Saturday, February 27, 2010

Republican Senator Lindsey Graham is for a carbon tax

This is fantastic news. A carbon tax is far superior to cap and trade and it will lead to energy independence, more jobs, and cleaner air. What's not to like. We need some other Congressmen to stand up and join him.

FCC Needs to Reconfigure Radio Spectrum

Richard Thaler has some great ideas for raising money and improving information access for all.

Thursday, February 25, 2010

A Parable About How One Nation Came to Financial Ruin

"... Among the suggestions of the Good Father were the following. First, he suggested that Basicland change its laws. It should strongly discourage casino gambling, partly through a complete ban on the trading in financial derivatives, and it should encourage former casino employees—and former casino patrons—to produce and sell items that foreigners were willing to buy. Second, as this change was sure to be painful, he suggested that Basicland's citizens cheerfully embrace their fate. After all, he observed, a man diagnosed with lung cancer is willing to quit smoking and undergo surgery because it is likely to prolong his life.

The views of the Good Father drew some approval, mostly from people who admired the fiscal virtue of the Romans during the Punic Wars. But others, including many of Basicland's prominent economists, had strong objections. These economists had intense faith that any outcome at all in a free market—even wild growth in casino gambling—is constructive. Indeed, these economists were so committed to their basic faith that they looked forward to the day when Basicland would expand real securities trading, as a percentage of securities outstanding, by a factor of 100, so that it could match the speculation level present in the United States just before onslaught of the Great Recession that began in 2008.

The strong faith of these Basicland economists in the beneficence of hypergambling in both securities and financial derivatives stemmed from their utter rejection of the ideas of the great and long-dead economist who had known the most about hyperspeculation, John Maynard Keynes. Keynes had famously said, "When the capital development of a country is the byproduct of the operations of a casino, the job is likely to be ill done." It was easy for these economists to dismiss such a sentence because securities had been so long associated with respectable wealth, and financial derivatives seemed so similar to securities...."

by Charlie Munger, Vice Chairman of Berkshire Hathaway

Wednesday, February 24, 2010

Foreign Occupations = Entitlement Programs

Andrew Sullivan gets it right. If we demand a timeline for welfare recipients here at home to get back to work, why don't we do the same for the huge welfare we send to foreign countries in the form of occupation. At some point, those countries citizens have to be responsible for themselves.

Here's his post:

Empire For Ever

Tom Ricks makes it. He argues that "the best way to deter a return to civil war is to find a way to keep 30,000 to 50,000 United States service members in Iraq for many years to come." His final paragraph:

As a longtime critic of the American invasion of Iraq, I am not happy about advocating a continued military presence there. Yet, to echo the counterinsurgency expert David Kilcullen, just because you invade a country stupidly doesn’t mean you should leave it stupidly. The best argument against keeping troops in Iraq is the one some American military officers make, which is that a civil war is inevitable, and that by staying all we are doing is postponing it. That may be so, but I don’t think it is worth gambling to find out.

I believe - and have said so for some time - that the US occupation will likely be in place as long as Iraq remains ungovernable. Which means the rest of my lifetime.The surge failed. The idea it succeeded in its critical criterion was and is untrue.

If Obama does not have the courage to withdraw regardless of the consequences, he will end up entrenching Bush's insane gamble, not ending it, as he was elected to do. If Obama increases troop levels in Afghanistan and extends Bush's timetable for leaving Iraq, why on earth did we support him? Those were McCain's policies. Why have elections if they are essentially meaningless?

Occupations are the foreign equivalent of entitlement programs. They never end. Why should Americans be denied basic access to health insurance because the money is going to sustain 50,000 troops in Germany, for Pete's sake, or to tamp down sectarian conflicts that have existed for centuries in a country we had no troops in for all of US history until 2003?

When will this madness end? Do we really have to go completely bankrupt and be forced to withdraw from these anachronistic pretensions? Are seven years not enough?

Monday, February 22, 2010

The Bankrupty Boys

Rarely in the past did I find Paul Krugman's columns interesting. But his latest is quite a good read.

"For readers who don’t know what I’m talking about: ever since Reagan, the G.O.P. has been run by people who want a much smaller government. In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub.”

But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?

The conservative answer, which evolved in the late 1970s, would be dubbed “starving the beast” during the Reagan years. The idea — propounded by many members of the conservative intelligentsia, from Alan Greenspan to Irving Kristol — was basically that sympathetic politicians should engage in a game of bait and switch. Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.

And the deficit came....

... Why are Republicans reluctant to sit down and talk? Because they would then be forced to put up or shut up. Since they’re adamantly opposed to reducing the deficit with tax increases, they would have to explain what spending they want to cut. And guess what? After three decades of preparing the ground for this moment, they’re still not willing to do that.

In fact, conservatives have backed away from spending cuts they themselves proposed in the past. In the 1990s, for example, Republicans in Congress tried to force through sharp cuts in Medicare. But now they have made opposition to any effort to spend Medicare funds more wisely the core of their campaign against health care reform (death panels!). And presidential hopefuls say things like this, from Gov. Tim Pawlenty of Minnesota: “I don’t think anybody’s gonna go back now and say, Let’s abolish, or reduce, Medicare and Medicaid.”

What about Social Security? Five years ago the Bush administration proposed limiting future payments to upper- and middle-income workers, in effect means-testing retirement benefits. But in December, The Wall Street Journal’s editorial page denounced any such means-testing, because “middle- and upper-middle-class (i.e., G.O.P.) voters would get less than they were promised in return for a lifetime of payroll taxes.” (Hmm. Since when do conservatives openly admit that the G.O.P. is the party of the affluent?)

At this point, then, Republicans insist that the deficit must be eliminated, but they’re not willing either to raise taxes or to support cuts in any major government programs. And they’re not willing to participate in serious bipartisan discussions, either, because that might force them to explain their plan — and there isn’t any plan, except to regain power."

Sunday, February 21, 2010

GOP Can't Find Its Own Party Line

Remember this from House Republican Leader John Boehner (R-OH) and House Republican Whip Eric Cantor (R-VA), in a letter to White House Chief of Staff Rahm Emanuel, dated Feb. 8, 2010:

"If the President intends to present any kind of legislative proposal at this discussion, will he make it available to members of Congress and the American people at least 72 hours beforehand? Our ability to move forward in a bipartisan way through this discussion rests on openness and transparency."

Different times, different circumstances...

Appearing on Fox News Sunday today (Sunday, Feb. 21), Senate Minority Leader Mitch McConnell (R-KY) criticized the White House's plan to post a health care reform proposal online, just days before the upcoming health care summit.

"You know, apparently we're going to be there most of the day and have an opportunity to have a lot of discussion," said McConnell. "But if they're going to lay out the plan they want to pass four days in advance, then why are -- what are we discussing on Thursday?"

Hat tip to Andrew Sprung

Friday, February 19, 2010

Consider the German Economic Model

Thomas Geoghegan's recent article "Consider the Germans" in Harpers (March 2010) lays out a pretty convincing, in my mind, argument for adopting the German model of works council, co-determined board, and wage-setting institutions as a way to strengthen the long-term prospects of the US economy. As he points out, Germany has created a high-wage, strongly unionized economy that up until recently has led the world in exports, and certainly has strongly beaten the U.S., even though the U.S. has "almost every comparable advantage" - including "more research spending, more land, more labor, more capital, and higher levels of formal education."

The co-determined board especially seems to provide a good check on runaway executive pay. I've long been angry at an American system that continues to reward executives at increasing rates relative to employee pay at the lowest level. According to the Economic Policy Institute, "in 1965, U.S. CEOs in major companies earned 24 times more than an average worker. In 2005, the average CEO in the United States earned 262 times the pay of the average worker, earning more in one day than the average worker in a whole year." It's probably even more today.

This practice suggests that CEO's are the most important part of a business, without acknowledging that a CEO's success is based in large part on how the whole team functions. If the company does well, all team members should be rewarded and it could be argued they should be rewarded as much or more than the executives. Instead, we laud CEO's like former GE CEO Jack Welch in our press giving them far too much credit. As recent history has shown, Welch's business decisions for which he was praised and put on countless magazine covers (as well as given millions in a sweetheart retirement package that continues to this day, even after the SEC made Jack return some of it) were actually detrimental to GE in the long run. That's just one example.

Here's an idea: Take any large company and remove the CEO for a month (or even a week), say he's out sick. Now take the same company, and starting from the bottom in terms of wages, remove every worker for the month until their cumulative wages equal the CEO's entire compensation. Obviously, it would differ for each company, but let's say it's the bottom 5% of the workforce. Now, let's see whose more important to the functioning and success of the company.

What is the best approach to changing the status quo? Is it just an awareness issue, or do people just not care, or are there just no institutions strong enough to counter the CEO-Media Complex?

And one final question. How can conservatives argue with a straight face for closing our borders to immigrants while they are simultaneously preaching for free, unregulated markets? The labor market is a huge part of the market system. If they are not willing to allow labor to move freely across borders, then it seems their whole principle of free, unregulated markets does not stand on firm ground. Why don't the media or anyone else point out this hypocritical stance? Instead, we hear this principle preached to us again and again everyday in all forms of media, yet it obviously has limitations. So why can't we be honest about the fact that those who espouse free markets are actually unwilling to support them if truly put into practice?

Tuesday, February 2, 2010

Naughty Bits in the Bible

From a review of The Uncensored Bible:

In court we swear to tell the truth with a hand placed on the Bible. But in the book itself, Jacob, nearing death in Egypt, asks Joseph to swear an oath not to bury him there by “put[ting] your hand under my thigh” (Gen. 47:29). Earlier in Genesis, Jacob wrestles with God, who touches “the hollow of his [Jacob’s] thigh” (32:25). “Thigh” happens to be a biblical euphemism for male genitalia; it’s from Jacob’s “thigh” or “loins” that his numerous offspring sprang.

The practice of swearing an oath while touching one’s or someone else’s testicles was common in the ancient Near East (Abraham also orders a servant to do just that in Genesis 24:2). Its linguistic memory survives in our word “testify”—testis being the Latin both for “witness” and the male generative gland.

Hat tip to Alex Tabarrok of MR