Most people will want to skip this post, but it’s something I need to get off my chest. One unfortunately aspect of the internet is that it lifts off the lid, and exposes all the dark sides of human nature. One of those dark aspects is the urge to blame the victim.

1.  The sick

If you follow sports, you will eventually come across a case like Derrick Rose, or Kawhi Leonard. These are players that suffered severe injuries, and had trouble getting healthy again. At some point medical science is no longer able to identify the problem. They look healed but they still felt pain, which got worse when they played. When that happens, sports reporters start whispering that it’s a mental thing, that these players are weak. This despite the fact that when healthy, these men were among the toughest in the league, willing to mix it up with much bigger players under the rim. We get frustrated that they aren’t healed yet—and that the problem cannot be identified—so it’s their fault. (This year it’s Markelle Fultz who is being picked on.)

Medical science may be impressive, but there is still a great deal that it doesn’t understand. If you go to the doctor and complain about chronic intestinal pain, there’s a good chance that he or she won’t be able to pinpoint the problem. Indeed there are lots of things that cannot be identified in X-rays or blood tests, including severe back pain, chronic fatigue syndrome, migraine headaches, and dozens of other illnesses. We get frustrated with people who have these hard to pinpoint problems, and label them “hypochondriacs.” Or we say they have a low threshold for pain—as if anyone knows the pain felt by another person. Yes, it’s true that the pain is “all in their head”, but that’s equally true of someone suffering pain from a “phantom limb”, and someone who has their hand on a hot stove. Where else would the pain be?

2.  The sad

It’s even worse with mental illnesses. People suffering from depression are told to just “snap out of it”, or think positive thoughts. They are viewed as losers.

3.  The lonely

There has been recent discussion of “incels”, people who are celibate but who would prefer to be in a romantic relationship. The non-lonely often tell them to just “lower their standards”, as if they had never thought of that. Or join a church. Please, just stop. Even worse, one prominent pundit implied that tech firms might want to get rid of these awful people. After all, one incel in Canada murdered some people.

4.  The poor

Like you and I, indeed like almost everyone, poor people often make bad choices. But the last thing they want to hear is someone telling them what they did wrong. Consider a young woman at the bottom of society (in terms of looks and education). Her life is pretty bleak, with only a few men to choose from. Having a child would provide some meaning to her life. She finds the best man she can, but in the end he walks out on her, leaving her a poor single mother. Or maybe he beat her and she walks out on him.  Sure, she might have been able to stay slightly above the poverty line by becoming a low wage, childless, “incel” worker with nothing in life to look forward to; but not everyone can live that way. Yes, poverty is bad, but being physically ill, mentally ill, or lonely might well be worse.

I understand that there are people out there who are deserving of blame. Think of the famous case of the worker who is on disability for a bad back, but is discovered out skiing. (Or Trump with his “bad feet“.)  These people exit. But unless you have clear evidence pointing in this direction, do not blame victims for their plight. Just don’t do it.

If I were to generalize, I’d say that the biggest mistake made by conservatives is to view the unfortunate as “losers” who are to blame for their plight. In the case of incels, both the left and the right piles on.

On the liberal side, the biggest mistake pundits make is to rank people by how much sympathy each victim deserves. Don’t tell people that their suffering is less bad than someone else’s. YOU DON’T HAVE ANY IDEA WHAT IT’S LIKE TO BE IN THEIR SHOES. For all we know, the most miserable person in America might well be a billionaire. These pundits base their opinions on social science, whereas they ought to spend more time reading great literature.  There’s more to life than money.

HT:  Scott Aaronson, who has a much better post.

From the FT:

The Turkish lira led a broad drop in emerging market currencies on Tuesday after President Recep Tayyip Erdogan vowed to take greater control of monetary policy if he wins elections next month.

Mr Erdogan has for years harboured a deep antagonism towards high interest rates, taking the unconventional view that they cause rather than curb inflation. Last week, he warned that they were “the mother and father of all evil”, fuelling concern that he would not allow the central bank the freedom to raise rates.

The Turkish president told Bloomberg that cutting interest rates would lower inflation. “The lower the interest rate is, the lower inflation will be,” he said. “The moment we take it down to a low level, what will happen to the cost inputs? That too will go down . . . you will be able to get the opportunity to sell your products at much lower prices . . . The matter is as simple as this.”

PS.  A new paper by Warwick J. McKibbin and Augustus J. Panton makes the case for NGDP targeting:

Looking to the future the importance of supply shocks being driven by climate policy, climate shocks and other productivity shocks generated by technological disruption as well as a structural transformation of the global economy appear likely to be increasingly important. This suggests an important evolution of the monetary framework may be to shift from the current flexible inflation targeting regime to a more explicit nominal income growth targeting framework. The key research questions that need further analysis are: how forecastable is nominal income growth relative to inflation?; and what precise definition of nominal income is most appropriate given the ultimate objectives of policy (nominal GDP, nominal GNP or some other measure that is available at high frequency (e.g. big data on spending)). Also, the issue of growth of income versus the level of income is an open research question with many of the same issues to be faced as the choice between inflation targeting versus price level targeting.

Lars Christensen is now doing videos at Patreon.  Check it out.

Also check out my new post at Econlog, where I express skepticism about whether Japan is a “safe haven”.

So how’s the economy doing over the past 16 months?  Here’s RGDP growth:

That’s better a bit better than before.

Here’s employment growth (annual % change):

That’s a bit worse than before.  Yet the unemployment rate is falling, as it has been for 8 1/2 years.

Here are real wages (deflated by the PCE):

Still rising modestly, as before.

Here is the trade deficit:

Worse than before, as expected.

Here’s the stock market:

The bull market continues.

Conclusion.  We are still in the Obama economy, with the possible exception of RGDP growth, which seems a bit stronger.  Otherwise things are about the same.

Prediction:  RGDP growth will stay around 3% for a couple more quarters (reflecting the corporate tax cuts and Fed easing), and then fall back below 2%.

The Economist reports that a number of Trumpian politicians are on the rise in Canada.  Interestingly, the Trumpian issues there are not immigration and trade.

Meanwhile the same issue says that Republican politicians report that their constituents couldn’t care less what Trump’s views are on the issues, they just want to know if their elected representatives support Trump.

I know that my commenters will never believe me, but the global rise of anti-intellectual, tribal, populist, right wing authoritarianism is not about the “issues”, it’s about something much deeper.  Because it has no appeal to me, I’m completely blind to the attraction.  So are all the liberal pundits who write articles claiming to understand Trumpism.  Maybe it’s about how the rise of the internet and cable TV mean that the elites are no longer gatekeepers for information.  “Hey liberal pundits, it’s not about the issues, it’s about the fact that voters despise YOU.”  (But then there’s China, which doesn’t fit that theory.)

I suspect this means Trump will be re-elected, if his health holds up.  (And his health is said to be absolutely spectacular.)

Off topic; I was glad to see that sports betting is going to be allowed at the state level.  (I have no opinion on the legal aspects of the Supreme Court decision, which seems to have been based on a technicality.  I don’t know how I would have voted, but I like the policy outcome.)

Nine years ago I did a post discussing how the CPI was distorted by mis-measurement of housing prices:

Good News! There was no housing crash.

At least according to the US government.

The BLS claims that housing prices are up 2.1% in the last 12 months.  Why does this matter?  For all sorts or reasons, but first let’s try to figure out what really happened.  According to the BLS, housing makes up nearly 40% of the core basket of goods and services.

Category    weight     inflation

Housing     39 %             2.1%

Other         61%              1.4%

Overall      100%             1.7%

Suppose that instead of rising 2.1%, housing costs have actually fallen 2.1% over the past 12 months?  In that case the core rate would be zero.  Which number seems more likely?  For much of the past year house prices have been falling at more than 2% a month.

Bloomberg reports a new academic study that reached similar conclusions:

New research shows that the CPI is slow to reflect changes in prices—and, equally important, understates the degree to which prices move up and down. The problem stems from the way the government calculates the price of shelter, a category that makes up one-third of the index.

Three economists have developed an alternative measure that captures price moves as soon as they occur and shows the full range of changes. If it had existed in 2008-09, when the economy was in the deepest recession since the Great Depression, it would have shown far deeper deflation than the Bureau of Labor Statistics registered. The official CPI, they write in a new paper, was overstating inflation by 1.7 percentage points to 4.2 percentage points annually during the Great Recession. More recently, they write, the problem has been the opposite: Annual readings have understated inflation by 0.3 to 0.9 percentage points. Those are huge disparities given that forecasters make a big deal of fluctuations of just one or two tenths of a percentage point in the official rate.

Here’s a graph that shows how big a difference it makes:

That correction is actually a bit larger than even I would have expected.  But even if their method is not perfect, I have little doubt that the basic point is correct; the CPI is less volatile than an alternative price index that reflects actual market prices in the economy.

The problem they point to is similar to the one I mentioned back in 2009. The BLS uses rent payments on existing contracts that do not reflect the market rent on apartments currently on the market.  During a slump, it’s not unusual for a new tenant to get one or two months free rent:

The economists behind it are Brent Ambrose and Jiro Yoshida of Pennsylvania State University’s Smeal College of Business and Edward Coulson of the Merage School of Business at the University of California at Irvine. Their latest version is described in an April 20 academic paper titled “Housing Rents and Inflation Rates.” The key difference from the CPI is that their measure factors in only new rental leases, including those of new tenants and old ones who recently renewed. The BLS, in contrast, also includes rent paid by tenants whose leases weren’t up for renewal in the latest month, which means it’s slower to pick up on changes in market conditions.

Kudos to Ambrose, Yoshida and Coulson for putting a spotlight on a very important flaw in the CPI, which many professional economists use too uncritically.