Thursday, March 31, 2016

Reform Conservatism Is Dead On Arrival At The Republican Bible

The editorial page of the Wall Street Journal is the Bible of Republican orthodoxy.  Simple put, the WSJ clings to the view that the Reagan/Kemp economic policies that have defined the Republican Party since Reagan should not be changed.  In other words, the Party should continue its strategy of cutting taxes for the donor class and claim that it is a pro-growth strategy that will benefit everyone.

Reform conservatives, like David Brooks and the author of this op-ed at the NYT, argue that the time has come to adapt conservative orthodoxy to changing times.  They have learned something from the success of Donald Trump with a large segment of the GOP base.  Many of them do not support the economic status quo.  The authors of the GOP Bible believe otherwise. They can accept a Trump presidency.  Trump does not have any fixed ideals and Ryan will be able to win him over to the orthodox view.  The writers of the holy scriptures at the WSJ are very critical of reform conservatives who believe that the Party should be more inclusive and adapt its policies to a new economic reality.  The orthodoxy has worked for over thirty years.  The conservative reformers should be ignored.

Wednesday, March 30, 2016

CNN Town Hall Hosted By Anderson Cooper Provided Tough Test For Trump and Cruz

Anderson Cooper did a great job hosting the CNN Town Hall.  He did what most in the media fail to do.  He asked tough questions and he did not let Trump or Cruz evade the questions.  When forced to answer the questions both of the candidates showed that they were unable to go beyond the sound bites that they rely upon.  There is no substance to anything that they have proposed about important issues that any president will face.

Tom Friedman Describes The Hopeless Problem That We Face Against ISIS

Tom Friedman supported the US invasion of Iraq.  He now understands the chaos that it unleashed in Iraq and how that led to ISIS.  He also appreciates the complexity of the problems that we face in our efforts to eradicate and contain ISIS. The religious war between the Saudi's and Iran is at the heart of our struggles in the Mid-East.  Friedman now appreciates the problems faced by Obama and any president who succeeds him.  Unfortunately, many of our politicians tell the public that they have an easy solution for the complex problem that Friedman now understands.  Their focus in on winning elections which they understand.  We should expect more from our politicians but that is not likely to happen.

Tuesday, March 29, 2016

Attorney Generals Accuse EXXON Of Misleading Public About Climate Change

Attorney Generals in several states are requesting internal data from EXXON about its research on climate change.  They believe that EXXON scientists produced data on the risks from climate change which the corporation failed to disclose.  Even worse, EXXON has funded organizations which have minimized risks from climate change.  Some liken this to the tobacco companies which failed to disclose information that they had about the causal relationship between smoking and cancer. 

Republican Governors Forced To Choose Between Religous Right And Business

Republican governors in several states have been put in a bind.  State legislators have passed bills which are favored by the religious right.  Business leaders oppose those bills and they have threatened to take their business, especially major sporting events, to other locations.  This article describes the difficult choices that Governors wished they did not have to make.

Does The US Electoral System Provide A Good Model For Other Nations?

The US primary campaign, starring Donald Trump, has provided good entertainment for the rest of the world.  Most Americans would argue that the US electoral system is the best in the world and that the Donald Trump show is atypical.  That is true; this is not a typical election.  On the other hand, political scientists have developed methods to rank electoral systems in terms of their democratic effectiveness.  The US ranks at the bottom in comparison with most of the developed world.  It compares more closely to Mexico than it does to most of the countries in Europe.  We are familiar with many of the more obvious problems with our system.  The problems with our electoral system are more numerous than we might imagine.  We do not provide a good example to the rest of the world.

Another Leading Conservative Struggles With Trump's Success

Michael Gerson is a regular opinion columnist for the Washington Post; he was also a speech writer for George W Bush.  In this op-ed he worries that the voice of conservatism on talk radio may have increased Donald Trump's chances to win the Republican nomination.  Rush Limbaugh states that Ted Cruz is the better conservative candidate but that Donald Trump is the best anti-establishment candidate.  Gerson equates an attack on the GOP establishment as an attack on conservatism and the Republican Party which is based upon conservative ideals.  Perhaps his real concern should be that a large segment of the GOP base is not really conservative.  Their connection to the GOP is not based upon the economic ideology that is central to the Republican Party's concept of conservatism.  They are social conservatives who oppose the liberal social values of the Democratic Party. Most of them do not subscribe to many of the conservative values described by Gerson.  The dilemma for the Republican Party is that they can't survive without their votes, but their attraction to Trump repudiates conservative principles that are dear to Gerson.

Monday, March 28, 2016

A Prediction Made In 2012 Has Come True

An article written by two experienced observers of Washington, one of whom is a senior member of the conservative American Enterprise Institute,  blamed the gridlock and dysfunction in Washington on the Republican Party.  I posted this article because it described the political situation in 2012 very well.  Its relatively easy to accurately describe things the present.  This article concluded with a prediction of what would happen if the Republican Party continued on the path that it had taken. You can judge for yourself whether they were prescient or not.

What Do Bernie Sanders And Donald Trump Have In Common?

Donald Trump has been smart enough to realize that a large segment of the Republican base is economically disadvantaged and that Republican policies on trade are a part of their problem.  He also understands that entitlement programs like Social Security and Medicare are very popular.  The Republican Party has been doing what it can to reduce spending on those programs.  Trump's style, and much of his rhetoric is not presidential, but he has capitalized on populist discontent in the GOP base to soundly trounce more conventional Republicans who adhere to the Party line.  Trump's tax policies and his healthcare plan are very Republican and very bad for this populist base but these policies are drowned out by his promises to bring jobs back to America and to protect entitlements.

When it comes to trade and entitlements Bernie Sanders sounds a lot like Trump. However, his  tax polices and his healthcare proposals are progressive where Trump's are regressive.  He may overlook the problems that he would face in implementing his policies, but they appeal to the populist base in the Democratic Party.  His ideas are as far to the left in a centrist Democratic Party as Trump's are in the Republican Party which has moved to the extreme right under the assurance that its populist base does not understand their own economic interests.  Populists in both parties are disenchanted with a political system that serves corporate interests over their own.

Bernie Sanders may move the Democratic Party away from the center right position that it has been forced into by the need to compete with Republicans for campaign funds.  That would be a relatively easy transition.  The Republican Party cannot easily make that transition.  It would have to give up an ideology that defines their Party.

Sunday, March 27, 2016

The Economist Explains Why Corporate Profits Have Risen To New HIghs

Warren Buffet is a shrewd investor.  He invests in firms that have a moat around it that limits competition.  Business strategy courses in MBA programs focus on moat building.  The basic idea is to limit competition in order to avoid price competition.  The Economist describes how moat building has increased industry concentration which, in turn, has limited competition and led to historically high profits and free cash flow in many industries.  The methods used by large firms to build moats around their business are thoroughly described in this article.  It concludes that a big dose of moat destruction and an increase in competition is needed in the US.  Oligopolistic industries are the rule in the US. The Economist argues that it is also a leading cause of income inequality,

Saturday, March 26, 2016

Another Look At The Reagan Miracle

People like to tell a story about the Reagan miracle.  Reagan cut taxes and the economy responded like a rising tide that raises all of the boats.  Everyone benefited from the Reagan miracle.  The graph in this article tells a different story.  There was a V shaped recovery starting in 1979 from a deep recession.  The Fed made a dramatic cut in interest rates and oil prices dropped from a high set by OPEC policies. That stimulated the economy.  However, the graph shows that the rising tide did not lift all boats.  The recovery was very good for those at the top but income for the bottom 99% did not budge much above the peak level in 1979.

Friday, March 25, 2016

Paul Krugman Argues That Cruz Is Not Any Saner Than Donald Trump

This column by Krugman provides the perfect prelude to the post that follows by David Brooks.  Krugman describes the economic policies of Ted Cruz and Paul Ryan as far removed from the center of modern economic thought.  Cruz wants to revert to the gold standard and Ryan clings to economic ideas that have dominated Republican ideology since Reagan. 

Krugman will be surprised by the op-ed by Brooks which argues that the Reagan paradigm no longer works and that conservatism, and the Republican Party, need a new paradigm.

David Brooks Calls For A New Vision For Conservatism And The Republican Party

The most widely read conservative op-ed columnist for the NYT describes what we have learned from Trump's success.  The Reagan vision, that has dominated conservative thought since 1980, no longer works for many people.  It is also inappropriate in a more globalized world.  Brooks compares the current state of conservatism to what happens in science when the existing paradigm fails.  It will hang on until a new paradigm emerges to take its place.  Conservatism is not there yet but the old paradigm which assumes that man is a rational utility driven being, that wears an Adam Smith necktie, is out of date.  Homo Economicus is a myth.

These are strong words coming from one of conservatism's leading advocates.  He put a dagger into the heart of the Republican Party in the process.  He believes that the Party will continue to exist but it is in desperate need of a new paradigm to replace the outdated paradigm.

Thursday, March 24, 2016

How Patent Law Impedes Scientific Discovery

Its refreshing to find something interesting that is not about terrorism or US politics.  This article argues that scientific discovery depends upon the free exchange of ideas.  Most big discoveries occur through a process in which lots of small ideas lead scientists to develop insights that would not otherwise have happened.  Patent laws and intellectual property rights promote secrecy.  Universities are awarded intellectual property rights that derive from government funded research.  Those IP rights can be worth billions.  That gives scientists an incentive to maintain secrecy so that other scientists don't beat them in the race for patents.

Is There Anyone, or Anything, Less Popular Than Congress In The US?

A poll conducted for Bloomberg News answered this question.  Since Congress is hated by almost everyone, it took a lot of effort to go below the bar set by Congress.  The changes that have occurred in the popularity contest may surprise you.  They surprised me.

What Do The Terrorists In Brussels and Paris Have In Common?

The terrorists, based in Hamburg, who were responsible for the 9/11 attack in the US are very different from those who carried out the attacks in Paris and Brussels.  The 9/11 attacks were conducted by highly educated individuals who had adopted a radical form of Islam under Osama bin Laden. The terrorists responsible for the attacks in Paris and Brussels had a long history of violent criminal behavior.  They had served time in prison for acts of criminal violence well before the violence they put on display in Paris and Brussels.  Criminal gangs have been transformed into terrorist gangs by ISIS leaders who have provided them with a justification for their violent behavior.  The criminal gangs in Brussels have something in common with criminal gangs elsewhere.  They grew up in conditions of extreme poverty where criminal violence was a common form of behavior.  Some intelligence experts describe them as Islamized Radicals.  Others claim that they are not radicals at all.  They are criminals who have found an excuse for the acts of violence that that they have come to enjoy.

Donald Trump And The Breakdown Of The Conservative Coalition

Every political party depends upon a coalition of supporters.  Donald Trump's success in the GOP primaries has weakened the glue that has held the Republican coalition together.  This article describes the chasm that has developed between influential conservatives as well as the conflict within the Christian evangelical movement.  This goes well beyond a conflict between the GOP "establishment" and  those outside of the establishment.  Each of the coalition partners are having their own problems over the nomination of Donald Trump.

Wednesday, March 23, 2016

An Argument For Globalization And Against Free Trade Agreements

Ordinarily, proponents of free trade agreements (FTA) also favor globalization.  However, globalization can proceed without FTA's.  This article, written by someone who has worked on FTA's, explains why he is critical of FTA's and why globalization can proceed without them.  He then describes how globalization can proceed in ways that do not produce large trade deficits with our trading partners.

Tuesday, March 22, 2016

An Interactive Graphic On The Changes In Income Distribution In US Since 1971

This article contains an interactive graphic produced by the Financial Times based upon data collected by Pew.  It enables one to observe changes in income distribution over time. It also debunks arguments  by conservatives who have attempted to deny or explain away the trend in income distribution. 

Washington Post's Editors Describe Interview With Donald Trump

The Washington Post editors interviewed Donald Trump for one hour.  They report on the interview in today's paper.  It's a short article that does not require any comment from me.  It tells us a lot about Donald Trump, but it tells us more about the state of democracy in the US.  A huckster has convinced a large share of the Republican base that he should be their president. 

Monday, March 21, 2016

The Market May Reduce Coal Production And Reduce Carbon Emissions

The finance market has determined that the future does not look good for the coal industry.  Consequently, banks have become reluctant to finance coal mining.

Saturday, March 19, 2016

Paul Ryan Loves Income Redistribution As Long As He Can Hide It

Paul Ryan is the Speaker of House of Representative and also the architect of its tax policy.  This article illustrates how his plan increases the after tax income of the top .01%.  That is, it redistributes income to the top of the pyramid.  When Ryan is asked about using the tax system to redistribute income to those below the top of the pyramid, he claims that he does not believe in income redistribution.  His plan is designed to make it difficult to discern the direction of income redistribution.  The tax lawyers employed by the top .01% understand exactly how it works. 

Donald Trump has been riding a populist wave by telling low income citizens that he is on their side. In fact, Trump's tax plan is similar to Ryan's plan.  Trump gives his followers strong words about immigration and other things that worry them.  His message on tax policy is to let them eat cake.  Cutting taxes for the top .01% has been a feature of Republican policy since 1980.  We can't blame Trump for Republican policies that are harmful to ordinary citizens. 

Friday, March 18, 2016

A Post Mortem On The Demise Of The US Political System By David Brooks And Paul Krugman

David Brooks has built his career around  a conservative ideology that he believed to be best represented in the Republican Party.  He describes the monster that his Party is likely to nominate as its candidate for the presidency.  He is not happy with that result.  He takes solace in the fact that Trump may have sold himself to a segment of the GOP base, whose problems he had ignored,  but who is unlikely to win the general election.  He doesn't say much about how his political party paved the way for an immoral, and unprepared candidate, to contend for the presidency.

Paul Krugman strongly agrees with David Brooks' analysis of Donald Trump, but he looks at the Trump problem from another direction.  He offers his analysis of how the Republican Party made it possible for Trump to capture a large segment of its populist base. 

The comments that follow the articles from Brooks and Krugman are thoughtful and provocative. 

Wednesday, March 16, 2016

Marco Rubio Tried To Sell George Bush's Synthesis And Failed

Ross Douthat is one of the NYT conservative opinion writers.  In this article he describes George Bush's political synthesis and he argues that Marco Rubio duplicated that synthesis.  That made Rubio the favorite candidate of many Republican leaders.  The Bush synthesis failed because it no longer reflects the needs and concerns of Republican primary voters.  Trump offers them a very different synthesis.  He promises even more tax cuts for the wealthy as Bush had done but he offers a more aggressive foreign policy than Bush.  He does not want to use force in order to build more friendly states in the Mid-East; Trump wants to stamp use military force to obliterate those who he perceives as threats.  Trump also deviates from the Bush synthesis on free trade.  He tells voters that he will do what is necessary to reduce our trade deficit.  He also promises to maintain funding for Social Security even as he cuts taxes. Bush tried to privatize Social Security and failed.  The other GOP candidates stress the need to reduce funding for entitlements.  Trump sounds more like a Democrat on trade and on entitlements.

Douthat sees the need to create a new Republican synthesis that better reflects the change in voter concerns.  However, he is not optimistic about the prospect of uniting the Republican Party on a new synthesis.  Trump has exposed the real divisions that exist in the Party.  The GOP electorate may not be interested in policy debates according to other GOP leaders.  Trump did not bore them with policy Proposals.  He channeled the anger that he sensed in the GOP base by showing voters that he shared their anger and that he was more likely to do something about it than the other candidates.

Tuesday, March 15, 2016

Brookings Explains Populist Anger With One Graph

Brookings reports the conclusions of a team of economists on the effects of deindustrialization in the US.  The loss of manufacturing jobs, especially in the Rust Belt, is blamed for much of the discontent among working class Americans.  In a sense, we have become a consumption economy.  Consumers have access to a wider range of products at lower prices.  However, there has been a loss of labor income and wealth associated with deindustrialization.  The jobs that remain pay lower wages due to competition with workers in lower cost locations (including those moved to the South).  The loss of wealth in rust belt cities is visible to anyone.  The infrastructure that was developed to support more prosperous communities cannot be supported by a greatly reduced tax base.  The citizens that remain in wasted cities are forced to struggle with poor schools and access to necessities such as clean water in Flint.  It is not a pretty picture. 

GOP Establishment Reluctantly Embraces Ted Cruz

Republican leaders who backed Marco Rubio for the GOP nomination after Jeb Bush flamed out have given up on Rubio.  They have concluded that Ted Cruz is the only candidate left standing who might be able to stop Donald Trump.  Cruz is on the campaign trail doing his best imitation of Donald Trump's.  He now supports blue collar workers who are losing their jobs to immigrants.  He may end up telling the immigrants that they are fired just like The Donald did on his popular TV show.

Monday, March 14, 2016

US Politics And 36 Years Of Magical Thinking

Ronald Reagan believed in magic.  He sold Americans on a powerful belief in magic that has been impossible to dispel.  He told voters that he could cut taxes, increase military spending and balance the federal budget.  He believed that this would be possible because the tax cuts would cause the economy and tax revenue to grow enough to pay for the tax cuts.  The magic did not work as Reagan had promised.  Budget deficits mushroomed, and the national debt tripled during his Administration.  One would think that voters would lose faith in Reagan's magic but they have not. Each of the candidates for the Republican nomination are selling the same version of Reagan's magic.  All of them argue that they can cut taxes, increase military spending and balance the federal budget.  As one might expect,  Donald Trump is selling a more powerful version of magic than his competitors.  He has proposed larger tax cuts, and he promises that he can continue to pay for popular entitlements by eliminating government waste.  Marco Rubio and Ted Cruz argued that there was not enough waste in government to maintain entitlements at their current level,  They promised to pay for their tax cuts by gradually reducing entitlement spending so that those receiving benefits today would not be affected by their cuts in taxes.  Future generations will have to pay for the tax cuts.  At present, Donald Trump's version of magic is selling better than the magic promised by his competition.  This election will come and go but the magic promised by the GOP will remain a fixture in their policy proposals.  We don't want to live in a world without magic.  The tooth fairy will live forever.

Sunday, March 13, 2016

Social Security, Economics and Presidential Politics

For the last couple of decades politicians have been battling over Social Security.  Democrats love it; most of the public loves it, but many Republicans hate it.  In the last GOP debate Donald Trump separated himself from Marco Rubio who told us that Social Security was going to go broke and that we would have to cut benefits for people his age who would be retiring in the more distant future.  Rubio's position assures him that he wont lose the votes of those collecting benefits today or in the near future.  That position has another favorable outcome.  Younger people, will believe that Social Security will not be there for them when they retire. That will make it easier for Republicans to attack Social Security in the future.  Its the age old strategy of divide and conquer.  Cruz agreed with Rubio that Social Security is in trouble.  He wants to partially privatize Social Security by creating individual investment accounts for young people.  We got nothing new from Rubio or Cruz; they have taken well worn Republican positions on Social Security.  Trump's position of Social Security separates him from the GOP herd.

This article does two important things.  It provides valuable information about the finances of Social Security that most people do not understand.  It also explains why Trump has moved away from the GOP game plan on Social Security.  Trump has been very clever during his campaign.  He told Republicans in the South what they wanted to hear about social issues but he has taken positions on Social Security and Trade that will appeal to Democratic voters outside of the South.  He is preparing himself for the general election by taking away two of the big talking points that will be used by his Democratic opponent.  It will also help him in the GOP primaries in the Rust Belt.  Trump will be present himself as a Democrat outside of the South.  He understand why the GOP loses presidential elections.

Saturday, March 12, 2016

Trump Rally In Chicago Canceled for Security Reasons

Protesters disrupted a scheduled Trump rally in Chicago which forced cancellation of the event. Trump should not be prevented from holding public rallies but we get a valuable lesson from what happened in Chicago.  Trump correctly observed that we have a divided country.  What he did not admit is that his candidacy has exasperated the divisions that exist in the US.  A Trump presidency would be a threat to our system of governance.  He is not respected in his own Party and most of his proposals for change would be vigorously opposed by both of our political parties.

Friday, March 11, 2016

Volkswagen May Be Giving Up On Mass Market In US

The emissions scandal may have caused VW to shift its marketing strategy in the US.  It invested $1 billion in a new plant in the US to pursue a mass market strategy but the subsequent drop in VW sales has caused VW to consider other options in the US.  The recent resignation of VW's US executive who supported the mass market strategy has caused US VW dealers to threaten suits if VW backs down on its US expansion plans.  VW dealers have invested around $1 billion to upgrade their dealerships in order to pursue a mass market strategy. The dealers will lose big time, but so will VW if it scales down its plans for the lucrative US market.

Washington Post Conservative Has Given Up On Republican Party

Jennifer Rubin has given up on the Republican Party.  The head of Republican National Committee announced that the Party would support any candidate that wins the nomination.  That was the last straw for Rubin. She announced that the Party that she has supported throughout her career no longer has any principles. It only cares about winning elections.  Rubin would like a third party candidate to run in the general election even if it results in a victory for Democrats.  She would like to replace the GOP with a principled political party that would be antithetical to everything that Trump represents.  That is not good news for the GOP.  It has allowed Trump to tarnish its brand forever in the minds of many traditional Republicans like Rubin. 

Two Responses To Last Nights GOP Debate

One of the Washington Post's conservative columnist's offers her analysis of the GOP debate and one of the more liberal writers for the Post turned his attention to the general election.  Last nights debate disappointed Jenifer Rubin, who has been a Rubio supporter, because the candidates decided not to act like school children.  They decided to focus on policy issues instead of attacking Donald Trump.  Rubio, Cruz and Kasich showed that they could answer the policy questions articulately, but they did not put a dent in Trump's armor.  Trump was able to bullshit his way through the debate.  He was clearly less informed about the issues and he easily deflected criticisms about the solutions that he has proposed to most of the issues.  Trump survived the debate and he has a good chance of winning the Florida primary.  Another chance to stop Trump's march to the nomination was wasted according to Rubin.

Greg Sargent decided to discuss Trump's chances to win the general election.  All of the GOP candidates, including Trump, have focused on winning the GOP primaries.  All of their remarks in the debates were directed towards conservative Republicans in conservative states.  Consequently,  they were forced to constrain their criticisms of Trump's positions on important policy questions.  Each of the GOP candidates have proposed large cuts in federal taxes.  Trump took the high ground on entitlements.  He will not cut Social Security, Medicaid and Medicare. There is no way that Trump can cut taxes and continue to fund entitlements.  His opponents could not argue that tax cuts would endanger entitlements because they have also proposed tax cuts which will force cuts in entitlements. The Democratic candidate will not be similarly constrained.  All of the GOP candidates are climate change deniers and so is the GOP electorate.  The Democratic candidate will not let Trump off the hook on climate change in the general election.  Lastly, the GOP candidates were forced to shy away from Trump's extreme positions on Muslim immigration and how to deal with illegal immigrants from Mexico.  That will allow the Democratic candidate to attack Trump's extreme positions on these issues.

Sargent did not discuss trade agreements in his article.  They were a big issue in the Democratic debates and both Trump and Cruz showed that they are ready to debate the Democratic candidate on trade policy in the general election.  Neither of them has a workable plan to reduce US trade deficits, but its not clear that they would lose a debate on trade to the Democratic candidate in the general election.  Cruz was able to easily attack Trump's position but Trump bluffed his way through a non-response to the attack.  He may get away with that in the general election.  Trump's strategy in the general election is designed get votes from Democrats in blue states who have been disappointed by the failure of the Democratic Party to protect their interests.

Thursday, March 10, 2016

Free Trade, Globalization And US Politics

Paul Krugman asserts that free trade has finally become an issue in US politics.  Donald Trump has taken a strong position against trade agreements and that has helped him in his campaign against establishment Republicans who are strong supporters of free trade.  On the Democratic side Clinton and Sanders are working hard to convince those affected by globalization that they also want to bring jobs that have gone overseas back to America. 

Economists have a long history of ideological support for free trade going back to David Ricardo who argued that it enabled nations to exploit their comparative advantages such that each nation was better off as a result of free trade.  More moderate economists have taken the position that there are winners and losers from free trade.  Therefore, they support government programs that use income redistribution programs that lessen the negative impact of trade on the losers.  Krugman points out that Republicans are totally opposed to income redistribution unless it works in the favor of those who benefit most from trade.  Consequently, it is not surprising that we have not been able to moderate the negative effects of trade on the losers.

Those who are the losing side of globalization have become more involved in politics.  Consequently, it may be time to do something about it.  It is not impossible but it would be difficult.  Krugman argues that Sanders attack on trade agreements is more complicated than it seems.  He believes that Clinton would be tougher on future agreements, but that she can't tear up those that exist (TPP has not been fully implemented at present}.  Trump is the wild card. If he became President it is not clear what he would do.  He could be more dangerous than he is helpful.

The bottom line is that Krugman, whose specialization has been in international trade, and many other economists, are now aware of the political feedback that is having a powerful impact on US politics.  Globalization has been one of the powerful factors that have contributed to income inequality and there will continue to be powerful resistance to politics as usual. However, we are a long way from agreement on how those issues should be dealt with.  Democrats will have a hard time moving away from its centrist position, and Trump has shown that the Republican positions which have made things worse for those most affected by globalization may not continue to be a winning strategy.  The losers may not be satisfied with Republican efforts to promote religion and other social values as the response to growing poverty.  Trump's success in the bible belt should be giving them some pause.

Ben Bernanke Offers His Advice To China

Bernanke learned a lot about monetary policy during his tenure at the helm of the Federal Reserve.  He describes the monetary policy issues that China faces and he advocates a fiscal policy solution as it manages its growth and transition to a larger economy.  Fiscal policy can be used to manage the transition without causing its currency to lose value and also prevent currency outflows.  He does not advocate infrastructure investment as the fiscal policy tool.  He argues that an expansion of social welfare programs would provide needed security to its citizens and decrease the necessity to over save.  That would increase spending and domestic demand.

Bernanke was hampered by the failure of US politicians to deal with the problem of deficient demand with greater use of fiscal policy.  That increased pressure on the Fed to pursue monetary approaches that were insufficient during a deep and enduring decline in demand.  US fiscal policy deficiency attenuated the impact of monetary stimulus on the US economy. 

Wednesday, March 9, 2016

Major Florida Paper Cannot Back Any GOP Candidate

The Sun Sentinel, major Florida newspaper that had backed Jeb Bush, explains why it can't endorse Cruz, Rubio or Trump.  It also states that Hillary Clinton is by far the most qualified candidate we have had in years.  The key factor for the Sun Sentinel is experience at the level required for the oval office.

Tom Friedman Argues That Only Trump Can Stop Trump

Tom Friedman gives Trump credit for his leadership skill.  His supporters have not responded to the details of his proposals.  They have responded to his gut.  He came to understand the GOP base when he traveled around the country claiming that Obama was not an American.  He fed their concerns right back to them on the campaign trail.  The basic difference between Trump and the others was the force of his personality and the feelings  that he put behind ideas that are similar to those of the other candidates.  Friedman describes the three aces that Trump has up his sleeve but he also offers two jokers that could defeat him.  We will have to see how Trump plays his hand.  Friedman believes that he can't be stopped by the leadership of the Republican Party.

Friedman also blames the GOP for the Trump problem.  They are the Dr. Frankenstein to the Trump monster.  He sums up the GOP's failures in a nutshell.  They are getting what they deserve.  Well worth reading.

Tuesday, March 8, 2016

David Brooks Explains Why This Election Is Important For His Favorite Party

David Brooks is arguably the Republican Party's most respected spokesperson.  He has described himself as the liberals favorite conservative.  There aren't many liberals who listen to Rush Limbaugh and other conservative cranks that populate the popular media.  David Brooks has a presence on PBS and a platform on the NY Times for a reason.  He is not interested in making a fortune by telling preposterous stories to folks who do not watch public television or read the NY Times.  In this article he describes a problem that goes beyond the 2016 election.  He wants to save the Republican Party.

Like most Republicans, Brooks is concerned about the rise of Donald Trump.  He cites some evidence which raises his hopes for a decline in voter support for The Donald.  Marco Rubio has been the last remaining hope for the Party establishment and for David Brooks.  Unfortunately, the strongest remaining contender for the nomination is Ted Cruz.  Brooks and most of the GOP establishment do not like Ted Cruz.  He is an ideological purist who has fueled the obstructionist wing of the Republican House.  They will not compromise on any issue that is not ideologically pure;  they criticize their leaders when they try to craft compromises which are an inherent component of a political system with more than one political party.  If Cruz is the only alternative to Trump, Brooks explains why it is more important to the Party to put its house in order than it is to win the 2016 election by any means.  He believes that there are potential Republican leaders in government that can help to return the Party to its traditional roots.  The House Majority leader Paul Ryan is chief among them.  He has his hands full dealing with Cruz's ideological purists in the House. 

The Best Reason Why The GOP Should Not Vote For Trump

Catherine Rampell describes the belated campaign slogans being used to discredit Donald Trump.  They cover the waterfront.  Its hard to imagine any candidate surviving the frontal assault on every aspect of Trumphood.  Trump will only weather this attack if he has the strongest coat of Teflon protecting him than any candidate in history.  In fact, the GOP attack on Trump is so forceful that it raises an interesting question that GOP leaders have not considered.  If Trump survives the nomination process and runs against Hillary Clinton (or Bernie Sanders),  the GOP would be forced to explain why Trump would be a better President than either Democrat.  All of the GOP candidates running against Trump have vowed to support him if he wins the GOP nomination.  Do they really believe that the monster that they have described would be better for our country than any Democrat?  Nobody would vote for that monster.  Voters should also be wary of the Party that spawned the monster that bears a strong resemblance to several of the remaining candidates.

I have frequently been critical of the US media because they are often guilty of false equivalency.  That is, they often pretend that there are two sides to every story.  For example, if 99% of climate scientists claim that human activity is responsible for global warming the media feel obliged to provide equal time to the 1% who disagree.  If a large number of billionaires fund the Republican Party's campaigns they are obliged to tell us that George Soros donates money to liberal causes etc. etc. etc.  That is a valid criticism of the media but we should not ignore the fact that we get better information from the media than the great majority of citizens in the rest of the world.  Cathrine Rampell is published by the Washington Post along with George Will, Robert Samuelson and others that shape their reporting to their ideologies.  There have been few examples of false equivalency in the media about Donald Trump.  The public has all of the information that it needs to evaluate his candidacy. 

Monday, March 7, 2016

The Delegate Math For GOP Nomination

This article looks at the numbers and concludes that Trump wins the nomination if he wins Ohio and Florida.  Trump is ahead in the polls in Florida but millions are being spent by PAC's to attack Trump's character and his reputation as a successful business person.  Kasich is the Governor of Ohio; he is likely to win his home state.  If that happens Trump is unlikely to have enough delegates to win the nomination prior to the GOP convention.  The GOP nominee will be determined by brokered convention.  Trump is unlikely to be the candidate in a brokered convention.  On the other hand, Rubio, who was the establishment candidate would be a poor choice unless a miracle happens in the remaining primaries.  Ted Cruz will probably have the second largest number of delegates, but he is very unpopular within the GOP leadership.  Cruz is very popular with ideological purists in the Tea Party and with evangelicals; he would be easy to beat in the general election.  Someone like Mitt Romney may emerge as the nominee.

Trump, Rubio and Cruz Are Not Much Different On Issues

Mitt Romney claimed that Donald Trump was not a Republican.  He asked Republicans to vote for one of the other Republican candidates instead of Trump.  There is certainly a style difference between the candidates.  Trump's comments are more outlandish;  he does not mince words when he states his ideas.  The differences between the candidates diminishes however when you compare their positions on many important issues.  The debates have not been about policies; they have been primarily about the language they use to describe their positions on social issues upon which there is general agreement.  Trump is doing a better job of selling a similar product.  This article shows how similar they are on the issues that seem to matter to many Republicans.  The Debates between Clinton and Sanders have been primarily on economic issues which have been absent in the Republican debates. 

Trump's position on international trade is different from the general position of the GOP.  He has opposed international trade agreements.  He claims that he would do something about our trade deficit with China.  Romney attacked Trump's position on international trade.  Republicans are typically strong supporters of free trade.  However, Romney also claimed that China was not playing fairly on trade during his campaign against Obama.  He claimed that he would retaliate by imposing tariffs on imports from China.  Romney and Trump find it convenient to scapegoat China during election campaigns.

Saturday, March 5, 2016

Is Trump The Voice Of The People And The Republican Party?

Mitt Romney told Republicans not to vote for Trump.  He ridiculed the candidate for whom many of them had voted.  He said that "Trump was playing them for suckers".  The "suckers" have responded.  There have been numerous rallies in support of Trump and full of outrage against Romney who they view as part of the Republican establishment that they detest.  They don't believe that they are suckers and they don't know why Republican leaders will not accept the outcome from the democratic process.  One Trump supporter stated that Trump is the "voice of the people".

Many Republicans praised Romney for attacking Trump and the ideas that he has articulated.  Like Romney, they don't accept him as a "true conservative" or a "real Republican.  On the other hand, Trump has been defeating establishment candidates in the primary campaigns.  He is the voice for a large segment of the Republican Party.  Some of them would like Trump to take over the Party.

Trump may not be able to takeover the Party whose leaders are trying to expel him but the Republican Party is clearly a splintered Party.  Many of their leaders, like David Brooks, have raised concerns about the future of the 150 year old Republican Party.  Trump's success with a significant number of Republicans indicates that the Party does not represent their interests.  They once called establishment Republicans RINO's or Republicans in name only.  Now establishment Republicans reject their leader as a real Republican.  The Republican coalition that was carefully developed with Nixon's Southern Strategy has reached its end point.  We have more than one Republican Party.

The Democratic Party under Roosevelt,  and until Lyndon Johnson pushed the civil rights bill through Congress, functioned as a coalition between "Dixiecrats" in the South and Democrats in the rest of the country which was heavily influenced by organized labor.  The Dixiecrats had no interest in the Party of Lincoln.  They joined forces with the Democratic Party.  They were able to moderate some of the liberal programs that they did not like, and they were a powerful force on national defense.  A large portion of the defense budget was used to develop the South economically.  The passage of the Civil Rights Bill ended the alliance between the Dixiecrats and the Democratic Party.  Richard Nixon took advantage of this rupture and managed to turn the Dixiecrats into Republicans.  What was once the "Solid South", that always voted for Democrats, became the "Solid South" that always votes Republican.  The rise of Donald Trump may rupture that alliance.  It would be similar to a situation in which the Dixiecrats tried to take control of the Democratic Party.  The historical roots of the Republican Party are not in the South.  It has been the Party of business, and it was very successful in the agricultural states.  The business community has evolved culturally along with the globalization of the economy.  Most multinational corporations get half of their income from their foreign subsidiaries.  They are as multicultural as they are multinational.  They also require a sophisticated and well educated workforce, and a government that can work with them to build international alliances.  Trump's supporters have been left out of that process along with many traditional Democrats who have not prospered under globalization.  Many Democrats who have also been left out of that development voted for Trump in the Republican primaries that allow independents to vote.  Both parties are dependent upon the votes of Americans who feel that they have been left behind.  There is room for a Populist Party which reflects their interests.  The two party system in America may not have a big enough tent to include all of them.  Trump has stretched the Republican tent to a breaking point.  The arch conservative business wing of the Republican Party has depended upon the Trump voters to protect their interests.  The Republican Party has been able to satisfy their desire for tax cuts and and a more friendly regulation of the economy.  It cannot continue to do so without the votes of Americans who have responded favorably to Trump's demagoguery.

Friday, March 4, 2016

Hillary Clinton's Tax Plan

Most of us have been caught up in the GOP horror show.  There has been less discussion about important Democratic budget proposals.  This article describes Hillary Clinton's plan which would make the federal tax system about as progressive as it was during her husband's administration.  It would also increase federal tax revenue substantially.  Clinton's plan is clearly different from the plans proposed by Republicans which would make the federal tax system less progressive.  They all propose tax cuts for the super rich. This increases the tax burden for ordinary Americans or it forces the government to reduce spending to avoid huge budget deficits.

In addition to Clinton's plan, there is also a description of more ways to increase federal tax revenue that Clinton does not touch.  The biggest source of tax revenue would be to eliminate one of the huge tax breaks enjoyed by the super rich.  Suppose that a painting were purchased for $100 which increased in value to $40,000,000 after the artist became famous.  If you left that painting to one of your heirs the tax basis for that painting would be $40,000,000.  If that painting were sold by your heir the capital gains tax would only apply to the sale price in excess of the tax basis of $40,000,000.  The huge capital gain passed on to the heir would escape taxation, and the sale of high gain assets prior to death would be reduced.  This has a huge impact on government tax revenue and it passes on wealth inequality from one generation to the following generation.

Making America Great Again???

All of the GOP candidates are preaching the same gospel.  They claim that America is in decline due to eight years of the Obama Administration.  The only way to arrest the decline is to "throw the bums out" and put one of them in the White House.  This article wrongly attributes the America in decline slogan solely to Donald Trump.  It does, however, describe what it means to be a nation in decline and it shows why American is not in decline.  One might say that we entered a period of relative stagnation around 2000, and well before Obama took office.  The article also suggests many of things that might be done to counter stagnation.  Most of the suggestions are not on the menu of the Republican candidates.  They would oppose most of them.

David Brooks Explains Why Trump Is A Bad Person But He Can't Expain Why He Is Winning

Donald Trump's success in the primary campaign has finally alarmed the Republican establishment.  The first salvo came from Mitt Romney who told his fellow Republicans that they were being suckered into voting for a candidate who would be a terrible President.  David Brooks came out of the closet and offered his views on Donald Trump.  They are both right.  Donald Trump is not presidential material but more Republicans voted for Trump in the primaries than for any of the other candidates.  Brooks touted Marco Rubio in some of his earlier opinion pieces but Rubio has not impressed voters in the debates, and he has done little in career to establish the kind of credentials that we would expect in a President.  The Republican establishment settled on Rubio when Jeb Bush failed to impress voters and their only other choice would have been Ted Cruz.  The Republican establishment has watched Cruz establish his own wing within the Party by hooking up with Tea Party members of the House of Representatives to thwart the elected leaders in the House and the Senate.  They know what Cruz is all about.  He, like Donald Trump is all about himself.  His strategy has been to establish himself as the leader of the emerging Tea Party wing of the Party.  He has moved too fast for freshman Senator.

The GOP debates served an important purpose.  They attracted more attention because Donald Trump was one of the candidates, and the public has had an opportunity to audition the candidates.  Trump demonstrated his ability to sell himself to an important and growing segment of the GOP base.  He also gave many voters a good opportunity to determine why they would not vote for him.  The other candidates were not able to sell themselves to the GOP base and they gave us a chance to see that they are empty suits.  None of them are electable on their own merits.  Their only chance in the general election will be to convince voters not to vote for the Democratic candidate.

The other lesson from the debates is that they failed to address the issues that we face as a nation.  The public learned little about the important issues that a President must deal with and how the candidates propose to deal with those issues.  The last debate looked more like a junior high school debate in which the candidates spent most of their time insulting each other.  Marco Rubio and Donald Trump hit the bottom when Rubio insinuated that Trump's small hands indicated that another part of his anatomy was also small.  Trump felt obliged to defend his manhood by offering a personal guarantee.  After all, we could not elect a President with a physical disability.

The bottom line is that the GOP has created its Frankenstein Monster.  They have cultivated the base of their Party that prefers Donald Trump to the empty suits that preach conservative values but offer nothing in substance to deal with the malaise that they are experiencing.  They can't win elections without their votes, but they can't put an empty suit in the White House as long as demagogues like Donald Trump threaten to turn that base against them. They demand a Frankenstein Monster and the GOP has nobody else on offer.  Donald Trump's success has exposed the lack of unity in the Republican Party.  Marco Rubio's claim that he represents the Party of Ronald Reagan is falling on deaf ears.  Rubio is too young to remember Ronald Reagan, and he may have made a mistake when he called the Republican Party the Party of Lincoln.  There aren't many men named Abraham in the parts of the South that remember Lincoln's legacy.  Rubio's understanding of US history is not any better than his record as a state legislator, or as a US Senator.  Even David Brooks may not be able to save his candidacy or even the Party that spawned the candidates and the GOP base.

Thursday, March 3, 2016

Washington Post Editorial On Romney's Attack On Trump

Good summary of Romney's critique.  He called Trump a con man and a liar who cannot be trusted.  However, Trump won the majority of votes in most of the primaries.  The implication is that the GOP base is either stupid or easily fooled by a con artist.  That will not go down well with most of the base.  Moreover, they set themselves up for a guy like Trump and they got a lot of help from the conservative media which supports their biases.  They can't win elections without the segment of their base which voted for Trump.  The GOP base also supported Trump because none of his contenders were worth voting for either.  Cruz tried to sell himself as an evangelical by using clergy on his behalf.  Rubio tried to turn himself into a stronger conservative to win their votes.  They did not buy Rubio either.  The primaries have been more of a soap opera than a display of talent.

Saving Marco Rubio And The Republican Party

Marco Rubio is pinning his hopes on winning the primary in his home state of Florida.  If he can't overcome Trump's double digit lead in the polls and win Florida he is history.  That makes life difficult for those in the GOP who are not happy with Trump.  They are left with Ted Cruz.  Rubio's strategy is to belatedly attack Trump's personal history which is a fertile field that has not been aggressively exploited.  He will be helped in this effort by several conservative PAC's that will spend millions on negative Trump ads.  Mitt Romney also plans to make a speech on Thursday attacking Trump.

Rubio's attack strategy raises some interesting questions.  He has been unable to sell himself to the GOP electorate for a good reason.  He has done nothing in his brief career that might qualify him for the presidency.  Many of the comments that follow this article are from Floridians who are familiar with his record.  Its hard to understand why the GOP establishment, led by commentators like David Brooks, jumped on the Rubio bandwagon when Jeb Bush's campaign floundered.  They selected an empty suit who they thought that they could sell to the public because of his personal attractiveness.  Rubio failed to convince the GOP base that an empty suit could satisfy their demands for change.

One of Rubio's problems is that he failed to convince many voters in the South that he is a real conservative.  They voted for Donald Trump who many in the GOP establishment refuse to accept as a conservative.  That raises an interesting question about how to define conservatism.  It means many different things to Republicans.  David Brooks and George Will believe that it has a philosophical base in the ideas of dead scribblers who reacted to the French Revolution by defending social hierarchy.  For most of the folks, who like Donald Trump, conservatism is defined by the things that they don't like, or by what they fear.  They want a strong response to creeping liberalism which they define in terms of a variety of social and sexual values that they oppose. There is also a strong scent of racism and nativism among the things they fear. They hate liberals or progressives, but they have also lost trust in the elites who run our political parties.  Trump speaks their language; he is not part of the GOP hierarchy, and he projects more power than his competitors. Many believe that Trump will make the changes that Republican elites have not made because he is not dependent upon financial support from wealthy donors.

At a deep level,  the GOP elite is concerned that  Trump and many of his followers do not support the Party line and its definition of conservatism which is defined in economic terms.  That is, tax cuts for the wealthy which are paid for by cuts to social programs,  deregulation, and a more spending on the military.  Trump has barely mentioned his economic policies in his campaign.  However, he has been critical of Paul Ryan who is the mastermind of the the GOP budget.  He claims that Ryan cost Mitt Romney the last election by proposing unpopular cuts to Social Security and Medicare which were necessary to pay for his tax cuts.  Trump is too smart to attack popular social programs, but that is one of the key elements in the GOP economic plan.

Wednesday, March 2, 2016

Chris Christie Does A Poor Job During Trump's Victory Speech

The media are full of stories about the primary results.  The Donald wiped out his opponents in the deep South.  Ted Cruz is the only contender left standing.  He won Texas, which is his home state; he also won Oklahoma which borders Texas.  Marco Rubio, was the GOP's establishment choice after Jeb Bush's campaign failed, despite the enormous sums his campaign spent to advertise a product from the last decade.  Rubio did not win any of the  Southern states.  He will not easily recover from his performance.  That leaves the GOP establishment in a very bad position.  Ted Cruz is the only remaining contender who might be able to stop Trump.  However, Cruz is despised by most of his colleagues in the Senate and few believe that he could win a general election against Clinton.  The Republican Party is in a real bind.  They may nominate a presidential candidate who they cannot control.

It has been said that a picture is worth 1,000 words.  Chris Christie,  the Governor of New Jersey, announced his support for Trump after he withdrew from the primary campaign.  He was selected to introduce the victorious Trump at his campaign headquarters in Florida.  Twitter has exploded with video images of Christie standing behind The Donald during his victory lap.  He does not look very happy.  In fact, he seems as conflicted about the result as do many regular Republicans.  A seed was planted in the GOP by the Tea Party.  Ted Cruz nurtured that seed, but Donald Trump has injected his own steroids into the plant and is happily feasting on the fruit.  The Koch brothers put up the funds, and the organization for the Tea Party but they are also unhappy about the result.  Revolutions do not always turn out as planned.  The GOP brand has been tarnished and pirated by an opportunist who preaches an extreme version of the Tea Party hymnal.  The electoral segment that it inspired prefers Trump's reading of the scriptures.  It remains to be seen whether Trump can expand that base in a general election.  The Clinton campaign will have lots of opportunities to exploit the attacks on Trump coming from within the Republican Party.

Tuesday, March 1, 2016

Bernie Sanders' Economic Advisor Defends His Recommendations

Bernie Sanders has followed recommendations from an economist who does not share the assumptions of many mainstream economists.  Mainstream liberal economists believe that economic stimulus is necessary and useful during a recession.  However, they do not believe that economic stimulus will increase the productive capacity of an economy over the long run.  It is primarily a method of dealing with blips in the business cycle.  Consequently, they have attacked Sanders' economic proposals which are dependent upon an increase in the capacity of the economy in order to fund the social welfare programs advocated by Sanders.  This is the defense of the economic assumptions employed by the economist who advises Bernie Sanders.  He argues that an economic stimulus can increase the output capacity of the economy by using latent human resources and encouraging investments in productivity. 

I am sympathetic to the idea that government programs can increase the potential output of the economy.  Larry Summers has argued that our unemployed labor resources are becoming less productive over time.  He believes that this is one of the reasons why we may be in a period of secular stagnation.  Most of my concerns about about how we can best employ our slack resources and the formidable political resistance to any efforts to use government programs to increase our economic potential.  Sanders claims that we need a political revolution to achieve his goals.  He is probably correct.  We are now experiencing the consequences of a political revolution from the right that has been underway for decades.  Donald Trump has been capitalizing on some of the effects of that revolution.  His only practical solution to the problems is to put him in charge of the government. He has no workable ideas that will deal with our major problems.  Perhaps he could pave the way to some solutions by destroying the Republican Party which has been the source of many of our problems. 

Was World War 1 The First War Of Globalization?

The first World War reconfigured the world that existed prior to the war.  In many ways we are still living with the consequences of the war and the events that followed.  There are many historical explanations for the causes of the war.  This is a review of book that links the cause to industrialization in Britain and Germany and the globalization of the economy that followed.  It argues that both nations moved to higher productivity manufacturing and a movement of much of its population from agricultural communities to the cities.  They imported much of their food and they both developed a powerful navy to protect their food supplies and the flow of their exports to nations that supplied their food and raw materials.  In other words, industrialization and globalization led to the development of a powerful military force in each country.  Some historians believe that globalization increases dependence upon one's trading partners and that reduces the likelihood of war.  It is clear, however, that globalization increases competition between nations and it can shift the balance of power within nations.  Workers are concerned about competition with cheap labor and they tend to resist immigration.  It also places a burden on political systems that are forced to deal with rapid changes which are often beyond their control.