Month: July 2022

So we’re living with rapid inflation.

Discontent has enveloped the nation.

It won’t stop on a dime

But it eases with time.

Think on that when you see a gas station.

In what I would characterize as a bit of a sleeper NYT column this morning, David Brooks identifies two extremely different ways to view life: as a story or a game. People with the latter view see life as an unending contest with the rest of the world to gain and affirm status. Every human interaction has winners and losers. There are no other rules.

The reader will have noticed immediately that this a perfect description of Donald Trump’s mindset, about which I write all of the time. What occurred to me afterwards, however, is how profoundly the gamer mentality conflicts with Christianity. How could someone with Trump’s fascist, amoral world view win the intense support of American Christians?

By engaging in grievance politics. By telling Christians they were losing–on the verge of annihilation, actually–and by persuading them that only he could bring them the permanent political and cultural predominance to which they were manifestly entitled. Millions of them still believe it today.

Florida is apparently giving what amounts to stimulus payments to a fairly large segment of its population in order to offset the impacts of inflation. When it was correctly suggested that this action would increase demand and thus drive up inflation, DeSantis’ press secretary reportedly said that inflation was caused by large federal deficits and by printing too much money, neither of which was relevant to the Florida stimulus.

It’s sort of hard to square this rationale with the fact that the country had an enormous deficit, ultra-low interest rates, and no inflation during the pandemic stage of the Trump administration. Today, we have a much smaller deficit, higher interest rates, and significantly higher inflation. DeSantis bucks will make matters slightly worse, just as the overly generous Biden stimulus payments (which, it should be noted, took the form of a tax cut) did in their day.

I’ve written extensively on this subject over the years. The principal reasons for soaring rents are: increased demand for low-density housing in somewhat remote areas due to the pandemic; the loss of construction workers after the Great Recession; rising materials costs; and overly strict, or at least poorly structured, local government regulations.

The first of these reasons has already started to ebb. The third can’t really be controlled by any level of government. The second could be addressed by encouraging immigration and by providing better vocational training opportunities. The last is complicated, but the key is to give neighbors incentives to support new housing projects instead of reasons and pathways to oppose them.

The Economist thinks the center-left, presumably starting with the president, should make a concerted effort to distance itself from woke culture warriors. Does that make sense?

The reality is more nuanced than that. First, discouraging the activists will only depress blue turnout in the midterms, when turnout is already low, and activists rule. Second, if even one Twitter warrior says something stupid, Fox News will make sure the whole Democratic Party wears it; the right is very disciplined and effective in that way. However, there is room for compromise here. Center-left candidates should make it clear that, while they do not accept the more extreme claims of the woke warriors, they do not support discrimination against historically powerless groups or censorship of their views. That will set them apart from both the right and the extreme left, and should win them plenty of votes in the center.

The GOP thinks the solution to rising health care costs is a wintry blast of market forces. Just make consumers put more skin in the game, they say, and the problem would go away. It sounds reasonable in theory. Would it work in practice?

No. With high co-pays and deductibles, American consumers already have a huge amount of skin in the game. Medical professionals, like professionals in other fields, don’t compete on price. Pricing is totally opaque, anyway. Consumers are rarely in a position to evaluate what they really need, as they lack the requisite training and information and are in exigent circumstances at the time they should be bargaining. Local hospitals are effectively monopolies. The health care field, as a result, is just one market failure after another.

The bottom line here is that, once a country has decided that health care is a right rather than a privilege, extensive government involvement is inevitable. The only solution to market failures is even more government. We need to follow the example of virtually every other country in the world and create a consumer cartel to impose reasonable prices on providers. Prescription drugs would be a good place to start; authorizing the government to bargain would be of great benefit to consumers, and innovation in drug production can be encouraged through more targeted government subsidies, as in the case of the Covid vaccines.

Believe it or not, the Russians played a generally constructive role dealing with the Iranian nuclear threat until now. Putin’s need for diplomatic friends after Ukraine has changed the equation, however. He now looks more like an Iranian ally than an honest broker.

The Iranian nuclear negotiations already appeared to be on life support; after this week, I can’t imagine they have any future. Then what? In one sense, the new axis of evil simplifies everything for American diplomats; the Israelis and the Saudis have been soft on the Russians for self-interested reasons to date, but they can’t possibly ignore the existential threat that a Russia-Iran alliance would present to them, so I would expect that posture to change. With the imminent failure of the negotiations, however, the American choice is stark: acquiesce to the Iranian nukes and rely on deterrence or send in the bombers. I’m afraid the latter is more likely.

According to Ezra Klein, the cost of day care rose 2,000 % between 1972 and 2007. While I let that figure sink in, I will raise the pertinent questions: how did that happen, and what can we do about it?

Since day care centers are typically small, family-run businesses (maybe that should change), it wasn’t the result of an abuse of market power. I think it comes down to four things. First, on the demand side, more women were going to work. Second, on the supply side, the informal ties within families were eroding; you can’t ask your parents to help with the kids when they live in The Villages. Third, there just aren’t enough workers available to fill more day care centers, particularly since the job pays poorly. Finally, there may be an element of overregulation present here that impacts supply.

So what can be done? I would say there are three options–all of them on the supply side. You can increase the number of workers available by liberalizing immigration laws; you can take a hard look at the regulatory schemes in each state, with an eye to cutting unnecessary costs; and you can provide federal subsidies to encourage capitalists to move into this field.

After the inauguration, President DeSantis and the new GOP Congress got to work. The first priority, of course, was a national ban on abortion, which Mitch McConnell facilitated by acquiescing to the repeal of the filibuster. The second major initiative was a new Test Act. This legislation, modeled on the one adopted in England in the 17th century, required all federal employees and officeholders to provide proof that they had attended at least one service at a church in existence in 1791. The Act was later amended to include Mormons in order to accommodate a large right-wing group that didn’t exist at the time the First Amendment was approved.

The new legislation was challenged as being a clear violation of the Establishment Clause. DeSantis argued that it was constitutional in that it provided the plaintiffs with numerous religious options; it did not create any sort of national church. Furthermore, he contended that the Founding Fathers were pious Christians who had no time for agnostics and atheists. He thus insisted that the legislation was valid if one correctly applied an originalist approach.

How do you think this turns out, based on the Supreme Court’s latest decisions? And don’t say it is too extreme even for the GOP; this is what reactionaries really want, and the frontier is moving fast.

Ezra Klein argues that inflation in services has been a serious problem for decades; it has just been hidden in an avalanche of cheap imported goods. The cost of health care, housing, day care, and education has skyrocketed for the average person, thus making a middle-class lifestyle unaffordable. The Democrats would be wise to emphasize these issues in the coming campaign, and the foreseeable future.

Klein is right. Over the next few days, I will be discussing what the government could actually do to solve these problems.

As I’ve noted many times before, the GOP isn’t capable to devising a plausible approach to climate change, because it is too ideologically wedded to the notion that government action deprives us of our freedom and turns us into mindless slackers. With that in mind, what would a GOP response based on the cult of self-reliance look like?

We would get rid of FEMA, agricultural assistance programs, and the Federal Flood Insurance Program. Property destroyed by a hurricane? Too bad, Jack! You should have known better than to live there. Coastal areas turning into ghost towns because nobody can afford insurance? Tough noogies, guys! Grin and bear it. Can’t figure out how to get the same yields in your fields? Work smarter, not harder. Everyone leaving your state, because they can’t stand the heat? Well, as they say, get out of the kitchen.

This will never happen, of course, because the GOP doesn’t have the courage of its convictions, and there are too many right-wing voters out there who will be impacted by climate change. Instead, the GOP believes in subsidizing the people who contribute to climate change, and then paying hundreds of billions of dollars to subsidize the victims after the fact, which makes absolutely no sense.

The most powerful Joe in America is really an independent, not a Democrat. He says he wants to bring back moderate, bipartisan legislation. That sounds noble in theory; how is it working in practice?

In order for Manchin to bring the parties together, he needs to play hardball with the right as well as the left. There is precious little evidence of him doing that; he tells off the progressives, and then repeatedly engages in hopeful, but ultimately unproductive negotiations with the GOP. He never engages in coercion. He doesn’t threaten, for example, to vote to abolish the filibuster to get concessions from the right on fundamental issues such as voting rights.

The result of this is a gridlocked legislative process, not a bipartisan one, which plays into the hands of the Republicans. And while Manchin may be McConnell’s favorite senator today, wait until the GOP wins a majority in the midterms. Once Mitch has 51 Republican votes in his pocket, the most powerful Joe in America will become Mr. Irrelevant, wandering around alone in a bipartisan universe of his own mind.

Janet Yellen and Nancy Pelosi have come to the White House to discuss policy and political responses to inflation.

B: So, you’re here to help us deal with stagflation!

Y: Not exactly. We’re a long way from the late seventies.

B: The Republicans don’t think so. They’re making me out to be the new Jimmy Carter. What a load of malarkey!

P: I agree, Mr. President. Things aren’t nearly as bad as they were then, and the problem will go away in time.

B: I remember those days. I bet you do, too. It seemed some new group was marching on Washington to demand more money every day. The country was falling apart. The economy’s not that bad now, although the political situation is worse, with Trump and all.

P: That’s about the size of it.

B: So what can we do that we haven’t already done?

Y: Unfortunately, not much–what we need is patience and an end to the war.

P: Patience is in short supply these days.

B: But surely we can do something–particularly on gas prices.

Y: You’ve jawboned the Saudis and released oil from the reserve. Public responses to high prices will take care of the rest. Prices are already coming down. Not that we’re getting much credit for it.

B: What about food?

Y: Rising prices are tied to the war, the weather, and oil prices. There is an issue with oligopolies in the food industry that could be addressed, but it would take years. The only possible way to deal with it now is by jawboning.

B: Rent?

Y: Supply problems were caused by high prices for materials, local government regulations, and a lack of construction workers after the Great Recession. You could deal with the last one by encouraging immigration. As an aside, you could also reduce prices in a variety of ways by getting rid of the Trump tariffs.

B: As you know, those are both politically sensitive areas, and I can’t do anything on immigration on my own. Nancy, do you have any ideas?

P: We need to do a better sales job with the economy we have. The important thing here is that the Republicans don’t have any idea of how to deal with inflation. All they want to do is cut taxes, which would make things worse. We also need to explain that inflation is a worldwide problem; it wasn’t caused by anything we did here.

B: Anything else?

P: You can blame big, greedy corporations for driving up prices. Go on TV every night, single out the worst offenders, and show the public you’re really on this issue. They need to see what looks like leadership, even if it doesn’t have any direct and immediate impact on inflation.

B: I’ll consider it. Thanks for coming. (They leave)

It’s 2023, and the new GOP Congress is approaching a debt ceiling cliff. In Scenario 1, the Republican majority in the House is very small, so McCarthy depends on the votes of his extremists to keep him afloat. In Scenario 2, the majority is larger, and McCarthy can afford to ignore MTG, Gaetz, et. al.

In which of these scenarios is it more likely that the debt ceiling will ultimately be raised? That’s right–the crazoids hold the balance of power in Scenario 1, and they won’t hesitate to burn it down.

Manchin just dealt a death blow to the little that remained of the Democrats’ ambitious agenda. The election almost certainly will make it official. For the next two years, the GOP will be playing offense in Congress.

How should the president react? By creating contrasts and exposing GOP extremism. By appearing to be fair-minded and reasonable in the face of right-wing nihilism. By offering to work with the GOP on issues of mutual interest, but refusing to back down on matters of principle, particularly if his position polls well.

It is a perfect role for Biden. He isn’t a great salesman for his underappreciated accomplishments, but he excels at looking moderate when the rest of the world is going nuts. He is just the president the Democrats need for the next two years.