There is one paragraph in Holman Jenkins’s Wall Street Journal column in defense of Howard Schultz of which I think note should be be taken:

This is the part that never will be explained in a campaign speech or op-ed. Scandinavian citizens exhibit an off-the-charts willingness to pay the necessary taxes because they have an off-the-charts confidence in government to deliver services in an honest, equitable and efficient fashion.

The reason that the Swedes and the Norse have more trust in their governments is that their governments are more trustworthy than ours. I do not entirely know why that is but I know that it is true. I do not know if it is due to our greater individualism, their greater (until recently) homogeneity, our lack of social cohesion, our two party system, just plain perversity or all of the above but American politicians using their offices to become rich is commonplace and crosses party lines and ideologies. Bill Clinton never earned a salary greater than $30,000 in his life before he became president. Now he’s a multi-millionaire. Rahm Emanuel pushed his way into investment banking without training or experience using the Rolodex he’d acquired via his political activities as a lever and was paid millions. Illinois House Speaker Mike Madigan has been cross-ruffing his law practice with his power over property taxes in Springfield, an obviously corrupt arrangement, more than 30 years. These are not exceptions. They are the rule.

It will take more than a government program to change that. It will take a sea change in American government and if you want to see why that will not happen just look at the present Congressional leadership.

The editors of the New York Times, reversing their previous position, say that it’s time to withdraw our troops from Afghanistan:

This page has been supportive of the war in Afghanistan since it began. We criticized NATO countries in Europe for not sending enough soldiers. And we were critical of the Bush administration for its lack of postwar planning and for diverting resources to the war in Iraq.

Events have shown us to have been overly optimistic regarding the elected Afghan government, though we were rightly critical of its deep dysfunction. We have raised concerns about military tactics that cost civilians their lives and been skeptical of the Pentagon’s relentlessly rosy assessments of the progress made and the likelihood of success.

[…]

It is time to face the cruel truth that at best, the war is deadlocked, and at worst, it is hopeless. The initial American objective — bringing Bin Laden to justice — has been achieved. And subsequent objectives, to build an Afghan government that can stand on its own, protect the population and fight off its enemies, may not be achievable, and certainly aren’t achievable without resources the United States is unwilling to invest.

Walking away from a war is not a strategy. But an orderly withdrawal of NATO forces can be organized and executed before the year is out and more lives are lost to a lost cause. Two Americans have been killed in combat already in 2019. No American soldiers should be fighting and dying in Afghanistan in 2020.

President Trump should seize the opportunity. If he does not, we may be stuck in a futile stalemate for years, decades, spending money and wasting American lives.

There is nothing the editors point out other than Bin Laden’s assassination that was not true in 2009 or in 2005 and every sign tells us that they will be true in 2020 and 2024 as well. What assurance do we have that, if a Democrat is elected in 2020, the NYT will not reconsider its editorial position again and decide that the stalemate in Afghanistan was a consequence of feckless Republican bungling of the war in Afghanistan rather than the intrinsic character of the conflict itself? Time to withdraw or, at the very least, change from the present counter-insurgency strategy to a strategy of counter-terrorism.

My reactions to the three policy proposals in Adam Garfinkle’s article at The American Interest vary from indignant disagreement to grudging agreement. His first proposal is about health care reform:

To take just one example, healthcare insurance premiums could be made affordable again for the vast majority of Americans if the three categories of the most expensive generic cases were carved away from the main insurance pool: the very ill elderly; trauma cases; and treatment for chronic and progressive diseases like diabetes. These cases could be handled by a secondary insurance market, just as secondary insurance markets operate in many niches of a modern economy. Even if some combination of state and Federal government were to heavily subsidize insurance premiums for these classes of cases, it would still be simpler and cheaper than the Affordable Care Act.

and exhibits a remarkable lack of understanding of insurance, health care, economics, or human nature. The total amount of insurable risk outside of his exclusions is extremely small—perhaps as little as 5% of health care spending. The ACA was a “Hail Mary” designed to preserve insurance companies and discourage the legislation being tarred as “socialized medicine”, a goal at which it did not succeed. I believe the question the Obama Administration was trying to answer was how do you insure more people, get the legislation through the Congress and past the various interest groups, and have the result be something you can reasonably claim is health care reform? The ACA was an answer to that question about as good as could have been expected. I happen to think it was the wrong question but that’s another issue.

Mr. Garfinkle’s proposal amounts to socializing 95% of spending. That would remove it from the hands of the insurance companies. When you add subsidies for the poor to the mix in the amount left there would be no health care insurance industry. How that results in lower prices eludes me. It would unquestionably be resisted to the last breath by the health care insurance industry and what the reaction of physicians would be is not clear.

His second proposal is for Social Security:

Second, let’s take a look at the Social Security trust fund. We’ve known for many years that our demography is leading to an insolvency train wreck—more healthy retirees and fewer workers to support them. Every expert who follows this problem agrees that at current rates of tax inflow and disbursements we have at most seven years before the entire system implodes. It’s hard to think of a clearer example of the irresponsibility of Congress—or perhaps we should be honest about calling it cowardice—that this can has been kicked so far down the road.

Of course something has been done in recent years to slow the train engines, but what has been done has been both band aid-like and prejudicial, again to people who work with their bodies for a living: The retirement age for both men and women has been kicked out several years. This is class prejudicial because the data clearly show that people who do physical labor for a living have shorter lives than those who do not. So extending the retirement age amounts to a reverse Robin Hood: taking from the poor to give to the rich.

None of this is necessary, because if Congress had any courage it would do the simple and honest thing: Simultaneously remove the cap from taxing income and means-test benefits.

My preference would be to abolish the payroll tax and the trust fund and to pay Social Security benefits from general revenues but I’d settle for his plan. Heck, I’d settle for raising FICA max to the lowest wage earned by the top 1% of income earners (presently about $389K), indexed. At that we could probably afford to lower both the employer and employee sides of FICA in a revenue neutral way, a consummation devoutly to be wished.

I think his final proposal, putting the budget on auto-pilot, is insanity:

The Westminster method is a bridge too far for us, but legislating an automatic continuing resolution isn’t. So why doesn’t any Senator or Congressman even suggest it? You tell me.

That illustrates my fundamental disagreement with Mr. Garfinkle. Representative government shouldn’t be easy. It should be hard. I’d like to make it even harder by mandating single-issue requirements for all laws. That would eliminate government shutdowns, too.

His proposal would do the opposite of making government more responsible. It would result in removing all responsibility from the Congress.

I think you might find anaesthesiologist Ronald Dworkin’s essay at The American Interest thought-provoking. It begins by making an argument against the public health establishment’s opposition to vaping:

Companies like JUUL Labs have created an e-cigarette substitute for smokers to “vape.” Although the substitute contains nicotine, it lacks the carcinogens and carbon monoxide found in “real” cigarette smoke. Despite improvement over traditional cigarettes, many public health experts oppose vaping, thinking it represents more of a gateway to cigarettes than a liberation from them. Nor does the FDA allow e-cigarette makers to advertise their products as being safer than traditional cigarettes. This has caused the public to mistakenly view both products as equally bad.

E-cigarettes are like the nicotine patches in my patient story: While it is best for people to abstain from all cigarettes, better that they use a less dangerous form. The public health activists are like the surgical team that denied the man his patches: In their quest to bring perfect health, they sometimes end up causing worse health. The average American is like my patient: resentful toward those who tell him or her how to live.

and then turns to how public health, despite its scientific foundations, is inevitably ideological:

Individuals, like all real things, have resistance; they do not reliably conform to abstract principles or universal categories. Every nurse, social worker, psychologist, and doctor knows this limits science’s applicability. Because public health experts deal with whole populations, they are less likely to see how abstract scientific principles can fail. A public health expert might say, “We must fight cigarette addiction to improve health.” The phrase can be taken for truth because it evokes no precise image, and because the expert who utters it does so in good faith. But the policies the phrase inspires do not necessarily end cigarette addiction. Why? Because there is a divergence between words and things, between the scientific principle and the reality of individual human behavior. A simple phrase does not represent with sufficient exactitude the complexity of addictive behavior expressed by any one person—as most social workers, psychologists, nurses, and doctors can attest.

These two historical tendencies in public health combine to make the field both arrogant and ideological, relatively speaking.

Arrogant because public health experts do not watch their science fail on a daily basis. Because they work with large populations rather than with individual cases, public health experts often think with words—for example, the American Public Health Association’s (APHA) goals to “reduce global childhood mortality” and “support global food security.” Goals like these are easy for the thinker with words; the delay between error and the serious consequences of error—a very short timespan for an anesthesiologist—is too long for the public health expert to learn humility or even responsibility. After articulating a principle, the public health expert sees nothing go right or wrong for years, if ever, and so the value of the words can only be judged by their good intentions. When the entire planet becomes a platform for action, and the desired goals verge on being utopian, the issues themselves start to lack physicality. The public health expert is thus tempted to believe that everything has been done when only words have been spoken.

Read the whole thing.

There are aspects of the story which Dr. Dworkin touches on but does not explore. One is the will to power. Nietzsche thought it was the main driving force in human beings. It would be incredible if it were completely absent among public health activists.

The other aspect is that constraints on government spending also place constraints on this will to power. Remove those constraints and there is a real danger of loosening the constraints on that urge to power as well. If there were no constraints on government spending it would be necessary to invent them.

In her op-ed at Bloomberg economist Stephanie Kelton lost me at this paragraph:

Option B is your standard Robin Hood redistribution. Money is taxed away from those at the top, and money is invested in programs to lift everyone else (shown in blue). Again, the distance (or degree of disparity) between the top and the bottom is the same as under Option A, but this time the top lost and the bottom gained.

Name one federal program that does that. Overwhelmingly, federal government programs do one of two things

1. They notionally at least help everyone. That’s the case with military spending, Department of Agriculture food inspections, the judiciary, and so on.
2. People who already have income in the top 10% of income earners are paid to do things on behalf of “the bottom”. Whether the things they’re paid to do actually “lift” anyone is hard to say. At the very least it’s disputed.

If you’re going to just extend credit indefinitely, why not actually “lift” those at “the bottom” with direct cash grants? If you argue to do anything else, you’ve stopped being an economist and started being a politician. Or a commissar.

Chicago Tribune columnist John Kass takes on the Chicago mayoral election in his latest column:

Boss Madigan is a careful, disciplined and cautious man. Yet now he’s on federal tape, and he’s heating up at just the right, or wrong, time in the mayor’s race.

And just the idea of Madigan on federal tape sent shock waves of fear through the state’s political establishment.

Madigan can thank Ald. Danny “Happy Ending” Solis, who was wired up by the FBI on Madigan’s friend Ald. Edward Burke, another prince of the property tax reduction business in Chicago.

The FBI videotaped Madigan pitching for tax appeals legal business in a Chinatown hotel deal, and it all went public in the Sun-Times.

Now the four “establishment” candidates in the mayoral race — I prefer to call them the Madigan-Burke Gang of Four because that is what they are — are trying to distance themselves from Madigan-Burke. They’re sending out their wizards to shake rattles so voters might not connect the dots.

The Madigan-Burke Four are Cook County Board President Toni Preckwinkle, Illinois Comptroller Susana Mendoza, lawyer Gery Chico and Bill Daley, son and brother of Chicago mayors.

Last night a pollster called me to get my opinion on the upcoming mayoral election. One of the questions was “If you had a choice among…for mayor, for whom would you vote?” I answered “None of the above” to the delighted laughter of the pollster and my wife.

There are presently 14 candidates running for mayor. I won’t vote for any of the “establishment” candidates. That leaves me with Jerry Joyce, the son of a former alderman, Garry McCarthy, formerly chief of the Chicago Police Department, Paul Vallas, formerly head of the Chicago Public Schools, and Willie Wilson, a businessman. I’m suspicious of Garry McCarthy and I have issues with all of the candidates’ stated positions. It’s not a happy time. I think that we need a candidate with a pre-built constituency who’s nonetheless willing to upset the status quo and I don’t think that characterizes any of the candidates.

I want to commend Cullen Roche’s post on the good, the bad, and the ugly of modern monetary theory to your attention. You will be hearing a lot more about MMT in the coming year or so, since it’s being espoused by people who want to spend a lot more than they can within present constraints, and you may find it informative. I suspect that most of them will ignore this key passage from his post:

Importantly, MMT does not say deficits don’t matter or that the government has NO constraint. While the government has no nominal budget constraint it does have a real budget constraint (ie, inflation).

and, importantly, real productive capacity. Our present problem is that we’re already issuing ourselves credit faster than inflation and faster than we’re increasing what we’re producing. Therefore, if you want to consume more you should want us to produce more. There are fundamentally two ways that more can be made available to consume:

1. We can import less.
2. We can produce more.

In theory we could also export more but other countries want to consume more, too, and are in a position to block that strategy.

In my view if we elect to do none of those things and instead issue ourselves credit so we can buy whatever we want, untethered to the underlying economy, it’s risky.

A few more things to keep in mind: very few Keynesians actually believe in what Keynes taught, very few free marketeers actually believe in free markets, and very few of those who claim to support MMT actually do. There will never, however, be a lack of people longing for perpetual motion.

Also I remember very clearly Paul Krugman’s curt assessment of MMT (“it’s just wrong”). As those espousing what could best be thought of us “folk MMT” gain more influence in the Democratic Party, I expect that to disappear into the memory hole.

Update

There’s another good explainer on MMT at The Macro Tourist.

So far I have searched in vain for informed, unbiased comment on the prudence of the United States’s suspension of the Intermediate Range Nuclear Forces Treaty, annnounced by Sec. of States Pompeo and remarked on by me yesterday. I will continue to look.

The best argument I have seen to date for remaining in the treaty has been that remaining in the treaty provides the United States with a legal basis for sanctions. That is untrue. No such sanctions are authorized in the treaty. It provides no legal basis. It might be argued that it provides a moral basis but I don’t think it does that any more than anything else offensive we might deem Russia to have done.

The full text of the treaty is here. I’m not an expert but my reading of the plain language of the treaty suggests to me that the Russians are not in compliance for reasons many others have mentioned. However, it also suggests that the Russians are right as well: our use of armed drones, something we have done for well over a decade, is a violation of the treaty as well.

It is a rule of thumb in negotiation theory that when the parties to a treaty are unequal in strength and the weaker of the two parties is in violation, the treaty should be reconsidered.

International treaties are means not ends. I believe that we should conform faithfully to the terms of treaties to which we are party. That’s why I believe that we should enter into treaties much more deliberately and sparingly than we do.

I am not yet persuaded that the Trump Administration has acted prudently in suspending the INF. I will continue to consider the matter. The question I would ask of readers is, when both parties disregard a treaty, what good is it? To whatever extent is a signal of intentions it has become a signal of the wrong intentions.

This afternoon Secretary of State Mike Pompeo announced that the United States was suspending its participation in the Intermediate Range Nuclear Forces Treaty (INF). CNN reports:

Washington (CNN)Secretary of State Mike Pompeo announced Friday that the US is suspending the Intermediate-Range Nuclear Forces Treaty, a key pact with Russia that has been a centerpiece of European security since the Cold War.

“For years, Russia has violated the terms of the Intermediate-Range Nuclear Forces Treaty without remorse,” Pompeo said, speaking from the State Department. “Russia’s violations put millions of Europeans and Americans at greater risk.”
“It is our duty to respond appropriately,” Pompeo said, adding that the US had provided “ample time” for Russia to return to compliance.
The long-expected suspension, which has raised concerns about a renewed arms race with Moscow and put European allies on edge, goes into effect on Saturday. Pompeo’s announcement starts a 180-day clock to complete withdrawal unless Russia returns to compliance with the 1987 agreement.
President Donald Trump and his senior officials had been signaling for months that they were ready to pull out of the INF treaty, which the US accuses Moscow of violating since 2014.

Background

According to this report prepared by the Congressional Research Service, the Obama Administration complained of Russian violations of the INF in 2013, officially in 2014. In September 2014 then-Secretary of State John Kerry met with Russian Foreign Minister Sergey Lavrov. The Russians responded with claims of their own, one of which was that American use of drones violated the INF. The U. S. position on this is that, since drones are piloted albeit remotely, they are not covered under the INF. The talks ended with assuaging U. S. concerns.

The U. S. has reiterated its concerns ever since in its annual compliance report.

The Trump Administration announced its intention of suspending its participation in the INF unless Russia came back into compliance back in October. The Russians have done nothing to assuage U. S. concerns.

Alternatives

I could create a decision matrix for this but the parameters of the alternatives include Russian compliance, U. S. compliance, and whether to suspend or not for a total of eight different alternatives including the Russians are not in compliance but the Americans are and the Americans suspend participation, the Russians are not in compliance but the Americans are and the Americans do not suspend, neither the Russians nor the Americans are in compliance and the U. S. suspends its participation, neither the Russians nor the Americans are in compliance and the U. S. does not suspend its partipation, and so on.

Conclusions

I have no way of determining whether the Russians are in compliance with INF or not or whether we are in compliance with the treaty or not. I will take it on faith that the Russians are not in compliance but we are. Making those assumptions is remaining in a treaty the Russians are violating better than suspending our participation in a treaty the Russians are violating?

I will reserve judgment in the hope of reading the views of an unbiased commentator. I despair of finding one.