The Economists’ View

In the Wall Street Journal Paul Kiernan and Anthony DeBarros report something that may surprise some of you:

WASHINGTON—Most economists think inflation, interest rates and deficits would be higher under the policies former President Donald Trump would pursue in a second administration than under those proposed by Vice President Kamala Harris, according to a quarterly survey by The Wall Street Journal.

The results of the Oct. 4-8 survey echoed those of the Journal’s survey in July, when Trump was facing President Biden. Biden dropped out of the race on July 21, and Harris became the nominee shortly afterward.

Since then, both Harris and Trump have released significant new policy proposals. Harris, for example, has called for new credits for newborn children and home buying, while Trump has proposed tax cuts on overtime pay and Social Security benefits, and breaks for auto-loan interest and state and local taxes.

The upshot: Economists still say Trump’s policies are more likely to add to inflation, deficits and interest rates. If anything, the margin has grown since July.

No word on how many of those economists failed to predict the inflation produced by Trump’s tax cut, Trump’s COVID lockdown spending spree, followed by Joe Biden’s spending spree in quick succession.

I think both Trump and Harris have awful economic policies with only a few glimmers of hope. One of those is that neither one of them is likely to follow through on their campaign promises. Another is that we may have no choice.

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The Two Evils

This is the worst presidential election in my adult life. I am being deluged with phone calls, text messages, and emails—sometimes as many as 20 a day. Nearly every video I watch and most web pages I read are interrupted by pleas for political contributions.

In my opinion the two presidential candidates are objectively the worst of my lifetime. I have said many times that I have not and will not vote for Donald Trump. My reasons are somewhat different from those of most people. Many people complain about his lying but I don’t think that’s true. I think he lives in a world of his own imagination, something the Japanese call kizoku no sekai in reference to their own aristocracy. It is a malady of the rich and powerful. In addition he is remarkably poorly informed and incurious.

Furthermore, I believe that those who think that Kamala Harris is just being cagey during the election are kidding themselves. I think she’s vapid, even vacant.

Perhaps it doesn’t matter what she believes or if she believes in anything at all beyond getting elected. Perhaps she’s just a placeholder for those who are actually running our government. That’s not a relief to me since they are wrong about so much.

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Incredible

Jury selection on the corruption trial of long-time Illinois House Speaker Michael Madigan continues to day. They need one more juror and several alternates. The challenge is finding people who a) don’t know anything about the case or b) are willing to lie about what they know and say they haven’t formed an opinion.

Mr. Madigan was the longest-serving speaker of a state legislature—any state legislature—in U. S. history. He was speaker from 1983 on (with a small gap when the Republicans held the Illinois legislature for two years) and was chairman of the Illinois Democratic Party for 23 years. It is simply not credible than anyone in his district, anyone in the Illinois Democratic Party leadership, or anyone in the national Democratic Party leadership did not know about his corruption. That includes Bill and Hillary Clinton, Barack Obama, and Nancy Pelosi. They all knew. They just didn’t give a damn as long as he kept delivering votes.

Mr. Madigan presided over the decline of the State of Illinois which is ongoing and the decline was due in large part to the policies he championed. Those included not just reckless spending and taxation but extended to not paying into public employees retirement funds over lengthy periods of time.

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Columbus Day 2024


and Indigenous Peoples Day.

I found the report from ABC 7 Chicago encouraging. At least it’s better to have Italian-Americans and Native Americans celebrating their own and each others heritages than at daggers drawn.

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My Dad’s Birthday

Today is my dad’s birthday. It’s not his centenary—that was quite a while ago. Although it has been well over a half century since he died, I still miss him, particularly since he and I were just beginning to develop a mature relationship when he died.

I’ve written quite a bit about him over the years. Phi Beta Kappa, Summa cum laude, editor of the college newspaper in his senior year. Graduated from law school, law review, graduated with a JD (somewhat unusual all those years ago). Spent a year in Europe (1937-1938!). Arrested as a spy in Serbia. Was in Munich on November 9, 1938—left Europe shortly thereafter.

It was still the Depression so he had some difficulty getting a job as a lawyer when he returned from Europe. Worked as an insurance adjuster. Tried unsucessfully to join the military during World War II although the OSS asked him to join after the war. Got a job with the (then) biggest law firm in St. Louis as an associate. The firm dissolved in scandal and he went off on his own. Taught law school

He was the smartest, wisest, hardest-working, most decent man I’ve ever known.

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Asking the Questions

Many of the opinion pieces yesterday and today have been on the anniversary of Hamas’s attack on the Israelis. For example, in his Washington Post column David Ignatius speculates:

Perhaps Israel’s sword of vengeance has broken the power of Iran and its boldest proxies, as Netanyahu and his supporters seem to hope. But this is the Middle East. A more likely outcome is that, at a cost of so many thousands of dead, this war has restored the old paradigm of a strong Israel that can crush its enemies — until the next round.

Perhaps the saddest legacy of this war will be that it could so easily happen again. We all know the adage about those who don’t learn from history. When we see the hardened faces of Israelis, Palestinians and Lebanese, we know that many of them are thinking about the next conflict, even as they fight this one. The displaced Gazans, the stunned Hezbollah fighters, aren’t likely to forget. And in the Middle East, memory is an addictive drug, and a poison.

while the editors of the Wall Street Journal declaim:

The reply of respectable liberalism has been to urge de-escalation, cease-fires and a two-state solution, and to blame Israeli Prime Minister Benjamin Netanyahu when they don’t materialize. It’s as if Hamas, Hezbollah and their patron in Iran don’t exist. Hamas has refused to engage with mediators for weeks, and a Palestinian state at peace with Israel has never been its objective or Iran’s. They want Israel destroyed and the Jews expelled or murdered.

As long as Iran pursues war, Israel must defend itself aggressively to survive. Mr. Biden has supported Israel, but he has also tried to cut short its defense. He withheld weapons from Israel even while Hamas ruled Rafah and its brigades controlled Gaza’s smuggling routes to Egypt.

and Walter Russell Mead says:

Oct. 7 has come and gone. The one-year mark since Hamas’s butcheries brought more of what we’ve come to expect—rocket attacks on Tel Aviv, anti-Israel protests at Columbia. Not to mention the warnings about World War III if President Biden can’t persuade Prime Minister Benjamin Netanyahu not to exercise the right the president says the Jewish state has to defend itself. It is the perfect capstone to Mr. Biden’s legacy: a foreign policy that projects American weakness.

and

The irony is that Mr. Biden was elected president on his own version of Make America Great Again. Drawing on his foreign-policy chops, he saw himself as restoring America’s global standing by repairing alliances that had been ruptured by Donald Trump and recultivating ties with foreign leaders—many of whom he knew personally from both his days as vice president and his long service on the Senate Foreign Relations Committee. But his managerial approach assumes the status quo is always worth preserving.

Thus Mr. Biden was willing to supply military arms in conflicts that broke out provided doing so wouldn’t seriously threaten the status quo, which is why he gave Ukraine what it needed to fight but not what it needed to prevail. It’s worth recalling that before Vladimir Putin invaded Ukraine, Mr. Biden was assuring the world that a “minor incursion” by the Russians wouldn’t be a big deal. Unfortunately, when maintaining the status quo becomes paramount, all the initiative goes to the bad actors who are always more than willing to disrupt it.

Let’s ask a question. Is it in the U. S. interest for Israel to annex the West Bank and Gaza? I don’t think so but maybe our diplomatic experts think it is. I recognize it’s terribly indiscreet but maybe if that’s U. S. policy we should say so.

Here’s another question. Is it possible for the U. S. to encourage Israel’s attacking Iran without that transmogrifying into a direct conflict between the U. S. and Iran?

In what seems like a non sequitur I wonder if those urging the U. S. to give the Ukrainians missiles capable of reaching deep into Russia recognize that they are encouraging the U. S. to get involved directly in the conflict between Russia and Ukraine? That’s how those missiles work—U. S. technicians are required to configure them. That’s direct involvement.

A final question. Do those in favor of greater U. S. involvement in attacking Iran recognize that conflict, particularly in combination with direct U. S. involvement in the war between Ukraine and Russia, is likely to draw China as well?

To summarize my views:

  • I think that Israel has a right to defend itself
  • I do not believe that a “greater Israel” is a vital interest of the U. S.
  • I think that radical Islamists like Hezbollah, Hamas, and the Iranian mullahocracy are our enemies
  • I think we should tread lightly to avoid a regional war
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I Was Wrong

I haven’t filled you in on the latest shenanigans in Chicago politics. The entire board of the Chicago Public Schools is resigning. Sarah Schulte and Eric Horng report at ABC 7 Chicago:

CHICAGO (WLS) — The entire Chicago Board of Education will resign, the office of Mayor Brandon Johnson said Friday.

The Chicago Public Schools shakeup with the mass resignation of all seven members of Johnson’s hand-picked board paves the way for the mayor the reappoint a board who will be willing to act on Johnson’s wish to oust CPS CEO Pedro Martinez.

Messages left by ABC7 for the school board president and multiple board members have not been returned, so ABC7 hasn’t heard directly whether the board members resigned in protest or were forced out.

The mayor is moving quickly to name new board members. That will happen Monday morning. However, the action is still unsettling to many in the district.

“It’s shocking,” CPS parent Sarah Strasser said. “We’re all, I guess, going to have to find out what comes out in the wash. I would love to know what was said behind closed doors.”

The outrage over which the board is resigning is the mayor’s insistence on the CPS CEO’s resignation which Mr. Martinez, also appointed by the mayor, has refused to do. The basis of the mayor’s displeasure is Mr. Martinez’s refusal to do something egregiously stupid: borrow to pay operating costs.

I had thought that no mayor could possibly be as bad as our previous mayor, Lori Lightfoot, but I obviously was wrong. Not that I voted for Brandon Johnson. I voted for the other guy. Mayor Lightfoot’s mistake was in not doing what she was elected to do—reform the Chicago Police Department. The problem with Mayor Johnson is that he is doing precisely what anyone who was paying attention should have expected him to do.

This turmoil is more opportunistic than ironic. Democrats have long been striving for an elected Board of Education and they will get their wish in November at which time we will have the opportunity to elect some of the board members. Mayor Johnson wants to appoint a new Board of Education that will do his bidding before the November election.

Mayor Johnson’s approval rating has declined to 25% according to a recent NBC poll. His disapproval rating is 60%. I’m surprised his approval rating is that high.

I genuinely wonder what Mayor Johnson’s supporters, that 25%, expected him to do. He’s doing exactly what I predicted he would do—whatever the Chicago Teachers Union want him to do.

All of this highlights a desire I have mentioned before. I think that Illinoisans deserve the ability to recall any elected official. At present the only elected official whom we have the power to recall is the governor under the Blagojevich Amendment.

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The Fog of War

The “fog of war” does not pertain only to war (the concept although not the precise phrase is attributed to von Clausewitz). What’s actually going on in the aftermath of Hurricane Helene? I’ve heard people claiming that FEMA has everything under control and I have heard people saying that FEMA is actually impeding relief after the flooding in North Carolina. I’ve heard people claiming that FEMA is running out of money and that FEMA has plenty of money (sometimes the same people). I’ve heard people claiming that FEMA has spent money supporting migrants and that FEMA has done no such thing.

I have no idea what’s actually going on. They all may be true. My predisposition was to give the administration the benefit of the doubt and let the dust settle (or, maybe more appropriate, the flood waters recede) before commenting.

Today the talking heads programs are devoting a lot of time to damage control which I presume they think of as refuting disinformation, producing plenty of disinformation of their own in the process.

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Working Class Hispanics and the Democratic Coalition

Ruy Teixeira examines the recent polling data:

Among Hispanics under 35, Harris only leads Trump by 10 points, a 34-point drop from their 2020 merged data.

and

Among Latino men under 50, Trump actually leads Harris by 9 points. Trump also leads by 13 points among all working-class Latino men.

and

Interestingly, while Trump is preferred over Harris among all Hispanic voters on dealing with inflation and the cost of living and the economy generally, his biggest lead over Harris (13 points) is actually on “securing the border and controlling immigration”(!)

The quotes above are regarding a recent NBC/Telemundo poll.

Here’s his conclusion:

Combined with general deterioration among working-class voters of all races, it appears Democrats, win or lose in this election, are in urgent need of a new theory of the case for growing their coalition. Without it, any majorities they attain will be tenuous, undercutting their ability to govern effectively. And, no doubt, leaving the American people increasingly frustrated.

Those results certainly conflict with the prevailing narrative. When a majority of Hispanic voters are voting Republican, I won’t be surprised if the Democrats’ view of immigration shifts dramatically.

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How Do You Calculate the Unemployment Rate?

In an op-ed in the Wall Street Journal two consecutive commissioners of the Bureau of Labor Statistics make a plea for increased funding for the agency to enable it to calculate the rate of unemployment accurately or at least reasonably so:

We were appointed as commissioner of the Bureau of Labor Statistics by Presidents Trump and Obama, respectively. We ran the BLS for a combined eight years. Today, we’re raising an alarm: Perhaps the most vital indicator the agency uses to understand our nation’s economy—the U.S. monthly unemployment rate—is in imminent danger.

Once a month (usually on the first Friday), policymakers and financial traders react to the so-called Jobs Day report from the BLS, which estimates the monthly unemployment rate. Unfortunately, this nonpartisan fact-finding agency has been underfunded for more than a decade.

The BLS needs adequate funding to help run the Current Population Survey, which feeds into Jobs Day reports. At current funding levels, cuts to the survey’s sample size in 2025 will be unavoidable. That would endanger the quality and variety of estimates the BLS can produce. As technology evolves, people are less likely to answer calls from an unfamiliar number or open the door for a stranger. When the pandemic hit, without safe ways to conduct in-person surveys, response rates dropped to all-time lows. They’re still trending down.

I found this startling:

Because BLS began publishing monthly unemployment rates for Native Americans only two years ago, policymakers didn’t know until 2022 that the unemployment rate spiked to nearly 29% for Native Americans in 2020—about double the national rate. Even now, BLS can’t break down unemployment rates for specific racial and ethnic minorities in many states due to funding shortages. Veterans, teens, seniors, people with disabilities, women of color and other population subsets won’t be perceived or appropriately supported if they disappear from future Jobs Day reports.

I used to follow the BLS’s monthly Unemployment Situation report faithfully. I gave up when I recognized how phony it is. The commissioners cite some of the reasons it’s phony but not the most important reason. The statistics reported include a “fudge factor” based on something called the “birth-death ratio” (rate at which new businesses are formed and old ones are closed) and that fudge factor is not empirically based. When the fudge factor exceeds the actual numbers being reported, the statistic becomes purely political.

Furthermore, there are two important sources for information about employment: the employers report and the household report. The employers report is derived from payrolls reported by employers while the household report is based on a survey of households. There is a notable gap between the two reports (Mish Shedlock reports on this occasionally). The greater the gap the less reliable what the BLS is reporting about unemployment.

I also wonder how one calculates the rate of unemployment in a service economy? Is a sole proprietor or sole practitioner without clients or customers employed or unemployed? They are not deemed as unemployed by the BLS. The more “gig workers” (however you characterize them) the less relevant the unemployment rate.

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