Last Friday, Ben Casselman was savage, A Wall Street Journal Op-Ed Gets It Very, Very Wrong on Seasonal Adjustment. It is in reference to an article Daniel Quinn Mills wrote, Seasonally Adjusted Jobs Numbers Offer Cold Comfort. The “cold” in the title seems to be a sort of joke because Mills seems to think that seasonal adjustments to the jobs report is mostly about the weather. Mills wants you know, “The US economy lost more than 2.7 million jobs between the middle of December and the middle of January.” If he weren’t allowed to write this kind of thing in The Wall Street Journal, I’m sure that he would be shouting it in Washington Square Park.

As you no doubt know, that loss of 2.7 million jobs in January is what happens every year. It is the economy winding down from the Christmas rush. It takes a Harvard Business School professor to demonstrated this astounding level of ignorance. As Casselman discussed in some length, the point of seasonal adjustments is to allow us to know what is happening with the economy. We don’t need the Bureau of Labor Statistics to tell us that come January, all those temporary hires in November will be gone. What’s more, Mills didn’t write his little OpEd in December complaining that the jobs report didn’t reflect the millions of new hires.

And that’s the point. Mills wouldn’t have written this article — and The Wall Street Journal wouldn’t have published this article — if a Republican were in the White House. We saw the same thing with the unemployment rate when Obama came into office. The official unemployment rate was 8.2% in February 2009. But suddenly, conservatives everywhere were screaming about how the “true” unemployment rate was far higher: 15%! Well, in a sense, they were right. The standard number is U-3 and it doesn’t reflect the true level of suffering in the economy. The number they were pushing was U-6, which includes discouraged and involuntary part-time workers.

But the issue is consistency. (To be fair, I’ve seen liberals do the same thing, but it isn’t nearly as common.) While Bush was in office, the U-3 number was just fine. But once Obama was in office, the U-6 number was suddenly used. Similarly, the conservatives who couldn’t care less about the budget deficit found God once Obama was in office. Or to take the most extreme case, I’ve heard conservatives claim that they don’t, in fact, know that Obama was born in the United States. Fair enough. Neither do I. But why is it that the issue only came up when Obama was president? Admittedly, that’s not because he’s a Democrat; it’s because he’s an African American and a Democrat.

The Wall Street Journal editorial page is in the business of apologetics. It will turn on a dime when the party in power changes. It is embarrassing. And even more, it is greatly concerning that someone from Harvard Business School would write an article that shows such complete lack of understanding of economic data. Nothing will change, however. It is very likely that Mills is so insulated that he won’t ever hear about how foolish he looks. This is what has allowed the right wing of this country to lose touch with reality. Everything is definitional: if a Republican does it, it’s good; if a Democrat does it, it’s bad.

On Saturday, I published, Jobs Report Always Brings Calls for Fed Tightening. It was about this whole class of people who always want the Federal Reserve to raise interest rates because (they claim) inflation is going to rise. There is generally a trade-off in Fed policy: to lower inflation, you must slow the economy. Thus, calls for raising rates are also calls for ending jobs. But to the power elite, it is axiomatic that a slight reduction in the wealth of the rich is worse than thousands of poor people losing their jobs.

This is all based on the concept of the non-accelerating inflation rate of unemployment or NAIRU. The basic idea behind the NAIRU is fine. The truth is that there is a natural rate of unemployment because people do choose to be unemployed for periods of time. If unemployment gets below this rate and businesses are so desperate for workers that they raise their pay faster than the rate of productivity, it causes inflation. It’s interesting that so many powerful people are obsessed with this happening, given that its been many decades since anything like it happened. The point is that economic policy probably should not shoot for a zero unemployment rate.

But when it comes to specifics, the NAIRU is pretty much a myth. I’ve been amazed the last year to hear people claim authoritatively that that the NAIRU is between 5.0% and 5.5%. Were they not around in the late 1990s when Greenspan allowed unemployment to get below 4% without causing any inflation? And try as I may, I could not find that there was any change in the economy that might make the NAIRU larger today than it was then. It just seems that this class of people want the NAIRU to be high so the Fed is forced to raise interest rates and protect their piles of cash.

Saturday Morning, Paul Krugman posted an amazing collection of data, Remembrance of NAIRUs Past. It contains the following list of NAIRU estimates from the 1990s leading up to the Greenspan boom when (Again!) unemployment went below 4% and inflation did not take off:

What is fascinating here is that the estimates of the NAIRU were roughly the same then as they are now. Yes, they are slightly higher. But there is no recognition that maybe the way that the NAIRU is calculated is all wrong. Instead, it is always this very conservative number designed as though the greatest good is low inflation — clearly trumping low unemployment. And I think this is just unconscionable.

No amount of data matter. What matters is what the rich want. Actual lost jobs can’t compete against theoretical future inflation. This is yet another indication that we do not live in a democracy. Democracies are much more than elections. As you can see in almost every dictatorship in the world: people vote. It doesn’t even matter that the elections are nominally free when the institutions of democracy are controlled by and for the benefit of the power elite.

Most libertarians complain about the Federal Reserve as an unaccountable institution. I am inclined to agree with them. But the problem is the opposite of what they think. Libertarians generally think that the Federal Reserve is “devaluing” our money. But it is the other way: they are doing everything they can to protect the wealth of the rich. The only constraint is that they can’t do that job so well that the economy crumbles. If all the serfs die, what will happen to the rich? But clearly, the Federal Reserve and many other institutions of our democracy are only indirectly interested in the people.

See Also

The Myth of the NAIRU and Its Purpose
How the Fed Enforces the Status Quo
Economic Scale and Income Inequality

Paul Waldman is wrong. On Monday, he wrote, An Open Letter to Hillary Clinton. Basically, he’s asking that Clinton prove to liberals that she isn’t going to squander what looks like a pretty clean run at the presidency. I don’t disagree with this. But the way he thinks she ought to earn that trust is all screwed up. I want Clinton to show me that she isn’t going to be just another New Democrat. And frankly, I don’t think she will ever convince me of that, because she has every intention of being just another new Democrat. Waldman wants her to prove that she won’t be a magnet for scandals.

I don’t think that the Clintons were scandal magnets. I think they were simply on the leading edge of the Republican lunacy that sees any Democrat as fundamentally invalid. Thus, any Democratic president — or potential president — must be involved in something nefarious to destroy America itself. If there was any doubt about this, it should have been clear in 2004 with the Swift Boat Veterans for Truth. That’s where Republicans showed that there is no level that they wouldn’t sink to for political gain. They smeared a military hero for no other reason than to gain a slight advantage in a political campaign. It was shameful.

But what have we been living through for the last six years? Has this not been one scandal after another? And really, who on the planet is more squeaky clean than Barack Obama? Waldman claims that with the Clintons there was always a “kernel of truth.” But that’s only true in the most ridiculous sense. The “kernel of truth” that ended in Bill Clinton’s impeachment was that Hillary Clinton actually did lose money on the Whitewater investment? This is what we are supposed to think the Clintons should have managed better? I don’t think so.

Waldman also wants Clinton to be more open with information. But wasn’t that also what led to Bill Clinton’s impeachment? Isn’t it always the case that if a determined critic digs deep enough for long enough, something will turn up? Ken Starr started with Whitewater and ended at a blowjob. He could have started anywhere and ended at that. The Clintons were probably lucky Starr didn’t come up with treason or at least sedition. I just don’t see this as being the Clintons’ fault. And the fact that they are worried about this stuff is not surprising.

The biggest problem with Waldman’s letter is how “inside the beltway” it is. When liberal voters think of the Clintons, they do not think of the scandals. Certainly, they remember them. But mostly, they remember that the Clintons survived them. The takeaway, however, is that the last time the economy was good was when Bill Clinton was president. Also, I think liberal voters are still disappointed that they couldn’t vote for both the African American man and the white woman in 2008. So for the last six years, they’ve been itching to have their second cake.

Like I said before, there are things that I want Clinton to show me. And I also hope that she can run a decent campaign. But scandal is going to follower her just like it is going to follow any Democratic presidential candidate. The GOP and Fox News will make sure of that. And if that reminds reporters of the 1990s, well, there’s a reason for that. And it has nothing to do with Hillary and Bill Clinton.

There is one thing that really amazes me about the open letter (pdf) from the 47 Republicans (who I hope will all commit seppuku at the end of this term because of the shame they have brought on the nation). It is the level of hubris that it is based on. What they all want to convey is that America is simply right and all other countries should fall in line. Their message to the Iranians is that the United States could back out of this agreement at any time. But that’s true regardless. And more to the point, it is also true of the Iranians.

What do the 47 Republicans think these negotiations are all about? Do they think this is just an exercise where the P5+1 countries are trying to figure out the best way to give Iran everything it wants? This is a deal that will be good for everyone involved. The only people this deal is not good for are those people who want Iran to get a nuclear weapon and those people who want to go to war with Iran. Obama was right to compare the 47 Republicans (and their leader, Benjamin Netanyahu) to the Iranian “hard-liners.” And what they want is not inconsistent: we could go to war with Iran and they could also get a nuclear weapon. All the right wing freaks could get what they want!

Brian Beutler made a compelling case on Monday, Republicans’ Attempt to Sabotage Obama’s Iran Negotiations Will Backfire. But I doubt that this letter is really intended to make any difference to the negotiations. This is what the 47 Republicans think is governing. This is the Senate equivalent of yet another vote to repeal Obamacare. You know the old saying: if you can’t do something constructive, do something that makes a lot of noise and embarrasses you. The Republicans are incapable for doing something constructive.

Another aspect of this embarrassment is the condescending tone of the letter. It reminds me of a recent episode of The Simpsons, “The Princess Guide.” In it, the Nigerian king[1] comes to Springfield to sell Uranium to Mr Burns. During the negotiations, Mr Burns keeps offering goats in exchange for the Uranium, which the king takes offense at. It’s funny when Mr Burns does that. When the 47 Republicans make roughly the same mistake — assuming that the Iranians are ignorant of our political system — it is just embarrassing.

But this just highlights the fact that the letter was not intended for the Iranians. And it was not intended for the president or any of the P5+1 countries. The 47 Republicans — like the Iranian leaders — are sophisticated people. They don’t actually believe that the Iranian leaders are primitive people who deal in goats. But they don’t mind the world thinking they do. And that’s because their base most definitely thinks that. And their base most definitely thinks that every country should just bow and fall in line behind America. And the base is who this letter was intended for: people filled with so much hubris that they think they are humble. And I doubt the 47 Republicans care that Brian Beutler is right: hurting their supposed cause doesn’t matter to them. The only thing that matters is that they win their next primary. Isn’t it time to vote to repeal Obamacare again?

[1] For the record, Nigeria has a political system modeled on ours; it has no king. But it was necessary for the plot so they could make jokes about the Nigerian prince who keeps ripping people off.