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Reconciliation

By Dylan Matthews

Today, Ezra considered Mitt Romney's job creation proposal, laid out three solutions for demand declines, and looked at yet another tax cut chart.

1) Matt Yglesias goes hard against barber licensing.

2) The Census released new data on child care.

3) Maybe the Federal Reserve just doesn't like Democrats.

4) David Post on why jazz fans should support copyright reform.

It's been a rainy day in D.C. and, other suggestions aside, that means listening to lots of Belle & Sebastian. Here's "Marx and Engels."

By Dylan Matthews  |  August 18, 2010; 6:30 PM ET
 
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Comments

The piece about the newly uncovered treasure trove of vintage jazz recordings, and the fact that it may never enter public circulation due to the difficulties of ascertaining all potential copyright owners, is maddening.

On a related note, I have never quite understood why there is such great concern about lost royalties from file sharing and digital duplication in the music and film worlds, and yet historically there has been no equivalent concern about public libraries and xerox machines in the print publishing world. Maybe someone here can explain why a thousand people reading a library book is any less of a form of intellectual property theft than a thousand people sharing an mp3 file...?

Posted by: Patrick_M | August 18, 2010 7:27 PM | Report abuse


Fire Klein.

Posted by: screwjob19 | August 18, 2010 7:35 PM | Report abuse

"3) Maybe the Federal Reserve just doesn't like Democrats."

A few nits to pick here.

The paper claims the 1970s was a period of easy money, and it was. But was it all on behalf of the Republican Party?

In a 2002 research paper, Athanasios Orphanides took a look at monetary policy in the US during the 1970s and found it consistent with an activist, forward-looking monetary policy consistent with an inflation target of 2%, and responded strongly to forecasts of inflation and the unemployment gap. How did high inflation result? Well, according to Orphanides the Fed's estimate for full employment was too low, hence the Great Inflation. That seems more likely to me than to think the Fed was involved in a conspiracy to re-elect Gerald Ford. It also explains why money was tight during Carter's re-election - Volcker had to run a tight monetary policy to tame the Great Inflation, which is more plausible than imagining Volcker trying to put the guy who appointed him out of office.

The paper claims monetary policy was really easy under George H.W. Bush, ostensibly in order to support his re-election.

The White House tried to force Greenspan to cut rates in late 1991 and Greenspan refused - Bush later blamed his '92 loss on Greenspan (see pg 121-122 of Greenspan's memoir, hardcover, near the end of the Black Monday chapter). To the extent the Fed was trying to support Bush's campaign, he might have obliged him with a 25bps cut at least.

In the run-up to Clinton's re-election, the Fed cut rates twice, in late 1995 and early 1996. If the Fed didn't want Clinton to remain in office, you'd think at the very least they would have kept rates steady.

The model claims that the Fed's reaction to unemployment is asymmetric - it reacts to low unemployment, but it does not necessarily cut rates to increase the slope of the yield curve when the unemployment rate is above target and rising. Maybe throwing various variables into a model will give you that result, but it doesn't jive with an institutional understanding of the Fed. It's clear that the Fed starts cutting rates when it perceives economic weakness, cuts over a year or two, and hikes after the decline in unemployment has turned into a trend (after about 12-18 months). Take a look at the chart from Calculated Risk.

http://www.calculatedriskblog.com/2009/09/fed-funds-and-unemployment-rate.html

Also, just think in terms of actual election cycles. Clinton and Obama won in part because of a bad economy under a Republican incumbent. Clinton also had an economy at what was then considered to be full employment heading into the 1996 election. Gore won the popular vote with a very strong economy. If the Fed is trying to sabotage Democrats it isn't doing a great job.

At the end of the day, I'd be shocked if Fed chairs and the FOMC in general were motivated by much other than turning in solid economic performances under their watch.

Posted by: justin84 | August 18, 2010 9:08 PM | Report abuse

--Here's "Marx and Engels."--

What next from Klein and Harvard Boy?

"Glory be to the people's heroes" posters?

Posted by: msoja | August 18, 2010 10:33 PM | Report abuse

"What next from Klein and Harvard Boy?

"Glory be to the people's heroes" posters?"

Chances are that your critical commentary might benefit if you first had a clue about the thing which you are criticizing.

The song lyrics behind that title do not glorify Marxism, and are not even about Marxism. The song is about a girl (about whom the singer says "she spoke in a dialect I could not understand, but one thing she made clear, there was no coming on to her") who is reading Marx and Engles.

Funny that you so often espouse an anarchist utopia of complete individual freedom, but can't tolerate the existence of a song by a Scottish pop band that simply mentions the names of a couple of long-dead philosophers.

Posted by: Patrick_M | August 19, 2010 12:03 AM | Report abuse

Of course the Fed hates Democrats.

They are mostly a bunch of rich Republicans who want their taxes kept low.

I mentioned this bias right here on this blog several weeks ago.

The fact Obama kept Bernanke shows Obama is not the progressive people thought.

When will the Democrats nominate and elect a true progressive instead of someone who just keeps protecting the status quo? Clinton kept Greenspan and worked hard to extend voodoo economics, and now Obama is doing the same thing.

God help us all.

This country no longer belongs to the people or to Americans. We're bought, sold and controlled by foreign corporations and her majesty's crown.

Posted by: lauren2010 | August 19, 2010 7:16 AM | Report abuse

--"The song lyrics behind that title do not glorify Marxism, and are not even about Marxism."--

What is wrong with you, Patrick? One of the band members quotes from the Communist Manifesto in the background. Read the rest of the lyrics. Read the comments. Google it. Quit being such a lying shill.

Posted by: msoja | August 19, 2010 8:59 AM | Report abuse

Full lyrics:

There's misery in all I hear and see
From people on TV
After their tea when life begins again
They'll be happier than me

There are a thousand meals being made on Saturday
From the view I saw today
I took a bet inside the launderette
With a girl from Wallasey

She spoke in dialect I could not understand
But one thing that she made clear
There was no coming on to her
There was no way

There's misery in all I hear and see
From people on TV
After their tea when life begins again
They'll be happier than me

There are a thousand meals being made on Saturday
From the view I saw today
I took a bet inside the launderette
With a girl from Wallasey

She spoke in dialect I could not understand
But one thing that she made clear
There was no coming on to her
There was no intellect
That she could respect
If it couldn't see
That the girl just wants to be
Left alone with Marx and Engels for a while
She's writing in the style
Of any riot girl

-------------------------------------

And yes, you hear a bit of Marx in the background for effect. Sorry your mind can't handle such a bit of indie pop fluff, liberty-loving ad anarchist msoja.

Posted by: Patrick_M | August 19, 2010 11:24 AM | Report abuse

i thought matt yglesias had a license to sell hot dogs?

Posted by: jackjudge4000yahoocom | August 19, 2010 1:30 PM | Report abuse

--"And yes, you hear a bit of Marx in the background for effect."--

Ah, just for effect. What are the odds, do ya think, that Klein and Harvard Boy just happened to pick a song with "a bit of Marx in the background for effect"? Just a really crazy coincidence?

Posted by: msoja | August 19, 2010 4:23 PM | Report abuse

Yes, just for effect. Just for effect. Just listen a few more times msoja. Just a few more times...

LISTEN ONLY TO THE EXACT SONG LINKED!

Just a few more times...
___________________________________
And while we're after work texting... You do know your moniker is evokative of S. Sosa of the double chest thump fame? Was that purposeful?

Posted by: BHeffernan1 | August 20, 2010 12:47 AM | Report abuse

--"LISTEN ONLY TO THE EXACT SONG LINKED!"--

The one titled "Marx and Engles"? With the riot girl (Ezra, herself?) unable to respect anyone interfering with her commie rapture? With the quote from the Communist Manifesto lovingly offered in the background?

--"You do know your moniker is evokative of S. Sosa of the double chest thump fame? Was that purposeful?"--

Nope.

Posted by: msoja | August 21, 2010 3:25 PM | Report abuse

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