Dual mandate?

Unemployment remains high while inflation remains low. So, the Fed should do more to reduce the former, right? Uh, no, hints Chairman Bernanke. He thinks the economy is doing well enough to “taper” monetary stimulus. But we should keep in mind the inflation rate, which some argue is too low.



Matthew Yglesias weighs in here. He writes:

…He [Bernanke] said that if the economy improved enough, tapering would begin and he said it even though inflation is low and inflation expectations were falling. It’s essentially a posture that looks at QE purchases as evil per se, and thus something to be halted in the face of good news even in the absence of inflation. The Evans Rule for interest rates embeds the dual mandate in the correct way, saying that mass unemployment will lead the Fed to temporarily ignore a bit of inflation. The taper criteria did the reverse, saying that good economic news means tighter money even if inflation is well-behaved. With that kind of dual mandate in place, bad news out of GDP revisions means tapering is less likely which means the stock market rises. Meanwhile, we’re all left to cross our fingers and hope that the GDI number proves more accurate.

But a “bad news is good news” recovery can’t last for very long. What we need is a new statement from the chairman that good news is not bad news and there’s absolutely no chance of tighter money as long as inflation stays below target.


In this third installment of an elder’s story (second one here), I’ll mention briefly my parent’s obsession with stripes. A series of photographs of me, beginning at an early age and running through grade school, depicts yours truly in shirts with horizontal layers.

David (1948)

When you’re young, as I was in the above photograph, taken of me near my first birthday, stripes might be considered cute. Here’s another at Thanksgiving in 1952.

1952 Thanksgiving in SF

I dreaded indoor photographing back then, because the flash bulbs would blind me for minutes. You may have seen Hitchock’s Rear Window wherein Jimmy Stewart attempts to ward off Raymond Burr by setting off a succession of camera flash bulbs. Well, I could certainly relate.

Nancy and Dave in Richmond (circa 1951)

I don’t know the year of this photo; it may predate the previous one. I’m in stripes again, this time wider. My sister Nancy is on the left. I look anxious, with signs of early chubbiness in the face.

Dave in Richmond, CA (circa 1951)

And one final picture of the striped young man.

Liz, Grandma, Jim, Grandpa, David, Dad, and Liz (1958)

I consider this priceless. Not only am I in stripes, but look at those cuffs! You see, back in the day my pants were “husky” sized, which meant that they were big enough to fit around my waist but much too long for my stubby legs. So I rolled them up from the bottom. Quite the fashion statement for a boy just reaching adolescence. And that posed another problem, as my year-younger sister Nancy was actually taller than I was. Deflating.

Separate and unequal

Those who devised the U.S. Constitution hoped to erect a system of “checks and balances,” fearing concentration of power. So they limited the Executive while establishing a Senate that gives obvious deference to states. We now live in a country whose national legislature cannot accomplish much of anything, but it can and does stymie presidential initiatives.

However, one branch emerged over time to become the unrivaled super power. That would be the Supreme Court, whose rulings supplant congressional acts, becoming the “law of the land.” Over the years those rulings have engendered both joy and anger, depending on one’s political perspective.

Over the last couple of days the justices have issued decisions of great moment, choosing to: gut a long-standing and oft-renewed Voting Rights Act; allow for same-sex marriages; and dramatically increase the difficulty of seeking judicial relief through class-action lawsuits. Previous rulings cemented the court’s bias toward corporations and against the Rest of Us.

On the Voting Rights Act, law professor Richard L. Hasen writes for the New York Times about Chief Justice Roberts’s “long game.” The court’s decision yesterday paves the way for state efforts to frustrate minority voting. Hasen:

Here’s what’s going to happen now. Texas has already announced that it will put its voter-ID law into effect, a law that was on hold under Section 5 awaiting Supreme Court review. Texas’ law, one of the toughest in the nation, requires voters lacking acceptable ID (like a concealed-weapons permit) to travel up to 250 miles at their own expense to get one.

Texas’ law will be challenged on other grounds, but winning voter-ID cases has proved to be tough business. Now Texas can also re-redistrict, freed of the constraints of Section 5, splitting Latino and black voters into different districts or shoving them all in fewer districts to make it harder for them to have effective representation in the State Legislature and in Congress. The biggest danger of what the court has done is in local jurisdictions, where discrimination is more common and legal resources to fight back are thin.

Roberts certainly knows that Congress is incapable of addressing serious issues, including voting disparities and constraints. Nor will D.C. overturn any judicial ruling, because it is so dysfunctional.

All hail the Supremes!

The true job creators

Jon Talton, writing for the Seattle Times, begins his essay yesterday with these provocative words:

It’s time to stop criticizing the compensation of America’s job creators.

In fact, their pay as a share of gross domestic product has been falling since the 1970s, with the exception of a few years in the 1990s. If they have a job. Adjusted for inflation, most of them have seen nearly flat household incomes for decades.

I’m writing, of course, about the real job creators: Average American citizens who create demand in an economy heavily dependent on consumer spending.

His piece accompanied the paper’s annual exposé on CEO pay, which continues to rise inexorably. In addition to providing us some ratios of executive incomes to average worker wages, also rising, the report also reveals that there is absolutely no correlation between CEO compensation and company performance. Moreover, commanding a firm comes with perks none of us could ever gain, including chauffeurs, corporate jets, and even subsidized housing.

We may be unable to refrain from concluding that the game is rigged. Executive pay keeps going up while incomes for the Rest of Us stagnate or even decline. We are told to perform or else; and there are plenty of people ready to replace us after we’ve been escorted out the door with a single cardboard box. So we are understandably afraid of losing that job, since it pays the rent and food and perhaps even health care insurance.

If Talton is right, and I think he is, the economy would be doing much better if our wages were higher. Why? Because we’d spend more money, and when we spend more money on goods and services firms expand their businesses to accommodate increased demand, and that means more people working.

I say let’s start coddling the real job creators—the Rest of Us, of course. Wishful thinking, I know. If we’ve learned anything during the Great Divergence, it’s that the rich thirst after even more wealth and gladly realize their insatiable appetite on the backs of everyone else. They are not about to voluntarily reverse course. Nor is Congress, the best that money can buy, predisposed to correct the gross imbalance. What’s left?

There was a time in America when desperate people took matters into their own hands. They organized.

Sounds altogether quaint these days. As a nation we’ve evidently grown accustomed to lowered expectations as we defer to our superiors, who are only too happy to trumpet and accentuate the disparities.

As Yoda might say: pathetic, we are.

Communing with nature [u]

The composer John Luther Adams, years beyond his teen-age fascination with playing drums in a rock-and-roll band, took up residence in isolated Alaska, building himself a one-room cabin set in the wilderness. From there he wrote music, inspired by the frigid landscape about him. Now, in his 60th year, he lives with his wife in a more fashionable above outside Fairbanks, replete with an artist’s studio.

The Seattle Symphony Orchestra commissioned JLA to write a new piece. The band debuted Become Ocean this past weekend. My wife and I attended Sunday afternoon’s performance.

In the pre-concert lecture we were told that Adams’s work is unusual. The composer essentially divided the orchestra into three ensembles: two percussion and strings, along with a piano and celeste. Colored lights shone on the sections to emphasize their playing and differences.

Conductor Ludovic Morlot, substituting for the composer who was under the weather and unable to attend, prefaced the concert with as much a precaution as an explanation. Morlot advised that the score was in 4/4 with each beat roughly 60 per minute. As the performance was to last approximately 42 minutes, that would be 2,520 beats over 630 measures. Also, rather than over think the piece, the advice was to allow ourselves to become immersed, to reflect as if viewing and hearing a “landscape.” We may think that we’ve entered a very long-running composition, since there would be no clear beginning or end.

Well, we listened and watched. Despite a few interesting sounds, shall we say, and very ocean-like, and a very muted light show, when the production ended I said, “Mercifully.”

There is a problem it seems, denying oneself human interaction. Being one with nature, the “spiritual,” according to Adams, I could not avoid an obvious conclusion: boring.

Perhaps Morlot’s pre-performance admonition foretold the outcome. He invited us to close our eyes and to even fall asleep—but “no snoring.”

UPDATE (July 1, 2013):

What do I know?

The New Yorker‘s Alex Ross visited Seattle to attend both rehearsal and premier of John Adams’s piece. As he writes in the July 8 issue, he came away “reeling.” Also, Become Ocean, he continues, “may be the loveliest apocalypse in musical history.” The combination strikes me as odd. A lovely planetary destruction? Perhaps I was too harsh above. After all, I did not fall asleep.


Don’t smoke while drinking your water

The headlines read: “Studies Find Methane in Pa. Drinking Water.” From the brief article:

Methane is an odorless gas that is not known to be toxic, but high concentrations can be explosive.

The Marcellus Shale Coalition, an industry group, had no direct comment on the Duke findings. CEO Kathryn Klaber says private water well construction and methane migration are longstanding issues in Pennsylvania.

Gas drilling has recently boomed in Pennsylvania, Ohio and West Virginia.