Tag: Matt Yglesias

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Criticism Domestic issues Immigration Politics Videos

Bloomberg: How To Use Immigration Policy to Save Detroit

[reddit-me]Three thoughts regarding this suggestion by Mayor Bloomberg on Meet the Press yesterday morning:

1) This is exactly the sort of sensible, pragmatic suggestion that Bloomberg is known for — that is business-focused but would never get through any Democratic or Republican legislature because of the anti-immigrant backlash.  But it’s a good idea — and one grounded in the American tradition — as Matt Yglesias explained a year ago — similar to the homesteading policies that the U.S. used to encourage settlers to move West. Which leads me to my next point.

2) When I heard Bloomberg say this, I thought: “Aha! I wonder if he reads Matt Yglesias too!” Probably a silly thought — as Bloomberg spends his days focused on urban policy. But when I first heard Bloomberg say it, I had thought this was one of Yglesias’s many excellent ideas — but as I read his original post, it was instead one of the many interesting ideas that Yglesias brings to his audience from other sources.

3) Bloomberg’s approach to government is so successful because it is pragmatic and businesslike. But this comment also reveals what he misses. He uses the rather obnoxious line that any business run as the government is would fail. Of course! That’s part of why we have a government — to perform tasks that aren’t profitable but are still necessary. Bloomberg explains how politicians fail to act like businessmen by focusing on “issues they can’t come together on.” For a company, it makes a lot of sense to steer your company away from any matter on which their isn’t agreement. But politics is precisely where these ideas are hashed out. Of course, the tendency of some purists to insist on halting all action until the other side gives in needs to be balanced with the pragmatism that all successful businessmen and politicians have in common.

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Criticism Domestic issues Liberalism Libertarianism Politics Uncategorized

The Sheeple of r/libertarian

[reddit-me]The rantings of a self-proclaimed “Libertarian Asshole” who is so incredibly deluded as to think that the America is approaching something worse than a despotic government — an “Absolute Despotism!” — aren’t generally worth responding to. But I like reddit — and I like libertarians. Which is why I’ve been consistently frustrated with the regressive turn that the /r/libertarian has taken since Obama’s election.

How else to explain the popularity of the Libertarian Asshole’s factually-challenged post blaming “Liberals” for the Bush administration’s regulation being enforced in his story?

As a liberal, let me tell you that stories of government corruption and government idiocy, of victimless crimes prosecuted and overreach make me mad. I believe in good government — and not government and regulation for it’s own sake. I believe a law should not be unjustly applied. Liberals have made a strong showing in opposing regulatory capture — when organized lobbies of special interests (such as optometrists) are able to get a regulatory agency to act against the interests of the public and in favor of the lobby. That’s why liberals have fought against the FCC to allow for more competition on the radio waves and that’s why liberals pointed to the corruption in the Minerals Management Service. That’s why Matt Yglesias — one of the web’s most prominent liberals — focuses so much on opposing rent-seeking and unnecessary regulation. As a liberal, I believe the government is capable of acting in the public interest — but that citizens must always provide a check against the inevitable abuses.

I only state this because in the world of the Libertarian Asshole, the phantom “Liberals” are those who say the “Law’s the Law” as they turned in runaway slaves because they…are like “cheap whores” with no self esteem.

With that brilliant insight into the Liberal mind, this Asshole struck r/libertarian gold — as 268 redditors and counting demonstrate.

——–

One more thing: The Libertarian Asshole apparently wasn’t satisfied with a rather sympathetic story of a businesswoman who was busted for selling decorative contact lenses without prescriptions and made to sell her car.

He had to embellish. And by embellish, I mean, apparently, to lie. A few minutes on Google reveals the following:

  1. Lie: The Libertarian Asshole claims that Da Young Kim, who ran an internet store selling contact lenses, was “arrested” for doing so.
    Fact: The Court records and the FTC’s records both show that this was a “civil complaint” — not a criminal one. No where does the news or any other source support the out-of-the-blue claim that Kim was arrested.
  2. Lie: The Libertarian Asshole claims that the FTC spent “your tax dollars on an undercover sting operation.”
    Fact: There’s nothing in the news or in the record or elsewhere on the web to back this up. None of the evidence presented against Kim was from any sting operation.
  3. Lie: The FTC acted because they believed the internet store run by Da Young Kim “might not be checking every customer’s prescription.”
    Fact: According to the FTC complaint, Kim kept no records of prescriptions at all. This wasn’t a few contact lenses sold without prescription — this was a business plan.
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Criticism Economics Financial Crisis New York City Politics The Media The Opinionsphere

Must-Reads of the Week: The IRA, Journalism, Unsavory Profits, Bipartisanship, and the Tyranny of New York

1. Double Agents in the IRA. I recently came across an excellent article by Matthew Teague in The Atlantic about the British counterintelligence program and the IRA. It’s from 2006, but still engrossing.

2. Restoring Journalism. Maureen Tkacik talks about her life as a journalist, the nothing-based economy, and the future of journalism:

If journalism’s more vital traditions of investigating corruption and synthesizing complex topics are going to be restored, it will never be at the expense of the personal, the sexual, the venal, or the sensational, but rather through mastering the kind of storytelling that understands that none of those things exists in a vacuum. For instance, perhaps the latest political sex scandal is not simply another installment of the unrelenting narcissism and sense of invincibility of people in power. Most of the journalists writing about it have—as we all do—some understanding of the internal conflicts that lead to personal failure. By humanizing journalism, we maybe can begin to develop a mutual trust between reader and writer that would benefit both.

What I’m talking about is, of course, a lot easier to do with the creative liberties afforded a blog—one’s humanity is inescapable when one commits to blogging all day for a living.

The piece is long, and worth every word. (H/t to John Cantwell.)

3. The Papacy, Blumenthal, and Now Goldman Sachs. The New York Times took on Goldman Sachs earlier this week with a look at the perfectly legal but unsavory practices it uses to make money:

Transactions entered into as the mortgage market fizzled may turn out to have been perfectly legal. Nevertheless, they have raised concerns among investors and analysts about the extent to which a variety of Wall Street firms put their own interests ahead of their clients’.

“Now it’s all about the score. Just make the score, do the deal. Move on to the next one. That’s the trader culture,” said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University and former counsel to the Federal Reserve Board. “Their business model has completely blurred the difference between executing trades on behalf of customers versus executing trades for themselves. It’s a huge problem.”

4. Erroneous Assumptions. Matt Yglesias concisely summarizes what left-leaning advocates of bipartisanship have found time and again:

Oftentimes people reach the conclusions that conservatives might support this or that by the erroneous method of pretending that conservatives believe in the stated reasons for their policy positions. It seems to me that private views of wonks aside in practice the conservative political movement simply opposes anything that would increase government revenue and/or be bad for rich people.

5. The Tyranny of New York (cont). Continued from last week, many voices around the interwebs weighed in on the conversation started by Conor Friedersdorf on the tyranny of New York in media and culture. There’s a lot of good pieces to read on this — but the 2 I will recommend are this response in the New Yorker by Amy Davidson and this follow-up by Friedersdorf himself.  Davidson, as an aside mentions an E. B. White essay “Here Is New York” that I now need to read:

(Friedersdorf mentions “living vicariously through” E. B. White, who once wrote that there were three New Yorks, that of the native, the commuter, and the newcomer from smaller American places, and that “Of these trembling cities the greatest is the last—the city of final destination, the city that is a goal…Commuters give the city its tidal restlessness, natives give it solidity and continuity, but the settlers give it passion.” But I’ve never really bought that, as matchless as many of White’s descriptions of the city are, maybe because, as a native, I feel no shortage of passion, and don’t much like being called solid. And, again, for many of the most interesting newcomers, this is an entry point to America, not the “final destination.”)

[Image by me.]

Categories
Afghanistan National Security The Bush Legacy The Opinionsphere The War on Terrorism

A Sustainable Afghanistan Policy

[digg-reddit-me]Matt Yglesias makes the essential point regarding our Afghanistan policy, illustrating it with this chart:

Whatever this may or may not be creating, it’s not a sustainable and legitimate government.

There simply is no exit plan.

Yet this isn’t tarred with the same politics as the bailout of Wall Street or Greece because the populist right responds first and foremost to invocations of war and patriotism — and only secondarily to the invocation of moochers. And so the pressure to create a sustainable structure and stop the incessant bailout isn’t there. Instead, the populist right is pressuring Obama to stay until….we win…What we might win is never quite explained.

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Barack Obama Conservativism Criticism Liberalism Political Philosophy Politics The Opinionsphere

Connecting the Dots on Epistemic Closure

The epistemic closure debate has been raging around the internets these past few weeks — and it has generated some extremely sharp commentary among liberals who pay attention to conservatives and conservatives who have been drummed out of the “conservative movement.” Slate now even offers to test your web browser history to see how epistemically closed you are. Here’s some of the more insightful comments I’ve found:

Ezra Klein:

“Epistemic closure,” Julian Sanchez writes, is the toxic result of “confirmation bias plus a sufficiently large array of multimedia conservative outlets to constitute a complete media counterculture, plus an overbroad ideological justification for treating mainstream output as intrinsically suspect.” It is, in other words, the conditions necessary for a political movement to fool itself into believing whatever’s convenient. And, Sanchez says, it’s one of the serious problems facing the conservative movement right now.

Jonathan Bernstein:

[T]he real test of whether conservative (and Republican) decision-makers really believe the nonsense rhetoric that they often use will be Sarah Palin, 2012.  For there can be no question but that a lot of Republican pols act as if they are fully captured by what Andrew Spung calls the “screamosphere” — thus the endless repetition of factually incorrect assertions, such as the “10/6”  and “16K” claims about health care reform.  But of course pols of all stripes — not to mention propogandists such as those on talk radio — have never been known for being especially careful about facts.

Bruce Bartlett:

After about half an hour I decided to start asking people what they thought of the article. Every single one gave me the same identical answer: I don’t read the New York Times. Moreover, the answers were all delivered in a tone that suggested I was either stupid for asking or that I thought they were stupid for thinking they read the Times.

I suppose this shouldn’t have surprised me, but it did. After all, the people I was questioning weren’t activists from the heartland, but people who worked on Capitol Hill, at federal agencies, in think tanks and so on. They represented the intelligentsia of the conservative movement. Even if they felt they had no need for the information content of the nation’s best newspaper, one would have thought they would at least need to know what their enemies were thinking.

Matt Yglesias:

Just as conservative legislative politics isn’t really about free markets conservative judicial politics isn’t really about restraint. The rhetoric is just rhetoric, and the reality is that conservative politics is about conservatism—about entrenching the power and influence of the dominant economic and sociocultural groups.

Jonathan Chait:

Michael Brendan Dougherty writes:

[T]he Tea Party is nothing more than a Republican-managed tantrum. Send the conservative activists into the streets to vent their anger. Let Obama feel the brunt of it. And if the GOP shows a modicum of contrition, the runaways will come home. …

The Tea Party movement creates the conditions in which the activist base of the GOP can feel like it is part of the game again. They can forget Bush-era betrayals, swallow their doubts, and vote Republican this November. The next Reagan is coming, the next Contract With America will work, the next Republican nominee will be one of us. All it takes is for someone to appreciate the anger—and it doesn’t matter that she supported the bailouts that enraged them or the candidate who forsook their ideas and support.

Former GOP staffer Scott Gallupo comments, “I don’t deny the Tea Partyers’ sincerity. But anyone who doesn’t see the reality of the Dougherty scenario is simply being painfully naive.” [my emphasis]

Jonathan Bernstein:

The accusation isn’t that conservatives all reach the same conclusions about everything, nor is it that conservatives are excessively politically correct, nor is it that conservatives demand strict adherence to a set of ideas if one is to remain a conservative in good standing.  It’s rather about information, and what counts as evidence about the real world.  Sanchez’s point is that if one only gets information from a narrow set of sources that feed back into each other but do not engage beyond themselves, that one will have a closed mind (not his phrase, by the way) regardless of what one does with that information.

Ross Douthat:

It’s precisely because American conservatism represents a motley assortment of political tendencies united primarily by their opposition to liberalism that conservatives are often too quick to put their (legitimate, important and worth-debating) differences aside in the quest to slay the liberal dragon. After all, slaying liberalism is why they got together in the first place! And it’s precisely this motley, inconsistent quality, too, that encourages activists and pundits alike to stick to their single issue or issues and defer to the movement consensus on everything else. So pro-lifers handle abortion, Grover Norquist handles taxes, the neoconservatives handle foreign policy and the Competitive Enterprise Institute handles environmental regulations and nobody stops to consider if the whole constellation of policy ideas still makes sense, or matches up the electorate’s concerns, or suits the challenges of the moment. This unity-in-opposition was a great strength for the right for a long, long time, but it’s made conservatism much more brittle and less adaptable than it needs to be right now.

Daniel Larison:

The dispiriting part of all this is that hating liberals more than loving liberty is hardly a new phenomenon. Unfortunately, it has defined a large part of postwar conservative politics all along. As Prof. Lukacs wrote in his “The Problem of American Conservatism” 26 years ago: “Many American conservatives, alas, gave ample evidence that they were just conservative enough to hate liberals but not enough to love liberty.” What we have seen over the last ten years is a tendency to make loathing for liberals the thing that truly matters, and usually liberty becomes important to most conservatives only when it is useful to berate liberals. To the extent that liberals have defended constitutional liberties against anti-terrorist government intrusions, it is the latter that most conservatives have embraced. It is not just that loathing for liberals exceeds love of liberty, which might be true for members of all kinds of ideological movements, but that love of liberty becomes almost entirely contingent on whether or not it can be marshaled in opposition to liberals.

Barack Obama:

If you’re someone who only reads the editorial page of The New York Times, try glancing at the page of The Wall Street Journal once in awhile. If you’re a fan of Glenn Beck or Rush Limbaugh, try reading a few columns on the Huffington Post website. It may make your blood boil; your mind may not often be changed. But the practice of listening to opposing views is essential for effective citizenship. So too is the practice of engaging in different experiences with different kinds of people.

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Barack Obama China Criticism Domestic issues Economics Financial Crisis Foreign Policy Green Energy Immigration Life New York City Politics The Bush Legacy The Opinionsphere The Web and Technology

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

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.]

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Domestic issues Immigration Politics The Opinionsphere

Yglesias Award Nominee

Andrew Sullivan’s creation of the “Yglesias Award” is actually what led me to Matt Yglesias in the first place. Now, in my Google Reader, Matt Yglesias and Jonathan Chait (and Ezra Klein) all commingle in a single feed folder as my essential reading — and so, when reading this, I actually mistook it for a Yglesias post. But it was by Jonathan Chait:

As for bad faith, Graham is a Republican Senator from South Carolina. His highest risk of losing his seat, by far, comes from the prospect of a conservative primary challenger. Indeed, I’d say that prospect is far from remote, and Graham is displaying an unusual willingness to risk his political future. He has little incentive to negotiate on these issues except that he believes it’s the right thing to do. So when Democrats put climate change on the backburner to take up immigration, and so so for obviously political reasons, Graham has every right to be angry. He’s risking his political life to address a vital issue, and Harry Reid is looking to save his seat.

This isn’t to say I disagree with the move to tackle immigration. The Republican Party’s obstructionism makes their defeat more necessary than if they were willing and able to work on areas in which they share common ground. You could bet that if they take back the House they will be incentivized to cooperate, but I wouldn’t count on that. Bringing up immigration will raise the level of rhetoric though — as it will be the first controversial issue Obama has addressed. Health care was made controversial after being popular; the stimulus as well.

By taking on immigration now, the conventional wisdom (on the left) is that the Republican Party will marginalize itself in the future in order to achieve some temporary gains today — and the Democratic Party will become the party of the fastest growing ethnic group. The Republican coalition of business and cultural conservatives will be aggravated as a bonus.

Aside from political calculations — it clearly is an issue that we must tackle as a nation — and the new draconian Arizona law demonstrates this further.

But Chait’s right that Graham has a right to be angry. Even if Graham does shamelessly play deficit politics while pushing America towards a fiscal catastrophe. Making common ground with people you disagree with is hard. And Graham is the only one in the Republican Party who seems to be trying, at a political cost to himself even.

[Adapted from image by isafmedia licensed under Creative Commons.]

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Barack Obama Criticism Economics Financial Crisis Foreign Policy Political Philosophy The Media The Opinionsphere The Web and Technology

Must-Reads of the Week: Obama’s Accomplishments and Diplomatic Brand, Facebook, Epistemic Closure, Financial Reform, Our Long-Term Fiscal Crisis and Problem-Solving Capacity, and Mike Allen

1. Obama’s Accomplishments. Jonathan Bernstein explains how Obama has gotten so many of his legislative goals accomplished despite the GOP’s constant obstructionism: By loading up the major bills with many other smaller items. In fact, according to PolitiFact, Obama has accomplished almost a third of his campaign promises if compromises count (and a fifth if they don’t).

2. Facebook v. Google. Ian Schafer in the Advertising Age has a smart take on Facebook’s recent challenge to Google and how Facebook is trying to reorganize the web.

3. Epistemic Closure. Julian Sanchez follows up on his starting post on the epistemic closure of the right wing. Every single link he provides in the article is worth following as the conversation he started extended across many people and was full of insights all around.

4. Obama’s Diplomatic Brand. Marc Ambinder has an excellent post on “the essence of Obama’s diplomatic brand.” While Ambinder acknowledges it’s too early to assess how effective Obama’s diplomacy will be and has been, he does a good job of describing it — and little wonder it bears little resemblance to the weak, anti-American apologizing that the right sees as Obama’s trademark. Ambinder lists a few qualities, but let me focus on one:

Bush assumed a position of direct strength, not deference, when he met with leaders. Obama has been decidedly deferential, which, in the traditional binary way the media covers foreign policy, allegedly suggests weakness. From Obama’s perspective, deference is both strategic and is demanded by the goals he sets out. Treating countries as equals foists certain obligations upon them. It helps leaders deal with internal politics. Year one, Obama was the star, and wasn’t seen as a heavyweight, even by some allies. Year two is different: he’s charted a course on legacy problems (Iran, Iraq, Afghanistan, Middle East peace), so the world knows where he stands.

5. How Financial Reform is Playing. There was some disagreement around the opinionosphere about how financial reform is “playing.” Initially, there was concern that the Republicans would once again follow their tried and true strategy of: Make up stuff that’s really awful — and pretend the bill is about that. There was concern that the Obama administration didn’t have a plan for this contingency, presuming that Republicans would crack under public pressure. And then, the SEC filed suit against Goldman and Blanche Lincoln (who was expected to water down the bill) adopted the strongest language we’ve seen and the Republicans seem to be breaking ranks over this with Bob Corker critizing McConnell’s lies and Chuck Grassley voting for the bill in committee. Kevin Drum suggests McConnell crossed some line of absurdity:

[I]t turns out there really is a limit to just how baldly you can lie and get away with it…[W]e seem to have reached a limit of some kind, and McConnell crossed it. Maybe we should name this the McConnell Line or something so that we know when future politicians have crossed it.

I tend to think Matt Yglesias is more right when he observed:

This time around, though, it doesn’t seem to be working nearly as well, perhaps because people realize we’ve seen this movie before.

6. Our Long-Term Fiscal Crisis. Jonathan Chait observes what may prove to be a fatal flaw in the political strategy of the GOP on fiscal matters if they authentically do support a smaller government:

Distrust of government makes Americans distrust everything people in governemnt say or do, including cut spending, which — with the exception of a few programs seen to help “others,” like welfare and foreign aid — tends to be wildly unpopular.

Their current strategy has been to provoke a fiscal catastrophe and cut government spending in the aftermath. But Chait suggests that this strategy of starve-the-beast governance may not work. On a related note, William Galston has an astutely even-handed piece describing the fiscal problems we are facing and what the solution must realistically be. He quotes Donald B. Marron in National Affairs who explains an idea that is antithetical to ideological right wingers:

Policymakers should not always assume that a larger government will necessarily translate into weaker economic performance. As few years ago, Peter Lindert—an economist at the University of California, Davis—looked across countries and across time in an effort to answer the question, “Is the welfare state a free lunch?” He found that countries with high levels of government spending did not perform any worse, economically speaking, than countries with low levels of government spending. The result was surprising, given the usual intuition that a larger government would levy higher taxes and engage in more income redistribution—both of which would undermine economic growth.

Lindert found that the reason for this apparent paradox is that countries with large welfare states try to minimize the extent to which government actions undermine the economy. Thus, high-budget nations tend to adopt more efficient tax system—with flatter rates and a greater reliance on consumption taxes—than do countries with lower budget. High-budget countries also adopt more efficient benefits systems—taking care, for example, to minimize the degree to which subsidy programs discourage beneficiaries from working.”

Right wingers rarely acknowledge this even as they oppose measures that would improve the efficiency of government (like the VAT). They simply call it “European-style socialism” and move on with addressing why on the substance more efficient government measures shouldn’t be adopted.

7. Our Problem-Solving Capacity. Stephen Walt has a very long and very, very good post that attempts to balance optimism (global violence is at historic lows!) with some pessimism:

One way to think about the current state of world politics is as a ratio of the number of important problems to be solved and our overall “problem-solving capacity.” When the ratio of “emerging problems” to “problem-solving capacity” rises, challenges pile up faster than we can deal with them and we end up neglecting some important issues and mishandling others.  Something of this sort happened during the 1930s, for example, when a fatal combination of global economic depression, aggressive dictatorships, inadequate institutions, declining empires, and incomplete knowledge overwhelmed leaders around the world and led to a devastating world war…

[Today] Washington D.C. has become synonymous with the term “gridlock,” leading the Economist magazine to describe the U.S.  political system as “a study in paralysis.” Obama did get a health care reform package through, but it still took an enormous effort to pass a watered-down bill that pandered to insurance companies and other well-funded special interests. Meanwhile, decisive action to address climate change, the persistent U.S. budget deficit, or financial sector reform remain elusive, and it’s going to get a lot tougher if the GOP makes big gains in the 2010 midterms. Nor is it reassuring to realize that the Republican Party seems to be taking its marching orders from two entertainers — Rush Limbaugh and Glenn Beck — the latter of whom has made it clear that he’s interested in making money and doesn’t really care about public affairs at all…

Nor is this problem confined to the United States. Japan’s ossified political order remains incapable of either decisive action or meaningful reform; the Berlusconi-government in Italy is an exercise inopera bouffe rather than responsible leadership, French President Nicolas Sarkozy’s early flurry of reform efforts have stalled and Mexico remains beset by drug-fueled violence and endemic corruption. Britan’s ruling Labor Party is a spent force, but the rival Conservatives do not present a very appealing alternative and may even lose an election that once seemed in the bag. And so on.

There are some countries where decision leadership is not lacking, of course, such as China (at one end of the size scale) and Dubai (at the other). Yet in both these cases, a lack of genuine democratic accountability creates the opposite problem. These government can act quickly and launch (overly?) ambitious long-term plans, but they are also more likely to make big mistakes that are difficult to correct them in time…

In short, what I am suggesting is that our inability to cope with a rising number of global challenges is not due to a lack of knowledge or insufficient resources, but rather to the inability of existingpolitical institutions to address these problems in a timely and appropriate way.

8. Mike Allen. Mark Leibovitch in the New York Times Magazine has an excellent profile of Mike Allen of Politico and how that organization is changing the news business by covering it like some combination of ESPN and Facebook’s feed of data on the activity of your friends. As a character study, it succeeds given Mike Allen’s unique personality — and as a look at the changing media landscape in politics, it succeeds in raising many questions about where we’re headed. Marc Ambinder responds.

[Image by me.]

Categories
Criticism Economics Financial Crisis Libertarianism Political Philosophy The Opinionsphere

Wall Street’s enormous profits are evidence of a poorly functioning market.

[digg-reddit-me]Matt Yglesias and Ezra Klein had 2 complementary points in posts yesterday. (Damn you, JournoList!) Yglesias:

…[L]ooking at this chart I think it’s hard to avoid the conclusion that Wal-Mart is the last thing we should be worried about. The worrying trend is the domination of the corporate landscape by super-profitable firms in the heavily regulated energy, banking, and telecom sectors.

Yglesias is making a point most commonly associated with libertarians that large firms often use the government — through favorable regulation, tax breaks and incentives, etc. — to increase their profits. For example, increasing the barriers for new firms in the industry and restraining their indirect competitors from direct competition. This follows the well-known principle that any government policy whose costs are diffused and whose benefits are concentrated will be adopted more often than not. Thus highly regulated industries tend to be dominated by a small number of large firms that make very large profits — because thanks to government regulation, there isn’t much competition. However, Ezra Klein observed:

In a competitive market, there’s really no place to make 27 cents on the dollar. Some other firm will come in and offer the same services for 24 cents, and then someone will undercut them at 19 cents, and so it will go until the profit margin narrows. Wal-Mart, for instance, has a profit margin of around 3.5 percent. Ah, capitalism.

Not so in the financial sector, though, which ever since deregulation has been posting higher and higher profit margins.

So, the exception to this trend is Wall Street — where deregulation has lead to higher profits. All of this seems quite intuitively true — both from a libertarian and from a liberal perspective — and even from a liberaltarian one.

The enormous profits taken out of every dollar (as seen in much of the the financial industry) is a demonstration of a lack of competition and thus a poorly functioning market. Of course, Goldman Sachs didn’t manage to make it on the list above — but it had more than double the amount of profit out of every dollar it took in as compared to each of the companies here. Goldman managed to take $0.26 of every dollar they made as profit to their shareholders. (And that includes the massive bonuses given to employees as expenses.) I think I need to see more data though to draw the conclusion that Klein is hinting at — that the deregulation of Wall Street increased it’s profits as a percentage of revenues — while deregulation generally has the opposite effect (as in the case of Wal-Mart).

Annie Lowery drives the point home in analyzing the 1Q results from Wall Street:

This is not quite a picture of a healthy industry. In a competitive marketplace, prices and fees at Wall Street firms should fall and margins should become thinner. On the one hand, Wall Street firms like J.P. Morgan and Goldman Sachs have seen a number of their competitors die in the past two years, and have absorbed business from the failed Lehmans and Bear Sterns of the world. But on the other hand, Wall Street profit margins have remained sky high except for a short blip during the worst of the credit crunch. And, an economist would tell you, such sustained levels of high profitability point to anti-competitive behavior…

[T]he profits point to a lack of competition. That is one thing the Dodd bill — via derivatives regulation — attempts to fix. Right now, Wall Street firms do not bid for big derivatives contracts — they simply quote a price and work over-the-counter. For that reason, derivatives are wildly profitable for the companies. The Dodd bill will force derivatives pricing to become public to the market, driving down margins as companies compete.

There’s a whole lot to unpack within these points about the nature of American capitalism and the government’s role in it.

But one key takeaway seems to be a repudiation of the most ideological take of either the left or right — and an acknowledgment that free markets are not merely what happens when the government is out of the way — but are created and maintained by a complex balancing act in which government regulates and participates. What you end up with is something less than socialism or libertarianism and more like liberalism:

Contemporary liberals reject the doctrinaire distinction between the “market” and the government that animated so much of the conflict in the 20th century. The free market should not be treated as some theoretical utopian ideal or as a perpetually lost state of innocence. And the government is not some evil force which must be reduced until it is of a size that it “could be drowned in a bathtub.” Rather the government and the free market exist together – and in a capitalist republic such as ours, each is dependent on the other. The free market does not exist in a state of nature but must be created by and maintained by the society and the state which provide the values and the rules and other conditions without which a market cannot be free. In other words, a free market is a product of a just government.

Follow-up post here.

[Image by f-l-e-x licensed under Creative Commons.]

Categories
Barack Obama Criticism Economics Election 2012 Financial Crisis National Security New York City Palin Politics The Opinionsphere Videos

Must-Reads of the Week: Nukes, Inconsistencies, Graphing the Economic Crisis, Half-Hookers, Palin 2012, Mailer’s Wife, & Complex Business Models

1. Nukes. Jon Stewart and Andrew Sullivan both make the same point: Obama’s nuclear policy is the fulfillment of Ronald Reagan’s vision:

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
The Big Bang Treaty
www.thedailyshow.com

2. Inconsistencies. Matt Yglesias:

The main difference between left and right with regard to property rights is simply that the right is invested in a lot of rhetoric about markets and property rights and the left is invested in different historical and rhetorical tropes.

… Formally, the right is committed to ideas about free markets and the left is committed to ideas about economic equality. But in practice, political conflict much more commonly breaks down around “some stuff some businessmen want to do” vs “some stuff businessmen hate” rather than anything about markets or property rights per se…

Or if you look at the energy sector, you’ll see that businessmen want to push property rights for the stuff that’s in the ground (coal, oil, whatever) and a commons model for the stuff (particulates, CO2) that’s in the air. You can call that “inconsistent” if you like, but obviously it’s perfectly consistent with what coal and oil executives want! And those industries are the most loyal supporters of “right” politics around.

3. Graphing the Economic Crisis. Ezra Klein puts out some interesting graphs about the economic crisis and nascent recovery including this one:

Klein explains:

This graph is a political problem for the Obama administration (if not, in the short-term, an economic problem). But it is also necessary for all the other graphs. The bank rescue, which added temporarily to the deficit, stabilized the stock market and set the stage for its recovery. The stimulus, which also added to the deficit, helped moderate the job losses and and has contributed to recent gains. You could’ve made the lines on this graph better, but only by letting the lines on the other graphs get worse.

4. Half-hookers. Lisa Taddeo for New York magazine writes about the burgeoning half-hooker culture which exists in a bizarre alternate reality existing so close to our own where celebrities and finance guys get their women:

The general-admission crowds dance, and the table crowds dance a little more woodenly, a little more entitledly, with their finger pads on their tables. The promoters are dancing with the models and the waitresses are dancing with the bottles and everybody finds a place on the floor.

The floor people, they are just to fill the place up. The celebrities and the athletes and the tycoons are the ones for whom this world is zealously designed. A rung below in after-work pinstripes are the money guys, the Deutsche guys and the Goldman guys and the no-name hedge-fund guys—the “whales”—guys like that one over there in a Boss suit and John Lobb shoes, standing beside the table that cost him $3,000. Standing very close to it, like a Little Leaguer who wants to steal second but has never done it before. This gentleman’s not dancing, but he’s thinking about it.

There’s quite a lot to the article. A fascinating piece of reporting.

5. Palin 2012. Chris Bowers makes the argument for why Sarah will win if she runs.

6. Mailer’s Wife. Alex Witchell profiles Norris Church Mailer, Norman Mailer’s final wife, whose story moved me as I read of it:

John Buffalo Mailer [stepson of Norris:] “People are their best selves and worst selves intermittently,” he told me, “and the best marriages navigate that ride over the hurt, which I believe they did right to the end. They both had options, and at the end of the day the life they created together won out over infidelity, illness and hard times…”

7. Complex Business Models. Clay Shirsky:

One of the interesting questions about Tainter’s thesis is whether markets and democracy, the core mechanisms of the modern world, will let us avoid complexity-driven collapse, by keeping any one group of elites from seizing unbroken control. This is, as Tainter notes in his book, an open question. There is, however, one element of complex society into which neither markets nor democracy reach—bureaucracy.

Bureaucracies temporarily reverse the Second Law of Thermodynamics. In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one.

Read the rest.

[Image by me.]