Suchergebnisse

I'm returning to the question of whether American values have changed:  specifically, whether there's been a move towards money and careers and away from personal relationships.  Following a suggestion from Claude Fischer, I looked at the World Values Survey.  Starting in 1990, it has a series of questions asking how important various things are in your life:  very important, rather important, not very important, or not at all important.  People are asked about family, friends, leisure time, politics, work and religion.  The average ratings in the United States:Religion and work have clearly declined, while the others don't show any clear trend.  In 1990, family ranked first, then friends and work almost tied, then leisure and religion almost tied, then politics far behind.  Now it's family, friends, leisure, work, religion, politics.   Whatever you think about the decline in ratings of religion and work, people aren't turning away from personal relationships.Part of the reason I am interested in this issue is that many people say that the problems in American politics today reflect problems in society.  There are many variants of this analysis, but the idea that people have become more focused on themselves is a popular one.   Nicholas Kristof offered another one  the other day--that they result from stagnation or decline in working-class standards of living--so while I'm at it I'll look at his evidence.  Kristof says:  "Average weekly nonsupervisory wages, a metric for blue-collar earnings, were actually higher in 1969 (adjusted for inflation) than they were this year."  He doesn't link to his source, just says it's from the Bureau of Labor Statistics, but I tried to reconstruct it from the Federal Reserve Economic Data.  He's right--in fact, average weekly nonsupervisory earnings are lower then they were in 1965.  There's been an increase in part-time work since the `1960s, which is related to increased labor force participation by women, so I also show the figures for real hourly wages.  They give a more optimistic picture, but still say that there's been essentially no progress since 1973.  However, there are actually two offsetting periods of change:  a decline from the early 1970s until the mid-1990s and a pretty steady increase since that time.  So any reaction to economic distress should have occurred in the 1980s or 1990s, not in the last few years.  Of course, these figures aren't definitive, but they're what Kristof uses.So what is the problem?  I agree with another New York Times columnist, David French, that it's primarily one  of political leadership.  Of course, that raises the question of why the quality of political leadership has declined.  I've had several posts that touch on that issue, but haven't addressed it directly--I'll do that in the near future.

Traditionally close partners, Morocco and France have seen their relationship deteriorate in recent years under a variety of pressures. Much analysis has focused on the role of high politics and diplomatic considerations, such as the question of the sovereignty of Western Sahara. This article argues that while these are important, bottom-up approaches must also be considered. In particular, we highlight the impact of visa restrictions on inter-societal links, and how these affect the core of bilateral relations by damaging the human fabric of politics. The "exceptional partnership" between France and Morocco is a thing of the past, or at least severely damaged. Over the last two years, new crises have erupted at regular intervals. The most recent source of tension ...

In Late Fascism: Race, Capitalism and the Politics of Crisis, Alberto Toscano unpacks the rise of contemporary far-right movements that have emerged amid capitalist crises and appropriated liberal freedoms while perpetuating systemic forms of violence. According to Dimitri Vouros, Toscano’s penetrating, theoretically grounded analysis is an essential resource for understanding and confronting the resurgence of reactionary ideologies. Late Fascism: … Continued

Jai Kedia


Recently, CMFA published an article and a working paper that detailed the Federal Reserve's departure from rules‐​based governance following the financial crisis of the late 2000s. As per academics and Fed officials, the era of rules‐​based governance facilitated the Great Moderation – a stable economic period characterized by less volatile macro indicators such as inflation, output gap, and unemployment. In academic parlance, macroeconomists refer to this situation as determinacy. Despite conflicting evidence, the prevailing view is that the Fed facilitated the Great Moderation by establishing a determinate economic environment through rules‐​based governance that focused on keeping inflation low. Previous CMFA papers had posited the question as to whether the Fed's departure from this "successful" era of monetary policy may have instead led to indeterminacy. This article provides evidence that indeterminacy did occur during this period.
Determinacy is a feature of an economic system whereby outcomes such as inflation, output, etc., can be precisely determined based on a given set of initial conditions and policy rules. Under determinacy, the economy (as represented by a mathematical model) has a unique equilibrium outcome. In simple terms, under determinacy, the economy has only one possible resting state and is also stable with no large spirals or variability. Conversely, indeterminacy occurs when there are multiple possible equilibria that could result from the same initial conditions and policy rules. This state can create uncertainty in predicting the future state of the economy, as different equilibria may lead to significantly divergent economic outcomes. Simply put, the economy could end up in multiple possible states, some of which may be highly volatile, depending on how individuals form their expectations and make decisions.
Academics generally believe that a strong Fed response to inflation (a more than one‐​to‐​one increase in the target federal funds rate to inflation changes) can ensure a determinate system. This is known as the Taylor Principle. A greater than one‐​to‐​one response to inflation is deeply entrenched in the economic literature; most empirical macroeconomic studies simply assume determinacy and fix the Fed's response to inflation at a number higher than one or use estimation techniques that entirely exclude the possibility of indeterminacy. This determinacy bias has serious implications for policy analysis because economic models (such as those used by the Fed) exhibit significantly different dynamics in an indeterminate system. Additionally, even approaches that account for indeterminacy, including seminal papers, fail to take consumers' inflation expectations seriously. As noted above, expectations matter drastically when determining equilibrium selection. They should be included in the datasets used by empirical methods.
I utilize a simple macro model – connecting output gap, inflation, and the federal funds rate – to test the determinacy of the U.S. economy during the period when the Fed abandoned rules‐​based governance (2009 through 2022). I use actual U.S. time series data for the three variables listed above as well as a measure of consumers' inflation expectations – one year ahead inflation expectations collected from the Michigan Survey of Consumers.[1] I fit the macro model to the data using a Bayesian estimation procedure under both determinacy and indeterminacy to see which fits the data better.
I find that the model under indeterminacy significantly outperforms its determinate counterpart in fitting the data set. That is, the model under indeterminacy has a much higher "goodness‐​of‐​fit" versus determinacy. Goodness‐​of‐​fit values from Bayesian analysis are unlike the usual R2 value reported from regressions. Bayesian model comparison is conducted through marginal likelihoods which are then converted to an odds ratio (similar to betting odds) called the Bayes factor. The estimated odds of determinacy to indeterminacy are 1 to 1.5 x 1015 – making determinacy an extremely unlikely event. To understand exactly how unlikely, let us compare these odds to another extremely unlikely event – being struck by lightning. The odds of being struck by lightning are much higher in comparison: 1 to 1.5 x 104. In other words, the odds of being struck by lightning are significantly higher than the odds that the U.S. economy was determinate from 2009 through 2022.
Consequently, the probability that the U.S. economy was indeterminate following the financial crisis is nearly 100%. The (indeterminate) model with a 0.57 estimated inflation response coefficient fits the data better than the (determinate) model with a 1.13 coefficient estimate. The results confirm that the Fed did not target inflation in line with the Taylor Principle.
These findings raise an important question: how responsible is the Fed in keeping the economy determinate with a unique and stable outcome? If it is, as several academics and Fed officials have claimed, then they must answer why they did not conduct policy in a way that ensured the economy's determinacy. If they are not responsible for keeping the economy determinate (as several recent studies are now finding), then the Fed's reputation for stabilizing the economy is undeserved, and the public should question why an unelected governmental agency exerts such a high degree of influence over the political economy discourse if it is ineffective in maintaining prices or keeping the economy stable. A forthcoming paper will further examine the history of the Fed's effectiveness in achieving determinacy.
The author thanks Jerome Famularo for providing research assistance during the preparation of this essay. For more information on the model, empirical methodology, and posterior distribution please click here.


[1] Respondents are asked the question: 'By what percent do you expect prices to go up, on the average, during the next 12 months?' The average of all responses is used as the measure for inflation expectations.

By Amélie Jaques-Apke. As Europe begins to emerge from a pandemic, we begin to evaluate emerging
political damages. Now more than ever, we must understand how radical right populist parties design their message toward vulnerable, crisis-shaken populations. The objective of this study is to reflect critically on the interplay between democracy and populism, exploring recent discursive developments of
the parties Vox and The League and its power relations, which are linked to the exogenous shocks provoked
by the pandemic. The author used qualitative techniques of content analysis, and conducted interviews with scholars and political actors, and group discussions with local actors for several months.

Welcome to another episode of Fully Automated!



With the inauguration of Joe Biden just around the corner, many are pondering what new approaches his team might bring to US foreign policy. Despite President Trump's penchant for bombast and bellicose rhetoric, it can't be gainsaid that his reign has been more or less dovish in comparison to those of his more recent predecessors. One huge exception to this rule, of course, has been Iran.



Early 2020 US forces assassinated the Iranian General Qasem Soleimani. Then, in November 2020, we saw the assassination of military scientist Mohsen Fakhrizadeh — a hit apparently green lit by Trump himself. In response to this latest provocation, the Iranian parliament introduced a law that will require Biden to renew the Iranian nuclear deal, or JCPOA, effectively within a month of taking office. The law also requires Iran to produce at least 120 kg of 20-percent enriched uranium annually. What does it all mean? On the one hand, as former UNSCOM inspector Scott Ritter has been arguing, Iran's response has been remarkably calm. The amount of higher enriched fuel to be produced is still very low, arguably not for military purposes, and is "in conformity" with the limits proscribed under the JCPOA. Nevertheless, as Ryan Grimm reports, even on the way out the door, the Trump Administration has been plotting military strikes against Iran.



To discuss the current situation, and the release of their new co-authored book, Understanding and Explaining the Iranian Nuclear 'Crisis': Theoretical Approaches (Lexington: 2020), our guests for this episode are Drs. Hal Tagma and Paul Lenze Jr. Tagma is Assistant Professor at the Department Politics and International Affairs, at Northern Arizona University, where he teaches Middle Eastern politics, the political economy of international conflict, and critical approaches to international relations theory. Lenze Jr is Senior Lecturer in Politics, also at Northern Arizona University. He teaches International Relations and Comparative Politics with a focus on Civil-Military Relations, Middle East politics, and US National Security. Lenze can be reached on Twitter @DrPaulELenzeJr



This is a rich book, which I think will appeal both to IR theorists, and those looking to gain a sense of the debates around US-Iran relations. On the one hand, it contains a rich meta-commentary on contemporary IR, and the theoretical possibilities it contains for dialogue between its various theoretical paradigms. Second, its a very detailed and reasoned analysis of the state of US Iran relations, and the idea that there is a 'crisis' (and what it even means to speak of crisis).



Before we get started, the authors make strong claims in the book in favor of what they term eclectic pluralism, and they are critical of the idea that there is only one truth, or one story to be told, about International relations. That might seem to imply they see all truths in IR as somehow equal or equivalent. Nevertheless, as you'll hear, the book is doesn't hesitate to land some punches. In the chapter on Marxism and World Systems Theory, for example, they write that, from the perceptive of Marxism:




Modern academic Realism is a superstructural tool that legitimizes and naturalizes the exploitative and violent polito-economic order of global capitalism. Modern academic Realism is not outside of history nor is it 'timeless wisdom.' Instead, Realism is caught up in constructing the violent, capitalist World-System that it is hopelessly trying to make sense of.




Thanks for listening. We don't ask for any financial support, in bringing you this show. But if you like what you hear, please leave a kind review on your podcast app. If you have any feedback, you can DM us @occupyirtheory on Twitter and Instagram. Thanks!

In political science, there's a well-known phenomenon known as the "Rally Around the Flag Effect". Quite simply, when the nation is under threat, the public turn to and give their support to the president. Two very good examples of this are the Presidents Bush: When Iraq invaded Kuwait and the Twin Towers were attacked on September 11th, Presidents George HW Bush and George W. Bush enjoyed a quick surge in public support in public opinion polls.












It is also the case that other executives experience surges in public support during time of crisis. We've seen Governor Cuomo's numbers surge in New York, and it's surely the case that other governors are suddenly more popular during this unprecedented and difficult global crisis.







Part of the rally effect is likely in part due to the fact that a crisis moment is a focusing event for the media: it drives other stories off the front pages. In the case of 9-11 and the current COVID-19 pandemic, these stories became the only story covered by the media. Nearly every cable channel turned to 9-11 coverage, sporting events were cancelled, and travel halted. In the case of COVID-19, there is almost nothing else to cover: not only are sporting events cancelled as they were during 9-11, but nearly everything else in society has ground to a halt. The only way to avoid COVID-19 is to read a book or binge shows on Netflix.



How does the singular coverage of a crisis by the media potentially generate a rally effect? Executives are the actors who receive the bulk of the coverage during the crisis. Governors and presidents have emergency powers they can draw upon--often enshrined in constitutions and in statutes--which empower them to respond decisively and quickly to coordinate relief efforts. Legislators obviously respond by passing appropriations and emergency legislation to address the crisis, but it is the responsibilities of executives to put those directives and appropriations to work. As a result--with all eyes focused on the crisis--governors simply get more media attention and that attention is very often positive. The sheer act of moving--of doing--to make people feel safe can generate goodwill from the public. Governors also provide information from the many executive agencies they lead and which are responsible for addressing the crisis. Legislators simply get lost in the shuffle: there are too many and while their response can be just as crucial, it can seem by comparison less dramatic and direct.



How does this matter for the U.S. Senate race here in Montana? It could very well matter a lot. Why? Because in a period where electioneering is challenging at best, Governor Bullock is dominating earned media. And that earned media is overwhelmingly, if not exclusively, positive. Steve Daines, on the other hand, is receiving almost no coverage by comparison.



How do I know? I ran the numbers. Here at Montana State University, I have access to Access World News--a database of news coverage spanning the globe. Very simply, I selected media coverage in Montana from April 2019 through the March 30, 2020, searching for "Bullock" and "Daines" respectively. I also did a similar search for former Governor Brian Schweitzer between April 2011 and March 2012 to provide a baseline comparison to Governor Bullock's coverage. The results are reported in Figure 1, which reports the trend in coverage by the total number of articles mentioning Bullock, Daines, and Schweitzer by month. I simply counted all articles--including editorials and letters to the editors.




Figure 1: MT Media Mentions April 2019 (2011) to March 2020 (2012)






Under normal circumstances, one might expect that Governor Bullock to receive minimal coverage after the conclusion of the legislative session when--for all intents and purposes--he's a lame duck. This should also be the case for Schweitzer, who was in a similar position at the end of his second term. If one compares Governor Bullock's coverage to Governor Schweitzer's, that seems to be the pattern for both of them until March. There's a spike in May 2012 and May 2019 for each: Schweitzer responded to a series of terrible floods in the state, while Bullock announced his presidential run. Senator Daines' coverage is a bit lower than Governor Bullock's during this period, but not appreciably so--in fact, he even receives more mentions in January and February of 2020.



And then, the Corona virus hits the US, and Governor Bullock goes from 184 articles mentioning him in February to 809 in March--while Senator Daines stays essentially the same.



A closer look at March in Figure 2 maps this even more precisely. At the beginning of the month, Daines and Bullock had a near-parity in media coverage up to and including the day Bullock declared his intention to contest Daines' Senate seat.  But, as the COVID crisis hit America, Bullock's coverage began to take off while Daines remained steady: 36 stories on March 12, 28 on the day Governor Bullock announced the state's first COVID cases, 51 on March 16, 36 on the day Bullock extended school closures (March 24), and 69 (the series high) when the Governor announced his shelter in place order.




Figure 2: MT Media Mentions in March 2019






By comparison, Daines' best day was 16 articles on March 17 when the Senate came back into session to discuss the House COVID-19 relief package. 



The nature of the global pandemic has upended daily life. It certainly has turned electioneering upside down; how does one campaign when you can't hold rallies, hang out with voters, pop in to TV studios for interviews, or raise money? It may also have changed some of the dynamics in the Montana Senate race, giving Governor Bullock a crucial early advantage in the spring that under normal circumstances he would not have.

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I'm
a political scientist—with an emphasis on the science.  I've viewed my role in the public sphere as inserting
into debates what political scientists have learned about political processes
and institutions—and to try to keep both sides faithful to the empirics. At
heart, I've always been a skeptic and my training as a political scientist
makes me even more so. I'm not one to join partisan frays. It's not my style. I just go where data lead.



The election of Donald Trump, someone who had zero political
experience, certainly sent my skepticism into high gear given the data. Limited
political experience does not often equate with political success. One major
exception is Dwight David Eisenhower, but he is the exception who proves the
rule. Eisenhower was an exceptional student of leadership and, as Supreme
Allied Commander in Europe, developed a well-honed ability to convince,
negotiate and compromise with many talented, egoistic generals as they fought
the Third Reich to rid the world of Nazism.


During the fall campaign, a video of historian David
McCullough made the rounds on social media. I've long admired McCullough's accessible
and well-written history, especially his biography of Truman.





In the video, McCullough draws our attention to Eisenhower's
four qualities of leadership, noting that Trump exhibited none of those
qualities. He had neither character, ability, experience, nor responsibility. In
short, McCullough did not believe Trump was suited for the presidency. He
was especially not suited to articulating a clear moral purpose and acting as
the conciliator in chief in times of national sorrow and crisis.



Trump's repeated failure as a leader over the past eight
months should not surprise. He was as prepared for the presidency as I am to do any kind of home or car repair.



Yet the president can be a poor leader and the nation can survive:
We managed the ineptitude of Hoover and Carter. What is most troubling is that
Trump himself, through apparently carefully contrived acts, may be encouraging
values antithetical to the Republic itself.



That causes me great alarm and concern, as it should every
American regardless of party.



There are certain moral certainties, bright lines in the
sand, that are not debated in civilized society. Racism, white supremacy, and support
for Nazism are among them. No race, no people, no ethnicity is superior to any
other. Advocating violence against someone else because they are different than
you is wrong. Killing innocent people is wrong. Full stop.



An easy test of leadership, methinks, is denouncing
yesterday's terrible events in Charlottesville with clarity and precision. "Nazism,
racism, and violence are acts of terrorism, and have no place in our Republic
and receive my strongest condemnation" would've been a good start. Perhaps you might have taken a cue from Vice President Pence, who had no problem naming who was the blame for yesterday's events: "We have no tolerance for hate and violence from white supremacists,
neo-Nazis or the KKK," said Pence, calling them "dangerous fringe groups" today in Colombia.



Instead, the President issued a statement that was ambiguous
at best, but spoke volumes: Calling out racism, Nazism, and white supremacy wasn't
on the table. Best case? He's a coward and inept. I'm less inclined to believe this is the case: He's spoken out clearly concerning acts of terrorism undertaken by Muslims in the past. And Trump certainly has no trouble telling us what he thinks most of the time. That leaves the worst case: He's sympathetic
to their cause.


Many Americans voted for Trump because they were angry at
what they believe our country had become. Others voted for Trump simply because
he was the Republican nominee. Still others voted for him because they couldn't
stomach Hillary Clinton. It is not for me to judge a person who voted for
Trump. That's their business, and frankly, that's water under the bridge



We've seen Trump can't stomach doing what's right when the
path is clear, and may be conspiring with forces seeking to undermine the very
foundation of our Republic. It doesn't matter how you voted, but how you answer
the question: "What now?"



If you are troubled with what you've seen, at least we have
a constitutional system with multiple points of access. Write to the president;
tell him how you feel (although I'm skeptical that would matter). Write to your congressional delegation: Remember,
ambition counters ambition in our system of separated (but shared) powers. Write
to your state parties and tell them to make changes to the primary system that
will make it more likely better candidates survive the nomination process
(ironically, that may mean a little less democracy in the primaries and more
control to party elites who were overwhelmingly opposed to Trump). But do
something. Be heard, while you still can.



We have a democracy. That is, as Ben Franklin said, as long
as we can keep it. We've kept it for more than 200 years.



Whether we keep it for another 200 depends on the choices
you make now.



Just in case you need a refresher course on leadership, here's
how great leaders should behave:



1.      
Responsibility. Eisenhower, on the eve of D-Day,
prepared this statement should the landings fail:









"Our landings in the Cherbourg-Havre area have failed
to gain a satisfactory foothold and I

 have  withdrawn
the troops. My decision to attack at this time and place was based on  the  best information available. The troops, the
air and the Navy did all that bravery and devotion to duty could do. If any blame or fault attaches
to the attempt it is mine alone."



2.      
Character. George W. Bush after 9-11.





3.      
Ability and Experience. LBJ and the Voting
Rights Act.





4.      
Fortitude. Ronald Reagan in Berlin at the
Brandenburg Gates.





5.      
All of the Above. Churchill. 1940, as France
fell and Britain stood alone.





Ask our members of Congress to display the leadership our President will not.

Here are three economic arguments I present in my new policy analysis for why policymakers should reduce deficits now, even if a fiscal crisis doesn't appear imminent.

Truth Decay—the diminishing role of facts and analysis in public life—could weaken the U.S. military, costs America credibility with its allies, and calls into question the nation's ability to respond to the next big crisis. How can the United States guard against these risks?

Coulter & Nagle, Eds.

On today's episode, we are joined by Colin Coulter, of the National University of Ireland, Maynooth. Colin is a Lecturer in Sociology, and he has an article out recently in Critical Sociology, co-authored with Francisco Arqueros-Fernández and Angela Nagle, entitled Austerity's Model Pupil: The Ideological Uses of Ireland during the Eurozone Crisis.

As some listeners may know, I have myself been working on a book about the role of culture in Irish austerity. And I've always found Colin to be a really great writer on this subject. He has a real knack for seamlessly blending together both analysis of the material dynamics of the Irish financial crisis, with a critique of the role of culture as force sustaining the legitimacy of austerity as the necessary solution. This cultural project is one being carried out by government institutions, to be sure, but also by a number of other cultural agencies that exist within Irish society, as they seek to orient Irish people better to understand their responsibility in causing the crisis.

But Colin also has an analysis of how certain strains within the Irish academic left have perhaps enabled this process — namely by overlooking questions to do with the production of capitalist culture. Colin explains the role of capitalist culture in Ireland in a really accessible manner, so its great to have him on the show. I think you'll really enjoy the interview.

You can find a copy of Colin's article on my Dropbox. Remember, if you like what you hear, please leave us a positive review on iTunes. As ever, if you have any feedback, you can reach us on Twitter @occupyirtheory. Enjoy the show!

As we head into the second half of the year, the swift recovery many were hoping for is facing an uncertain future. The resurgence of the COVID-19 virus and concerns about dwindling fiscal support have many worried. I submit that even in the absence of these worries, the recovery would still be on shaky grounds without the Fed explicitly committing to 'make-up' policy. Make-up policy is an explicit framework that allows the Fed to correct for past misses in its target. In the case of a recession, this feature allows the FOMC to be fine with inflation temporarily overshooting its target while the economy bounces back. Tolerating this overshoot implies a similar surge in nominal income that would restore it to the levels expected by household and business prior to the crisis. This restoration is important since many fixed-price nominal financial obligations like mortgages, loans, and leases were made based on these forecasts of nominal income.  Without make-up policy, the Fed may feel uncomfortable with inflation temporarily overshooting and prematurely tighten monetary policy. This would prevent nominal income from returning to its pre-crisis trend levels and trigger secondary spillover effects like mass insolvencies and other financial stress. Chris Condon notes that the Fed is aware of this issue and has been discussing it at the FOMC meetings this year.  For all this talk, though, members of the FOMC have given no indication in the Summary of Economic Projections (SEP) that they are taking make-up policy seriously. The SEP indicates persistent undershooting of its inflation target and consequently, a lack of make-up policy in its implicit nominal income forecasts. Nominal income or NGDP can be constructed from Table 1 in the SEP by combining the real GDP growth forecasts with the PCE inflation forecast plus 20 basis points (to make it GDP Deflator equivalent). This is done in a revised version of Table 1 below:The second-to-the-last row of the table is titled "NGDP Change - 4.0" and is the forecasted NGDP growth rate minus the pre-crisis trend of 4 percent growth. The final row accumulates up these misses and reveals NGDP is still 5.3 percent below its per-crisis path even after 2022. Put differently, there is a permanent loss in nominal income according to the SEP. These forecasts are applied to the current NGDP levels to create a forecast in dollar level form and are presented in the figure below. The sustained drop in nominal income can be seen as the difference between the pre-crisis trend and the forecasted level of NGDP:Note, that this forecasted loss is based on FOMC members assessing what is "appropriate monetary policy" for the SEP. The FOMC, in short, currently does not see make-up policy in the cards nor does it see it as appropriate monetary policy. Similar implications fall out of other Federal Reserve forecasts, including this one from the New York Fed. But it not just the Fed who thinks there will be no make-up policy and therefore a sustained loss in nominal income. First, the CBO's July update  shows a persistent gap between nominal income and its pre-crisis trend over the next decade. This forecast is conditioned on, among other things, what the CBO sees as likely monetary policy going forward.  Second, the Blue Chip consensus forecasts of NGDP also shows a sustained drop in nominal income. The graph below shows this drop and compares it to the neutral level of NGDP, the level of nominal income needed to meet the expectations of households and businesses plans in years leading up to the crisis. The forecasted gap between these two measures is called the NGDP Gap. So wherever one looks, make-up policy is not being forecasted. Its absence does not bode well for the recovery and underscores the urgency of the FOMC review of its framework. I really dread repeating the slow recovery of the last decade. So please FOMC, bring this review to a vote and give make-up policy a chance during this crisis. Update: A reader informed me that adding 20 bps to the PCE inflation to make it equivalent to GDP deflator inflation may overstate the difference. If so, the analysis above actually understates the permanent loss in nominal income projected by the FOMC's SEP.

Ukraine Benefit Conference, March 17-19,  2023, organized by Aaron James Wendland:A Benefit Conference for Ukraine aims to raise the funds required to establish a Centre for Civic Engagement at Kyiv Mohyla Academy.Session 1 (video)* A.J. Wendland – 'Introduction: On War and Philosophy'* Jennifer Nagel – 'Philosophy, For Better, For Worse, and In Itself'* Quassim Cassam – 'Liberation Philosophy'* Volodymyr Yermolenko – 'Thinking in Dark Times'Session 2 (video)* Sally Haslanger – 'Philosophy and Paradigm Shifts'* Philip Pettit – 'From Philosophy to Politics'* Elizabeth Anderson – 'Philosophy is for Everyone'* Jeff McMahan – 'What Good Is Moral Philosophy?'Session 3 (video)* Kieran Setiya – 'Public Philosophy, Amelioration, and Existential Value'* Agnes Callard – 'The Paradise Paradox'* Dominic Lopes – 'Beauty at the Barricades'* Margaret Atwood – 'Crisis LiteratureSession 4 (video)* Timothy Snyder – 'Thinking About Freedom in Wartime Ukraine'* Jonathan Wolff – 'Values and Public Policy'* Jason Stanley ­– 'Discourses of Genocide'* Seyla Benhabib – 'Philosopher's Dreams of Perpetual Peace'Session 5 (video)* Kate Manne – 'Philosophy and Gaslighting: It's (Not) All in Your Mind'* Barry Lam – 'Discretion: A Philosophical Analysis of the Power of Bureaucrats'* David Enoch – 'What Good Is Political Philosophy in the Face of an Acute Political Crisis?'* Peter Godfrey-Smith – 'Philosophy and the Events of the Day'Session 6 (video)* Peter Adamson – 'What Good Is a History of Philosophy 'Without Any Gaps'?'* Angie Hobbs – 'Public Philosophy in an Age of Uncertainty'* Melissa Lane – 'Philosophizing Our Way Out of the Cave'* Timothy Williamson – 'Debating the Good'Session 7 (video)* Simon Critchley – 'Question Everything'* Tim Crane – 'Philosophy as Freedom of Thought'* Mychailo Wynnyckyj – 'Grappling with Evil'* Amb. Yulia Kovaliv – 'Conclusion: Defending Democracy'

Peter Stella joined me on the podcast this week. He was back by popular demand and we touched on two important and related questions: how should the government finance its relief efforts and who should ultimately manage the public debt? The U.S. Treasury may seem like the obvious answer to both questions, but it is not the whole story. The Federal Reserve can also finance the relief efforts and, in so doing, affect the structure of public debt. But is this a good thing? Peter Stella says no, at least in the longrun. He makes the case that it is economically and politically cheaper to return the financing and management of the public debt back to the U.S. Treasury once the COVID-19 recession is over. In other words, the Fed's expansion of its balance sheet, an understandable response to the crisis, needs to be unwound as the economy improves. Otherwise, we might end up with two government agencies with very different objectives trying to manage the public debt. This is an interesting argument and one I want to flesh out in this post by taking a closer look at the two questions of financing the budget deficits and managing the public debt.Financing the Budget DeficitsThe first issue is financing the budget deficit. The question here is whether the government should fund the deficit through (1) overnight debt with a variable interest rate or (2) long-term debt with a fixed interest rate. The former option is what happens when Federal Reserve liabilities--the monetary base--finance the deficit, while the latter option arises when it is funded by treasury securities. The Fed financing of deficits, in other words, is not risk free. It could lead to higher financing costs as the economy recovers. In such a scenario, financing with long-term treasury securities with fixed interest rates would be ultimately cheaper. But is this even possible in the current crisis with the Fed buying up so much public debt? That is, even if Treasury Secretary Steve Mnuchin issued more long-term treasury bonds, the Fed's asset purchases have been so large they would effectively convert most of the long-term bonds into overnight reserves. That, in fact, is what has happened over the past three months. The chart above shows that for  March, April, and May, the Fed purchased about $1.67 trillion of treasury securities compared to $2.31 in new issuance. The Fed, in other words, bought up about 72 percent of the treasury securities supplied during this time.Not only was the Fed buying up most of the new issuance, but it was buying up treasury securities with a maturity far longer than overnight reserves. This can be seen in the chart below. The Fed, then, has been acting as the final financier for most of the deficit during the COVID-19 crisis and, in so doing, has transformed the structure of $1.67 trillion of U.S. public debt into overnight government liabilities.  Managing the Public DebtSo are we stuck with these short-term government liabilities forever? As Peter Stella explained in the show, the answer is no. The U.S. government could convert those overnight reserves back into longer-term treasury securities once the crisis is over.  To illustrate how, imagine that by the end of 2020 the Fed has bought up $2 trillion in treasury securities. The purchase of these treasuries were used to indirectly fund the cash transfers to households, the PPP program, extended unemployment benefits, and other economic relief efforts. The figure below shows this development in terms of the respective balance sheets of the Treasury and Fed. The treasury securities are liabilities for the U.S. Treasury and assets for the Fed and vice-versa for Fed-issued reserves. The Treasury takes the reserves on its balance sheet and sends them to the private sector as part of the economic relief efforts.If we now combine the Treasury and Fed balance sheets into a consolidated government account and also look at the private sector balance sheet, we see the following two t-accounts: The net government liabilities are now $2 trillion in overnight reserves which are assets on the private sector's balance sheet. Again, during a crisis this is not a surprising outcome as the Fed rapidly expands its balance sheet. But left unchanged, it would imply rising interest rate costs once the economy starts recovering and the Fed is forced to raised the IOER to keep inflation in check.To avoid this problem, Peter Stella recommends that after the crisis the Treasury issues additional long-term treasury bonds that lock in low interest rates. Selling these treasuries to the private sector means taking reserves off their balance sheets. The Treasury, in other words, is swapping long-term treasury securities for the overnight Fed liabilities. This is what the consolidated balance sheet would like after this activity: Peter Stella outlines this process more thoroughly in his paper titled "Exiting Well". Again, this would not happen right away, but after the crisis has ended. Historically, the Fed has financed about 20 percent of the consolidated public debt (CPD) based on data back through 1945. I define CPD as the sum of marketable treasury securities not held by the Fed and the monetary base. Using data from the Financial Accounts of the United States, I constructed the chart below that shows the share of CPD attributable to the Fed and the U.S. Treasury. Unsurprisingly, the Fed's share of CPD during the Great Inflation rose to an average of almost 30 percent and hit almost 40 percent in 1974. During the Great Moderation it fell to about 14 percent. As of May, the Fed's share of CPD is approximately 24 percent, just above the historical average. The reason it is not higher is because of large budget deficits coming into the crisis. If 'exiting well' means returning to the historical average, it might occur naturally with regular budget deficits after the crisis. If 'exiting well' means returning to something closer to the Great Moderation levels, then this will be a more ambitious project and require a vast reduction in the stock of reserves.Other ConsiderationsThe argument so far for reducing the Fed's management of the public debt is that it is likely to be economically cheaper. As noted by folks like George Selgin, Charles Plosser, Paul Tucker, and others, a second argument is that it is also politically cheaper for the Fed to avoid playing the role of public debt manager. The management of U.S. public debt is normally under the purview of the U.S. Treasury because this process is inherently politically and therefore overseen by representatives of the taxpayers. The Fed can avoid these political entanglements by minimizing its influence on public debt management. This, of course, requires a smaller Fed balance sheet.

A post-crisis journey to a smaller balance sheet, however, faces two big roadblocks. First, the Fed has chosen an 'ample reserve' or floor operating system. This keeps the stock of excess reserves large in normal times and therefore keeps elevated the Fed's influence over public debt management. A number of post-2008 bank regulations also has increased the demand for bank reserves. Some of these regulations have been tweaked in the crisis, but both they and the Fed's floor system would have to be reconsidered if we wanted to return to a world of scarce reserves and less political entanglement for the Fed. Finally, it is worth noting that maintaining large central bank balance sheets do not guarantee robust growth. The charts below show the 2009-2019 averages of central bank balance sheets sizes against several measures of nominal economic activity. They, ironically, show bigger balance sheets are tied to slower nominal growth. Now, it could be the case that the countries with the weakest nominal growth responded with the most aggressive use of the LSAP programs. This is probably true, but the data span an entire decade so one would expect to see inflation, domestic demand, and credit growth respond to the use of LSAPs over this long of a period if QE worked as advertised. If nothing else, these figures should give us pause in considering the benefits of maintaining large central bank balance sheets over long periods. Further analysis of this data supports this interpretation. So between the higher financing cost for the public debt, the greater political entanglement for the Fed, and the unclear benefits from maintaining a large central bank balance sheet over a long period, we should take seriously Peter Stella's suggestions for 'exiting well' once the crisis is over. Here's hoping we do.

The "gigantic" power of the meat and dairy industries in the EU and US is blocking the development of the greener alternatives needed to tackle the climate crisis, a study has found.The analysis of lobbying, subsidies and regulations showed that livestock farmers in the EU received 1,200 times more public funding than plant-based meat or cultivated meat groups. In the US, the animal farmers got 800 times more public funding.Why is this allowed, why is this happening, good questions both. This is partially wrong as an answer:Alex Holst, at the Good Food Institute Europe, said: "While European investment in sustainable proteins has increased in recent years, this study shows the sector is still only picking the crumbs off the EU's table. The sector needs public investment to scale production and reduce prices [or] Europe risks missing out on the enormous benefits."We've noted that both almond and oat milks are available in the local Aldi. As, we believe, are a number of the fake meats. And let's be honest about it, if something's on sale at Aldi then it's already at scale. So, no, we don't see that subsidy is required to get to scale as it's already there.But it's this which is really wrong:"It's not a level playing field at all at the moment," Lambin said. The answer to that which is wrong that is. Level playing field? Sure. Level it by paying off whoever can chat up the minister responsible for subsidy? No. The correct answer is to stop subsidising the alternative. The claim is that dairy and meat gain a £35 billion a year subsidy. We'd not be surprised if that were true. The answer is to stop paying that subsidy.Free market farming is the answer to the demand for a level playing field. So let's have unsubsidized free market farming.