On The Minneapolis Fed Shake Up

There's been a big staff shake up at the Minneapolis branch of the Federal Reserve. If you don't know much about the Fed you should first read Matt Yglesias's great overview from 2011. I'd also recommend Paul Krugman great piece for The New York Times Magazine from 2009 about the state of the "dismal science" to get a good look at divisions inside the discipline.

Simply put, the Minneapolis Fed, along with a few other regional branches like Dallas and Kansas City, have been consistent advocates of a hard money approach to monetary policy. They've been arguing for years now that the Fed should tighten credit in order to head off non-existent and imaginary inflation.

The result has been a divided central bank under Bernanke that knows what it needs to do, for example pull out all the stops to help alleviate unemployment and heal our nation's economic wounds, but can't go "all the way" so to speak because of Ben Bernanke's moral cowardice and a wrongheaded obsession with "consensus" that allows the hard money wingnuts to tie the Fed's hands.

Enter Narayana Kocherlakota, the current president of the Minneapolis Fed. Kocherlakota is the former chair of the economics department at the University of Minnesota (along with the University of Chicago a stronghold of hard money fire eaters and the idea that the marketplace is what some have called "a perfectly self-correcting instrument" and other such silliness) who, unlike few members of his profession, has changed his mind over the past few years in light of the the experience of the "Lesser Depression." Basically Kocherlakota used to be a hard money kook and believed that there was nothing that the Federal Reserve could possibly do to ease unemployment. Then he actually changed his mind about something in light of reality. Kocherlakota decided that there were things that the Fed could do to help address unemployment and, amazingly, publically annouced this view.

He recently appeared to have decided to fire his research director, then another researched was removed, and yet another monetary policy "adviser" named Ellen McGrattan was forced into taking unpaid leave. Ellen didn't like that one bit and she was all outraged to Minnesota Public Radio, "I'm a monetary adviser, by the way. The job is to advise the president. He has chosen not to use me in that capacity."

To which I would reply with something along the lines of:

"Yes he did, and good for him! Your "research" is a bunch of silly nonsense that has been proven totally wrong over the last five years and you refusing to take this into account shows that you are a terrible "adviser." You coauthored a paper back in 2008 where you argued that monetary policy can't do much to affect the unemployment rate. This was obviously pretty silly back then and now is an egregious error, (note that Ireland, Iceland and Israel all dealt with the global downturn with different monetary policies, this has resulted in radical different experiences between them. So yeah, you're an "expert" on monetary policy in the same way phrenologists were "experts" on intelligence.) no matter. You'll obviously get an easy gig teaching econometrics or whatever at the University of Minnesota where you and the rest of the "New Classicals" can be bitter about how horrible Obama is and what an unappreciated genius Alan Greenspan was. Okaythanksbye."

I've noticed some hand-wringing by econ folks on twitter over this new development. They, and the Wall Street Journal, seem to be following the view that this has nothing to do with disputes about policy and is more of a Kocherlakota-going-nuts type story. To which I have to say: I honestly don't care. Maybe Kocherlakota got drunk and did this on a whim, maybe he really is a mad dictator obsessed with power, maybe he just believes in things like the idea of the free market and meritocracy and thus doesn't believe high level research gigs at a branch of the Federal Reserve are entitlements that should be handed out to the enlightened few. As I see it, it's just great to see these folks kicked to the curb. In fact as MPR has pointed out this will probably severly strain, and maybe even break, the long standing ties between the Minneapolis Fed and the University of Minnesota's econ department, "If the Minneapolis Fed is going to split from the U's economics professors philosophically, it's not clear whether that mutually beneficial relationship will hold up."

But that relationship not "holding up" is a really good thing! Rather than letting one of the branches of the Fed be captured by hard money kookery and Randian nonsense from the so called "freshwater" school of economics, we could see people who are, you know...uhh...right about stuff, take over in Minneapolis! It will also put pressure on the U of M's econ department to be...uhh...right about stuff instead of resting on the laurels of a "close relationship" with a branch of the Fed.


All in all this is a wonderful development.


This post probably sounds a little harsh, but as I see it these people kind of deserve it. The hard-money-inflationistas that call Minnesota and the University of Chicago home are responsible in my book for a great deal of human suffering in this world. As someone who graduated from college into what would soon become the disastrous job market that they helped to create and prolong, I can't feel sorry for them. Now we are even.

Celebrities Behaving Badly And St. Elsewhere

Ta-Nehisi Coates has a nice post up riffing off of an Andrew Sullivan post about Alec Baldwin being a bigot. I honestly don't really follow celebrity news so I didn't realize all the things that Baldwin has in fact said. And yes I would have to agree with with both of them and say that from what I've read yes, Alec Baldwin has behaved in an abusive bigoted way and I really wish so many progressives wouldn't jump up to defend him.

Having said that I do want to say that I find these kinds of posts to be a bit frustrating. Rather than using the events as a spring board for say talking about the phenomena of racism and homophobia, a lot of authors go down the rabbit whole of writing a lot about how a certain person is terrible. And while I'd agree that Alec Baldwin has behaved in a terrible manner in the past, I don't think you can get a whole lot of mileage in the whole social change realm out of proving that one person (one celebrity even) is awful. Sadly enough, the world is full of terrible people.

Ta-Nehisi goes a little further and expands onto some important political points:

One need not believe that LGBTQ human beings are equal to support their right to marry, any more than one needed to be an anti-racist to support abolition, or an anti-sexist to support women's suffrage. There any number of self-interested reasons to support the advancement of civil rights.

I think that is spot on, but unfortunately Sullivan basically writes up a giant Alec-Baldwin-Is-Awful-And-Liberals-Should-Stop-Carrying-Water-For-Him type polemic and then debates some emails he says he got from liberals trying to carry water for Alec Baldwin (this is one of Sullivan's more annoying tendencies, he picks emails that "make the other sides argument" instead of actually engaging with the other side head on). And I'd agree this is an important argument to make! But the conversation could be so much more than that.

This will probably blow over, just like Mileygate and Imusgate and our periodical Tom Bernardgates here in Minnesota and, well this list could go on for pages. Maybe if enough people make enough of a stink we can get MSNBC to discipline Baldwin, or at least make him take some anger management classes or something, but the reality is Miley is bigger than ever (and probably right now is thinking of ways to outdo it in her next VMA appearance) and Imus and Bernard are still on the air and so on and so forth.

Which I think is a shame, because we could be having an interesting conversation about what it means to be homophobic, but instead are getting a lot of debate about how someone is a jerk.



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Over the past two weeks at The Good Men Project I've been writing up quite the storm, well the usual two posts per week. But you should still go read them! I talked about why a hypothetical president Hillary won't change Washington all that much, I also highlighted how awful Ted Cruz's dad Rafael is, I talked about why the 2013 elections don't tell us much about what will happen in 2014, I also did a Veterans Day post about the legacy of the Iraq War (this was a bit out of my wheelhouse, but I was really pleased with the outcome), and today discussed the future of Obamacare (it's not going anywhere).

Read them all!

On Greg Mankiw And Conservative Punditry

Greg Mankiw is the chair of the economics department of Harvard University. He is also a life long Republican political actor who was Dubbya's chairman of Council of Economic Advisers and latter became one of Mitt Romney's chief economic gurus. For some strange reason he, like Niall Ferguson, has decided to venture out of the stuff confines of academia (and ruining the national economy) and step into the silly world of conservative political punditry.

Why? I have absolutely no idea. But it has resulted in the chair of Harvard's economics department saying a lot of silly stuff. Take this recent post about how Obama is a dirty filthy liar for the whole "if you like your plan you can keep it" phrase we've been hearing a lot recently. Here's Mankiw's epic argument that employes Watergate rhetoric in the title for some reason:

President Obama is getting heat over his often repeated claim that, under his healthcare reform, "If you like your plan, you can keep it." It is clear now that for millions of Americans, particularly those who participated in the individual insurance market, that is simply not true. You can argue that the plan they will get under the Affordable Care Act is better, but it seems undeniable that the President's sales pitch was factually incorrect.

As someone who has previously worked for a President, I am fascinated by how the White House staff let President Obama so consistently and so publicly make a false statement. Presidential speeches undergo a painstakingly thorough review process. It seems that there are only three possibilities:

1. The White House staff did not know the statement was false. That is, they did not understand the law the administration was promoting.

2. The White House staff knew the statement was false, but they decided to keep this fact from the President. That is, they let the President unwittingly lie to the American people.

3. The White House staff knew the statement was false and told the President so, but the President decided to keep saying it anyway. That is, the President consciously decided to lie to the American people.

These are the only three possibilities I can envision. None of them reflects particularly well on what has been going on in the White House.

Unpacking this is going to be tough but let's give it the ole (Midwestern, wannabe-Ivy-League-but-not-quite-there-Northwestern) college try.

First of all Mankiw is being really vague and unhelpful when he talks about "staff" (even if he is someone who has "who has previously worked for a President" he really shows a lot of ignorance for how the institution of the modern American presidency actually functions). To review, yes there are the senior staffers that we all know from The West Wing. There are also around 2000 odd people who "work for a president" in the sense that they are staff members of the Executive Office of the President. So when Mankiw complains that "That is, they did not understand the law the administration was promoting." I would say, "Yes, junior staff assistants in the Office of National Drug Control Policy, do not in fact know "the law" works."

Just as Mankiw doesn't in fact know how the law works. That is if I were to ask him to make a comprehensive list of all the changes to people who get their health insurance through there employer, he could probably just list some general points. Because that's how national health care policy works. It's monstrously complex and few people actually really understand the ins and outs.

But to point our how his general post is really wrong, I'd say that there is a fourth reasons (in fact I can think of more of them than that). That is President Obama used talking points, rhetoric really, to advance his agenda when talking about how to change our health care system. Basically one of the biggest impediments to expanding access to health care historically is that middle class suburban constituencies (those vital swing voters that decide national elections) react to plans of changing health care policy as attempts to strip away their decent health care. This is the story from the Clinton era, or Ronald Reagan announcing that Medicare will destroy the medical profession for that matter.

So while saying "if you like your plan you can keep it" might be not the most truthful talking point to say, it still makes sense from a presidential standpoint. Basically you need to sell the idea of giving poor people access to health care to to suburban moderates, and if it all works its like how Medicare Part D is part of the American policy structure.

Mankiw's decision to moonlight in conservative punditry strikes me as being really weird. Like Furegson weird. I don't know why he does it, so I'll just file it in the more evidence that the Republican Party is dysfunctional file.

On Politics (And Russell Brand)

I had two pieces up at The Good Men project recently that were sparked by current events but really just touch more on my ideas about the nature of democracy. In the first I’m talking about why Terry McAuliffe is probably going to be the next governor of Virginia. And what drove me to write it is how McAuliffe’s impressive performance is being mocked by liberals all over the internet who seem to see him as a Clinton/plutocratic stooge. I’d hardly call McAuliffe my political role model, and yes he is winning in no small part because the GOP nominated a unreconstructed bomb-thrower who really, really wants to bring back Virginia’s unconstitutional anti-sodomy laws, but I think there’s some more to this than that.

Simply put a lot of liberals and progressives throughout the Obama years have treated complaining/criticizing the powers that be in the Democratic Party as being action. But while that sort of things can be fun and seem like political action, they really aren’t. McAuliffe was easily beaten in a three way Democratic primary back in 2009, but now he’s on top. Why? Well because he actually did the work necessary to win in 2013 while progressives in Virginia couldn’t find anyone to run instead of him. We could be electing a much different Democrat this year in Virginia, someone more like Tim Kaine, but since a lot of liberals didn’t do anything in this race we won’t be.

Good progressives don’t get elected into high office because they’re nice, when they win they do so because a lot of people worked really hard to get them there.

The other piece is about Russell Brands latest political diatribe(s). I personally think this type of “revolutionary” rhetoric is pretty pointless all things considered. And I basically lay out my reasons why in the article and comments, so go check it out if you want to see why calling for total revolution is silly if you can’t even be bothered to vote. But if you want a simpler version of it I’d just say something along the lines of this: when you call for a “revolution” do you mean literally a revolution as in an actual overthrow of the state? Or do mean a figurative “revolution” as in a lot of political and social change? If you want a literal revolution I will say that you will almost certainly fail and a lot of people will get killed in your attempt. And even if you succeed the order you create in the aftermath of destroying the old one will probably be worse. Even revolutions that go well, like the American Revolution, have problems. Our revolution gave us independence but it also resulted in slavery being legitimized in the Constitution, which in turn almost certainly assured the Civil War. So yeah, in "The Game of Revolutions" even when you win, you lose.

If you mean a figurative revolution, like say the expansion of marriage equality in the last five years, well then you mean an organized political movement to change laws and things like that, which means you need to engage in politics, which means you need to do a lot of hard work. Voting is just the start of that and if you can't even be bothered to do that when you start calling for revolution you are just acting like an all around clown.