“Flyover Country”

My advice to coastal liberals, with a tip of the hat to Owen Wister, is “Smile when you say that”.

If you want Trump to win re-election in 2020 and for Republicans to hold the House, keep saying “flyover country” and “deplorables” as often as you can, including in jest.

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There Oughta Be a Law

Douglas Licor and Lisa Jaycox, writing at the RAND Blog, provide some useful context on some of the asylum claims being filed at our southern border:

After Attorney General Jeff Sessions rescinded asylum protections earlier this month for victims of domestic violence, many in the immigrant advocacy community essentially observed that he had turned the clock back to the 1950s.

Sessions did so by reversing a 2014 decision by the Department of Justice that granted asylum to a Guatemalan woman based on the severe domestic violence she suffered in her home country. She had described how her husband had beaten her weekly, burned her with paint thinner and raped her. Despite repeated pleas for help, the Guatemalan police told her they would not interfere in a marriage. After determining she had been persecuted, and had been unable to escape from her abuser, an immigration review board (PDF) ruled she was deserving of protection in the U.S.

I think that goes some way to explaining why the number of families, presumably women and children, suddenly exploded after 2014. The 1967 international accord on refugees defines them this way:

A person who owing to a well-founded fear of being persecuted for reasons of race, religion, nationality, membership of a particular social group or political opinion, is outside the country of his nationality and is unable or, owing to such fear, is unwilling to avail himself of the protection of that country; or who, not having a nationality and being outside the country of his former habitual residence as a result of such events, is unable or, owing to such fear, is unwilling to return to it.

If we are to extend that to abused women, a highly sympathetic group, it should be by legislation not ukases by the Attorney General. Outcomes are not the only important thing. Processes are important, too, and what can be decreed by an Attorney General may be reversed by another.

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Turning the Temperature Down on Supreme Court Appointments

At Atlantic Bob Bauer has some suggestions for reducing the acrimony on Supreme Court appointments and I’m sad to report that he’s fantasizing. His suggestions boil down to just two:

  • Impose term limits on Supreme Court justices
  • Require a supermajority for the SCOTUS to strike down acts of Congress

The reason those are fantasies is that the Supreme Court won’t impose them on itself (it could) and each would require a constitutional amendment.

There’s one, easy way to reduce the temperature on Supreme Court appointments: lower the stakes. By “easy” I mean easy to say not easy to accomplish. The Congress could lower the stakes on Supreme Court appointments without a constitutional amendment by limiting the appellate jurisdiction of the Court, something it has never done but one of its enumerated powers. Nearly all of the highly contentious cases brought to the Court are on appeal. The power of the federal courts more generally to hear cases on appeal from the state courts is subject to Congressional limitation.

But Congress will never do that. Congress likes the ability to work their will outside the electoral process and the Supreme Court affords them that possibility.

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Happy Birthday, Olivia de Havilland


Olivia de Havilland turns 102 today. She is the last surviving bona fide star of the Golden Age of Hollywood. The last surviving bona fide star of the Silent Era is Diane Serra Cary AKA “Baby Peggy” at 99. If you’re interested in Ms. Havilland’s enormous breadth as an actress, you might consider these movies:

Captain Blood (1935)
Gone With the Wind (1939)
The Snake Pit (1948)
The Heiress (1949)
Light in the Piazza (1962)
Lady in a Cage (1964)
Hush…Hush, Sweet Charlotte (1964)

She’s still feisty, jealously guarding her image, pursuing an appeal in her case against FX for her depiction in their miniseries Feud: Bette and Joan.

Update

I stand corrected. I would end the “Golden Age of Hollywood” at around 1950. In that case both Olivia de Havilland and Kirk Douglas are still living as of this writing would be considered Golden Age stars. If the Golden Age is ended in 1964 as some do, then Sophia Loren and Sidney Poitier qualify as well as would Albert Finney, Sean Connery, Michael Caine, and a number of others. I resist such a late date. I’m tempted to end the Golden Age in 1943 with, ironically, Olivia de Havilland’s lawsuit against Warner Bros.

In any case my apologies to Mr. Douglas.

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Reminder

This is a little reminder of things I’ve been pretty consistent in over the last 20 years.

  1. I think we need a guest worker program. The 10,000 work visas for which Mexicans are eligible is obscenely, absurdly low. Think a million, two million rather than 10,000.
  2. I think we need some sort of accommodation for people who were brought to the U. S. illegally as children.
  3. Our immigration policies should be changed to resemble those of Canada, Australia, and New Zealand—all countries with which we have much in common historically, culturally, and economically—more than they do our present policies. They all have workplace enforcement and vigorous border control. Maybe I’ve just missed them but I haven’t seen Canada, Australia, or New Zealand’s policies likened to the Third Reich or complaints of a holocaust on their borders in the American media.

One more point. Mexico deported twice as many Central Americans as we did last year. They shouldn’t do that—those are refugees and asylum-seekers. Rejecting them is a violation of their treaty obligations.

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High-Deductible Health Care Insurance

There’s an interesting article at Bloomberg on the effects of high-deductible health care insurance. Here’s the kernel of the article:

“High-deductible plans do reduce health-care costs, but they don’t seem to be doing it in smart ways,” said Neeraj Sood, director of research at the Leonard D. Schaeffer Center for Health Policy and Economics at the University of Southern California.

Some big companies are sitting up and taking notice. “We all thought high deductibles are going to drive people to get involved—‘skin in the game,’” Jamie Dimon, the chief executive officer of JPMorgan, said in early June. Instead, “they didn’t get the surgery they needed, when they needed it, because they can’t afford the high deductible in one shot.” JPMorgan is effectively eliminating deductibles for workers making less than $60,000 a year.

Dimon has teamed up with the top executives of Amazon.com Inc. and Berkshire Hathaway Inc. to improve the health care they provide for their workers. The incoming CEO of that venture, surgeon and journalist Atul Gawande, has also noticed the plight of such families as the Jordans. “I had one friend who was bankrupted with a health plan,” Gawande said at the Spotlight Health event in Aspen, Colorado, on Saturday. “He had a $3,000 deductible and couldn’t meet it.”

which is completely unsurprising to anyone who’d actually looked into the issue rather than merely mouthing free market nostrums. There have been multiple studies which all found the same thing: high-deductible plans cause people to economize but they don’t necessarily economize on the right things. They’re as likely to economize on things that can reasonably be postponed as they are on care that should not be postponed.

Increasing deductibles does not lower the cost of health care.

Higher payments from the government does not lower the cost of health care.

As the late Uwe Reinhardt put it, it’s the prices, stupid.

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The Mexican Election

Let me start this post with an old Yiddish joke.

Woman 1: What do you think of the Romanian border?

Woman 2: Mama doesn’t like the way he’s flirting with Rosa.

You might be interested in this article at Atlantic by Jorge Guajardo on the prospects for Mexico if Andrés Manuel López Obrador is elected president. He’s already said that the accords to which Mexico is a party governing the treatment of refugees are meaningless and that the U. S. economy is a public resource to which Mexicans are entitled. Maybe it’s just campaign rhetoric.

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How Not To

At Fortune Eric Ellis has advice on how to make autonomous vehicles “go mainstream”.

I’ve said it before and I’ll say it again: strict liability. Plaintiffs shouldn’t need to prove intent or negligence. They should just need to demonstrate harm.

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Second Verse, Same As the First

Jeffry Snider has one of his interesting if prolix posts at RealClearMarkets. It begins brightly enough:

Ultimately what anyone wants is not all the growth we can manage in a short period of time, rather the necessary aim is sustained maximum growth over a very long stretch. Monetary control of this type, according to the concept, is a very important control rod so as to ensure the second, healthy version of economic expansion.

That’s what everyone believes, anyway.

The Federal Reserve is right now undertaking just such a policy adjustment. In the view of its econometric models, the US economy is facing “balanced” risks; which simply means that it is as likely to take off as fall down. Those risks are, in the official interpretations of modeled economic simulations, in the process of becoming more unbalanced – in favor of the upside. Thus, rate hikes.

This would be a very welcome change. It’s not just that risks have been unbalanced the wrong way for so long, it’s that it hasn’t been limited to just forecast risk.

but then becomes a bit turgid. If I understand his point correctly, it’s that central banks and big banks more generally are in the process of sinking the global economy to maintain the lifestyle to which they’ve become accustomed.

All I have to contribute is a point I’ve made before. We don’t have the tools to manage banks in a global economy. There are basically three alternatives. We can develop the tools to manage the Systemically Important Financial Institutions which will necessarily interfere with national sovereignty, something for which there is no appetite on anybody’s part. We can insulate ourselves from the actions of these SIFIs which would mean unravelling most of the economic globalization that has taken place over the last 30 years, another choice for which there is no appetite on anybody’s part.

Or we can just take our lumps. I’m betting that’s what we do. I mean, we can’t have Jamie Dimon (net worth: $1.23 billion) losing money, can we?

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Cultivate a Better Relationship With Business

I agree with Tony James’s op-ed in the Wall Street Journal:

We Democrats assumed a Trump presidency would be disastrous for the economy. But despite a disorderly administration and confusion in Washington, the economy is on a roll and the stock market has soared. Whether we view President Trump as a nightmare to be endured or a foe to be battled, Democrats should hear a wake-up call.

Economic growth, hourly wages, consumer confidence and personal spending are accelerating. Unemployment is the lowest in two decades. For the first time, job openings exceed the number of unemployed. Some of the current expansion is built on the foundation laid by the Obama administration. And although Mr. Trump’s lack of fiscal discipline risks ballooning deficits, Democrats cannot dismiss the critical importance of new policies that have helped propel the economy.

Many Trump voters—high-school-educated Americans battered by globalization—are our natural constituents. We need to win them back. If Democrats are going to return to power, we need a strong pro-prosperity platform that includes pragmatic and economically inclusive policies that drive growth.

Let’s look at regulation. The attitude that regulation is fundamentally good—and any attempt to reduce it bad—is far too prevalent among Democrats. In 2012 and again in 2016 the U.S. Supreme Court unanimously held that landowners could sue to challenge Environmental Protection Agency decisions to protect wetlands. No one at the EPA seems to have asked if its regulations were actually the best way to preserve wetlands. Regulation of the wrong sort hurts economic growth and diminishes U.S. competitiveness.

The new tax bill is also instructive. Let me state something that is heresy with some Democrats: Cutting the corporate tax rate was good for the economy. It levels the playing field with other countries, keeps thousands of jobs at home, and makes billions of dollars available for reinvestment, especially in smaller companies with limited access to capital markets.

A recent Morgan Stanley survey showed that companies expect to reinvest the bulk of the tax savings in higher wages, increased capital expenditures and research and development. The companies surveyed anticipated passing only a quarter to shareholders in dividends and buybacks. That squares with the plans of the companies our firm has invested in, and is corroborated by the significant jump in capital expenditures—24%—by S&P 500 companies last quarter.

Many think corporate tax reform was not the appropriate national priority. It certainly didn’t do enough to help struggling Americans, and the personal tax cuts were insufficiently progressive. But heated rhetoric from Democrats often dismisses tax reform altogether. From the results, it appears that these policies have given the economy a significant boost. As Democrats, what blinded us? Did our overriding disdain of all things Trump mean we failed to recognize that some of his policies make economic sense?

It is time we built a closer partnership with business, and prioritize ideas over criticisms. One example is infrastructure. Investment in infrastructure would provide fiscal stimulus, create high-paying jobs, improve safety, and increase productivity. Over the longer term, fixing aging infrastructure can add 0.5% to annual economic growth.

Another driver of economic expansion is growth in our labor force. That means we need immigrants—skilled and unskilled. Tech businesses struggle with the deficit of workers trained in science, technology, engineering and math. Agriculture suffers from a lack of seasonal workers. A more accommodating immigration policy would be embraced by business, unleashing further economic growth and expanding the tax rolls.

Addressing trade inequities would also help U.S. producers protect jobs at home. The U.S. has effective tariffs of 9%; China, 27%. Beyond tariffs, China also appears to have benefited disproportionately from current trading rules and has not taken sufficient steps to open its own economy. The result for the U.S. is a trade deficit of $375 billion a year.

Contrary to the prevailing views of most corporate executives, economic evidence shows that a higher minimum wage would benefit business because the added demand more than offsets the added cost. It doesn’t help anyone to have consumers at the poverty line. By engaging constructively with business leaders, Democrats should be able to build consensus on this issue.

There are other areas where Democrats’ priorities and business goals should align: What business executive wouldn’t favor more-efficient health care for everyone, an effective retirement system, better education for more talented employees, and federal support for technological innovation?

Embracing business doesn’t mean turning a blind eye to its flaws. Sensible regulation is vital to a vibrant market economy. More fundamentally, Americans have to feel that the economic system is fair and can work for everyone.

But if we want voters to hand us back the reins of government, we must be able to help the economy grow. That means establishing a constructive partnership with private business. As Democrats, we have already conceded faith, family and freedom to the Republican Party. We need to be the party of inclusive prosperity. Let’s not also concede that to the Republicans.

To understand my views consider the story of Jeff Immelt, the poster boy for the Obama Administration’s good relationship with business. As a member of President Obama’s President’s Economic Recovery Advisory Board, he proceeded to offshore GE’s manufacturing. After 15 years at the helm of GE he was ousted by its board of directors for nearly having brought the company to its knees. During his tenure the company’s stock value dropped nearly 61% and real income declined. He burdened the company with debt through pricey acquisitions and held onto money-losing subsidiaries for far too long. During that period he collected compensation of more than $100 million. He’s just not the kind of business leader Democrats should be cozying up to. He represents everything they should oppose: incompetence, hurting the little guy, and avarice.

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