The Case for Permanent Stimulus (Wonkish) [feedly]

PK is right: this post IS wonky(contains some math and advanced econ lingo, but most of it is accessible. AND, it is a good review of the NEED for REAL fiscal policy when monetary action (at the zero interest bound) is useless.

The Case for Permanent Stimulus (Wonkish)
https://www.nytimes.com/2020/03/07/opinion/the-case-for-permanent-stimulus-wonkish.html

If you're a normal human being considering reading this post, fair warning: although it's not super-technical, it's aimed at a very wonky audience, and parts of it won't exactly be in English. Also, it's of limited policy relevance: the Trump administration would never consider the policy I suggest, and even a Biden administration would probably balk at going where I suggest. The only reason I'm writing about it is to get the idea out there. Oh, and I don't think it's very different from what Larry Summers has been saying, but I thought it might be helpful to put some stylized numbers to what I believe, and believe he believes.

OK, if you're still with me: I hereby propose that the next U.S. president and Congress move to permanently spend an additional 2 percent of GDP on public investment, broadly defined (infrastructure, for sure, but also things like R&D and child development) — and not pay for it.

The starting point for my argument is the astonishing drop in interest rates over the past few weeks. They were historically very low even a year ago, but at the time of writing the 10-year rate was only 0.76 percent. That's below the rates on Japanese debt during the Lost Decade:

Image

US rates now below Japan's during the Lost DecadeCredit...St. Louis Fed

What this tells us is that the bond market isn't just pricing in a global recession driven by the coronavirus, but that it expects the Fed funds rate to be near zero a lot of the time looking forward. That is, the market sees a future of secular stagnation, in which the economy is in a liquidity trap, that is, a situation in which monetary policy loses most of its traction, much if not most of the time. We were in a liquidity trap for 8 of the past 12 years; the market now appears to believe that something like this is the new normal.

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Conventional monetary policy doesn't work in a liquidity trap, but fiscal policy is highly effective. The problem is that the kind of fiscal policy you really want — public investment that takes advantage of very low interest rates and strengthens the economy in the long run — is hard to get going on short notice. That's why current proposals for fiscal stimulus, like the one advanced by Jason Furman, basically involve handing out cash — a good idea given the constraints, but a shame given the missed opportunity to invest in the future.

Hence my suggestion. Why not put investment-centered stimulus in place all the time? It would cushion the economy when adverse shocks hit. It wouldn't be necessary to achieve full employment in better times, but it wouldn't hurt either, given low interest rates and the need for public investment.

But, you say, what about debt? Well, that's where the arithmetic of debt in an era of low interest rates becomes crucial to understand.

Let's consider a stylized, round-number economy that I'll call "America." This economy currently has public debt equal to 100 percent of GDP. It can expect, on average, to experience nominal GDP growth of 4 percent a year, half real, half inflation. It can also expect, on average, to pay an interest rate of 2 percent on its debt. The actual numbers don't match my example exactly — right now, growth prospects may be a bit worse than that, but interest rates are even lower. But I think this is close enough to make my point.

In the long run, fiscal policy is sustainable if it stabilizes the ratio of debt to GDP. Because interest rates are below the growth rate, our hypothetical economy can in fact stabilize the debt ratio while running persistent primary deficits (deficits not including interest payments.)

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Let d be the ratio of debt to GDP, b be the primary balance as a share of GDP, r and g be the interest and growth rates, respectively. Then the equation for debt dynamics (I warned you, normal human beings) is

Change in d = -b + (r — g)*d

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So in my hypothetical case, where d = 1 (debt is 100 percent of GDP), the debt ratio can be stabilized while running a primary deficit of 2 percent of GDP.

Put the interest payments back in, and this translates to a headline deficit of 4 percent of GDP. Our actual deficit is a bit bigger than that, but we could get back into that range by repealing Trump's giveaways to corporations, which don't seem to be doing anything for investment anyway.

OK, now let's introduce a public investment program of 2 percent of GDP, with no pay-fors. The debt ratio will now begin to rise, but not without limit. If nothing else changes, d will eventually stabilize at 2 — debt at 200 percent of GDP.

That's terrible, right? Um, why? Don't tell me about the burden of paying interest on the debt — that's already taken into account by the calculation. Maybe we'd have a debt crisis, but Japan has debt exceeding 200 percent of GDP, with no crisis in sight.

 -- via my feedly newsfeed

IMF: Limiting the Economic Fallout of the Coronavirus with Large Targeted Policies [feedly]

Limiting the Economic Fallout of the Coronavirus with Large Targeted Policies
https://blogs.imf.org/2020/03/09/limiting-the-economic-fallout-of-the-coronavirus-with-large-targeted-policies/

 -- via my feedly newsfeed

his blog is part of a special series on the response to the coronavirus.

By Gita Gopinath

This health crisis will have a significant economic fallout, reflecting shocks to supply and demand different from past crises. Substantial targeted policies are needed to support the economy through the epidemic, keeping intact the web of economic and financial relationships between workers and businesses, lenders and borrowers, and suppliers and end-users for activity to recover once the outbreak fades. The goal is to prevent a temporary crisis from permanently harming people and firms through job losses and bankruptcies.

The human costs of the coronavirus outbreak have risen at an alarming rate and the disease is spreading across more countries.

The first priority is clearly to keep people as healthy and safe as possible. Countries can help by spending more to boost their health systems, including on personal protective equipment, screening, diagnostic tests, and additional hospital beds.

Without a vaccine to stop the virus, countries have taken measures to limit its spread, like travel restrictions, temporary school closures, and quarantines. Such measures also buy valuable time to avoid overwhelming health systems.

The economic impact is already visible in the countries most affected by the outbreak.

Economic fallout

The economic impact is already visible in the countries most affected by the outbreak. For example, in China, manufacturing and service sector activity declined dramatically in February. While the drop in manufacturing is comparable to the start of the global financial crisis, the decline in services appears larger this time—reflecting the large impact of social distancing.

The global supply and demand for dry bulk shipping stocks such as building materials and commodities has also dropped similar to during the most acute phase of the global financial crisis, reflecting curtailed economic activity associated with the unprecedented containment effort. This drop was not seen in recent epidemics or after the 9/11 attacks.

Supply and demand shocks

The coronavirus epidemic involves both supply and demand shocks. Business disruptions have lowered production, creating shocks to supply. And consumers' and businesses' reluctance to spend has lowered demand.

On the supply side, there is a direct reduction in the supply of labor from unwell workers, from caregivers who have to take care of kids because of school closures, and sadly, from increased mortality. But an even larger effect on economic activity occurs because of efforts to contain the spread of the disease through lockdowns and quarantines, which lead to a drop in capacity utilization. In addition, firms that rely on supply chains may be unable to get the parts they need, whether domestically or internationally. For example, China is an important supplier of intermediate goods to the rest of the world, particularly in electronics, automobiles, and machinery and equipment. The disruption there is already having knock-on effects to downstream firms. Together, these disruptions contribute to a rise in business costs and constitute a negative productivity shock, reducing economic activity.

On the demand side, the loss of income, fear of contagion, and heightened uncertainty will make people spend less. Workers may be laid off, as firms are unable to pay their salaries. These effects can be particularly severe on some sectors such as tourism and hospitality—as seen for example in Italy. Since the start of the recent US equity market selloff on February 20, 2020, airline stock prices have been hit disproportionately, in line with the post-9/11 terrorist attacks but lower than after the global financial crisis. In addition to these sectoral effects, worsening consumer and business sentiment can lead firms to expect lower demand and reduce their spending and investment. In turn, this would exacerbate business closures and job losses.

Financial effects and spillovers 

As seen in recent days, borrowing costs can rise and financial conditions tighten, as banks suspect consumers and firms may be unable to repay their loans on a timely basis. Higher borrowing costs will expose financial vulnerabilities that have accumulated during years of low interest rates, leading to a heightened risk that debt cannot be rolled over. A reduction of credit could amplify the downturn arising from the supply and demand shocks.

And when these shocks are synchronized across many countries, the effects can be further amplified through international trade and financial linkages, dampening global activity and pushing commodity prices down. Oil prices have fallen dramatically in recent weeks and are about 30 percent below their levels at the start of the year. Countries reliant on external financing could find themselves at risk of sudden stops and disorderly market conditions, possibly requiring foreign exchange intervention or temporary capital flow measures.

Targeted economic policies are needed

Considering that the economic fallout reflects particularly acute shocks in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to help affected households and businesses.

Households and businesses hit by supply disruptions and a drop in demand could be targeted to receive cash transfers, wage subsidies, and tax relief, helping people to meet their needs and businesses to stay afloat. For example, among other measures, Italy has extended tax deadlines for companies in affected areas and broadened the wage supplementation fund to provide income support to laid-off workers, Korea has introduced wage subsidies for small merchants and increased allowances for homecare and job seekers, and China has temporarily waived social security contributions for businesses. For those laid off, unemployment insurance could be temporarily enhanced, by extending its duration, increasing benefits, or relaxing eligibility. Where paid sick and family leave is not among standard benefits, governments should consider funding it to allow unwell workers or their caregivers to stay home without fear of losing their jobs during the epidemic.

Central banks should be ready to provide ample liquidity to banks and nonbank finance companies, particularly to those lending to small- and medium-sized enterprises, which may be less prepared to withstand a sharp disruption. Governments could offer temporary and targeted credit guarantees for the near-term liquidity needs of these firms. For example, Korea has expanded lending for business operations and loan guarantees for affected small- and medium-sized enterprises. Financial market regulators and supervisors could also encourage, on a temporary and time-bound basis, extensions of loan maturities.

Broader monetary stimulus such as policy rate cuts or asset purchases can lift confidence and support financial markets if there is a marked risk of a sizable tightening in financial conditions (with actions by large central banks also generating favorable spillovers for vulnerable countries). Broad-based fiscal stimulus consistent with available fiscal space can help lift aggregate demand but would most likely be more effective when business operations begin to normalize.

Considering the epidemic's broad reach across many countries, the extensive cross-border economic linkages, as well as the large confidence effects impacting economic activity and financial and commodity markets, the argument for a coordinated, international response is clear. The international community must help countries with limited health capacity avert a humanitarian disaster. The IMF stands ready to support vulnerable countries with different lending facilities, including through rapid-disbursing emergency financing, which could amount up to $50 billion for low-income and emerging market countries.

NYTimes.com: Thomas Piketty Turns Marx on His Head

From The New York Times:

I am glad the book is now out in English I downloaded it when first announced, but my French could not get me past page 2.

Now i will read it. If Krugman is right, it is a step away from materialism (~~ Marx) toward a more ideological explanation). My intuition and education says that would not be step in the right direction. But, anytime you get close to Marx, either in economics and philosophy, Krugman, unlike his friend Brad DeLong, get squishy. Trust bur Verify!!

Still - a good read

Thomas Piketty Turns Marx on His Head

Piketty's latest book, "Capital and Ideology," takes a global overview to inequality and other pressing economic issues of our time.

https://www.nytimes.com/2020/03/08/books/review/capital-and-ideology-thomas-piketty.html

[text only]

CAPITAL AND IDEOLOGY
By Thomas Piketty

Seven years ago the French economist Thomas Piketty released "Capital in the Twenty-First Century," a magnum opus on income inequality. Economists already knew and admired Piketty's scholarly work, and many — myself included — offered the book high praise. Remarkably, the book also became a huge international best seller.

In retrospect, however, what professionals saw in "Capital" wasn't the same thing the broader audience saw. Economists already knew about rising income inequality. What excited them was Piketty's novel hypothesis about the growing importance of disparities in wealth, especially inherited wealth, as opposed to earnings. We are, Piketty suggested, returning to the kind of dynastic, "patrimonial" capitalism that prevailed in the late 19th century.

But for the book-buying public, the big revelation of "Capital" was simply the fact of soaring inequality. This perceived revelation made it a book that people who wanted to be well informed felt they had to have.

To have, but maybe not to read. Like Stephen Hawking's "A Brief History of Time," "Capital in the Twenty-First Century" seems to have been an "event" book that many buyers didn't stick with; an analysis of Kindle highlights suggested that the typical reader got through only around 26 of its 700 pages. Still, Piketty was undaunted.

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His new book, "Capital and Ideology," weighs in at more than 1,000 pages. There is, of course, nothing necessarily wrong with writing a large book to propound important ideas: Charles Darwin's "On the Origin of Species" was a pretty big book too (although only half as long as Piketty's latest). The problem is that the length of "Capital and Ideology" seems, at least to me, to reflect in part a lack of focus.

[ This book was one of our most anticipated titles of March. See the full list. ]

To be fair, the book does advance at least the outline of a grand theory of inequality, which might be described as Marx on his head. In Marxian dogma, a society's class structure is determined by underlying, impersonal forces, technology and the modes of production that technology dictates. Piketty, however, sees inequality as a social phenomenon, driven by human institutions. Institutional change, in turn, reflects the ideology that dominates society: "Inequality is neither economic nor technological; it is ideological and political."

But where does ideology come from? At any given moment a society's ideology may seem immutable, but Piketty argues that history is full of "ruptures" that create "switch points," when the actions of a few people can cause a lasting change in a society's trajectory.

To make that case, Piketty provides what amounts to a history of the world viewed through the lens of inequality. The book's archetypal case study is French society over the past two and a half centuries. But Piketty ranges very far afield, telling us about everything from the composition of modern Swedish corporate boards to the role of Brahmins in the pre-colonial Hindu kingdom of Pudukkottai.

He describes four broad inequality regimes, obviously inspired by French history but, he argues, of more general relevance. First are "ternary" societies divided into functional classes — clergy, nobility and everyone else. Second are "ownership" societies, in which it's not who you are that matters but what you have legal title to. Then come the social democracies that emerged in the 20th century, which granted considerable power and privilege to workers, ranging from union representation to government-provided social benefits. Finally, there's the current era of "hypercapitalism," which is sort of an ownership society on steroids.

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Piketty tries to apply this schema to many societies across time and space. His discussion is punctuated by many charts and tables: Using a combination of extrapolation and guesswork to produce quantitative estimates for eras that predate modern data collection is a Piketty trademark, and it's a technique he applies extensively here, I'd say to very good effect. It is, for example, startling to see evidence that France on the eve of World War I was, if anything, more unequal than it was before the French Revolution.

But while there is a definite Francocentric feel to "Capital and Ideology," for me, at least, the vast amount of ground it covers raises a couple of awkward questions.

The first is whether Piketty is a reliable guide to such a large territory. His book combines history, sociology, political analysis and economic data for dozens of societies. Is he really enough of a polymath to pull that off?

I was struck, for example, by his extensive discussion of the evolution of slavery and serfdom, which made no mention of the classic work of Evsey Domar of M.I.T., who argued that the more or less simultaneous rise of serfdom in Russia and slavery in the New World were driven by the opening of new land, which made labor scarce and would have led to rising wages in the absence of coercion. This happens to be a topic about which I thought I knew something; how many other topics are missing crucial pieces of the literature?

The second question is whether the accumulation of cases actually strengthens Piketty's core analysis. It wasn't clear to me that it does. To be honest, at a certain point I felt a sense of dread each time another society entered the picture; the proliferation of stories began to seem like an endless series of digressions rather than the cumulative construction of an argument.

Eventually, however, Piketty comes down to the meat of the book: his explanation of what caused the recent surge in inequality and what can be done about it.

For Piketty, rising inequality is at root a political phenomenon. The social-democratic framework that made Western societies relatively equal for a couple of generations after World War II, he argues, was dismantled, not out of necessity, but because of the rise of a "neo-proprietarian" ideology. Indeed, this is a view shared by many, though not all, economists. These days, attributing inequality mainly to the ineluctable forces of technology and globalization is out of fashion, and there is much more emphasis on factors like the decline of unions, which has a lot to do with political decisions.

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But why did policy take a hard-right turn? Piketty places much of the blame on center-left parties, which, as he notes, increasingly represent highly educated voters. These more and more elitist parties, he argues, lost interest in policies that helped the disadvantaged, and hence forfeited their support. And his clear implication is that social democracy can be revived by refocusing on populist economic policies, and winning back the working class.

Piketty could be right about this, but as far as I can tell, most political scientists would disagree. In the United States, at least, they stress the importance of race and social issues in driving the white working class away from Democrats, and doubt that a renewed focus on equality would bring those voters back. After all, during the Obama years the Affordable Care Act extended health insurance to many disadvantaged voters, while tax rates on top incomes went up substantially. Yet the white working class went heavily for Trump, and stayed Republican in 2018.

Maybe the political science consensus is wrong. What I can say with confidence, though, is that until the final 300 pages "Capital and Ideology" doesn't do much to make the case for Piketty's views on modern political economy.

The bottom line: I really wanted to like "Capital and Ideology," but have to acknowledge that it's something of a letdown. There are interesting ideas and analyses scattered through the book, but they get lost in the sheer volume of dubiously related material. In the end, I'm not even sure what the book's message is. That can't be a good thing.

Paul Krugman is an Op-Ed columnist for The Times.

CAPITAL AND IDEOLOGY
By Thomas Piketty
Translated By Arthur Goldhammer
1,093 pp. The Belknap Press of Harvard University Press. $39.95.

DeLong: Friedrich Engels (1884): The Relative Autonomy of the State: Weekend Reading [feedly]

I notice as things get worse, and class division more obvious in the US, DeLong's on again and off again affair with Marx and Engels gets hotter.
Lots of interesting observations from Engles on social democracy in the years after Marx's passing, when it rapidly expanded along with electoral suffrage for working classes.


Friedrich Engels (1884): The Relative Autonomy of the State: Weekend Reading

https://www.bradford-delong.com/2020/03/friedrich-engels-1884-_the-origin-of-the-family-private-property-and-the-state_-the-state-is-normally-the-stat.html

Weekend Reading: Friedrich Engels (1884): The Relative Autonomy of the Statehttps://www.marxists.org/archive/marx/works/download/pdf/origin_family.pdf: 'The state... is normally the state of the most powerful, economically ruling class, which by its means becomes also the politically ruling class, and so acquires new means of holding down and exploiting the oppressed.... The ancient state was, above all, the state of the slave-owners for holding down the slaves, just as the feudal state was the organ of the nobility for holding down the peasant serfs and bondsmen, and the modern representative state is the instrument for exploiting wage-labor by capital. Exceptional periods, however, occur when the warring classes are so nearly equal in forces that the state power, as apparent mediator, acquires for the moment a certain independence in relation to both. This applies to the absolute monarchy of the seventeenth and eighteenth centuries, which balances the nobility and the bourgeoisie against one another...

...and to the Bonapartism of the First and particularly of the Second French Empire, which played off the proletariat against the bourgeoisie and the bourgeoisie against the proletariat. The latest achievement in this line, in which ruler and ruled look equally comic, is the new German Empire of the Bismarckian nation; here the capitalists and the workers are balanced against one another and both of them fleeced for the benefit of the decayed Prussian Cabbage-Lord Junkers.

Further, in most historical states the rights conceded to citizens are graded on a property basis, whereby it is directly admitted that the state is an organization for the protection of the possessing class.... This political recognition of property differences... marks a low stage in the development of the state. The highest form of the state, the democratic republic, which in our modern social conditions becomes more and more an unavoidable necessity and is the form of state in which alone the last decisive battle between proletariat and bourgeoisie... no longer officially recognizes differences of property. Wealth here employs its power indirectly, but all the more surely. It does this... by plain corruption of officials... and by an alliance between the government and the stock exchange, which is effected all the more easily the higher the state debt mounts and the more the joint-stock companies concentrate in their hands not only transport but also production itself.... In addition to America, the latest French republic illustrates this strikingly, and honest little Switzerland has also given a creditable performance in this field. But that a democratic republic is not essential to this brotherly bond between government and stock exchange is proved not only by England, but also by the new German Empire, where it is difficult to say who scored most by the introduction of universal suffrage, Bismarck or the Bleichroder bank....

The oppressed class... the proletariat... in the measure in which it matures towards its self-emancipation... constitutes itself as its own party and votes for its own representatives, not those of the capitalists.... On the day when the thermometer of universal suffrage shows boiling-point among the workers, they as well as the capitalists will know where they stand...

 -- via my feedly newsfeed

DeLong: Shelton the Charlatan: Project Syndicate [feedly]

Trump want "opportunist and fraud" Judy Shelton on the FED. DeLong amasses voices from nearly entire spectrum of econ to oppose.

Shelton the Charlatan: Project Syndicate
https://www.bradford-delong.com/2020/03/shelton-the-charlatan-project-syndicate.html

In 1994 Milton Friedman wrote about Judy Shelton: "In a recent Wall Street Journal op-ed piece (July 15)... Judy Shelton started her concluding paragraph: "Until the U.S. begins standing up once more for stable exchange rates as the starting point for free trade..." It would be hard to pack more error into so few words.... A system of pegged exchange rates, such as the original IMF system or the European Monetary System, is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital..." https://miltonfriedman.hoover.org/friedman_images/Collections/2016c21/NR_09_12_1994.pdf. To turn monetary policy away from internal balance toward preventing exchange rate movements that market fundamentals wanted to see occur was, in Friedman's view, the road toward disaster. It was simply wrong. And it could be held together only if economies moved from free trade back toward managed trade—and so beggared not just their neighbors but themselves.

Two and a half decades later, today's Judy Shelton seems no freer from error, but to it has added an enormous amount of incoherence. There is no consistent thread of argument in what she says. She is, rather, a weathervane pointing in the direction of whatever political wind she thinks likely to get her her next job.. Last year she said that the Federal Reserve should be careful not to do anything to curb stock prices: "More than half of American households are invested through mutual funds or pension funds in this market. I don't want the Fed to pull the rug out from under them..." https://www.bloomberg.com/news/articles/2019-07-05/trump-fed-pick-shelton-says-central-bank-should-support-markets. But in 2016—when unemployment was higher and the case for easy money stronger—it was the Fed's "appeasing financial markets" that was the thing to be avoided https://www.washingtonpost.com/opinions/yes-trumps-latest-fed-pick-is-that-bad-heres-why/2020/02/10/a13fa1ec-4c44-11ea-9b5c-eac5b16dafaa_story.html. Back then under the Obama administration when there were lots of unemployed workers who could be put to work producing exports, policies to produce a weaker dollar to boost exports were to be shunned: "The obvious quick route to export success for any nation is to depreciate its currency. Dollar depreciation is already being pushed by the Obama administration.... Let's not compromise our currency in a misguided attempt to boost U.S. job growth. America's best future is forged through sound finances and sound money..." https://www.wsj.com/articles/SB10001424052748704698004576104260981772424. These days "compromising the currency" is a plus from the interest-rate cuts she wants to see https://www.marketwatch.com/story/trumps-fed-choice-judy-shelton-says-interest-rate-cut-needed-because-europe-is-set-to-devalue-euro-2019-07-05. Today monetary policy should be made looser "as expeditiously as possible" https://www.washingtonpost.com/business/2019/06/19/fed-meets-trumps-potential-next-pick-wants-see-lower-rates-fast-possible. Back then "loose monetary policy... leads to internal bankruptcy... whole nations have foundered on this path..." https://www.wsj.com/articles/SB123742149749078635.

Catherine Rampell https://www.washingtonpost.com/opinions/yes-trumps-latest-fed-pick-is-that-bad-heres-why/2020/02/10/a13fa1ec-4c44-11ea-9b5c-eac5b16dafaa_story.html earlier this month correctly called Judy Shelton "an opportunist and a quack", and reported that Republican senators think she is not qualified. Kevin Cramer (R-ND) said: "I wouldn't want five [Fed Board] members like her". Thom Tillis (R-NC) said that her views on the gold standard do not matter because return to the gold standard is off the table. Tim Scott (R-SC) agreed with Tillis, stating that "controversial statements" were "not relevant". Pat Toomey (R-PA) worried about the "very, very dangerous path to go down" she advocated. Richard Shelby (R-AL) was "concerned". John Kennedy (R-LA) said: "Nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas" https://www.wsj.com/articles/republican-senator-raises-concerns-over-sheltons-fed-candidacy-11581608467?mod=hp_major_pos1.

But the Wall Street Journal editorial board has decided to back Judy Shelton's "more error packed into so so few words" over Milton Friedman by praising her as a believer that "monetary policies that ignore exchange-rate stability wreak political and economic havoc". Trump wants Judy Shelton on the Fed Board so he can threaten to—and possibly actually—replace Jay Powell with her as chair. If we have learned anything over the past three years, it is that furrowed brows of concern from Republican senators are worth precisely nothing. John Kennedy (R-LA) followed his furrowed brow by saying "I'm not saying that's the case here". Mike Crapo (R-ID) praised her "deep knowledge of democracy, economic theory and monetary policy", and denounced the "war on Judy Shelton". If Republican senators are going to save the country from yet another Trump misstep that makes America less great, first core Republican supporters have to step up and give their senators 53 spine transplants.

---

J. Bradford DeLong: Shelton the Charlatan https://www.project-syndicate.org/commentary/judy-shelton-fderal-reserve-nominee-charlatan-by-j-bradford-delong-2020-02: Like most of US President Donald Trump's earlier picks for the US Federal Reserve Board, Judy Shelton has no business even being considered for the job, let alone winning the support of self-respecting conservatives. But in the Trump era, up is down, and quackery is the new expertise.

BERKELEY – Back in September 1994, the Nobel laureate economist Milton Friedman actually wrote about one of US President Donald Trump's current nominees to serve on the Federal Reserve's seven-member Board of Governors. "In a recent Wall Street Journal op-ed piece," Friedman observed, "Judy Shelton started her concluding paragraph: 'Until the US begins standing up once more for stable exchange rates as the starting point for free trade…'" Stopping there, Friedman noted that, "It would be hard to pack more error into so few words"...

..."A system of pegged exchange rates, such as the original [International Monetary Fund] system or the European Monetary System," Friedman went on to explain, "is an enemy to free trade. It is no accident that the 1992 collapse of the EMS coincided with the agreement to remove controls on the movement of capital." In Friedman's view, the idea that monetary policymakers should turn away from the internal balance and focus instead on preventing market-driven exchange-rate movements was a recipe for disaster. Such an approach would require all economies to abandon free trade and return to managed trade, thereby beggaring not just their neighbors but also themselves.

More than two decades later, Shelton's views are no less erroneous or incoherent. Her arguments about monetary policy do not follow any consistent thread, because she is merely a political weathervane, pointing in whatever direction is most convenient for securing her next job.

Last year, she warned that the Fed should be careful not to do anything to curb stock prices, telling CNBC, "More than half of American households are invested through mutual funds or pension funds in this market. I don't want the Fed to pull the rug out from under them." And yet, in 2016, when unemployment was higher and the case for easy money stronger, she chastised the Fed for "appeasing financial markets" with loose monetary policies. Given this volte-face, it is not unreasonable to conclude that Shelton's support for monetary-policy easing depends not on economic fundamentals but on who is in the White House.

Similarly, back in 2011, when there were lots of unemployed Americans who could be put to work producing exports, Shelton argued against policies that would weaken the dollar. "Let's not compromise our currency in a misguided attempt to boost US job growth," she advised in a commentary for the Wall Street Journal. "America's best future is forged through sound finances and sound money."

But nowadays, the same person who wrote those words sees compromising the currency as an added bonus from the interest-rate cuts she wants the Fed to pursue in response to monetary-policy loosening by the European Central Bank. In fact, she now believes that US monetary policy should be eased "as expeditiously as possible." Never mind her warning in 2009 that "loose monetary policy … leads to internal bankruptcy … whole nations have foundered on this path."

Given this history of flimflam, Catherine Rampell of the Washington Post was absolutely correct earlier this month when she called Shelton "an opportunist and a quack." Rampell also notes that, "Senate Republicans seem to know this," even if they "still may be too craven to oppose her nomination, for fear of crossing Trump." For example, Kevin Cramer of North Dakota has said that while he likes the idea of having someone on the Fed Board who will challenge the status quo, he "wouldn't want five members like [Shelton]." More worryingly, Thom Tillis of North Carolina apparently does not think that Shelton's bizarre advocacy of the gold standard matters, because that issue is already off the table. Tim Scott of South Carolina agrees, arguing that Shelton's past "controversial statements" are "not relevant."

Putting on a slightly braver face, Pat Toomey of Pennsylvania told Shelton at her confirmation hearing that he is worried about her recent statements in support of devaluing the dollar. "We don't get to control other countries' monetary behavior," Toomey warned. "I think that is a very, very dangerous path to go down." Likewise, Richard Shelby of Alabama has indicated that he is "troubled by some of [Shelton's] writings," and John Kennedy of Louisiana admits that, "Nobody wants anybody on the Federal Reserve that has a fatal attraction to nutty ideas."

Nonetheless, the Wall Street Journal editorial board has decided to defend Shelton's nomination, particularly her belief that "monetary policies that ignore exchange-rate stability wreak political and economic havoc." In effect, it is choosing her error-packed words over Friedman's commonsense arguments about the proper goals of monetary policymaking.

Trump, of course, wants Shelton on the Fed Board so that he can threaten Fed Chair Jerome Powell by holding her out as a ready replacement. If we have learned anything over the past three years, it is that congressional Republicans' furrowed brows and rhetoric of "concern" are worthless. Kennedy, after expressing his reservations about "nutty ideas," went on to stipulate that, "I'm not saying that's the case here." And Mike Crapo of Idaho has gone so far as to praise Shelton for her "deep knowledge of democracy, economic theory, and monetary policy."

If Republican senators are going to save the country from yet another Trump misstep, they will need to find their long-lost spines. I'm not holding my breath....

 -- via my feedly newsfeed

'No coordination coming from the government,' says America's top flight attendant amid coronavirus outbreak and plummeting demand for air travel [feedly]

'No coordination coming from the government,' says America's top flight attendant amid coronavirus outbreak and plummeting demand for air travel
https://www.businessinsider.com/americas-top-flight-attendant-says-no-coordination-coming-from-govt-2020-3?utm_source=feedly&utm_medium=webfeeds

Andrew Caballero-Reynolds/Getty Images

• Sara Nelson, the president of the Association of Flight Attendants, blasted the Trump White House on MSNBC's The Last Word for not effectively coordinating a response to the COVID-19 outbreak in the US.
• Nelson blamed President Donald Trump for putting flight attendants and the public at risk by making it harder for labor and the government to work together. 
• Airlines have been working diligently to ensure air travel remains safe but cannot do so much without government coordination and assistance. 
• Visit Business Insider's homepage for more stories.

America's head flight attendant criticized the Trump administration for what she claims is a lack of coordination between the government and labor unions to combat the spread of COVID-19 in the US.

Sara Nelson, president of the Association of Flight Attendants, praised the work of airlines during an appearance on MSNBC's The Last Wordbut accused the White House of not taking the outbreak as seriously as previous administrations did. 

"The words that have come from the White House have put both [flight attendants] and the traveling public in harm's way," Nelson said.  

Citing the lack of testing capabilities for COVID-19, Nelson first pointed to growing coronavirus spread that has transcended national borders and resulted in hundreds of US cases, saying the government's inability to contain the outbreak "puts us all at risk." 

Nelson also highlighted the lack of coordination between airlines, unions, and the government through the White House to effectively implement "simple, good ideas" such as allowing airlines to stock additional quantities of hand sanitizer on their aircraft.

Meanwhile, President Donald Trump repeatedly touts his swift action in the early days of the virus' spread, saying that he closed the borders "early on" and against the advice of others in his administration. 

Directives from the White House regarding air travel have been to deny entry into the country for non-US citizens who have traveled to China or Iran while requiring US citizens who have traveled to either region enter the country through designated gateway airports. US citizens returning from either country will be subject to CDC screening and may be required to quarantine for a two-week period. 

Having worked with the Obama administration during the Ebola outbreak, however, Nelson believes the Trump administration's response has been insufficient in protecting the public and that the government is ill-informed on the status of the outbreak because it isn't talking to labor groups. 

"We can't even talk here with good information about what we can do in this country to be able to contain this," continued Nelson, comparing her experience with the Trump administration compared to the Obama administration's response to the Ebola outbreak. "So, I can't even believe where we are today and I'm extremely disheartened that the President of the United States is putting [flight attendants] at risk, [flight attendants] jobs at risk, our entire economy at risk and not taking this seriously." 

Despite fears to the contrary, Nelson stated that airplanes and airports are among the safest locations due to the extra precautions being taken by airlines such as ensuring aircraft are cleaned and sanitized before and after flights. 

"Ironically, going to airports and getting on planes may be one of your safest public locations because the airlines have been working with the unions and the people that know how to address these things for the last two months..." 

A reduction in demand for travel has led to airlines around the world canceling flights and reducing service on even the most lucrative routes. British Airways recently reduced frequencies on its flagship London-New York route, a top business route that's earned the airline over $1.1 billion in previous years, as businesses cut back on non-essential travel. 

Some airlines have implemented travel waivers and are waiving change fees for future bookings in an attempt to boost consumer confidence in air travel. The reduced demand for travel has been evident in the increasing lower airfares for flights between Europe and the US. 

While flights to affected regions in Asia and Italy from the US have been largely reduced, airlines are continuing to operate internationally and will continue to do so until demand dictates otherwise. Nelson praised the work of airlines in ensuring flying remains a safe form of air travel despite the outbreak. 

"The airlines are working very hard on making sure that they are taking deliberate measures to do extra cleaning, follow CDC guidelines on that cleaning, and they have been interfacing with [labor unions] on that," said Nelson. 

"We can take this crisis on but not with this kind of chaos from the White House," she added.

NOW WATCH: Here's why in-flight WiFi is so slow and expensive

See Also:

• Flight attendants from American, United, and more reveal what's making them anxious as coronavirus spreads and the airline industry gets slammed
• Shifting Gears: Airlines had a very, very bad week
• Carnival Cruise Line is offering passengers up to $200 of extra onboard credit if they keep their scheduled bookings through May 31

SEE ALSO: 5 US airlines are canceling flights to global destinations outside of China as coronavirus spreads — here's the list

DON'T MISS: How to lessen the chances of getting sick when traveling on planes in the age of coronavirus, according to experts

 -- via my feedly newsfeed

Sticking with Sanders till he stops.

Trump is not just a bad president. His regime is a fatal sickness infecting US, and not only US, society. A sickness rising from poverty, racism, the immense class divides, and out of control capitalism. If you compromise with this sickness, you will get it. Recovery will cost you your skin, if not your life, at the minimum.

To be honest, I have not met a "Bernie Bro" -- the abusive type of folks Elizabeth Warren used to slam Sanders (again) today with Rachel Maddow. We have anarchists, and some moral crusaders against "greed" who have their feet planted in mid-air politically, in West Virginia. But I do not see much meanness in them.

However, I know the fake leftist and fake militant type well, from years in the labor movement: Mostly middle and upper middle class -- almost always white -- youth organized into sects with big plans to invade the labor movement, replace its "sell-out" leadership, and turn it into some fantasy version of a Bolshevik brigade.

If the company had a skilled labor relations staff, and if the union leadership was inexperienced or naive, these types were easily manipulated into helping destroy the strike, if not the entire union.

Before I learned more economics, I was a better strike organizer than negotiator. The workers in most of these shops (they were all manufacturing during my service) could tell when the company was lying, but they did not always know why. Unless you could put a fire under the ass of the employer, he would rarely bother to tell you the truth.

Strikes are semi-legal, semi-civil, warfare. They require the maximum degree of unity and solidarity and DISCIPLINE among the members to win or prevail, or simply NOT LOSE, as most -- in my memory ALL -- strikes are defensive in motivation and NOT designed to ATTACK their employer. These constraints make it very difficult in the midst of a struggle to denounce any "supporter" showing up at the picket line every day. The union has NO weapon other than unity. In every case I can recall where this became a problem, at least one of the "fools" was not a fool, but a company agent deliberately plotting confrontations that would give the company grounds for injunctions against picketing and for mass arrests. In some cases the only remedy was to use our own muscle, and do our own policing -- a risky and imperfect solution. But if you go on strike, you are your own protection, or you lose -- -- no one but your own strength can save you. The courts will not defend you. The "fools" and parasites that latch on to the movement are not there for you to win -- they always prefer "glorious defeat". Fortunately, in most cases, our union had a deep bench of people very experienced in this matter. Not all unions or locals, however, did.

IN at least two instances, we had the fools fired as a condition of settling the strike. For which I earned the hatred of he fake Left -- I welcome it!

A presidential campaign on socialist values seems not unlike a meta-strike. Bernie's campaign is the first such mass campaign in US history. Other countries have more experience. In my view -- after the campaign -- there will be time to eval the wins and setbacks of his historic, and heroic effort. And it will not be for naught. He has brought a LIGHT to the the salvation of this nation and shined it on the path. His powerful campaigns must found broad based and sustainable organization to the Left so it can discard its 75 year marginalization.

While I do not agree with EVERY point in Bernie's program, I know from personal experience, he is real, and wise, and without guile. And I will support his campaign, in solidarity, until it is over, at the time HE and his team decides. If Joe Biden ends up as the nominee, Bernie will support him.

BTW, WITHOUT that support, and help, Biden will lose.

  

--

John Case
Harpers Ferry, WV

Enlighten Radio

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