“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.
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Paul Krugman: On Economic Stupidity
Bill Clinton’s 1992 campaign famously focused on “the economy, stupid.” But macroeconomic policy — what to do about recessions — has been largely absent from this year’s election discussion.
Yet economic risks have by no means been banished from the world. And you should be frightened by how little many of the people who would be president have learned from the past eight years.
If you’ve been following the financial news, you know that there’s a lot of market turmoil out there. It’s nothing like 2008, at least so far, but it’s worrisome.
Once again we have a substantial amount of troubled debt, this time not home mortgages but loans to energy companies, hit hard by plunging oil prices. Meanwhile, formerly trendy emerging economies like Brazil are suddenly doing very badly, and China is stumbling. And while the U.S. economy is doing better than almost anyone else’s, we’re definitely not immune to contagion.
William K. Black: The Inaugural Financial Fraud Lemons of the Week Award Goes to DOJ
The Bank Whistleblowers United announce the inaugural Financial Fraud Lemons of the Week award. There can be no more fitting recipient than the ironically named Department of Justice (DOJ). The “lemon” is used in the economics and criminology literature to refer to a car of surpassingly terrible quality. The quality is so bad that the car can only be sold through fraud. We will award it each week to an example of dishonesty or cowardice about financial fraud that is worthy of public ridicule. We want to leave room in our scale for truly spectacular examples, so this first award will only receive Four Lemons. The first award is for what has become a routine example of dishonesty and cowardice by DOJ. Its conduct should be a scandal of national proportions, but by now everyone expects DOJ to embarrass our nation when it deals with elite bankers.
DOJ wins the inaugural award for picturing its humiliating settlement with Morgan Stanley as a triumph. This first column in a series we will do on DOJ’s refusal to prosecute the scores of senior bankers that led Morgan Stanley’s criminal enterprise will focus on DOJ’s press release. In the course of the series we will see that state and federal investigators, the Financial Crisis Inquiry Commission, and Clayton’s (not very) “due diligence” reviews have repeatedly documented that Morgan Stanley was one of the largest criminal enterprises in the world and committed tens of thousands of acts of fraud that cost the American people billions of dollars in losses.
Wiliam Astom: The U.S. Military Suffers from Affluenza
The word “affluenza” is much in vogue. Lately, it’s been linked to a Texas teenager, Ethan Couch, who in 2013 killed four people in a car accident while driving drunk. During the trial, a defense witness argued that Couch should not be held responsible for his destructive acts. His parents had showered him with so much money and praise that he was completely self-centered; he was, in other words, a victim of affluenza, overwhelmed by a sense of entitlement that rendered him incapable of distinguishing right from wrong. Indeed, the judge at his trial sentenced him only to probation, not jail, despite the deaths of those four innocents.
Experts quickly dismissed “affluenza” as a false diagnosis, a form of quackery, and indeed the condition is not recognized by the American Psychiatric Association. Yet the word caught on big time, perhaps because it speaks to something in the human condition, and it got me to thinking. During Ethan Couch’s destructive lifetime, has there been an American institution similarly showered with money and praise that has been responsible for the deaths of innocents and inadequately called to account? Is there one that suffers from the institutional version of affluenza (however fuzzy or imprecise that word may be) so much that it has had immense difficulty shouldering the blame for its failures and wrongdoing?
The answer is hidden in plain sight: the U.S. military. Unlike Couch, however, that military has never faced trial or probation; it hasn’t felt the need to abscond to Mexico or been forcibly returned to the homeland to face the music.
Jared Bernstein: How States Can Stop Wasting Their Taxpayers’ Money
Most state governors want to bring more businesses and employment to their states and maintain sustainable budgets. An important new paper from two of our colleagues, Michael Mazerov and Mike Leachman (M&L), provides a new and important insight in this regard: incentives in the form of tax breaks and other goodies are a bad way to get more jobs and a good way to waste taxpayer money. These ideas fail not just because they are poorly targeted, but also because their cost diverts state resources away from important investments that do boost employment prospects in the long run. [..]
Of course, when you’re running a state, any new job is welcomed (and state officials have little incentive to worry about the zero-sum problem). But tax incentives that may or may not drive employment marginally upward are a poor focus for state resources. They reduce revenues available for public goods like education and infrastructure, which, in addition to being important resources for city residents, are more likely to attract entrepreneurs.
In fact, entrepreneurs cite things like “access to talent” and “availability of local transportation options” much more frequently than they cite taxes when listing factors that contribute to their location decisions. As M&L summarize: “This suggests that states that cut taxes and then address the revenue loss by letting their schools, parks, roads, and public safety deteriorate will become less attractive to the kinds of people who start high-growth companies and the people they need to hire.”
Matt Katz: Chris Christie and the Bridges He Burned
In the weeks before his re-election as governor of New Jersey in 2013, Chris Christie avoided campaigning for Republican legislators in his state. Instead, he aggressively courted endorsements from elected Democrats, racking up dozens. His office emailed YouTube videos to the press in which Mr. Christie and the president of the state Senate, a Democrat, heaped praise on each other. His plan was to win big in this blue state, setting up a future White House run as a bipartisan Republican who could actually get elected in a general election.
The gambit worked, at first. Mr. Christie won, landing 66 percent of independents and 32 percent of Democrats in the November election. The following month a CNN/ORC poll showed that thanks to strong support from independents, Mr. Christie was the Republican front-runner for the nomination, and statistically tied with Hillary Clinton for the next presidential election, in 2016.
But less than two weeks later, an email from a top Christie aide emerged. “Time for some traffic problems in Fort Lee,” it read. The revelation of that email, and the scandal that ensued, began the gradual dissipation of Mr. Christie’s broad appeal over the next two years, culminating with his devastating sixth-place finish in the New Hampshire Republican primary on Tuesday. Despite spending more days in that state than any other candidate and more money per voter there than all but one competitor, he saw his White House dreams die on a snowy night in Nashua.
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