Jonathan Chait at NYMag looks at the ‘Beltway consensus’ from the opposite end of the IGMFY spectrum, in “Why Washington Accepts Mass Unemployment“:
Good news! The economy added 163,000 jobs last month, just a bit over the level required to keep up with population growth. A return to a free fall now seems less likely. On the other hand, there is the small footnote that the return to full employment is nowhere in sight. The recovery looks safe for those of us who are not already screwed. That, sadly, has come to be the primary focus of our economic policy.
In the years since the collapse of 2008, the existence of mass unemployment has stopped being something the economic powers that be even pretend to regard as a crisis. To those directly impacted, the economic crisis is an emergency, a life-altering disaster the damage from which will endure for years. But most of those in a position to address it simply have not seen it in such terms. History will record that the economic elite has viewed the economic crisis from a perspective of detached complacency….
I live in a Washington neighborhood almost entirely filled with college-educated professionals, and it occurred to me not long ago that, when my children grow up, they’ll have no personal memory of having lived through the greatest economic crisis in eighty years. It is more akin to a famine in Africa. For millions and millions of Americans, the economic crisis is the worst event of their lives. They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth. But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.
You should definitely click over and read the whole thing. I’ve deliberately left out the details and backups to Chait’s argument, since it’s succinct enough to be digested very quickly — not to mention, re-tweeted and facebooked and pinboarded, or whatever the technerati are doing this week.
Silver
I read the post office thing, and it appears someone finally showed that stupid fuck Yglesias how to proofread or use spell check. Normally, I would have thought that those would be skills a person who writes for a living would have, but I obviously didn’t go to the “right” schools.
Baby steps, my friends. Rome wasn’t destroyed in a day, y’know?
danah gaz (fka gaz)
This is all Alan Greenspan’s fault.
If there were any justice in the world he and his fellow Rand acolytes would have to pay back all of the money they bilked from America during his tenure.
That said, I’d settle for him living under a bridge – preferably near an urban stretch of pavement named after MLK ;)
sb
Are we piling on Yglesias? As a public school teacher, I’d just like to say I do not object.
PeakVT
There was some discussion of hysteresis a couple of years ago, but it was largely ignored at the time and has been forgotten since then.
Chet
Wow, you really burned Yglesias – except for the part where he said the exact same thing, yesterday:
EconWatcher
I’ve often had idle thoughts of taking my small family, with young kids, and just leaving this country for good. I have some savings and a small inheritance, as well as at least some skills that would be transferable in another culture, so it wouldn’t be entirely out of the question. I’m also pretty good with languages. But where to go? Suggestions (for purposes of these idle thoughts)?
some guy
as Pierce like to say, F*ck the Deficit, People got no jobs, people got no money!
robertdsc-PowerBook
Fixed.
Christian Sieber
@Chet:
Your post is spot on. The line about Yglesias is snarky, unwarranted, and ignorant. He has been one of the strongest voices on precisely this subject for the past four years, long before most people in the punditerati class caught on to the economy still sucking.
The hate for him is stupid and makes Anne look bad in this case.
Quincy
Yeah despite Yglesias’ blind spots about certain issues, he’s consistently promoted a stronger fed response on unemployment these past 2 years. This is probably one of his best areas. I’d suggest a different thread title
Origuy
Now all we need is a post about Ron Paul.
Chet
@Quincy: Won’t happen. We’re about thirty seconds from the horde showing up to say that it actually doesn’t matter what he actually said, he’s just so wrong about barber licensing that any slander is fair game.
Alex S.
Eh, Yglesias is hit-or-miss, in my opinion. But Chait said something very wise here.
Omnes Omnibus
@Silver:
Damn right. It’s still there as we speak.
MikeJ
England might win on penalty kicks and it’s still the first half.
Citizen_X
@Chet: Barber licensing is pretty minor. The Post Office? Not so much.
Chris
Yglesias constantly talks about the need to address unemployment and criticizes the Washington consensus that accepts it. This thread title is stupid.
Todd
@EconWatcher:
Costa Rica, Panama, Nicaragua or St Vincent.
Omnes Omnibus
@EconWatcher: Do you ski? Swim? Urban or rural? Etc.
Pinkamena Panic
Notice the sudden flood of one-name Yglesias supporters all saying the same thing?
Coincidence?
Ben Johannson
@Christian Sieber: Yglesias’ support for Fed “action” is equivalent to insisting we maintain mass unemployment. The Fed does not have the ability to stimulate aggregate demand via monetary policies. It never did. All it can do is influence prices on loans, which have already been reduced to the minimum.
Jim, Foolish Literalist
It’s a point that can’t be made enough, the people who talk about politics on TeeVee are by and large white, upper middle class (and then some), college-educated suburbanites. Tote-baggers, in the vernacular of the BJ horde and rabble. To his credit, Yglesias pointed this out years ago in the person of David “This isn’t just about fat cats, it’s about people like you and me!” Gregory. Chait’s piece makes a nice companion to Pierce’s about little Lukey Russert and his Deep Concern about choosing someone so controversial and radical as Elizabeth Warren to speak at the DNC convention. Ever since little Lukey was old enough to play waiter at his parents’ dinner parties, passing out shrimp puffs to Auntie Cokie and bringing Uncle Broder his orange blossom (only half a shot of gin, Tim!), everyone he knows knows the problem is getting these entitlements under control.
Chet
@Ben Johannson: The Fed has two levers, not just one.
Keith G
@Pinkamena Panic: Its a little early for conspiracy theories, even at Balloon Juice.
Ben Johannson
@Chet: And what would those be?
Chris
@Pinkamena Panic
I love Balloon Juice and read every post, every day. I don’t comment here because in general I don’t care to comment on blogs.
But I also read Matt Yglesias, who I do not always agree with. However, one thing that is clear is that he’s not part of that consensus ignoring unemployment being mentioned here. The title here makes no sense.
Or maybe I’m part of Matt Yglesias’ paid astroturf squad that scours the internet to defend him! That’s also totally plausible, I guess.
MikeJ
@Chris: Maybe nobody could tell because he spelled it unimpoughmint.
FlipYrWhig
I think Yglesias’s chief concerns definitely skew towards White People Problems, but he also has a longstanding hobbyhorse about the stimulative effects of monetary policy, so he’s not a cut-the-“entitlements” austerity-monger, as the title would imply. He’s a dink, but not that particular kind.
Jamie Hotspur
I’ll add to the chorus pointing put that this is completely unfair to yglesias. He is constantly talking about how shameful the official response to mass unemployment has been, and how stated concerns about the deficit and inflation are preposterous.
And I gave myself 2 names, to prove i’m not part of the conspiracy!
Ben Johannson
Yglesias’ calls for Fed action are flawed for a very simply reason: the Fed does not control the money supply. Via horizontal banking transactions (transactions between you and your bank) the money supply expands in response to demand and contracts as the loans are paid back. Fed policies cannot force the private sector to take on more debt, which is exactly what Yglesias is advocating. The only way to add net financial assets (dollars) to the economy is via vertical transactions (fiscal spending). It is fiscal policy which Yglesias wishes to avoid at all costs, because Free Markets so shut up.
James E. Powell
From the quoted article:
But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.
From the perspective of those in a position to alleviate the suffering, the crisis is and has been a great opportunity to improve one’s financial status while engaging in gratuitous moralizing directed at their social and financial inferiors.
Keith
It always felt to me like the bad job market has been going on since 2001. We had a double-dip recession post-9/11 (along with the dotcom/post-y2k crash), a few years of decent-but-not-great employment for a few years, followed by ’08-now.
Chet
@Ben Johannson:
You kind of skipped over the bit at the end, where you’re supposed to make an argument.
I don’t think the guy who has advocated printing money and dropping it from helictopers; is the guy you’re thinking wants to “avoid fiscal policy at all costs.”
Anya
I really don’t get the Yglesias hate. Can we put our energy on deserving opponents, like, I don’t know, the Racist Homophobic Women Hating Tea Party and their enablers in the media.
Ben Johannson
@Chet:
You need to read more. Friedman’s “helicopter drops” were to occur by having the Fed swap large quantities of bonds and add reserves to bank balance sheets. Today we call that Quantitative Easing. It doesn’t work because banks are not reserve constrained. They can always obtain reserves and therefore pumping up their reserve positions does not increase their capacity to make loans.
Turbulence
@Ben Johannson: You’re wrong. As Yglesias often points out, the Fed could stop paying absurdly high interest rates to banks and financial institutions on their reserves. This policy started circa 2008.
lurky lou
Count me as another one who doesn’t get the Yglesias hate in this post.
Ben Johannson
@Turbulence: Yglesias’ “absurdly high” maintenance rate is 0.25%. I suggest this does not meet the definition of “absurd”.
Chet
@Ben Johannson: I don’t see where Yglesias says that, and it’s Yglesias’s record you attacked, not Friedman’s. Can you substantiate your characterization of Yglesias’s record, or not?
Yutsano
@Pinkamena Panic: PINKAMENA DIANE PIE!!
(no real point, I just love her full name.) :)
Brutusettu
I first read that as “Well Everyone, Matt Yglesias Knows (sic!!!!) Is Doing Just Fine!” and thought Matt hurt his nose or something.
Ben Johannson
@Chet:
The term “helicopter drop” is directly from the work of Milton Friedman and means engaging “non-conventional” monetary policy via quantitative easing. Yglesias call for it is a call for the Fed to do something that has repeatedly failed. Furthermore I haven’t attacked Yglesias’ “record”. I’m stating the fact he doesn’t understand central bank operations.
Well, he called for expansionary monetary policies which we’ve had four years of to no effect. I’d say being wrong is pretty damning.
paulj
@Ben Johannson: Keep up posting on this. You’re the first person I’ve seen posting here that understands how money gets into the economy.
The Fed has used all of it’s bullets, everything it can do involves credit and private-sector borrowing, which is pretty much maxxed out. Credit is nothing more than bringing future income into the present, and future income isn’t guaranteed for the 99%.
The 99%’s pension funds and savings aren’t guaranteed either, as we are about to see over the next 10 years.
The 1% wants it all.
Only direct government spending (deficits) can replace demand leakages (savings) that directly reduce spending and cause recessions and unemployment, and monetize paper gains.
The credit circuit creates bubbles.
Christian Sieber
Yglesias has written extensively and repeatedly about the idea of literally printing money and dropping it out of helicopters as being an extremely good idea. The term might be Friendman-inspired, and Yglesias supports additional QE, but that is not what he’s talking about.
He has also written extensively and repeatedly about how the government should be ignoring deficits and stimulating the economy far, far more than it currently is via any available method, from printing money to spending on infrastructure, because the long-term interest rate is negative in real terms.
He has also written extensively and repeatedly about the need for the Fed to accept more inflation as a way of allowing them AND Congress to engage in unemployment reduction policies and actually achieve their dual mandate.
The common theme of his writing is that this level of unemployment is a travesty and that the Fed IN PARTICULAR should be in the crosshairs for not fixing it, but he also talks about all sorts of other levers for it all the time.
Ben, you are so wrong on this issue that I don’t really think trying to discuss it with you is fruitful, but anyone who has actually read Yglesias’ work (at Slate in particular) will know this about him, as multiple commenters are pointing out. Your characterizations are completely dishonest, although a little ironic since Yglesias moved to Slate specifically so he could comment on these issues MORE than generic political stuff.
Cripes.
Ben Johannson
@paulj: It’s maddening we still listen to people like Yglesias. After four failed years of expecting monetary policies to save the day, at what point do we tell them to sod off? At what point do professional blabbermouths, having seen their predictions fail again and again, reconsider their positions? Yglesias argument is literally, “I know we’ve been doing the hokey-pokey 24-7 for over four years now, but if we just put our left foot in this time instead of our right, it’ll work.”
Ben Johannson
@Christian Sieber:
You aren’t listening. Helicopter drops are considered monetary operations, the purvue of the Fed. It cannot do this because it is a violation of its charter.
Nor can the Fed inflate because the Fed does not control the money supply. The Fed only controls interest rates which influence the costs of making loans. There is no form of targeting the Fed can engage in which will produce the desired stimulatory effect. Every minute we spend debating how this is the Fed’s fault is another minute not spent discussing policies which actually can correct our unemployment problem.
Chyron HR
@Chet:
That’s hilarious, Chet. Just out of curiosity, will you ever be posting anything on this site other than deranged rants defending the Great and Powerful Yglesias from those who would dare to judge him based on the things he writes?
Ben Johannson
@Chyron HR: Notice how Yglesias’ writing on this subject is remarkably free of detail. It’s the equivalent of a psychic making predictions so vague they can be interpreted in any way. If what Yglesias calls for doesn’t work, he argues “they” didn’t do it right and should do it differently.
Chet
@Chyron HR: I don’t know. Are any of the Balloon Juice cognoscenti ever going to write anything but deranged rants about Matthew Yglesias?
longtime lurk
Sure, Yglesias isn’t an orthodox liberal on every economic issue, but he writes at least two posts a day railing about unemployment and how congress/Fed/WH should do various things to fix it. I agree with the commenters above: this post title either shows complete ignorance (charitable explanation) or is a dishonest smear.
xian
apparently two posts (and this one does seem like a pile-on, to me, fwiw) is the entire output of the balloon-juice front-posters. i note the same argument-from-hyperbole style that fails to convince so convincingly elsewhere.
(i wonder if chet is short for chetthew)
John
@Chet: Printing money and throwing it out of helicopters is monetary policy, not fiscal policy.
eemom
Ah, an Yglesias flame war inspired by humble, down to earth Man of the People Jonathan Chait. A L, you’ve outdone yourself AGAIN.
Chris T.
@John: Problem is, the Fed can’t literally print money and “throw it out of helicopters”.
True, it is physically possible: the Fed could instruct the Bureau of Engraving and Printing to print piles of 20s, and collect them into bags of money, and then someone from the Fed could climb into a helicopter and pour out the contents of these bags of newly printed bills. But whoever did this would get arrested, because this is not one of their approved powers.
The only arm of the government with the legal authority to do this—or something more rational, approaching this—is the Congress. Congress can authorize the Treasury to issue new debt, and can then appropriate the money thus created, and spend it on pretty much anything, up to and including dropping currency from helicopters. Unfortunately, this has to be done through the House, and Boehner’s House is definitely not going to do anything like that while the president is a-near.
Dropping money from helicopters would not be very fair, nor particularly productive, but it would improve the current situation. Much better would be to borrow $500 billion (via new Treasuries) per year and hand it over to states to hire teachers and firefighters, or even use it to hire teachers and firefighters directly (although this might invite legal challenges).
Medrawt
Wait, are we fighting about whether or not Yglesias has the proper solutions to our economic problems? Or are we fighting about whether he cares?
Because damn, I have no idea whether he has the right solutions. I don’t know a thing about the economy. But I took the post to be snarking on him as an example of the sort of person who doesn’t care. And he clearly does. The other week he pointed out that during a recession suicide rates go up, as part of his diabtribe against just letting things continue as they have been. As far as I can tell, the people who disdain Yglesias’ writing tend to think he’s the sort of person who would consider a comment like that out-of-bounds or unserious, to use the adjective of our time.
So are you really mad that he’s got the wrong economic policy (he might!) or that he’s a privileged oblivious person (he’s privileged, and he’s wrong about barbers and the USPS, but he’s not oblivious in general).
Pauli
@John:
Sorry Charlie, but a helicopter drop would be fiscal policy, not monetary.
Plus, the Fed can’t legally do this. The Treasury would have to do it.
The Fed deals in abstract money called reserves, that only exists as accounting entries outside of the non-government. Reserves never hit the street.
Reserves are used only for inter-bank settlements.
In the non-government, money exists in only a few forms:
* Dollars
* Credit, which consists of dollars and dollar liabilities that sum to zero.
* Bonds held by the public.
Under normal rules the only fiscal the Fed participates in is interest paid on bond swaps that rearrange the composition of the bond portfolio (maturity composition).
Fiscal is the responsibility of Congress by law and all fiscal operations enter the non-government through the Treasury (spending).
John
Whether or not the Fed could actually legally drop money from helicopters, the whole helicopter drop idea is a metaphor used by Milton Friedman to refer to monetary policy – specifically, to increasing the money supply to prevent price deflation. It has nothing to do with fiscal policy, and Yglesias’s advocacy of it cannot be used as evidence of his support for using fiscal policy to reduce unemployment.
John
I’ll just add that the original post is obviously deeply unfair to Yglesias, who has repeatedly expressed his concern about unemployment.
I do think, however, that Yglesias’s concern about unemployment generally has more to do with his hobby horse of attacking the Fed for not doing more stuff (what stuff, exactly, is typically left unspecified), rather than with actual concern for the unemployed.
And, on the whole, I think Yglesias probably deserves to be treated unfairly, because he’s incredibly intellectually lazy and well on his way to becoming Mickey Kaus: The Next Generation.
Corner Stone
@Chris T.:
Hmmm, if only there were an institution that could equitably disperse these funds across both urban and rural areas in a way so that coverage approximated a connectedness of our society…
Too bad something like that doesn’t exist.
Medrawt
@John: I agree that Yglesias can be lazy and is certainly deeply blase about his wrongness on some subjects, but I find that a remarkable amount of the criticism lobbed his direction has less to do with what he’s precisely written on a topic and more to do with reading into what he’s written based on the Yglesias-true-motivation rubric inside someone else’s head.
I also think he’s not helped by the fact that outside of two things I’ve seen regularly get him to write angrily (and entertainingly) he seems to write as though he wants to keep an even emotional keel, where others in his position will make their personal outrage a little more clear. I think it’s kind of uncharitable to move from that to “I don’t think he really cares about the poor, he just wants a club with which to beat the Fed.”
(Those things being the mendacity and stupidity of Jonah Goldberg, and the stupidity of John Pence, whom I think Yglesias thinks is too stupid to be mendacious.)
pseudonymous in nc
I’ll just add to the chorus: Yglesias has a lot of blind spots; this isn’t one of them. You can extend a second-order argument that his positions on people working jobs that aren’t “author” don’t mesh with the policy realities for maintaining a strong economic base, but his views on the Fed are sufficiently explicit that the post title is an unwarranted kick in the shins.
Corner Stone
Fuck Yglesias. If that guy is nominally on “my side” then I’m hunting a hole and pulling it in over myself.
To me this is like saying Sully writes eloquently about some topic that is just fucking common sense, and forgetting that he’s a self-absorbed prick who’s incapable of empathy outside of areas that personally effect him.
Matt has written some of the most heinously stupid diatribes about real deal policy that I can shudder to think about. He should be constantly questioned about his stances that truly affect real people, and never given a pass on anything.
LanceThruster
@EconWatcher: My friend took his family to New Zealand. Hard to get in though.
Augie
I can be one of those “Get out the pitchforks” rabble-rousers but if our party doesn’t have room for Matt Yglesias, our cause doesn’t have a fucking prayer.
xian
@Augie: oh we have room for him. we just need to send him to one of our reeducation camps to eliminate any WrongThink.