Thursday, July 24, 2014
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I'm no lawyer, but from the first time I heard it the theory advanced by the plaintiffs in the Halbig case has struck me as laughably far-fetched and as best I can tell most objective legal observers agree that they are unlikely to prevail. But liberals should check themselves before falling back on the assumption that this is how the judicial system works, or even that we are capable of ascertaining what it is objective legal observers think or do. For a reality check, it's worth looking at yesterday's Halbig coverage on the National Review website:

Halbig The coverage was extensive, unanimous, and included the participation of Ramesh Ponnuru, probably the magazine's most broadly respected writer. A Washington Examiner editorial hailed the ruling. The libertarian magazine Reason disagrees with the conservative mainstream about many issues including foreign policy and immigration, but their Affordable Care Act coverage is relentlessly hostile and their most-read article yesterday was a Halbig piece sympathetic to the the ruling.

The point is that, for better or for worse, as conservatives see it this case is not a close call and there are no doubts expressed that affirmation by the Supreme Court would be the right call.

Parallel realities

The deep nature of the division is illustrated by the suspicious way in which legal opinions and policy preferences are lining up on this issue. Essentially everyone who believes the Affordable Care Act was an important step toward securing social justice also agrees that it would be absurd to construe the statute in a manner that's plainly inconsistent with congress' goals. And essentially everyone who believes it's crucially important to give the crucial sentence the most straightforward possible reading rather than defer to the IRS' efforts to make sense of the law as a whole, also believes that the law is a scandalous boondoggle.

In a less polarized political climate, the stakes of the legal decision would be much lower. You would expect members of congress to respond to the Halbig ruling by passing an amendment to bring the text into clearer alignment with its goals. And even if congress failed to do so, you would expect the vast majority of states currently using the federal exchange to simply switch to a state exchange in order to make their citizens eligible for subsidies.

In that kind of climate, opinions about Halbig would be driven by feelings about the best approach to statutory interpretation — a question about which almost nobody has strong feelings. But in our actual climate, upholding Halbig will render Obamacare non-operational in a great many states. And most people — especially politically aware people — have much stronger views about Obamacare than about edge cases in the world of statutory interpretation. Our tribal instincts are activated.

Polarized judges


The judicial branch is supposed to operate separately from the contours of partisan politics. But judges are human beings, subject to the same cognitive failings as everyone else — and the cognitive failings associated with polarized political disputes are large. And the judiciary is becoming more polarized along with everything else in America. David Paul Kuhn, for example, has shown that 5-4 decisions have become drastically more common over time.

The Supreme Court gets to choose which cases it hears, and this shows a Court that is increasingly inclined to hear cases that sharply divide the justices — and therefore the legal community — rather than to rule on questions where there is broad consensus. The justices also seem increasingly inclined to write maximalist rulings that can secure minimum winning coalitions, rather than to enter into compromises to secure broader agreement.

Another sign of polarization is in the selection of clerks. In recent years, Justices appointed by Democrats have come to almost exclusively select clerks who worked for Circuit Court judges appointed by Democrats and Republican justices behave the same way. Rather than seeking to surround themselves with intelligent young aides of varying views who will challenge their knee-jerk opinions, Justices seek assistants who share their outlook. Institutions like the Federalist Society and the American Constitution Society operate to ensure that politically-active lawyers operate in separate intellectual and professional networks from an early age.

Overturning Halbig would be a betrayal

Vox's Ezra Klein mounted an argument that it's very unlikely the Supreme Court will affirm Halbig, citing the pragmatic reality that taking away health insurance from millions of people who already have it could be a political disaster. This makes a ton of sense to me. But as a forecast it would carry more credibility if we were seeing it on Fox News or The Wall Street Journal editorial page. Justice Scalia has gone so far as to say he doesn't read the New York Times or the Washington Post because they're too liberal, so it's not obvious that ideas circulating in the non-conservative press tell us much about the thinking of conservative judges.

After all, John Boehner and Republican governors could be spending this week working to avert this potential political fiasco by amending the law or switching off the federal exchange. But they aren't. So the idea that Halbig would be bad politics does not seem any more persuasive to most conservatives than the idea that it's bad law or bad policy.

All of which is to say that a decision by the Supreme Court to overturn Halbig would entail a substantial act of ideological apostasy by one or more justices. Apostasy isn't impossible. Justices Roberts committed a major betrayal by voting to uphold the Affordable Care Act's individual mandate, and Justices Kagan and Breyer committed one in the opposite direction (perhaps as part of a deal) to strike down some of its Medicaid clauses.

But acts of apostasy are psychologically, socially, and professionally difficult. It would be a mistake to simply assume Roberts will commit another one. And it would be an even bigger mistake for liberals to draw excessively broad conclusions from their own media diet. On the right, Halbig is broadly considered good law and five of the nine Justices side with the right most of the time.

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The rise of soulless big box retail chains has often been lamented, but there's persuasive evidence that big stores and big chains are good for workers. The data comes from Brianna Cardiff-Hicks, Francine Lafontaine, and Kathryn Shaw in an NBER working paper titled "Do Large Modern Retailers Pay Premium Wages?"

The short answer is yes. The long answer is below.

Big companies pay higher wages

They find that in the retail sector, working for a big company rather than a small one leads to higher wages. High school graduates who work for companies with over 1,000 employees earn 15 percent more than similarly educated workers who are employed by smaller firms. Workers with at least a little college education see a bigger pay boost and earn 25 percent more when employed by big companies.

Big stores pay higher wages

Sometimes a large company operates small stores (many Starbucks shops are small) and in principle a small company can operate a very large store. The researchers find that not only do big companies pay higher wages, but big stores pay higher wages. High school graduates working at retail establishments with over 500 workers earn 26 percent more than similarly educated workers at smaller shops. Those with at least some college education, again, earn an even larger premium — 36 percent more at big stores than small ones.

It's not all selection effect

Those findings involve basic demographic controls, but there's more to life than demographics. When the authors do more math, they find that a lot of this premium is due to "unobserved worker quality." In other words, big companies are good at recruiting the best workers from all demographic cohorts and that's part of the reason they pay more. But a lot of the wage increases remain. The exact same worker can earn an approximately 10 percent raise (11 percent for high school graduates, 9 percent for those with at least some college) by moving from a small company to a large one.

Moving from a small store to a big store has an even bigger effect — 19 percent for high school graduates and 28 percent for those with some college.

This should not be a huge surprise

Given widespread skepticism of big box versus mom and pop retailers, these findings will be surprising to some. But the general conclusion that larger companies pay higher wages than smaller ones is fairly well-established in the literature. What is new here is the demonstration that this stylized fact holds true inside the retail sector, and also that it is robust to sophisticated statistical controls.

Big companies create the chance for upward mobility

Another finding from the paper is that 28 percent of retail workers are eventually promoted into a managerial role offering higher wages. Small firms, by contrast, typically have less need of managers and managerial jobs are often occupied directly by the people who own the company and their family members. Big companies are more likely to be owned impersonally by shareholders who aren't involved with the management of the company, allowing more opportunities for outsiders to move up.

A debate whose time has passed?

The authors frame the policy implications of their findings in terms of the tendency to lament the loss of "good manufacturing jobs" and the rise of Walmart-style chains. They write that there is an alternative to manufacturing-promotion as a strategy for increasing worker earnings and "that alternative is to prepare workers to be managers in modern retail firms."

In many ways, however, the debate over the merits of the big box store seems like a debate for the previous decade. Borders and Circuit City are out of business, while their competitors are on their last legs. The big question in retail is the race between Walmart's efforts to move into e-commerce and Amazon's efforts to move into grocery delivery. Whoever succeeds (or both of them) won't really be running big box stores anymore. And the debate and analysis over wages and promotional activities will have to be done all over again for the new cohort of retailers.

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Rewatching Sex and the City with my wife over the weekend, I queried twitter as to whether Carrie Bradshaw was the last non-villainous character to be a regular smoker on TV. A rather irate Sonny Bunch counters with Roger Sterling, Don Draper, Rust Cohle, Skyler White, Lafayette from True Blood, and Laurie from The Leftovers.

I haven't seen the Leftovers, but mostly I think these exceptions serve to sharpen the point.

Sterling and Draper are, obviously, being set in the past. Cohle isn't a villain, but he is a dissolute alcoholic. Lafayette is a drug dealer. Most of all, Skyler White the suburban mom most certainly is not a regular smoker. The smoker is Skyler White the morally-complicit-but-also-semi-captive wife of a major drug baron.

Bunch is correct that villainous versus non-villainous isn't quite the right demarcation line here. But it's that in recent shows, depicting a character as a smoker is a way of signaling that something is wrong. The difference with Carrie is that she's just a normal person who happens to be a pretty heavy smoker. Just like I was until about 2007 and like many people continue to be today. Part of this is simply because television portrayals of smoking have become much more rare. But clearly beyond that there's been an effort to really define smoking as either something that happened in the past or something that's socially deviant.

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If you want to understand the state of Democratic Party factional politics — or, rather, the lack thereof — in 2014, you could do worse than to look at Elizabeth Warren's 11 commandments for progressives as reported by Emma Roller from the Netroots Nation conference:

  1. "We believe that Wall Street needs stronger rules and tougher enforcement, and we're willing to fight for it."
  2. "We believe in science, and that means that we have a responsibility to protect this Earth."
  3. "We believe that the Internet shouldn't be rigged to benefit big corporations, and that means real net neutrality."
  4. "We believe that no one should work full-time and still live in poverty, and that means raising the minimum wage."
  5. "We believe that fast-food workers deserve a livable wage, and that means that when they take to the picket line, we are proud to fight alongside them."
  6. "We believe that students are entitled to get an education without being crushed by debt."
  7. "We believe that after a lifetime of work, people are entitled to retire with dignity, and that means protecting Social Security, Medicare, and pensions."
  8. "We believe—I can't believe I have to say this in 2014—we believe in equal pay for equal work."
  9. "We believe that equal means equal, and that's true in marriage, it's true in the workplace, it's true in all of America."
  10. "We believe that immigration has made this country strong and vibrant, and that means reform."
  11. "And we believe that corporations are not people, that women have a right to their bodies. We will overturn Hobby Lobby and we will fight for it. We will fight for it!"

As I've said before, the striking thing about this progressive factional agenda is there's really nothing on it that Barack Obama or Hillary Clinton would disagree with. It is true that if you read this list with your progressive populist decoder ring on, you will know that items (1) and (7) are sort of intended as shots at the White House. But while Warren certainly could have bored down into those issues to make commitments that Obama and Clinton won't match, she didn't in this statement of principles.

She also didn't pick at a number of other possible scabs. State and local Democrats fight quite a bit about K-12 education policy — testing, teacher pay, charter schools, and all that.

National Democrats can typically avoid open warfare over these issues because the federal government doesn't do much K-12 policy, and here's Warren avoiding them. By the same token, Warren doesn't pick up the left-wing banner on NSA surveillance or drone strikes or aid to Israel or any of the other national security issues where liberal intellectuals often differ from mainstream Democratic Party politicians. Nor does Warren attempt to put new issues like patent reform or copyrights on the table.

Not that there's anything wrong with any of that. The point is simply that taking a moment to explicitly write down a progressive catechism at an activist gathering, Warren chose to restate the Democratic Party consensus rather than challenge it. It's a very unified party that's going to run on this agenda whether the nominee is Hillary Clinton or Elizabeth Warren or Martin O'Malley or Deval Patrick or anyone else you like.

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There are a lot of odd rules around car dealerships in the United States, often in the news lately because of various fights about Tesla, and one of them is that in many states you can't sell a car on Sunday.

Here, courtesy of Briana Bierschbach, is a map illustrating which states adhere to this timeless Biblical precept:


The regional distribution here looks pretty random, but the economics of these kind of arrangements are interesting. Obviously any given auto dealer who refused to open on Sunday would be putting himself at a competitive disadvantage. But since cars aren't exactly impulse purchases, if you prevent all dealers from selling on Sunday you don't depress overall auto sales. Instead, car-buyers are mildly inconvenienced while dealership owners save money because they don't need to stay open as long.

Convenient for them.

Of course in theory the dealers could push that idea even further and go for a law saying you can only sell cars on a Wednesday. But presumably state legislatures wouldn't go for that. A little Christian observance works, though.

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The latest round of inflation hysteria (which you should be ignoring for these eight reasons) is especially focused on the rising price of certain foods. The interesting thing about food is that the general category contains many many many different commodities. So at any given time it's almost certainly going to be the case that the price of something or other — pork or milk or wheat or what have you — is skyrocketing.

But here's a chart of expenditures on food as a share of all disposable income:

Food_is_cheap The big story is a huge multi-generational increase in food affordability. It's true that the pace of progress has slowed down with the bad economy over the past decade. But zoom in and you'll see that affordability is pretty steady, not deteriorating:


In the short-term, this is a noisy data series. Food prices swing a lot more than personal incomes do. But if anything, since the recession started food has become slightly more affordable for the typical family.

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Take a gander at this amazing chart Louise Sheiner and Brendan Mochoruk made for the Brookings Institution based on CBO data:

15_cbo_budget_outlook_fig1-1 It highlights an amazing and under-covered change in federal budget policy, something that is a much bigger deal than recent declines in the short-term budget deficit. For years now, budget wonks have been warning that the real deficit problem is in the long-run, and it's driven by the cost of federal health care programs. What you're seeing on this chart is that those programs now look like they're going to be much cheaper than was previously believed.

Good deficit news ignored

Matt Yglesias explains in 90 seconds why you shouldn't worry about the national debt right now.

And yet to the extent that attention has been paid to these developments, it's been through a narrow partisan lens dedicating to asking whether or not the Affordable Care Act deserves the credit.

The big bipartisan debate about the future of the federal budget has been scarcely touched by this. Indeed, it's noteworthy that, while this chart was made with CBO data, nothing like it appears in the latest edition of the CBO's Long Term Budget Outlook. The new version of the CBO's annual report is updated with new numbers, but the text and the doommongering rhetoric are essentially unchanged. If there's any difference, it's that they've added a forth bullet point to what used to be a three-point list of bad consequences of high deficits and debt loads. Fix The Debt put out a blog post saying that "just as we were getting good news about falling deficits, a new report demonstrates that looking further out tells a much different story."

This is a classic pathology of the policy advocacy world: fear that any admission of good news is going to undermine the case for action.

So let's be clear about this — the declining projections in federal spending make the long-term budget situation look a lot better than it looked in 2009, but they don't make it look perfect. It's still true that the elderly share of the population is rising, and that health care spending is likely to grow faster than the overall economy. Those two trends will inevitably either squeeze out other forms of government spending, or else squeeze out private sector economic activity via higher taxes or more borrowing. That was true in 2009 and it's true in 2014.

Optimism is contagious

But fundamentally, the worldview which says that, until the problem is solved, all discourse must be gloom and doom, is misguided. In a variety of contexts, optimism is a more powerful force for action than pessimism. Heart attack victims who are optimistic, for example, have a much higher survival rate than pessimists. One key reason, according to researchers, is that "optimists try, while pessimists lapse into passive helplessness."

Albert Hirschman's classic book The Rhetoric of Reaction: Perversity, Futility, Jeopardy likewise identifies pessimism as a key driver of counterproductive politics.

Budget scolds appear to believe that only by frightening people into a state of maximum alarm can they spur action. But inspiring action requires a judicious mix of hope and fear. If people think there's nothing that can be done to solve the problem, they'll suspect the worst about any proposed change and look to safeguard the narrowest possible definition of their self-interest. The fact that the structural sources of health care cost growth can improve and that improving them does make a difference, is a powerful reason to try for more improvements.

The end of the "grand bargain"

Ezra Klein talks with Frances Lee, Professor of American Politics at University of Maryland, about polarization and Congressional gridlock.

One reason the deficit panic industry has resisted acknowledging the good news is that it undermines one of their main political conceits, a dedication to bipartisanship and to the pursuit of a "grand bargain" in which Democrats and Republicans will come together to solve the deficit problem once and for all.

The fiscal outlook is improving for a mixture of reasons that are outside politics, and ones that relate to Democratic Party victories. Democrats have pushed tax revenues up higher than the old CBO's Alternative Fiscal Scenario said was likely, and Democrats have probably contributed to the health spending slowdown through some of the measures in the Affordable Care Act. And given the realities of partisan polarization, if further progress is to be made this is what it will probably look like. Both parties have some ideas that would improve the fiscal outlook, and both parties will probably have some opportunity to implement some of those ideas.

There's nothing wrong, per se, with the idea of a grand bargain. But in a world where legislators see little incentive to cooperate with the other party, it's not particularly realistic. So framing solutions in terms of huge bipartisan compromises rather than multiple small steps is counterproductive. There's been no grand bargain over the past five years, but enormous progress has been made and more progress can be made in the future.

Next steps on the budget deficit

The 90 second case for empowering nurse practitioners.

The good news is that there continue to be lots of good ideas about how to further reduce health care costs. In the past I've recommended more immigrant doctors, wide scope of practice for nurse-practitioners, action against pharmaceutical monopolies, and all-payer rate-setting as promising options.

And of course one can delve into the guts of things like the Simpson-Bowles plan and find literally dozens of ideas that together made up a proposed grand bargain. Individual items from this agenda can — and should — be taken up by politicians who like them.

Moving on from the grand bargain framework also opens up the terrain for ideas that are two "extreme" to be considered part of a bipartisan compromise. Adding a public option to the Affordable Care Act, for example, is a left-wing spending cutter. Meanwhile, the GOP could easily trim ACA costs by reducing how much insurance plans are required to cover. This sort of back-and-forth is a much more plausible path forward than a new big deal.

But to keep people — both legislators and ordinary citizens — motivated, it's necessary to remind that them that it's not an all or nothing battle. A ton of progress has been made in recent years and more could come in the future.

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As best as anyone can tell, the child migrant crisis is playing perfectly into the hands of conservatives in congress — it's making Obama look bad while pushing Democrats off their immigration reform message. Then along comes Ted Cruz to ruin it all with a plan reported by Manu Raju and Burgess Everett to link any new funding to deal with the situation to deporting DREAMers — kids who came to the US years ago, grew up here, and are now being protected from deportation by Obama administration executive action.

Catherine Frazier, a spokesperson for Cruz, describes ending the deferred action plan as his "top priority."

Of course one senator taking an eccentric stand needn't have major political implications. But this is essentially how last fall's government shutdown got started. Cruz floated the idea that Republicans should refuse to fund the government unless the White House agreed to repeal Obamacare. Most Republican members of congress thought that was unworkable and politically unwise. But once the idea gained traction in the conservative media, nobody wanted to take the RINO stand of breaking with Cruz out of political timidity. Next thing you know the whole caucus was stampeding off the cliff.

Obama's deferred action (and its legislative predecessor, the DREAM Act) has always polled well. There's likely nothing Democrats would rather do than shift the conversation onto that terrain, while simultaneously allowing them to argue that it's Republicans who are distracting attention from the crisis of the moment.

But Cruz isn't necessarily interested in what's best for his caucus. He's interested in what's best for driving Cruz's influence inside the caucus. And that means finding new fights to pick beyond the ones the party leadership is interested in.

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Rupert Murdoch's media conglomerate 21st Century Fox has made an attempt to buy rival media conglomerate Time Warner for $80 billion; the Time Warner board considered and then rejected the offer. But nobody thinks this is a done deal. Murdoch will continue to press his case to Time Warner shareholders, and Time Warner may press Murdoch to sweeten the deal. It's premature to say that a merger is likely, but the fact that these talks are in the news means that even though Time Warner rejected the offer, the possibility is hardly off the table.

Why is this happening? And what does it mean for an ordinary television viewer? You've got questions and we've got answers.

1) What do these companies do and why would they merge?

21st Century Fox and Time Warner are both media conglomerates. They own television and movie production studios that make shows and movies, and they own cable television networks. CNN, Cartoon Network, TNT, and HBO are all Time Warner networks. 21st Century Fox's networks are mostly identifiable by their Fox branding — Fox News, Fox Sports, and FX are all 21st Century Fox Networks — though they also own a majority stake in National Geographic.

Companies like Fox and Time Warner make a lot of money from what are called carriage fees that cable infrastructure owners pay for the right to carry a channel. Cable TV providers don't face much competition, but nobody is going to pay for a cable package that doesn't feature the networks they want to watch. Recently, the cable industry has seen significant consolidation. One major aim of this consolidation is to gain more leverage over the networks, so that cable providers can pay lower fees for the right to carry channels like Cartoon Network and Fox News. One major aim of consolidating 21st Century Fox and Time Warner would be to accomplish the opposite and allow the network owners to have more leverage vis-à-vis the people who own cable infrastructure.

2) Why doesn't Time Warner want to merge?

The merger makes business sense, and the price Murdoch is offering — about a 22 percent premium over the current market price of Time Warner shares — is fair. Nonetheless, Time Warner executives and board members are raising one big objection to the merger. Murdoch is offering some cash to Time Warner shareholders, but most of the purchase would be financed with shares of 21st Century Fox stock.

That's a fairly standard practice, except 21st Century Fox stock is a bit unusual — it doesn't carry any voting rights. Like many family firms, Murdoch's company has a two-tier share structure with the bulk of the voting shares in the hands of the Murdoch family. Time Warner's board says it would be a mistake for Time Warner shareholders to swap their voting rights in the company for non-voting shares of questionable value.

At any rate, that's their story. They also might just be bargaining for a higher price.

3) Didn't Time Warner just get bought by Comcast?

No. The proposed takeover is that Comcast is buying Time Warner Cable, which is a different company. Comcast owns both cable providers and television networks, and Time Warner used to be the same way. But in March 2009, the conglomerate's cable assets were spun off as a separate company, Time Warner Cable.

That's what Comcast is buying. More recently, Time Warner also spun off Time Inc, its magazine division. Rupert Murdoch also separated his newspaper interests from his television and film production interests. That leaves the present-day incarnation of 21st Century Fox and the present-day incarnation of Time Warner as very similar businesses, and logical candidates for a merger.

4) Does this mean Fox would be running CNN?

Almost certainly not. That would be an obvious anti-trust red flag. It's fairly common for two companies that are merging to sell off a handful of assets to avert anti-trust concerns, and this is almost certainly what would happen in the case of CNN.

In the past both CBS (a division of Viacom) and ABC (a division of Disney) have expressed interest in owning the network. Both of those companies run fairly costly news divisions as part of the legacy of traditional broadcast television, but like all general interest networks they don't actually air very much news. Combining their news infrastructure with the distribution capabilities and strong brand of CNN is a compelling proposition, so offloading the news channel shouldn't be a problem.

5) How about a music break?

There's no genuinely on-point songs to offer, but one guy on YouTube did rather amusingly recast a They Might Be Giants song as a very mean tune about Murdoch:

6) Am I gonna get screwed if this happens?

Probably not. The reason that you are screwed, as a cable customer, is that there is very little competition in the cable industry. That, in turn, is not so much a failure of anti-trust policy as a reflection of the fundamental economics of infrastructure. There are better and worse ways to regulate (or not regulate) industries like cable television, but there's no clearly correct solution. It's simply a hard problem. Tim Lee reported on how you can counter-exploit the economics of low competition to get a better deal on your cable bill, but that's about the best we can offer.

With that context as background, diminished competition among cable networks is unlikely to harm consumers. What's happening is that cable companies are extracting monopoly rents from consumers, and if Murdoch gets his way he'll be able to ensure that more of those rents flow into his pockets rather than Comcast's pockets. You're in the same boat regardless.

7) Why do people own non-voting stock shares?

It's a little bit mysterious. In theory, the value of a share of stock stems from the fact that owning it entitles you to a small slice of control over the enterprise. Firms with dual-class share structures — a group that's grown lately to include Google and Facebook — break that link between ownership of the stock and control of the enterprise.

Buying a share of stock like that is arguably a form of pure gambling. You don't really own anything of value other than the right to sell the share later if it becomes more valuable.

On the other hand, in practice almost nobody owns enough shares of stock for the voting rights to matter. Ordinary shareholders in Time Warner do not influence the governance of the company in any practical sense any more than ordinary shareholders of 21st Century Fox do. Indeed, since so much stock is owned through mutual funds or index funds, it's quite common for people to own shares of both companies. So the Time Warner board's objections to the deal make sense in theory, but violates ordinary practice.

8) Isn't the whole cable television industry dying?

Maaaaaybe. Certainly among young tech-savvy urbanites there is a distinct trend toward "cord-cutting" and relying on streaming internet video services for one's entertainment. If that trend continues, the whole way Time Warner and 21st Century Fox have structured their businesses will collapse.

That said, since both companies have very similar businesses, it's not clear that the existence of some chance the industry will collapse necessarily militates against a merger. They're in the same boat. And in the short-term, at least, a merged company could have more clout in working out deals with Google, Apple, Amazon and other firms involved in the streaming video industry. Meanwhile, both firms have their feet somewhat in the live sports realm, which has only increased in monetary value as time-shifting and streaming video have devalued advertising on things that aren't live.

9) So what about sports?

ESPN, owned by Disney, is the 800-pound gorilla of the live sports world. But Time Warner is also an important secondary player in this industry. They run the MLB Network in a partnership with Major League Baseball, and run NBA TV and the NBA League Pass service and apps in partnership with the National Basketball Association. Fox is a major broadcaster of professional football, and also airs many baseball games. Time Warner's TNT subsidiary broadcasts NBA and NCAA basketball games and its TBS subsidiary shows baseball games. Fox also owns a network of regional sports cable networks that carry local live sports coverage, and has interests in college football.

If you were to somehow add it all up, and then redivide it in a more coherently branded way — presumably with games transitioning off TNT and TBS onto the flagship Fox Sports Network — you'd have what's potentially a credible competitor to ESPN.

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The employment statistics you normally see cited in the media are seasonally adjusted, meaning run through an algorithm to flatten out regular surges in employment around Christmastime and the summer season. Seasonally adjusted data is more useful for most purposes, but the BLS made this chart showing the raw data for a few industries that have large summer peaks and it helps us understand something else — where are the summer jobs?

Screen_shot_2014-07-15_at_4.30.58_pm Note that this is a logarithmic scale, so the modest undulations of the hotels and motels line actually represents a quantity of jobs swinging up and down that's larger than the summer camp swing. Using the log scale captures the fact that the vast majority of hotel jobs are non-seasonal, but it obscures the fact that the raw quantity of seasonal hotel jobs is quite large.

But the biggest raw swing looks to be in the country club industry, where over 200,000 jobs are created and then lost again every summer. Meanwhile, as Danielle Kurtzleben has documented, teenagers are growing less likely to seek and obtain seasonal summer employment even as the seasonal trend in labor demand looks to be robust.

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You can tell it's the dog days of summer because some of Washington's finest minds are spending their time debating the inherently unknowable question of whether today's teenagers will grow up to be Republicans. Jon Chait says no way, but Harry Enten and John Sides and David Leonhardt say maybe.

I've been reading a lot about the politics of the 1850s lately, so I'll just say that one thing you learn from history is that partisan and ideological configurations can change a lot — and in surprising ways — over time.

More interesting than asking whether people born in the 1990s will be voting GOP in the 2020s, I think, is asking what kind of a GOP it would have to be for them to vote for it. As an older member of the left-leaning youth cohort, I was really struck by something John Boehner said four summers ago. He complained that the Democratic majority that existed that summer, paired with Barack Obama, was "snuffing out the America that I grew up in."


(Chart by Delphi234 using Tax Foundation data)

Boehner was born in 1949 and presumably isn't nostalgic for the sky-high income tax rates (or strong labor unions) of his youth. So what was so great about it? The racial and gender discrimination? In practice, he probably didn't have anything at all in mind — he's just mixing up disagreement with aspects of the Democratic agenda (the specific issue under discussion was the Dodd-Frank financial regulation bill) with a generalized nostalgia for his youth. That probably resonates with a lot of older Americans, but while today's teenagers might well turn against some of the failings of Obama-era liberalism, they're unlikely to be pining for a return to Mad Men social norms.

There's just no way.

Which isn't just to say that the younger generation is socially liberal and the GOP is socially conservative. For one thing, on some key issues like abortion and gun control, younger voters don't seem to have particularly left-wing views. For another thing, there's really a broader issue with the GOP than it's specific views on, say, marriage equality for gay and lesbian couples.

There's something very oldsterish about contemporary conservative politics. The constant bickering about Ronald Reagan is very odd to anyone too young to have any particular recollection of the Reagan years. Calling a group of people "Beyoncé Voters" as an insult is weird. Some of this oldsterism is just tics, but some of it has policy implications. The sort of budgetary priorities that call for huge cuts in all domestic spending, except no cuts at all for anyone born before 1959 is kind of weird. The huge freakout over New York City starting a bicycle program last summer was bizarre. It's easy to imagine a political party that's broadly favorable to low taxes and light regulation without sharing this particular set of tics. And then there was the time George Will wrote a column-length rant against blue jeans.


There have always been cranky old people asserting that things were better when they were kids and whatever is happening now is terrible (my late grandmother once told me things were better in the 1930s "because at least we had hope") and presumably there always will be cranky old people. But a confluence of circumstances has created a situation in which conservative politics has gotten bound up with cranky oldersterism in a somewhat weird way.

And I think it's fairly predictable that today's young people aren't going to vote for that. Maybe because they're all Democrats, maybe because Republicans change positions (small government ideology and, say, marijuana legalization would seem to be a great match), or maybe because some of both. What's really important is that as the population changes, the country's politics are sure to change too.

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Because the Green Bay Packers are publicly owned, they make financial information available to the public in a more detailed way than most other American sports teams. And their data makes it clear that owning an NFL team is a really good business to be in. The Packers received $187.7 million as their automatic share of the league's national television revenue, while spending $171 million on player compensation.

Of course a team has expenses beyond the cost of players.

But many of those expenses directly related to the raising of local revenue. The Packers reaped a further $136.4 million from their local fan base through ticket sales, stadium advertising, merch sales, etc. Teams located in larger markets almost certainly sustain more local revenue than this, and that larger local revenue base sustains a larger and better-paid workforce. If you're in New York City, than the commissions you end up paying out to the guys who sell the luxury suites or the corporate sponsorships are going to be giant compared to what the Packers pay.

But fielding a full team of NFL players does not require any more money than what every team receives by default. That gigantic pool of national television revenue is what makes the NFL such an economic juggernaut, and it's also what makes it possible for the league to sustain a team in Green Bay or really anyplace else it likes.

Other major sports leagues are lucrative, too, but none of them have that firehose of national revenue. The NBA brings in a bit less than $1 billion a yearMajor League Baseball gets $1.55 billion,  and the NHL gets a paltry $200 million. The NFL has just over $6 billion a year.

And because life isn't fair, the firehose makes it possible for the rich NFL owners to get even richer. The fact that teams can be profitably located in arbitrary cities means that threats to relocate elsewhere are always credible — meaning you can extract more subsidies. The NFL manages to rake in this financial bonanza even while snubbing the gigantic Los Angeles media market, simply because LA hasn't been willing to pony up the subsidies the league wants. Basically no other league could pull that off.

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Getting ahead in the workplace is something that's very important to most people. And yet it's not something that very many of us receive explicit instruction in. Katie Liljenquist recently highlighted a couple of findings from her research that shows one potent but underexploited method for getting ahead — ask for advice.

Her 2010 paper "Resolving the impression management dilemma: The strategic benefits of soliciting others for advice" shows that asking for advice accomplishes the key goal of signaling warmth and likability without compromising your reputation for competence.

Advice-seekers are seen as warm and humble

People really like people who ask them for advice, perceiving advice-seekers to be warmer, more humble, and more cooperative than non-seekers.


After all, everyone likes flattery but nobody likes flatterers. Asking for advice is a nice implicit way of complementing a more senior colleague — you wouldn't be asking unless you respected that person's skills and judgment — but it doesn't require you to say or do anything obsequious. It demonstrates humility, but in a way it also demonstrates competence since it will seem awfully clever of you to have had the good sense to ask this particular person for advice since he will naturally think he's a great person to ask.

Advice-seekers are more likely to be promoted

But this isn't just a question of getting the boss to say nice things about you. In Liljenquist's simulated job performance reviews, advice-seekers were significantly more likely to be recommended for promotion than non-seekers.


Of course, this is just a simulation and not a randomized study of real-world workplaces so it doesn't quite meet a gold standard of research rigor. On the other hand, asking some senior colleagues for advice is a pretty low-cost strategy so why not give it a shot?

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Companies doing business globally need to consider the local cost of living when designing compensation schemes and assignments for their workers. So the consulting firm Mercer produces and annual list of the most expensive cities globally for expat professionals. I mapped the top ten below:

Screen_shot_2014-07-13_at_8.18.05_am Three interesting facts. One is that none of the most expensive cities are in the Western Hemisphere. Obviously, New York City isn't exactly a cheap place to live, but in the grand scheme of things we do okay.

The other is that two of the most expensive cities are in Africa — Luanda and N'Djamena. Given the poverty of Angola and Chad, these aren't "high cost of living" cities per se. What the report is capturing is that they're expensive places for an international businessperson to live in. That means housing in a secure community is expensive, and imported global goods are very expensive. These cities are unattractive locations for global firms to do business.

A third is that of Europe's most expensive cities, three — Geneva, Zurich, and Berne — are all in Switzerland. That's in part a consequence of exchange rate dynamics. But it also shows that despite Switzerland's very aggressive efforts to shape itself as a business friendly European destination, they're still falling down on some basic attributes, most notably affordable rental housing.

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Rich Sandomir of the New York Times is upset that Sports Illustrated let LeBron James pen a James-bylined first-person account of his return to Cleveland rather than insisting on a more traditional reported scoop.

I don't really see a problem with what SI did. But what I think is really missing from Sandomir's story is any sense of what's the counterfactual here. Suppose SI did refuse to run a first-person story from James. Suppose ESPN and other legacy outlets also played by the same rules. What happens then? Well, James publishes the first-person story on Medium or he does a Fanpost for Fear The Sword or he posts the story on his website or his Facebook page or he does it as a tweetstorm.

I'm not someone who thinks media brands are irrelevant.

Editors and publishers have enormous value we can add to 95 percent of the work that 95 percent of the people who'd like to write stuff would be interested in doing. But we can't add anything to LeBron James announcing he's returning to Cleveland. He doesn't need Sports Illustrated's help getting that story distributed. It is guaranteed universal, instantaneous pickup wherever it's published. Now LeBron probably does need help with the composition and editing of his account. But the guy is worth hundreds of millions of dollars. If he didn't work with a Sports Illustrated writer, he could have hired any number of freelancers to work with him to publish on any platform.

Under the circumstances, SI made the only reasonable choice.

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A new analysis from Gallup shows that opinions of President Obama are heavily correlated with religion — Muslims and Jews love him, Mormons and Protestants do not:


Of course, common sense reminds us that these sectarian divisions are heavily mediated by race and ethnicity. Catholic views of Obama more or less track those of the American public overall. But if you looked deeper, you'd doubtless find that Obama is well-liked by Latino Catholics and disliked by non-Hispanic Catholics. Similarly, a large share of the pro-Obama Protestants in America will be African-American while the views of white Protestants may not be so different from those of white Mormons.

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The trust fund that pays for federal transportation spending in the United States is running out of money in August, prompting a big congressional debate over how to refill its coffers. But the the main proposals offered by the Senate Finance Committee and the House Ways and Means Committee both miss a crucial fact: Americans are driving less than they used to.


The decline in driving is relevant to the debate for two reasons.

One is that it directly impacts the revenue situation. Federal transportation spending has historically been financed by federal gasoline tax revenue. The idea was that money for highways should come from people who use highways. That worked until the mid-aughts when gasoline tax revenue started to fall.


What happened? American cars have gotten more fuel efficient over time. Once the actual amount of driving started to plateau those improvement in fuel economy began driving nominal gas tax revenue downward. Meanwhile, each and every year inflation slightly eats away at the value of the gasoline tax. But congress kept on spending money on highways, rapidly depleting the trust fund until it was patched in 2012 with general revenue. The proposals on the table in congress right now are all proposals to find new kinds of patches.


Right now, fees on drivers account for only 72 percent of federal transportation spending, and even less than that at the state and local level. This is offset partially by the fact that a share of transportation spending goes to mass transit rather than highways, but at all levels of government the highway share of total spending is larger than the user fee share.

Transportation policy was supposed to avoid this outcome for good reason — there's no point in building more roads than people want to use.

If the amount of driving happening in America is in decline, stepping up the level of financial subsidies offered to encourage driving is an absurd result. Either spending on roads should fall, or else road users themselves should be charged more money for their activity. Any other approach constitutes a deeply unwise ratcheting up of public subsidies to a polluting and dangerous activity, feeding a dynamic of overbuilding.

Highways and other roads are great. But they are also expensive to build. The traditional formula of trying to build a quantity of highways that's roughly proportionate to what highway-users are willing to pay to use them makes a lot of sense. The new paradigm in Congress where highway spending is unrelated to driving-related tax revenue is a bad idea, and its bipartisan embrace is one of the public policy disasters of the past few years.

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LeBron James startled the sports world today by announcing in Sports Illustrated that he'll be taking his talents to Cleveland, Ohio rather than resigning with the Miami Heat.

When James initially opted-out of the final year of his contract with the Heat, it was generally interpreted as a power play to restructure the team's contracts and attract some fresh talent. But as days went by without Miami succeeding in securing any firm commitments to add major new help, rumors grew that James was considering a return to his original team. Now it's happening. Here are five reasons why.

1) The Cavaliers are about as good as the Heat

Last season, the Miami Heat made their way to the NBA Finals for the fourth straight season. The Cleveland Cavaliers, by contrast, missed the playoffs for the fourth straight season. But despite those divergent fortunes, the currently constructed rosters of the two teams are about equal in quality.

NBA player evaluation is a controversial subject, but different metrics reach a pretty broad consensus that LeBron James is personally worth about 20 wins in the NBA (here's Nate Silver's preferred metric, here's one I like developed by economist Dave Berri) which is slightly larger than the gap in wins between Cleveland and Miami last season.

In other words, the Heat were a lot better than the Cavs solely because the Heat had LeBron James and the Cavs didn't. Add LeBron to the Cleveland roster, and the team is just as good. Except Cleveland, unlike Miami, has some young talent on the roster.

2) LeBron has extremely deep ties to Ohio


Personally, I like Cleveland. So much that I once proposed relocating Silicon Valley to the North Coast. But most people, given the choice, would rather live in Miami than in Cleveland. So to understand the move, you need to understand that James has deep personal ties to Ohio.

He grew up in Akron, not far from Cleveland. And he went directly from playing high school ball in Ohio to playing professionally for the Cavaliers. His wife is also from Ohio. He has no real personal or family connections in South Florida or anywhere else other than the Cleveland area.

3) The Eastern Conference is really bad

One major factor for James in deciding what to do this offseason is maximizing his chances of winning future championships. This decision is complicated by the fact that currently the teams located in the Western Conference are much much stronger than the teams located in the Eastern Conference. Last season, six of the top eight teams by point differential were in the West — including three of the top three.

That means that to maximize his odds of playing for the very best team in the league, LeBron would likely have to go West. But to maximize his odds of reaching the NBA Finals again, it makes the most sense to stay in the East. Speaking strictly in terms of probabilities, that makes the Eastern Conference attractive. And since the Eastern Conference is lacking in high quality teams, Cleveland looks about as good as any other destination. Stacked up against some potential Western suitors, the roster is unimpressive. But as we've seen, it's just fine compared to Miami's.

4) Nobody likes the Atlanta Hawks

Based purely on logical considerations, the best destination might well have been the Atlanta Hawks. Their record last season was slightly better than Clevelands, and their team also suffered a number of serious injuries that are unlikely to recur. They had the cap space to sign LeBron, and also play in a bigger media market that's still in the Eastern Conference.

And yet the Atlanta option never appears to have garnered substantial consideration from James or from any other high-profile free agents in recent years. It's not entirely clear why this is, but the city of Atlanta has gained a reputation for possessing indifferent sports fans who don't like to turn out for even reasonably successful teams.

5) If LeBron wins in Cleveland he'll be a hero

This is probably the most important consideration. When James decamped for Miami, he had aspirations of building a historic dynasty that would rival the Chicago Bulls teams that Michael Jordan led in the 90s or the Boston Celtics teams that dominated the NBA in the 1960s. It's clear by this offseason that it isn't going to happen. The James-led Heat mini-dynasty had an impressive four-year run, but not a historic one. Even if he won another ring there over the next three years, it wouldn't substantially change his legacy.

By contrast, winning even a single championship in Cleveland would be a huge deal. The Cavaliers have never won an NBA championship. The Cleveland Indians last won the World Series in 1948. The Cleveland Browns won a championship in 1964, two years before the inauguration of the Super Bowl. Any star player who leads any of these three teams to a championship, will be a sports hero to several generations of people in Northern Ohio. For a native son of the region to do it, would be especially special.

James has reached a point in his life and career where doing things that are truly special is what matters most to him and that means trying to win in Cleveland.

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Perhaps the strangest thing about John Boehner's lawsuit trying to rein in Barack Obama's use of unilateral executive authority is how plainly welcome the White House finds it.

"You're going to sue me for doing my job?" Obama himself mocked, speaking to supporters at a rally. Meanwhile, Thursday administration sources pushed multiple quotes and angles and twitter jokes around to journalists trying to gin up maximum Friday coverage. It's easy enough to understand why the White House doesn't fear this lawsuit. As Andrew Prokop has explained, the odds of the House GOP prevailing in court are miniscule. But it's more than that. Obama is thrilled he's getting sued, because public attention on the lawsuit actually solves the administration's biggest problem.

We can't wait


(White House photo)

Since Republicans took the House in 2010, Obama's basic political challenge has been that average American voters have a pretty poor grasp of the fundamental operation of the US constitutional order. People expect the government to do things to make their lives better, and when that doesn't happen, they grow angry at the person in the White House. When the president's agenda gets stymied in congress, people don't want to hear about filibusters or the Speaker's ability to keep bills from getting to the floor. They ask why the president isn't leading and getting things done.

That's why, in recent years, Obama hasn't just relied on unilateral executive action to advance his policy aims — he's tried really hard to highlight his executive actions. Every president has always used this kind of authority. But Obama has tried to brand it, tying this agenda together under the banner We Can't Wait. The problem is that, objectively, it's been difficult to attract substantial public attention to these We Can't Wait initiatives because they tend to be rather small-bore.

Do nothing Congress


(Chip Somodevilla/Getty)

Under the circumstances, the specter of a United States Congress literally picking a high-profile political fight over the idea that the president has been doing too much stuff is manna from heaven. Now there's no more argument over why the president won't lead. He is leading! Leading as far as he can possibly go! Leading so far that the Speaker of the House is complaining that he's engaged in an illegal level of leadership!

In a statement to reporters, White House Press Secretary Josh Earnest scolded that "at a time when Washington should be working to expand economic opportunities for the middle class, Republican leaders in Congress are playing Washington politics rather than working with the President on behalf of hardworking Americans."


Ezra Klein explains Boehner's lawsuit may be in order to avoid an impeachment battle

The implication that were Republicans not pushing this lawsuit they'd be reaching constructive compromises with the White House is absurd. The real world alternative to litigation is simply doing nothing — the parties don't agree and nothing Obama or Boehner does or says is going to change that. But that's not what the American people want to hear. Voters instinctively like the idea of compromise, collaboration, and action.

The current partisan debate is often described as a stalemate, but it's actually better captured by a more obscure chess term. Zugzwang is a situation in which the optimal move would simply be to pass and force the other player to make a move — except that passing is against the rules of chess. The best thing for House Republicans to do this summer and fall is nothing — Obama's approval rating is underwater, the GOP is poised to pick up seats in the midterms, and there's no need to rock the boat.

But conservative activists won't tolerate a pass strategy. They hate Obama and want Boehner to do something that expresses that hatred. Lawsuits are a milder move than impeachment, so given the realities of the situation the litigation is arguably a savvy move by Boehner rather than a blunder. But the impatience of the activist right is still a gift to the White House. Rather than leaving Obama to struggle impotently from the White House, it allows him to underscore the basic reality of the situation — there's stuff he would like to do that Republicans are furiously fighting to keep from happening.

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Understanding the pile-up of unaccompanied minors crossing the US-Mexico border is hard. Facile political analogies are easy. So suddenly the political world is ablaze with speculation and debate as to whether or not the crisis under way is "Obama's Katrina."

The truth, however, is that not only is the border crisis no Katrina, Katrina itself was no Katrina, at least not in the super-politicized sense in which Katrina analogies are intended. Consider the history of George W. Bush's approval ratings.

Cvfspjk4hesmzts2bc0brg See the Katrina Effect here? Me neither. Indeed, staring at this chart you may realize that you don't even remember when Hurricane Katrina happened. Specifically, an August 22-25 Gallup poll found Bush with a 40 percent approval rating. That number rose to 45 percent in the August 28-30 poll that coincided with the storm (the levees in New Orleans broke on August 29). In the September 8-11 Gallup poll, Bush's approval had ticked up to 46 percent. By the September 16-18 poll it was back down to 40 percent, then by the September 26-28 poll it was at 45 percent.

What's true — and clearly visible from the chart — is that the general Bush trend was steadily downward throughout 2005. But Katrina does not appear to have played any particularly noteworthy role.

If you want to pin Bush's post-reelection change of fortune on anything, the right candidate is Social Security reform. Bush was moderately popular when he won reelection in November of 2004, and retained strong ratings through the lame-duck winter. As his second term began, he pushed for large changes to Social Security. In his post-inaugural State of the Union address he opined that the program "was created decades ago, for a very different era." He noted that a range of Democratic Party officeholders had, over the years, proposed various kinds of benefit cuts. And without endorsing a specific plan, he called for bipartisan action on some form of privatization scheme, arguing that under such a plan "your money will grow, over time, at a greater rate than anything the current system can deliver."

Given Bush's success in his first term in securing substantial Democratic Party votes for a large regressive tax cut, for an invasion of Iraq, and for a bipartisan education overhaul (and his ability to squeak a second large tax cut and a major change to Medicare through congress with the backing of a few Democrats) it wasn't a crazy calculation on his part that this would work.

But it was the wrong calculation.

Democrats adopted a posture of unanimously rejecting full or partial privatization. Bush barnstormed the country in support of privatization, but to no avail. Social Security is incredibly popular, and root-and-branch Democratic opposition solidified partisan hostility to Bush. With no clear legislative path forward available, Republicans fell into bickering over the merits of various different versions of the Social Security reform plan which further eroded Bush's standing. It would be a huge oversimplification to lay responsibility for all of Bush's second term political problems on this, but Social Security privatization was the first big thing Bush tried to do and its failure certainly set the tone for a second term of political impotence.

If Social Security was Bush's real Katrina, we might say the Manchin-Toomey gun control bill was Obama's: an early post-reelection legislative initiative that looked promising at one point, but failed in a way that clarified there was no "mandate" and no real prospect for ambitious further legislating.

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Last week, Derek Thompson at the Atlantic unveiled a potentially devastating critique of the endless wave of trend pieces about the surge in young people living at home with their parents. The key is a single sentence lurking in the Census Bureau's reports on housing in America:

It is important to note that the Current Population Survey counts students living in dormitories as living in their parents' home.

Yikes. So is everyone wrong about everything? Fortunately, no. Housing economist Jed Kolko rides to the rescue with a definitive analysis proving that all your pre-existing biases are correct. There really are a lot more young people living with their parents today than there were ten years ago.

Two charts make it clear. First, the Census actually does let us separately track full-time college students from people who aren't full-time college students:

Shareof1824livingwithparents This shows pretty clearly that while it is true that many of the people counted as living with their parents are full-time college students (some of whom live in dorms, some of whom commute to a local school) the increase in living in home is being driven by people who aren't full-time students.

Still, is it possible that the surge is composed of a huge increase in the number of part-time college students? Maybe people are working a little, getting an associate's degree part-time, and living at home to save on expenses? Well, maybe. But here's a chart of what you might call older young people — it shows the exact same surge:

Shareof2534livingwithparents The best evidence, in other words, is that the conventional wisdom is correct. Due to high unemployment and sluggish wage growth, lots of young people who aren't in school don't have very much money in their pockets. And yet even though young people have less money today, rents are higher and mortgage lending standards are tighter. Higher costs plus lower incomes = growing need to economize, so more people are living with their parents.

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Foreign homebuyers are widely discussed these days — particularly in the New York-based media where the specter of Russians scooping up Park Avenue real estate looms large. A new report from the National Association of Realtors confirms that there's been a surge in international real estate purchases, but also undermines many of the common claims made about the buyers.

First, the surge. In the period from April 2013 to March 2014, foreigners bought $92.2 billion worth of American real estate — up 35 percent from the previous year.


The largest source of foreign buyers by far is the not-very-exotic land of Canada. Another big one is our other neighbor, Mexico, and the rather banal United Kingdom (the Canada of Europe). And the increase in the number of foreign buyers over the past few years is entirely attributable to a surge of Chinese buyers of American real estate. Russians are a small and shrinking share of the market.


The buyers, meanwhile, are largely headed to Florida. Florida's a nice place for a vacation and lots of Americans of means buy second homes there, so why should foreigners be any different? The warm climes of California, Texas, and Arizona also attract a lot of interest. The Manhattan pied à terre concept is much less popular.


Last but by no means least, the homes these foreigners are buying aren't necessarily extravagant. The $268,000 median price paid by a foreigner is more than what the typical American spends, but it's not crazy high either. There are clearly foreigners participating in the super-luxury real estate segment, but just as with Americans that segment is a minority of the market.

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New information released Monday by the Bureau of Labor Statistics shows massive improvement as of May in one crucial labor market indicator — the total number of job openings. Openings skyrocketed this past spring, with April and May seeing a surge in overall employment:


In absolute terms, the largest number of openings is available in the somewhat amorphous industry the BLS describes as Professional and Business Services. That's everything from lawyers to temps to consultants.:


But a particularly sharp surge happened in the Accommodation and Food Services sector:

Food_service_openingsThis is also the sector that registered the highest vacancy rate at 4.9 percent. That's not a historical high or anything, but it's in the neighborhood. That means employers in the legendarily low-wage food service sector are either going to need to start raising wages soon, or else start taking risks on the long-term jobless or people who've left the labor force. An example of why a little complacency about inflation could be very much in the public interest.

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The bankrupt City of Detroit's Water and Sewage Department cut off service to about 7,500 residents for unpaid bills in April and May and says the pace of cutoff notices has only accelerated in June. The situation is a tragedy for thousands of families, who worry both about the practical problems and social humiliation resulting from lack of water but also that they might lose their children to social services if they are deemed unable to bathe them properly. The problem has spurred bubbling outrage for the past several weeks, and even an intervention from a UN Special Rapporteur who deems the shutoffs "an affront to human rights."

How has it come to this?

1) The turnoffs are not a conspiracy


(Joe Guldi/Flickr)

A Canadian organization called the Blue Planet Project has done a great deal to publicize the situation, and cites the Michigan Welfare Rights Organization for the view that the crackdown is "a ploy to drive poor people of color out of the city to facilitate gentrification."

The reality, however, is that the ploy is much simpler than that: DWSD would like more people to pay their water bills. The utility estimates that almost half of DWSD's customers are at least two months behind on their bill, with an average arrears of $560. They also say that about sixty percent of households served with notice of an imminent shutdown pay up. In other words, DWSD is turning people's water off because the threat of doing so works as a tactic to get people to pay their bills.

2) Detroit's water bills are super-high


(Anna Fox/Flickr)

Part of the context for the massive number of people facing shutoff is simply that DWSD has been terrible about enforcement in the past. Another part of the context is that with the city filing for bankruptcy, getting cash now is a priority. Another part of the context is that Detroit is a very poor city, with a large number of residents who have trouble paying the bills.

But another big part of the context is that water is expensive in Detroit. As Anna Clark writes, Detroiters pay about double the national average for water — with rates scheduled to rise 8.7 percent — despite living in a region where freshwater is plentiful.

3) Detroit's water infrastructure is a disaster


(Bryan Debus/Flickr)

A December 2013 Associated Press article by Corey Williams can help you understand one reason why Detroit water bills are so high — the underlying infrastructure is a disaster with leaky pipes and vacant buildings causing the utility to spew water out wastefully. In fact it's such a disaster that Williams reported "city officials say they have no idea how much is being lost" to spills and broken pipes.

The city could drastically reduce its operating costs by incurring the one-time expenses necessary to upgrade its infrastructure, but that would require money Detroit doesn't have. Credit markets are supposed to finance useful investments for entities that lack current funding, but the DWSD is already almost $6 billion in debt and the city has filed for bankruptcy protection. Only by becoming more solvent first can the city possibly secure the funds necessary to improve the infrastructure. Hence the priority on securing cash now.

4) DWSD is also owed a lot of money by commercial customers


(Kevin Ward/Flickr)

The biggest unpaid bills come from commercial sources, not individual households. Clark's op-ed focused attention on the idea that Joe Louis Arena and Ford Field are major debtors, but an April investigation by the local Channel 4 news team showed that the biggest unpaid bills actually derive from the City of Detroit itself. A random apartment building and some now-vacant structures are also way up there. The hockey arena and football stadium aren't facing immediate cutoff because they're paying their current bills while simultaneously disputing some older charges.

5) Detroit is trapped in a downward spiral


(Jeff O'Brien/Flickr)

The problems of the water utility are, in a sense, a microcosm of the broader problems of Detroit. The city's water infrastructure was built to serve a much larger population than currently resides in the city (1.85 million in 1950 versus about 700,000 today). But all those pipes still need to be maintained, and pension and health benefits for retired workers still need to be paid.

Servicing all those legacy costs is expensive relative to the size of the city's current, diminished tax base. That means the basic value proposition — services received relative to taxes and fees paid — in Detroit is unattractive compared to what other cities (or even many nearby suburbs) can offer. This, in turn, tends to drive further population flight. Worse, the people left behind tend to be those lacking financial resources or useful social capital — further worsening the basic fiscal dynamic.

6) Other cities manage to deal with this


(Hampton Roads Planning District)

For all that Detroit is unique, the basic problem of water bills is common. Every city faces the same basic tradeoff — if you don't shut down water when people don't pay, then nobody will pay. But depriving indigent households who genuinely can't pay of water is inhumane and accomplishes nothing. Normal practice is to establish programs to assist needy households. In DC, for example, low income households are entitled to 400 cubic feet of free water while New York City has a range of programs targeting senior citizens and the disabled.

Many jurisdictions also run charitable or quasi-charitable initiatives where bill-payers can check a box on their bill to contribute to a local assistance fund. Clearly, a city whose poorest residents lack access to clean, healthy water is going to suffer serious public health risks and impaired economic opportunity on top of a humanitarian emergency. In other words, the basic problem is not unsolvable. But few cities have Detroit's level of outstanding unpaid bills, low-income population share, and legacy of mismanagement and poor oversight.

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As long as I've been writing about politics in Washington, income inequality has been something that left-of-center intellectuals like to talk about and professional political operatives regard as a non-starter in practical politics. That changed briefly in 2013 as the Obama administration began talking about inequality and the president gave speeches in which he warned about "a dangerous and growing inequality and lack of upward mobility that has jeopardized middle-class America's basic bargain — that if you work hard, you have a chance to get ahead."

He called that "the defining challenge of our time."

More recently, though, the old conventional wisdom has reasserted itself and, as Zachary Goldfarb writes for the Washington Post, leading Democrats are no longer talking about inequality in their political messaging. He connects this to an "ongoing dispute between the Democratic Party's liberal and moderate wings" but the striking thing about it is the extent to which the dispute is a dispute about speechwriting tactics and not public policy.

As it happens, I was at that "defining challenge" speech and immediately after the president finished speaking I got to talking to a wonk who was in the audience and whose views I knew to be well to the left of the key economic policy gurus in the White House. We agreed that what was odd about the speech was that while it unveiled a bold new framing of Obama's economic agenda, there was no new policy departure. What Obama stood for before inequality became the defining challenge of our time was exactly what he stood for after it became the defining challenge of our time.

In the speech, Obama touted the Affordable Care Act and food stamps, called for a higher minimum wage, said it's important to improve education, called for federally-subsidized preschool, called for corporate tax reform, and called for infrastructure spending. He reiterated his support for a budget deal that would rescind the sequester and reduce the long-term deficit. He defended Social Security and Medicare but also said "progressives should be open to reforms that actually strengthen these programs and make them more responsive to a 21st century economy."

In other words, he restated consensus Democratic Party ideas on the shape and purpose of the welfare state in America.

And the next Democratic Party presidential nominee — whether it's Hillary Clinton or Elizabeth Warren or whoever else — will run on those same ideas, whether or not they explicitly link them to income inequality (as Obama did in 2013) or not (as Obama did in 2008 and 2012). The simple fact of the matter is that today's Democrats don't disagree about very much. Every single Democrat in congress — and certainly any plausible national leader  — regularly backs proposals to make rich people pay more taxes in order to finance more generous benefits for people in the bottom half of the income distribution. Depending on your tastes, you may see this as a sign that the party has a strong agenda or a sign that the party has become intellectually stagnant but either way it's not much of a debate.

Indeed, the extent to which questions about whether speeches use the phrase "inequality" and/or strike a populist tone are under scrutiny these days are mostly an indicator of how little is dividing Democrats.

For a sense of what a real policy disagreement looks like, consider the brewing intra-conservative argument about taxes. The mainstream Republican view has been that the party should reduce tax rates on the highest-income Americans, even if doing so requires the middle class to pay higher taxes. But a dissident viewpoint embraced by Senator Mike Lee and others says the GOP should reduce tax rates on middle class parents even if doing so requires higher taxes on some wealthy people. Those are two different ideas. What you have on the Democratic side is really just two different ways of talking about the same idea.

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This map shows Amtrak stations by ridership; the bigger the circles, the more riders the station serves. Rail usage is dominated by the New York to DC route, which connects the two highest-ridership stations and has #3 Philadelphia in between them. Those three cities accounted for over 18 million boardings and alightings in 2013 (about 30 percent of total boardings). The eighth (Baltimore), 11th (Wilmington), 12th (BWI), and 15th (Newark) most popular stations are also on this corridor, adding another 3 million passengers or so.

Of course some of the ridership from the NYC-Philly-DC stations is bound for New Haven, Providence, Boston and other cities on the northern leg of the Northeast Corridor. But outside of the Boston-Washington Megalopolis, there's very little ridership happening, and even within it the bulk of the riders are in the southern half.

The vast majority of the stations and routes have very few riders, and you can see these absurd strings of little-used stations dotting the southeast and midwest. Providing that geographically expansive service is smart politics for a federally-run agency that needs to maximize its base of support, but it makes very little business or transportation sense.

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After a bit over five years of catastrophic unemployment and inflation below the Federal Reserve's 2 percent annual target, America's inflation hawks are having a moment. In the first half of the year, the unemployment rate has fallen by 0.6 percentage points to 6.1 percent — if that pace continues, by Christmastime it'll be downright low. Meanwhile, over the past twelve months consumer prices have risen by 2.1 percent — at long last slightly above the Fed's target.

So is it time for Janet Yellen to start curbing inflation? Here are eight reasons to doubt it.

1) Inflation hawks want lower wages


(Scott Olson/Getty)

Clamping down on inflation sounds good to most people since everyone would like to see a lower cost of living. But reducing the money supply so that workers in industries that are sensitive to interest rates and currency fluctuations (construction, manufacturing, auto retailing, etc.) lose their jobs isn't a reasonable way to reduce the price of gasoline or milk. The kind of inflation it makes sense to fight with tighter money is wage inflation, and that's exactly what the tight money crowd is worried about.

On June 20, Justin Lahart wrote a Wall Street Journal article headlined "America, Inc. Wakes Up to Wage Inflation" about how companies are concerned that a healing labor market will force them to raise pay and reduce profit margins. Two days after that, E.S. Browning reported for the same paper that "Inflation Is Back on Wall Street Agenda." But if higher wages sound good to you, then ringing the alarm bells about inflation doesn't make much sense.

2) Wage pressure is actually extremely weak


It's a sign of how weird America's priorities have become that Torsten Slock of Deutsche Bank actually presented the chart above as evidence that wage demands are getting out of control.

The red line shows actual wages. It says that since 1986 the five worst years for wage growth were 2009, 2010, 2011, 2012, and 2013 and that 2014 is set to be the sixth-worst. The blue line shown an indicator of wage pressures, and it shows that pressure has risen from its weakest reading ever all the way back up to a level that we previously only saw at the low-points of business cycles. If you think that Ronald Reagan's second term, and every single year of the Bush, Clinton, and W. Bush administrations featured out-of-control wage inflation, then you should worry about wage inflation today. But not otherwise.

3) Workers have been taking it on the chin


It is totally understandable that business executives aren't thrilled about the idea of reduced profit margins. That's their job. But while it's entirely true that the share of national output going to labor compensation has risen lately, it's been rising from record lows.

It would take a fair degree of additional wage inflation just to get us back to normal.

4) We're still missing a million manufacturing workers


Inflationistas like to point out that "capacity utilization," a measure of industrial output relative to potential, is nearly back to its long-term average level.

But consider a simpler method of industrial capacity — the manufacturing workforce. Despite years of much-hyped growth, we have over on million fewer people working in manufacturing than we did at the start of the recession. Indeed, we have slightly fewer manufacturing workers employed today than we did in January 2009, a time when nobody thought the economy was running out of slack.

It may be true that we will soon be faced with a below-average amount of excess manufacturing capacity. But we just suffered through a years-long spell of an above-average amount. So what's wrong with spending a few years in the other direction? It will give businesses an incentive to invest and grow our industrial infrastructure.

5) States are poised to cut taxes and fees

Screen_shot_2014-07-05_at_7.55.47_pm The recession took an unprecedented bite out of state government tax revenue, forcing governments to not only reduce services but also to raise taxes and fees (the latter of which can often — in the form of higher bus fare, for example — play politically as a spending cut). This is a subtle but real source of inflation in American life.

With revenue rebounding strongly on the backs of economic growth, governors and state legislators will have again have the ability to pull off the political magic trick of cutting taxes without reducing services. Those tax cuts will moderate price growth naturally in a way that doesn't restrain wages or reduce employment.

6) The jobs gap is still enormous


The economy continues to be afflicted by over 5 million "missing workers" who are neither employed nor actively seeking work. Some of these workers are over the age of 55, and perhaps simply in a state of irrevocable early retirement. But as this chart from the Economic Policy Institute shows, over 3 million of them are in prime working years and another 1.5 million are below the age of 25.

Macroeconomic policy dedicated to preventing currently employed workers from ever securing a raise essentially guarantees that no employer will ever face a strong business case for taking a risk on these missing workers. Yet keeping millions of able-bodied adults out of the workforce will do permanent harm to the American economy.

7) The last jobs report wasn't that good


The 288,000 jobs the economy added in June represented a perfectly decent level of job growth which, following hot on the heels of several other perfectly good months, has people in a happy mood. And rightly so. After a prolonged span of sub-par job growth it's natural to be happy about a return to normalcy. But don't mistake the past few months' worth of job growth for some kind of crazy boom.

Months better than this have happened many times in the past, and during the robust prosperity of the 1990s they happened regularly. It is possible that we won't be able to return to that kind of job creation without inflation first reaching uncomfortably high levels. But given that we have seen much faster job creation in the past, we owe it to ourselves to at least aim for it and see if we can achieve it.

8) Supply-side reforms can reduce inflation

Critics of expansionary monetary policy tend to propose instead, as John Cochrane did last week in the Wall Steet Journal, that we focus on supply-side reforms to create jobs. But this exact same logic can be applied in reverse. Throwing people out of work to moderate pressure on consumer prices is perverse in a world where many price pressures could be alleviated by improving public policy.

Allowing nurse-practitioners to treat patients autonomously could bring down health care costs. More broadly, many states have created a wide range of price-increasing occupational licensing cartels whose reform would reduce prices. Changing zoning laws to allow for more construction would ameliorate rent increases. The regulatory landscape is littered with potentially price-reducing regulatory reforms, ranging from over-the-counter oral contraceptives to embracing Uber and other similar companies (Lyft and Sidecar in the taxi industry, AirBNB in hotels).

Supply and demand intersect throughout the economy, of course, but insisting on demand-side solutions to supply bottlenecks in the housing and medical care sectors is especially perverse. Moderating rents and doctors' bill by engineering a situation in which people have to live in their parents' basements or skip routine treatments is absurd and destructive of the sources of long-term prosperity. The Fed should commit to keeping the labor market recovery on track, and challenge legislators and regulators to improve policy in other areas.

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The Export-Import Bank has traditionally had lots of friends in congress but not much in the way of big intellectual defenses. But Larry Summers offers one this weekend in the Financial Times, essentially a foreign policy rationale:

At a time when authoritarian mercantilism has emerged as the principal alternative to democratic capitalism, the US Congress is flirting with eliminating the Export Import Bank that, at no cost to the government, enables US exporters to compete on a more level playing field with those of competitor nations, all of whom have similar vehicles. Only by maintaining a capacity to counter foreign subsidies can we hope to maintain a level global trading system and to avoid ceding ground to mercantilists. Eliminating the Export Import Bank without extracting any concessions from foreign governments would be the economic equivalent of unilateral disarmament.

This is a great example of how economics underdetermines public policy. Suppose you think the best world is one in which no major government is running a targeted program to subsidize politically favored exporters. Is the quickest route to that endpoint for the United States to unilaterally abolish its own export-subsidy program? Or is to maintain our export-subsidy program until such programs can be phased out on a multi-lateral basis?

Summers' argument has some plausibility. On the other hand, consider this. To Summers, the existence of foreign export-subsidy programs is a key reason to keep the Export-Import Bank. So if the European Union were to unilaterally abolish its export-subsidy programs, Summers would be more favorable to abolishing ours. In other words, "unilateral disarmament" by the EU might make US disarmament more likely. So maybe unilateral disarmament by the USA would make EU disarmament more likely? It's extremely hard to know which way the strategic argument cuts, but whatever you make of it this would all hinge on something well outside the bounds of normal economic thinking.

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According to Gallup, 79 percent of Americans are satisfied with the level of freedom in their lives. That's a lot, but it's not even close to the 94 percent that New Zealand scores. And yet the leaderboard is curious. It's mostly full of the kind of countries that lead all sorts of quality of life indicators, but also features a few weird ones:

Freedom In Cambodia, widespread allegations of election fraud led to a months-long protest campaign early this year which was paired with violent repression. The present rulers were installed by the Vietnamese military after an invasion that threw out the Khmer Rouge. Freedom House says the government of Uzbekistan "suppressed all political opposition" and "the few remaining civic activists and critical journalists in the country faced physical violence, prosecution, hefty fines, and arbitrary detention."

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Matthew Quirk is a former journalist for The Atlantic who spent five years reporting on crime, private military contractors, the opium trade, terrorism prosecutions, and international gangs before moving on to the more entertaining terrain of thriller writing. James Patterson described his debut novel, The 500, as "The Firm goes to Washington, only with a whole lot more action." His second novel, The Directive, is quite possibly the world's first monetary policy thriller. A bank heist caper where the objective has nothing to do with anything in any vault.

In an interview conducted in mid-June, Quirk spoke to me about insider trading, break-ins, and the real source of security vulnerabilities in the modern American workplace.

The transcript has been edited for length and clarity.

Matthew Yglesias: How did you start thinking of the idea of doing a heist around economic data?

Matthew Quirk: I was casting about for the biggest hoards of money in the world, and you get to the Federal Reserve Bank in New York fairly quickly. But that's been done. Then I learned more and more about the trading desk, and my mind was blown.

You get to have this great line where you say, "There's $300 billion worth of gold in the basement, but the real money is on the ninth floor."

Yglesias: The Federal Reserve is in the news a lot, but people would be surprised to learn what's actually going on up there, right?

Quirk: Yeah. I was a reporter in Washington for a while, and I thought, "Oh, the Fed sets interest rates," because that's always what people say. But as you dig into it, you realize that the Fed just has to induce interest rates to where they want to be. They have to trade back and forth with these 19 or 20 banks, and they have 8‑10 guys at this trading desk, trading about $5.5 billion a day. That's actually how the government prints money and expands and contracts the monetary supply.

It's this high wire act. You explain it to people and they say, "Oh, it's a conspiracy thriller." You say, "No, no. That's the real part. I haven't gotten to the conspiracy yet." But it's a miracle that it works.

Yglesias: The point is, if you know what the trading desk is going to do you could make a lot of money.

Quirk:  Yeah, you could, especially if it were a contentious time, like this year where everyone's freaked out about the taper.

Yglesias: As far as we know, there haven't been any high‑profile break‑ins at the Fed. But are there examples we know of insider trading based on government data?

Quirk: Yes. There was a study recently that looked at the pattern of trading in gold, right around the Fed statements. It found that the markets factor in the news 15 minutes before it becomes public. They did statistical controls and it was strong evidence — it went back to 1997 and found profits as high as I think $256 million — so it seems to be coming out of the press lockups.

Yglesias: Have people tried to break into the New York Fed, maybe just to get that gold? Or is it too obviously secure and nobody goes for it?

Quirk: They had a big computer security breach last year. I don't think there's actually been a physical attack on it. The funny anecdote I heard is that after September 11th they evacuated the security guards for health concerns, and that was the first time they realized there weren't locks on the doors. It had been guarded continuously since 1923, so they had to call a locksmith.

Yglesias: But the big idea of the book is that in practice, social engineering is more important than physical security, right?

Quirk: Yes, the idea is that, rather than a heist relying on brute force like blowing up the safe, or stealth like doing gymnastics through a laser field, you get in by abusing people's trust.

When I planned out the book, I actually talked to the red teams that work for government facilities to try to break into them, and most of their techniques are based on social engineering and getting people to trust them and let them in.

It could be something as simple as having two cups of coffee — like when I went into  the elevator at Vox’s office, somebody saw I was busy and they just swiped me in because I look like I belong here. Another famous one is the smokers' door. If you get to the smokers' door before the smokers come out and you seem like you belong there, they'll let you back in the building because people are very reluctant to challenge people.

To beat social engineering, you would have to challenge everyone, which just isn't in our makeup. It works at the Pentagon, they have guys with podiums everywhere whose job is to challenge people. But otherwise if you turned around and slammed the door in someone's face and said, "swipe in," you would seem so rude, and that's just so against human nature. That's the trait that these guys use to break into places.

It was fun to plot out a Fed heist that would rely on those techniques, and that would actually look like how a break‑in would occur, today.

Yglesias: Basically your security's only as good as the mindset of the people working for you.

Quirk: Yeah, and at the Fed, the outside is very intimidating. It's all limestone and sandstone, they have a turret. Once I got past security, they waved me through the man traps — which are these scary extra heavy security turnstiles — with a group of employees, and then I was on an elevator with no key control. Even your office has key control in the elevator.

I just said, "Oh, I'm on nine." Then I went up to the floor with a desk on it. Inside, it was just a culture of economists and bankers, so I was able to snoop around. I was astonished by that.

Yglesias:  Of you couldn't put together a giant break‑in, you could probably hire Ben Bernanke as a consultant, or to come give you some speeches. Isn't that the real way to get this information?

Quirk:  Absolutely. It doesn't make for a good thriller, to just have a private room with Ben Bernanke. But the really interesting thing about the former Fed officials is, if you do a full term as a governor, you're allowed to go directly into banking. Larry Meyer, who runs Macroeconomic Advisors, he will routinely describe Fed vote counts and other stuff that’s not public.

The former Fed officials keep their IDs to the Federal Reserve system, and they can go and use the gym and the barber shop and the dining hall.

After a dinner event with Ben Bernanke, the hedge fund manager David Tepper basically told The New York Times: "I didn't realize how good his information was. I would have traded on that. He totally told us about that bond rally," so besides the potential leaking from the lockups, there's this old boys' network.

Although sometimes those guys, even after they purport to have inside information, still bet wrong — like in 2010 a lot of them bet wrong, including PIMCO.

Yglesias:  So you might think you have better information than you really do, or be getting conned by someone.

Quirk:  Yeah. The Fed ... it's crazy, because the major banks own the stock of the Fed — so they technically own it — and the Fed is responsible for stability, so the last thing it wants to do is surprise these people. It somehow has to ask them about economic conditions, do everything it can to reassure them about the way it's going, and do that without tipping its hand at all.

Some people argue that it's impossible that the Fed could keep information from the major traders.

Yglesias:  The book ends on a cynical note about how the legal system works. It involves this big policy institution. Is there a message you want people to take away?

Quirk: I'm not trying to score political points. I don't really like to get on a soapbox in the book. But if you look at the financial crisis of 2008 and the number of people who have been held accountable for it, if you look at the way the recovery and stimulus has been done ... I don't know if they had any other options, but it's definitely been top‑down. Banks and investors have recovered, but Main Street jobs are lagging behind.

A little bit of cynicism is in order, and it's nice when I'm writing the books that I can be more than just an action plot, and reflect the world as it is, and gesture to some larger issues.

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The Declaration of Independence, ratified by the Continental Congress on July 4, 1776 is best known for its clickbait headline about all men being created equal. But Thomas Jefferson was also an important pioneer in the art of listicles and explainer journalism. He understood that complicated ideas are often easier to read and assimilate when they're broken down into a highly structured format that helps guide you through the thinking.

Thus he produces the following 27 reasons these United Colonies ought to become Free and Independent States:

1) He has refused his Assent to Laws, the most wholesome and necessary for the public good.


2) He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.


3) He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.


4) He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their public Records, for the sole purpose of fatiguing them into compliance with his measures.


5) He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.


6) He has refused for a long time, after such dissolutions, to cause others to be elected; whereby the Legislative powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.


7) He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.


8) He has obstructed the Administration of Justice, by refusing his Assent to Laws for establishing Judiciary powers.


9) He has made Judges dependent on his Will alone, for the tenure of their offices, and the amount and payment of their salaries.


10) He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.


11) He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.


12) He has affected to render the Military independent of and superior to the Civil power.


13) He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation.


14) For Quartering large bodies of armed troops among us.


15) For protecting them, by a mock Trial, from punishment for any Murders which they should commit on the Inhabitants of these States.


16) For cutting off our Trade with all parts of the world.


17) For imposing Taxes on us without our Consent.


18) For depriving us in many cases, of the benefits of Trial by Jury.


19) For transporting us beyond Seas to be tried for pretended offences.


20) For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies.


21) For taking away our Charters, abolishing our most valuable Laws, and altering fundamentally the Forms of our Governments.


22) For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.


23) He has abdicated Government here, by declaring us out of his Protection and waging War against us.


24) He has plundered our seas, ravaged our Coasts, burnt our towns, and destroyed the lives of our people.


25) He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.


26) He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.


27) He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages, whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.


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I used to talk this way myself, but my wife is a Texan and so I now know perfectly well that barbecue is slow cooked smoked meat and not just anything grilled over hot coals:

The economy added 288,000 new jobs in June, according to the latest release from the Bureau of Labor Statistics. That was well above economists' pre-release consensus forecast. The BLS also added a net of 29,000 jobs thanks to revisions to the April and May numbers.

Meanwhile, in the separate household survey the unemployment rate fell to 6.1 percent.

This isn't exactly game-changing news for the economy but it is consistent with a recovery that's not just continuing, but accelerating a bit. In other words, it's a sign that the awful first quarter GDP reading is an outlier that's not necessarily indicative of a broader economic disaster.

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What did Janet Yellen do today? Let's ask Google News:

Yellen Central banking is hard.

The Bureau of Labor Statistics normally issues its monthly Employment Situation Report on the first Friday of the month, but in honor of Independence Day it's being pushed forward to a Thursday this week.

The economic news so far in 2014 has been a bit weird. The initial estimate of GDP growth in the first quarter was bad, and after revisions it came to look downright terrible — as best we can tell, economic output shrank at a 2.9 percent annualized rate in the first three months. And yet despite that awful news, most economists are downright complacent about the state of things. One reason is that though job growth in the first five months of the year hasn't been stellar, it's been at a bit of a faster pace than what we saw in 2013 or 2012.

Meanwhile, other important indicators like auto sales and credit growth have been strong.

So broadly speaking, most people are expecting pretty good news to continue. Reuters' poll of economists found that they're expecting non-farm payrolls to grow by 212,000 which would be the fifth straight month of above-200k job increases. If that happens, people will continue to shrug off the Q1 GDP number and just wait to see what happens in the second quarter. But given the bad GDP news, if the jobs number disappoints — or if we see negative revisions to previous months' data — today's complacency could easily turn into tomorrow's panic.

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Fifty years ago today, Lyndon Johnson signed the Civil Rights Act into law. The landmark legislation barring racial discrimination in employment and public accommodations was, alongside 1965's Voting Rights Act, the culmination of a decades-long struggle to break the back of institutionalized racial segregation in the American South. At least since the 1930s, the civil rights issue had sharply divided the Democratic Party, which was torn between a northern liberal faction and a southern faction that despite some disagreement on economic policy was monolithically in favor of white supremacy.

LBJ was himself a southern politician who opposed civil rights for most of his career before embracing the cause as he emerged on a national stage. The intense pressure brought on national Democratic leaders by the civil rights movement's marches and actions combined with the political momentum generated by President Kennedy's assassination led the Johnson administration to directly confront the segregationist faction of his party and push for a bill that deeply divided his party.

Soon after signing the bill he famously remarked to an aide that the Democratic Party had "lost the South for a generation."

This managed to be both too pessimistic and too optimistic.

In 1976, Jimmy Carter was able to capture the White House mostly with southern electoral votes thanks to a strong biracial coalition in which the backing of newly empowered African-American voters was more than enough to overcome a deficit among southern whites. But we're now well over a generation removed from the Civil Rights Act and the South is, on the whole, more Republican than ever. Back in 2011, the Matt's Maps blog pulled together some charts that illustrate the surprisingly slow but remarkably steady southern march to the GOP.

Here's the US House of Representatives:

Republican_percentage_of_house_seats Here's the US Senate:

Republican_percentage_of_senate_seats And here's the state legislatures:

Republican_percentage_of_seats_state_legislatures1 One reason the realignment was so slow was that even though some segregationist politicians swiftly switched to the GOP (Strom Thurmond), quite a few conservative Democrats lingered in congress for a long time. John Stennis of Mississippi signed the 1956 Southern Manifesto, voted no on the Civil Rights Act, and stayed on as a Senate Democrat all the way until 1989.

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Here's Budweiser getting patriotic:

But of course these days, Budweiser is a subsidiary of AB Inbev, a Belgian company. Drink something else.

Chief Justice John Roberts, writing for the Supreme Court in the case of Riley v California this morning established an important precedent about the need for law enforcement officers to secure a warrant before searching someone's cell phone.

He also established a crucial cultural precedent by ruling, accurately, that iPhones and Androids and such aren't really phones at all (emphasis added):

Cell phones differ in both a quantitative and a qualitative sense from other objects that might be kept on an arrestee's person. The term "cell phone" is itself misleading shorthand; many of these devices are in fact minicomputers that also happen to have the capacity to be used as a telephone. They could just as easily be called cameras, video players, rolodexes, calendars, tape recorders, libraries, diaries, albums, televisions, maps, or newspapers.

This makes the decision not just a win for privacy, but an important victory for those of us who hate phone calls but love our iPhones. Steve Jobs did many great things, but giving that particular device that particular name was a mistake.

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Debates about "health care costs" or "health care spending" oftentimes conflate two separate issues — the prices paid for health care services and the quantity of health care services received. But these are different things. Outside the health care sector, we take it for granted that people getting more stuff is one thing (rising living standards) while rising prices for stuff is another (inflation).

So here's Jason Furman to draw the distinction:

This is super important. The only caveat is that in the health care sector there's a third wrinkle. More doctors visits is a lot better than pricier doctors visits, but what we really want out of the health care system is good health outcomes.

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Regardless of what happens tonight in the Mississippi Senate race, I'm really struck by the basic fact of Thad Cochran's age. The guy will turn 77 in December and he's running for a new six-year term. He's hardly alone in trying to hang on to a Senate seat deep into old age, but it strikes me as an unwise behavior.

But beyond unwise, I'm just surprised that politicians in their late-seventies find reelection appealing.

Charlie Rangel is even older. These veteran members of congress get nice pensions and health care benefits.

Here is a Tweet from Delta:

And here is a map made by Mysid using International Union for Conservation of Nature data of where giraffes live (the political boundaries of Sudan as shown on this map are outdated, but the point about giraffes and Ghana stands):



One piece of feedback I got about my piece on Democratic unity was whether the party's disagreement about K-12 education policy is really just a special case of a larger disagreement about labor unions.

The answer I think is: maybe in theory, but probably not in practice.

To the theory. Based on years of conversation and reporting, I'm quite convinced that there are some Barack Obama appointees who think that a large-scale revival of union membership in America would be really good for the country and there are others who think it would be either non-beneficial or perhaps actively harmful. This same division probably recurs in the congressional caucus.

But not much comes of this in practice because union advocates don't really have a plausible proposal to make that revival happen.

There's no ask that's so big that union-skeptical Democrats feel compelled to say no. And basically all Democrats, whatever they think about the big picture, are perfectly comfortable with the idea of union-friendly appointees to the NLRB and the National Mediation Board and the Labor Department and so forth.

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This time it's war for oil:

Americans seem to think that the vast increase in domestic oil production from shale deposits has immunized the U.S. economy from Middle East instability. Not by a long shot. The International Energy Agency has warned as clearly as it can that projected low prices of oil in the future depend more on increased Iraqi oil production than on North American shale. And every postwar American recession has been preceded by an increase in oil prices, often the result of Middle East instability.

The cure involves "drone strikes, weapons, reconnaissance assets, targeting assistance, improved and expanded training for his forces, even manned airstrikes."

What could go wrong?

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D-Day according to the Financial Times — great news for French railway stocks:

The news that Bill de Blasio is considering moves to legalize the keeping of ferrets as pets reminds me naturally of this classic radio interview in which Rudy Giuliani flies off the handle at a pro-ferret activist:

Jonathan Ezer made a cool visualization of my piece on implicit bias and what America's racism problem really looks like:

With inherited wealth in the news thanks to Thomas Piketty, it's cool that Bloomberg's billionaires interactive lets you sort billionaires according to whether they're self-made or inheritors.

Except this turns out to be challenging, and Bloomberg seems to err systematically on the side of proclaiming people self-made. Take Charles and David Koch, who inherited a substantial oil company from their father and then built it into an even bigger business. They're both "self-made" according to Bloomberg. But how many of us are lucky enough to inherit an oil company?

They also consider Alwaleed al Saud to be a self-made man. But the "al Saud" here is the ruling dynasty of Saudi Arabia.

At any rate, there's no cut and dry correct answer to this. Among the class of people who inherit a lot of money, the richest will be those who go on to manage their fortunes in a skillful or lucky way.

Another thing we see from the list is the importance of family size. Had Sam Walton had two children, they would be the second-richest and third-richest people on the planet. But instead he had four children, so his heirs currently occupy slots 9, 10, 12, and 13. If the very rich were to consistently maintain above-average levels of fecundity, that would disperse intergenerational wealth accumulation pretty effectively. By contrast, if they decided to adopt primogeniture the heirs would inherit the earth quite quickly.

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Paul Krugman observed recently that if you look exclusively at prime-age workers — people between the ages of 25 and 54, in other words — the employment rate in France in actually higher than in the United States. If you delve a bit deeper into the data, this turns out to be a highly gendered phenomenon:

France If you look at men, the gap seems to have come and gone with the Great Recession and I would speculate it has to do with the fact that French labor law makes it harder to lay fire workers with seniority. But among women the gap is larger and more durable. This presumably has something to do with the fact that France has a much more robust system of publicly provided child care, so it is considerably easier for prime age women to work while raising children.

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A sort of bonkers ESPN piece features the idea that "Minnesota has been in search of a savior since KG, but shouldering the load isn't Kevin Love's thing."

In other words, we're supposed to see it as a sign of personal weakness that Love doesn't want to play for bad Minnesota teams that miss the playoffs.

One of many interesting things to note about this is that back in his peak performance years of 2003 and 2004, the Timberwolves paid Garnett $25 and $28 million a year. This season Love got $17 million. Adjusting for inflation, Garnett's 2004 salary equals $35 million in today's dollars. That's more money than any NBA player is currently paid.

And that, in turn, is no coincidence. The owners have acted over the past couple of CBAs to restrain how much money top stars get paid. One big consequence of that is that top stars are increasingly picky about where they want to play and increasingly forceful about getting there. After all, if you can't make mid-aughts Garnett money then you're going to demand some non-monetary compensation.

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Can't believe the NYT's innovation memo missed this approach to Facebook image selection.


Chris Hayes offers a take on the VA scandal that's calculated to warm the hearts of America's teachers unions:


These are arguments that should be familiar to fans of The Wire but the David Simon viewpoint has always puzzled me. Is a person who cheats in response to an incentive program the kind of person who's going to do amazing work in the absence of an incentive program, or the kind of person who's going to respond to the objective incentive to be lazy? If a data-based framework is imperfect, is going to a data-free one any better?

What is true is that you always want some kind of external check on your own metrics. The murder rate, for example, can't really be "juked" since dead bodies are easy to count. In addition to the state tests that are used for accountability purposes, students take the NAEP. And during the period that Hayes and Simon are so worried about, NAEP scores have generally risen while murder rates have generally fallen. Cheating is obviously bad, but it seems like a manageable problem occurring within the context of a successful effort to improve the quality of public services.

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Expressing some puzzlement over the decision to put Julian Castro in the cabinet, Brian Beutler refers to him as "mayor of a medium-large city."

It's worth noting that this is an area where the disjunct in America between the size of cities in the sense of political municipalities governed by a mayor and cities in the sense of metropolitan areas where people live and work is important. The San Antonio Metropolitan Area has about 2.3 million residents, making it 25th largest in the country and comparable to Portland or Orlando.

But the City of San Antonio — the place that Castro is the major of — is actually a really big city. With 1.4 million residents it's bigger than San Diego or Dallas or San Francisco or Boston or DC or lots of other cities that we think of as bigger cities than San Antonio. But there are ten states with fewer residents than the City of San Antonio. It's big.

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As The New York Times detailed in its 91-page memo on innovation strategy, there is no more frustrating experience on the contemporary social web than throwing a lot of work into a great piece of journalism only to see the traffic rewards accrue to a competitor's aggregation + superior social media packaging.

Which brings me to the case of 17 year-old Connecticut high schools senior Talia Maselli whose receipt of a corsage from Joe Biden after asking him to be her prom date is currently blowing up everywhere on social media.

Everywhere, that is, except for Maselli's own Facebook page where she hasn't even bothered to post the Hartford Courant photo that everyone is using to drive traffic. She did the legwork, but there is zero engagement with her brand as a result of all the effort. It's sad to see that many teens still don't have the nimbleness necessary to navigate the modern media landscape.

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Super interesting chart from the NYT's innovation report looks at how loyal the followings of the paper's different columnists are online:

Screen_shot_2014-05-19_at_1.29.13_pm At first glance, I thought this was just showing the relative popularity of different columnists. But these lines don't actually show that. Instead they're basically Lorenz curves that measure inequality among the columnists output.

The Bill Keller readership, according to this data, is extremely hits driven. Fewer than 10 percent of people who've read at least one Keller column have managed to read 10. By contrast, Paul Krugman (appropriately) has the most egalitarian distribution. Compared to other NYT columnists, his different columns have similar levels of performance.

That said from a broader lessons learned perspective, the takeaway here should be that even Krugman's column performance is very unequal. A handful of hit columns establish the breadth of a writer's reach, but few readers are loyalists who read every column.

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New state-level unemployment data is out and it shows the unemployment rate declining in 43 states. The striking thing continues to be very large gaps from place to place:

States Unfortunately for the country, the six very low unemployment states on the map have about 7.5 million total residents — somewhat fewer than New York City. But the moral of the story is pretty clear. If you want a job, head for Omaha or Salt Lake City or the wide open spaces of the Plains (or Vermont; there's always Vermont).

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