Crazytown, USA

So, what are we to make of this anonymous Op-Ed in the New York Times on September 5?  (I don't know if the link works for non-subscribers.)

A few questions:

What is a "senior official in the Trump Administration"?  The Times refuses to elaborate. What point is there to using words if you refuse to say what they mean?  I remember Robert Bork offering a thought experiment:

I do not think you can use the ninth amendment unless you know something of what it means. For example, if you had an amendment that says "Congress shall make no" and then there is an inkblot and you cannot read the rest of it and that is the only copy you have, I do not think the court can make up what might be under the inkblot if you cannot read it.

The Times has put an inkblot over the rest of "senior Trump Administration official means ...." rendering the term meaningless if we assume that the Times wouldn't publish an anonymous op-ed by anyone the readership would not view as senior anyway.  The Times's op-ed editor Jim Dao, in an interview with Brian Stelter of CNN, said:

"We were simply trying to abide by the standard that the Times in general would use when referring to someone who's not named."

On The Daily (the Times's podcast), he added, "I feel that we followed a definition that has been used by our newsroom in the past."  One hears the anguished moans of turtles all the way down.

FWIW, I will read "senior official" to mean "Trust us, this is big." I can't go all the way to "household name," given the ignorance shown in about 40% of American households.  But I'm thinking it's a honcho.  Still, there should be stated criteria, or there can be no "definition" that was used in the past, because that wouldn't have been a definition either.  On the contrary, there's no denying it's a non-definition definition.

Why an op-ed?

I heard Jeffrey Toobin say on CNN that this editorial is just an extended quote from an anonymous source.  Why didn't the Times op-ed editor say to the author "Go tell your story to a reporter"?  Here, Maybe the Times was baited by the "Fake News" rap.  The argument that Maggie Haberman, say, "made up" a source, or misquoted an unnamed source, is more likely to be believed by Trump's hoopleheads than the claim that the editorial board fabricated and author.  This is not an anonymous source; it is an anonymous author.  The Trumpsters have, of course, floated the idea that the author doesn't exist, but it just doesn't have the same oomph when you can't make what is said just one hated reporter's version of what an unnamed source has to say.

Why anonymous?

I am more sympathetic to the author's anonymity than many commentators. Some say the author - to whom I'll refer with male pronouns to save myself keystrokes - should step up, give his name, and resign. Well, what happens then?  One thing is that his best friends inside the White House become suspect, too. In another context, lawyers follow the maxim noscitur a sociis - a thing can be understood by the company it keeps. If we don't know who the anonymous author is, we don't know whom he eats lunch with or plays basketball with or sleeps with.  The "resistance"depends on its participants not being found out; identifying one may identify all.

Then there's the Murder on the Crazytown Express problem.  Let's suppose this author speaks for the entire coterie of resistors.  Maybe the "author" who presented himself to the Times is an avatar for the entire group, which effectively ghost-wrote the book, like Naked Came the Stranger.  It would be dishonest for the "author" to claim authorship.

Finally is a sort of fallacy of composition.  It may well be that the author, if he is a real person and not the voice of many, could leave with no real damage done.  But the standard critique we hear is that anyone who feels as the author does should resign.  Thus, if this author should go public and resign, then all of his fellows must resign, too.  Then who would be left to mind the store?

Why now?

Why expose this behavior, which, one must assume, will be rendered less effective going forward?  Maybe Woodward's book, in parts not yet shared with the public, exposes it.  (The book release is scheduled for 9/11/18.)  There are anecdotes  in the publicly known parts of the book about Gary Cohen and Sec. Mattis effectively deep-sixing Presidential actions, on the theory that, having the attention span of a goldfish, Trump will forget he even wanted to do what didn't get done.  Maybe he only wants to say things should be done with no particular interest in whether they get done.

But whatever efforts are being made quietly to keep the truck on the road, those efforts are impeded by their revelation.  Maybe the president will create some sort of Chief Compliance Officer for the staff, someone whose job it is to tell the Orange King when "Off with his head!" doesn't result in a head being off. 

That would not be a good thing.

It's the Self-esteem, Stupid

My favorite professor in college was Lee Benson. He was my favorite professor in college because he taught me the most useful thing I learned in college: the importance of self-esteem in human activity and, therefore, human history. 

I took a course on the American Civil War from Prof. Benson.  In it, he explained his view that the war was fought largely because the self-esteem of Southern politicians demanded they defend their honor.  The peculiar institution on which their wealth was built had been made illegal in parts of the country, implying a growing national consensus that said institution, and those who practiced it, were evil.  That notion could not stand.  People care what those to whom they are linked think of them, because it affects how they think about themselves.

Donald Trump lets ordinary Americans like themselves.  He says, expressly and by example, that it's ok to be ordinary, ok to resent holier-than-thou scolds, ok to think women and non-WASP men should know their place.  When was the last time a Democrat treated the salt of the earth crowd with the respect all self-respecting people demand (whether or not they deserve it)?  Hillary certainly didn't.  Hillary was a scold, supported by scolds.  For all its cool, "woke" just means "better than you" in a particular way.  People needn't be forgiven for defending the indefensible, but, as Chris Rock said about OJ, we don't have to condone an action to understand it.  No one goes into the voting booth thinking "I'm gonna vote for the guy who thinks I'm a benighted piece of shit."

The best politicians are aspirational.  They offer us the chance to be proud of ourselves for releasing our better angels.  But we haven't had an aspirational Democrat since Robert Kennedy.  Martin Luther King, Jr., was an aspirational leader.  In public, at least, he looked forward to a better day, without dwelling on the "isms" of the sinful.  If politics is the art of the possible, then it must be the art of getting people to change their ways without believing that they are bad people for having acted in the old way.  The Peace Corps used to run ads in the New York City subway.  Maybe they still do, but I'm talking about fifty years ago.  One ad featured this bit of bumper-sticker wisdom: The trick isn't getting the natives to dig the well; the trick is getting them to believe digging the well was their own idea.  The ad does not trade on any special characteristics of Peace Corps clients.  Natives are natives, wherever they live.

The role of self-esteem in electoral politics is not overt.  People may say they are voting for a populist demagogue because "I like his ideas," but they don't have the information to judge his ideas, so something else must be going on.  What they have is confirmation bias.  If a guy who says it's ok to be like me says it's ok to put tariffs on steel, then it must be ok to put tariffs on steel, because he was certainly right about it being ok to be like me.  Populists often emerge when the people are feeling badly about themselves.  And in a two-party system, the demagogue is helped if the other party's whole raison d'etre seems to be to make "people like me" feel bad about being people like me.

If I were running for President, I'd give serious thought to "Do America Proud" as my campaign slogan.  America doesn't need to be great again. America needs to be good again.  We haven't been good in quite some time, and the longer we spend being bad, the more tempting it is for scolds to try to shame us into action.  Only, the action they shame us into is the short-cut to ending shame: electing someone shameless.  How to make voters feel good about rejecting the man who made them feel good about rejecting Hillary is the challenge the Democrats - the challenge that anyone who cares about whether America remains true to Americanism - must face.

It will not be easy. 

About those Tariffs

The President, through his adviser Peter Navarro, has offered a powerful argument for tariffs on steel and aluminum: national security.  National security, no pun intended, is the ace of trumps in the policymaker's deck.  But it is so powerful an argument that only one counterargument is available: national security.  Everything else is just whinging about the tax that must be paid to cover the cost of the national security interest advanced by the tariff.   Orrin Hatch says that the steel and aluminum tariffs will be a "tax" on the American people.  Yes, Senator, they will be.  We pay overt taxes to fund battleships, so why not pay indirect taxes to protect strategically vital industries?  Hatch's claim is true; it just isn't relevant.

But, tariffs being a political football, all sorts of irrelevancies must be dealt with.  The mainstream media are fixated on jobs, not wonkery.  They don't really care about the national security argument.  They don't even understand it.  The President is implying, correctly in my view, that for our national security, we need to roll our own steel, just as we must grow our own staple foods and supply our own energy.  We must not depend on the kindness of strangers for our survival.  

Mr. Navarro has been making that case on the Sunday morning news shows, but the hosts won't engage him on that level.  They tell us instead that more people have jobs using steel than making it.  So what?  We don't need those jobs for our national security.  GM may sell fewer cars, and we may drink less beer.  We will need to adjust for those losses somehow.  But we must roll our own steel, says Mr. Navarro, so what else matters?  At least, that's what he could say.  Instead, Navarro denies that the downstream effects will be significant.  No point relying on the trumpiness of your card if you can rely on its just having a  higher face value than the other guy's.  And why admit you're imposing a tax if you don't have to admit it?  

To make matter worse, Mr. Navarro cannot resist offering an irrelevant argument of his own, viz., that the US is for free trade if it's fair.  That argument neuters his trump card.  Would Mr. Navarro be for fair trade if it meant importing steel rather than producing it?  What if China responded to our steel tariffs by offering, in exchange for their removal, to lower the tariffs on US goods and to enforce US intellectual property claims?  That would certainly make the tariffs look like a stroke of genius (for a while, but see below).  But it would give the lie to the principal argument advanced by the White House for the tariffs in the first place.  

Both Trump and Navarro are China bashers from way back.  Their concern was not that China was preventing us from making our own strategic goods.  Their concern was jobs.  As Navarro says, we are exporting our wealth and jobs under current trade rules.  Well, what do we care about more?  Would we give up the strategic goods argument if we could get our jobs and wealth back?  I don't understand the WTO's rules, and maybe the organization is just where the rest of the world unites to fight the US.  But, for some reason, WTO rules allow nations to impose tariffs for national security reasons.  Is Trump's national security claim just eyewash for the WTO?  Could the best argument for the tariffs be a lie?  Would Trump lie?  

It would be nice if the MSM could ask Mr. Navarro about the conflict between his national security argument and his free trade argument, but they don't understand the implications of the national security argument, so they don't.  Rather, they address the national security argument by pointing out that the tariffs will piss off our allies, which is bad for national defense in a different dimension.  That is the DOD's position, but, even if we take it at face value, is it reason enough for us not to make our own steel and aluminum?  

The problem, as with all things Trump, is execution.  Was there no way through diplomacy and negotiation to reach an agreement with our allies whereby we could make our own steel and aluminum?  Did this surgery have to be done with a cleaver?  Granted, our aluminum industry, in particular, is on its last legs.  But Trump's been in office for over a year.  What evidence is there that he has worked the steel and aluminum issue from a national security perspective with our trading partners?  

Sadly, the best argument for these tariffs is the least attractive politically.  That's why we will hear about what it is going to cost us in economic terms instead of what it is going to gain us in national security terms.  How do you measure the value of not having to rely on Chinese steel?  (China accounts for 2% of US steel imports, but it's not clear how much steel from other places is transshipped from China.)  What is the value of not having to rely on Canadian steel?  Brazilian steel?  It's very difficult to understand and evaluate the benefits of resource independence in the abstract.  And yet, that's the best reason for the tariffs, if they will, in fact, make us safer.

Meanwhile, what about Trump's real trade agenda, getting rid of the trade deficit that he says arises from unfair trade.  I doubt our feckless leader has ever heard of Robert Triffin.  Mr. Navarro should have heard of him, as Triffin's Dilemma lies at the heart of Mr. Navarro's misguided trade policy.  The "unfair" trade that creates our trade deficit is how we put dollars in the world so that it can be the world's reserve currency.  We translate the benefits of being the issuer of the world's reserve currency into benefits to US consumers via lower prices and interest rates (as our trading partners lend us back the dollars we pay them for things they send us).  "Fair trade" means no more exorbitant privilege.  Is that a good thing or a bad thing?  I don't expect these issues to be aired publicly.  But I do expect them to be aired privately within a White House with working brains at all levels.  I wonder if they were....

[Update a day later: Trump tweets that tariffs will be lifted if NAFTA is renegotiated.  In other words, act first, then negotiate to undo the damage.  Sounds like "Take the guns, then give them due process."  This is not a bad way to deal with a weak enemy.  It was how the Russians used the Cuban missile crisis to get rid of American missiles in Turkey.  The tariffs are a demand for ransom.  Mostly from our friends!  What happened to national security?  Oh, well.]  

USA Announces Phase 1 Clinical Trial of Modern Monetary Theory

I remember the Reagan tax cuts in 1981.  The Bill was called ERTA - the Economic Recovery Tax Act.  It was a Keynesian stimulus bill, with the stimulus largely coming from tax cuts, allowing people to keep more of their money to spend.  Trouble is, it created a significant deficit quite quickly, and it favored the rich.  So, a year later, Congress dealt with these problems by passing a Tax Equity and Fiscal Responsibility Act.  Who could complain about that - we like tax equity and fiscal responsibility, right?   But it wasn't enough.  In 1984, the deficit was still rising, and it became necessary to take the gloves and the sugar-coated names off.  We passed the Deficit Reduction Act, raising taxes again, or at least closing some "loopholes," i.e., revenue losers that some people don't like.  (Sorry, no link.)

Now, we get to do it all over again, maybe.  The recent tax law and today's budget agreement are budget-busters.  They will cause the deficit to grow.  Self-styled fiscal conservatives are aghast.  And yet, this time there is a new player in the game, a theory of money that says deficits and (monetized) national debt aren't inherently bad.  Fiscal conservatives' hearts may be in the right place, but their minds may be in the wrong century.

The thing is called Modern Monetary Theory (MMT). (Knock yourselves out.)  Here's the short version of it.  If there were no taxes, and the government just printed all the money it spent, the currency would go splooey, because no one would know that money was rare enough to use as a medium of exchange.  But nothing else bad would happen.  The country wouldn't go "bankrupt," because it could just keep printing money to pay its debts.  So, if the trouble with not taxing is that the money would become worthless, we must conclude that the reason to raise taxes is not to "pay for" things, but to protect the currency from the effect of paying for things with printed money.

This is a big deal, says MMT, because the amount of taxes necessary to protect the currency does not necessarily equal the amount of money printed by the government to pay its bills.  What if taxes fell a dollar short each year?  What would be the harm?  Surely, our economy can absorb on extra dollar every year without a loss of faith in our money.  Well more than that is counterfeited every year, and life goes on.  While it's easy to say that zero taxation would result in hyperinflation, it is much more difficult to say how much money could be printed without damaging the currency.  In other words, why is it necessary or wise to run a balanced budget when some things could be paid for simply by printing money?

MMT is not about borrowing money; it's about printing it.  Our laws don't allow the government to print money per se, but a cooperative Treasury and central bank can, together, effectively do so.  Thus, one "solution" to the increased interest cost of the new debt arising from the new deficits would be for the Fed to buy the bonds.  The Fed sends the interest it collects right back to the Treasury, effectively neutralizing the interest costs associated with those bonds. That's "printing money" for all intents and purposes.

The transmission mechanisms whereby printing too much money leads to inflation are beyond the scope of this memo (because they are beyond the scope of my knowledge), but the general drift is this: if the Fed buys up bonds, interest rates will fall too low, too much credit will be created, and too many dollars will soon be chasing too few goods.  Inflation isn't driven by the government spending; it is driven by the private credit created when government spending does not compete for the same private dollars.

But that's the thing: the problem always comes down to inflation, and inflation always requires a "shortage" of goods or services, including labor.  I put "shortage" in scare quotes because I mean only a scarcity relative to demand.  There may be no unusual bottleneck in production; hyperdemand can create a "shortage" even when the production facilities are operating perfectly well.

The heart of the MMT argument, then, is this: We live in an era of rapidly rising global supply of everything we need, including labor.  The growth in output is reminiscent of the deflationary days of the late nineteenth century in the US, when the money supply could not keep up with the output of goods.  MMT says that there cannot be inflation without shortage, and shortage will not happen even the face of a surge in demand, because global capacity is growing, and the time necessary to bring even more capacity on-line is shrinking.  Indeed, "supply" might even be reckoned to include the supply that could show up in six months if the need were known.  Mickey's broomsticks are running wild, and we need a mop to clean up the water they are bringing from the well; that mop is printed money, or, at least, so says MMT.

If the MMTers are right, the deficits created by the recent legislation will be "handled" by an economy that can easily absorb the resulting spending.  The issue is interest rates.  Will the Fed raise rates to cool the economy, causing an unnecessary recession, or will it accommodate the new budget by monetizing some of the debt and watching to see if the extra money in the economy actually causes inflation.  1937 suggests the former.  In that year, skittish conservatives looked up, saw their shadows, and pulled the fiscal plug on the New Deal.  A theretofore recovering economy saw five more years of winter until the exigency of war overcame our aversion to debt. 1982 and 1984 say the same thing. What if we had let the Reagan deficits run?  What did the supply curve look like back then?

But this is 2018.  All Congress has to do to test whether the new laws are unduly inflationary is nothing.  The Fed will be the key.  Will it monetize the debt and see if inflation happens, or will it assume that undue inflation will happen and end the trial of MMT that Congress is now conducting?  Time will tell.  For now, however, I would urge fiscal "conservatives" to inform themselves about MMT and ask themselves not whether they "like it" - they won't - but whether there is anything about it they actually disagree with.  In my experience, no one disagrees with the principles of MMT, but most people disagree with its conclusions.  What a piece of work is man...

Shit

The President wondered aloud, to people to whom it is never smart to wonder aloud, why America is letting in so many people from "shithole" countries.  Of course, the heads on the left exploded at the denigration (check your etymological privilege) of these places, but I believe their attacks on the President's attitude completely miss the point.  Immigration is supposed to come from shithole countries.  America is all about the tired and poor, the huddled masses yearning to breathe free.

Escaping shitholes is what made America great.  It's how my ancestors got here.  It's how everybody's ancestors got here, including the persecuted pilgrims and even the so-called "native Americans," who themselves migrated here from somewhere worth the trouble to migrate from when migrating was even harder than arriving two hours early for a flight.

Herr Drumpf says we should bring in more people from a place like Norway.  But, for some reason, people are not trying to sneak into America from Norway.  Maybe that's because, with all due respect to Disneyland, Norway is by all accounts the happiest place on Earth.  No, people are trying to get into America by any means necessary from places where people do not want to stay.  That's where immigrants come from.

Which brings me to the visa lottery.  I'm not sure why Trump is opposed to this program, but as an alleged branding expert, he should know better.  What better way is there for a country to demonstrate its wonderfulness than to run a raffle where the prize is a green card?  Does Russia have such a program?  I know a wonderful woman from Ukraine who got her green card through the lottery and became a citizen as soon as she could.  Ukraine is a shithole.  It's people aren't brown, but it's a shithole.

So, yes, Trump's comments were racist, but there's nothing new there.  We already knew that he favored racist policies that appeal to his racist base.  And I guess we already knew that he was stupid.  But still, if we have to pick one thing about shitholegate to go apeshit over, I nominate the man's utter ignorance of what immigration is about, what (not where) we came from, and what our generosity of spirit means to our national image and, therefore, at the end of the day, to our national self-esteem.  Having elected this fool is embarrassing enough.  But to have our noses rubbed in it daily by our leader's noise and our leaders' silence is really a bit much.

Shit.