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May 2008

Academic Robes

Excuse me, what gown is that?

This is a Harvard gown from the late 1980s

Harvard's color is pink?

No, Harvard's color is crimson.

But your gown isn't crimson.

No, my gown is fuchsia.

Someone thought that was crimson?

Or maybe it is electric pink. Or hot pink.

I don't understand.

Clearly somebody at Harvard in the 1980s had absolutely no color sense.

You are brave to wear that!

I agree. Some people have bought replacement robes made in the 1990s--by which time they had figured out what crimson was. And if you cannot wear hot pink in Berkeley, where can you wear hot pink?


Political Economy Graduation Blogging

160 new U.C. Berkeley baccalaureates in political economy today.

Unfortunately, the survey indicates that about 64 of them are "not satisfied" with their major.

For half of those, "not satisfied" means that they wanted to major in undergraduate business or economics, but could not: those majors are "capped"--allowed by California Hall to limit their major numbers.

I decline to speculate why California Hall allows this.

For the other half of those "not satisfied", reasons are various: inability to get into courses where preference in enrollment was given to economics or politics majors, lack of sufficient guidance in designing what is effectively their own interdisciplinary major.

The most common reason mentioned is an inability to take the courses they wanted to take--not offered, not offered in the right semester, not offered in a large enough room.

We do have a problem here.

Plus graduation suffered from the great blank scroll shortage of 2008...

Brad DeLong http://www.j-bradford-delong.net http://delong.typepad.com brad.delong@gmail.com 925 708 0467

"Economists set themselves too easy, too useless a task when in
tempestuous seasons they say only that when the storm is long-past the
sea will be flat again"


DeLong Smackdown Watch: John Yoo's Torture Memo and Academic Freedom

A commenter, Wetzel, writes:

You have placed Professor Drumond in a position where to initiate an action in defense of a thousand year tradition of law against, torture he must push up to the line, and maybe cross the line into an improper form of inquisition. The question of your standing, and the Senate's standing, is really important, I think, to interpreting the rationale of his reply.

For us who are outraged over what Yoo and the others have done in our name, his reply seems like a really thin gruel. I think he is probably taking the right approach, unfortunately. Although your approach in the letter is to present the inquiry as a fact-finding approach, information gathering, and liberal discourse, you are really calling to subject Yoo to an Inquisition. It is disingenuous to misrepresent what would have called for as a scholarly inquiry when the stakes professionally and possibly criminally for Yoo would make it more of a grand jury proceeding or a judicial inquiry.

There is another tradition in law going back even further than prohibition of state torture governing the standing of complainants in proceedings. The question of standing to speak is a settled wisdom that is a first order concern of any parliamentary organization. In the light of this, Dr. Drumond understands the limitations of his position. The controller of the floor must withstand those who would advocate the parliament assume a role for which it was not intended or proper. Obviously the introduction of matters of professional misconduct by peers within a university against each other to the floor of the Senate for debate must involve the questino of the standing of the complainant. Certainly it is not permitted for one faculty member to initiate an inquiry by the Senate against another faculty member as an individual Professor, and if there were such a process it would certainly need to be extremely circumspect and deliberative before even the first proposal of inquiry were public, no matter how egregious the complaint. I imagine Professor Drumond is a bit peeved that you do not seem to understand the dangers of Inquisition, because if you did then you would understand you have put the Inquisition on him, because many readers will see his reply simplistically and view him as Kafkaesque, cowardly, or participating in the banality of evil. The ability of a university administrator to accept this perception of their bland, indifferent replies as a bad thing is frankly sacramental.

Because the seriousness of John Yoo's Torture Memo extends to criminal behavior, I feel that an inquiry at the university level, especially at this early stage, is not proper because there would not be proper rules of evidence and processes ensuring objectivity and transparency. In a Berkeley inquisition, how would evidence of law breaking produced through the inquiry be referred to the Justice Department? Although I suspect that Professor Drumond would probably want to see Cheney, Yoo, Bush all at the Hague like the rest of his do, he modulated his reply to even have the not too diplomatic mention of the word 'defamatory', which is his way of kicking your shins a bit for catching up the Senate in the overall legal crisis of having a criminal in the White House. It is beyond their scope. I think you should not hold the letter against him because it is written to be exactly bland and imperturbable to protect the Senate against becoming an inquisition, which is a first order responsibility.

I think Wetzel's critique is easy to answer.

First I genuinely think a fact-finding inquiry would be useful. At what point violations of intellectual integrity become grave enough to warrant some kind of sanctions--that is not a question I know the answer to. I think that there is a line that should not be crossed, and that some form of responsibility for line-crossing would be a good thing, but I am not at all sure where the line is or what the sanctions should be. And my first response as an ineffectual liberal academic is to say that we should try to discover what the facts are and what we think about them by talking about them, publicly.

Wetzel says, essentially, that it is impossible to have a fact-finding inquiry into John Yoo's Torture Memo because the facts have an anti-Yoo bias:

Although your approach in the letter is to present the inquiry as a fact-finding approach, information gathering, and liberal discourse, you are really calling to subject Yoo to an Inquisition. It is disingenuous to misrepresent what would have called for as a scholarly inquiry when the stakes professionally and possibly criminally for Yoo would make it more of a grand jury proceeding or a judicial inquiry...

Thus Wetzel believes that any such inquiry must turn into an Inquisition, rather than (say) into a vindication of Yoo's actions (and legal theories) or into a rough consensus that Yoo faced painful dilemmas and dealt with them like a responsible adult. And I think that Wetzel suggests that if the facts were not so biased against John Yoo--did not suggest a possibility of criminal culpability that makes the Republican ex-chief of staff for Secretary of State Colin Powell suggest that Yoo not travel to western Europe ever again--then we could have a fact-finding inquiry.

I think there has got to be something wrong with any "it's unfair because the facts are biased!" position. Wetzel's position seems to me to be one such. It is not the case, mind you, that I am dead certain of what is wrong with Wetzel's "it's unfair because the facts are biased!" position. But I am dead certain that there is something wrong with it.

And I would like to know--coolly, factually, dispassionately--the answers to the following questions:

  • In 2000, John Yoo wrote that President Clinton exceeded his powers as commander-in-chief by placing American forces in Kosovo under the command of British NATO General Michael Jackson. Is it possible for an honest and sane lawyer to believe that and also to believe the doctrines Yoo set forth in his Torture Memo?

  • Does the omission of any discussion of the Youngstown case from John Yoo's Torture Memo cross a legal line and violate the professional duty of a lawyer to give advice about what the law is--not about what he thinks the law should become--to his clients?

  • Consider the arguments of the Torture Memo--arguments about which Georgetown's Marty Lederman writes: "I don't think John, et al., actually believed that the arguments they were making... would be adopted by many, if any, relevant legal communities. Nor do I think that the Yoo memos purported to present a "balanced" view.... I don't think John, et al., thought that their arguments would withstand scrutiny if presented to a court.... I think that John knew full well that many of the specific arguments within his memos... were simply hooey, supported by "authorities" that were at best tendentious and off-point, and at times mischaracterized in a way that can only be presumed to have been dishonest..." Do these arguments rise to a level of misconduct equivalent to that of the misrepresentation of sources in other disciplines?

  • Did John Yoo cross the line at OLC and become not just an advisor but an implementer, and thus a member of a conspiracy to commit acts of torture?

  • Is there an academic freedom safe harbor, according to which all deeds and writings while not at the academy are irrelevant to whether one meets the intellectual standards of inquiry, scholarship, honesty, and honor that must be maintained for continued membership among the faculty of the university?

Originally I had two more questions:

  • Was John Yoo's role in the Bush administration confined to the justification of torture only in "ticking bomb" situations in which the plea of necessity can be made (whether or not it is accepted)?

The answer to this is "no." John Yoo's role was to argue for the power to torture in routine bureaucratic cases--torture of people many of whose factual guilt and ability to threaten the national security of the United States was not only doubtful but extremely unlikely.

  • Have John Yoo's actions strengthened the national security of the United States?

The answer to this is also "no." His actions have weakened it.


DeLong Smackdown Watch: John Yoo's Torture Memo and Academic Freedom

David Levine writes:

The Torture Memo: The Torture Memo and Academic Freedom: Consider Professor Left, on leave at CEA, who went on national TV to argue that a rise in the minimum wage would not reduce employment, increase prices, or harm small business's profits. Professor Left knew that at least one of these effects was essentially certain to occur, but had a political job to do.

Consider Professor Right who, a few years later, went on national TV to argue that a cut in capital gains tax rates would raise tax revenues. He knew full well that the short-term boost in tax revenue will be overwhelmed by revenue cuts in later years. He hid that fact on TV, in Congressional testimony, and in memos to executive branch decision-makers.

Professor Center is more mainstream than his colleagues on the left and right. He goes on national TV to argue that a free trade pact will increase U.S. employment. In fact, Professor Center believes unemployment will be roughly unchanged as it is largely determined by the Federal Reserve. Employment will probably be lower, Prof. Center believes, because the free trade pact might increase employment with the trading partners and reduce immigration to the United States.

Assume that each policy in fact had (somewhat predictable) harmful consequences: job loss for minority teens, massive budget deficits, and a financial crisis in the southern trading partners that reduced their ability to purchase U.S. exports. Was it professional misconduct to push these policies while declining to mention (and sometimes implictly denying) the downsides? Do those recommendations disqualify the professors from teaching? Would it matter if the economists had line authority and made policy decisions, or were trusted advisors who were very influential with both parties, not just standard wonk advisors?

I mention these cases not to defend Professor Yoo or the despicable U.S. policy of torture. I mention these cases to suggest the issues of academics acting as political advisors and decision-makers are tough.

I agree that the questions are tough. I do think that:

  • Left-wing economists should not say that minimum-wage increases would neither (a) decrease employment, (b) rise prices, nor (c) diminish profits.
  • Right-wing economists should not say that capital gains tax rates would raise tax revenues--unless they in fact do believe that the short-term boost in tax revenues outweighs properly-discounted revenue losses in the out-years.
  • Centrist economists should not say that free trade will boost U.S. employment--unless they believe that free trade will make the country richer and so actually boost labor supply and demand.

But neither left-wing, right-wing, nor centrist economists say such things in the classroom: in the classroom we all teach what we believe. At what point do violations of intellectual integrity by economists under message discipline become grave enough to warrant some kind of sanctions--that is not a question I know the answer to. I think that there is a line that should not be crossed, and that some form of responsibility for line-crossing would be a good thing, but I am not at all sure where the line is or what the sanctions should be.


The Bankruptcy Bill

Avedon Carol writes:

Eschaton: I'd like to post a little corrective to a myth I've seen propogating in comment threads: Neither Hillary Clinton nor Barack Obama voted for the bankruptcy bill. John McCain did vote for it.

The Republican Congress originally passed a version of the bill during President Bill's adminstration, and he vetoed it because his wife convinced him it was a terrible bill. She has always steadfastly opposed it.

When it came to the Senate this time, Senator Clinton voted in favor of every single attempt to amend it to make it less odious. However, her husband was having heart surgery on the day of the actual floor vote on the bill itself, and she was with him in the hospital; her office did issue a statement of opposition to the bill. (Her vote would have made no difference.) Barack Obama voted against the bill.


Barack Obama and the Colombian Free Trade Agreement

A highly-respected John McCain-supporting economist encountered on the north side of Evans Hall suggests that Obama's position on the Colombia free trade agreement is worse than McCain's position on the gas tax holiday. He has a point. Here is Don Pedro from the Economists for Obama weblog:

Economists for Obama: The Colombian Free Trade Agreement, Again: Although I can't vouch for the specific figures cited, I think this NY Times article has it generally right. Obama, Hillary, and leading Congressional Democrats all say that their single objection to the Colombia trade pact is that Colombia needs to do more to prevent killings of union members. But as the article notes, Colombia has been a violent place all around--murder rates of union members in 2007 were actually way below the murder rate for the population at large. And the murders of union members were only related to union activity in a minority of cases. On top of that, the murder rate has declined dramatially in recent years, and the government has convicted many of the killers of union members.

As I noted in an earlier post, polls show that the trade agreement is overwhelmingly popular in Colombia. I think this is because Colombians recognize that the accord will help lift many of the country's people out of poverty. I think it's almost impossible to imagine that the agreement passes during this election year, but I hope President Obama pushes for its approval.

By the way, as someone with professional and personal connections to Colombia, I often wish I had a good reference to point people to in order to explain what the FARC guerrilla group there is about. I still don't have any suggestions in English, but today Spain's El Pais had this very good article in Spanish, which gives a good description of the FARC, emphasizing the key point, which is that while decades ago the group had populist/leftist ideals, it is now basically a criminal enterprise that funds itself through drug trafficking and kidnapping.

I think Don Pedro has it right. The Colombian government should be under severe pressure to punish murderers of union activists, yes, but blocking a FTA that Colombia seems to want relatively badly seems to me to be the wrong sort of pressure to apply.


Inhospitable Job Market to Greet College Graduates

Larry Mishel and Elise Gould write:

Economic Snapshots: This month’s crop of new college graduates will confront a more inhospitable job market than their predecessors faced in 2001, the beginning of the last recession.... [T]he labor market for recent college graduates (ages 23-29) was weaker in 2007 than before the last recession in 2001. Inflation-adjusted average hourly wages for young college graduates... are still lower by about $0.60 for women and $1.60 for men than they were six years ago... a college degree has become less of a guarantee of receiving health and retirement benefits on the job... college graduates in entry-level jobs... less likely to receive employer-provided health insurance... over 5 percentage points lower than in 2001, and less than half of young college grads now receive any form of pension coverage on the job (see Figure B).

The fact that new college grads are doing poorly is a troubling sign, since those with higher education and more skills required in the new economy... are expected to be faring well...

Inhospitable Job Market to Greet College Graduates

Inhospitable Job Market to Greet College Graduates


Mr. Oil Market Gets Out the Megaphone

Martin Wolf on how the high price of oil is Mr. Market's way of giving us tough love:

FT.com / Columnists / Martin Wolf - The market sets high oil prices to tell us what to do: [O]il... is a finite resource; it drives the global transport system; and if emerging economies consumed oil as Europeans do, world consumption would jump by 150 per cent. What is happening today is an early warning of this stark reality. It is tempting to blame the prices on speculators and big bad oil companies. The reality is different.

Demand for oil grows steadily, as the vehicle fleets of the world expand. Today, the US has 250m vehicles and China just 37m. It takes no imagination to see where the Chinese fleet is headed. Other emerging countries will follow China’s example.... It looks increasingly hard to expand supply by the annual amount of about 1.4m barrels a day needed to meet demand. This means an extra Saudi Arabia every seven years.... [I]f speculation were raising prices above the warranted level, one would expect to see inventories piling up rapidly, as supply exceeds the rate at which oil is burned. Yet there is no evidence of such a spike....

[I]t seems... likely that such speculation as there is has been stabilising, rather than destabilising: in other words, it is moving prices in the right direction, in order to reduce demand. Will the high prices succeed in doing this? Certainly. Demand has to match supply for a simple reason: we cannot burn oil that does not exist.

The price spikes of the 1970s were followed by big absolute falls in demand and output.... Both forces should work again this time, but to a much smaller extent.... On balance, it is quite unlikely that aggregate demand for oil will collapse, as it did after the two previous price spikes.... So what should be the response to these simple realities? Here are some obvious “do nots” and “dos”.

First, do not blame conspiracies by speculators, oil companies or even Opec. These are the messengers. The message is one of fundamental shifts in demand and supply. If speculators push prices up in response, they are helping the adjustment. Even if Opec keeps output back, it is preserving a valuable resource for the future.

Second, do not blame the emerging countries for their growing demand. Citizens of rich countries must adjust to the higher prices of resources that the rise of the emerging countries entails. The only alternative is to attempt to destroy those hopes. That would be a blunder and a crime.

Third, understand that prices at these levels are now playing a big macroeconomic role. At $100 a barrel the annual value of world oil output would be close to $3,000bn. That is 5 per cent of world gross product. The only previous years in which it was higher than that were 1979 to 1982.

Fourth, adjust to high prices, which will play a big part in encouraging more efficient use of this finite resource and ameliorating climate change. The current shock offers a golden opportunity to set a floor on prices, by imposing taxes on oil, fossil fuels or carbon emissions.

Fifth, do try to reach global agreement on a pact on trade in oil based on the fundamental principle that producers will be allowed to sell their oil to the highest bidder. In other words, the global oil market needs to remain integrated. Nobody should use military muscle to secure a privileged position within it.

Finally, do become serious about investing in basic research into alternative technologies. Energy self-sufficiency is an implausible goal. Investing for a post-oil future is not....

The great event of our era is the spread of industrialisation to billions of people. The high prices of resources are the market’s response to this transforming event. The market is saying that we must use more wisely resources that have now become more valuable. The market is right.


Washington Post Death Spiral Watch (Richard Cohen Edition)

Richard Cohen now appears to be aware that he is an idiot:

McCain in the Mud: In 2000, I boarded John McCain's campaign bus, the Straight Talk Express, and, in a metaphorical sense, never got off. Here, truly, was something new under the political sun -- a politician who bristled with integrity and seemed to have nothing to hide. I continue to admire McCain....

McCain's charge that Barack Obama is the favored presidential candidate of Hamas. The citation for this remark is the statement of Ahmed Yousef, a Hamas political adviser, who... forgot that Obama has repeatedly called Hamas a "terrorist organization." McCain seems to have forgotten that, too. His campaign has sent out an e-mail showing how guilt by association really works.... Never mind that this was the sort of campaigning that McCain vowed to eschew. More to the point is what McCain said in his own defense. Not only was Yousef's praise of Obama "a legitimate point of discussion," he said, but everyone should understand that McCain himself will be "Hamas's worst nightmare." This aspect of McCain is my worst nightmare....

My concern for the moment, though, is not McCain's physical age but his intellectual age.... McCain's tax plan is a joke, and his foreign policy is frightening....

The most admirable of McCain's qualities -- his life story, his integrity -- make him particularly well suited to accomplish the next president's primary task, restoring the American people's trust in their government. But ideas matter, and on the Middle East, McCain not only has little to say that is interesting but, in his swipe at Obama, a distinctly ugly way of saying it.


Time Flies When We Are Having Fun!

Politics:

Things younger than Republican Presidential candidate (oh, and did I forget to mention “war hero”?) John McCain: LSD.... THE COBB SALAD.... DEFIBRILLATION (ON PEOPLE).... THE GOLDEN GATE BRIDGE.... THE CHOCOLATE CHIP COOKIE.... SCIENTOLOGY.... THE SLINKY.... SPAM.... KODACHROME.... PAT BUCHANAN.... ALASKA.... PLUTONIUM.... BUGS BUNNY.... THE BEAV.... BOTH OF BARACK OBAMA’S PARENTS.... THE POLIO VACCINE... MCDONALD’S.


Physiocracy...

Megan McArdle, Physiocrat, writes:

Megan McArdle: I think I'm crazy too: Economics of Contempt:

Call me crazy, but I think a permanent doubling of food and energy prices would slow our rate of economic growth pretty significantly. How long it would take incomes to recover "at current rates of economic growth" is irrelevant when the doubling of food and energy prices would lower the rate of economic growth.

Given that we and all our machines run on either food or energy, it's a pretty safe bet to say that doubling their prices would have a sizeable impact on growth...

This casts me in mind back to Paris in the late eighteenth century, and to the salon of Anne-Robert-Jacques Turgot; François Quesnay; Pierre Le Pesant, Sieur de Boisguilbert; and Pierre Samuel du Pont de Nemours. They argued:

  • Artisans use the food and other products of the agricultural sector to maintain themselves (at a subsistence standard of living) and to make crafts, which they then sell in order to buy the agricultural products they need to survive (at their subsistence standard of living) and to prepare for the next round of production.
  • Farmers grow agricultural which they then consume (including in consumption the transformed agricultural goods that are the products of the artisans), pay to the landlords in rent and taxes, and save as raw materials for the next round of production.
  • Land-owning aristocrats produce nothing, but they and the government take their rents and their taxes and spend them: on luxury, on war, on bureaucracy, and on works of charity and civil improvement.

It is then plain that the right way to value the economic output of society is via the net product: the difference between the value of farm production and the subsistence requirements of farmers. That net product can be used in many ways:

  • to boost the standards of living of peasants and artisans above subsistence, either through lower rents and taxes than the maximum sustainable or through works of charity.
  • for war.
  • for the luxurious consumption of the landed aristocracy, the bureaucracy, and the court.
  • for investment in works of civic improvement

To the Physiocrats, it was clear that the net product could be increased by either (a) boosting the number of farmers (holding the surplus of farm production per worker minus subsistence per worker constant), or (b) boosting the surplus above subsistence per farmer (holding the number of farmworkers constant). The government's role in economic policy should therefore be:

  • to discourage people from moving to the country to the city--in the country they add to the net product, but in the city they don't, becoming either workers in the sterile artisanal craft-making sector or flunkies serving as part of elite luxury consumption.
  • to encourage farmers and farmworkers to learn the newest and best agricultural techniques--especially those involving the seed drill and the turnip--to increase net product per farmworker.
  • to pay no attention whatsoever to the sterile craft-making artisanal sector--it is not "productive."
  • to streamline and simplify the tax system by taxing land rent only--taxes levied on anybody else simply lead to increased bureaucratic inefficiency and waste, since ultimately the only place from which the surplus to pay taxes can come from is the net product, and the entire net product comes out of the agricultural sector.

Now what do we think of this analysis? Let's give du Pont de Nemours, Boisguilbert, Quesney, and Turgot a bye on their assumption that the bureaucracy, landed aristocracy, and court of eighteenth-century France were parasitic--that seems a reasonable model-building assumption. But let's note two implicit assumptions in the Tableau Economique that are not correct and not unimportant. They are:

  • that the artisanal craft-making sector is sterile, in that the utility value of what farmers (and landlords, court, and bureaucracy) buy from it is equal to the utility value of the agricultural goods the farmers sell to it.
  • that the artisanal craft-making sector consumes at a subsistence level.

Make these two assumptions, and the Physiocrats' argument goes through. But it is not the case that what the farmers and the landlords buy from the artisan sector is no more valuable in utility terms than what they sell. It is true that the wagons, clothes, Louis XVI furniture, and marzipan purchased from are together worth the same on the market as the large piles of wheat and wood sold to the craftsmen. But the landlords, bureaucracy, court, and farmers value the first bundle in utility terms more than they value the second--that's why they buy the first and sell the second. And it is definitely not true that the non-agricultural workers of France in the eighteenth century lived at a "subsistence" level. So the Physiocratic model does not go through--as Adam Smith argues at interminable length in Book IV of the Wealth of Nations.

Similarly, Megan McArdle's and the Contemptuous (Contemptible?) Economist's argument that there is something especially key to growth in the food and energy sectors would go through if the rest of the economy were either (a) parasitic (in the sense of the eighteenth-century French bureaucracy, landed aristocracy, and court) or (b) sterile (in the sense the Physiocrats mistook the French craft-making artisanal manufacturing sector to be).


Mme. de Pompadour:


New York Times Death Spiral Watch (John Tierney Edition)

Outsourced to Mark Kleiman:

The Reality-Based Community: Greenhouse-gas footprints and environmental activism: John Tierney, demoted from the NYT op-ed page and now continuing his libertarian propagandizing in the guise of "science writing," points out that flying around to climate-change conferences creates a large carbon footprint for high-profile environmental activists. That allows Tierney to claim the sort of faux-populist gotcha! so beloved among glibertarians and greedhead conservatives. (The theocrat, nativist, and imperialist wings of conservatism prefer their faux-populist gotcha!s on different topics.)

If you travel frequently by air, even on commercial flights, you can’t escape having a huge carbon footprint. Yet many of the most vocal advocates of cutting emissions — politicians, environmentalists, journalists, scientists — are continually jetting off to campaign events and conferences and workshops. Are they going to change the way they operate? If not, how are they going to persuade anyone else to cut back emissions? (My advice to the peripatetic preachers: Do not try explaining why your work is more important than everyone else’s.)

Where to start?

  1. The point of environmental management isn't to denounce sin, it's to get prices right. The problem with GHG-emitting activities is that they are artificially underpriced due to the lack of a carbon tax (or equivalent mechanism, such as cap-and-trade, for internalizing the external costs of those activities). With the right prices, the cost of conferences with physical attendance will rise, improving the competitive position of alternatives such as high-quality teleconferencing, which allows people to meet virtually rather than physically. But if people want or need to confer in person, and are willing to pay the full price including the price of the environmental damage their travel does, they can do so with a clear conscience.

  2. Rich people use more goods and services than poor people. That's what "rich" means. Of course multi-millionaires have larger gross GHG footprints than you and I do. So what? If Tierney wants to work on decreasing income gradients, I'm all for it. But of course he's not. He just hates the idea that some rich people use their wealth to promote ideas he dislikes.

  3. A large gross carbon footprint doesn't imply a large net carbon footprint. That's what offsets are about. Once GHG contributions are priced appropriately, there won't be any need for private offset purchases. But in the meantime someone who wants to be personally GHG-neutral can get there by writing checks for the activities necessary to offset his or her footprint. Tierney's admirer and fellow faux-populist glibertarian Glenn Reynolds thinks that this is no better than "buying indulgences." The difference, of course, is that the purchase of an indulgence didn't offset the damage done by the underlying sin (and certainly didn't make reparation to the other people injured by it), while GHG offsets actually undo the original damage. If Al Gore is prepared to pay for enough carbon sequestration or tree-planting or whatever to offset the GHG costs of his house and his air travel, it's no skin off my nose, and given the nature of market transactions it's a benefit to whomever he's buying the offsets from; otherwise those people wouldn't be willing to sell at the price. Isn't it astonishing how many devotees of "the free market" know jack sh*t about how market processes actually work?

Footnote Yes, Tierney's technique is precisely that of feminists who criticize anti-feminist women such as Phyllis Schlafly for not staying home and raising their kids, as anti-feminist ideology would dictate. And the technique is equally dishonest and offensive in the two cases. Schlafly is a liar and a scoundrel, but she ought to be criticized for what she says, not for entering into the debate. Is she supposed to leave the case for sex-role differentiation to be made exclusively by men, which would discredit it from the outset?

Second footnote Yes, there are some fools on the "moral/spiritual" or "deep environmentalist" end of the spectrum who also disdain offsets as indulgences. Indeed, the Al Gore who wrote Earth in the Balance might not have been fully comfortable with the offset idea. But if he's learned something in the meantime, and the climate-change denialists haven't, it's not Gore who warrants criticism.

Third footnote And yes, offsets are not without their practical problems, especially the problem of choosing a baseline. But that's a technical issue, not the basis for an objection in principle.


A Song of Religious War, Abuse of Prisoners, Ethnic Cleansing, and Similar Light Topics

A little history lesson, about the 45:


Source: David Robertson Photography: http://www.dwrobertson-photography.com/gal_loch_arklet.asp

Andrew Lang : Poems of Andrew Lang : THE BONNIE BANKS O' LOCH LOMOND:

There's an ending o' the dance, and fair Morag's safe in France,
And the Clans they hae paid the lawing,
And the wuddy has her ain, and we twa are left alane,
Free o' Carlisle gaol in the dawing.

So ye'll tak the high road, and I'll tak the laigh road,
An' I'll be in Scotland before ye:
But me and my true love will never meet again,
By the bonnie, bonnie banks o' Loch Lomond.

For my love's heart brake in twa, when she kenned the Cause's fa',
And she sleeps where there's never nane shall waken,
Where the glen lies a' in wrack, wi' the houses toom and black,
And her father's ha's forsaken.

While there's heather on the hill shall my vengeance ne'er be still,
While a bush hides the glint o' a gun, lad;
Wi' the men o' Sergeant Mor shall I work to pay the score,
Till I wither on the wuddy in the sun, lad!

So ye'll tak the high road, and I'll tak the laigh road,
An' I'll be in Scotland before ye:
But me and my true love will never meet again,
By the bonnie, bonnie banks o' Loch Lomond.


Yuppies in the Fields

We signed up for Eatwell Farm's http://www.eatwell.com/ large weekly box of (relatively) locally grown (they are in Dixon) vegetables for $24.50 a week. They tell us such things as:

The chickens have spent their spring among the citrus, leaving their valuable droppings to fertilize the trees. Now they have moved on to their summer pasture, which is two acres of alfalfa that we planted last fall. I believe that the eggs are always richest when the chickens eat alfalfa. The egg production fell for a few days after we moved them. It is back up to normal now...

They send us recipes:

http://f1.grp.yahoofs.com/v1/IPYoSI0mPwzLxOf2rRzhpnFlpe2mEe3fpTsqVayMI1ahs3BaufzHTA-DahhRfcMh8hBeEf0lJPLc3_wtLe_YZUJb8KTUcBM/2008%20Newsletters/csanews050708.PDF

They encourage us to view the farm as more than just a black box from which a weekly box appears:

http://f1.grp.yahoofs.com/v1/IPYoSI0mPwzLxOf2rRzhpnFlpe2mEe3fpTsqVayMI1ahs3BaufzHTA-DahhRfcMh8hBeEf0lJPLc3_wtLe_YZUJb8KTUcBM/2008%20Newsletters/csanews050708.PDF

If I were a better sociologist, I would have something profound to say about how the highest form of gesellschaft turns out to be where one becomes rich enough to purchase a reasonable facsimile of gemeinschaft as a luxury out of one's ample disposable income--and then one begins to view the turnips in the box not with a "Jeebus! I'm paying this for turnips?! I loath turnips!" But rather with a "Hmmm... This is a challenge..."

Italian turnip soup, if you are curious.


links for 2008-05-13


Jonah Gelbach on McCain's "Economist" "Supporters"

Jonath makes the mistake of taking the McCain "economists" letter as an analytical statement, rather than as an expression of attitude written by spinmasters, and demands intellectual consistency:

Economists for Obama: McCain's Economist Supporters vs. Facts: Over at MarginalRevolution, Tyler Cowen has posted the text of an email... prominent, right-leaning economists [who] have endorsed John McCain's stated economic proposals... the usuals (e.g., Becker, Hassett, McCain chief economic adviser Doug Holtz-Eakin, Taylor, Harvey Rosen, Meltzer, etc.)... [NS] prominent economists who have earned their academic reputations.... I've previously discussed the enormous increase in deficits that would be caused by McCain's tax proposals, as scored by Len Burman and Greg Leiserson of the Tax Policy Center. So let me focus on the second paragraph [of the letter], which is uniformly contradicted by both facts and experience:

"His plan would control government spending by vetoing every bill with earmarks." Well, this one has already been repudiated by... John McCain's chief economic adviser, Doug Holtz-Eakin. I've already posted on this issue:

McCain has already had to change his "definition" of those nasty earmarks he'll eliminate (somehow, without a line-item veto). According to this story by the Politico's Ben Smith, Holtz-Eakin initially claimed that there were $100 billion in earmarks in the current budget, the idea presumably being that eliminating all of these earmarks would give McCain $100 billion to work with in paying for his tax cuts. After a former senior Democratic staffer, Scott Lilly, pointed out that many of these earmarks included stuff McCain supports, like money for Israel, Egypt and U.S. military construction, Holtz-Eakin stated that in fact the real amount of money associated with earmarks McCain would not fund (again, magically preventing them without a line-item veto) was only $16-18 billion.

"[I]mplementing a constitutionally valid line-item veto..." Clearly, this one is there to allow them to respond to criticisms, like the parenthetical reference in my earlier post, based on the fact that under current law, the President has no capacity to pick and choose which items to fund. President McCain will have to sign or veto actual statutes, not their components.... I am not a constitutional lawyer, but given my understanding of the Court's language in Justice Stevens's opinion for the Court, I find it very difficult to imagine that McCain and his lawyers (much less his economists) will be capable of "implementing a constitutionally valid line-item veto".

"[P]ausing non-military discretionary government spending programs for one year to stop their explosive growth..." Gee, I hardly know where to begin on this one. First off, a one-year pause would do nothing to stop "explosive growth". It would reduce the level of spending, to be sure, but then that "explosive growth" would go right on happening. This is a mathematical principle of which each of the economist-letter's signatories no doubt is aware.

That said, this post over at CBPP is worth a look [Update: I see that Mark Thoma posted much of the CBPP post, which I should have noted was written by Richard Kogan, back in March]. It shows the following:

Domestic discretionary spending fell from 18.4% of all non-interest federal spending in 2001 to (an estimated) 14.7% in 2008. By comparison, defense and security spending (in which the CBPP includes DHS and Veterans' spending) rose from 21.7% to 29.2%.

The real, i.e., inflation-adjusted, growth rate of domestic discretionary spending over this period was 1.3%. That's hardly an "explosive growth" path; by comparison, defense/security increased 9.1%, while SS/Medicare/Medicaid increased 3.8%.

As a share of GDP, domestic discretionary spending actually fell, from 3.1% to 2.8%. That means that this category of spending has been becoming less, not more, burdensome. Defense/security rose from 3.6% to 5.6% of GDP over this period, while SS/M/M rose from 7.7% to 8.4%.

I am frankly baffled as to what my colleagues on the right are talking about when they discuss "explosive growth" in "nonmilitary discretionary government spending". The real money on the spending side is in the military and entitlement categories....

[I]t is difficult for me to believe that people who promote John McCain's economic policies on the basis of the second paragraph of the letter above can simultaneously be aware of the facts and providing honest assessments. Perhaps I am wrong. I hope so.

I think that the disconnection of the letter from fiscal and economic reality is, from the point of view of the signatories, a feature and not a bug--because the McCain platform is so far out in the Gamma Quadrant, nobody will think that this is what the economists actually believe, and they will not have to spend any time defending it.


I Know That This Is Wrong...

But I cannot help but ask you all for your views on this:

The Corner on National Review Online: The Bush Legacy   [Jonah Goldberg]: About a month ago, I called Ramesh in a panic because I'd forgotten that I was slated to do a Close-Up Foundation interview on the Bush legacy and I hadn't thought too much about it. Fortunately, not only did Ramesh have some great thoughts, but I was wrong about the date — by a month (I'd entered it into my PDA wrong). Anyway, I'm doing the interview this Thursday and while I have my thoughts far better organized, I thought it'd be interesting to know what NRO readers think Bush's legacy will be. Please send thoughts — hopefully constructive — to JonahResearch@AOL.com

Post 'em in comments, and I will send them all bundled up to JonahResearch@AOL.com...


Grading Tim Geithner

Felix Salmon defends Tim Geithner at the New York Fed. I think Felix is right:

Has Tim Geithner Been Captured by Wall Street?: Gary Weiss has a long profile of Tim Geithner in the June issue of Portfolio, and... he gives a lot of space to some very harsh criticisms of the New York Fed chief... accuses Geither of having been captured by those he would regulate, and of working for Wall Street rather than Main Street, especially when he helped to orchestrate the acquisition of Bear Stearns by JP Morgan....

Weiss does a reasonably good job of laying out the first best defense against such accusations - that the risks of doing nothing were so enormous that Geithner was forced to act. Once you've accepted that, everything else is niggling: did the Fed use too much of its own balance sheet? Could Geithner have designed a different kind of bailout? The answers to those questions are unknowable, and in any case don't change the fact that Geithner averted something which could have been truly disastrous...

But more important is that:

the accusations themselves are... incoherent. In what way could Geithner have been "outmatched" by Alan Schwartz, when he forced Bear Stearns to be sold for a peppercorn, wiping out its executives' enormous equity holdings?... [I]t's simply false to say that Bear Stearns' competitors "stood to gain" from Bear going out of business: the collapse of one investment bank is bad news for all of the others, since it forces a 360-degree reevaluation of counterparty risk. Weiss makes great play of the fact that Geithner is heavily influenced by Goldman alumni such as Gerry Corrigan and John Thain... but the biggest winner in the Bear Stearns deal was Jamie Dimon. And a victorious JP Morgan is a much bigger competitive threat to Goldman Sachs and Merrill Lynch than Bear Stearns ever was.

Weiss is right that the New York Fed is a creature of Wall Street, but that's what it's meant to be. If... you're worried that Wall Street has too much influence over the Fed, then you should be looking... to Ben Bernanke - a man whose name, tellingly, appears only in passing in Weiss's piece.

As I have said before, I think the Fed's behavior was appropriate. JPMorganChase got a nice present for being well-capitalized enough to be willing to help the Fed deal with systemic risk. Those at Bear Stearns whose actions had created the systemic risk got appropriately fleeced:

Grasping Reality with Both Hands: The Semi-Daily Journal Economist Brad DeLong: Twenty First-Century Central Banking: The problem of dealing with moral hazard in twenty first-century central banking has taken an interesting twist. Twice in the past decade the Federal Reserve has intervened in cases in which specific institutions have gotten into serious trouble--specific institutions that the Federal Reserve, or at least the New York Federal Reserve Bank (lines of authority are somewhat unclear) has concluded are too big to be allowed to fail through standard processes. The two institutions are the hedge fund Long Term Capital Management--LTCM--in 1998, and the bank Bear-Stearns in 2008.

In 1998 LTCM had suffered major losses on a mark-to-current-market basis (although its long-term prospects in the event of global financial recovery from the crisis looked correspondingly good), and appeared both illiquid and--if forced to liquidate its positions at then-current values, especially if liquidation induced significant price pressure against it--insolvent. Alan Greenspan and Peter Fisher at the New York Fed gathered all of the Federal Reserve's major creditors in a room, told them that they had a problem, and told them that they should solve it: that systemic risk would be created by an LTCM bankruptcy and liquidation and that the Fed did not want to go there. The creditors agreed to cooperate and split both the liability and the upside (with the exception of Bear Stearns, that declined), and they made LTCM an offer. The only alternative bidder was said to be Warren Buffett, who claims to have not been focused on the situation because he was fishing in Alaska. With only one potential bidder, the equity of LTCM's principals and investors was confiscated--to the dismay of LTCM's principals and investors, some of whom believe that they would have been able to get a much better split of the upside had they been allowed to play their creditors off against each other.

In 2008 Bear Stearns had suffered major losses on a mark-to-current-market basis (although its long-term prospects in the event of global financial recovery from the crisis looked correspondingly good), and appeared both illiquid and--if forced to liquidate its positions at then-current values, especially if liquidation induced significant price pressure against it--insolvent. Ben Bernanke and Tim Geithner at the New York Fed declared that systemic risk would be created by a Bear Stearns bankruptcy and liquidation, that the Fed did not want to go there, and that the only deal they would fund and support would be a deal that sold Bear Stearns to J.P. MorganChase at $2 (later raised to $10) a share, and the Federal Reserve kicked into the deal a put on Bear Stearns assets that one might speculate had a full-information liquid-market value of perhaps $3 billion. Various speakers for principals and investors in Bear Stearns protested that this effective confiscation of their equity value was unfair and inappropriate, and that a better split of the upside or at least a payment of more than $2 a share was appropriate.

We now have two precedents. If the Federal Reserve judges that a major financial institution:

  • is too big to fail in that its failure will generate systemic risk
  • has followed portfolio strategies that have produced inappropriate and excessive leverage requires immediate action

then the Federal Reserve will intervene to structure and support a deal that leaves principals and investors in the offending systemic risk-creating institution with effectively zero equity. Counterparties will be rescued. Principals and investors will not--even if normal more lengthy legal and bargaining processes would give principals and investors a share of the equity value on the table.

This is not the arms-length equal-treatment impersonal-rule-of-law ideal to which a government should aspire. This does, however, seem to get the incentives about right.

Charlie Kindleberger once wrote, in Manias, Panics, and Crashes, that the key to avoiding both depression and moral hazard was for the lender-of-last-resort to always show up in a crisis but for its appearance to always be doubted until the very last moment. These two precedents suggest that the Federal Reserve is evolving a case-law-of-twenty-first-financial-crisis that is somewhat different: in a crisis the lender-of-last-resort will always show up, but investors and principals in individual institutions that need to be specially rescued will discover that the lender of last resort is not their friend.


When Hyperbolic Discounting Attacks!

Back in January, the question of whether to declare the last day of instruction here at U.C. Berkeley--May 12--part of reading period and cancel the class is a no-brainer. the students are good, enthusiastic, and well prepared. There are oceans of material to cover. The syllabus has just been hacked with a chainsaw--the half-week unit on contemporary Chinese monetary policy has just bitten the dust--and I don't wan;t to have to cut any more. And the question of whether to extend the semester and have another meeting on May 14 is also a no-brainer: it wouldn't be fair to grab normal course time for review, would it?

But today it is May 12, and this is the 44th time I have trudged into this particular course's classroom this semester. And my heart sinks at the thought that I have to do it again...

This is not to say that this has been a bad course: these are good kids, they were well-preoared, and they have learned a lot.They are still pestering me with questions about John Hicks's IS curve and John Taylor's monetary policy reaction function (which I have no covered at such length that I guessed they have to be on Friday's exam). But my marginal disutility of lecturing all of a sudden feels very high...


On a related issue, I have never been gladder that my real gradebook is in paper in my backpack then when I see this:

bSpace : My Workspace : Home


Three Names Shock Me...

Tyler Cowen tells me about economists who have endorsed John McCain's economic plan:

Marginal Revolution: Economists who have endorsed John McCain's economic plan: Gary Becker, James Buchanan, Robert Lucas, Robert Mundell, Vernon Smith, Michael Boskin, John Cogan, Steven Davis, Francis X. Diebold, Martin Eichenbaum, Martin Feldstein, Kevin Hassett, Douglas Holtz-Eakin, Glenn Hubbard, Anne Krueger, Deepak Lal, Burton Malkiel, Paul W. McCracken, Allan Meltzer, Tim Muris, June O'Neill, Michael E. Porter, Kenneth Rogoff, Richard Roll, Harvey Rosen, George Shultz, Beryl Sprinkel, John Taylor, and Arnold Zellner.

Three names shock me: Francis X. Diebold, Anne Krueger, and Kenneth Rogoff. I am going to have to revise my opinion of each of them down several large notches. Even if you do think that the Republican Party is better than the Democratic one, right now--in the middle of John McCain's gasoline tax idiocy--is not the time to sign on. Right now is the time to extract a price in terms of policy consistency and rationality for one's support. Krueger, Rogoff, and Diebold know that very well--and ought to have acted on it.

Tyler goes on to say:

The... statement reads:

We enthusiastically support John McCain's economic plan. It is a comprehensive, pro-growth, reform agenda. The reform focuses on the real economic problems Americans face today and will face in the future. And it builds on the core economic principles that have made America great.

His plan would control government spending by vetoing every bill with earmarks, implementing a constitutionally valid line-item veto, pausing non-military discretionary government spending programs for one year to stop their explosive growth and place accountability on federal government agencies.

His plan would keep taxes from rising, because higher tax rates are exactly the wrong policy to restore economic growth, especially at this time.

His plan would reduce tax rates by cutting the tax that corporations pay to 25 percent in line with other countries, by completely phasing out the alternative minimum tax, by increasing the exemption for dependents, by permitting the first-year expensing of new equipment and technology, and by making permanent a reformed tax credit for R&D.

His plan would also create a new and much simpler tax system and give Americans a free choice of whether to pay taxes under that simple system or the current complex and burdensome income tax.

His plan would open new markets for American goods and services and thereby create additional jobs for Americans by supporting good free trade agreements such as the one with Colombia and working with leaders around the world to avoid isolationism and protectionism. His plan would also reform education, retraining, and other assistance programs so they better help those displaced by trade and other changes in the economy.

His plan addresses problems in the financial markets and housing markets by calling for increased transparency and accountabi! lity, by targeted assistance to deserving homeowners to refinance thei r mortgages, and by opposing so-called reform plans which would raise the costs of home-ownership in the future.

The above actions, as well as plans to address entitlement programs--especially Social Security, Medicare and other government health care programs--and his regulatory reforms--especially in the area of health care--constitute a broad and powerful economic agenda. Because of John McCain's experience working with the American people in all walks of life, with members of Congress on both sides of the aisle, and with leaders around the world, we are optimistic that these plans will become a reality and will create jobs and restore confidence and strong economic growth."


James Poulos on the Invisible College

A good college--visible or invisible--is composed of people who (a) know stuff, and (b) think well. The best colleges are made up of people who know different stuff, who think well in different ways, and who--most important--understand that when they listen to people who know different stuff than they do and who think well in different ways than they do, they learn.

James Poulos:

James Poulos » In Defense of Blogger Collegiality: [W]hat has drawn this motley crew of bloggers together in such a way? Surely not a freakish felicity with constitutional law, or even a common writing style. In fact, all of the bloggers mentioned in this post share what I at least think are fairly wild mutual divergences in style and tone, as well as in content and slant. If anything, there’s a vague libertarian consensus among those identified on the right. But Ramesh is a different kind of conservative than Ross, I am a different kind of conservative than both of them, and Reihan has just identified himself succinctly as a

Rawlsekian neoconservative singulitarian meliorist humanist neoliberal infosocialist Viridian postliberalincrementalist.

Add other blog greats with whom many of us are familiar, like Andrew and Daniel, and the valences of intellectual diversity are only intensified. The main common attribute, it seems to me, is idiosyncrasy, which isn’t necessarily correlated with collegiality in any way. What looks like a nonthreatening difference of opinion to one idiosyncratic blogger might strike another as a dangerously or dumbly uncategorizable source of opposition.

No, the big conspiracy here I think is one among people who like a good conversation, and have discovered a consistent set of conversation partners whose content and style best compare and contrast with their own. Professional bloggers are paid conversationalists — or should be, at least. And the good social art of collegiality well understood is an essential part of good conversation — especially good public conversation. People sometimes fear that the blogosphere will close itself off to new talent, but, based on the dynamic I’ve just outlined, that strikes me as impossible. The ‘gold rush’ is probably over, but blogging will probably take on the generational tempo of the music world, with big acts retiring for a while to pursue real lives and then making comeback tours after a suitable hiatus — and with lots and lots of new acts competing for attention. Sometimes attention is won by mere novelty, but more often it’s won by talent. That may be somewhat boring when the talent involved is taking ‘Baba O’Reily’ and turning it into a Nickelback-style gruntfest, but may be less so when the talent involves daily attention to political, economic and cultural life.


Why Oh Why Can't We Have a Better Press Corps? (Chris Wallace of Fox Department)

Outsourced to Ezra Klein:

EzraKlein Archive | The American Prospect: Martin asks, "This weekend, Chris Wallace on Fox interviewed Sens. Schumer and Durbin. He noted that Sen. Obama wants to raise the capital gains tax, but that 50% of the people who get taxed make $50,000 or less, therefore making this a middle class tax hike. Is this true? Are they playing with the numbers?"

I can't tell you exactly which number set Chris Wallace is working off of, so I'm not really in a position to say whether exactly 50 percent of those getting taxed make under 50 percent. But there's definitely some trickery going on here. Lots of ordinary Americans have money in the stock market through pension funds and the like. But they have very, very little of it. A share or two of stock, a bit of property. In 2005, the wealthiest one percent of Americans received almost 70 percent of long-term capital gains, and paid 72 percent of the capital gains taxes. What Wallace is trying to do is confuse the issues of eligibility and exposure. Lots of Americans might end up paying a minimal amount of the capital gains tax, but the real exposure is among the wealthy....

That group there in the middle? The so-called average taxpayers Wallace is so concerned about? They make, on average, $176 from capital gains in a given year. They will pay next to nothing. The Top 1 percent makes $232,000! The capital gains tax, in other words, is a tax on people with capital gains. Those people are overwhelmingly the rich, and the rich are overwhelmingly the ones who pay the tax. The fact that lots of Americans have nominal holdings is effectively meaningless here. Wallace is just using them to mislead as to the tax's true target.


Charlie Stross Takes His Sense of Indignation for Its Sunday Walk

The large bandwidth downside of advertiser-supported media:

Charlie's Diary: Why your internet experience is slow: Here is a random-ish URL from Salon.com, a not too unusual online magazine: http://www.salon.com/tech/col/smith/2008/05/09/askthepilot276/. This HTML page contains the first chunk of a piece of journalism by Patrick Smith... 950 words of text... 6.5Kb.... (Patrick, if you're reading this, I am not picking on you; I just decided to do some digging when I got annoyed by how long my browser was taking to load your words.)

In actual fact, the web page my browser was downloading turned out to be 68.4Kb in size. The bulk of the extra content consists of HTML tags and links.... But that's just the text, and as we all know, no web page is complete without an animated GIF image. So how big is this article, really?... I switched off my browser anti-advertising plugins (AbBlock and NoScript), hit "reload", and then saved the web page. Inline in the page are: 4 JPEG images, 4 Shockwave FLASH animations, 4 PNG images, 8 GIF images (of which no less than five are single-pixel web bugs), 4 HTML sub-documents, 6 CSS (style sheet) files, 22 separate Javascript files... in order to read 950 words by Patrick Smith my cable modem had to pull in 948Kb, of which 942Kb was in no way related to the stuff I wanted to actually read....

This is a novel in HTML.... "Accelerando" runs to 145,000 words; it fits in about 400 pages.... It is 949Kb in size, or about 10Kb larger than a Salon.com feature containing 950-odd words....

If content is king, why is there so little of it on the web? And why are content providers like Salon always whining about their huge bandwidth costs, given that 99% of what they ship — and that is an exact measurement, not hyperbole — is spam?

(Note: these are rhetorical questions. Despite the burning certainty that someone on the internet is wrong, you don't need to try and explain how the advertising industry works to me. Really and truly. I'm just taking my sense of indignation for a Sunday walk.)


Newsweek Death Spiral Watch

That four-year countdown until the death of the Washington Post unless it radically reforms itself? That applies to Newsweek as well.

Outsourced to Matthew Yglesias:

Matthew Yglesias: Perception and Reality: Michael Isikoff reports that the guy John McCain picked to run the GOP convention has done some lobbying for the military junta that rules Burma. Then there's this dissonant element of the analysis: "But some allies worry that Goodyear's selection could fuel perceptions that McCain—who has portrayed himself as a crusader against special interests—is surrounded by lobbyists." But it's not just a perception that McCain is surrounded by lobbyists, he's actually surrounded by lobbyists. This is a quantifiable reality of McCain's campaign -- it's chock full 'o lobbyists.


Philippe Sands Talks to Bill Moyers About the Torture Team--David Addington, John Yoo, and Company

This is even scarier than I had imagined it would be:

Bill Moyers Journal . Transcripts | PBS: After 9/11, writes Philippe Sands, our highest government officials sanctioned a 'culture of cruelty' that put our troops, our Constitution, and our own standing in the world at risk. This week, members of the House Judiciary Committee began hearings trying to find out how the President came to approve "enhanced interrogation methods" — that's the official code for the use of cruelty in the pursuit of confession. The administration has been fighting to stop a public accounting of the internal decisions behind that policy. The officials who took part in those discussions fear they could one day face prosecution if their actions turn out to have been illegal. Those key officials talked to Philippe Sands for his book, and this week he was asked to testify at those hearings in Congress.

REP. JERROLD NADLER:This hearing of the subcommittee on the Constitution, Civil Rights and Civil Liberties will come to order....

REP. MIKE PENCE: Some, of course, have suggested that relationship-building interrogation techniques are preferable and even more reliable in the long-run than stress methods. They raise the question, though, what about the hard cases? And I can tell by your grin you acknowledge the somewhat absurd thought that you could move people who have masterminded the death of more than 3000 Americans by Oprah Winfrey methods.

PHILIPPE SANDS: I did smile because, frankly, the image that weeks and weeks of rapport-building with KSM is somehow going to produce results is counterintuitive. But the reality is we don't know. And I spoke in my investigation to a lot of interrogators — military, FBI — who basically said, "coercion doesn't work. You get information that they want to give you that they think is going to stop the pain from happening."

BILL MOYERS: Philippe Sands is known in top legal circles for his work on torture cases spawned by such infamous dictators as Chile's Pinochet and Liberia's Charles Taylor, and by genocide around the world. He's a counselor to the Queen of England, and director of the Center on International Courts and Tribunals in London, where he closely studied the British fight against terrorists of the IRA.

PHILIPPE SANDS: The thinking in the British military and the thinking across the board politically — it's really not a left-right issue, it's a broad consensus in the United Kingdom — is that coercion doesn't work. The view is taken in the United Kingdom that it extended the conflict with the IRA probably by between 15 and 20 years....

BILL MOYERS: Let me go right to a story that happened after your testimony. It's the story of the suicide bomber in Baghdad who drove his bombing vehicle into an Iraqi police station. It turns out that he had been held at Guantanamo for over three years. Pentagon records say that he had told people he wanted to kill as many Americans as he possibly can . And a lot of people — you go to the blogs this morning — a lot of people are thinking, why give someone like that the benefit of the doubt?

PHILIPPE SANDS: Well, firstly, we give people the benefit of the doubt because that's the nature of our system. We are a country, United Kingdom, United States, who believe fundamentally in democratic values. We don't assume guilt. We assume innocence. There are people at Guantanamo who pose a threat, undoubtedly. But there are also a great many more people who don't pose a threat. And in those circumstances, I think using this as an example to somehow come down on the merits of the Guantanamo system is not a sensible thing to do. I think Guantanamo has been a problem as Abu Ghraib has been a problem, because it has undermined America's claim to moral authority in facing up to the very real challenge of terrorism. And, locking them up and throwing away the key is only going to exacerbate the problem. And it's a problem that we faced in Britain, for example, in relationship to the IRA back in the 1970s and the 1980s. That's not the way to go.

BILL MOYERS: You told the committee this week that the British experience in fighting the terrorists of the IRA actually extended the conflict 15 to 20 years. What's the evidence for that?

PHILIPPE SANDS: The story's a simple one. Back in '71, '72, the British moved as the United States has done now, to aggressive techniques of interrogation. They used pretty much the same techniques: hooding, standing, humiliation, degradation. Five techniques, they were called.... But there was a bigger problem, even beyond their illegality, in my view. And that was this: That what the use of those techniques did was to really enrage part of the Catholic community, who felt that IRA detainees alleged to be terrorists, were being abused. And it turned people who were perhaps unhappy with the situation into being deeply and violently unhappy with the situation. And if you speak to British politicians who were involved in that period, and the British military, what they'll tell you is that there is a feeling that the use of those types of techniques extended the conflict.

BILL MOYERS: Did you learn that people will say anything to stop the torture?

PHILIPPE SANDS: Well, actually, I think it's self-evident that that is what happened. If you speak to interrogators, they will tell you that aggressive techniques of interrogation don't work. They don't produce meaningful information. And just the other day, I was listening to a very interesting tape of John McCain. And he explained how he, in the end, had signed a confession, owning up to crimes against children and women in North Vietnam, basically because he had reached a point, he thought he wouldn't be broken, where he had reached a point where he simply couldn't bear it any more, and he wanted the pain to stop. And the only thing he could do was to tell them what they wanted to know. And that's, that's what interrogators will tell you. Abuse produces information that is the information the detainee thinks you want to know, and nothing more than that. It's not reliable.

BILL MOYERS: Going back to the hearings, one member of the committee, Representative Trent Franks of Arizona, a Republican, said--and I quote-- "The results of a total of three minutes of severe interrogations of three of the worst terrorists were of immeasurable benefit to the American people. A full 25 percent of the human intelligence we've received on Al Qaeda came from just three minutes worth of rarely used interrogation tactics."

PHILIPPE SANDS: Well, I remember that very well. And I appreciated very much everything that Representative Franks had to say. But I've described that to my friends in London as a sort of Monty Python moment in the hearing. Because he alleged that there had been three individuals water boarded. They had been water boarded for no more than one minute each. And they had spilled the beans. And I was sitting there watching him and thinking, well, that's new information. I've never heard that before. Where on earth does that come from? Counterintuitively, I can't imagine how a waterboarding of one minute is suddenly going to produce useful information. We don't even know if it is useful. But also, imagine the scene. You've got guys there with stopwatches. We're gonna waterboard him for one minute, and then we will stop. And in that one minute, everything will come up. I don't know where he got all that from. I thought he sounded as though he made up on the stop. We don't have any objective evidence that any of these interrogation techniques have produced any useful information. KSM, you've referred to, has owned up to virtually everything under the sun that has happened that is bad for the United States in the last five years. And I find that counterintuitive to common sense. I would say I don't have actual information on KSM. I do have actual information on detainee 063. I spent time, as I describe in the book, with the head of Mohammed al-Qahtani's Exploitation Team. And the bottom line of it was, contrary to what the administration said, they got nothing out of him....

PHILIPPE SANDS: Look, Bill, I've spent 20 years during courtroom work as a litigating lawyer. I like to see evidence on things. I like arguments to be based on evidence. David Rivkin is unable to provide any evidence. I have honed in on the interrogation of one man, detainee 063. The administration has publicly declared they got a mass of information out of him that related to all sorts of extraordinarily important things to protect the Americans. I then spoke to the people who were involved in his actual interrogation and the head of his Exploitation Team. That's not what they told me. If the evidence I had been given had been different, then I would reach possibly a different conclusion. Not as to the legality or the utility of torture, but what do we do in the face of evidence that it works? But there isn't evidence that it works. The British experience is that it doesn't work. The Spanish experience is that it doesn't work. The Egyptian experience is that it doesn't work, in the sense of producing meaningful information that is going to protect a country. Sure, it produces information. But as John McCain said in his interview in 1997, it produces the wrong information. Because someone who's subject to that sort of pain and suffering is going to do anything they can to stop it from happening. And they will tell the person who is abusing them what the person wants to hear, and nothing more and nothing less.

BILL MOYERS: Philippe, you spent a long time and made a lot of trips and talked to a lot of people to do this book. What was driving you? Why did you-- you've got enough to do. Why did you want to do this particular book?

PHILIPPE SANDS: I did it totally off my own back. I was fascinated by a simple question. How could lawyers at the upper echelons of the administration, trained at Harvard Law School and other distinguished institutions, have approved torture? In what circumstances could that happen? I didn't understand how it happened. And it combined with a real sense of injustice that the truth of the story had not come out. Because what the administration said, and I was really catalyzed by a press conference I read in June, 2004, as the administration struggled to contain the disaster of Abu Ghraib. The administration spun a story. You're a press man. You know how governments work. I know how governments work. And the story was this: The desire for aggressive interrogation came from the bottom up. People on the front line, people at Guantanamo, elsewhere, told us they needed to move to new techniques. Who are we at the top, to say no? And in that context, we approved certain techniques.... But it struck me as counterintuitive, because I know the American military. I've got a lot of friends in the American military. And they are deeply committed to the rules of the Geneva Conventions and other international rules, and don't go about the abandonment of President Lincoln's disposition. So what I decided to do was I took the famous memorandum by Donald Rumsfeld, signed in December 2002, where he writes on the bottom—why standing limited for four hours a day, I stand for eight hours a day--and I tracked back the entire decision making process, identified the 10 or 12 people I needed to meet. And one by one, tracked them down, went and found them, spoke to them and I'm truly grateful to them. Once I'd had my first conversation, which I think was with Diane Beaver who was the lawyer down at Guantanamo, I was then able to get right up to the very top. And one by one, I followed from Diane Beaver, the lawyer at Guantanamo, her boss, Mike Dunleavy (who's the head of interrogations, through General Hill, who is the head of Southern Command in Miami, up through General Myers, the Joint Chiefs of Staff, up to Doug Feith, the head of policy at the Pentagon, and then right up to the main man in my book, Jim Haynes. Jim Haynes was Mr. Rumsfeld's lawyer. And Jim Haynes wrote the very famous, the infamous, iconic, why is standing limited to four hours memo. And he went to Harvard Law School. And I just couldn't understand how someone so well trained could authorize abusive interrogation like that.

BILL MOYERS: And did he talk to you?

PHILIPPE SANDS: He did talk to me. I had two meetings with him. The fact of the meeting was on the record, the content of those meetings were off the record. But as I say in the book, concluding chapter includes taking to account everything he said to me.... [T]ake Diane Beaver. I had written a previous book where I treated her legal advice. She had been the person down at the bottom who'd signed off on aggressive interrogation. I didn't like her legal advice at all. I thought it was really bad advice and wrong advice. And I was rather uncomplimentary, perhaps even rude about it, in my last book. And then I met her. And she explained to me the circumstances in which she found herself. I don't think it justifies what happened. But she described to me the pressure she felt herself under, the anniversary of 9/11 coming up. This man, detainee 063, al-Qahtani, present and caught. Tremendous pressure coming from the upper echelons of the administration. She described to me a visit that the administration has never talked about in which the three most important lawyers in the administration, Mr. Gonzales, who's the president's lawyer, Mr. Addington, who is the vice president's lawyer, and Mr. Haynes, who is Secretary Rumsfeld's lawyer-- came down to Guantanamo at the end of September, talked to them about interrogations and other issues, watched an interrogation, and left with the message, do whatever needs to be done. Now, put yourself in Diane Beaver's situation. You're getting a signal from the main man at the top of the administration: do whatever needs to be done. That takes the lid off and opens the door.

BILL MOYERS: Was there a single architect of the decision, the person who said, "Take the gloves off?"

PHILIPPE SANDS:There was one lawyer in particular who everyone kept referring to as being, if you like, the brains. I'm slow to use that word for such an awful series of events. But the driving force behind it, and that was David Addington.... But he wasn't speaking off his own back. I mean, he was speaking for the vice president. And I think that the finger of responsibility in the end, will most likely go to the vice president. But Mr. Rumsfeld was deeply involved. And, of course, the president has indicated just within the past month, that he signed off on everything.

BILL MOYERS: You subtitle the book Rumsfeld's Memo and the Betrayal of American Values. Tell me briefly about that memo and why it betrayed American values.

PHILIPPE SANDS: The memo appears to be the very first time that the upper echelons of the military or the administration have abandoned President Lincoln's famous disposition of 1863: the U.S. military doesn't do cruelty.... It's called the U.S. Army Field Manual, and it's the bible for the military. And the military, of course, has fallen into error, and have been previous examples of abuse.... But apparently, what hasn't happened before is the abandonment of the rules against cruelty. And the Geneva Conventions were set aside, as Doug Feith, told me, precisely in order to clear the slate and allow aggressive interrogation... at the insistence of Doug Feith and a small group, including some lawyers. And the memo by Donald Rumsfeld then came in December, 2002, after they had identified Muhammed al-Qahtani. But it was permitted to occupy the space that had been created by clearing away the brush work of the Geneva Conventions. And by removing Geneva, that memo became possible. Why does it abandon American values? It abandons American values because this military in this country has a very fine tradition, as we've been discussing, of not doing cruelty. It's a proud tradition, and it's a tradition born on issues of principle, but also pragmatism. No country is more exposed internationally than the United States. I've listened, for example, to Justice Antonin Scalia saying, if the president wants to authorize torture, there's nothing in our constitution which stops it. Now, pause for a moment. That is such a foolish thing to say. If the United States president can do that, then why can't the Iranian president do that, or the British prime minister do that, or the Egyptian president do that? You open the door in that way, to all sorts of abuses, and you expose the American military to real dangers, which is why the backlash began with the U.S. Military.... It slipped into a culture of cruelty. There was a, it was put very pithily for me by a clinical psychologist, Mike Gellers, who is with the Naval Criminal Investigation Service, spending time down at Guantanamo, who described to me how once you open the door to a little bit of cruelty, people will believe that more cruelty is a good thing. And once the dogs are unleashed, it's impossible to put them back on. And that's the basis for the belief amongst a lot of people in the military that the interrogation techniques basically slipped from Guantanamo to Iraq, and to Abu Ghraib. And that's why, that's why the administration has to resist the argument and the claim that this came from the top.... It started with a few bad eggs. The administration has talked about a few bad eggs. I don't think the bad eggs are at the bottom. I think the bad eggs are at the top. And what they did was open a door which allowed the migration of abuse, of cruelty and torture to other parts of the world in ways that I think the United States will be struggling to contain for many years to come.

BILL MOYERS: You said that the backlash came from the military....

PHILIPPE SANDS: You've got different camps who are struggling down at Guantanamo. And I think it would be wrong in any way to give the sense that there was unanimity to move towards abuse or that there was even strong support towards moving towards abuse. There was a strong body of belief down at Guantanamo amongst the military community, amongst the military lawyers, with the FBI, with the Naval Criminal Investigation Service, that this is a bad thing. Abuse doesn't work, abuse undermines authority, abuse undermines morale. We are going to stop it. Initially, they weren't successful. But once the abuse began, a backlash followed. And the folks down at Guantanamo identified a man in Washington who was the general counsel of the Navy, a man by the name of Alberto Mora, who truly is a heroic individual, in my view, who intervened very courageously, no personal advantage, directly with Jim Haynes, and said, "This must stop. If it doesn't stop, I'm going to reduce this into writing, and I'm going to cause a big fuss."...

BILL MOYERS:The legal affairs correspondent of The National Journal, a very respected fellow named Stuart Taylor, says that we should focus on amending the law to prevent future abuse of torture, but not hold those responsible for past interrogations of questionable legality. What do you think about that?...

PHILIPPE SANDS: I think the crucial issue is you've got to ascertain the facts. I was asked by the committee what should happen. My answer to that question was, "Let's sort out the facts. Once we've sorted out the facts, then it will be for others to decide what to do." I'm satisfied here a crime was committed.... The Geneva Conventions were plainly violated in relation to this man. And in our system laws, if a man violates the law and commits a crime, he is punishable.

BILL MOYERS:So who violated the law?

PHILIPPE SANDS: I think it goes to the top.... I'm not on a witch hunt. I'm not saying that there should be a campaign of investigation and prosecution and sentencing, and conviction, and so on and so forth. What I'm saying is let's start by sorting out the facts. Once the facts have been sorted out, let's see exactly what they say, and it will be for others to decide what needs to be done. But until that's done, you can't close on the past and you can't move forward.... The lawyers were deeply involved in the decision making process. The lawyers that I've identified, from John Yoo at Department of Justice, preparing a legal memorandum which abandons American and international definitions of torture, and reintroduces a new definition that has never been passed by any legislature, that is totally unacceptable. What was he doing there? Was he really giving legal advice? No he wasn't. He was rubber stamping a policy decision. This is not careful, independent legal advice. What was Jim Haynes doing when he recommended to Donald Rumsfeld the authorization for the approval of 15 techniques of interrogation? He was saying to the Secretary of Defense, I'm your lawyer. I'm telling you this is fine. You can do it. If he hadn't done that, Mr. Rumsfeld would not have signed the piece of paper that Jim Haynes wrote. Jim Haynes is directly involved in the decision making process. And the lawyers, as such, play an absolutely key role. Now, at the end of the day, they're not the most important people. The most important people are the people whose signatures are actually appended. They are the politicians who actually decided the issue. But in this case, without the lawyers, they would never have had a piece of paper to sign.

BILL MOYERS: Do you think that people like David Addington and John Yoo and Jim Haynes, and the other lawyers you've mentioned who advised and were on the torture team, should ultimately be held responsible in court for what they did in government at this period of time?

PHILIPPE SANDS: If they were complicit in the commission of a crime, then they should be investigated. And if the facts show that there is a sufficient basis for proceeding to a prosecution, then they should be prosecuted. Lawyers are gatekeepers to legality and constitutionality. If the lawyers become complicit in a common plan to get around the law, to allow abuse, then yes, they should be liable.... Soldiers on the front lines who are doing their best in difficult circumstances, to protect the United States, should not be blamed for what was decided at the top.... If people like Doug Feith and Jim Haynes had said to me, "Look, Philippe. September the 11th came. The anniversary was coming. We were getting information that there were going to be more attacks. We had people that we were told had information that we need to do something about. And we therefore felt, in those circumstances, it was right to use all means appropriate and necessarily to get the information. But, with the benefit of hindsight, we realize we fell into error, we made a mistake. We accept responsibility for that. We will learn from those mistakes. We'll make damn sure it doesn't happen again." I didn't get that at all. There was not a hint of recognition that anything had gone wrong, nor a hint of recognition of individual responsibility. When you read these chapters, when you read my account with Doug Feith and with others, you will see the sort of weaseling out of individual responsibility, the total and abject failure to accept involvement. Read Mr. Feith's book. on how to fight the so-called war on terror. And it's as though the man had no involvement in the decisions relating to interrogation of detainees. And yet, as I describe in the book, the man was deeply involved in the decision making from step one. So it's about individual responsibility. And there's been an abject failure on that account.

BILL MOYERS: Do you think torture's still going on?

PHILIPPE SANDS:I don't think torture is still going on at Guantanamo.... I think there was probably far more systemic torture in Afghanistan, at Bagram and in Kandahar, but not in the military. And I think the military has now stopped. But it's important not to forget that although the military now, following in particular, the intervention of the United States Supreme Court in 2006, very important judgment in the case of Hamdan v. Rumsfeld, which said, Common Article Three of the Geneva Conventions can be invoked by all detainees at Guantanamo. So on the military side, it has stopped. But there remains the other side, the dark side, as Vice President Dick Cheney called it, the CIA. And just in the past few weeks, the President of the United States has vetoed legislation which would... prohibit the CIA from using the very techniques of interrogation that are the subject of this book....

BILL MOYERS: I read comments just this week by a noted Arab scholar, who said that if you walk the streets of Cairo today, stop at the book stalls, stop at the book stores, you see, looking out at you everywhere, photographs of Abu Ghraib and Guantanamo. That the-- this torture, these enhanced interrogate-- interrogation techniques — this cruelty-- has seized the imagination of the Arab world. And that long after all of us have gone, including the torture team, the next generation of Arabs will living with those images. What's your own sense of that?

PHILIPPE SANDS: Well, that, I'm very sad to say, is my observation. I do travel a lot. I travel, you know, in South America, I travel in Asia, I travel in the Arab world. I do a lot of work for governments around the world. And it's sad but true. The image of the United States today is that it's a country that has given us Guantanamo and Abu Ghraib. Now, that is not the America that I know. I've spent a lot of time here, you know. I'm married to an American. My kids were born in the United States. I know what the true America is. And for me, this is a distressing story, because it has allowed those who want to undermine the United States a very easy target for doing it. It's even worse than that, Bill. I mean, I've been in situations-- in a globalized world with the internet, the legal advices that have been written by people like John Yoo at the Department of Justice, and the memos written by Jim Haynes, that have been put in front of the desk of Donald Rumsfeld, have gone all over the world. They've been studied all over the world. Other governments are able to rely upon them, and to say equally, look, this is what the United States does. If the U.S. does it, we can do it. It's undermined the United States' ability to tackle corruption, abuse, human rights violations in other countries, in a massive way. And it will take 15 or 20 years to repair the damage. And that's why, irrespective of the complexion of whichever next president happens to hold that high office-- and I think irrespective of whether it's Mr. McCain or Mr. Obama, or anyone else, there will be a recognition of a need to move on. And moving on means recognizing that errors were made.

BILL MOYERS: So the next president has to wrestle with this, and so do we?

PHILIPPE SANDS: I think we're all going to be wrestling with this. And I think we have a responsibility to wrestle with it in a constructive way, precisely because I think we do face real global challenges. And the threat of terror is real. And the importance of putting the spotlight on the past is to make us learn for the future and to make sure it doesn't happen again.... You need to take the trouble to go and spend many, many hours with people, talk to them, get to know them, understand what motivated them, understand that these are not bad people. These are not people who wanted to do bad things. These are people who found themselves in a very difficult situation, under intense pressure from the top. I think once you've spoken to people, you begin to get a clearer picture. And I hope I have accurately conveyed the conversations in a fair and balanced way. There are people I liked, there are people I didn't like. There are people whose views I shared. There are people whose views I didn't share. But I thought it was terribly important to lay out in the book the range of views that were expressed, and often not even to comment on them. But to let people's views inform the reader, and the reader can then form a view as to whether they agree or disagree. But I have put the other side of the argument, against my own argument. And there will be many, I'm sure, who will disagree with me. And that's fine. Because that's what our societies are about, debating these important issues. I know what I think, though. What happened was wrong, and it needs to be sorted out.

BILL MOYERS: And it's only the beginning. There will be more hearings in June before the same committee, with David Addington saying he will be there, and many of the others: John Yoo and Haynes, and others, saying they will come voluntary and testify.

PHILIPPE SANDS: Yes.... The next hearing is slated in for the 26th of June. I think John Yoo is going to appear at that hearing. He has agreed, if I understand it, to come voluntarily...


Phillip Carter on the "Stabbed in the Back" Narrative

He tries to lay to rest the ghost of Vietnam, which is its turn the ghost of the western front of World War I:

Vietnam Ghosts - Intel Dump -: Ah yes, the "stabbed in the back narrative." This narrative is popular among American military officers of a certain age, who believe if only they'd had gutsy political leadership, support from the homefront, and a willingness to steamroll North Vietnam with overwhelming force, we might have won the war.

It's a good story, but it's wrong. No amount of America firepower could have crushed the North Vietnamese people's will. It's true that we made many missteps in waging the Vietnam War, and that we might have achieved a better outcome in the short term had we backed better South Vietnamese leaders, implemented smarter counterinsurgency strategies sooner, and pursued Vietnamization earlier. But the ultimate outcome was ordained long before 1973, and probably long before American combat troops arrived in 1965. Most of the histories I've read suggest the die was cast sometime around when the French surrender at Dien Bien Phu in 1954. We didn't lose the Vietnam War because of any "stab in the back." We lost because we failed to see the strategic environment correctly, and we chose a war of a time, place and manner that we could not win.

This narrative came to mean a great deal to the cohort of American military officers who shepherded the services through the post-Vietnam years. They vowed to never again fight a war like Vietnam. These generals embraced the Weinberger-Powell doctrine prescribing when, how and why they would fight. They rejected counterinsurgency efforts and small wars, choosing instead conventional wars with defined objectives and familiar features. And they rebuilt the Army with capabilities to fight these wars, marginalizing those who thought about small wars and pushing them into the special forces, civil affairs, military police and intelligence communities. Even during the 1990s, when the Army deployed for peacekeeping operations around the world, these missions remained peripheral.

On the very next page, Sanchez criticizes the decision to send "unprepared and improperly trained soldiers" into the "guerilla warfighting conditions" of Vietnam. He appears to miss the connection, however, between his misunderstanding of the Vietnam war and the Army's lack of preparedness for Iraq, which flowed from that deeply flawed view.


Fake Steve Jobs on the Red Queens' Race that Is a Competitive, Contestable Market--and Why Dell Will Not Bounce Back

You know, I have forgotten whom Fake Steve Jobs really is:

The Secret Diary of Steve Jobs: Why Dell will not bounce back: love Charles Cooper of CNET... but I have to take issue with his latest effort (see here) where he tries to argue that while Dell looks like crap today, in fact Dell could bounce back just the way Apple did....

What people overlook is that the advantages that allowed Dell to prosper for about a decade were all fleeting advantages. Dell was for a while an innovative company, but its innovations did not involve product design. They involved manufacturing and distribution efficiencies. On the distribution side, Dell sidestepped the cumbersome... distribution model... wholesalers like Ingram Micro and Tech Data who in turn sold to retailers who in turn sold to end customers -- Michael Dell early on recognized that this was stupid and simply decided not to play ball.... The other PC makers knew they were caught in an abusive relationship with their channel but it took them a decade or so to unwind the old relationships and sell direct.... Game-changer here was the Internet which made it easy for anyone to set up their own Web store and build direct relationships with customers. Dell's advantage got erased.

On the manufacturing side, Dell figured out faster than the others in its space how to squeeze component suppliers... brought in loads of former Wal-Mart people... you, Mr. Parts Supplier, end up paying rent to Dell for the privilege of carrying its inventory on your books. Nice, right? Trouble with this "innovation" is that the advantages it creates are fleeting. What wiped this one out was a little place called China.... The rise of China means everyone can make PCs pretty much as cheaply as Dell does. And it's not just cheap manufacturing anymore. The real genius and power of China lies in its armies of low-cost and brilliant engineers. Seen a Lenovo box lately? Heck of a lot nicer than anything Dell is pooping out from its factory in Round Rock.

Bottom line is this: the only innovations worth making are the ones involving product ideas and product design.... To sustain an edge in any market you must make better products than your competitors, consistently, over and over and over again. Just making the same products as everyone else but taking a little friction out of the system can give you an advantage, but only a temporary one.

The other reason Dell won't rebound is that the company is yoked to Microsoft. Vista has hurt them tremendously. Don't doubt it. All of the PC makers know this and they are furious about it. But what can they do? They put their future in the hands of the Beastmaster. They figured they could deal with the Borg's evil nature; they didn't anticipate having to deal with the Borg's incompetence.... [I]nstead of putting our future in the hands of the MicroTards we undertook the massive effort of creating a next-generation operating system of our own. A lot of people, including some very smart ones, said this was crazy. Especially for a company with 2% market share. They said we were suicidal, ridiculous, old-fashioned, hubristic, doomed. The effort cost us huge amounts of time and money and was far from a sure bet. But my feeling is if you don't dare bet on yourself and your own people, you shouldn't be in business. So we made the bet. And now it is paying off in spades -- on Macs and iPhones and other devices which we have not yet announced but will restore a sense of childlike wonder to your lives, trust me....

Now as for Dell, well, you know what their big problem is? Dell doesn't have me. Or anyone like me. Mostly because, let's face it, there isn't anyone else like me. I'm one of a kind. Sui generis, as the French say. What Dell has is Michael Dell. Don't get me wrong. He's a nice guy. And a smart guy. But he's not a visionary. He's not an artist. The stuff he's good at -- squeezing suppliers, screwing distributors -- was very cool ten or fifteen years ago. Today? No big deal.... The truth on Dell? Dell is Gateway. Dell is Kaypro. Dell is Osborne Computer. It's DEC and DG and Apollo. It's a flower that bloomed and now must die. It's roadkill. It's mulch. Nothing wrong with that. In fact, it's a good thing.


The Bush Administration: Worse than You Can Imagine Even Though You Know It Is Worse than You Can Imagine

Via Sadly, No! Stew Magnuson reports on psychopaths who "have the ear" of Undersecretary Jay Cohen:

Security Beat: Now a fixture at Department of Homeland Security science and technology conferences, SIGMA is a loosely affiliated group of science fiction writers who are offering pro bono advice to anyone in government who want their thoughts on how to protect the nation. The group has the ear of Department of Homeland Security Undersecretary Jay Cohen, head of the science and technology directorate, who has said he likes their unconventional thinking.... Among the group’s approximately 24 members is Larry Niven, the bestselling and award-winning author of such books as “Ringworld” and “Lucifer’s Hammer.”...

Niven said a good way to help hospitals stem financial losses is to spread rumors in Spanish within the Latino community that emergency rooms are killing patients in order to harvest their organs for transplants.

“The problem [of hospitals going broke] is hugely exaggerated by illegal aliens who aren’t going to pay for anything anyway,” Niven said.

“Do you know how politically incorrect you are?” Pournelle asked.

“I know it may not be possible to use this solution, but it does work,” Niven replied.

“I cannot guarantee I’m going to be a great help to Homeland Security,” Niven said earlier....

The 45-minute panel discussion quickly deteriorated as federal, local and state homeland security officials, and at least one congressional aid, attempted to ask questions, which were largely ignored...

The Bush administration: worse than you can imagine even though you know it is worse than you can imagine.


Bruce Bartlett Prays for Fiscal Sanity from the GOP

He prays in vain: >The GOP's bait-and-switch tax strategy - Los Angeles Times: The rhetoric defies reality, when what the nation really needs is a permanent plan. It is an article of faith among Republicans that tax cuts are the cure for every problem the economy faces, and that tax increases are the equivalent of economic poison. Any hint by Democrats that the current administration's tax cuts should be revisited in light of changing economic or fiscal conditions is met with charges that they are proposing the largest tax increase in history. >The truth is that President Bush's tax cuts didn't do much good for the economy; they were mostly giveaways to GOP political constituencies and were little different conceptually from pork-barrel spending. Although there were some good elements to the tax cuts, such as the reduction in marginal tax rates, they were fatally undermined by their temporary nature. >The fact is that the massive tax increase Republicans claim the Democrats are proposing is entirely the result of the GOP's penny-wise and pound-foolish policies. Rather than expend the effort to make their tax cuts permanent in the first place, they attached expiration dates to every major provision. Most will expire automatically at the end of 2010. The alleged tax increase that would result is simply a consequence of the tax system returning to what it was before 2001, when the first tax cuts were implemented.... >Republicans respond that they had no choice; they didn't have the votes to enact permanent tax cuts, so it was temporary cuts or nothing. This is not true. They could have made them permanent, but that would have required bipartisanship and more political capital than Republicans were willing to spend. So they took the easy way out, figuring that Democrats wouldn't dare oppose extending the tax cuts when the time came, lest they be accused of favoring a vast tax increase.... >This sort of political game may be fun for Republicans who think that they have boxed Democrats into a corner. But this game has had real economic consequences. Because the tax cuts are not permanent, their economic impact has been severely diminished. All economists know that permanent tax changes have far more effect than temporary ones because people won't change their behavior significantly unless they have some assurance that the tax regime will be in effect for the long term...

Andrew Samwick Wants to Take Back His Party

From Andrew Samwick:

Whitman Republicans? | Capital Gains and Games: On Thursday, Governor Christie Todd Whitman visited campus. She may be the only unabashed Rockefeller Republican with any political prominence today.... She articulated as well as anyone I've heard recently the case for decentralized, responsible, and effective government. If she were running this year, she would have my vote.

So I started to wonder whether she might be a viable candidate.... [W]hat about 2012 against a Democratic incumbent? She seems to have recovered from her frustrating years at the EPA and has parlayed her success with It's My Party, Too into a PAC, which has now merged with the Republican Leadership Council (an odd name for a centrist organization given today's Republican leadership at the national level). She's clearly still active. Maybe the opportunity will present itself.


Why Oh Why Can't We Have a Better Press Corps? (Don Gonyea of NPR Department)

Outsourced to James Fallows:

James Fallows: "Stupidest policy ever" contest update: Don Gonyea of NPR... traditional "one side claims, the other side responds" approach -- as if there were any identifiable economist or energy expert, from any political camp, who thought that the "tax holiday" proposal made sense. Maybe he missed the previous night's All Things Considered broadcast, which contained a very good segment about the pointlessness of the [gas tax holiday] plan? And he presented the whole issue as a matter of campaign tactics: the Hillary Clinton campaign had been hitting Obama hard with a crisp attack ad about his refusal to give American motorists "the help they need," while Obama had come back only with a woolier, more "complicated" reply about why the plan was mad. Yes, this episode shows us something about the two campaigns, but it's not mainly about their relative skill in attacking each other.


Reducing the Number of One-Person per Car Commutes

What is to be done with respect to mass transit:

Matthew Yglesias: Transit Up: Via Atrios, we learn that people are price sensitive:

With the price of gas approaching $4 a gallon, more commuters are abandoning their cars and taking the train or bus instead.

Mass transit systems around the country are seeing standing-room-only crowds on bus lines where seats were once easy to come by. Parking lots at many bus and light rail stations are suddenly overflowing, with commuters in some towns risking a ticket or tow by parking on nearby grassy areas and in vacant lots.

The question is: What happens next? What really shouldn't happen is for politicians to run around talking as if expensive gasoline is a temporary phenomenon. Responsible leaders will tell people that prices will fluctuate, but that as long as the Chinese and Indian economies keep growing, the general trajectory will be upward. Then they should sympathize with people who would like to take transit, but find it prohibitively inconvenient and with people who've just started taking transit and are finding it annoying and they should commit to making transit better and more available.

Alternatively, you could act like southern Florida and propose steep service reductions on your commuter rail system. But that'd be crazy. Jurisdictions with existing commuter rail lines need to make service more frequent. With transit, you can get into good equilibria and bad equilibria. On the good path, you have tons and tons of people who want to ride your line and as a result service is very frequent so as to accommodate all the traffic. And because service is so frequent, lots of people find the line convenient to use. On the bad path, infrequent service leads to low ridership which leads to infrequent service which leads to low ridership.


Hilzoy on the Character of John McCain

She writes:

Obsidian Wings: Great Choice, Senator McCain!: Via... Josh Marshall, this from Newsweek:

After John McCain nailed down the Republican nomination in March, his campaign began wrestling with a sensitive personnel issue: who would manage this summer's GOP convention in St. Paul, Minn.? The campaign recently tapped Doug Goodyear for the job, a veteran operative and Arizonan who was chosen for his "management experience and expertise," according to McCain press secretary Jill Hazelbaker. But some allies worry that Goodyear's selection could fuel perceptions that McCain—who has portrayed himself as a crusader against special interests—is surrounded by lobbyists. Goodyear is CEO of DCI Group, a consulting firm that earned $3 million last year lobbying for ExxonMobil, General Motors and other clients.

Potentially more problematic: the firm was paid $348,000 in 2002 to represent Burma's military junta, which had been strongly condemned by the State Department for its human-rights record and remains in power today. Justice Department lobbying records show DCI pushed to "begin a dialogue of political reconciliation" with the regime. It also led a PR campaign to burnish the junta's image, drafting releases praising Burma's efforts to curb the drug trade and denouncing "falsehoods" by the Bush administration that the regime engaged in rape and other abuses.

You have to admire not just the McCain campaign's tin ear, but their impeccable sense of timing:

Myanmar's military regime distributed international aid Saturday but plastered the boxes with the names of top generals in an apparent effort to turn the relief effort for last week's devastating cyclone into a propaganda exercise. (...) With voters going to the polls, state-run television continuously ran images of top generals including junta leader, Senior Gen. Than Shwe, handing out boxes of aid at elaborate ceremonies.

"We have already seen regional commanders putting their names on the side of aid shipments from Asia, saying this was a gift from them and then distributing it in their region," said Mark Farmaner, director of Burma Campaign UK, which campaigns for human rights and democracy in the country. "It is not going to areas where it is most in need," he said in London."

No doubt all these stories are just falsehoods too.

What's particularly amusing is the McCain campaign's rationale for choosing Goodyear:

Ironically, Goodyear was chosen for the post after the McCain campaign nixed another candidate, Paul Manafort, who runs a lobbying firm with McCain's campaign manager, Rick Davis. The prospect of choosing Manafort created anxiety in the campaign because of his long history of representing controversial foreign clients, including Philippine dictator Ferdinand Marcos. More recently, he served as chief political consultant to Viktor Yanukovich, the former Ukrainian prime minister who has been widely criticized for alleged corruption and for his close ties to Russia's Vladimir Putin—a potential embarrassment for McCain, who in 2007 called Putin a "totalitarian dictator." "The Ukrainian stuff was viewed as too much," says one McCain strategist, who asked not to be identified discussing the matter.

So Ukraine is too much, but Burma is OK?


Why Aren't More People Going to College?

Altonji, Bharadwaj, and Lange do not know.

They say:

The anemic response of skill investment to skill premium growth | vox - Research-based policy analysis and commentary from leading economists: The earnings premium for skilled labour has increased dramatically in recent decades. Yet... Americans are not acquiring significantly greater skills in response to this change.... Since 1980, the demand for skilled labour has risen faster than the supply of skills, fuelling a steady increase in the earnings premia found for measures of skills such as schooling or cognitive test scores. The rapid rise in the skill premium represents a substantial increase in the economic incentive to acquire skills.... [B]etween 1980 and 2000 the internal rate of return for completing high school rather than dropping out after tenth grade has increased from approximately 40% to 55%.... How rapidly and how much young adults respond to this increase in the returns to skills and how this response varies across the population have important implications....

In Altonji, Bharadwaj, and Lange (2008), we... look at factors that influence skill acquisition, such as parental education and growing up in a two-parent family... make use of measures of the ease with which young adults transition from schooling into the labour market.... [O]verall the 1997 youth cohort is more skilled than the 1979 cohort... at the median... skill[s]... increased by about 6.5 percent. Is [that]... a behavioural response by youth to the widening skill premium?... [N]o.... [M]embers of the more recent cohort have significantly more educated parents than young people in 1979.... Holding parental education, race and gender, and family structure constant, the supply response to the increase in skill premia between cohorts was small: about 1% on average and about 1.5% at the median.... It seems that very large increases in skill premia are necessary to induce young workers to increase their investments in skills substantially.... This implies that, all else equal, the large degree of earnings inequality observed today is likely to persist far into the 21st century....

[T]he difference in the skills of the 1980 and 2004 youth cohorts is larger at the top of the skill distribution than at the bottom... due to the changing distribution of parental education.... [T]he changing distribution of skills in the population will exacerbate rather than counteract the trend towards increasing earnings disparities....

At this point we can only speculate as to why the response in skills to the increase in skill premia is so small... non-pecuniary costs of skill investments... liquidity constrained... myopic... other reasons... consistent with a number of studies (e.g. Kane (1994), Dynarski (2003)) that find that schooling decisions are quite sensitive to direct costs of schooling and tuition subsidies.... Cunha and Heckman (2007)... [perhaps] parental investment during early childhood shapes the potential to acquire additional skills later in life....

At this point, the question of why the supply response to the increase in the labour market returns to skill has been so small is an open one. In our opinion, it ranks among the most important empirical issues facing labour economists today.

This raises the possibility that the only easy way to reduce market inequality is to greatly increase the supply of the skilled and educated in the long run by making higher education free--which is a very dubious policy on the inequality front, because it starts with a honking huge transfer from the average taxpayer today to the relatively rich well-educated of tomorrow.


Malthusian Danger Cage Match Round II

Steve Bodzin joins the Malthus-McArdle team against Greg Clark and Brad DeLong:

Hoisted from Comments: Steve Bodzin: Howdy Brad,

It's not so simple, is it? Real estate and urban planning lock in high levels of energy consumption in the U.S. There is no easy way for the U.S. to approach a Danish level of consumption without, in Clark's word, "suffering." Some of this "suffering" -- fewer vehicle and air trips and a reduction in use of climate control -- would be very good for the environment and economy, but when choices become more constrained by a lack of resources, that is indeed suffering.

Except for the high-schoolers being forced to bike to school in Davis. That isn't suffering.

It is in June! And in August! Being forced to leave one's bathtub in Davis during the summer is suffering!


Alma Mater Blogging...

Greg Mankiw's desire to move Harvard to someplace better adapted to human life than Massachusetts was triggered by:

Greg Mankiw's Blog: Time for Harvard to Move?: The Wall Street Journal reports one of the most pernicious ideas I have heard of late: "Massachusetts legislators, demonstrating a growing resentment against the wealth of elite universities in tight economic times, are studying a plan to levy a 2.5% annual tax on the portion of college endowments that exceed $1 billion. The effort takes aim at one of the primary economic engines of the state, which is home to nine universities with endowments that surpass the $1 billion level, led by Harvard University's $35 billion cache, the nation's largest.... Supporters said the proposal would raise $1.4 billion a year. Based on the most recent size of Harvard's endowment, the university would have to shell out more than $840 million annually..."

There is an important underlying issue here with respect to America's private universities...

Let me put it this way: in 1960, the University of California--then overwhelmingly UCB and UCSF and UCLA--was about four times the size of Harvard, 5000 vs. 1200 undergraduates a year, with graduate students and faculty roughly in proportion. Clark Kerr, as president of the University of California in the 1960s, took a look at space constraints in Berkeley and Westwood, took a look at the rising population of California, took a look at increasing wealth, took a look at increasing educational attainment, took a look at the increasing attractiveness of American universities to people abroad, and conclude that the number of undergraduate students who could and would want to take full advantage of a UC education was going to grow eightfold over the next fifty years. So he decided to go all-out to clone UCB and UCLA.

And he did it.

Today we have UC Davis, UC Merced, UC Santa Barbara, UC Santa Cruz, UC Sunnydale, UC Irvine, UC Riverside, UC San Diego which together with UCB and UCLA graduate 40,000 undergraduates a year. Quality of education at UCB and UCLA has suffered a little bit as this cloning process has diverted resources away from us--but only by a very little bit. And the other UCs are damned good--with Davis and UCSD now being, I think, equal to the flagship campuses (although we don't admit it in bureaucratic system wars). And the Cal States do an impressive job as well. And the community colleges provide remarkable educational value for the money. The high administrators of the University of California starting with Clark Kerr have an extraordinary, remarkable accomplishment to look back upon. And they should be very proud--especially as they have accomplished it in the face of declining relative levels of support from the state legislature in Sacramento.

Harvard, over the same fifty-year time span... Harvard has gone from 1200 undergraduates a year to 1600, and has done so in spite of starting with a substantial endowment and receiving $15B of private charitable gifts. Harvard does a great many things well--and I am impressed by the fact that Larry Summers's presidency seems to have had the effect of creating a large brand-new science building on every block. But it is hard to think that the production function from resources to outcomes is an efficient one or something to be particularly proud of: I think presidents Pusey, Bok, Rudenstine, Summers, and Bok again were beaten by the system. At meetings of high academic administrators Berkeley Chancellor Robert Birgeneau and his ilk can hold their heads up high as proud successors to a highly capable group of administrators who made a lot of lemonade out of the lemons that they were handed, but I don't think Harvard president Faust can do the same.

Somebody last week--was it Jan de Vries? John Ellwood? Somebody else? I forget who, but it is not original to me--said that the right model for Harvard over the past century is Yugoslavia. Remember the story of the Yugoslavian socialist worker-managed firm? If you add another worker to the firm, that worker gets a pro-rata share of the firm's value added. The firm's value added has a component attributable to the firm's capital stock, a component attributable to the ideas embedded in the firm, a component attributable to the firm's market position, and a component attributable to the workers. Hire another worker, and only the last of these goes up: the first three do not, and so average compensation falls.

This means that a worker-managed firm is likely to shrink whenever it gets good news that makes it more productive--the larger is the value added due to ideas, capital, or market position, the more expensive does it become for the existing workers to replace workers who leave, let alone hire enough workers to expand. While a competitive market capitalist firm responds to good news about its productivity and value to society by increasing employment, a Yugoslavian-model market socialist firm responds to good news about its productivity and value to society by shrinking. On this analysis, the very success of Harvard over the past two generations together with its degree of worker management has created enormous internal pressures not to expand, the better to share out the surplus among the existing stakeholders.

If this story of Harvard-over-the-past-two-generations-as-the-socialist-Yugoslavia is correct, then a bunch of hard questions to which I do not know the answers are raised about:

  • The judgment of those who have tried to satisfy their charitable impulses by giving $15B to my alma mater over the past two generations.
  • The proper incentives that the government should try to present to the institution--and to those who might try to satisfy their charitable impulses in the future by adding to its endowment.
  • The responsibility of alumni like myself to try to influence the future governance of the institution: corporation members like Bob Reischauer know what is going on at least as well as I do, but seem to have been unable to move the institution.
  • The question of how Harvard should expand if indeed it should expand: it doesn't seem to be nearly as good as the small liberal arts colleges or even its rivals Yale and Princeton at undergraduate education (I did very well, but only because I quickly found two places--Social Studies in Hilles basement, and the graduate economics program--where Harvard was, effectively, a small college); the medical school and the biomedical complex that surrounds it appears to do very well indeed as research institutions; the public policy school seems to have been an experiment worth trying that did not fulfill Derek Bok's hopes, but that I cannot fully evaluate; few of the many people I know who went to the law school say many good words about it; et cetera.

Greg Mankiw Wants to Move Harvard

Greg Mankiw wants to move Harvard to someplace better adapted to human life than Massachusetts:

Here is what I would consider.... Harvard could create a second campus in another state. Call it Harvard South. (Put it in a better climate than Boston, and I would be one of the first faculty to volunteer for the move.) Transfer much of the endowment to Harvard South. Support Harvard North by slowly selling off land in Massachusetts. Eventually, make Harvard South the main campus, and Harvard North the satellite. If Massachusetts state lawmakers remain hostile, close Harvard North down entirely.... I have often wondered what the efficient scale of a university is and, in particular, whether it would be better to create a second Harvard with the university's wealth than to expand the first one. Maybe the Massachusetts state legislature will give the powers-that-be at Harvard an incentive to consider more radical expansion plans.

There may be a Pareto-improvement possible here. Extrapolating from how much it cost to get Tom Campbell here at Berkeley formally called the Bank of America Dean of the Haas School of Business, I am confident that it would cost relatively little--perhaps 5% of Harvard's current endowment--to get us to be willing to rename this campus the Harvard University of California at Berkeley. And while I haven't talked to department chair Hermalin or personnel chair Shannon about this, I do think their judgment would be that adverse selection problems are low enough and Harvard's standards in economics high enough that we would be willing to issue a blanket offer to its faculty (but this would not, I understand, be the case in some other fields, computer science and chemistry for example). For Greg I'd even be willing to give up my office, with its $10M view of the Golden Gate, San Francisco, and its bay from its perch 100 feet above Berkeley's faculty glade. (Although if he wants both the west and the south view, he would have to strike a deal with Maury Obstfeld.)

There is one important proviso. Harvard's administrators--everyone who works in Massachusetts Hall, University Hall, and whatever that atrocity on the south side of Harvard Square is called--would have to stay behind. Even if we had not been certain of this point before, this month's Harvard ad-hoc committee personnel decisions have fixed our resolve. I had always thought that "when they heard the news, they couldn't stop laughing" was hyperbole. But it took John Quigley five full minutes before he could say an intelligible word...


Ta-Nehisi Coates Sends Us to the Great Jon Chait On the Spiro Ted Agnewization of Hillary Rodham Clinton

Ta-Nehisi Coates reads the New Republic so we don't have to risk catching a loathesome disease, and finds a gem: The Great Jon Chait On Hillary's Conservative Populism.

One cavil.. Jon Chait says that the fact that Bill and Hillary Clinton "obviously [do] not believe... [their] social conservative rhetoric" is a defense of their actions. I do not understand in what way this is supposed to be a defense. First, it may not be true: the easiest people for you to con are those whom you wink at and who then think that they are in on the con. Second and more important, this is, as Greg Mankiw puts it and as Paul Krugman does not see, a character issue--I think the most important character issue. And it cuts heavily for Obama, and against Rodham Clinton and McCain.

Here is Chait on the mysterious transformation of Bill and Hillary Clinton into clones of Spiro Ted Agnew:

Let Them Eat Arugula: The dying days of the Hillary Clinton campaign have brought the breathtaking spectacle of a candidate lashing out at every element of public life that has nourished her career. The über-wonk has disparaged economists and expertise. The staunch ally of black America has attacked her opponent for lacking support of "working, hard-working Americans, white Americans." People who thought they knew Hillary Clinton have gazed in astonishment: What has she become? The answer is, a conservative populist....

Liberal populism posits that the rich wield disproportionate influence over the government and push for policies often at odds with most people's interest. Conservative populism... prefers to divide society along social lines, with the elites being intellectuals and other snobs who fancy themselves better....

Consider this analysis recently offered by Bill Clinton in Clarksburg, West Virginia: "The great divide in this country is not by race or even income, it's by those who think they are better than everyone else and think they should play by a different set of rules." This is precisely the dynamic that allows multimillionaires like George W. Bush and Bill O'Reilly to present themselves as being on the side of the little guy. A more classic expression of conservative populism cannot be found.

Historically, the conservative populist's social divide ran along racial and ethnic lines.... [Today it's] nostalgia about small towns... stronger values... work harder... overwhelmingly white.... Bill Clinton recently declared, "The people in small towns in rural America, who do the work for America, and represent the backbone and the values of this country, they are the people that are carrying her through in this nomination." The corollary--that strong values and hard work is in shorter supply among ethnically heterogeneous urban residents--is left unstated....

Liberal populism is... harnessed to a concrete legislative program aimed at broadening prosperity.... Conservative populism... is a way of exploiting the grievances it identifies without redressing them. It has an ever-shifting array of targets--Michael Dukakis's veto of a law requiring students to recite the Pledge of Allegiance, or the rantings of Jeremiah Wright--but no way to knock them down....

Hillary Clinton's embrace of the gas tax holiday is a miniature example of the same pattern. Her plan... is highly congenial to the interests of oil companies. Yet she presents it as an assault on Big Oil....

If economists or other social scientists dispute the conservative populist's claims, that is only because they, too, are elitists.... Clinton campaign chairman Terry MacAuliffe replied, "Maybe for Barack Obama and for many of your economists, Tim, who you may talk to, you know what, maybe an extra hundred bucks for them isn't a big deal. But I can tell you this, it is a big deal for most Americans."

Social science analysis is the mortal enemy of conservative populism... [because it] sees politics as a series of quantifiable trade-offs between competing interests. The conservative populist offers an appeal that can't be quantified: Who shares your values? Who is more manly? (James Carville: "If she gave him one of her cojones, they'd both have two.")...

[Citing] numbers to back [a] position... [is] to the conservative populist... the intellectual equivalent of buying arugula from Whole Foods. A Clinton endorser addressed a rally last month, "You didn't go to Harvard! You weren't born with a silver spoon in your mouth!" (Never mind that Clinton graduated from Yale Law School and had a far more stable, middle class upbringing than Obama.) In the liberal populists' world, the locus of evil is K Street. In the conservative populists' world, the locus of evil is Cambridge, Massachusetts.

In Clinton's defense, she obviously does not believe her own social conservative rhetoric.... [N]either do Republican social conservatives. She is not running for president so she can suspend the gas tax any more than George H. W. Bush sought the office on order to increase the rate of flag-saluting.

One conceit of the conservative populist style is that its practitioners are "real," while its targets are "fake." For years, Hillary Clinton put herself forward as the earnest liberal policy wonk she actually is, while conservatives lambasted her as a phony. Since she started campaigning as the enemy of all she once held dear, some conservatives have started to appreciate her, even lauding her authenticity. The Weekly Standard's Noemie Emery gushed that after March 4, Hillary "began to seem real." Indeed, she is now real in exactly the same way the conservative populists imagine themselves to be.


Linux: The Revenge of Ronald Coase

Tom Slee writes:

Whimsley: Linux Grows Up and Gets a Job: One of the highlights: "over 70% of all kernel development is demonstrably done by developers who are being paid for their work". 14% is contributed by developers who are known to be unpaid and independent, and 13% by people who may or may not be paid (unknown), so the amount done by paid workers may be as high as 85%. The Linux kernel, then, is largely the product of professionals, not volunteers.

So Linux has become an economic joint venture of a set of companies... participating for a diverse set of commercial reasons. Some want to make sure that Linux runs on their hardware. Others want to make sure that the basis of their distribution business is solid. And so on, and none of these companies could achieve their goals independently....

This does not mean that Linux was always a commercial venture, or that all open source projects are commercial ventures.... Open source started off as a small-scale set of projects done mainly by volunteers. As the scale and scope of open source projects an increasing number have provided their contributors with some money (augmented perhaps by a waitressing job). Now a few of the most successful have hit the big time and become full-scale economically important commercial enterprises.

Things change. As open source software has matured and expanded it has become both more unlike the rest of the world and more like it. It will be fascinating to see what comes next, but the Linux Foundation report has made clear that open source has crossed its commercial Rubicon, and there is probably no going back.


I Really Do Not Need to See This...

This is evil. Thoroughly evil.

I have no idea which Google tool is doing this, so they are all going into the trash right now:

403 Forbidden: Google: Error: We're sorry...

... but your query looks similar to automated requests from a computer virus or spyware application. To protect our users, we can't process your request right now.

We'll restore your access as quickly as possible, so try again soon. In the meantime, if you suspect that your computer or network has been infected, you might want to run a virus checker or spyware remover to make sure that your systems are free of viruses and other spurious software.

If you're continually receiving this error, you may be able to resolve the problem by deleting your Google cookie and revisiting Google. For browser-specific instructions, please consult your browser's online support center.

If your entire network is affected, more information is available in the Google Web Search Help Center.

We apologize for the inconvenience, and hope we'll see you again on Google.


The Four Seasons vs the Bureaucrats of Mumbai

Joe Leahy writes:

FT.com / Asia-Pacific / India - Riches rise from Mumbai slum clearance: [T]his week, after years of navigating red tape, the 202-room Four Seasons Mumbai became the first luxury hotel of its size to launch in the city’s south in about 20 years.... “In hindsight, the choice of this location seems quite straightforward but at that time this wasn’t an obvious site for a hotel,” Adarsh Jatia, a director of the family company, Magus Estates and Hotels, says. Guests arriving at night at the Canadian chain’s first hotel in India will see slum-dwellers sleeping on one side of the road and on the other the glittering glass tower of Mumbai’s newest symbol of luxury.

In India’s financial capital, engine of the country’s rapid economic growth, such scenes are increasingly common as high-end developments sprout up among the sprawling huts.... The idea is to move slum-dwellers into apartment blocks occupying a corner of the area over which they sprawl and redevelop the remainder.... The Four Seasons slum-dwellers living on the site were compensated.... “You’re seeing Rolls-Royces on one side, luxury hotels on the other and slums in between – that’s why they call Mumbai the Maximum City,” Jason Stinson, marketing director at the hotel, says....

Archaic restrictions that have prohibited the construction of high-rise buildings and sky-high land prices have contributed to the shortage, Vincent Lottefier, chief executive of Jones Lang LaSalle Meghraj, says. Bureaucracy and a shortage of skilled workers make building hotels difficult – the opening of the Four Seasons was delayed by at least two years. The hotel needed 165 government permits – including a special licence for the vegetable weighing scale in the kitchen and one for each of the bathroom scales put in guest rooms. In the end, the hotel cost $100m (€64.5m, £51m), or about $500,000 per room, and prices – which start at $500 per night rising to more than $1,000 – reflect that.

But there is little social envy [expressed to Financial Times reporters]. Vishal Doshi, whose shop sells samosas in the slum, says the hotel brings prestige. “Everyone can now say: ‘I’m living near the Four Seasons’,” he says. He is under no illusions that he will be a guest there any time soon. “This side of the road is for servants, that side for bosses,” he says.


Megan McArdle and Thomas Malthus vs. Greg Clark

The cage match!

In this corner, Megan McArdle and Parson Malthus:

Megan McArdle: Economics of Contempt:

Call me crazy, but I think a permanent doubling of food and energy prices would slow our rate of economic growth pretty significantly. How long it would take incomes to recover "at current rates of economic growth" is irrelevant when the doubling of food and energy prices would lower the rate of economic growth.

Given that we and all our machines run on either food or energy, it's a pretty safe bet to say that doubling their prices would have a sizeable impact on growth.

In this corner, Greg Clark:

China, India and Malthus - Los Angeles Times: Thomas Malthus warned in 1798 that population pressures would forever keep food and energy scarce and incomes low. In the 200 years since, world population has grown sevenfold, to 6.7 billion. Yet food and energy have become cheaper and more abundant. Malthus's dystopia, it seemed, belonged in history's junkyard. But, suddenly, rapid growth in China and India and the consequent scramble for increasingly scarce resources has revived the Malthusian specter. By 2050, 9 billion people in a world where all have U.S. consumption standards would need eight times as much oil and five times as much food than the planet current uses. Is the future a world of $10-a-gallon gas and $20 Big Macs?

Two things allowed growth to occur from 1750 to 2000 with declining commodity prices. First, only a small fraction of the world grew rapidly.... The West was alone in its voracious appetite for raw materials and energy. Second, fossil fuels cheaply substituted for land in agriculture by increasing crop yields.... What will happen depends on the race between technological improvement and growing demand.... [N]o one can predict which force will win. A "full world"... may also be one of cheap and abundant commodities. But suppose the worse. Suppose [commodity] abundance is over. Must we fear that?

The answer is no. First, the share of modern U.S. consumption devoted to raw food and energy purchases is small: 1.4% for food raw materials, 7% for energy. The U.S. economy can withstand enormous increases in food and energy costs with little damage because food and energy are even now so extravagantly cheap that most of both are squandered in uses of little value. In my town -- Davis, Calif. -- there is a traffic jam outside the main high school each morning as healthy teenagers are ferried by car or drive themselves a few miles to school. They are ferried from houses that are heated, air-conditioned and lighted, most of which rarely gets used by people.

Currently in the U.S., we consume the energy equivalent of six gallons of gas per person per day.... Danes, for example -- whose public policy mandates expensive energy -- use the equivalent of only three gallons.... The Danes are not suffering.... Given that we can easily reduce consumption when costs go up, a permanent doubling of the prices of food and energy would reduce income by less than 6%. At current rates of economic growth, incomes would recover from such a shock in less than three years. After that, onward on our march to ever greater prosperity.

I call this one for Greg Clark. I am a utopian neoliberal optimist.


Duncan Black Is My Copilot!

He is smart, wise, and correct:

Eschaton: [T]t really never mattered much to me who won this nomination.... I leaned various ways at various times, and I became more and more annoyed at the Clinton campaign over time. Obama did a bunch of things that annoyed me too, but not as much recently. I'm sure Hillary Clinton would be a decent president. "Electability" arguments for either of them aren't very persuasive, though smart people on both sides are pretty convinced that their candidate will win and the other will flame out spectacularly.

At this point, however, Obama's won. There's no nomination path for her which doesn't involve rewriting the rules in a way which would never be seen as legitimate, or a massive shift in superdelegates which would likewise be problematic, and even those paths range from unlikely to impossible....

One wishes we could've rewound things to about March 4 and had a more substantive campaign, instead of the identity politics-based Freak Show campaign we've had since then. It isn't all the candidates' fault, of course, as you go to campaign with the media you have and not the media you want...

My one caveat is the "sure." I think it is highly likely that Hillary Rodham Clinton would be a better president than John McCain--he seems to be putting his trust in some very wrong people on both security and economic policy, and he also has major character issues. But her campaign's degeneration into a troop of flying leaking backstabbing monkeys accusing each other of incompetence does not give me great confidence in her as an experienced, crackerjack manager ready on day 1.


In Which We Add Ralph Miliband to the Infamous, Mighty, and Numerous Noam-Norm Axis...

Chris Bertram attacks Oliver Kamm for being a "vicious little merchant banker." It seems Kamm complained about the late Ralph Miliband's support for Pol Pot. It seems to me that anybody who--like Ralph Miliband--says that the North Vietnamese overthrow of Pol Pot was a bad thing because dictators deserve to be left in peace unless they are WROSE THAN HILTER1!!! and Pol Pot was not--well, that they deserve as many intellectual flamethrowers as can be brought to bear. It seems to me that Oliver Kamm does a fine job here and here, and deserves our critical support.

Here is Chris Bertram:

Crooked Timber » » A vicious little merchant banker: The merchant banker Oliver Kamm has a vicious little post today attacking the memory of the late Ralph Miliband for a paper he published in 1980. Miliband... a Marxist theoretician and a member of the British new left.... [A]s a member of that new left, he had an ambivalent relationship to the Soviet bloc. On the one hand he lamented the lack of democracy in those countries; on the other he thought they had achieved various social gains. Well he was (largely) wrong about the latter, but 1980 is a long time ago, and, back then he wasn’t alone in that false belief. In fact, he shared it with people for whom Kamm now declares his admiration and support and who then wrote for those same journals. The difference is, of course, that they are alive and he is dead. Miliband cannot reconsider.

Kamm’s post attacks Miliband’s paper “Military Intervention and Socialist Internationalism” (Socialist Register, 1980 ) on the grounds that [Miliband] doesn’t think the crimes of Pol Pot were sufficient to justify the Vietnamese invasion. Reading the paper today, it has an odd and stilted feel: Miliband is wrestling with a set of issues and problems that seem deeply alien today. I think Miliband was wrong about that case, and badly so. But I presume (and hope) that he didn’t appreciate how horrific the Pol Pot regime had been, or didn’t believe all the reports. What the casual reader wouldn’t glean from reading Kamm’s nasty little post, though, is that the substance of Miliband’s article was an attack on the idea that the socialist ideal should be advanced by “socialist” states invading other countries. In other words, it was principally an attack on the idea that socialists should support the Soviet invasions of Hungary, Czechoslovakia and Afghanistan. Miliband argues, correctly, that all that resulted from such interventions was alienation from the socialist cause, and the installation of weak puppet regimes without popular legitimacy. You’d never gather that from reading Kamm’s blog, though. He presents Miliband’s attack on Soviet tankism as an apologia for massacre. That wasn’t how it would have been read at the time. In fact, it isn’t how a fair-minded person would read it now.

Actually, it is how a fair-minded person would read it now. Ralph Miliband's position is that military intervention against the likes of Pol Pot or Idi Amin is illegitimate because they are not as bad as Adolf Hitler.

Here is Miliband:

A subsidiary argument, which has sometimes been used to justify some military interventions, notably the Vietnamese intervention in Kampuchea, may be considered at this point. This is the argument that, whatever may be said against military intervention in most cases, it is defensible in some exceptional cases, namely in the case of particularly tyrannical and murderous regimes, for instance the regime of Idi Amin in Uganda and of Pol Pot in Kampuchea....

The argument is obviously attractive: one cannot but breathe a sigh of relief when an exceptionally vicious tyranny is overthrown. But attractive though the argument is, it is also dangerous. For who is to decide, and on what criteria, that a regime has become sufficiently tyrannical to justify overthrow by military intervention? There is no good answer to this sort of question; and acceptance of the legitimacy of military intervention on the ground of the exceptionally tyrannical nature of a regime opens the way to even more military adventurism, predatoriness, conquest and subjugation than is already rife in the world today.

The rejection of military intervention on this score is not meant to claim immunity and protection for tyrannical regimes. Nor does it. For there are other forms of intervention than military ones: for instance economic pressure by way of sanctions, boycott and even blockade. Tyrannical regimes make opposition extremely difficult: but they do not make it impossible. And the point is to help internal opposition rather than engage in military 'substitutism'. As noted earlier, there are rare and extreme circumstances where nothing else may be possible--for instance the war against Nazism. Hitler's Third Reich was not only a tyranny. Nor was it merely guilty of border incursions against other states. It was quite clearly bent on war and the subjugation of Europe. But neither Uganda nor Kampuchea are in this order of circumstances...