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March 29, 2021

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The long-form article is really long, over 9 thousand words, but interesting. I'm still working on it.

It's an epic for sure. If you pick and choose, you can find almost any argument you want in there, though the bulk of it is Variations on a Theme titled Both Sides Do It. She is correct that mutual dehumanization is a deadly road, but examples like equating McConnell blocking a vote on Garland with Democrats giving Ford a platform to voice her accusation against Kavanaugh and her crafted version of the investigation of Carter Page aren't as compelling as she thinks.

the world looks like, to me at least, one power of one constituency is slowly ebbing but they are not going down without a fight. However, the constituencies whose power is waxing have problems because replicating the way power has been taken in the past merely replaces the group on the top with another group, leaving the problematic social relations intact.

I would say that it's more that one political group has moved (or, if you wish, been moved) way far from the center. Which is causing them an entirely predictable waning of political power. And they are fighting the losing fight with increasing desperation.

Meanwhile, the other major political group has expanded, not least because of sane people leaving the first group. As a result, they really don't so much represent liberalism as "everything to the left of flat out reactionary." There's still a center, it's just deeply imbedded in one group. Which makes it much more difficult that you might, at first, expect to implement their traditional agenda -- the constituency for that agenda hasn't really grown as overwhelming as the raw numbers might suggest.

There has been a shift in the center. Therefore some bits of the traditional liberal agenda will doubtless get enacted. And be embraced by the population at large. Just not as much as the traditional left naively expected -- frustrating, that.

I'm still working to get through the whole thing, but it's a slog, especially because it seems her only point to make is that "Trumpers" and "The Woke Left" are intolerant of each other an of "The Center" and that "The Center" is our only hope.

Except that in insisting this she fails fundamentally to listen to or to take seriously any of the groups that she is insisting need to return to playing the good faith game of the center as if there is good faith, and as if the needs and desires of these groups will be served by the political process. I am not at all sure that either of those last two are present in our political situation.

Also, she argues that "The Left" has been too reliant on technocrats and the courts in trying to solve the problem of what to do about Climate Change when what's needed is working for a political consensus. We've seen that particular solution at work, though, for the last year in our response to COVID, and what we are looking at is a process whereby the side opposing the scientific consensus is, through their reticence, literally killing people that need not have died. I do not see how Climate Change is fundamentally different.

The problem is not, as I see it, that right and left have decided to demonize the other side and have abandoned the center out of spite. The problem I see is that the particular set of priorities and concerns that came to define centrist US politics from Reagan through Bush II and into the Obama years have proven themselves ineffectual for dealing with a whole host of issues that cluster around race and gender and how those things relate to prosperity. The Reagan Era Center offers nothing more in the way of solutions. It's hit stalemate, and the people on the right and left who are no longer engaging have done this because the game rules offer no solution for them.

In Game Theory terms, the center is broken with respect to social justice and to traditional notions of a society grounded in patriarchy and religious fundamentalism respectively.

She sees Donne, but she fails to see that Donne cannot offer consolation while Yeats resonates so strongly.

The center cannot hold.

We need a new center. One that isn't broken. And to find that center you have to cut loose one or the other of the old poles that defined the center.

"In Game Theory terms, the center is broken with respect to social justice and to traditional notions of a society grounded in patriarchy and religious fundamentalism respectively."

While there is lots to unpack here, the opposite of this is true. This assumes as fact that the center is broken. That certainly isn't the problem. The perception on both poles that they are the center is the problem. It allows both sides to caricature the other while both disdain the center as being, by not agreeing with them, part of the other pole.

The perception on both poles that they are the center is the problem.

I really don't know any advocates on the left who believe that they are the center. I know many who believe that they are in the right, but that is not the same thing.

Likewise, I don't think that any of my religious right relatives think of themselves as the center. They think of themselves as the faithful remnant fighting for godliness.

If you want to actually discuss my framing of the issue, then we can do so. If you just want to try to recharacterize it in a way that fits your own perception of things, then I'd like to see you actually develop your argument and not mischaracterize my own.

The problem I see is that the particular set of priorities and concerns that came to define centrist US politics from Reagan through Bush II and into the Obama years have proven themselves ineffectual for dealing with a whole host of issues that cluster around race and gender and how those things relate to prosperity.

that center no longer exists in DC.

the GOP has run so hard to the right that there's no Congressional bi-partisan centrist caucus. there's the GOP Culture War Theater Troupe and the Dems trying to do big things because it's a waste of time trying to do little things.

If you think of a see-saw, the center is 'preserved' if you move equal numbers to each end. Which is what you have here, I think. The question is who moved first? I'd suggest that the inexorable demographic and societal changes (*1st black president* cough cough) have those on the other side moving further over cause they don't like the way things are changing. That causes the reaction of people moving more out to the left and the complaints of moving to fast from people like the author.

I'm on the left cause I feel the center has to move. It would be great it if moved gradually and people got used to it and didn't put up a huge fuss. But when you have demagogues who use any change in the status quo to imply a threat to the majority (transgender sports anyone?), you are going to get a tad more vigorous debate. Get Cruz and Hawley, Carlson and Fox to shut up and then we can talk about preserving some 'center'.

To pick at some of the background, she complains a lot about academia and tries to shield herself by invoking King criticizing the church. It's a nice move, but when your research field is the military applications of technology and the rise of the military-industrial complex, I'm not really sure she's on firm ground.
https://www.journals.uchicago.edu/doi/10.1086/684670

Now, I think that is part of academia, and I appreciate when she writes
I’m a history professor, and I love what academia is supposed to be: a gift that society gives to itself, a space with an unusual degree of insulation from market forces and pressures for immediate results, which in return is supposed to generate the knowledge and provide the education that a vital society wants and needs.

Ok, cool, but if you are going to do the history of the torpedo and not question why we have torpedoes in the first place, there is a bit of a problem. I'm in a strange place as an academic, in Japan where it is really a simulacrum of academia in the West, but while you can search for knowledge for its own sake, if your research ties you too closely to the powers that be, no matter how eloquently you argue for its separation, you are probably going to get pulled down.

Anyway, that's my morning take on this.

The perception on both poles that they are the center is the problem.

Do you see yourself as being in the center?

If you think of a see-saw, the center is 'preserved' if you move equal numbers to each end. Which is what you have here, I think.

Except that politics are less like a line and more like a plane. And "equal" means "equal in effect" which means that all the different thumbs on the scales from gerrymandering and voter suppression and the electoral college and whatnot. So some people have more political "weight" than others.

And the GOP's efforts at this time have mostly to do with trying to find ways to rig the voting systems to add "weight" to their side so that they can keep balance in their favor despite the mounting demographical challenges.

Nous, sure that this is why intersectionality is so helpful in examining issues and possibly why conservatives are so against it, because it would demand a more considered analysis (I'm sure you realize this, I'm just talking for the benefit of the class as it were)

I'm not an optimistic person, but I think that the right has really gone way too far and there will be no way back. It's interesting because in earlier times, conservatives would have been happy to remain relatively anonymous, but modern culture that equates value with visibility (and monetizes that) ends up having them put more of themselves out in front and thus garnering a much stronger pushback, imo.

The perception on both poles that they are the center is the problem.

Do you see yourself as being in the center?

To the first point, I think that the problem, or at least a significant part of it, is that one side does NOT perceive themselves as the center. They feel that they used to be the center, but have lost that.

As for the question (and assuming that it was a general one, rather than just directed to Marty): I see myself as slightly right of center. Although the center is shifting left**, so I'm probably a bit further from the center than I think.

** Partly from views changing because of perceptions that old solutions aren't working. (Regardless of whether the individual thinks they ever did.) And partly in revulsion at the way the right is advocating for some of their positions -- if a partisan is obnoxious enough, that tars all of their views by association.

I’m not sure what ‘the center’ looks like. And I’m not sure there has ever been a ‘center’, in the United States anyway.

There are probably couple of periods of profound calamity when we all ‘pulled together’ - the Depression, WWII maybe? Other than that, I can’t really think of a time when there was a deep consensus about what the country is about, or about how to organize ourselves economically or socially, or really about much of anything.

In some ways, it’s kind of amazing to me that we’ve come this far.

IMO the trick is holding tension in balance. We pull it off a lot of time, but less so right now. I’m not sure we can, or need to, ‘come together’ in the sense of somehow arriving at a common and agreed upon understanding of who we are, or why. What I think we need to recover is the balance part - how to function as a nation and a society, in spite of differences.

As far as right and left, as far as I can tell there is not a meaningful left in the US. What passes for ‘the left’ here is basically a middle of the road modern bureaucratic state. Bureaucracies are annoying and can be stultifying and even oppressive, but that is a function of form and structure rather than ideology.

Bureaucracies are also a reasonable way to manage large organizations, including large numbers of people. Edge cases fall through the cracks, but they are an efficient way to hit the 80/20 sweet spot. Amazingly enough, they continue to pop up - to emerge organically in human societies - because in spite of all of their flaws, they are effective.

I really do understand why people dislike the whole bureaucratic apparatus, but I’m not sure there’s an alternative. Just my opinion.

In any case, I’m not really all that nostalgic for some bygone day when we all sang the same tune, because that’s never been true in my lifetime, and I’m hard pressed to find examples of it in our history.

Tension is fine, but it needs to be held in balance.

They feel that they used to be the center, but have lost that.

The funny thing is, I can’t tell which side ‘they’ refers to here.

We have discussed this before: The Center is either:
1) The collection of people whose views on almost every subject, from abortion to guns to markets to taxes to zoology, are halfway between the Right and the Left on each topic; or
2) The collection of people whose individual views on any particular subject may be Right or Left, but those views are pretty evenly split over the range of subjects.
I am not sure which definition of The Center is more useful.

Is there in fact a substantial number of Americans who fit the first definition? Do any of us fit it?

Alternatively, using the second definition, is it practical to imagine a coalition of that kind of "centrists"?

I acknowledge, of course, that I'm using the terms "Right" and "Left" very crudely. As nous rightly points out, individuals' policy preferences can not be neatly arranged on a linear spectrum. As a matter of fact, I think even plotting them on a 2D plane may be too simplistic, although it's at least a step up in sophistication.

Liberal-Conservative and Authoritarian-Libertarian are often used as the 2 axes of the 2D plane. If it were possible to characterize any individual's politics by a single point on that plane, the US electorate would be a cloud of about 200 million points, denser in some places and sparser in others.

We could then engage in all sorts of mathematical wonkery. If the cloud clustered along a narrow band, we could reasonably define the best line through it as the principal axis, call it the Left-Right axis, and define its center of mass as The Center.

We could also imagine adding a 3rd axis: Passionate-Apathetic, say. Again, that's assuming each individual could be plotted as a single point in this 3D space.

My guess is, that particular axis would not be very useful, since most people would cluster at the Apathetic end of it, whatever their other two coordinates might be. So The Center would be heavily weighted toward Apathy, which might render the whole exercise pointless :)

--TP

I don't know that any one person in particular represents The Center. I think that the center is an abstraction, and a person is a centrist when enough of their core values overlap with the plurality of other people to feel like the world is working well enough that incremental changes are acceptable on the places where they don't overlap.

I'm probably a centrist on a lot of issues by that standard, but not a centrist on balance because I don't think the world is working well enough with regard to far too many of my core values.

And when I say that the center is broken, what I mean is that the political structures we have built - the party infrastructures and the political philosophies that they represent - are built to solve the problems of 40 years ago and not to solve the problems of today. And many of the problems of today are the result of yesterday's expedient, partial solutions to yesterday's most pressing problems grown to greater scale.

They feel that they used to be the center, but have lost that.

The funny thing is, I can’t tell which side ‘they’ refers to here.

Russell, when I wrote that I was referring to the right. (Hence the use of the present tense.) The left felt that way, to some extent, from the 1980s. But never, as far as I could tell, to the point of hysteria. Fury, perhaps, at what was happening, but not hysteria.

the political structures we have built - the party infrastructures and the political philosophies that they represent - are built to solve the problems of 40 years ago and not to solve the problems of today.

I'd be interested to see you expand on that view of 40 years ago. Perhaps your memory of circa 1980 diffets from mine.

Simple lever law: if a large majority goes slightly left, a small minority has to go far right to keep the center in place. Now imagine how far the 1% have to go to compensate (for?) it when voting rights, civil rights and a higher minimum wage rise in popularity.

Re: Hartmut's observation. How one defines the center in say, 1957
https://en.wikipedia.org/wiki/Little_Rock_Nine

might be revealing of what a person thinks of the center today...

Thinking about 1957, I have come to the conclusion that it is hard for me to see the world at 65+ years old without an odd mix of nostalgia, pride, outrage and resignation. So much is different, some things are really much better, and some things are very much worse and the next generation is really in charge.

It is a better world but different enough I don't feel comfortable here. This time and space. It matters little at this point what I think, no one pays attention.

I tell my children that they are now creating a world for their grandchildren so consider how the things you think are important will effect them.

That sounds like it could be depressing but my reaction in general is to go fishing a lot and hope I have enough money in a few years to retire. Not really my circus anymore.

A note: this led me to wonder if. My Dad felt this way at 70, does each generation eventually look at the world and feel apart from the world they have created, or really is it just me.

there used to be something more of a centrist coalition in the US because the parties, Democratic and Republican, weren't polarized into left and right the way they are today. that didn't happen until the 80s.

the current alignment won't last forever, either.

How one defines the center in say, 1957

It depends on what is being discussed. Different things move in different directions.

In 1957 it took the National Guard to get black kids into a Little Rock schoolhouse. Emmett Till was lynched in 1955. Gay people could lose their jobs and families, with no recourse. Restrictive covenants to keep neighborhoods white and Christian were common.

In 1957, my parents could raise 4 kids on a single income, and they could buy a house for 2x my old man’s salary. The top marginal tax rate was 91% and nobody except Birchers saw that as a signal of incipient communism. The (R) platform was, by current standards, profoundly supportive of labor, and emphasized investment in infrastructure, education, and public services.

So if we want to talk about how baselines have shifted, I think we need to be clear about which baselines we’re talking about.

Lots of people in 1957 saw the 91% tax rate as a problem. The GOP platform is still supportive of labor, infrastructure, education and public services, having moved not much at all.

Right to work is fundamental to supporting labor, infrastructure is pretty bipartisan other than who controls the money, the right to the best education for all is very key to GOP and conservative policy, public services are strongly supported at the level of government that is best equipped to provide them. The difference is that the "conservative" party keeps trying to innovate to provide all of that more effectively while the opposition clings to the status quo in every one of those areas(teachers unions, unions in general, federal control of infrastructure priorities, federal control of of educational standards). A status quo that has consistently failed their key constituency for 50 years.

Hmmm. Marty and I see the current "conservative" movement very differently. To me, it appears to be a bunch of nutty loud-mouths trying to become political celebrities, not terribly interested in governing, and looking to monetize their media profiles by generating faux outrage over things like genderless potato heads. The legacy of tRump.

The conservative party of innovation. It's easy when words don't actually mean anything.

The GOP platform is still supportive of labor, infrastructure, education and public services, having moved not much at all.

I have absolutely no idea where this notion comes from. On the metrics of each one of these things, the states that embrace this platform are all red, and are all socio-economic basket cases. Every one.

I beg to disagree:

https://www.usnews.com/news/best-states/rankings/economy

You might as well have posted a link to a story on the history of Big Bird or how to make garlic toast.

A ballpark-with-a-moderate-amount-of-mustard: I'll venture to guess that a fair number of Americans, if asked what constitutes centrist policies, would probably come up with a list that looks like bog-standard Reaganomics: Low regs, moderate-to-low taxation, a deference to market solutions, and the like. Fair enough.

But what seems to be missing from any discussion of such a list is how stark a break it was from what came before it. It brought a host of things with it that were both economically tonic to those it favored and economically detrimental to those it did not favor. And its acceptance was so great that it hid the fact that the ideology that drove these policies was radical and rupturing. Yet we're now around 40 years on with it, and it's soured into a moribund orthodoxy that is holding the country hostage in what amounts to a second Gilded Age.

So, the difficulty of trying to grasp what the center is comes in trying to identify not only what policies form it, but what ideologies and values drive it. The center is not, in that sense, an abstraction; it is a generationally shifting web of beliefs, desires, and preferences that get realized into definitory practices. There was a time when mass layoffs were a sign of corporate failure – if a major employer had to fire loads of people for things none of the people were at all responsible for, someone upstairs, perhaps an exemplar of the Peter Principle, screwed up. There was a time when the notion that the only thing that college graduates had to their name was a pile of debt was so unthinkable as to be beyond dystopian. There was a time when the idea that people had to choose between rent or food was an outrage. And I don’t have to mention the once-upon-a-time of health care for anyone to catch my drift.

The problem is that so much of this has become mainstreamed, to the point that it feels like the center; the policies that were once the magic bullets to the problems of yore became orthodox, but have created new problems that have been allowed to spiral out of control yet have also resulted in a political impotence that has become synonymous with the center; and if that’s what life in the center is, it’s no wonder people are abandoning it, because it's one that demands that there be a loser for every winner.

(A sidebar - as for Marty’s link, I find it telling that the first metric touted is the one on business environment, the second employment, and the third, growth. There’s no mention of quality of employment – what kinds of jobs are we talking about? And yes, I went to the link on the full methodology. I’m from Idaho, which is third on the list – and if I moved back there now, to Boise, which is where I'm from, I would probably not be able to afford to live there.)

Lots of people in 1957 saw the 91% tax rate as a problem.

Don’t disagree with this. I’d probably find a 91% tax rate as a problem, for that matter. I’m just pointing out that different things move in different directions.

The GOP platform is still supportive of labor, infrastructure, education and public services, having moved not much at all.

The GOP platform still has words about being supportive of all of those things. At least, prior to the last election cycle.

The policies the GOP advocates in support of those goals have changed. It’s not surprising, 1957 was 64 years ago, and things change. But it is a change.

The difference is that the "conservative" party keeps trying to innovate to provide all of that more effectively while the opposition clings to the status quo in every one of those areas

As an aside, a party that holds the White House and both branches of Congress is not properly called “the opposition”. A nit. Moving on...

I don’t disagree that (D) policies are generally consistent with what they’ve been basically since FDR. To the degree that they’re different, they’ve moved to the right. Those policies were fairly successful, for quite a long time, so it’s not surprising that folks would go back to the well. They may or may not be effective for the world we live in now, whether they are or not is a good question.

The conservative ‘innovations’ of the last 40 years have resulted in a small number of people getting really rich, while most people’s situation has remained flat or gone downhill. All in the context of an economy that has grown, significantly. So I don’t think they’re very useful innovations.

There was a time, just before Reaganomics, where the interest rates and inflation were so high that the poverty level went up faster than the cost of living adjustments that became popular. Poor people didn't get cost of living adjustments and the middle class was paying 17% on a 30 year fixed mortgage. The popular metric of the day was the misery index that hurt everyone from the middle class on down.

Reagonomics stifled that and provided fifty years of sustained low interest rates and curtailed inflation while allowing average compensation to keep up with GDP growth and productivity. To some of us who lived through that this has seemed much better than what preceeded it. There have been other factors over that fifty years that have precipitated income inequality.

Also - in Marty’s link - the top three states for business environment, specifically, are:

  1. Massachusetts
  2. California
  3. Washington

Blue, blue, and mostly blue.

A lot of that is based on patent creation and attracting capital, but hey, somebody’s gotta be out in front on technical innovation.

God bless the People’s Republic, may it live long and prosper.

lots of people in 2021 see the 37% tax rate as a problem.

so what? a lot of people don't like paying taxes.

they do like roads and schools and an army and safe drinking water. it's not taxes' fault people don't recognize the relationship.

Reagonomics stifled that and provided fifty years of sustained low interest rates and curtailed inflation while allowing average compensation to keep up with GDP growth and productivity.

But you've mentioned upthread that you hope you'll have enough to retire on. If these policies were so great, why are you having to wonder if you'll be able to retire well?

Average compensation indeed went up, but compensation at the top end blew the wad of the mercury right through the meter, and was enabled in no small part by lousy employment practices that became bread-and-butter warhorses and have had you & me & a whole slew of other folks wondering if we can realistically retire at all while the Bezoses, the Musks, and the Zucks have ended up as one-man economies by comparative scale.

So I don't get what's being lionized here.

I'd be interested to see you expand on that view of 40 years ago. Perhaps your memory of circa 1980 diffets from mine.

Deregulation and privatization; the War on Drugs and Tough On Crime; interventionist foreign policy for economics, but not so much for human rights; embrace of free market capitalism and hyperglobalization as growth-positive; concern for regulating IP in the networked era.

Interest rates of 17% or so lasted about a year, in the second half of 1981 and the first of 1982. The yearly average didn't get below 10% until 1991. A 30-year mortgage in 2000 was still at 8%. Rates didn't go steadily below 5% until 2010.

Rates were under 10% in 1978 and several years before that.

How Reganomics was the cure for interest rates is beyond me.

A lot of the ideas about deregulation weren't from Reagan, they were from Carter.

This should get CharlesWT's motor running, it is from the Mises Institute
https://mises.org/library/rethinking-carter

Here's another one
https://www.theregreview.org/2019/03/11/dudley-brief-history-regulation-deregulation/

Now, I don't think that the rush to deregulate has been all wine and roses, and the speed at which many things have been deregulated without devising sufficient backstops to bad behavior (I started to make a list, but when I got to 10, I figured y'all wouldn't need it), but it's important to get your history right, and the claim that those innovatin' conservatives were responsible is wrong.

There was a time, just before Reaganomics, where the interest rates and inflation were so high that the poverty level went up faster than the cost of living adjustments that became popular.

There was a lot going on in the 70’s, above and beyond economic philosophy and policy, that contributed to all of that. Notably, with the advent of OPEC, the price of crude oil went from about $2/bbl to about $35. Maybe also going off the gold standard.

The conventional wisdom is that the guy that crushed the inflationary spiral was, IMO, Volcker, in his role as Fed chairman. He did it by raising interest rates, up to about 20% at one point. It was freaking brutal, and it took a couple of years, unemployment went up to 10%, but it got done. After that, interest rates came back down.

How Reganomics was the cure for interest rates is beyond me.

It might also be worth noting that those high interest rates were an effort to get control of runaway inflation. Which, in my view and the view of most economists, is seriously worse. High inflation which owed little to government spending and a great deal to a monopoly on oil production outside our borders.

the guy that crushed the inflationary spiral was, IMO, Volcker, in his role as Fed chairman.

Volker, who was appointed by Carter. (And reappointed by Reagan. By that point, his track record was pretty hard to miss.)

Reaganomics, dammit! Not Reganomics.

Personally, I think official party platforms are not worth the paper they used to be printed on (more or less independent of party).
a) they tend not to be what the party officials really want but what they believe people want to hear.
b) the average voter does not even read that stuff.

As for Reaganomics, what about him rising taxes twelve times because even he had to recognize that his first round of tax cuts threatened bankruptcy/default on obligations*.
The Elder Bush (who, before he became Reagan's VP, called what became Reaganomics voodoo economics) in effect took the bullet for righting the ship up again for the heresy of doing it by (among other things) rising taxes.
For many conservatives the claim that St.Ronny ever raised taxes is as absurd (and blasphemous) as for a conservative Christian any doubt about the virgin birth or the trinity.

*which would make him 100% unelectable these days.

I'd be interested in Marty's explanation of how the New Orleans experiment with Charter Schools shows that Ds are opposed to innovation.

The first person to advocate for charter schools in the US was Albert Shanker, president of the American Federation of Teachers. He wanted greater diversity of approach for at-risk students and a classroom space in which professional teachers had more control over their curriculum. I'd still support that model, as would most AFT teachers I know.

Not wild about the for-profits and the charters that juice their results through excluding any students with behavioral issues (and often any with special needs). These two groups probably need charters more than most.

I'm not really that familiar with the charter school experience in New Orleans. I think it was a result of Katrina and it went pretty well. I dont think that translates to Democrats supporting charter schools on a more general basis.

if the ACA wasn't innovation, nothing is

here's a nice innovation: ending $62B in fossil fuel subsidies

that's some ham sandwich.

ending $62B in fossil fuel subsidies

He should end all subsidies to the fossil fuel industry. And the subsidies to all other energy sources too.

And no a tax deduction is not a subsidy. But do away with them too.

The third leg of the 70's problems was a stagnant very slow growth economy. So the challenge for Volcker and Reagan was to win against inflation while jumpstarting the economy then bring rates down without restarting inflation.

Sure supply side economics didn't accomplish all that on its own, just like it didn't create all the ills of the world sans any other inputs. But with GDP quadrupling during that time, compensation keeping pace and the workforce almost doubling it is inaccurate to say it's the reason for income inequality in a vacuum.

Stock options and restricted grants made a huge impact as company valuations grew rapidly, somewhat based on globalization.

...it is inaccurate to say it's the reason for income inequality in a vacuum.

Correct. Did someone say that?

And no a tax deduction is not a subsidy.

yes, it is.

the bottom line of your balance sheet will be just as high with a tax break as it would be with no tax break and an equivalent grant of cash.

GDP quadrupling during that time, compensation keeping pace

Wages and salary / GDP from 1947 to 2020.

Stock options and restricted grants made a huge impact as company valuations grew rapidly, somewhat based on globalization.

Who gets stock options? Were there any public policy changes that fostered equity as compensation and/or globalization?

yes, it is.

Regardless of how it appears on the balance sheet, there's a difference between keeping the money you already have and being given money taken from someone else.

Are deductions for dependents and other income tax deductions a form of welfare?

Are deductions for dependents and other income tax deductions a form of welfare?

Yes. That's why they phase out at some level of income. They are there for the welfare of families with children and other dependents.

Tax breaks for certain business endeavors subsidize those endeavors because someone decided they needed a subsidy.

The deduction for mortgage interest is a housing subsidy more so than a form of welfare, but you could look at it either way.

If I owe you money, and you say “no worries, keep it”, am I keeping money I already have?

I assume the stock libertarian response here is “taxes aren’t money I owe the public” but we’ll probably just have to agree to disagree on that one.

When the "logic" yields absurd results, you don't need to examine it in detail to know that it's flawed. Thanks, bobbyp!

there's a difference between keeping the money you already have and being given money taken from someone else.

not sure why libertarian dogma is relevant here.

On another point. Much of the tax deductions available to the fossil fuel industry are the same ones available to all other industries. Eliminating them just for fossil fuel might be grounds for a lot of lawsuits.

"Much of the tax deductions available to the fossil fuel industry are the same ones available to all other industries."

Wait, the processed-food industry gets a depletion allowance tax break?1?? Who knew?

I did say, "much of." There are industry-specific tax deductions.

  1. Massachusetts
  2. California
  3. Washington
A lot of that is based on patent creation and attracting capital, but hey, somebody’s gotta be out in front on technical innovation.

Except for Georgia, the top ten are all either geographically small northeast urban corridor states or western states. (Interestingly, at least to me, the only two states that made the top five in all three categories were red Idaho and blue Colorado. As I understand those economies, those placements are more driven by the Front Range urban corridor in Colorado and Boise in Idaho than anything.)

When I worked with the Colorado Governor's Office of Economic Development, they divided businesses into two categories. One were "elite" in the sense of relatively few employees but all paid quite well. The other tended to more employees not paid nearly so well. For the first group, taxes and regulation were far down on the list of things they were considering. For the second group, avoiding taxes and regulation was right at the top. The first group likes Colorado; the other group not so much.

On another point.

On another point, it strikes me that eliminating government subsidies to private businesses should be right at the top of the list of things a libertarian would applaud.

What's the problem?

What's the problem?

I did say up thread, "He should end all subsidies to the fossil fuel industry. And the subsidies to all other energy sources too."

On the other point, I was wondering if the fossil fuel industry would have grounds to sue for unequal treatment under the law if their tax deductions and credits were eliminated while other industries retained theirs.

I was wondering if the fossil fuel industry would have grounds to sue for unequal treatment under the law if their tax deductions and credits were eliminated while other industries retained theirs.

It would be a hell of a stretch. They'd have to argue that they have some kind of a right to preferential tax treatment. I suppose, with the right judge, they might get somewhere....

At the risk of both putting up too much info about me and demanding too much of others, a couple of observations. I was in the middle of uni when Reagan was elected, and I believed that he was tracking in a false nostalgia, was indifferent to details and history and was surrounded by a bunch of creeps who were a step up from Gordon Liddy et al (RIH, which I assume is the antonym of RIP). Perhaps it might have been different had I been older, had I not had the parents I had, or any number of things, though it is hard to imagine what those circumstances would have been. When Reagan was elected, I was applying to study overseas, and I'm pretty sure that it was that election that planted the seed that I was not going to be living in America as an adult, though I certainly had no idea where I was going to go. However, I was in university, so these things that Marty points out

There was a time, just before Reaganomics, where the interest rates and inflation were so high that the poverty level went up faster than the cost of living adjustments that became popular. Poor people didn't get cost of living adjustments and the middle class was paying 17% on a 30 year fixed mortgage. The popular metric of the day was the misery index that hurt everyone from the middle class on down.

At that time, I could make enough money from gigging and part time work to pay tuition, which led me to bounce from major to major and have my parents despair and ask the question 'are you ever going to graduate?' So all of what Marty points out are pretty abstract concerns. In addition, being in a university town in Mississippi means that you are in a liberal island surrounded by an ocean of conservatism, so maybe a different school in a different place would have changed me.

But I'm guessing that Marty is close to the same age as me, maybe a few years older, so all those things were probably abstract to him as well. I'm sure he'll say if they weren't, but if they were, I'd suggest that you have grabbed on to the narrative that you want to champion and no amount of evidence is going to budge you from that. I'm sure you could say the same about me, though I feel (as one might expect) the facts do have a liberal bias...

My wife and my first mortgage was at 14.5% because we could provide enough down payment. We had friends paying 17%. We rode interest rates down for 15 years, and then paid off the remaining balance. Helped by a relocation that took us out of NJ at a local real estate peak and into Colorado at the right point after a bust.

Most important for sustaining inflation and interest rates at those levels was that the unions could command 3-5% annual wage increases. My first question for the inflation hawks these days is, "70% of the economy is services; show me how those wages are going to increase at 10% per year, and I'll consider your argument that we're going to have 10% inflation. If wages can't keep up, inflation in a contemporary democracy will get snuffed out in a hurry."

Inflation will stay low as long as banks, businesses, and households continue hoarding money.

CharlesWT,

What will happen if they STOP hoarding money?

Notice I'm taking your pronouncement seriously, though I doubt I should.

--TP

I don’t know the answer, but there is this:

https://fred.stlouisfed.org/series/EXCSRESNS

Higher inflation. Or so this argument goes.

"Banks, businesses, and households tend not to hoard money in good times, or when they have confidence in the credibility and predictability of policymakers; they hoard in bad times, when they lack sufficient confidence. That is precisely the case today, even if officials won’t admit it.
...
Again, the laws of economics have not been suspended; those laws
include the law of supply and demand, which includes the supply and demand for money.
...
Just because a reckless central bank foists tons of fake money on banks, businesses, and households does not mean any of them must spend it. Fiscal-monetary recklessness itself can signal private-sector actors not to part with safe, liquid assets. Eventually, of course, they may choose to flee the money
and the debt, bringing higher inflation rates and higher interest rates. Meantime, the prudent observer must never neglect to consult the demand side of money."
Lots of New Money, But Still-Low Inflation. What Gives?

Excess reserves are the money that the banks are hoarding. If they decide to loan all that money out, things could get interesting.

Meanwhile, in supply and demand land we have the circumstance that lumber prices have close to tripled during the pandemic, yet owners of timber land have gotten none of that increase, and are getting half of what they did 20 years ago. There are some factors causing this beyond market manipulation by intermediaries, the general point is Econ 101 descriptions of markets do not map well on to the complexities of actual human economic activity.

Excess reserves are the money that the banks are hoarding. If they decide to loan all that money out, things could get interesting.

Interest rates go up and down with inflation. For a bank, money which isn't out on loan is money which is wasted. So as long as their net intetest rate (what they get from loans minus what they pay on deposits), is positive, their entire incentive to make loans. Otherwise, that money "isn't working" -- meaning they are net negative. Hoarding is seriously dumb business.

Now if you want to argue that people aren't borrowing, or don't have plausible plans for paying it make, that's a different story.

"make" => "back"

For a bank, money which isn't out on loan is money which is wasted.

The Fed pays banks interest on the excess reserves the banks deposit with the Fed.

To stop hoarding cash means to start spending it. To spend cash means buying things and hiring people. Maybe even at decent wages. Sounds awfully like a more-robust economy. Marty would approve, I think.

All this millennium, "excess reserves" have swelled and shrunk as Congress and the Fed have toyed with stimuli and tax cuts and TARPs. When did inflation last exceed 2%?

--TP

Much of the increased cost of lumber and other building materials is due to trade barriers and tariffs.

Increases in excess reserves have been offset by decreases in money velocity.

Much of the increased cost of lumber and other building materials is due to trade barriers and tariffs.

Tariffs on (Canadian) lumber have been around since the early 1980s. What's special about now?

Lumber costs more but people selling trees are not getting any of that. The point is pointing out simple notions of supply/demand do not play out in the real world. Georgia mills are running full capacity, retailers like Home Depot are raking in dough, Georgia timber owners are getting none of that. Has nothing to do with trade barriers and tariffs, it’s internal supply and production. Mills reduced staffing and capacity anticipating a recession like 2008, the reverse happened. Their reduced orders on the supply side depressed timber prices, the increased demand on the retail side pumped up prices. As I said, complexities. Demand for lumber does not equal price for trees, even in a local market.

"Surely, there many factors contributing to the dramatic run-up in materials prices, but construction industry players should also "thank" U.S. trade policy for the situation. Indeed, as I noted here last July, U.S. tariffs and other trade measures currently restrict the supply of "almost everything you need to build a house, from the foundation to the roof and in between." The following table provides the current status of these measures, including a couple new import restrictions that have been added since last summer:"
How U.S. Trade Policy Helped Construction Materials Costs Go Through the Roof

"Sales of new single-family homes rose for a second consecutive month in January, rising 4.3 percent to 923,000 at a seasonally-adjusted annual rate after gaining 5.5 percent in December. Sales are still 5.7 percent below the July peak but are up 19.3 percent from a year ago and are at the fifth highest level since 2006."
Housing Surge Continues as New Single-Family Home Sales Rise Again in January

With the Georgia mills creating a bottleneck, there's an undersupply of lumber and an oversupply of trees. Seems like supply and demand working to me.

Ah, I know that one*. We must therefore get rid of the oversupply of trees.

*It's just a slight variant of the Golgafrincham currency problem.

There was a time, just before Reaganomics, where the interest rates and inflation were so high...Reagonomics stifled that...

Inflation took off in 1979 as oil prices rose following the Iranian revolution. It peaked at the beginning of 1980 and fell rapidly thereafter. Reagan was inaugurated in January 1981.

Of course, the worship of St Ronnie is a matter of religion not history.

Perhaps the theory is that Reagan's treasonous pre-election dealings with Iran had something to do with it.

I recently bid a job using $32/sheet as my plywood cost, and then find it is now north of $50/sheet. Such fun. Alas, I have not had time to read the linked essay.

As to remembering the 70's, I recommend Rick Perstein's Reaganland. One thing that struck me was that Carter pretty much knew what Volker was going to do when he appointed him, and was quite aware that such a policy would pretty much doom his re-election chances.

I would also take pains to point out that those who extol the Volker recession tend to overlook the millions thrown out of work, but hey, lowering the mortgage interest rate on your 2nd home is way more important than the fact that many others are having their lives ruined in order to make that possible. Remember-who benefits from inflation? Debtors, that's who.

Here's an interesting little essay on US populism and it's place in how we got to where we are.

Back to struggling with my project budget.

we just turned down a bid to fix up the space above our garage because material prices are astronomical.

it wasn't going to use much lumber, since the space is already mostly framed. but pretty much everything else has become a lot more expensive over the last year, due to the pandemic, and yes due to trade policy (we import a lot of steel from China, including mundane things like nails and screws).

The ship getting stuck in the Suez Canal and the traffic jam at the L.A. and Long Beach ports won't help supplies and prices any.

The velocity of money peaked in the latter half of the 1990's, and the trend has been downward ever since.

Excess reserves were fairly flat for quite some time, only to take off with the Bush recession.

Does the velocity of money actually tell us anything useful? Opinions vary, but I hesitate to assert what "most economists" say.

We must therefore get rid of the oversupply of trees.

The US Forest Service can only burn its stock (and private stock on adjacent land) so fast.

Increases in excess reserves have been offset by decreases in money velocity.

Maybe I'm missing something, but this doesn't make sense to me. Excess reserves are money that's essentially out of play, not circulating as part of economic activity. How would a decrease in money velocity offset that? That is, if the money that is in play is moving more slowly, that means less economic activity. It seems to me that an increase in excess reserves would be compounded by a decrease in money velocity, since both would reduce economic activity.

Or, perhaps, if excess reserves are considered part of the supply of money, even though that money is static, that's why a measure of money velocity would be lower?

Either way, there doesn't seem to be any offsetting going on AFAICT.

Either way, there doesn't seem to be any offsetting going on AFAICT.

I should have said, "Increases in excess reserves money supply have been offset by decreases in money velocity."

The US Forest Service can only burn its stock (and private stock on adjacent land) so fast.

Not to worry. Climate change and wild fires are on the case.

Gotcha. Thanks, Charles.

I'd add that, whether the banks aren't willing to lend, or households and businesses aren't looking to borrow, or even both, the result is the same - excess reserves go up. And it's not just about interest. It's also about risk.

People don't stuff their mattresses with cash all that much these days, so hoarding shows up in the banking system, whether it's the banks doing the hoarding or everyone else. But I'd say the two, banks and everyone else, are so integrated that the distinction doesn't have meaning when looking at the situation in aggregate.

I guess if the fed decided to pay some excessive rate of interest on excess reserves, they could make it not worth the banks' while to lend money out even if there was a big demand for loans, at which point I guess you could say it was specifically the banks doing the hoarding. Short of that, I don't think it works.

So, all the investments in those space lasers were for naught? And were all the components imported from China too?

People don't stuff their mattresses with cash all that much these days, so hoarding shows up in the banking system, whether it's the banks doing the hoarding or everyone else.

It also shows up in financial instruments like the stock market.

It also shows up in financial instruments like the stock market.

So my IRA constitutes hoarding??? I'm getting really confused here.

I could be wrong, but the impression I had was that the big banks were taking all the money the Fed was handing out over the last decade or so and trading with it.

So, not making loans, but also not just sitting on to the money.

Don't know how that plays into the Reason Magazine theory of macroeconomics, but just offering it as yet another factor to consider.

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