The Fiscal Stimulus Gridlock

The best can be said about a possible fiscal stimulus in the face of a renewed Covid-19 surge that is dragging the economy down as many areas shut down in various degrees is that at least a few hours ago the US Senate approved a one week continuing budget resolution to keep the fed govt functioning. In past years govt shutdown was a big deal, but with the current president threatening to seize power in a coup even in the face of the SCOTUS unanimously repudiating his final "Kraken" lawsuit, not to mention the positive drama of the FDA approving the Pfizer vaccine for US use, well, a govt shutdown right now does not look like such a big deal. But, hey, for at least the next week it will not happen, snore.

But we are facing a much more serious matter than this matter of just keeping the US fed govt going now, given that the US economy seems on the verge of possibly going into "double dip," as cut backs on economic activity spread as we see the coronavirus surging across the country. The House back in either April or May or thereabouts passed the HEROES bill that was a $3 trillion bill. Mitch McConnell in the Senate said no.

I do not precisely know when, but some months later, in an effort by House Speaker Pelosi, an attempted "compromise" bill was passed in the House of a bit over $2 trillion . This also led to no response from McConnell, and I note that it is not a matter of the Constitution that the Majority Leader of the Senate can single-handedly block for consideration bills passed by the House, much less presidential nominations for the Supreme Court as when in 2016 McConnell blocked even the consideration of Obama's nomination of the clearly centrist nominee, Merrick Garland.

Which brings us to now, with the economy on the verge of a likely double dip decline, and the debate in Congress now reduced to an approximately $900 million deal, something put together by a bipartisan  group of centrists, a deal that by now has dropped the obvious demand of handing out money directly to people as was done earlier this year and so many other nations have done, an approach now backed by the vast majority of professional economists, with Noah Smith recently arguing, arguably a bit over the top, that all of macroeconomics has simply become "Give them money."

Anyway, it has looked like maybe this reduced proposal, that does not do what Noah and the vast majority of economists say should be done, has bogged down and is not being passed.  It seems that the rarely seen bipartisan committee agreed upon a deal that had a temporary cover for McConnell's demand that businesses not be liable for making their workers sick from Covid-19 and some reduced amount for state and local govts.

But McConnell has rejected this bipartisan proposal, already much reduced from the earlier bills passed by the House. Why he has done so is the question, although he has invoked both wanting a full liabitily protection along with a larger cutback for state and local aid.  At this point we must note that much is up in the air. Yes, Joe Biden will indeed be inaugurated as the legal President of the United States at noon on 1/20/21. But many will be contesting that, with half of Trump voters so out of touch with reality to think that Trump will actually be taking that oath of office on Jan. 20.

So obviously McConnell is playing the long game, having just gotten reelected in Kentucky. I think he is planning to replay what he die in 2009 and after, simply oppose anything Biden proposes in an effort to gain against him in 2022 and then oust him in 2024.  We have people like Ted Cruz saying the Senate should not approve any cabinet appointee of Biden.  Presumably Biden could imitate Trump and simply appoint his people on an "Acting" basis and proceed to govern. 

Frankly the bottom line seems to be that he wants to reprise how he played things after 2008, complete opposition to any admin proposal with the hope that the economy will do badly so the GOP can do well in future elections, with an eye to bringing down the economy as the coronavirus worsens, thus bringing back a hope for Trump or some other Republican in 2024. Given all the immediate noncertainties in the political sphere, how this all turns out remains very much up in the air right now.

Barkley Rosser

The Failure of the Public Health Establishment

 Matt Yglesias has an excellent retrospective on the absurd reversals over mask usage that arose in the early stages of the pandemic.  You will recall that the public health establishment, amplified by mainstream media outlets like the New York Times, told us all to ditch our masks and concentrate instead on frequent, vigorous hand-washing.  This was transparently absurd at the time, since from the beginning it appeared that coronavirus transmission had something to do with airborne virus exposure.

We were told masking didn’t protect us.

We were told only N95 masks worked, and only if they were taken on and off just so, in a complex procedure us untrained mortals could never execute.

And we were told we had to save these precious masks so health care workers could protect themselves, even though that was in direct contradiction to argument #1.  (Later, Anthony Fauci told us that conserving the inadequate supply of N95's was the underlying motivation, and the rest was mostly persuasion.)

By mid-spring the story had changed, and now we were all supposed to wear masks at least some of the time, although the WHO and the CDC were reluctant to go the full distance and admit that aerosol transmission was widespread and justified routine use of masks in social settings.  Today we have arrived at the point where reluctance to wear a mask is cause for shaming and shunning—as if the initial mask guidance and its repetition in the media had never happened.

But the mask fiasco was only a part of it.  Yglesias also mentions the shifting and contradictory policies regarding distancing: the immediate shutdown of outdoor activities even though indoors was more dangerous and the “hygiene theater” of deep cleaning while air filtration languished.  He says we should have a serious, critical examination of America’s response to the virus once the worst of the pandemic is over.

I agree, but I want to add a further observation and hypothesis.  Every failure of guidance and regulation had a common theme, protection of the health care system.  We should abjure masks because the health care workers needed them.  We can’t base messaging or policy on aerosol transmission because that would require expensive retrofitting of health care facilities.  We can’t restrict travel because medical supply chains and the movement of health care resources can’t be disrupted.  The objective is to “flatten the curve”, not eradicate the virus, because the important thing is to not run out of ventilators or ICU capacity—even though flattening has no visible endgame and itself contradicts the messaging about how awful it is to get covid.  Put it all together, and it’s hard to avoid the conclusion that the mission of public health had quietly morphed from protecting the health of the public to protecting the resources and operations of the health care system.

This is how it looks to me, but it’s still a hypothesis.  We could benefit from scrutiny of public health schools in universities, not least their funding, and public health agencies at the state and federal levels—and also the WHO.  Has public health been redefined this way in practice and even in theory?  If so, what would it take to redirect it so the health status of the public and not the burden on health service providers is their guiding concern?

THE CULT OF THE VICTIM

 

On March 15, 2019 a gunman opened fire on worshipers at two Christchurch, New Zealand mosques, killing 50 and wounding around as many. Survivors of gunshot wounds often have traumatic injuries that require multiple surgeries and leave them severely disabled for life. Before embarking on his rampage, the alleged gunman broadcast over the internet a "manifesto" outlining the motive for his deed.

In his manifesto, the alleged perpetrator claimed to have had "brief contact" with "Knight Justiciar" Anders Breivik, the convicted Norwegian mass murderer, and to have taken "true inspiration" from Breivik's "2083" manifesto. Indeed, the Christchurch massacre would fit the definition of a copycat crime in terms of motive, manifesto and mass murder.

Breivik plagiarized approximately 15,000 words of his manifesto from a pamphlet on "Political Correctness" by William S. Lind. In turn, the alleged Christchurch killer "plagiarized" his deed from Breivik. On his March 17 traditionalRIGHT webcast, Lind spent a little over 16 minutes talking about the Christchurch rampage. Not surprisingly, neither he nor his interlocutors mentioned the Oslo precedent.

So what did Lind say about the Christchurch terror attack?  Did Lind take moral responsibility for the consequences -- even unintended -- of his words?

Lind's first observation was to caution that there was much that remained unknown about the attack. He then criticized "the establishment media rushing to judgment" by reporting that it was a right-wing hate crime. Then he launched into speculation -- "I only say possible no idea at this point" -- that the alleged attacker had been converted to Sunni Islam during his travels in Pakistan and that the attack on the mosques was "actually part of the Sunni-Shiite war" and that "it would make sense in many ways for him to try to blame this on the right because of course who's leading the opposition to Islam in the Western countries?"

It also could be somebody sitting on their bed that weighs 400 pounds, OK?

The "second thing that immediately jumped out" at Lind was "why in the Hell are there mosques in New Zealand to begin with?" This remark evoked appreciative laughter from his co-hosts, Brent and John. The real problem, according to Lind, was allowing Muslims to come to Western countries, or, if they are allowed to come, allowing them to build mosques.

Lind then expounded for three minutes on the unrelenting persecution of Christians in Islamic countries and the disregard of the establishment media toward "church bombings and mass murders -- those get a paragraph or two in the same papers that splash this [Christchurch] across the headlines on the front page with the biggest type." 

According to Lind, these atrocities are "happening all the time in Africa":

We have had Christians worshiping on a Sunday morning suddenly the doors of their church are barred and it's set on fire by Muslims. These don't even make the New York Times. Remember the Times's real slogan is "all the news that fits we print." So this [Christchurch shootings] fit their narrative of evil Christianity -- evil white males, evil right-wing etc. The mass murder of Christians by Islamics doesn't fit the narrative so, okay, doesn't exist and this by the way is exactly what the President and his supporters means by fake news.

So the murder of 50 people by a gunman in New Zealand was "fake news" because it fit a supposed MSM "narrative." After discounting media coverage of the Christchurch attack, conjecturing about an alternative scenario and objecting to Muslim presence in Western countries and lack of media coverage of atrocities committed against Christians, Lind turned his attention to the strategic disaster of the attack. 

For this analysis, he assumed the "current narrative" of a right-wing, anti-Islamic attack. From that perspective, Lind expressed sympathy for the killer's alleged motivation, "from what we're being told now were inspired by this guy's reaction to seeing Islamics all over France -- well, that's an understandable reaction [laughter]." Let's unpack that logic: according to Lind, it is an "understandable reaction" for someone to commit mass murder because he didn't like seeing so many Muslims in France. 

Nevertheless, Lind was eager to advise "our colleagues on the right [that] it's important to understand why actions like this actually work against us." 

In other words, the "understandable reaction" of mass murder is a public relations mistake.

Lind's analysis of the strategic inaptness of this particular kind of "leaderless resistance" action relies on his theory of "fourth generation warfare" and with the "cult of the victim" that he attributes to Antonio Gramsci and Georg Lukacs, "what we know as cultural Marxism or political correctness":

All Marxism is loser worship. It's if you're successful, if you're a builder, if you're a producer, if you're out there doing great things, you're evil, you're a capitalist, you're a member of the bourgeoisie, you're an exploiter, you're a landlord etc., you deserve a firing squad or the gulag. If you're a complete loser who produces nothing you know you're only a taker, you're, you're always defeated, then you're a moral hero and in the climate that we now live in where cultural Marxism sets the tone throughout much of the world the highest status you can achieve is victim.

Why "loser worship" makes this kind of "leaderless resistance" violence strategically disastrous for the right is left unspoken by Lind. My interpretation of what Lind is getting at here but not clearly articulating is that the attacks will evoke sympathy for the victims and thus elevate their status. 

But the real victims here, according to Lind and his colleagues, are the young, white heterosexual Christian men -- such as Breivik and the Christchurch terrorist -- driven to violence by the pervasive cultural Marxist oppression:

...so many lost young men that feel like they have no future we're not allowed to have our own spaces anymore as like white Christian European people without having to have without foreigners coming in here...  

...we can't speak out against any of this without censorship or losing your job or something and it's driving people mad...   

...this feeling of oppression where you can't say what you think about anything because because certain viewpoints have effectively been outlawed... 

...more and more men young men particularly -- and this by the way, Brent, is happening in many parts of the world -- are finding themselves with no prospects if in this country they're white Christian men, heterosexual. They are considered somehow evil. Again they're the old equivalent of the capitalists and landlords under the old economic Marxism. They're inherently evil and they can't do anything without women but they can't do anything with women because if they displeased a woman she could immediately claim sexual harassment and he's guilty until proven innocent and the rage is just building and building and building and because of the way the internet fosters leaderless resistance I'm afraid you're right, Brent, we are going to see more of this but on our side we need to understand it is strategically disastrous.

Does your head hurt trying to follow Lind's "logic"? That is the point. It is not logic but a propaganda technique that relies on the listener/reader's conditioning to assume that what they are hearing/reading and trying to follow is a logical argument. Jacques Ellul gave a concise description of the technique Lind employs:

Propaganda by its very nature is an enterprise for perverting the significance of events and of insinuating false intentions. There are two salient aspects of this fact. First of all, the propagandist must insist on the purity of his own intentions and at the same time, hurl accusations at his enemy. But the accusation is never made haphazardly or groundlessly.* The propagandist will not accuse the enemy of just any misdeed, he will accuse him of the very intention that he himself has and of trying to commit the very crime that he himself is about to commit. He who wants to provoke a war not only proclaims his own peaceful intentions but also accuses the other party of provocation. He who uses concentration camps accuses his neighbor of doing so. He who intends to establish a dictatorship always insists that his adversaries are bent on dictatorship. The accusation aimed at the other's intention clearly reveals the intention of the accuser.

*Because political problems are difficult and often confusing, and their import not obvious. the propagandist can easily present them in moral language -- and here we leave the realm of fact, to enter that of passion. Facts, then, come to be discussed in the language of indignation, a tone which is always the mark of propaganda. 

Lind's cult of the victim enlists young, white, heterosexual Christian men driven mad by having their future -- their rightful prospects as successful builders, producers, capitalists, landlords and doers of great things -- stolen from them by losers. They just can't catch a break! Even when they go out a shoot a bunch of those losers, it is the losers who get elevated as high-status victims in today's cultural Marxist climate instead of the real victims, those meritorious young, white, heterosexual Christian, dispossessed males who deserve to be successful but have been cheated out of their victory because the system has been rigged by those inferiors who deserve to lose.

"We're all victims. Everybody here. All these thousands of people here tonight. They're all victims. Every one of you." -- Trump

Constructing An Alternative Reality

 This has been gradually developing for about the last quarter of a century or so.  While there was some of this going on before, it took off after the Newt Gingrich-led GOP took over Congress in the 94 election and Rush Limbaugh began his radio show.  Not long after Fox News began a more aggressive stance against President Clinton, pushing any and every scandal that would lead to his impeachment for lying about his sex life, although this proved unpopular with the public.  But that did not slow it down.  It became more developed in the Bush admin when support for the Iraq War became increasingly disconnected from reality, a war that was not connected to reality to begin with as it was based on false claims about WMDs supposedly in Iraq.  When Obama became president the alternate reality became more developed as Fox and talk radio obsessed on the fake news birther nonsense, not to mention the endless obsession on Benghazi and Hillary's emails.

And then Trump became president and all of this kicked up to a whole new level, with his 23,500 plus lies and counting, which came along with a personalistic cult worshipping him.  This was bad all through his presidency, but now that he has lost the election it has further accelerated, now reaching seriously deranged levels that are also seriously dangerous to US democracy.

So in the real world Trump allowed the GSA to allow the official transition to a Biden presidency proceed, and most foreign leaders recognize the reality (although not V.V. Putin so far), and we have now had all the six main swing states officially and legally certify that Biden beat Trump in their states, with none of the margins less than 10,000, not all that close, frankly. Even those so far not coming out to admit this reality sometimes leak that they recognize it, occasionally making remarks that clearly recognize that Biden will almost certainly be president as of Jan. 20, 2021, even as they do not officially come out and say so openly, with the pathetic GOP senators from Georgia at the top of this bizarre hypocrisy.

But even as this reality continues to creep forward, reinforced by failure after failure of the Trump team's lawsuits, a win-loss record currently at 1-46, even though they keep submitting more cases, Trump himself seems to be more than doubling down, with many people following him and becoming more seriously insane and dangerous in their efforts.

So we have freshly pardoned Michael Flynn openly calling for Trump to declare martial law and impose a new election, with a disturbing number of other folks coming out to support him on this. We have had death threats in multiple states against election officials who supported the vote outcomes, even as many of these officials have been Republicans (congrats to them for standing up for principle), with the most dramatic of these in Georgia where some of those officials have sharply spoken back with little effect on those pushing the false claims of fraud, most importantly President Trump himself, due to appear in Georgia tomorrow, supposedly to support the GOP senate candidates there, but more likely to push his own ongoing effort to overturn the election results.

At this point two items stick out to me how the effort to construct an alternate reality continues apace even as it becomes increasingly disconnected with reality.  One part of this is coming from Trump himself. Son two evenings ago he put out a 46 minute video of a speech he made alone in the White House that he labeled "the most important speech I have ever made."  Most of it was simply more of the lies and conspiracy theories he has been pushing and pushing for the past month since the election. But one item stuck out at me as showing an increasing degree of disconnect from reality.  He claimed that id there had been an accurate count of the votes, he would have won "all states." Really. Only two presidents have taken all states: George Washington and James Monroe in 1820.  So he really thinks he won Delaware, Massachusetts, and Hawaii, not to mention DC (not a state)?

The other was watching Sean Hannity last night.  OK, so others in the prime time Fox lineup are playing the game of "Trump is right that the election was a fraud and he should fight to show it, but maybe Biden will be president after Jan. 20." But not Hannity, who disappeared for most of last week after Trump caved on letting the transition legally proceed.  No, he is totally in with Trump, declaring that he will succeed in overturning the election results and be inaugurated on Jan. 20, even without declaring martial law. He points to the case out of PA going to the SCOTUS.  He points to the 4-3 Wisconsin Supreme Court ruling against Trump's motion being based on that Trump's team should have gone through a circuit court first, which they are now doing. And then there is a video out of Georgia, now being dragged through hearings in the Georgia legislature, supposedly showing some "suitcases" being brought out from under a table in Fulton County after poll watchers were kicked out, and votes getting counted for another two hours, hey, enough to overturn the GA results. I saw that video, and I do not know what was going on in it, but I saw one image of a white object being brought out from under the table that did not look like a "suitcase."  He also had some woman who claimed somebody else submitted an absentee ballot with her name, and some guy from Michigan claiming to be an independent who was a poll watcher in Detroit, whining about being kept back from looking at ballots.

I do not know where or how this is all going to end.  Maybe if we get the Electoral College actually vote Biden in on Dec. 14, but based on what has gone down so far, I doubt it will stop.  Next up will be the Senate having to certify that vote, and, hey, GOP will still be in control even if Dems win the GA runoffs.  And there is still the chance to declare martial law, and maybe he can get a war with Iran going, which seems to be on the verge of happening, given the assassination of their top nuclear scientist.  And we still have something like 70% of GOP voters living at least to some extent in this alternate reality, and today it came out that Trump has specifically praised the QAnon conspirators for "being for better government." This is going down to the wire with possible roadblocks at every possible location.

Addendum: I have just heard that the Biden transition team is being prevented from meeting with people from any of the intelligence agencies located in the DOD, which is by far the majority of such agencies, including such heavyweights as the NSA, DIA, and NRO, among others.  I find this to be very disturbing.

Barkley Rosser

Yellen And Akerlof Or Akerlof and Yellen?

 I have already posted about the nomination of Janet Yellen to be Treasury Secretary, a historic first and most duly deserved.  She is great and totally appropriate, and I have already bloviated at length on that.

I am now going to discuss a more obscure and odd matter, the view of her and her Nobel-Prize-winning husband, George Akerlof, in the eyes of the public.  This is triggered by various media stories that have sort of downplayed or dismissed him while praising her and lifting her up, which I am all for and have done myself here and elsewhere on numerous occasions.  I note that I may be in a special position to comment on this as I have known George for 60 years, which might make me concerned about how people view him, although as someone frequently described as "the nicest person in the economics profession" who is also genuinely humble, he does not mind or care about any of this at all.

Mostly I want to reaffirm his important role both in her work and more broadly his importance to the economics profession and more broadly the history and development of economic thought. While she published papers on her own and with others, her most important and influential papers have been coauthored with him, including the one getting mentioned in the news reports about efficiency wages.  They have had a long joint research program studying labor market behavior taking into account such things as social interactions effects such as workers taking seriously whether they are being treated fairly.  They also contributed to the lit on the downward stickiness of nominal wages, which is an important macro fact, with Yellen bringing this into the policy discussion at the Fed when she was first a gov there under Greenspan, with this playing a role in her helping him to move from focusing on a zero inflation target to a positive one.  A major paper by George with Dickens and Perry at Brookings would support this and help pin down what is now the nearly universal 2% target that most central banks use, for better or worse.  They have had an enormous influence on global central banking that is not all that well understood or recognized.

Regarding George himself a curious thing has reminded me, actually clarified, how important his work has been for microeconomic theory as a whole.  He merely shared his 2001 Nobel for asymmetric information with Michael Spence and Joseph Stiglitz, although I think that both he and Stiglitz deserved to get it each by themselves.  Anyway, nearly a week ago Tyler Cowen posted on Marginal Revolution the grad micro major exam at MIT for Spring, 1961, available at irwincollier.com/m-i-t-comprehensive-theory-exam-in-microeconomics-1961 , or something like that.

Most of the exam looks like stuff one would see on a current one at most grad micro programs in the US, lots of stuff derived from Samuelson's Foundations, especially as mediated by the now somewhat passe Varian grad textbook, still in use.  Some questions look more undergrad for today, such as some industrial org applications not using game theory and a question on when are laissez faire equilibria not Pareto optimal.  There is also one question that would now be strictly on a macro exam, although it does have a microfoundation, to explain the distinction between nominal and real interesr rates, thank you Irving Fisher, whom Samuelson took very seriously.

Anyway, given all the continuity and carryover, what struck me is what was not on that exam, basically two items: game theory and asymmetric information. Of course von Neumann and Morgenstern published their book in 1944 and Nash proved his more influential equilibrium in 1950, published in 1951.  But while probably they talked about how the prisoner's dilemma explains the instability of cartels, game theory was largely still not being taught at the MIT econ dept in 1961. Its takeover of industrial org and other topics was still in the future, frankly at a minimum waiting for the modifications that Harsanyi and Selten would make on Nash's important theorem to bring forth the canonical Bayes-Nash-subgame perfect equilibrium, from which many developments would come.

And, of course, the other missing topic now all over the grad micro courses is asymmetric information. Ah ha!  Yes, there had been informal discussions of this topic, most importantly by Hayek in his arguments against the efficacy of central planning.  But it was indeed the now-taken-for-granted paper from a half century ago, yes, 1970 in the QJE, originally rejected by at least one other journal, "The Market for Lemons," about used car markets.  It is easy to forget about how important it was.  It began the formal discussion of this important issue, which as near as I can tell is along with game theory the main new thing that has happened in orthodox microeconomic theory in the last half century plus.

Indeed, much of what was new in standard micro theory in the final decades of the 20th century, as well as well into this one, involved integrating game theory with asymmetric information and then applying this to a a wide variety of topics in microeconomics, as well as occasionally macro as well.. Insurance markets, basic industrial org, auction theory, financial markets, health economics, it goes on and on.  A sign of this is more recent Nobels since that one in 2001, with Hart and Holmstrom getting it together in 2016 basically for their 1987 paper that really nailed down the principal-agent problem, and this fall's one for Milgrom and Wilson, with Milgrom having contributed substantially to the development of all this and auction theory an important product of it.

So, bottom line, quite aside from his important work with Janet, George Akerlof's paper from a half century ago is one of the most important papers published in economics since the early 1950s, being the foundation of one of the two main streams of development in microeconomic theory.  We can talk all we want about Yellen and Akerlof, especially right now, but in the longer run, George is just incredibly important.

I am going to add on to this post an odd item related to both of them coming from my old personal connections to them, especially George,. One sign of his humility is that he regularly says he was the intellectual failure of his family, especially on his mother, Rosalie Hirschfelder's, side.  Many of them, including her and her brother Joe, and his brother at least, went to Yale and majored in chemistry, and his father, Gustav, an immigrant from Sweden, was also a successful chemist, although I do not know if he went to Yale.  Anyway, George went to Yale for undergrad before going to MIT for grad school, but he did not do chemistry, and in this has said he viewed himself as not living up to the family ideal of hard science, going into the softer economics instead.

Anyway, his uncle Joe participated in the Manhattan Project as a chemist and after the war became a professor at the University of Wisconsin-Madison, where he became a friend of my father's, and I came to know him.  He married a woman, Elizabeth Stafford, a mathematician who had become divorced from her mathematician husband, with whom she wrote a widely used textbook in the 1930s.. Betty Hirschfelder wrote many papers on her own and taught math at UW for 20 years, but was never offered a full-time or tenure track position.  Nevertheless she lived to be 100 years old and eventually gave substantial money to the math dept, some for grad students and some for the library, which was closed a few years ago as part of stupid policies there.  I knew her, and my mother used to have her over for tea, and George regularly visited her.

After Janet Yellen became Fed Chair she wrote a paper, which I should track down to see where it was published, that got a lo of publicity.  It was about discrimination against women in American academia, and her leading example was this aunt-by-marriage of her husband George, Betty Hirschfelder, who was a highly productive and capable mathematician, but was treated poorly by the UW-Madison math dept.  And now Janet herself has helped improve conditions for women in economics and has become this shining example of breaking through to new positions by a woman in economic policymaking.

Barkley Rosser

Unprecedented

 It occurs to me that our current president has engaged in a rather large number of actions that are unprecedented by any other president, as well as some only rarely happening and not for a long time, many of which for nearly all other politicians would make them viewed as simply unacceptable for being a president.  However, with him, there have been so many that people simply ignore most of them as being, "Oh well, there goes Trump again being himself."

First of all I do not have a full list of his norm-shattering precedents. In googling I saw an article that proclaimed he had violated 20 "presidential norms." But it was behind a firewall.  And even though these may have been norms, it may be that other presidents violated at least some of them.  Anyway, here goes a a partial list.

The first president to be accused of violating the emoluments clause of the Constitution.  Actually there are two such clauses, the more famous one involving foreigners buying off a president, and then a domestic one as well.  He has been accused of violating both of them on numerous occasions, although never formally convicted of any, with a couple of law cases in court, mostly involving just the Trump Hotel in Washington.  But the list of likely violations is long and involves many properties and forms, with at least 22 foreign nations reputedly involved.  The funny thing is that just because something is forbidden in the Constitution does not immediately make it specifically against the law.  In any case, it remains that somehow no other president has even been accused of violating either of these clauses, but Trump is pretty clearly massively guilty of actually violating both of them blatantly and numerous times, with only the mildest outcry even from his critics.

He is the first president to have been legally charged with engaging in racial discrimination.  This would have been in 1973 right after he began working for his father's real estate business.  He was not found officially guilty but had an out of court settlement in which he was ordered to stop doing what he had been doing. As it was, the Justice Dept later accused him of doing exactly that, returning to his previous racially discriminatory practices, after which he seems to have more or less stopped.  Of course there are past presidents with much worse race relations records than his, such as outright owning slaves as did most of the Founding Fathers from the South.  But in those days what they did was legal, if immoral.

The first president to be sued for breach of contract.  I do not have the exact number of times that he has been so sued, but it is a lot.  As it is he has been involved in over 3500 lawsuits, although more often than not with him as the plaintiff.  This is more than the combined lawsuits involving the top five construction businesses in New York City.  Many presidents have been sued for a variety of things, such as defamation or policy actions they engaged in as president.  Not a president, but Hillary Clinton has been sued about 900 times, mostly by people upset with policy actions by her, never for breach of contract, despite all her and Bill's Whitewater shenanigans.  Somehow I would think that repeatedly violating something so basic as simply keeping one's word in a business contract would make one ineligible to be president, but I think many of his followers inaccurately think this is a sign of him being a "good businessman," a reason many people voted for him in 2016 reportedly.

The only president to go bankrupt more than once, in his case six times, another matter suggesting he has not been as good a businessman as many think he has been.  Four other presidents have gone bankrupt, each of them once and in all cases due to cosigning for loans where the person they cosigned with engaged in conduct that led to the financial problems that dragged the president into having to declare bankruptcy.  Those four included some distinguished ones: Thomas Jefferson, Abraham Lincoln, U.S. Grant, and William McKinley.  Of course Jefferson was a profligate spender and poor money manager, dying deep in debt.  Lincoln's wife, Mary, was a notorious overspender. Grant generally had poor experience in his business affairs, with his bankruptcy occurring after he left office, with some attributing his drinking to his poor business judgment.

The only president to suggest that those who died in military service for the US were "losers" and "suckers," apparently the last straw that led John McCain's widow, Cindy, to support Biden for president.

The only president to publicly lie in office more than 1000 times.  The latest count for him now exceeds 23,000 times, and this is in a bit less than one term.  Actually I could not find an exact count for any other president basically because they did it so infrequently nobody seems to have kept count, so it is possible I am wrong on this. But certainly nobody came remotely close to him in his lying rate.  Digging around it seems that his closest rivals were actually a predecessor-successor pair: LBJ and Nixon.  LBJ notoriously repeatedly lied about the Vietnam War, a very serious matter, with the Gulf of Tonkin incident at the top of the list.  Of course, Nixon repeatedly lied about Watergate.  Almost certainly every president lied while in office, with the lies ranging from serious to strategic (FDR in WW II) to political to sexual (Bill Clinton) to careless unawareness of facts (Reagan) to just frivolous.  In digging into this I found an article excoriating Obama for supposedly lying 37 times about details of the ACA, with the article, written by a critic while he was in office, suggesting that this would ruin the entire rest of his presidency and nearly rose to the level of impeachability.  Oh how we have moved on.

Which brings us to refusing to concede defeat when an election was called against him by leading observers.  We need to be clear here that a number of elections were not called for a long time and involved difficult and even extra-constitutional machinations, including 1800, 1824, 1876, and 2000. But in all those cases once the unusual delays ended in determining the winner, the loser conceded forthwith without further efforts to undo the outcome.  As of almost a week ago Trump did finally allow the GSA to allow transition activities to begin, but only because he could still contest the election outcome, which he continues to do, with I gather a majority of his backers still supporting his efforts, even as nearly all his lawsuits have failed and enough states have formally certified their results to guarantee that indeed Biden will have more than 270 electoral college votes.

This leads us to a last item, not completely unprecedented and not yet done by him, but not done since 1869, and on twice before then, in 1801 and 1829 some in connection with those dragged out contested elections, but with this one a pretty clearly solid win for Biden.  It would be if he refuses to attend and participate in the inaugural of his successor.  Even Herbert Hoover did so in 1933 for FDR in what many have identified as the last really hostile and difficult transition, although Hoover did not contest the landslide outcome against him.  Trump may yet change his mind, but current reports have him considering not only not attending but holding a rival event at the same time, a rally in which he would declare his candidacy for 2024, and if he does that, it would be another unprecedented action.  John Adams, John Quincy Adams, and the also impeached Andrew Johnson did not do anything like that when they did not attend the inauguration of their respective successors.  And if somehow Trump does not attend, expect his fervent followers to be all impressed rather than duly shocked.

Barkley Rosser

Is Bitcoin A Bubble?

 We have all thought so, with no income and nothing backing it, and it went zooming from nearly nothing to over $19,000, only to fall back hard down to around $3000, where it more or less hung out for a couple of years with the occasional up  to $6000 or so.  But recently it has moved up to over $18,000, near its previous peak, and some other cryptocurrencies have also moved up sharply, with #2 Ethereum essentially doubling in price in the last month or so.  So, is this another round of bubble speculation that will be followed by another crash?

I note that some other non-monetary assets have been moving.  After long sitting around $1200 to $1300 per ounce, with reportedly the Chinese central bank keeping it above $1000 whenever it occasionally headed down in that direction, gold this year has also moved up to near its old high.  It is now over $1800, not far from its previous high of over $1900.

Oil is not anywhere near a high, but just in the last week or so has suddenly been moving up. While hanging our around $40 per barrel for both Brent crude and West Texas crude for a long time, and even down almost to the mid-30s not too long ago, Brent as of today is at $48.70, pushing 50 for the first time in a long time, with WTI a few dollars behind.

Some are saying all this is due to a fear that the US dollar will collapse.  Maybe, although I do not know.  It is not screamingly obvious why that might happen now more than at other times.  Pro Trumpers might push this, but they were pushing the stock market would collapse if Biden won.  And, heck, the announcement of allowing transition to Biden sent the Dow over 30,000 for the first time ever, not exactly a collapse, although Trumpers say this is all due to the vaccine hopes, and all that is due to Trump.  Sure.

Anyway, back to bitcoin in particular, Tyler Cowen at Marginal Revolution (and I guess in a Bloomberg column also) has suggested there might be an improvement in fundamentals that might be consistent with a more solid upward move in bitcoin's price, even if we see some "correction" ahead. The reason is that a number of entities out there have recently announced that they will accept payments in bitcoin, with this not likely to be reversed.  This suggests that it is not gong to collapse and disappear and also that its use as a medium of exchange may continue to spread.  This would  make it a more seriously established alternative form of quasi-money with more solidity to its longer run price.

Of coures, technically speaking all fiat currencies that are not backed by a commodity are bubbles.  They only have positive value because people think other people think they will be accepted, a sort of giant mass hallucination.  But as long as the belief holds, it works.  These are stable bubbles, not the sort that zoom up and then crash, which is what a lot of people mean when they a particular price movement is a bubble (and this may happen still with btc). This is the argument of the original overlapping generations models due to Allais and Samuelson, that fiat currencies are essentially stable bubbles that can continue because they can passed on to future generations.

Of course fiat currencies, like the USD, have their governments supporting them in a variety of ways, if not with a specific commodity, and bitcoins and other cryptocurrencies do not.  That certainly makes the cryptos a lot shakier than national fiat currencies.  But maybe they, or at least bitcoin, will now have a higher floor for its price than was the case a year ago or so.

Barkley Rosser

Yemen: More Damage To World Peace And Security Due To Trump Wrecking Everything As He Exits

Michigan certified its vote results for Biden, and now crucially Emily Murphey at the GSA has agreed and now recognized officially that at least Joe Biden should be allowed to transition properly as has always happened in the past normally.

But in his lame duckery, still denying his obvious loss, Donald Trump is trashing everything in sight.  Very serious matters of foreign policy are part of this. One of these has been discussed in comments here previously, the removal from the Open Skies Treaty, which right now I am watching Rachel Maddow report that DOD is destroying the planes US used for this. Ack!!!

But for this post I am noting another awful thing they are doing along a bunch of others.  This involves Yemen, long one of the worst humanitarian disasters on the planet, horrible, but so in place for so long that most people pay no attention anymore because, bore, been there done that snore. But it continues to be a place of ongoing civilian deaths from bombs and economic deprivation.

So, just to make things "better," the Trump admin has decided to declare that the Houthi group who rule not only most of northern Yemen, but also its capitol, Sana'a, to be officially a "terrorist group." The immediate result of this ruling is that all kinds of humanitarian aid that has been going to people in the parts of Yemen they live in will no longer receive it.  This is morally awful and just plain stupid.

So this is part of Trump frustrated in his anti-Iran policy.  He exited the Iran nuclear treaty, leading to a massive increase in enriched uranium there.  Ooops! He killed a top general from there to stop attacks on US forces in Iraq by Iranian militias.  But those continue, with more political support in Iraq. Duh.

The argument for this move on the Houthis is that they are backed by Iran, which they are.  But that is a far secondary matter. The Houthis are Zaydi Shia in contrast with the 12-Iman Shia of Iran, not close at all. While Trump admin has long claimed Iran has armed them, most evidence has suggested not much.  Most of the Houthi arms are leftover US arms.

The other part of this is the Saudis, who have been waging war against the Houthis, with Trump deeply tied to the murderous Saudi Crown Prince, Mohammed bin Salman, who has been behind this awful war against the Houthis in Yemen, support that dates back to the Obama admin.  This makes this a serious issue for the incoming Biden admin. I note that Congress has in recent years moved away from supporting this horrendous war in Yemen that has led to massive deaths among innocent civilians. Those votes that had support from many GOPs in Congress were turned down by Trump vetoes. So, I think it will not be that hard for Biden to finally end this corrupt relation between Trump and MbS to end US support for this war.

Barkley Rosser 

Janet Yellen Will Be Treasury Secretary

 I have long been a great fan of hers as well as knowing her and her husband, George Akerlof, personally.  Back in 2009 I was the first person to call for her to be named Fed Chair. I am very pleased with this appointment.  This is as good as it gets. (For those who wanted Lael Brainerd, we need her at the Fed where all the current governors are Trump appointees other than her).  Elizabeth Warren also would have been good, but Mass has a GOP governor who would appoint her successor, not so good. Yellen is the best pick and will be great.

Barkley Rosser

The New Coup Attempt

 OK, I thought that the collapse of Trump's lawsuits and the flight of his top lawyers was going to do in his coup attempt.  But we now see a far more desperate effort going on, although with Trump still trying to stay at least marginally within legal boundaries, although not by much, and clearly trying every single thing he can do to block Biden's victory.  It is getting down to blocking certification of results in enough states so that even if he cannot get legislatures to approve pro-Trump electors, highly unlikely as illegal in all the swing states actually, but to have the situation undecided so that nobody goes from enough states so that when Electoral College votes on Dec. 14, Biden falls short of the necessary 270, which would then throw it to the House of Representatives, where Trump would win because a majority of the states have majority GOP representation, and the voting is by state. The last time the House determined the outcome was in 1824, when second place John Quincy Adams defeated first place in both popular and electoral votes Andrew Jackson, as Henry Clay threw his support to Adams in return for being appointed Secretary of State.

The sign of how desperate Trump has become is that even though GOP Sec of State in Georgia Raffensperger has certified that Biden won Georgia, in the face of calls for his resignation and death threats, that needs to be signed by the GOP Governor Kemp, whom apparently Trump is calling and pressuring not to sign off, again, the effort to simply have things unresolved as of Dec. 14.

Needless to say, the conspiracy theory pushed by Guiliani and Sidney Powell in yesterday's insane press conference is completely off the wall, that there has been a nationwide conspiracy to use Dominion machines to add votes for Biden in certain major cities, with the program coming from Venezuela via some antifa people where it was written originally to help keep Hugo Chavez in power. Wow. But only two GOP senators have stepped forward to denounce this nonsense: Romney and Sasse, with supposedly 70% of GOP voters still buying the story that the election was "stolen" from Trump, with this wild Venezuela theory the latest to support that, even as nearly all the legal cases have collapsed due to a total lack of any evidence.

The immediate focus of this new coup effort has been on Michigan, where Trump is encouraging the militias who have threatened to take over the state house and start executing "tyrants" on TV, most certainly including Gov. Whitmer.  For the first time in US history ever we nearly had a Board of Canvassers not certify a clear electoral outcome, this in Wayne County, which includes Detroit.  The two Republicans initially blocking the certification then backed off after pressure arrived, but with Trump calling them on the phone, they apparently want to go back to non-certifying.  But too late, all counties have now certified.  Which puts it up to the state board, which must act on Monday, Nov. 23, but one of the two GOP members there is talking about non-certifying, and Trump is meeting right now with the GOP leaders of the legislature, presumably about trying to get them to appoint pro-Trump electors in any case, in clear violation of existing law.  The only good thing there, aside from Biden having a 157,000 vote lead, is that apparently Gov. Whitmer has the legal authority to replace a member of the State Board of Canvassers, so hopefully if they do try to refuse to certify, she will act to make sure there is a certification. But the hard fact is that Trump is throwing everything he has to block Biden getting the 16 electoral votes from Michigan.

He has called for a recount in the two most Dem counties in Wisconsin, which is going on now and will probably not change Biden's 20,000 plus lead much.  But also he is playing to the state legislature and the Board of Canvassers to block Biden.  Apparently the legislature has no authority to do anything other than support the certified winner. The positive there is that ultimately it is the Chair of that board who certifies, and she is a Dem.  It is astounding that we are getting down to this.

He is making efforts in AZ and NV, but they do not look like they are going anywhere, although in AZ GOP is in control of the state machinery, so cannot yet be ruled out.

Which brings us to the big prize of PA, where Trump has been throwing more efforts, both legal and political, than anywhere else, well, with the possible exception of MI. Biden has a more than 50,000 vote lead, but the effort has been to block certification in Philadelphia and Pittsburgh (Allegany County).  He did get one of his few legal victories there, leading to over 2,000 absentee ballots in Allegany Cty not getting counted. But that will not overturn things there.  The gov and AG are Dem, but I am not sure who is in charge of certification at the state level, and Trump has been playing to legislators. There are more suits there still ongoing, with apparently 18 still nationwide, including at least one in NV, also trying to block certification.

It may be that MI and PA are Trump's best shots, unless he can get Gov. Kemp in GA not to sign off on the certification that has already happened there. If he can keep MI and PA from sending electors, Biden would still win with just barely 270, PA having 20 and MI having 16, with Biden currently leading with 306.  So if it is just those two, Biden will squeak in, although at this point I am now worrying that indeed Trump is so desperate he may yet try something else.  But he needs a third state, and I do not think it will be Wisconsin, with its good government traditions, despite some bad GOP actors there.  We may still be back to the He who wins Prairie du Chien, Wisconsin, wins the White House, but maybe only by a hair against a wildly extra-constitutional coup-like effort.

Barkley Rosser

Biden Won Because Of White Men?

 OK, I confess I am mystified.  An article in The Guardian by Musa al-Gharbi looks at the data now available on voting patterns in the US presidential elections of 2016 compared to 2020.  Almost all groups moved towards being more pro-Trump, including both Black men and women, Hispanic men and women, Asian men and women, and white women.  The only group that moved away from Trump was white men, with his margin declining from 31% to 23%.  It is true that the minority groups overall supported Biden more than Trump, but they did so by smaller margins than they supported Clinton over him in 2016.  Some sub=groups of minorities actually favored Trump, including Cuban Americans and Vietnamese Americans.  The only sub-group moving away from Trump was Japanese Americans.

In terms of swing states, the move of Hispanics toward Trump gave him Florida and Texas, and the move of Blacks toward him gave him North Carolina. However the flips of Michigan and Arizona were led by shifts of white men.

As I opened, I really do not know what is going on with all this, although the article noted that most of these trends have been going on for some time, if not especially noticed before.

Barkley Rosser

Will President Biden Scrap GILTI?

Congratulations to Brad Setser for being selected to be the Agency Review Team for the Office of the United States Trade Representative. I’m curious, however, as to his views on certain aspects of President Elect’s proposals with respect to corporation taxation. There was lots to criticize as to the 2017 Tax Cuts and Jobs Act. Conservative economists were correct to note that it made corporation taxation more complicated. Progressives objected to the dramatic reduction in corporate tax rates. Biden wants the statutory rate raised to 28%. He also is not happy with certain aspects of the Global Intangible Low-Tax Income (GILTI) provisions. Brad Setser ties trade policy and international taxation in a post that brings up transfer pricing abuse. The Cliff Notes version of his insights is that Big Pharma may source production of these new coronavirus treatments in places like Ireland so that they can abuse transfer pricing to make sure their high profits face low tax rates even if the patient is American. My understanding of all that BEAT, FDII, and GILTI jazz was to shore up transfer pricing enforcement by complex legal schemes. Conservatives can rightfully complain that all these legal complications make compliance by multinationals just trying to pay their fair share of taxes very costly. Progressives will note that the large multinationals who want to avoid US taxes find clever means around these silly rules. And to add to our woes – these bizarre rules frustrate our allies abroad who will respond with their own complex rules both in trade and tax issues. Maybe a simple idea might be for all parties involved including our foreign allies to sit down and scrap these legalese and simply get back to enforcing the arm’s length standard using sound economic principles. Just saying.

New Reasons To Believe Trump Will Not Attempt A Coup

 Officially Trump continues to hold a hard line of denying he has lost, with most GOP officeholders continuing to support his denials publicly, and he is likely to continue to not officially concede in various ways, including such as blocking official support for the transition process to a future Biden admin, which is potentially damaging in various ways.  Nevertheless, after some important developments in the last day or so and Trump's presser today (well, technically yesterday as it is now early morning on Saturday, Nov. 14), I think there is good reason to believe that whatever irresponsible and damaging things he may yet do, I think it is now seriously unlikely that he will attempt a coup to block the transition.

I think the most important development that has triggered this is one I did not foresee: the sudden withdrawal of law firms supporting his legal efforts to demand ballots to be thrown our and to block certification of results, with those efforts becoming less able to overturn the electoral results given the calling of both Arizona and Georgia for Biden. A crucial part of the scenario I posed was Trump piling on endless lawsuits, however frivolous and vacuous, in various crucial states in a way to block clear certification of results in those states, leading ultimately to a confused or contested outcome when the Electoral College votes in mid-December, all of this opening the door for him to refuse to step down while bringing in various forces to support him.  

What I did not know is that courts can punish attorneys for bringing clearly ridiculous lawsuits, especially repeatedly, with judges able to actually throw them in jail for contempt of court, not to mention them possibly losing their licenses to practice.  Add all this to just more general public embarrassment as these suits became increasingly absurd, we have now seen several major law firms that were making these suits for Trump decide to withdraw from doing so.  This has crucially undercut Trump's strategy, such as it was.  He has always liked to sue and sue and sue, but I do not think he has ever so overdone it that his own lawyers have abandoned him.  But they have been doing so now, and I think this is the bottom line fatal development for any coup effort by him, with others supposedly under his authority in various parts of the government beginning to openly refuse to do his bidding.

On the sort of positive side is this alternative that he has been reportedly increasingly considering seriously, to let Biden get in, even if he continues not to allow a proper transition and engages in other inappropriate and damaging conduct, but not to concede and continue to claim he deserved to win, but then to use this as a basis for running for president in 2024.  For various reasons, such a run may well run into serious problems quite quickly once he is out of office, but the hope to be able to do so, bolstered by his 89 million Twitter followers, may be sufficient to allow him not go to the extreme move of trying to remain in office by means of a coup.

While he certainly did not clearly concede in his remarks in his presser (in which he showed up with gray/white hair with the orange gone), one aside remark suggests he knows that the end has arrived.  In talking about future Covid policy, he referenced "whatever administration will be in charge" after Jan. 20 to carry out the policy, obviously a recognition of the possibility it might not be his administration.  Let us hope indeed that the reality he has lost the election really is penetrating and Donald J. Trump will not attempt to remain in power via a coup.

Barkley Rosser

Project Perjury

The Washington Post has a story about the Erie, Pennsylvania postal worker who claimed to not have not recanted his fantasy about overhearing a conspiracy to backdate ballots. For some unknown reason Project Veritas thinks the audiotape of the postal worker's interview with investigators from the Post Office Inspector General's proves the opposite of what it does. There is no coercion in the interview. The investigators repeatedly advise Hopkins of his right to not speak to them and his right to have a lawyer present. And in no uncertain terms, he recants his affidavit story, even claiming he didn't read what the Project Veritas lawyers had written for him to sign.

Of course the MAGA cultists commenting on the Youtube audio are aghast that an investigator would ask a courageous whistleblower questions in a way that makes him think twice about what he had sworn to in an affidavit. I would copy and paste the Washington Post article here but I don't want to violate copywrite. I'm sure it will show up in comments.

Is Trump Going To Attempt A Coup?

 I realize that Joe Biden just held a press conference where he basically dismissed the refusal of Trump and a lot of other Republicans to concede the presidential election to Biden as "embarrassing," laughing at SecState Pompeo who earlier today talked about a transition to a second Trump term, and said it will all be over and fine by Jan. 20.  Maybe, but I am somebody who has taken seriously for a long time words from people like Michael Cohen and more recently Mary Trump who have said he simply will not go willingly and will continue to refuse to accept defeat.  I have watched various commentators supporting him from time to time thinking, "Will they support him if he declares martial law?"  Unfortunately, I think a lot of them will.

He certainly is laying the groundwork for making an attempt. The obvious such sign was yesterday's firing of SecDef Esper, reportedly because Esper made it clear in June he would not order US troops to move on peaceful civilian demonstraters in Washington.  Rumor has it he is about to replace the FBI and CIA directors also. And the Undersec of DOD is also out.  It certainly looks like he is trying to stock the top levels of the military and intelligence establishment with total toadies who will do his bidding.  If he makes the move and invokes the Insurrection Act or simply declares a National Emergency, which, frankly, is in his legal power. Will these newly installed flunkies stand up to him?  Who will?

I am seriously worried about this, and the more I see people like Mitch McConnell and Sean Hannity just spouting rank lies about the election, my concern grows.  I hope I am wrong, but I am now afraid we may be facing a very serious showdown over this, and I see the refusal of certain foreign authoritarian leaders friendly to Trump, such as Putin, not accepting the result, as a sign that they would support him if he made such a move, and we know he really likes and admires those guys.  This is a very bad situation.

Barkley Rosser