Too Hot, Too Cold, or Just Right?

Tim Congdon, writing at the Wall Street Journal, is concerned that the Fed, paying little attention to fundamentals, is underestimating the prospect of inflation:

The Fed has been dismissive of concern, describing the upturn in inflation as “transitory.” But it can’t deny that the forecasts it made in the spring and summer of 2020 missed the mark by a wide margin. Its main concern then, according to FOMC minutes, was that the Covid-19 pandemic would result in a long period of disinflation lasting “many years,” which would have to be countered by “accommodative” financial policies. In fact, the sequel to the pandemic is an inflationary boom.

Research at the Fed is dominated by the New Keynesian school. According to the New Keynesians, actual inflation is heavily influenced by inflation expectations, with some role for excess demand and supply (measured by the so-called output gap). New Keynesians—such as Richard Clarida, the Fed’s vice chairman—pay little attention to the quantity of money. Over the past remarkable 15 months or so of highly accommodative policies, the FOMC minutes haven’t once referred to any concept of the quantity of money.

The omission is all the more remarkable because June 2019 to June 2020 saw the highest increase in the M3 money aggregate since 1943, at 26%. (The M3 aggregate is no longer estimated by the Fed. The figure given here comes from the Shadow Government Statistics consulting firm, using information still made available by the Fed.) Avant-garde New Keynesians might pooh-pooh the comparison as irrelevant to the 21st century. Maybe so, but it can’t be overlooked that in the year leading to March 1947 consumer prices climbed by more than 20%.

The Fed was wrong a year ago, but forecasting errors are a defining feature of modern economics. Today, a case can be made that the Fed is underestimating the inflation risks in the balance of 2021. The FOMC’s latest verdict on inflation relies on inflationary pressures being markedly weaker in the last seven months of the year than they were in its first five months. That seems debatable. Perhaps the Fed has made a less forgivable analytical mistake.

Meanwhile, Paul Krugman is convinced it’s just right. I don’t know whether inflation will continue at the present or an increasing rate or whether it is, indeed, transitory as the Fed governors maintain. I do know that the increase in the money supply is unprecedented in my lifetime. And, as Al Jolson used to say, you ain’t seen nothing yet.

I also know that the pressure of inflation will fall hardest on the poor and those on fixed incomes, groups to whom it is hard to say “no” and inflation can’t be stemmed by spending more.

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Conflicted

I found Carly Olson’s piece in the LA Times a study in conflicts. While I agree with her that not enough good jobs are being created by the U. S. economy:

A labor shortage implies there aren’t enough available workers to fill open jobs, but this is not the case nationally, or in California. National unemployment in June was 5.9%, up from 5.8% in May, in part because the number of people looking for jobs grew, according to data from the Labor Department on Friday. California’s unemployment is tracking higher, at 7.9% in May.

Millions of Americans are seeking work, and the Labor Department is reporting the highest number of advertised job openings in 20 years of data. Friday’s jobs report indicated the hiring crunch might be starting to ease: U.S. employers added 850,000 jobs in June, the biggest gain in 10 months.

Economists say it’s only a matter of time before open roles are filled, and the least desirable jobs with the lowest pay and benefits will be the last to go. They don’t see the job market as a sign of shifting economic forces unleashed by the pandemic, or of a workforce made comfortable or lazy by stimulus payments.

“Nothing about this is going to be permanent,” said Heidi Shierholz, a senior economist at the left-leaning Economic Policy Institute.

Yet some trends are emerging clearly. The struggle to fill jobs is hitting smaller businesses disproportionately. Workers may be in a prime position to secure better conditions and pay, but without changes at the federal level, economists said the gains will be short-lived — and white-collar workers may gain the most, entrenching inequality.

Nearly all the jobs she mentions are in the hospitality sector. How does she expect jobs with practically no qualifications and zero cost of entry to be “good jobs”?

I think there’s a kernel of truth in the “skills mismatch” hypothesis and I think it’s even more true that the the jobs on offer aren’t necessarily where the workers are. There’s enormous variance across the country in unemployment—well into double digits in some places in California while in the low single digits in Utah, Idaho, and elsewhere.

But the fast food jobs she cites have a special problem. The entire sector grew up in response to an enormous spike in the number of entry-level workers entering the market in the 1960s and it’s been dependent on entry-level workers ever since. 60 years ago those entry-level workers were Baby Boomers who had just entered their teens. Now they are largely immigrants.

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Prepare for Pounding on the Table

At The Week Joel Mathis writes about ending judicial review:

Forget packing the court. What if the U.S. Supreme Court was neutered, instead?

It’s a possibility. A presidential commission considering reforms to the court last Wednesday heard from Nikolas Bowie, an associate professor at Harvard Law School. He argued that it is time to end the high court’s power of “judicial review,” which gives it the authority to declare a law unconstitutional and thus usually gives SCOTUS the last word in battles with the legislative and executive branches.

The Supreme Court’s “relationship to Congress is not that of an umpire overseeing a batter, but of a rider overseeing a horse,” Bowie told the commission in his written testimony. “Most of the time, the court gives Congress free rein to act as it pleases. But the court remains in the saddle, ready to pull on the reins when Congress moves to disrupt hierarchies of wealth or status.”

When President Biden appointed the commission in April, public and media attention focused mostly on progressive hopes to pack the court with additional justices — the new seats to be occupied by Democratic appointees, of course — and reverse the court’s conservative tilt. As Bowie’s testimony indicates, the commission is actually considering a much wider array of possible changes to the judicial branch.

And the conversation involves more than mere technical changes, like court size or term limits for justices. Instead, it strikes at the very heart of the Supreme Court’s role in American governance, politics, and culture. Without judicial review, can the court be the court?

Judicial review, of course, is mentioned nowhere explicitly in the Constitution — the court claimed that authority for itself in Marbury v. Madison in 1803. “It is emphatically the duty of the Judicial Department to say what the law is,” Chief Justice John Marshall wrote in the ruling. The precedent has stood for more than 200 years.

There is a bit of trial lawyers’ wisdom, at least a century old, to the effect that when the law supports you argue the law; when the facts support you argue the facts; but when neither the law nor the facts support you pound on the table. For the last 65 years liberals and then progressives were very effective in getting the courts, the least democratic of our institutions, to further their social agenda for them. Now neither the Congress nor the courts are promoting their goals fast enough to suit them. Be prepared for more pounding on the table.

Actually, I support limiting the appellate jurisdiction of the Supreme Court—more to the point than eliminating judicial review entirely and eminently doable. It’s one of the Congress’s enumerated powers. From Article III, Section 2 of the Constitution:

The judicial power shall extend to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;–to all cases affecting ambassadors, other public ministers and consuls;–to all cases of admiralty and maritime jurisdiction;–to controversies to which the United States shall be a party;–to controversies between two or more states;–between a state and citizens of another state;–between citizens of different states;–between citizens of the same state claiming lands under grants of different states, and between a state, or the citizens thereof, and foreign states, citizens or subjects.

In all cases affecting ambassadors, other public ministers and consuls, and those in which a state shall be party, the Supreme Court shall have original jurisdiction. In all the other cases before mentioned, the Supreme Court shall have appellate jurisdiction, both as to law and fact, with such exceptions, and under such regulations as the Congress shall make.

The emphasis is mine. If the argument is that’s more than can expected of a do-nothing Congress, I agree. But that doesn’t mean that it’s impossible. IMO it should have been done back in the late 60s.

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Rhyme Time

At UnHerd Joel Kotkin notes that a rebirth of fascism is going on, primarily among progressives and “anti-fascists”:

There’s a tendency today to see Benito Mussolini as a pathetic sideshow, an incompetent blusterer who went from Adolf Hitler’s idol to his lapdog. Yet in many ways, Mussolini’s notion of fascism has become increasingly dominant in much of the world, albeit in an unexpected form: in the worldview of those progressives who typically see “proto-fascism” lurking on the Right.

Mussolini, a one-time radical socialist, viewed himself as a “revolutionary” transforming society by turning the state into “the moving centre of economic life”. In Italy and, to a greater extent, Germany, fascism also brought with it, at least initially, an expanded highly populist welfare state much as we see today.

Indeed, Mussolini’s idea of a an economy controlled from above, with generous benefits but dominated by large business interests, is gradually supplanting the old liberal capitalist model. In the West, for example, the “Great Reset,” introduced by the World Economic Forum’s Klaus Schwab, proposes an expanded welfare state and an economy that transcends the market for the greater goal of serving racial and gender “equity”, as well as saving the planet.

Wherever it appears, whether in the early 20th century or today, fascism — in its corporate sense — relies on concentrated economic power to achieve its essential and ideological goals. In 1922, for instance, large corporations and landowners helped finance Mussolini’s Black Shirts for their March on Rome. Confindustria, the leading organisation of Italian industrialists, was glad to see the end of class-based chaos and welcomed the state’s infrastructure surge.

Read the whole thing. History may not repeat itself but it does rhyme. Most Americans know nothing of Mussolini today but in the 1930s he was widely admired by American business leaders, politicians, New York Times columnists, and intellectuals. Power is always intoxicating and although the precise circumstances may change the incentives and motives remain the same.

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It’s the Progressives’ Fault

And I found this post by Kevin Drum gratifying, especially because I’ve been pointing this out for most of two decades, frequently to the bitter denunciation of progressives:

I’ve made this point many times before, and I want to make it again more loudly and more plainly today. It is not conservatives who have turned American politics into a culture war battle. It is liberals. And this shouldn’t come as a surprise since progressives have been bragging publicly about pushing the Democratic Party leftward since at least 2004.

Now, I’m personally happy about most of this. But that doesn’t blind me to the fact that “personally happy” means nothing in politics. What matters is what the median voter feels, and Democrats have been moving further and further away from the median voter for years:

but he’s worried about it:

Despite endless hopeful invocations of “but polls show that people like our positions,” the truth is that the Democratic Party has been pulled far enough left that even lots of non-crazy people find us just plain scary—something that Fox News takes vigorous advantage of. From an electoral point of view, the story here is consistent: Democrats have stoked the culture wars by getting more extreme on social issues and Republicans have used this to successfully cleave away a segment of both the non-college white vote and, more recently, the non-college nonwhite vote.

Plenty of facts, figures, and charts.

Not only are Democrats abandoning the white working class, they are rapidly discouraging blacks and Hispanics as well. It’s like the Cheshire cat.

I only have one major problem with Kevin’s post. The first is that progressives are not liberals. Most liberals are over 80 years old and are even more discouraged by the direction of their party than I. Liberals are tolerant; progressives aren’t. They reject any views that aren’t their own and their vision is always just beyond reach. That’s the nature of today’s progressivism. It’s a form of vanguardism but one unmoored from any principles other then overthrowing the existing order. Should their order become the existing order they’ll want to overthrow that, too.

Update

Some may ask why did it happen? I think that Bernie Sanders’s presidential campaign in 2016 moved the “Overton Window”. Add social media to that and the illusion of numbers they provide and that’s sufficient to explain it. If you wonder why it makes a difference, the answer is that I think we’re sitting on a powderkeg right now. There are places in the country that have been in a state of rebellion for more than a year.

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Beyond the Sound and Fury

I found this post by Mark t. Mitchell resonated with my post on the Sauganash Parade:

As Independence Day dawns again, the United States seems disoriented and on edge. The one-two punch of Covid-19 and urban riots, coupled with a sense of economic fragility and impending inflation, has left many feeling drained and nervous about the future. Institutions that once served as the ballast for national well-being have shown themselves to be untrustworthy. Americans brace for the next wave of disruption.

When Twitter, Facebook, and cable news frame the issues of the day, it’s hard not to be discouraged. We are polarized and angry, and the radical Left is to blame—or maybe it’s the fascist Right. The despair is often accompanied by a self-righteous assurance that things would be better if only our political opponents would disappear.

But another America still exists, beyond the sound and fury of Twitter and the Beltway. It lives quietly in homes, where parents try to raise their children well. It exists in schools, where dedicated teachers show up day after day to teach. It flourishes in neighborhoods, community centers, and diners, where neighbors gather for conversation and a shared story. It pervades churches, synagogues, and mosques, where families pause from their busy lives to return thanks to God. Indeed, despite the turmoil and uncertainty, we have much to be grateful for.

I’m grateful for my neighbors and my neighborhood. Not that I didn’t hear more than one political argument today.

Dr. Mitchell concludes:

Stewardship of this cultural and political inheritance means living gratefully and responsibly in such a way that we strengthen our institutions and pass them along to the next generation. We must seek to inculcate in ourselves and our children the habits and practices necessary for sustaining and improving what we have been given. Ignoring this task means squandering the very things that make a free society possible.

On Independence Day, set aside some time to remember and celebrate America’s founding principles. Let us recommit ourselves to the responsibility of upholding those principles with fidelity and steadfastness born of gratitude. Let us take seriously the responsibilities, and not just the rights, of citizenship. Americans are inheritors of great but fragile gifts; gratitude should foster a commitment to steward them well.

and yet there are some who are eager to discard that inheritance. In favor of what? Not even they can tell you.

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July 4, 2021

Here’s a selection of pictures from this year’s Sauganash Parade. It was cancelled last year but back in full force this year.


The parade always begins with one of Chicago’s finest.


followed by a sequence of vehicles of all shapes and sizes.


This is the first time I recall seeing this shape.


We generally have some pipers in the parade.


And politicos are always well represented.


There were a few surprises. This lady was one of them.


He was another. That suit must have gotten hot after a couple of miles.


Various organizations.


My beloved Happy Foods. Not the greatest picture.


They were playing Dixieland. Not bad for what must have been a pickup group.


And my neighbors. They come in all shapes, sizes. colors, and religions. As I’ve said before in Sauganash “parade” is a verb. I’m convinced more people march in the Sauganash Parade than watch it.


Dogs of all shapes, sizes, and colors, too.


And that’s the end for this year.

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Baldur’s Gate 3 Pre-Release

As I’ve mentioned before I’ve been playing Baldur’s Gate 3 in its pre-release form. All that’s presently available is, essentially, the first chapter. I’ve played through three times now&mdaash;first as a fighter, then as a mage, and most recently as a rogue. I have found playing as a rogue the most fun. Some of that may be me; it also may be because my first time through (right up until the first patch was issued) it was practically unplayable.

I wish they’d release it officially already but that probably won’t happen until next year. It definitely has potential and I want to know what will happen next.

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What Has Happened to the Teaching of History?

Or maybe the right questions are how does the teaching of American history vary from place to place in the country and how has it changed over the years? Those are the questions that came to me as I read Tyler Cowen’s opinion piece at Bloomberg, his thoughts on “revisionist history” for the 4th of July 2020. Here’s its opening:

True patriotism, especially of the American variety, comes from questioning the history you were born into. As July 4 approaches, we should all keep this in mind as we question some of the fundamentals of the American story — and we should ask ourselves not whether these reconsiderations are justified, but why there aren’t more of them. Revisionist history serves many useful purposes, and for the most part it should be encouraged — even though many particular revisionist claims turn out to be wrong.

For my part I think there’s revisionist history and revisionist history. I don’t think much of “revisionist history” that’s an outright lie, easily disproven, and does nothing but undermine any sense of common values. Keep in mind that the U. S. is distinctive among countries in that our nationhood is founded on shared values; without them we’re just a dormitory, a waystation.

Tyler is considerably younger than I am but I have known about racism, slavery, Jim Crow, the Tulsa race riots, the American Civil War and its foundations, and have considered American foreign policy skeptically since I was a kid. But some of that might be due to where I grew up, the schools I attended, and my family background.

Let’s consider one example of revisionist history: that Thomas Jefferson had an affair with a mulatto slave, Sally Hemmings, and sired several children by her. As I understand it the genetic evidence is unable to distinguish whether Jefferson or his uncle sired Sally Hemmings’s children and there is non-genetic evidence, e.g. letters that contradict the genetic evidence. We’ll never know. And yet it is taken as revealed truth by many. Why? I think it’s to undermine Jefferson’s contributions to our history and disrupt our shared values. To the extent that’s the case I think it’s harmful.

There’s another sort of revisionist history, for example, many people in the South do not believe that the American Civil War was fought over slavery. IMO there is sufficient evidence to conclude that the Civil War is not severable from slavery. I don’t think the view held by those Southern dissenters, that they were defending their homes against Northern invaders and the issue was one of states’ rights is healthy.

I don’t think much of Howard Zinn’s or Noam Chomsky’s revisionist histories and believe they are largely destructive. I think we’d be better off with Parson Weems than with them.

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Bad Policy Makes It Hard for Businesses to Fill Crappy Jobs That No One Wants

Here’s the conclusion of the editors of the Wall Street Journal’s observations on the latest Bureau of Labor Statistics’s Employment Situation Report:

By now anyone who wants a job can get one. Yet employment is still 7.1 million lower than in February 2020 while the Labor Department’s Jolts report showed 9.3 million job openings in April. The $300 federal unemployment bonus, which Democrats extended through Labor Day, allows many workers to earn more not working—and for up to 99 weeks in some states.

As a result, many workers are picky about which jobs they take, which San Francisco Federal Reserve President Mary Daly says is good. Not for many businesses and their customers. Ninety-four percent of nursing home providers said they had staffing shortages in the last month, and the industry continues to shed workers.

The reply is that businesses can merely increase wages, but most are doing exactly that. Many are offering bonuses for new hires. Average hourly wages increased 10.4% for production-level retail and 28% for leisure and hospitality workers at an annual rate. Disney recently announced a $1,000 signing bonus to recruit cooks who earn $18 per hour for its Florida theme parks.

As businesses bid up wages, more workers are quitting for higher-paying jobs. The number of workers who voluntarily left their jobs to look for other work increased by 164,000 to 942,000. High worker turnover makes it hard to run a business, and the labor shortage is causing supply-chain problems and pushing up prices. Inflation has eroded wage gains in recent months.

The jobs recovery was always going to accelerate as the pandemic eased, and the labor market will recover faster as the $300 bonus for not working ends. Twenty-six states have either stopped accepting the bonus or soon will. The economy’s problem now isn’t too little work. It’s too few workers willing to do the work.

I think they’re oversimplifying things quite a bit. I don’t disagree with them that present White House policies have contributed to the problem and the President Biden is either misreading the present situation or has other motives for the policies he’s espousing.

But one of the problems is that the jobs on offer aren’t where the people are and there’s considerable geographical variation in both jobs and the unemployed. The unemployment rate in Los Angeles County is around 12%. In Dallas it’s 6%. Logan, Utah, Huntsville, Alabama, and Lincoln, Nebraska all have unemployment rates around 2%. El Centro, California’s is 16%. It takes more to induce people to move across the country than the availability of an undesirable job.

Another issue is that many of the jobs on offer are, frankly, crappy jobs (in some cases literally). Nursing home workers? Leisure and hospitality? IMO a little deeper thought is called for. Is the approach we are taking to filling those needs the right one? Should we subsidize a return to the way things were or, as Mr. Biden has vowed, should we “build back better”? That will mean that some of the businesses that closed over the last year will remain closed.

Don’t get me wrong. I don’t think that government policy should stand in the way of a return to the way things used to be but I don’t think we should be subsidizing it, either, by ensuring the creation of vast numbers of low wage jobs.

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