Matthew Yglesias's Blog, page 2472

No Merry Christmas For Persecuted Iraqi Christians

Baghdad Latin Church

Steven Lee Myers reports for the New York Times that there's a new wave of Christian refugee flows in Iraq "amid a campaign of violence against them and growing fear that the country's security forces are unable or, more ominously, unwilling to protect them."

Those who fled the latest violence — many of them in a panicked rush, with only the possessions they could pack in cars — warned that the new violence presages the demise of the faith in Iraq. Several evoked the mass departure of Iraq's Jews after the founding of the state of Israel in 1948.

"It's exactly what happened to the Jews," said Nassir Sharhoom, 47, who fled last month to the Kurdish capital, Erbil, with his family from Dora, a once mixed neighborhood in Baghdad. "They want us all to go."

The invocation of the persecution of Middle Eastern Jews in the late-1940s is interesting. In late October my colleague Matt Duss compared the mass-displacement of Iraq civilians to the Palestinian naqba that preceded those events. Either way, the history of both the Middle East and other parts of the world is full of examples of this mass-displacement episodes laying the seeds of future bitterness and political conflict. It's a reminder that for all the putative "success" of post-2007 Iraq, the scale of the human tragedy remains enormous and the extent of the lingering problems remains under-appreciated in the United States.

Financial Reform in a World Where Committee Chairmen Think Regulators Should Serve Banks

Early efforts to force derivatives onto a central clearinghouse are apparently running into some trouble as big banks try to shut everyone else out. That's an important reminder that all the ket issues in financial regulation really have to do with implementation. Will regulators have the opportunity to do the right thing? And will they be encouraged to do so?

Spencer Bachus, Republican of Alabama and new Chairman of the House Financial Services Committee seems determined to make things work out as poorly as possible:

"In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks," he said.

Hm. The same article notes that "[w]ith Sen. Richard Shelby, R-Ala., as the top Republican on the Senate Banking Committee, it further cements Alabama's legislative power on issues that affect the industry and consumers." Fortunately for America, Alabama has a legendary good-government political culture that's allowed it to climb to the top of so many social indicator league tables. Nothing could possible go wrong.

Letting the Art Out

I don't know anything about art, really, but I do enjoy Renée Magritte (memorably described to me by an art critic friend as a "painter for people who don't like art") and am always glad when I see his work on the wall of a museum. Meanwhile, it took a trip to Berlin for someone to mention to me that the Museum of Modern Art in New York has taken the excellent step of putting its complete collection, including works that aren't on display, online in a searchable database. So I did a quick search for Magritte and—behold—several works I've never seen before even though I've been to MOMA three times since its renovation:

You can even go here and listen to a brief talk about the painting. Very cool.

My only critique is that given the relatively low resolution of these files it would be easy for the museum to release these images on a Creative Commons license without needing to worry about cannibalizing the market for prints. If you think about a future world in which all museums are putting their collections online, the best outcome would be for innovative people (perhaps affiliated with existing institutions or perhaps not) to be able to take these imagines and do things with them. Create "virtual exhibits" of different kinds mixing and matching works from different sources the way is currently done (with great care and at great expense) with traveling shows.

To make a policy point, all this is a great example of the consumer surplus issues at stake in getting the various aspects of this right. Creating a world in which a kid in Boise or Bangalore or Bangkok or Bethlehem and an interest in art has all the world's most important paintings at his fingertips is going to have only a tiny impact on measured economic output. But the welfare gains of vastly expanding the horizons of culture available to people around the world are nonetheless substantial.

Only Nixon Could Go to Ireland

Timothy Naftali's been doing the Lord's work since he was sent by the National Archives to wrest control of the Nixon Library from the Nixonphiles, and while the anti-semitism revealed in the latest tapes won't surprise anyone this seems like a very strange thing to say about Irish people:

In a conversation Feb. 13, 1973, with Charles W. Colson, a senior adviser who had just told Nixon that he had always had "a little prejudice," Nixon said he was not prejudiced but continued: "I've just recognized that, you know, all people have certain traits."

"The Jews have certain traits," he said. "The Irish have certain — for example, the Irish can't drink. What you always have to remember with the Irish is they get mean. Virtually every Irish I've known gets mean when he drinks. Particularly the real Irish."

Drunk Irish people are fun! Everyone knows that. Meanwhile note that Irish affection for booze is not just a lazy stereotype, the people of Ireland do in fact have the world's second-highest per capital alcohol consumption after Luxembourg, a tiny oft-ignored outlier in many ranking lists.

Insight of the Day

From Nick Rowe: "Countries like the UK, US, Japan, have large debts and deficits. But they control their own monetary policy, and none of them have monetary policy anywhere near that tight. If they did set monetary policy that tight, they too would have a solvency crisis."

How tight is "that tight"? Well, it's Ireland tight. Coincidentally, Ireland doesn't control Ireland's monetary policy.

QE2 + Payroll Tax Cut = Helicopter Drop

It seems like only yesterday that I was hearing from people that QE2 wouldn't be very stimulative because what's the point of lowering interest rates when rates are already low. Then last week I was hearing that the tax cut stimulus deal might be bad because it was pushing interest rates up a bit.

It seems to me that the right way to think about it is that these are two great tastes that taste great together. Fiscal stimulus helps the economy by boosting demand, but we need to worry that it will raise interest rates which puts a drag on the economy. But here comes Mr Bernanke who can buy bonds and keep interest rates low. Ta-da, economic boost! The combination of quantitative easing and payroll tax cuts is, in effect, a "helicopter drop" of money onto employed American. And the combination of quantitative easing and Unemployment Insurance extension is, in effect, a "helicopter drop" of money onto unemployed Americans.

The trick looking forward to the next recession would be to come up with some less agonizing, less ad hoc, more predictable monetary policy response to a situation in which the economy is depressed and nominal interest rates are near zero. You could give the Fed explicit legal authority to execute helicopter drops and establish some kind of "Taylor Rule" convention relating the scale of the drops to macroeconomic conditions. With that framework in place, the mere expectation that large drops will occur in depressed conditions should act as a stabilizing force and reduce the need to actually implement the recovery strategy. One of the challenges we faced as a country throughout 2008 is that nobody knew how the Fed would respond when rates approached the zero bound and everybody knew that nobody knew what would happen. This sort of thing tends to lead to panic and depression.

It's The Economy, Stupid

Peter Baker's Week in Review piece trying to add some texture to the story of Bill Clinton's post-1994 political moves is pretty good, but like most such narratives I think it slights the central role of macroeconomic performance:

Mr. Clinton's lowest postelection moment arguably came less than 24 hours before he began his comeback. In April 1995, he was reduced to arguing at a news conference that "the president is relevant." The next day, bombers blew up an Oklahoma City federal building, and Mr. Clinton's steady, reassuring and empathetic response made him more of a national leader.

Mr. Sosnik identified two other phases that followed. Phase 2, he said, was spent "getting our theory of the case on how we were going to deal with this new reality," and really started when Mr. Clinton proposed balancing the budget in hopes of outflanking the Republicans. Phase 3, he said, came in the fall of 1995, when Mr. Clinton engaged Republicans over the role of government, ultimately refusing to agree to deeper spending cuts and winning the spin battle over who was responsible for government shutdowns.

Underlying all of this is the fact that economic growth accelerated rapidly in the mid-1990s. For example, I think most of us would agree that were an allegation to emerge that Barack Obama had an affair with a White House intern, then Obama responded by denying the affair to his senior staff and the public, then it was proven that he'd been lying, and then it was also proven that he'd offered misleading sworn testimony about the matter that this would constitute a serious political misstep. And yet, all those things happened to Bill Clinton and he enjoyed high approval ratings and Democratic gains in the 1998 midterms.

That's not to say that Obama's tactical decisions don't matter. They make a great deal of difference to the question of what laws get passed, which regulations are implemented, what judges obtain lifetime appointments, and to the conduct of US foreign policy. And these things, in turn, to some extent influence the performance of the American economy. But it's the performance of the economy that will, above all else, determine Obama's public fortunes just as it did for Clinton.

A Hell of a Heel

Andrew Exum's observations from a trip to Afghanistan are interesting, but this paragraph contains about 90 percent of what I think you need to know:

We have two "Achilles heels" in the current strategy: Afghan governance and insurgent sanctuaries in Pakistan. What these two weaknesses have in common is their combined effect on the ability of insurgent ranks, which have been decimated this year, to regenerate either through sanctuaries (to include external support) or by exploiting grievances caused by bad governance. I'm going to be honest and say that I do not see a coherent or otherwise effective strategy for dealing with the sanctuaries in Pakistan. I do not see it anywhere in the U.S. government or within NATO, whose writ only extends to the borders of Afghanistan anyway. With respect to governance, I have seen some isolated rays of hope at the local level, but it is easy to see how, as long as Afghans consider their country the third most corrupt country on Earth and look elsewhere for the rule of law, insurgents will continue to recruit and recover their losses.

The great Achilles himself only had the one vulnerable heel and that was enough to doom him. These two seem like plenty.

Indeed, it's hard for me to sketch out an optimistic end-game even for these "isolated rays of hope at the local level." Let's imagine that several different localities do in fact develop effective governance at the local level. That's good for the local leaders and good for the local people. But what happens next? Do effective local leaders want to submit to the authority of an ineffective central government? Does the population of well-governed localities want to see their effective local government subordinated to an ineffective central state? If the goal is some kind of Afghan state that holds some approximation of a monopoly on the use of force inside Afghanistan's borders, then I don't think rays of hope at the local level actually constitute steps toward that goal.

Lines Are Terrible

In the past two weeks, I've six separate airport security screening checks (IAD to LAX, then LAX back to IAD, then IAD to Frankfurt, then they made me re-screen before going to Berlin, then in Berlin back to Frankfurt, then again rescreening before going to DC) and despite my view that we irrationally overweight the importance of airport security I'm honestly not so moved by privacy concerns. To me the problem is just the long-lines and the waste of time. Waiting around in lines is really misery inducing, and the unpredictable duration of the lines leads to extra post-screening waiting and more waste of time. Time is such a precious commodity in a world where we're always inventing more things to do!

I'd gladly use full-body x-rays or whatever like in Total Recall if that meant the process moved expeditiously:

All things considered, though, I'd still rather just put less emphasis on airport security. Actually preventing terrorist attacks is a valuable thing to do, but it seems to me that very intensity security at airports doesn't so much eliminate attacks as encourage people to set off bombs on crowded city streets instead. That doesn't strike me as a particularly high-value undertaking.

One calculation I'd like to see is this. What proportion of Portland-Seattle flights would need to be blown up by terrorists before driving became the safer option?

Technology and Currency

A thought while waiting at the gate at Frankfurt Airport: 20 years ago before the near-universal availability of credit cards and ATMs, having a single currency for Europe would have offered tremendous practical advantages. You could fly from Dublin to Paris to catch a connecting flight to Helsinki and back without the need for constant visits to the currency exchange bureau. Or take a day trip from Belgium to the Netherlands.

But of course back then there was no Euro. Today, we have the currency union but information technology has drastically reduced the practical benefits. Last fall I was in Germany for a week, then in Sweden for a week, and then in Denmark for a week—three currencies in three weeks—and it honestly was no problem at all. You basically just live life as you always do, paying for lots of things with plastic and withdrawing small amounts of cash when you need it.

Which makes me wonder if moving the different countries of Europe into a single currency wasn't actually a step against the tides of change. Maybe the real move for the 21st century is for large to go to smaller currency areas. It would arguably have done the "rust belt" some good over the past 30 years to be able to devalue relative to higher-growth portions of the United States. And everyone knows that economic conditions in China's coastal cities are radically different from what you find in the rural north and west.