DeLong's Retrospective

Brad DeLong gave a talk at the EPI (Economic Policy Institute) and posted his speech on his blog. Here are some key bits he starts with:

About a year and a half ago—in the days after the forced merger of Bear Stearns into J.P. MorganChase, say—there was a near consensus of economists that an additional dose of expansionary fiscal policy was unlikely to be necessary. The Congress had passed a first round of tax cut-based stimulus, the impact of which in the summer of 2008 is clearly visible in disposable personal income and perhaps visible in the tracks of estimated monthly real GDP. The near-consensus belief back then, however, was that that was the only expansionary discretionary fiscal policy move that was appropriate.

With the Bear Stearns forced merger it appeared that the Federal Reserve and the Treasury had settled on a policy: they would punish as severely as they could the shareholders of and the managers at institutions too-big-to-fail that required rescue, but that they would insulate bondholders and counterparties. The incentives to avoid bankruptcy would thus be concentrated on those who actually had power to do something to manage organizational risk. As for the rest—well, the markets interpreted the forced merger as the Federal Reserve guaranteeing and making riskless essentially all the unsecured debt of all the large commercial and investment banks in the country.

The resulting “approaching liquidity tsunami,” as more than one senior policymaker described it to me, meant that the risk of a deep recession was very low—or so the situation looked in the spring of 2008.

By the late summer of 2008 things looked significantly different. The tax-based expansionary fiscal policy of early 2008 had had less than the desired effect—perhaps it had prevented a decline in the economy and kept things marching in place, but it effect was not overwhelming and not entirely obvious. It was clear that the formal announcement that the economy had fallen into recession was only a matter of time.

By August 2008 Lawrence Summers was writing of a gap between actual and sustainable production of $300 billion at an annual rate, forecasting that that gap was likely to more than double over the following year, and predicting sustained weakness thereafter—“unemployment peaked nearly two years after the end of the last recession, output and employment are likely to remain below their potential levels for several years in the best of circumstances…” in a time when “the remaining scope for monetary policy to stimulate the US economy is surely very limited…”[1] Take an initial output gap growing from $300 to $600 billion over the first year and then declining to zero over the next three and you have a cumulative output gap of $1,350 billion in a situation in which monetary policy on it own can do little to correct it. Suppose that a prudent use of fiscal policy would be to enlarge the government’s budget deficits by a third of the forecast output gap, and you have an estimate of the appropriate size of expansionary fiscal policy as the situation looked in August 2008: $450 billion in cumulative deficit spending spread out over the next four years.

Then came the nationalization of Fannie Mae and Freddie Mac on September 7, 2008; the bankruptcy of Lehman Brothers on September 15, 2008; and the nationalization of AIG on September 22, 2008. In the aftermath it was immediately clear that the recession problem was at least twice as bad as it had looked in August, and over the next four and a half months until the February 17, 2009 signing of the ARRA the magnitude of the likely cumulative output gap doubled again as the magnitude of the financial crisis’s impact on the real economy became clear.

If $450 billion was the appropriate size of a short-term deficit-spending program for the $1,350 billion cumulative output gap anticipated as of August 2008, then simple extrapolation suggests that the appropriate size of the boost to short-term deficit spending as of February 2009 was $1.8 trillion (over three to four years).

What we got was a cumulative number of $600 billion—roughly 1/3 aid to states, 1/3 tax cuts (in a good-faith effort by the Obama administration to propose a bipartisan plan that legislators of both parties could sign on to), and 1/3 infrastructure and other direct government purchases intended not so much to slow the decline as rather to boost the recovery. We also got an extension of the AMT and other measures that no economist I have talked to believes are properly counted as part of an effective fiscal boost under any currently-live theory of how the economy works. Figure an increase in deficits of $200 billion per year spread out over the next three years. At the technocratic level, the disproportion between the size of the response and the magnitude of the need is obvious.

There's a lot more very interesting material. Go read the whole speech.

• I love the part where he looks at arguments against stimulus and tears them to shreds.


• I love the bit where he points out that Nobel prize winner Robert Lucas cashed out of equities and is 100% into cash because he panicked, just like most other investors.


• I love the bit where he maps out where some short term deficit spending would be useful.

There's lots to chew on. Go read the speech.

DeLong on the State of Macroeconomics

This is a funny but serious posting by Brad DeLong on the crisis in economic theory: the inability of macroeconomics to account for the periodic crises in the economy, the business cycles gone seriously bad.

If you ask a modern economic historian—like, say, me—if I know why the world is currently in the grips of a financial crisis and a deep downturn, I will say that I do know and I will give you this answer:

This is the latest episode in a long history of similar episodes of bubble—crash—crisis—recession, episodes that date back at least to the canal bubble of the early 1820s, the 1825-6 failure of Pole, Thornton, and company, and the subsequent first industrial recession in Britain. We have seen this process at work in many other historical episodes as well—1870, 1890, 1929, and 2000, for example. For some reason asset prices get way out of whack and rise to unsustainable levels. Sometimes the culprit is lousy internal controls in financial firms that overreward subordinates for taking risk; sometimes it is government guarantees; sometimes it is the selection of the market as a long run of good fortune leaves the financial market dominated by cockeyed unrealistic overoptimists.

Then the crash comes. And when the crash comes the risk tolerance of the market collapses: everybody knows that there are immense unrealized losses in financial assets and nobody is sure that they know where they are. The crash is followed by a flight to safety. The flight to safety is followed by a steep fall in the velocity of money as investors everywhere hoard cash. And the fall in monetary velocity brings on a recession.

I will not say that this is the pattern of all recessions: it isn’t. But I will say that this is the pattern of this recessions—that we have been here before.

If you ask the same question of a modern macroeconomist—like, say, the extremely sharp Narayana Kocherlakota of the University of Minnesota—you will find that he says that he does not know:

Why do we have business cycles? Why do asset prices move around so much?... [M]acroeconomics has little to offer by way of answer to these questions...

He will say that there are models that attribute economic downturns to various causes:

[M]ost models in macroeconomics rely on some form of large quarterly movements in the technological frontier. Some have collective shocks to the marginal utility of leisure. Other models have large quarterly shocks to the depreciation rate in the capital stock (in order to generate high asset price volatilities)...

That is, downturns are either the result of a great forgetting of technological and organizational knowledge, a great vacation as workers develop a sudden extra taste for leisure, or a great rusting as the speed with which oxygen in the air corrodes speeds up and so reduces the value of large things made out of metal.

...

This situation is personally and professionally dismaying. I do not say that the macroeconomic model-building of the past generation has been pointless. I don’t think that it has been pointless. But I do think that the assembled modern macroeconomists need to be rounded up, on pain of loss of tenure, and sent to a year-long boot camp with the assembled monetary historians of the world as their drill sergeants. They need to listen to and learn from Dick Sylla about Alexander Hamilton’s bank rescue of 1825 and Charlie Calomiris about the Overend, Gurney crisis and Michael Bordo about the first bankruptcy of Baring brothers and Barry Eichengreen and Christy Romer and Ben Bernanke about the Great Depression.

If modern macreconomics does not reconnect—if they do not realize just what their theories are crystallized out of, and what the point of the enterprise is—then they will indeed wither and die.

I want to see Brad decked out with the fancy uniform with all the gold braid shouting until he is red in the face trying to shape up all those macroeconomists. I would pay good money for a ring side seat!

How to Lose a War

The stupidity of the war in Afghanistan continues unabated. Here's a bit from a news story on Wired:

The Royal Air Force has accidentally killed a young girl in Afghanistan — by dropping a box of leaflets on her. The British Ministry of Defence is carrying out a full investigation. Meanwhile, the seemingly-antiquated practice of leaflet bombing continues. In the 21st century, it remains one of the primary tools of psychological warfare; U.S. Special Operations Command is even looking to build leaflet-carrying missiles. And while top American commander Gen. Stanley McChrystal has virtually banned “kinetic” air strikes, paper bombs are in regular use.

Several things about this strike me as odd:

• While dropping leaflets in WWII where literacy rates were 95%, it makes no sense in Afghanistan where the literacy rate is 28%. It would make more sense to hand out radios -- the gift that keeps giving -- and put on a lot of popular radio shows that entertain, educate, and propagandize. But I guess that kind of "advanced" thinking hasn't penetrated the US & NATO leadership.


• The "technology" of leafleting is 70 years old. You mean there are still cases where you drop boxes instead of individual leaflets? I guess the military figures failure rates on boxes is OK because it isn't going to fall on the heads of their troops. Everybody knows that "the other side" is expendable.


• The brains of the military supposedly "diagnosed" the failures in Afghanistan to the seize & retreat missions of the past. They decided they need to "keep a presence" among the people. How does dropping a leaflet from 2000 feet qualify as "keeping a presence" among the people?


• The military claims they know that killing civilians is bad for morale among the Afghans, but from how they bombed fuel trucks, dropped boxes, and open fire on villages, I'm now convinced that all that "new strategy" talk is really military propaganda for the home front. The reality out there is same old, same old.

Krugman Nails It

Here is a beautiful blog posting by Paul Krugman to swat back twits like David Brooks who wants to argue "moral shortcomings" when in fact the root cause of economic woes is a change in the political climate. I've put in bold the key bits:

Moral decay? Or deregulation?

Andrew Leonard is unhappy with my colleague David Brooks for suggesting that rising debt in America reflects moral decay. Surprisingly, however, Leonard doesn’t make what I thought was the most compelling critique.

David points out, correctly, that something changed around 1980 — that consumers started spending a larger share of national income and that debt began increasing. Although he doesn’t point this out, this was also when the federal government first began running substantial deficits even in good years.

David would have you believe that what happened then was a decline in Calvinist virtue. But, um, didn’t something else happen around 1980? Can’t quite remember .. someone whose name begins with the letter “R”?

Yes, Reagan did it.

The turn to budget deficits was a direct result of the new, Irving-Kristol inspired political strategy of pushing tax cuts without worrying about the “accounting deficiencies of government.”

Meanwhile, the surge in household debt can largely be attributed to financial deregulation.

So what happened? Did we lose our economic morality? No, we were the victims of politics.

Go click on the link to get to Krugman's original which will give you access via links to the underlyiing info via the links Krugman provides.

Adam Gopnik's "Angels and Ages"

This is a wonderful intellectual escapade into the lives of Lincoln and Darwin over the theme of angels and ages. I picked this book because Gopnik writes for the New Yorker and I enjoy the 'literate' style. He met my expectations. It is a rich treat. I discovered lots of interesting 'literate' tidbits about both men. But it was, in a sense, too rich and as I neared the final chapter I was feeling that it was all style and no substance. But the last chapter redeemed the book for me.

The first four chapters introduce the two protagonists. They contrast and compare the two. They explore details and grand ideas. They look at the historical period and the daily life of each man. It is all grand, but I found it unfulfilling. The last chapter went for meaning and that more than satisfied me:

Darwin and Lincoln were makers and witnesses of the great change that, for good or ill, marks modern times: the slow emergence from a culture of faith and fear to one of ob sedrvation and argument, and from a belief in the judgment of divinity to a belief in the verdicts of history and time. First, the change from soul to mind as the engine of existence, and then from angels to ages as the overseers of life. For good or ill, that is what we mostly mean by "modernity," and by the special conditions of modern times.

And this bit summarizes the message of this book:

There is no struggle between science and art or between evolutionary biology and spiritual faith; there is a constant struggle between the spirit of free inquiry and the spirit of fundamentalist dogma. That struggle is the story of human intellectual history.

This is a message of a dynamic tension between science and spirituality. Science is the grand view, the summing up into great theories the facts of an immense and indifferent universe. The spiritual is the irreducible factualness of our individual lives with its petty meanings.

He points out that both Lincoln and Darwin understood death. Lincoln from the hundreds of thousands sent to their death on the battlefields. Darwin in the fact that death is the tool by which selection occurs. But both were not prepared for the immediacy of death in their families.

Gopnik is pointing out that we live our lives at two extremes in the modern world. In the grand understanding of the world achieved by science and the very personal feelings we have as individuals struggling with our own lives. The latter is mediated through religion:

... if we mean by religion what most people have actually meant by it since the beginning of time -- an encompassing practice of irrational rituals that can't be justified but only experienced, and give order and continuity to life -- then, yes, or course, religion is compatible with Darwinism. The fairth of George Herbert and Dr. Johnson, of Kierkegaard and W. H. Auden, has nothing to do with obeying the commandments of an invisible man in the sky who occasionally intervenes, and everything to do with confronting the chaotic reality of the cosmos to find serene order within it. In this sense the "epiphenomena" of religion -- choral music, stained glass, Communion -- are the thing itself.

That pretty well sums it up for me. This is very much the same as what the biologist Stephen Jay Gould put forward as the non-overlapping magisteria.

An Inspirational Story

I'm a sucker for inspirational stories, of people overcoming handicaps to do the unexpected. Here's a good one about William Kamkwamba:



He's even got his own blog.

Update 2009oct05: There is an article in Wired Science by Kim Zetter on this fellow:

Now 22, Kamkwamba wants to build windmills across Malawi and perhaps beyond. Next summer he also plans to construct a drilling machine to bore 40-meter holes for water and pumps. His aim is to help Africans become self-sufficient and resolve their problems without reliance on foreign aid.

“The problem we have is electricity and water problems,” he says. “I want to be tackling all of them at once.”

In a country steeped in superstition and wracked by crushing hardship and government corruption, Kamkwamba’s story is remarkable for its ingenuity and persistence.

Kamkwamba wasn’t a natural-born over-achiever. Before windmills, his biggest ambition was to be a car mechanic.

Beauty in the Eye of the Beholder

If you love logic, I mean if you r-e-a-l-l-y love logic, then you must love the Turing machine. And have I got a deal for you...

Via Aarhus University, I bring you the Lego Turing machine:



And you gotta love that they presented it with the theme song from The A-Team!

The Economic Crisis, 1837 edition

If you like to learn your history from cartoons, here's a great intro into the critical roles of Ada Lovelace and Charles Babbage in the 1837 financial crisis, or so it would seem:

Part 1:
http://sydneypadua.com/2dgoggles/lovelace-and-babbage-vs-the-economy/

Part 2:
http://sydneypadua.com/2009/03/31/the-lovelace-adventures-pt-2/

Part 3:
http://sydneypadua.com/2dgoggles/lovelace-and-babbage-vs-the-economy-part-3/

As you well know, history never repeats, but it sometimes rhymes. Well, the above proves that history is mostly comic book caricature of itself.

Speaking the Truth

He's a bit from a posting by Thomas E. Ricks in his The Best Defense blog that nails both Bush and Obama. Both fell short on what they promised the American people. The posting title says it all "Bush and Obama: panic vs. dither":

George W. Bush came into office with many of his national security officials thinking that their adversary would be China. The overarching foreign policy task of his administration, some of them thought, would be to manage the rise of China and the decline of Russia. This was reinforced by the EP-3 knockdown incident with China just six weeks into his first term. But nine months into that term, Bush found out different, as Islamic extremism got his notice with acts in New York, Washington, and Pennsylvania. He reacted, characteristically, with panic. Sometimes that manifested itself as a deer-in-the-headlights look, and at other times as pelvis-thrusting bluster.

I think Obama may be having his own 9/11 moment, finding out that things aren't gonna go like he planned during the campaign. He came into office, I think, believing that his tasks were to engage or contain Iran, manage the withdrawal from Iraq and change the war in Afghanistan. On Iran, I think, he has done pretty well-trends are certainly pointing toward a multilateral containment effort.

But Obama has done nothing much on Iraq except screw up a couple of appointments there and break a campaign promise to withdraw a brigade a month this year. And on Afghanistan, when told recently what it would take to implement the strategy he announced in March, he appeared to balk. So he reacted, characteristically, I think, by dithering.

...

Bottom line: For the first time, I am getting worried by Obama's handling of a foreign policy issue. But I'll take dither over panic any day.

Since Ricks focuses only on military matters, he didn't throw into the mix the complete incompetence of Bush during the Katrina emergency nor the blundering of Obama on health care and his inability to get free of the tarbaby of Wall Street lobbyists who run his financial policies for the benefit of the Wall Street banks and not for the people.

Ricks does point at an article by Rajiv Chandrasekaran in the Washington Post that gets at the root of Obama's weakness:

All the options Obama faces in Afghanistan are unpalatable. With Iraq, when presented with a set of troop-withdrawal timelines this year, the president took the middle way. He has shown similar instincts on health-care reform and the detention of terrorism suspects. With Afghanistan, however, that may be the most perilous path.

It is the incessant searching for a "middle way" that is undermining Obama. You can't be a decisive leader if you spend all your time trying to find a negotiating partner or fritter all your time on consensus building. You have to act. You will make mistakes.

It is funny. Obama claims that Lincoln is his exemplar. But Lincoln was dogged by generals who wouldn't fight. Obama doesn't have the problem of being surrounded by underlings unable to act. It is Obama who dithers. Lincoln wanted to act but was trapped by underlings who wouldn't be decisive. Obama thinks he wants to emulate Lincoln but he is the opposite from Lincoln as a leader.

What Caused the Economic Crisis?

Here's a very succinct and very accurate assessment by Bill McBride on his Calculated Risk blogging site:

About two years ago, I was asked to sum up the causes of the crisis in a few words, and I responded "Securitization and the lack of regulatory oversight". I then explained how rapid innovation in lending resulted in a disconnect between the borrower and the eventual debt holder.

The mortgage lenders and Wall Street firms were disconnected from the performance of the actual loan (the "Originate-to-sell" model). At the same time, the rating agencies were evaluating the debt based on the historical performance of the old style lender-borrower relationship. The eventual debt holders relied on the rating agencies, without realizing the entire model had changed.

Meanwhile the regulators were not following this advice:

“Instruct regulators to look for the newest fad in the industry and examine it with great care. The next mistake will be a new way to make a loan that will not be repaid.”
William Seidman, "Full Faith and Credit", 1993.

There is nothing inherently wrong with securitization or financial innovation. But the regulators should always be on the lookout for "a new way to make a loan that will not be repaid".

The original post has some bits from an interview by the Washington Post with Congressional representative Barney Frank that is worth reading as well.

The Odd Debate over Stimulus

I would have thought that for most people stimulus spending makes sense. When the economy is in the dumps and people are scared, it makes sense for the government -- on behalf of the people -- to step in and spend. The government can "print money" to create demand. Sure it creates a current deficit and that adds to an overall federal debt, but if Bush could run up $400 billion deficits during the "boom" years of the housing bubble, why wouldn't you spend when people are white knuckle worried over the future?

Here's some key bits from a posting by Paul Krugman on his NY Times blog that gives the story from an economist's viewpoint:

...I’m coming more and more to the conclusion that the public debate over fiscal stimulus, which views it as an agonizing tradeoff between possible benefits now and certain costs later, is wildly off base.

... first, in the short run fiscal expansion leads to higher GDP, which leads to higher revenues, which offset a significant fraction of the initial outlay. A billion dollars in stimulus probably leads to only $600 million or a bit more in additional debt.

But that’s not the whole story. Crowding in raises future GDP — which raises future tax revenues. And the rise in revenues relative to what they would have been otherwise offsets at least some of the burden of debt service.

I’m not proposing a fiscal-stimulus Laffer curve here: it’s probably not true that spending money actually improves the government’s long-run fiscal position (although that’s certainly within the range of possibilities.) What I am suggesting is that fiscal stimulus under current conditions, where the Fed funds rate “ought” to be around -5 percent, does much, much less to hurt that long-run position than the headline number would suggest.

And that, in turn, means that penny-pinching on stimulus is deeply, destructively foolish.

I really enjoy Krugman. He tells it like he sees it. He is consistent. He isn't in thrall to some political party, but he takes a people-oriented leftist approach to the economy. He's hated by the right wing nuts. He called Bush to task for his lying. He's criticized Obama for his choice in financial advisers and his eagerness to "compromise" with the right over health care.

Sadly, most people don't know enough to have a real opinion about the economy and the deficit. They get manipulated by fanatics who have a "message" to sell. These same fanatics were cheerleaders for the trillion dollar tax giveaway of Bush to the super rich, but when it comes to trying to staunch the loss of jobs by having the federal government step in to spend when people are scared, these same fanatics suddenly get "fiscally conservative". This is a lot like how Wall Street yells about giving away money to welfare bums, but suddenly comes cap in hand for a trillion dollar bailout when they collapse the economy. They are such hypocrites.

The Decline of Public Facilities in the US

People in the US are sold that "private enterprise" is magical. It means "better" in most American minds. The funny thing is that prior to 1850 when there was no "public health" and only "private enterprise" life was short and squalid. When I wander through a grocery store and see the brightly coloured machine dispensing "water" for about 100 times what you pay for water from the public infrastructure I get mad. It means that this fascination with "private enterprise" means there will be under-investment in public infrastructure and the eventual displacement of it by for-profit industries, like the companies that sell you water at exorbitant prices.

Why do the water companies succeed? Because they know how to sell "sizzle". If you notice, all kinds of things are "branded" as if a Sunkist orange doesn't grow on a tree like any other orange. Water from a municipal waterworks is generally cleaner than what you get from the expensive plastic bottles, but you don't get the brand name and the fancy packaging with all the colourful pictures. Public is bland because it focuses on selling you the steak and not selling you the sizzle. But people love the sizzle.

Here's a blogger, an educator, who is really put off by how American education is being co-opted by "private enterprise":

I'm guessing that Arne Duncan does not drink from public water fountains. I do (when I can find a working one). And that may be the fundamental difference between Arne and me.

Public fountains are disappearing because the concept of public is disappearing.

Public water fountains are not dangerous (unless cooties are real). Tap water is safe, and the spigots are designed to prevent contamination.

The rise of bottled water here in the States shows how a public institution can be demonized and replaced by a much more expensive privatized solution.

If you can put down the alcohol wipes to look at the numbers, though, you'll learn that tap water is safe, and that the government standards for tap water are higher than the standards required for the commercial stuff.

Charter schools are like bottled water--they're believed to be superior, and their standards are less stringent that their more public counterparts. (Yes, I know that charter schools are part of the public school systems, but they are not public in the sense that they equally accept all students. This difference matters.)

Self Criticism

Here is a bit from a NY Times op-ed piece by Thomas Friedman that points out that most Americans are willing to sacrifice a fellow citizen in Iraq/Afghanistan but isn't willing to sacrifice even the tiniest amount of tax to make the US safe from petro-based terrorism. This is the great enigma of the US:

According to the energy economist Phil Verleger, a $1 tax on gasoline and diesel fuel would raise about $140 billion a year. If I had that money, I’d devote 45 cents of each dollar to pay down the deficit and satisfy the debt hawks, 45 cents to pay for new health care and 10 cents to cushion the burden of such a tax on the poor and on those who need to drive long distances.

Such a tax would make our economy healthier by reducing the deficit, by stimulating the renewable energy industry, by strengthening the dollar through shrinking oil imports and by helping to shift the burden of health care away from business to government so our companies can compete better globally. Such a tax would make our population healthier by expanding health care and reducing emissions. Such a tax would make our national-security healthier by shrinking our dependence on oil from countries that have drawn a bull’s-eye on our backs and by increasing our leverage over petro-dictators, like those in Iran, Russia and Venezuela, through shrinking their oil incomes.

In sum, we would be physically healthier, economically healthier and strategically healthier. And yet, amazingly, even talking about such a tax is “off the table” in Washington. You can’t mention it. But sending your neighbor’s son or daughter to risk their lives in Afghanistan? No problem. Talk away. Pound your chest.

I am not sure what the right troop number is for Afghanistan; I need to hear more. But I sure know this: There is something wrong when our country is willing to consider spending more lives and treasure in Afghanistan, where winning is highly uncertain, but can’t even talk about a gasoline tax, which is win, win, win, win, win — with no uncertainty at all.

So, I ask yet again: Who are the real cheese-eating surrender monkeys in this picture?

Yep... taxes are the great stumbling block of the American body politic. No taxes for health care. No taxes for energy security. No taxes even if it would reduce the Middle East terrorist threat. But no problem sending the kid from down the street to die in an endless "mission" in Iraq/Afghanistan. Crazy.

Dowd On Bush as the Modern Jefferson

Here's a bit out of Maureen Dowd's latest NY Times op-ed piece. Here she cits a bit out of Matt Latimer's tell all biography about George Bush. Here's the bit where Bush is supposed to go give a speech at Monticello and boast that he has matched Thomas Jefferson in his legislative accomplishments for education:

My favorite part is when the White House political office suggests that W. go to Monticello and make a speech pointing out that his legacy matched Thomas Jefferson’s. “Jefferson had founded the University of Virginia,” Latimer writes, describing the aides’ reasoning. “Well, they said, Bush had gotten the No Child Left Behind Act passed. Jefferson had authored the Declaration of Independence. Well, Bush had launched the Freedom Agenda in Afghanistan and Iraq. Jefferson had authored the Virginia statute for religious freedom. Well, that was just like the president’s faith-based initiative.” Latimer balked, noting that “if Bush actually went to Monticello to proclaim himself the Thomas Jefferson of our day, there’d be grounds to question his sanity.”

Bush was a dufus. Nixon was a dufus. Americans have a bad habit of falling in love with right wing rhetoric and voting for the idiots who use the speech writers to mouth the right wing platitudes that Americans want to hear. (Yesterday William Safire died. I positively abhor that guy. To me he is the American version of Joseph Goebbels. In the late 1960s Safire used his speech-writing skills to create the "culture wars" that still inflict the US.)

Funny... the TSA Scrutinized

Here's a bit from a Corey Doctorow posting from the BoingBoing site about TSA security. It is funny... funny sad... pathetic actually...

Now that a terrorist has tried unsuccessfully to blow up a Saudi prince with a bomb shoved up his ass, the TSA is obliged to perform rectal exams on every flier for the rest of time. After all, once a jihadi failed to blow up a plane with his shoe, we all needed to start taking our shoes off. Then some knuckleheads believed they could blow up a plane with energy beverages and hair gel, so now we have to limit ourselves to 100ml of all liquids and gels, unless they're for babies or are prescription (because no mass-murderer would be so evil as to forge a doctor's note, which, as every junkie knows, cannot possibly be forged).

Now we found someone who was made to believe he could kill people with an asshole bomb, and so it follows that the TSA will have to ban -- or at least inspect -- our assholes.

...

Let's just be thankful that no one has yet convinced a suicidal murderer that he could blow up a plane with his mind, because once that happens, we're all in for mandatory airport trepannations. Because, you know, you can't be too safe.

The Long Arm of the Law

The news is filled with the idiocy of the US going after Roman Polanski 30+ years after the crime. (Funny, I didn't see such vigorous enthusiasm for applying to law to Nazis after WWII, maybe it is something about Poles that gets the LA District Attorney's juices going.)

Anyway, here's a better example of how "the Law" in the US goes after the "bad guys"...

Hoosier Grandmother Arrested for Purchasing Cold Medication

Monday, September 28th, 2009

Last March, Sally Harpold, an Indiana grandmother of triplets, bought two boxes of cold medication in less than a week. Together, the two boxes contained 3.6 grams of pseudoephedrine, putting her in violation of the state’s methamphetamine-fighting law, which forbids the purchase of more than three grams by one person in a seven-day period.

Police came to Harpold’s home, arrested and handcuffed her, and booked her in a Vermillion County jail. No one believes Harpold was making meth or aiding anyone who was. But local authorities aren’t apologizing for her arrest.

“I don’t want to go there again,” [Vermillion County Prosecutor Nina] Alexander told the Tribune-Star, recalling how the manufacture and abuse of methamphetamine ravaged the tiny county and its families.

While the law was written with the intent of stopping people from purchasing large quantities of drugs to make methamphetamine, the law does not say the purchase must be made with the intent to make meth.

“The law does not make this distinction,” Alexander said…

Just as with any law, the public has the responsibility to know what is legal and what is not, and ignorance of the law is no excuse, the prosecutor said.

“I’m simply enforcing the law as it was written,” Alexander said…

It is up to customers to pay attention to their purchase amounts, and to check medication labels, Alexander said.

“If you take these products, you ought to know what’s in them,” she said.

Harpold’s photo was put on the front page of the local paper as part of an article about the arrest of 17 people in a “drug sweep.” Alexander has generously allowed Harpold to enter a deferral program. If she commits no crimes in the next 30 days, her arrest will be wiped from her record. She’ll still have to pay court costs and attorney fees.

I’ll leave it to Vigo County Sheriff Jon Marvel to (unintentionally) put an exclamation point on the absurdity.

“Sometimes mistakes happen,” Marvel said. “It’s unfortunate. But for the good of everyone, the law was put into effect.

“I feel for her, but if she could go to one of the area hospitals and see a baby born to a meth-addicted mother …”

Because clearly the best way to prevent meth-addicted babies is to arrest women who buy cold medication for their grandchildren.

No wonder the US went after Al Capone for income tax evasion rather than for breaking the Volstead Act. The legal authorities in the US are crazed! They have a topsy-turvy view of justice. For them, justice is not a case of "seeing the law applied quickly and fairly". Instead it is a big cat-and-mouse game of "gotcha" and an environment of no rules, anything goes!

Notice how the Indiana prosecutor ignores the fundamentals of justice, i.e. the necessity of mens rea. I'm not a lawyer, but the US legal system stinks of the Puritan "legal" system where they put the non-conformist in stocks at let the little kids torture by throwing rotten veggies and small rocks at them. This let the prissy Puritans feel morally superior, but by modern standards this was a travesty of justice. The US has a legal system that is a travesty of justice.

Oh... and by the way, the US is so high-handed in its sense of "justice" that it completely ignores the International Court of Justice. Funny, the US actively promoted the Nurenberg Tribunal as a necessary application of international law to apply to Germany, but the US refuses to allow anybody to apply international law to the US. In this regard, the US acts like the Mafia, i.e. no respect for legal institutions. Instead the US loves to thumb it nose while pretending to be "holier than thou", literally because the US likes to self-congratulate itself on its "religiousity".

Typical American Problem Solving

Here's Scott Adams, the cartoonist who does Dilbert, with a posting on health care. As a Canadian, I'm sensitive to typical American approaches to "problem solving". What got my goat:

• He wants to offload the "doctor problem" to other countries and thinks nothing of using big bucks to pull in specialists from around the world. Countries invest in their doctors and when they lose them, they lose the investment. But Adams, like most Americans treats the rest of the world like "elevator music", i.e. something to be ignored.


• He takes the typical misinformed attitude toward other countries. Specifically he continues to spread the ridiculous myth that because Canada has government health care, people here are subject to queues for everything. He "supposes" it takes 10 months to get a doctor's appointment. For me, I generally get in the same day. At most a one day wait. My parents who lived in the US had to generally wait a few days to get in. And I watched the health care system in the US abuse them. I spent most of one day in an "emergency" room at a hospital trying to get my 85 year old mother in to see a doctor. We finally left because it was obvious we would be waiting another six hours, well into the wee hours of the morning before we had any hope of getting to see anybody. One year I sat in an American hospital and watched as my brother painfully passed a kidney stone in the emergency room. Of course he was billed for the pleasure of passing the stone unattended in the waiting room. American hospitals are big on "tests" even if they are a 'day late and dollar short' in providing real medical care. This kind of poor treatment is something I've never heard of in a Canadian hospital. But Canadian hospitals don't have the hordes of uninsured that treat the emergency room as they "primary care" physicians. Despite all this, Americans are convinced that "socialized" medicine must be bad.


• You will witness below the typical American allergy to paying taxes. I find that insane. If you want to live in a civilized society, it costs money. If you want to live in the Wild West where Wall Street can mug you for a trillion dollars, then pay no taxes and demand deregulation! That is what you get.


• The final paragraph exhibits why "change" doesn't happen in the US. The citizens are cynical about politics. Yes, they have a right to complain, but it is mostly by their own hand. If they voted more intelligently and held their representatives more accountable, if they had more real democracy, then the US wouldn't have the disaster of a political system that it has.

That's what bugs me about this Adams posting. Adams is right-of-center politically with an inclination toward libertarianism, but he is honest about his beliefs. Read his posting it for yourself and form your own opinions. I've bolded the bits I refer to above.

HealthCare Thought Experiment

Before you complain that I'm a socialist who wants to take away your freedoms and your money, what follows is just a thought experiment. I start with the premise that the government of the United States, against all odds, declares universal healthcare a basic right.

Obviously no one has figured out how to pay for universal healthcare in a way that society can swallow. So today's thought experiment imagines that ALL options are on the table except raising taxes, just to make this interesting.

As President Obama has pointed out, there might be some savings involved with covering everyone. At the moment, two-thirds of all bankruptcies are caused by medical bills. If that problem goes away, society saves a bundle.

If we assume a so-called single payer option goes into effect, which means the government offers an insurance program in competition with private insurers, we could eventually see some drops in prices. If you prefer keeping your private insurance company, the only change you would see is a lower bill.

A big benefit of universal healthcare insurance is job mobility. At the moment, lots of people stay at suboptimal jobs because switching jobs would mean losing healthcare for themselves or their families. That's a huge drag on economic efficiency. I suppose wages might creep up if people feel more freedom to job hop, and there would be some extra training involved for all the fresh meat, but on balance I'm guessing job mobility is a boost to the economy, and potentially a big one.

Another economic benefit from universal healthcare coverage is that doctors can catch problems early, before they become more expensive to treat. That's a winner all around.

A big downside of insuring everyone is that in the short run there wouldn't be enough doctors to go around. One solution is to recruit qualified doctors from overseas. If they can pass the same tests as American doctors, they're in. I have to think we'd have plenty of doctors in that case. Then the shortage becomes the problem of other countries.

Next, we legalize doctor-assisted euthanasia, under strict medical guidelines. A disproportionate amount of healthcare costs go toward the last few months of life, when the patient is getting very little bang for the buck. I don't know anyone who wouldn't want the option for himself.

Then we require junk food to be labeled like cigarettes, and make it a national priority to decrease our exposure to unhealthy food. People still have to eat, so perhaps the fast food outlets could make the same profit from offering convenient food that is healthy, even if it isn't as tasty and addicting. The government could bully or legislate unhealthy foods out of our diets if it needed to.

Next, the government could start to push the benefits of exercise. And I don't mean the hand-waving they do now. I mean a serious push, until couch potatoes start feeling like flag burners. Exercise could become a matter of national pride.

The government could tax cigarettes into the realm of novelty. Remember, this is the imaginary world of the thought experiment. If universal healthcare is mandated, and you don't want to wait ten months to see a doctor like you do in Canada (allegedly), then society has to make some hard choices.

The government could also require your doctor to treat patients by e-mail, as my HMO already does. That probably saves 10% on patient visits right off the top. Once hi def cameras are more ubiquitous, you should be able to e-mail photos of your bruises and suspicious moles to your doctor too. And I have read that there is a lot of progress in various types of home medical monitors that can send info to your doctor. That should help.

Imagine also that employers who offer health insurance have to treat cohabitation just like marriage. If you're shacking up with someone, you have the option of being on their insurance plan, no further questions asked. Employers currently don't discriminate against married employees even though their families cost extra to insure. This simply extends that benefit to non-traditional familes.

I can also imagine a loosening of the rules for what a Nurse Practitioner can do without a doctor's direct supervision. Between the Internet and a Nurse Practitioner, patients can eliminate a lot of doctor visits.

Most of what I mentioned here is thoroughly impractical because of lobbyists, morons, bad leadership, superstition, and our addictions to unhealthy behavior. It's just interesting to imagine what universal healthcare would look like if it were a constitutional right and raising taxes was off the table.

Reading this, it is pretty clear to me that the US won't get any real health care reform in my lifetime. Like California, Americans will wait until their system is completely busted (and maybe a bit beyond) before they will countenance any fundamental change in their "live free or die" mentality (and the "he who dies with the most toys wins" mentality).

Requiem for a Summer Now Past

Here's a little Gershwin...



If you want to know what makes this octet unusual, read this posting by Jennifer Ouellette on the Cocktail Physics web site. It is a recap of the life of instrument maker Carleen Hutchins with a couple of YouTube videos stuck in. It is very nice. Go read the posting.

Botched American Policy

I find it funny to watch the "big boys" stumble around and make mistakes. You would think a rich country like the US would be able to "get it right". They proved with George Bush that the country could be spectacularly incompetent. Now with Obama in place, they are proving they can be quietly incompetent (in financial reform and military policy among other things). It is pathetic.

Here's a post from Thomas E. Ricks that gives you an idea of how the US continues to screw up the situation in Iraq:

American insiders in Baghdad say the relationship between the top U.S. commander there, Gen. Raymond Odierno, and the top civilian official there, Amb. Christopher Hill, is deteriorating rapidly. Old hands say the chill between the two brings to the bad old days of Sanchez vs. Bremer, when those two unfortunates barely would speak to each other as the American position fell apart in early 2004, along with Iraq itself.

What I am hearing is that Odierno is profoundly frustrated with Hill, who despite knowing almost nothing about Iraq has decided after a short time there that it is time to stand back and stop influencing the behavior of Iraqi officials on a daily basis. In addition, I am told, the ambassador believes the war is an Iraqi problem, not something that really concerns Americans anymore, despite the presence of 125,000 American soldiers. On the other hand, the diplomats respond, the military guys believe they have good relationships with Iraqi officials, but, the dips add, how would the soldiers really know? Because unlike Hill's posse, they don't speak Arabic. Which brings to mind my favorite saying of Warren Buffett, that if you've been playing poker for half an hour and you don't know who the patsy at the table is, you're the patsy.

This is not good. Too often in Iraq over the last six years, the mission has been undercut by needless squabbling between our soldiers and diplomats. For some inexplicable reason, we've never had a structure that gives the Americans unity of command, with one person in charge of the overall national effort. (Calling Gen. Tony Zinni! Oh wait, the Obama administration screwed him early on about an Iraq post, and he isn't taking their calls anymore.) We have been tying ourselves in needless knots because correcting the bifurcated command structure somehow has been deemed too hard. Some people, like Gen. Petraeus and Amb. Ryan Crocker, were able to overcome the jerry-built command structure by being determined to achieve unity of effort, even if it meant banging together the skulls of subordinates. But it sounds to me like this top-level spirit of cooperation has evaporated and once again the smackdown is Camp Victory vs. the Green Zone -- and let places like Kirkuk and Fallujah fall apart in the meantime.

I was pretty tough on Odierno in Fiasco, but then was very impressed with how he adapted and changed for his second tour in Iraq, in 2007-2008, which I wrote about in The Gamble. By contrast, I've never understood the selection of Hill for Iraq. I met him in the Balkans and thought him a pleasant and smart guy who speaks Serbo-Croatian and Polish, but from what I can tell, he doesn't know much about the Middle East. I am told he is there because he is a Holbrooke homey. But what does Richard "AfPak" Holbrooke have to do with Iraq? I mean, doesn't his writ end several hundred miles to the east, around Herat?

You would think 'once bitten, twice shy', but apparantly that isn't the way the Americans play the game. Instead they bumble from one catastrophe to another. Such a shame.

It is bad enough to have a rogue President, Bush, on a personal vendetta go in and rape and pillage a country. It is a tragedy when his successor, Obama, fumbles about and allows the situation to slip slide away due to incompetence.

Meanwhile the media is on the warpath over Iran, yet again. (Remember just three years back when Seymour Hersh ran around saying 'the end is nigh' claiming that Bush was planning to bomb Iran over nuclear weapons?) What I find funny is that the US's tilt toward Pakistan was going on just as Pakistan built its nuclear weapons, and under A. Q. Khan was busy proliferating that weaponry amongst rogue states. So it is peculiar to see the US anxiety over Iran when they held the Pakistani viper so closely to their bosom. This stinks of hypocrisy.

The Sleazy Always Rise to the Top

I just ran across this report on BBC:

The Swiss multinational Nestle is buying milk from a farm seized from its white owners and now owned by the wife of Zimbabwe's President Robert Mugabe.

Britain's Sunday Telegraph newspaper said up to 1m litres of milk a year are being sold to Nestle from the farm.

Nestle says it has no contract with the farm, but buys milk on a cash on delivery basis after other suppliers went out of business.

The company says its products help meet the food needs of Zimbabwean consumers.

Mrs Grace Mugabe is subject to US and EU sanctions, along with her husband and some other Zimbabwean officials.

But since Nestle is based in Switzerland it is not bound by those sanctions.

The newspaper said that Mrs Mugabe had taken over at least six of Zimbabwe's most valuable white-owned farms since 2002, including the Gushungo Dairy Estate in Mazowe, north of the capital Harare.

In a statement sent to the BBC, Nestle says that since the collapse of Zimbabwe's dairy industry it has been forced to buy milk on the open market "from a wide variety of suppliers on a non-contractual basis" for its factory in Harare.

"This includes milk from the Gushungo Dairy Estate which today accounts for between 10 and 15% of Nestle's local milk supply," the statement said.

"Had Nestle decided to close down its operations in Zimbabwe, the company would have triggered further food shortages and hundreds of job losses among its employees and milk suppliers in an already very difficult situation."

I just chalk it up as another example of how the sleazy either worm their way to the top or how the brutal rape & pillage their way to the top. The joke is that we are sold a Horatio Alger story that those who rise do so because of merit. My experience in life was that most managers were incompetent and that most of the "rising" was done through cronyism and favouritism. I'm willing to admit that the average manager was smarter & more motivated than the average worker, but there were a lot more workers and a very sizable portion were far more competent than most of the managers I knew over my working career.

Sadly, corruption and the abuse of power have been with us since the start. I'm a sucker for idealism, so I really like the idea of meritocrazy and giving everybody a fair shot at going to the top. But that really is a fairy tale. The only time true "outsiders" make it to the top is when the rich and powerful reach down and "promote" some outsider (in school that is via scholarships to the "deserving" poor) and you get the oddball outsider rising. As best I can tell this is pure propaganda. It is done so that the rich & powerful can say "see, you really can rise" and it is done to assuage what feelings of guilt they have for their own inside track to the top.

Using the Legal Law Stick

Sitting in Canada watching the US is funny sport. Generally Canadians take responsibility for their lives and don't try to sue at the drop of a hat. Americans, on the other hand, seem to have an uncommon belief that if something goes wrong, then somebody must be to blame and must be made to pay. This leads to ridiculous lawsuits. Here's an example from the site Lowering the Bar which finds humour in the law:

Bank of America Sued for 1.784 Sextillion Dollars

Apparently hoping to either (a) send a message, (b) set the new record for largest demand ever made in a lawsuit, (c) be awarded all of the money that may exist in the galaxy, in whatever human or alien denominations may be available, or (d) all of the above, Dalton Chiscolm sued Bank of America in August for "1,784 billion, trillion dollars."

Assuming that the second comma isn't a typo, and that Chiscolm actually demanded 1,784 billion trillion dollars, to my knowledge that is at least a new record for stupidly large lawsuit demands. In 2008, someone sued the federal government for more than three quadrillion dollars, but a quadrillion is only a thousand trillion. These days, maybe that just doesn't seem like a lot of money to people.

I did a bunch of the math that time, but this time I think I will stick with the numbers in the news report. A billion trillion, also known as a "sextillion," could be written as a 1 followed by 21 zeros. I know the dollar has weakened lately, but a sextillion dollars would still be a lot of money. The gross domestic product of the entire world in 2008 was only $60 trillion, so even if Chiscolm won it might be a little hard to collect.

I put this up there with

• the lawsuit against MacDonalds for coffee which was "too hot" and


• the woman who claimed to find a finger in her chili, yep, right where she placed it. She was so outraged she sued, but ended up incarcerated by a judge without a sense of humour.

Only in America.

The Sly Cruelty of Right Wing Politics

Here's a bit from a blog on Discover magazine by John Conway, physics professor at UC Davis. He is talking about the effects of the budget shortfall in California on the California educational system, specifically the University of California system of universities:

Anyway, things simmered along during the summer, with anger building steadily. The walkout was planned about a month ago, and has really caught fire now. But then, last week UC President Yudof, faced with the spectre of even deeper cuts next year (when federal stimulus money for the state of California runs out), and a continuation of the “fiscal emergency” he declared into the next academic year all but certain, he announced plans to dramatically increase student fees by 30%, to over $10,000 per year for the first time ever, in addition to the 9.3% increase pushed through in May to help close the budget gap.

Ultimately, we all realize that the budget problems we face stem from the poor economy coupled with the effects of Proposition 13, passed over 30 years ago. By requiring a 2/3 majority in the state legislature to pass budget actions, it has led to a tyranny of the minority, a minority of, yes, Republicans who simply will not accept any new tax no matter what it does to the future of the state. Prop 13 caps property taxes at 1% of assessed value of a home, and caps the rate at which that value can rise to 2% per year, unless the house is sold. Clearly in a housing market that saw huge increases past decades, with far faster increases than 2%, this has led to enormous inequities in tax rates. For example, though my neighbors across the street have a house worth about what ours is, they pay about a quarter of what we do in taxes. This has benefitted the elderly greatly, and was a strong motivation for Prop 13 originally, but it has hamstrung the ability of both the state and local governments to support education, both K-12 and higher education.

We, as a state, are eating our seed corn. The University of California and the California State University systems are a tremendous engine for both long and short term economic growth.

My mind boggles at the American obsession with not paying taxes. It goes back to tossing boxes of tea into Boston harbour. Sure, everybody hates taxes, but in any civilized society the citizens recognize the need to pay into a common kitty to provide the infrastructure and services that make a civilized life possible. But not Americans.

The horrors that Proposition 13 has created are obvious to everyone but the fanatical right.

The radicalism of "Live Free or Die!" still lives in the political body of the US. It is corroding the society from within but seemingly people of good will can't fix it because the infection is deeply internalized. Sad.

Security Gone Mad

This report on BBC made me chuckle...

A north London council has apologised after a woman was refused the loan of a pair of scissors in a library because she "might stab a member of staff".

Lorna Watts, 26, a self-employed dressmaker, was turned down at Holborn Library in central London.

She said: "It's ridiculous - public libraries are supposed to be supportive of small businesses."

A spokeswoman for Camden Council, which runs the library, has apologised and said it would investigate the incident.

Ms Watts, from Islington, north London, said: "I asked why I couldn't borrow a pair of scissors and she said, 'they are sharp, you might stab me'.

"I then asked to borrow a guillotine to cut up my leaflets but she refused again - because she said I could hit her over the head with it!"

She added: "It's absurd - there are plenty of heavy books I could have hit her with if I wanted to.

"I hardly look very threatening - it's really sad she could not make a commonsense judgement."

The businesswoman then visited another three libraries in north London but her request was rejected in each of them.

A spokeswoman for the Health and Safety Executive said there was no policy in place on lending sharp implements.

"People know their own workplaces and must carry out their own risk assessments", she said.

"But we do ask workplaces to take a common sense approach.

"This could be a case of someone misinterpreting the rules."

The world has gone mad. I notice that my local community centre has a "no photos allowed" sign now posted outside. This is absurd. If somebody is going to "case" the place, they can do it with a hidden camera or just be observant and sketch it later. All this sign does is bully innocent people with cameras. It is security gone mad.

This reminds me of the "evil commie terror" of my youth. I was constantly pumped up with the idea that the USSR was champing at the bit to find a way to nuke us. The idea was also pushed that commies were everywhere taking over the government. In reality, the Communist Party was falling apart because of the Khrushchev revelations.

I guess people like being scared. Some go to horror shows to terrify themselves. The more political ones run around spreading scare stories about commies everywhere or terrorists everywhere. Nutty.

I love the bureaucratic answer given:

A Camden Council spokeswoman said: "We are sorry we have not reached our usual high standards. We will investigate fully as soon as possible."

The fact that a total of 4 libraries all refused to lend scissors says to me it is very unlikely that this is simply a slip up in "usual high standards". It sounds like a policy whether formal or informal that has been passed around the staff. Four in a row is pretty long odds for a "slip up".

Robert Reich's Logic

I don't buy Reich's logic in a posting he has on his blog about the "trigger" option being discussed in Washington. I'm sympathetic to his cause, but there is something phony about his argument. Here is the key bit:

The White House is looking for a way to be in favor of a public option but also get enough Blue Dog Democrats -- many of whom hail from swing districts and states, and therefore need some cover -- to vote for it. One such cover is a Republican Senator from Maine, named Olympia Snowe. If she votes for the bill, Blue Dogs can calm their constituents -- who have been worked up into a lather by the right -- by saying "you see? Even a prominent Republican senator is voting for this."

So will Snowe play ball? It depends. Her idea (evidently encouraged by Rahm Emanuel, the President's chief of staff) is to hold off on any public option. Give the private insurance companies a period of time -- say, five years -- within which to make changes that extend coverage to more people and also drive down long-term costs. If those goals for coverage and cost aren't met by end of the five-year grace period, kaboom: the public option is triggered -- which will force such changes on the insurance companies.

The beauty of Snowe's proposal is that it seems to offer Blue Dogs a way out and liberal Democrats a way in. Nobody has to vote for or against a public option. The public option just happens automatically if its purposes -- wider coverage and lower costs -- aren't achieved. And the trigger idea seems so, well, centrist.

The problem is twofold. First, it's impossible to design airtight goals for coverage and cost reductions that won't be picked over by five thousand lobbyists and as many lawyers and litigators even if, at the end of the grace period, it's apparent to everyone else that the goals aren't met. Washington is a vast cesspool of well-paid specialists who know how to stop anything resembling a "trigger." Believe me, they will.

Second, any controversial proposal with some powerful support behind it that gets delayed -- for five years or three years or whenever -- is politically dead. Supporters lose interest. Public attention wanders. The media are on to other issues. Right now the public option is very much alive because so many Democrats care deeply about it, with good reason. But put it off for years, and assign it to the lawyers and lobbyists I just mentioned, and you can kiss it goodbye for ever.

I buy the argument that health costs in the US are high because the system is inefficient. All the private insurers are putting big efforts into offloading anybody with a real need for insurance. So there is a lot of "buck passing" along with orphaned seekers of insurance who can't find anybody willing to take them.

Europe, Canada, and Japan prove that mandated universal health care delivers better care at lower cost. The US system is broken. But Reich seems to be saying that if you don't force a public option, then the US system will manage to hobble along. But at the same time, the story is that the US system is (a) much more expensive than that in any other developed country while getting worse outcomes and (b) costs are skyrocketing in the US. Doesn't that mean it will only get worse?

Why isn't Reich sitting back smiling knowing that if this "trigger" option gets passed the system will blow up and the Congress will have to come back and clean up an even bigger mess in 5 or 10 years? I think they will. I think Reich is pushing a phony argument. I'm on Reich's side in the argument, but I don't buy this maneuver in his logic.

On a happier note... Here's a posting by Robert Reich giving the long history of attempts to get health care in America. It is very instructive. It will make you appreciative of the ups & downs, the hurdles, the miscues, and the ugliness of the fight. Go read the whole thing.

The Nice Side of No More Mr Nice Blog

I thought this was nicely put by the blog "No More Mister Nice Blog"...

SO WHY HASN'T OBAMA ORDERED THE FBI TO STAND DOWN?

The FBI has apparently disrupted a terror plot centered on Najibullah Zazi of Colorado; it conducted a sting operation that led to the arrest yesterday of a man charged with attempting to blow up a Dallas skyscraper; and it conducted another sting that led to the arrest of a Muslim convert (and apparent admirer of John Walker Lindh) in Illinois who allegedly tried to detonate what he believed was a bomb outside a federal courthouse.

Odd that this is all happening while we supposedly have a president who loves our enemies and hates America.

No, really -- why didn't B. Hussein Osama, pinko commie and bestest friend of domestic terrorists, order the FBI to stop pursuing these cases? Wouldn't that just follow logically? For a man dedicated to the destruction of America, wouldn't allowing the pursuit of these cases fly in the face of everything he holds dear?

Isn't it high time we demanded an explanation of this apparent contradiction from those who literally believe Obama is a treasonous America-hater? I don't just mean teabaggers or Beck or Limbaugh -- I mean "respectable" people like barking lunatic Michael Ledeen ("I think that [Obama] rather likes tyrants and dislikes America").

But I suppose that, for them, all that treason talk is like the verbal nastiness in sexual sadomasochism -- we're supposed to just know that they don't really mean it and it's all posturing and playacting; surely there's a "safe word" that can be uttered before someone takes it all too literally and decides Obama is a genuine menace to the Republic who's earned a bullet in the head. (See, e.g., John McCain, who gets a lot of credit for ultimately acknowledging Obama's patriotism on the campaign trail, even though he did so only after tolerating and encouraging the build-up of a hell of a lot of rage based on fantasies.) It's all theater; it's all sport. All fun and games -- until what?

I've been so sickened by mad dog Cheney running around saying "Obama has made the US less safe". This hopefully puts that to rest. You don't have to sign up for torture to be a "patriot". Cheney is a fool. He and Bush did more to make the US unsafe than the previous 40 administrations.

If you liked the above, try out this.

Click on the above headline to go to the original and follow up the links.

The Truth Comes Out Now, about 8 Years Too Late!

It is fun to read the kiss & tell books that reveal the "secrets" of a presidential administration. But I'm annoyed when an incompetent holds office for eight years and nothing comes out. But once he loses his grip on power, the truth comes out in all its shocking, horrifying detail. It is too late now. That stuff should have come out when it first came up in the Bush admin so that voters could have tossed the bum out early before he completed his full five acts of tragedy wherein he pretty well destroyed America...

Here's the right winger Bruce Bartlett reviewing the right winger Matt Latimer's book on Bush:

I am reading Matt Latimer's book, just out today, Speech-Less: Tales of a White House Survivor. Two things struck me. First is confirmation of the portrait of George W. Bush that I painted in my Impostor book of a bully who cannot stand to be contradicted, who thinks he knows everything despite being grossly ignorant most of the time, and who browbeats those beneath him into agreeing with him.
Second is how different the Bush White House was from the Reagan White House where I worked. Reagan's WH was a model of thoroughness, adherence to proper procedure, and respect for the office of the president. Bush's WH seems amazingly slipshod, showing total disregard for all of the things that were important to Reagan in terms of how his administration functioned.
On the first point, I was struck by this paragraph as the author discusses his first session with Bush reviewing a draft speech he had written:
"The president's editing sessions went like this: he talked, you listened and scribbled furiously whatever he said. On occasion, he might ask a question. But usually he wasn't too interested in the answer. Sometimes in the middle of your explaining something, if he felt he wasn't getting what he wanted, he'd interrupt and say, 'Okay, here's what we need to do.' This wasn't a process that encouraged dialogue or pushback on an important point. This was George W. decisively telling you what he wanted to say, and you writing it down. Got it?"
The problem with such a bullying method is that the president isn't just some guy expressing a personal opinion when he speaks. If he were, then it would be perfectly appropriate for him to demand that his speechwriters wrote whatever he damn well told them to say. But the president of the United States speaks not just for himself, not just for his administration, but for the country as a whole. His words carry weight. Consequently, it is appalling to see him treating those words in such a cavalier manner.

...

I continue to believe that a great many of Bush's screw-ups, most especially on Iraq, resulted from his personal style, which eventually permeated throughout his entire administration. It disdained facts and analysis and glorified decisiveness and action. "Shoot first and ask questions later" could have been its motto.

Of course the true believers will poke their fingers in their ears and whistle Dixie rather than listen to reason. The political process in the US is broken. Starting with Goldwater and the hard turn to the right in the Republican party, things have been going downhill for nearly 50 years. The bus is over the cliff and careening off the cliff wall, but it hasn't hit bottom yet. That is going to be one sad day when the next yahoo Republican takes power and finishes the job of destroying America.

Absolute Hypocrisy

John Yoo was the lawyer who argued for extraordinary powers of the President under a theory of the "unitary executive". In effect, Yoo denied the Constitution's division of powers into three branches by saying:

In its most extreme form, unitary executive theory can mean that neither Congress nor the federal courts can tell the President what to do or how to do it, particularly regarding national security matters.

(from Wikipedia. Note: the Wikipedia article does not quote Yoo directly, but it does reference Yoo, so you have to dig to get the specific words used by Yoo, but the above is completely in line with Yoo's allegiance to the idea of a 'unitary executive'.)

This is the same ideological right wing nut who argued that Clinton, as president, exceeded the powers available. Here's Yoo speaking out of the other side of his mouth:

But in The Rule of Law in the Wake of Clinton, a book published in 2000 by the libertarian Cato Institute, John Yoo took an entirely different view of "The Imperial Presidency Abroad," as his contribution was titled.

Yoo wrote: "President Clinton has exercised the powers of the imperial presidency to the upmost ... [and] undermine[d] notions of democratic accountability and respect for the rule of law ... ."

It's a provocative claim, especially coming from Yoo. How does he claim that Clinton did so? By using his powers as commander in chief to place American troops under the command of British NATO generals. "War power questions to one side, President Clinton's military adventures raise a second legal and constitutional difficulty—their unprecedented reliance on multilateral cooperation," Yoo writes. "That position has serious constitutional and policy defects .... [T]he Constitution nowhere permits the president ... to delegate federal power completely outside of the national government."

(from an article by Brad DeLong in The Week Magazine)

Here is the stark contrast between the rabid anti-Clinton Yoo and the sycophantic pro-Bush Yoo:

Yoo's Bush-era writings support presidential powers so wide-ranging that the president can order the torture of captives regardless of what treaties the U.S. has signed or what laws the U.S. Congress has passed. Yet we are expected to accept that Yoo previously believed that the president's power as commander in chief is so puny and circumscribed that he cannot lawfully put American troops under the command of allies?

DeLong goes on to show how ignorant Yoo is of history by pointing out:

Dwight D. Eisenhower—not the commander in chief but merely the theater commander—in December 1944 placed the U.S. First Army under the command of British Field Marshal Montgomery. President Wilson put the army of Gen. Pershing under the command of French Field Marshal Foch. Commander in chief George Washington put American troops under the command of Jean-Baptiste Donatien de Vimeur and Marie-Joseph Paul Yves Roch Gilbert du Motier. And let's not talk about the command authority over the Continental Army exercised by Friedrich Wilhelm Ludolf Gerhard Augustin von Steuben at Valley Forge.

Yoo is the ignoramus which the Stanford University UC Berkeley Law Faculty has "adorned" itself with. This is the guy that they dare not get rid of because it would affront "academic freedom". Nutty!

Go read the whole of DeLong's article. It is very enlightening!

Getting the Right Perspective

This is funny... I saw a reference to the following on the Brad DeLong site which pointed me off to another site. From there I tried to track down the original, and wonders of wonders, it was a Brad DeLong posting. So I tried to open that, but the original from 14 May 2003 is missing. A little more digging and I found it resurrected on 21 February 2008 on the DeLong website. Bizarre.

Here's the factoid that sent me chasing my tail:

The hideously depressing thing is that Cuba under Battista--Cuba in 1957--was a developed country. Cuba in 1957 had lower infant mortality than France, Belgium, West Germany, Israel, Japan, Austria, Italy, Spain, and Portugal. Cuba in 1957 had doctors and nurses: as many doctors and nurses per capita as the Netherlands, and more than Britain or Finland. Cuba in 1957 had as many vehicles per capita as Uruguay, Italy, or Portugal. Cuba in 1957 had 45 TVs per 1000 people--fifth highest in the world. Cuba today has fewer telephones per capita than it had TVs in 1957.

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Thus I don't understand lefties who talk about the achievements of the Cuban Revolution: "...to have better health care, housing, education, and general social relations than virtually all other comparably developed countries." Yes, Cuba today has a GDP per capita level roughly that of--is "comparably developed"--Bolivia or Honduras or Zimbabwe, but given where Cuba was in 1957 we ought to be talking about how it is as developed as Italy or Spain.

My heart is on the left, but I learned in my youth that there are some truly evil people on the far left. Just like there are some truly evil people on the far right. And, indeed, there are some truly evil people who are apolitical. Life is full of pitfalls.

There are not Cliff Notes version where you can "check the facts". Sadly, people lie. Sadly their ideology blinds them to the fact that they lie. Sadly, we can only get at the truth by hard, lonely work. Being told that you are wrong doesn't mean you are wrong. Being told by your buddies that you are part of the enlightened few who really have truth by the tail does not mean that you are right. Life is complicated. It is struggle from your first breath to your last. And like Diogenes you can carry a lantern your whole life trying to find 'honest man' and never find one. That is the sad truth.

If you think I'm cynical, go read this. In particular, this bit:

Diogenes took Antisthenes' anti-worldliness to what is now foolishly considered an extreme, turning the latter's disregard for wealth and worldliness into complete rejection. He believed that virtue (the goal of most Greek philosophers but an irrelevance to consumer-societies) could be attained only by fighting hypocrisy, greed and corruption - i.e. conventional morality. He is famously said to have gone around Athens with a lantern by day, vainly looking for an honest man. He would have agreed with Khayyám that society is merely knots of people on puppet-strings of systems of belief.

The Next Bubble

Here is a key bit from an interesting article by Steven Pearlstein in the Washington Post. He points out that the Bush/Obama financial maneuvering is setting us up for another big bubble and crash:

Less encouraging is what's happening on Wall Street. It turns out that all those bold and necessary steps by the Federal Reserve to prevent the financial system from collapsing wound up creating so much liquidity that it has now spawned another financial bubble.

Let's start with the $1.45 trillion that the Fed has committed to propping up the mortgage market -- money that, for the most part, was simply printed. Effectively, most of that has been used to buy up bonds issued by Fannie Mae and Freddie Mac from investors, who turned around and used the proceeds to buy "safer" U.S. Treasury bonds. At the same time, the Fed used an additional $300 billion to buy Treasurys directly. With all that money pouring into the market, you begin to understand why it is that Treasury prices have risen and interest rates fallen, even at a time when the government is borrowing record amounts of new money.

As it was printing all that money, the Fed was also lowering the interest rate at which banks borrow from the Fed and each other, to pretty close to zero. What didn't change was the interest rate banks charged everyone else. As a result, "spreads" between what banks pay for money and what they charge are near record highs.

So who is borrowing? By and large, it's not households and businesses, which are reluctant to borrow during a recession. Rather, it's hedge funds and other investors, who have been using the money to buy stocks, corporate bonds and commodities, driving prices to levels unsupported by the business and economic fundamentals.

The excess liquidity is even being used to finance a new "carry trade" in which global investors borrow at U.S. rates and buy government bonds in places like Australia, where prevailing rates are higher. Because the carry trade involves exchanging dollars for foreign currencies, it has been a major contributor to the recent decline in the dollar.

Naturally, this has been a blessing for Wall Street's biggest banks, whose trading desks have not only made big money executing and financing the investment strategies of others, but have also been trading actively for their own accounts. And with bubble profits come bubble bonuses.

Back at the Fed, the attitude has been to welcome anything that strengthens the balance sheets of banks, particularly while they continue to write off billions of dollars in soured loans each quarter. Nor is the central bank in any rush to begin pulling back from its current policies. Citing the mistakes made by their predecessors during the Great Depression and by the Bank of Japan during the "lost decade" of the 1990s, Fed officials are determined not to snuff out the economic recovery by moving too early to raise interest rates and reduce liquidity.

But the lesson I prefer to focus on is the one from this decade, which is that central bankers ignore financial bubbles at their peril. Given the new architecture of global finance, the Fed can no longer think of its job solely in terms of the trade-off between inflation and unemployment. Nor should it become complacent about restrained consumer prices while ignoring rapidly rising prices for financial assets. As Alan Greenspan discovered, it is also a mistake for central bankers to assume that they can quickly sop up excess liquidity whenever they decide the moment is right.

Alan Blinder, the Princeton economist and former Fed vice chairman, may be right when he says it's too early for the Fed to begin raising interest rates. The economy is still too weak, he says, the threat of deflation still too real.

But it is certainly not too early for the Fed, at the conclusion of its meeting Wednesday, to warn Wall Street that its current policies cannot, and will not, continue indefinitely -- particularly if the money is used to inflate bubbles rather than finance real, sustainable economic growth.

I worry about inflation. It is a tax on everybody who lives within their means. The only people who benefit from inflation are those holding debt since they can replay loans with inflated dollars. Meanwhile, the government is fighting this current financial crisis using a hidden tax on everybody who holds financial assets. By keeping interest rates artificially low to allow banks to make profits to climb out of the hole they created for themselves, it taxes the rest of us by denying us the income from our savings that we deserve. Instead, we are being taxed both through federal spending and indirectly through the artificially low interest rates on our savings. All this is being done to make whole the malfactors who created this problem. They get no punishment. Instead they get rewards. While the average Joes, who had no responsibility, are paying both through taxes and through a hidden tax to put money into the pockets of the bankers who created the problem. This is evil.

It may be needed in the short term, but it should be openly acknowledged. (Where is all that "transparency" that Obama promised?) The government should make known what it is going to do to punish the evil doers and how quickly it can stop punishing the innocent with this two-handed tax grab.

Chopping Ralph Nader Down to Size

People love to put their "heros" on pedestals. But all "big men" have feet of clay. It's in the job description (as in, "power corrupts, absolute power corrupts absolutely").

Here's an excellent blog posting by Doug Henwood that points out Ralph Nader's feet of clay:

I’ve long been struck by Ralph Nader’s imperious view of politics—his preference for progressive change via litigation, not legislation, and a career (during which he accomplished many very good things, don’t get me wrong) capped by a few celebrity presidential campaigns in which he never made any effort to build a movement out of the crowds and publicity they generated. So now he’s out with a “novel” that apparently argues that a small posse of enlightened plutocrats will save us. Citizens’ groups aren’t up to the task, Ralph tells Amy Goodman. Only enlightened businesspeople, working from inside (with the assistance of a perky parrot), can.

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So the problem isn’t private ownership and a competitive system driven by profit maximization—it’s simply scale (small good, big bad) and temperament (replace the evil bizpeople with the good ones). He seems to have no idea that competition and profit maximization make people, who may be perfectly warm and lovely in their private lives, do monstrous things. I once heard a very similar line from Ben “Ben & Jerry’s” Cohen, who couldn’t understand how CEOs could both go to church and be nice to their families and then go to work and exploit and pollute.

Of course, as Liza Featherstone pointed out long ago, when faced with a union organizing campaign in crunchy Vermont, B&J fought it as roughly as any thuggish Southern mill owner would. “It’s business, man!,” as Liza’s title explained. Oh, and Ralph did pretty much the same thing when faced with organizing campaigns in a couple of his own shops, Multinational Monitor and Public Citizen. He fired the troublemaking editor of MM, Tim Shorrock, and spread nasty rumors about him, which led Shorrock to this conclusion about Nader:

Ralph Nader may look like a democrat, smell like a populist, and sound like a socialist – but deep down he’s a frightened, petit bourgeois moralizer without a political compass, more concerned with his image than the movement he claims to lead: in short, an opportunist, a liberal hack. And a scab.

And now he’s fully out of the closet as an admirer of the nice sort of plutocrat.

I was never a fan of Ralph Nader. I liked the idea of going against the corporations for the evil they do. But there was alway a "holier than thou" aura around Ralph Nader that bothered me. I'm a down-in-the-dirt democrat. I accept that people are imperfect. I think we are all in this together. But Nader was always an elitist.

Doug Henwood is an interesting fellow. His writing are always worth reading.

Deconstructing a Faulty Paradigm

I'm only too happy to see the multiple efforts underway to tear down the myth of the "rational market" and of a all-knowing, calculating homo economicus.

Here's a bit from an article by Robert Shiller making this very point:

The widespread failure of economists to forecast the financial crisis that erupted last year has much to do with faulty models. This lack of sound models meant that economic policymakers and central bankers received no warning of what was to come.

As George Akerlof and I argue in our recent book Animal Spirits, the current financial crisis was driven by speculative bubbles in the housing market, the stock market, energy and other commodities markets. Bubbles are caused by feedback loops: rising speculative prices encourage optimism, which encourages more buying and hence further speculative price increases — until the crash comes.

You won’t find the word “bubble,” however, in most economics treatises or textbooks. Likewise, a search of working papers produced by central banks and economics departments in recent years yields few instances of “bubbles” even being mentioned. Indeed, the idea that bubbles exist has become so disreputable in much of the economics and finance profession that bringing them up in an economics seminar is like bringing up astrology to a group of astronomers.

The fundamental problem is that a generation of mainstream macroeconomic theorists has come to accept a theory that has an error at its very core — the axiom that people are fully rational. As the statistician Leonard “Jimmie” Savage showed in 1954, if people follow certain axioms of rationality, they must behave as if they knew all the probabilities and did all the appropriate calculations.

So economists assume that people do indeed use all publicly available information and know, or behave as if they know, the probabilities of all conceivable future events. They are not influenced by anything but the facts, and probabilities are taken as facts. They update these probabilities as soon as new information becomes available and so any change in their behavior must be attributable to their rational response to genuinely new information. If economic actors are always rational, then no bubbles — irrational market responses — are allowed.

Abundant psychological evidence, however, has now shown that people do not satisfy Savage’s axioms of rationality.

In fact, people almost never know the probabilities of future economic events. They live in a world where economic decisions are fundamentally ambiguous, because the future doesn’t seem to be a mere repetition of a quantifiable past. For many people, it seems that “this time is different.”

I'm happy with science trying to push back the borders of ignorance. But that needs to be built on foundations of solid science. The myths that drove economic theory for the last 30 years were laughable. But they were above reproach because so many bought into it. It is a sad commentary on the illusions of academics. They love their math more than they love the truth.

It should be noted that one of the most poignant criticisms of string theory in physics is that these scientists are more in love with their math than the truth. So this is a common ailment and not simply localized to economists.

John Emerson in his blog Trollblog goes into a frenzy while making the point that contemporary economics has a corrupted foundation:

Akerlof and Schiller ask, “Why did most of us utterly fail to foresee the current economic crisis?”, and their answer is that we failed to take animal spirits into account.

My own response is: “What do you mean ‘we’, white man?” Lots of us were uneasy about the twenty-year boom/crash cycle we found ourselves stuck in, but few of us are economists. Lots of people also tried to tell the economists that their models were dangerously unrealistic, but economists were securely protected by tenure and were being rewarded very well by the malefactors who controlled the economy, so why should they care what anyone else said? Economists are smarter than anyone know tons and tons of math, you know.

What are “animal spirits”? According to Keynes (A&S, p.3) animal spirits are the “spontaneous urges to action” of large numbers of people which have unpredictable effects on the greater economy, whereas for Akerlof and Schiller (p. 4) they are “the restless and inconsistent element in the economy”. Thus stated, “animal spirits”, whatever it is that causes the economy to behave erratically, might seem merely to be the active equivalent of the dormitive element in morphine — a big fudge-factor, and just a way of kicking the can over to the psychologists and saying “We didn’t do it! The Second Great Depression is your fault, not ours!” However, in fairness, it’s not quite as bad as that. Akerlof and Schiller do describe several of the factors interfering with economic rationality: variations in levels of confidence, considerations of fairness, bad faith, the money illusion, and the ways people understand their world by means of constructing and telling stories:

But the current crisis bears witness to the role of such changes in our thinking. It was caused precisely by our changing confidence, temptations, envy, resentment, and illusions — and especially by changing stories about the nature of the economy. [A&S, p. 4]

They seem to think of these factors primarily as impurities or contaminants which unfortunately have disrupted the otherwise perfect descriptive / prescriptive rational economy which economists discovered / created / imposed, rather than as evidence that the economic model they’ve been working with for fifty years is no damn good. Almost sixty years ago, in the “Introduction” to Positive Economics, Milton Friedman claimed philosophically that scientists can make shit up and get away with it. For decades this has been professional dogma, and economics grad students who have had trouble believing this have been weeded out. As one consequence of this, during the last several decades economists have been working with a risible notion of individual economic rationality which is neither empirical nor normative, and which was chosen purely because it makes mathematical modeling possible.

Emerson may be extreme, but there is going to have to be a lot of fundamental re-work done before economists can walk in the sunshine again. They have failed miserably. All that mountain of "research" and so little of it of any use in the real world. That's not science. The test of science is the powers it gives us over nature. As scientists, economists are a pathetic failure.