I have obviously read the [Reinhart and Rogoff 90% “debt cliff”] report and have referenced it a number of times. I know they had a worksheet error in the report and my understanding is that does make a difference. But what it doesn’t change is the common sense and my own personal experience in both the public and private sector that when any organization has too much debt that is an enormous risk factor and your risks go up then people lending you money will want more money for their money. My best guess is that whether the 90 percent number is the number or not, I don’t know. That is obviously up to question. But the fact that adding more leverage to a company or a not-for-profit or a government’s balance sheet does increase risk and therefore increases the return that somebody is going to expect on their capital, is absolutely a fact.

—Erskine Bowles
Quoted in Bowles Dismisses “Flaws” in Favorite Debt Study

[It’s funny that after the study was shown to be wrong (although there was never any reason to take it seriously), Bowles suddenly didn’t know for sure. He showed no such humility when he could use the study to push his debt hysteria. When a study says what you are pushing, it is simply: The Truth™. When it is debunked, suddenly there is nuance. Fancy that! —FM]

The pretense that economics is a science is harmful in that it gives economic ideas more credibility than they often deserve. Policymakers — and US citizens — are unaware of the questionable underpinning of much of the advice offered by economists, which has time and again led to gravely incorrect policy decisions.

But evidence often does not seem to matter. Only in recent years have most economists softened their antagonism to a higher minimum wage, despite the persuasive analyses undertaken by some since the 1990s that it can be beneficial. Similarly, most in the profession have only lately broadened their thinking about the adverse effects of offshoring jobs. A renewed interest in financial regulation, including higher capital requirements, was provoked only by the devastating 2008 financial crisis, which revealed gaping holes in efficient markets theory. The position of some economists from prestigious universities on the benefits of austerity economics was a mockery of good research, as updated scholarship has clearly shown. Despite this intellectual flexibility, policymakers seem to think that most economists know what they are talking about when they agree with them, or they cynically use them to promote their own political agendas in areas such as financial regulation, free trade, and workers’ rights.

Also, there has been a de facto censorship of needed ideas that don’t fit today’s idological preferences. For example, until the slow recovery after 2009, economists generally did not even enter into a discussion about the role of consumer demand and high wages as sources of economic growth. The orthodox conversation instead focused on low inflation and the dangers of rising wages…

The basis of much of economics is a set of value judgments, a claim as widely denied as it is generally true. The Invisible Hand cannot be divorced from a bias in favor of laissez-faire solutions. Economists opposed to active government involvement find adherence to the Invisible Hand comfortable as they do a belief in self-adjusting economies. Given the predominance today of such views, judgments are often skewed because the path to professional success requires conformity, not scientific objectivity.

—Jeff Madrick
Seven Bad Ideas

The nuts and bolts of it is that he’s wrong about the issues. That’s part of the equation. But the other part is that he’s been terrible for the district. He’s been in Congress for 12-and-a-half years. He’s never passed any legislation. He’s never brought anything back to Iowa. And, if he had any standing with the House leadership, he’d be the next chairman of the [House] agriculture committee, because he’s got the most seniority. But he’s not. It’s going to be Representative [Michael] Conaway from Texas. They’re not going to give the gavel to him because the Republican leadership doesn’t like him. They think he’s dangerous. John Boehner has said that Steve King doesn’t speak for the Republican party. If he were going to be the next chair of the Agriculture committee, that would be huge for Iowa. Instead, he has a selfish, Tea Party agenda. So, instead, they’re going to give the chairmanship to a representative who’s against the renewable fuel standard. Do you think that’s good for Iowa? It’s not.

—Jim Mowrer
Steve King Country Showdown

As Nate Cohn outlined in The New York Times on Thursday, the latter three error sources are more likely to undercount Democrats than Republicans. For example, Democrats are more likely than Republicans to have a cell-phone from a different area code than where they currently live (like all three of the authors of this article), which in turn results in coverage error since such individuals cannot be included in state-level polls. Cohn notes that among cell-phone only adults, people whose area code does not match where they live lean Democratic by 14 points, whereas those that matched lean Democratic by 8 points. For an example of non-response and survey error, Cohn notes that Hispanics who are uncomfortable taking a poll in English are more likely to vote Democratic than demographically similar Hispanics.

Thus, we expect the actual polling errors to be larger than the stated errors, and moreover, we expect polling results to favor the Republicans. This pattern is strikingly apparent when we plot the observed differences between poll predictions and actual election outcomes for the 2012 Senate races…

How much do these overly optimistic forecasts matter? First, the theoretical 3 percentage point margin of error is already substantial, and puts nearly every competitive race within that range. Second, when you add in the unaccounted for errors, election outcomes in contested races are simply far less certain; and coverage and non-response errors will likely only get worse each cycle. Third, while aggregating a bunch of polls for each election reduces the variance, it does not eliminate the bias, so these overconfident predictions pose a problem for aggregate forecasts as well. In short, those fancy models that show probability of victory are only as good as their ingredients, and if the polls are wrong, the poll aggregations will be wrong as well.

—David Rothschild, Sharad Goel, and Houshmand Shirani-Mehr
Hidden Errors and Overconfident Pollsters

In other words, the economy can’t recover on its own, and if it doesn’t soon it might never be able to. We need more inflation, more infrastructure spending, and less tut-tutting about the deficit that, unlike our anemic recovery, isn’t an urgent problem. We need to realize that just waiting for catchup growth is the new waiting for Godot — and we can’t afford for it to not show up.

—Matt O’Brien
This Is Why the Economy Has Fallen and It Can’t Get Up

How can anyone possibly look at the past 14 years and conclude that the modern Republican party can be trusted to “make the economy favor regular people again”? The party of deregulation, privatization, obstruction, and Mitt Freaking Romney? Well, one reason is that there is no apparent opposition to it on the core economic issues. There has been lip service, and moans of impotent frustration, and Tim Freaking Geithner as Treasury Secretary. So kids come to believe the darndest things…

Yeah, this is about a kind of willful detachment and deliberately cultivated stupidity on the part of what is still allegedly a self-governing people. But it’s also about every Democratic politician who made The Deficit more of a priority than stimulating the economy, all the Democratic politicians who fed Vaal on the Simpson-Bowles fiasco, and every Democratic senator in a “red” state, most of which took the brunt of the collapse right in the teeth, who chose austerity because that’s what “my constituents” want. This is Creationism in a political context, true. But it’s Creationism that both parties pitched to the country. Come next Tuesday, we may see the true triumph of calculated and crafted ignorance. Nice job, everyone.

—Charlie Pierce
Kill Me Now

America’s young people are struggling with more than $1 trillion in student loan debt. I asked: why does the United States government lend to the biggest banks — the same banks that nearly broke our economy — at an interest rate that is less than one percent, and then turn around and charge our students an interest rate that is nine times higher? Why is the US government scheduled to make $185 billion in profits off the backs of our students? We’re not investing in these students — no, we’re asking them to pony up the money to subsidize the rest of us.

—Elizabeth Warren
A Fighting Chance

Even if focusing almost solely on maintaining low, stable inflation made complete sense, why such a low rate of inflation? Persuasive studies find that only annual rates of inflation into the double digits affect economic growth. Moderate levels of inflation of well more than 2 percent show little appreciable damage. Some economists make a strong case that an inflation target closer to 3 percent would have been more beneficial to the United States. Few paid attention to this research, which seemed like a radical notion, a mere one percentage point rise in the target.

As far back as 1988, Alan Greenspan told Congress that the rate of inflation should be low enough that “households and businesses in making their saving and investment decisions can safely ignore the possibility of sustained, generalized price increases or decreases.” In 1996, he told his Federal Open Market Committee, the group of Federal Reserve governors and regional bank presidents who set monetary policy, that the rate should be close to zero. But Greenspan settled for a 2 percent target because the inflation data collected by the Bureau of Labor Statistics overstated, he thought, the rate by a percentage point or more. The informal target of 2 percent annual inflation, as measured by the consumer price index, was therefore really closer to zero already.

—Jeff Madrick
Seven Bad Ideas

The inclination to wait depends on one’s experiences. “For a child accustomed to stolen possessions and broken promises, the only guaranteed treats are the ones you have already swallowed,” remarked a group of social scientists at the University of Rochester. Last year they conducted an experiment in which children were encouraged to wait for “a brand-new set of exciting art supplies” rather than using the well-worn crayons and dinky little stickers that were already available. After a few minutes, the adult returned. Half the kids received the promised, far superior materials. But the other half got only an apology: “I’m sorry, but I made a mistake. We don’t have any other art supplies after all.”

Then it was time for the marshmallow challenge. And how long did the children wait for two to appear before they gave up and ate the one sitting in front of them? Well, it depended on what had happened earlier. Those for whom the adult had proved unreliable (by failing to deliver the promised art supplies) waited only about three minutes. But those who had learned that good things do come to those who wait were willing to hold off, on average, for a remarkable twelve minutes.

—Alfie Kohn
S’More Misrepresentation of Research
From The Myth of the Spoiled Child

It was Central America, and Latin America more broadly, where an insurgent New Right first coalesced, as conservative activists used the region to respond to the crisis of the 1970s, a crisis provoked not only by America’s defeat in Vietnam but by a deep economic recession and a culture of skeptical antimilitarism and political dissent that spread in the war’s wake. Indeed, Reagan’s Central American wars can best be understood as a dress rehearsal for what is going on now in the Middle East. It was in these wars where the coalition made up of neoconservatives, Christian evangelicals, free marrketers, and nationalists that today stands behind George W Bush’s expansive foreign policy first came together. There they had near free rein to bring the full power of the United States against a much weaker enemy in order to exorcise the ghost of Vietnam — and, in so doing, begin the transformation of America’s foreign policy and domestic culture.

A critical element of that transformation entailed shifting the rationale of American diplomacy away from containment to rollback, from one primarily justified in terms of national defense to one charged with advancing what Bush likes to call a “global democratic revolution.” The domestic fight over how to respond to revolutionary nationalism in Central America allowed conservative ideologues to remoralize both American diplomacy and capitalism, to counteract the cynicism that had seeped into both popular culture and the political establishment regarding the deployment of US power in the world. Thus they pushed the Republican Party away from its foreign policy pragmatism to the idealism that now defines the “war on terror” as a world crusade of free-market nation building.

At the same time, the conflicts in Nicaragua, El Salvador, and Guatemala allowed New Right militarists to find ways to bypass the restrictions enacted by Congress and the courts in the wake of Vietnam that limited the executive branch’s ability to fight wars, conduct covert operations, and carry out domestic surveillance of political activists. The Reagan White House perfected new techniques to manipulate the media, Congress, and public opinion while at the same time reempowering domestic law enforcement agencies to monitor and harass political dissidents. These techniques, as we shall see, prefigured initiatives now found in the PR campaign to build support for the war in Iraq and in the Patriot Act, reinvigorating the national security state in ways that resonate to this day. The Central American wars also provided the New Christian Right its first extensive experience in foreign affairs, as the White House mobilized evengelical activists in order to neutralize domestic opponents of a belligerent foreign policy. It was here where New Right Christian theologians first joined with secular nationalists to elaborate the ethical justification for a rejuvenated militarism.

In other words, it was in Central America where the Republican Party first combined the three elements that give today’s imperialism its moral force: punitive idealism, free-market absolutism, and right-wing Christian mobilization. The first justified a belligerent diplomacy not just for the sake of national security but to advance “freedom.” The second sancified property rights and the unemcumbered free market as the moral core of the freedom it was America’s duty to export. The third backed up these ideals with social power, as the Republican Party learned how to channel the passions of its evangelical base into the international arena.

To focus, therefore, exclusively on neoconservative intellectuals, as much of the commentary attempting to identify the origins of the new imperialism does, deflects attention away from the long history of American expansion. The intellectual architects of the Bush Doctrine are but part of a larger resurgence of nationalist militarism, serving as the ideologues of an American revanchism fired by a lethal combination of humiliation in Vietnam and vindication in the Cold War, of which Central America was the tragic endgame.

—Greg Grandin
Empire’s Workshop

The Davis ad is an important one because it strikes at the heart of what movement conservatism has made of the Republican party, which once was the party of the Pure Food and Drug Act, trust-busting, the Interstate Highway System, the Clean Water Act, and the EPA. Over the past three decades, however, beginning with that epochal moment when Ronald Reagan said, in his first inaugural, that government was the problem — not if you were a defense contractor, one thinks, or a mullah who wanted missiles — the Republican party has profited uniquely from a massive internal contradiction that would have given a less well-funded institution the blind staggers. And the party has doubled down on that contradiction year after year, decade after decade. Simply put, the Republican party deliberately has transformed itself from the Party of Lincoln to the Party of I’ve Got Mine, Jack. And it rarely, if ever, gets called to account for that. As a result, and without substantial notice or paying a substantial price, and on many issues, individual Republicans have been able to justify the benefits they’ve received from government activity that they now oppose in theory and in practice. This is not “hypocrisy.” That is too mild a word. This is the regulatory capture of the government for personal benefit. That it makes a lie, again and again, of the basic principles of modern conservatism — indeed, that it shows those principles to be a sham — is certainly worthy of notice and debate. It is certainly worthy of notice and debate that the conservative idea of the benefits of a political commonwealth means those benefits run only one way. Modern conservatism is not about making the government smaller. It’s about making the government exclusive. It’s not about streamlining the benefits of the political commonwealth. It’s about making sure those benefits flow only to those people who have proven through their ability to work all the other levers of power that they deserve those benefits.

One of the clearest demonstrations of the contradiction came during the Republican National Convention in 2012, when the party gave one night of speeches over to the theme, “We did build that,” a deliberate misinterpretation of something the president had said. Speaker after speaker spoke of how they pulled themselves up and built their success without interference from “government.” By the end of the night, the bootstraps has been pulled up so hard and so long that they must’ve extended from Tampa halfway through Alabama. But there was a curious thing about these speeches. A great many of them began with, “When my Dad got out of the Army…” There was the guy who built his business who never mentioned the small-business loans he’d obtained. There was Chris Christie, railing against the dead hand of big government while nearly sobbing over how important the GI Bill had been to his Dad. There was Governor Mary Fallin of Oklahoma who, against all history and logic, explained how her state had been built only through the sweat of Oklahomans. It was a night of organized bullshit so epic that it stands alone in my memory. It should have been all anybody talked about for a month. It should have defined the Republican party for a generation. Hell, if it weren’t for the New Deal, Ronald Reagan’s father would have been the town drunk. Government wasn’t The Problem then. Instead, it passed without conspicuous notice. If a conservative is a liberal who’s been mugged, then a liberal is a conservative who was stupid enough to buy a Pinto. My son’s industrial accident must be avenged. Oh, and we should do away with OSHA as soon as that happens. Greg Abbott deserved that $10 million, but all the people taking advantage of the Americans With Disabilities Act don’t deserve wheelchair ramps or curb cuts. It’s monstrous.

—Charlie Pierce
Pulling Up the Ladder