Friday, September 28, 2012

Bitter Clingers, 47%, and is it Always About Race?

Since the Romney video is all in the news, I was going to write a fairly conventional post on it, comparing it to Obama's bitter clingers speech, as so many others have.  Both speeches, after all, were a candidate speaking to wealthy donors, making disparaging remarks about large number of ordinary Americans.  Obama's bitter clingers remark has done him more harm, over the long run, than his associate with Jeremiah Wright.  How Romney's speech will affect him remains unknown, of course, but it certainly confirms a lot of people's worst stereotypes about Republicans.  So the comparison is apt.

But this exchange convinced me that there is more going on here than meets the eye and that another issue has to be addresses -- that of race.  So let me start out with my conventional analysis and then move on to race.

Comparing the insult:

Obama started out with what was actually a promising beginning:
You go into some of these small towns in Pennsylvania, and like a lot of small towns in the Midwest, the jobs have been gone now for 25 years and nothing's replaced them. And they fell through the Clinton administration, and the Bush administration, and each successive administration has said that somehow these communities are gonna regenerate and they have not.
This would actually go over well -- if he proposed to do something about it, or acknowledged that he didn't know what to do about it but would make it a priority, or told his donors that until the Democratic Party can offer something to the small town white working class, it has no business expecting their votes.  But then, of course, he added:
So it's not surprising then that they get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations.
Contrast that to  Romney::
There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you name it. That that's an entitlement. And the government should give it to them. And they will vote for this president no matter what. And I mean, the president starts off with 48, 49, 48—he starts off with a huge number. These are people who pay no income tax. Forty-seven percent of Americans pay no income tax. So our message of low taxes doesn't connect. And he'll be out there talking about tax cuts for the rich. I mean that's what they sell every four years. And so my job is not to worry about those people—I'll never convince them that they should take personal responsibility and care for their lives.
Romney is clearly  insulting a large portion of the population.  I agree with Rich Lowry's analysis -- that Romney is lumping together three disparate groups -- the ones who regularly vote Democratic, the ones who don't pay income taxes, and the ones who receive government benefits -- and writing them collectively off as a lost cause.  This is a highly offensive argument.  I am also inclined to agree with Lowry that Romney is picking up unrelated conservative concerns and lumping them together without really understanding them.  But in this he is doing no different than countless other popularizers and vulgarizers do all the time.

Obama, by contrast, is trying to "understand" and encourage his donors to "understand" people he doesn't understand at all.  He is equating what many people proudly hold up as virtue with social pathology.  His remarks are properly offensive, but more ignorant and patronizing than deliberately hostile -- or so I believed until just recently.


Conor Friedersdorf has wisely that the damage in remarks like this is not just in their insult to large portions of the population.  It is also in showing that what candidates say in closed meetings of donors is not what they say to the general public.  People jump to the conclusion that they are simply lying or pandering to the general public, and the what they say in secret to donors is what they really believe.

I have no doubt that Obama really meant what he said in the "bitter clingers" speech.  He was, after all, not just pandering to his donors.  He was asking them to move at least a little beyond their comfort zone and show at least a little understanding for how some people might be so benighted as to disagree with them.  Romney, by contrast, was telling his donors what they wanted to hear, so there is no way of knowing whether he actually meant it or was just pandering.  (See Lowry, above, for an excellent case that he was pandering).

I am less clear, however, which candidate this reflects less favorably on.  It is sort of like the Ron Paul news letter controversy.  Which is worse, that Ron Paul believes all the paranoid lunacy in his newsletters, or that he doesn't believe it, but panders to people who do?  Which is worse, a candidate who sincerely believes offensive things about his fellow countrymen, or one who merely pretends to to pander to wealth donors?


But to some people, it all comes down to race.  Is the critical part of both speeches race?

I will start with Romney.  No, I do not believe that his comments were intended as a plausibly deniable appeal to racial resentment, for two reasons.  First, he was speaking at a closed gathering of donors.  There is no need to maintain plausible deniability in closed meetings.  Second, wealthy donors don't have racial resentments, at least not ones that they will admit to, and don't want even plausibly deniable appeals to racism. The resentment of the upper class against the perceived laziness and irresponsibility of the lower is longstanding and independent of race.  On the other hand, I suspect his remarks will do him less harm than they ought.  Yes, a great many Republicans fall within the 47%, either who don't pay taxes or who receive some sort of government benefits.  But my guess is that they don't see themselves as within the nearly half of the population who will never "take personal responsibility and care for their lives."  My guess is that most Republican voters, including ones who pay no income tax, assume that Romney was talking about someone else, and probably not someone white.

I had long been baffled by the people who described the "bitter clinger" remark as an expression of hate and intentional insult.  Yes, it was offensive.  Yes, patronizing.  Yes, it essentially dismissed religion as the opium of the masses.  But actual hate?  But this was what finally clued me in to the real reason the remark has stuck to him.  It wasn't the remark about clinging to guns and religion.  It was the part about clinging to " antipathy to people who aren't like them or anti-immigrant sentiment."  Bingo!  A lot of people took this as an accusation of racism.  And the same people tended to think both that false accusations of racism are rampant, and that they are the dirtiest form of politics possible.  What am I to make of that?

First, I don't think Obama was trying for plausible deniability for the same reason that I don't think Romney was.  There is no need to maintain plausible deniability in a closed meeting of donors.  On the other hand, yeah, I do think it is possible that he was making an accusation of racism, or at least nativism towards at least some rural Americans.  But, contrary to my conversation partner at the link, I certainly do not think he was casting his net anywhere near as broadly as Romney.  He certainly wasn't saying that nearly half the population were racist (or nativist).  He was making the accusation toward a (deliberately) ill-defined sub-group.  But then there is another little awkward fact.  Yeah, probably racism (or nativism) does play some role in the world view of some people, especially the more passionate anti-immigration types.  I also believe that small town virtues (the guns and religion, representing, as they do, a closer knit, more personal, more human society than Obama's donor base) are inseparable from small town vices (antipathy toward outsiders not part of the tight-knit community).

So I suppose you could say advantage Romney, who was not talking about race, over Obama who may have been remotely raising the subject.  But I do not believe that racism was Obama's primary emphasis.

Tuesday, September 25, 2012

Update on Ryan in Krugman's Taxonomy

Apparently I was wrong.  Paul Krugman has said any successful Republican candidate has to be totally clueless or totally cynical.  He hadn't classified Ryan, but I was betting on cynical because Ryan keeps posing as a deficit hawk and offering numbers that just don't add up.  But Krugman's latest column suggests that maybe Ryan actually believes his numbers, in which case he would fit in the clueless category.

Maybe so.  But I find it encouraging that Republicans at least no longer want their candidates to appear clueless.

Thursday, September 20, 2012

Foxes, Hedgehogs and Economics

I'm still struggling with this foxes and hedgehogs concept. The hedgehog, as I understand it, is a specialist, whether at curling up into a ball or whatever.  A fox is a generalist.  In terms of conceptual analysis, a hedgehog has a fixed template and plugs the facts in to form an answer.  A fox gathers up to facts and assembles them to form a template.  In the field of punditry, foxes regularly outperform hedgehogs. People who attempt to apply a single ideological template to all situations invariably find that the facts confound their predictions. People who look at the complex facts of each individual situation and and analyze them separately do better.

But there are other fields more favorable to hedgehogs.  Science, for instance, is a hedgehog-y discipline.  Scientists discover scientific laws that apply in all instances, with no exceptions.  But the hedgehog approach to science has its limits.  Scientific laws with no exceptions apply better the simpler the system being studied.  The more complex the system, the more it starts calling for a fox-like analysis.  Journalistic hedgehogs are trying to make punditry into a science, but the system they are studying is too complex.  When the hedgehog template applies to a particular situation they can be impressively right and come across a predictive geniuses.  But because reality is much too complex to fit into anybody's ideological mold, they are wrong most of the time.

Which leads to the subject of my last post, Scott Sumner.  Sumner is a hedgehog's hedgehog.  He has a one-track mind.  He reduces everything to monetary policy.  He even compares himself to the man with the hammer who thinks everything looks like a nail.  It is maddening.  To use an overworked metaphor, it is as if someone noticed that cars go faster when you push on the accelerator and slower when you hit the brake and so reduced everything about their speed to the brake and the accelerator.  There are clear disadvantages to this approach.  Suppose a car is going up a steep hill into a strong headwind and the driver has floored the accelerator, but it is still losing speed.  If you reduce everything to brakes and accelerators, hard money guys will see the accelerator floored be certain this is madness and you have to hit the brake fast or the car will careen wildly out of control.  Sumner will look at the speedometer, notice the car is losing speed, and say no, you have to hit the accelerator even more.  Hard money guys will be baffled as to how you can floor the gas and not run out of control, and Sumner will have no other answer than that the car is not, in fact, running out of control, so the brake is not needed.  The conversation would be a whole lot more productive if you could introduce concepts like "hills" and "wind" to explain why what is appropriate in one circumstance is wrong in another.  And this is what Sumner refuses to do.  And yet he seems to be getting a whole lot right.

So, granting that science is advantage-hedgehog and punditry is advantage-fox, which is economics more like?  Economics, after all, is considered the most "scientific" of the social sciences, but still not a true science.  Is it "scientific" enough to allow room for successful hedgehogs?  The best I can suggest is that certain basics in economics, particularly monetary economics, show something like a scientific rigor.  Printing too much money causes inflation.  To little money chokes off credit, with severe detriment to the real economy.  Deflationary pressure causes distortions and depressions.  Over-valued currencies are devastating to an economy.  These conclusions, at least, are consistent enough to allow reliable hedgehog predictions.  And what of Sumner's theories of nominal GDP targeting?  We may soon find out.  My guess, though, is that it will all turn out to be more complicated than he foresaw.

Friday, September 14, 2012

Milton Friedman is Being Zen, But the Empirical Evidence Supports Him

So, now the Federal Reserve has vowed to undertake an open-ended QE.  In other words, they will continue their monetary expansion until it gets results. (They did not specify what results).  Ben Bernanke speaks in terms of lowering interests rates in order to encourage more investment.
I must say, though, that I am following this through the eyes of Scott Sumner, the economist whose blog, The Money Illusion has regularly been calling for the Fed to target a certain rate of nominal GDP growth.  Sumner has an entertaining sense of humor and a somewhat annoying one-track mind on the subject (he has himself admitted that he positively invites jokes about the man with the hammer thinking everything looks like a nail) and a much over simplified tendency to reduce all macroeconomic performance to monetary policy.  In this he copies Milton Friedman whom he greatly admires.

In particular, he is fond of pointing out that Friedman warned that low interest rates are not, in an of themselves, proof of easy monetary policy.  Quite the contrary, he likes quoting Friedman as saying that high rates are a sign that money has been too easy and low rates are a sign that it has been too tight.  Of course, people like me don't believe that everything Milton Friedman says is infallible holy writ.  To us "because Friedman said so" just doesn't cut it as proof.  The quote just sounds like Milton Friedman trying to be Zen.

So if I don't believe that Milton Friedman is infallible holy writ, what would I accept as proof.  How about empirical evidence?  And then the empirical evidence started to materialize.  Sumner said that very low interest rates are a sign of tight money, and that monetary expansion would raise them. It seemed very counter-intuitive, but a funny thing happened.  Every time the Fed announced a QE program, saying it would lower interest rates, interest rates responded by rising.  When the QE expired, interest rates fell again.  It was counter-intuitive, but it was happening.  And, once again, no sooner has Bernanke announced an open-ended policy of QE, then interest rates go up again.  Who am I to argue with empirical evidence?

Still, it wasn't enough for me to accept, "Because Milton Friedman says so, that's why."  Given that the empirical evidence was supporting a very counter-intuitive conclusion, I wanted to figure out why.  Why too-easy money would lead to high interest rates was obvious.  Too-easy money leads to inflation.  Nominal interest rates are necessarily high under conditions of high inflation just to stay ahead of it.  This was certainly born out in the 1970's when too-easy monetary policy did, indeed, lead to high inflation and high inflation led to high (nominal) interest rates.

But why are low rates a sign of too-tight monetary policy?  Well, let's start out by conceding that tight money conservatives have a point.  Interest rates these days really are pathologically low.  Their mistake, though, is in blaming our economic problems on too-low interest rates.  That confuses cause and effect.  In other words, our economy is not in bad shape because of pathologically low interests rates.  Interest rates are pathologically low because we have a depressed economy, i.e., because there is not enough borrowing.  Since I'm so fond of empirical evidence, what is the empirical evidence that interest rates are pathologically low because of a depressed economy and not because of too-easy monetary policy?  The main evidence is that every time there is a crisis of some kind, interest rates respond by falling without any action by the Federal Reserve.  Some of the things that have prompted falling interest rates have been about as counter-intuitive as you can get.

Japan, after two decades of running enormous deficits and debt, had a devastating earthquake, tsunami and nuclear power accident.  All of this will necessarily require yet more borrowing in a country with a national debt twice its GDP.  So how did markets respond?  Well, not too surprisingly, the Japanese stock market fell.  More surprisingly, the bond market did not.  In fact, investors responded to the news that Japan would have to take on huge new debts by fleeing to the safety of Japanese treasury bonds, causing interest rates to fall.

The US, by contrast, suffered a completely needles and self-inflicted wound over the debt ceiling.  The President and Congress had a long, pointless standoff with Congress threatening to force the US into a completely unnecessary default.  Moody's lowered the US credit rating on the grounds that our political system was too broken to hand even basic budgets.  So how did the markets respond?  Once again, unsurprisingly, the stock market fell.  Once again, surprisingly, the bond market did not.  The threat of default on the US debt led investors to dump their stocks and flee to the safety of US treasury bonds, causing interest rates to fall!

The various fiscal crises Europe has experienced have also led to falls in interest rates without the Fed acting, although that is not particularly surprising.  The conclusion that I would draw from this does, indeed, appear to be that our current, pathologically low interest rates are mostly the result of a depressed economy, which makes investors risk-averse, rather than too-easy monetary policy.

So Sumner, Friedman, and the empirical evidence have gotten me three-quarters of the way there, anyhow.  They have convinced me that too-easy money necessarily causes inflation and inflation necessarily causes high interest rates.  They have also convinced me that a depressed economy causes abnormally low interest rates.  So the big question is: is a depressed economy necessarily the result of too-tight monetary policy.  Or, at the very least, is our current depressed economy the result of too-tight monetary policy?  Friedman and Sumner say yes.  The empirical evidence, that interest rates go up whenever the Fed undertakes more monetary expansion, suggests that it may be true.

But somehow I can't quite be sure.  So my reaction to the Fed's announcement is one of guarded optimism. If it really does finally revive the economy, I can take it as filling in the final piece of the Friedman/Sumner puzzle and showing that the depressed economy is the result of too-tight money.  I just need a little more empirical evidence to be convinced.

Wednesday, September 12, 2012

My Suggestion on the Budget

Let's face it.  The budget process is seriously broken.  The problem is simple.  The American people hate deficits and government "spending," but are not willing to give up any services.  They simply don't see "spending" (let alone taxes) and services as connected.  Hence proclamations that one intends to massively cut spending and balance the budget are as popular as actual concrete proposals are unpopular.  And you get things like Mitt Romney saying he will balance the budget, but he won't say how because that would be unpopular.  Republicans have tried for a long time to cut Medicare costs, only to have their attempts demagogued by by Democrats.  Now Democrats are have made the attempt to control Medicare costs, only to be demagogued by Republicans.  But don't worry, Democrats are demagoguing right back.

One might compare it to emperor penguins gathered on an ice shelf, knowing that someone has to jump into the ocean, but not wanting to be the one because there might be sharks out there.  But actually it is a good deal worse.  In this case, the penguins are gathered on the ice shelf, knowing that someone has to jump in, but also knowing that as soon as one penguin jumps in the others will turn into sharks and eat it!  Appointing a bipartisan commission to come up with a plan to balance the budget has signally failed. The differences between the parties are simply too great. And neither party dares put forth anything like a realistic plan to balance the budget for fear of sharks.  It doesn't help that the deficit is artificially enlarged now because of bad economic times, but even if the economy recovered tomorrow, the deficit would be much too large.

So here is my plan, similar to what I proposed before.  Stop looking for a bipartisan agreement on how to balance the budget.  Admit the parties are just too far apart.  Instead, agree on certain ground rules of what a reasonable plan to balance the budget would mean.  I personally would favor the following:

  1. The plan will be developed now, but not implemented until some pre-determined criteria of economic recovery.  Once those criteria are reached, the plan will go into automatic effect.
  2. Only structural, not cyclical, deficits need be eliminated.
  3. The budget must balance in approximately 10 years, not more or less.
  4. Balance must be certified by the Congressional Budget Office (CBO), not some partisan outfit.
  5. The plan need not lay out every minute detail, but must be specific enough that people have some idea what is being cut, (i.e., and cut everything but Medicare, Medicaid and Social Security to a quarter its current size is not specific enough).
  6. Social Security revenues and expenditures need not be brought into balance within 10 years, but should be on the course to balance by the time the purported trust fund runs out.
These are my preferred rules; no doubt some alternate set could also be made to work.

Let each party work out its plan under the agreed-upon rules, and let the CBO rate the plans and determine if they work.  Then let the two parties run against each other, with the agreement that the winner's plan will be implemented.  Let the plan then be passed in the lame duck session.  Only by being forced to choose between two unpalatable alternatives, rather than one alternative versus all-out opposition, will the American people ever be made to submit to the discipline necessary to balance the budget.

Sunday, September 9, 2012

Where Does Ryan Fit on Krugman's Taxonomy?

Paul Krugman has proposed a taxonomy for Republican candidates seeking public office.  To espouse the counter-factual beliefs that make one a loyal Republican, a candidate must be either totally clueless (Bachman, Perry, Cain) or totally cynical (Romney, Gingrich). But then Rich Santorum called  that rule into doubt by being neither clueless nor cynical, just crazy.

So if a Republican politician these days has to be either clueless, cynical, or crazy, where does Paul Ryan fit in?  Well, as the wonkiest of all Republican wonks, Ryan certainly doesn't seem clueless.  And with his passionate advocacy of balanced budgets, he comes across as absolutely sincere and not at all cynical.  And, unlike Santorum, Ryan's whole manner of earnesty, sincerity and reasonableness seems incompatible with him being crazy.  And yet his budget numbers just don't add up. It relies on doing things like assuming Obamacare's reductions to Medicare (and then denouncing those reductions as an outrage at the convention); turning Medicaid and Food Stamps into block grants to the states and making deep cuts to them while pretending that people will not be denied benefits as a result; and assuming that spending on everything but Social Security, Medicare, Medicaid and S-CHIP will fall to 3.75% of GDP while Mitt Romney promises to maintain defense spending at 4% of GDP.  So clearly Ryan is proposing some things that are, at best, factually dubious.  Does that make him clueless, cynical, or crazy?

Ryan projects wonkiness, sincerity, and rationality so well that it is hard for me to tell.  I will say, though, that Krugman, whose judgment has proven to be impressive, is betting heavily on cynical.

Eastwood, Party Conventions, and the Story of O

I did not watch either party's political convention, merely read the reports.  The general consensus on the Democratic Convention is that Michelle Obama gave an excellent speech, Bill Clinton gave an outstanding though overly long speech that managed to be simultaneously folksy and wonky, and Barack Obama gave an okay speech that just didn't measure up to the other two.

The general consensus on the Republican Convention is that Clint Eastwood ranted incoherently at an empty chair -- oh, yes, and some politicians gave politician speeches.

When started college, I had no idea that The Story of O was a notorious pornographic classic, so I missed the double entendre when we were shown a film by that name about racial/ethnic/gender/etc. discrimination.  It portrayed the discriminated against group generically as an O surrounded by X's.  The presentation was a generally trite and superficial warning about the evils of discrimination that is not worth remembering.  One part did stick out in my mind, though, as memorable and genuinely valuable.  First, the screen showed various pictures of a group of X's with one O, and showed them moving around and changing positions.  What I saw was a bunch of X's with one O.  The O stood out as conspicuous; the X's all looked the same.  Once they took the O out and showed only X's, things changed.  Suddenly, the individual differences between the X's became noticeable.  Some were larger and some smaller, some thicker and some thinner.  Some had one cross-bar thicker than the other, and others had the other cross-bar thicker, while some had cross bars of equal thickness.  Without an O, the X's stood out as individuals.  With an O present, the X's were just X's, their individual differences submerged in their obvious difference from the O.

When your convention consists entirely of politicians making politician speeches (political wives count as politicians when giving speeches on behalf of their husbands), then people retain some memory of who said what and who made what impression.  When your convention consists of politicians making politician speeches and an old man ranting at a chair, the differences and even content of the politician speeches tend to get overlooked.  They just seem like any old speech given by any old politician..  What really stands out is the old man ranting at a chair.  So I suppose the question is which image is you think is more useful to your party.

Monday, September 3, 2012

Dog Whistles and Plausible Deniability

New category; The Joy of Lex, in which I examine words, language and how they are used.

In this post, I mean to talk about two different devices used in political speech -- the dog whistle, and plausible deniability.  These are often confused because they are both forms of double meaning.  But they use of double meaning differently.

A dog whistle is so-called because dogs have a different range of hearing than humans.  In particular, they can hear higher frequencies, so that actual, literal dog whistles exist that dogs can hear but humans cannot.  A dog whistle statement, then, is one that has one meaning to the general public and another, covert, meaning that only a small number of insiders recognize. The goal is to convey a hidden message to a select group of listeners that the general and journalistic public miss.

Plausible deniability, on the other hand, is a statement with two readily apparent meanings, one offensive and one inoffensive.  When a politician makes such a statement, both meanings are clear, not just to insiders, but to the general and journalistic public as well.  Indeed, the whole point of plausible deniability is to be called out for the offensive meaning and then whine that one is being unfairly accused by the liberal media.

One point here, then, is that dog whistles are generally not about race.  Indeed, our society has become so absurdly hypersensitive about race that racial dog whistles are almost impossible because almost anything can be said to have a veiled racial meaning.  I have even heard questions about whether Obama is too skinny to be President interpreted as a coded racial appeal. 

So if you can't get even to most covert racial comment past the public, what is a genuine dog whistle?  When George W. Bush criticized Dred Scott as an example of judicial activism, that was a true dog whistle.  The right-to-life crowd immediately understood that he was comparing abortion to slavery.  Outsiders were simply baffled.  Paul Ryan may have pulled off a brilliant dog whistle in his convention speech, when he said, "[T]he greatest of all responsibilities, is that of the strong to protect the weak. The truest measure of any society is how it treats those who cannot defend or care for themselves."  The face value meaning of that statement, the way it is most likely to be interpreted by the general and journalistic public is as a promise not to balance the budget on the backs of the poor, even though his budget plan proposes to do just that.*  But it has been suggested (alas, can't find the link) that this is actually a dog whistle, having nothing to do with the poor or social spending, but as a call to protect the unborn from abortion.  If so, then THAT is a highly successful dog whistle.

By contrast, an example of plausible deniability is Mitt Romney's claim that Obama gutted welfare-to-work requirements.  The racial subtext is clear.  But let's face it.  The main point of making such a comment is to make the racial subtext clear. Google "racist dog whistle."  Most of the links are of conservative sites complaining about the unfair accusations.  Some complaints are well-founded (See "Obama too skinny" above).  But with comments like one about gutting the welfare-to-work requirement, it is hard to see them as anything but attempts to provoke an accusation of racism in order to be offended by it.  And that is not, by any reasonable standard, a dog whistle.

*Well, to make the poor bear the brunt of spending cuts, anyhow.  No doubt the tax cuts, defense increases, and exemption of Social Security and Medicare will prevent the budget from actually balancing.