Friday, July 30, 2010

The Republican Position

Dean Baker pulls back the curtain:

. . . in spite of what [NY Times Columnist] David Brooks tells us, [Republican Congressman] Ryan’s concern is not reducing the size of government, but rather redistributing income upward.

Of course, upward redistribution of income is not a very good political platform since there are many more people who end up losers in this story than winners. And, in a democracy, politicians are unlikely to win elections if they promise to take money out of most voters’ pockets.

So, Mr. Ryan and David Brooks come up with stories about how conservatives want to limit government and unleash individual entrepreneurs. The story might have little basis in reality, but that doesn’t mean that you can’t get it in the New York Times and persuade lots of people to take it seriously.

Friday, July 16, 2010

Close to Zero

Tyler Cowen on "The speed of labor market adjustment"
I find myself coming back to the view that many previously employed workers simply have a current marginal product pretty close to zero.

Wednesday, July 14, 2010

“Radical leaders prey on the fearful & naive.”

Iowa tea party billboard likening Obama to Hitler and Lenin draws criticism - Los Angeles Times

The North Iowa Tea Party began displaying the billboard in downtown Mason City last week. The sign shows large photographs of Obama, Nazi leader Hitler and communist leader Lenin beneath the labels “Democrat Socialism,” “National Socialism,” and “Marxist Socialism.”

Beneath the photos is the phrase, “Radical leaders prey on the fearful & naive.”

The co-founder of the roughly 200-person group said the billboard was intended to send an anti-socialist message.

I like the use of the phrase, “Radical leaders prey on the fearful & naive.”

Is that "irony"?

Saturday, July 10, 2010

A Modern American Entrepreneur

The U.S. Naval Institute reports the story of a modern American entrepreneur:

The Olympia was a successful museum vessel, at least according to the numbers. More than 100,000 visitors annually paced the same decks where Dewey uttered the immortal fighting words, "You may fire when you are ready, Gridley."

In 1996, the museum, flush from a six-year $15 million capital campaign, took control of the Olympia. The future looked bright. But now, 14 years later, the nearly broke museum is giving up the distressed vessel, claiming her maintenance poses an insurmountable fiscal challenge.

What has been steadily sinking the ship? Not disinterest. Instead, more modern American vices-greed, corruption, and civic disengagement-may have overpowered this monument to the strong, optimistic America of old.

As the Olympia sat deprived of basic maintenance, the Independence Seaport Museum's chief, John S. Carter, enjoyed perks far above compensation provided at peer institutions. In 2004, his salary exceeded $350,000, and he lived rent-free in a $1.7 million executive mansion bought, maintained, remodeled, and even furnished with museum funds, according to news reports.

The criminal complaint against Carter claimed that by 2006, the museum had been billed more than $335,000 for work on the director's Massachusetts home. While Carter charged the museum over $280,000 for personal purchases of jewelry, home electronics, designer clothing, and rare artwork, almost $200,000 dollars in maritime artifacts-including a rare print of Dewey-went missing.

Rather than support the Olympia, Carter defrauded the museum of more than $900,000 dollars in a scheme to restore and resell-for personal gain-several antique pleasure boats.

The museum faltered. Between 1999 and 2005, its endowment went from $48 million to a mere $7.7 million. Admission receipts tumbled by half. And all this time, the final arbiters of fiscal management, the museum board, did nothing.

Outside the museum, interested stakeholders did little more. In 2002, after the U.S. Naval Institute's own Naval History magazine published a devastating article detailing the Olympia's dire condition, Carter flatly rejected the story in a letter, claiming the account was "somewhat dated and generally uninformed." This strange rebuttal evoked little response, even though the Olympia's decay, well documented by photographs in the magazine, was undeniable.

Carter's looting of America's historic treasure continued unabated. Apparently gambling on a federal bailout, the museum director carried on until his house of cards began crumbling in 2005.

In 2007, Carter was sentenced to a 15-year prison term for defrauding the museum of more than $1.5 million over his 17-year tenure.

Thursday, July 8, 2010

Learning lessons

Rich people have solution to economic crisis: Make lazy poor get jobs - U.S. Economy -". . . these wealthy elites think the biggest problem facing America today is that the wealthy elite have to pay taxes, while the poor and unemployed sit around collecting "Social Security" and "food stamps" and "unemployment benefits."

Aspen Ideas Festival: Obama Loses Support of Nation’s Elite - The Daily Beast

Sunday, July 4, 2010

The Fire Next Time

"God gave Noah the rainbow sign, no more water -- the fire next time."

A Spiritual

The great political storm came, sweeping the Democrats into power, first in the Congress in 2006 and to the Presidency in 2008. And, what did they with that power? What lessons were taught and learned? What change was promised, and what change delivered?

I'm afraid that the main lesson delivered to date is that American democracy doesn't work. It doesn't matter, who you vote for, the corporations still run things, and the powers that be, deliver Republican policy, no matter what.

Mike Lux at Huffington Post and Open Left takes note of an opinion poll by Stan Greenberg.

What [the poll] basically showed was that Democratic arguments, even relatively well framed one, have little credibility with the majority of the likely voters in the 2010 elections. Greenberg tried four different sets of competing Democratic and Republican arguments, and the Republican arguments won each time- by 10, 12, 12, and 13 points. Not a single one of the four was even competitive. In past years, similar lines of debate have tended to favor Democrats, but not this time.

Here's Greenberg:

62 percent of Republicans in Democratic districts describe themselves as very enthusiastic about the upcoming election. That compares with 37 percent of Democrats in those same districts.

By 57 to 37 percent, voters in these 60 Democratic seats believe that President Obama’s economic policies have produced record deficits while failing to slow job losses — and not averted a crisis or laid a foundation for future growth.

Republicans are encouraged; Democrats are discouraged, and independents are, what?

Mark Kleiman reports on a survey of two, his dinner guests.

I just had dinner with two people – one an old and trusted friend with a sophisticated knowledge of public policy, one a relative stranger with limited information – both of whom plan to vote for Carly Fiorina over Barbara Boxer this fall.

Why, you might ask?

For each of them, the Access to Care Act is an important reason. Their concerns were opposite; the stranger loves Medicare and fears that ACA will cut into Medicare spending, the friend has caught Peterson-itis and is convinced that Medicare is going to eat the GDP, and hates ACA for not cutting Medicare enough.

Similarly, the stranger thinks that extending the Social Security retirement age would be a crime, while the friend regards it as an obvious response to increased longevity.

The fact that they were voting for Fiorina for opposite reasons didn’t bother either of them; the stranger has decided that all incumbents ought to replaced, and indeed offered John Boehner’s proposal to raise the retirement age as a reason to vote against Boxer. (All this while railing against “socialism.”)

Mark Kleiman explains this existential political confusion, as the success of Republican propaganda:

Anecdote isn’t data, but the hint here is that the Repubilican strategy of obstruction plus obfuscation is, so far, working pretty well.

On the other hand, one might consider it a failure of the Democrats' messaging and policy. The success of Republican obstruction is the failure of Democratic administration and strategy.

Kleiman is inclined to see the Left of the Democratic Party as the problem. He complains, "the problem with trying to make change is that you have strong enemies and lukewarm allies", but he doesn't see Obama as the lukewarm ally of change. His co-blogger, Jonathan Zasloff, has complained about progressives, dissenting from Obama-love, demanding a pejorative term be coined,
for a progressive who holds out against a good bill, under circumstances where it is virtually impossible to get something better, and thus undermines his/her own party’s ability to govern, while pretending to uphold the “true” values of the party, movement, coalition etc.

It's one view of the political situation, I guess. I find it hard to reconcile this view with what I know of reality. Kleiman wants to praise Obama for his "courage" in supporting, for example, the military's anti-gay Don't Ask, Don't Tell policy -- a policy repeal that has the support of 3/4s of the population!

It seems to me that the ability of the Party to govern has been impeded by the President, not by the Left of the Democratic Party, which has dutifully supported every move, albeit with ever diminishing enthusiasm. If a Democratic President is going to govern as a Republican, what is the point?

Brad DeLong, not exactly Jane Hamsher's soul mate, had an excellent post on how the political problem and the policy problem have married at the putrid center, in Obama's style of governance:

In fighting the recession, Obama decided early on that he would push for a fiscal stimulus program about half the size of what his Democratic economic advisers recommended, and he decided to count that as a total victory rather than press for expanding half a loaf into the full amount.

Obama has been so committed to that cautious policy that even now, with the unemployment rate kissing 10%, he will not grab for the low-hanging fruit and call for an additional $200 billion of federal aid to the states over the next three years in order to prevent further layoffs of teachers. Rather than stemming further erosion of the national commitment to educate the next generation, Obama has shifted his focus to the long-term goal of balancing the budget – even while the macroeconomic storm is still raging.

And, in order to move forward on long-term budget balance, Obama has appointed a fiscal arsonist, Republican ex-Senator Alan Simpson, as one of his fire chiefs – one of the two co-chairs of his deficit reduction commission. Simpson never met an unfunded tax cut proposed by a Republican president that he would vote against, and he never met a balanced deficit-reduction program proposed by a Democratic president that he would support. Partisans whose commitment to deficit reduction vanishes whenever political expedience dictates simply do not belong running bipartisan deficit-reduction commissions.

Likewise, in dealing with the financial sector’s distress, Obama has acquiesced in the Bush-era policy of bailouts for banks without demanding anything of them in return – no nationalizations and no imposition of the second half of Walter Bagehot’s rule that aid be given to banks in a crisis only on the harsh terms of a “penalty rate.” Obama has thus positioned himself to the right not only of Joseph Stiglitz, Simon Johnson, and Paul Krugman, but also of his advisers Paul Volcker and Larry Summers.

On environmental policy, Obama has pressed not for a carbon tax, but for a cap-and-trade system that, for the first generation, pays the polluter. If you were a major emitter in the past, then for the next generation you are given a property right to very valuable emissions permits whose worth will only rise over time.

On anti-discrimination efforts, the repeal of the US military’s “don’t ask, don't tell” policy toward gay soldiers is on an extremely slow track – if, that is, it is hooked up to an engine at all.

On policy towards the rule of law, the closure of the mistake that is Guantánamo Bay is on a similarly slow track. Moreover, Obama has joined George W. Bush in claiming executive powers that rival those claimed by Charles II of Britain in the seventeenth century.

On healthcare reform, Obama’s proudest moment, his achievement is...drum roll...a scheme that almost precisely mimics the reform that Mitt Romney, a Republican who sought the presidency in 2008, brought to the state of Massachusetts. The reform’s centerpiece is a requirement imposed by the government that people choose responsibly and provide themselves with insurance – albeit with the government willing to subsidize the poor and strengthen the bargaining power of the weak.

In all of these cases, Obama is ruling, or trying to rule, by taking positions that are at the technocratic good-government center, and then taking two steps to the right – sacrificing some important policy goals – in the hope of attracting Republican votes and thereby demonstrating his commitment to bipartisanship. On all of these policies – anti-recession, banking, fiscal, environmental, anti-discrimination, rule of law, healthcare – you could close your eyes and convince yourself that, at least as far as the substance is concerned, Obama is in fact a moderate Republican named George H.W. Bush, Mitt Romney, John McCain, or Colin Powell.

Now, don’t get me wrong. My complaints about Obama are not that he is too bipartisan or too centrist. I am at bottom a weak-tea Dewey-Eisenhower-Rockefeller social democrat – that is, with a small “s” and a small “d.” My complaints are that he is not technocratic enough, that he is pursuing the chimera of “bipartisanship” too far, and that, as a result, many of his policies will not work well, or at all.

And, that brings us back to Mike Lux and Stan Greenberg's poll, which has Democrats, even in Democratic districts, deeply depressed, and Republicans, while foaming at the mouth like mad dogs, enthusiastic.

Obama achieved power in 2008 by shifting a small, but critical slice of secular, conservative Republicans into the Democratic coalition. It represented a big chunk of money, because financial sector bigwigs were a big part of the slice, and it resulted in several Republicans in key posts in Obama's cabinet -- Defense Secretary and Transporation Secretary, most prominently.

It wasn't a campaign strategy or a coalition strategy, which required anyone to change his mind about anything. It wasn't based on George W. Bush and the Republican Party being wrong; it was based on George W. Bush being incompetent.

Obama's governance has followed, on the same, faulty premise -- that Bush policy, well-executed, would be some kind of ideal. The Democratic Party has not been able to offer the electorate an alternative, or to articulate an alternative philosophy or to enact substantive change.

Thursday, July 1, 2010

Coulda, Shoulda, Did-a

atrios of Eschaton speaking truth (not to Power, but only because Power is not listening):

Bernanke could have sent money from the Fed's magic money machine in all kinds of ways. They could have paid down mortgages. They could have put money in my bank account. They could have given it to state governments. What they did was prop up a failed banking system, and the worst failures of the failed banking system, under the premise that capital misallocating financial intermediaries were necessary for a stable economy.

It's one way to do things.

Policy debates confuse people into thinking that policy doesn't matter. They don't know what the policy is, or was. They think there wasn't any choice, that circumstances force those in charge into certain channels.

On the whole, the struggle over what policy is to be, just isn't very edifying. Policy is a joint product of the actions of many people, and so no single person's intentions are controlling; plus, people deny what their intentions are. And, the policy may concern broad and confusing areas of collective life: social institutions, the functions and evolution no one fully comprehends, let alone can explain. And, even the parts of the debate, which are not outright deceptions, may be -- probably are -- oversimplifications. Bumperstickers, slogans, cliches.

All of that said, journalism -- contemporary, narrative observation of what is -- can be really useful. And, succinct.

The U.S. had a definite policy, in responding to the Financial Crisis of 2008. It really didn't involve very many people at the top. So, it was, unusually coherent. By contrast, the fiscal policy enacted at the beginning of 2009 had many participants, and little coherence.

And, looking back, the shape is sharp and distinct and unmistakable.

I suspect that many folks, who spent years contemplating in prospect how to respond to the emergence of such a crisis, and wrote opinions about what to do -- as Bernanke himself was wont to do -- thought they knew the best course. But, they never really came to grips with what the basic policy forks would be. They faced imminent disaster, and like a driver, whose car has started to slide on ice, their impulse was to steer away.

The most basic decision fork -- whether to let a failed system, collapse -- received minimal consideration in the moment.

If someone did glimpse the choice, I suspect their impulse might have been to think they could parse the decision: patch things together in the moment, and reform later.

I cannot read minds. I don't know what primitive decision heuristics the key players were using at the time: Bernanke, Geithner, Secretary Paulson.

Now, in retrospect, as their panicked decision-making is revealed in detail, it is convenient to charge corruption or worse. I don't care to go there.

But, I consider that the policy was what it was, and it has consequences.