J. Bradford DeLong's Blog, page 265

Fairly Recently: Must- and Should-Reads, and Writings... (December 12, 2018)

Fama's Fallacy: Hoisted from Ten Years Ago: The economists who cheerled for the Trump-McConnell-Ryan tax cut and claimed it would rapidly and permanently boost annual investment in America by 800 billion had arguments���bad arguments. The economists who condemned Benanke's quantitative easing and claimed it would soon lead to high inflation and a debased dollar had arguments���bad arguments. I do not think any of them made those bad arguments in good faith: the failure of those in either group to acknowledge that they got a big one wrong and to engage in Bayeisan updating is interesting: that silence speaks volumes. But Fama and the others who claimed a decade ago that, while private decision to spend more boosted employment and production, public decisions to spend more���fiscal stimulus���not only would not, but could not possibly ever boost employment and production... they had no argument at all...

Some Disconnected Thoughts Over the Years About Legal Realism and the Man Whom Judge Posner Calls "Disreputable": Chief Justice John Roberts: The dirty little secret is that serious legal arguments are those that lawyers pretend to take seriously. If enough Republican hacks decide to pretend that Judge Reed O'Connor is serious, he becomes serious. My forecast? The Fifth Circuit narrowly upholds O'Connor, and then it goes down 8-1 in the Supreme Court���unless one of the Democratic justices dies or retires before the decision is announced, it which case O'Connor is upheld 5-3...

DeLong's Principles Of Neoliberalism: Thanks to Miniver Cheevy for Formatting: Hoisted from the Archives from 1999: The "neoliberalism" I was talking about then is a relatively distant cousin (but was a cousin) of what people are calling "neoliberalism" today...

Weekend Reading: Paul Krugman (2011): Mr Keynes and the Moderns: Paul Krugman's distinction between Chapter 12er and Book 13 Keynesians is, I think, dead on...

Abe ���Bastard Keith��� Goldfarb: "Phase One: 'Mexico will pay for the wall!'!

Phase Two: 'Mexico will eventually pay through tariffs for the wall!'

Phase Three: 'The US will pay for the wall!'

Phase Four: 'We will shut down the government if American taxpayers don���t pay for the wall!'

Lawrence Christon: Rita Rudner Is Svelte, Pretty, Original American Princess

David Brooks remembers the Weekly Standard���how fun it was to convince people Saddam Hussein and Osama bin Laden were close allies, and so trigger the Iraq War! They have their separate lives now, but they will always have Baghdad...: David Brooks: "This was the most concentrated collection of talent I���ve been around. And the most fun. Read the whole list... #orangehairedbaboons #journamalism

Economic History Association: Prizes and Awards

Aleksandar Hemon: Fascism is Not an Idea to Be Debated, It's a Set of Actions to Fight: "It is frightening to think we could be entering the civil war mode, wherein none of the differences and disagreements can be hashed out in discussion. It is quite possible that there is no resolution to the present situation until one side is thoroughly destroyed as an ideological power and political entity. If that is the case, the inescapable struggle requires that anti-fascist forces clearly identify the enemy and commit to defeating them, whoever they are, whatever it takes. The time of conversations with fascists is over, even if they might be your best friend from high school... #neofascism #orangehairedbaboons

The dirty little secret is that serious legal arguments are those that lawyers pretend to take seriously. If enough Republican hacks decide to pretend that Judge Reed O'Connor is serious, he becomes serious. My forecast? The Fifth Circuit narrowly upholds O'Connor, and then it goes down 8-1 in the Supreme Court���unless one of the Democratic justices dies or retires before the decision is announced, it which case O'Connor is upheld 5-3. Jack Balkin wants to maintain two positions at once: 1. "The lesson of Sebelius is that if you give enough very smart lawyers enough time to work on a legal problem, they can come up with creditable arguments for many (but not all) legal positions, even if, when the task started, the position seemed hopeless..." 2. "I am most certainly not saying that legal argument and legal craft are mere disguises for political ideology or that they have no independent significance. I have been trained as a lawyer and I express opinions about the quality of legal arguments all the time. It is my job to do so. Thus, whether lawyers are willing to support a given claim depends on their perception of the quality of the legal reasoning and the quality of the legal arguments that can be advanced for it..."

 

But the second means almost nothing if "creditable" arguments can be constructed for nearly everything, and the task of law professors is then to retrospectively justify whatever the judges pick. The first means little if the legal community does have strong standards for what is a strong argument. How to resolve this? By noting that whatever gets five votes on the Supreme Court is retrospectively turned into the strongest arguments. And Supreme Court justices are very good at convincing themselves that what upholds their ideology and partisan position is in fact the best-argued and best-crafted. Jack Balkin: Texas v. U.S: Off the Wall and On the Wall in the Age of Trump: "The judge's arguments are not even close to being persuasive given existing legal precedents. Does that mean that the position is 'off-the-wall'?... Asking whether a legal claim is 'off-the-wall' is a question of whether it is a reasonable claim, or at least one on which reasonable minds can differ.... But the perceived quality of legal reasoning and legal arguments are not exogenous from social influence...#orangehairedbaboons #judicialreview

Sam Bagenstos: "My view on this is closer to Jesse's than to (my learned and valued colleague!) Nick's. The Fifth Circuit could reverse this ruling, but I don't have the confidence in them Nick does. I do think Roberts doesn't want to strike down the ACA 5-4 on this farkakte theory, though. But let's imagine one of the Dem appointees to the Court slips on a banana peel before the issue gets to SCOTUS. Then we really do have a direct threat to the ACA. So let's not breathe so easy...

As I see it, Bernanke is right: the housing bubble and housing construction (maroon line) had collapsed���with its effects on household wealth and thus on consumption���before the recession began, and very few thought as of late 2007 that we were doomed to have a deep recession. So I do not see how Krugman and Baker could be correct. Then our slow recovery looks to me due in large part to two factors. The first is fiscal austerity (purple line), for which blame Republicans, economists who do not understand IS-LM but who insist on opening their mouths, and an Obama listening to Geithner, Orszag, and company and thinking that his job is to reach a grand entitlement bargain with Republicans. The second is the failure of housing to recover to normal���for which I blame Obama listening to Geithner and not making the revival of housing finance a priority: Paul Krugman: The Credit Crunch and the Great Recession: "Ben Bernanke argues that it was mainly about finance. I have (friendly) questions.... There���s an economic dispute underway about the causes of the Great Recession ��� but that���s not what���s weird. What���s so strange in these days and times is that it is being carried out among well-informed people who actually look at data and argue in good faith. Hey, guys, don���t you know that sort of thing went out a couple of decades ago?...

The assumption driving the argument here is that the natural rate of interest varies one-for-one with productivity growth. That is probably right, but not certainly right. If it is right, the Federal Reserve's 2% inflation rate target is a huge mistake generating huge risks: Thomas Laubach and John C. Williams* (2001): Measuring the Natural Rate of Interest: ���A key variable for the conduct of monetary policy is the natural rate of interest���the real interest rate consistent with output equaling potential and stable inflation. Economic theory implies that the natural rate of interest varies over time...

Ed Luce: The Double Life of Trumpian Nationalism: "Mr Pompeo did the world a favour... crystallised the dissonance that runs through the Trump administration. Mr Trump���s aim is to contain China���s global rise. He also wants to remove the tools with which to blunt China���s rise. He offers with one hand what he removes with the other. Mr Pompeo called for a new global liberal order of 'noble nations'. In the same breath, he called on them to pursue their go-it-alone destinies. Nowhere in his speech did the words 'west' or 'western' occur. Countries that abandon mutual endeavours do not naturally see eye to eye...

Joseph E. Gagnon (PIIE) and Takeshi Tashiro: Abenomics Is Working, Don't Stop Now: "Japan is on track for its longest postwar economic expansion, with female labor force participation and corporate profits at record highs and unemployment at a 25-year low.... [Is] the goal of raising inflation to 2 percent is really necessary?...

Friedrich Engels (1843): Outlines of a Critique of Political Economy: "In the struggle of capital and land against labour, the first two elements enjoy yet another special advantage over labour���the assistance of science; for in present conditions science, too, is directed against labour. Almost all mechanical inventions, for instance, have been occasioned by the lack of labour-power; in particular Hargreaves���, Crompton���s and Arkwright���s cotton-spinning machines...

Ramesh Ponnuru: Recession Is a Far Larger Threat Than Inflation: "We should use this moment of relative monetary calm to consider deeper questions, such as whether that target is the right one.... The real failing of the current monetary regime is not that it generates too much inflation. We haven���t had ruinous levels of inflation since the early 1980s (something for which Volcker���s own chairmanship deserves great credit)...

Fama's Fallacy: Hoisted from Ten Years Ago

I was profoundly embarrassed by and ashamed of the Swedish Nobel Committee and of being an economist when they awarded the Nobel Prize to Eugene Fama.

You see, the economists who cheerled for the Trump-McConnell-Ryan tax cut and claimed it would rapidly and permanently boost annual investment in America by 800 billion had arguments���bad arguments. The economists who condemned Benanke's quantitative easing and claimed it would soon lead to high inflation and a debased dollar had arguments���bad arguments. I do not think any of them made those bad arguments in good faith: the failure of those in either group to acknowledge that they got a big one wrong and to engage in Bayeisan updating is interesting: that silence speaks volumes.

But Fama and the others who claimed a decade ago that, while private decision to spend more boosted employment and production, public decisions to spend more���fiscal stimulus���not only would not, but could not possibly ever boost employment and production... they had no argument at all.

What do I mean? This. This is why I am embarrassed and ashamed: Hoisted from Ten Years Ago: Fama's Fallacy, Take I: Eugene Fama Rederives the "Treasury View": A Guestpost from Montagu Norman, former Governor of the Bank of England:

Back in the 1920s and 1930s���in the days that overly-clever bisexual academic dilettante John Maynard Keynes was trying to persuade us that if only we got the government to spend more money the unemployment rate might go down���by far the silliest argument against his position was the one put forward by the staff of the Chancellor of the Exchequer: the so-called "Treasury View."

The Treasury View was that nothing could boost employment: not government spending, not tax cuts, not private business decisions to expand their capacity, not irrational exuberance on the part of entrepreneurs���for the level of output was what it was and the unemployment rate was what it was and no fiscal policies or private investment decisions could change it, for all they could do was move resources from one use to another without affecting the total flow of economic activity.

Back on Christmas Eve Paul Krugman whacked Caroline Baum of Bloomberg on the nose for rediscovering the Treasury View. Now Eugene Fama of the University of Chicago has rederived it from scratch (apparently without knowing anything of its history), claiming that the savings-investment national income identity proves that fiscal policy cannot have any effect on output and employment.

This is a howler of such magnitude that it has pulled me from my grave to speak���because we went over and over this in the 1920s starting with R.G. Hawtrey (1925), "Public Expenditure and the Demand for Labour," Economica 5, pp. 38-48, and with F.W. Leith-Ross's various Treasury memos to P.J. Grigg, and thrashed this out to a conclusion that Fama appears not to know. It is very strange: the argument Fama wants to make���that government deficits completely crowd out private investment so that fiscal policy has no effect on output or employment���is, depending on circumstances, sometimes true and usually false, depending on circumstances. But the premise from which Fama attempts to derive complete crowding-out is the savings-investment accounting identity in the National Income and Product Accounts���and an accounting identity is something that must be true by construction, no matter what. The fact that savings equals investment in the NIPA is logically independent of whether the complete crowding-out doctrine is true or false.

Here is Fama:

Bailouts and Stimulus Plans: There is an identity in macroeconomics... private investment [PI] must equal the sum of private savings [PS], corporate savings (retained earnings) [CS], and government savings [GS]....

(1) PI = PS + CS + GS....

The problem is simple: bailouts and stimulus plans are funded by issuing more government debt.... The added debt absorbs savings that would otherwise go to private investment.... [S]timulus plans do not add to current resources in use. They just move resources from one use to another.... I come back to these fundamental points several times below....

 

The Sad Logic of a Fiscal Stimulus: In a "fiscal stimulus," the government borrows and spends the money on investment projects or gives it away as transfer payments to people or states. The hope is that government spending will put people to work.... Unfortunately, there is a fly in the ointment.... [G]overnment infrastructure investments must be financed ��� more government debt. The new government debt absorbs private and corporate savings, which means private investment goes down by the same amount....

Suppose the stimulus plan takes the form of lower taxes... we can't get something for nothing this way either... lower tax receipts must be financed dollar for dollar by more government borrowing. The government gives with one hand but takes them back with the other, with no net effect on current incomes...

Fama's reasoning is that fiscal policies don't change private saving, but fiscal policies do change the government deficit, thus investment must change in an amount equal and opposite to the change in the government deficit. Fama's reasoning is dead wrong. Fama's reasoning is dead wrong for an elementary reason. The accounting identity that savings are equal to investment is true only under a particular definition of investment���one that counts unwanted growth in inventories as part of investment���and under a particular valuation of unexpected inventory accumulation���that which values unwanted inventory accumulation at its cost.

In general, the value of unwanted inventory accumulation can't be equal to its cost���the inventory accumulation is unwanted and unexpected, meaning that they tried to sell it at a normal price and failed, and it is now sitting in a corner of a warehouse somewhere. When Fama writes "bailouts and stimulus plans... absorbs savings that would otherwise go to private investment" he does not think that the rise in public spending is truly useful stuff while the fall in private investment is a decline in unwanted inventory accumulation���a decline in the amount of stuff made at high cost that firms could not sell and then must mark down in value.

This matters a lot because whenever unwanted inventories accumulate the next thing that happens is that incomes and savings drop. (i) NIPA-defined investment is equal to (ii) private savings minus the (iii) government deficit, so if (iii) changes and (ii) doesn't then (i) must change. But if that change in NIPA-defined investment is driven by unwanted inventory accumulation or unexpected inventory declines then private savings do change, and do change quickly and substantially.

Let's tell the story of how:

Suppose that it is Friday, January 2, 2009, and all of a sudden the federal government borrows some money���reducing savings���and buys some extra stuff. Savings is still equal to investment on January 2: savings went down because the government ran a bigger deficit but investment also went down because firms sold extra and so their inventories dropped.

What happens on Monday, January 5? Over the weekend the firms mark the value of the goods in their remaining inventory up: inventories are now scarce. They revisit their production plans. Sunday night they call some extra workers and tell them to show up on Monday���that they are expanding production because they are now short of inventories. So when Monday rolls around more people are at work. Thus incomes are higher on Monday than they were on Friday. And in all likelihood savings will be higher as well, for consumers on Monday probably won't raise their consumption spending by as much as their incomes rose. Maybe on Monday purchases will be back in balance with production, and there will be no more unwanted inventory changes. Maybe it will take until Monday January 12 before the change in inventories is back to its desired level. Maybe it will take until the third quarter of 2009, or perhaps 2010. But when the change in inventories does come back to its wanted level, production, employment, income, savings, and investment will all be higher than they were on January 1: the stimulus will have worked.

Yet at every point���on every single day���savings are equal to investment according to the accounting conventions of the National Income and Product Accounts. Fama's premise holds. His conclusion���that stimulus programs cannot work���doesn't. How can this be? The reason is that his conclusion has nothing at all to do with his premise. Whether there is complete crowding-out depends on circumstances���on how much of offsetting investment changes are unwanted and unexpected changes in inventories, and what the consequences of those unwanted and unexpected changes in inventories are for private savings. But whether there is complete crowding-out or not, savings always equals investment in the NIPA framework by construction, by definition.

Thus Fama's claim that "stimulus spending must be financed which means it displaces other current uses of the same funds..." rests on Fama's implicitly making one of two assumptions: either that stimulus spending does not lead to any surprise reduction in inventories, or that a surprise fall in inventories does not lead to any change in the flow of saving. Make either of these assumptions, and Fama's argument goes through���but it is those ancillary assumptions that Fama does not explicitly own up to that drive his conclusion, not his stated premise of the truth of the NIPA savings-investment identity.

But why should you make either assumption? Why would you ever assume that there can't be unwanted growth in inventories? Why would you ever assume that household incomes and saving do not change whenever firms' stocks of unwanted inventories grow ever larger?

The answer is that you never would���but that Fama does not know enough national income accounting to know that that he is making these two ancillary assumptions. He does not understand the identity he deploys as equation (1). He thinks that "investment" means "growth in the value of the capital stock." He simply does not understand what the NIPA investment concept is, or that what he thinks of as "investment" is not in general equal to savings.

All of this is part of the undergraduate sophomore economics curriculum. It is gone over again very quickly in graduate school���for example, David Romer (2006), Advanced Macroeconomics 3e, p. 224:

If one treats goods that a firm produces and then holds as inventories as purchased by the firm, then all output is purchased by someone. Thus actual expenditure equals the economy's output, Y. In equilibrium, planned and actual expenditure must be equal. If planned expenditure falls short of actual expenditure, for example, firms are accumulating unwanted inventories; they will respond by cutting their production...

These mistakes are, literally, elementary ones.

They were elementary when R.G. Hawtrey and the other staffers of the British Treasury made them in the 1920s.

They carry the implication not just that government cannot stimulate or depress the economy, but that no set of private investment or savings decisions can stimulate or depress the economy either, and thus that there can be no business cycle fluctuations from any source whatsoever���because every action that shifts savings or investment simply moves resources from one use to another.

What is extraordinary is that these mistakes are being rederived today, at the end of the 2000s���without any consciousness of their past or of the refutations of them made by past theory and history.

I think it is time to draw a line in the sand: no more economists who know nothing about the economic history of the world or the history of economic thought.

I, the ghost of Montagu Norman, have risen from my grave to say this.

Jeebus save us...

Fama's Fallacy II: Predecessors: Eugene Fama's predecessors in error. The "Treasury View." From G.C. Peden (2004), Keynes and His Critics, p. 80:

F.W. Leith-Ross to Sir Richard Hopkins and P.J. Grigg, 3 April 1929: Before the government can give increased employment it must obtain resources.... Unless the government is prepared to... bring about an inflation... [it] can only obtain [resources] by taxation or borrowing.... The proposal that we are examining is that all the money required is to be borrowed.... When the Government borrows, it enters the money market as a competitor with all other enterprises.... The resources from which the government must draw... are the savings of the people.... But it is precisely on these that industry relies on.... The competition of the Government with private traders by means of large Government loans would not (apart from inflation) increase the resources available for the employment of labour. It would only mean that a portion of these resources would be directed by the Government instead of being directed by private persons...

Fama, actually, is much worse than the British Treasury economists of the 1920s. They acknowledged that monetary policy could affect the level of employment--could do more than shift resources from one use to another. Fama's argument based on his misinterpretation of the NIPA savings-investment identity has the implication that monetary policy cannot affect the unemployment rate either.

See R.G. Hawtrey (1925), "Public Expenditure and the Demand for Labour," Economica 5, pp. 38-48...

Fama's Fallacy, Take III: "... >...Ummm... Greg Mankiw writes:

Fama on Fiscal Stimulus: Eugene Fama is a stimulus skeptic: In fact, he is even more skeptical than I am. I am willing to concede that many Keynesian effects work in the short run, although I prefer monetary policy to fiscal policy and, within fiscal policy, I prefer the use of tax instruments to government spending as a tool for short-run demand management. By contrast, I read Fama's article as a largely wholesale endorsement of the classical model with complete crowding out...

No, Greg. It's not an endorsement of any model. It's just a mistake. Fama mistakes the NIPA savings-investment accounting identity for a behavioral relationship that constrains the behavior of investment: when the government deficit goes up, Fama says, private investment must go down by the same amount.

The complete crowding-out argument is different: it is that the velocity of money is completely interest-inelastic, so when government purchases rise that triggers a rise in interest rates large enough to discourage investment and exports, and the sum of the discouragement equals the rise in government purchases. It is something that happens in equilibrium because prices move to make it so. In Fama there are no prices moving. There is just an accounting identity.

When the government deficit goes up, private savings could go up by more���and private investment could increase. Private savings could go up by less���and private investment would fall by less than the rise in the government deficit. Private savings could remain unchanged. Or private savings could fall. Determining which of these is most likely to happen would require a model of the economy of some sort���and Fama does not have one: all he has is an accounting identity that he does not understand...

Fama's Fallacy IV: The Decline of Chicago: Note to Self: How to make the "crowding out" argument the intellectually coherent way.

Milton Friedman (1972), "Comment on the Critics," Journal of Political Economy 80:5 (September-October), pp. 914-5 http://www.jstor.org/stable/pdfplus/1... "'I do not share the widespread view that a tax increase which is not matched by higher government spending will necessarily have a strong braking effect on the economy...

...True, higher taxes would leave taxpayers less to spend. But this is only part of the story. If government spending were unchanged, more of it would now be financed by the higher taxes, and the government would have to borrow less. The individuals, banks, corporations or other lenders from whom the government would have borrowed now have more left to spend or to lend-and this extra amount is precisely equal to the reduction in the amount available to them and others as taxpayers. If they spend it themselves, this directly offsets any reduction in spending by taxpayers. If they lend it to business enterprises or private individuals���as they can by accepting a lower interest rate for the loans the resulting increase in business investment, expenditures on residential building and so on indirectly offsets any reduction in spending by taxpayers.

To find any net effect on private spending, one must look farther beneath the surface. Lower interest rates make it less expensive for people to hold cash. Hence, some of the funds not borrowed by the Federal government may be added to idle cash balances rather than spent or loaned. In addition, it takes time for borrowers and lenders to adjust to reduced government borrowing. However, any net decrease in spending from these sources is certain to be temporary and likely to be minor.

To have a significant impact on the economy, a tax increase must somehow affect monetary policy���the quantity of money and its rate of growth. (Newsweek, January 23, 1967, p. 86)....

Why "certain to be temporary"? Because the leftward shift in the IS curve is a once-for-all shift.... Put in monetarist terms, the lowered interest rate resulting from the federal government's absorbing a smaller share of annual savings will reduce velocity; the transition to the lower velocity reduces spending for a given money stock....

Why "likely to be minor"? Because the monetarist view is that "saving" and "investment" have to be interpreted much more broadly... that the categories of spending affected by changes in interest rates are far broader than the business capital formation, housing construction, and inventory accumulation to which the neo- Keynesians tend to restrict "investment." Hence, even a fairly substantial tax increase will produce only a minor shift in the IS curve....

Of course, the terms "temporary" and "minor" are highly imprecise. We get closer to a rigorous statement by comparing the changes resulting from a reduced or increased deficit without any change in monetary growth with those that result when a change in the deficit is matched by a dollar-for-dollar change in monetary growth.... [A] deficit financed by borrowing... [is] a once-for-all shift to the right in the IS curve, a higher interest rate, a higher velocity, and a higher level of spending for a given monetary growth path.... [F]inancing the deficit by creating money... shifts the LM curve to the right.... But this is not a once-for-all shift. So long as the deficit continues, and continues to be financed by creating money, the nominal money stock continues to grow and the LM curve (at initial prices) continues to move to the right. Is there any doubt that this effect must swamp the effect of the once-for-all shift of the IS curve?...

We may put this point differently. Assume a one-year increase in the deficit, with the budget then returning to its initial position. If this is financed by borrowing from the public with no change in monetary growth, then, in the most rigid Keynesian system, the IS curve moves to the right and then back again; real and nominal income rise for one year, then return to their initial values. If the one-year increase in the deficit is financed by creating money, the LM curve moves to the right as well, and stays there after the IS curve returns to its initial position. If prices remain constant, real and nominal income stay at a higher level indefinitely. If, as is more reasonable, prices ultimately rise, real income may return to its initial level, but nominal income will stay at a higher level indefinitely. Surely, to paraphrase a remark of Tobin's in another connection, the monetary effect is "alchemy of a much deeper significance" than the fiscal effect...

For Friedman, the NIPA savings-investment identity is the prelude to the analysis: the meat of the analysis involves going deeper by:

arguing that savings and income levels will adjust so that the economy will quickly move to a point at which unwanted inventory accumulation is zero (that's the "IS curve").
analyzing the combination of possible values for interest rates and output levels at which unwanted accumulation is zero (that's the shape and position of the "IS curve").
assessing how the changing financial asset supplies and demands in the economy pick out a particular point on the IS curve (that's the "LM curve").

For Fama, the NIPA savings-investment identity is the completion of the analysis���hence he gets driven to the conclusion that not just fiscal policy via the government deficit but monetary policy via open market operations has no effect on employment and output as well.

This makes me think I should finish writing up one of the talks that I gave in Singapore���the point of which was that Chicago economists today are profoundly ignorant of what the Chicago School of economics���the school of Friedman and Stigler���believes...

Fama's Fallacy V: Are There Ever Any Wrong Answers in Economics?: Montagu Norman here, back from my grave once again. This time it is Greg Mankiw whose words have summoned me...

One thing that used to give me nightmares���and that provoked several of my nervous breakdowns���was how you could never get any economist (except for John Maynard Keynes) to take a definite position. They were always "on the one hand���on the other hand." This was what led Harry Truman in later days to wish for a one-handed economist, a wish that has never been fulfilled���there is in fact a picture of Barack Obama's economic advisor Christina Duckworth Romer in Time (or is it Newsweek?) showing her with four hands...

The "on the one hand���on the other hand" nature of discourse raises the question of whether in economics���a "science" where there is enormous intellectual and ideological and political disagreement about how the world works���there can ever be any wrong answers?. I believe that there can be wrong answers in economics, because examinations in economics tend to take a particular form: instead of asking (i) "do expansionary fiscal policies increase output and employment?" we ask (ii) "in models where there are idle resources and high unemployment, do expansionary fiscal policies increase output and employment?" (ii) is a question about a particular class of models of the economy, and so has a definite right answer���"yes, in that class of models they do"���and a definite wrong answer���"no, in that class of models they don't."

Eugene Fama claimed that "when there are idle resources���unemployment" expansionary fiscal policies had no effect in models in which the NIPA savings-investment identity:

investment = (private savings) - (government deficit)

held.

Now the NIPA savings-investment identity holds in all models���it is, after all, an identity, true by definition and construction. And every single model that has been built in which there is a possibility of high unemployment and idle resources is a model in which fiscal policy works because increases in government spending lead to unexpected declines in inventories and unexpected declines in inventories lead to firms to expand production, which leads to increases in income and saving.

I would, therefore, say that Fama's claim is "wrong". Not only does it not hold in all models in the class, it does not hold in any models in the class.

Greg Mankiw disagrees:

Greg Mankiw's Blog: Fama's arguments make sense in the context of the classical model... presented in Chapter 3 of my intermediate macro textbook.... I would go on to the Keynesian model.... But whether one leaves the classical model behind to embrace the Keynesian model is a judgment call...

Mankiw thinks that Fama is not wrong but is, rather, making a "judgment call."

But Mankiw writes in his chapter 3 that the classical model "assume[s] that the labor force is fully employed." And so Greg gets himself into Cretan Liars' Paradox territory here: Fama says that there is high unemployment and idle resources, while Mankiw says that Fama is not wrong because he makes sense as long as the labor force is fully employed and there are no idle resources.

Is Mankiw's answer here a "wrong" answer, or is he too making a "judgment call"? I seek an empirical test. I seek a Harvard undergraduate to take Greg Mankiw's course this spring, to write the following in an appropriate place:

the classical model of chapter 3 shows us that expansionary fiscal policies have no effect on output even where there are idle resources���unemployment.

and to report back on the reaction of the course instructors...

#shouldread

Ramesh Ponnuru: Recession Is a Far Larger Threat Than Inf...

Ramesh Ponnuru: Recession Is a Far Larger Threat Than Inflation: "We should use this moment of relative monetary calm to consider deeper questions, such as whether that target is the right one.... The real failing of the current monetary regime is not that it generates too much inflation. We haven���t had ruinous levels of inflation since the early 1980s (something for which Volcker���s own chairmanship deserves great credit)...

...We have, however, had a severe recession and a weak recovery, beginning a decade ago, and it is not at all clear the Fed is well-equipped to prevent a recurrence.... The Fed... may be tempted to tighten money inappropriately after a negative supply shock. In 2008, for example, higher oil prices seem to have led to a more restrictive Fed policy than warranted.... Another possible complication during the next downturn: Because interest rates have been generally declining for a generation and the Fed typically relies on reductions in interest rates to boost the economy, it may find itself with little ability to help in the next recession...

#shouldread

Friedrich Engels (1843): Outlines of a Critique of Politi...

Friedrich Engels (1843): Outlines of a Critique of Political Economy: "In the struggle of capital and land against labour, the first two elements enjoy yet another special advantage over labour���the assistance of science; for in present conditions science, too, is directed against labour. Almost all mechanical inventions, for instance, have been occasioned by the lack of labour-power; in particular Hargreaves���, Crompton���s and Arkwright���s cotton-spinning machines...

.... There has never been an intense demand for labour which did not result in an invention that increased labour productivity considerably, thus diverting demand away from human labour. The history of England from 1770 until now is a continuous demonstration of this. The last great invention in cotton-spinning, the self-acting mule, was occasioned solely by the demand for labour, and rising wages. It doubled machine-labour, and thereby cut down hand-labour by half; it threw half the workers out of employment, and thereby reduced the wages of the others by half; it crushed a plot of the workers against the factory owners, and destroyed the last vestige of strength with which labour had still held out in the unequal struggle against capital. (Cf. Dr. Ure, Philosophy of Manufactures, Vol. 2.) The economist now says, however, that in its final result machinery is favourable to the workers, since it makes production cheaper and thereby creates a new and larger market for its products, and thus ultimately reemploys the workers put out of work. Quite right. But is the economist forgetting, then, that the production of labour-power is regulated by competition; that labour-power is always pressing on the means of employment, and that, therefore, when these advantages are due to become operative, a surplus of competitors for work is already waiting for them, and will thus render these advantages illusory; whilst the disadvantages ��� the sudden withdrawal of the means of subsistence from one half of the workers and the fall in wages for the other half ��� are not illusory? Is the economist forgetting that the progress of invention never stands still, and that these disadvantages, therefore, perpetuate themselves? Is he forgetting that with the division of labour, developed to such a high degree by our civilisation, a worker can only live if he can be used at this particular machine for this particular detailed operation; that the change-over from one type of employment to another, newer type is almost invariably an absolute impossibility for the adult worker?

In turning my attention to the effects of machinery, I am brought to another subject less directly relevant��� te factory system; and I have neither the inclination nor the time to treat this here. Besides, I hope to have an early opportunity to expound in detail the despicable immorality of this system, and to expose mercilessly the economist���s hypocrisy which here appears in all its brazenness....

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Joseph E. Gagnon (PIIE) and Takeshi Tashiro: Abenomics Is...

Joseph E. Gagnon (PIIE) and Takeshi Tashiro: Abenomics Is Working, Don't Stop Now: "Japan is on track for its longest postwar economic expansion, with female labor force participation and corporate profits at record highs and unemployment at a 25-year low.... [Is] the goal of raising inflation to 2 percent is really necessary?...

...Why not settle for trend inflation between 0 and 1 percent, where it is now?[1] The answer is that the Bank of Japan (BOJ) has no room to maneuver when the next downturn arrives, as it surely will someday. Unless Japan returns inflation sustainably to 2 percent or more in the next few years, it will have difficulty emerging from the next recession...

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Ed Luce: The Double Life of Trumpian Nationalism: "Mr Pom...

Ed Luce: The Double Life of Trumpian Nationalism: "Mr Pompeo did the world a favour... crystallised the dissonance that runs through the Trump administration. Mr Trump���s aim is to contain China���s global rise. He also wants to remove the tools with which to blunt China���s rise. He offers with one hand what he removes with the other. Mr Pompeo called for a new global liberal order of 'noble nations'. In the same breath, he called on them to pursue their go-it-alone destinies. Nowhere in his speech did the words 'west' or 'western' occur. Countries that abandon mutual endeavours do not naturally see eye to eye...

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The assumption driving the argument here is that the natu...

The assumption driving the argument here is that the natural rate of interest varies one-for-one with productivity growth. That is probably right, but not certainly right. If it is right, the Federal Reserve's 2% inflation rate target is a huge mistake generating huge risks: Thomas Laubach and John C. Williams* (2001): Measuring the Natural Rate of Interest: ���A key variable for the conduct of monetary policy is the natural rate of interest���the real interest rate consistent with output equaling potential and stable inflation. Economic theory implies that the natural rate of interest varies over time...

...and depends on the trend growth rate of output. In this paper we apply the Kalman filter to jointly estimate the natural rate of interest, potential output, and its trend growth rate, and examine the empirical relationship between these estimated unobserved series. We find substantial variation in the natural rate of interest over the past four decades in the United States. Our natural rate estimates vary about one-for-one with changes in the trend growth rate. We show that policymakers��� mismeasurement of the natural rate of interest can cause a significant deterioration in macroeconomic stabilization.
...

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As I see it, Bernanke is right: the housing bubble and ho...

As I see it, Bernanke is right: the housing bubble and housing construction (maroon line) had collapsed���with its effects on household wealth and thus on consumption���before the recession began, and very few thought as of late 2007 that we were doomed to have a deep recession. So I do not see how Krugman and Baker could be correct. Then our slow recovery looks to me due in large part to two factors. The first is fiscal austerity (purple line), for which blame Republicans, economists who do not understand IS-LM but who insist on opening their mouths, and an Obama listening to Geithner, Orszag, and company and thinking that his job is to reach a grand entitlement bargain with Republicans. The second is the failure of housing to recover to normal���for which I blame Obama listening to Geithner and not making the revivlal of housing finance a priority:

Paul Krugman: The Credit Crunch and the Great Recession: "Ben Bernanke argues that it was mainly about finance. I have (friendly) questions.... There���s an economic dispute underway about the causes of the Great Recession ��� but that���s not what���s weird. What���s so strange in these days and times is that it is being carried out among well-informed people who actually look at data and argue in good faith. Hey, guys, don���t you know that sort of thing went out a couple of decades ago?...

...Dean Baker... has long argued that the burst housing bubble was the main factor in both the slump and the slow recovery, with financial disruption a minor and transitory factor���a view I mostly agree with.... Ben Bernanke, who argues in a new paper that credit market disruption was indeed the big story.... Bernanke is mainly focused on the first year or so after Lehman, while both Baker and I are more focused on the multiyear depressed economy that lasted long after the financial disruption ended.... My problem with Bernanke���s paper, on a first read, is that I don���t quite see how that consistency can work. Specifically, I have trouble seeing the ���transmission mechanism������the way in which the financial shock is supposed to have affected actual spending to the extent necessary to justify a finance-first account of the slump...

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Sam Bagenstos: "My view on this is closer to Jesse's than...

Sam Bagenstos: "My view on this is closer to Jesse's than to (my learned and valued colleague!) Nick's. The Fifth Circuit could reverse this ruling, but I don't have the confidence in them Nick does. I do think Roberts doesn't want to strike down the ACA 5-4 on this farkakte theory, though. But let's imagine one of the Dem appointees to the Court slips on a banana peel before the issue gets to SCOTUS. Then we really do have a direct threat to the ACA. So let's not breathe so easy...

Nicholas Bagley: The banana peel scenario is my nightmare too. But I think it's noteworthy that the elite Republican legal establishment has not yet thrown its muscle behind this lawsuit. If it does, my estimate of the odds would change.

Sam Bagenstos: Right now they can't count to 5 on the Supreme Court. (And some of the R justices may be essentially "Join-4" votes, so if it went up now the challenge would lose big.) If they could count to 5, I expect things would be different for some of these members of the establishment.

Nicholas Bagley: Maybe. But a bunch have already staked out positions, and the weakness of the legal arguments should make a difference. Still, I'm open to the possibility that I'm being naive.

Sam Bagenstos: Hopefully the banana peel scenario doesn't eventuate, so we never have to find out if you're being naive!...

Nicholas Bagley: I'm getting a lot of questions about when the judge's opinion takes effect. Bottom line: nothing changes for now, and nothing will change for some time to come. Here's why. The judge entered a declaratory judgment, not an injunction. That means the Trump administration and the states are free to keep implementing the ACA. One district court judge's declaration doesn't bind the government nationwide. What's more, California is going to appeal this decision. And it'll probably seek a stay pending appeal out of an abundance of caution���though I don't think it technically needs to do so, since there's no injunction in place. Some court will enter a stay���probably Judge O'Connor himself, but failing that the Fifth Circuit or the Supreme Court. What's certain is that it's above the judge's pay grade to invalidate the entire ACA without any possibility of review. So breathe deeply. The Fifth Circuit is unlikely to take this frivolous case seriously, and the case will die without the Supreme Court having to intervene. In the meantime, the ACA will remain in effect.

Jesse Lee: During Kavanaugh fight, I was asked whether threat to ACA was real. My answer was that Kavanaugh was bred to be a GOP political operative on the court. Alito, Thomas & Gorsuch���and now Kavanaugh���will repeal the ACA over the wrong font size. Q is how long Roberts will stand alone.

Scott Lemieux: I, too, think the Supreme Court is very likely to overrule O"Connor's opinion if it gets there, and even 5CA might. But remember that a lot of people don't have healthcare now because of a throw-everything-at-the-wall argument that attracted little attention in 2012.

Sam Bagenstos: There's a really good paper to be written about the sociology of liberal legal elites' reactions to the filing of, and developments in, the NFIB, King, and Texas ACA litigations.

Scott Lemieux: It doesn't seem easily available online, but I'm reminded of my favorite Bush v. Gore article, Tushnet's brief piece about how Bush v. Gore would slowly be normalized by legal scholars

Brian Beutler: Like, "the good men of the court would never countenance such an errant argument, for shame!" That kind of thing?

Sam Bagenstos: That is definitely one of the threads.

Brian Beutler: Yeah, it's frustrating, though this case makes me slightly more hopeful. In NFIB and King, the right collaborated in acting as though the arguments were not just perfectly reasonable, but the only ones available. This time that faction of the legal establishment is divided.

Matthew Martin: But let's not forget that a shockingly huge share of the republican establishment supports the arguments in this case. This is not just a rogue judge

Nicholas Bagley: are you subtweeting me?

Sam Bagenstos: I'm subtweeting all of us!

Mac LeBuhn: Similarly interesting to consider how extreme conservatism has rendered CLS true to otherwise skeptical liberals

Arlene Shumaker: Maybe they could write a paper on the fear and sleepless nights of the people that this decision will impact.

Touchline: I���m pretty sure it���s the same sociology that leads Neal Katyal to support Gorsuch for the Supreme Court.

Blank Slate: Liberals have this tendency to think the system, as represented by the weight of precedent and affirmed legal principles, will overcome rogue ideologues like this one. The truth is that an ideological court has hollowed out & inverted prior case law to achieve political results.

Protect the Truth: @mattyglesias identified the core principle: ���Conservative judges are weak-minded ideologues who liberal lawyers pretend to respect for money.���

Chad Hill: Not necessarily for money. There is also an ideological commitment to "the law" as a trans-partisan enterprise to which many liberal legal elites idealistically subscribe.

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Some Disconnected Thoughts Over the Years About Legal Realism and the Man Whom Judge Posner Calls "Disreputable": Chief Justice John Roberts

Today: The dirty little secret is that serious legal arguments are those that lawyers pretend to take seriously. If enough Republican hacks decide to pretend that Judge Reed O'Connor is serious, he becomes serious. My forecast? The Fifth Circuit narrowly upholds O'Connor, and then it goes down 8-1 in the Supreme Court���unless one of the Democratic justices dies or retires before the decision is announced, it which case O'Connor is upheld 5-3.

Jack Balkin wants to maintain two positions at once:

"The lesson of Sebelius is that if you give enough very smart lawyers enough time to work on a legal problem, they can come up with creditable arguments for many (but not all) legal positions, even if, when the task started, the position seemed hopeless..."

"I am most certainly not saying that legal argument and legal craft are mere disguises for political ideology or that they have no independent significance. I have been trained as a lawyer and I express opinions about the quality of legal arguments all the time. It is my job to do so. Thus, whether lawyers are willing to support a given claim depends on their perception of the quality of the legal reasoning and the quality of the legal arguments that can be advanced for it..."

But the second means almost nothing if "creditable" arguments can be constructed for nearly everything, and the task of law professors is then to retrospectively justify whatever the judges pick. The first means little if the legal community does have strong standards for what is a strong argument. How to resolve this? By noting that whatever gets five votes on the Supreme Court is retrospectively turned into the strongest arguments. And Supreme Court justices are very good at convincing themselves that what upholds their ideology and partisan position is in fact the best-argued and best-crafted.

Jack Balkin: Texas v. U.S: Off the Wall and On the Wall in the Age of Trump: "The judge's arguments are not even close to being persuasive given existing legal precedents. Does that mean that the position is 'off-the-wall'?... Asking whether a legal claim is 'off-the-wall' is a question of whether it is a reasonable claim, or at least one on which reasonable minds can differ.... But the perceived quality of legal reasoning and legal arguments are not exogenous from social influence...

...What moves arguments from off-the-wall to on-the-wall depends a great deal on who is willing to put their reputation and authority behind the arguments and stand up for them.... A federal judge and the President of the United States support the result in Texas v. U.S.... Much depends on whether other people will decide to add their institutional authority and influence.... The Republican Party almost immediately closed ranks in the first two Obamacare suits: NFIB v. Sebelius and King v. Burwell, and did so early on in the litigation. That meant that Republican politicians made speeches trumpeting the legal claims, the party's affiliated legal intellectuals engaged in serious intellectual work buttressing and strengthening the legal arguments, and the media organizations affiliated with the Republican Party and the conservative movement repeated and broadcast the claims. Because so many powerful and influential people made these arguments, mainstream media felt compelled to treat them as serious legal claims and this also helped support their reasonableness....

In Sebelius, the first district court decision striking down Obamacare came only after the party had already closed ranks... [But] when Republicans sought to repeal Obamacare in 2017, they discovered that there was strong public support for Medicaid and especially for protection of preexisting conditions. As a result, many Republicans ran in the 2018 elections.... If Republicans support the result in Texas v. U.S.���a case in which the Trump Administration sought to get rid of Obamacare's preexisting conditions protections, and the judge wiped out the entire bill���they will have do some fancy rhetorical footwork.... I don't doubt that they can do it.... I only question whether Republican politicians as a group will decide that this is the best approach.�� We will soon find out whether some Republican politicians, instead of offering full-throated support for the litigation (as they did in Sebelius), prefer to hem and haw, change the subject, argue that the process should be left to the courts, and bide their time.

The political context is also different in another respect.... Sebelius and King became something of a crusade against the overreaching nanny state and the tyrannical Barack Obama. By contrast, Texas v. U.S. occurs when the Republicans are no longer in opposition and are faced with the problems of governance.... Likewise, the conservative movement's legal intellectuals put enormous effort into sharpening and refining the arguments in Sebelius and King.... The lesson of Sebelius is that if you give enough very smart lawyers enough time to work on a legal problem, they can come up with creditable arguments for many (but not all) legal positions, even if, when the task started, the position seemed hopeless....

It will be very important to see what Republican politicians, affiliated legal intellectuals and media do in response to this decision...

June 25, 2012: "Constitutional Moments": Five times in U.S. history the Supreme Court has eaten its wheaties and said that in the future the law will in a major way be very different���or, rather, that Americans before, including the Supreme Court, had been in error about what the law truly was and had been doing it wrong.

Call the first Marbury vs. Madison: the Supreme Court's 1803 assertion of the power that it was going to be the final arbiter���that its decisions about what the Constitution meant would be the ones that stuck. It could have gone another way���

Call the second Lochner: the Supreme Court's 1905 assertion that a late eighteenth-century Constitution enacted an early-twentieth century conception that your key liberty interest is the freedom to make whatever contracts you want to make without let or hindrance from the federal government.

Call the third the Switch-in-Time-that-Saved-Nine: the Supreme Court's 1937 assertion that Lochner was in error, and that Congress's power to regulate interstate commerce was a trump that gave it the right to regulate everything.

The fourth and the fifth are Warren Court actions: (a) in 1954 that legal racial apartheid will no longer be part of America, and (b) in 1966 that the poor will have at least some of the privileges in their interactions���both criminal and civil���with the law that the rich have always had.

You can add others: Dred Scott in 1857 as an attempt to turn the entire United States into a slave country, Roe v. Wade in 1973, the overturning of the DOMA and Kennedy on same-sex marriage. The key is that the Supreme Court moves as a political (and moral) entity���and not as a judicial entity developing and extending precedent in an arena of laws set by common-law history and legislation. And, of course, the odd thing is that since Marbury vs. Madison (1803) there is precedent that the Supreme Court can do this.

In all previous Constitutional Moments, the stakes were political, but the stakes were also large, and the stakes were fundamental: about what kind of country we were going to be. Marbury vs. Madison was about whether the Supreme Court was going to be another anti-majoritarian brake on the powers of legislative majorities that were possibly transient. Lochner was about whether freedom of contract���or freedom to exploit���was going to be a core right. SiT was whether social democracy would come smoothly or would require an economic-regulation constitutional amendment, et cetera.

The interesting thing about the Constitutional Moment that now perhaps looms is that it is the first one in which the stakes are purely partisan, and purely political. The probable Supreme Court majorities in the ACA case have shown no inclination to restrict congressional power when it is a matter of exceeding black-letter patent clause authority to provide a payoff to Disney or to prohibit the medical use of marijuana���and will show no inclination to revisit and change those decisions in the future.

Bob Drummond:

The U.S. Supreme Court should uphold a law requiring most Americans to have health insurance if the justices follow legal precedent, according to 19 of 21 constitutional law professors who ventured an opinion on the most-anticipated ruling in years. Only eight of them predicted the court would do so. ���The precedent makes this a very easy case,��� said Christina Whitman, a University of Michigan law professor. ���But the oral argument indicated that the more conservative justices are striving to find a way to strike down the mandate.������ Five of the 21 professors who responded, including Whitman, said the court is likely to strike down the coverage requirement. Underscoring the high stakes and complexity of the debate, eight described the outcome as a toss-up.

During arguments in March, four justices appointed by Republican presidents questioned Congress���s constitutional power to enact the mandate, including Chief Justice John Roberts and Justice Anthony Kennedy, who had been viewed as potential swing votes. A fifth, Justice Clarence Thomas, rarely speaks during courtroom sessions. Questioning by four Democratic appointees was more sympathetic to the provision, a centerpiece of President Barack Obama���s health-care law. ���There was certainly a lot of hostile questioning by the more conservative members of the court,��� said Jesse Choper, a law professor at the University of California at Berkeley who described the court as likely to support the mandate. ���It���s relatively straightforward���if they adhere to existing doctrine, it seemed to me they���re likely to uphold it.���

There was broad agreement that the ruling, barely four months before November���s presidential election, has the potential to hurt the Supreme Court���s reputation as an impartial institution. Eighteen of the 21 professors said the court���s credibility will be damaged if the insurance requirement���which passed Congress without a single Republican vote���is ruled unconstitutional by a 5-4 majority of justices appointed by Republican presidents���. Nine of the law professors said if the coverage mandate is invalidated the justices are likely or very likely to throw out several related provisions, such as requiring insurance companies to offer policies without regard to pre-existing medical conditions. Five respondents said the justices will leave those provisions in place; seven called it a toss-up...

June 21, 2012: Akhil Reed Amar Looks at the Prospect of Having Wasted His Life...: Akhil Reed Amar:

I���ve only mispredicted one big Supreme Court case in the last 20�� years. That was Bush v. Gore. And I was able to internalize that by saying they only had a few minutes to think about it and they leapt to the wrong conclusion. If they decide this by 5-4, then yes, it���s disheartening to me, because my life was a fraud. Here I was, in my silly little office, thinking law mattered, and it really didn���t. What mattered was politics, money, party, and party loyalty���

Fred Rodell tried to warn Akhil. He should have listened.

There has been one and only one judge who followed the law when he believed it commanded him to do things that were (i) bad policy, (ii) bad ethics, and (iii) disadvantaged his political friends: Felix Frankfurter.

June 8, 2013: Justice Roberts and Justice McReynolds: Justice McReynolds screams in anger as Chief Justice Hughes has a Constitutional Moment:

NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1 (1937): Mr. Justice McREYNOLDS delivered the following dissenting opinion: Mr. Justice VAN DEVANTER, Mr. Justice SUTHERLAND, Mr. Justice BUTLER and I are unable to agree with the decisions just announced. Considering the far-reaching import of these decisions, the departure from what we understand has been consistently ruled here, and the extraordinary power confirmed to a Board of three, the obligation to present our views becomes plain.

The Court as we think departs from well-established principles followed in Schechter Poultry Corporation v. United States, 295 U.S. 495 (May, 1935), and Carter v. Carter Coal Co., 298 U.S. 238 (May, 1936). Every consideration brought forward to uphold the act before us was applicable to support the acts held unconstitutional in causes decided within two years. And the lower courts rightly deemed them controlling���

When you get a lawless Supreme Court decision, it is usually a Constitutional Moment���a belief by the justices that justice and the future of America requires that the law must change, a la Warren in Brown and Hughes in Jones and Laughlin���or alternatively a raw assertion of partisan advantage, as in Rehnquist in Bush v. Gore.

Yet Roberts in NFIB vs. Sibelius is neither making a Constitutional Moment nor asserting partisan advantage���the assembled Republican governors of America have gone absolutely apesh%t over Roberts's decision because it forces them to either (a) endorse ObamaCare by working to expand Medicaid, or (b) see the finances of their states' hospitals collapse.

So what is it, if it is neither a High Political Constitutional Moment or a naked assertion of partisan advantage?

June 26, 2013: Richard Posner Calls Chief Justice John Roberts "Disreputable"...:

Shelby County v. Holder, decided Tuesday, struck down a key part of the Voting Rights Act.... Justice Ruth Bader Ginsburg���s very impressive opinion (in part because of its even tone), at a length (37 pages) that, remarkably, one would not like to see shortened���marshals convincing evidence that the reasons Congress has for treating some states differently for purposes of the Voting Rights Act are not arbitrary, though they are less needful than they were in 1965, when the law was first enacted. That evidence���the record before Congress���should have been the end of this case. For apart from the spurious principle of equal sovereignty, all that the majority had on which to base its decision was tenderness for ���states��� rights.��� One doubts that this actually is a primary value for any of the justices. The same conservative majority that decided Shelby had rejected a more cogent argument for states��� rights when it held three years ago in McDonald v. City of Chicago that the Second Amendment���a provision of the Constitution designed to secure state autonomy���specifically, the right of states to maintain their own little armies, the militias, against federal abolition���creates rights against states��� limiting gun ownership. It seems that the court���s regard is not for states��� rights in some abstract sense but for particular policies that a majority of justices strongly favors....

The 2009 decision in Northwest Austin Municipal Utility District No. 1 v. Holder, heavily cited in Shelby... invoked the same imaginary doctrine of ���equal sovereignty���, yet without actually invalidating anything, and so avoiding a dissent by the liberal justices. So now in Shelby he could quote extensively from his opinion in Northwest Austin as if to imply that really there was nothing new here���just a small and logical next step. Was that a disreputable tactic, or merely a clever one?...

Today: Shelby County was a "normal" Constitutional Moment: an attempt to change America into a country in which it would be perfectly copacetic for a legislature elected by a white majority to use clever redistricting to restrict the influence of an African-American voter to 3/5 of a white voter. The stakes were large in privileging the candidates and politics that white people in America tend to vote for. And I have no doubt that John Roberts and his posse think that such a 3/5-clause America is a better America than a votes-count-equally America would be.

The ObamaCare decisions are... profoundly different. The stakes are not even partisan. Lots of moderate Republicans at the state level���and even those right-wing Republicans at the state level who had to balance budgets���cursed Roberts for offering them the choice of whether to expand Medicaid or not. And lots of Republican legislators right now are none too happy with O'Connor. Yet the rough beast slouches forward.

The only way I can read this is that they think they have a very strong ideal interest in tearing down whatever a Black President built up���even if what he built up was originally RomneyCare...

#shouldread #orangehairedbaboons #legalrealism #democracyontrial #highighted