Friday, December 2, 2011

Mike Konczal takes a hard look at the Obama administration's handling of the economy and doesn't like what he sees:
With job growth failing to exceed population growth each month, and with no serious increase in the percent of Americans working, 2011 was a lost year for the economy.

Lost years for the economy have major consequences. Beyond the human misery that results, they put the entire project of liberal governance at risk. Choices made early by this administration resulted in no advancement on three fronts... fiscal policy... monetary policy... and dealing with the problems in the housing market....

In the 2010 State of the Union, President Obama stated that he would freeze 2011 discretionary spending even though unemployment was projected to be above 8 percent... This conventional wisdom gave the Republicans the leverage they needed to destroy any pro-active economic agenda.

Thus the Democrats spent 2011 -- which could have been a crucial year for the recovery -- in a futile debate with the Republicans over the budget. From the original government shutdown in April to the debt ceiling fights in July, Republicans showed that they were capable of making even the most trivial changes to the budget costly to the Democrats. As time went on the administration became ever more willing to make huge concessions to get a deal and restart the economy, and each time was left at the table....

Monetary policy is another avenue that spent 2011 in limbo... In the midst of collapsing prices, President Franklin Roosevelt in a fireside chat in 1933 announced that "[i]t is the Government's policy to restore the price level first"-- a signal to the markets that the New Deal was going to take monetary policy very seriously. President Obama has shown less interest in monetary policy, reappointing the moderate Republican Ben Bernanke to office and leaving [Fed board] seats open for years.... Obama's lack of movement on recess appointments has left the Fed tilted to the right. Since the other people that sit on the Federal Reserve are hard conservatives appointed by banks, getting people concerned about unemployment there is even more important.

At the end of 2011, key liberals... started talking about a new way of doing Federal Reserve policy based on "nominal GDP targeting" which would allow for higher inflation in weak economic times. Meanwhile, Chicago Federal Reserve President Charles Evans put out a plan to allow 3 percent inflation while unemployment is above 7 percent. These are good ideas; the administration could put them into practice by filling vacancies with appointees who understand their value.

The third important element of the recovery is restoring the housing sector... Foreclosures are a lose-lose-lose, devastating homeowners and neighborhoods, ravaging municipality budgets and hitting the creditors themselves... The most obvious way to deal with this is to allow courts to write down mortgage debt in bankruptcy, but the Obama administration passed on requiring bankruptcy modifications...

Ever since then, abuses in the mortgage payment "servicing" system-ranging from robo-signing to phantom foreclosure referrals to illegal foreclosures on servicemen overseas-have been reported by both community activists and from financial analysts. In late 2010, the largest banks voluntarily halted foreclosures to investigate before going back to business as normal.

The administration could have pushed hard on investigating the foreclosure market. Instead they pushed for quick settlement with the largest banks...

In 1938, shortly after premature fiscal and monetary tightening triggered a recession, the economist John Manyard Keynes wrote a worried letter to President Roosevelt. He was, he wrote, "terrified lest progressive causes in all the democratic countries should suffer injury, because you have taken too lightly the risk to their prestige which would result from a failure measured in terms of immediate prosperity. There need be no failure. But the maintenance of prosperity in the modern world is extremely difficult; and it is so easy to lose precious time."

Everything progressives have fought for -- from the policy advancements of the Obama administration like healthcare and financial reform to the New Deal and Great Society programs that remain, like Social Security and Medicare -- has been at risk as a result of this Great Recession. A longer period of sustained joblessness will wreck the working class and devastate the budget, leaving our economy even weaker.... There are ways forward; it is just a question of whether the administration is prepared to take them. It is easy to lose precious time, and we've just lost a full year with nothing to show for it.

Thursday, December 1, 2011

Taxing the 1%

Nick Hanauer, a 0.1%-er on taxing the rich... his whole op/ed is worth a look, but here's the best quote, which helps explain why top-heavy societies don't work:
Since 1980, the share of the nation's income for fat cats like me... has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007... In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.

One reason this policy is so wrong-headed is that there can never be enough super-rich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don't buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.

If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.

Tuesday, November 22, 2011

The Roots of Police Violence

There have been way too many instances of police violence against peaceful protestors during the OWS movement (see the eleven videos on Garance Franke-Ruta's post at the Atlantic for examples). Glenn Greenwald gets behind the roots of all the recent police violence:

The now-viral video of police officers in their Robocop costumes sadistically pepper-spraying peaceful, sitting protesters at UC-Davis shows a police state in its pure form. It's easy to be outraged by this incident as though it's some sort of shocking aberration, but that is exactly what it is not... 
There are several points to note about this incident and what it reflects:
(1) Despite all the rights... guaranteed by the U.S. Constitution, the reality is that punishing the exercise of those rights with police force and state violence has been the reflexive response in America for quite some time...
The intent and effect of such abuse is that it renders those guaranteed freedoms meaningless. If a population becomes bullied or intimidated out of exercising rights offered on paper, those rights effectively cease to exist. Every time the citizenry watches peaceful protesters getting pepper-sprayed -- or hears that an Occupy protester suffered brain damage and almost died after being shot in the skull with a rubber bullet... they become fearful... of exercising their rights in a way that is... threatening to those in power. That's a natural response, and it's exactly what fear imposed by all abusive police state actions is intended to achieve...
Implanting fear of authorities in the heart of the citizenry is a far more effective means of tyranny than overtly denying rights.... Overzealous prosecution of those who engage in peaceful political protest... are all about deterring meaningful challenges to those in power... Rights are so much more effectively destroyed by bullying a citizenry out of wanting to exercise them than any other means.
(2) Although excessive police force has long been a reflexive response to American political protests, two developments in the post-9/11 world have exacerbated this.
The first is that the U.S. Government -- in the name of Terrorism -- has aggressively para-militarized the nation's domestic police forces...
The second exacerbating development is more subtle but more important: the authoritarian mentality that has been nourished in the name of Terrorism. It's a very small step to go from supporting the abuse of defenseless detainees (including one's fellow citizens) to supporting the pepper-spraying and tasering of non-violent political protesters. 
(3) Beyond the light it is shedding on how power is really exercised... this UC-Davis episode underscores why... the Occupy movement is one of the most exciting, inspiring and important political developments in many years. What's most striking about that UC-Davis video isn't the depraved casualness of the officer's dousing the protesters' faces with a chemical agent; it's how most of the protesters resolutely sat in place and refused to move even when that happened... We've repeatedly seen acts of similar courage spawned by the Occupy movement.
It was the NYPD's abusive pepper-spraying, followed by Mayor Bloomberg's lawless destruction of the Zuccotti Park encampment, that prompted far more people than ever to participate in the next march across the Brooklyn Bridge. A tear gas attack on Occupy Oakland was followed by a general strike of 20,000 people. And this truly extraordinary, blunt and piercing open letter demanding the resignation of the heinous UC-Davis Chancellor Linda P.B. Katehi was written by a young, untenured Assistant Professor -- Nathan Brown -- who obviously decided that his principled beliefs outweigh his careerist ambitions.
This is the most important effect of the Occupy movement: acts of defiance, courage and conscience are contagious.... The protest movement is driving the proliferation of new forms of activism, citizen passion and courage, and -- most important of all -- a sense of possibility...

Monday, November 21, 2011

Where's the Super Committee for Job Creation?

Mark Thoma, in a column in the Fiscal Times, wonders why we don't have a Super Committee for Job Creation:
The bipartisan Super Committee trying to forge a politically acceptable path for deficit reduction ended in a super fail, and one of the big reasons... is disagreement over the extension of the Bush tax cuts for high income households. 
[Democrats]... argue that the present tax structure places too little burden on the wealthy and too much on the middle and lower classes, and therefore the expiration of the Bush tax cuts... would make taxes more progressive and more equitable without endangering the recovery. Allowing the cuts to expire would also provide $800 billion in revenue over the next ten years and this would help preserve important social programs.
The failure... to come to agreement on the Bush tax cuts does not end the battle... If Congress does nothing... the two percent payroll tax cut [will] expire in December, and extended jobless assistance [will] also [expire].
I don't expect Republicans to put the unemployed at the forefront of their policy agenda. It comes as no surprise that they would insist on tax cuts for the wealthy despite their purported concern for the deficit, and then sing a different tune for the working class...
But I do expect Democrats to be the champions of the poor, the underprivileged, and the unemployed. When... did the need for deficit reduction... come to be more important than the needs of households struggling with the recession? Why aren't Democrats talking about the need to help the unemployed at every possible opportunity? Where's the Super Committee for Job Creation?
President Obama and many Democratic members of Congress have endorsed the idea that budget deficits are biggest threat we face... and this has helped to convince the public that the national debt is our biggest concern, and that we simply do not have the resources to.. help with job creation.
The main cause of our present deficit is a combination of the recession, the Bush tax cuts, and wars, and those three items will continue to be the main source of deficits in the near future. But Democrats have allowed Republicans to portray the problem as out of control spending on social programs that require super special commissions to resolve immediately, and it will be difficult to change that perception now....  
But it's important that Democrats at least try since any success at all would make a huge difference to the unemployed... I would like to see Democrats adopt a tougher stance on the need for higher income households to pay more in taxes so that important social programs can be preserved. But right now our main problem is the unemployment crisis. 

Saturday, November 19, 2011

William K. Black on OWS

William K. Black was one of the premier federal litigators during the S&L crisis. He spoke last week at Occupy LA:
In the Savings and Loan crisis, which was 1/70th the size of this crisis, our agency made over 10,000 criminal referrals, and that resulted in the conviction on felony grounds of over 1,000 elites in what were designated as major cases...
... Epidemics of fraud [are] led from the C-Suite, from the CEOs and CFOs... in the Enron era, [there were] always frauds from the very top of the organization, and in this crisis, the frauds came from the top of the organization again. 
But what's different in this crisis? In this crisis, the same agency that I worked with, that made over 10,000 criminal referrals, in a tinier crisis, made zero criminal referrals. They got rid of the entire function. And so there are zero convictions of anybody in the elite ranks of Wall Street.
And if they can defraud us with impunity then they will cause crisis after crisis and they will produce maximum inequality. The group that has the audacity to refer to itself as the "productive class" is the largest destroyer of lives, of jobs and of wealth of any group ever produced in this world. 
They wiped out six million existing jobs and five-to-six million jobs that would have been created. As you've heard they've left 26 million Americans wanting full-time work with no ability to find that work... 
And then they had the nerve to say [that] they are "the productive class"... [but] they are mass destroyers of jobs... 
Everybody opposed our re-regulation of the [financial] industry. The big deregulation bill... occurred in 1982, and became effective in 1983... but by November of 1983 we were [trying to re-regulate] the Savings and Loan industry, and we were called re-regulators because that was the greatest swear-word the Reagan Administration believed existed; to call people "re-regulators". But [opposition to re-regulating] was not partisan, a majority of the members of the [Democratically-controlled] House... co-sponsored a resolution saying, "do not... re-regulate"...
The Reagan Administration was so outraged that we were closing insolvent S&L's with great political support, that the OMB threatened to file a criminal referral against the head of our agency on the grounds that he was closing too many insolvent banks. Have we had that problem recently? Do you see Geithner out trying to close the big, powerful banks?
We can prosecute these frauds... the Federal Housing Finance Administration (FHFA) has just filed complaints saying seventeen of the largest banks in America committed massive fraud, endemic fraud, and that there is a paper trail proving that they did so. 
So where is the justice department? Why is it not indicting these clear frauds?
... Remember, it is the lenders who put the "lies" in "liars loans", not the borrowers. We know this empirically. And we stopped that [in 1982] because, [as regulators] that was insane. So guess what happened, the leading folks making liars loans gave up their federal charter; gave up federal deposit insurance and became a mortgage bank, for the sole purpose of escaping regulation. 
And they changed their name... to Ameriquest... the leading predatory lender that, in addition to making liars loans, every day, every day of the week, targeted minorities, to destroy [minorities'] wealth... they targeted latinos, they targeted blacks, and they were caught three times doing this, and the justice department refused to prosecute, instead [Ameriquest] settled for $400 million, [but] guess what happened to the head of Ameriquest? ... we [made] him our ambassador to the Netherlands. 
Why do you think we made him our ambassador to the Netherlands? Because he was the leading political contributor to the President of the United States of America. 
And that's bad, but what comes next is far worse, remember [that Ameriquest] is the most notorious fraud in the nation. [It is a company that] targets minorities, [and] everybody knows it does so, [but] two entities rush to acquire [Ameriquest's] personnel and business, and their names? Citicorp, and Washington Mutual, who become two of the most notorious frauds in [the subprime crisis]...
When we prosecuted [in the S&L crisis] we had a 90% conviction rate, [even] when [the defendants] had the best criminal defense lawyers in the world, and they spent money like water to protect the CEO from going to prison. So when they tell you, "no one can stop this", it is utter nonsense. 
[I] will leave you with these statistics: The FBI warned of this in September of 2004, in open testimony. It warned, expressly, that there was an... epidemic of mortgage fraud, and it predicted it would cause a financial crisis. 
If that's not enough, the [mortgage] industry's own anti-fraud experts, in 2006, in writing, went to every mortgage banker in America... and said three things:
1.) "Stated income loans" are an open invitation to fraudsters
2.) The incidence of fraud in [stated income loans] is 90%
3.) These loans are deserve the phrase... "liars loans" because they are pervasively fraudulent
What did the industry do after it was warned? Did it stop making these loans? No. It massively increased the amount of these loans such that by 2006, one out of every three home loan in America was a "liar's loan" and that's why we have a crisis. And it came from the very top of these organizations, and it went through, as the FHFA said in its complaint, the largest banks in the world, [which] were endemically fraudulent.  
It is not a few rotten apples, it is an orchard of one-percenters who are rotten to the core. 

Friday, November 11, 2011

Taibbi on OWS

Taibbi article from yesterday. It's worth reading in its entirety:
I have a confession to make. At first, I misunderstood Occupy Wall Street.... my initial impression was that it would not be taken very seriously.... [M]odern finance is a giant mechanical parasite that only an expert surgeon can remove. Yell and scream all you want, but [Blankfein] and his fellow financial Frankensteins are the only ones who know how to turn the machine off.
That's what I was thinking during the first few weeks of the protests. But I'm beginning to see another angle. Occupy Wall Street... [is] about providing a forum for people to show how tired they are not just of Wall Street, but everything. This is a visceral, impassioned, deep-seated rejection of the entire direction of our society...
We're all born wanting the freedom to imagine a better and more beautiful future. But modern America has become a place so drearily confining and predictable that it chokes the life out of that built-in desire.
There's no better symbol of the gloom and psychological repression of modern America than the banking system, a huge heartless machine that attaches itself to you at an early age, and from which there is no escape... This is why people hate Wall Street. They hate it because the banks have made life for ordinary people a vicious tightrope act; you slip anywhere along the way, it's 10,000 feet down into a vat of razor blades that you can never climb out of.
That, to me, is what Occupy Wall Street is addressing. People don't know exactly what they want, but as one friend of mine put it, they know one thing: FUCK THIS SHIT! We want something different: a different life, with different values, or at least a chance at different values.
And here's one more thing I was wrong about: I originally was very uncomfortable with the way the protesters were focusing on the NYPD as symbols of the system. After all, I thought, these are just working-class guys from the Bronx and Staten Island...
But I was wrong. The police in their own way are symbols of the problem. All over the country, thousands of armed cops have been deployed to stand around and surveil and even assault the polite crowds of Occupy protesters. This deployment of law-enforcement already dwarfs the amount of manpower that the government "committed" to fighting crime and corruption during the financial crisis. One OWS protester steps in the wrong place, and she immediately has police roping her off like wayward cattle. But in the skyscrapers above the protests, anything goes.
This is a profound statement about who law enforcement works for in this country.... There have already been hundreds of [Occupy] arrests, which is hundreds more than we ever saw during the years when Wall Street bankers were stealing billions of dollars from retirees and mutual-fund holders and carpenters unions through the mass sales of fraudulent mortgage-backed securities.
It's not that the cops outside the protests are doing wrong, per se, by patrolling the parks and sidewalks. It's that they should be somewhere else. They should be heading up into those skyscrapers and going through the filing cabinets to figure out who stole what, and from whom. They should be helping people get their money back. Instead, they're out on the street, helping the Blankfeins of the world...
People want out of this fiendish system, rigged to inexorably circumvent every hope we have for a more balanced world. They want major changes. I think I understand now that this is what the Occupy movement is all about.... Eventually it will need to be specific about how it wants to change the world. But for right now, it just needs to grow... It doesn't need to tell the world what it wants. It is succeeding, for now, just by being something different.

Thursday, November 10, 2011

Journamalism - Gregg Easterbrook Edition (Vol. Eleventy Hundred)

Easterbrook's up to his old, stupid tricks again, pretending to be the "middle" while really being as wingnutty as ever. His latest column praises Mitt Romney for being a similar "middle" wingnut and then he does a drive-by on Social Security. 

Easterbrook believes Mitt Romney should be praised for threatening to take away benefits for seniors and poor people. I'll point out everything wrong with Easterbrook's column below, but I would also like to point out that I commented on the article (though it was perhaps a little ranty) and had my comments deleted by Reuters.

I'm not sure they deserved to be. And if Reuters wants to consider itself a reputable news organization it probably ought to think long and hard about letting Easterbrook write the crap he writes, misinforming his readers in the process and deleting comments... that way lies RedState (and no, I will not link to RedState).

Anyway, here's how Easterbrook starts. He opens by praising Romney for what Easterbrook feels is a "gold" statement:
"We cannot with moral conscience borrow trillions of dollars that can only be repaid by our children."
Easterbrook comments:
Reckless borrowing, with the invoice passed to our children – nobody in power in Washington right now will be asked to repay the national debt – is not just numbers, it is a moral issue. Romney recognizes this.
Both Easterbrook and Romney are guilty of throwing out pointless platitudes here, and neither displays the slightest understanding of economics. The federal government can currently borrow billions of dollars for 2% per year for ten years. If the economy improves (without further fiscal policy action, this is unlikely to happen immediately) then the government really should be able to inflate away the interest payments on all those billions (and probably a lot of the principal as well). They should be able to do that long before the ten years is even up. Is it reckless for the government to borrow billions when the market is willing to shove billions at it at such ridiculous low rates? No.

Conversely, is it reckless of the government to let the opportunity to borrow at ridiculously low rates pass without taking advantage of it? Yes, it is. Especially when the government could use those billions to invest in infrastructure and provide jobs that might re-inflate the economy and then provide a much broader and healthier tax base to pay off the debt.

The truly horrifying part of the article is when Easterbrook follows Romney into his baseless attack on Social Security (as is typical of every single wingnut in existence). Easterbrook calls the following line of crap, '24-karat gold':
Romney placed his hand on the third rail of American politics, by proposing Social Security cutbacks. He said, “I believe we can save Social Security with a few commonsense reforms. First, there will be no change for retirees or those near retirement. No change. Second, for the next generation of retirees, we should slowly raise the retirement age. And finally, for the next generation of retirees, we should slow the growth in benefits for those with higher incomes.”
Easterbrook adds to Romney's nonsense by saying (emphasis mine):
The Social Security trustees report that the system can currently pay only about three-quarters of scheduled benefits. In 2010, the report notes, that system wasn’t even self-sustaining, having to draw on the federal debt. If benefits aren’t trimmed, either taxes must rise or the federal deficit must accelerate anew. Neither would be good for the country, and that’s assuming China would keep loaning us additional money, which may not be an accurate assumption.... Many seniors need their Social Security checks, but those who don't should no longer receive them. 
Where to begin with all this lunacy? First of all, you knew that Easterbrook would say that raising taxes is an impossibility didn't you? But raising taxes to the levels of the mid-90s, you know back when Bill Clinton was busy destroying the economy, would completely fix Social Security's funding problems. Of course Easterbrook, being a wingnut, has completely ruled that out. He's also ruled out taxes on Wall Street, financial speculation, cuts to military spending... all of it. We only need to make small changes to fund Social Security for the next eighty years, but Easterbrook says those small changes are too much, instead we should cut benefits!!!

Next Easterbrook simply lies about the Social Security trustees report when he claims that the system can only pay 3/4 or scheduled benefits. Easterbrook's lying because he knows that the report states that Social Security can pay FULL BENEFITS to everyone until 2036 (without making ANY adjustment whatsoever) but that, after 2036, if there have been absolutely no adjustments made to the fund's income, it will only be able to pay 77% of what it should to every retiree. And again, this is without any adjustment (meaning no tax increases on the wealthy, on Wall Street, on financial speculation, on ANYTHING). So is Easterbrook lying about this? Well, by not saying that the fund is fully healthy until 2036 and by not saying that it will only pay 77% of benefits AFTER 2036 (if no changes are made to the fund's income) he's trying to make a wingnut point by deliberately misleading his readers that the fund is not healthy NOW. (which, to me, amounts to an outright lie).

But this is typical, Easterbrook and Romney are doing their conservative duty to hammer a valuable, worthwhile social program by lying about its current funding.

Finally, Easterbrook lauds Romney for proposing that Social Security stop paying well-off retirees their benefits on the one hand, but saying we can't raise taxes on the other.

Well, first of all, not paying benefits to well-off retirees really amounts to a progressive tax, doesn't it? The well-off will be paying taxes for benefits they don't receive, so why not just raise taxes on the wealthy? Wouldn't that be easier? Raise taxes on the well-off and keep paying everyone seems like a much easier solution to me. And while the average person might not understand that 'means-testing' for Social Security benefits (which is what Easterbrook has proposed) amounts to a progressive tax, someone who's a Visiting Fellow at the Brookings Institution, a public intellectual, and has a paid gig writing for Reuters? Well, he really, really, reeeeally oughta understand this.

But very well, he doesn't. What he also doesn't understand about his moronic proposal is that means-testing for Social Security will also force the government to be more invasive of citizens' private lives. To determine if a person should or should not receive Social Security the federal government will now have to determine not just a private person's wealth, but their dependents, their monthly outlays and a whole host of other information. And they'll probably have to do this regularly. Who the fuck wants that? Why not just leave the well-funded program the way it is, so that when you reach eligibility you get Social Security, no questions asked. And why not fund that system by raising taxes on the rich? Um, of course, all that's already been ruled out before even starting.

Just typical.

UPDATE: I forgot that somewhere in Easterbrook's idiocy he mentioned the threat of China not buying our debt anymore. But remember, if China stops buying Treasuries, that would be a good thing. Which once again proves Easterbrook is a complete ignoramus on all matters economic. 

Thursday, November 3, 2011

Taste, Wine, and Not Understanding Permutations

Jonah Lehrer wrote an article on Wired discussing the limited sense of taste and how taste can be easily fooled. But he's wrong on nearly all fronts. Here's his opening:
Let's be blunt: The tongue is really dumb. Unlike the rest of our sensory organs, which are exquisitely sensitive, that lump of exposed muscle sitting in the mouth is a crude perceptual device, able to only detect five different taste sensations... [but], we are convinced that the tongue is remarkably sensitive, able to perceive all sorts of subtle flavors. That's why we rhapsodize about the taste of our favorite foods and drinks... 

Obviously Lehrer doesn't understand the mathematics of permutations. Sure, the tongue is capable of only sensing five separate tastes: salty, sour, bitter, sweet and umami (the brothy, mouthwatery taste of meat is considered umami) but that doesn't mean taste isn't infinitely complex. In fact, proving that taste is infinitely complex is inestimably easy:

Let's mix only two of each of the five basic tastes together in perfect, 50/50 harmony. Doing that gets us up to 20 different tastes right away. To make this point in a visual manner, I've listed the combinations below (and keep in mind that Salty, Salty is definitely different than Salty, Nothing... for instance, if I pour a whole cup of salt into your mouth, it will taste a lot more like Salty, Salty, than if I put one grain of salt on your tongue, which will taste more like Salty, Nothing). Anyway, here are the 20 different tastes:

Salty, Nothing
Salty, Salty
Salty, Sour
Salty, Bitter
Salty, Sweet
Salty, Umami
Sour, Nothing
Sour, Sour
Sour, Bitter
Sour, Sweet
Sour, Umami
Bitter, Nothing
Bitter, Bitter
Bitter, Sweet
Bitter, Umami
Sweet, Nothing
Sweet, Sweet
Sweet, Umami
Umami, Nothing
Umami, Umami

As we can see, just from the "limited" five tastes we have a combination of 20 very distinct tastes the tongue can appreciate. At minimum.

But what if we take this a step further, and mix all five tastes together perfectly so that each 'taste' in any individual piece of food represents EXACTLY 16.67% of the food being eaten? Suddenly we get to 462 different tastes that our "dumb" tongues can sense. Below are four of the possible combinations:

Salty, Salty, Sour, Bitter, Sweet
Salty, Sweet, Sour, Bitter, Nothing
Salty, Sweet, Sweet, Bitter, Nothing
Sweet, Sweet, Bitter, Umami, Umami

You get the idea. But again, these 462 different combinations are still operating on a binary scale of taste (either it's salty or not salty, there is no in-between). But anyone who's eaten anything knows that we don't have a binary sense of taste. There are subtle and not-so-subtle degrees of taste.

As I mentioned before, if I drop one grain of salt in your mouth, it will taste different than if I ask you to swallow a teaspoon of salt. And if I pour an entire salt-shaker into your mouth you'll probably gag and ask for a gallon of water to wash it down and it will certainly taste different than the teaspoon of salt I gave you earlier. But to assume that we only have 462 different tastes means we have to assume only six degrees of possible salt combinations. Which basically means that this particular combination...

Salt, Salt, Salt, Salt, Salt, Salt

... tastes exactly the same to every single person on the planet. Which I'm not sure is true. And that means that the five "tastes" have to have more than six degrees to them, which raises the possibility that our "dumb" tongues can sense nearly infinite possibilities.

However, for the sake of argument, I'll assume that all tastes are all exactly the same and that "Salt, Salt, Salt, Salt, Salt, Salt" tastes exactly the same to every single person on the planet (hey, it might). If that's true then yes, there are only 462 different combinations of taste in any single piece of food. But wait, that still doesn't account for texture does it? No, of course not, how stupid of me!

How many textures should I add in? Um... hard, medium and soft with no further degrees or differences (but is there a difference in texture between the "hardest" and "softest" cheeses and "hardest" and "softest" breads? Of course there is, but for this experiment only one degree of hard, medium and soft will suffice). So if I add hard, medium and soft into the permutation formula suddenly we have 24,310 different possible tastes. And Lehrer's "dumb" tongue statement starts falling apart rather quickly.

But now we need to go further and add spiciness and temperature to the foods we're eating (and, by the way, there is an absolute CERTAINTY that temperature isn't a binary experience). Once we add those two into our formula now we're up to 352,716 different possible tastes that our "dumb" tongues can appreciate (and this number was arrived at using assumptions designed to limit it to the lowest possible integer).

In short, you don't have to be some egg-head scientist to understand all of this, all you need to understand is basic math. And any egghead scientist (or person who wrote a book titled "How We Decide") ought to understand basic math. If they did, then writing about the tongue only being able to sense five different tastes would be either misleading or stupid on their parts.

Are there are million different taste to red wine? No. Can wine reviewers be fooled, and does cheap wine often taste better than expensive wine? Absolutely. But that doesn't mean Lehrer's article makes any sense. No. And for proof, look at the last few paragraphs he offers:
A new study led by Adrian North of Heriot-Watt University adds to the indictment [of the tongue]... [He] has shown that when people drink wine to the accompaniment of music, they perceive the wine to have taste characteristics that reflect the nature of that concurrent music... Some of the participants sampled their glass to the tune of music identified... as powerful and heavy; others drank their wine to music rated earlier as subtle and refined; others to the tune of zingy and refreshing music; and lastly, the remaining participants drank their wine with mellow and soft music in the background....

After they'd savored their wine for five minutes, the participants were asked to rate how much they felt the wine was powerful and heavy; subtle and refined; mellow and soft; and zingy and refreshing. The results showed that the music had a consistent effect on the participants' perception of the wine. They tended to think their wine had the qualities of the music they were listening to.
He's gone off the rails here, because he's now delved into the world of Neuro-Linguistic Programming and doesn't realize it (and neither do the creators of the experiments, apparently). Humans are highly suggestible creatures. In fact, stupid things like not shaking hands with someone can be enough to disrupt their routine and put them into a suggestible trance. If the general atmosphere of a place, its music, or the specific words a waitress (or experimenter) says, are being used to validate something OTHER than NLP, then that study is inherently flawed.

But this is old news. Or, at minimum, this should be old news to someone who, again, wrote a book called "How We Decide". For Lehrer not to understand NLP is dumb, and for him to think that NLP actively negates a person's sense of taste is even dumber (and now I'm wondering if How We Decide is worth reading).

People can be influenced to say and do all sorts of things using NLP. If a test subject eats dog crap wrapped in a burrito and the experimenter uses the right NLP techniques afterward (certain auditory or visual cues), then the subject will probably repeat whatever the tester wants him to (i.e. that the dog crap burrito tasted like powdered sugar). This doesn't prove that the subject's taste buds are "dumb", it only proves that NLP is a much more powerful influencer than taste.

Is it a big surprise that we're more influenced by visual and auditory cues than olfactory or gustatory ones? Again, to someone like Lehrer this shouldn't be a surprise, and certainly shouldn't be something worth writing about. But the last few lines in his column contain a whole concoction of ways NLP affects people when  they're dining out and it's worth reading for that alone (even if Lehrer doesn't know it):
[T]his is why the ambience of a restaurant matters... For instance, when we eat a meal in a fancy place, full of elaborate place settings, fine porcelain and waiters wearing tuxedos, the food is going to taste different than if we ate the same food in a cheap diner.... [T]he music matters, but so does everything else. The tongue is easy to dupe.

Message from Anonymous to Wall St. and the Protesters

Wall Street... you sit before your trading screens, before your analysis, you are the players of the game, and you play very well. You rig the game even better. You care very little for the lives of average Americans, mere pawns. But you have strongly misread the world. Your complete lack of passion for your fellow man has left you with a grave error. The game is over Wall Street...

This is our Arab Spring, this is our time. Protesters, savor the smell of tear gas. Savor the feeling of pepper spray. Rejoice to your bruises and your tears. You are our generation's counterculture. You are our martyrs. Clench your fists and grind your teeth. Do not be moved and you will have fire breathed into you. Smile at the police. Ignore the pundits. The worse it gets, the stronger you become. The more hopeless your movement looks, the closer you are to success. You will be written into history. You will be backed up. We will not let your cries go idle. We will not allow your fire to be smothered. 

We are Anonymous.

Wednesday, October 19, 2011

Anti-Oligarchy is not Anti-Capitalism

Reports in the media (and most conservatives, natch) have been attempting to label the OWS movement as anti-capitalist, and the label seems to be catching on, but nothing could be further from the truth. What "We Are the 99%" clearly and directly signifies is that OWS is anti-oligarchy, not anti-capitalism. And anti-oligarchy is easily the best label for the movement.

Oligarchies have always been, and will always be, the greatest enemy of collective social good. Oligarchies concentrate power in the hands of the few, disempower the rest and impose their rule upon the masses. Throughout most of recorded history, oligarchies governed the masses directly -- as divine monarchs, as non-democratically-elected dictators, or as the heads of religious nation-states (and sometimes as a combination of all three).

Monarchies are nothing more than oligarchies that allow families to remain in power. Theocracies are oligarchies that allow a few, connected, true-believers to remain in power. Dictatorships are non-elected oligarchies that allow a few friends to remain in power through military force, police control and propaganda.
But the enlightenment brought about the end of those types of oligarchic rule for western European nations and the United States. A transparent, representative democracy, with strict, unbreakable term limits, and inalienable human rights has forever removed the possibility of direct rule by a monarch or dictator. And the separation of church and state has forever removed the possibility of a theocracy coming to power by some state-issued decree. 
But oligarchies refuse to die, and the power hungry will always seek more power. Having lost the ability to rule with military force, police control or government decree, capitalistic oligarchies instead try to rule by wealth. Thirty years ago the growing capitalistic oligarchy in the United States began using its small concentration of wealth to influence the government to favor it. The pro-oligarchy government of Reagan proved extremely pliable and the oligarchy grew more wealthy as the government titled playing fields in its favor. This larger concentration of wealth allowed the oligarchy to buy still more government influence, which allowed it to consolidate even more wealth and the cycle continued unabated for the last thirty years. 
Our current oligarchy found corruptible, money-hungry politicians on both sides of the political aisle, but its strongest ally has undoubtedly been the modern GOP. In the last three decades the Republican Party has proven itself pro-oligarchy in absolutely everything it does--and not just in its capitalist wing, but in its theocratic wing as well (though often it seems GOP leaders pander to the theocrats). These two factions sometimes clash as the oligarchic heads of both groups try to assert and assume power over the other, but both have found a very sympathetic ally in the GOP; a political party that now proudly announces declares itself the defender of the powerful against the weak
The GOP appointed a steady stream of pro-oligarchy federal judges who eventually ruled that powerful, oligarchic corporations (both foreign and domestic) could use their concentrated wealth, money and power to influence our democratic elections. The modern GOP has also proposed, and enacted, a never-ending stream of pro-oligarchy tax schemes that takes money from the poor to give to the rich. And Republicans have busted unions and removed the regulations that kept capitalistic oligarchies in check for nearly fifty years.
All of the GOP's pro-oligarchy deregulating, union-busting and regressive-lawmaking sabotaged the work that FDR, a traitor to his oligarchy, put in place. The rules, regulations and social programs instituted during his administration helped the United States experience the strongest two decades of economic growth in its history. 
FDR, like millions of others, fought against the run-amok, capitalistic oligarchy because all oligarchies are unfair. All oligarchies destroy and damage social order. All of them make life worse, not better. All of them ruin lives. Which means that no oligarchy will be readily accepted by the masses without the strategic use of deception, lies, suppression of knowledge and propaganda. And the GOP-assisted, capitalist oligarchy's use of all four today is no different. 
So beware when the oligarchy tells you that the OWS movement is anti-capitalist. Beware the oligarchy telling you that big government is what you should fear. Beware the oligarchy telling you not to rely on an ineffective government--especially when the oligarchy is the one that has worked so hard to make it so.
Remember that a transparent, representative democracy of the people, with strict, unbreakable term limits and inalienable human rights, has forever removed the possibility of direct rule over the masses by dictators and theocrats. And, since this is the case, remember that the oligarchy opposes progressive taxation, regulations, health care, strong unions and everything else it labels "big government" because those things are direct threats to the oligarchy's power, not yours.

Saturday, October 15, 2011

Easterbrook is Still an Idiot

Well my last three posts have now been anti-Easterbook, but really, I'm not planning this, I've just been busy and he's been the guy who's been making my blood boil the most recently. And, in any case, this fisking isn't courtesy of me, it comes from Andrew Gelman who, unfortunately, seems to have discovered Gregg Easterbrook for the first time:
I don't know when I've seen political writing quote so misinformed as this. It's a bizarre mixture of cliches, non-sequitors, and outright mistakes. The author is Gregg Easterbrook and he's writing for Reuters.
At this point in the 1992 election cycle, the elder George Bush held an 89 percent approval rating. . . . Clinton beat a popular incumbent with a fantastic approval rating. For the 2012 election, Barack Obama is just as vulnerable as the elder Bush, if not even more so. Obama currently has an approval rating of 23 percent.
This is all fine, except that:

1. It's not true that at this point in the 1992 election cycle, the elder George Bush held an 89 percent approval rating.

2. It's not true that Obama currently has an approval rating of 23 percent.

Now let's move from Easterbrookworld to reality.

1. According to Gallup, on 13 Oct 1991, George H. W. Bush's ratings (data from the Roper Center) were 66% approve, 28% disapprove, 7% no opinion (not adding to exactly 100% due to roundoff error, I assume).

2. Gallup estimates Obama's job approval as of 11 Oct 2011 as 38%.

So where did Easterbrook get his numbers? 89% was George H. W. Bush's highest approval rate ever, and it was at the beginning of March 1991. As for Obama's 23%, this comes from a Rasmussen report that Easterbrook linked to but misread: 28% "strongly approve" of Obama's job performance but about 45% approve in total, according to Rasmussen's own graph.

But wait, there's more! Easterbrook continues:
But don't sell Huntsman short because he is low in the polls - Obama had been at that point, too. 
That would be interesting-if true. But at this point Easterbrook is 0 for 2 on truth, so I'm not inclined to trust him. Instead, I'll look the numbers up myself. Luckily I have an internet connection:

As of 14 Oct 2011, Gallup gives Huntsman 2% support among Republicans. That puts him behind the leaders: No Opinion and Mitt Romney (tied at 20% each), Herman Cain, Rick Perry, Ron Paul, Newt Gingrich, and Michele Bachman. Rick Santorum is ahead of Huntsman, for chrissake. Google that, pal!
What about Obama? How was he polling in October, 2007? He was in second place with 21% support (compared to Hillary Clinton at 50%). So, yeah, anything could happen-but there's a big difference between 21% and 2%.

The real mystery here is how this got published by Reuters. They're a reputable news organization, right?
Easterbrook is listed as "a contributing editor to The Atlantic, The New Republic and The Washington Monthly, a former visiting fellow at the Brookings Institution and distinguished fellow of the Fulbright Foundation, and writes the Tuesday Morning Quarterback column for ESPN."

P.S. I found the George H. W. Bush approval ratings by Googling. It's a great trick. Maybe one of Easterbrook's editors at Reuters could tell him about it.

P.P.S. Why do I waste my time commenting on this stuff? We spend so much time gathering and understanding these data, it's just depressing to see people just make poop up and then spread it around like this. I guess it's like tenure in academia. A tenured professor can do (almost) anything he wants and still get paid to teach classes. Similarly, Easterbrook is so well-connected that he can continue publishing forever in top outlets. I can only assume that nobody edits his pieces for content, just as nobody sits in on my classes to check that I'm actually teaching what I say I am. All Easterbrook has to do is show up on time and he gets the job.

I know some people criticize Thomas Friedman (say) on the same grounds, that he can just publish whatever half-baked ideas he wants and get it in the New York Times. But I think Easterbrook is much much worse than Friedman. Friedman's speculations are often interesting, whereas Easterbrook is just spouting cliches that would make Theodore H. White spin in his grave. And supporting it with numbers that are so wrong as to be beyond garbled. Can't Easterbrook do like a real journalist and interview some cab drivers or something?
I like Reuters and although I blame them for allowing Easterbrook to write anything and still call himself an expert at Brookings when he's not, I think they have time to learn. After all the same organization that employs Felix Salmon, can't also employ (for long) Gregg Easterbrook. Can it? 

Thursday, September 29, 2011

Easterbrook's Stupidity Makes My Eyes Bleed

Gregg Easterbrook writes a blog post today (I've linked to it, but please for the love of God, plese don't go read it, it's unusually moronic, even for an Easterbrook post). Here, I'll summarize Easterbrook's commentary on the recession thusly:
1.) Democrats are demanding government spending to help fix the economy. But that's what Democrats always demand and it hasn't worked.

2.) Federal government spending has risen dramatically since 2008 (due to the stimulus) so Paul Krugman is an idiot for pointing out that government spending has decreased.

3.) The whole problem with the economy is pessimism and the only fix is optimism. Once people become optimistic again, the economy will turn around. 
Let's start the fisking shall we?

Point 1: Do Democrats always demand government spending? Of course not. Only a complete idiot would say this. When the economy is healthy, Democrats do not demand government spending. But when interest rates are at 0.0%, and have been at 0.0% for three years but still haven't pushed the economy out of its recession, that's when Democrats demand government spending. Nevermind that this is textbook macroeconomics.

Point 2: Do I really need to correct this point? Let me just re-write what Easterbrook said once more for you. 
"Federal government spending has gone up since 2008, so Paul Krugman is an idiot for pointing out that total government spending (which includes both federal and state spending) has decreased. He has named that 'austerity'. Hahaha, look at what an idiot that man is. Hahahaha."
Point 3: Do I really need to correct this point either? This 'lack of optimism' crap is basically the same line of thinking that wingnuts use as a reason for being in a recession. But they limit it to businesses and say we're in a recession because businesses lack confidence. This talking point has been fisked and fisked and fisked and fisked until it can't be fisked anymore. But here is the most recent, point-by-point destruction by Larry Mishel.

So that's it. That's Easterbrook's column today. Everything in it (and I mean EVERY SINGLE THING in it) is so wrong that it would be laughable if it weren't for the fact that Easterbrook is somehow a popular and respected "centrist" columnist.

And I'm not going to apologize for my ad-hominem attacks on this nitwit. His blog posts tend to make my eyes bleed, but after reading this most recent one I went through a fifteen minute stretch where I thought I might never recover my eyesight again. Suffice it to say that the world would be better off if Easterbrook never put printed word to page ever again. 

Thursday, September 8, 2011

Libertarian Hackery - Gregg Easterbrook, Vol 2

Easterbrook writes a blog post on Reuters today and proves that he doesn't know how to calculate GDP, but that doesn't stop him from writing about it nonetheless (there are a lot of things wrong with Easterbrook's post, but I'll concentrate on just this one most glaring of mistakes).

Firstly, let me explain the calculation of GDP. It's an easy calculation and shouldn't intimidate anyone. GDP equals C+I+G+NX.

What that means is that GDP equals private consumption (C) plus investment (I), plus government spending (G) plus net exports (which is imports minus exports). This is an accounting equation which means it must balance. I'll repeat that again. The calculation of GDP is an accounting equation that must balance (it's also an equation that anyone who's taken a Macro 101 course would have learned on the first day).

I highlighted government spending above because, as Libertarian Hacks are wont to do, Easterbrook tries to claim that federal government spending (in this case, construction spending) doesn't contribute to GDP. He says federal government construction spending is wasteful and slow, which means (obviously) that it cannot contribute to GDP.

But for Easterbook to be right, that would mean that any money the federal government spends on construction just disappears into thin air. Literally, it just disappears. I'm not sure if space aliens or magical wizards took it, but it's gone. And seriously, this is what Easterbrook is claiming.

What he insinuates (but doesn't prove, by the way) is that federal government construction money goes into the pockets of contractors who work slowly, inefficiently and come in over budget, and might even be outright crooks. But even if that were absolutely true and Easterbrook proved it were true, the money still wouldn't have magically evaporated. It would have been paid to someone. And economics (and the GDP calculation) don't care whether the people who take government money are inefficient workers, crooked cheats or pathologically lazy contractors. They're still people and they're still economic actors. So economics (and the GDP calculation) only care that another dollar has been put into circulation. And government spending, therefore, contributes to GDP, no matter where the money goes or who it goes to.

I can illustrate this most plainly with the end of the Great Depression. WWII pulled the country out of the Great Depression and it did so because it forced the country into a massive round of federal government spending (some of which started with the New Deal, but really the depression was wiped out completely and totally by government spending on the war effort). So if you're a Libertarian Hack, and you want to claim that government spending doesn't contribute to GDP or can't pull us out of the current recession because government spending is "wasteful", you have to willfully ignore the fact that the federal government didn't spend a dollar on anything economically useful in the run up to the war. All those tanks, planes and bombs could have been built and dumped into the ocean for all the economic good they did.

WWII was quite possibly the greatest example of Keynes' "money hole". It was wasteful government spending that pulled the country out of a depression. Should we repeat that now? Probably not. Keynes advocated spending money on economically useful projects (bridges, roads, dams etc.), but in the absence of that, even burying money in jars at the bottom of a hole and getting workers to dig it out would work. And WWII proved him right.

But Easterbrook dismisses history, macroeconomics and accounting in service to being a Libertarian Hack of the First Order. And we're all worse off for having to read whatever he spews. 

Wednesday, September 7, 2011

Reflections of a GOP Operative

Mike Lofgren was a Republican staffer for thirty years. His written a piece that lays out what most of us have known for a while -- that the modern GOP is out to destroy the government, and the country with it. Most of what Lofgren writes was covered in more detail in Thomas Frank's book The Wrecking Crew. I recommend reading both Frank's book and Lofgren's article. I've summarized a large chunk of Lofgren's article here, but I still recommend you click through and read the whole thing.
To millions of Americans who... watched with exasperation the tragicomedy of the debt ceiling extension, it may have come as a shock that the Republican Party is full of lunatics. To be sure, the party, like any political party on earth, has always had its share of crackpots... but the crackpot outliers of two decades ago have become the vital center today.

I could see as early as last November that the Republican Party would use the debt limit vote... to concoct an entirely artificial fiscal crisis. Then, they would use that fiscal crisis to get what they wanted, by literally holding the US and global economies as hostages...It should have been evident to clear-eyed observers that the Republican Party is... an apocalyptic cult... This trend has several implications, none of them pleasant.

Virtually every bill, every nominee for Senate confirmation and every routine procedural motion is now subject to a Republican filibuster. Under the circumstances, it is no wonder that Washington is gridlocked: legislating has now become war...

A couple of years ago, a Republican committee staff director told me candidly (and proudly) what the method was to all this obstruction and disruption. Should Republicans succeed in obstructing the Senate from doing its job, it would further lower Congress's favorability rating... By sabotaging the reputation... of government, the party that is against government would come out the winner.

[It is a] psychologically insightful [tactic] that plays on the weaknesses both of the voting public and the news media. There are tens of millions of low-information voters... [whose] confusion over who did what allows them to form the conclusion that "they are all crooks," and that "government is no good,"... This ill-informed public cynicism... further intensifies the long-term decline in public trust in government.

The media are also complicit in this phenomenon... Inside-the-Beltway wise guy Chris Cillizza...wrote that the institution of Congress was a big loser in the [debt ceiling] fracas, which is, of course, correct, but then he opined: "Lawmakers - bless their hearts - seem entirely unaware of just how bad they looked during this fight and will almost certainly spend the next few weeks (or months) congratulating themselves on their tremendous magnanimity." Note how the... deprecation falls... on those who precipitated the needless crisis and those who despaired of it. He seems oblivious that one side... has deliberately attempted to damage the reputation of Congress to achieve its political objectives.

This constant drizzle of "there the two parties go again!" stories... combined with the hazy confusion of low-information voters, means that the long-term Republican strategy of undermining confidence in our democratic institutions has reaped electoral dividends.

But if this technique falls short... there are other even less savory techniques upon which to fall back.... Republicans... have systematically attempted to make it more difficult to vote: by onerous voter ID requirements (in Wisconsin, Republicans have legislated photo IDs while simultaneously shutting Department of Motor Vehicles (DMV) offices in Democratic constituencies while at the same time lengthening the hours of operation of DMV offices in GOP constituencies); by narrowing registration periods; and by residency requirements that disenfranchises university students.

[T]he deindustrialization and financialization of America since about 1970 has spawned an increasingly downscale white middle class - without job security (or even without jobs), with pensions and health benefits evaporating and with their principal asset deflating in the collapse of the housing bubble. Their fears are not imaginary; their standard of living is shrinking.

While Democrats... dismissed [those] fears... Republicans went to work.... the business wing of the Republican Party consists of the most energetic outsourcers, wage cutters and hirers of sub-minimum wage immigrant labor to be found anywhere on the globe. But the faux-populist wing of the party... played on the fears of the white working class to focus their anger on scapegoats that do no damage to corporations' bottom lines: instead of raising the minimum wage, let's build a wall on the Southern border (then hire a defense contractor to incompetently manage it). Instead of predatory bankers, it's evil Muslims. Or evil gays. Or evil abortionists.

How do they manage to do this? Because Democrats... do not understand language. Their initiatives are posed in impenetrable policy-speak: the Patient Protection and Affordable Care Act. The what? No wonder the pejorative "Obamacare" won out. Contrast that with the Republicans' Patriot Act. You're a patriot, aren't you? Does anyone at the GED level have a clue what a Stimulus Bill is supposed to be? Why didn't the White House call it the Jobs Bill and keep pounding on that theme?

You know that Social Security and Medicare are in jeopardy when even Democrats refer to them as entitlements... Why not call them "earned benefits," which is what they are because we all contribute payroll taxes to fund them? That would never occur to the Democrats. Republicans don't make that mistake; they are relentlessly on message.

After a riot of unbridled greed... by Wall Street and its corporate satellites, where is the popular anger directed? At "Washington spending" - which has increased primarily to provide unemployment compensation, food stamps and Medicaid to those economically damaged...

The Republican Party of 2011 believes in three principal tenets...

1. The GOP cares solely and exclusively about its rich contributors... they... cannot abide so much as a one-tenth of one percent increase on the tax rates of the Walton family or the Koch brothers, much less a repeal of the carried interest rule that permits billionaire hedge fund managers to pay income tax at a lower effective rate than cops or nurses.

John Boehner is fond of saying, "we won't raise anyone's taxes," as if the take-home pay of an Olive Garden waitress were inextricably bound up with whether Warren Buffett pays his capital gains as ordinary income or at a lower rate. Another chestnut is that millionaires and billionaires are "job creators." US corporations have just had their most profitable quarters in history; Apple, for one, is sitting on $76 billion in cash, more than the GDP of most countries. So, where are the jobs?

...Republicans have assiduously spread the myth that Americans are overtaxed. But compared to other OECD countries, the effective rates of US taxation are among the lowest. In particular, they point to the top corporate income rate of 35 percent as being confiscatory... But the effective rate is much lower. Did GE pay 35 percent on 2010 profits of $14 billion? No, it paid zero.

2. They worship at the altar of Mars. Democrats... can never match GOP stalwarts... in their sheer enthusiasm for invading other countries. [John] McCain wanted to mix it up with Russia - a nuclear-armed state - during the conflict with Georgia in 2008... while Lindsey Graham has been persistently agitating for attacks on Iran and intervention in Syria. And these are not fringe elements of the party; they are the leading "defense experts"... Militarism springs from the same psychological deficit that requires an endless series of enemies, both foreign and domestic.

3. Give me that old time religion. Pandering to fundamentalism is a full-time vocation in the GOP. Beginning in the 1970s, religious cranks ceased to be a minor public nuisance... but grew into the major element of the Republican rank and file.... Also around us is a prevailing anti-intellectualism and hostility to science.

[H]ow did the whole toxic stew of GOP beliefs - economic royalism, militarism and culture wars cum fundamentalism - come completely to displace an erstwhile civilized Eisenhower Republicanism? [T]he rise of politicized religious fundamentalism... may have been the key ingredient of the takeover... Politicized religion... rationalizes...all three of the GOP's main tenets.

If you are wealthy, it is a sign of God's favor. If not, too bad! But don't forget to tithe in any case. This rationale may explain why some economically downscale whites defend the prerogatives of billionaires.

The GOP's fascination with war is also connected with the fundamentalist mindset. The Old Testament abounds in tales of slaughter... This... has led to such phenomena as Jerry Falwell once writing that God is Pro-War.

I left [the GOP] because I was appalled at the headlong rush of Republicans... to embrace policies that are deeply damaging to this country's future... Having gutted private-sector pensions and health benefits... the GOP now thinks it is only fair that public-sector workers give up their pensions and benefits, too.... Under the circumstances, it is simply safer to be a current retiree rather than a prospective one.

If you think Paul Ryan and his Ayn Rand-worshipping colleagues aren't after your Social Security and Medicare, I am here to disabuse you of your naiveté. They will move heaven and earth to force through tax cuts that will so starve the government of revenue that they will be "forced" to make "hard choices" - and that doesn't mean repealing those tax cuts, it means cutting the benefits for which you worked.

If Republicans have perfected a new form of politics that is successful electorally at the same time that it unleashes major policy disasters, it means twilight both for the democratic process and America's status as the world's leading power.

Tuesday, September 6, 2011

Listen to the Markets!

Martin Wolf thinks governments should listen to the markets and spend:

Martin Wolf (FT):
"[L]isten to the markets. They are saying: borrow and spend, please... US 10-year Treasuries yielded 1.98% on Monday, their lowest for 60 years... fiscal deficits help the private sector deleverage. Fiscal deficits are helpful... in a balance-sheet contraction.

One objection... is that people will fear higher future taxes and save more... But there is a good answer: use cheap funds now to raise future wealth and improve the fiscal position in the long run.  It is inconceivable that creditworthy governments would be unable to earn a return above [1.98% for ten years]... by investing in physical and human assets.

Another noteworthy objection... is that growth slows sharply once public debt exceeds 90% of GDP. Yet that is a statistical relationship, not an iron law. In 1815, UK public debt was 260% of GDP. What followed? The industrial revolution.

It is becoming ever clearer that the developed world is making Japan's mistake of premature retrenchment during a balance-sheet depression, but on a more dangerous scale... In a world of excess saving, the last thing we need is for creditworthy governments to slash their borrowings. Markets are loudly saying exactly this. So listen."

Friday, September 2, 2011

Joseph Stiglitz Examines US War Costs

His column from Project Syndicate:

The Price of 9/11 - Joseph Stiglitz 
"[The] attacks by Al Qaeda were meant to harm the United States, and they did, but in ways that Osama bin Laden probably never imagined.... Bush's response to the attacks compromised America's basic principles, undermined its economy, and weakened its security. The attack on Afghanistan... was understandable, but the subsequent invasion of Iraq was entirely unconnected to Al Qaeda... that war quickly became very expensive... When Linda Bilmes and I calculated America’s war costs three years ago, the conservative tally was $3-5 trillion. Since then, the costs have mounted further.

Even if Bush could be forgiven for taking America... to war on false pretenses, and for misrepresenting the cost... there is no excuse for how he chose to finance it. His was the first war in history paid for entirely on credit. As America went into battle, with deficits already soaring from his 2001 tax cut, Bush decided to plunge ahead with yet another round of tax “relief” for the wealthy.

Increased defense spending, together with the Bush tax cuts, is a key reason why America went from a fiscal surplus of 2% of GDP... to its debt position today. Moreover... disruption in the Middle East led to higher oil prices, forcing Americans to spend money on oil that they otherwise could have spent buying goods produced in the US.

Ironically, the wars have undermined America's (and the world's) security... an unpopular war would have made military recruitment difficult in any circumstances. But Bush... underfunded the troops, refusing even basic expenditures... or adequate health care for returning veterans.... Military overreach has predictably led to nervousness about using military power... but America's real strength, is its "soft power," its moral authority. And this, too, was weakened as the US violated basic human rights... and its longstanding commitment to international law was called into question.

The wars' collateral damage has been massive: by some accounts, more than a million Iraqis have died... [and] America's military spending still nearly equals that of the rest of the world combined.... Some of the increased expenditures went to the costly wars in Iraq and Afghanistan... but much of it was wasted on weapons that don't work against enemies that don't exist.

Al Qaeda, while not conquered, no longer appears to be the threat that loomed so large... but the price paid in getting to this point... has been enormous – and mostly avoidable. The legacy will be with us for a long time. It pays to think before acting."

Thursday, September 1, 2011

The question is not "can" the economy be saved, but "will" it.

Martin Wolf:
Struggling With a Great Contraction - (FT)
"Many ask whether high-income countries are at risk of a "double dip" recession. My answer is: no, because the first one has not ended. The question is, rather, how much deeper and longer this recession... might become. By the second quarter of 2011, none of the six largest economies had surpassed... their 2008 [output levels]... In the US, unemployment is still double its pre-crisis rates. 
In neither the US nor the eurozone, does the politician in charge... appear to be much more than a bystander of unfolding events... Obama wishes to be president of a country that does not exist. In his fantasy, US politicians bury differences in bipartisan harmony. In fact, he faces an opposition that would prefer the country to fail, rather than the president succeed... 
In the long journey to become ever more like Japan, the yields on 10-year US and German bonds are now down to where Japan's had fallen in October 1997... does deflation lie ahead...? That seems... to be a more plausible danger than the hyperinflation those fixed on fiscal deficits find so terrifying. [The] huge fight over US fiscal policy... has caused a run into, not out of, US government bonds. Meanwhile, stock markets have taken a battering... Nouriel Roubini, also known as "Dr Doom", predicts a downturn... yet he is surely right that the buffers have mostly gone: interest rates are low, fiscal deficits are huge and the eurozone is stressed. The risks of a vicious spiral from bad fundamentals to policy mistakes... are large. 
Yet all is not lost. In particular, the US and German governments retain substantial fiscal room for maneuver--and should use it. But, alas, governments that can spend more will not and those who want to spend more now cannot. Again, the central banks have not used up their ammunition. They too should dare to use it... the key, surely, is not to approeach a situation as dangerous as this one within the boundaries of conventional thinking."