Wednesday, December 21, 2016

NEW YORK | Dismay Today over Pay to Play

Both Federal SEC officials and NY state prosecutor Preet Bharara have charged two brokers and the former director of fixed income at the NYS Common Retirement Fund with a pay-to-play arrangement.

The Fund is under the aegis of the NYS Comptroller, Thomas P. DiNapoli, who had no comment for the time being.

Allegedly the brokers got $2 billion worth of funds to manage in return for "at least" $180,000 worth of sex, drugs and rock-and-roll (including tickets to a Paul McCartney concert) demanded by the fixed-income director.

Bharara said:
This case finds itself at the intersection of public corruption and securities fraud. Unfortunately, this appears to be a busy intersection.
The charges were filed in federal court in Manhattan. Here is the story in Crain's.

NEW JERSEY | Huge Fire in North Bergen

View from New York City, across from 23rd Street. Photo © JT Marlin.
A four-alarm fire in North Bergen has been brought under control, say fire officials, but the smoke is still intense. 

The fire broke out in the Kennedy Furniture Store to the west of Hoboken.

Latest photo: 12:50 pm.
Same view, 12:50 pm. Looking west. Gehry building south at left, London
Terrace north at right. High Line runs north-south. Photo © JT Marlin.

Tuesday, December 20, 2016

BLOG VIEWS | Greetings–300K–Top Posts

Warm wishes from your blogger.
Best wishes for Christmas, Hanukah and the New Year from CityEconomist. 

This blog passed 300K views while we weren't looking.

It is now up above 304,000 views. Thank you for reading.

The top 10 (most-viewed) posts in the last month are shown below.  Posts on President-Elect Trump (#1) and Art Biz (#2) begin and end (#9 and #10) the list.

My Foreword to The Borrowed House (#7was written in July. It has become more relevant since then...

Wednesday, December 14, 2016

JOBS | Two Job Numbers for Trump to Beat (Updated Jan. 6, 2017)

Trump visits Obama at the White House. 
It is understood among the cognoscenti that the Democrats managed the economy better for most Americans than the Republicans in the new millennium.

The problem for the Democrats in the 2016 election was voters who switched parties between 2012 and 2016. They were predominantly non-college-educated, from the least-well-educated states.

They picked up on the plain-language appeals and promises of candidate Donald Trump. The Democratic arguments were pitched to their college-educated base.

Perhaps the Democratic appeal to voters should have been based on a smaller number of performance indicators. President-elect Trump has promised to increase jobs. Two broad indicators–as opposed to anecdotal evidence from individual companies–might suffice to measure the success of his administration.

We can even use the BLS November job numbers [Jan. 6, 2017: see below for update, which changes little] for clear and independent benchmarks against which the economic performance of our presidents can properly be measured. The final report on the Obama Administration will be issued on January 6, subject to revision, but the December numbers, based on November reporting (and prior months for their seasonal adjustment), are not likely to change much from November.

Two Key Indicators

Here are the two key long-term numbers against which Obama's economy can be compared with the Bush economy of eight years ago and the Trump economy of two and four years hence:

1. Unemployment =  a rate of 4.6 percent in November

This is arrived at by dividing the number of unemployed, 7.4 million in November, of whom 1.9 million have been unemployed for 27 or more weeks, by the labor force (employed + unemployed), 159.5 million.

This compares with 7.3 percent in December 2004, the last month of the George W. Bush administration. (The numbers are easily found by punching into Google the two words  Unemployment and FRED. This will take you to the super-user-friendly St. Louis Fed database, God bless them.) That is a reduction of 2.7 percentage points. This compares with an increase of 3.4 percentage points during the Bush 43 administration and a decrease of 3.5 percent during the Clinton administration:
  • Clinton vs. Bush 43: Better by 3.5 - (-3.4) = 6.9 percentage points.
  • Obama vs. Bush 43: Better by 2.7 - (-3.4) = 6.1 percentage points.
2. Employment-population ratio = a rate of 59.7 percent in November.

This number is arrived at by dividing the number of civilian noninstitutional employed, 152.1 million, by the civilian noninstitutional population, 254.5 million.

This number is solid for long-term comparisons because it is not affected by answers to the unemployment survey. The labor force participation rate is dependent on the unemployment rate in the definition of the labor force. The employment-population ratio is not affected by any long-term change in the definitions of the unemployed or in the conduct of the monthly surveys of the labor force.

In December 1992 when President Clinton came to office, the employment-population rate had been falling and was at 61.4 percent. It rose during his administration to 64.3 percent, an increase of 2.9 percentage points. Under G. W. Bush, the rate fell by 3.3 percentage points to 61.0 percent. Under Obama the rate fell further to 59.7 percent, a drop of 1.3 percentage points. So here is the record of this measure:
  • Clinton vs. Bush 43: Better by 2.9 - (-3.3) = 6.2 percentage points.
  • Obama vs. Bush 43: Better by 3.3 - 1.3 = 2.0 percentage points.
On both measures, the last two Democratic administrations outperformed the Bush 43 administration, by a lot. Too bad this message didn't get through.

Update, Jan. 6, 2017

Here are the final numbers for November, which arguably should still be the baseline, seasonally adjusted, if the incoming President wants to take credit for changed expectations in December (or his opponents do). Here also are the December seasonally adjusted numbers. Either way, from here on, it is President Donald Trump's baby–Trumpacare, Trumpeconomy and all.

HEALTH CARE | Federal and State Policy in 2017

Gottfried at a Health Care Rally in Albany.
I just received an email from my NY State Assemblyman, Richard N. Gottfried, who chairs the Assembly Health Committee. 

He says (with some minor edits by me to save space and clarify references):

The election of Donald Trump and Republican control of Congress are a serious threat to programs and policies that protect our health.  Washington could make radical changes to Medicare, Medicaid, the Affordable Care Act, reproductive care, and other programs that could drastically undermine our right to health care, cost New York State billions of dollars a year in federal funds, and destabilize health care providers. ...

For years, congressional attacks on funding and programs have been defeated by the threat or use of presidential vetoes. Now we will have a president who may be leading the charge.
Under the Affordable Care Act (ACA), we [in NY State] get 90% federal matching money, instead of the usual 50%, for the "expanded" Medicaid population. ACA repeal would take away the additional funding and cost New York over $2 billion a year. ACA repeal would also eliminate federal funding for the new Essential Plan, blowing an additional $800 million hole in the state budget and potentially leaving 100,000 New Yorkers without health coverage.

President-elect Trump has vowed to eliminate funding for Planned Parenthood, and Vice President-elect Mike Pence is an anti-choice extremist who carried legislation doing just that. This is a major platform for the Republican Party and it's likely that Congress would eliminate federal support for family planning services. If President-elect Trump has his way, a new Supreme Court majority would not only overturn Roe v. Wade, but could go further and outlaw some or all abortion - overriding New York's law that protects legal abortion. ...

When Trump and Republicans in Congress say "repeal and replace Obamacare," the agenda is eliminating financial help for low and middle income people who can't afford high premiums and deductibles, shifting more of the cost of health care from insurance companies to consumers, and eliminating consumer protections. They talk about letting insurance companies sell in any state, but insurance companies already can do that. What they really mean is making out-of-state insurance companies exempt from state consumer protection and financial solvency laws. ...

Much of our state public health policy is driven by federal funding, laws, regulations and oversight. We must protect the federal policies and programs New York depends on, and respond with appropriate changes to state law when needed.

Our health insurance-based system is a major contributor to economic inequality and lack of opportunity. The insurance company wants the same premium and imposes the same "cost sharing" whether you're a multi-millionaire CEO or the receptionist struggling to make ends meet. For a median-income household, the cost of insurance can be over a quarter of your income (whether paid by the worker directly or indirectly by your employer lowering your wages). And that's not counting possibly thousands of dollars in out-of-pocket costs.

The New York Health Act is my bill to provide complete universal health coverage (called "single payer" or "improved Medicare for all"), eliminate financial barriers to care, and let people go to the doctor and hospital of their choice. Instead of regressive premiums, deductibles, co-pays and out-of-network charges, it would be funded fairly through broad-based taxes based on ability to pay.
The Assembly passed the bill in 2015 and 2016 - helping to move it from being "a great idea that could never happen" to something really achievable. In 2017, we will continue to work to build public support so it can ultimately pass the [NY State] Senate.

Sunday, December 4, 2016

WW2 | Foreword to "The Borrowed House," by Hilda van Stockum

New Purple House Press edition.
The following was written in early July 2016 to serve as a Foreword to the new Purple House Press edition of The Borrowed House by Hilda van Stockum, my mother. The book was originally published by Farrar Straus & Giroux in 1975.

The Borrowed House is about Hitler’s Occupation of Holland in 1940-1945, from the perspective of a German girl, Janna Oster. She travels from the Black Forest in Germany with her parents to Amsterdam. When we first meet her, Janna is memorizing Hitler’s theories of racial supremacy for a school test. How could she know, or even imagine, the ultimate implications of these theories, fulfilled in death camps like Auschwitz and Treblinka?

Later, when Janna discovers that someone she actually cares about is from one of the races she was taught were “inferior”, it comes as a shock to her. She is angry that the theories she was carefully taught conflict with her warm feelings for a real human being. Can she reconcile her feelings with the theories?

Those who resisted Hitler paid the ultimate price. Many people in World War II were reluctant heroes, acting against a monstrous evil. When Queen Juliana in exile called Dutch Resistance leaders heroes, they objected. “We only did our duty,” they said. “Can you say No, when you are the only person who can prevent someone’s death?”

Today, we often complacently believe our country would ever succumb to a demagogue like Hitler. In the wake of the 9/11 attacks we saw widespread signs in America of selflessness, of men and women in uniform rushing to save innocent people, and our hearts were with them. But the same uniting behind the victims of 9/11 also generated a wish for revenge and exacerbated fears of people with certain religious beliefs or appearance. If a time comes when we again have to make difficult choices, how thoughtful and brave will we be?

As a young boy growing up in Washington, D.C. and then Montreal, I heard a lot about bravery and moral choices made at great personal cost. My mother, Hilda van Stockum, talked for hours with her mother about the wartime suffering and courageous acts of their Dutch relatives. They didn't want to upset a boy of five or six so they spoke in Dutch. But I heard and understood the pain in their voices.

They had reason to lament. Dozens of my mother’s Dutch cousins died. Many were very brave and some are buried in the Dutch Cemetery of Heroes. More are honored with Yad Vashem awards for sheltering Jewish people. We know the story of Anne Frank; here we see that she was one of many. My mother’s closest relative, her brother Willem, was an RAF bomber pilot; he was shot down in June 1944 and he is buried in Laval, France.

Through the wartime letters, my mother was frequently in touch with her Dutch cousins. The Borrowed House is dedicated to one of them, her “twin cousin” Nella de Beaufort.  Just as Hilda's brother Willem was killed by enemy anti-aircraft ordnance, Nella’s younger brother Hans de Beaufort was a Resistance hero. He wrote a moving letter from prison in Dijon before he was killed by the Nazis. The closing lines (translated by my mother) were:

I did what I thought my duty. I did what I could but at a certain moment it is too much and you can't manage any more. From that moment you have to leave it all to God's care. Now I can happily say: "Thy will be done" and give body and soul back to Him from Whom I got them. I greet you all with deepest love, all without exception just as I take leave of life with gratitude, hope of forgiveness, and trust in God. 

For two decades, the losses were too painful for my mother to write about. But nearly 20 years after the end of the war, she wrote the first of her two books about the Dutch Occupation, The Winged Watchman, which tells the story of how a rural family living in a windmill fought against Hitler and his followers. It was, like this book, fictionalized, but is based on her deep knowledge of Holland and the war, and wartime and postwar letters to her, and postwar visits with her relatives.

In 1975 she wrote this sequel based on a true story, The Borrowed House, about a German girl uprooted from her Hitler Youth program to accompany her parents to an Amsterdam house that is “borrowed” from a Dutch family. The 2013 Dutch translation by Boekencentrum calls it The Stolen House. It follows Janna from her first introduction to Amsterdam, where her parents were entertaining German troops, to her questioning of Hitler’s theories of racial superiority.

Both of her books lead the reader to ask: “Would today's generation show such courage or be willing to make sacrifices of the kind that people made in World War II?” Many people say no, but we don't know what people are made of until they are faced with a crisis. B. Kelly, a graduate in English Literature from Bard College, has thoughtfully noted two compelling features about this book:

First, this book offers views of the Dutch Occupation from the contrasting perspectives of the occupying Germans and the occupied Dutch. We meet many kinds of German and Dutch people, ranging from committed Nazis to people who are politically ambivalent. We glimpse the owners of the house, the van Arkels, through their home, art works and other possessions. We see how a transplanted German family adjusts to the sheltered life on Amsterdam’s Emperor’s Canal under the patronage of a German Baron and General. (The building on the back cover is surely the famed Keizersgracht 324.)

Second, Hilda van Stockum shows how Janna is startled by her experiences, such as the contradiction between the propaganda she has been taught and the reality she sees. This gradually rising moral awareness may well be uncomfortable for us readers, because it forces us to ask: “Would we have accepted Hitler’s racial dogma just the way Janna does, when other children and people in authority were aligned with these theories?”

Hitler’s propagandists were extremely good at what they did for their evil purpose. They linked Nazi views to ancient German and Greek myths through monument-building, music, children’s camps and theater. Hilda van Stockum shows us through Janna just how effective this can be. 

If we are sure that we would have been a hero like Hans de Beaufort in wartime, we should look closely at ourselves in the reflection from the windows of the van Arkel house. How immune are we really from racist and other ideology that continues to be sold and bought in a world where propaganda is a big business?

Hilda van Stockum’s granddaughter Christine has written a brilliant analysis of the place of this book among van Stockum’s writings. It appears at the end of this book. The Winged Watchman is being considered along with The Borrowed House for a television miniseries. I am grateful to Jill Morgan and The Purple House Press for re-issuing this book.

John Tepper Marlin, July 2016

ART BIZ | Sales at Art Basel, Miami Beach

Art Basel, Miami Beach, 2016. Attendance was down.
In an uncertain world, buyers were cautious, but still eager.
Dec. 4, 2016–My mother, artist  Hilda van Stockum, used to talk up art as an investment.

She said that art, unlike most other investments, can be appreciated by its owners while they wait for it to appreciate.

I have from time to time posted on what is selling at some small art galleries that I frequent.

These minnows in the art sea can be measured against the giant whale that is  Miami Beach's 15th Art Basel, which ends today.

From this huge marketplace, the biggest single primary art show in the world, we get a snapshot of what 269 galleries from 29 countries sold in less than a week.

This year the political shocks have forced people to rethink what we know about the world we live in. This surely affected Art Basel sales.

In a word, the art market is softer than in 2015. Robin Pogrebin of the NY Times headlined a story about the art fair with Paul Kasmin Gallery's star $6 million sale of Lee Krasner’s Another Storm (1963) to a private collector. This is one of the Krasner's five largest paintings. Pogrebin quoted Kasmin as saying that buyers have an eye on the long-term marketplace, looking for art that is "rare, good or new".

Mnuchin Gallery in New York City.
One frisson of interest occurred in Miami Beach when it was announced that Steven Mnuchin would be appointed Treasury Secretary, the position Alexander Hamilton first occupied, in the administration of Donald Trump.

Steven is the son of dealer Robert Mnuchin, former long-time Goldman Sachs trader, whose gallery at 45 East 78th Street has carried his name since 2013.

A report I tweeted by Alexander Forbes of Artsy confirms what Pogrebin reports, that medium-priced art work (roughly the $10,000-$100,000 range) continued to sell at steady rate, but buyers in an uncertain U.S. and British marketplace were less inclined to take risks acquiring unknown artists or paying very high prices for the work of known artists.

Artsy quotes Steven P. Henry, director of Paula Cooper gallery, as saying that people buy more art when they feel good, and right now they don't feel good. At Art Basel dealers seemed to be using the fair as an advertising platform for future sales as much as a venue to close—to a great extent sales were made before the fair opened. Here are some major sales, the first one already mentioned:
  • Lee Krasner, Another Storm (1963), as mentioned via Paul Kasmin Gallery, $6 million. Nick Olney of the gallery said: "We were very excited to have this to announce to the world in a very physical way that we’re working with the [Pollock-Krasner Foundation]. I haven’t found hesitancy [among buyers]; it’s maybe just less impulsive."
  • Roxy Paine, 41-foot-tall sculpture Compression (2016), $2 million.
  • Iván Navarro, five works, $50,000 to $150,000.
  • William N. Copley, Under the Stars (Hommage à Picabia) (1994), $185,000.
  • Herrera via Logsdail, Untitled Estructura (Blue) (1966/2015) and Ave Maria (2011), $450,000 apiece. Also several works on paper.
  • Roy Colmer, also via Logsdail, spray-gun work, $50,000, and
  • Anish Kapoor, art, £500,000–£700,000.
  • Marco Maggi, from Brazilian Galeria Nara Roesler, three related paintings–BIG DATA (North and East), 2016 for $42,000 each, and BIG DATA (West), 2016, $36,000.
  • Maggi, Complete Coverage on Oiticica (March, Turner Box), 2016, $14,000.
  • Tommy Ohtake, untitled painting, 1965, $160,000.
  • Julio Le Parc, three works (Alchimie 339: En spirale huit couleurs, 2008 / 2016, €150,000; Continuel mobile transparent, 1962 / 2016, €290,000; and Continuel Mobile rouge, 1962 / 2016, €190,000.
  • Maya Lin, Silver Pearl (2015), $150,000; several small Joel Shapiro sculptures, $125,000; two pieces out of Tara Donovan’s Composition (Cards) series, $65,000; five works on paper by Yoshitomo Nara, $30,000-$65,000; Nigel Cooke, a painting, $50,000, and Leo Villarreal, editions of Cloud Drawing (2016), $85,000 apiece. All via Pace, directed by Ben Strauss-Malcolm.

Saturday, December 3, 2016

FREE SPEECH | Dec. 3–800 Arrested at UC Berkeley

Mario Savio is arrested, Dec. 7, 1964.
This day in 1964, about 800 student demonstrators were arrested on the campus of the University of California at Berkeley.

The anniversary was marked today by the Writer's Almanac founded by Garrison Keillor, citing a 2014 retrospective NPR article.

At the time, I was employed as an economist by the Federal Reserve Board and was also a Ph.D. student in economics. I wrote an article for a student newspaper about the Berkeley incidents that was sympathetic to the students. But I was assured by several of my elders that the demonstration was surely organized by Communist sympathizers. That was the Cold War state of mind in Washington, D.C. in the mid-1960s.

From today's perspective, the students can be considered to have won their battle on campus, and surely on the specific civil rights issues for which they fought. But they also set in motion a reaction that we still live with...

The activist Berkeley students had spent their summer in the South on drives to enroll more black voters. When they returned to the campus, they set up information tables to tell their fellow students about civil rights issues, collect donations and sign up volunteers.

Berkeley's administrators were distraught about the controversy and shut down the tables. They were within their rights, since the University of California had a system-wide ban on political speeches and fundraising because it was supported by tax dollars. Campus police arrested a graduate student (Jack Weinberg) on October 1 for refusing to show his ID. A spontaneous crowd formed and trapped the campus police car for 32 hours. People climbed on the car to give speeches, including Mario Savio, one of the leaders of what came to be called the Free Speech Movement.

On December 2, an estimated 1,500 students peacefully occupied the main Berkeley administration building, Sproul Hall. Joan Baez sang songs. Some graduate students taught ad hoc classes. Savio proclaimed:
There's a time when the operation of the machine becomes so odious, makes you so sick at heart that you can't take part, you can't even passively take part, and you've got to put your bodies upon the gears, and upon the wheels, upon the levers, upon all the apparatus and you've got to make it stop.
Gov. Pat Brown was under pressure to do something about the lawlessness. At 2 am on Dec. 3 he ordered the building cordoned off. The police, frustrated by days of having their hands tied behind their backs, began vigorously arresting the protestors. Journalists reported seeing them drag some protestors down the stone steps by their feet, with the students' heads banging on every step.

The negative press coverage of the arrests meant that the Free Speechers won hands-down on campus. By the spring, university officials reversed themselves and allowed wider political discussion on campus. Sproul Plaza now hosts informational tables that open up political discussion on the left and the right. The steps of Sproul Hall are now called the Mario Savio Steps, rentable for a speech or a rally.

However, folks, that is not the end of the story. Gov. Brown (father of Jerry Brown, California's present governor since 2011) had defeated an assault on his incumbency by Richard Nixon in 1962 with a surprising 5 percent margin. Nixon had been opposed by a John Birch Society candidate in the GOP primary, and that weakened him. Nixon famously said after his defeat, in his "last press conference":
You won't have Nixon to kick around anymore.
But the Berkeley Free Speech movement and the Civil Rights movement in general can be said to have created so much change that champions from the right were bound to have emerged, and several came to prominence within a year.

Barry Goldwater made an unsuccessful run for President in 1964. One of his supporters was a young Hillary Rodham. Another was...

William Buckley, Jr., founder of National Review in 1955, had already spotted widespread unrest in the ranks of working-class Catholics, upset by changes in the Catholic liturgy (he himself went out of his way to continue attending a Latin Mass). In his well-researched and influential 1965 run for Mayor of New York, unsuccessful like Goldwater's, Buckley predicted correctly that working-class Irish Americans could be peeled away from the Democratic Party as a reaction against too much change. The social conservatives joined in a marriage de convenance with libertarians (who oppose market and social constraints).

Ronald Reagan rode the law-and-order issue into the governorship of California in the 1966 election,

Richard Nixon into the White House in 1968, and in due course Reagan and George H. W. Bush into the White House in 1980...