The “Biden Effect”

At Roll Call Republican pollster David Winston notes that Biden’s net disapproval is dimming the electoral prospects of Democrats all over the country. After a lengthy digression on President Biden’s lack of understanding of how increasing willingness to pay in the context of constraints on supply should be expected to increase prices,

On top of that, confidence in the federal government to manage the nation’s challenges has also taken a beating. It started with a lack of COVID-19 tests, followed by shortages of everything from paper towels to cars to chicken and now baby formula, an embarrassing exit from Afghanistan, the negative effects of an open border, and inflation. The list is a long one.

In a survey done by The Winston Group for the S Corporation Association, we found the brand image of the federal government at an unbelievable low, with almost 2-to-1 negatives — 33 percent favorable to 59 percent unfavorable. It is even worse among independents, at 24 percent favorable to 68 percent unfavorable.

This puts the feds at the bottom behind Pelosi, Biden, Trump and both parties in Congress. Still, in the end, it is the president tasked with running the federal government, and if it is failing in its mission, so is the manager in chief.

It is hard to see a way out of the hole this president and his party find themselves in without a significant change in policy direction. But to listen to Biden over the past week, staying the course seems to be the operative strategy.

There has been a lot of bad news lately—inflation, the shortage of infant formula, Russia’s war against Ukraine, the murders in Buffalo, decreases in various stock market indices. A lot of things seem to going wrong all at once. Joe Biden is the president and the Democrats hold narrow majorities in both houses of Congress. It’s the party in power that tends to get blamed when things go wrong.

I had to guffaw at this paragraph:

But Team Biden seems intent on ignoring well-founded criticism even from the Democratic fold. In February, Democratic economist Steven Rattner warned in The New York Times, “The bulk of our supply problems are the product of an overstimulated economy, not the cause of it. … It’s a classic economic case of ‘too much money chasing too few goods,’ resulting in both higher prices and, given the extreme surge in demand, shortages.”

Steve Rattner is no economist. He’s a Democratic fundraiser, apparatchik, and private equity Rolodex hire (i.e. he didn’t get the job for his business acumen but for his contacts). Nonetheless his advice should be heeded since it probably reflects what his big money contacts are saying.

IMO President Biden’s problem is that any “change in policy direction” is likely to be the opposite of what needs to be done. That’s the direction in which the progressive wing of his party is pulling and he’s sunk without their support.

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What’s the Matter With Buffalo?

I thought I might share Jason L. Riley’s take on the situation in Buffalo from his Wall Street Journal column:

It is unfortunate that this is what it takes for Buffalo to get the attention it deserves, because the city has been hurting for decades. Its population peaked in 1950 and has been falling steadily since the 1970s. Today, this former industrial powerhouse is the third-poorest city of its size in the country, with more than 1 in 3 residents on food stamps. Three-quarters of the city’s public schoolchildren qualify for free or reduced-price lunches. Between 2019 and 2020, murders rose by 30% nationwide but by 34% in Buffalo, according to the Buffalo News. In 2020, there were 100 more shooting victims than the city had averaged over the previous decade.

And while the actions of a self-described white supremacist have put Buffalo in the news, the city’s problem is hardly white supremacy. Buffalo has a black mayor who is serving his fifth consecutive four-year term. The leader of the City Council and the school superintendent are also black, as is the man who served as police commissioner from 2018 until his retirement earlier this year. Like other cities in previous eras—Coleman Young’s Detroit, Marion Barry’s Washington, Sharpe James’s Newark, N.J.—Buffalo’s black underclass has gotten poorer under the direction of black politicians. Electing people who share your race or ethnicity is no guarantee that they will act in your best interests.

Buffalo’s black population is about three times as much relative to its population as New York City, a little higher than Chicago’s. The cruel irony is that although the Democratic Party is extremely dependent on the fidelity and participation of black voters, black voters are largely ignored by Democrats after election day. As young urban highly educated professionals have assumed greater importance in the party that situation has become worse rather than better.

The midterms will be telling. While I expect turnout by black voters to remain high, it is likely to be lower than in a general election and I suspect that the black vote will be frighteningly different than it was in 2020.

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“Back to Africa”?

In a column in the Washington Post Karen Attiah urges African Americans to consider emigrating to Ghana to escape America’s violence and systemic racism:

It’s hard to find refuge in the political back and forth over the massacre, and over who is responsible for mainstream racism in general. Since the shooting, much liberal commentary has been devoted to blaming Fox News, Tucker Carlson and other race-baiting GOP apparatchiks for promoting racism and the great replacement theory.

But when it comes to white supremacy, White liberals have long held on to dangerously naive replacement theories of their own — that increasing populations of nonwhites will automatically dent anti-Blackness, for instance, and that younger generations are automatically less racist than their forebears. If President Biden’s reactions are anything to go by, the temptation is to believe that the salve for America’s racist spasms is a good ol’ dose of national unity. This liberal complacency puts us all at risk.

With these domestic options, it’s no wonder that in the past several years, there are more stories of Black people yearning for elsewhere. The rise of social media communities such as Nomadness Travel Tribe, Travel Noire and Blaxit Global are a testament to a growing awareness that Black people don’t have to feel trapped in America. “I don’t have to freeze and worry for my life every time I see a police officer,” a Ghanaian American friend who moved back told me in Accra.

I have been waiting for earnest appeals along these lines for some time. I hope that Ms. Attiah is aware of it but the “back to Africa” movement has been active in the United States for more than 200 years, since long before the abolition of slavery. The number of African Americans who have elected to emigrate to Africa has been miniscule. The number is larger today than it was in 1813, of course, but the population is larger than it was then, too. During Ghana’s “Year of Return” in 2017 about 2,000 African Americans left the United States. The number of sub-Saharan Africans who emigrated to the U. S. on the other hand outnumbered them nearly by tenfold. My understanding, based purely on anecdotes is that the emigres are very happy in their new homes. I wish them the best. Most African Americans consider the United States their home and feel no particular affinity for Africa. Ms. Attiah, a dual citizen, was clearly reared in a family in which Africa was considered home.

Probably the wisest thing about mass movements in America was said by the “longshoreman philosopher” Eric Hoffer. It’s probably his most famous statement: “What starts out here as a mass movement ends up as a racket, a cult, or a corporation.” The “back to Africa” movement is no exception. Reading up in its history is quite an education.

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Technically

A “bear market” is a declining stock market in which stocks have declined 20% or more. NASDAQ is technically in a bear market; neither the S&P 500 nor the Dow-Jones Industrial Average are in that territory. So, technically, what’s going on right now is a correction.

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What Actually Happened During the Clinton Administration?

In his Wall Street Journal column William A. Galston leaps to the defense of neoliberalism and the Clinton Administration of which he was a part:

In this narrative of the past half-century, critics often mark the Clinton administration as the moment when establishment Democrats capitulated to the ideology of the unfettered market. Poor and working-class Americans paid the price, they charge, with lower pay, diminished job security, and the collapse of entire sectors exposed to trade competition.

The historical record tells a different story.

Begin with the economic aggregates. During eight years of the Clinton administration, annual real growth in gross domestic product averaged a robust 3.8% while inflation was restrained, averaging 2.6%. Payrolls increased by 22.9 million—nearly 239,000 a month, the fastest on record for a two-term presidency. (Monthly job growth during the Reagan administration averaged 168,000.) Unemployment fell from 7.3% in January 1993 to 3.8% in April 2000 before rising slightly to 4.2% at the end of President Clinton’s second term. Adjusted for inflation, real median household income rose by 13.9%.

Mr. Clinton inherited a substantial budget deficit. Despite this, one group of administration officials, headed by Labor Secretary Robert Reich, urged him to propose a major stimulus package to accelerate economic growth and reduce unemployment more quickly. He refused, focusing instead on reducing inflation and interest rates to create the conditions for long-term growth. (I worked in the White House at the time but had no role in economic policy.) During the administration, federal spending as a share of GDP fell from 21.2% to 17.5%, and federal debt as a share of GDP fell from 61.4% to 54.9%.

He goes on to defend NAFTA, applaud gains made by the poor, minorities in particular, and reduced income inequality. He concludes:

In sum, during the heyday of neoliberalism, Americans weren’t forced to choose between high growth and low inflation or between aggregate growth and fairness for the poor, working class and minorities. This helps explain why Mr. Clinton’s job approval stood at 65% when he left office.

We can’t go back to the 1990s, but there are lessons from the past. Deregulation can go too far, but so can regulation. The market doesn’t automatically produce acceptable results for society, but neither does government. In these and other respects, policy makers need to find a reasonable balance, the location of which depends on ever-changing circumstances. No algorithm can substitute for good judgment guided by study and common sense.

In our effort to respond to the pandemic generously and humanely, we lost our balance. We have learned the hard way that demand doesn’t automatically create its own supply and that bad things happen when too much money chases too few goods. As we struggle to regain equilibrium, the critics of neoliberalism have much to learn from an administration whose economic performance will be hard to beat.

There are multiple different sorts of leaders. There are autocrats who just tell people what to do. There are visionaries who set out a vision and convince people to follow them. And then there are leaders who figure out which way the band is marching and get out in front it. I think that Bill Clinton was that sort of leader.

By the time Bill Clinton became president American companies had been investing in computing and network technology at a furious pace for almost ten years. Why? They were convinced it would pay off eventually. During that period I remember reading many articles that documented how poor the return on those investments had been. There’s a comment (Heinlein?) that when it’s time to railroad everybody railroads. That was what was happening.

While those investments may not have produced much in the way of returns in the 1980s or early 1990s it left the companies that made those investments well positioned to take advantage of the Internet as that went mainstream. A major step in that direction happened when Microsoft, in a panic, did a major course correction and started bundling Internet Explorer with Windows 95. That was in the third quarter of 1995. After that the returns began to pour in and the “dot com boom” was born. Bill Clinton didn’t create that development. He didn’t even help it along. He did benefit from it.

There are a couple of other developments Mr. Galston does not mention. For example, it was the tax reforms of early in Bill Clinton’s first term which made the enormous income increases of the very highest earners possible. And the Clinton Administration were the champions of granting China Most Favored Nation trading status and WTO membership which the Bush Administration pulled pulled across the finish line. That was what produced the enormous manufacturing job losses of early in the Bush Administration. I also note that Mr. Galston does not mention the work requirements of what is called “welfare reform”. That is a primary criticism of today’s progressives.

So, while I will give Bill Clinton credit for not getting in the way of the Internet Revolution and the “dot com boom”, I think the credit should largely be limited to that. That’s pretty faint praise.

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Bigotry, Inequity, and Antiracism

In an op-ed in the New York Times and in the aftermath of the murders in Buffalo, John McWhorter defends himself against the charge that he’s living in a fantasy world. Here’s the meat of the op-ed:

I’d like to clarify, at a juncture like this, why I take issue with most strains of what is today called antiracism, despite the reality of racist violence.

The key difference is between outright bigotry and the more abstract operations of what we call “systemic racism.” Yes, there is a synergy between the two. But as the difficulty in our conversations about racism attests, there is a wide gulf between personal prejudice (Racism 1.0) and the societal and sociohistorical operations that render Black physicists, for example, rare relative to Black people’s proportion of the population — Racism 2.0, sometimes even termed “white supremacy.” In an alternate universe, those two things might not go under the same name.

On Racism 1.0, the lamentable thing is that I see no reason it will ever completely vanish, at least not in our lifetimes. Studies have revealed that a degree of fear and distrust of “the other” exists in our species, for better or worse. Call it conservative of me, but I see little point in hoping that human nature will entirely change. Educated Westerners, especially, have already acquired a more robust habit of self-monitoring for racism than perhaps any humans in history. In our country, this habit noticeably gained traction in the 1960s. Some argue that white Americans need to go further, plumbing more deeply for subtle racist assumptions in their hearts. I understand the desire for it but wonder just how realistic that expectation is at this point.

I assume, with regret, that there will always be racists among us. As long as our gun laws make it easy to obtain assault-style weapons, there will be people, some mentally imbalanced and some just plain evil, who decide to commit mass shootings. There is no reason the hatred in people like this will mysteriously step around racism; the question would be why such people would not often be motivated by it. We live with this horror.

However, there isn’t enough of a nexus between this grim reality and disparities between Black people and white people — in, for example, wealth and educational opportunity — to gracefully put both under the general heading of “racism.” That is, we increasingly apply the term in reference both to violent hate crimes and to the fact that, for example, in the aggregate, Black students don’t perform as well on standardized tests as some of their counterparts. But while we tend to use the term “racism” for both things, it isn’t readily obvious to most how both prejudice and a differential in performance are versions of the same thing, referred to with one word. One of the thorniest aspects of today’s race debate is that we have come to apply that word to a spread of phenomena so vast as to potentially confuse even the best-intended of people.

I’m materially in agreement with that. I also think there’s presently a lot of overgeneralization going on. There’s a lot of white people who have much the same problems as black people do. It’s not simply whiteness that conveys privilege but location, money, class, status, contacts, and a host of other factors. Plus I wonder how much of “systemic racism” is just another way of saying “in an identifiable minority”?

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A Plague On Both Green and Brown Houses

In his New York Times column Tom Friedman is sour on both environmental activists and oil companies. His complaint about environmental activists is that they’re underestimating the difficulty of changing from fossil fuels to solar and wind power and overestimating the significance of cost per kilowatt-hour. His complaint about the oil companies is their insistence on increasing the production of oil. Here’s his summation:

Well, they’re both wrong, and accepting the repetition of either of these tired shibboleths is hurting us economically, environmentally and geopolitically — especially, of late, geopolitically.

Because our continued addiction to fossil fuels is bolstering Vladimir Putin’s petrodictatorship and creating a situation where we in the West are — yes, say it with me now — funding both sides of the war. We fund our military aid to Ukraine with our tax dollars and some of America’s allies fund Putin’s military with purchases of his oil and gas exports.

And if that’s not the definition of insanity, then I don’t know what is.

Have no illusion — these sins of the green movement and the oil industry are not equal. The greens are trying to fix a real, planet-threatening problem, even if their ambition exceeds their grasp. The oil and coal companies know that what they are doing is incompatible with a stable, healthy environment. Yes, they are right that without them there would be no global economy today. But unless they use their immense engineering talents to become energy companies, not just fossil fuel companies, there will be no livable economy tomorrow.

Let’s look at both. For too long, too many in the green movement have treated the necessary and urgent shift we need to make from fossil fuels to renewable energy as though it were like flipping a switch — just get off oil, get off gasoline, get off coal and get off nuclear — and do it NOW, without having put in place the kind of transition mechanisms, clean energy sources and market incentives required to make such a massive shift in our energy system.

and here’s his primary criticism of the “green movement”:

If you can’t install the transmission lines — to get that sun and wind power from the vast open spaces where it is generated to the big urban areas where it is needed — and if you cannot set aside more land to install the scale of solar and wind farms you need to replace coal, gas or nuclear, it doesn’t matter that your renewables are cheaper on a per-kilowatt-hour basis.

And today transmission is a huge problem in the U.S. and Europe, where many people don’t want wind farms, solar fields, electricity lines — or natural gas pipelines — in their backyard.

He misses the importance of baseline power. And he makes an error common to notional environmentalists, confusing subsidies including export subsidies with lower prices.

If we genuinely wanted to reduce the use of fossil fuels in transportation we’d stop subsidizing new highway construction and do a lot more additive manufacturing rather than importing inexpensive manufactured goods from far away. There’s still no such thing as a green container ship.

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Apologia Pro Consilium Suum

“Apologetics” means the organized justification of something, typically religious doctrine. An “apologia” is a formal written defense. At Vox.com Andrew Prokop offers what appears to be an apologia for the Biden Administration’s signature bill, the American Rescue Plan. He confesses that it did, indeed, increase inflation beyond what it otherwise would have been:

Countries around the world are struggling with inflation due to pandemic disruptions, but the Biden stimulus made the US’s inflation problem more severe, to at least some extent. “I think we can say with certainty that we would have less inflation and fewer problems that we need to solve right now if the American Rescue Plan had been optimally sized,” said Wendy Edelberg, a senior fellow in economic studies at the Brookings Institution.

Maybe I’m missing something but to my eye a shortened version of his argument would be:

  • Inflation in the U. S. is higher than in any other developed economy.
  • Core inflation in the U. S. is higher than in any other developed economy.
  • Not all of the effects of the ARP were bad: GDP and employment have recovered well.
  • The Biden Administration had good intentions.

but he offers no alternative explanation for why inflation if worse here than in other OECD countries. Blaming supply chain disruption, as the Administration does, is facile for reasons I make clear later in this post.

I also wanted to call out this passage:

Giving money to people who don’t need it isn’t necessarily a bad thing in and of itself.

I wish he had expanded on that sentence a little more since I disagree with it categorically. I think it reflects a view of government completely different from mine. In what view of economy and government is “giving money to people who don’t need it” a good thing?

I also think there is a fact he omits completely. The U. S. has a higher trade deficit as a percentage of GDP than any other developed economy. Not just higher than the China, the UK, Germany, and France. Higher than Russia. Higher than Mexico. Higher than Canada, New Zealand, or Australia. We’re not in the same fix as economic basket cases like Somalia but we’re about in the same situation as the poor countries of Africa and South America.

That has serious implications. We are more vulnerable to global supply chain disruptions than any other developed economy. Consequently, increasing demand as the ARP demonstrably did inherently raises prices more than it will in any other developed economy.

It is said that the Roman orator Cato the Censor concluded all his speeches with Carthago delenda est (Carthage must be destroyed). Maybe I should start ending all of my posts with Increase. Domestic. Production.

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The Ordinary Weekend Massacre

The editors of the Wall Street Journal make an observation very similar to the one I made:

The shooting in Buffalo on Saturday has horrified Americans, but it was massacre as usual in Chicago this weekend and few outside the Windy City noticed.

At least 33 people were shot, five fatally, according to police. Five of the victims were in the 1st police district, which covers the downtown Loop and Near South Side. The city’s daily mayhem isn’t limited to high-crime neighborhoods but has spread to busy commercial areas. Shootings in the 1st district are up 60% over last year.

Sixteen-year-old Seandell Holliday was shot in the chest and killed in downtown Millennium Park. He’s the 97th child shot and 20th slain this year. The previous weekend 24 people were shot, six fatally.

Sunday was the first day in three weeks without a homicide. The balance of the editorial is devoted to an analysis of Mayor Lightfoot and the City Council’s strategy for restoring peace to downtown Chicago.

Missing from their analysis is a reality: Chicago has more police officers relative to its population than either New York or Los Angeles. Frankly, I’m skeptical that more police officers even more better-trained police officers will do much about the situation in Chicago. What will they do when flash mobs consisting of a couple of hundred teenagers suddenly appear downtown? My guess: nothing. There is clearly a pathology at work far beyond the capacity of the Chicago Police Department.

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The Fog of War

The editors of the Washington Post declaim that a Ukrainian victory is imminent in Ukraine:

In the face of stiff Ukrainian resistance — bolstered by timely and massive shipments of Western arms — Russia has retreated from Kharkiv, the second-largest city in Ukraine, reportedly, in some areas, all the way back to the international border Mr. Putin sought to erase. Russia has “likely abandoned the objective of completing a large-scale encirclement of Ukrainian units” in eastern Ukraine, the Washington-based Institute for the Study of War reported Sunday. It now appears to be aiming to take, at most, the entirety of a single Ukrainian region, Luhansk.

And even that might be beyond the capability of Russia’s depleted, poorly led forces. Quite the contrary: The more likely next game changer in this war would be a widening Ukrainian counteroffensive that brought still more of the Russian-held south and east of Ukraine back under the control of its legitimate government. Certainly that is the result that would do the most to compound the strategic defeat of Mr. Putin, and that Ukraine’s supporters in the United States, Europe and elsewhere should therefore be pursuing in unison.

Now is not the time, therefore, to go for a negotiated cease-fire between Ukraine and Russia, as France, Germany and Italy have proposed in recent days. Their desire to shorten this destructive war — and thus limit the damage both to Ukraine and to their own hard-pressed economies — is understandable. Their promises not to impose terms on Kyiv are undoubtedly well intentioned. Still, the risks of relaxing the pressure on Mr. Putin before he is thoroughly beaten, and maybe not even then, are too high.

Meanwhile at 1945 Daniel Davis provides a more sobering assessment:

If Kyiv has hopes of eventually winning the war, it will need to make some significant changes in its approach to the fighting in the near term. It will also need to develop a new plan for the longer term. Kyiv must continue to hold in the Donbas while simultaneously starting the process of building an offensive force with the capacity to push Russian troops from its soil.

As I have written many times in these pages – both before the war started and since it began – I assess the most logical course of action for Kyiv is to make the best deal it can with Moscow and end the war through negotiations. That is the best way to stop the fighting, end the killing of thousands of Ukrainian citizens, and halt the destruction of still more Ukrainian cities.

Yes, that would result in the likely loss of the Donbas, but it would prevent tens or perhaps hundreds of thousands more Ukrainians from being killed, allowing the rebuilding of the country to begin. Negotiations would prevent Putin from escalating the war, thus precluding an even worse outcome for Kyiv later.

But as both Ukrainian President Volodymyr Zelenskyy and his foreign minister, Dmytro Kuleba, said following the May 9 Victory Day commemorations, many Ukrainians would rather continue fighting. No matter how long it takes or how much risk they incur, Ukraine would like to win back all of the territory Russia has occupied.

Attempting to retake all lost territory by force of arms will certainly impose a high cost on Ukraine, and there is no guarantee of eventual success. If the people of Ukraine decide they are willing to take on this burden, however, there is a path to ultimate victory.

which he follows with a rather detailed prescription of the steps that the Ukrainian forces should take.

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