Monday Reads

Good Morning!

We’re headed towards fall and the season when everything is pumpkin-spiced. I selected some Harvest Pumpkin Ale by Blue Moon for the weekend.  I haven’t quite hit the energy level to make pumpkin bread or muffins but I’m sure it will come soon.  The a/c is beginning to stay off over night so the seasons must be changing.

I read a few things in the NYT that I thought I’d share today.  The first one is up my alley: “Don’t Tell Anyone, but the Stimulus Worked”.  Yup, Keynes is still relevant and so is the idea of using stimulus to recover from a recession.

On the most basic level, the American Recovery and Reinvestment Act is responsible for saving and creating 2.5 million jobs. The majority of economists agree that it helped the economy grow by as much as 3.8 percent, and kept the unemployment rate from reaching 12 percent.

The stimulus is the reason, in fact, that most Americans are better off than they were four years ago, when the economy was in serious danger of shutting down.

But the stimulus did far more than stimulate: it protected the most vulnerable from the recession’s heavy winds. Of the act’s $840 billion final cost, $1.5 billion went to rent subsidies and emergency housing that kept 1.2 million people under roofs. (That’s why the recession didn’t produce rampant homelessness.) It increased spending on food stamps, unemployment benefits and Medicaid, keeping at least seven million Americans from falling below the poverty line.

And as Mr. Grunwald shows, it made crucial investments in neglected economic sectors that are likely to pay off for decades. It jump-started the switch to electronic medical records, which will largely end the use of paper records by 2015. It poured more than $1 billion into comparative-effectiveness research on pharmaceuticals. It extended broadband Internet to thousands of rural communities. And it spent $90 billion on a huge variety of wind, solar and other clean energy projects that revived the industry. Republicans, of course, only want to talk about Solyndra, but most of the green investments have been quite successful, and renewable power output has doubled.

Americans don’t know most of this, and not just because Mitt Romney and his party denigrate the law as a boondoggle every five minutes. Democrats, so battered by the transformation of “stimulus” into a synonym for waste and fraud (of which there was little), have stopped using the word.

Actually, Romney appears to be a closet Keynesian.  As usual, what he says depends on who he’s saying it to.

Edward Lazear, chairman of the Council on Economic Advisers under George W. Bush, released a paper last week attempting an empirical estimate of whether current unemployment is “structural” or “cyclical” and came down firmly on the side of a cyclical explanation. Released 12 months ago, that would have read as a powerful argument for the Democratic side in an ongoing argument about stimulus. But everyone knows that stimulus is not going to happen between now and the election. Instead, it’s a sign that prominent economists in GOP circles haven’t really abandoned the New Keynesian consensus in policy circles but were only putting it in cold storage to hobble President Obama. Earlier in August, Alesina published a new paper with two coauthors arguing that deficit-reduction plans do hurt growth after all—but only when they involve tax hikes. Together, these papers lay the foundation for a 2013 agenda of big, deficit-increasing tax cuts—coincidentally enough the exact same policy that was at the heart of Reagan and Bush administration economics.

Meanwhile, accepting the GOP nomination, Romney argued that “cuts to our military will eliminate hundreds of thousands of jobs, and also put our security at risk”—a precisely Keynesian take on every Republican’s favorite form of government spending.

Romney also swore that “when nations cheat in trade, there will be unmistakable consequences.” The Republican platform more specifically argues that America should “impose countervailing duties if China fails to amend its currency policies.” That’s a policy whose previous most prominent advocate has been none other than ur-Keynesian Paul Krugman. More broadly, it’s an indication that Romney may be thinking of pursuing much-needed monetary policy stimulus and trying to frame it as a nationalistic anti-Chinese measure.

Romney’s inkled Keynesian type stimulus ideas before as mentioned in this Jonathan Chait analysis.

 But in his Halperin interview, Romney frankly admits that reducing the budget deficit in the midst of an economic crisis would be a horrible idea:

Halperin: You have a plan, as you said, over a number of years, to reduce spending dramatically. Why not in the first year, if you’re elected — why not in 2013, go all the way and propose the kind of budget with spending restraints, that you’d like to see after four years in office? Why not do it more quickly?

Romney: Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression.  So I’m not going to do that, of course.

Romney says this as if it’s completely obvious that reducing the deficit in the short term would throw the economy back into recession, even though he and his party have been arguing the opposite case with hysterical fervor. Republicans have committed themselves to Austrian economic notions and other hoary doctrines justifying the position that reducing deficits is a helpful way out of a liquidity trap.

Isn’t it weird how Democrats are now afraid to talk about the stimulus plan and how it worked, but Mitt Romney appears to offer up Keynesian solutions when he’s not out race baiting in front of some right wingers?  Does this man stay consistent on anything?

Chicago Mayor Rahm Emmanuel is going to take Chicago teachers to court to end their strike.

Chicago Mayor Rahm Emanuel has announced that he will seek a court order to end the first teachers’ strike in the city in 25 years, which escalated on Sunday when the teachers’ union decided to extend their walk-out.

The strike has cancelled classes for 350,000 kindergarten, elementary and high school students in the United States’ third-largest school district and will enter its sixth day on Monday.

It risks friction within President Barack Obama’s political coalition, where many Democrats differ over approaches to education reform, ahead of the November 6 Presidential election against Republican Mitt Romney. Emanuel is Obama’s former top White House aide.

The mayor called the strike “illegal” on Sunday and said he would go to court to seek an injunction to block it.

“I will not stand by while the children of Chicago are played as pawns in an internal dispute within a union,” Emanuel said, adding that the union walked out over issues that are not subject to a strike under Illinois state law.

 There is a lot at stake for every one in this strike.  We’ve seen a lot of crap reform happen in the educational system recently that is not in the best interest of children.  Breaking teachers unions happened in New Orleans.  The results have not been good but that has not stopped the same types of reforms from creeping around the country.  There is more here at stake than most people realize.

Under the guise of austerity measures, the burden of deficit reduction now becomes an excuse to remove public education from the discourse of freedom and social transformation. Within this regime of repressive schooling, education for the masses now consists of a “dumbing down” logic that enshrines top-down high-stakes testing, vocationalized education for the poor, schools modeled after prisons and teachers reduced to the status of mindless technicians.

The brave teachers in Chicago have had enough of this authoritarian and anti-democratic view of education. They have revolted in the name of a revolutionary ideal that inserts dignity and power back into teaching, and breathes vitality and substance back into the relationship between education and democracy. In rejecting the primacy of “the market as the sole principle of social and political organization,” they have recognized that what is at stake in the current struggle they face is “a whole generation ‘s sense of the future.”[2]

They are reclaiming the right, if not the responsibility, to assert the civic duty of public education, address the issues of race, class and agency that over-determine the relations of power that bear down on schools; and assert that the real crisis of education is about the conditions of its democratic institutions and the teachers, students and citizens who are responsible for maintaining them.

And while the strike is close to being settled, the ideals it is fighting for are far from settled. The noble ideals and project underlying this strike are primarily focused on both the purpose of schooling, and the vital nature of public education in developing the formative culture necessary to produce the ideas, values, individuals and public spheres essential for the construction of a vibrant and substantive democracy.

Okay, here’s a good one.  Shark SAVES man. Yes.  It’s for real.  This man was adrift on a boat for 5 weeks until …

Only a day after Falaile passed away a storm blew into the area and rained for several days allowing Teitoi to fill two five-gallon containers with a life-saving supply of fresh water.

“There were two choices in my mind at the time. Either someone would find me or I would follow my brother-in-law. It was out of my control.”

He continued to pray regularly and on the morning of September 11 caught sight of a fishing boat in the distance but the crew were unable to see him.
Dejected, he did what he had done most days, curling up under a small covered area in the bow to stay out of the tropical sun.

Mr Teitoi said he woke in the afternoon to the sound of scratching and looked overboard to see a six-foot shark circling the boat and bumping the hull.

When the shark had his attention it swam off.

“He was guiding me to a fishing boat. I looked up and there was the stern of a ship and I could see crew with binoculars looking at me.”

When the vessel Marshalls 203 pulled Mr Teitoi on board the first thing he asked for was a cigarette.

“They told me to wait. They took me to meet the captain, and they gave me juice and some food.”

What an amazing story!

So, what’s on your reading and blogging list today?

15 Comments on “Monday Reads”

  1. That shark story is something…you’d think it would be a dolphin saving a guy like that and not “Jaws.”

    • quixote says:

      It’s a fun story, but (sorry to be Debbie Downer :() sharks don’t have the neurological or social complexity to try to help anyone. They don’t even care for offspring. Egg-guarding in a few species is as far as it goes. I’d be willing to bet money it was a coincidence. The shark may have been trying to use the boat to scrape off barnacles or something else on its skin.

      But the good news is the man survived! I can’t begin to imagine how terrifying it would be to drift in the ocean with nothing but a bit of drinking water.

  2. Pat Johnson says:

    I am close to finishing the book “The New New Deal” which essentially validates the statement that the stimulus has worked. The issue is the argument that is that the amount should have been higher (Romer/Summers) but the votes just were not there.

    The larger issue is that many of those job losses currently showing in the unemployment figure are those in the public sector with the states having to meet the “austerity” measures forced upon them by congress.

    The bottom line is that it could have been catastrophic had it not been for the stimulus that brought the Tea Party crazies into power.

    The thinking today is that a slow recovery is predictable when things were as bad as they were in 2009 and the stimulus package helped to avert a Depression.

    The simple conclusion is that without a demand for goods layoffs are sure to follow as this is the economic wheel the economy in large part depends upon.

    • NW Luna says:

      I was hiking over the weekend on trails built during the New Deal as part of the WPA. Sunny weather, no mosquitoes, mountain blueberry bushes turning orange and red, blue-green lakes, quite a few other people out enjoying nature. The WPA, amid many more high-profile projects, left a wonderful enduring legacy of trails for the people.

  3. quixote says:

    Kristof has a good column about Rmoney and foreign policy.

    “Plenty of candidates don’t write their own foreign policy position papers, but Romney is unusual in that he seems not to have even read his.”

    Gawd. Is it November 7th yet?

    • RalphB says:

      Seems like this campaign has gone on forever. I think almost everyone is ready for it to be over.

      Kristof was very good.

  4. pdgrey says:

    They “Romney and Ryan” have a cunning plan.H/T FDL

  5. NW Luna says:

    I have to point out that leeches can be part of modern medicine:

    ….leeches are often the best option for safely removing congested blood from a wound.

    They’re an extremely effective artificial vein in certain situations where a body part such as a finger has been replanted after an amputation, but only the arterial side is working. The, the leech then serves as an artificial vein by drawing off the excess blood or the congested blood, until the person can actually grow back small, venous capillaries. ….

    Plus, leeches secrete natural anticoagulants that prevent the blood from clotting. One of these chemicals, hirudin, is so powerful that it’s being studied as a possible therapeutic drug for people who have had heart attacks and strokes. These chemicals allow the wound to bleed slowly even after the leech has been removed, while the patient’s new veins are still forming.

    A better Flat-Earther cartoon for medical care would be “Sick? It’s Gawd’s Will.” Unless you’re rich.