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N.Y. / Region
Seeking a Plan to Rein In the Floodwaters Through the South Mountain Reservation
A massive dam, which is among several proposals to mitigate flooding of nearby towns, would submerge up to 110 acres during major rainstorms.
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Opinion
The Deepwater Horizon Threat
Not enough has been done to prevent a blowout at another well.
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U.S.
Covert Inquiry by F.B.I. Rattles 9/11 Tribunals
The F.B.I.’s inquiry became the focus of the pretrial hearings at Guantánamo this week, after the contractor who was visited by the F.B.I. disclosed it to the defense team.
3
Science
Nasal Spray Holds Hope in Fighting Flu Epidemic
A new method, still being tested, would coat receptors in the throat and nose before influenza viruses attach.
5
Opinion
Reining In Predatory Schools
The Obama administration should strengthen its new rules against for-profit colleges that saddle poor students with crippling debts.
6
U.S.
Texas Twins Campaign, but They Aren’t Sure for What
While Mayor Julián Castro of San Antonio and Representative Joaquin Castro have projected a fresh Latino face for the Democratic Party, some are concerned they are too politically cautious.
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No Time For Sargent
I’m a little late to this, but there’s lately been some buzz about the unearthing of Tom Sargent’s 2007 graduation speech,
in which he briefly laid out 12 principles of economics. For the most
part the speech is getting favorable attention. So let me be a
spoilsport. It’s not so much that what Sargent said is wrong, although
some of his principles are by no means universally agreed upon, even in
normal times. What’s so striking about Sargent’s points is that it’s
hard to think of a worse time to cite them. And the people citing that
old speech clearly have ulterior motives.
So, about the not so time-dependent points:
Sargent declared as a principle, “There are tradeoffs between equality
and efficiency.” Well, every economist would agree that Cuban-type
equality is bad for efficiency. But would reducing our current level of
inequality reduce efficiency? That’s far from clear: there are a number
of reasons to believe that high levels of inequality have adverse
effects on economic growth – and evidence to that effect is coming not
from fringe leftists but from places like the IMF.
The main point, however, is that Sargent’s
principles aren’t actually immutable truths; they’re statements about a
fairly efficient market economy not too far from full employment. Even
leaving general issues of market failure aside, they seem remarkably
off-point in an economy still suffering from high unemployment and
excess desired savings (as evidenced by the fact that interest rates are
at the zero lower bound).
So when Sargent reminds us that communities
face trade-offs, that’s much less clear at a time when the community is
not at all like an individual – in which there are substantial amounts
of unemployed resources, and putting those resources to work would be
pure gain, not a tradeoff. And then he tells us this:
When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.
There are very good reasons to believe that
this is just wrong under current conditions. There’s overwhelming
evidence that in an economy against the zero lower bound government
spending has a large, positive multiplier, so the goods the government
buys don’t come at the expense of other consumption or investment; and
there’s a reasonable argument to the effect that even in purely fiscal
terms spending more than pays for itself.
Now, when Sargent gave that speech – before
the financial crisis – he could reasonably have imagined that conditions
under which his eternal truths weren’t true would be rare. But at this
point we’ve been against the zero lower bound for more than five years,
and we’re talking seriously about the possibility that depression-like conditions are the new normal.
So why the sudden attention to Sargent’s 2007
speech? I think it’s fairly obvious: it’s essentially stealth
anti-Keynesian propaganda, cloaked in the form of a widely respected and
liked economist uttering what sound like eternal truths. But they
aren’t, and the real goal here is to undermine the case for fighting
unemployment in the here and now. There are virtues to that 2007 talk,
but right now is no time for 2007 Sargent.
The Economy is Not Like a Household
I dashed off my Sargent comment
in the few minutes before class, which meant that it was longer and
more complicated than it should have been. So I want to come back to
what I think is the most important point. In his speech, Sargent went
right away to this:
2. Individuals and communities face trade-offs.
At one level this is, of course, true. But
left there without further elaboration, it is deeply misleading —
especially right now. For the essence of what’s happening now — the key
to understanding the mess we’re in — is that sometimes the economy is
not like a household, that our individual choices sometimes lead to
outcomes that are in nobody’s interest.
In particular, when you have economy-wide
deleveraging — when everyone is trying to spend less than his or her
income, so as to pay down debt — you have a fundamental adding-up
problem. My spending is your income, and your spending is my income, so
if both of us try to spend less at the same time, what we end up
achieving is mutual impoverishment.
Ah, you say, but the price mechanism will
take care of that. Indeed: in normal times interest rates rise or fall
to match desired spending to the economy’s productive capacity. But what
if the interest rate needed to achieve this outcome is negative? Well,
that can’t happen — so when the deleveraging shock is big enough, the
economy goes into a depression.
And that’s the world we’re in! I know that
many people just hate it when economists talk about liquidity traps — it
all sounds like mumbo-jumbo to them — but the zero lower bound isn’t
hypothetical, it’s staring us in the face.
And if you want to insist that some other
kind of flexibility would save us if only markets were perfect and pure
enough, tell me how. A fall in the overall price level would do nothing
to raise real incomes, but it would increase real debt, increasing the
pressure to deleverage. If for some reason wages were to fall while
prices didn’t, it would reduce real wages — but firms would have less,
not more, incentive to hire workers, because their real sales would fall
too. And so on down the line.
I’m going on too long again, so let’s just
come back to the key point: the reason we’re in the state we’re in is
precisely the fact that the community doesn’t face the same kinds of
tradeoffs that face individuals. Highlighting supposed words of wisdom
that suggest the opposite is a big step backward."
There Goes the Sun
Like just about everyone who has looked at the numbers on renewable energy, solar power in particular, I was wowed by the progress. Something really good is in reach.
And so, inevitably, the usual suspects are trying to kill it.
For the Kochs, it’s partly a matter of financial interest. But for the conservative movement in general, Kevin Drum has it right: it’s all about tribalism. Liberals like solar power, so we’re against it. Or as Drum says,
We’ve now entered an era in which affinity politics has gotten so toxic that even motherhood and apple pie are fair targets if it turns out that liberals happen to like apple pie.
What makes it even worse is that one (not
the only) reason to like the solar revolution is that it helps fight
climate change. So if you’re a card-carrying conservative, who believes
that climate change is the biggest, most intricate, and most incredibly
successful conspiracy in history — thousands of scientists around the
world, and not one of them squealing! — you want to block solar even if
it saves money.
To reuse an old line from Brad DeLong, at
this point right-wing paranoia is worse than you can possibly imagine,
even if you take into account the fact that it’s worse than you can
possibly imagine."
Arts
Vision of Home
It’s a new life for many repatriated antiquities, back on display in their countries of origin.
9
Opinion
Benefits of Hospice Care
A nurse responds to a Sunday Review article about how a stranger gave tender care to the writer’s ill mother.
12
Business Day
California’s Thirsting Farmland
California farmers have never relied only on rain. But given a prolonged drought and environmental regulations, the jockeying for water is becoming more intense.
14
U.S.
Florida Lawmakers Proposing a Salve for Ailing Springs
An effort to clean up waterways plagued by agricultural runoff and other pollutants is meeting some legislative opposition.
15
N.Y. / Region
In Queens, Chickens Clash With the Rules
Officials at Forest Hills Gardens, a private neighborhood, are citing century-old regulations to make a resident get rid of her chickens.
16
World
Apology Over Rwanda Genocide
The president of the United Nations Security Council in 1994 apologized on Wednesday for their failure to do anything to halt the slaughter of more than one million people during the Rwandan genocide.
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U.S.
Waiting, Hoping and Coming Unraveled
Disappointment mounts as a couple pursues infertility treatments in Israel.
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U.S.
Covert Inquiry by F.B.I. Rattles 9/11 Tribunals
The F.B.I.’s inquiry became the focus of the pretrial hearings at Guantánamo this week, after the contractor who was visited by the F.B.I. disclosed it to the defense team.
3
Automobiles
Auto China Opens in Beijing
This year’s edition of the biennial show includes many models custom-tailored to the Chinese market.
4
Science
Nasal Spray Holds Hope in Fighting Flu Epidemic
A new method, still being tested, would coat receptors in the throat and nose before influenza viruses attach.
5
Opinion
Preventing Painkiller Overdoses
With thousands of fatal overdoses from pills and heroin, the federal and state governments are trying new initiatives to save more lives.
6
Opinion
Cancer Society and Tobacco
The chief executive of the American Cancer Society explains its policy on the sale of tobacco products by pharmacies.
7
Arts
Vision of Home
It’s a new life for many repatriated antiquities, back on display in their countries of origin.
8
Opinion
Reining In Predatory Schools
The Obama administration should strengthen its new rules against for-profit colleges that saddle poor students with crippling debts.
9
U.S.
Texas Twins Campaign, but They Aren’t Sure for What
While Mayor Julián Castro of San Antonio and Representative Joaquin Castro have projected a fresh Latino face for the Democratic Party, some are concerned they are too politically cautious.
10
11
Opinion
Benefits of Hospice Care
A nurse responds to a Sunday Review article about how a stranger gave tender care to the writer’s ill mother.
12
U.S.
With Eyes on 2016, Perry Is Mired in the Past
While Gov. Rick Perry of Texas has been traveling to promote himself and his state, a criminal inquiry continues into his handling of a district attorney’s drunken driving arrest and the financing for a public corruption unit under her control.
13
U.S.
Bloomberg Plans a $50 Million Challenge to the N.R.A.
Michael R. Bloomberg, the former mayor of New York City, said that gun control advocates had to learn from the National Rifle Association and punish those politicians who fail to support their agenda.
14
Business Day
Alaska Lawmakers Back Natural Gas Plans
Alaska’s legislature on Monday approved Gov. Sean Parnell’s plan to join four energy companies in moving ahead on plans to build infrastructure to transport and market 35 trillion cubic feet of North Slope gas to be shipped by an 800-mile pipeline to a liquefied natural gas export plant.
15
U.S.
G.O.P. Discovers Useful Voter Outreach Tool: Gun Sweepstakes
Online weapon giveaways have become one of the fastest growing ways for Republican candidates to build up donor lists and expand support.
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N.Y. / Region
A Catholic High School Abruptly Loses Its Fight to Stay Open
Saddled with an estimated $4 million in debt and low enrollment, 52-year-old Bishop Ford Central Catholic High School in Brooklyn will close in June.
18
Business Day
Skeptical Justice Scolds Coca-Cola on Juice Label
A lawyer for Coca-Cola remained poised under sometimes harsh questioning on its Pomegranate Blueberry juice blend, which contains only notes of either fruit.
19
Automobiles
Wheelies: The Welcome Back Maybach Edition
Daimler has plans to bring back the Maybach brand; AT&T strikes a connected-car deal with a global automaker.
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