I didn’t want to let these observations by the editors of the Wall Street Journal to pass without remark:

Mr. Scholz is dragging his feet on new tanks as Kyiv begs the West for the weapons to build on the momentum of its recent advances against Russia’s invaders. Berlin in April promised to provide Cheetah anti-aircraft tanks, and then waited until July to start delivering them. As of this week, Berlin’s defense ministry says 24 have been sent.

Germany could also send its Marten infantry and Leopard battle tanks, and a growing chorus of German leaders and foreign allies says Mr. Scholz should. That includes Foreign Minister Annalena Baerbock of the Green Party and chairwoman of Parliament’s defense committee Marie-Agnes Strack-Zimmermann, a Free Democrat. Both parties are part of the coalition government with Mr. Scholz’s Social Democrats. The opposition Christian Democrats also support sending more tanks.

Even Mr. Scholz’s party, long a bastion of pro-Russian pacifism, is changing. Social Democrat Michael Roth, chairman of the Parliament’s foreign-affairs committee, is a vocal advocate for more weapons deliveries.

I don’t find the Germans’ action as baffling as the editors seem to. I think that

1. The Germans are extremely reluctant to do anything which bears costs for Germany.
2. But they want to remain in the U. S.’s good graces

Basically, they’re trying to have it both ways. I suspect the Germans’ strategy depended on the war having been concluded before winter and they’re very disappointed with how it has dragged on.

It always catches my attention when national media outlets take note of Chicago, almost always in a negative light. This time it’s the editors of the Wall Street Journal, reacting to remarks from the CEO of McDonald’s:

McDonald’s Corp. calls Chicago home, with its corporate headquarters and some 400 restaurants, but CEO Chris Kempczinski issued a frank warning Wednesday about the city’s crime and social deterioration. “Everywhere I go I am confronted by the same question these days: ‘What’s going on in Chicago?’ . . . There is a general sense out there that our city is in crisis,” he said, and he’s right.

The fast-food chain moved its headquarters to the Loop from the suburbs in 2018, and Mr. Kempczinski estimates its economic contribution to the city at $2 billion a year. But lawlessness is taking a toll. “It’s felt most significantly every single day in the restaurants,” he told the Economic Club of Chicago. “We have violent crime that is happening in our restaurants . . . we are seeing homelessness issues in our restaurants, we are having drug overdoses that are happening in our restaurants.”

Calling Mayor Lori Lightfoot. When residents no longer feel safe at a major restaurant chain and a CEO issues a public plea, social order is breaking down.

The comments won’t surprise residents who have watched their city on Lake Michigan slide into a mess of public disorder. Tent cities sprawl across lakeside parks. Crime that was once confined to certain neighborhoods now threatens the downtown business district.

Overall crime in the city is up 38% in 2022 over 2021, according to Wirepoints, and a new city policy this summer made it harder for cops to pursue criminals on foot for minor offenses. Mayor Lightfoot has given little support to the beleaguered police force that has shrunk to 11,600 officers from 13,300 in 2019.

As if crime were not enough of a problem there are economic issues as well:

“It has become increasingly difficult to operate a global business out of the city of Chicago,” Mr. Kempczinski said, owing in part to a tax climate that the Tax Foundation says now ranks Illinois 36th of 50 states. “There are fewer big companies headquartered in Chicago this year than last year. Fewer this month than last month.” Among those fleeing have been Boeing (Virginia), Caterpillar (Texas) and Citadel, the giant hedge fund (Miami).

Ms. Lightfoot and Illinois Gov. J.B. Pritzker will be tempted to dismiss Mr. Kempczinski’s remarks, but they do so at the city’s peril. They might not get another wake-up call as clear as this one. “Make no mistake . . . McDonald’s commitment to Chicago is not corporate altruism,” Mr. Kempczinski said. “It’s not open ended, it’s not unconditional. As a publicly traded company, our shareholders wouldn’t tolerate that.” Chicagoans shouldn’t either.

That looks to me as though Mr. Kempczinski is firing a shot across Chicago’s bow. I wonder if anyone is paying attention?

IMO there are several different strategies that either the state of Illinois or Chicago might employ. One is a growth strategy. Reduce corruption. Lower taxes. Streamline government. Enforce the law.

Another strategy would be to just keep right on doing what you’ve been doing. Call it an IGBYBG strategy.

A third strategy would be the one that Mr. Pritzker attempted to put in place. Raise taxes. Give more power to the public employees’ unions. Call it the “double down” strategy. The people of Illinois rejected Gov. Pritzker’s attempt to impose a graduated state income tax. Will they reject granting more power to the public employees’ unions, too?

I think that David Brooks is wrong in his latest New York Times column. There is a strategy to defeat Trump:

Many strategies were deployed in order to discredit Trump. There was the immorality strategy: Thousands of articles were written detailing his lies and peccadilloes. There was the impeachment strategy: Investigations were launched into his various scandals and outrages. There was the exposure strategy: Scores of books were written exposing how shambolic and ineffective the Trump White House really was.

The net effect of these strategies has been to sell a lot of books and subscriptions and to make anti-Trumpists feel good. But this entire barrage of invective has not discredited Trump among the people who will very likely play the most determinant role. It has probably pulled some college-educated Republicans into the Democratic ranks and pushed some working-class voters over to the Republican side.

The barrage has probably solidified Trump’s hold on his party. Republicans see themselves at war with the progressive coastal elites. If those elites are dumping on Trump, he must be their guy.

lamenting that there is no strategy for defeating Trump.

I think there is a strategy and it is to disqualify him from running in 2024. I don’t think it’s the right strategy but I think that’s the strategy.

I think the right strategy is competence. Apparently, that’s too much to ask.

Although millions of retirees are looking forward to the Social Security Retirement Income cost of living adjustment (COLA), there’s actually another question that’s equally if not more important. Estimates of next year’s COLA are runnng around 8% due to the high rate of inflation.

Here’s the other question. What impact will the COLA have on the Social Security Trust Fund? For that we’ll need to wait until the trustee’s report comes out which, judging by the last few years, may be anywhere from May to July. I’m betting that the COLA shaves a whole year off the date at which the trust fund is expected to be unable to pay full SSRI.

If you think things are miserable now, wait until that one hits.

I didn’t say “fixed” because, at least here in Chicago, that means something different. Okay, I’ll bite. Will the reforms proposed by Mark Penn at RealClearPolitics reform primary election:

To fix these problems we need to take some urgent steps. First, we need to shine light on this low participation and information as a problem. Second, we should deny tax deductibility status to nonprofits that are carrying out one-party agendas and encourage the growth of nonprofits that want high voter participation in all elections by all voters. Third, we need to set three or four regional primary days in which groups of states all hold their primaries at the same time to cut down on all the confusion of 20 or more possible dates. Further complicating this are Democratic campaigns to meddle with the primary process by deliberately providing tens of millions of dollars to extreme candidates they oppose and hope will be easier to defeat in the general election. Though unlikely to be banned outright, this practice further undermines the primary process, and hopefully the parties will agree to end it in the name of a fair democracy.

I don’t think they’ll do a darned thing.

I’ll propose a different slate of reforms:

1. Abolish primaries. Back to the proverbial “smoke-filled room”!
2. Make voting in primaries compulsory with stiff fines for not voting and enforce it. I only know of three countries in which that’s the case: Australia, Belgium, and Luxembourg. I can’t imagine that happening here.
3. Render anyone who fails to vote in the primary ineligible to vote in the general election.

I always vote in the primaries. Here they are the only election that matters. The candidate for whom I cast my vote in the primary almost never gets the nomination.

I honestly don’t believe that primaries can be cured.

It’s pretty easy to summarize Megan McArdle’s most recent Washington Post column—the go-to economic policies of both political parties are obsolete:

If the president wants to spare himself further such embarrassments, and his constituents further price hikes, he needs to stop fire hosing money into the economy. That won’t be easy, because both Democrats and Republicans think of deficit spending as free money with which to pursue their goals and reward their voters.

Politically, deficit spending is a hard habit to kick. Democrats, in particular, have devoted the past 15 years to arguing that deficit spending isn’t just politically expedient (all politicians love spending borrowed money) but is a positive boon to the economy.
Some of those arguments were sound. I supported deficit-financed relief during both the Great Recession and the covid-19 pandemic, and not just because I wanted to mitigate the misery of people who lost jobs and businesses. Rapid economic contractions can feed on themselves, as panicked consumers hoard money against possible financial hardship and thereby trigger further waves of layoffs and business failures. Strategic injections of government deficit spending can theoretically slow, or even reverse, that downward spiral.

But those injections only cure the patient if there’s spare economic capacity waiting to be put back into service as soon as demand recovers. That’s no good to us now, because unemployment is below 4 percent, core inflation is above 6 percent and demand has already recovered. So, when the government (as it has under Biden) comes in with even more borrowed money, all that money can do is bid up the price of existing goods and services further.
Unfortunately, a lot of Democrats, including our president, are stuck in the economic mind-set of days past, when there was always economic slack that could theoretically be stimulated away, so that deficit spending of any amount seemed to be all upside. They have yet to adjust to the new reality of an economy where the problems are all on the supply side.

The Republicans’ problem is easier to summarize: they believe in tax cuts. Full stop. Even Reagan didn’t reduce the size or scope of government. The key problem with relying solely on tax cuts is that we were on a different part of the Laffer Curve 40 years ago than we are now.

As I have been saying some time we need to produce more. More energy. More food. More houses. More stuff that people want to buy.

The alternatives are have fewer people and want less. For the last couple of years the U. S. population (births – deaths + immigration) has been about 3 million people. It should be obvious that increases aggregate demand. Regulating immigration is a lot more humane and politically possible than reducing births or increasing deaths.

That’s my assessment of what’s going on in the war in Ukraine right now. The Russians are overstating their preparedness for the Ukrainians’ counteroffensive and the casualties that the Ukrainians have taken in the operation. The Russians are understating their own casualties both in terms of lives and equipment as well as the significance of the territory from which they’ve been forced to withdraw. They may also be overstating the involvement of Western forces in the intelligence, planning, and execution of the operation.

However, the Russians aren’t the only ones overstating and understating. The Ukrainians are overstating Russian casualties and the significance of the operation and understating their own casualties.

Even if the Ukrainians continue to receive material support from NATO, a war of attrition probably favors the Russians.

The Phillips Curve is the observed stable and inverse relationship between inflation and unemployment. When I took my economics courses, lo! those many years ago, it was taught as Holy Writ. It came into disrepute a decade or so ago when the relationship appeared to have broken down.

Now, impelled presumably by the higher rate of inflation, the discussion over the Phillips Curve has heated up. Is there a relationship between inflation and unemployment? A. W. Phillips, Paul Samuelson, and Milton Friedman all said “yes”. John Tamny says “no” in this piece at Forbes:

Back to reality, inflation has nothing to do with unemployment. Think about it. Consider Lebanon at present, Argentina for decades, and perhaps Mexico in decades past. Inflation is a decline in the unit of account. Put more plainly, inflation is a currency devaluation. More on actual inflation in a bit, but for now it’s useful to remind readers that a focus on unemployment when contemplating inflation is a sign of the mind wandering, or a thought non sequitur.

In a working paper at the National Bureau of Economic Research (PDF) David Ratner and Christopher Sims say that labor market policies resulting in less bargaining power for workers has “eroded” the validity of the Phillips Curve:

In particular, we build a theoretical model in which workers’ bargaining power determines the slope of the Phillips curve. We argue that the “missing inflation” puzzle is due to a collapse of workers’ bargaining power that has in turn left the slope of the Phillips curve nearly flat.

Figure 1 juxtaposes the work stoppage index for the United States (blue solid line, the left axis), one potential measure of workers’ bargaining power, and the core PCE price inflation rate (red dashed line, the right axis). The figure suggests that the bargaining power of workers may be an important driver of the inflation dynamics during 1960s and 1970s. Both the bargaining power of workers and the inflation rate suddenly collapsed around the mid-1980s. Correlation is, of course, not causation and another interpretation is possible: monetary policy tightening under Paul Volcker led to the disinflation shown in the figure, which in turn may have made striking for cost of living adjustment less urgent as the inflation rate has been stabilized.

Mario Seccareccia and Guillermo Matamoros Romero expand on that in a piece at the Institute for New Economic Thinking:

The US Fed as well as many other central banks internationally seem now to be united in favor of a steep hike in the Fed’s policy rate, as we witnessed with the most recent 0.75 percent jump on June 15. We are told, moreover, that there are many more increases to come since the Fed rate is, supposedly, still much below its “neutral” level. For a very recent plea in support of what may have been the “mother” of rate hikes in the United States, namely another “Volcker shock”, one has only to peruse the recent paper by Bolhuis, Cramer and Summers (2022) in which they suggest that, to get the current inflation rate down to align with the US Fed’s 2 percent inflation target, it would now “require nearly the same amount of disinflation as achieved under Chairman Volcker.” (2022, p. 1).

Given the nature of the current supply shocks affecting our weak Covid-battered economies, orchestrating another Volcker-style scenario by creating yet another deep recession is chilling. Besides, it would appear to be somewhat in conflict with the above assessment of former US Fed Chair Janet Yellen in 2019 as well as with the research of these two US Fed economists, Ratner and Sim, who suggest that the slope of the Phillips Curve is actually relatively flat and it has remained so for decades, for reasons that have little to do directly with the Volcker shock of the early 1980s.

I have only a few observations to add to the pieces linked. First, the Phillips Curve has always been primarily an empirical observation rather than a philosophical assertion. The statistical evidence is quite strong or, at least, it was until a decade or so ago.

Second, note that no one explains what is meant by a “loss of worker bargaining power”. It can have all sorts of causes including importing workers (legal or illegal) rapidly, overseas competition, workers without the training or experience desired, labor unions with goals that take priority over the things measured by Mssrs. Ratner and Sims which they use as a proxy for a loss of bargaining power, or workers that don’t have the skills, training, or experience that employers want.

Finally, none of the writers seems to understand the U. S. law that requires the Federal Reserve to underwrite Treasury Department debt. We don’t devalue our currency or, at least, such events are rare. The Congress appropriates money. If tax revenues are insufficient to cover the amounts appropriated the Treasury borrows. Period. Of which parts of that process does Mr. Tamny disapprove?

I presume it’s the appropriations. Would raising taxes to cover the appropriations cause fewer people to lose their jobs than raising interest rates? Note, too, that those injured by high interest rates are generally the same as those harmed by decreasing employment. It’s a judgment call and under present circumstances it looks to me as though decreasing employment is a risk less than that of increased inflation.

Please keep in mind that I would prefer that we had neither. I would also prefer that American workers had less competition from workers overseas or from rising numbers of imported workers. But as somebody or other said you can’t always get what you want. I almost never can. Didn’t the same guys write a song about that, too?

In an op-ed in the Washington Post Jennifer Finney Boylan argues that the states that are moving to bar Medicaid from paying for hormone supplementation or other forms of “gender affirming” care:

Many years ago at a wedding reception, a transgender woman showed me a scan of the human brain. One section — the bed nucleus of the stria terminalis, in fact — was highlighted. “You see?” she said. “It’s not my fault!”

The thing that was not her fault (she said) was being trans. Research at the time suggested that this particular brain structure in trans women was much more like that of cisgender women, rather than cis men, lending some support to the idea that transness is a neurological condition, not so different from cerebral palsy or epilepsy.

As opposed to, say, simply being someone who’s obsessed with stilettos and sponge cake.

When I came out in 2000, I remember trying to explain my situation by using some of this same language. I begged people for understanding and kindness. My voice was more than a little apologetic. Please, I said to those I loved. I’m hard-wired this way! It’s not my fault!

Twenty-two years later, the idea that trans people need to explain themselves to others feels a little weird. Being trans is no longer something we believe we need to apologize for. It is, at least in some circles, a thing to celebrate.

Here is the specific object of the author’s ire:

Last month, Florida became at least the ninth state to bar trans people from using Medicaid to help pay for gender-affirming care.

The reason? Transition care is not, the state has determined, a medical necessity.

In a report issued in June, the state went against decades of medical opinion. “Florida Medicaid has determined that the research supporting sex reassignment treatment is insufficient to demonstrate efficacy and safety,” said the report, which is signed by Gov. Ron DeSantis (R).

As a result, many people who have been on hormones for years, and in some cases decades, will be forced to de-transition if they cannot find other coverage, or if they are unable to pay for health care themselves.

The problem with the author’s analysis is that brain scans may not be as dispositive as the author thinks. For one thing it is known that behavior can alter physical brain structure, cf. this study from the National Institute of Health’s library—TL;DR version is that behavior can change brain structure.

Additionally, it is known that the use of pharmaceuticals may change the actual physical structure of the brain and, although it is as you may expect, controversial that supplementation with exogenous hormones may actually change the physical structure of the brain.

My own view is that we should be focusing more on what is clinically appropriate and less on claims of rights to specific kinds of care. That is the direction in which other countries, e.g. United Kingdom, Sweden, Finland, have been moving. There are much less likely to prescribe “gender affirming care” than they used to be.