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April 2010

Jay Rosen Is Unhappy with David Gregory (Why Oh Why Can't We Have a Better Press Corp? Department)

Rosen alerts us to his ire:

Twitter / Jay Rosen : My new post! David Gregory ...: My new post! David Gregory: 'No I won't fact check my guests and you guys can't make me.' A time line.

David Gregory: "No, I won't fact check my guests and you guys can't make me..." A time line. - Jay Rosen: Public Notebook: So... what is going on here?  As with his defiant claims that the press did well in questioning the Bush Administration's case for war, David Gregory believe he always and already asks the questions necessary to get at the truth. (So what's your problem?)  If the truth does not emerge from his interviews, it's not his fault because he--always and already--asks the tough questions. That's who he is. It's in his DNA. The criticism he gets is therefore partisan chatter. Or it comes from people who want him to go beyond asking the tough questions to the point of conclusion: that man is lying.

David Gregory thinks that is not his role.

I see two other possibilities.... The banal: He's too proud to adopt something that a competitor picked up on first; it would look like a "me too" response....  The more disturbing possibility is that he thinks Tapper's policy may give Meet the Press a competitive edge in booking guests who won't want to be checked so vigorously.... Look at it this way: the Washington politician who's been on Meet the Press more than any other is John McCain. On April 6, Politifact's truth-o-meter rated McCain a pants-on-fire liar for claiming that he never called himself a maverick. See what I mean?

It's the Aggregate Demand, Stupid

David Wessel talks to Christy Romer:

It's Agregate Demand, Stupid Christina Romer... says the reason unemployment remains so painfully high is clear: It's not the inadequacy or laziness of the workers or the long-standing mismatch between workers' skills and employers' needs. It's the old-fashioned Keynesian diagnosis: Too little demand in the economy. "The overwhelming weight of the evidence is that the current very high--and very disturbing--levels of overall and long-term unemployment are not a separate, structural problem, but largely a cyclical one. It reflects the fact that we are still feeling the effects of the collapse of demand caused by the crisis. Indeed, at one point I had tentatively titled my talk 'It's Aggregate Demand, Stupid' but my chief of staff suggested that I find something a tad more dignified," Ms. Romer said.... it doesn't have to be this way, she argued, essentially making the case for more government stimulus to help the economy. "We have the tools and the knowledge to counteract a shortfall in aggregate demand. We should be continuing to use them aggressively."... More private demand is essential, she said, but government can do more.... "One targeted measure that is likely to be very effective is additional fiscal relief to the states," she said...

The view gaining strength is that additional stimulative policies won't do much good because much of our current employment i "structural." This is,best as I can see, simply not true: there is no evidence for it. But that if we let unemployment linger above 9 percent for several years, it is highly likely to become structural--and then we will have even more huge problems than we have now.

And at the moment it looks like getting unemployment below 9 percent will take some luck. Certainly fiscal policy and monetary policy are unlikely to provide much additional stimulative force going forward.

Worth Reading, Mostly Economics, for April 17, 2010

  • Olivia: "Obviously the internet is the greatest distribution technology ever created for music and writing and video and journalism. But it’s also obvious it generally makes it more difficult for people producing such things to earn a living. So I have three goals with this: 1. Finally start paying some of the people who’ve created wonderful things I’ve enjoyed. 2. If possible, get lots of other people online to start doing this as well. It would be a beautiful thing if it grew and grew.... 3. In my most grandiose dreams, this idea would—in the process of becoming popular—make people realize that we need a new way to fund all kinds of art.... ’m convinced the answer is something like Dean Baker’s Artistic Freedom Vouchers... a $100 voucher each year that they could in turn give to anyone producing anything creative.... [R]ecipients... [who] accepted AFV money... for a period of time afterward... everything they produced would be copyright free.
  • Popova: "I am not saying that stealing a movie is a victimless crime.... I'm... describing the behaviour of movies as goods in economic terms.... [I]t's become progressively more difficult to make content... excludable.... It doesn't mean content is free... or cheap to make... or that content creators should not get rewarded.... It means that old business models based on content being a club good simply don't work.... So what does the future of content look like?... I don't know.... [F]or certain types... putting it up for free... increase[s] your sales.... We're going to see a wider variety of distribution models.... Art isn't the shiny disc.... It's the project that your favourite artist announces on their blog and asks you for funding and posts updates about.... Of course there will be free-riders. Not everyone will pay... even if they really like it. But those people might point their friends in the direction of that artist.... Bottom line: change is happening."
  • Bartlett: "It seems like eons ago that John McCain was a senator worthy of respect even when he was wrong. Now he's just wrong. His irresponsible attack on the value added tax yesterday is a case in point. Out of the blue, McCain introduced a non-germane amendment to pending legislation (H.R. 4851) denouncing the VAT. Here is the full text of his amendment, which is in the form of a resolution expressing the opinion of the Senate."
  • Bartlett: "The larger point Mark is making here applies as well to the decline of the news media... the things the right figured out long ago is that reporters and TV producers are lazy and the ones that aren't are too pressed for time to do more than take studies by think tanks or anyone else at face value. They don't have the knowledge, education or resources to do fact-checking or quality control.... One consequence of Heritage's breakthrough in developing short, readable, time-sensitive policy analyses is that they were just as useful to the media as they were on Capitol Hill. Reporters had the same need for predigested studies written in plain English, as opposed to the sorts of books written in academese that were the stock-in-trade of traditional think tanks like Brookings. Conservatives also realized that putting out a study saying the exact opposite of a liberal study was sufficient to muddy the water..."
  • Roubini: "All successful rescues of countries in financial distress – Mexico, Korea, Thailand, Brazil, Turkey – require two conditions: the country’s credible willingness to impose the fiscal austerity and structural reforms needed to restore sustainability and growth; and massive amounts of front-loaded official support to avoid a self-fulfilling rollover crisis of maturing public and/or private short-term debts. Reform without money on the table does not work, as nervous and trigger-happy investors would rather pull their money out if the country lacks the foreign-currency reserves needed to prevent the equivalent of a bank run on its short-term liabilities."
  • Jacob Levy thinks he has a problem: he cannot present conservatism attractively in his classes because there are no attractive modern conservatives.... "It's a real problem--one I've often talked with people about in a teaching context, because there's no modern work... that really gets at what's interesting about Burkean or social conservatism.... history keeps right on going--and so any book plucked from the past that was concerned with yelling "stop!" tends to date badly to any modern reader who does not think he's already living in hell-in-a-handbasket... race in America--no mid-20th c work... that talks about how everything will go to hell if the South isn't allowed to remain the South.... Oakeshott... ridiculous by the time he's talking about women's suffrage?..." I say cut the Gordian knot. THERE ARE NO ATTRACTIVE MODERN CONSERVATIVES BECAUSE CONSERVATISM SIMPLY IS NOT ATTRACTIVE TO US MODERNS. DEAL WITH IT!!
  • Mitchell: "NYT today in print quietly runs correction on Sorkin's column which misstated Krugman, causing battle"
  • Dingeldein: "On this day in history, 16 April 1789, Revolutionary War hero and Sarah Palin’s Favorite Founder George “Father of My Country; Also, Owner of 316 Slaves” Washington set off from his posh digs at Mount Vernon (“The Mount That Slaves Built”) for New York City, loathed metropolis of punchy-faced Glenn Beck, to get his inauguration on.... Agreeing with Hamilton that some serious taxation was necessary to pay for the ass-kicking we’d just handed Britain and to “secure the power of the new federal government,” Washington... got the f--- on his horse and – in the first real test of Federal Authority – led a massive army against these tax-dodging pricks.... “irony”: In the first real crisis of the new Federal Government, Sarah Palin’s bestest Founding Father Figure... personally horsed up and led a federalized army... against protesters bitching about high federal taxation..."
  • Krugman: "On Tuesday, Mitch McConnell, the Senate minority leader, called for the abolition of municipal fire departments. Firefighters, he declared, “won’t solve the problems that led to recent fires. They will make them worse.” The existence of fire departments, he went on, “not only allows for taxpayer-funded bailouts of burning buildings; it institutionalizes them.” He concluded, “The way to solve this problem is to let the people who make the mistakes that lead to fires pay for them. We won’t solve this problem until the biggest buildings are allowed to burn.” O.K., I fibbed a bit. Mr. McConnell said almost everything I attributed to him, but he was talking about financial reform.... But it amounts to the same thing. Now, Mr. McConnell surely isn’t sincere; while pretending to oppose bank bailouts, he’s actually doing the bankers’ bidding."
  • NYT: "125: The approximate number of former Congressional aides and lawmakers who are lobbying for Wall Street and the financial services sector as part of a multibillion dollar effort to shape, and often scale back, federal regulatory power over the industry, according to analyses by Public Citizen and the Center for Responsive Politics." Accept any number by PC or the CRP without careful checking and you will find yourself naked on the moon, but these seem about right to me.
  • Jay Ackroyd: "I keep trying to come up with scenarios that would allow an international organization to systematically cover-up, and even enable, the sexual abuse of children. Like, imagine the Montessori program turned out to be an organization that permitted their practitioners to break molestation laws, and covered up for them. I can't see how the organization would last a month. The idea that the Church can have its members pray the hierarchy's way out of this seems absurd on its face. And yet we have seen no RICO filings. Oh, and by the way, all the talk in the Church hierarchy is that this is all in the distant past. You can be sure that this is not the case."

Department of "Huh?!"

Yes, I know that National Review has no principles. So I am not surprised at this. But still...

Look: John Paulson is the kind of person you want to have around in a market economy. He collects information, analyzes it, and looks for places in financial markets that have got fundamentals wrong. He then bets on fundamentals--and the price pressure he creates drives prices closer to fundamentals so that they can serve as better signals to induce companies to make things that people do, in fact, want and that it is good to, in fact, make. To be a "short artist" in the middle of a bubble of irrational exuberance is a good thing. We want to have such people around: if we have enough of them, they nip bubbles in the bud and keep them from emerging and then causing trouble.

So John Paulson concludes that the real estate market is overleveraged and overpriced and looks for a way to bet that prices will decline--doing exactly what we want people to do when they rationally think there is an irrational bubble. And so he bets against it, constructing "ABACUS 2007 AC-1" and trading it off to Goldman Sachs...

...and Goldman Sachs then sells his securities off to other people without disclosing the material fact that the security had in large part been constructed not by the ACA Management Company that they claimed had constructed it, but by somebody else. The SEC now maintains that in so doing Goldman Sachs failed in its duty to disclose material facts about the securities that it sold, and is liable under civil law.

But I had not seen anybody claim that John Paulson had been a party to the possible--I would say probable--fraud that the SEC alleges was committed by Goldman Sachs and Fabrice Tourre.

Until now, when National Review comes out against capitalism and against stabilizing speculation:

Goldman Silent Partner Was a Schumer Fundraiser - Daniel Foster: Goldman Silent Partner Was a Schumer Fundraiser [Daniel Foster]: John Paulson, the hedge fund short-artist in the middle of today's SEC suit against Goldman Sachs, recently helped raise money for Sen. Charles Schumer (D., N.Y.)...

Why oh why can't we have a better press corps?

Can't Anybody Play This Game? (Why the Washington Post Should Be Shut Down Immediately Department)

Why oh why can't we have a better press corps? I am once again annoyed by Washington Post "ombudsman" Andrew Alexander. He writes about the Post's Pulitzer prizes. And he doesn't catch the ball. He doesn't even try to catch the ball.

Here's what he says:

Four more Pulitzers -- but does it matter?: It didn't take long for cynics to weigh in.... [A] reader.... "Why does this matter any more?" In many ways, it doesn't. Although The Post won more Pulitzers than any other newspaper, its prizes didn't boost circulation.... Nor will winning the most prestigious honor in American journalism mean giant advertising gains. The financial situation for The Post, which lost money last year, continues to improve but remains challenging. And National Editor Kevin Merida said Pulitzers aren't needed to lure talent to the newsroom. "Recruiting isn't a problem," he said. "It's a buyer's market."... At most newspapers, winning a Pulitzer is a once-in-a-career rarity. At The Post, it's commonplace. But in two critical ways, this year's Pulitzers have outsized importance among the 64 The Post has won since 1936.

First, they haven't attracted new subscribers, but they may help retain existing ones... local readers hold The Post in higher regard when it wins Pulitzers.... The second impact is... [a] conspicuous sense of pride could be seen returning to a staff.... "The effect on the morale of a staff is so strong that it does translate to something you see on the page," said Roy J. Harris Jr., a former Wall Street Journal reporter.... To many who win a Pulitzer, the jubilation is fleeting. The Post's Gene Weingarten, who won his second prize for feature writing, recalls getting an e-mail from "Doonesbury" cartoonist Garry Trudeau after winning his first Pulitzer two years ago. "Congratulations," it read. "The euphoria will last until your next deadline." Sure enough, Weingarten's editor called about 20 minutes later to complain.... The process is rigorous. It's also imperfect. Finalists, like The Post for its coverage of last year's Fort Hood massacre, fall heartbreakingly short.... Quality is subjective. Winners may not always represent last year's best work. But they almost always reflect truly exceptional journalism. "None of us comes to work every day with the aim of winning a Pulitzer," Brauchli told the newsroom on Monday, "but it sure is nice when it happens."

Notice anything missing? The names of three of the four Pulitzer winners. And not a smidgeon of information about what they won the prizes for.

Instead of writing, "Gene Weingarten, who won his second prize for feature writing..." Alexander should have written:

Gene Weingarten, who wrote about parents who accidently kill their children by forgetting that they are there and leaving them strapped in in hot cars, won his second Pulitzer for what is perhaps the most awesomely great piece of feature writing ever written...

Did Alexander ever read it? It's hard for me to to imagine how anybody could write about Weingarten and not feel compelled to write about the story he wrote.

Alexander should have done the same for Anthony Shadid. He should have simply quoted the citation, awarding him the prize for:

his rich, beautifully written series on Iraq as the United States departs and its people and leaders struggle to deal with the legacy of war and to shape the nation’s future.

My favorite recent Shadid piece is:

Alas, Sarah Kaufman won a Pulitzer for dance criticism. All the citation says is "Sarah Kaufman of The Washington Post for her refreshingly imaginative approach to dance criticism, illuminating a range of issues and topics with provocative comments and original insights." It does not point to anything in particular. And I have not read what she has written. Nor does Alexander. He doesn't even mention her name. A simple "the four winners--Gene Weingarten, Antony Shadid, Sarah Kaufman, and Kathleen Parker" would have greatly improved Alexander's article, and done much to reduce the suspicion that he's simply out to lunch.

For the fourth Pultizer--alas, the award to Kathleen Parker for commentary cannot help but strike me as wingnut welfare at its worst. The citation talks of her:

perceptive, often witty columns on an array of political and moral issues, gracefully sharing the experiences and values that lead her to unpredictable conclusions.

What the citation does not say is that she, in fact, lies. As in columns like this recent one, in which she falsely claims that the health care reform PPACA "expands public funding for abortion." But she can't explain how it does. Nobody can. Because it doesn't: Stupak. Etymology: Eponym for Congressman Bart Stupak. Function: verb. 1: In a legislative process, to obstruct passage of a proposed law on the basis of a moral principle (i.e. protecting the unborn), accumulating power in the process, then at a key moment surrendering in exchange for a fig leaf, the size of which varies according to the degree of emasculation of said legislator and/or as a reflection of just how stupid people are presumed to be. (Slang: backstabber.) Poor Bart Stupak. The man tried to be a hero for the unborn, and then, when all the power of the moment was in his frail human hands, he dropped the baby. He genuflected when he should have dug in his heels and gave it up for a meaningless executive order. Now, in the wake of his decision to vote "yes" for a health care bill that expands public funding for abortion, he is vilified and will be forever remembered as the guy who Stupaked health care reform and the pro-life movement...

But even though he doesn't have space to mention the winners (save Weingarten) or what they won for (for anyone), he does have space for (with no quotes and no sourcing):

A conspicuous sense of pride could be seen returning to a staff that has endured a tumultuous year of organizational upheaval and the continued loss of some of the nation's most respected journalists to cost-cutting buyouts.... It was as if the newsroom had rediscovered the end zone...

And two small obeisances to the local Cult of Personality:

These were the first Pulitzers won for work under the leadership team headed by Marcus W. Brauchli, who become executive editor in the fall of 2008...


"None of us comes to work every day with the aim of winning a Pulitzer," Brauchli told the newsroom on Monday, "but it sure is nice when it happens."

I would say, you hate to see that kind of thing at this level of play. But does Alexander even have a level of play?

I Say It Again: Nobody Has Any Business Contributing to, Voting for, or Defending the Current Republican Party. Nobody

If you do any of those things, be ashamed: be very ashamed.

Matthew Yglesias's headline says it all:

Obama Administration Sues Goldman Sachs for Fraud, Pushes Regulatory Bill Goldman Sachs Opposes, Gets Accused by Boehner of Doing Goldman’s Bidding


[I]t’s the Obama administration that initiated the lawsuit against Goldman Sachs in the first place. Also consider the fact that Goldman isn’t a leading support of the president’s regulatory reforms at all, it’s a leading opponent.... The Goldman Sachs position is, as best I can tell, identical to the positions of Boehner and Senator Mitch McConnell and all the rest. They recognize the need for reform, but oppose the reform bill in the House and oppose the reform bill in the Senate and don’t have any alternative reform bill they do support and don’t have any concrete changes they want to see made to the bills. In other words, they don’t want to do anything. Meanwhile, I don’t know how stupid Boehner and McConnell think people are, but obviously bailouts just happened under the status quo so the idea that passing the bill will somehow make bailouts possible or that standing by the status quo will make it impossible is 100 percent nonsense. Not everyone believes that Chris Dodd’s system is totally airtight, but how on earth does just doing nothing improve on that?

The sooner the Republican Party dies, the better for America. I wish those reasonable people trying to take it back and restore its honor luck, but their cause is hopeless.

James Kwak on the SEC-Goldman Sachs Civil Fraud Case

James Kwak:

SEC Charges Goldman with Fraud: The allegation is that Goldman failed to disclose the role that John Paulson’s hedge fund played in selecting residential mortgage-backed securities that went into a CDO created by Goldman.... "GS&Co arranged a transaction at Paulson’s request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests, but failed to disclose to investors, as part of the description of the portfolio selection process contained in the marketing materials used to promote the transaction, Paulson’s role in the portfolio selection process or its adverse economic interests...”

That does sound like a material fact that one has a duty to disclose. In fact, it looks like GS did more than fail to disclose a material fact. Kwak:

The problem is that the marketing documents claimed that the securities were selected by ACA Management, a third-party CDO manager, when in fact the selection decisions were influenced by Paulson’s fund. Goldman had a duty to disclose that influence.... It seems like the key will be proving that Paulson influenced the selection of securities enough that it should have been in the marketing documents. Paragraphs 25-35 include quotations from emails showing that Paulson was effectively negotiating with ACA over the composition of the CDO, so it’s pretty clear he had influence. The defense will presumably be that ACA had final signoff on the securities, and Paulson was just providing advice, so Paulson’s role did not need to be disclosed. (I don’t know what kind of standard will be applied here)...

It's a "more likely than not" standard, so I believe GS is toast on thi sone.


One of the things I say now and then that most annoys people is... [m]y general line is that I’m sure there was some bad behavior that rose to the level of criminal liability — like lying in disclosure documents — but that it wasn’t necessary for the crisis, and we could have had the crisis without any criminal activity at all... the ideological takeover and the resulting non-regulatory environment that we discuss in 13 Bankers were enough to do the job. And I don’t think this action contradicts my general point. I would love it if the SEC could nail banks for some of the CDOs they created, but I’m still betting that the vast majority will not create legal liability for them. The type of transaction involved — in which a hedge fund makes a CDO as toxic as possible in order to then short it — is similar to the Magnetar trade, which I discussed earlier. One thing we learn from paragraph 5 is that Paulson sure knew how to pick ‘em:

The deal closed on April 26, 2007. Paulson paid GS&Co approximately $15 million for structuring and marketing ABACUS 2007-AC1. By October 24, 2007, 83% of the RMBS in the ABACUS 2007-AC1 portfolio had been downgraded and 17% were on negative watch. By January 29, 2008, 99% of the portfolio had been downgraded. As a result, investors in the ABACUS 2007-AC1 CDO lost over $1 billion. Paulson’s opposite CDS positions yielded a profit of approximately $1 billion for Paulson.

And once again, no doubt to the annoyance of many, I don’t blame Paulson. It’s Goldman that had the duty to its investors, not Paulson. Fabrice Tourre of Goldman, however, who is named as a defendant? Well, he will forever be identified by the email quoted in paragraph 18, whatever it means:

At the same time, GS&Co recognized that market conditions were presenting challenges to the successful marketing of CDO transactions backed by mortgage-related securities. For example, portions of an email in French and English sent by Tourre to a friend on January 23, 2007 stated, in English translation where applicable: ‘More and more leverage in the system, The whole building is about to collapse anytime now…Only potential survivor, the fabulous Fab[rice Tourre]…standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstruosities!!!’ Similarly, an email on February 11, 2007 to Tourre from the head of the GS&Co structured product correlation trading desk stated in part, ‘the cdo biz is dead we don’t have a lot of time left.’

Tbe Deaf, Dumb, Blind... What's the Word for Unable to Smell?... Anosmic... What's the Word for Unable to Taste?... Ageusic... Conservative, Umm, "Mind." It Has No Prioperceptive Sense Either

What Jonathan Bernstein said. Bernstein:

More on that Closed Loop: I think we can add "epistemic closure" to the things that Jonah Goldberg either doesn't understand, or pretends not to understand.... Goldberg fights back against the accusation that conservatives are subject to "political correctness and intellectual taboos."  Moreover, he believes that "the larger 'evidence' that seems to be driving the idea that conservatives are brain dead is the fact that the GOP has become the 'Party of No.'"  But that's not what Julian Sanchez was actually talking about in his post.... Here's Sanchez:

One of the more striking features of the contemporary conservative movement is the extent to which it has been moving toward epistemic closure. Reality is defined by a multimedia array of interconnected and cross promoting conservative blogs, radio programs, magazines, and of course, Fox News. Whatever conflicts with that reality can be dismissed out of hand because it comes from the liberal media, and is therefore ipso facto not to be trusted. (How do you know they’re liberal? Well, they disagree with the conservative media!).

The accusation is... about information, and what counts as evidence about the real world... if one only gets information from a narrow set of sources that feed back into each other but do not engage beyond themselves, that one will have a closed mind (not his phrase, by the way) regardless of what one does with that information. Evidence to contradict Sanchez can't be found by comparing how many people your side has exiled with the number of people the other side has exiled (and, you know, I can't help but point out that if your prime example of someone who has been banned for violations of political correctness is the president's current director of the National Economic Council, you might want to look for a better example. Or does Goldberg think that David Frum is likely to get a prominent position in the next Republican White House?  How about Bruce Bartlett?  Lawrence Wilkerson?  Richard Clarke?). No, evidence to contradict Sanchez would involve... well, to start with, Jonah Goldberg could report where he gets his information?  Does he always watch Fox News, or does he also turn to CNN?  Does he read the New York Times?  If so, does he... think news reports in the Times can be "dismissed out of hand because it comes from the liberal media, and is therefore ipso facto not to be trusted" (as Sanchez asserts).  Does he seek out information from academic sources[?]... How often (and I don't know the answer to this) does he find himself repeating things that have long been debunked by neutral fact-check sites such as  Ah, there's a good one -- does he believe that all such sites that claim to be neutral are really just liberals in disguise?...

Goldberg explains,  "A lot of this closed-mind talk sounds like tendentious code for why conservatives should change their convictions."... To an outsider, this sounds suspiciously like exactly what Sanchez and others are saying, no?  Conservatism, to Goldberg, is constantly under assault from people -- non-conservatives -- who want real conservatives to give up their deepest principles, their capital-C convictions. It appears difficult for him to imagine a situation in which two people are equally conservative, even though they disagree on a number of issues. I saved the best for last.  Goldberg:

And I just don't know what these people are talking about when it comes to the notion that the conservative mind is closed. In a way it smacks of the tendency of losers in foreign policy fights to insist they're the "realists" unlike the winners who are really ensorcelled by ideology or idealism.  Just because your preferred position didn't win, doesn't mean the winners have some major intellectual defect or shortcoming.

Look, "realist" and "idealist" are not terms invented post-hoc by people upset that they didn't get their way in Iraq (or any other contemporary policy fight); they are long-settled ideas about international relations. Nothing about the terms implies "major intellectual defect or shortcoming."  That's Goldberg's view from the apparently very narrow place he lives.  The idea that these types of schools of thought, realists or idealists, could "win," after which conservatives, having settled their convictions in foreign policy, are done with that debate and can safely ridicule the losers (can safely think of them as losers)  -- well, that's what we're talking about.  That is what one who is closed-minded does. 

Obviously, everyone has sources they trust more, sources they are somewhat suspicious of, and sources they dismiss.  What Sanchez is talking about is a group of people who all agree on which sources are to be trusted -- and who have narrowed it down to a fraction of all the information out there, a fraction which is both closed and small and suspicious of any outside sources.  He's actually not talking at all about ideology or issue positions; he's talking about staying in touch with reality...

Ten Pieces Worth Reading, Mostly Economics, for April 16, 2010

  1. Campos: "This Arthur Brooks WSJ article illustrates most of the classic tropes of Republican anti-tax rhetoric: (1) Talk only about federal income taxes.... (2) Focus on marginal rates rather effective rates.... (3) Treat taxes as an artificial intrusion on “the market".... This kind of selective blindness allows for statistics such as the claim that “60% of Americans consume more in government services than they pay in taxes.” Such statistics are based on the idea that Bill Gates and a single mother living below the poverty line are consuming precisely the same amount of government services in the form of the existence of courts of law, legislation, police protection, and indeed the entire structure of the contemporary regulatory state. So since Gates isn’t eligible for food stamps, that means he’s consuming less in government services than someone living below the poverty line."

  2. Yglesias: "Financial advisor Mike Donahue whines in the WSJ: “I have more than most only because I’ve worked harder than most and because I am a saver.” I find it literally shocking that people say things like this. And I always go back to the case of the Salvadoran guys who moved all my furniture.... I certainly make more money than those guys. But whether or not I work longer hours than they do... you’d have to be clinically insane to think that writing my blog entails working harder than they do. In the real world, the reason I earn more than Salvadoran movers is the same as the reason I work less hard—I have more valuable skills, and people with valuable skills can demand both more money and cushier working conditions. But it’s not as if those guys were too lazy to become American political pundits, they were born in El Salvador in the middle of a civil war and never had a chance to obtain the relevant skills."

  3. Emerson: "CBS news published a rumor invented by disgraced plagiarist and rightwing operative Ben Domenech.... [A]ll that Washington Post media critic Howard Kurtz had to say about the episode was that “the flare-up underscores how quickly the battle over a Supreme Court nominee — or even a potential nominee — can turn searingly personal.” Just another he-said she-said disagreement.... Corrupt, conspiratorial organizations need a demimonde of lowlifes and hoodlums.... After his disgrace, Domenech did not have to get a job in food service.... He wasn’t even banned from the major media for long.... All these people... are completely competent... they don’t see their jobs the way we do.... There should be a camp for liberals who use the words “competent” and “incompetent” all the time. (Call it the Dukakis Memorial Re-education Center)."

  4. Mackenzie: "a recent article by Xie Zhenhua, China’s lead negotiator at Copenhagen and a vice-chairman of the National Development and Reform Commission which oversees China’s economic policymaking, indicates that fears around climate change as a threat to the country’s development are rising: “The scale of economic destruction would be equivalent to that of the two world wars and the Great Depression combined” if global temperatures rise by 3 degrees (5.4 Fahrenheit) to 4 degrees Celsius, Xie said. “Human beings and the Earth cannot afford such disasters.” This argument moves the debate on from “climate change is bad, but development is our first priority” towards “development is our first priority, and climate change may threaten that”. That in turn suggests that the concerns of Mr Xie at least are starting to focus on risks that are longer-term than the next quarterly GDP report. The realpolitik behind this is elegantly laid out by Brad DeLong..." Elegantly?!

  5. Froomkin: "[W]henever he got back around to trying to explain why one would ever pick a military commission over a civilian trial, he was at best amorphous. "When selecting between these two weapons, the choice should be based on a case-specific assessment of the threat at hand, the evidence in possession and a careful consideration of what will best allow us to achieve justice," he said. And don't expect any specific rationales.... Holder's defense of military commissions was ultimately less an argument than a series of assertions. "[M]ilitary commissions are also useful in the proper circumstances, and we need them, too," he said. "[I]n some cases, military commissions are not only appropriate, but also necessary to convict and neutralize terrorists." The nicest thing he was able to say about them, really, was that they are a lot like civilian trials."

  6. Bartlett: "The original think tank was probably the Brookings Institution... a sort of university without students.... Brookings has always had a moderately liberal perspective.... AEI tried to match the quality of Brookings' staff, but it was a lot harder.... This began to change in the 1970s as stagflation made many conservative economic ideas... more academically respectable... increasing demand... among policymakers... frustrated by the slow, plodding style of AEI and Brookings... From Feulner's vision the Heritage Foundation.... Rather than fill its staff with aging Ph.D.s, he hired people with master's degrees who had perhaps studied with the small number of conservatives in academia. Their job wasn't to do original research, but to take the research that had already been done by conservative academics, summarize it and apply it to the specific legislative issues.... Instead of writing books of several hundred pages, Heritage studies were typically 10 pages or less..."

Voters of America! All 41 Republican Senators Knuckle Under to the Banks!!

Matthew Yglesias:

The Battle Lines: 41 Senate Republicans have signed a letter promising to oppose the Democrats’ Wall Street reform bill with none of them offering any alternative proposals of their own. They claim that the bill “allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks.” Of course the status quo already allows for endless taxpayer bailouts. The point of the new regulatory powers it to (a) prevent the need for bailouts and (b) provide an alternative process to bailouts. The banks aren’t paying McConnell to put a stop to bailouts, they’re paying him to prevent the regulations that might stop bailouts.

They have all decided that future campaign contributions from banks are worth more to them than the combination of (a) their duty to the country, and (b) the political hit they will take from the voters for carrying the banks' water.

They are all betting that the voters are stupid enough to not understand who they are working for.

It would be very nice--and good for the country--if over the next five years the voters of America proved them wrong, and all 41 of them lost their seats in the Senate.

Just saying.

in Which Greg Mankiw and Clive Crook Puzzle Over the Puzzle of Why So Few Academics Believe in the 4000 Year Old Earth, That Human-Emitted Carbon-Dioxide Molecules Don't Absorb in the Infrared Spectrum, or that Unregulated Financial Markets Are Socially O

Wow. Just wow:

Clive Crook: Greg Mankiw points to an interesting, if slightly dyspeptic, essay on the puzzle of academic bias to the left. Thomas Reeves says it is mostly due to envy, aggravated by (relative) financial distress. Times are hard for scholars....

Even US$300,000, well beyond the reach of most young and many senior professors, won't buy much in Boston, New York, Los Angeles, New Orleans, Atlanta or Chicago.... And so many of us move into older, deteriorating, often dangerous areas, telling all who listen that we made the choice deliberately and that we, being humanists, have a natural desire to live among the poor and oppressed... some English and anthropology professors actually believe this nonsense, and enjoy dressing as factory workers and displaying furniture obviously purchased at a rummage sale.

In this talk from 1998, Robert Nozick put it down to a subtly different cause: a sense of frustrated entitlement... Note the difference: envy is wrong; insisting on reward by merit (however Utopian) is right:

The intellectual wants the whole society to be a school writ large.... Those at the top of the school's hierarchy will feel entitled to a top position, not only in that micro-society but in the wider one, a society whose system they will resent when it fails to treat them according to their self-prescribed wants and entitlements. The school system thereby produces anti-capitalist feeling among intellectuals.

Of course, the two causes are not mutually exclusive.

May I point out that one has to live in a strange alternate universe to think that belief in evolution, in human-caused global warming, and in the need for regulation of the banking system is a "bias" rather than the natural order of things?

The interesting question from my perspective is why Clive Crook and Greg Mankiw support a political party opposed to evolution, opposed to recognizing human impacts on climate, opposed to financial regulation, opposed to RomneyCare, and opposed to the government budget constraint. That seems to me to be a "bias" that it is important that we try to understand.

Perhaps ressentiment of some sort has a role?

Say It Ain't So, Greg! Whatever Happened to Greg Sargent? (Why Oh Why Can't We Have a Better Press Corps?)

Greg Sargent observes Jon Kingsdale's departure from his job running Romney's Massachusetts Health Connector and Kingsdale's writing: "We should all feel very proud of having created the model for national health reform.... The power of the Bay State's example is enormously consequential. I believe that national reform would not have happened without it..."

And what does Sargent have today about this? Sargent says that it shows that "Mitt Romney’s vexing Romneycare-Obamacare conundrum continues."[1]

I remember a man named Greg Sargent. He was:

...editor of Election Central, Talking Points Memo's politics and elections Web site. He has previously covered New York City politics for The New York Observer and for New York magazine, where he published a number of features, columns and news stories. He has also written for the Washington Monthly, The American Prospect, Newsday, Mother Jones and other publications. Greg also founded a blog about political coverage called The Horse's Mouth, which has now been merged with Election Central. He splits his time between New York City and Connecticut.

That man would not have spun this episode as an amusing and somewhat ridiculous "conundrum" that poses an obstacle to Mitt Romney's quest for high federal office. That man would have pointed out that this episode has powerful substantive implications--it tells you a lot about what good public policy for the nation is. And that man would have pointed out that it also tells you a lot about the total shameless mendacity of Republican office-seekers.

I used to read that man and I learned an awful lot about the world from him--not just about who was up and who was down in the zero-sum inside-baseball Washington-village game of political status.

I miss that man.

How do we I him back?

[1] The Morning Plum | The Plum Line:

Mitt Romney’s vexing Romneycare-Obamacare conundrum continues: Now the dude who helped him implement Romneycare’s individual mandate says this: “We should all feel very proud of having created the model for national health reform.”

EXTRA: MUST CREDIT DELONG: Court Nomination News: Senators McConnell and Hatch Denounce Nomination of Solomon ben David

In a press conference last midnight, Senators McConnell and Hatch reacted to a report by Jeremiah that YHWH had secretly met with Solomon ben Davi in a dream at Gibeon and planned to nominate him. "We question whether YHWH understands what makes a good judge," they said in a joint statement.

The press report by Jeremiah claimed that:

In Gibeon the LORD appeared to Solomon in a dream by night: and God said, "Ask what I shall give thee."
And Solomon said, "Thou hast shewed unto thy servant David my father great mercy, according as he walked before thee in truth, and in righteousness, and in uprightness of heart with thee; and thou hast kept for him this great kindness, that thou hast given him a son to sit on his throne, as it is this day.
"And now, O LORD my God, thou hast made thy servant king instead of David my father: and I am but a little child: I know not how to go out or come in.
"And thy servant is in the midst of thy people which thou hast chosen, a great people, that cannot be numbered nor counted for multitude.
"Give therefore thy servant an understanding heart to judge thy people, that I may discern between good and bad: for who is able to judge this thy so great a people?"
And the speech pleased the Lord, that Solomon had asked this thing.
And God said unto him, "Because thou hast asked this thing, and hast not asked for thyself long life; neither hast asked riches for thyself, nor hast asked the life of thine enemies; but hast asked for thyself understanding to discern judgment;
"Behold, I have done according to thy words: lo, I have given thee a wise and an understanding heart; so that there was none like thee before thee, neither after thee shall any arise like unto thee..."

Senators McConnell and Hatch promised to do all they could to prevent Solomon ben David's nomination from even reaching the floor. "We want a ruler who will apply as written," they said. "We don't believe in any of this 'empathy' stuff. 'Wise and understanding heart'--feh!!"

Attention Howard Kurtz: The Dominant View Is That Elena Kagan Is Not a Lesbian

Howard Kurtz:

White House complains about CBS News blog post saying that possible Supreme Court nominee is gay: The White House ripped CBS News on Thursday for publishing an online column by a blogger who made assertions about the sexual orientation of Solicitor General Elena Kagan, widely viewed as a leading candidate for the Supreme Court. Ben Domenech, a former Bush administration aide and Republican Senate staffer, wrote that President Obama would "please" much of his base by picking the "first openly gay justice." An administration official, who asked not to be identified discussing personal matters, said Kagan is not a lesbian.

CBS initially refused to pull the posting, prompting Anita Dunn, a former White House communications director who is working with the administration on the high court vacancy, to say: "The fact that they've chosen to become enablers of people posting lies on their site tells us where the journalistic standards of CBS are in 2010." She said the network was giving a platform to a blogger "with a history of plagiarism" who was "applying old stereotypes to single women with successful careers." The network deleted the posting Thursday night after Domenech said he was merely repeating a rumor. The flare-up underscores how quickly the battle over a Supreme Court nominee -- or even a potential nominee -- can turn searingly personal. Most major news organizations have policies against "outing" gays or reporting on the sex lives of public officials unless they are related to their public duties...

Howard: nobody besides Ben Domenech has ever said that Elena Kagan would be the first "openly" gay justice.

Indeed, my six-degrees-of-separation-links leading toward Ms. Kagan say that they do not believe that she is a lesbian at all.

It's not about how the battle over a Supreme Court nominee can turn searingly personal.

It's about how news organizations hire, print, and display dumbness and incompetence.

You should be ashamed of yourself foor misleading your readers.

And you should be ashamed of yourself for your misleading summary of Box-Turtle Ben's three-day career at the Washington Post as well:

The Post's Web site briefly hired Domenech as a conservative blogger in 2006. He resigned three days after his debut after a flurry of plagiarism allegations that were trumpeted by liberal Web sites. The sites found signs of plagiarism in a movie review he wrote for National Review Online and, earlier, in his writing for the College of William & Mary's student newspaper. Domenech maintained that he did not knowingly use other people's writing without attribution but said the "firestorm" had "reached the point where there's nothing I can really do to defend myself."

So, Howard, was box-turtle Ben telling the truth when he said that he did not knowingly use other people's writing, or not?

Here's what National Review had to say:

No Excuses [John Podhoretz]: I don't know Ben Domenech, but I've always found him impressive. The evidence of his plagiarism, however, is overwhelming, and there can be no excuses for these intellectual felonies. He needs to come clean and take his punishment like a man.


A Message to Our Readers [The Editors]: As the previous links on the matter mention, at least one of the pieces Ben Domenech is accused of having plagiarized was a movie review for National Review Online. A side-by-side comparison to another review of the same film speaks for itself. There is no excuse for plagiarism and we apologize to our readers and to Steve Murray of the Cox News Service from whose piece the language was lifted. With some evidence of possible problems with other pieces, we're also looking into other articles he wrote for NRO.


Domenech, Continued [The Editors]: As we mentioned in our earlier editor's note, staff here at National Review Online are going through all of the pieces Ben Domenech has written for us (the most recent of which appears to have been published in 2002) in light of questions raised in the wake of the debut of his "Red America" blog this week on the Washington Post's website (from which he has since resigned). Our review unfortunately raises questions about several other pieces besides the one we apologized for this morning.... You get the idea. Put alongside other pieces that we're looking at and that have been linked to elsewhere in the blogosphere, it's hard not to conclude there was something amiss. We're still looking. And again apologize to our readers that this ever happened on our site.

Why oh why can't we have a better press corps?

25 Pieces Worth Reading, Mostly Economics, for April 15, 2010

  1. Hoyt: "Sorkin came right back Wednesday on his blog with a salutation that some took as sarcastic..." I did not see it as such. Hoyt goes on: “[Sorkin] cited three examples... a full and fair reading of the column where they appeared does not support the notion that he favored nationalizing the entire banking system. Nor did he say that without nationalization the banks would fail again.... Krugman wrote that he agreed with Alan Greenspan, who had said, “It may be necessary to temporarily nationalize some banks in order to facilitate a swift and orderly restructuring.” Krugman’s argument for doing so was that, if the government was going to have to put up all the money to get the banks going again, it should get the ownership.... Sorkin... said [Sweden] took over some banks but guaranteed the debts of all of them. “That’s how many people would define ‘nationalizing the entire banking system,’” he said." That's not nationalization. That's a bailout. Two different things.

  2. Wolfers: "If we are interested in thinking about the potential taxes the rich can pay, Mankiw’s 0.2 percent is incredibly misleading. The issue here isn’t how many people are rich, but rather how many dollars are earned by the rich.... Families earning more than $1 million probably do represent close to 14 percent of total income, and maybe more. By arguing that only 0.2 percent of families are this rich, Mankiw risks distracting his readers from the fact that increasing the taxes paid by the rich can be a big part of the solution to our fiscal woes."

  3. Scoble: "Apple has announced it is selling far more iPads than it expected.... So why did Apple guess its prediction so wrong? Several reasons: 1. They didn’t realize just how many apps would ship on day one and how good the quality of those apps would be. 2. Even the app developers never had their hands on iPads... so the marketplace couldn’t tell them before it shipped just how hot this would be. 3. The focus groups that Apple talked with didn’t hype it up... because they, themselves, didn’t have the apps.... They didn’t realize how fast skeptics would be convinced.... gThis is one of those dangers that Apple has: predicting demand is really tough when your market really can’t see the complete product before it ships. On the other hand, this is a very positive sign for Apple. It means that the iPad is moving outside of the “Apple faithful” very quickly.... Apple has a runaway hit."

  4. Yes, he is serious: Hans-Hermann Hoppe: "[S]tates disarm their citizens so as to be able to rob them more surely... a natural order is characterized by an armed citizenry... [and] insurance companies, which play a prominent role as providers of security... the relationship between insurer and client is contractual.... States have not just disarmed their citizens by taking away their weapons, democratic states in particular have also done so in stripping their citizens of the right to exclusion.... [T]o lower the production cost of security and improve its quality, a natural order is characterized by increased discrimination, segregation, spatial separation, uniculturalism (cultural homogeneity), exclusivity, and exclusion.... [A] natural order is distinctly un-egalitarian: "elitist," "hierarchical," "proprietarian," "patriarchical," and "authoritorian," and its stability depends essentially on the existence of a self-conscious natural – voluntarily acknowledged – aristocracy.

  5. Andrew Odlyzko: This time is different: An example of a giant, wildly speculative, and successful investment mania

  6. Leah Finnegan: "Mike Huckabee has come out swinging at an unlikely target: a student journalist from New Jersey.... Today, Huckabee responded to the interview on his website, saying he was taken out of context. "The young college student hopefully will find a career other than journalism. I would ask that he release the unedited tape of our conversation...." The Perspective, in turn, responded to the governor on their site: "It is telling that nowhere in his statement did Huckabee suggest he was misquoted in the article, and rightfully so.... Huckabee's problem seems to lie more in the focus of the article.... We feel that same-sex marriage, laws prohibiting gays and lesbians from adopting children, and 'Don't Ask Don't Tell' are legitimate policy concerns about which to question national political figures. Gov. Huckabee may disagree." Looks like the proof may be in the student paper -- listen for yourself in this excerpt of the interview.

  7. Neil Irwin: "In recent weeks, there have been a series of positive readings on the economy, including news that job growth was its strongest in three years in March and a report Wednesday that March retail sales rose a strong 1.6 percent. But in describing his view of the economic outlook to the Joint Economic Committee, Bernanke sounded the same restrained tone in describing his expectations that he did in testimony back in the winter. “On balance, the incoming data suggest that growth in private final demand will be sufficient to promote a moderate economic recovery in coming quarters,” Bernanke said in prepared testimony. He added later that, “if the pace of recovery is moderate, as I expect, a significant amount of time will be required to restore the 8 1/2 million jobs that were lost during the past two years.”"

  8. Chinn: "The CEA has just released the newest quarterly report on the impact of the ARRA. In addition to tabulating the impacts on output and employment, there's a special section by Chris Carroll (one of the leading authorities on modeling consumption behavior -- I used to teach his papers in my PhD macro course), which concludes in the absence of the ARRA "...consumer spending would likely have continued to fall" (which is consistent with my post from a couple days ago)."

  9. Duy: 'Today's retail sales report should dispel any lingering concerns that American consumers remain huddled in their basements, clutching a bar of gold with one hand and a loaded shotgun with the other. Indeed, even a relative pessimist like me has to admit that recent trends (log differences) look pretty good"

  10. Wilder: "Brad DeLong and Mark Thoma posit that a falling US public deficit is bad news – they are right! Deficit hysteria is now mainstream thinking, while the more appropriate hysteria should be “jobs hysteria”. How in the world is nominal income growth expected to finance a drop in consumer debt leverage if the government supports a smaller deficit? TARP costs less and tax receipt growth is beating expectations. But that's all it is, beating expectations."

  11. Ackerman: "This New York Times piece reminds us of a 2006 quote from Condoleezza Rice, if you remember her: 'Three years ago, Condoleezza Rice, then secretary of state, declared during a speech in Jerusalem that a peace deal between Israel and the Palestinians was a “strategic interest” of the United States. In comments that drew little notice at the time, she said, “The prolonged experience of deprivation and humiliation can radicalize even normal people.”'... [Y]ou need to strike the word “even” there. The rational response to persistent, entrenched injustice... is radicalization. Ever talk to a Palestinian stopped at a checkpoint? And ever hear how he can’t remember a time when he wanted to drive from Jerusalem to Ramallah when he wasn’t stopped at a checkpoint? It’s not the mass murderers and conspiracy theorists who are radicalized.... Those guys use that experience as a catalyst for something deeper. It’s the normal people who react that way..."

  12. Ackerman: "But oh God, this Dana Milbank column on Attorney General Holder’s testimony yesterday. 'Eric Holder is a Guantanamo Bay prisoner.' Stop right there. I have personally seen Guantanamo detainees. (“Prisoners” have been convicted of something.) I’ve seen them strapped to the flatbeds of small vehicles just to be driven a few yards. I’ve seen the bolts in the floors of their interrogation chambers where they’ve been “short-shackled.” I’ve seen them, in restraints, plead their cases through translation to a panel of colonels in air-conditioned trailers that they were just employees on a Taliban road construction crew and why are they still here.... I’ve read the reports about the torture.... I didn’t see anything like that at Eric Holder’s testimony yesterday. (Dana, your throat-clearing caveat about how “He’s not imprisoned at Gitmo, but he’s imprisoned by Gitmo” is just a pathetic excuse for your frivolous opening sentence, and so you are granted no absolution.)"

  13. Bertram: "Surfing around, listening to Neil Young, and thinking that, perhaps, someone should buy Bryan Caplan some Edith Wharton novels (or, failing that, Terence Davies’s film of The House of Mirth), when I came across J.K. Rowling’s magnificent piece in today’s Times about what it was like as an impoverished single mother under the last Tory government, how her life changed when she became one of the richest women in Britain, her attitudes not so much"

  14. PGL: "CNNMoney and the Vice President must think this is excellent news: 'The government's Recovery Act is responsible for between 2.2 and 2.8 million jobs through the first quarter of 2010... on track to create or save 3.5 million jobs by the end of the year. "From tax cuts to construction projects, the Recovery Act is firing on all cylinders when it comes to creating jobs and putting Americans back to work." Vice President Joe Biden said...." Job growth is better than job losses.... But let’s assume that simply keeping pace with a rising population and labor force means we have to create 100,000 new jobs per month. With the civilian non-institutional population being near 237 million, the projected increase in the employment to population ratio for 2010 seems to be a mere 1 percent. This ratio was 58.2% as of December 2009 and has risen to 58.6% as of March 2010. If it rises to 59.2% by the end of the year, we will still have a very weak labor market."

  15. Andrews: "Is McConnell right?... [T]he Senate bill would require financial institutions to put up $50 billion to deal with possible future meltdowns. It is also true that federal regulators would have new "resolution authority."... But those are very different things from pre-authorizing future bailouts. The recent bailouts kept zombie banks and AIG alive, because... their collapse would set off a chain-reaction.... The new resolution authority would give the government new powers to... shut down failing giants... [not] bailing out a bank.... What's that $50 billion for? The same thing that the FDIC fund is for: shutting down institutions without sending shockwaves through the whole system.... The Democratic bill may not be nearly tough enough on Wall Street and the banks. But it certainly doesn't set up a system to bail them out all over again. Republicans might be able to cloak their opposition with what sounds like anti-Wall Street rhetoric, but they do so at their peril."

  16. Black: "Uh... To the extent that such distortions are real, they're generally predictable, and since when do Sunday holidays have a major impact on such things... 'Claims [for unemployment insurance] have unexpectedly risen two straight weeks, but a Labor official said the Easter holiday and a special holiday in California, the nation's largest state, disrupted collection of jobless data. The distortions should fade over the next few weeks, he said. Economists surveyed by MarketWatch had forecast that claims would drop to 430,000. Claims have to fall to 400,000 or lower to indicate an accelerated hiring trend, economists say.' Maybe get some new economists who are aware of the obvious impacts of these 'distortions.'"

  17. Greg Jaffe: "It was as if the five years of almost ceaseless firefights and ambushes had been a misunderstanding—a tragic, bloody misunderstanding. More than 40 U.S. troops have been killed, and scores more wounded, in helicopter crashes, machine-gun attacks and grenade blasts in the Korengal Valley.... The Afghan death toll has been far higher.... The valley’s extreme isolation, its axle-breaking terrain and its inhabitants’ suspicion of outsiders made it a perfect spot to wage an insurgency.... U.S. troops arrived here in 2005.... They stayed on the theory that their presence drew insurgents away from areas where the U.S. role is more tolerated.... The troops were, in essence, bullet magnets..... [N]ew... commanders concluded that the United States had blundered into a blood feud with... villagers who wanted... to be left alone.... subduing the Korengal wasn’t worth the cost..." Cole: "It took five years to figure that out? And we’re dumping more blood and treasure in Afghanistan?"

  18. Johnson: "Senator Mitch McConnell continues to insist that the Dodd bill creates permanent bailouts – and that it would be definitely better to do nothing. Apparently, he has indicated a willingness to make a Senate floor statement to that effect every day. Senator McConnell is completely wrong on this issue – and, if he gets any traction, we will feel the need to point this out every day. His remarks today and yesterday go far beyond any reasonable level of partisanship. This is about playing games with the financial stability of this country and the world; it should stop."

  19. Williams: "The provocative subtitle alerts you to the fact that this is going to be much more than a textbook. Diarmaid MacCulloch begins with what turns out to be one of many tours de force in summarising the intellectual and social background of Christianity in the classical as well as the Jewish world, so that we can see something of the issues to which the Christian faith offered a startlingly new response. Greco-Roman religion... an uneasy mixture of the cult of the emperor... and a chaotic plurality of local rites and myths. The Jewish world was marked by a lively tension over... Jewish identity.... Christianity brought... a definition of Jewish identity that opened up to become a definition of human identity... a religion as a form of belonging together that did not depend on political loyalties. Of course, Christians rapidly worked out how to deploy political power and to enforce conformity. But MacCulloch resists the glib narrative of decline and fall..."

  20. Boone and Johnson: "The bailout of Greece, while still not fully consummated, has brought an eerie calm in European financial markets. It is, for sure, a massive bailout by historical standards. With the planned addition of IMF money, the Greeks will receive 18% of their GDP in one year at preferential interest rates. This equals 4,000 euros per person, and will be spent in roughly 11 months. Despite this eye-popping sum, the bailout does nothing to resolve the many problems that persist.... Next on the radar will be Portugal. This nation has largely missed the spotlight, if only because Greece spiralled downwards. But both are economically on the verge of bankruptcy, and they each look far more risky than Argentina did back in 2001 when it succumbed to default. The main problem that Portugal faces, like Greece, Ireland and Spain, is that it is stuck with a highly overvalued exchange rate when it is in need of massive fiscal adjustment..."

  21. Limousine Maoist Arundhati Roy: "Kolkata, April 14 (IANS) Writer-activist Arundhati Roy Wednesday virtually justified the Maoist attack on the Central Reserve Police Force in Chhattisgarh's Dantewada.... 'I salute the people of Dantewada who have stood up against such a mighty state. Was there any other alternative to the people of Dantewada? The tribals have been neglected for decades. And now when they have started protesting against this injustice, the government is waging war against them,' said Roy while addressing a gathering in Kolkata. On April 6, 75 paramilitary troopers and a lone policeman were massacred by the Maoist in Dantewada district in one of the biggest attacks by the Left wing rebels to date..."

  22. Johnson: "The Republican Senate leadership finally express clear positions on the financial industry... what they are proposing is downright scary. In a Senate floor speech yesterday, Senator Mitch McConnell (Senate Republican leader) said, 'The way to solve this problem is to let the people who make the mistakes pay for them. We won’t solve this problem until the biggest banks are allowed to fail.' Do not be misled by this statement. Senator McConnell’s preferred approach is not to break up big banks; it’s to change nothing now and simply promise to let them fail in the future. This proposal is dangerous, irresponsible, and makes no sense."

New York TImes FAIL

Why oh why can't we have a better press corps? Ben of Unfogged on the New York Times and Ross Douthat:

Those little sluts: Via Bërubë... that other CT thread... about the 70s and how that explains (and I suppose also excuses) everything. Now here is a question for you. Douthat's role as a Times columnist is, as I understand it, to espouse conservative opinions while also occasionally saying things that a nonconservative can read with agreement, thinking, "I guess he is worth looking at occasionally--I mean he's not totally off his rocker". (Let's set aside the question of why Douthat's being a conservative might have led him to defend the one true and universal church in this instance, especially via so paradoxical and idiotic an argument.) Surely this is a gimme! One wouldn't have to venture very far into the land of the sane to write 750 words about how, hey, child abuse, maybe not so nice. Plus it would let him give exhibit some moral clarity...

2010 Peder Sather Symposium: After Copenhagen: What Can Be Done to Meet the Economic and Environmental Challenges?

AudioL Download After Copenhagen- Peder Sather Symposium (04.15.2010 05-54-19 PM)

After Copenhagen: 2010 Peder Sather Symposium | IIS:

AFTER COPENHAGEN: What Can Be Done to Meet the Economic and Environmental Challenges?

4 p.m., Goldman Theater, David Brower Center, 2150 Allston Way at Fulton St., Westside of UCB Campus, Berkeley, CA 94704

The Peder Sather Symposium represents an ongoing collaboration between the governments of Norway and Sweden and UC Berkeley. The goal of the symposium is to promote the understanding of political, economic, and cultural issues. The event is designed to foster interdisciplinary discussion among scholars and policymakers from Europe and the U.S. on global and national issues of mutual concern.

About Peder Sather: Peder Sather was born in Norway in 1810. He emigrated to New York and then to California, where he founded the banking firm of Sather and Church. Peder Sather was one of the early trustees of the College of California and an active participant in aiding the institution that has become the University of California. Upon his death, the Sather and Church banking firm was absorbed by the Bank of California. Although it was Peder Sather who had accumulated the wealth and resources that helped fund education in California, it was the work of his wife, Jane Krom Sather, a native of New York State, who made the Sather name part of UC Berkeley's history. Through her generous endowments to the University's teaching resources and beautification effort (notably Sather Gate, which was the main entrance to the UC campus), the Sather name has come to symbolize a legacy of collaboration between Norway and the University of California. With the Sather legacy in mind, the University of California and the Royal Norwegian Consulate General of San Francisco inaugurated the first Peder Sather Symposium in 1991.

After Copenhagen, What?

J. Bradford DeLong
Professor of Economics, U.C. Berkeley
Research Associate, NBER

April 15, 2010


We have just experienced the hottest twelve-month period in at least the past thousand years.

Media personalities and freakeconomists claim that in recent years there has been global cooling. They lie.

If global temperatures continue to rise at the rate that they have risen for the past generation, then the world of 2100 will see a world 2.3C—4.1F—hotter than the world of the 1970s. If global warming accelerates, as industrializing China, India, and other countries pour more carbon dioxide and other greenhouse gases into the atmosphere, and as Indonesia, Brazil, and other countries cut and burn their forests. We are looking at a world that by 2100 will be 5C—9F—hotter than the world of the 1970s. If we are lucky, we might discover that there are powerful carbon-sink processes and reflective cooling processes that have not yet swung into action, and we might discover magical new non-greenhouse gas emitting technologies that can be deployed more cheaply than our current open carbon-cycle technologies, and we might wind up with a world in 2100 that is little warmer than the world of the 1970s. We can hope.

But hope is not a plan. We can hope. We should also plan.

The world was supposed to plan at Kyoto, and then again at Copenhagen. It did not.

So what do we do now? I think we should do four things:

  • Pour money like water into research into closed-carbon and non-carbon energy technologies in order to maximize the chance that we will get lucky—on energy technologies at least, if not on climate sensitivity.
  • Beg the rulers of China and India to properly understand their long-term interests
  • Nationalize the energy industry in the United States.
  • Restrict future climate negotiations to a group of seven—the U.S., the E.U., Japan, China, India, Indonesia, and Brazil—and enforce their agreement by substantial and painful trade sanctions on countries that do not accept their place in the resulting negotiated system.

Let me briefly outline the reasons for these four things we should be doing:

Research. Into closed-carbon energy technologies, into non-carbon energy technologies, into geoengineering. It would be really nice to find a technological magic bullet. It would mean that all kinds of painful and difficult political negotations would not have to be carried through and we could devote the energy to all kinds of things. And it would mean that all kinds of investments economizing on energy use would no longer have to be carried through and we could spend the wealth on other things. Plus it would be cool to watch the gigantic 8000-mile in diameter sunshade being moved into its position at the appropriate Lagrange point for the Earth’s orbit. And it would be fun to watch the giant cannons throwing dust into the atmosphere—and to watch the beautiful sunsets that would result (if such a world would not be a Blade Runner-esque world in which our oceans were turning into acid soda water).

Beg the Rulers of China and India. Unless the North Atlantic Conveyor shuts down and Europe returns to the climate of the Younger Dryas Era, global warming is not a huge deal for the North Atlantic economies for a century. We mourn the losses of our glaciers and our snowpacks. We lament the extinction of the polar bears, the coral reefs, and the giant sequoias. We welcome the extra sunny days to go to the beach. We move a few miles north, relocate economic activity to get out of the paths of hurricanes and droughts, turn down our heaters, turn up our air conditioners, and live our lives. It would be expensive for us to simply adapt—more expensive I believe than dealing with the problem—but we could do so.

But China and India will soon have, along with their neighbors, three billion farming peasants in the great river valleys of Asia. They depend on the regular monsoon rains and the river flows of the Indus, the Ganges, the Mekong, the Yangtze, and the Yellow Rivers. Global warming means the climate will change. There will either be much more precipitation in the valleys and feeding the rivers, or much less. If there is much less, hundreds of millions will die in famine and drought. If there is much more, millions will die in floods and the dwelling and working places of hundreds of millions will be washed away. The peasant-farming populations are not rich enough to simply adapt.

So we need to beg the rulers of China and India to understand their long-term interest: The welfare of their countries over the next four generations depends on rapidly controlling global warming. Their own personal survival—unless they want mobs descending on their homes when they are in retirement, dragging them and their descendants out into the street, and carrying their heads on pikes—depends on rapidly controlling global warming. And because one of either China or India is going to be the globe’s dominant superpower in a century, pleasing that future superpower now is in every country’s interest. So we need to beg the rulers of China and India to recognize their personal and their countries’ long-term interest, and to use their power as future global superpowers to help us get this climate-control party started.

I hereby do so. Rulers of China and India: I beg you. Get on board. Please.

Nationalize the American Energy Industry. In the 1960s it became very clear that the price of oil in the United States needed to be higher: Because of powerful congestion and pollution externalities, we were overinvesting in the automobile civilization. A larger tax on oil would nudge the economy closer to the social optimum. In the 1970s it became very clear that the price of oil in the United States needed to be even higher: Because of instability in the Middle East, unacceptable geopolitical risks were being generated by our dependence on the Middle East as a source of energy. A larger tax on oil would nudge the economy into a configuration in which this geopolitical danger would be lessened. And at the start of the 1990s it became very clear that the price of carbon energy needed to be higher: global warming.
 Yet it never happened. It never happened because of what Lloyd Bentsen’s aides used to call the “ullengaz” industry—“oil and gas.” Powerful enough to block desirable public policy regulation and adjustment for nearly fifty years now. In general I am opposed to state-run nationalized industries: that is definitely the private sector’s place, not the government. But the interaction of rent-seeking politics with the flaws of America’s political system have made me willing to make an exception in the case of America’s oil industry: the increased allocative inefficiency that will flow from government ownership and management is, in my judgement, likely to be much less than the increased political efficiency that will flow from no longer having the energy industry able to purchase enough Representatives and Senators to block needed policy moves that it fears will be adverse to its interests. So nationalize—not to expropriate or to penalize the shareholders, but to get this particular selfish and destructive political voice out of American governance.

Restrict Future Climate Negotiations to a Group of Seven. When the United Nations was founded, key decision-making power was restricted to a group of five important countries that had been the victorious allies of World War II: The U.S., Britain, France, Russia, and China—those are the five Security Council veto powers. One of the things that Copenhagen has, I think, demonstrated is that climate-control negotiations are too complex and too fraught for them to be successfully achieved via grand multilateral processes. So allow everybody to kibbitz. But require only the agreement of a Climate Council of Seven in order to implement a treaty. And let those seven be the seven who have the biggest power to influence the climate and the most at stake: U.S., the E.U., Japan, China, India, Indonesia, and Brazil. Then enforce the treaty by using aggressive and substantial trade sanctions against outsider countries that do not want to live up to their responsibilities according to whatever plan is negotated by the Climate Council of Seven.

You may think—and you may even say—that these four proposals of mine are all unattainable and radical. You may think—and you may even say—that we should continue to walk down the road we have been walking, even though every time we do we seem to run into and bruise our noses against the same stone wall. We should, you may think, try again to walk the same road, and hope that this time it turns out differently.

But hope is not a plan.

Download 20100415 climate

20100415 climate presentation.pdf

20100415 climate presentation.key

Why Senator Bob Corker (R-Tenn) Should Resign Today - Sen. Bob Corker: 'The bill as it now is written allows ... bailouts in perpetuity'

He says, to Ezra Klein:

EZRA KLEIN: Was Sen. Mitch McConnell correct? Is the Dodd bill, as currently written, a permanent bailout?

BOB CORKER: I've cautioned against hyperbole. But the fact is that the bill as it now is written allows numerous loopholes that allow a situation where you could have bailouts in perpetuity. It's a fair statement...

Okay. So there we are. And so Ezra probes:

EZRA KLEIN: I think it would be useful for us to get very concrete here. So what is a "bailout," exactly?

BOB CORKER: A bailout is when the government comes to the aid of a company after the company begins to fail. The government comes in and creates mechanism for its survival.

EZRA KLEIN: My understanding is that the bill's resolution authority mandates that a company gets liquidated if it has to tap into the $50 billion resolution fund. Shareholders get wiped out. Management gets wiped out. The company gets taken apart. Am I wrong in any of that?

BOB CORKER: That's exactly right. What you've just said is true...

Which is why Senator Corker should resign today.

And then he starts to spin:

But there are a ton of technical things.... I have a list of 14 items that we're sharing with Treasury that we want them to look at.... I think they're very willing to look at them. I hope what you get out of this is that [Senator] Mark [Warner] and I have no issue [or disagreement here].... The way the language is written right now, the resolution process could be used on an auto company. We want this clearly, solely to apply to financial institutions. That's just one example of a definition type of thing.... I think the rhetoric has been overheated, and I've cautioned against it...

Then it what sense is McConnell's claim that the bill is a permanent bailout, Senator Corker?

And then he spins some more:

There are other things, too. The bill does not adequately deal with... that underwriting was really bad. Now, we have to end any discussion of companies being too big to fail. But there are other important issues...

And Ezra tries to guide the conversation:

EZRA KLEIN: As someone who just covered the health-care debate, yesterday was a bit worrisome to watch. This bill has been constructed without much public attention.... [B]efore we're even getting a chance to really ask whether it's structure is appropriate, McConnell is calling it a permanent bailout without offering any alternatives...

BOB CORKER: I think that's right, and unfortunately what happens in these debates is that if you take a complex bill and reduce it to four message points, it doesn't do our country or constituents a good service. But in politics, it works very effectively. What I try to do is say it's fair to say this is a criticism. It's fair. But we can fix it! And then let's fix it. And make sure the bill works to help create financial stability. There'll be more crises, but let's try to learn from what's occurred.

EZRA KLEIN: On that same point, it's a bit hard for people to understand what that criticism is right now, and so it's hard to judge if it has been fixed, or should be fixed. You've said you've got 14 items of concern. Will you release them publicly so people can see whether they agree?

EZRA KLEIN BOB CORKER: Well, if I do that then what happens is that the lines get hardened. And I'm not trying to be offensive, but a bunch of this read in the abstract would read like Greek. One of the issues is deeming language, which is very important. But I don't want to release it...

I don't think any country's legislature needs a Senator like Corker. Does anybody?

In Which I Disagree with John Holbo: In Atheistic Libertarian La-La Land Slavery IS Freedom

John Locke says that the only thing that keeps absolute slavery inconsistent with perfect libertarian freedom is that we cannot sell ourselves to others because we do not own ourselves--we only rent ourselves from God:

[A] man, not having the power of his own life, cannot, by compact, or his own consent, enslave himself.... No body can give more power than he has himself; and he that cannot [justly] take away his own life, cannot give another power over it. Indeed, having by his fault forfeited his own life, by some act that deserves death; he, to whom he has forfeited it, may (when he has him in his power) delay to take it, and make use of him to his own service, and he does him no injury by it: for, whenever he finds the hardship of his slavery outweigh the value of his life, it is in his power, by resisting the will of his master, to draw on himself the death he desires. This is the perfect condition of slavery, which is nothing else, but the state of war continued, between a lawful conqueror and a captive: for, if once compact enter between them, and make an agreement for a limited power on the one side, and obedience on the other, the state of war and slavery ceases, as long as the compact endures: for, as has been said, no man can, by agreement, pass over to another that which he hath not in himself, a power over his own life...

This has bearing on John Holbo, who this morning carries out a full "1984":

John Holbo: Libertarianism, Property Rights and Self-Ownership — Crooked Timber: [T]he thick/thin libertarian distinction... marks out two fundamentally distinct kinds of political philosophy, based on totally different principles... disguised because there is considerable overlapping consensus at higher levels; and the thin side... tends to be systematically confused about where it is coming from.... Once we see this, a few things that are a bit strange about libertarianism, as a sociological phenomenon, look less strange.... [And] libertarianism is a Bigger Tent than liberalism, philosophically, even though it is sometimes classed as a mere fringe of the liberal tent. Liberalism really is one kind of thing... libertarianism – which is really two fundamentally different kinds of thing.... [L]ibertarianism can run the gamut from feudalism to J.S. Mill’s On Liberty. That’s really pretty weird.

Now: why would libertarianism be a form of feudalism, of all things?... Libertarians – propertarians, anyway – rather notoriously maintain that you really ought to be able to sell yourself into slavery, if you want to. After all, you’re your property. You should be able to dispose of yourself as you see fit. (Some libertarians don’t go so far but many do. Nozick, for example. I think it’s pretty hard to resist this conclusion, in princpled fashion, once you’ve bought the strong self-ownership principle.) Now: suppose we drop, experimentally, just the libertarian ‘self-ownership’ assumption, while keeping the ownership model. Imagine a society in which everyone belongs to their parents, at birth. (Or, if their parents belong to someone, to their parents’ owners.) The libertarian logic of this is clear enough, I trust. (I don’t say all libertarians should be bound by logic to embrace this vision of utopia on the spot, but they ought to recognize libertarianism, minus assumed self-ownership, as a form of the philosophy they advocate, albeit an extreme form.) You didn’t make yourself. You are not the sweat of your brow. Someone else made you. And people are the sort of things that can be owned. So you are a made-by-someone-else thing. And made to be owned. Why shouldn’t you be born owned by whoever went to the trouble (two someones?)

It would be kind of fun to sketch a hyper-propertarian society, organized along these lines.... It wouldn’t be terribly surprising if it turned out radically … feudal. Libertarianism, in this extreme form... [is] the road to serfdom... political power is privately held... "elements of political authority are powers that are held personally by individuals, not by enduring political institutions. These powers are held as a matter of private contractual right. Individuals gradually acquire the power to make, apply, and enforce rules by forging a series of private contracts with particular individuals or families. Oaths of fealty or service are sworn in exchange for similar or compensating benefits. Those who exercise political power wield it on behalf of others pursuant to their private contractual relation and only so long as their contract is in force. Since different services are provided to people, there is no notion of a uniform public law....

Now, to repeat: this Freeman sense [of libertarianism] has nothing to do with serfs...

And here I disagree with John Holbo: this Freeman sense of libertarianism has everything to do with serfs. That's how serfdom got started. The Roman Empire collapses. The legions go away. You have a bunch of small farmers with their land who used to pay taxes to the legions. You have a bunch of local notables with land. You have some barbarian soldiers (or ex-Roman soldiers) with military equipment. The local notables marry their daughters and sons into the barbarian military lineages and become lords and the farmers contract with the lords, "hiring" them to provide local protection and arbitration services. That's the origin of feudalism: in a series of libertarian contracts made by autonomous property-owning individuals who found themselves in a libertarian state-of-nature vis-a-vis each other.

John Holbo goes on:

Suppose an inhabitant of this feudal libertarian utopia objected to not being able to own his own children. Because creeping socialism, that’s why! (What will they take away from me next?) The government is stepping in and taking property, without compensation, and redistributing it to – well, to the property. And a very undeserving sort of moocher it looks, there in its crib. This welfare scheme – taking things from owners and giving them to themselves – is sure to lead rampant child abuse, typical liberal self-defeating perverse consequences idiocy. (Anyway, why should there even be an agency with the authority to take and redistribute property in this extremely expansive and unwarranted fashion?)... I think libertarians should admit that it is a libertarian scheme. It’s roughly half of what libertarians believe, plus an argument that the other half is really inconsistent with the half we are keeping.... So what do libertarians believe?... That we should treat liberty as property, and everyone as their own property.... 4 can be regarded as a kind of feudalism + minimum welfare state: everyone is given one lump-sum gubmint handout at birth – herself. Feudalism + welfarism is a cheeky formula for thin libertarianism, to be sure. But it brings out its genuine kinship with other views like: your parents owns you at birth. The king owns you at birth. God owns you at birth. The local lord owns you at birth. These ‘propertarian’ variants are but one step from propertarian libertarianism....

[I]f libertarians stick to their ‘thin’ guns they are sticking with feudalism + minimum welfare state and letting go of any ideal of liberty in any ordinary sense... you are elaborately apologizing for the status quo.... [I]f libertarians stick with the ideal of maximizing (optimizing) the stock of freedom – making sure there is as much of the stuff as is consistent with everyone having that amount of it – then you are like Will Wilkinson or Jacob Levy... an instrumental, policy dispute over the best means of achieving what is basically a liberal end.... You think liberals are perversely obstinate about resisting market solutions; but you are philosophically at odds with ‘thin’ libertarianism because you are in favor of liberty....

Caplan is, I am pretty sure, a ‘thin’ libertarian. Self-ownership and the market and non-aggression and no fraud. The minimum libertarian package. He has this idea that men, in the 19th Century, in the US, were closer to his libertarian ideal than men today. Because less government and lower taxes, pretty much.... Liberty is not being interfered with, if the exercise of your legitimate property rights is not interfered with. But by that standard, not only might married women in the 19th Century qualify (if we accept the ‘put your foot down’ and force your husband to do it form of argument); but, actually, African-Americans under Jim Crow would quality. And indeed, African-Americans in slavery might qualify, if it had only been the case that their sales had been on the up-and-up, libertarian-wise (which they clearly weren’t). That is, you can’t tell that there is any lack of freedom, just by looking at the pre-Civil War South, and noticing there are lots of slaves. You have to ask: how did they get this way? Since Kaplan is not looking at how women in the 19th Century got into the general social state they were in, he is hardly going to conclude that there is anything necessarily ‘unfree’ about that state. Unless there are high taxes in it. In short, everyone is looking at the screamingly feudal results and saying: how the hell does this look like liberty? And the answer is: Caplan is a libertarian, so of course it can look strangely feudal. That’s because it can be completely feudal...

And Holbo is right. If not for the fact that we do not own ourselves but only rent ourselves from God. From a "think" libertarian standpoint slavery is libertarian freedom. And war is peace, too! And ignorance is strength!!

In Which I Disagree with the Very Sharp David Leonhardt

David Leonhardt writes:

Economic Scene - Yes, 47% of Households Owe No Taxes. Look Closer: That’s the portion of American households that owe no income tax for 2009. The number is up from 38 percent in 2007, and it has become a popular talking point on cable television and talk radio. With Tax Day coming on Thursday, 47 percent has become shorthand for the notion that the wealthy face a much higher tax burden than they once did while growing numbers of Americans are effectively on the dole. Neither one of those ideas is true. They rely on a cleverly selective reading of the facts. So does the 47 percent number.... All the attention being showered on “47 percent” is ultimately a distraction....

The 47 percent number is not wrong. The stimulus programs of the last two years — the first one signed by President George W. Bush, the second and larger one by President Obama — have increased the number of households that receive enough of a tax credit to wipe out their federal income tax liability...

And here I want to stop the tape. David: look at the headline above your article: "Economic Scene--Yes, 47% of Households Owe No Taxes. Look Closer." That's false: 47% of households do not "owe no taxes." As you know and as you say, 47% of households owe no federal income taxes.

When a number "that 47% number" leads your headline writers to automatically write a headline that is false, that number is false as well. You should not say "the 47% number is not wrong." You should say "the 47% number is highly misleading, and is crafted to be part of a deliberate lie..."

David Leonhardt goes on to explain in the rest of what is an excellent article:

[T]he modifiers here — federal and income — are important. Income taxes aren’t the only kind of federal taxes that people pay. There are also payroll taxes and investment taxes, among others. And, of course, people pay state and local taxes, too... poor families generally pay more in payroll taxes than they receive through benefits like the Earned Income Tax Credit.... Focusing on the statistical middle class — the middle 20 percent of households, as ranked by income — underlines this point. Households in this group made $35,400 to $52,100 in 2006... a household with one full-time worker earning about $17 to $25 an hour... firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers, according to the Bureau of Labor Statistics... the average household in this group paid a total income tax rate of just 3 percent. A good number of people, in fact, paid no net income taxes. They are among the alleged free riders. But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 0.8 percent of its income in corporate taxes (through the stocks it owned), 0.9 percent in gas and other federal excise taxes, and 9.5 percent in payroll taxes. Add these up, and the family’s total federal tax rate was 14.2 percent.... If anything, the government numbers I’m using here exaggerate how much of the tax burden falls on the wealthy. These numbers fail to account for the income that is hidden from tax collectors — a practice, research shows, that is more common among affluent families. “Because higher-income people are understating their income,” Joel Slemrod, a tax scholar at the University of Michigan, says, “We’ve been overstating their average tax rates.”...

So why are those radio and television talk show hosts spending so much time arguing that today’s wealthy are unfairly burdened? Well, it’s hard not to notice that the talk show hosts themselves tend to be among the very wealthy. No doubt, like the rest of us, they don’t particularly enjoy paying taxes. They are happy with the tax cuts they have received lately. They would prefer if other people had to pick up the bill for Medicare, Social Security and the military — people like, say, firefighters, preschool teachers, computer support specialists, farmers, members of the clergy, mail carriers, secretaries and truck drivers.

Conference Summary: North American Futures

Jeremy Kinsman: Berkeley-British Columbia Symposium: North American Futures:

Initial commentary from presenter Brad DeLong of Berkeley stressed that American political and economic governance was too overwrought with immediate internal issues and consequence to favor adding in new initiatives of major dimension. Chrystia Freeland of the Financial Times expected that now is not the moment to expect the US to think about “non-US solutions;” the critical US political issue is unemployment and the principal stance is defensive. Brad Delong asked rhetorically, “If the US can’t even manage the economy on behalf of its own citizens, what chance is there it could do so for the partial benefit of the citizens of Canada?” Yet, intra-NAFTA trade was in decline. Expectations for the of re- invigoration of NAFTA had to take account of the fact it would take a major effort to get the US to live up to its existing treaty obligations under NAFTA, though there is at least some acknowledgment politically the US has been in violation of obligations to Canada on both softwood lumber and Buy America. Preoccupation with US political and institutional gridlock meant there was little discussion of whether agreements could be negotiated for greater convergence in regulations and standards affecting finance and trade in goods and services.

Response from discussants and the floor pushed back against what appeared as laconic and inward-looking detachment from the challenges of international reality.

David Emerson stressed the over-arching fact of America’s competitive erosion in the globalizing world economy. He laid a lot of blame at the door of the role of money in US politics, arguing that this had made the US so protectionist, and contributed to counter-productive border thickening. Strengthening globally efficient North American supply chains in a more vigorous NAFTA is essential to restoring the competitive position of all North America.

He described the effects of globalization in positioning China in particular to “take us on.” The challenge argued for essential collaboration on such issues as climate change among North Americans, and in response to an observation from Pierre-Marc Johnson, possibly among North America and the EU. However, it was underlined by Brad de Long and others that there should be no question of an alliance against China.

China could be effectively engaged in a positive way from a North American platform, possibly in coordination with EU partners, though the “realist” view was that the US would actually prefer to opt for a G-2 relationship of its own with China.

Chrystia Freeland expected the environment to be an increasing point of tension between the US and Canada. David Emerson agreed that the “geo-politics” of the environment/natural resources swirl of issues could become more fractious before there is a strategic convergence on North American solutions, but that the logic of the argument in favor of a North America- wide approach to shared problems would become increasingly apparent politically.

As these issues are also driving global agendas, discussion took up with interest the potential significance of the proposition in the Dobell paper that North America could indeed be a “first mover” on such questions in global discussion and eventual resolution – similar to Ambassador Pickering’s proposal the two countries seek to identify “project-models.”

This led to the recommendation North American coordination also take place on the larger trilateral basis including Mexico, across a range of economic and infrastructural policies, a theme that was taken up in subsequent panels.

Why America Needs the Republican Party--at Least as Currently Constituted--to Die as Fast as Possible

Because they lie. All the time. About everything. And so corrupt our public policy decision making.

Ezra Klein:

What's the Republican alternative to bailouts?: If there’s one thing Americans agree on when it comes to financial reform, it’s this," said Senate Minority Leader Mitch McConnell. "Never again should taxpayers be expected to bail out Wall Street from its own mistakes. We cannot allow endless taxpayer-funded bailouts for big Wall Street banks. And that’s why we must not pass the financial reform bill that’s about to hit the floor."

So much for that vaunted bipartisan cooperation, huh?

The Republican attack on FinReg... that it creates a "permanent bailout"... isn't a judgment on the Dodd bill.... It goes back to a memo that GOP pollster Frank Luntz penned back in February. The subject? How to defeat financial regulation reform.... "Frankly," Luntz concluded, "the single best way to kill any legislation is to link it to the Big Bank Bailout." So that's what McConnell does. But is it true? When compared to the status quo, absolutely not....

[T]here's a good argument to be made that this bill doesn't go far enough. On some level, so long as we have systemically important firms, there will be the risk of bailouts.... Criticizing the Dodd bill for not entirely ending the problem of systemically-crucial firms -- and thus rescues of some form or another -- is a fair critique. The ways to permanently end bailouts... are... radical... break up large firms before they become too big to fail... insure the securities that banks lend to one another.... impose such enormous capital requirements on systemically important banks that they can't take many risks and can mostly cover their debts.

The way to judge whether someone is serious about ending bailouts is to see whether they propose one of these options.... McConnell... does not.... [T]he status quo, of course, is far more pro-bailout than the Dodd bill is. If that's McConnell's alternative, than he is ensuring and fighting for a future of endless bailouts...

No patriotic American has any business supporting this current crop of Republican legislators. None. Throw the b------- out.

Worth Reading for April 14, 2010

  • Cowen: "Let's say the government tells me I have to buy and place a five-foot ceramic grizzly bear statue.... If I have an upper-middle class income, it's an inconvenience and an aesthetic blight but no great tragedy. If I have a Haitian per capita income... I either give up some food or they send me to jail.... [T]heories of negative liberty... require standards for... coercion... [that] depend on how much wealth the victims of the coercion have and they will depend on a more general concept of positive liberty.... When people are poor, apparently small interventions can be quite crushing and quite coercive.... (Also, I would not in this case take the *legal* oppressions to be a stand-alone.... There were various male desires to oppress women, which took a mix of legal and non-legal forms... ) Every negative liberty theorist is a positive liberty theorist in disguise and this comes out once they start citing degress of outrage, degrees of harm, degrees of coercion, and the like.
  • Rowling: "I keep having flashbacks to 1997.... In January that year, I was a single parent with a four-year-old daughter... living mainly on benefits.... I had become a single mother when my first marriage split up in 1993. In one devastating stroke, I became a hate figure to a certain section of the press, and a bogeyman to the Tory Government. Peter Lilley... had recently entertained the Conservative Party conference with a spoof Gilbert and Sullivan number, in which he decried “young ladies who get pregnant just to jump the housing list”.... John Redwood, castigated single-parent families from St Mellons, Cardiff, as “one of the biggest social problems of our day”. (John Redwood has since divorced the mother of his children.) Women like me (for it is a curious fact that lone male parents are generally portrayed as heroes, whereas women left holding the baby are vilified) were... a prime cause of social breakdown... in it for... free money, state-funded accommodation, an easy life."

Democracy and Its Vicissitudes in the Nineteenth Century: A Note

The Communists--no, there were no Communists as we have known them before 1917, say rather that wing of the nineteenth-century socialists who were to become the organizational and intellectual ancestors of the twentieth century economists Communists--had a very uneasy relationship with democracy. Democracy in theory--as a part of the post-capitalist utopia-to-be when the New Jerusalem descended to earth, and as they claimed was prefigured in the operations of the 1870-1871 Paris Commune--was wonderful. Really existing democratic politics was not. You can see the problem arise in Friedrich Engels's 1890 preface to the Communist Manifesto:

Communist Manifesto (Preface): When the European workers had again gathered sufficient strength for a new onslaught upon the power of the ruling classes, the International Working Men’s Association came into being. Its aim was to weld together into one huge army the whole militant working class of Europe and America. Therefore it could not set out from the principles laid down in the Manifesto. It was bound to have a programme which would not shut the door on the English trade unions, the French, Belgian, Italian, and Spanish Proudhonists, and the German Lassalleans. This programme... was drawn up by Marx with a master hand [as was] acknowledged even by the Bakunin and the anarchists.... Marx relied solely upon the intellectual development of the working class, as it necessarily has to ensue from united action and discussion. The events and vicissitudes in the struggle against capital, the defeats even more than the successes, could not but demonstrate to the fighters the inadequacy of their former universal panaceas, and make their minds more receptive to a thorough understanding of the true conditions for working-class emancipation...

The workers are supposed to organize, lobby, vote, agitate, and strike for higher wages, better working conditions, more political voice, government regulation of industry, and an egalitarian distribution of income and wealth. The struggle will weld them into a single conscious movement. And they are supposed to lose. And when they lose--so Marx's and Engels's plan for world history went--they will recognize that the system cannot be successfully managed or changed or ameliorated but must be overthrown, be transformed, be superseded.

But what if they did not lose but won instead? And what if those victories did not strengthen but weakened working-class consciousness as a single group with common interests? And what if those victories convinced more and more peopke that the system could be worked within, and did not need to be overthrown? What then?

Well, then you get:

Engels of Laura Lafargue: September 11, 1892: Here we have had a very important event... the [Brirtish] Trades Unions Congress deliberately rejected the invitation to the Zurich Congress.... The English workmen are so deeply infected with the Parliamentary spirit of compromise that they cannot do a step in advance without at the same time taking 3/4 or 7/8 of a step backwards. Thus the sudden awakening of the Eight Hours enthusiasm (3 years ago considered an impossibility, you know, by the very people who now clamour loudest after it) has almost succeeded in giving a reactionary character to that cry. It is to be the universal panacea, the one thing to be thought of. In their exultation at having secured so soon such a large and unexpected majority, the mass of the 8 hours men now sacrifice everything that goes further, to the newly-converted “Old” Unionists. This massacre of the Socialist Innocents is submitted to all the easier as the “New” elements are divided, without general organisation, personally unknown to each other, and have not as yet had the time to develop men enjoying the confidence of all; as you know, this can only be obtained here in Britain by what Ruge... called the force of constant appearance, the effect of hawking your own person constantly for years before the public, teste Shipton, Cremer, Howell, etc...


Engels to Sorge: May 17, 1893: The May First demonstration here was very nice; but is already becoming somewhat of an everyday or rather an annual matter; the first fresh bloom is gone. The narrow-mindedness of the Trades Council and of the Socialist sects — Fabians and the S.D.F. — again compelled us to hold two demonstrations...


Engels to Plekhanov: 1894: Here things are moving, though slowly and in zigzags. Take for instance Mawdsley, the leader of the Lancashire textile workers. He’s a Tory: in politics a Conservative and in religion a devout believer. Three years ago these gentry were violently opposed to the eight-hour day, today they vehemently demand it. In a quite recent manifesto Mawdsley, who last year was a fierce opponent of any separate policy for the working class, declared that the textile workers must take up the question of direct representation in Parliament, and a Manchester labour newspaper calculated that the Lancashire textile workers might control twelve seats in Parliament in this county alone. As you see, it is the Trade Union that will enter Parliament. It is the branch of industry and not the class that demands representation. Still, it is a step forward. Let us first smash the enslavement of the workers to the two big bourgeois parties, let us have textile workers in Parliament just as we already have miners there. As soon as a dozen branches of industry are represented class consciousness will arise of itself. The height of comedy is reached in this manifesto when Mawdsley demands bimetallism to maintain the supremacy of English cotton fabrics on the Indian market. One is indeed driven to despair by these English workers with their sense of imaginary national superiority, with their essentially bourgeois ideas and viewpoints, with their “practical” narrow-mindedness, with the parliamentary corruption which has seriously infected the leaders. But things are moving none the less. The only thing is that the “practical” English will be the last to arrive, but when they do arrive their contribution will weigh quite heavy in the scale.

And... well, this is too long, so I will put it on the botttom.[1]

Even though by 1890 it was pretty clear that things were not going according to their plan, Engels was very loath to admit in public that things were not going according to plan:

Marx was right. The working class of 1874... was altogether different from that of 1864.... Proudhonism in the Latin countries, and the specific Lassalleanism in Germany, were dying out; and even the ten arch-conservative English trade unions were gradually approaching the point where, in 1887, the chairman of their Swansea Congress could say in their name: “Continental socialism has lost its terror for us”... continental socialism was almost exclusively the theory heralded in the Manifesto... it is doubtless the most widely circulated, the most international product of all socialist literature, the common programme of many millions of workers of all countries from Siberia to California....

In 1847... socialists... the Owenites in England and the Fourierists in France... mere sects... manifold types of social quacks who wanted to eliminate social abuses through their various universal panaceas and all kinds of patch-work, without hurting capital and profit... looked for support rather to the “educated” classes. The section of the working class... demanded a radical reconstruction of society, convinced that mere political revolutions were not enough... rough-hewn, only instinctive and frequently somewhat crude....

“Working men of all countries, unite!” But few voices responded when we proclaimed these words to the world 42 years ago, on the eve of the first Paris Revolution in which the proletariat came out with the demands of its own. On September 28, 1864, however, the proletarians of most of the Western European countries joined hands in the International Working Men’s Association of glorious memory. True, the International itself lived only nine years. But that the eternal union of the proletarians of all countries created by it is still alive and lives stronger than ever, there is no better witness than this day. Because today, as I write these lines, the European and American proletariat is reviewing its fighting forces, mobilized for the first time, mobilized as one army, under one flag, for one immediate aim: the standard eight-hour working day to be established by legal enactment, as proclaimed by the Geneva Congress of the International in 1866, and again by the Paris Workers’ Congress of 1889. And today’ s spectacle will open the eyes of the capitalists and landlords of all countries to the fact that today the proletarians of all countries are united indeed.

If only Marx were still by my side to see this with his own eyes!

By the time you are thinking like Engels was thinking in the early 1890s you are well on the road to Lenin and Stalin...

[1] Here it is:


Friedrich Engels (1890), "May 4 in London," Arbeiter Zeitung: The May Day celebration of the proletariat was epoch-making not only in its universal character, which made it the first international action of the militant working class.... Towards the beginning of last year the world’s largest and most wretched working-class district, the East End of London, stirred gradually to action. On April 1, 1889, the Gas Workers’ and General Labourers’ Union was founded; today it has a membership of some 100,000. Largely with the cooperation of this partner union (many are gas workers in winter and dock workers in summer), the dockers’ big strike started on its way and shook even the bottom-most section of the East London workers out of stagnation. As a result, trade union upon trade union began to form among these, mostly unskilled workers.... Last autumn the Gas Workers won an eight-hour working day here in London, but lost it again, after an unhappy strike, in the southern part of the city, acquiring sufficient proof that this gain is by no means safe in the northern part either. Is it surprising, then, that they readily accepted Mrs. Aveling’s proposal to hold the May Day celebration, decided on by the Paris Congress, in favour of a legalised eight-hour working day, in London? In common with several socialist groups, the Radical clubs and the other trade unions in the East End, they set up a Central Committee that was to organise a large demonstration for the purpose in Hyde Park....

To ensure that, as far as possible, all London workers took part, the Central Committee invited, with uninhibited naivete, the London Trades Council as well. This is a body made up of delegates from the London trades unions, mostly from the older corporations of “skilled” workers, a body in which, as might be expected, the anti-socialist elements still command a majority. The Trades Council saw that the movement for an eight-hour day threatened to grow over its head. The old trades unions stand likewise for an eight-hour working day, but not for one to be established by law. By an eight-hour day they mean that normal daily wages should be paid for eight hours — so-and-so much per hour — but that overtime should be allowed any number of hours daily, provided every overtime hour is paid at a higher rate — say, at the rate of one and a half or two ordinary hours. The point therefore was to channel the demonstration into the fairway of this kind of working day, to be won by “free” agreement but certainly not to be made obligatory by parliamentary act. To this end the Trades Council allied itself with the Social-Democratic Federation of the above-mentioned Mr. Hyndman, an association which poses as the only true church of British socialism, which had very consistently concluded a life-and-death alliance with the French Possibilists and sent a delegation to their congress and which therefore regarded in advance the May Day celebration decided on by the Marxist Congress as a sin against the Holy Ghost....

Now the new allies, strange bedfellows though they were, played a trick on the Central Committee which would, it is true, be considered not only permissible but quite skillful in the political practice of the British bourgeoisie, but which European and American workers will probably find very mean.... The Central Committee had not yet made the announcement; but the organisations allied against it had scarcely heard the news when they announced a meeting in the Park for May 4 and obtained permission for seven platforms, doing it behind the backs of the Central Committee. The Trades Council and the Federation... called a meeting of delegates... informed them that only trades unions, that is to say, no socialist unions or political clubs, could take part in the demonstration and carry banners.... The Council had already edited the resolution to be submitted to the meeting, and had deleted from it the demand for a legalised eight-hour day; discussion on a proposal for putting that demand back in the resolution was not allowed, nor was it voted on. And lastly, the Council refused to accept Mrs. Aveling as a delegate because, it said, she was no manual worker (which is not true), although its own President, Mr. Shipton, had not moved a finger in his own trade for fully fifteen years.

The workers on the Central Committee were outraged... the demonstration had been finally put into the hands of two organisations representing only negligible minorities of London workers.... Then Edward Aveling went to the Ministry and secured, contrary to regulations, permission for the Central Committee as well to bring seven platforms to the Park. The attempt to juggle with the demonstration in the interest of the minority failed; the Trades Council pulled in its horns and was glad to be able to negotiate with the Central Committee on an equal footing over arrangements for the demonstration.

One has to know this background to appreciate the nature and significance of the demonstration. Prompted by the East End workers who had recently joined in the movement, the demonstration found such a universal response that the two organisations — which were no less hostile to each other than both of them together were to the fundamental idea of the demonstration — had to ally themselves in order to seize the leadership and use the meeting to their own advantage... a conservative Trades Council preaching equal rights for capital and labour... a Social-Democratic Federation playing at radicalism... the two allied to do a mean trick with an eye to capitalising on a demonstration thoroughly hateful to both.... [T]he May 4 meeting was split into two parts. On one side were the conservative workers, whose horizon does not go beyond the wage-labour system, flanked by a narrow-minded but ambitious socialist sect; on the other side, the great bulk of workers who had recently joined in the movement and who do not want to hear any more of the Manchesterism of the old trades unions and want to win their complete emancipation by themselves, jointly with allies of their own choice, and not with those imposed by a small socialist coterie.

On one side was stagnation represented by trades unions that have not yet quite freed themselves from the guild spirit, and by a narrow-minded sect... on the other, the living free movement of the reawakening British proletariat... it was apparent even to the blindest where there was fresh life in that two-faced gathering and where stagnation. Around the seven platforms of the Central Committee were dense, immense crowds, marching up with music and banners, over a hundred thousand in the procession.... At the platforms of the combined reactionaries, on the other hand, everything seemed dull; their procession was much weaker than the other, poorly organised, disorderly and mostly belated....

What the numerous onlooking bourgeois politicians took home with them as the overall effect was the certainty that the English proletariat, which for fully forty years had trailed behind the big Liberal party and served it as voting cattle, had awakened at last... on May 4, 1890, the English working class joined the great international army.... The English proletariat.... Its long slumber — a result, on the one hand, of the failure of the Chartist movement of 1836-50 and, on the other, of the colossal industrial upswing of 1848-80 — is finally broken...

Worth Reading for April 13, 2010

  • Hamilton: "So to return to the question posed at the beginning: $87 oil is certainly not helping the recovery. But I would be very surprised if it proves to be the kiss of death."
  • Coates: "The God of History bounds the Confederacy in its own chains. From... secession in Texas... 'in this free government all white men are and of right ought to be entitled to equal civil and political rights; that the servitude of the African race... is mutually beneficial... abundantly authorized and justified by the experience of mankind, and the revealed will of the Almighty Creator... while the destruction of the existing relations between the two races... would bring inevitable calamities upon both and desolation upon the fifteen slave-holding states...' To Virginia... Mississippi... South Carolina... the Vice-President of the Confederacy itself....This is about a lancing shame, about that gaping wound in the soul that comes when confronted with the appalling deeds of our forebears. Lost Causers worship their ancestors, in the manner of the abandoned child who brags that his dead-beat father is actually an astronaut, away on a mission of cosmic importance..."
  • Johnson: "Last Friday, Rush Limbaugh asked why a coal miner union didn’t protect the 29 miners who were killed when Massey Energy’s Upper Big Branch Mine in Montcoal, WV, exploded.... There’s a simple reason the union didn’t protect the miners: the Upper Big Branch Mine, like nearly all of the mines under Massey CEO Don Blankenship’s control, is non-union. In fact, the United Mine Workers of America (UMW) “tried three times to organize the Upper Big Branch mine, but even with getting nearly 70 percent of workers to sign cards saying they wanted to vote for a union, Blankenship personally met with workers to threaten them with closing down the mine and losing their jobs if they voted for a union.” Blankenship rose in Massey’s ranks by breaking its union mines in the 1980s. Blankenship said then that busting unions is “invaluable” to profits, as non-union companies can “sell coal cheaper and drive union coal out of business.”"
  • Krugman: "I certainly never said anything like [what Sorkin claims I said], and I don’t think Nouriel did either. First of all, I never called for “nationalizing the entire banking system” — I wanted the government to take temporary full ownership of a few weak banks, mainly Citigroup and possibly B of A. I defy Sorkin to find any examples of me calling for a total takeover. And the argument was never that “no matter how much money we threw at the banks, they would eventually topple the system all over again”. Again, where did I say that? The argument was always that if we were going to rescue the banks — and we were — taxpayers should get the potential upside as well as the potential downside. If you want to say that the advocates of nationalization were excessively pessimistic about the prospects for a light-touch bank strategy, fine. But caricaturing their position, making it sound far more extreme than it actually was, is definitely not OK."
  • Salmon: "Patrick Jenkins of the FT has two great articles today following the maneuvering around Basel III. The big-picture story is clear: banks around the world are ganging up to try to weaken and/or delay Basel III’s implementation. Most of the arguments could be made only by banks who have been drinking their own kool-aid for so long that they no longer have any idea what sounds ridiculous and what doesn’t. I hope that the world’s central bankers aren’t going to be swayed"
  • Chinn: "Per capita consumption in September 2009 had not re-attained September 2008 levels. In fact, what's interesting is that only in January 2010 did real per capita consumption re-attain pre-Lehman bankruptcy levels. For sure, they have not, and will not soon, exceed previous peak levels in 2007M11. Is this a consumption disaster? Perhaps it's only part of the necessary rebalancing of the US economy; but I suspect (given the evidence on how consumption moves with current disposable income) that the consumption response was not solely an optimal response to a decline in anticipated permanent income (see discussion of the permanent income hypothesis in this post). I also believe in the absence the ARRA, consumption would have declined even more than it did."
  • Berkeley School of Law Professor John Yoo's writings and conduct rise to the level of intentional professional misconduct and violations of his duties to exercise independent legal judgment and render thorough, objective, and candid legal advice
  • Dani: "industrial policy never went out of fashion. Economists enamored of the neo-liberal Washington Consensus may have written it off, but successful economies have always relied on government policies that promote growth by accelerating structural transformation. China... Its phenomenal manufacturing prowess rests in large part on public assistance to new industries. State-owned enterprises have acted as incubators.... Local-content requirements have spawned productive supplier industries in automotive and electronics products. Generous export incentives.... Chile... often portrayed as a free-market paradise, is another example.... Chilean grapes broke into world markets thanks to publicly financed R&D. Forest products were heavily subsidized by none other than General Augusto Pinochet. And the highly successful salmon industry is the creation of Fundación Chile, a quasi-public venture fund."
  • Charlotte: "if you like your leading men dark and dangerous, you could do worse than Nahadoth, the menacing god-in-chains who might help Yeine, if he doesn’t kill her. He may be the Lord of Darkness, and you have to weigh the sexiness against the likelihood of death, but it’s hard not to fall for a guy who brings a black hole to a knife fight..."
  • Gasparino: "About 25 Wall Street executives... sat down for a private meeting... with... Mitch McConnell... and John Cornyn.... The stated topic of the meeting: The Financial reform bill being sponsored by Senator Chris Dodd.... The Senators explained they can’t just oppose the Dodd bill — they need to come up with a reform plan of their own, as they fight its least free-market components, such as the notion that the government can determine which banks are “too big to fail.”... McConnell, according to a person who was present, said “Barney likes to say ‘Wall Street used to say we have Washington by the (neck), and we’re going to change that.’”... During the meetings, both predicted that the Republicans will likely add at least six senate seats to their current total.... They also said that they have a shot at taking control of the House.... But in order to assure those gains, and add even more, McConnell and Cornyn made it clear they need Wall Street's help..."

Department of "Huh?!"

Andrew Ross Sorkin:

Andrew Ross Sorkin: You may recall that during the most perilous months of 2008 and early 2009, there was a vigorous debate about how the government should fix the financial system. Some economists, including Nouriel Roubini of New York University and The Times’s own Paul Krugman, declared that we should follow the example of the Swedes by nationalizing the entire banking system...

Paul Krugman:

Andrew Ross Sorkin Owes Several People an Apology: I certainly never said anything like that, and I don’t think Nouriel did either. First of all, I never called for “nationalizing the entire banking system” — I wanted the government to take temporary full ownership of a few weak banks, mainly Citigroup and possibly B of A. I defy Sorkin to find any examples of me calling for a total takeover. And the argument was never that “no matter how much money we threw at the banks, they would eventually topple the system all over again”. Again, where did I say that? The argument was always that if we were going to rescue the banks — and we were — taxpayers should get the potential upside as well as the potential downside...

Andrew Ross Sorkin:

Dear Professor Krugman … - DealBook Blog - You quoted part of my column that said, “Some economists, including Nouriel Roubini of New York University and The Times’s own Paul Krugman, declared that we should follow the example of the Swedes by nationalizing the entire banking system.” On your blog, you wrote, “I certainly never said anything like that, and I don’t think Nouriel did either.” Just so there is no confusion, I based that passage on what you and Mr. Roubini had said and written during the crisis about a Swedish-style nationalization of the banking system.... On your blog on Sept. 28, 2008, after reading a piece by Brad DeLong, an economist, which you linked to, you wrote, “Brad DeLong says that Swedish-style temporary nationalization is the right answer to a financial crisis; he’s right”...

To be clear, what I wrote was not "follow the example of the Swedes by nationalizing the entire banking system." What I wrote was:

Time Not for a Bailout, But for Nationalization...\: There are three options: (i) Do nothing. (ii) Bailout (a la Paulson). (iii) Nationalization (a la Sweden 1992). Do nothing was last tried in 1929-1932. The result was called the Great Depression. Let's not do that again. Let's decide between bailout and nationalization.

Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer. And it is the best way to deal with the moral hazard problem. It might work like this. Congress:

  • grants the Federal Reserve Board the power to take any financial firm whatsoever with liabilities and capital of more than $25 billion that is not well capitalized into conservatorship
  • requires the Federal Reserve Board to liquidate any financial firm in its conservatorship when it judges that the firm is insolvent (paying off in full or not paying off in full the liabilities of the firm at its discretion), unless
  • the Federal Reserve Board finds that preservation as a going concern is in the interest of the taxpayer, in which case Congress
  • grants the Federal Reserve Board the power to transform equity stakes in the firm into junior preferred stock at par value and then transfer ownership and custody of the firm to the Treasury
  • requires the Federal Reserve to terminate conservatorship if the firm becomes well-capitalized once again...

I call this one for Paul.

And let me say that I still think that plan would have been preferable to what we wound up doing--as Paul Krugman said, the government would have had a good deal of the upside, and making it clear that the government did stand 100% behind the firms it chose to stand behind would have ended the crisis more quickly.

Karl Liebknecht in the German Reichstag, 1914, on World War I

Karl Liebknecht (1871-1919):

This war... was not started for the benefit of the German or of any other people.. an Imperialist war... a preventative war provoked by the German and Austrian war parties in the obscurity of semi-absolutism and of secret diplomacy... [an] attempt... to demoralize and destroy the growing Labor movement. The German... slogan 'against Czarism'... has brought forth the most noble instincts... for the purpose of hatred.... Germany... possesses none of the qualities... of a liberator of peoples.... Peace... as possible... humiliate no one.... A simultaneous and continual demand for such peace in all the belligerent countries will be able to stop the bloody massacre before the complete exhaustion of all the peoples....

I have the warmest compassion for our brothers on the field of battle.... But my protest is:

  • against the war,
  • against those responsible for it,
  • against those who are directing it;
  • against the capitalistic ends for which it is being pursued,
  • against the violation of the neutrality of Belgium and Luxemburg,
  • against military dictatorship, and
  • against the government’s and the ruling class’s complete neglect of their social and political duties...

Friedrich Ebert (1871-1925):

No, not [war appropriations] for [the Emperor’s and the nobles’] Germany, but for the Germany of productive labor, the Germany of the social and cultural ascent of the masses. It is a matter of saving that Germany!… We cannot abandon the fatherland in its moment of need. It is a matter of protecting women and children...

iPhone Applications on the iPad Are Disturbing...

But why?

I certainly agree that (iPhone view x2 == belch) = true

But I don't know why I agree.

Am I really such a hopeless koolaid-drinking Steve Jobs-worshipping effete geek that I am so offended by blocky pixels and by a mismatch between the form factor of the screen and of the program within it?

Corporation III: The Rise of the (Social Calculating) Machines

or, “Malefactors of Great Wealth”: The Modern Corporation, Private Property, and Public Politics


UC Berkeley Events Calendar: The History, Law, and Politics of Corporate Personhood (3 of 6): "Malefactors of Great Wealth" - The Economic and Political Rise of American Corporations

Lecture | April 13 | 2:30-4:30 p.m. |  David Brower Center
Location: 2150 Allston Way, Berkeley, CA
Speaker: Brad DeLong, Professor of Economics, UC Berkeley
Sponsor: Osher Lifelong Learning Institute at UC Berkeley (OLLI @Berkeley)

J. Bradford DeLong is a professor of economics at U.C. Berkeley, chair of the Political Economy of Industrial Societies major, and a research associate of the National Bureau of Economic Research. He also served in the U.S. government as Deputy Assistant Secretary of the Treasury for Economic Policy from 1993 to 1995.

Target audience: All Audiences
Open to audience: All Audiences
Tickets:$15 Tickets at the door.


Corporation III- The Rise of the (Social Calculating) Machines (04.13.2010 02-49-28 PM)

20100414 delong OLLI.pdf

Yes, Bryan Caplan Is the Stupidest Man Alive

Belle Waring comments at the appropriate level:

On "Libertarian" Bryan Caplan: I keep thinking of responding to this…and then I keep thinking, what the f---ing f---? Don’t I have better things to do, like think about greasy black marsh mud? In South Carolina where my dad lives, there are several types of mud in the saltwater marsh, one of which is a peculiarly oily blackish-gray, and not only fetid with decomposed marsh grass roots but brutally slippery, such that if you step on a patch without realizing it you are likely to fall right on your ass with your hand on a pile of oyster shells, which will give you long, shallow but jagged cuts. And the cuts get full of mud too! Damn but that smarts. I think I’ma just think about that for a while; it’s more restful than considering whether anyone, anywhere, might be this much of a godforsaken moron, even a libertarian.

And Jacob T. Levy says that Bryan Caplan is NO TRUE SCOTSMAN!!!!

This is the kind of thing that I hesitate to say in a CT comments thread lest I become the red meat, but: in my view Bryan is clearly wrong even on libertarian grounds, and even on narrowly-formal libertarian grounds (e.g. without invoking Kerry Howley’s culture-of-freedom idea).

The contortions he’s having to go through in order to deny that massive restrictions on formal, legal, individual liberties actually count--the selective invocation of extra-formal considerations like marital comity, without admitting in extra-formal considerations like a patriarchal public culture--are very telling. His mistakes (at least in this case) aren’t libertarian mistakes per se...

It may not have much to do with true libertarianism, Jacob. But it has a lot to do with really existing libertarianism. How long ago was it that people at the Cato Institute were mourning the possession of the franchise by XX chromosomed persons?

Deficit: This Is Not Good News

David Cho writes:

The federal deficit is running significantly lower than it did last year, with the budget gap for the first half of fiscal 2010 down 8 percent over the same period a year ago, senior Obama administration officials said Monday. The officials attributed the results to higher tax revenue and to lower spending than projected on bailing out the financial system. If the trend continues for the rest of the year, it would mean the annual deficit would be $1.3 trillion -- about $300 billion less than the administration's projection two months ago for 2010...

This is bad news: unemployment is higher than it was a year ago, and so the deficit ought to be higher: a lower deficit means that they have gotten fiscal policy off.

But because David Cho has never bothered to learn the policy substance, he cannot add any value. It would have been much better to just let Peter Orszag grab the mike and publish what he said.

All Cho can do is go into an inside-baseball political-spin blather that would he better left on the cutting-room floor:

But by suggesting the deficit may have peaked, administration officials are taking a political gamble. If the favorable number does not hold up in coming months and the budget shortfall surpasses the $1.4 trillion recorded last year, voters in the November midterm elections could punish the Democrats for offering false hope...

David:they aren't "suggesting" anything. That the deficit is running lower than it did last year is a fact of life. It is not something that the Obama administration decided to do. Cho's spin is just silly.

Why oh why can't we have a better press corps.

Worth Reading for April 12, 2010

Online Education

Michael O'Hare's thoughts:

Online education: For my sins, I guess, I’m a member of the Berkeley faculty Committee on Courses of Instruction. Things are looking up for this gig, though, because there’s growing interest on campus and at the university level in online instruction, and the committee is starting to seriously deliberate... a lot of the action is going on in the wrong arena, looking for ways to cut costs “without reducing educational outcomes”, and this approach will assuredly wind up cutting costs and only reduce quality somewhat. But it’s almost certain that we could actually teach more, better, and cheaper with technology if we go at it wisely. How would we think about online education if we were focused on quality and value instead of penny-pinching? First, we would be looking at students... where value actually gets created... let’s talk more about learning and less about teaching.... In my vineyard, higher education, it has a few characteristic productive routines: A. reading textbooks, journal articles, and the like to accumulate declarative knowledge and maybe skills. B. practicing acquired skills.... C. being talked to, sometimes with exhibits on slides or a blackboard, in one-way, one-to-many lectures [did I mention professorial ego? If you haven't tried it, you have no idea what a rush it is.... D. conversing with peers about the course material. E. conversing with peers, in a facilitated discussion section.... F. creating original work like a term paper, a sculpture, or answers on an essay exam.... G. engaging with comments and critique of original work by the prof and/or GSI [see F]. H. being asked questions to which the prof knows a single right answer.... I. engaging with evaluation of exam and assignment work, in the form of a letter or number scalar summary..... J. providing feedback to management, in time to be useful for mid-course correction, about how the class is changing the student intellectually (and affecting her in all the other ways that matter).... K... formal presentations to peers, individually or as groups. This list is important because faculty attention to each of these has very different time fractions, salience, and intensity from students’ allocations, so thinking about how we teach is very different from thinking about how students experience what we put before them.

For most people, it appears that “putting a course online” is mainly providing C as online video, and eliminating E or turning it into a chat or email exchanges.  But lots of the other elements are already “online”, even in conventional courses.... What technology allows, that seems to me incredibly valuable, is to allow A and C to run together into a medium like the one students are already adept at using, and you are using now because it pays off for you at this moment better than a book or the TV: a multimedia thing like a web site with videos, perhaps including some talking-head shots of the prof, text with copious links, interactive experiments like those at PhET, chat rooms, and the like.  This thing allows student self-pacing, “rewinding” and repeating.... What’s at risk?  Well, paper books have pace control and rewind, portability, and they are just really nice to use.  I read them and I love them, but I’m not sure their deficiencies won’t doom them in competition with an iPad.... Most troubling to me is the fate of D (for distance-learning students not in the same zip code) and E [update: and K] (for all students). Learning is not just content, but also affect. We are hard-wired to talk face-to-face, and not only with words or even words in voices, but eyebrows and all the rest of it.  And conversation in a group of four or fifteen is not the same as three or fourteen separate dyadic schmooses, not at all. I’ve been in a lot more than my share of on-line international meetings recently, on the phone and web-enabled with exhibits and chat, and have a little experience with videoconference teaching. On the one hand, those meetings would not have happened if they required physical travel; on the other, they are really lame....

The “question of online education” has been settled: learning in for-credit degree programs is mostly online now.  Instead of asking whether we should do it, we should be asking how the on-lineness can pay off even better for students, and we need to think outside the absurdly cramped box of videotaping a bunch of standup lectures to sell to more customers than fit in a room.

Worth Reading, Mostly Economics, for April 11, 2010

  • Tim O'Reilly: : "Review of iPad as a work machine from @markos (@dailykos) should be a wake up call for lots of companies:"
  • Dorning: "Obama's instincts during the crisis were exceedingly Rubin-esque. Even the $787 billion stimulus packag... didn't reach the scale called for by many liberal economists, including... Christina Romer.... What unites Rubinomics and Obamanomics, she says, "is the focus on results, the pragmatism of what's right for the economy.... Like Clinton, Obama has tried to reduce income inequality.... Clinton aided the working poor with the Earned Income Tax Credit; Obama is doing the same with insurance subsidies in his health plan. A national health plan was an aspiration of both Presidents. Baily argues that the Obama approach is "at least in principle closer to Rubinomics than was the Clinton plan. [Obama's team] is trying to use market incentives to raise the quality and lower the cost, and that looks like Rubinomics.""
  • Holbo: "Several people wrote... that ‘the 1880’s were Golden’ should be reconstructed more in the spirit of ‘yes, there was a lot that was wrong, but a few things were right, and we ought to try to get those things right again. Namely, small government.’ Firstly, this is total step-back from the Golden Age.... Beyond that... there can be even smaller government any place that is experiencing total anarchy. The point has to be, rather, that in the 1880’s small government worked. So the attraction is... proof-of-concept. The problem... is that the infringements to liberty in the 1880’s weren’t incidental accretion... [but] the way society and politics and culture worked. It makes no more sense to say that we need the 1880’s, minus the infringements to liberty... than it does to make Louis “the Sun King” XIV your libertarian ideal on the grounds that: dude had a lot of liberty. If what makes liberty possible for some is lack of liberty for many, then you can’t just wave away the latter"
  • Heritage On Romney’s Individual Mandate: “Not an unreasonable position, and one that is clearly consistent with conservative values.” [Heritage, 1/28/06]. Heritage On President Obama’s Individual Mandate: “Both unprecedented and unconstitutional.” [Heritage, 12/9/09]. Heritage On Romney’s Insurance Exchange: An “innovative mechanism to promote real consumer choice.” [Heritage, 4/20/06]. Heritage On President Obama’s Insurance Exchange: Creates a “de facto public option” by “grow[ing]” government control over healthcare.” [Heritage, 3/30/10]. Heritage On Romney’s Medicaid Expansion: Reduced “the total cost to taxpayers” by taking people out of the “uncompensated care pool.” [Heritage, 1/28/06]. Heritage On President Obama’s Medicaid Expansion: Expands a “broken entitlement program,” pro
  • CROWLEY: The [Virginia] Governor didn’t even mention slavery in his proclamation. Was that a mistake? BARBOUR: Well, I don’t think so…I don’t know what you would say about slavery, but anyone who thinks that you have to explain to people that slavery is a bad thing — I think it goes without saying.... Well maybe they should talk to my Democratic legislature, which has done exactly the same thing in Mississippi for years. As far as I know, the Democratic legislature — we have a majority — both houses are Democrats. I’m unaware of them being criticized for it or them having their supporters feel uncomfortable with it.... To me it’s a sort of feeling that it’s just a nit. That it is not significant. It’s trying to make a big deal out of something that doesn’t matter for diddly.
  • Krugman: "Sorry about the radio silence; I’m just coming back from the memorial service for Paul Samuelson, which was yesterday at MIT. It was quite an event — and there were some remarkable talks. A genuinely moving (and funny) set of reminiscences from Larry Summers; and some amazing history from Jim Poterba. I had no idea that the MIT economics visiting committee tried to force Samuelson to call off the publication of his 1948 textbook, on the grounds that Keynesian economics was too left-wing."
  • Markos Moulitsas Zuniga: "I was a PC gamer, but the current generation of dedicated gaming consoles took care of that. My Xbox, despite being made by Microsoft, is stable, fast, and runs my games perfectly. How could a company that gave us Windows build such a great gaming platform? Because it was a closed system. Able to control its hardware and software, Microsoft avoided the instability created by the endless hardware/software configurations found on PCs... it's literally plug and play. Of course, that kind of stability has a price... all games must be approved by the company..... Such rigidity limits the freedom of developers to write for the platform as they see fit, but it allows Microsoft to ensure that end users get the kind of enjoyable experience that keeps them buying Xbox games. Same goes for Sony and the PlayStation, and I'm sure for Nintendo and its Wii as well. In the end, those closed gaming systems have been so effective, that they effectively killed PC gaming."

The Obama Administration Needs a New Course

As I understand it, the governing strategy of the Obama administration has been simple:

  1. Rule from the sensible, bipartisan, technocratic, consensus center and pursue good policies.
  2. Staff your administration with smart centrists--people who are, like me, between weak-tea social democrats and Dewey-Eisenhower-Rockefeller Republicans.
  3. Try hard to build bipartisan legislative coalitions from the center out.
  4. But in the end go for bills rather than issues--pass something, rather than drawing a line and urging the people to give you the members of congress you need to pass a good bill.
  5. Wait for the press corps to recognize that the Republicans are absolutely totally bats--- insane and tell this to the voters.

But this strategy does not seem to be working for three reasons:

  1. The Republicans are all insane--not just the Republican right, not just the Republican center, but the left wing of the Republican Party as well.
  2. The press is not cooperating--they continue their "opinions of shape of earth differ" reporting.
  3. "Consensus" policies on the economy were not "technocratic"--they have left us with a still overmighty and uncurbed financial sector, with 9.7% unemployment, and with an electorate rightly dissatisfied with the management of the economy.

President Obama needs to chart a different course for the country's sake. But what?

Isn't It Relevant Whether Obama Nominates a Good Judge or Not?

Matthew Yglesias:

SCOTUS Strategy: Peter Baker and Carl Hulse report:

The retirement of Justice John Paul Stevens presents a test for Republicans as much as it does for President Obama as they weigh how much they want to wage a high-profile battle over ideological issues in the months before crucial midterm elections. In the aftermath of the polarized health care debate, some Republican leaders said they were reluctant to give Democrats further ammunition to portray them as knee-jerk obstructionists. But they also want to harness the populist anger at Mr. Obama’s policies and are wary of alienating their base when they need it most.

And Matthew snarks:

Note that evaluating the nominee on the merits doesn’t seem to be an option. I think it’s pretty clear that there’s no political reason to think a moderate nominee in the Breyer/Sotomayor/Ginsburg vein would actually fare any easier than someone from a more robustly progressive tradition. The decision about whether or not to launch a no-holds-barred campaign against the nominee will be undertaken for other reasons...

But what Matthew does not snark--and should--is how extraordinary it is that Peter Baker and Carl Hulse don't think it worth noting that Republicans' decision to oppose or not oppose Obama's nominee is unrelated to how good a judge he nominates.

Why oh why can't we have a better press corps?

This Land Is Your Land

Woody Guthrie:

This land is your land, this land is my land
From California to the New York Island
From the Redwood Forest to the Gulf Stream waters
This land was made for you and me.

As I went walking that ribbon of highway
I saw above me that endless skyway
I saw below me that golden valley
This land was made for you and me.

I roamed and I rambled and I followed my footsteps
To the sparkling sands of her diamond deserts
While all around me a voice was sounding
This land was made for you and me.

There was a big high wall there that tried to stop me;
Sign was painted, it said private property;
But on the back side it didn't say nothing;
This land was made for you and me.

Nobody living can ever stop me,
As I go walking that freedom highway;
Nobody living can ever make me turn back
This land was made for you and me.

In the squares of the city, In the shadow of a steeple;
By the relief office, I'd seen my people.
As they stood there hungry, I stood there asking,
Is this land made for you and me?

When the sun came shining, and I was strolling
And the wheat fields waving and the dust clouds rolling
A voice was chanting, As the fog was lifting,
This land was made for you and me.

This land is your land, this land is my land
From California to the New York Island
From the Redwood Forest to the Gulf Stream waters
This land was made for you and me.