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For months now, observers have been wondering why the Republican Party has been failing to rally around one seemingly-obvious candidate in particular. Young, new to the United States Senate, he is smart, well-spoken, represents a large and diverse state, and would be the first Latino nominee of a major party. Despite some bumpiness in his tenure, his positions on most issues are conventional, and he is likely to have similar priorities to a Republican Congress. Even though he’s rubbed some of his colleagues the wrong way, the media has been pretty unified over the last few months in wondering:
“Why won’t the Republican elite rally around Ted Cruz?”
Ha ha ha, just kidding, nobody’s been asking that. Instead, they’ve been asking that about Marco Rubio, get it, he also meets that description. The problem with Rubio, though, is that he’s irrevocably tied to being on the wrong side of what has becoming the defining issue in the primary for nakedly cynical reasons and more generally that he’s an empty suit and even more generally that voters don’t seem to actually, you know, like him or want to vote for him.
But Ted Cruz doesn’t have that problem! He won Iowa! He placed third in New Hampshire despite it being an exceptionally weak state for him, behind the overwhelming winner and the guy who had banked 100% of everything on ekeing out second place, but ahead of Rubio and Jeb! He’s right there! What’s going on?
Ha ha ha, just kidding, we all know what’s going on. The problem with Ted Cruz is that literally ever person who has spent more than a few seconds in his physical presence apparently loathes him. Major publications are practically building out entire verticals devoted solely to aggregating quotes from public figures about the fingernails-on-the-chalkboard-of-the-soul experience that is interacting with Ted Cruz. And, yeah, he definitely hijacked the Senate that one time to shut down the government, putting his interests ahead of the party.
But you know what? It worked! It demonstrated an ability to understand and interact with a complex network of institutions to achieve his goals. It showed savvy. It was entrepenuerial. And unlike Marco Rubio’s immigration SNAFU, it showed he had, and has, his fingers much more squarely on the pulse of key portions of the GOP primary electorate.
Let me be clear – a Ted Cruz presidency would be terrible. And, as the Republican nominee, he would probably lose. He is very conservative! He would probably rub a lot of voters the wrong way because, truly, being a successful politician who nonetheless rubs people the wrong way, deeply, in their bones, is Ted Cruz’s unique gift in life.
But he is decidedly not Donald Trump. Donald Trump is scary. Donald Trump is accountable to nobody. Donald Trump is a monster. A Ted Cruz candidacy would most likely be a Goldwater- or McGovern-esque loss; a Donald Trump’s candidacy has an equal chance of either accelerating centrifugal forces in the Republican Party and coalition past the point of no return, or of being something much, much worse for the future of American democracy itself.
Any long-term thinking on the part of the Republican elite should, at this point, realize that the collective odds of Bush, Kasich, and Rubio securing the nomination are slim; the contest, at this point, may very quickly become an effective two-man race if Trump and Cruz 1-2 South Carolina and Nevada. The long-term viability of the Republican Party is, frankly, in doubt no matter what happens this year, but it is in much better shape if it loses in a large but ultimately controlled and predictable way than if it puts all its chips on…whatever it is we will one day call Trumpism. The GOP and its elite, to put it bluntly, should prefer to “Lose with Cruz” (now there’s a campaign slogan) than to grab the toupeed tiger by the tail and ride it into the dark unknown.
The fact that this decision seems gobsmackingly obvious from anyone outside the group of, at most, a few thousand people who constitute the core of the GOP elite, yet so repulsive to those few thousand people themselves, is a little scary in what is says about the inability of high-level political actors to put the political ahead of the personal. Shoot, just before the Rubio bubble had its brief moment, just before the Rubio bubble had its brief moment, just be[whack], there was a crazy spate of stories about how the Republican elite might actually prefer Trump to Cruz because Cruz is a galaxy-class asshole. How those stories will play out now that Trump is winning primaries and Rubio may have dispelled himself once and for all remains to be seen. But it would be a collective gamble of reckless, amoral, cynical, myopic abandon unlike any in recent American history for a major party’s elites to even acquiesce to the nomination of someone like Trump; it would be staggering if a perfectly viable and much more predictable and conventional, if not exactly promising, alternative were discarded simply because the person inhabiting that alternative has all the charisma of microwaved fish.
Why is there still inflation in Greece?
He thinks this puzzle is hard, but it is in fact easy. Let’s model this more simply:
There are three countries in the world, Productoland, Moderatia, and Dysfunctiony. In this model there are a few rules:
· All money is gold.
· All goods and money can be teleported and traded freely across national borders.
· There is a universal legal prohibition from a resident of any country from relocating to any other country for non-leisure purposes.
· Wages are sticky.
· The equation of exchange accurately describes these economies.
In the initial state all three economies are performing well, even though “fundamentals” (mainly institutions) are much stronger in Productoland and significantly stronger in Moderatia. However, after some unexpected shock (say, a surprising report about the economic state of Dysfunctiony), there is a “panic” about the economy of Dysfunctiony. Very rapidly money, ie gold, begins to flee Dysfunctiony.
What would we expect to see happen? Primarily, we would expect to see a substantial negative shock to AD in Dysfunctiony. Wages are sticky; and more importantly, the law of one price means that prices of all goods (since there are zero transaction costs in this model) must remain equal in all three nations. Therefore, the decrease in MV would result in a reduction in QP; but because both Plabor and Pgoods are sticky, we would expect to see most of the commensurate decline occur in Q. We would expect to see some slowdown in Productoland and Moderatia, since presumably the market for imports in Dysfunctiony is slower, and overall global NGDP would probably fall, but if labor markets remained relatively tight in Productoland and Moderatia, we may in fact see the increase in MV in those countries (due to the influx of gold, ie money) lead to an increase in P, since Q is probably nearing its upper-bound; and an increase in P in those countries would of course result in a further increase in P in Dysfunctiony to the extent it affected teleportable goods. This would of course result in a further commensurate decline in Q, which would cause MV to further flee.
Basically, if transaction costs and barriers to trade are low, we should expect to see consumer prices move in unison within a currency union, and we should expect monetary shocks to result in severe real declines in output but continued price stability. This, I believe, sufficiently explains why Greece saw massive unemployment even as prices continued along the ECB’s chosen path, for the same reason Nevada saw unemployment increase from 4.2% to 14% over the course of the Great Recession even as there is no evidence that consumer prices diverged wildly in Nevada from other parts of the United States.