SHOULD I MOVE BACK TO PHILADELPHIA?

Venus favors the bold. ~ Ovid 

It seems to me that the fall election will be the day after tomorrow. The intensity of media’s circus about all things electoral is being ratcheted way up – with more than Barnum’s three (3) rings and a mere 46 days remaining before November 3.

A growing bask[1] of poll results are published daily. Incessant interviews with allegedly undecided voters pervade the media. Come on, how could any semi-cognizant person 18yrs or older remain unresolved about voting for either Biden or Trump? The number of “swing” or “battleground” states –where someone has decided the expected election results are “too close to call” – have multiplied this time around. Past elections have categorized three or four states as swingers, not now. Last week there were 12 to 15 states that have been labelled “swing/battleground” by various organizations.

Fifteen states, really? Absurdity lives on both sides of the screen. Either the polls’ always-suspect forecast accuracy is getting worse, or the cabal of pollsters and media have determined it’s decidedly inequitable that only a couple of states get so anointed. Each of the 15 swingers must deserve a participatory blue or red tinted ribbon.

According to one analyst, Pennsylvania will likely decide the presidential election among the swingers. Sorry Wisconsin, Minnesota, Ohio and Florida. Your time in the election spotlight’s glare has apparently dimmed. So, if the Keystone State is indeed the key state, should I move back there – I grew up in suburban Philadelphia – and vote to help Joe win? Is my additional vote worth more there than in the People’s Republic of Berkeley, where I’ve resided for decades?

To see if I can still actually legally cast a vote in Pennsylvania I visited the comprehensive www.vote2020-womentowomen.com/ website that Patrice and her friend Linda Saulsby recently launched. I learned I need to relocate in PA no later than October 2 and register by October 19. It would be a rather quick hop, skip and a long jump back to Liberty Bell-land. Recent polls of likely voters in PA show Biden leading #45 by 3% to 7%, indicating that more Biden voters will help.

Each and every vote counts of course, and in the last presidential election Sec. Clinton beat The Donald by a significant 30.0% margin in my home state, California. In Alameda County, where Berkeley dwells, her victory margin was an incredible 63.6%. She received 5.4 votes for every vote Trump got. These results illuminate California’s and my home county’s status as deeply midnight blue territory. The most recent polls of likely voters in CA show Biden leading from 29% to 30%.

On the other hand, #45 won Pennsylvania in 2016 by a miniscule but vital 0.7% margin even though the state has been Democratically-aligned for a long time. The Dems’ presidential candidates have won PA in 10 of the 17 elections since 1952. Before 2016, the Dems triumphed the last six straight presidential elections. But now politicos believe PA is getting redder. As Democrat cognoscente James Carville stated, “Between Pittsburgh and Philadelphia, Pennsylvania is just Alabama.”

I cast my first presidential vote in November 1968 for Hubert Humphrey when I lived in Montgomery County, one of Philadelphia’s four “collar counties” that surround it. In 2016, Montgomery County gave Sec. Clinton a 21.3% winning margin.

In order for Biden to win PA this time around, these four collar counties (and Pittsburgh’s Dem majority) must surmount #45’s strength throughout the far less urban rest of the state. That, unfortunately, did not happen in 2016. It most assuredly needs to happen this November 3.

In his disastrous town hall meeting held in Philadelphia this week, #45 talked about “herd mentality” – yet another of his ever-lengthening list of spoken misnomers – when he likely meant herd immunity. Actually, from this I believe he and his deceitful campaign has been exposed for using heard mentality to inure his base from the real world and instead accept his fearfully-spoken dark fantasies.

I haven’t booked a flight to PHL yet. I’m hoping Joe and Kamala will continue bolstering their fearlessly bold and clear advantages to the voting public. They should keep emphasizing their positivism, humanity, knowledge, credibility, common sense and perhaps most importantly, empathy for every US resident.

I also haven’t scheduled a journey to our closest planetary neighbor, Venus. I found the report that astrobiologists may have discovered phosphine (PH3) in Venus’ atmosphere emotionally-positive news. On Earth, phosphine can be produced either by microbes or chemists (including as a lethal by-product of hazardously-operated meth labs).

That’s right, possibly some beyond-strange microbial lifeform could be floating next-door in the Venetian atmosphere. Wow; welcome to the planetary neighborhood. Unfortunately there’s no beaches to travel to (it’s a toasty 900°F on the surface), but what an escape from the onslaught of a covid-flu twindemic, wildfires, the on-going viral recession and vicious politics.

To Venus and beyond…

 

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[1] A bask is the collective noun that describes a group of crocodiles, a treacherous reptilian carnivore. 

ROLL OVER BILL PHILLIPS

You gotta hear it again today

The way to crush the bourgeoisie is to grind them between the millstones of inflation and taxation. ~ Vladimir Lenin 

The certified nation-builder, Vladimir Lenin, mentions above that inflation can be the bane of many people, even the bourgeoisie. He’s right. Milton Friedman, a certified Nobel-laureate economist, but not at all a fan of Lenin, stated that inflation is taxation without legislation. He’s right, too. They agreed about nothing political, but do agree about the harsh effects of inflation that reduce the purchasing power of money.

Inflation is a general rise in a nation’s prices. Not just the increasing price of fruit loops, Airbnb rentals or window panes, but all prices in a country. Economists cite woeful, recent examples of unchecked hyperinflation such as Venezuela’s 27,364% inflation in 2018, when prices doubled about every two weeks and Zimbabwe’s 66,000+% inflation in 2009. The “winner” in my national hyperinflation hall of fame is Hungary’s unfathomable 1946 general price increase of 9.63 x 10²⁶ percent (prices doubled in less than every one and a half days). Post-war periods and inflation often coincide. Even here in the good ol’ USofA. Cliometricians estimate that in 1779 the US had an inflation rate of 192%, mostly caused by the Revolutionary War’s substantial costs.

Have you experienced noticeable national inflation? Not unless you’re over 35 years old with virtuous long-term memory. The last time the US core Personal Consumption Expenditure price index (PCE), that our Federal Reserve Bank uses to measure official price changes, reached 5% annual inflation was the third quarter of 1983. The PCE has only been over 2% – the Fed’s target inflation rate – in merely two (2) of the most recent 40 quarters (10 years). Long gone are those economically-stormy, early 1975 days when inflation rose to 10.1%.

Thus, with perceptible inflation thankfully being in a long-term coma it’s hardly surprising that last week Federal Reserve chair Jerome Powell and his colleagues altered the Fed’s policy priorities. Going forward, the Fed will re-emphasize its goal of minimizing unemployment rather than its second goal, controlling macro prices (e.g., inflation). The Fed stated that low unemployment would no longer be a sufficient reason to tighten monetary policy, in an attempt to head off expected inflationary trends. In a remarkably truthful statement, the Fed’s wizard vice-chair, Richard Clarida, stepped in front of the curtain to state that the Fed’s macroeconomic models that have predicted inflation would always rise significantly when maximum employment was reached were wrong.

Apparently, Senate leader Mitch McConnell didn’t get this Fed memo, as he’s staunchly refusing to re-vitalize expansionary fiscal expenditures – such as the former $600 unemployment supplement – to ease the lives of too many people, and reduce unemployment. Mitch dismisses the facts that unemployment is now 10.2% and folks are suffering.

For a long time, both the Fed’s goals were nominally given equal policy priority. This dual prioritization was essentially founded on the Phillips Curve. In case you’ve forgotten this slight theme presented in Econ 101, here’s a recap.

The Phillips Curve is named after Professor William Phillips, my favorite New Zealand economist. He gained my fancy in part because he’s the only economist I know of who was a crocodile-hunter in his youth. After fighting in Southern Asia during WWII, he headed for London and enrolled in the London School of Economics (LSE). At the LSE he became captivated by the then quite radical, newish view of macroeconomics created by John M. Keynes and became an academic economist.

In 1958 Professor Phillips published his seminal paper that described an inverse/indirect relationship between a nation's wage-inflation rate and the unemployment rate using early-20th century United Kingdom data. When either unemployment or inflation is low, the other is high, as illustrated below.

The Phillips Curve 

Source: Forex

When similar patterns of wage-inflation and unemployment were observed in other nations at the time, the Phillips Curve became accepted by both academics and policy-makers. If an economy was growing with lower unemployment (higher employment), the Phillips Curve posited that higher wages/inflation will happen. It displayed the short-run macroeconomic trade-off between a strong economy (lower unemployment) and higher inflation.

This relationship has not held in more recent times despite considerable efforts to defend the Philips Curve and its shape. Some macroeconomists have differentiated short-term versus long-term Phillips Curves, others have added inflationary expectations to no real avail. I’ve believed the Phillips Curve has been a chimera for quite some time. But the Congress and the Fed, as well as other nations’ legislatures and central banks, still use the explicit Phillips Curve’s inflation-unemployment relationship for justifying policy.

When inflation appears set to rise, the Fed has typically tightened the money supply (by increasing interest rates), generating a little more unemployment. When inflation is poised to fall, the Fed has done the opposite. The result is that unemployment edges up before inflation can, and goes down before inflation falls. Monetary policy (and to a much lesser extent fiscal policy) is changed so that inflation will not.

But inflation has appeared to be less sensitive to differing employment levels, as mentioned above. Inflationary pressures have been in a coma. This past February (a lifetime ago) when the macroeconomy was quite strong with very low 3.5% unemployment, the PCE inflation rate was a remarkably quiet 2.1%.

The Philips Curve has apparently flattened over the past decade, so that a given change in unemployment, due to variations in monetary and/or fiscal policy, has had a smaller effect on wages/inflation than previously. This change is the basis for the Fed’s recent prioritization of fighting unemployment with much less concern about eventual inflation.

Oh my, Professor Phillips, your curve has broken down and metamorphosed over time to be far flatter, in spite of some macroeconomists’ best efforts to explain this change and do something about it. The Fed is going to focus now principally on promoting employment, downplaying price-stability.

That’s perfect timing because we’ve been in a significant recession for at least five (5) months. The Fed’s Board of Governors now will “appreciate the benefits of a strong labor market, particularly for many in low- and moderate-income communities.” After this Spring, when the Fed began its sizeable efforts to reduce the pandemic’s recession, will inflation awaken from its long, Ambien-induced torpor? A pro pos of the well-known Niels Bohr quote, predicting inflation is very difficult, especially about the future. But it appears that most economists and market analysts, despite voluminous and contrary opinions, do not think noteworthy inflation is anywhere near imminent.

I think the recent flatness of the Phillips Curve has contributed to the rise and spread of progressively-liberal economists’ Modern Monetary Theory (MMT). A simplified tenant of MMT argues that countries which issue their own currencies, like the US does, can never “run out of money.” The federal government is not financially constrained in its ability to spend. MMT claims that the government can afford to buy anything that is for sale in its currency with minimal concerns of resultant inflation.

Ironically, when Dems come into full federal power on January 20, 2021 with enough of them subscribing to the flatter Phillips Curve and MMT, they could embrace the Repubs own de facto fiscal policy that has exploded the federal budget deficit with their specific, pet fiscal initiatives like giant tax cuts for corporations and for the bluest of the rich as well as ever-increasing defense expenditures, with no discernible rise in inflation.

By brandishing the Phillips Curve’s modern flatness, adopting MMT and pointing a fiscal mirror at #45’s and the Repubs’ massive deficit spending, progressive Dems could justify, with enough backbone, their own expensive, pet fiscal initiatives. Ones like the Green New Deal, government-guaranteed $15/hr jobs and Medicare for All. It could be the Dems’ way of stating, if you Repubs can do and have done it, we can too for far broader benefit.

In my mind, it all started with one clever, crocodile-hunting Kiwi economist.