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Why Fiscal Stimulus Fails – Richard Epstein |
Janet Yellin and Mario Draghi should say something like this:
Sorry folks, you think that we are magicians, but we are only trained in monetary economics. And we are here to tell you that we have shot our wad with a set of stimulus programs that were broken from the outset. Only now the situation is worse. The law of diminishing returns to additional efforts has set in so any measures we take will make our economies worse. The burden is squarely on the political branches to do their part. Deregulation and lower taxation reduces administrative costs and economic burdens. It will allow private firms to increase output. Either your elected officials make structural reforms today, or we shall have another fruitless set of stimulus programs tomorrow.
Apple’s Shrinking Impact in the Smartphone Industry – HBR |
Now that Apple has begun to compete on the same terms as Samsung and the other smartphone providers, there is no smartphone company that is a market-creating innovator. Apple, Samsung, and the others are stuck in a battle of sustaining innovations, which is about classic competition on who makes a better phone. It does not benefit customers in the same way.
Think You Stink at Math? Amazon Wants to Change That – Re/code |
Elon Musk cancels blogger’s Tesla order after critical post – FastCo |
Long-term marijuana use tied to worse verbal memory in middle age – Reuters “Researchers found that as past years of marijuana use increased, verbal memory scores decreased. In practical terms, the results meant that for every additional five years of exposure, 50 percent of marijuana users would remember one less word from a list of 15 tested words.”
North Dakota Has Highest Gallup Good Jobs Rate – Gallup | “For the third year in a row, North Dakota had the highest Gallup Good Jobs (GGJ) employment rate among the 50 U.S. states, at 51.5%.”
Voter App Offers Tinder-Like Political Hookups – Re/code | “The app requires little introduction: Swipe right to vote “yes” and left to vote “no” in response to eight policy questions: Abolish the death penalty? Keep abortion legal? Decrease military spending? Repeal Obamacare? The answers lead to suggested party affiliations.”
The Science Of Hillary Clinton’s Coin Toss Victories – Forbes | “In some Iowa counties, there were an odd number of County Delegates to be awarded (or in one case, an orphan delegate), and the Clinton/Sanders races were literally a dead heat. And in the case of a dead heat, Iowa has a rule on which candidate receives the odd delegate: a coin toss.”
Thanks to Google Fiber, this is America’s best-connected public housing development – FastCo |
Again, if you want government to spend like a Nordic nation, it also needs to tax the middle class like one
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The WaPo’s Max Ehrenfreund has a great Q&A with sociologist Lane Kenworthy, author of “Social Democratic America” — a book I have written about a few times. The following bit gets at the idea that it wouldn’t be just the rich paying for the progressive dream of greatly expanded government, Scandinavian style:
One difference between these two candidates’ [Hillary Clinton and Bernie Sanders] platforms and the social-democratic agenda in your book is that both are talking a lot about raising taxes on the rich, while in the Nordic countries, the middle and working classes pay more in taxes, too.
The tax strategy that these countries have tended to pursue is to spread the tax burden around, and in fact, their overall tax systems are pretty much flat. Almost everybody pays roughly the same share of their pre-tax income in taxes. You have a progressive income tax, but that’s offset by regressive payroll taxes, and especially regressive consumption taxes, which are very large in these countries.
Everybody feels like they’re paying in and getting something out of the system, so the system becomes more legitimate. You’re less likely to get this kind of us-against-them argument from conservatives. Even high income households don’t tend to hate this kind of system.
If you’re going to have a really big government, as these countries do — government spending is the neighborhood of 45 to 50 percent of GDP — if you’re going to do that, you just have to go where the money is. There’s obviously no way you could do that just by tapping money from the rich. Sanders has said that and is acknowledging that.
If we’re talking about a big expansion of public insurance, you have to tax the middle class as well as the rich. In the short turn, for a smaller expansion, I don’t necessarily think it’s a terrible idea to say you’re going to get most of that revenue from the rich. It is possible.
I don’t like Hillary Clinton’s promise, “I’m not going to raise any taxes on anybody in the bottom 95 percent.” I don’t think that’s a smart or productive thing to do, but the general orientation — to raise as much of the additional revenue as you can from those at the top — I don’t necessarily oppose.
Indeed, Kenworthy favors roughly $1.5 trillion in increased annual spending — or 10% of GDP — for a variety of programs, half of which would be paid for by a VAT. Oh, he does briefly explore getting all that dough from the rich. But the “rich” wouldn’t just be millionaires and billionaires. He defines the rich as the top 5% — hundred-thousandaires — not the top 1% or 0.01% or 0.01%. Their average tax rate would need to more than double to nearly 70%. And this static analysis assumes no negative economic impact. When the Tax Foundation looked at the Bernie Sanders tax plan — similar in annual cost to the Kenworthy plan — with a dynamic analysis, it found “after-tax incomes of all taxpayers would fall by at least 12.84 percent.”
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Feds consider helping fund Elon Musk’s Hyperloop – Ars Technica |
As if to underscore the notion that the Hyperloop is not just some tech mogul’s science fiction fantasy, Anthony Foxx bounded onto the stage Friday night in College Station. By attending the competition Foxx, who has been the US Secretary of Transportation since 2013, said he was signaling his interest in the Hyperloop. “It’s one thing to have a really cool new idea,” he said. “It’s another thing for that idea to go through the traps required to have that actually used by the mass public. That’s not to say this isn’t an idea that has merit. I’m here. It has merit.”
There are four primary modes of transportation that move people around the world today: trains, automobiles, boats, and airplanes. The last of those, the airplane, was invented more than a century ago. Foxx said his department must be open to new ideas in a world with a growing population and aging infrastructure.
So, Dutch Cops Are Teaching Majestic Eagles to Hunt Drones – Wired | “The Dutch Police will continue tests for several months before deciding whether to implement the eagles full-time. Which means that no matter what they decide, we’ll hopefully be getting a few more videos like this one.”
Same-Day Hip Replacement – WSJ “Hip replacement surgery is now an outpatient procedure due to an increasingly popular surgical technique; surgeons promise less pain and faster recovery.”
Snuffed out – the kids’ classics that would be censored by a smoking ban – The Guardian |
The World Health Organisation would like films that feature smoking to automatically be given adult ratings. Bad news for Pinocchio and Cruella de Vil … In its survey of films released in the US between 2002 and 2014, smoking was present in 60% of films rated PG-13 (parental guidance, particularly for children under 13) and in 25% of films rated PG or for all ages. Some films popular with older children and teenagers, such as Lord of the Rings (Gandalf and his pipe) or X-Men (Wolverine and his cigar) would be affected if they were released now, as would dozens of children’s classics familiar to generations.
Deciphering the Language of the Brain: A new initiative gets us closer to understanding how our brain cells communicate – SciAm |
French Politicians Pushing To Ban Linking To Any Website Without Permission – TechDirt |
Now, it’s fairly obvious that you’re dealing with two politicians who think they’re somehow proposing a solution to “piracy” on the internet. But it’s really yet another attempt at punishing Google. Similar to efforts in Germany, Spain and even the European Parliament, very, very shortsighted Google haters think that a way to “punish” Google is to make it pay money to sites that it links to (mainly when it comes to news aggregation). The two French politicians admit flat out that they’re trying to help copyright maximalists.
Why Harry Potter Doesn’t Have Free Will –RCS
Backing bands: which musicians endorse which US presidential candidates? – The Guardian |
Both Ted Cruz and Marco Rubio beat Iowa caucus expectations — set by polls and betting markets — while Donald Trump underperformed. Let’s focus on Trump for a moment. Caucus entrance polls described his core support last night as “caucusgoers who didn’t attend college, were more moderate and, first and foremost, listed immigration as their top issue,” according to the Wall Street Journal. So the secular working class.
Now none of the other candidates are going to out-extreme Trump on immigration policy. Moreover, his sharp rhetoric and willingness to tolerate heat for being “politically incorrect” signals to supporters his seriousness on the issue. Mr. Trump won’t be pushed around! There is also evidence Trump has talked for sometime about the need for a wall on the southern US border, again suggesting his views are more than just ones of convenience.
Yet given Trump’s self-promoted image and branding as a “winner,” his Iowa loss would seem to provide a window of opportunity for rivals to grab his voters. Bad news is poisonous for momentum stocks. Of course if Trump wins NH and wins it big, perhaps that moment is gone and his momentum returns. He regains his balance and resets. It’s like that moment in “Terminator 2: Judgement Day” when the frozen T-1000 is frozen by liquid nitrogen and shatters. But then the various bits and pieces begin to melt and flow back into each other, slowly reforming the shapeshifting android. Time is of the essence, Cruz and Rubio.
Taking advantage requires a policy-infused message delivered — with both consistency and genuine empathy — to working class voters (and the broader middle for that matter) and that addresses their struggles and anxieties, both for their own lives and those of their kids. Among these ideas: a) tax relief by cutting payrolls taxes and/or expanding various tax credits; b) education reform that boosts high-ed access and value while providing non-college pathways to good careers, c) detailed Obamacare replacement/reform; and d) Social Security modernization that boosts benefits for low-income Americans. And when candidates talk about the miracle of capitalism, better differentiate between competitive capitalism and the cronyist type — and what that means in practice.
But they better hurry. The shafting T(rump)-1000 may be reforming even now.
Not only is America experiencing an historically weak recovery, but there are deeper signs of trouble. A big one: Productivity growth — a key indicator of technological innovation — has been basically flat since the Great Recession, according to official statistics.
Are things ever going to get better? Or as singer-songwriter Merle Haggard once put it,“Are the good times really over for good?”
I discuss the long-term prospects for the US economy and American workers in this week’s podcast with economist Robert Gordon of Northwestern University. His research asking whether U.S. economic growth is “almost over” has been widely cited, and he was named by Bloomberg as one of the nation’s ten most influential thinkers. He is also author of the new book “The Rise and Fall of American Growth: The US Standard of Living since the Civil War.”
Here are excerpts of our talk, which you can listen to in full over at Ricochet.
Pethokoukis: We are going to talk about the book, “The Rise and Fall of American Growth,” which you say is built around two big ideas. The first big idea is that the period from 1870 to 1970 was a special century when it comes to innovation, productivity and economic growth, a period – a special century both unique in human history and unrepeatable because the achievements could only happen once. So that’s the big idea number one.
Big idea number two: some inventions and innovations are more important than others, and that special century after the Civil War was made possible by a unique clustering in the late 19th century of what you call “the great inventions.”
If I can use the old Merle Haggard song, “are the good times really over for good?” I think you might say that maybe they are – that we’re not going to have that special century again.
GORDON: Well, the idea that it was a special century is pretty obvious if you go back before 1870 because we had virtually no economic growth from the Roman Empire through about 1700. The best research suggests that in England, where they have the best statistics, from 1300 to 1700, growth was only at a rate of 0.2% a year, enough that would take four centuries for the standard of living to double.
Starting around 1870, we had sufficient growth at roughly 2% a year; that is, not 0.2 but 2.0, and that’s enough to allow the standard of living to double every 30 years or so. So since the Civil War, it’s become commonplace to expect that each generation will be twice as well off as the generation that came before.
The reason this happened was that the world was ripe with opportunity for people to invent new things in the decade starting in the 1870s. The two really big inventions, the greatest of all were electricity — which of course made so many things possible, from the elevator to home appliances to power machine tools on the ground and power machine tools that people held in their hands — and the internal combustion engine, which made possible not only motor transport – cars, buses and trucks – but also allowed man to finally achieve his longtime dream of flight.
That special century went far beyond just a couple of inventions. We had the spread throughout urban America of an old idea called running water, so we had running water that came to the house and waste pipes that took it away – something that did not exist in a world of 1870, dominated by outhouses and poor housewives having to carry water into their homes in pails.
And we had perhaps the most valuable – if we try to quantify it, the most valuable of all improvements, which could only happen once, was the conquest of infant mortality. In 1890, the percentage of newborn babies who died in the first year was 22%. By 1950, only 60 years later, that percentage was down below 1%. And think of all the lives that were saved and all the value that was created. Some economists have calculated that the ending of infant mortality alone was worth more than all the other new consumption goods invented during that period.
So that’s the first big idea that the revolutionary century after 1870 was special and had never happened before.
And now, the second big idea is that it didn’t happen again. We’ve had plenty of inventions since 1970 but it’s been focused on the narrow sphere of entertainment, information, and communications technology. That means everything associated with the television, including time shifting through VCRs and DVRs; computing, going from the mainframe through mini-computers and personal computers through to the laptop and the smartphone; and the mobilization of communication, moving from the landline phone to the dumb mobile and now the smart mobile phone.
Those innovations are everything that we talk about today, but in perspective they’re just a small slice of what human beings care about. If we looked at food, clothing, shelter, transportation, entertainment, motion pictures, we have achieved relatively slow progress since 1970. So that’s the second idea – that the progress we’ve achieved has been more narrowly focused in a smaller part of the economy.
So those are the two big ideas and they lead to a forecast for the future, which is that despite all of the technological hoopla that we hear about, we’re not going to be having a return to the special century. (more…)
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Who is to blame for corporate inversions? Daniel J. Mitchell |
CEOs are not the culprits. …
The bottom line is that U.S.-domiciled firms are being forced to compete while burdened with a tax code that is uniquely destructive. Until that system is fixed, expect more mergers that lead to companies being based overseas. In the short run, that doesn’t really matter since the factories, headquarters, and research facilities generally stay in the United States. All that really happens is that there’s a corporate charter in a filing cabinet in Ireland, Switzerland, or the Netherlands rather than in Delaware. But thanks to the OECD’s BEPS project, it’s now more likely that there will be an incentive to shift actual jobs and investment out of America.
Let’s hope politicians put aside class warfare and anti-business demagoguery and fix the tax system before it’s too late.
Welcome to the sixth evolution of television: place-shifting – The Guardian | “Since its first demonstration in the mid-1920s television has gone through five major shifts that affect the way viewers consume it. Now we’re on the verge of a sixth shift that will bring it kicking and screaming into a brave new world of TV everywhere.”
New Facebook tool sparks the world’s biggest popularity contest – FastCo | “The fascinating trove of data offered by Audience Optimization forces us to reckon with Oscar Wilde’s famous proclamation: “There is only one thing in life worse than being talked about, and that is not being talked about.”
How Thunderstorms Trigger Asthma Epidemics- RCS |
The maths of February 29 – +Plus |
Will Machines Eliminate Us? Yoshua Bengio Q&A – MIT Tech Review |
Is there a risk that AI researchers might accidentally “unleash the demon,” as Musk has put it?
It’s not like somebody found some magical recipe suddenly. Things are much more complicated than the simple story some people would like to tell. Journalists would sometimes like to tell the story that someone in their garage will have this amazing idea, and then we have a breakthrough and have AI. Similarly, companies want to tell a nice little story that “Oh, we have this revolutionary technology that’s going to change the world—AI is almost here, and we are the company that’s going to deliver it.” That’s not at all how it works.
As Primary Season Opens, OpenText Releases Election News Tracking Tool – TechCrunch |
Parental Influences on Health and Longevity: Lessons from a Large Sample of Adoptees – NBER |
We study the formation of adult health and mortality using data on about 21,000 adoptees born between 1940 and 1967. The data include detailed information on both biological and adopting parents. We find that the health of the biological parents affects the health of their adopted children. Thus, we confirm that genes and conditions in utero are important intergenerational transmission channels for long-term health. However, we also find strong evidence that the educational attainment of the adopting mother has a significant impact on the health of her adoptive children, suggesting that family environment and resources in the post-birth years have long-term consequences for children’s health.
Donald Trump says Bernie Sanders is a probable “communist” and “total whack job.” Sanders calls Trump a “pathological liar,” his policy ideas “pathetic.” Trump would cut taxes by $12 trillion over the next decade, and Sanders would raise them by $14 trillion. Also big differences on issues such as climate change and immigration.
But over at Vox, John Judis sees some important similarities, suggesting there’s a big chunk of American voters that disagrees with the “market liberalism” or the “neo-liberal consensus” — free trade, immigration, deregulation, easy taxes — that dominates both parties. (To put it another way, if you got together a bunch of current and former Obama economic advisers and sat them down with some of their GOP counterparts from the McCain and Romney campaigns, there would probably be lots of agreement. One group might want a 50% top tax rate, the other 30%, neither 90%.) Both parties are “pro-business.”
But Sanders and Trump are saying something different. Judis: “Both men are foes of what they describe as their party’s establishment. And both campaigns are also fundamentally about rejecting the way economic policy has been talked about in American presidential politics for decades.” Sanders wants to break up the banks, install single-payer healthcare, and sharply raise taxes. Trump sees mass immigration and free trade as negatives. And he rejects entitlement reform, a pillar of modern GOP economic policy. Taken together, Sanders and Trump are “harbingers” of a “revolt” against the economic order driving both parties.
And where might this populist revolt lead? Judis:
What is happening to the United States and Western Europe now can be compared to what happened from the 1870s to the beginning of World War II. During this earlier period, capital and a laissez faire view of the economy initially reigned supreme, and, as Thomas Piketty has demonstrated, economic inequality grew apace, as it has over the past 40 years. There were initial outbursts similar to those that the United States and Western Europe are experiencing now — the populists and socialists in the United States, the socialist and Labour parties in Europe — but they didn’t cohere into a powerful challenge until the decades after World War I and the onset of the Great Depression.
When they did come together, however, the challenge took two very different forms. In the United States, the breakdown of the old order led to the triumph of the New Deal on the left. In Europe, it resulted in the rise of fascism.
So where will this “powerful challenge” lead? Maybe Democrats become more social democratic, though not full Denmark. For the GOP? It seems Judis is raising the specter of a Trumpian, neo-fascist GOP. But maybe save that scenario for an Amazon limited series.
More likely is a more populist, “closed” GOP — in the Tony Blairian sense — that is even more skeptical of trade and immigration and less likely to propose reforming the “earned benefit” systems of Social Security and Medicare. But here’s the thing: You cannot escape the demographic challenge that America’s aging poses to Medicare and Social Security. The China “trade shock“ seems to be at an end. Illegal immigration continues to decline. Those manufacturing jobs aren’t coming back in large numbers. Trumpism, as currently construed, is really off-point policywise, though the trade and immigration issues help the billionaire businessman make an emotional connection with voters.
So how about a GOP that eschews pro-business cronyism (business bailouts and subsidies and special tax breaks) in favor of a dynamic, competitive, market capitalism while modernizing the safety net for an evolving economy being shaped by globalization and technology? That’s what I’m thinking.
First watch this 2016 Super Bowl ad from Rocket Mortgage:
Hey, kind of like the subprime collapse and housing crisis never happened! (Great find by the WSJ’s Nick Timiraos.) But there is more to it. The supposed daisy chain of positive economic impacts from buying a house reminded me of this analysis of the US economy from Northwestern University’s Monica Prasad (bold mine):
Beginning after World War II, Germany, France and several other countries aimed to restrain private consumption and channel profits toward export industries, in a bid to reconstruct their war-devastated economies. Loose regulation was part of this business-friendly strategy. Some scholars have even called these European policies “supply side,” in that they focused on incentives for producers, at the expense of demand-side measures that would benefit consumers. They were one ingredient in Europe’s spectacular postwar growth.
The United States, on the other hand, developed a consumer economy based on government-subsidized mortgage credit, a kind of “mortgage Keynesianism.”Increasing consumption was a Depression-era response to a problem that puzzled observers at the time. On the one hand, unemployment and hunger were everywhere. On the other, the government was actively engaging in crop destruction to raise prices — like the great pig slaughter of 1933, in which millions of piglets and pregnant sows were destroyed so that hog prices would go up. In the words of Huey P. Long, the populist governor and senator of Louisiana: “Why is it? Why? Too much to eat and more people hungry than during the drought years; too much to wear and more people naked; too many houses and more people homeless than ever before. Why? This is a land of super-abundance and super-plenty. Then why is it also a land of starvation and nakedness and homelessness?”
The true answer to Long’s question — at least as far as we understand it today — is that a restricted money supply was constraining the economy. But observers at the time thought that the problem was that wealth was concentrated in so few hands that consumers did not have purchasing power to buy the goods that lay rotting in the fields. Increasing consumer purchasing power became the paradigm that drove economic policy during the New Deal and for decades after. A central element of this was increasing homeownership by encouraging citizens to take on large debts for the purchase of homes, beginning with the creation of the Federal Housing Administration under Franklin D. Roosevelt. Roosevelt thought the F.H.A. could revive the economy; the chairman of the Federal Reserve at the time called it “the wheel within the wheel to move the whole economic engine.” Where Europeans focused on restraining consumption, Americans saw consumption as the machine that drives growth — and we still do.
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Why the calorie is broken – Ars Technica |
Differences in height, body fat, liver size, levels of the stress hormone cortisol, and other factors influence the energy required to maintain the body’s basic functions. Between two people of the same sex, weight and age, this number may differ by up to 600 calories a day—over a quarter of the recommended intake for a moderately active woman. Even something as seemingly insignificant as the time at which we eat may affect how we process energy.
Life Expectancy Three Years Longer for Children Born Into Smaller Families in Developing World – JHU | “Children born into smaller families in the world’s poorest nations will live an expected three years longer than those born into larger families, new Johns Hopkins Bloomberg School of Public Health research suggests.”
Good boss? Bad boss? Study says workers leave both – University of Illinois |
How to Survive Solitary Confinement- Nautilus |
10 Publishers Account For Half Of All Online News – Publishers’ Daily |
Tallying The Uber Economy: Government To Finally Revive Gig Economy Measure- Forbes |
Asian Nations Push Courtship Of Israeli Tech Companies – TechCrunch |
Although China and Israel established diplomatic relations only in 1992, the two countries have in excess of $10 billion in trade since the beginning of last year.
“The floodgates have opened in a significant way. Chinese investors will increase their allocation to Israeli VC funds and into a growing a number of tech companies,” says Jeremy Lustman, partner at DLA Piper and head of the firm’s Israel Country Group. “Japan has also opened up, as has Korea and Singapore – each with company reps on the ground in Israel. Australia is also making a major play this year into Israeli tech and I think that will add to the broader pan-Asian appeal.”
Uber is now 15% cheaper in NYC – FastCo |
Uber has already dropped its prices in other cities, but today will see those changes go into effect nationwide. As Uber and Lyft jockey for dominance in the ride-hailing market, the two have slashed prices across the country, but Uber is the first to do so in New York City
British feminist Emmeline Pankhurst wrote “The militancy of men… has drenched the world with blood. The militancy of women has harmed no human life save … those who fought the battle of righteousness.” Even she — portrayed by Meryl Streep in “Suffragette,”and famous for condemning the docility of rival women activists — extolled women as less violent, and more peaceful and collaborative, than men.
This vision of women has a long history (looking at you, Rousseau), but some data support “female virtue.” For example, men constitute 80% of violent offenders (90% of murderers), while studies of business and state and city politics find women “far more willing … to be inclusive, and seek broader participation.” Melvin Konner, anthropology professor and author, hailed a future of women in charge in the WSJ:
As women come to hold more power and public authority, will they become just like men? I don’t think so. … Women won’t make a perfect world, but it will be less flawed than the one that men have made and ruled these thousands of years.
Hillary Clinton also seems to believe that women can run the world better. Maureen Dowd recently commented, “After running as a man,” Clinton is “now running as a woman.” In Clinton’s words, “women… are better listeners, are more collegial, more open to new ideas and how to make things work in a way that looks for win-win outcomes.” Active on #Grandmothersknowbest, Clinton also campaigns as a grandmother and abuela. As one author for The Atlantic wrote, “Emphasizing grandmotherhood may be authentic for Hillary.” Grandmothers represent the loving, defensive rulers of the metaphorical roost.
Clinton, apparently modeling herself after a matriarchal ideal associated with greatness, peace, and stability, may thus want to ignore a fascinating NYU study on patterns in European queen-ship. Controlling for a multitude of factors, historians found queens 27% more likely than kings to “participate in inter-state conflicts.” Queens were no more likely to usher in greater stability, and married queens initiated more warfare than married kings and unmarried queens. (The authors claim a division of labor in married couples “freed up time… for queens to pursue more aggressive war policies.”) And married queens not only fought more than unmarried queens; they were less provoked. Sounds a little more like Miss New Jersey (“Harsher sentencing for parole violators, Stan”) than Miss Rhode Island.
The study doesn’t weigh the merits of individual conflicts, so we cannot assess women’s sense of justice in war. But this analysis nevertheless reminds us that female leadership 1) may entail strengths beyond peacemaking, and 2) is not necessarily conducive to “world peace.”
Clinton has earned many battle scars in her time. But let’s not fall for her, or anyone else’s, gendered claims to moral authority.
(Thanks to Tyler Cowen for highlighting this paper on Marginal Revolution.)