Categories
China Economics Financial Crisis Politics

Stimulus and Stability

[digg-reddit-me]This Wall Street Journal article by Bob Davis accompanied by this graph to the right illustrates just how far from world opinion the Republican right is in it’s rejection of stimulus spending. This is not necessarily a bad thing – but it should give pause to those who are defending the fiscal austerity Republicans are proposing in the middle of this crisis. This issue is not considered a partisan issue for most of the world – and it is mainly Republicans in power today who see stimulus spending during a sharp downturn as something “liberal” or controversial.

David Brooks’s expressed his fair-minded exasperation this Sunday – as he pronounced the idea of the Republican-proposed government spending freeze “insane.” 

The International Monetary Fund – not normally known as a squishy, leftish organization as it promoted free trade and capitalism around the globe – is in favor of large stimulus packages:

The IMF has been urging nations to increase fiscal stimulus by at least 2% of gross domestic product to boost growth. Of the G-20 nations, only the U.S., Spain, Saudi Arabia, China and Australia are expected to reach that goal in 2009, according to the IMF.

More importantly, and more interesting then discrediting an almost powerless political party, is to notice that there seems to be some sort of inverse relationship between a society’s social safety net and the amount of stimulus spending they are proposing. 

This makes sense on a number of levels. Automatic stabilizers which should take some of the pressure off a need for a stimulus are not included here. On another level, these nations without a strong safety net must rely more heavily on economic growth for societal stability. 

If this is true, China and America would be more reliant on constant economic growth to relieve social and political pressure and would be more likely to have larger stimulus packages. France and Germany with stronger safety nets would feel more insulated and be less likely to push for large stimulus packages. This is exactly how this matter is playing out on the world stage today – with some exceptions due to political leadership. 

But both states with strong social safety nets and those without them are dependent on growth over time. But those states without strong safety nets feel the economic bumps more strongly – and downturns end up being more disruptive.

Categories
Economics Financial Crisis Politics

Housing in Detroit

The Associated Press:

The average sales prices of [single-family]homes [in Detroit] plunged from $46,702 in 2003 to $8,692 last year. Through the first month of 2009, average sales were $6,035. 

Categories
Barack Obama Economics The Opinionsphere

Clive Crook’s “Everything For Nothing”

[digg-reddit-me]Clive Crook in his new Financial Times column faults Obama for:

telling almost all taxpayers they can have everything for nothing.

This is his second column on the subject – and he bases this claim on a small portion of Obama’s overall plan. He does not fault Obama for proposing to increase the top marginal tax rate from 35% to 39%, as Bush’s tax cut legislation actually mandates unless it is amended; he does not fault Obama for pusing for health care reform; he does not fault Obama for pursuing cap-and-trade legislation; he does not fault Obama for any range of allegedly “socialist” policies – rather he takes issue with the fact that Obama plans to cap the deduction for charitable contributions, so that those making over $250,000 get the same percentage credit for a charitable contribution as someone making less than $250,000. 

In addition to this rather minor tweak of our tax system (which Crook points out will generate a large amount of revenue thanks to the extreme concentration of wealth in our society), Crook raises the more substantial issue of how health care reform and cap-and-trade legislation, both of which he favors, are being paid for:

[T]he revenues from cap and trade are spent mainly on wage subsidies and tax cuts tilted toward the working poor. The down-payment on the cost of healthcare reform is financed by an additional tax increase on the rich.

Crook seems to be trying to conjure that bane of neo-liberals and conservatives alike – class warfare! All of this based on the assumption contained in the beginning, that Obama is “telling almost all taxpayers they can have everything for nothing.”

But is this so? Crook bases his argument on the presumption that the status quo is fair. He says that if Obama is planning on paying for health care reform without levying any additional taxes on the majority of Americans, then this majority is getting something – or in the exaggerated vernacular of those who make opinons for a living, “everything” – for nothing. 

But this same majority of Americans getting “something for nothing” here allows a very small minority to control a far disproportionate amount of resources. The legitimacy of these social bargains – whereby those with power and wealth are allowed to keep their power and wealth peaceably – rarely enters into the minds of those who benefit most from the bargain until we enter periods of unrest and instability. In many parts of the world – China, Pakistan, Russia, Latvia, Bulgaria, Iceland – the current crisis is calling into question the legitimacy of their social bargains in fundamental ways. In America, this crisis is calling into question the historically recent amendments to our social bargain from the Reagan revolution of the 1980s. 

The crisis might have prompted a sort of reactionary liberalism that sought to rollback the Reagan revolution in its entirety – much as Reagan’s reactionary conservatism sought to undo the Great Society. But instead, liberalism is guided by Barack Obama whose liberalism accepts some of Reagan’s most profound critiques and incorporates them into a new liberalism, leavened with both the wisdom of Edmund Burke and Friedrich Hayek.

Clive Crook’s invocation of the lazy masses being offered everything for nothing strikes me as a more refined take on Rick Santelli’s famous rant about the “losers” who took out loans they could not pay for. What strikes me about both sentiments is the sense of who the “losers” are – not the corporations and Wall Street bankers who lost the most. To call them “losers” may be morally appropriate but rings hollow when you’re speaking about those who benefited the most from our societal bargain. These “losers” may be feeling the pressure from our flagging economy but having benefited disproportionately during the boom of the past thirty years – and especially the Bush recovery – are still quite well-off. Those who “lost” the most also had the most – and still, after losing so much, often have more than the majority of the population. The real “losers” in the complete derogatory sense of the word as the individuals who took on mortgages they could not afford and now will be left with nothing but bad credit and the knowledge that they too contributed to the financial meltdown.

In other words, the real losers are not those whose prosperity (based on fees generated from borrowed money) is diminished, but those whose prosperity was never quite achieved as they borrowed money (generating the above-mentioned fees) to acquire some portion of their American dream of prosperity.

Crook while complaining about those being offered everything for nothing fails to acknowledge the system itself which has been redistributing wealth upwards for some time now. What – a different version of Crook might ask – did the 95% of Americans receive for allowing the top 5% to control most wealth? They received the promise of a growing economy that would lift everyone up – and the assurance that certain basic services would be provided, even to the least of our citizens. So, if the wealthy will be paying $4.10 more per day to help maintain the stability of the society which has provided them with the opportunity to become so wealthy, I wouldn’t call that something for nothing.

Categories
Foreign Policy Libertarianism Mexico National Security Politics The Opinionsphere War on Drugs

The Unintended Consequences of a War on Drugs

American libertarian Alan Bock at Antiwar.com:

The most efficacious approach [.pdf] to stemming the violence in Mexico is to recognize that just as what most newspapers blithely call “drug-related crime” is actually drug-law-related crime or even drug-law-caused crime, the wave of violence in Mexico is not caused by the inherent viciousness of the Mexican underclass or the physiological properties of drugs deemed illicit, but by the set of perverse incentives that arise when governments treat adults like children and dictate what they can ingest, attempting to prohibit plants and substances that are easily grown and formulated and for which there is a steady demand. The violence in Mexico is not “drug-related” but “drug-law-related” or even caused directly and indirectly by the laws attempting to prohibit the use of some substances.

While I do not agree with the moral aspects of Bock’s approach – which attribute the moral failings of individuals to government policy – and place the moral blame for these actions on the government – his policy analysis here strikes me as fundamentally sound.

Categories
Humor Videos

Jimmy Fallon Slow Jams the News

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I have to admit – I had my doubts about Fallon as a late night host – but he seems to be off to a good start – not least of all with this.

Best non-Jon-Stewart take on this weeks events I’ve seen.

Categories
Economics The Opinionsphere

The Battle of the Elites

Matt Yglesias has an interesting observation regarding Jon Stewart’s takedown of CNBC:

Comedy Central vs CNBC nicely captures the cultural battle inside the American elite between “creative class” types and the business manager types. Both sides think the other side is composed of idiots, but their side is mistaken.

Categories
Domestic issues Economics Politics The Web and Technology

Free markets exist not in spite of the government, but because of government.

[digg-reddit-me]One thing many Republicans today do not seem to understand is that the free market is not a natural phenomon. The free market exists not in spite of the government, but because of government.

Reading this white paper by a broadband front group (pdf) which purports to described the “ideology behind net neutrality” which it dubs neutralism and connects it to a lack of respect for private property and an undermining of capitalism, the above sentiment was driven home. As they described the “private property” rights that net neutrality would undermine or take away, it seemed clear to me that they had a fundamental misunderstanding of capitalism – and upon reflection, this fundamental misunderstanding of capitalism seems to have animated a great deal of the perversion of the free market that Republicans ((I use this term although it is a rough one. Some Democrats seem to agree with the Republican points discussed – but they have mainly been associated with the Republican party.)) have promoted for the past thirty years.

The impression one gets from the quasi-libertarian Republican rhetoric of the past two decades is that “government is the problem – not the solution” – and that the free market is the solution. The government and the market are understood to be fundamentally at odds – and so, Republicans have supported a government retreat from any interference in markets. They are in favor of a relaxation of regulations in various areas including from financial industry to the environmental impact of industry; they favor a government that provides as few services as possible – from wanting Social Security privatized to opposing government interference in the health care industry; they want government to allow more mergers and avoid breaking up large companies; they want to reduce taxation; they do not want government to interfere to help labor unions; they oppose rules limiting media ownership; they oppose any laws or regulations enforcing net neutrality.

In short, the Republicans oppose virtually any government “interference” in the free market – and where they cannot plausibly roll back government programs and regulations, they seek to undermine them and to reduce them.

This point of view is often described and justified as a defense of capitalism and free markets – but it truly is an assault on our system of capitalism and free markets in favor of corporate interests. One of the chief roles of the government is the creation of a free market – and many, though not all, of the regulations, programs, and services of the government are designed with this in mind. Sometimes these government interventions do more harm than good – wage and price controls during the New Deal, for example. But the Republican assault on government has not been confined to attacking these harmful programs, but to attacking the role of the government itself.

Many Republicans these days are calling Democratic efforts “socialism,” “Communism,” and “Marxism” – but in reality the Democratic Party has mainly been trying to defend the American economic system which has been under assault since the second of the twin revolutions of late 20th century America. (First was the sexual/cultural revolution of the 1960s that overturned the social and cultural mores; then came the counterrevolution which masked the financial revolution of the 1980s which overturned political and economic values.) They use these broad brushes to attack the very concept that the government has a proper role in a free market – rather than to merely disagree about the effectiveness of certain measures.

The lie to this rhetoric is demonstrated by those limited instances in which Republicans have encouraged government involvement in the marketplace – to extend copyright far beyond its initial scope; to offer tax cuts to favored corporations; to have an extremely large military development budget, etcetera. Each of this policies follows what George Will described as “the supreme law of the land…the principle of concentrated benefits and dispersed costs.” In other words, each of these benefits big corporations rather than helping to maintain a free market.

A society creates a government to establish a process for making and enforcing group decisions. One group decision is to maintain a free market. A free market is not what happens when a government doesn’t interfere – if it was, then the lawless nation of Somalia would have the freest market on earth. Instead, a free market is a nurtured thing, created and shaped by government and society. The creation of a free marketplace in America meant investing in infrastructure and roads to allow for easy transport of goods and people; it meant the regulation of large corporations to ensure they did not become monopolies; it meant creating an independent judiciary to ensure that business disputes could be legitimately settled; it meant a relatively open and transparent government; it meant regulations concerning consumer safety and protection and environmental impact; it meant regulations regarding the stability of the economic system; it meant providing for the basic needs of citizens, especially the elderly, the disabled, and the young; it meant preventing the concentration of too much power; it meant protecting certain rights for minorities and individuals; and more. 

Today, it means protecting net neutrality. Net neutrality is one of the foundational principles of the internet – and as such must be a principle protected by the government. Imagine how our economy would have changed if there were fees required to travel along any roads – fees which could be waived if you were traveling to certain stores. It would reinforce the dominance of large corporations and serve to continue to concentrate power. Imagine if I would have to pay a fee to travel to my local hardware store, but could go for free if I went to Home Depot. Broadband industry advocates insist that not only should consumers pay broadband companies for access to the “roads”, but that websites should also have to pay broadband companies to get their potential viewers there. They propose to undermine and limit the decentralized market that is the internet to favor big companies. 

It is government’s proper role to protect this market – to enforce the rules that have made it such an effective and innovative force. 

The internet has spurred so much innovation because it is a free marketplace. Large corporate interests seek to control and limit this innovation – to ensure their power and profits are not threatened. The Republican party now seems to be going along with these interests. But they should not be allowed to do so under the pretense of protecting “private property” and “free markets.” In reality, their efforts to stop net neutrality are yet another assault on the freedom of the marketplace, another attempt to undermine the American economic system.

Categories
Barack Obama Humor Politics The Opinionsphere

Jim Cramer Jumps the Shark

[digg-reddit-me]Isn’t that what Jim Cramer does on every show, you might ask? That’s a fair point.

But what if Jim Cramer has now decided that he will dedicate himself to defeating Barack Obama’s agenda, declared himself to be on the “White House enemies list;” and that what he is doing now is what he has done all along – to “fight to help viewers and readers make and preserve capital.” That’s what I call jumping the shark. Bad investment advice is what Cramer does entertainingly. But this sense of self-grandiousity – and his seeming demand to be taken seriously instead of as a ridiculous figure. That’s too much.

The self-puffery is evident as Cramer insists he is on a “White House enemies list” (his source is the noted Democratic party insider Rush Limbaugh). Cramer thinks he is on this “list” because made an outrageous comment about White House policy being designed to destroy wealth and kill kittens, and when questioned about it, the White House press secretary pointed out that Mr. Cramer’s advice on how to create wealth wasn’t what the White House was looking for.

Cramer claims he has spent his career helping viewers and readers “preserve” their capital  – and that his advice now to oppose Obama is just a continuance of that. So for a moment, let’s look at the fate of those who would have followed Cramer’s advice in the past. The Consumerist points out that if one had followed Jim Cramer’s stock-picking advice since 2000, you would have been better served by flipping a coin – as Jim Cramer’s advice is slightly worse than a coin toss.

This is also the guy who publicly advised his viewers on October 31, 2008 2007, just before the beginning of this stock market slide:

You should be buying things and accept that they are overvalued, but accept that they’re going to keep going higher. I know that sounds irresponsible, but that’s how you make the money. Right now, up is down, left is right, peace is war. [my emphasis]

Eric Tyson supplements this by describing some of Cramer’s more recent investment advice:

  • Bear Stearns. Cramer recommended buying this stock on 8/17/07 at $118.20 per share. He lost 95 percent on this one – selling at just under $6 per share on 3/20/08.
  • Morgan Stanley. Cramer recommended buying this stock on 9/15/06 at $70.95 per share. Its recently been trading in the mid-teens.
  • Lehman Brothers. Cramer recommended this stock on 10/17/05 at $55.18 per share. On 9/5/08 with the stock trading at $16 per share, on CNBC, Cramer selected Lehman as a “screaming buy” and said things couldn’t get any worse for the company. The stock now trades at less than $1 per share for more than a 99 percent loss for Cramer.
  • Merrill Lynch. Cramer recommended buying this stock on 9/19/05 at $60.17 per share and sold it on 9/12/08 for $17.05 per share for a 72 percent loss…

(And, by the way, Cramer recommended buying financial services giant AIG on 11/7/05 at $66.34 per share and the stock currently trades around $2 per share for a 97 percent loss.)

Given his history, it’s a bit rich of Jim Cramer to claim his career has been about “preserving” anything other than his own entertaining presence. If he meant to dedicate his life to “preserving the wealth of his viewers and readers,” clearly he’s been quite a miserable failure. In terms of sheer lunacy, on the other hand, he’s still got it.

But I, for one, am grateful the White House isn’t following the Jim Cramer guide to wealth creation. And for those of you that are – I might advise you invest in a solid coin to flip, as it would apparently serve you better.

Categories
Barack Obama Criticism Domestic issues Politics The Opinionsphere The Web and Technology

Don’t Be Idiots: Stop Talking About the Fairness Doctrine

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I didn’t think the Democrats were stupid enough to start talking about reimposing the Fairness Doctrine. But I was wrong.

For those not up-to-date with the Fairness Doctrine controversy, it goes back to the late 1960s when the FCC began to push radio and television stations to air material about controversial matters including some consideration for both sides of the issue. ((The Fairness Doctrine was actually created earlier, but it was not incorporated into FCC guidelines until the late 1960s.)) The justification for this government interference was that with a very limited amount of media channels available, and with the airwaves owned by the public and merely licensed to the media companies profiting from them, this was a reasonable request and a necessary one in order to encourage an informed citizenry. By the late 1960s, the powerful corporate forces in the right-wing movement had begun to bankroll a conservative movement at this point – giving enormous amounts of money to create advocacy groups, think tanks, magazines, and other means of pushing conservative messages. One of their goals was to eliminate the Fairness Doctrine – and in 1987 they succeeded. At right about this time with no more obligation to be fair or present both sides of controversial issues, right-wing talk radio took off. Simon Rosenberg publicized this sequence of events – and Steve Rendall at Commons Dreams gives an overview of the liberal take on this history which is worth a read. Since then, conservative talk radio has mobilized the conservative movement – and perpetuated quite a few lies and distrortions. 

In this context, you can see why some Democrats want to bring back the Fairness Doctrine.  After all, if Steve Marlsburg, nemises of this blog, can use the public airwaves to talk for two hours about how Barack Obama is evil and no good people can support him and go on and on supporting this with one lie after another distortion, wouldn’t everyone benefit from a bit of the other side getting a word in edgewise? And if a handful of media titans control almost all of the media, the concentration of power in their hands ensures that opinions they agree with are aired – and oftentimes, that opinions they disagree strongly with are not aired. 

In this context, Bill Clinton mused about reimposing the Fairness Doctrine on a liberal radio show; Democratic Senator Stanbow wants hearings on something like a Fairness Standard; Senator Tom Harken was quoted on another liberal talk radio show saying, “We gotta get the Fairness Doctrine back in law again;” and a number of other Senators and Congressman have similarly suggested something be done to restore “fairness” to the radio. ((It’s worth noting that all of these more recent comments were made by politicians on liberal talk radio – and only after being prompted by their hosts.)) Barack Obama though made it clear during his campaign that he did not support this – and reiterated his opposition again after he took office.

And with good reason: reimposing the Fairness Doctrine might sound like a decent idea given the above history. But there are some major reasons not to:

  1. It won’t accomplish much. Cable and broadcast television shows already give alternative views on controversial issues. They might present one side much better than the other (think Hannity and Colmes) but they give the other side a platform as well. Listeners to conservative talk radio today choose to listen to right-wing nutjobs who don’t try to balance their opinion with facts over more serious sources of news. They have other options if they want them.
  2. It would endanger the important goal of net neutrality. Conservatives are already calling net neutrality a “Fairness Doctrine for the internet.” This is a ridiculous claim – but it will gain some credence if those who support net neutrality also support the Fairness Doctrine. The right continues to push this meme [pdf] and has been having some success in polarizing the support for net neutrality, picking off those right-wingers who are most gullible. As I wrote earlier about this campaign to link these two very different policy ideas: 

    3. [T]his propaganda campaign [to link net neutrality and the Fairness Doctrine] does not seem directed to the public at large, but at conservative activists. The Fairness Doctrine is not something that gets the blood of the average American boiling. But it does evoke a Pavlovian response among conservative activists and right-wing radio listeners. And although these groups are not large enough to force their way, they are large enough to derail the political conversation and make it harder to enact this obvious policy.

  3. It would also endanger other goals such as breaking up media monopolies. In terms of other issues, Rush Limbaugh in his recent Wall Street Journal op-ed began to lump in rules about “local content” and “diversity of ownership” as the Fairness Doctrine by other means. Rush Limbaugh here is clearly carrying water for Clear Channel Communications who recently gave him a $400 million contract and who would be threatened by rules regarding local content and diversity of ownership as they already own such a large portion of America’s radio stations. Byron York followed Limbaugh’s lead repeating the same talking points in a recent column.
  4. It will provoke a backlash. Right now, aside from the musings of a few prominent liberals and impassioned editorials from liberal talk radio hosts themselves, there is no serious effort to push this idea forward. Liberal ideas are out there – on newspaper editorial pages, on political opinion shows, and most of all on the web. The people most excited by the revival of the Fairness Doctrine are the conservative talk radio hosts and the right-wing movement they lead. I follow this matter closely – reading most articles published on it – and almost every article I read is from some conservative publication or blog hyping the threat to free speech and all that is good and holy that is the Fairness Doctrine. Which is why the Heritage Foundation has this piece of trash written by Rory Cooper insisting that the White House is “rushing” to the Fairness Doctrine – despite the aforementioned opposition by the White House. (A propaganda outlet such as Heritage has not patience for such “subtlties” as facts.) Which is why Senator Inhofe is promoting the view that the Fairness Doctrine as yet another assault on the Christians. Which is why Bryon York recently penned a column linking the Fairness Doctrine to breaking up media monopolies as assaults on “media freedom.” Which is why the World News Daily has distorted Senator Sherrod Brown’s comments to claim he supports the Fairness Doctrine. Which is why Rush Limbaugh and the rest of the talking heads can’t shut up about it. This is a fight the right wants – and for good reason. It plays into the liberal stereotypes conservatives promote – especially the idea of a nanny-state attempt to control free speech. It makes the right look important; it makes the Democrats look petty; if the right loses, they will be able to claim the mantle of victimhood that conservatives seem to relish as much as any other group. 
Categories
Barack Obama Economics Financial Crisis Humor Videos

Jon Stewart takes on Santelli and the Stock Market

[digg-reddit-me]Yesterday, I tried to take on some of the opposition to Obama’s handling of the financial crisis. I think I did a fine job – but I’m certainly no Jon Stewart. Pointing out that the stock market tanked after Ronald Reagan became president and after we won World War II, he takes on this farcical idea that the stock market is some sort of  rational indicator of economic conditions:

(I’ll post full links when TDS posts them.)

The stock market isn’t a rational creature – it is subject to panics and irrational exuberance and sour moods and churlishness and massive misjudgments. To judge whether an economic plan is working or not requires time and wisdom – neither of which are found in the daily results of the Dow Jones Industrial Average.

Of course, Stewart founds some time to mock Rick Santelli on the way:

Humor makes it all go down so much easier.

There’s no denying the inchoate anger, not fully formed, matured, directed, or realized, that some seek to target Obama with. The problem is that these Santellis and these Limbaughs and the rest of them have no more to offer than the mythical Howard Beale of Network – whose famous rants clearly inspired Santelli’s on-air persona:

Watching this famous clip today is eerie – as it echoes into our own time – and makes Santelli’s performance seem all the more post-modern. 

In the end, it comes down to this:

As a nation we have a choice to do nothing, to let Obama implement his plan, or to come up with a better one. In my opinion, Obama’s opponents have yet to offer a serious alternate plan. Which is why I’m sticking with him on this, at least for now.

Continue reading “Jon Stewart takes on Santelli and the Stock Market”