff to getting 25 cents per dollar.... But, given lower levels of leverage, it is unlikely that we will see, or want to see again, the returns on equity that we saw before the crisis. In the new world, pay bills may well have further to adjust.’

...less than 10% in the late 1970s but now exceeds 20%.... A large portion of this increase is due to an upsurge in the labor incomes earned by senior company executives and successful entrepreneurs. But... did wealth inequality rise as well?... The answer is a definitive yes.... We use comprehensive data on capital income—such as dividends, interest, rents, and business profits—that is reported on individual income tax returns since 1913. We then capitalize this income so that it matches the amount of wealth recorded in the Federal Reserve’s Flow of Funds.... In this way we obtain annual estimates of U.S. wealth inequality stretching back a century. Wealth inequality, it turns out, has followed a spectacular U-shape evolution over the past 100 years.... How can we explain the growing disparity in American wealth? The answer is that the combination of higher income inequality alongside a growing disparity in the ability to save for most Americans is fueling the explosion in wealth inequality. For the bottom 90 percent of families, real wage gains (after factoring in inflation) were very limited over the past three decades, but for their counterparts in the top 1 percent real wages grew fast. In addition, the saving rate of middle class and lower class families collapsed over the same period while it remained substantial at the top.... If income inequality stays high and if the saving rate of the bottom 90 percent of families remains low then wealth disparity will keep increasing. Ten or twenty years from now, all the gains in wealth democratization achieved during the New Deal and the post-war decades could be lost.... There are a number of specific policy reforms needed to rebuild middle class wealth.... Prudent financial regulation to rein in predatory lending, incentives to help people save... steps to boost the wages of the bottom 90 percent of workers are needed.... One final reform also needs to be on the policymaking agenda: the collection of better data on wealth...

...with Hillary Clinton as the presumptive nominee.  An article that explained why and how a candidate could be preferable would be useful.  Alas, Doug Henwood’s Harper‘s cover story is not that article.  Some of the problems are conveyed even in the intro that isn’t behind the paywall:

...are about Wu and Sarkeesian (oh, I'm sorry, LW1 and LW3 [or is Wu 2? I can't keep track]) and social-justice warriors.

So, to recap:

Me: I don't think this is really about corruption as much as it's about discomfort with feminism. After all, a lot of the heat seems to be aimed at small female devs/commentators of a feminist bent.

GamerGaters on Twitter: Not true! So unfair! Go to KIA!

[Goes to KIA. Suspicions appear to be mostly confirmed.]

9 million people living in the Confederacy: 5 million white, 4 million Black.

1.2 million adult white males in the Confederacy. 900,000 served. 75,000 died in battle. 75,000 died of wounds and infections. 150,000 died of disease in camp. 200,000 maimed. 200,000 deserted. 200,000 still with the Stars and Bars at the end.

21 million people living in states that remained loyal to the Union. 2.3 million served--1.9 million white, 400,000 Black (including Blacks from the Confederate states). 90,000 died in battle. 90,000 died of wounds and infections. 180,000 died of disease in camp. 200,000 maimed.

Mobilizing for a total industrial war is a b*tch when (a) your rich have been investing by buying slaves rather than building factories, and (b) nearly half of your population is more likely than not to turn any guns they get against you...

Missouri sent about 140,000 men to the Union, and about 60,000 to the Confederacy...

...so why are companies concluding that they should return cash to stockholders rather than use it to expand their businesses? After all, we normally think of high profits as a signal: a profitable business is one people should be trying to get into. But right now we see a combination of high profits and sluggish investment. What’s going on? One possibility, I guess, is that business are holding back because Obama is looking at them funny. But more seriously, this kind of divergence — in which high profits don’t signal high returns to investment — is what you’d expect if a lot of those profits reflect monopoly power rather than returns on capital. More on this in a while.