Matthew Yglesias's Blog, page 2327

A Falling Dollar Is A Real Wage Cut That Also Cuts Debts

Felix Salmon says "US workers are massively overpaid compared to their equally-productive and well-educated counterparts in countries all over the world" which is a rather mean way of saying that our country runs a trade deficit. What to do about it?

There are a number of ways that the discrepancy can be narrowed: wages in countries from Slovenia to South Africa could go up; US wages can go down; or the dollar can simply depreciate. Which is a lot easier than nominal or even real wage cuts.

If you're anything like me, your wages are denominated in dollars, so if the value of a dollar declines your real wages decline. Currency depreciation isn't an alternative to real wage cuts, it's a mechanism by which real wages can be cut. Of course on the level of rhetoric "we need to defend manufacturing in this country and make China stop its unfair currency manipulation" is a tough stand the voters will love whereas "we need lower real wages in this country" will get you booed off the stage, but these are closely related concepts.

But there are differences. One of the most important ones is that not only are Americans' wages denominated in dollars but so are our debts. If you make me swallow a wage cut via a cut in my nominal salary, then my mortgage debt relative to income will balloon. But if my real wage declines via a depreciation in the value of the dollar, then the cost of my mortgage debt stays even. Given that we're currently facing massive household debt loads, this is a much better path to take.

Is 'Fast Five' Really America's Most Racially Progressive Movie?

By Alyssa Rosenberg

Thanks to the good folks at PostBourgie, I stumbled across this Wesley Morris article in which he argues that the Fast and the Furious movies are the most progressive franchise in the country. I'm all for movies and television in which characters hang out in mixed-race groups of friends, date, love, and marry of people of races not their own without comment, in which non-white characters have permission to be mendacious, malign, even downright annoying without the content of their character being commentary on the color of their skin. But I also like pop culture where characters can comment on race without being issue movies or shows—this is actually one of the reasons I love Community as much as I do, because of scenes like this:

And this section in Morris' essay struck me quite strongly:

The movies have often dealt with race, of course, and when they do they tend to treat it as a serious and unwieldy problem. Sidney Poitier became a star in part by helping black and white Americans negotiate their new relationship in the post-Civil Rights era. As a rule, white characters—through white writers and directors—do a lot of the talking in these movies. Black characters rarely travel a similar dramatic arc. The bravery of Stanley Kramer's "Guess Who's Coming to Dinner" amounted to two Hollywood legends—Katharine Hepburn and Spencer Tracy—telling the world that a black son-in-law is something they can live with, and so should you, especially if he looks like Sidney Poitier and has degrees from Johns Hopkins and Yale.

That is the loose history of race as a subject in Hollywood: the province of a liberal white industry that wanted to promote fairness and equality, often at the expense of realism and sometimes at the cost of the black characters' humanness. Movies about race still tend to be self-congratulatory ("Crash") or mine tension for comedy, the way "48 Hours" and its offspring have. As a rule, a movie starring a white guy and a black guy is a movie about a white guy and a black guy. The enormous success of 2009's "The Blind Side," in which Sandra Bullock makes a black teenager one of the family, demonstrates that America isn't post-racial. It is thoroughly mired in race—the myths that surround it, the guilt it inspires, the discomfort it causes, the struggle to transcend it.

I sympathize with the idea that using movies as a means of doing the work of racial reconciliation is exhausting, and it often comes at the expense of black characters, and by reinforcing the idea that social change only requires a kindly white lady, not a radical revamping of institutions, attitudes, and concentrations of power. But as often as they go badly wrong, I'm not ready to say that we should give up on movies that acknowledge race as an issue rather than as a simple fact. The question should be what kind of work do we want those movies to do? Try to sell white people on working for racial equality by positioning it as a form of self-help?

(For the record, I think Kathryn Stockett's novel is somewhat more complex than it appears here, and if the movie restores that complexity, it's not really a nice-white-lady-saves-the-black-people story.)

Should we mash up race and class?

Make period pieces from historical perspectives that Hollywood doesn't spend much, if any, time in as a way of filling in the tattered document of the past? I don't have a definitive answer, and I think these are only some of the options. But if we want the movies to do the work of helping us formulate our opinions and means of action on issues of race, we should do the work of making sure they're good in the first place.

Non-Responsive Responses On Teacher Compensation And Retention Policies

A number of people who I customarily disagree with on education policy have recommended to me E.D. Kain's post disagreeing with me on education policy. But after reading his post, I just don't see what it is that I said that he disagrees with. Here's how Kain thinks we should treat teachers:

Here is my alternative plan: make teaching fun and rewarding. Treat teachers as autonomous professionals and make teaching more exclusive. Give teachers in urban and rural areas where turnover is high and schools are under-funded more support. Senior teachers can act as mentors at these schools. Expand the role of veteran teachers beyond classroom instruction. Let them use their experience and knowledge to help new teachers and try to curb the 50% turn-over rates.

That all sounds great to me! So what is it we were disagreeing about? What I said in my post is that if you take the idea that teaching matters seriously, then you can't seriously think that the Last In, First Out layoff policies and seniority-based compensation schemes that are mandated by most teaching collective bargaining agreements are a good idea. I don't understand what about Kain's ideas constitute an "alternative" to that. Implementing my ideas doesn't prevent us from implementing Kain's ideas. Implementing Kain's ideas doesn't prevent us from implementing my ideas. Kain might be interested to learn that his idea about expanding the role of veteran teachers is something my "reform"-y colleagues on the education team recently put out a paper about in which they note that this, too, is something that will require revision of most existing collective bargaining agreements.

Meanwhile, treating teachers like autonomous professional in an exclusive field isn't an alternative to changing hiring, compensation, and retention practices it requires us to do so. I think the Gordon/Kane/Staiger paper on "Identifying Effective Teachers Using Performance On The Job" (PDF) rather than a cumbersome-but-arbitrary certification system is still about the best thing on this.

What If Bin Laden Had Turned Himself In?

Something that's been on my mind since we found out where Osama bin Laden was hiding is the fact that by trying to save himself he actually avoided the opportunity to create a huge headache for the United States government. After all, suppose that six months ago he'd just walked into a Pakistani police station and surrendered. What happens then? A trial in Pakistan? Deportation to the United States? A new round of debates about military commissions, except this time at a much higher level of public attention? The whole thing would have been a political nightmare for an Obama administration that doesn't engage in Bush-style gleeful shredding of the rule of law but often seems disinclined to live up to its rhetoric on this score. A raid and a firefight are exactly what the government wanted.

Who Is Osama Bin Laden?

Jamelle Bouie, stuff that makes you despair for the future:

Oy.

Reducing The Deficit Would Be A Bad Idea

A joke from Lizz Winstead:

I'm not saying it's a good idea, I'm just saying our debt would disappear. #BinLadenTapeOnPayPerView

This is actually an excellent illustration of why reducing the deficit in the short-term would be undesirable. If you put video of the Bin Laden raid on pay per view, many Americans would reduce their consumption of other goods and services and instead hand money over to the federal government. In exchange, the federal government wouldn't need to borrow so much money. At certain points in time, reduced government borrowing would lead to lower interest rates on government debt which in turn would lead to lower interest rates being charged to corporate borrowers which would lead to increased corporate investment. But at this particular point in time, interest rates are extremely low—too low for us to boost investment substantially by making them lower. All you'd get is lower overall demand, and thus lower incomes, less output, and less employment.

Endgame

Practice makes you perfect:

— Jeffrey Simpson on the Canadian election.

— Conservatism, Canadian-style "a pledge to increase health care transfers to the provinces by 6% annually, the complication of the tax code with things like credits for going to the gym, and the continued funding of the arts."

— Growth and state fiscal policy (PDF).

— Richard Lugar calls for an endgame in Afghanistan.

— Dalia Lithwick says we should declare victory and bring back the rule of law.

— Gideon Rachman also wants to declare victory.

Panda Bear, "Slow Motion".

American Federation of Teacher Celebrates Teacher Appreciation Week With Teacher Bashing

I was shocked to read this on the American Federation of Teachers' official Twitter feed:

If you can't read, you can't Tweet. #thankateacher

Hasn't anyone told them that holding teachers responsible for kids' learning outcomes is teacher-bashing? That instead of talking about teacher efficacy we should be talking about poverty and segregation? No?

Of course not!

Because, look, it's totally obvious that teachers aren't the sole determinant of whether or not a given child knows how to read. Many parents teach kids the rudiments of reading before they start kindergarten. And throughout life questions about whether parents read to kids, encourage kids to read, have books around the house, etc. make a difference. So does the accessibility of a decent library or bookstore. So do a million other things. But when Teacher Appreciation Week comes around then of course teachers and their representatives want to emphasize the fact that one of the many things that makes a difference is the quality of teaching. Indeed, evidence suggests that quality of teaching is the most important non-demographic contributor to student learning. Acknowledging that isn't a form of "bashing" or "blaming" teachers, it's identical to celebrating their contributions. But once you accept that quality of teaching matters, then practices like Last In, First Out layoffs and compensation schemes based entirely on seniority and master's degrees don't make sense. Money to pay teachers is a finite resource and it's important to try to allocate it to the best teachers for all the same reasons that good teachers are important in the first place.

Two Reasons For a Corporate Income Tax

NB asks the question on the mind of every aspiring tax policy junky—why would you tax corporations as such?

Maybe this is stupid but after all the talk about corporate income tax lately (up here in Canada too), I find myself wondering what the point of corporate income taxes is. When you're taxing a person, it's easy to see where the money is coming from but when you're taxing a corporation, what's happening then? I suppose maybe it comes out of the pockets of the higher ups since there's probably more flexibility in pay there but maybe it comes out of the pockets of consumers in which case it's actually a regressive tax. What's the deal?

As I understand it, there are two reasons for having a corporate income tax. One is concern about tax evasion. If you made corporate income untaxed, then you might see all manner of rich people incorporating themselves as a tax shelter and then you'd have some huge enforcement headaches.

The other (and realistically more important) reason is just pure path dependency. Marie Diamond wrote for ThinkProgress yesterday about a Texas House committee moving to enact a tax break for yacht owners amidst a state budget crunch. That's in response to the fact that Florida recently cut its yacht tax. Now in both cases you could ask "how much sense does it really make to single out yachts for taxation?" and the answer is "not that much sense." Clearly the intent is to levy a consumption tax whose incidence will fall on the rich, but there are many technically superior ways of doing this. However, the point is that when you're in the midst of a state budget crisis, it's dumb to scrap the tax and need to engage in even deeper cuts in public services. It seems to me that the corporate income tax should be reformed in a revenue-generating way. If that means congress wants to scrap the tax entirely and replace it with some other kind of tax, that's worth talking about. But just scrapping it on the grounds that it's not optimal doesn't make sense. Lots of things aren't optimal, and you've got to work with what you've got.

How Important Is Pakistan?

Joshua Foust's overview of US-Pakistan relations in the wake of Osama bin Laden's killing is really great reading, but I'm not sure I agree with the conclusion:

Osama bin Laden's death at the hands of U.S. forces might not change the overall picture much, but it is clarifying. Even beyond the enormous political symbolism of the kill, it brings the particulars of the U.S.-Pakistan relationship into disturbingly sharp focus. Though often characterized by mistrust, the way this raid unfolded seems to indicate that the U.S. has never trusted Pakistan less than it does right now. But this just might be a good thing — the causes of that mistrust have long been present, but we are only now acting on them — especially if it results in more arrests or killings of senior leaders of al-Qaeda.

There are, however, downsides to the souring U.S.-Pakistan relationship. Pakistan's importance to the U.S. goes beyond the fact that terrorist groups inhabit its soil. It has nuclear weapons. It is one of the biggest recipients of Chinese economic aid (often targeted to annoy or provoke India and Iran). By sheer luck of geography, it will play an enormous role in the future of the war in Afghanistan, and the ultimate stability and economic interdependence of Central Asia. None of these things really depend on al-Qaeda. But if the U.S. destroys its relationship with Pakistan because of Pakistan's support for terrorism, we will be sacrificing much of our influence in a part of the world where influence is both increasingly important and hard to come by. In the end, if our relationship continues to sour, we just might not be that much better off after all.

I know that regional experts are often annoyed by the prognostication of know-nothings like me. But conversely, I'm often annoyed by regional experts proclaiming something or other to be important (or even "increasingly important") without explaining compared to what. The Pakistan government is important for the future of Afghanistan, but the most plausible reason to think Afghanistan is important is that it's important for the future of Pakistan. Pakistan is important because al-Qaeda is important, but if not cooperating with Pakistani authorities is the best way to fight al-Qaeda, then the Pakistan government can't be important for that reason. Pakistan matters because it's part of the China-India balance of power but of those three countries Pakistan is clearly the least significant.

This leaves us with the security of Pakistan's nuclear arsenal. That matters, obviously. But of course it matters even more to the Pakistani authorities then it does to us. It makes a ton of sense to, as Brian Katulis suggests, offer more assistance in this regard if Pakistan's government wants it. But that's not a reason per se to think we need to try to be nice to them and make them like us.