Are We in a Recession or Should I Say a “Banana”?

What is a Recession?

In the 1970’s Alfred Khan, an economist who was responsible for fighting inflation during the Carter administration, used the word “banana” as a substitute for “recession” when speaking to the press. His reasoning was that it made people nervous when he used the word “recession.” Apparently, he later switched to “kumquat” when a banana company complained. He was a funny guy.

We seem to be at a similar moment in history. First, let’s get the definitional argument out of the way. The National Bureau of Economic Research (NBER) uses a variety of factors to say whether the economy is in recession. Two consecutive quarters of negative GDP growth are among those criteria, but there are others. But to be honest, lots of people use the two quarter decline in GDP as a marker for a recession and you wont find many historical periods which had two such quarters that are not now considered to have been in a recession.

So what is the big deal?

Folks who root for the Democratic Party are reluctant to have the word “recession” associated with the Biden administration. Folks who cheer for the Republican Party are eager to tar the Biden administration with the term. The argument is pointless. The fact is the economy is slowing down and two quarters of negative GDP growth are a good marker for that.

Is a slow down bad thing?

In my opinion, a slow down is actually exactly what we need. More than a decade of loose monetary policy accompanied by aggressive fiscal stimulus, supply chain problems, and war have created the worst inflation in 40 years. The Federal Reserve needs to bring that inflation under control quickly before inflationary expectations become ingrained. That means higher interest rates with reduced demand for housing, cars, and capital investment. All of those mean a much cooler labor market. In the context of accelerating inflation these are good and necessary things. Ideally the slow down will be mild and brief, but make no mistake it is necessary.

What Should We Call the Current Phase in the Economy?

If it makes you happy you can call it a recession. If you prefer you can call it a temporary slow down (crossing your fingers and hoping for the best). Or you can follow Alfred Kahn’s lead and call it a “banana” or a “kumquat.” Whatever you call it remember it is not, necessarily, a bad thing.

June 28, Illinois Republican Primary for Governor.

Illinois Republican Primary for Governor

We are mostly concentrating on the primaries for the U.S. Senate, but we are occasionally endorsing candidates in the House races and a few notable races for governor.

The Illinois Republican primary for Governor is an interesting opportunity to pull the Republican Party back from Trumpism, by voting against the Trump backed candidate. The Democratic Governors Association is trying to aid Darren Bailey, the Trump backed Republican candidate, because they think he is so extreme that he will be easier to defeat in the general election. Illinois also has a form of open primary, in which it is possible for Democrats and independents to declare a Republican affiliation when they vote in the primary and receive a Republican ballot.

Efforts by the Democratic Governors Association to support the ultra conservative Republican candidate strikes us as playing with fire. We also think that voters who vote for the ultra conservative candidate because they feel that he will be easier to defeat in the general election are also making a serious mistake. Candidates have health problems, scandals emerge, and moods change between the primaries and the general election. It is far more important to have reasonable candidates in the general election, than to take this risk.

Ken Griffin, an Illinois billionaire, has spent millions promoting the candidacy of Aurora Mayor Richard Irvin. Irvin is a moderate Republican. His moderate policy positions, plus his opponent’s endorsement by Donald Trump, secure our endorsement in the Republican Primary. We, therefore, endorse Richard Irvin for Governor in the Illinois Republican primary.

J.B. Pritzger, the incumbent Democratic Governor of Illinois, is a heavy favorite to win in the Democratic party primary.

“Galactically Stupid” Policy Ideas

Galactially Stupid Policy Ideas

The Centrist Independent Voter publishes a Rogues Gallery of candidates that we view as so extreme that we would never endorse them.

I think it is time for us to publish a list of policy ideas that are so counterproductive that we would never support them. To achieve this august status, a policy proposal has to not only be less than the best solution, it has to actually make the situation it is intended to solve, worse. I propose that we call these policies “Galactically Stupid.” The phrase is borrowed from “A Few Good Men,” a movie from 1992.

Not all bad public policies are “Galactically Stupid.” Some policies are just bad because there are better ways of accomplishing the same thing. Regulations on emissions of pollution are worse than taxing pollutants but such regulations are better than doing nothing at all.

That said, some policy ideas are just dumb on an interstellar scale.

Galactically Stupid Ideas on the Left

Price Controls

Candidates for the status of Galactically Stupid on the left include: wage and price controls, “windfall” profits taxes, anti-price gouging laws, and rent controls. If you sense a common theme, you are right. All of these involve the government trying to regulate prices.

Prices serve a vital role in an economy. They signal goods whose production needs to be increased or decreased. They signal places where goods are in short supply and thereby direct supplies to those regions. They signal activities that require more investment, or less. Attempt to governmentally control prices and you create shortages, lines and other inefficient forms of rationing, including black markets.

Generally, price controls raise the real price of goods being regulated by making those goods more scarce. You may not see that price, but you will experience it through the difficulty of finding the regulated good at the official price.

President Biden’s implicit threat to regulate refinery margins qualifies as Galactically Stupid. Elizabeth Warren’s anti-price gouging legislation also falls into this group. To understand how bad these policy positions are, it is helpful to reflect on why refinery margins are high right now. Demand for gasoline and refinery margins cratered during the pandemic and many refineries were shut down. When gasoline demand rebounded, refiners were reluctant to invest in reopening those refineries or building new ones. Who would feel like doing so in a “heads I lose, tails you win” environment? Talk of eliminating fossil fuels doesn’t help either, in terms of incentives for refinery expansion.

So having created a problem by destroying incentives for refinery expansion or new refineries, left wing populists use the inevitably higher refinery margins that follow to justify price controls or windfall profits taxes that make the situation worse.

Non-Global Solutions to Global Warming

Unilateral approaches to climate change that fail to address the global nature of the problem also strike me as Galactically Stupid. Banning the use of fossil fuels in America is counterproductive if it simply shifts the production of energy intensive goods to China or India. Remember, the goods then have to be shipped back here with a net increase in green house gas emissions.

The Centrist Independent Voter does believe that climate change is a serious problem and supports a carbon tax with an associated tariff as the best way for dealing with the problem. We suggest that solution because it recognizes the inherently global nature of the problem.

Galactic Stupidity Ideas on the Right

So far, all of my suggestions for Galactically Stupid public policy solutions have come from the left. There is no shortage of Galactically Stupid ideas coming out of the right.

Intransigence on Gun Control/Gun Safety Laws

One that comes to mind is the position that no gun safety/control legislation can be justified. While the Centrist Independent Voter supports the Heller decision that the Constitution guarantees an individual right to bear arms, we also agree with the Supreme Court that this right is not unlimited. Refusal to even contemplate any restrictions on gun ownership only results in increased support for total bans on gun ownership with each mass shooting.

Isolationism

Right wing isolationists, like Sen. Rand Paul, also increase the likelihood that the United States will have to expend lives and money defending ourselves against emboldened and strengthened adversaries, made more powerful by America’s failure to confront them earlier. For these and other reasons, Rand Paul appears in the Centrist Independent Voter’s Rogues Gallery of candidates we can never endorse.

Galactically Stupid Populist Ideas

Protectionism

It has now become acceptable for both Republican and Democratic populist politicians to blame international trade for the loss of U.S. manufacturing jobs. The policy suggestion is higher tariffs on imports and re-writing free trade agreements, like NAFTA, to reflect a more protectionist point of view. (This the purpose of Trump’s USMCA agreement.) The truth is that the relative decline in U.S. manufacturing jobs has far more to do with technological change than foreign competition. It is also important to remember that low cost supply chains are crucial for U.S. competitiveness in global markets.

So what happens when we institute protective tariffs? Well, first the world becomes poorer as other countries do the same and global manufacturing becomes more expensive. Second, the temporarily higher wages in the U.S. accelerate automation and those jobs are permanently eliminated.

Don’t get me wrong. I am not an advocate of unilateral adoption of free trade policies. Sensibly negotiated mutual trade pacts, like NAFTA and the Trans Pacific Partnership (TPP), we’re win-win situations for the participants. The Centrist Independent Voter supports expanding these efforts.

I am also aware that some technologies should not be shared with countries that are antagonistic toward U.S. interests, like Russia and China.

Any Recommendations?

If you can think of other policy proposals that deserve to be labeled Galactically Stupid, please submit them in the comment section below. Remember the key thing that qualifies a policy for this category is that it is counterproductive to solving the problem that the policy addresses.

Rogues Gallery of Political Candidates

Rogues Gallery of Candidates

We have added 11 U.S. Senators to the Centrist Independent Voter group of candidates that we are unlikely to ever endorse. We call this group the Rogues Gallery. The new additions to the group include the 11 U.S. Senators who opposed the current proposed aid package for Ukraine. To see the full list of U.S Senators and Representatives included in this group visit the Rogues Gallery section of the Centrist Independent Voter website.

The Rogues Gallery section also explains the criteria used to select candidates for this group.

The only way in which a member of the Rogues Gallery could receive a CIVPAC endorsement would be if they were running against another member of the group.

Legislative Resolution of the Debate on Abortion Rights

Legislative Solution to Abortion Rights

The Centrist Independent Voter policy position on abortion rights is that if Roe/Casey is overturned, we should attempt to re-establish those same rights legislatively. The position is also that we should not take that opportunity to either expand or contract those rights.

Susan Collins(R) and Lisa Murkowski (R) have jointly introduced legislation in the Senate to accomplish exactly this objective. This link also provides their defense of this legislation.

If the Democrats in the Senate were to embrace this proposal, they might well be able to muster the votes necessary to overcome the filibuster. In addition to Collins and Murkowski, Shelley Moore Capito (R) is pro-choice. I believe seven more Republicans can be found who would settle for this legislation rather than risk having the Senate rules changed to eliminate the filibuster and seeing the Democratic version of this legislation pass and seeing the Court packed with liberal justices.

Remember some conservatives objected to the Roe decision because it represented an overreach by an activist court rather than because of the content of the decision. Reversal of Roe combined with a legislative answer to the issue constitutes victory for these judicial conservatives.

Democrats who want to use this issue to end the filibuster and pack the Court should remember that they will not always be in control.

Democrats who turn down this compromise, because they hope to gain a political advantage in the mid-terms, should remember that their refusal to even consider the compromise will hurt them. They should also remember that while support for abortion rights similar to those laid out in the Collins/Murkowski legislation is widespread, support for unlimited abortion rights is far less popular.

A final reason for Democrats to embrace the Collins/Murkowski bill is that it would make a Supreme Court decision on the issue currently before the court moot. If the Collins/Murkowski bill became law, the Mississippi law before the Court would clearly be illegal. The Court does not issue decisions if the issue is moot. That would address the concern that the Alito draft decision, if adopted, would set a precedent that would undermine other court decisions such as contraception and same sex marriage rights. If the Democrats wait until the Supreme Court delivers their final decision they will have missed this opportunity.

2022 General Election Endorsement for Ohio Senate Race

2022 Ohio Senate Race

Centrist Independent Voter Endorsements for the 2022 General Election

Because of limited time and resources, we are focusing on a relatively small number of elections in 2022. If you have an election you would like us to take a position on, contact us through the feedback button on the side or bottom of this page or use the contact us page. We will be adding more general election endorsements as the primaries conclude.

Ohio General Election for the U.S. Senate Seat

The Republicans have nominated J.D. Vance for this seat. We endorsed Matt Dolan in the Republican primary. Dolan did better than expected, by not good enough to get the nomination. Vance has a number of strikes against him. First, he has Trump’s endorsement. If Vance wins, Trump will use that fact to strengthen his hold over the Republican Party. Second, Vance has come to embrace what some refer to as Conservative Nationalism. As best we can determine, this means conservative on social issues like abortion, protectionist on trade, anti-immigration and isolationist on international affairs. In a particularly egregious example of his isolationist views, he has made it clear that he is indifferent to Ukraine’s fate. Anyone who has examined the Centrist Independent Voter’s philosophy section or the public policy section would conclude that the Centrist Independent Voter could not endorse J.D. Vance.

The Democrats easily nominated Tim Ryan. The Centrist Independent Voter endorsed Ryan in the Ohio Democratic Primary. Ryan is a center-of-the-left politician. For our tastes he is far too pro-union, but Ohio is heavily unionized. For a review of his positions on other issues visit ontheissues.org. He is, also, a member of the Problem Solvers Caucus in the U.S. House of Representatives, which marks him as more centrist than many Democrats. He is certainly more centrist than his opponents in the Democratic primary.

There is no question that Ryan is something of a long shot. However, a win for Ryan would strongly buttress the case, to both parties, that extremism loses, moderation wins. Tim Ryan therefore gets our endorsement for the U.S. Senate seat from Ohio.

The 2022 Arizona Primaries for U.S. Senate

2022 Arizona Primary Election

The Arizona primary for the U.S. Senate seat currently held by Mark Kelly (D) will be held August 2, 2022.

Mark Kelly is running unopposed in the Democratic primary.

There are five candidates vying for the Republican nomination. They are, according to Ballotpedia.org: Mark Brnovich, Jim Lamon, Blake Masters, Michael McGuire, and Justin Olson.

All of these candidates, except Brnovich are competing for Trump’s endorsement. Trump has said the the one candidate he will not endorse is Brnovich, because Brnovich would not back up Trump’s claims of a stollen election in 2020. Brnovich is, also, generally regarded as a mainstream, conservative Republican.

Centrist Independent Voter endorses Bronovich in the Republican primary as a reward for standing up to Trump and in an effort to pry the Republican party loose from both Trump and the more extreme elements of the Republican party.

The Pennsylvania 2022 Primaries

The Pennsylvania 2022 Primary: May 17, 2022

The race for the U.S. Senate seat from Pennsylvania, currently held by Pat Toomey (R) is heating up. Toomey is not running and there is a big field in both the Republican and Democratic primaries.

The Democratic Primary

The four candidates in the Democratic primary are: Conor Lamb, Alexandria Khalil, Malcolm Kenyatta, and John Fetterman. Khalil, Kenyatta, and Fetterman all seem to be competing for the progressive vote. Conor Lamb is reliably left of center on most issues. He is also a member of the Problem Solvers Caucus in the U.S. House of Representatives, which earns him our endorsement in the Democratic primary. The Philadelphia Inquirer, also, identifies him as the most moderate candidate in the race.

The Republican Primary

The seven candidates in the Republican Primary are: Kathy Barnette, Jeff Bartos, George Bochetto, Sean Gale, David McCormick, Mehmet Oz, and Carla Sands. Oz managed to secure Donald Trump’s endorsement which excludes him from our endorsement. Oz has no political or public policy experience and he would not have gotten our endorsement even if Trump had not endorsed him. While there isn’t anyone remotely centrist running for this seat as a Republican, the least extreme candidate appears to be Jeff Bartos. On the basis of this dubious distinction Bartos is able to garner our endorsement for the Republican primary.

Our overall recommendation is, therefore, to vote for Conor Lamb in the Democratic primary, if you can. Unfortunately, Pennsylvania is a closed primary state and you have to register by May 2, 2022. If you have to vote in the Republican primary, our recommendation is Jeff Bartos.

For an up-to-date summary of all Centrist Independent Voter endorsements to date for the 2022 primary season visit the Candidates page.

Inflation, Gas Taxes, and Ukraine

A number of states and the federal government are, or are considering, lowering gasoline taxes to offset the impact of inflation on consumers. Assuming that the gas taxes made sense in the first place, and that this is intended to be temporary, this is bad public policy.

What Causes Inflation?

Supply chain problems, surging demand as the global economy recovers from Covid and the impact of the war in Ukraine are all causes of relative price increases. As some commodities become harder to obtain, the price of the affected goods can be expected to rise relative to the price of other goods. These things are not in themselves the root causes of inflation. Absent accommodating monetary policies from central banks, like the Federal Reserve Bank (Fed) in the U.S., these price shocks would be accompanied by declines in the prices of other goods or an overall reduction in economic activity, rather than inflation.

Doesn’t Lowering Gas Taxes Reduce the Pain of Inflation?

Ok, you say, lowering gas taxes may not address the root causes of inflation, but doesn’t it reduce the pain to consumers?

Lower gas taxes can be thought of in two ways.

One, absent an increase in other forms of taxation, it is an economic stimulus payment, the exact opposite of what is needed in a period of escalating inflation.

Two, it is a relative price subsidy. If you subsidize the consumption of a commodity you get greater demand for it. One of the problems in persuading European countries to boycott Russian oil and gas exports is that the global demand and supply of oil and gas are highly inelastic, in the short run. That means that the quantity of oil and gas demanded and supplied does not change very quickly in response to price changes. As a result, even small changes in supply (or demand) result in very large changes in price, in the short run. By lowering gas taxes, the United States is subsidizing the purchase of oil and making the global demand for oil even more inelastic than it would otherwise be. That will mean that the pain of boycotting Russian oil and gas will be even higher in Europe than it would otherwise be.

Impact on OPEC Incentives.

A variable tax on oil imports was considered, in the 1970’s, but was rejected because, by reducing the elasticity of demand, a variable tax actually increases the incentive for OPEC to reduce supplies to drive up oil prices.

So What Should We Do?

What we should be doing, to lower inflation, is what we should have been doing for months. The Fed needs to end its open market purchases of bonds and begin raising interest rates. How far should this go? At least far enough that short and long-term interest rates meaningfully exceed the expected rate of inflation.

Ben Franklin, Ken Burns, and a National Civics Curriculum

I just finished watching the Ken Burns’ Documentary on Benjamin Franklin. I recommend it as great television. I was struck by how it was both honest and respectful in its approach to one of America’s founding fathers.

I was also impressed by how it provided a very balanced approach to American history. It gave me hope that we might actually be able to construct a common U.S. history and civics curriculum. The Centrist Independent Voter addresses the need for developing a common U.S. history and civics curriculum for K-12. The important points raised in that discussion are that the curriculum needs to be: age appropriate; honest about America’s failures to live up to its aspirations; and respectful of the institutions and values that are at the core of what it means to be American. It also needs to represent a point of view that a supermajority (say 75%) of Americans would be comfortable presenting to their children.

I think that the Ken Burns documentary meets all, or almost all, of those criteria. It might be appropriate delaying some of the subjects covered until middle school, but even those subjects are handled tactfully.

America is not united by a common ethnicity, race, or religion. We share a common language, but we share that language with much of the world. What makes America exceptional is its commitment to a common set of values expressed in the Declaration of Independence and the Constitution. America has been at its best when it has lived up to those values; it has been at its worst when it has failed to do so.

The Ken Burns documentary of Ben Franklin captures all of that, while providing interesting insights into the life of what some historians believe was the “First American.”