Paul Krugman coined a new acronym this morning. He was discussing an article by Larry Summers that argues that we are focusing too much on the deficit. The question is: if this is how Summers feels (and it is; Summers is a White Hat) why does he spend the first two paragraphs talking about how terrible the budget deficit is? And it is to explain this that Krugman coins of the acronym. Summers, he says, is providing these two paragraphs as his INK disclaimer: “I’m Not Krugman.” In other words, “I’m not that crazy liberal Krugman who just happens to be an insanely great economist who won the John Bates Clark Medal and the Nobel Prize.”

The point of Krugman’s article is that Summers is mistaken in thinking that he can have a reasonable conversion with the Very Serious Deficit Scolds. As I’ve written about many times before, these people are not interested in the budget deficit at all. Just look at the gold-standard in the field: the Simpson-Bowles proposal. The first thing is does is cut income tax rates. As Matt Yglesias brilliantly pointed out, this ain’t about deficit reduction!

Krugman says the same thing:

And that gets to something important about our political environment: a lot of those Very Serious Deficit Scolds are Democrats. Erskine Bowles and Ed Rendell come immediately to mind. But on some level, this isn’t even about politics. These people are just paid spokesmen. Krugman again:

So trying to have an honest conversation with them is worse than useless: it is dangerous. These people already get far too much attention as though they are something more than paid lobbyists. And that’s the battle we need to fight. Trying to convince them that the budget deficit isn’t a big deal will only hurt matters. As Upton Sinclair said, “It is difficult to get a man to understand something, when his salary depends on his not understanding it.” And the Very Serious Deficit Scolds’ salaries most definitely depend on not understanding that the deficit is not killing us.

But then, although INK, I totally agree with him.

Here is a good video on the Debt Ceiling from the great C.G.P. Grey:

We are on filibuster reform eve. Three weeks ago, Harry Reid recessed the Senate, so when the Senate comes back into session tomorrow, it will still technically be the first day. And so, they can reform the filibuster with a simple majority vote. The question is whether they will. It is looking more and more like the Democrats will do what we can almost always depend upon them doing: folding. If there were a Nobel Prize in being spineless and not standing for anything when it matters, the Democratic Party would have racked up a whole lot of them over the last three decades. But there is no such prize, so all they’ve racked up is a bunch of losses.

I have two positions on the filibuster: ethical and practical. From an ethical standpoint, I’m against it. The filibuster makes an already ridiculously undemocratic Senate even more undemocratic. This isn’t about minority rights; we have the Constitution for that. This is about minority veto power. We should get rid of it for purely ethical reasons.

But there is perhaps an even more compelling practical reason to get rid of it. The Republicans will destroy the filibuster as soon as it is to their advantage. The moment a Democratic minority blocks their legislative agenda, the filibuster will be killed. Any Democrat who thinks otherwise is hopelessly naive. The Republicans play for keeps and when they are in power, they don’t fret over the thought that at some time in the future they might not have the filibuster to protect them. Anyway, the Republicans are also whiners. Even with their excessive use of the filibuster, most Senate Republicans think they have been badly abused.

So what’s the problem? Well, Harry Reid, a man I have long admired, seems to be set to collapse on filibuster reform. Actually, it is worse than that. Politico reported last Thursday that he no longer supports the “talking filibuster” where Senators would have to hold the floor in order to grind the Senate to a halt. So what we are likely to get is a change in the rules that will be useless. But! It will set a precedent so that when the Republicans are in power, they can destroy the filibuster and the Democrats will have absolutely no room to complain.

I still have a little hope. Jeff Merkley, who wrote the main reform plan being discussed, says that he has the votes. So who knows? According to AMERICA Blog, not only is Harry Reid wavering, but so are both of my Senators: Feinstein and Boxer. Thanks a lot, gals!

Regardless, write or call your Senators. This is really important!

Big happenings over the weekend. (You can take that as a joke if you like, but I’m quite serious.) Joseph Stiglitz wrote an extended OpEd over at the New York Times, Inequality Is Holding Back the Recovery. He presents four reasons for saying this. First, he notes the deleveraging problem: the middle class is feeling very poor because of the bursting of the housing bubble, but they haven’t seen their incomes increase since the crisis. Second, low income growth has caused the middle class to limit investment in things like education. Third, income inequality is keeping tax receipts low. And fourth, high income inequality is associated with economic instability.

Krugman responded in a blog post on Sunday. He noted that Stiglitz’s second and fourth points are important, but don’t really have anything to do with job growth since the bubble burst. But mainly, Krugman’s point is that the evidence isn’t that good for the theory that the rich don’t spend as much money as the poor. He notes that Milton Friedman showed that most of this correlation was actually due to people whose incomes had temporarily fallen. Understandably, they would spend more of their incomes on average. Similarly, people who get a suddenly windfall are likely to save more of it. So Krugman turns to data and shows that total spending was moving in the opposite direction than it would be given Stiglitz’s hypothesis.

Dean Baker then counters Krugman’s point by noting that much of the spending was driven by the stock and real estate bubbles where people thought they had more money than they actually did. He makes a number of other good points.

And then this morning, Krugman is back, yielding a little of the territory. But mostly, he is arguing again that economics is not a morality play. Just because you think something is right doesn’t mean it is good economics. It is entirely possible to have an unjust economy that works great. And this is where all three of these great economists agree: extreme income inequality is bad for us as a people. As we’ve seen over the last 35 years, the economy can grow without it improving the lives of the vast majority of its citizens. This counters the argument that Milton Friedman liked to make that even though the rich were getting far richer, the poor were also doing better than they would in a more egalitarian system. That simply is not true. (Of course, the moment you argued this with Friedman, he would switch to arguing some nonsense about rights and responsibilities—the typical libertarian bait and switch.)

See how fun economics is? If not, here’s your take home: income inequality is bad. It is turning us into a feudal system. Democracy requires some level of equality. If you don’t have it, then the rich can just buy whatever government they want. You know, just like in modern America.

Update (21 January 2013 11:55 am)

Matt Yglesias says that while he thinks Krugman may have the better argument, Stiglitz is probably still right:

My father showed me an article on the 1963 Buick Riviera. It was the first year that it had the new boxy design. And it sold for $4,333 at the time. That struck me. People tend to think of restored vehicles as being worth a lot of money, but given my intuition about inflation, it seemed like in inflation adjusted dollars, the car would sell for more or less what it now does as a “classic.” I decided to check.

Using yearly inflation data from InflationData.com, I created a spreadsheet and calculated the inflation adjusted price of the 1963 Buick Riviera at every year from then until now. So in 1970, it was worth $5,493. In 1980, it was worth $11,669. In 1990, it was worth $18,520. In 2000, it was worth $24,405. And last year, it was worth $32,565.

But I ought to point out one thing about inflation that I learned recently reading Social Security: the Phony Crisis. Inflation doesn’t just measure how fast prices rise. It adjusts for improvements in products. So a 1963 car really should be worth quite a lot less than the inflation rate would indicate because the car hasn’t improved over the last 50 years. But still, I think this exercise is a valuable one.

So now I knew that the 1963 Buick Riviera would cost $32,565 dollars in 2012 dollars. How much were fully restored models actually selling for? I went over to Hemmings Classifieds to look. Of course, it doesn’t list what the cars are selling for; it lists what people are asking. There where four in basically new condition: $19,900; $19,995; $22,900; and $24,495. In other words: a lot less than the car sold for originally.

I guess this doesn’t mean that much. I had noticed before that the value of cars tended to be right about the cost of restoring them. But with all the buzz about “classic” cars and all the celebrity collectors, I am still a little surprised that the cars don’t retain at least their sticker value.

Last night I introduced my father to Downton Abbey. (Listen up, JMF!) He seemed to like it well enough. But he was really bothered by how horrible all the upstairs people were. I didn’t think they were all that bad. And he very much liked the cook, who, on second view, is very amusing.

The whole time, I was thinking of one thing: Bates. As you may recall, Bates is the noble valet how was injured in the second Boer War. But also: Alan Bates played the honable, but troubled butler Jennings in Gosford Park. It was one of his last roles. And it made me wonder if Julian Fellowes didn’t provide Bates this name as an homage to the late great actor.

One thing I was reminded of that I had meant to note when I wrote about it before, is the rather over-done direction. I’m all for making such a film dynamic and unlike what have traditionally been the very boring Masterpiece Theatre film versions of novel classics. But I’m also not keen on the Steadicam, and it is way overused here. I had flashbacks of Goodfellas. (Scorsese’s worst excesses involve the Steadicam.)

So there you go: a few thoughts on watching Downton Abbey with my dad.

Strangely, this is not in the news. There is a coming crisis and there appears to be not a goddamned thing we can do about it. But first: some background.

It is often said that the Andromeda Galaxy is the nearest galaxy to the Milky Way. This is not actually true. It is just that it is the nearest big galaxy to us. Galaxies are like solar systems: they have satellites, and maybe those satellites have satellites. The Milky Way has at least 26 satellite galaxies. Andromeda has at least 36. It’s a wonder you can still find parking downtown!

With all of this celestial congestion, it’s no surprise that things are always running into each. And as it turns out, the Andromeda Galaxy is headed straight for us! And it is going to be really bad. But there’s good news: we have a lot of time to prepare. Roughly four billion years. But it’s not like we can just focus on this problem. Undoubtedly many life destroying asteroids and comets will hit the earth during that time. Also the luminosity of the sun is raising; in only one billion years, it will be so bright that the oceans will evaporate. And there is always the possibility of a supernova nearby that will kill all life on earth. There really is so much to prepare for, and that isn’t even including the upcoming Debt Ceiling crisis.

Actually, I fully expect that humans will go extinct within 10,000 years. But even assuming the very best of our species (And regular readers will know what I think of that!) we don’t have more than 100,000 years on this planet. That’s kind of a cheerful thought, when you consider that’s how long we’ve already been here. That is assuming we even exist, which I mostly doubt.

Regardless of all this, the smart and hard working people at NASA have put together the following video to show what’s going to happen to the Milky Way Galaxy when our sister Local Group galaxy rams into us. It is really cool. And it helps me keep things in perspective. But nonetheless, I still worry about that Debt Ceiling.

Liberal Viewer posted a great video, Aaron Swartz Tip of Iceberg in Justice System. The point is that what happened to Aaron Swartz happens to thousands of people every day. In Swartz’s case, the federal prosecutors were apparently going to offer him a six-month sentence plea deal. If that’s the case, why were they threatening him with 35 years? Because they can. They lose nothing by piling on ridiculous charges. But they gain lots and lots of leverage, which can lead to the defendant taking a lesser but still unreasonable sentence. Or it can lead to the defendant killing himself.

A young man caught with a quarter ounce of cannabis will likely find that he is charged with “intent to distribute.” That way, he is more likely to just accept the one charge that the prosecution has any chance of proving rather than fighting. The truth is that most plea deals come down to this, “We’re going to drop all the bullshit charges in exchange for the only one we have a case for.” This is not justice. This is just, as Aaron Swartz’s family said, “a criminal justice system rife with intimidation and prosecutorial overreach.” Or as I call it, the Injustice System.

Here’s the video if you can stand to hear any more of this travesty: