AT&T and Time Warner

In what seems like a repeat of Comcast’s purchase of NBC Universal, AT&T has announced its intentions to purchase Time Warner to the tune of $85 bn. AT&T, a provider of TV, internet, phone and wireless services, is purchasing the content to carry on those pipes and airwives: HBO, TBS, TNT, CNN, and Warner Brothers TV, movies and video games.

James Stewart of the New York Times mentions how vertical integration deals rarely get prohibited by regulatory authorities, especially in recent decades. Even the Comcast and NBC Universal deal, which faced fierce public opposition, was ultimately approved 4-1 by the FCC with minor concessions. If you are not buying a direct competitor, as when AT&T attempted to purchase T-Mobile, then there are few things in the way, generally, according to the current antitrust calculus. But the public’s appetite for such deals has appeared to sour in recent years as there’s been a growing awareness of corporate power in society.

There’s little risk here for AT&T to pursue Time Warner, with a break-up fee of just $500 mn (a drop in the bucket for AT&T) in the event the deal doesn’t work out, compared to $4 to $6 bn in cash and assets sent to T-Mobile when that deal failed to pass regulatory muster. But there are a few questions here that can help illuminate whether regulators should take action to block the deal. As James Stewart notes, things have changed in recent years. Donald Trump says the deal shouldn’t be pass; so do Bernie Sanders and Tim Kaine. Trump says lots of things, but let’s go with it for now.

First, why is AT&T going for Time Warner?
It’s important to note a few things. AT&T is profitable in offering cellular service to consumers, but the U.S. market is increasingly saturated: almost everyone has a smartphone with a data plan, and it’s increasingly difficult to add new customers. AT&T is also profitable in offering TV, internet and home phone services to consumers, but again, this market is largely saturated (and there are expected to be a fair amount of cable cutters in the future).

Furthermore AT&T has already begun experimenting with alternative revenue streams. As part of building out gigabit internet (with a terrabyte cap) and offering it to consumers for $70 (depending on the market), there is the scarcely mentioned fact that as part of the subscriber agreement, customers agree to allow their internet traffic to be used to target ads to them. They can opt out by paying $100 instead. This should raise privacy concerns, but there is an (expensive) option to opt out. At an extra $30 per month, few will. Verizon, meanwhile, is pursuing a similar strategy of highly-targeted ads in their wireless services, and this is one reason they have purchased AOL and Yahoo in recent years (for the ad tech as well as the high-traffic properties).

So what’s the business motivation here? As noted above, providing core services (the pipes) has ceased to be a growth industry, although it remains profitable. And so these companies, with huge cash reserves, low interest rates, and scarce investment opportunities, are increasingly buying the content delivered on their pipes. AT&T would deliver the content to consumers regardless, but it usually pays fees to Time Warner for the right to do so. Now they don’t have to pay those fees, and can collect the fees from other competing cable service providers. Second, they now own both the pipes and much of the content delivered on these pipes. And they increasingly collect large amounts of information about their consumers. They approach a position of collecting fees to use the pipes; fees to view the content regardless of whether it’s on their pipes; and fees for highly targeted ads on the content given to consumers. At every step of the process, a new AT&T can now earn revenue on every part of the flow of information and content.

Second, what has been the impact of Comcast purchasing NBC Universal? Were consumers benefited or hurt?

This one is harder to assess. It’s hard to imagine a public benefit that came out of it, as Susan P. Crawford has noted in the NYTimes piece. And it’s easy to note some instances where Comcast, with or without NBC Universal, has exercised its market power for ill (think of the hoops they made Netflix jump through). This had less to do with NBC Universal, but it’s something to consider.

There was a recent report that stated the FCC was probing whether there was an effort by cable companies to harm the growth of internet video, including Comcast and Hulu (which they explicitly stated they would not do in order to gain approval for purchasing NBC Universal). The evidence looks bad to neutral, and it calls into question whether concessions can ever be effective for taming the market share and power of the companies merging.

Third, should industries involving the flow of information be treated differently by antitrust law?

In a word: yes. This is in some ways the main point in Tim Wu’s book, The Master Switch. Information is different (the content on TV and internet), and concentrated power should be fought and avoided at every possible turn. Giving power over content to companies who already have large power over the pipes that control what information we get is a dangerous trend.

There’s also the issue of precedence. AT&T is buying Time Warner, in part, because Comcast bought NBC Universal. They’ve even stated that this deal is much less problematic than the Comcast deal, and on those grounds it should be immediately approved.

Consolidation, power, and vertical integration by one company pushes the other few competitors to make similar decisions in the future. You see this not just in vertical mergers, but also in horizontal mergers. Over the course of a few years, the airline industry consolidated and merged to essentially a few major players. They have cut capacity and been very profitable. In part this is due to low oil prices, but it also has to do with having fewer major competitors to deal with. This started a while back, in 2005. By 2015, when US Airways merged with American Airlines, there was little hope of stopping the deal. How else would they compete with the other large airline groups: Delta/Northwest, United/Continental, and Southwest/Airtran? In other words, approving the earlier deals tied the regulators’ hands. They created the conditions early on under which they would have to approve later deals. This was one reason why AT&T and T-Mobile were not allowed to merge: it was clear that Sprint could not exist in that market (and it might not, still).

Approving these deals also leaves regulators in a fundamentally reactive and passive state of being. They are never breaking companies that get to be too large; they are always allowing companies to get bigger. Not since going after Microsoft in the late 1990s (with no major consequence, ultimately) have antitrust authorities made any attempt at breaking up large powers.

Given the stakes here are not just higher airfare, but how we receive and consume information, and how we express ourselves to a large extent, and that there is little consumer benefit to be had, it’s hard to argue in favor of the deal. Vertical integrations should be looked at suspiciously, especially when they involve just a few large corporations and the flow of information.


Remembering what’s at stake in 2016

Lost in the arguments about who is sane, and who has the right temperament for the presidency, is the practical impact of the election. People have wondered aloud: how can men of conscience like Paul Ryan endorse and support someone like Donald Trump? They ascribe a level of moral consciousness that is not deserved according to Ryan’s actions and plans. And they furthermore ignore the entire premise and goal of most of the elected GOP members: to slash taxes on the rich and gut the safety net.

It has been apparent for a long time now that this is what Paul Ryan intends to do: it was clear in 2012 when he was picked as Romney’s vice president. The GOP will in all likelihood control the house regardless of the presidential outcome due to the extreme gerrymandering done at the state level since the 2010 census and district redrawing, and there is a desperate fight for control of the Senate right now, where the tie-breaking vote could be the vice president’s (a role which Cheney played several times). If Trump wins the presidency, it’s likely that Republicans will also control the Senate, and at least have the tie-breaking vote.

What is Paul Ryan’s plan in the event of a Trump presidency and Republican control of the Congress? Here is the lede of a Politico story:

If Donald Trump is elected president and Republicans hold onto Congress, House Speaker Paul Ryan is bluntly promising to ram a partisan agenda through Capitol Hill next year, with Obamacare repeal and trillion-dollar tax cuts likely at the top of the list. And Democrats would be utterly defenseless to stop them.

He would do this through the use of budget reconciliation: this is what was used to pass the Bush tax cuts in the early 2000s, and it was used to finally get Obamacare passed (to reconcile the differences between the House and Senate bills, the latter which required a super-majority to pass). There would be no president to veto: in fact, Paul Ryan is counting on Donald Trump’s support to pass the plan, which explains Ryan’s quiet endorsement despite personal objections to Trump’s style, instability and blatant racism.

Apparently, Americans want Congress to “get things done” as opposed to gridlock, while awarding the party causing the gridlock with a massive and radical legislative victory. They will award this to Republicans through a series of protest votes for third-party candidates and a core failure to understand the actual stakes of the election. They are content with either saying “single-payer or nothing” while ignoring the 20 million + who have receive health insurance under Obamacare, and ready to punish a center-left agenda they see as corrupt by giving massive tax cuts for the wealthy (ignoring that the center-left Obama successfully drove up taxes for the wealthy).

Here is a line in the article that summarizes what is at stake:

By the end of the decade, the richest 1 percent would have accumulated 99.6 percent of the benefits of the House GOP plan, according to the nonpartisan Tax Policy Center.

New York Magazine’s Ed Kilgore also covered Ryan’s agenda, in an article titled “Paul Ryan Is Planning a Revolution, and It Starts in January”

[T]he illusion that the filibuster would give Senate Democrats a veto over anything egregious, the Republicans-in-disarray meme has lulled a lot of Democrats, and the media, into a drowsy inability to understand how close we are to a right-wing legislative revolution if Donald Trump becomes president and Republicans hang on to Congress.

This was the plan in 2012 as well if Romney were to win. People claimed nothing much would change back then, or that it wouldn’t be much of a disaster. They were wrong then and they are wrong now. They ascribe a fundamentally undeserved level of moderateness in policy substance to politicians based on speaking style and handsome looks alone.

I am unsure of the Clinton strategy: they want to win over independents and moderate Republicans by appealing to their sense of patriotism and the fact that Trump is clearly unstable and bigoted. But the campaign has done precious little to demonstrate the radical nature of the GOP plan that would go into effect with high likelihood in the event of a Trump presidency.

And I am unsure of the voters “unhappy” with the two candidates and what they will ultimately due in roughly a month’s time. There are real stakes to the results of the election; voting for someone you don’t personally respect or like seems to be a small price to pay for saving the hard fought gains of the last 8 years and salvaging any hope of withstanding a radical set back to the progressive agenda for years to come.

Ed Kilgore concludes:

[I]t should be a warning to Democrats as well, and something that with imagination and persistence they can convey to those critical progressives who are meh about voting for Hillary Clinton and don’t think the identity of the president much matters. Even if you think Clinton is a centrist sellout or a Wall Street puppet, she’s not going to sign legislation throwing tens of millions of people out of their health coverage, abolishing inheritance taxes and giving top earners still more tax benefits, shredding the safety net, killing Planned Parenthood funding, and so on through Ryan’s whole abominable list of reactionary delights. If Democrats think a scenario so complicated that it’s lulled the press to sleep cannot be explained to regular voters, maybe they should break out the hand puppets. There is no more urgent and galvanizing message available to them.”

Before the first debate

I want to say that, on the eve of the first presidential debate, there’s a lot at stake.

Briefly, a few words on what is not at stake. Regardless of who wins, we’ve already lost a lot. We have a media that appears to favor entertainment and false equivalence at the cost of truth, and at the cost of normalizing truly radical and unqualified figures. We have a deeply divided populace, where possibly a majority of the population endorses the banning of Muslims from entering the country while only 38% of the country personally knows a Muslim. 59% of Republican primary voters think the President of the last 7.5 years is a Muslim. And a major party candidate has already said that if he loses, it will be due to widespread voter fraud, diminishing confidence in our already fragile system.

Meanwhile liberals proudly claim that they don’t know any Trump supporters, as if being in a bubble were a badge of honor. We don’t talk to each other. We separate increasingly on class, education and religion while ignoring facts that fly against our own narratives.  We are in deep shit, regardless of where this debate and this election ultimately go. That’s what we have already lost.

Then what’s at stake in the debate and in the remainder of the campaign? Alot. We could salvage some decency in our discourse and in our media coverage, and importantly, we could salvage the direction of the country.

It’s common to criticize the media’s role in enabling Trump, and to call out Trump’s blatant lies (though not common enough), but we’ve done precious little to actually understand how he would govern, which should be a central question right now. I am disheartened by those who say the constitution is “robust” and that the president will not be able to do much, and so we shouldn’t worry. These are the people who often argue things will be “OK.” I don’t know what OK means, really. We won’t cease to exist, probably (more on that later). But a lot of people might suffer, and the direction of the country would be drastically altered (for the worse). Why should the threshold for panic and alarm about the election be existence itself being threatened?

There was the news about Trump’s campaign possibly promising or offering a Supreme Court nomination to Peter Thiel, the billionaire venture capitalist who funded the lawsuit that bankrupted Gawker. The lawyer in the Gawker case representing Hulk Hogan has since gone on to threaten action against New York Magazine for exposing dirt on Roger Ailes’ years of sexual harassment as head of Fox News. And there’s Donald Trump’s own litigious nature (including barring the Washington Post from press conferences). Does that not meet the threshold for panic and alarm? At what point do we recognize that the constitution is what the Supreme Court says it is (and it says things often at a considerable lag), and that claims of its robustness mean nothing if we do not fight clear attacks on it standing up?

The debate, then, can shed light on how Trump would actually govern. Evan Osnos wrote a detailed look at how a Trump administration might look like. Among other things, he notes that the research shows that candidates achieved around 70% of their campaign promises. There is also that he has the power to name some four thousand appointees in all parts of the government.  Here are some other highlights.

On Day One:

Trump aides are organizing what one Republican close to the campaign calls the First Day Project. “Trump spends several hours signing papers—and erases the Obama Presidency,” he said. Stephen Moore, an official campaign adviser who is a senior fellow at the Heritage Foundation, explained, “We want to identify maybe twenty-five executive orders that Trump could sign literally the first day in office.”

On Judicial and Congressional Checks:

[T]he founders gave Congress the power to make laws, and the Supreme Court the final word on the Constitution [. . .] but during the Cold War the prospect of sudden nuclear attack further consolidated authority in the White House. “These checks are not gone completely, but they’re much weaker than I think most people assume,” Eric Posner, a law professor at the University of Chicago, said. “Congress has delegated a great deal of power to the President, Presidents have claimed power under the Constitution, and Congress has acquiesced.” The courts, Posner added, are slow. “If you have a President who is moving very quickly, the judiciary can’t do much. A recent example of this would be the war on terror. The judiciary put constraints on President Bush—but it took a very long time.”

There was that little old warrantless surveillance program by George W. Bush that lasted until 2015. A very robust program, it seemed.

We might also want to be a little worried about our existence. Evan Osnos also discusses just how easy it would be for a president to potentially authorize a nuclear attack (Nixon once faked it, to near disastrous results).

A year and a half ago, people didn’t think Trump could win the Republican primary. They thought it was crazy. Now it has come to pass. Now people think it’s crazy that Trump could win the presidency, and that he could do something as radical as appoint Peter Thiel to the Supreme Court, or do the things he has actually said he would do. We think these things are so crazy they aren’t worth giving another thought. Things have a habit of happening though.

So this is all at stake at the debate. As important as what happens at the debate, is what happens after. Does the media immediately shift into body language territory (who was calm? Shrill? “Presidential”?) and away from factual substance?

Tony Schwartz, the repentant ghostwriter of Art of the Deal, said the following in an interview with the New York Times on what he thinks should happen, and what Hillary Clinton ought to do:

“I’d be very calm, direct, and unflappable, but relentless, I mean relentless, over 90 minutes, in calling out every time a lie came out of his mouth [. . .] to demonstrate the thinness of his knowledge, his inability to answer any question beyond a sentence or two without repeating himself.”

“What I would hope is that [Hillary Clinton] doesn’t go the same route she did with Matt Lauer when he started coming at her relentlessly, which was to revert to her knowledge, to revert to her ability to produce a hundred facts in a short period of time, [. . .] Because this debate is going to turn not a bit on the issues. It’s going to turn on emotion, it’s going to turn on which candidate makes all of us feel safer and which candidate makes us feel less safe. And the one who wins that contest wins the debate — and probably wins the election.”


Coalition Building, Before Election Day

My previous criticism of those deciding to absolve themselves of responsibility by opting for a third party (at least in competitive states) has within it the underlying hypothesis about how presidential (and most Congressional) politics work in the United States.

In countries like the United Kingdom, a “third” or minor party can dominate in certain locations, like the Scottish National Party in Scotland. That happens to work, because after the election, if a single party in parliament does not have an outright majority, the elected MPs from different parties can work to form a coalition to get to a majority, and they decide on a prime minister to represent this coalition, usually selected from the dominant party in the coalition. Think of the Conservatives and Liberal Democrats in the 2010 election (although this happened to be a disastrous choice for Lib Dems). Crucially, the Scottish voter doesn’t need to concern himself with throwing his vote away, although he is certainly aware his elected representative will join a coalition (possibly for getting some substantive policy in return).

In the United States, coalitions are built before election day, with the understanding that the elected will govern in such a way as to represent the voter groups involved in that process, or they will be pressured to do so over the course of their term. The process of electing a president is distinct from selecting Senators or House representatives. It’s possible that a third party (or independents, as it has happened more often) wins a particular local election. But in the first place, no Democrat or Republican is particularly bound to vote a particular way. And the centrist to leftist independent members of Congress tend to ‘caucus’ with Democrats so that they have some influence in the processes that develop policy.

My thinking, then, is that we have these supremely long campaign seasons because the process is about first building support among the base (for Democrats, a center-left base, for Republicans, an increasingly far-right base), and then building some support outside of the base once the primary season is over in order to win the election. It’s a process of building coalitions analogous to MPs from different parties joining together to get a majority.

And then the election will decide who is president, whether they have 51% of the vote or a plurality of the vote (e.g. Bill Clinton with 43% in 1992). Voting for a third party, then, is nice in that it lets you say, “I don’t like either major candidate, they suck,” but it seems less clear what it actually does: no one gets points for coming in 2nd or 3rd. The most plausible argument seems to be if you really are a Libertarian, and you want the Libertarian party to get above the 5% threshold to get some public financing in the next election (and automatic ballot access in all 50 states), and they happen to be close to that threshold this election. But this means you are less interested in the immediate outcome that will impact the next 4, or 8, or 12 years.

And how many of the people who are against Clinton and Trump are actually Libertarian? The Republican party already wants to gut the safety net, Medicaid and Medicare: the Libertarian party follows this path while also cutting defense, which I guess is kind of honest according to its own internal logic. But do people really want all income taxes replaced by consumption taxes (this is highly regressive)?

And with the Green Party, are they worthy of the attention they clamor for? Fighting for a leftist agenda is great, but lazy thinking is decidedly not fine.

An interviewer asked Jill Stein about the possibility of playing the role of spoiler like Nader in Florida in 2000, and helping Trump win in the process. Her response:

What we know from history, and what we know from the current situation, we are seeing a rise in right-wing extremism, not just in the United States, and it’s not just Donald Trump, it’s also throughout countries in Europe [. . .] The answer to neofascism is stopping neoliberalism. Putting another Clinton in the White House will fan the flames of this right-wing extremism. We have known that for a long time ever since Nazi Germany. We are going to stand up to Donald Trump and to stand up to Hillary Clinton!

To be fair, I was never going to be convinced of her reasoning, regardless of her response, although I acknowledge anyone’s right to run for office (and anyone’s right to vote for them). But this answer is garbage and nonsensical. If you’re running as a third-party in a post-2000 election world, you should have a better response than this. You should have thought about this.

Jonathan Chait responds brutally (and correctly):

In fact, the one time in American history a Clinton held the White House, it did not lead to fascism. True, it did lead to a Republican administration, but it wouldn’t have if it weren’t for, among many factors, a Green Party candidate who siphoned off enough votes in Florida to tilt the outcome.

[. . .]

This, however, is also a strange conclusion to draw. The crisis in Weimar Germany had many causes, but one of them was the Communist Party’s insistence on destroying the Social Democrats. Because the Communists would not support any center-left government coalition, it was impossible to form a parliamentary majority without the Nazis. So whatever lessons about left-wing political strategy we should draw from the Nazi era, “withhold votes from the mainstream party that is the only viable alternative to the far right” is definitely not one of them.

What’s most fascinating is that Stein does not try to downplay the danger of a Trump presidency. Instead, she likens it to fascism and Nazism (a comparison that I actually think, for all of Trump’s authoritarian tendencies, goes too far). And yet, proceeding from her premise that Clintonism will lead to fascism, she concludes that she must “stand up to” both Donald Trump and the only candidate who can prevent Donald Trump from winning the presidency, in equal measure. “Neoliberalism” — the left-wing term of abuse for liberalism — leads to fascism, so we might as well skip the neoliberalism step and go straight to the fascism.

The assertion is that the Democratic party is fundamentally corrupt, and is no better than the Republican party, basically. This despite that the way our elections work, someone can win a presidency with a plurality of the vote: a least-preferred candidate (Trump) can win by enough people voting for their most-preferred candidate (Stein) rather than the second-least preferred candidate (Clinton) who is the only viable opposition. This is the reality of our election system, regardless of our internal moral quandary about picking. And the point is, there is no regrouping after the election. The regrouping is going on now. Whether people vote in a way that lets them sleep at night or not, the outcome is what matters.

Bernie Sanders mounted a challenge against Clinton from within the Democratic party, and he pushed the conversation towards his end, and got changes in the platform. It’s not clear he would have done this had he skipped the Democratic primary process altogether and joined the Green Party. The Democratic Party is probably better for it, though a minority of his supporters have not yet come to the same conclusions he has.

The Libertarian party would also not likely withstand scrutiny, although they have actual governing experience in diverse settings, so perhaps there’s less concern there. William Weld, the vice presidential nominee for the party, was a moderate Republican governor of Massachusetts. It seems, though, that actual libertarian and conservative commentators don’t like his views on how to govern.

On the supreme court:

JOHNSON: Really, there are going to be no litmus test. You’re going to appoint good people, and you’re going appoint people that look at the Constitution of original intent.

WELD: Well, I don’t think you have to panic and say it has to be a way lefty or way righty. Steve Breyer has been a good justice. He was appointed by Democrats.

GILLESPIE: A Massachusetts guy, right?

WELD: A Massachusetts guy. Merrick Garland, I think, would have been a very good pick, and he’s nominated by Obama.

Weld’s answer is a reasonable answer; but it’s not an answer that can satisfy the Libertarian or conservative die-hards, and it seems his running mate doesn’t agree either.

Leon Wolf writes:

Johnson’s answer is pretty good. Weld’s is awful, and if Johnson disagrees with him he should tell him to shut up about it. Breyer has been a “good justice” in the sense that he hasn’t been openly corrupt and he’s reasonably intelligent, but he’s also a doctrinaire liberal who has stood blithely by and endorsed the massive expansion of the Federal government and the administrative state in particular. His jurisprudence shows no respect for any even theoretical limit of the commerce clause. His philosophy isn’t conservative, and it sure as hell isn’t Libertarian. What is Weld even driving at? This country doesn’t need two Democrat parties.

[. . .]

Leave it to the Libertarians. They have a once-in-a-lifetime opportunity to remove their party from the fringes and they blow it by putting this buffoon Weld on the ticket.

It’s telling that Wolf thinks being more libertarian and more idealogical would be the tactic that would remove the party from the fringes. That seems counter-intuitive to me.

It seems that the third parties want the attention but maybe not the scrutiny that comes with it: maybe we’ll find out that they’re as human and impure as the rest of us.

Putting July’s job numbers into perspective

Or, why the Fed should not raise interest rates in September.

The BLS reported that 255,000 jobs were added in July. The New York Times ran a story quoting Michelle Meyer of Bank of America Merrill Lynch saying, “This was everything you could have asked for, maybe more.” The unemployment rate held steady at 4.9 percent, and wage growth has finally picked up a bit, growing at 2.6 percent year over year. After years of nominal wage growth that barely kept up with inflation, 2.6 percent represents real gains, if only just so.

The underlying threat to any good jobs report over the last few years is that the Federal Reserve will potentially overreact and raise interest rates prematurely, just as the recovery is gaining steam, and despite constant threats to recovery from a tumultuous world. I am not in the Fed prediction business, but prior to the release of the report, Fed watcher Tim Duy stated that July’s FOMC meeting was really just laying the markers for a showdown between hawks and doves in September, and with July data now in hand, a good jobs report may make it untenable to push off on raising rates again. September may be the month interest rates go up to 0.50%.

Why do I worry that the Fed raising rates in September is premature?

It’s true that job growth was strong in July. And it’s also true that the unemployment rate stands at 4.9%, which might normally be considered full employment, which is the unemployment rate where people think things can’t get much better without inflation spiraling upwards.

But, there are a few charts and data points that better describe the status of the labor market than the headline unemployment rate, and they show that the recovery from the greatest recession since the Great Depression is still far from complete, and that there is no sign of inflation getting out of control. The downsides of not raising rates, then, are minuscule compared to the downsides of raising rates, which could harm the still fragile and incomplete recovery.

The headline unemployment rate doesn’t count a lot of people who have exited the labor force: if the jobs just aren’t there, people don’t look, and thus aren’t included in the relevant denominator of the calculation. The BLS thankfully calculates an alternative measure: the unemployed (those actively looking for work but not employed) as well as those who are part-time for economic reasons, plus those who are “marginally attached” to the workforce. This latter category includes those who are available for work, but who didn’t bother looking for various reasons, including the belief that there were no jobs available.


U-6 Unemployment Rate


As of July of 2016, this expanded-definition unemployment rate stood at 9.7%, much higher than the troughs in the previous economic expansions at 7.9% in December of 2006 and 6.8% in October of 2000. The usual suspects argue that this is structural: that there is a mismatch of skills, and that this is just the new normal. But these people were wrong at the start of the recovery, and there are few reasons to believe they are right now.

The employment-to-population ratio for ages to 25 to 54 is another metric that is more informative than the headline unemployment rate. This “prime-age” ratio captures employment in the part of the population you’d like to see employed. It captures similar trends to what we saw in the expanded unemployment rate: again, we see an incomplete recovery:



Employment to Population Ratio, 25-54 Years


The peak in the prior economic expansion was 80.3%, and we are still at 78.0%. There’s clearly been improvement, but there’s also still quite a bit of ground to make up. A back-of-the-envelope calculation shows that if an employment to population ratio of 80% represents full employment, and the estimated population ages 25-54 stands at about 125 million, then we are still short 2.5 million jobs.

I hopefully have convinced you that there’s still considerable slack in the job market. Is inflation the metric that is then pushing the Federal Reserve to raise rates?

Various measures based on the consumer price index (CPI) make it hard to think inflation is getting out of control. I plot a few here for reference:


16% Trimmed-Mean and Median CPI

Median CPI and 16% trimmed-mean CPI, both intended to get at the momentum or inertia of inflation without being affected by volatile outliers like food and energy, show 2.2% and 1.9% inflation, respectively, in June of 2016. This is right around the Fed’s target (and one could argue the target is far too low).

So: inflation is right around the 2% target, and there’s still significant slack in the labor market. What, then, is the hurry?



The Lie

I have a long post about the election and its consequences. TL;DR: I am a neoliberal shill for Hillary Clinton.

There are various groups who are having serious doubts about the upcoming election. On the right, there are conservatives who feel like Trump will not actually be a conservative, and there are libertarians who feel even less inclined than usual to vote Republican. On the left, there are those who have serious misgivings about voting for a foreign policy hawk. And then there’s the “Bernie-or-Bust” movement, which feels it cannot in good conscience vote for Hillary Clinton.

There is a strain of thought in the vocal dissent against Hillary Clinton from the left, in particular the Bernie or Bust movement, that is hard to square. On the one hand, I’m happy that there are those who are actively involved in the discussion of the country’s future: we need more of that energy and less passivity, whether I agree with the views or not. Many of these people care about the crucial issues of the day: discrimination, inequality, war, and healthcare, to name just a few. Their hearts and minds are generally on the right side of the issues.

I preface with these kinder words because I have harsh things to say. My empathy for these people also means that I won’t mince words or water down my arguments against whatever it is they are presently doing. And make no mistake, I believe that what they are doing is counter-productive and harmful: from booing speeches by Elizabeth Warren and Bernie Sanders, to protesting outside the Democratic National Convention with chants of “Hillary for Prison”, or even just proclaiming on social media that they will never vote for Hillary Clinton because of “what she stands for.” They have a right to do these things! At the end of the day, what people do and how they vote is up to them. But if they publicly declare who they are voting for (or who they are not voting for) with fallacious logic and an insistence on idealogical purity, it must be pointed out and they must be challenged, because the outcome they are pushing for could be disastrous. What’s at stake are the very issues they claim to care about. What happens in November will show whether they care about these ideas only in the abstract or whether enough people have grasped the real-life impact.

There are two things I will address. First, whether Clinton legitimately won the primaries. Second, whether a dissenting liberal can morally vote for Clinton in the presidential election.

The first argument we have to dispel of is that the Democratic party primaries were rigged. This is a salient point to make in the wake of the hacking of the DNC emails. Those arguing the “election was rigged” point of view have several points put forth: (1) many registered voters were purged by local election authorities, (2) states with closed primaries like New York worked against Bernie Sanders, and (3) the DNC, as well as the super delegates, showed favoritism towards Hillary Clinton at the expense of Bernie Sanders.

The Nation covers many of these arguments in better detail than I do. I will briefly add my own thoughts here. In short, (1) there is no evidence that the purging of voter rolls favored any candidate in particular (and it may have hurt Clinton more in some places), nor would it have made any difference to the election. It is a symptom of how convoluted and broken our system of voting can be: bringing attention to this is great. But calling things rigged at every opportunity weakens the work against things like Voter ID laws and restrictive hours. (2) Bernie Sanders enjoyed an advantage in caucus states, which are arguably more restrictive and less democratic than closed primaries, where Clinton had some advantage. Clinton won more open primaries and many more votes, in the end. (3) Hillary Clinton won more votes and more elected delegates. Superdelegates and the DNC did not decide the election. Although the nasty emails of the DNC were shameful, it did not influence the outcome of the election. They can be wrong without the system being rigged. The people voted for Clinton in larger numbers than for Bernie Sanders. Hillary Clinton faced far more scrutiny and negative coverage in the process, even more so than Donald Trump.

To deny the coalition that voted in overwhelming numbers for the winning candidate their legitimacy, while claiming the system is rigged, is to make light of systems that are actually rigged. People seemed more interested in the DNC’s emails, which showed the arm of a political party having some preference for one candidate over another to lead said political party, than in the fact that a foreign dictatorship likely instigated the event in an effort to influence the outcome of the election. Russia. Where elections are actually probably rigged. Words like “corrupt” and “rigged” matter, because the system we have is imperfect, but it is not those things (yet). And so far, it is still our own election to decide. It seems we are more interested in making a point about a pre-existing narrative about unfairness than recognizing the danger in a foreign power attempting to sway our election results. To throw words around is to cheapen peoples’ voices and to further polarize people who largely agree on the issues of the day.

But forget all this, for a minute. Here is the fact of life: the presidential election is a zero-sum game. You either get some of what you want, or you get a lot of what you don’t want. There is no way around this.

What liberal dissenters seek in the voting booth it seems, is a church or confessional. They want to leave feeling pure, like they have participated in the process while having kept their conscience clean. This thirst for idealogical purity, to make a decision that is in complete concordance with their belief system, is ultimately a sign of selfishness. The ballot box is not a confessional. It is not a church. It is a choice. And if enough people say they don’t want Trump but that they could never live with voting for Clinton, then we end up with Trump.

The Lie we tell is that we have kept ourselves clean and uncompromised in the process. We tell ourselves: at the end of the day, a single vote doesn’t matter. Might as well make a decision fully in agreement with our beliefs so we feel good. Don’t want to ‘give’ something to Clinton and encourage more of this corrupt behavior in the supposedly liberal party into the future. No. They have to learn. And then the argument goes further: we can survive a Trump presidency.

And The Lie is then complete. Not only is it a complete fabrication, it is fundamentally selfish. We have exonerated ourselves of any personal accountability even as we expect it of everyone else. And it becomes clear: these ideas, these issues, they are really just abstract for us. The bar has now been set to “we will survive” 4 years, or 8 years. And having sent a message, we might eventually get a real liberal at the end of that. We can wait. A message is what a vote is worth, then.

This was a bad argument in 2012, when people could look to Romney’s moderate record as Governor of Massachusetts and say, “He’s just saying these crazy right-wing things. He’ll probably be fine as president. He knows better.” It is interesting to note these people continue to say these things about Trump, a man with no similar governing record and no intellectual curiosity or investment in any of the issues at hand. They will, then, convince themselves of whatever helps them sleep at night.

These are the people who have not fully recognized the far right-wing turn of the Republicans in the House and Senate. The more time goes on, the less sane their views become: cut taxes for the rich and gut the safety net, full stop. Romney proposed a similar plan, but people seemed to think he’d turn it around once elected. As if he could go to John Boehner and say, “Hey, let’s do liberal things instead. Forget what I said in the election.” The $5 trillion proposed tax plan of Romney in 2012 has now become the $10 trillion proposed tax plan of Trump and co. in 2016. But we still tell ourselves The Lie so that we can sleep at night.

This was in 2012 when Democrats still controlled the Senate. So back then, we could maybe say: we’ll just have gridlock, which is okay. There are, again, deep-seated problems with this argument, both in 2012 and even more so in 2016, given the power of the executive branch. And should Trump win the presidency this fall, he will likely have a strong majority in the House and a slim majority in the Senate. As we tell ourselves The Lie, we can then ignore the Supreme Court, conveniently, even as there is a vacancy in the court that will be directly and immediately decided by the election’s outcome, and determine the balance of the court. We can then ignore the appointments to agencies like the EPA that issue rules that can silently save thousands of lives in their regulation of toxic chemicals and pollution, or the Department of Labor which just passed a rule giving overtime protections to 4.2 million workers. We can ignore the incredible power vested in the Department of Human and Health Services as Obamacare continues to expand (or not in some states). Make no doubt that under any Republican, these things will go into reverse. And of course, there is the power of the executive branch in conducting foreign affairs, where it seems a declaration of war has become more of a suggestion than a constitutional requirement.

The quest for idealogical purity would have deemed Obama a fake liberal in 2008, despite his lofty rhetoric. He supported civil unions and not gay marriage, and he did not argue for a single-payer system that would demolish the profit-making pharmaceutical companies. He didn’t even argue for the individual mandate, even though he must have known it was necessary for any plan to work. He was a center-left candidate, and one could emphasize the center.

Yet is there any doubt of his impact on the LGBTQ community in the years since, as he has fought DOMA in court, repealed Don’t Ask Don’t Tell and directed the his attorney general to battle states passing discriminatory laws? Is there any doubt, as 20 million more are insured in 2016 despite repeated legal challenges by Republicans, whether we are closer to our liberal ideals of universal healthcare? Did we worry about Obama’s idealogical purity, or did we understand that he was on our side, even if we didn’t agree on everything?

We tell ourselves stories so we can feel good and make sense of the world, which is messy and full of compromise. We tell ourselves The Lie. But politics is not an abstract space. It is not a church for us to feel pure in. It is and has always been about real outcomes. We move up or down.

To say “we can survive,” all in order to send a message (and what is that message?), is to ignore the real, human suffering of millions of people. It is to betray any semblance of a commitment to pro-choice issues. It is turning our backs on the poor and the underclass. One wonders whether the third party candidates, who would not withstand similar scrutiny from the media despite asking for similar attention, have any sense of this. They have a right to run for office, make no mistake, and people have a right to vote for them. But I wonder what those who voted for Nader in Florida felt as Bush prepared to send troops to Iraq in 2003. “We can survive this,” they may have said in 2000. Maybe they did, but many did not.

It is the job of Hillary Clinton to convince people to vote for her through a combination of policy ideas, convictions and biography, and it is not my job to shame people to vote for her, though it seems I have taken that role here. Nor will my attempts (or anyone’s attempts) work! But all of this is a long way of saying that we must hold those in office accountable, but we must also hold ourselves accountable. Even when it comes to a single, meaningless vote.

The presidential election is only one step in many. Conversations can continue afterward, pushing the party in this direction or that direction. But in losing, there is no next step. And the message we send is not the message we think we are sending: that however dangerous, far-right and racist the Republican party becomes, we will allow them to win so that we can feel good about ourselves.


Who is driving? Computer is driving.

There are conflicting visions of a future with autonomous driving. One version seems to focus on a select few benefits: expanded availability to disabled, elderly, and perhaps even children, vastly reduced traffic deaths (they were on the order of 30,000 in 2014), and the possibility that you won’t have to own a car at all: you’ll simply summon one when you want one. An article from The Atlantic’s City Lab seems to focus on this latter point and its potential impact in disrupting public transit systems: why would anyone ride public transit at all?

Yet as I think about a possible future with driverless cars, it seems more likely that people will continue to own their vehicles, as this is the primary way the median American travels to and from work. There are probably deep cultural reasons somewhere in there too. The article has some interesting notes, and it seems to me that very few people are thinking about how autonomous driving technologies would implement into public transit systems in cities.

In fact, if driverless cars encourage a large class of people to ride in cars more frequently (they no longer have the pain of driving themselves, and can focus on work or some other form of leisure in the car), then things like commute times and congestion (and possibly pollution, absent greater gains in emissions technology) may become an even greater problem. The only solution to this problem, electric cars or not, autonomous driving or not, is increased investment in public transit.

So what happens to public transit? Potentially, implementing this autonomous driving technology could eliminate or greatly reduce the share of labor costs in public transit. A bus can be added to a route without hiring a person with a pension, health benefits, and overtime restrictions. This could be good from the perspective of a commuter: costs would be more predictable, service could be expanded, and chronically underfunded systems could potentially have more cash to invest in infrastructure and maintenance. Adding a bus route used to depend on the fixed cost of potentially buying a bus and the variable cost of adding a worker to drive the bus for certain hours of a day. Without a worker, the bus would sit idle. Now, the sole essential cost is a fixed one (or the role of labor costs would be much smaller, perhaps limited to inspection and repair). Furthermore, pre-set bus routes seem more predictable and easier to implement in the autonomous driving algorithms as compared to the many additional challenges faced with a personal car, where the destination could literally be anywhere. Fewer edge cases would be encountered.

This is one possibility. Yet another is that companies like Uber, which are investing heavily in a driverless future (few people mention the dark motivations of this: Uber doesn’t want to deal with the headache of having actual employees), could take advantage of the current state of affairs in public transit. It’s not hard to imagine that the acrimonious relationship between many cities and Uber could be changed: tired of dealing with labor unions in the public transit sector and chronic under-service, they make a deal with Uber to start providing some bus-like services. And so the privatization of government services in American society may continue. This may seem crazy right now, but I have to think that companies like Uber and Lyft are thinking beyond their current model. They have already thought of car pooling, and they are already investing in driverless cars to rid themselves of the headache of dealing with actual employees. It may not be crazy to imagine Uber getting into operating its own line of buses as cities turn desperate.

Another interesting question that comes out of all of this: what happens to the jobs? Public transit systems are heavily unionized, and the relationship with the public is ambivalent in many ways. A job that provides generous benefits and a living wage should be applauded: on the other hand, in a society where median wages have stagnated and living in many urban centers has grown more expensive, fewer and fewer think “we should try and get what they have”, and instead think “if we don’t have it, neither should they.” Having lived through several public transit strikes where service was largely shut down by unions, bringing city life to a standstill, I have some sense of the complex feelings involved.

So then in 30 years, when the occupation of driver (whether bus, taxi or truck) has disappeared, where do these millions of workers transition to? It has been a fallacy throughout history to decry technology as destroying jobs on net: new industries arise from the gains in technology and productivity and fill the gap created by the destroyed industry. But so far, I have seen very few imagine what this future would look like, and where these jobs might appear. Instead we hear about a future where the Silicon Valley unicorns and monopolies gradually solve all of society’s ills. Furthermore, even if new industries appear, we have learned over the past few decades just how hard transitioning careers can be, and how permanently harmful the process can be to one’s lifetime earnings (not to mention psychological well-being). Research by David Autor has also shown that jobs have become increasingly bifurcated: a hollowing out of middle-class jobs and an expansion in low-wage jobs, and to a lesser extent, highly skilled jobs. And has the role of technology fundamentally changed, moving from something augmented by labor to something completely substituting for labor?

If it’s going to happen, it’s going to happen. But the future to aim for is one where institutions are robust and able to handle the future’s potentially massive job losses, and one that doesn’t envision a personal car for every person who can afford it, exacerbating congestion issues and disadvantaging the poorest. As the population grows and technology becomes potentially more disruptive to the workforce, investments in infrastructure and accessible education should be made a priority. Out of all the claims made by Silicon valley types about the huge technological advances just around the corner, autonomous driving seems to be the one that might actually come to pass. It’s better to be proactive if we know the changes are coming.