Archive for the ‘Green Energy’ Category

Right Wing Mythology

Sunday, March 27th, 2011

My normal tack — when seeing a political cartoon like this that is so clearly off-base — is to “Fact-Check” it.

For example, the cartoon might lead you to believe that there was no unemployment compensation in 1950 — but unemployment compensation began in in 1935.

It’s not clear under what program the rich banker is paying for the unhygienic poor man’s mortgage either now or then. Federal housing policy offers tax subsidies to anyone paying a mortgage — which means the man on the right probably receives a bigger subsidy.

The health care point is likewise odd. In the 1950s, there was no Medicaid for the very poor. But everyone who received health insurance from their employer received a tax subsidy [pdf] both then and now.

In terms of subsidizing car ownership — federal and state policies began encouraging car ownership in the 1950s — from zoning laws requiring large amounts of parking to bailouts given to the auto industry to the construction of the federal highway system. The artificially low price of gasoline is another subsidy — as the cost of pollution and of a foreign policy of ensuring stability in the Middle East is borne by the public at large and not factored into the price. As everyone pays for pollution cleanup and foreign policy, this is a redistribution of wealth from those who minimize their use of gas to those who use more than the average. However, the complaint of cartoonist seems to be a tax subsidy given to those who purchase hybrid cars that use less gasoline. Which — though significantly less than the various other subsidies — is apparently the real obscenity.

And of course, the biggest thing the cartoonist is missing between the man on the right in 1950 and the man on the right in 2010: In 1950, the top marginal tax rate was 91%. In 2010, it was 35%. And that 35% doesn’t include all of the tax subsidies that surely would be used to lower the rich man’s tax rate — from tax subsidies for his employer-provided health insurance to any interest on mortgages or student loans or the myriad of other exemptions someone with a good accountant can find. And of course any profits from investments would be taxed at a lower rate– of 15%. Which is why today, the billionaire Warren Buffett pays a lower percentage of his income in taxes than does his secretary.

All of this makes the cartoon all the more revealing — not of the facts, which it does not reflect — but of right-wing mythology. Why does the cartoonist choose 1950 — rather than a time such when his points would have been true such as 1920 or 1890? The answer is simply that no one wants to go back those eras. Those were periods of economic growth, but inherently unstable times — an instability created by the enormous inequality between the top-most and the bottom-most parts of society. Those periods of history are remembered for the top and the bottom. The 1950s though was the era of the great middle class — robust, strong, stable. In the contemporary conservative mythology, the era personifies the American values of family and hard work. Much of the conservative intelligensia’s opposition to the Civil Rights Movement, the anti-war movement, the sexual revolution, the feminist movement, and the gay rights movement of the 1960s and 1970s came because they saw these movements as a threat to the stability of this status quo.

But the right wing was supported by forces equally opposed to the status quo — who sought a change every bit as dramatic as the radicals of the 1960s sought. Rather than free love, they sought free trade and deregulation. Rather than rights for gays and women, they sought favors for the financial industry. Rather than civil rights for people, they sought corporate rights to influence the political process. Rather than the naive dream of destroying bigotry, they sought the more practical dream of destroying the labor unions.

Since these twin political revolutions, the stability and the strong middle class of the 1950s are remembered with fondness — by mythologists of both the left and right. The conservative argument used to be that radicalism of Civil Rights for women, blacks, gays, and other minorities was what caused the unraveling of this mythological utopia. It has now evolved to blaming the government for redistributing too much to the poor and holding back business with taxes and regulation. The only problem with this story is that the past 60 years have seen a government retreat — with regulations being repealed and failing to keep up with changing times, with taxes having been more than halved, with the rich getting more and more of the wealth and power in the country and the poor less and less.

Which is how you can get a political cartoon such as this — harking back to a flatly false view of an era lost that never was.

Must-Reads of the Week: American Power, Inequality, 1 Billion Heartbeats, Hacking Life, Anthora Cups, Structural Deficit, Financial Doomsedays and Crises, China, the Tea Party’s Views on Immigration, and Lady Gaga

Friday, April 30th, 2010

There were a lot of good articles and posts I came across this week — so brace yourself…

1. The American Power Act. David Brooks makes the case for progressive reform — specifically the American Power Act regarding climate change:

When you read that history, you’re reminded that large efforts are generally plagued by stupidity, error and corruption. But by the sheer act of stumbling forward, it’s possible, sometimes, to achieve important things…The energy revolution is a material project that arouses moral fervor — exactly the sort of enterprise at which Americans excel.

Matt Yglesias had earlier this week critiqued Brooks (among others) for taking the exact opposite stance of the one he was adopting here:

Oftentimes in the Obama Era the difference between “reasonable” conservatives (David Brooks and Greg Mankiw often leading the charge) and reasonable liberals has been that reasonable liberals look at flawed legislation that would improve on the status quo and support it while “reasonable” conservatives look at flawed legislation that would improve on the status quo and oppose it, while claiming to support alternative flawed proposals that they don’t actually lift a finger to organize support for within their own ideological faction.

2. Inequality, social mobility, and the American Dream. The Economist had a good piece that can serve as a starting point for a post I’ll be writing soon on inequality, social mobility, and the American dream:

The evidence is that America does offer opportunity; but not nearly as much as its citizens believe.

Parental income is a better predictor of a child’s future in America than in much of Europe, implying that social mobility is less powerful.

3. The Science of Life. Jonah Lehrer for Seed magazine has a brilliant piece on how cities are like living organisms. As a side matter, he notes this beautifully poignant data point:

[A]n animal’s lifespan can be roughly calculated by raising its mass to the 1/4 power. Heartbeats scale in the opposite direction, so that bigger animals have a slower pulse. The end result is that every living creature gets about a billion heartbeats worth of life. Small animals just consume their lives faster.

4. Fine-tuning life. Gary Wolf for the New York Times Magazine explains how the accessibility of computers is creating data about every aspect of our lives — and of the efforts of some people to begin to catalog and find insights in their own data. Surprisingly, Lifehacker was never mentioned.

5. The Anthora Cup. Margalit Fox of the New York Times writes the obituary for Leslie Buck, the designer of the Anthora cup:

It was for decades the most enduring piece of ephemera in New York City and is still among the most recognizable. Trim, blue and white, it fits neatly in the hand, sized so its contents can be downed in a New York minute. It is as vivid an emblem of the city as the Statue of Liberty, beloved of property masters who need to evoke Gotham at a glance in films and on television.

6. Unified Theory of the Financial Crisis. Ezra Klein synthesizes various narratives into a unified theory of the financial crisis.

7. The Structural Deficit. Donald B. Marron provides a coherent and reality-based conservative look at America’s structural deficit. Absolutely a Must-Read.

8. The Financial Doomsday Machine. Martin Wolf dedicated his column in the Financial Times last week to describe the “financial doomsday machine“:

[T]he financial sector has become bigger and riskier. The UK case is dramatic, with banking assets jumping from 50 per cent of GDP to more than 550 per cent over the past four decades…The combination of state insurance (which protects creditors) with limited liability (which protects shareholders) creates a financial doomsday machine. What happens is best thought of as “rational carelessness”. Its most dangerous effect comes via the extremes of the credit cycle.

9. Realism on China. Stephen Walt explains his take on China’s strategic ambitions — and its inevitable rivalry with the United States and other regional powers.

10. The Tea Party & Immigration. Radley Balko explains his take on the widespread support among the Tea Party for the massive government power grab that is Arizona’s new immigration law:

It also makes a mockery of the media narrative that these are gathering of anti-government extremists. Seems like in may parts of the country they’re as pro-government as the current administration, just pro-their kind of government.

Coincidentally, I made that exact point about the Tea Party back in September 2009 entitled: These Protests Aren’t Against Big Government, But About Liberals Running the Government.

Andrew Sullivan piles on:

Worse, on the fiscal front, they’re total frauds. They have yet to propose any serious cuts in entitlements and want far more money poured into the military-imperial complex. In rallies, the largely white members in their fifties and older seem determined to get every penny of social security and Medicare. They are a kind of boomer revolt – but on the other side of that civil conflict, and no longer a silent majority. In fact, they’re now the minority that won’t shut up.

More and more, this feels to me like an essentially cultural revolt against what America is becoming: a multi-racial, multi-faith, gay-inclusive, women-friendly, majority-minority country.

11. Sovereign Debt Crisis. Felix Salmon and Paul Krugman are both very pessimistic about how Greece will get out of this crisis — and what it means for the global economy.

12. Lady Gaga’s Ambition. Brendan Sullivan for Esquire chronicles the life and ambitions of Lady Gaga:

“There is a musical government, who decides what we all get to hear and listen to. And I want to be one of those people.” The girl who said that didn’t yet have the number-one hits (although she had already written most of them).

She was not yet the creative director of the Haus of Gaga, which is what she calls the machine of more than a hundred creative people who work for her. She didn’t make that statement in an interview or from the stage. She made it in 2007, when she was a go-go dancer sewing her own outfits and I was her DJ. She wrote it in one of my notebooks…

Lady Gaga is a student of fame, and the fame she studies most is her own — being famous seems to both amuse and fascinate her.

[1st image by me; 2nd image by LarindaME licensed under Creative Commons.]

Obama’s Dramatic Showdown Leads to Climate Deal

Monday, December 21st, 2009

The dust is still settling from Copenhagen, and the reactions that I’ve seen so far have been muted. But the consensus is that it was something between a disaster and a face-saving attempt to achieve the smallest measure of progress possible. One item that has begun to be reported, but not gotten much attention is how in a dramatic gesture, President Obama himself salvaged what of the agreement there is by breaking into a secret meeting organized by China with a few emerging countries to develop their own local non-binding goals instead of working with the world community.

Some environmental activists havetried to spread out the blame around – as Rick Patel of Avaaz wrote in an email:

Big polluters like China and the US wanted a weak deal, and potential champions like Europe, Brazil and South Africa didn’t fight hard enough to stop them.

Interestingly, this breakdown conforms almost exactly to what critics of the Copenhagen summit such as Charles Krauthammer would predict – as they see these efforts to combat global warming as a giant socialist conspiracy to “raid [...] the Western treasuries” by imposing “taxes on hardworking citizens of the democracies to fill the treasuries of Third World kleptocracies” with “a dose of post-colonial reparations thrown in.”

But the opposing sides weren’t the simplistic ones outlined by either Krauthammer or Patel. The principles at stake weren’t simply big polluters versus small polluters or the proponents of global socialism versus its opponents. Instead, Copenhagen was about whether or not there could be collective action and global governance in the face of a global crisis – or whether each nation would act on its own. When Obama along with most other world leaders arrived at the end of the conference, the final details were supposed to come together quickly as the principals gathered in the same rooms and made the deals they needed to. Which is why despite grumbling before the conference about America’s inability to pass legislation to combat climate change* and the concerns of poorer countries about being restrained from development, the blame has settled on China for scuttling the talks. As the Guardian reported:

The Chinese prime minister, Wen Jiabao, walked out of the conference at one point, and sent a lowly protocol officer to negotiate with Barack Obama.

After the snub and with China refusing to back down from any attempts to bind itself to meeting targets, Obama spoke to the conference. David Corn, writing in the Atlantic explained the impact:

Not hiding his anger and frustration, [Obama] said, “I think our ability to take collective action is in doubt.”

…Obama played it simple and hard. He maintained the United States was calling for three basic principles: mitigation, transparency, and financing. But he noted that it was absolutely necessary to verify the reductions commitments of the major emitters.

Obama’s speech left the gathered leaders and activists stunned as he seemed to be signalling the collapse of any possible agreement – of even some small measure of progress. Following this speech, Obama, Secretary of State Hillary Clinton, and America’s negotiators attempted to salvage some agreement meeting with various world leaders (pressing China to come as a key player). But China’s negotiation team refused, secretly meeting with leaders from India, Brazil, and South Africa to negotiate on a non-binding agreement they could announce independent of the global community. The situation grew tense as world leaders realized no agreement could be reached without China’s participation. But in a dramatic moment, Obama salvaged some small measure of a deal, as John M. Broder reported the drama in the New York Times:

The deal eventually came together after a dramatic moment in which Mr. Obama and Secretary of State Hillary Rodham Clinton burst into a meeting of the Chinese, Indian and Brazilian leaders, according to senior administration officials. Mr. Obama said he did not want them negotiating in secret.

The intrusion led to new talks that cemented central terms of the deal, American officials said.

The deal was less than was expected going in, but it signified some small measure of progress:

Expected to be included in this agreement is a commitment by developed nations to reduce greenhouse-gas emissions by 80 percent by 2050, to create a finance mechanism to handle any agreement, to set a climate “mitigation target” of 2 degrees Celsius, to create a high-level panel to monitor carbon emissions, and to push for increased transparency in how they are being dealt with.

Like much of Obama’s presidency thus far, this deal is both a disappointment and the most significant effort to date to deal with an intractable policy and political problem.

*John M. Broder of the Times had a good piece on the obstacles the Senate was posing to climate change legislation as well as the measures the Democrats and Obama administration were taking to get around their sluggishness – including Pelosi pushing the legislation through the House and Obama’s EPA complying with the Supreme Court order and taking steps to regulate carbon.

[Image not subject to copyright.]

Limbaugh claims Obama is a radical leftist because he supports programs Republicans proposed a generation ago.

Thursday, November 5th, 2009

Rush Limbaugh, Dick Cheney, Glenn Beck, Sarah Palin, Charles Krauthammer, and other right wingers have begun to converge on a unified theory of Obama – a systematic critique of who he is, what he stands for, and what he is trying to do. Part of this theory – one of the core themes being developed – is that Obama is the most far left American leader ever. Rush Limbaugh expresses this as well as anyone – and I’ve spliced together two clips from his interview this past Sunday with Fox News. (Full interview here.)

Let’s take two of these quotes out for a moment:

We’ve never seen such radical leadership at such a high level of power…

I don’t know of any Republican who would try to take over one sixth of the U.S. economy. I don’t know one Republican who would put forth this…this…irresponsible cap and trade bill. I don’t know one Republican who would actually do that.

To understand why this is such a bizarre thing to say you need to look at some history.  It illustrates what I mean when I call the Republican Party and the right wing – and much of our public debate as it attempts to find the middle ground between the right and left – unhinged. Take a minute to look at the history of the policy proposals regarding the two examples Limbaugh cites – health care and cap and trade.

Health Care

The plans moving through Congress now have an historical precedent in most of their aspects in the two serious Republican attempts to reform health care after LBJ’s introduction of Medicare and Medicaid – Richard Nixon’s health care proposal in 1974 and the Dole-Chafee bill in 1993. Between the two bills, they contained a technocratic institution to reign in health care spending by looking at medical practices – similar to the IMAC that Sarah Palin called a death panel (Richard Nixon’s proposal); an individual mandate, an extension of Medicaid eligibility (the Dole-Chafee plan); an end to insurance industry abuses – for example, banning people with preexisting conditions, subsidies or vouchers for individuals who couldn’t afford health insurance to purchase it, and the creation of a standard minimum level of benefits for health insurance plans (both plans.)

Those who developed the base model that of health care reform now – used these models as the base onto which they grafted a health insurance exchange and a public option. They combined market forces with decentralized decision-making – the exchange on which private companies would offer health insurance – with a more top-down centralized approach – the public option which would compete with the private companies. Clearly, though the plan is distinctly liberal, it was developed by people who have a deep appreciation for some of the central conservative critiques of government planning and New Deal/Great Society-style liberalism. The plan is also clever politically – as a great majority of the American people, in their wisdom, see great value in having a choice between public option and a private one. Michael F. Cannon of the libertarian Cato Institute accidentally justified the rationale behind this popular sentiment:

Any payment system creates perverse incentives…which is why we need competition between different payment systems to temper the excesses of each.

Unlike the Dole-Chafee bill which sought to undermine the current system with the hope that something else would develop, the plans working through Congress now are more conservative as they seek to preserve the status quo while introducing an alternative model that people could opt into if it works.

You wonder how far to the right the Republican Party Rush imagines is if he claims he doesn’t know any Republican who would propose anything like this.

How about Mitt Romney, Bob Dole (who incidentally endorsed a version of the bill currently moving forward), Richard Nixon?

The one thing that makes this plan distinctly liberal is the public option. Yet, if anyone believes that after dropping it, the Republicans would support a health care bill, they haven’t been paying attention.

(For more on the similarities on health care, see this post from yesterday.)

Cap and Trade

On climate change, the story is even more dramatic.

Cap and trade started out as a hair-brained scheme to solve the problem of acid rain thought up by a Reagan administration lawyer, C. Boyden Gray. Environmentalists and liberals hated the idea. They saw it as a license to pollute, a “morally bankrupt” “license to kill,” or more reasonably as a “scheme for polluters to buy their way our of fixing the problem.” They preferred the more “command-and-control” approach of top-down regulation. Regulators resisted the idea – as it forced them to surrender “regulatory power to the marketplace.” Industry opposed it, claiming it “was going to shut the economy down.”

But George H. W. Bush thought that free market principles could realign the incentives to fix this problem – and he wanted to placate the Canadians who were bearing the brunt of the acid rain.

So he pushed through a cap and trade scheme to eliminate acid rain over these strong objections. It beat all expectations. Eventually environmentalists came around and industry continued to thrive. This Republican success on solving a major environmental issue without top-down regulation made cap and trade a popular, bipartisan idea. Eventually, Bill Clinton saw it as a way to tackle global warming. But as a significant minority of Republicans continued to question whether or not global warming was real and whether or not it was man-made (along with every other scientifically moot question that industries raised) any possible deal was postponed. Still, as late as 2008, the Senate had strong bipartisan support for a cap and trade program – with Joe Lieberman and John McCain taking the lead. Now McCain is a major opponent of the cap and trade legislation, complaining about the lack of support for nuclear reactors in the bill as a reason to oppose it. This when as late as a year ago, he reiterated his statements of the past eight years in saying that global warming demanded “urgent attention” – that we must “act quickly” to “dramatically reduce our carbon emissions” with a “cap-and-trade” program.

As I said regarding health care, if anyone thinks that McCain will come around to support this legislation that is so similar to what he supported as essential a year ago if the Democrats just tossed some more money into nuclear energy, then you haven’t been paying attention. McCain will likely start calling it a “power grab” and a “government takeover” of the world, echoing Cheney and Krauthammer by the time the bill is up for a vote.

Conclusion

In both cases, Republicans proposed ideas based on core conservative principles – on a respect for the free market, on avoiding rapid change, on avoiding top-down regulation. And now Democrats led by Barack Obama have taken up these proposals – amending them somewhat to take into account liberal ideas such as a distrust of large corporations and a concern for community goods – hoping to pass bipartisan legislation.

What they are met with instead is screams of “Socialism!” and “Government takeover!” and “Unprecedented!” “Attacks on liberty!” and “Why do you hate America?”

Is Obama Leading Us To A Technocratic Dystopia?

Thursday, July 30th, 2009

Implicit in many of Obama’s policy proposals and programs is an assumption shared by many reformers (from here to here to here): that America’s political system is broken and that our traditional democratic institutions just aren’t up to the job of managing serious and difficult areas and making rational, long-term decisions when the payoff only comes after policy-makers are out of office. I’m not sure that they’re wrong – but I’m wary of the decision made by the Obama administration to focus on creating a technocracy to manage these areas.

In many of Obama’s programs and proposals, there is a bureaucratic independent or quasi-independent agency that is designed to manage whatever process is relevant to the program and that receives from the Congress authority to make decisions on its own. To the technocrats’ credit, in most cases, although the decision-making is outsourced to these agencies, Congress has some sort of limited veto over them. The appeal of outsourcing authority to these institutions comes from the fact that they are theoretically insulated from politics and are capable of making minor decisions over a long period of time which – if managed properly – can effect significant changes. The idea is that – rather than forcing through a controversial and wholesale change – you set up an independent agency that will gradually manage things in order to achieve the changes needed. This makes a great deal of sense politically – as the agency can be tasked with some anodyne goal that everyone can agree on – and as it makes controversial decisions,  politicians can distance themselves from each individual decision while still supporting the independence of the organization (as you often see with the Federal Reserve). They can say they didn’t vote for this or that specific proposal – and that they oppose it – but that given the authority of this independent agency, there’s little they can do. On a policy level, this also makes sense – as any attempt to push through wholesale reform is limited by one’s knowledge at the time the legislation is drafted. Better to experiment and try various small steps and set up different incentives to accomplish the same thing than to attempt to impose some pre-made solution. It’s also worth noting that these technocratic institutions are often supported on a bipartisan basis – while specific reforms are generally opposed by one side or the other. The appeal is obvious – yet the anti-democratic impulse is disturbing.

One example of these organizations is the IMAC (or Independent Medical Advisory Committee) which would be a technocratic institution that would set the pay rates for reimbursement of various Medicare programs and eventually perhaps for all government-sponsored insurance (as MedPAC does now) and also compare and evaluate what treatments work best to treat different conditions and make recommendations. Unlike MedPAC which simply advises Congress, IMAC would make annual recommendations which would take effect if accepted by the president and not vetoed by the Congress. The White House has been selling this plan as a way to take the politics out of Medicare reimbursements and restrain costs. A similar approach helps explain why Obama is pushing for the Federal Reserve (the organization to which the IMAC is most often compared) to be the regulator of those institutions that are “too big to fail” as well as tracking and regulating various other systematic risks – despite their role in the collapse that just occurred. What the Federal Reserve is known for is its independence from political pressure and its technocratic bent, thus making it the perfect vehicle for Obama’s efforts to reform the financial industry even though it clearly failed so recently. There is the proposal for a National Infrastructure Bank which would direct federal transportation money – again, independent of political concerns. The cap-and-trade program would likewise gradually institute dramatic reforms by giving authority over to a technocratic institution that would manage carbon emissions – distancing these actions from politically accountable leaders.

On each individual proposal, the solution seems compelling, but as an overall trend, it is disturbing. When Obama was elected, many claimed that there was a similar feeling of hope and progress to when John F. Kennedy was elected – and as then, when Kennedy gathered “the best and the brightest,” Obama has reinvigorated the idea of public service. But the downfall of these Kennedy men was their belief that they could “control events, in an intelligent, rational way.” Obama’s technocrats do not seem to have this same hubris. Their hubris is of a different variety: they believe that they can best manage complex areas and achieve needed reforms not through political action but by creating bureaucracies onto which they put the difficult political decisions.

But what kind of system do we end up with then? As rules and regulations are created by technocrats and then merely accepted or rejected by the elected officials. This system seems to resemble an oligarchy with democratic checks. With the Federal Reserve along with other less independent agencies already deputized to take care of most government responsibilities, we have already started down this road – but it doesn’t seem wise to double down on this approach. Unfortunately, I do not offer a solution – only a concern.

[Image not subject to copyright.]

The Larger Narrative

Tuesday, February 24th, 2009

David Brooks:

The crisis was labeled an economic crisis, but it was really a psychological crisis.

Republican pollster David Winston:

[Obama]‘s going to have to fit other issues into the larger narrative of the economy.

Michael D. Shear and Paul Kane in the Washington Post:

Whichever side proves to be right, the sharp, partisan lines over the stimulus bill make it plain that both parties intend to exact a political cost over last week’s votes. And their leaders are looking to history for inspiration as they consider how to maneuver in the weeks and months ahead…

Republicans have made it clear that they intend to try to shift the economic debate toward concern about the federal deficit.

Obama is now completing the three-step jig he planned from the beginning, with his address to Congress tonight focused on the Grand Bargain needed to shore up our economy for the forseeable future.

The first step of this jig was supposed to be easy, nonpartisan, and uncontroversial – a spending and tax cutting bill to stimulate the economy. The second step was supposed to be harder but still nonpartisan – dealing with the mortgage and banking messes. In both cases, Obama has approached these problems as a mechanic trying to figure out what has gone wrong and taking whatever steps are necessary to fix it. Just as a mechanic does not make moral judgments about springs and gears but focuses instead on doing what is necessary to get the machine working again, so Obama approached the economy. Most Americans appreciate this, as polls show that while many dislike the specific measures he has had to take, they approve of the job he is doing. The question was: how to get growth started again – greedy bankers and lying loan applicants and wasteful consumers all are being bailed out – because the problems they have caused are “gumming up the works.” And the consumers at least are being encouraged to continue in their spendthrift ways – at least for now, as Dana Milbank explained:

[Ben Bernanke] even indulged in a bit of economist humor when talking about the paradox of encouraging people to spend even though overspending caused the problem: “Somebody once called this the Augustinian principle, which says something like, ‘Let me be moral, but not quite yet.’ “

The third step is more complicated and politically fraught – as Obama seeks to tackle the third-rail of American politics – Social Security; and at the same time, health care reform; and deficit reduction; and tax reform; and possibly climate change legislation. Obama argues that this economic crisis – and the borrowing to stimulate us out of the economic crisis – have created a “fierce urgency of now” – and that all these issues must be tackled at once. 

John Harwood of The New York Times spoke with Senator Judd Gregg about this:

To protect America’s currency and its borrowing capacity, Mr. Gregg said in an interview, “the world has to be told that we’re going to be fiscally disciplined in the out years.”

Efforts to tame long-run entitlement spending may find more Republican support than Mr. Obama achieved on the stimulus. “He has extremely fertile ground in the Senate,” Mr. Gregg said, crediting the president’s early outreach and “courageous position of saying the can’s been kicked down the road long enough.”

Yet despite the bipartisan consensus that these issues must be tackled, here is where the real disagreements should be. Contra George F. Will who argued constantly that the stimulus bill and banking and mortgage bailouts should be opposed by Republicans and supported by Democrats on based their principles, the initial stimulus and other emergency measures should only have raised principled objections from those with an unflagging belief in the free market – which describes only a minority of Republicans. These measures violate the ideologies of both parties – as big business is bailed out and the market is intervened in. There were issues to be raised as to what the most effective methods of dealing with the crisis were – but to oppose measures wholesale as the Republicans did – indicates a lack of seriousness.

The real debate should come now as we decide the shape of things to come and address the moral and political and long-term issues instead of the emergency measures taken to attempt to stimulate the economy.

But in this challenge is an opportunity, as Richard Florida explained in The Atlantic:

The Stanford economist Paul Romer famously said, “A crisis is a terrible thing to waste.” The United States, whatever its flaws, has seldom wasted its crises in the past. On the contrary, it has used them, time and again, to reinvent itself, clearing away the old and making way for the new. Throughout U.S. history, adaptability has been perhaps the best and most quintessential of American attributes. Over the course of the 19th century’s Long Depression, the country remade itself from an agricultural power into an industrial one. After the Great Depression, it discovered a new way of living, working, and producing, which contributed to an unprecedented period of mass prosperity. At critical moments, Americans have always looked forward, not back, and surprised the world with our resilience. Can we do it again?

David Brooks writes with both concern and a carefully measured dose of hope:

[Obama's] aides are unrolling a rapid string of plans: to create three million jobs, to redesign the health care system, to save the auto industry, to revive the housing industry, to reinvent the energy sector, to revitalize the banks, to reform the schools — and to do it all while cutting the deficit in half.

If ever this kind of domestic revolution were possible, this is the time and these are the people to do it. The crisis demands a large response. The people around Obama are smart and sober. Their plans are bold but seem supple and chastened by a realistic sensibility.

Brooks is still concerned about how this may turn out. As are we all. 

With tonight’s speech, Obama will begin to craete his legacy – beyond fixing the problems accrued during Bush’s tenure. He will begin to, at long last, deal with the stability issues raised by the combination of FDR’s New Deal revision of the social contract and Reagan’s counter-revolution, as he sets a fiscally sane course for the future. In the midst of this crisis, if Obama is to be the leader we need him to be, he needs to see the opportunity to re-write the social contract and create a more stable economic, financial, and international system. Tonight is his chance to make that case. 

Here’s hope it is not wasted.

Eliot Spitzer v. Sarah Connor

Wednesday, January 7th, 2009

Eliot Spitzer has some good ideas about how to spend the stimulus money, including this technology which I’d heard of but not understood until reading:

[Smart meters] would permit, with a smart grid, time-of-day pricing for all consumers, with potentially double-digit reductions in peak demand, significant cost savings, and consequential remarkable energy and environmental impacts. These declines in peak demand would translate into dramatic reduction in the number of new power plants. The problem with installation of smart meters has been both the cost and, often, state-by-state regulatory hurdles. Now is the moment to sweep both aside and transform our entire electricity market into a smart market.

However, Spitzer has another more controversial proposal which Matt Yglesias fears will lead to the end of the human race, “Provide funding for robotics teams at every school. Yglesias:

After the human race is enslaved by robots, there are going to be small rebel groups hiding out somewhere and Elliot Spitzer’s going to be writing op-eds about how “no one could have predicted” that the robots would rebel and overthrow their masters. And it’ll be left to DFH bloggers to observe that this is in fact one of the most widely predicted scenarios in all of science fiction. From the proto-SF of Mary Shelly’s Frankenstein through to Karel Capek’s R.U.R. and The War Against the Newts all the way up through Terminator and The Matrix. Yes, yes, yes eventually the Butlerian Jihad will allow us to re-overthrow the Thinking Machines and establish human rule but do we really want to fall into that trap?

Just say no to robots. And certainly say no to robots in our schools.

You just know that Spitzer – for promoting this idea – would be on Sarah Connor’s hitlist.

An Ambitious Presidency

Thursday, December 18th, 2008

In his interview with Time magazine, Barack Obama listed those issues on which he believes his first two years as president should be judged:

Domestic Policy

  • Have we helped this economy recover from what is the worst financial crisis since the Great Depression?
  • Have we instituted financial regulations and rules of the road that assure this kind of crisis doesn’t occur again?
  • Have we created jobs that pay well and allow families to support themselves?
  • Have we made significant progress on reducing the cost of health care and expanding coverage?
  • Have we begun what will probably be a decade-long project to shift America to a new energy economy?
  • Have we begun what may be an even longer project of revitalizing our public-school systems so we can compete in the 21st century?

Foreign Policy

  • Have we closed down Guantánamo in a responsible way, put a clear end to torture and restored a balance between the demands of our security and our Constitution?
  • Have we rebuilt alliances around the world effectively?
  • Have I drawn down U.S. troops out of Iraq, and have we strengthened our approach in Afghanistan — not just militarily but also diplomatically and in terms of development?
  • Have we been able to reinvigorate international institutions to deal with transnational threats, like climate change, that we can’t solve on our own?

Intangibles

  • And, two years from now, can the American people say: “Government’s not perfect; there are some things Obama does that get on my nerves. But you know what? I feel like the government’s working for me. I feel like it’s accountable. I feel like it’s transparent. I feel that I am well informed about what government actions are being taken. I feel that this is a President and an Administration that admits when it makes mistakes and adapts itself to new information, that believes in making decisions based on facts and on science as opposed to what is politically expedient.” Those are some of the intangibles that I hope people two years from now can claim.

So, basically, a rather limited agenda here.

The Generation That Sucked

Monday, December 8th, 2008

With apologies to all those Baby Boomers I know – I, of course, don’t mean you.

There is something so very right about trashing the Baby Boom generation. Tom Friedman – a member of said generation – suggests a few names in his column on Sunday:

“The Greediest Generation?” “The Complacent Generation?” Or maybe: “The Subprime Generation: How My Parents Bailed Themselves Out for Their Excesses by Charging It All on My Visa Card.”

Barack Obama himself wrote in The Audacity of Hope:

In the back and forth between Clinton and Gingrich, and in the elections of 2000 and 2004, I sometimes felt as if I were watching the psychodrama of the baby boom generation — a tale rooted in old grudges and revenge plots hatched on a handful of college campuses long ago.

Perhaps this passage is what led Andrew Sullivan to describe Barack Obama’s candidacy (back when he was a long shot) as America’s only chance for a much needed truce in the long civil war fought by the Baby Boom generation:

…the most persuasive case for Obama has less to do with him than with the moment he is meeting. The moment has been a long time coming, and it is the result of a confluence of events, from one traumatizing war in Southeast Asia to another in the most fractious country in the Middle East. The legacy is a cultural climate that stultifies our politics and corrupts our discourse.

Obama’s candidacy in this sense is a potentially transformational one. Unlike any of the other candidates, he could take America—finally—past the debilitating, self-perpetuating family quarrel of the Baby Boom generation that has long engulfed all of us. So much has happened in America in the past seven years, let alone the past 40, that we can be forgiven for focusing on the present and the immediate future. But it is only when you take several large steps back into the long past that the full logic of an Obama presidency stares directly—and uncomfortably—at you.

At its best, the Obama candidacy is about ending a war—not so much the war in Iraq, which now has a mo­mentum that will propel the occupation into the next decade—but the war within America that has prevailed since Vietnam and that shows dangerous signs of intensifying, a nonviolent civil war that has crippled America at the very time the world needs it most. It is a war about war—and about culture and about religion and about race. And in that war, Obama—and Obama alone—offers the possibility of a truce.

The point of all of this is that the Baby Boom generation was quite terrible. While the “Greatest Generation” tackled a Great Depression and won a World War, and then came home and created an age of prosperity and the United Nations – and then, by the late 1950s and early 1960s, fought for and won civil rights, finally erasing the official discrimination against African Americans that had blighted America since it’s inception – the Baby Boomers – the children of the Greatest Generation – started an American civil war, focused initially on Vietnam, and then later on the role of government, on abortion, and on religion’s place in public life. While these are worthy issues to argue about, the culture war of the Baby Boomers kept them from tackling many of the urgent challenges of their day – from global warming to infrastructure deterioration to America’s place in the world. As the Baby Boomers entered adulthood, their national cohesion that was evident in the Greatest Generation dissolved into squabbles and then by 1968, into a virtual civil war.

Since the 1960s, America has failed to invest in our roads, our utilities, our energy infrastructure; America’s dependency on foreign oil was demonstrated in the 1970s, yet we did nothing and blamed it on Jimmy Carter’s bad leadership; at the same time, a radical brand of extremist Islam began to grow – and our government encouraged it, seeing it as a tool to use against the Soviet Union; some two decades ago, global warming was accepted as a fact by the greatest majority of scientists, yet we have failed to take any significant steps.

Instead, since the late 1960s, we have fought and re-fought the war over the war in Vietnam. What happened in the rice paddies and jungles of that nation are almost irrelevant to the culture war. What is remembered is where people stood while they were here. John Kerry served with distinction, but spoke against the war when he came back – forever putting him on the liberal side of the war. Dick Cheney got one deferment after another, avoiding serving at all – yet he was enthusiastic about the war as long as he himself wasn’t fighting, making him a conservative. John McCain was captured and came home a hero and George W. Bush served stateside in a cushy National Guard unit for the sons and daughters of those politicians influential enough to prevent their children from serving – yet both are equally conservative because they both were annoyed at the hippies protesting. Barack Obama was only a boy, but as Sarah Palin never failed to mention, he served on a charitable board with someone who decided to fight an insurgency against the American government to oppose the war – which by association made Obama a far-left radical. Much less important than what these Baby Boomers actually did is how they felt about the war.

It is possible to determine with a great degree of accuracy whether a Baby Boomer is a Democrat or Republican simply by asking their position on a war that ended almost forty years ago. Those who protested the war and stood against it took one side in the culture war; those who supported the war took the other side. As a rule, the Democrats – Kerry, Clinton, Gore – were against the war. The Republicans – Bush, McCain, Cheney – were for it. (This was despite the fact that it was “the best and the brightest” under Democrats John Kennedy and Lyndon Johnson who started the war.)

The obvious problem is that these divisions are barely relevant anymore.

The Baby Boomers pissed away the prosperity their parents bequeathed to them and squandered the opportunities presented to them – and now are busy using their children’s future earnings (our future earnings) to buy their way out of the mess they have created. They avoided the challenges of their times and found people to blame. They focused on OJ Simpson, Britney Spears, Madonna, and Monica Lewinsky – on abortion, Vietnam, gays, and religion – and not on global warming, on campaign finance, on the corruption of our political process, on an overleveraged economy.

After decades of avoiding systematic problems – as the solutions became embroiled in the ongoing culture war – we now must face them. With two wars in the Mid-East, a failing world economy, a growing threat of catastrophic terrorism, and whatever else may come our way, procrastination is impossible. Now it’s time for us to try to salvage this wreck.

That’s what the 2008 election was really about. And that’s our challenge. It remains to be seen if we’re up to it.

The Detroit Investment Group

Friday, December 5th, 2008

Jon Stewart pointed out against last night how non-constructive the political debate regarding the bailout of the Big Three Automakers has been:

Clearly, politicians are applying a double standard. But I think the hypocrisy is worse than Stewart suggests – because the product financial companies are supposed to be creating is profit with the risks associated thoroughly managed and quantified. Their product has proved to be far more defective than the cars produced by the Big Three, as the financial products have not just malfunctioned, but acted as a virus spreading the failures around to everyone.

Stewart previously pointed out how the first story regarding the bailout of the Big Three focused almost exclusively on the method of transportation used by the CEOs of the auto companies to get to hearing instead of any substantive issues. The real controversy has barely been discussed:

Corporations, whose primary purpose is to amass wealth by any means available for their owners (and who always manage to simultaneously amass wealth for the managers) cannot be trusted with public money. There is no public purpose to such profit-making. The public value of a corporation comes from it’s incidental activities – the means by which it is able to amass it’s profits. By bailing out General Motors, the government would be giving it’s money away for no public purpose. But the government does serve a public purpose by keeping General Motors’ factories churning out cars – by keeping people employed, by providing stability, by keeping the economy going and producing usable items.

Within that distinction lies the difference between outrageous abuse of taxpayer funds and a valid public purpose. The more difficult question is how to avoid the abuse while serving the purpose. [edited slightly from my original]

Which is why I think a bailout should be postponed – to attempt to find the least worst of all the options – rather than to cause great problems with hasty solutions. If the automakers won’t survive without an instant cash infusion though, the government needs to step in one way or another.

Michael Moore described his common sensical solution to this whole mess earlier this week:

1. Transporting Americans is and should be one of the most important functions our government must address. And because we are facing a massive economic, energy and environmental crisis, the new president and Congress must do what Franklin Roosevelt did when he was faced with a crisis (and ordered the auto industry to stop building cars and instead build tanks and planes): The Big 3 are, from this point forward, to build only cars that are not primarily dependent on oil and, more importantly to build trains, buses, subways and light rail (a corresponding public works project across the country will build the rail lines and tracks). This will not only save jobs, but create millions of new ones.

2. You could buy ALL the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You’re going to demand collateral anyway if you give them the “loan,” and because we know they will default on that loan, you’re going to own the company in the end as it is. So why wait? Just buy them out now.)

3. None of us want government officials running a car company, but there are some very smart transportation geniuses who could be hired to do this. We need a Marshall Plan to switch us off oil-dependent vehicles and get us into the 21st century.

Moore’s solution seems like what was done with the railroad industry in the 1970s – when it was taken over by the government, revamped, and then privatized again. I think Moore’s almost got it right. But not quite. Moore’s solution seems very 20th century – like India’s Five Year Plans or other centralized, government-sponsored attempts to solve large problems. Instead, I think Moore could take a lesson from Nassim Nicholas Taleb, the philosopher, economist, and former hedge fund manager who has been explaining the underlying weakness of our financial markets since he made a killing in the 1987 crash. Taleb understands that if you put a bunch of geniuses in charge, you might get something great. But as he points out, the truly game-changing developments happen by accident. The computer, lasers, the internet – all of these innovations have accidentally changed the world in a way that could not be anticipated. He refers to this type of game-changing development as a Black Swan.

And a Black Swan is exactly what Michael Moore, Barack Obama, and the rest of us know we need to jump start the green energy industry. The best way to catch a Black Swan in Taleb’s parlance is to tinker.

In that spirit I propose to create a government-affiliated entity, the Detroit Investment Group (DIG).1  DIG would be a modern-day government intervention in the market that would take inspiration from the Tennessee Valley Authority (especially it’s regional focus), the Manhattan Project (it’s think tank aspect), NASA’s moon shot (in the specificity of it’s goal and it’s timeline), and the Department of Defense (in how it creates incentives for inventors to create new technologies with the promise of contracts.)

Government intervention is necessary as the marketplace has failed to invest in the long-term development of green energy. This tendency of the market to focus on short-term profits over long-term projects has certainly been revealed to be a significant flaw in our current economic structure, as, for one common example, corporate managers seek instant profits which lead to huge bonuses and leave before the long-term effects of their actions hit. Not knowing how to fix this tendency to focus exclusively on the short-term, a government agency can create incentives within the market to focus on long-term issues that are essential to our nation’s security and stability. This would be the purpose of DIG – to supplement the market rather than to impose it’s own hierarchical structure.

DIG would be given goals and rules rather than a typical bureaucratic organization. It’s goals would:

  1. To spur the creation of new green technologies and a green energy industry in America; and
  2. To rejuvenate Detroit and the surrounding areas.

To accomplish both of these goals, DIG would make Detroit the place to go for green industry – the way Silicon Valley is for computer technology. DIG would not have a specific method of encouraging green industry – but would use an infusion of cash and people to tinker and innovate and generate solutions. It would need quite a number of tools to spur this growth and innovation:

It would need the authority:

  • To offer government contracts to license green technologies or buy green products;
  • To sponsor a think tank of top experts in various fields to come up with technologies;
  • To offer prizes for creating products that meet certain benchmarks or accomplish certain ancillary goals;
  • To have input into a cap-and-trade program not managed by DIG;
  • To buy companies with worthwhile technologies or resources (including General Motors for example) and continue to operate them.

The point is – DIG would try everything. It’s task would not be to follow certain procedures, but to achieve it’s goals. It would be structured in such a way as to create market incentives and to centralize planning – on two alternate tracks – and let each influence the other. If this problem is fixable, then DIG would unleash the money and human resources to find the fix – and it would be agnostic about the ideology of it’s solution.

It is, in short,  a very Obama-esque approach to the problem.

  1. Dig.gov is not being used by any government agency at the moment. []