Persistent Unemployment & the Austerity Class

Over the longer run I remain an economic optimist, but the North American economy is being dragged down by an "Austerity Class" that dominates political and media discourse preventing the adoption of the Keynsian policies needed to break out of our current economic malaise. Ari Berman has written an excellent summary of its influence in the Nation, that I discovered courtesy of Economist's View:

...a central paradox in American politics over the past two years: how, in the midst of a massive unemployment crisis—when it’s painfully obvious that not enough jobs are being created and the public overwhelmingly wants policy-makers to focus on creating them—did the deficit emerge as the most pressing issue in the country? And why, when the global evidence clearly indicates that austerity measures will raise unemployment and hinder, not accelerate, growth, do advocates of austerity retain such distinction today?

An explanation can be found in the prominence of an influential and aggressive austerity class—an allegedly centrist coalition of politicians, wonks and pundits who are considered indisputably wise custodians of US economic policy. These “very serious people,” as New York Times columnist Paul Krugman wryly dubs them, have achieved what University of California, Berkeley, economist Brad DeLong calls “intellectual hegemony over the course of the debate in Washington, from 2009 until today.”

Its members include Wall Street titans like Pete Peterson and Robert Rubin; deficit-hawk groups like the CRFB, the Concord Coalition, the Hamilton Project, the Committee for Economic Development, Third Way and the Bipartisan Policy Center; budget wonks like Peter Orszag, Alice Rivlin, David Walker and Douglas Holtz-Eakin; red state Democrats in Congress like Mark Warner and Kent Conrad, the bipartisan “Gang of Six” and what’s left of the Blue Dog Coalition; influential pundits like Tom Friedman and David Brooks of the New York Times, Niall Ferguson and the Washington Post editorial page; and a parade of blue ribbon commissions, most notably Bowles-Simpson, whose members formed the all-star team of the austerity class.

The austerity class testifies frequently before Congress, is quoted constantly in the media by sympathetic journalists and influences policy-makers and elites at the highest levels of power. They manufacture a center-right consensus by determining the parameters of acceptable debate and policy priorities, deciding who is and is not considered a respectable voice on fiscal matters. The “balanced” solutions they advocate are often wildly out of step with public opinion and reputable economic policy, yet their influence endures, thanks to an abundance of money, the ear of the media, the anti-Keynesian bias of supply-side economics and a political system consistently skewed to favor Wall Street over Main Street.

Taken together, the various strands of the austerity class form a reinforcing web that is difficult to break. Its think tanks and wonks produce a relentless stream of disturbing statistics warning of skyrocketing debt and looming bankruptcy, which in turn is trumpeted by politicians and the press and internalized by the public. Thus forms what Washington Post blogger Greg Sargent calls a Beltway Deficit Feedback Loop, wherein the hypothetical possibility of a US debt crisis somewhere in the future takes precedence over the very real jobs crisis now.

See the rest of the article here.

Part of what permits this oppressive admosphere to flourish is a journalism that refuses to acknowledge the most obvious of facts.  This phenomenon was recently tackled by James Fallows, a blogger with the Atlantic and former Jimmy Carter speech writer, who took on the dishonest practices of Washington journalism that have facilitated the Republicans' deliberate obstruction of the Democratic majority Senate, using the example of Obama's jobs bill, an initiative at odds with the views of the austerity class.

The link above was to his original post but he followed it up here, here, here, here, and here.

Ontario election polls postscript

The Ontario election produced a minority, or bare majority if the legislature selects an opposition member to be speaker, who is then obligated to vote with the government in the event of tied vote.

Overall, the polls were fairly close to the actual result. The day after analysis in the Globe, in TC's view, was somewhat muddled on this point.

The table below illustrates how the pollsters performed.  It is ranked by the sum of the errors with respect to the PCs, Liberals and NDP (the Top Three column). The All column adds in the error for Greens and others:

			Liberal	PC	N.D.P.	GP	Other	Total Error
	Election Result	Oct. 6, 2011	37.62	35.40	22.70	2.90	1.30	All	Top 3
Oct. 5, 2011	Forum Research	Oct. 4-5	-0.62	-2.40	0.30	0.10	-0.30	3.72	3.32
Oct. 4, 2011	Abacus Data	Oct. 3-4	-0.62	-1.40	1.30	1.10	-0.30	4.72	3.32
Oct. 5, 2011	EKOS	Oct. 3-5	0.98	-1.40	-1.60	2.40	-0.30	6.68	3.98
Oct. 4, 2011	Nanos Research	Oct 1-3	0.08	-2.20	3.10	0.50	-1.30	7.18	5.38
Oct. 5, 2011	Angus Reid*	Oct. 4-5	-0.62	-2.40	3.30	0.10	-0.30	6.72	6.32
Oct. 4, 2011	Angus Reid*	Oct. 3-4	-4.62	0.60	3.30	2.10	-1.30	11.92	8.52
Oct. 4, 2011	Ipsos Reid	Sept 30-Oct 3	3.38	-4.40	2.30	0.10	-0.30	10.48	10.08

Ipsos, which is at the bottom of this list, had the most accurate poll in the federal election.  Given the inherent error in polling one should be very cautious in concluding which polling firm is 'better' than others.

However, there is an asterisk beside Angus Reid as they delivered two 'final' polls in less than a day leading to this account in the Globe after the election:

Ipsos Reid said the Liberals would receive 41 per cent among decided voters, the Tories 31 per cent and the NDP 25 per cent.

That same day, the polling firm Angus Reid announced in a press release, titled “Tories Edging Liberals But Ontario Race Could Turn in Final Hours.” that an online survey it conducted from Monday to Tuesday morning showed the Tories were at 36 per cent and the Liberals at 33 per cent.

“The Progressive Conservative Party has recovered some grounds,” the firm said of its survey conducted for the Toronto Star.

The Star published the results, saying it was the final major poll of the campaign.

But later that day, Angus Reid began to conduct another online poll, which yielded very different results.

“We wanted to track the election right to the last minute so we want back in the field Tuesday afternoon,” Angus Reid managing director Jaideep Mukerji said in an interview.

“There was volatility among Ontarians . . . We knew it was going to a very tight race.”

The later poll ,which wasn’t commissioned by the Star but conducted on Angus Reid’s own account, Mr. Mukerji said, predicted the Liberals would get 37 per cent, the Conservatives 33 per cent and the NDP 26 per cent.

“We’re happy we caught that shift,” Mr. Mukerji said. “There were some Liberals at the last minute who got cold feet about voting conservatives.”

The pollster who worked for The Globe and Mail and CTV, Nanos Research, however released similar numbers two days before Angus Reid’s final poll.

Federal election polls in Ontario
The polls on the provincial election were quite good overall. This was was not the case with the Ontario sub-samples on polls taken during the federal election. The average error in Ontario understated Conservative support by 6.1 percentage points while overstating all the others, the NDP by the 3.2 points the Liberals by 1.7 and the Greens by 1.1.  TC is still puzzled by the error in polling during the federal election although one can find some interesting discussion of this on Pundit's Guide.  Ekos pollster Frank Greaves is the only one who seriously addressed his own mistakes after the election.

TC observes that the average Conservative support from the beginning of the federal election to the approximate beginning of the NDP surge in Ontario was 41.8% (not too far from 44.4% they actually won) and thereafter it averaged 38.1%. However, I am not sure what that tells us other than perhaps the instability in preferences reflected in the shift had some impact on the measurement difficulties actually experienced.

Ontario likely headed for Liberal majority

There has been closing tick in this election to the McGuinty Liberals.  Eight polls released since Monday by five different firms yield an average of:

Liberal: 37.6 %
PC: 33.2 %
NDP: 24.7 %
Green: 4.0 %

And less than 1% for others. 

This gives the Liberals 58 seats, 29 for the PCs and 20 for the NDP - a Liberal majority.  A minimum of 54 is required for a majority, so uncertainty remains about the issue of majority/minority.  TC thinks the Liberals will certainly win the most seats. It will likely be a majority (the Liberals could win over 60 seats) but there is still some doubt on that score. 

In these circumstances the trend is your friend and the trend is to the McGuinty Liberals.

How close is it in Ontario?

About as close as it could be. Here is the average of the four polls released in the last couple of days:

Liberal	PC	NDP	Green
34.4	34.6	26.4	4.1

The outcome seems likely to depend on asymmetric shifts within the province. In some regions such as the Greater Toronto Area Liberal losses appear to be smaller than in other areas. Overall there will be many close races. A small movement over the next couple of days could shift the election from one party to another.  The average above would give us a Liberal minority based on the 2007 results. 

NDP headed for win in Manitoba

The Friday moring headline in the Free Press said "NDP clinging to lead", but it is clearly enough to ensure victory in next Tuesday's provincial election for Mr. Selinger's party. The Probe numbers are at roughly the midpoint of the other two polls, an average of the three essentially replicates Probe's numbers.

TC does not have an estimate model based on the current boundaries, but if the Probe numbers are accurate the one notable change we can see now would be the loss to the Liberals of both their seats. The NDP would win a majority.  How large is difficult to determine.  TC's estimate is that the absolute lowest number of NDP seats would be 30 (the result that would occur if the PCs win every close race) but it will probably be greater than that.

Methodological Snake Oil

TC wants to make some points about the polling controversy started by the Ipsos commentary about polling discussed in my previous post.

First, there are legitimate unanswered questions about online polls.  There is no accepted methodology.  Partly because of that there is effectively zero transparency and accountability on the part of online polling companies.  For example, on their website at the bottom of a recent poll the Reid group says this:

Methodology: From September 20 to September 21, 2011, Angus Reid Public Opinion conducted an online survey among 1,668 randomly selected Canadian adults who are Angus Reid Forum panellists. The margin of error—which measures sampling variability—is +/- 2.4%, 19 times out of 20. The results have been statistically weighted according to the most current education, age, gender and region Census data to ensure a sample representative of the entire adult population of Canada. Discrepancies in or between totals are due to rounding.

What it doesn't tell you is how large the panel is from which the sample is selected. When it says 'randomly selected' it goes on to say 'who are Angus Reid Forum panelists'. However, the phrase 'randomly selected' on its own implies 'selected from the whole population of Canada'. The subsequent reference to the panel also infers, without saying so explicitly, that they actually come from the Angus Reid panel.

In Canada if it is within a province, one assumes it is a subset of a national panel and perhaps panel size within the province could be an issue. But we don't know the overall size or demographics of the national panel - gender, income, language - let alone the provincial sub-sample. We don't know what methods were used to recruit it. Surely if we are to accept the panel itself as representative we would need to be assured that it was selected at random. Is this case?

We don't know how the panel is contacted or how the surveys are conducted to ensure their integrity. If these are to become commonplace, the polling industry should set some standards that provide some reassurance that there is some validity to all this.

TC doesn't agree with the Ipsos critique of IVR.  These are ultimately phone surveys, an established proven methodology.  The only difference is an electronic voice and answers given on a telephone touchpad.  We already know such polls have obtained good results. See what New York Times polling blogger Nate Silver (who formerly blogged at fivethirtyeight.com) said about Survey USA, which uses this methodology:

... SurveyUSA is a very strong polling firm; no company has done more to contradict the notion that a "robopollster" need be inferior. Although it's not my place to make any endorsements, it would certainly make the life of electoral forecasters easier if SurveyUSA were to get more business.

Competing Ontario polls

Two new polls out in Ontario today ahead of the debate, one with the Liberals ahead, one with the PCs, so which to believe.

An Ekos poll had the Liberals at 34.9%, the PCs at 31.4% with the NDP at 24.7%.  However, Abacus Data had the PCs ahead at 37%, the Liberals at 33% and the NDP at 23%.  The only big difference is actually in the PC number but it is significant.

One way of verifying the credibility of a poll is to look at its internal subgroups.  There is a certain consistent pattern that reappears in poll after poll regardless of overall outcome or source.  If there is an anomaly it should be apparent.  Look on page four of the Abacus poll.  It tells us that the PCs lead among women and voters age 18 to 29.  So younger voters and women support the PCs almost to the same degree as the province as a whole.  However, there is absolutely no way that is true.  PC support is typically older and male to a much greater degree than we see in Abacus.  In the Ekos poll (see page 7) one sees the relative weakness of the PCs among youth and women, and one sees it over and over again in many others.

Abacus was attacked by Ipsos Research (the most accurate pollster in the May 2 federal election) for shoddy methodology (methodological snake oil is how they described it) earlier in this campaign. Abacus made a point in their release of emphasizing that they used a traditional ballot question on this poll (in response to the Ipsos critique).  TC thinks Abacus has more work to do.