Pop Culture Gets Radical

“Sorry to Bother You” and “Dietland” offer something we need at this moment.

When the history of this terrible moment in American life is written, I suspect the surreal and deeply radical indie film “Sorry to Bother You” will be a major cultural marker, like “Easy Rider” in 1969 or “Slacker” in 1990. Watching it — agog that it ever got made in the first place — felt like getting a little glimpse into the future, and not just because its dystopian satire is half a step away from our reality.

.. “Sorry to Bother You,” a sleeper hit, may be the most overtly anticapitalist feature film made in America.

.. If you want to get a feel for the zeitgeist behind the growth of the Democratic Socialists of America, the wave of unionizing in digital media, the striking teachers in red states, and the general broad seething fury about inequality that’s particularly pronounced among people who came of age amid the Great Recession, it’s a good place to start.

.. It’s about an African-American man named Cassius Green — he goes by Cash — living with his girlfriend, an avant-garde artist, in the garage of his uncle’s house, which is facing foreclosure. Desperate for work, he becomes a telemarketer, where his uncanny ability to feign the voice of a confident white man makes him a star, lofting him into a rarefied realm of high-paid, grotesquely immoral salesmanship. The movie includes subplots about unionization, (literal) debt slavery, viral videos, brutal reality television and the cultural worship of sociopathic entrepreneurs. (As well as weird disturbing stuff I don’t want to give away.) I’ve never seen anything like it.

.. In another time, the fantasies of violent leftist resistance in “Sorry to Bother You” and “Dietland” might have caused more of a backlash. But the scary obliteration of limits on the right has also opened up new imaginative space on the left. Donald Trump is trying to destroy liberal democracy, a system that seemed inviolable, before our eyes. Watching it happen, it’s hard not to wonder: what other systems might be more fragile than they seem?
.. At least for the duration of “Sorry to Bother You,” capitalism feels evil but also tawdry and preposterous, and labor solidarity seems sexy and exuberant.
.. Americans in their 20s and 30s, after all, are as a cohort poorer and more indebted than their predecessors, while being surrounded by comic-book villain displays of wealth. (Just this week, Education Secretary Betsy DeVos, whose family owns 10 yachtsproposed to make it harder for students defrauded by for-profit colleges to seek loan forgiveness.) They are the most diverse generation of adults in history at a time of vicious right-wing backlash from older white people.

Inflation? Bring It On. Workers Could Actually Benefit.

as is too often the case when workers finally start to see some of the benefits of growth, economists are warning that higher wages will lead to inflation, and they’re calling for the Federal Reserve Board to hit the brakes by raising interest rates.

What if we tried an experiment and waited until inflation actually began to rise substantially before raising interest rates too quickly? Even if prices did rise, my hypothesis is that the benefits, especially for those who haven’t gained from economic growth in recent years, would exceed the costs of higher inflation.

.. It’s not exactly clear why prices haven’t risen very much. It may be because greater international competition keeps prices down; because the decline of union contracts means that fewer companies give automatic cost-of-living adjustments; because consumers can compare prices so easily on the internet; because oil prices have fallen recently; or simply because, after years of low inflation, people expect price increases to be limited.

..  the costs of the Great Recession were enormous — at least $4 trillion in lost income, or about $30,000 per household

.. a high-pressure economy run over a longer period will actually increase that potential by pushing firms to improve productivity and draw more workers into the labor market.

Ben Bernanke’s The Courage to Act: A Review Essay

The most interesting lessons of The Courage to Act are not about Bernanke himself, but about the system in which he operated. The key revelation is that the way that the U.S. deals with macroeconomic challenges, and with monetary policy, is fundamentally flawed. In both academia and in politics, old ideas and prejudices are firmly entrenched, and not even the disasters of crisis and depression were enough to dislodge them

.. Most people who are forced to deal with momentous historical events do not have the luxury of preparing for the particular challenges they face. Franklin Roosevelt, for example, did not come into office expecting to fight World War II. Ben Bernanke is an exception to this rule. More than almost any other economist of his time, he had spent his career thinking about the Great Depression—the closest analogue for the crisis he would eventually face.

.. But Lucas showed that if the public was expecting the Fed to lower interest rates in an attempt to boost employment, the relationship broke down, and all you got was inflation with no boost to the real economy. The experience of the 1970s seemed to vindicate that prediction. The profession was thus in Lucas’s hands to reshape. He joined up with Edward Prescott and others to promote a school of thought known as Real Business Cycle (RBC) modeling, also known as New Classical economics.

.. Economic downturns were the natural and efficient result of fluctuations in the rate at which scientists and engineers discovered new technologies—or, possibly, the result of harmful government meddling in the economy

.. Unemployment was a purely voluntary response to lower wages—in effect, a vacation

.. New Keynesian models were not, in fact, very Keynesian. Instead, they codified the intuition of Milton Friedman, who believed that counteracting depressions with easy money was a key job of central bankers.

.. So it was eerily providential that when the Great Recession hit, America’s most powerful economic policymaker (Bernanke was appointed Fed chair in 2006) was the economist who had spent more time than almost anyone thinking about the main historical precedent for this sort of crisis. At a time when the financial sector threatened to collapse, the Fed was headed by one of the only macroeconomists who realized how dangerous a financial collapse could be. Nearly anyone else—for example, Martin Feldstein or Glenn Hubbard, who were widely mooted for the top Fed job—would have been more blase about letting the big banks collapse under the weight of their own bad decisions. Bernanke, on the other hand, bailed out big banks quickly and decisively.

.. Reading these sections, one comes to understand just how much Fed policy-making was constrained by the intellectual ghosts of the 1970s and 1980s.

.. Bernanke also appears to be one of the only Fed officials to have thought about the thread of deflation before 2008.

.. In other words, the anti-inflation firewalls that academic macroeconomics built after the 1970s held firm. Even as deep and lasting of an economic wound as the Great Recession failed to convince the most dovish of Fed officials that a 4% inflation rate was a risk worth running. Even the 2% target—enshrined in official Fed policy since 2012—looks more like a ceiling than a target

.. One example is the Senate’s refusal to confirm Peter Diamond to the Fed’s Board of Governors in 2010. Diamond, an enormously respected economist who won a Nobel Prize for his work on labor search theory in October of that same year, should © 2016 John Wiley & Sons Ltd Ben Bernanke’s The Courage to Act 115 by any reasonable criteria have been a shoo-in for the nomination. But Senate Republicans, deciding that Diamond’s politics were too liberal for their tastes, blocked his nomination twice, forcing him to withdraw on the third round. Anti-tax activist Grover Norquist even threatened Republicans to keep them from voting for Diamond.

.. Top congressional Republicans, for example, publicly opposed the second round of quantitative easing in late 2010. They wrote a letter warning that QE2 would generate “long-term inflation and … artificial asset bubbles.” Needless to say, none of these politicians were experts in the inflationary or financial consequences of asset purchase programs.

.. ” This sort of behavior by politicians, of course, serves to illustrate why central bank independence is a good idea in the first place

.. Even worse was the attempt by a few politicians to “audit the Fed”—a somewhat misnamed campaign, since the Fed is already audited quite thoroughly. The “audit the Fed” campaign was actually an attempt to end the central bank’s independence by allowing Congress to review monetary policy decisions through the Government Accountability Office

.. But the episodes illustrate how technocracy, which functioned effectively during the crisis, nevertheless became a target for political grandstanding and opportunism

.. If policy uncertainty is bad for the economy—and many studies indicate that it is—then it appears clear that partisan brinksmanship made central bank technocrats’ job harder in the early 2010s.

..” The worsening extremism of the Republican Party during and after the crisis caused Bernanke, a lifelong Republican, to leave his party and become an independent

 

A Conversation With Joseph Stiglitz

The Nobel-winning economist discusses the Fed, the election, and the role of economists in fixing inequality.

.. In the first three years of the recovery, 91 percent of all gains went to the top 1 percent. So the bottom 99 percent saw nothing.

.. The labor force participation rate of people in their 40s, 50s, is still lower than it’s been in decades. People who lost their jobs in 2008, didn’t get jobs in 2009, ‘10, ‘11, maybe aren’t likely to get a job ever. If they do, it’s not going to be anywhere near as good as their old job. There are many people for whom they lost their job at 50 or 55 and are unlikely to ever work again. The scar is permanent.

.. They should have focused more on improving the channel of credit to make sure that money was going to small and medium-sized enterprises They should have said to the bank—like some other countries have done—if you want access to the Fed window you have to be lending to SMEs.

..  Just using the interest rate is not going to have a first-order effect on the economy as a whole. You’re encouraging people not to focus on the really critical thing.

.. They’re just focusing on this one variable as if it was a magical number, and I think it would be great if every American small business could go out and borrow at a negative interest rate, we would have a recovery. But that’s not the interest rate that they’re facing.

.. The most problematic option is clear: Cruz. He’s an ideologue. Conservative Republicans like him because he’s true to the faith, that means getting rid of social security, making our tax system more regressive, cutting back on all the programs that lean against growing inequality. Of the major candidates remaining, he stands out as the person most likely to do the most harm.

.. Are you generally disappointed with the way the Obama administration has handled economic policy?

Stiglitz: I guess I would say so overall, but not compared to the way it would’ve been handled by Romney or Bush. The stimulus should have been larger, deeper, longer. The bank bailout should have been more focused on helping small and medium sized banks, on helping homeowners.

.. A big question, in all of these areas, is could he have gotten more out of Congress? That’s a very difficult political judgement. I think a lot of people feel that in those first two years where there was a Democratic president and a Democratic Congress he could’ve gotten a lot more done—he was just too conservative. He was too much in the hands of the banks, too much in the hands of big business, too much in the hands campaign contributors. He’s done a lot of things by executive order in the last year, like raising the minimum wage and climate change. But a lot of people are wondering, why did he wait?

.. Stiglitz: The prevalent ideology—when I say prevalent  it’s not all economists— held that markets were basically efficient, that they were stable. You had people like Greenspan and Bernanke saying things like “markets don’t generate bubbles.” They had precise models that were precisely wrong and gave them confidence in theories that led to the policies that were responsible for the crisis, and responsible for the growth in inequality. Alternative theories would have led to very different policies. For instance, the tax cut in 2001 and 2003 under President Bush. Economists that are very widely respected were cutting taxes at the top, increasing inequality in our society when what we needed was just the opposite. Most of the models used by economists ignored inequality. They pretended that macroeconomy was unaffected by inequality. I think that was totally wrong. The strange thing about the economics profession over the last 35 year is that there has been two strands: One very strongly focusing on the limitations of the market, and then another saying how wonderful markets were. Unfortunately too much attention was being paid to that second strand.

.. It’s very hard to persuade a young person who has seen the Great Recession, who has seen all the problems with inequality, to tell them inequality is not important and that markets are always efficient. They’d think you’re crazy.

President Obama Weighs His Economic Legacy

Eight years after the financial crisis, unemployment is at 5 percent, deficits are down and G.D.P. is growing. Why do so many voters feel left behind? The president has a theory.

“If you ask the average person on the streets, ‘Have deficits gone down or up under Obama?’ probably 70 percent would say they’ve gone up,” Obama said, with some justifiable exasperation — the deficit has in fact declined (by roughly three-quarters) since he took office, and polls do show that a large majority of Americans believe the opposite.

.. Obama is animated by a sense that, looking at the world around him, the U.S. economy is in much better shape than the public appreciates, especially when measured against the depths of the financial crisis and the possibility — now rarely even considered — that things could have been much, much worse.

.. The budget deficit has fallen by roughly $1 trillion during his two terms. And overall U.S. economic growth has significantly outpaced that of every other advanced nation.

..A large swath of the nation has dropped out of the labor force completely, and the reality for the average American family is that its household income is $4,000 less than it was when Bill Clinton left office.

.. Many within Bush’s own party were supporting an alternative bill that was focused on mortgage-­asset insurance and tax cuts. But Obama, convinced that anything short of a major bailout could lead to economic catastrophe, said Democrats should back Paulson’s plan. They did.

It was a rare moment of bipartisanship, with long-term political consequences. To Obama, this was a necessary alliance with Wall Street and a Republican president. To many others, it looked like a sweetheart deal for the same people who created the mess ..

 .. “The whole thing about financial crises is the tools that work are the ones that will make you look like you’re in bed with the banks,” said Timothy Geithner, an architect of TARP whom Obama made his Treasury secretary.