In a nutshell
August 1, 2012: Fed meeting
August 3, 2012: July employment report
September 7, 2012: August employment report
October 5 , 2012 : September employment report
November 2, 2012: October employment report
November 6 , 2012 Election day
The rest is just noise.
PS. I just saw this:
“I think marijuana should not be legal in this country. I believe it’s gateway drug to other drug violations,” Romney said during a May interview with a CBS affiliate in Denver, Colo. “The use of illegal drugs in this country is leading to terrible consequences in places like Mexico and actually in this country. I oppose legalization of marijuana, I oppose legalization of other kinds of drugs.”
“Those are state issues,” Romney, who appeared uncomfortable discussing the topic, said after the interview.
I’m confused. Does that mean Romney supports policies that have “terrible consequences in places like Mexico,” or does he oppose such policies? Maybe that’s why he “appeared uncomfortable.”
PPS: I continue to be amazed by the breath of Evan Soltas’ knowledge. Everything from Wes Anderson films to regulation of AIG to the East Asian development model. But nothing prepared me for this amazing sentence:
Don’t the Chinese car manufacturers remind you of Korea’s Kia or Hyundai in the 1990s, or Japan’s Datsun in the 1980s?
Yes, that was written by an 18 year old. I’m impressed that Evan can come up with theories of efficient bubbles. But I’m astounded that he knows what a Datsun is. Has anyone checked his ID?
Tags:
10. July 2012 at 08:38
On any issue you care to name, rest assured Romney is on the record-for both sides of the issue.
The words ‘I was for it before I was against it’ apply to every question. Whether it’s ACA, drugs, immigration, abortion…
10. July 2012 at 08:38
I clearly do not understand what a bubble is as I fill my gas tank instead of only putting enough in to get to the next gas station.
10. July 2012 at 08:52
@Mike Sax:
Quite correct. It’s just another way that he’s just like President Obama.
Scott, this FT story Youth of the Ice Age describes how Japan’s economy is viewed by Japanese, to go back to something you asked before. There are some positive spins that people put on not being driven to sacrifice the now for the future.
10. July 2012 at 08:59
John, I know all politicians flip flop, but even so Romney is setting a new record. He contradicts what he said this morning, at the end of a sentence he contradicts what he said at the front.
Is he really so unselfconscious about running against his own health care law? That he has no sense of irony is amazing.
10. July 2012 at 09:07
The Datsun line, owned by Nissan, is being revived, by the way.
10. July 2012 at 09:16
Scott, a very serious criticism of your NGDP futures idea has been by Michael Sankowski, here: http://monetaryrealism.com/why-scott-sumners-ngdp-level-futures-will-give-goldman-sachs-500bn-in-one-day-part-i/
I think it’s something worth addressing.
10. July 2012 at 09:21
I bet Evan likes cars.
1970s Toyota & Honda = 1980s Datsun = 1990s Hyundai/Kia = 2000s Chery
i.e. cheap cars that offer 80% of the functionality and reliability of cars in developed markets. As their median customer gains more income these brands offer more and more of the features you would expect in a developed brand. Today Hyundai/Kia are still hampered in the US because consumers remember how unreliable the cars were 15 years ago, so you can get a GREAT car at a bargain price if you’re aware that the perception has no bearing on the cars today. The same pattern happened in the past with Datsun/Toyota/Honda.
10. July 2012 at 09:29
“I’m confused. Does that mean Romney supports policies that have “terrible consequences in places like Mexico,” or does he oppose such policies?”
Or are they state issues?
10. July 2012 at 09:36
cthorm,
1970s Toyota & Honda = 1980s Datsun = 1990s Hyundai/Kia = 2000s Chery
I would say that Datsun came to America before Toyota and Honda. Maybe, that is because my dad drove a Datsun 260 Z. He would have bought in about 1974 or 1975. Honda was a big name in motor cycles, but not yet in cars.
10. July 2012 at 09:39
Hey now, the Datsun 280Z was a pretty cool car.
10. July 2012 at 10:03
Romney’s going to be a disappointment on the WOD, but then so was Obama. I do like the sound of “state issues” though — does he mean the Fed raids will stop? Defunding DEA is probably way too much to dream of.
Highlighting the worthlessness of polls, the latest ABC poll has the race dead even… with a D+9 sample… of RVs… even though the high-water mark of 2008 was only D+7 (2010 was even) and Democrats have lost ground on voter registration since then. This kind of thing explains why in 1980 there was actually a poll showing Carter ahead by six a week before Reagan won by 10. And I’m not confident polling has gotten any better for being more prevalent.
10. July 2012 at 10:06
Thanks John, That’s also my perception of the situation there.
Brito, It would be nice if someone would actually bother to figure out what I was proposing before they criticized me. First Noah Smith, now this guy. I left a couple of comments.
Cthorm, Doug and BL, The Datsun 240Z was $3500 when it came out in 1969. The Acura Legend was $22,500 when it came out in 1986. My Nissan Altima costs about $22,500 today, and it’s essentially the same car as the 1986 Acura Legend, if not better. People who think we have a lot of inflation are completely nuts. The period of 1969-86 was real inflation, this is nothing.
10. July 2012 at 10:09
“He contradicts what he said this morning, at the end of a sentence he contradicts what he said at the front.”
@Mike Sax:
And that’s different from President Obama giving a speech in 2008 and immediately having advisers run around and say not to take it seriously?
Neither invented the technique of speaking in vague terms and having everyone believe that the politician secretly “really” agrees with them. You want to talk healthcare? The biggest difference between Hillary Clinton and Barack Obama in the 2008 debates was Obama insisting that the law didn’t need and shouldn’t have a mandate. On immigration, the war on drugs, free trade, it’s all the same story.
I don’t see Romney as taking it to a new record. I see it as similar to any other politician. The only difference is that Romney is somewhat worse at pandering, and is thus more obvious. That makes him to me somewhat endearing, and possibly less dangerous (but I’m likely kidding myself there) compared to the average politician, including the President.
10. July 2012 at 10:12
Completely off topic – Scott, have you seen all the movies on this list of Tyler Cowen’s favorites?
http://www.gmu.edu/centers/publicchoice/faculty%20pages/Tyler/movies.html
10. July 2012 at 10:35
Scott — Cars are a great example of deflation. “Inflation” is such a multivariate notion, I’m increasingly skeptical it even makes sense to attempt to publish a single number that captures price movement relative to value (which is itself subjective) aggregated across all goods.
Even with hedonic adjustment, do people in 2012 really have the same living standards as those with the equivalent CPI-adjusted “real” after-tax income from the 1950s or 1970s? I would love to see a detailed, good-by-good analysis, I wonder if Tyler’s 2nd Law applies here?
10. July 2012 at 10:43
TallDave, what’s Tyler’s Second Law?
10. July 2012 at 11:06
TallDave,
“Cars are a great example of deflation.”
I’m not disputing that there have been technological improvements in cars (especially through the 1970s) but on a related note back in 2009 I researched car affordability throughout US history (I’m an unpaid self proclaimed authority on ancient US auto history).
Two decades really stood out in that regard; the 1920s and the 1970s. In 1973, for example, gross median family income (in nominal dollars) was $12,051 (median family income data is available from the Census as far back as 1947). The average price of a new car was $4052 (U.S. Department of Energy has data on that as far back as 1970), or about the price of a Chevrolet Caprice. Thus it took 17.5 weeks of gross income to buy a new car. In 1926 I estimate that median family income was about $1500. And I estimate a new car averaged about $500, or about the price of a Chevrolet Superior. Thus it took 17.3 weeks of gross income to buy a new car.
According to Comerica Bank’s Auto Affordability Index it took 22.1 weeks of gross median family income to buy a new car in 2009. The average car price went up sharply relative to other goods in the 1980s as real median family income stagnated in real terms shooting up to over 30 weeks by the mid 1990s. It will take some income growth or a reduction in average new car price before they can be as affordable as they were in the 1920s and 1970s.
On the other hand you could get a Model T Ford for $265 in 1926 and a Chevrolet Vega for $2087 in 1973 (although I would have rather spent $2150 for a Honda Civic). As of 2009 a Nissan Versa could be had for $10,685 (no AC of course). Do the math and you’ll see that they all cost almost exactly 9 weeks worth of gross income. So looking only at the most affordable cars nothing has changed at all by this standard in over 80 years.
10. July 2012 at 11:14
Scott,
“Does that mean Romney supports policies that have “terrible consequences in places like Mexico,” or does he oppose such policies?”
I think we both know that what he means is people should stop doing drugs. Now whether that is a realistic expectation, and what would be the optimal policy in response to things as they are and not as he thinks they should be, is another matter. Obviously he is not a consequentialist libertarian.
10. July 2012 at 11:15
I find a tiny bit of hope in this:
“Those are state issues,” Romney, who appeared uncomfortable discussing the topic, said after the interview.
Leaving it up to the states could lead to an end in the war in drugs.
10. July 2012 at 11:15
ssumner:
The Datsun 240Z was $3500 when it came out in 1969. The Acura Legend was $22,500 when it came out in 1986. My Nissan Altima costs about $22,500 today, and it’s essentially the same car as the 1986 Acura Legend, if not better. People who think we have a lot of inflation are completely nuts. The period of 1969-86 was real inflation, this is nothing.
Suppose in a free market of money production, the Datsun 240Z would have been $3000 when it came out in 1969. The Acura Legend would have been $20,500 when it came out in 1986. And your Nissan Altima would have cost about $19,500 today.
Now compare the prices.
See, the problem with looking at price formation only in the temporal sense is that it ignores counter-factual analysis. If the prices of cars would have otherwise fallen 10%, 20%, 30%, 50%, 75% since 1969, then even “stable” temporal price inflation would represent extremely high inflation.
One can’t look at prices so superficially.
10. July 2012 at 11:21
So vote for Mitt, he’s so bad at lying? I think one of the most endearing qualities about him, John, is how he tries to be a regular guy by saying things like
“I like sport. I like cars. Michigan is a great place. All the trees here are the same height.”
The irony is usually the Repugs run on “who would you rather sit down and have a beer with?” but Romney has killed that script.
If “real American” means anything it means a guy who knows what sports are. But anyone who says “I like sport” has never played any sport, at least any American sport in his life.
So trust him to overturn Romnneycare. The billionaires love him that’s clear. All crying at that fundraiser the other night. “Why can’t my butler realize how great Mitt is?”
10. July 2012 at 11:32
Thrown off by the Datsun analogy. Pretty nice cars as far back as I remember. The 280Z was a classic. My uncle had a mid-70’s Datsun station wagon that he drove into the ground but lasted 250+ miles.
10. July 2012 at 11:36
The rest is just noise.
Ironically, the Fed printing money, which is what “August 1, 2012: Fed meeting” is supposed to allude to, introduces “noise” of its own into economic calculation.
“Is the additional demand for my product a result of real consumer preferences, or is it just money printing? Or both? How much of it is real driven and how much is nominal driven and dependent on accelerating inflation? Interest rates are really low. This makes investment in longer, more capital intensive projects more profitable. Are these low interest rates a function of voluntary saving, or a function of Fed easing, or both? How much is due to saving and how much is nominal driven?”
Ergo malinvestment.
Ergo employment that will depend on continually accelerating inflation which of course cannot be sustained in the long run without currency collapse.
Ergo unemployment in the future.
Then, noise from monetarists that the Fed didn’t print enough.
Yay noise.
10. July 2012 at 11:50
Hello Scott,
First of all, let me say good post.
Sorry to post this here, but I couldn’t find any email address. I was wondering if you accept guest posts on your blog. Obviously, one that is relevant to your niche.
I am kindly waiting for an answer.
Thanks,
Paul
10. July 2012 at 11:50
Ten years ago I did some early marketing research for Hyundai around their launching a luxury car and selling it at an obvious loss to inflate expectations about the value of the brand on the low end segment.
All that matters is Election Day, either Scott wins our bet, or I go big.
Mine is NGDPLT’s only real stopper argument. We’ll shall see.
10. July 2012 at 12:14
Mark I love the way you guys dignify Romney up. Maybe you and John should run his campaign. Probably make less unforced errors by a mile
10. July 2012 at 12:14
Scott, I think your Altima blows the doors off the ’86 Legend.
10. July 2012 at 12:22
It seems to me that Romney is very clearly blaming the use of drugs for the bad things in Mexico, not the policies that convert that use into profitable criminal activities.
So, yeah, just wish away the use (which is “bad, dontyaknow”), and voila, there’s nothing wrong with the Drug War.
10. July 2012 at 12:24
Right Adam. Basically Mitt’s Nancy Reagan-just say no!
10. July 2012 at 12:33
More clear proof on my political power frame:
A Power = those who spend time in 80-99% Tea Party / SMB owners
B Power = the 1%
C Power = everybody else
Look how much richer the 80-99% are than the 1%. And they are all likely voters, they own their homes, they pay the taxes, and the own all the guns.
http://www.washingtontimes.com/news/2012/jul/10/cbo-rich-pay-outsized-share-taxes/
The country can’t be happy until the A Power are happier than the B Power.
The C Power should be working to achieve that.
10. July 2012 at 12:43
See Morgan I think the whole trick is that the 1% tries to convince the 80-99% that their interests are the same.
I notice that even your Washington Times piece doesn’t say 80-99% but 60-99%
10. July 2012 at 12:44
What about the Septemeber and October Fed meetings? Oh, and the minor issue of the possibility of a euro zone induced collapse of the finacial system (not offset by the Fed and the ECB of course).
You may no be interested in the euro zone but the euro zone is interested in you.
10. July 2012 at 12:53
Yeah unfortunately a lot is riding on Europe. Today they got a deal for Spain done which was good. But now Germany has some court case where they have to decide if these measures conflict with German law.
So basically a German judge can decide they don’t and sink the entire system
10. July 2012 at 13:01
Evan’s cookie production analogy, along with an interesting concept of time pooling, went quite nicely with my oatmeal raisen cookie.
10. July 2012 at 13:16
@ Mark Sadowski
“Do the math and you’ll see that they all cost almost exactly 9 weeks worth of gross income.”
Yes, but today you can drive that car 100,000 miles over 10 years with very little maintenance, while running the air conditioning, electric heated seats, and IPod docking all at the same time. Then you can crash into a tree and walk away uninjured.
Several decades ago, you’d have had to spend the entire purchase price on maintenance within the first 5-10 years, and you’d be maimed if you crashed.
10. July 2012 at 13:32
Soltas’s “efficient bubbles” isn’t even a defense of economic bubbles. He writes:
“Note that I do not seek to imply that all bubbles are efficient — just that there exists a plausible set of conditions for which a large, temporary, inventory-creating, price-driven increase in production could be an optimal outcome for a problem of allocating scarce resources.”
This is just a defense of economic fads. Like the hula hoop.
Then he writes:
The second condition which would make a bubble efficient is the presence of positive externalities such that total returns for a society are often higher then the private return. If private individuals can be “convinced” by an asset-price bubble to make those marginal investments which eventually have a negative private return but a positive total return, then a bubble may be an efficient outcome for a society.
This is just the same old hypostatization constantly invoked by non-clear headed thinking. “Society” is divorced from “individuals”, and we’re supposed to believe that something can harm individuals but somehow benefit “society”, as if society is something other than the individuals from which “society” has meaning.
Methodological individualism wipes the floor with that nonsense.
Pretty weak non-defense of economic bubbles.
10. July 2012 at 13:43
Scott, might be worth responding here. This criticism is pretty well thought out.
http://monetaryrealism.com/why-scott-sumners-ngdp-level-futures-will-give-goldman-sachs-500bn-in-one-day-part-i/
10. July 2012 at 13:57
Mike Sax,
“Mark I love the way you guys dignify Romney up. Maybe you and John should run his campaign. Probably make less unforced errors by a mile.”
I’m just noting the obvious. Romney even avoids coffee and tea for fear of their mind altering effects. As for running his campaign he’d have to pay me an awful lot if he expected me to actually improve his chances.
10. July 2012 at 14:17
Steve,
“Yes, but today you can drive that car 100,000 miles over 10 years with very little maintenance, while running the air conditioning, electric heated seats, and IPod docking all at the same time. Then you can crash into a tree and walk away uninjured.
Several decades ago, you’d have had to spend the entire purchase price on maintenance within the first 5-10 years, and you’d be maimed if you crashed.”
I have three older cars (a 1959 Lincoln Continental coupe, a 1966 Imperial Crown convertible and a 1974 Buick Buick Estate wagon) and I’d rather pay the cost of maintaining all three than the cost of a single modern car. The cost of rebuilding any of their transmissions is roughly one sixth that of modern car for example.
Air conditioning has been around since 1940 and heated seats since 1965. As for Ipod docking stations all my cars are wired up for satellite radio and digital. Who buys a car based purely on something trivial and that is easily installed and will be obsolte in a few years anyway? My Lincoln has an autodimmer (an Autronic Eye). Do modern cars have that?
As for accidents, all three of my car models are banned from demolition derbies. I could make most cars on the road today my hood ornament and not even notice. The laws of physics will always trump protection devices and passive restraints.
The only thing I will grant is that modern cars get much better MPG, and given peak oil and global warming that does matter.
10. July 2012 at 14:28
Re: Romney and Pot
I read his statement several times and I fail to see the confusion. He says he is not in favor of legalizing marijuana because it is “bad” for both the US and Mexico. We can disagree, but why is it confusing?
Maybe you are “confused” because of his use of the word legal and illegal in apparently different ways? Is the fact that he is against both legal and illegal marijuana what is confusing? My impression is you are being sarcastic and have a touch of “denying the antecedent” in your supposed “confusion”. It is as if you claim “confusion” because you believe Romney was confusing because he did not say the following:
“Marijuana is illegal, therefore bad
Marijauna legal
Therefore Marijuana not bad”
You claim confusion because both illegal and legal marijuana is apparently bad to Romney. But that is logical. The above statement would not be logical. It is obvious he is simply against the use of Marijuana because he thinks it is a bad drug and that enforcing its non-use is a good thing for Mexico and the US.
The fact that I disagree with him, does not make his statement confusing at all. What am I missing?
10. July 2012 at 14:42
Clearly what Romney was saying is that he favors widespread LEGALIZATION of drugs. Read it carefully:
“The use of ILLEGAL drugs in this country is leading to terrible consequences in places like Mexico and actually in this country.” (emphasis mine).
If you understand that you have all the terrible consequences under the status quo war on drugs regime, then it follows that Romney is saying that the solution is to get rid of all the illegal drugs by legalizing them.
Also, I understand that he winked knowingly when he said this.
It’s subtle, but you have to read between the lines with this guy.
10. July 2012 at 14:59
Romney expressing his opposition to legalizing drugs is the least surprising news I have heard in this campaign. Did anyone really think he was going to go after the 1% Gary Johnson vote?
I think marijuana will be legalized if and when most voters favor it, much like gay marriage. It will be a cultural change, regardless of who is sitting in the White House.
My vote will be based on monetary policy, fiscal policy and foreign policy. Which candidate is the most likely to implement NGDPLT or something like it, reduce the deficit, simplify taxes, kill as many terrorists as possible, and keep us out of foreign wars? That is who will get my vote. The rest is noise.
10. July 2012 at 15:06
“Those are state issue”
*Breaking News* Mitt Romney now in favor of repealing all Federal drug laws!
#Notintendedtobeafactualstatement
10. July 2012 at 15:15
Mike Rulle you’re trying to show how there’s nothing confusing about Romney is the most confusing thing of all!
10. July 2012 at 16:09
“Those are state issues”
EXACTLY.
The more often a politician says and acts on this, the more we want them in Federal office.
10. July 2012 at 16:38
“Those are state issues”
Not really though. The federal government is involved in the drug war. It spends money, it prosecutes, etc. So you can’t end the War on Drugs only at the state level.
10. July 2012 at 16:53
Evan Soltas is a composite of the best Princeton professors—except maybe they would not be that smart.
After reading Soltas, I am inclined to retire. If the kids are this smart…..
10. July 2012 at 17:17
Scott: and political science backs you up, US presidential campaigns make little difference.
10. July 2012 at 17:32
Romney’s statements technically don’t conflict if looking at them through the lens of federalism. The Feds control interstate commerce, states have intrastate commerce. So both statements work together, except the part about Mexico. I agree the black market created by prohibition has caused a lot of problems there (as well as here).
Perhaps libertarian-minded folks everywhere should volunteer for jury duty and employ jury nullification for drug offenses. I was a hold out on the last Federal jury I was on concerning drug and weapons charges. In addition to charging this guy only for possession, they had him in jail for more than two years before he even got a trial. They’ve got a real racket going there where the public defender keeps delaying, gets reassigned and then the next one delays. If you don’t have any money they can lock you up for who knows how long before you even get a chance at justice.
10. July 2012 at 17:46
Mark,
So looking only at the most affordable cars nothing has changed at all by this standard in over 80 years.
Yes, until you look at the utility of the car. You can not even sell cars made to 1990s standards today, let alone 1970s, and a car made to 1920s standards would bankrupt its producer in a week on product liability.
10. July 2012 at 18:12
Bonnie you said:
“Romney’s statements technically don’t conflict if looking at them through the lens of federalism. The Feds control interstate commerce, states have intrastate commerce. So both statements work together, except the part about Mexico. I agree the black market created by prohibition has caused a lot of problems there (as well as here).”
At this point I should give up. You guys will always find the most charitable possible interpretation of anything Mitt says. It’s not a “federalist” issue if the US government spends millions of dollars and manpower fighting the War on Drugs-which was iniitiated at the federal level by Nixon.
So even by federalist logic you should call for the end of it. The states can’t solve it as the federal government usurped the issue.
If Romney’s a libertarian in your sense then he should say the first thing he’ll do-ok he already promised to “repeal and replace” first but then he promises to everything first-is end the War on Drugs.
Then states can decide whether they want to fight a costly battle over drugs. Right now lots of states aren’t.
10. July 2012 at 19:10
Relax Sax.
If Cali wants to be New Amsterdam – they should be able to.
The US govt. has no legitimate right to have a war on drugs anymore than they had the right to force states to raise drinking age.
IF states wants to be super conservative and throw the book at a guy with a joint, that’s up to them.
Let it go Sax, if you make me be in your club, you’ll end up in a club you hate being in because guys like me will thwart your every desire.
Instead MOVE away from me and expect me to move away from you.
You ought to look into a book called the Big Sort.
11. July 2012 at 02:46
Oh my God – it seems that everyone was a market monetarist in 2000 – when it came to Japan: http://marketmonetarist.com/2012/01/22/allan-meltzers-great-advice-for-the-federal-reserve/
11. July 2012 at 02:54
Maybe a post on how it’s so much easier for economists to see what needs to be done when deflation comes through prices rather than NGDP (real output, mainly). So ironically economists pay more attention to deflation when it matters less (in so far as prices are falling, the economy is adjusting) than when it matters more (deflation responsible for pulling down employment and output).
11. July 2012 at 07:15
Of course one more thing not on your list-maybe it doesn’t rise to the level-is the Fed minutes. The market is waiting with bated breath.
11. July 2012 at 07:39
I think that to measure only the unemployment would be a bad choice. Romney is not the best candidate to deal with current economic problems. I expect the new trend to immigrate to Canada (check the nice resume of the U.S. Immigration to Canada). With all current difficulties and economic instability combined with useless presidents like Bush or Obama, there is not much hope for the future. Do you really think that somebody would come and change the course of the economic crisis just because he is an American president. No chance. The heyday of presidents was over long ago.
11. July 2012 at 08:09
UGGG69, I’ve left 3 comments over there.
11. July 2012 at 08:24
If Romney’s a libertarian in your sense
He’s definitely not.
Really, the only reason for libertarians to support Romney is that Obama has proved to be a consistent statist. Romney will be far superior on economic issues (not perfect, but a night and day difference from the current “crucify” admin), and the economy is what’s important right now.
11. July 2012 at 08:26
Perhaps libertarian-minded folks everywhere should volunteer for jury duty and employ jury nullification for drug offenses.
Yes! That’s how the first Prohibition ended.
http://en.wikipedia.org/wiki/Jury_nullification#United_States
11. July 2012 at 10:34
“But I’m astounded that he knows what a Datsun is. Has anyone checked his ID?”
Ryan Avent and Karl Smith have some theories:
https://twitter.com/ryanavent/status/222774065084108800
And his Twitter profile has been updated, it now suggests he’s been hired by the Huffington Post. (Well actually, it’s the Huffington Post, so “contributor” could mean anything, really.)
12. July 2012 at 18:13
Tea Party still rolling. This is not the GOP of 2008, we may actually get some serious spending restraint.
13. July 2012 at 07:38
Saturos, Those comments were funny.