There has been a lot of discussion in the wake of the 2012 election of the need for the Republican party to alter. The general thesis has been that the Republican party needs to do more to appeal to non-white, young, and female voters. This is a correct analysis of the electoral challenge facing Republicans, but I think it overlooks the nature of political parties.
The press generally has a very candidate-centered view of political parties, and has focused on the degree to which various candidates--Bobby Jindal, Marco Rubio, Jeb Bush--can move the Republican party in a direction is more appealing to voters. This narrative represents an incorrect view of parties.
In "The Party Decides", a quartet of political scientists make the argument that parties are actually coalitions of policy demanding groups with narrow interests. These interest groups negotiate amongst themselves and decide on a presidential nominee who is generally acceptable to all members of the party coalition. From this perspective, the Republican party can be thought of as an alliance between the social conservatives, small government conservatives, Neocons, anti-environmentalist business organizations, nativists, etc.
In the recent election cycles, nominally moderate candidates--Romney, McCain--have shifted their positions to the right on a number of issues, in order to be acceptable to these groups.
For the party to really change there would have to be a largescale realignment, effectively destroying the party as we know it, or all of the policy demanding groups would have to simultaneously ease their demands for fealty from candidates. I see no evidence of a realignment happening, and policy groups are unlikely to ease demands for two reasons. First, these groups exist for the very purpose of demanding certain policies. Second, if one group eases its demands it will effectively cede some of it's power to other groups, this creates a collective action problem within the coalition, with each group fearing that by easing its demands, the others will take advantage to gain more power within the party.
What we will see instead is a series of candidates trying to appear moderate and electable, while convincing each of the groups that makes up the Republican party that he or she (probably he) won't sell out their cause once they are in office. The potential nominees don't actually have the power to pull the party in a different direction--because they aren't the party, they are just the politicians.
Sunday, 30 December 2012
Saturday, 29 December 2012
Deficits and Full Employment
Joe Wiesenthal has a great piece at Business Insider showing that our deficit problem is really a growth and unemployment problem.
The basic point is that short term deficits are driven by recessions, which cause tax revenues to fall and spending to increase relative to GDP.
He goes on to note that inequality has been steadily increasing: "If this inequality is something that's of concern, and something worth addressing, then taxes should be one part of the discussion in addressing them." He is correct that taxes should be one part of the discussion, but I wish he had spent some time noting that one of the ways to help reduce inequality is to demand more aggressive counter-cyclical policies from the Federal Reserve and Congress--policies that would simultaneously reduce budget deficits.
I think one of the tragedies of the politics of the "99%" is that it focuses too heavily on taxing the wealthiest, while ignoring the importance of full employment.
The basic point is that short term deficits are driven by recessions, which cause tax revenues to fall and spending to increase relative to GDP.
He goes on to note that inequality has been steadily increasing: "If this inequality is something that's of concern, and something worth addressing, then taxes should be one part of the discussion in addressing them." He is correct that taxes should be one part of the discussion, but I wish he had spent some time noting that one of the ways to help reduce inequality is to demand more aggressive counter-cyclical policies from the Federal Reserve and Congress--policies that would simultaneously reduce budget deficits.
I think one of the tragedies of the politics of the "99%" is that it focuses too heavily on taxing the wealthiest, while ignoring the importance of full employment.
Friday, 28 December 2012
Bipartisanship
A few weeks ago, Charles Krauthammer argued that Obama's original fiscal cliff offer--where he refused to concede anything--wasn't about deficit reduction, but was rather a cynical effort to fracture the Republican House majority:
Since then, Obama has moderated his position substantially, reducing revenue demands and increasing the amount of spending he is offering to cut. Nonetheless, Krauthammer went on Hannity and repeated his claim:
I think Krauthammer was completely wrong the first time, but basically correct the second time.
There isn't a single Republican in congress who would have been willing to support Obama's initial offer, as a result it would have been a terrible vehicle for creating splits in the Republican ranks. Republicans were able to unite in opposition to that offer, denouncing Obama as negotiating in bad faith.
Since that first offer, Obama has tried to be more realistic, proposing plans that some Republicans would vote for, but would still be acceptable to most Democrats. Krauthammer is right that the goal is to split Republicans. But with such wide political differences between the most conservative Republicans and the Democratic leadership, any Bipartisan solution requires this.
Such nonsense abounds because Obama’s objective in these negotiations is not economic but political: not to solve the debt crisis but to fracture the Republican majority in the House. Get Boehner to cave, pass the tax hike with Democratic votes provided by Minority Leader Nancy Pelosi, and let the Republican civil war begin.
Since then, Obama has moderated his position substantially, reducing revenue demands and increasing the amount of spending he is offering to cut. Nonetheless, Krauthammer went on Hannity and repeated his claim:
He’s been using this, and I must say with great skill–-and ruthless skill and success–to fracture and basically shatter the Republican opposition… His objective from the very beginning was to break the will of the Republicans in the House, and to create an internal civil war. And he’s done that.
I think Krauthammer was completely wrong the first time, but basically correct the second time.
There isn't a single Republican in congress who would have been willing to support Obama's initial offer, as a result it would have been a terrible vehicle for creating splits in the Republican ranks. Republicans were able to unite in opposition to that offer, denouncing Obama as negotiating in bad faith.
Since that first offer, Obama has tried to be more realistic, proposing plans that some Republicans would vote for, but would still be acceptable to most Democrats. Krauthammer is right that the goal is to split Republicans. But with such wide political differences between the most conservative Republicans and the Democratic leadership, any Bipartisan solution requires this.
Saturday, 22 December 2012
Push Back the Fiscal Cliff
With the Republicans in a state of confusion, I think Obama should attempt to push the Fiscal Cliff back a year or two. This strategy isn't being discussed much, but I think it would lead to a good outcome for Democrats in both the short and long term.
First, Democrats should have a long-term goal of returning all taxes to Clinton-era levels. Funding government programs that liberals favor requires this amount of revenue. Pushing back the fiscal cliff preserves the option for Obama to unilaterally return tax rates to those levels in a few years. At the point the economy will likely be stronger and hopefully the market trusts the new, more aggressive, federal reserve to sustain nominal spending in the face of a tax increase.
Second, the sequester mechanism makes no sense at any point. But the spending cuts less devastating in a year or two, for the reasons stated above.
I know Obama promised to raise taxes on the rich, but one or two years of additional revenue from those making over 250,000 isn't that helpful to the U.S.'s fiscal position. The Republicans will probably claim it as a political victory--taxes didn't go up on the rich--but it will be a substantive victory for Democrats. Obama will have achieved both his short term goal (avoid the fiscal cliff) and will have paved the way for what should be the Democrats long term goal (clinton-era revenue levels). The current aim of permanently extending tax cuts for those making under 250,000, while letting tax cuts expires for those above that amount, prioritizes the political over the substantive, and makes future cuts to government programs more likely.
Hindsight is 20/20, but I think liberals should have used the attention being paid to income inequality as an argument for shoring up and expanding government programs, not as a call to tax the rich.
First, Democrats should have a long-term goal of returning all taxes to Clinton-era levels. Funding government programs that liberals favor requires this amount of revenue. Pushing back the fiscal cliff preserves the option for Obama to unilaterally return tax rates to those levels in a few years. At the point the economy will likely be stronger and hopefully the market trusts the new, more aggressive, federal reserve to sustain nominal spending in the face of a tax increase.
Second, the sequester mechanism makes no sense at any point. But the spending cuts less devastating in a year or two, for the reasons stated above.
I know Obama promised to raise taxes on the rich, but one or two years of additional revenue from those making over 250,000 isn't that helpful to the U.S.'s fiscal position. The Republicans will probably claim it as a political victory--taxes didn't go up on the rich--but it will be a substantive victory for Democrats. Obama will have achieved both his short term goal (avoid the fiscal cliff) and will have paved the way for what should be the Democrats long term goal (clinton-era revenue levels). The current aim of permanently extending tax cuts for those making under 250,000, while letting tax cuts expires for those above that amount, prioritizes the political over the substantive, and makes future cuts to government programs more likely.
Hindsight is 20/20, but I think liberals should have used the attention being paid to income inequality as an argument for shoring up and expanding government programs, not as a call to tax the rich.
Friday, 21 December 2012
Bizzare Ideas from the NRA
The NRA held a press conference this morning where they advocated the placement of armed cops in schools, in order to prevent future tragedies like the one in Newtown. This idea strikes me as a weird abdication of what seems to be their purpose as an organization. The NRA and fellow second amendment advocates usually promote an ideology and policies that support an armed citizenry; the idea being that we cant rely on the government or its agents to protect us or loved ones. This type of suggestion cuts against that purpose; with more cops there really isn't any reason to own a gun, unless you are worried about the cops--in which case you shouldnt be arguing for them to be placed in schools in the first place.
Sunday, 18 November 2012
Svennson Strikes Back
Lars Svennson, deputy director of the Riksbank, has been publicly disagreeing with his colleagues over the proper role monetary policy. The other day he gave a speech at the the BIS trying to clarify the differences in opinion.
I recommend reading the entire speech, but, broadly he believes conditions in Sweden (high unemployment, low inflation) warrant looser monetary policy. His colleagues are concerned that looser monetary policy will 1) encourage households to take on too much debt; 2) the debt will be used to buy houses; and 3) housing prices will rise too much. Their concern is that this creates instability in the financial system and leaves it vulnerable to drops in housing prices.
Svennson notes that currently household debt and housing prices are at stable levels, while unemployment is high, and thus, even within their framework, they should still be advocating looser policy. However, his larger point is that monetary policy isn't a very effective tool for dealing with these problems. He argues that these problems are better remedied by "Macroprudential Policy" initiatives like rules on mortgage lending.
I think this is an important point. It seems like monetary policy officials throughout the world are trying to juggle too many balls; the ECB is really concerned about the fiscal policy of some of its constituent countries. Narrowing monetary policy makers' focus to unemployment and inflation makes it more clear where and when they are failing to provide sufficient demand.
I recommend reading the entire speech, but, broadly he believes conditions in Sweden (high unemployment, low inflation) warrant looser monetary policy. His colleagues are concerned that looser monetary policy will 1) encourage households to take on too much debt; 2) the debt will be used to buy houses; and 3) housing prices will rise too much. Their concern is that this creates instability in the financial system and leaves it vulnerable to drops in housing prices.
Svennson notes that currently household debt and housing prices are at stable levels, while unemployment is high, and thus, even within their framework, they should still be advocating looser policy. However, his larger point is that monetary policy isn't a very effective tool for dealing with these problems. He argues that these problems are better remedied by "Macroprudential Policy" initiatives like rules on mortgage lending.
I think this is an important point. It seems like monetary policy officials throughout the world are trying to juggle too many balls; the ECB is really concerned about the fiscal policy of some of its constituent countries. Narrowing monetary policy makers' focus to unemployment and inflation makes it more clear where and when they are failing to provide sufficient demand.
Saturday, 17 November 2012
Secession Won't Solve all Your Problems
Dave Weigel posted this funny article about the man who started the Alabama petition to secede on the White House's misguided "We The People" site. The man, Derrick Belcher, used to own a topless car wash before it got shut down by government officials for being in violation of obscenity laws. After Obama got reelected Belcher decided enough was enough and started the petition to secede.
What's interesting is that his, supposedly profitable, topless car wash business was actually shut down for being in violation of an Alabama state law. He really shouldn't have any beef with the feds at all! In fact, starting a car wash business requires navigating a series of state and local regulations. Car washes can't be placed in most locations because of local land use laws. Furthermore, you would likely need a state permit to open a car wash because of laws about discharging wastewater. There are, of course, applicable federal regulations, I'm sure the EPA says something about how you dispose of your wastewater and there are federal employment laws and such. But, in general, a lot of laws and regulations are state and local. At the same time its easier to just say "big government", blame Obama, and petition to secede.
What's interesting is that his, supposedly profitable, topless car wash business was actually shut down for being in violation of an Alabama state law. He really shouldn't have any beef with the feds at all! In fact, starting a car wash business requires navigating a series of state and local regulations. Car washes can't be placed in most locations because of local land use laws. Furthermore, you would likely need a state permit to open a car wash because of laws about discharging wastewater. There are, of course, applicable federal regulations, I'm sure the EPA says something about how you dispose of your wastewater and there are federal employment laws and such. But, in general, a lot of laws and regulations are state and local. At the same time its easier to just say "big government", blame Obama, and petition to secede.
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