Tom Shakely

America

  • Strange economics

    “Warren Buffett says no textbook could have predicted the strange economy we have today:”

    The current economic environment is one that no one could have seen coming, Warren Buffett said. …

    Buffett noted that unemployment is at generation lows, yet inflation and interest rates are not rising. While at the same time the U.S. government continues to spend more money than it takes in.

    “No economics textbook I know that was written in the first couple of thousand years that discussed even the possibility that you could have this sort of situation continue and have all variables stay more or less the same,” Buffett told CNBC’s Becky Quick on Thursday ahead of the annual Berkshire Hathaway shareholders meeting in Omaha …

    The Labor Department said Friday the unemployment rate fell to 3.6% in April, the lowest since 1969. However, inflation was up just 1.6% on a year-over-year basis in March. That’s well below the Federal Reserve’s 2% inflation target. The overnight interest rate is also below historical levels despite four rate hikes in 2018. The central bank, at its meeting this week, kept rates unchanged at a target range of 2.25% to 2.50% …

    “I don’t think our present conditions can exist in terms of fiscal and monetary policy and various other elements across the political landscape,” he said. “I think it will change, I don’t know when, or to what degree. But I don’t think this can be done without leading to other things.”

    “While at the same time the U.S. government continues to spend more money than it takes in…”

  • How narrow and selfish

    Chris Arnade writes on “back row America”:

    I first walked into the Hunts Point neighborhood of the Bronx because I had been told not to. I had been told it was too dangerous and too poor, and that I was too white. I had been told that “nobody goes there for anything but drugs and prostitutes.” The people telling me this were my colleagues (other bankers), my neighbors (other wealthy Brooklynites), and my friends (other academics). All, like me, successful, well-educated people who had opinions on the Bronx but had never been there.

    It was 2011, and I was in my eighteenth year as a Wall Street bond trader. I spent my work days sitting behind a wall of computers, gambling on flashing numbers, on a downtown Manhattan trading floor filled with hundreds of other people who did exactly the same thing. My home life was spent in a large Brooklyn apartment, in a neighborhood filled with other successful people.

    I wasn’t in the mood to listen to anyone, especially other bankers, other academics, and the educated experts who were my neighbors. I hadn’t been for a few years. In 2008, the financial crisis had consumed the country and my life, sending Citibank, the company I worked for, into a tailspin stopped only by a government bailout. I had just seen where hubris—my own included—had taken us, and what it had cost the country. Not that it had actually cost us bankers, or my neighbors, much of anything.

    I was in the habit of taking walks, sometimes as long as fifteen miles, to explore and reduce stress, but now my walks began to evolve. Rather than setting out with some plan to walk the entire length of Broadway, or along the length of a subway line, I started walking the less-seen parts of New York City. Along the way, I talked to anyone who talked to me. I used my camera to take portraits of people I met.

    What I started seeing and learning was just how cloistered and privileged my world was—and how narrow and selfish I was.

    I started reading Chris Arnade after discovering him on Twitter at some point in 2016 or so. His writing helped prepare me for President Trump’s victory, because his writing reveals aspects of the American people from which our ruling class has alienated itself:

    Where do most of the press and elites get it wrong? They don’t believe that we live in a two-tiered system. They don’t believe, or know they are in, the top tier. They also don’t understand what people view as value.

  • ‘A very particular type of fury’

    Samuel Gregg considers Michael Novak’s Spirit of Democratic Capitalism in light of the apparent resurgence in interest in democratic socialism:

    Novak never claimed that economics should be decisive in political choices. But he did think that the basic insights into reality provided by economics — the workings of incentives and self-interest, comparative advantage, trade-offs, the necessity of free prices as carriers of information, attentiveness to the known side effects of particular choices, etc. — should no more be ignored than any other empirically validated observation arising from the social sciences.

    The lessons of economics, however, weren’t the primary point of departure for Novak’s critique of socialism. He genuinely wanted to understand why people embrace socialism, and he concluded that it wasn’t simply economic ignorance.

    By the early 1980s, Novak argued, socialism had become less about practical economic programs than about (1) certain ideals regarding equality and poverty and (2) deep hostility to capitalism per se. The single-minded pursuit of these beliefs, combined with the tendency to view capitalism in almost demonic terms, meant that socialism assumed the form of what Novak called a “political religion.” This, he believed, was what made socialism erroneous — and very dangerous.

    Being a political faith, socialism could never fulfill the expectations associated with true religion. But its ersatz religious nature meant that socialism’s economic and political failures would inevitably generate a very particular type of fury.

    Socialism’s record of failure, Novak pointed out, was clear. Instead of growing wealth across society, it gradually impoverished all. Far from producing greater equality, it facilitated its own inequities, the most glaring being those between the planners and everyone else. …

    Throughout The Spirit of Democratic Capitalism, Novak was relentless in stressing that any serious theory of political economy must pay attention to the human condition. Humans are good yet capable of evil. Our reason is powerful but not all-powerful. Men are not angels, but neither are they beasts. The genius of market economies, Novak held, is that they recognize humanity’s capacities and limitations and help direct them to the realization of some important goods. …

    Many of the social dysfunctionalities that worry socialism’s advocates and capitalism’s critics don’t have market solutions because, Novak understood, their causes often have little to do with economics.

  • Surveillance capitalism

    Alessandra Bocchi shared this excerpt from The Age of Surveillance Capitalism: The Fight for the Human Future at the New Frontier of Power:

    Sur-veil-lance Cap-i-tal-ism, n.

    1. A new economic order that claims human experience as free raw material for hidden commercial practices of extraction, prediction, and sales; 2. A parasitic economic logic in which the production of goods and services is subordinated to a new global architecture of behavioral modification; 3. A rogue mutation of capitalism marked by concentrations of wealth, knowledge, and power unprecedented in human history; 4. The foundational framework of a surveillance economy; 5. As significant a threat to human nature in the twenty-first century as industrial capitalism was to the natural world in the nineteenth and twentieth; 6. The origin of a new instrumentarian power that asserts dominance over society and presents startling challenges to market democracy; 7. A movement that aims to impose a new collective order based on total certainty; 8. An axpropriation of critical human rights that is best understood as a coup from above: an overthrow of the people’s sovereignty.

    That’s a capacious definition, but it’s hammering away at surveillance capitalism as something that I think many of us intuit. Planning to read this at some point later this year, especially to discover whether the book focuses more on surveillance or more on capitalism.

  • U.S. Digital Service and taxes

    Justin Elliott reports that Congress appears ready to prohibit the IRS from offering free online tax filing:

    Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system. …

    Last week, the House Ways and Means Committee, led by Rep. Richard Neal, D-Mass., passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis, D-Ga., and Mike Kelly, R-Pa.

    In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits. …

    Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013. …

    Intuit and H&R Block last year poured a combined $6.6 million into lobbying related to the IRS filing deal and other issues.

    Devin Coldewey, meanwhile, reports the latest from the U.S. Digital Service, which exists to modernize existing federal services, websites, etc.:

    The USDS is a small department that takes on creaking interfaces and tangled databases of services for, say, veteran benefit management or immigration documentation, buffing them to a shiny finish that may save their users months of literal paperwork.

    … the USDS overhauled VA.gov, which is how many veterans access things like benefits, make medical appointments, and so on. But until recently it was kind of a mess of interconnected sub-sites and instructional PDFs. USDS interviewed a couple thousand vets and remade the site with a single login, putting the most-used services right on the front page. Seems obvious, but the inertia of these systems is considerable. …

    These projects are often short-term, putting modern web and backend standards to work and handing the results off to the agency or department that requested it. The USDS isn’t built for long-term support but acts as a strike team putting smart solutions in place that may seem obvious in startup culture but haven’t yet become standard operating procedure in the capitol.

    The work they do is guided by impact, not politics, which is likely part of the reason they’ve managed to avoid interference by the Trump administration…

    “I signed up for a three month tour, and that was three years ago,” [head of the U.S. Digital Service Matt Cutts] said. “It’s really a whole civic tech movement here, there are a ton of people sort of holding hands and working together. There’s also stuff happening at the state and local level, at the international level, from the UK to Estonia and Singapore — everyone’s starting to realize this matters.”

    I remember reading about the corporate lobbying effort to kill free tax filing a year or two ago, when lobbyists for the for-profit companies were trying to rally people under something like the banner of “Keep government out of the tax filing process!” I don’t think it was quite that intellectually self-defeating, but it was nearly so.

    It’s a scandal that there might be a bipartisan Congressional consensus that is allowing the IRS to tie its own hands from serving Americans with a simpler filing process.

  • Elections and majorities

    Ross Douthat offers a contrarian defense of the Electoral College:

    Debates about the Electoral College, like the one that Democrats have lately instigated, often get bogged down in disputes about the intentions of the founding generation — whether they were trying to check mob rule, prop up Southern power, preserve the power of small states, or simply come to a necessarily arbitrary constitutional compromise.

    These disputes are historically interesting but somewhat practically irrelevant…

    Is there a case for a system that sometimes produces undemocratic outcomes? I think so, on two grounds. First, it creates incentives for political parties and candidates to seek supermajorities rather than just playing for 50.1 percent, because the latter play is a losing one more often than in a popular-vote presidential system.

    Second, it creates incentives for political parties to try to break regional blocs controlled by the opposition, rather than just maximizing turnout in their own areas, because you win the presidency consistently only as a party of multiple regions and you can crack a rival party’s narrow majority by flipping a few states.

    According to this — admittedly contrarian — theory, the fact that the Electoral College produces chaotic or undemocratic outcomes in moments of ideological or regional polarization is actually a helpful thing, insofar as it drives politicians and political hacks (by nature not the most creative types) to think bigger than regional blocs and 51 percent majorities.

    The principle of federalism is almost never raised when I see the Electoral College’s merits brought up. Transitioning to a national popular vote would only make worse the present state of affairs, where governors and states act as little more than regional territorial managers for a central federal apparatus. A national popular vote would also lead to enormous disengagement from constituencies whose interests would be more or less permanently shut out, and that alone is a recipe for weakening the body politic.

    But whatever present debate really exists over the Electoral College can be answered more simply by point out that Donald Trump didn’t win the presidency thanks so much to a flawed or outdated electoral system, as he did thanks to the failure of Hillary Clinton’s get-out-the-vote efforts: “Donald Trump will be president thanks to 80,000 people in three states…“

    If those 80,000 people had voted differently, would there be hand-wringing about a supposedly outmoded system? No.

  • Mueller and the reputation of the media

    Robert Mueller’s investigation is over. The New York Times reports “Mueller Finds No Trump-Russia Conspiracy,” reporting that the “investigation did not establish that members of the Trump Campaign conspired or coordinated with the Russian government in its election interference activities.” Matt Taibbi writes:

    Nobody wants to hear this, but news that Special Prosecutor Robert Mueller is headed home without issuing new charges is a death-blow for the reputation of the American news media. …

    Nothing Trump is accused of from now on by the press will be believed by huge chunks of the population, a group that (perhaps thanks to this story) is now larger than his original base. As Baker notes, a full 50.3% of respondents in a poll conducted this month said they agree with Trump the Mueller probe is a “witch hunt.”

    Stories have been coming out for some time now hinting Mueller’s final report might leave audiences “disappointed,” as if a President not being a foreign spy could somehow be bad news. …

    In the early months of this scandal, the New York Times said Trump’s campaign had “repeated contacts” with Russian intelligence; the Wall Street Journal told us our spy agencies were withholding intelligence from the new President out of fear he was compromised; news leaked out our spy chiefs had even told other countries like Israel not to share their intel with us, because the Russians might have “leverages of pressure” on Trump.

    CNN told us Trump officials had been in “constant contact” with “Russians known to U.S. intelligence,” and the former director of the CIA, who’d helped kick-start the investigation that led to Mueller’s probe, said the President was guilty of “high crimes and misdemeanors,” committing acts “nothing short of treasonous.” 

    Hillary Clinton insisted Russians “could not have known how to weaponize” political ads unless they’d been “guided” by Americans. Asked if she meant Trump, she said, “It’s pretty hard not to.” Harry Reid similarly said he had “no doubt” that the Trump campaign was “in on the deal” to help Russians with the leak. 

    None of this has been walked back. To be clear, if Trump were being blackmailed by Russian agencies like the FSB or the GRU, if he had any kind of relationship with Russian intelligence, that would soar over the “overwhelming and bipartisan” standard, and Nancy Pelosi would be damning torpedoes for impeachment right now. 

    There was never real gray area here. Either Trump is a compromised foreign agent, or he isn’t. If he isn’t, news outlets once again swallowed a massive disinformation campaign, only this error is many orders of magnitude more stupid than any in the recent past, WMD included. Honest reporters like ABC’s Terry Moran understand: Mueller coming back empty-handed on collusion means a “reckoning for the media.” 

    Of course, there won’t be such a reckoning. (There never is). But there should be. We broke every written and unwritten rule in pursuit of this story, starting with the prohibition on reporting things we can’t confirm.

  • ‘Persuading people to buy less stuff’

    When I was in Charlotte in October, I got into a conversation with a manufacturer who told me that China was no longer going to be accepting a lot of our recycling. He told me this was going to be a huge problem for companies and municipalities across the country that have been spending decades trying to get people to recycle, because American recyclers wouldn’t be able to compete on cost, among other reasons. I thought of that conversation when I read Alana Semuels’s piece today:

    After decades of earnest public-information campaigns, Americans are finally recycling. Airports, malls, schools, and office buildings across the country have bins for plastic bottles and aluminum cans and newspapers. In some cities, you can be fined if inspectors discover that you haven’t recycled appropriately.

    But now much of that carefully sorted recycling is ending up in the trash.

    For decades, we were sending the bulk of our recycling to China—tons and tons of it, sent over on ships to be made into goods such as shoes and bags and new plastic products. But last year, the country restricted imports of certain recyclables, including mixed paper—magazines, office paper, junk mail—and most plastics. Waste-management companies across the country are telling towns, cities, and counties that there is no longer a market for their recycling. These municipalities have two choices: pay much higher rates to get rid of recycling, or throw it all away.

    Most are choosing the latter. …

    In 2015, the most recent year for which national data are available, America generated 262.4 million tons of waste, up 4.5 percent from 2010 and 60 percent from 1985. That amounts to nearly five pounds per person a day. …

    The best way to fix recycling is probably persuading people to buy less stuff…

    America’s present economy is fueled by consumption that is fueled in part by historically unknown levels of national debt.

  • Forward Operating Base Shank

    J.P. Lawrence writes on what we’ve left behind in the form of ex-American military base in Afghanistan, and what it reveals about our approach to our presence there:

    Limping as he climbed the stairs of a watchtower, the general turned his gaze south toward a once-sprawling base the Americans handed over to Afghan forces here in late 2014. Today much of it lies in ruins.

    “Everything went to pieces,” Brig. Gen. Abdul Raziq Safi said of the base, which the Americans dubbed Forward Operating Base Shank. “Everything fell apart.”

    After more than 17 years and $80 billion to build them up, Afghan security forces still struggle to secure their country, while corruption and other challenges strain their ability to maintain equipment and facilities provided by foreign forces, largely the United States.

    FOB Shank’s fate — left to rot in the hands of overwhelmed Afghans — illustrates those challenges…

    Roaming packs of feral dogs now bed down at what was once Shank’s busy helicopter landing pad. Crows pick over scrap heaps amid metal tent skeletons whose torn plastic skins whip in the wind. Snow blows through collapsed walls of wood huts that once housed military offices.

    As more Americans have been pushed out to Dahlke to advise front line units in the past year, U.S. troops have forayed into the wasteland to reclaim abandoned equipment, such as heaters and generators.

    “You drive through and it’s like the ‘Walking Dead,’” 1st Lt. Tom Kopec, 26, a soldier in the 1st Cavalry Regiment, said in December. …

    Even with a base full of troops, Safi couldn’t afford to maintain it, he said, claiming the facilities are too costly to run. Everything the Americans left requires power, he said, even bathroom door locks his troops have replaced with ordinary padlocks.

    Despite $2 billion in U.S.-funded power projects, Afghanistan’s grid remains underdeveloped and unreliable, and bases often depend on electric generators to power lights, heaters and other equipment.

    For just one of the big tents now rotting in Zombieland, the Americans would burn about 80 gallons of fuel a night, said Safi, who spent hours one January morning searching room to room in his headquarters for a working heater.

    “Where are Afghans supposed to get that much fuel?” Safi asked. He said later: “The Americans, money has no value for them.” …

    “We were being less than truthful with ourselves that the Afghans would be able to take care of these bases,” [retired General Richard P.] Mills said.

    Thinking back on our most recent September 11th.

  • Curtailing civil asset forfeiture

    Mark Sherman reports on today’s U.S. Supreme Court Timbs v. Indiana ruling, which is a major victory for reigning in states that abuse civil asset forfeiture:

    Tyson Timbs admitted he’d sold drugs, and he accepted his sentence without a fight. What he wouldn’t quietly accept was the police seizing and keeping the $40,000 Land Rover he’d had when arrested. On Wednesday, the Supreme Court sided with him unanimously in ruling the Constitution’s ban on excessive fines applies to the states as well as the federal government.

    The decision, in an opinion written by Justice Ruth Bader Ginsburg, could help efforts to rein in police seizures of property from criminal suspects.

    Reading a summary of her opinion in the courtroom, Ginsburg noted that governments employ fines “out of accord with the penal goals of retribution and deterrence” because fines are a source of revenue. …

    Timbs, of Marion, Indiana, was charged in 2013 with selling $400 worth of heroin. He pleaded guilty and was sentenced to a year of house arrest but faced no prison time. His biggest loss was the Land Rover he had bought with some of the life insurance money he received after his father died. Timbs still has to win one more round in court before he gets his vehicle back, but that seems to be a formality.

    A judge in Indiana had ruled that taking the car was disproportionate to the severity of the crime, which carries a maximum fine of $10,000. But Indiana’s top court said the justices had never ruled that the Eighth Amendment’s ban on excessive fines — like much of the rest of the Bill of Rights — applies to states as well as the federal government.

    Here’s C.J. Ciaramella for context on this practice:

    2018 was a bad year for civil asset forfeiture, the infamous practice by which police can seize property even if the owner is not charged with a crime.

    In late summer, Philadelphia settled a federal class-action lawsuit over its aggressive asset forfeiture program. (How aggressive? One 78-year-old pensioner had $2,000 seized after police found her possessing a small amount of marijuana, which her retired husband used to alleviate his arthritis.) The city agreed to drastically curtail when and how it seizes property from residents and to set up a $3 million fund for victims of its sticky-fingered cops.

    Asset forfeiture will continue in Philadelphia, albeit in a limited form. But the salad days when police and prosecutors could seize 300 to 500 homes a year, according to the lawsuit, are now over.

    Earlier in the summer, a federal judge struck down Albuquerque’s asset forfeiture program, ruling the city “has an unconstitutional institutional incentive to prosecute forfeiture cases, because, in practice, the forfeiture program sets its own budget and can spend, without meaningful oversight, all of the excess funds it raises from previous years.”

    The U.S. Supreme Court, which previously seemed reluctant to interfere in such cases, has agreed to consider an asset forfeiture challenge out of Indiana. … Justice Clarence Thomas also sharply criticized the practice in a 2017 dissent in a different case. “These forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings,” he wrote.

    When agents of the government can “seize property even if the owner is not charged with a crime,” it should be clear enough that there’s a problem.