Tag Archives: Congress Watch

Updates from Chicago Booth

No, America is not more divided than ever before
By Howard R. Gold – It may seem sometimes like the United States is coming apart. “While rural America watches Duck Dynasty and goes fishing and hunting, urban America watches Modern Family and does yoga in the park,” write Chicago Booth’s Marianne Bertrand and Emir Kamenica.

“The economically better-off travel the world and seek out ethnic restaurants in their neighborhoods, while the less well-off don’t own a passport and eat at McDonald’s.” Conservatives, they write, favor masculine names for boys while liberals prefer more-feminine names, and men play video games while women browse Pinterest.

These kinds of cultural splits can have economic, social, and political consequences in that they may ultimately reduce social cohesion within a country. But according to Bertrand and Kamenica, who measured cultural divisions over time, the cultural gap in the US is largely stable—not widening.

The data reveal that divisions definitely exist. Watching certain movies or television shows, reading certain magazines, or buying particular consumer products are predictable markers of traits such as how much money people make or how far they got in school. more>

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The World Order Is Starting to Crack

By Stewart Patrick – When Donald Trump was first elected U.S. president, foreign observers hoped that he would moderate his more outrageous campaign positions as the practicalities of governing socialized him to adopt more conventional stances. Failing that, they hoped to contain the damage until the U.S. electorate returned to its senses. Trump’s scythe has sliced through these thin reeds.

For a onetime chaos candidate, Trump has been remarkably methodical in his efforts to destroy the liberal international order.

Stunned U.S. allies are now adapting to their new normal by taking steps previously unimaginable. They are hedging their bets in dawning recognition that the America of old may never return, regardless of who succeeds Trump. They are pursuing strategic autonomy, seeking to decouple from an unpredictable United States. And they are considering how to restore some semblance of international cooperation in a world left rudderless in the wake of the U.S. abdication of global leadership.

Collectively, Trump’s actions have sent U.S. allies reeling, shaking their long-standing faith in the West as a community of shared values, interests, and institutions. In response, they are working with China to safeguard globalization, expanding their own strategic autonomy vis-à-vis Washington, and grasping to defend what remains of the open world from the depredations of its erstwhile creator.

Trump’s trade protectionism has done the seemingly unimaginable. It has allowed mercantilist China—which flagrantly steals intellectual property, restricts foreign investment, and protects entire sectors from foreign competition—to portray itself as a bastion of multilateral trade. more>

The Wounds Won’t Heal

By David French – We usually place outsized emphasis on elections that define our politics and too little emphasis on the values that define our culture.

But it was the nomination of Kavanaugh and the wrenching debate about core cultural and constitutional values that dominated American discourse these past few weeks. It’s a debate that illustrated the fundamentally different ways in which conservatives and progressives view the world, and it unlocked not just an intellectual response but an emotional response that has radicalized otherwise reasonable and temperamentally moderate individuals into believing that the other side hates even the good people in their own tribe.

And so when Ford came forward, it’s as if her allegations landed in two different countries. The good-faith residents of Redworld were skeptical and said, “Prove it.” The good-faith residents of Blueworld believed Ford and said, “Finally, she has a chance for justice.” The presumptions were diametrically opposite, and everything that followed turned on those different presumptions. more>

Four Lessons (Not) Learned From The Financial Crisis

By John T. Harvey – That’s fantastic. Good work, Presidents Bush, Obama and Trump. But just because we bailed the water out of the sinking ship doesn’t mean we patched all the holes. And while the former is a necessary first step, without the latter we won’t remain upright for long.

So what didn’t we fix that could still potentially cause a catastrophic leak? Too much. Here’s a short list of what we should have learned but didn’t.

  1. If you are going to bail someone out, bail out the debtor and not the creditor
  2. Financial institutions should be very closely supervised
  3. The market is not always right
  4. Deficit spending doesn’t cause inflation or bankruptcy

Most people assume that what financial institutions do is loan out other people’s money. That is, of course, part of what they do, but what is far more significant is the fact that they create money. I don’t just mean the intro-econ, money-multiplier story where banks make loans after the Federal Reserve injects new funds. In fact, that view is so wrong that economics professors are beginning to eliminate it from their curriculum (not nearly fast enough, but it’s getting there).

Rather, the standard scenario is one in which banks increase the money supply first by making loans to customers and then the Federal Reserve steps in second to supply the necessary reserves. Financial institutions make money out of thin air, not from someone’s savings, and if that leaves the system short of reserves then the Fed buys securities from banks. They do this to prevent interest rates from rising above their targeted rate and therefore the central bank accommodates rather than dictates when it comes to the supply of money. more>

Lessons From The Greek Tragedy Unlearnt

By Simon Wren-Lewis – Private banks were happy to lend to the Greek government because they mistakenly believed their money was as safe as if they were lending to Germany.

Other governments first delayed and then limited Greek default because they were worried about the financial health of their own banks. They replaced privately held Greek debt with money the Greek government owed to other Eurozone governments.

From that point voters would always want all their money back. In an effort to achieve that the Troika demanded and largely achieved draconian austerity and a vast array of reforms.

The result was a slump which crippled the economy in a way that has few parallels in history. Most economists understand that in situations like this it is ridiculous to insist that the debtor pays all the money back. For basic Keynesian reasons this insistence just destroys the ability of the debtor to pay: it is not a zero sum game between creditor and debtor. This is why so much of German debt was written off after WWII.

By July 2015 the Greek government was able to pay for its spending with taxes, so all it needed was loans rolled over. The Troika would only do that if the Greek government started running a large surplus to start paying back the debt i.e. further austerity. more>

The Progressives’ Plan to Win in 2018

By Elaine Godfrey – Democrats have been grappling with key questions about coalition building since the 2016 election: Should they prioritize winning back the voters they lost to Trump?

Should they attempt to woo the white voters gradually fleeing the party?

Progressives this weekend said, emphatically, no. It’s a genuine attempt to remake the Democratic Party at a time when racial and class tensions are the highest they’ve been since the 1960s—and it’s also put them on a collision course with party leaders and other Democrats.

That doesn’t mean ignoring whites and Trump voters, she says. Instead, “it’s rejecting the notion that our way to victory is having a centrist, moderate right-leaning strategy that feels like we could peel off Romney Republicans, versus investing in communities of color, marginalized groups, and progressive white people,” Anoa Changa said. “There is this notion that … we can’t address the issues of race, systemic oppression, because we don’t want to piss these voters off. We have to find a way to do both.” more>

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What’s More Dangerous, Immigration Or Russian Meddling?

By Robert Reich – What’s the most worrisome foreign intrusion into the United States—unauthorized immigrants, Chinese imports, or interference in our democracy?

For Trump, it’s immigrants and imports. He doesn’t care much about the third.

Yet Trump continues to assert that talk of Russian meddling in American elections is “a big hoax.” And his White House still has no plan for dealing with it.

In fact, Trump has it backwards.

Illegal immigration isn’t the problem he makes it out to be. Illegal border crossings have been declining for years.

And if the Chinese want to continue to send us cheap imports that we pay for with U.S. dollars and our own IOUs, that’s as much of a potential problem for them as it is for us.

But Russian attacks on our democracy are a clear and present threat aimed at the heart of America. more>

What makes people distrust science? Surprisingly, not politics

By Bastiaan T Rutjens – Today, there is a crisis of trust in science. Many people – including politicians and, yes, even presidents – publicly express doubts about the validity of scientific findings. Meanwhile, scientific institutions and journals express their concerns about the public’s increasing distrust in science.

How is it possible that science, the products of which permeate our everyday lives, making them in many ways more comfortable, elicits such negative attitudes among a substantial part of the population?

Understanding why people distrust science will go a long way towards understanding what needs to be done for people to take science seriously.

Political ideology is seen by many researchers as the main culprit of science skepticism. The sociologist Gordon Gauchat has shown that political conservatives in the United States have become more distrusting of science, a trend that started in the 1970s.

From these studies there are a couple of lessons to be learned about the current crisis of faith that plagues science. Science skepticism is quite diverse. Further, distrust of science is not really that much about political ideology, with the exception of climate-change skepticism, which is consistently found to be politically driven.

Additionally, these results suggest that science skepticism cannot simply be remedied by increasing people’s knowledge about science. more>

Towards The Disappearance Of Politics?

BOOK REVIEW

The Human Condition, Author: Hannah Arendt.

By Valerio Alfonso Bruno – Today, erosion of the public sphere is once more a harsh reality, as is particularly evident in the current weakness of “Western Democracies.”

The substantial risk of leaving democratic institutions only formally alive, but significantly lacking any content, is encouraging a deep reflexion on the reasons behind this erosion of the space for public debate and active political action.

However, some frequent arguments are employed by different people (belonging to political parties, policy-makers, academia, analysts, media) to justify the impossibility of developing a comprehensive political debate within contemporary democracies. At least four main orders of arguments can be identified that are used to justify the shrinking of the Vita Activa:

  1. technical complexity,
  2. global issues,
  3. trivialization of politics and
  4. ideological taboo.

Open, pluralistic, debate within democratic societies is unfortunately the first victim of the current political environment, as seen recently in the US and Italy.

The limitation of the public debate by reason of technical complexity and growingly global issues, or trivial generalization and ideological taboos, is dangerously forcing democracies’ citizens into political passivity, narrowing de facto the window of alternatives to an extreme degree, and resulting is an increased polarization. more>

The Globalization Backlash: It’s Both Culture and the Economy, Stupid

BOOK REVIEW

Euroscepticism and the Future of European Integration, Author: Catherine De Vries.
Globalization represents a “trilemma” for societies, Author: Dani Rodrik.

By Catherine De Vries – While many thought the process of greater cross-border cooperation to be irreversible, in part because it was expected to lead to a universal acceptance of liberal and capitalist values, isolationism, nationalism and protectionism are back on the political scene with a vengeance.

While Donald Trump’s slogan to “Make America Great Again” is at the heart of his campaign and current administration, Nigel Farage’s mantra of taking back control (“we will win this war and take our country back”) dominated the Brexit campaign.

A fierce debate has developed about the origins of these developments. Are they the result of economic grievances of those who feel threatened by globalization (a term for increasing international cooperation and increasing interdependence), or do current developments represent a cultural backlash based on immigration fears and prejudice.

Opposition to globalization is gaining such a foothold in the political and public domain in advanced industrial democracies, precisely because processes of economic interdependence have coincided with increasing migration flows.

Although current societal and academic debates are mostly framed in either economic or cultural terms, it is important to realize that these types of explanations are not mutually exclusive. We should focus more of our efforts on trying to understand how cultural and economic fears interact and fuel the recent popular backlash against globalization. more>