Bob Schwartz

Why all this talk about stagflation?


Stagflation is the simultaneous occurrence of high inflation, high unemployment, and slow (or negative) economic growth. It defies classical economic theory, which held that inflation and unemployment move in opposite directions (the Phillips Curve trade-off) — meaning policymakers can’t use standard tools without making one problem worse.

Raising interest rates curbs inflation but deepens unemployment. Stimulus spending reduces unemployment but worsens inflation. Policymakers face a genuine dilemma with no clean solution.

The defining American stagflation episode ran roughly 1973–1982. Unemployment hit 9% in 1975 while inflation ran above 10% — numbers once considered theoretically impossible together.

Fed Chairman Paul Volcker deliberately induced a severe recession (1981–82) by pushing the federal funds rate above 20%, breaking inflationary expectations. Unemployment peaked near 11%, but inflation was crushed from 13% to 3% by 1983.


A couple of Americans generations have no experience of stagflation. If they pay attention to the possibility at all (as noted, once considered a theoretical impossibility), it is an arcane matter of economic history.

Hints of stagflation have been showing up over the past year, and more so in recent months. Inflation has been stubborn, though not stratospheric, while employment has been shrinking and the economy less than robust.

The previous stagflation began in 1973 with the OPEC oil embargo. Then as now, despite attempts to promote alternatives, oil is a primary driver of the economy. The current serious oil disruption, with concomitant inflation not only at the gas pump but in many sectors, might not be enough by itself. But despite what you might be hearing from some sources, the economy is less strong than it has been in a while. So even if there is a quick wrap up of this war on Iran, with relief on the shipping of oil, there are other areas of concern.

Could we again see ever higher inflation and ever higher unemployment? Do we have the best and the brightest economic minds leading the nation, able to respond effectively to the not theoretical scourge and suffering of stagflation? Only when the best and the brightest return to American leadership do we have a chance.

President Trump: Officially Worst American Administration

Historians generally wait until the end of a presidency to evaluate an administration and where it ranks historically.

As low as the first Trump administration already ranks, at or near the bottom, this second term, even after one year with three more to go, is incontrovertibly the worst.

Which is why it is not too early to award him the prize for Worst American Administration.

Is this an “actual” award? It is no more or less “actual” than the FIFA Peace Prize.

Is it “official”? Not to repeat, but it is no more or less “official” than the FIFA Peace Prize.

Am I claiming the authority to offer a prize? Repeating again, I have as much authority to offer a historical assessment of a presidential administration as an international football association has to offer an assessment of contributions to peace or war. Probably more.

Finally, a funny story about this award. It was created by Nano Banana. All I asked for was an award with the text shown above. But on the first try, it added a little text of its own to the plaque, shown below, “Awarded by popular consensus”. AI with attitude.

God’s Political Will

 

This post was originally published on October 25, 2012, a week before the general election in which Republican Richard Mourdock was running to win a Senate seat. Indiana was and remains solidly Republican, yet he lost to Democrat Joe Donnelly. It was attributed to a debate in which Mourdock said “life is that gift from God that I think even when life begins in that horrible situation of rape, that it is something that God intended to happen.”


In the history of Christian theology, philosophy has sometimes been seen as a natural complement to theological reflection, whereas at other times practitioners of the two disciplines have regarded each other as mortal enemies….

Philosophy takes as its data the deliverances of our natural mental faculties: what we see, hear, taste, touch, and smell. These data can be accepted on the basis of the reliability of our natural faculties with respect to the natural world. Theology, on the other hand takes as its starting point the divine revelations contained in the Bible. These data can be accepted on the basis of divine authority, in a way analogous to the way in which we accept, for example, the claims made by a physics professor about the basic facts of physics.

 On this way of seeing the two disciplines, if at least one of the premises of an argument is derived from revelation, the argument falls in the domain of theology; otherwise it falls into philosophy’s domain.

Stanford Encyclopedia of Philosophy


Current American politics includes little study and application of philosophy. Some of our founders were steeped in philosophy, being educated sons of the Enlightenment. But even then, the struggling rebel nation was marked by pragmatism: there may be no atheists in foxholes, but there aren’t many philosophers either. Today, even when ideologues throw around the names of Mill or Burke, that is a rarity. Most of our politicians don’t know, can’t practice and don’t care about philosophy.

Theology is another story. Our government and the campaign trail seem to be overflowing with those who consider themselves theologians, whether they call themselves that or not. But even though the ground of theology is distinct from philosophy, the rigor and discipline required is exactly the same. The simplistic adoption of an isolated theological premise is no more sturdy than an isolated philosophical one. A solid theological conclusion must be supported from start to finish. If you can’t answer all (or at least most) of the consequent questions, you can’t be trusted to answer any.

And so when Indiana Senate candidate Richard Mourdock announced that when a woman becomes pregnant through rape, the pregnancy is “God’s will,” the question isn’t whether that is true. The question is: assuming it is true, what else is God’s will?

Mr. Mourdock, and every other politician who claims to know God’s will, owes us a comprehensive list of those things that are and are not God’s will. In the case of Mr. Mourdock, if he is schooled in the fine points of Christian theology, that should be a straightforward matter.

For example: Are the outcomes of elections God’s will? If Mr. Mourdock’s opponent wins, will that be God’s will? If President Obama beats Mitt Romney, will that be God’s will?

There are a raft of sub-questions for the theologian. If God wills an election winner, how does it happen? Are some potential voters kept away from the polls by stormy weather or traffic jams? And how exactly does God decide who the winner should be? Is there a scorecard based on the Ten Commandments or the Seven Deadly Sins? Does a high score on “bearing false witness” or “greed,” for example, make it difficult to get an endorsement?

In the event Mr. Mourdock does not win, it may be God’s will after all. Just a few miles from his home in Darmstadt, Indiana is an excellent school, Trinity College of the Bible and Theological Seminary. Trinity offers a number of degree programs and dozens of courses on theology. If his keen interest in theology continues, that could be just the way to spend his time.