Here we have a graph covering the period from the War of the Pragmatic Sanction to World War I, showing for six global cities the male day-laborer wage divided by the cost of 2000 cheap calories--rice in China, polenta in Milan, rye in Leipzig, and oats in Amsterdam and London. It suggests that in 1740 day laborers in Leipzig, Beijing, Suzhou, and Milan could barely keep body and soul together--if their work was not too strenuous, and if they did not have too many non-working dependents.
By contrast, male day laborers in London and Amsterdam appear to be living the life of Riley: only a quarter of their wages needed to be set aside for the basic caloric requirements, leaving the rest for dietary variety and fortification, clothing, shelter, dependents, entertainment, and so forth.
But this is if people in London ate oats. And people in London did not eat oats. Oats were for Scotsmen--and horses. Englishmen ate wheat bread. And calories from wheat-based bread were two to three times the cost of calories from oats.
So were workers in London in 1740 as miserably poor as workers in Milan, Leipzig, and Beijing, spending most if not all on their income on bare caloric maintenance in the form of the grain typical of their time and place? Or were the workers of London relatively rich--and deciding to spend their relative wealth on the superior taste and mouth feel of yeasty wheat bread rather than leaden oatcakes and on the associated symbolic declaration that they were proud and free Englishmen, not benighted barbarous Scots (or horses)?
This morning, David Leonhardt gets a story about John McCain on page A1--and buries the lead in paragraph 23:
The real lead:
McCain’s Fiscal Mantra Becomes Less Is More: On several occasions over the last year, Mr. McCain has said that tax cuts can reduce the deficit by spurring additional activity that, in turn, leads to more taxes being paid. But numerous studies have found that not to be the case.... During his campaign, Mr. McCain has focused much more on spending [cuts] than on taxes. He has called for the end of earmarks.... They are “a very small part of the budget,” he said, “but so symbolic.”... McCain would consider cutting the programs that the White House has identified as ineffective... has not specified which ones it would cut. In addition to Amtrak, the list includes various programs dealing with Defense Department communications, veterans’ disability and low-income heating assistance...
The printed lead:
Senator John McCain said that, if elected, he would do what other presidents had tried but failed to do: cut government spending sharply enough to reduce the budget deficit while lowering taxes at the same time.... Mr. McCain emphasized his experience working on economic matters in Congress and laid out an unorthodox version of conservatism. After initially opposing President Bush’s tax cuts, he has become a supporter of making them permanent and of pursuing additional tax reductions, saying they are the best way to encourage economic growth.
But unlike Mr. Bush — or other Republican presidential candidates this year — Mr. McCain favors government mandates to halt global warming and slow the growth of Medicare costs. His campaign says it would also cut financing for programs that the White House budget office has deemed ineffective, a list that includes Amtrak...
There is only one number in the entire article--"$250,000."
Now David Leonhardt is a smart guy, and his articles in the Business section are nearly always worth reading. But this leaves everybody who knows about taxation and the budget shaking their heads in disgust. And it leaves everybody who isn't already fully briefed-up on tax and budget issues misled and misinformed.
The article printed is very, very different from the post that David Leonhardt would write if he were proprietor of his own weblog. That post would be very much worth reading--it would lay out the long-term fiscal dilemmas, it would be chock-full of numbers about just how "symbolic" and insignificant earmarks are in the total budget context, it would have references to a whole bunch of good studies of the revenue impact of tax-law changes, it would put the entire budget issue in quantitative context. It would be something that David Leonhardt could be proud of. It would be something useful.
But this?
David Leonhardt needs his own weblog. He needs it really bad.
A good sermon by my sister-in-law's law school classmate:
Barack Obama: The Scripture tells us that when Joshua and the Israelites arrived at the gates of Jericho, they could not enter. The walls of the city were too steep for any one person to climb; too strong to be taken down with brute force. And so they sat for days, unable to pass on through.
But God had a plan for his people. He told them to stand together and march together around the city, and on the seventh day he told them that when they heard the sound of the ram’s horn, they should speak with one voice. And at the chosen hour, when the horn sounded and a chorus of voices cried out together, the mighty walls of Jericho came tumbling down.
There are many lessons to take from this passage, just as there are many lessons to take from this day, just as there are many memories that fill the space of this church. As I was thinking about which ones we need to remember at this hour, my mind went back to the very beginning of the modern Civil Rights Era.
Because before Memphis and the mountaintop; before the bridge in Selma and the march on Washington; before Birmingham and the beatings; the fire hoses and the loss of those four little girls; before there was King the icon and his magnificent dream, there was King the young preacher and a people who found themselves suffering under the yolk of oppression.
And on the eve of the bus boycotts in Montgomery, at a time when many were still doubtful about the possibilities of change, a time when those in the black community mistrusted themselves, and at times mistrusted each other, King inspired with words not of anger, but of an urgency that still speaks to us today:
“Unity is the great need of the hour” is what King said. Unity is how we shall overcome.
What Dr. King understood is that if just one person chose to walk instead of ride the bus, those walls of oppression would not be moved. But maybe if a few more walked, the foundation might start to shake. If a few more women were willing to do what Rosa Parks had done, maybe the cracks would start to show. If teenagers took freedom rides from North to South, maybe a few bricks would come loose. Maybe if white folks marched because they had come to understand that their freedom too was at stake in the impending battle, the wall would begin to sway. And if enough Americans were awakened to the injustice; if they joined together, North and South, rich and poor, Christian and Jew, then perhaps that wall would come tumbling down, and justice would flow like water, and righteousness like a mighty stream.
Unity is the great need of the hour – the great need of this hour. Not because it sounds pleasant or because it makes us feel good, but because it’s the only way we can overcome the essential deficit that exists in this country.
I’m not talking about a budget deficit. I’m not talking about a trade deficit. I’m not talking about a deficit of good ideas or new plans.
I’m talking about a moral deficit. I’m talking about an empathy deficit. I’m taking about an inability to recognize ourselves in one another; to understand that we are our brother’s keeper; we are our sister’s keeper; that, in the words of Dr. King, we are all tied together in a single garment of destiny.
We have an empathy deficit when we’re still sending our children down corridors of shame – schools in the forgotten corners of America where the color of your skin still affects the content of your education.
We have a deficit when CEOs are making more in ten minutes than some workers make in ten months; when families lose their homes so that lenders make a profit; when mothers can’t afford a doctor when their children get sick.
We have a deficit in this country when there is Scooter Libby justice for some and Jena justice for others; when our children see nooses hanging from a schoolyard tree today, in the present, in the twenty-first century.
We have a deficit when homeless veterans sleep on the streets of our cities; when innocents are slaughtered in the deserts of Darfur; when young Americans serve tour after tour of duty in a war that should’ve never been authorized and never been waged.
And we have a deficit when it takes a breach in our levees to reveal a breach in our compassion; when it takes a terrible storm to reveal the hungry that God calls on us to feed; the sick He calls on us to care for; the least of these He commands that we treat as our own.
So we have a deficit to close. We have walls – barriers to justice and equality – that must come down. And to do this, we know that unity is the great need of this hour.
Unfortunately, all too often when we talk about unity in this country, we’ve come to believe that it can be purchased on the cheap. We’ve come to believe that racial reconciliation can come easily – that it’s just a matter of a few ignorant people trapped in the prejudices of the past, and that if the demagogues and those who exploit our racial divisions will simply go away, then all our problems would be solved.
All too often, we seek to ignore the profound institutional barriers that stand in the way of ensuring opportunity for all children, or decent jobs for all people, or health care for those who are sick. We long for unity, but are unwilling to pay the price.
But of course, true unity cannot be so easily won. It starts with a change in attitudes – a broadening of our minds, and a broadening of our hearts.
It’s not easy to stand in somebody else’s shoes. It’s not easy to see past our differences. We’ve all encountered this in our own lives. But what makes it even more difficult is that we have a politics in this country that seeks to drive us apart – that puts up walls between us.
We are told that those who differ from us on a few things are different from us on all things; that our problems are the fault of those who don’t think like us or look like us or come from where we do. The welfare queen is taking our tax money. The immigrant is taking our jobs. The believer condemns the non-believer as immoral, and the non-believer chides the believer as intolerant.
For most of this country’s history, we in the African American community have been at the receiving end of man’s inhumanity to man. And all of us understand intimately the insidious role that race still sometimes plays – on the job, in the schools, in our health care system and in our criminal justice system.
And yet, if we are honest with ourselves, we must admit that none of our hands are entirely clean. If we’re honest with ourselves, we’ll acknowledge that our own community has not always been true to King’s vision of a beloved community.
We have scorned our gay brothers and sisters instead of embracing them. The scourge of anti-Semitism has, at times, revealed itself in our community. For too long, some of us have seen immigrants as competitors for jobs instead of companions in the fight for opportunity.
Every day, our politics fuels and exploits this kind of division across all races and regions; across gender and party. It is played out on television. It is sensationalized by the media. And last week, it even crept into the campaign for President, with charges and counter-charges that served to obscure the issues instead of illuminating the critical choices we face as a nation.
So let us say that on this day of all days, each of us carries with us the task of changing our hearts and minds. The division, the stereotypes, the scapegoating, the ease with which we blame our plight on others – all of this distracts us from the common challenges we face – war and poverty; injustice and inequality. We can no longer afford to build ourselves up by tearing someone else down. We can no longer afford to traffic in lies or fear or hate. It is the poison that we must purge from our politics; the wall that we must tear down before the hour grows too late.
Because if Dr. King could love his jailor; if he could call on the faithful who once sat where you do to forgive those who set dogs and fire hoses upon them, then surely we can look past what divides us in our time, and bind up our wounds, and erase the empathy deficit that exists in our hearts.
But if changing our hearts and minds is the first critical step, we cannot stop there. It is not enough to bemoan the plight of poor children in this country and remain unwilling to push our elected officials to provide the resources to fix our schools. It is not enough to decry the disparities of health care and yet allow the insurance companies and the drug companies to block much-needed reforms. It is not enough for us to abhor the costs of a misguided war, and yet allow ourselves to be driven by a politics of fear that sees the threat of attack as way to scare up votes instead of a call to come together around a common effort.
The Scripture tells us that we are judged not just by word, but by deed. And if we are to truly bring about the unity that is so crucial in this time, we must find it within ourselves to act on what we know; to understand that living up to this country’s ideals and its possibilities will require great effort and resources; sacrifice and stamina.
And that is what is at stake in the great political debate we are having today. The changes that are needed are not just a matter of tinkering at the edges, and they will not come if politicians simply tell us what we want to hear. All of us will be called upon to make some sacrifice. None of us will be exempt from responsibility. We will have to fight to fix our schools, but we will also have to challenge ourselves to be better parents. We will have to confront the biases in our criminal justice system, but we will also have to acknowledge the deep-seated violence that still resides in our own communities and marshal the will to break its grip.
That is how we will bring about the change we seek. That is how Dr. King led this country through the wilderness. He did it with words – words that he spoke not just to the children of slaves, but the children of slave owners. Words that inspired not just black but also white; not just the Christian but the Jew; not just the Southerner but also the Northerner.
He led with words, but he also led with deeds. He also led by example. He led by marching and going to jail and suffering threats and being away from his family. He led by taking a stand against a war, knowing full well that it would diminish his popularity. He led by challenging our economic structures, understanding that it would cause discomfort. Dr. King understood that unity cannot be won on the cheap; that we would have to earn it through great effort and determination.
That is the unity – the hard-earned unity – that we need right now. It is that effort, and that determination, that can transform blind optimism into hope – the hope to imagine, and work for, and fight for what seemed impossible before.
The stories that give me such hope don’t happen in the spotlight. They don’t happen on the presidential stage. They happen in the quiet corners of our lives. They happen in the moments we least expect. Let me give you an example of one of those stories.
There is a young, 23-year-old white woman named Ashley Baia who organizes for our campaign in Florence, South Carolina. She’s been working to organize a mostly African American community since the beginning of this campaign, and the other day she was at a roundtable discussion where everyone went around telling their story and why they were there.
And Ashley said that when she was nine years old, her mother got cancer. And because she had to miss days of work, she was let go and lost her health care. They had to file for bankruptcy, and that’s when Ashley decided that she had to do something to help her mom.
She knew that food was one of their most expensive costs, and so Ashley convinced her mother that what she really liked and really wanted to eat more than anything else was mustard and relish sandwiches. Because that was the cheapest way to eat.
She did this for a year until her mom got better, and she told everyone at the roundtable that the reason she joined our campaign was so that she could help the millions of other children in the country who want and need to help their parents too.
So Ashley finishes her story and then goes around the room and asks everyone else why they’re supporting the campaign. They all have different stories and reasons. Many bring up a specific issue. And finally they come to this elderly black man who’s been sitting there quietly the entire time. And Ashley asks him why he’s there. And he does not bring up a specific issue. He does not say health care or the economy. He does not say education or the war. He does not say that he was there because of Barack Obama. He simply says to everyone in the room, “I am here because of Ashley.”
By itself, that single moment of recognition between that young white girl and that old black man is not enough. It is not enough to give health care to the sick, or jobs to the jobless, or education to our children.
But it is where we begin. It is why the walls in that room began to crack and shake.
And if they can shake in that room, they can shake in Atlanta.
And if they can shake in Atlanta, they can shake in Georgia.
And if they can shake in Georgia, they can shake all across America. And if enough of our voices join together; we can bring those walls tumbling down. The walls of Jericho can finally come tumbling down. That is our hope – but only if we pray together, and work together, and march together.
Brothers and sisters, we cannot walk alone.
In the struggle for peace and justice, we cannot walk alone.
In the struggle for opportunity and equality, we cannot walk alone
In the struggle to heal this nation and repair this world, we cannot walk alone.
So I ask you to walk with me, and march with me, and join your voice with mine, and together we will sing the song that tears down the walls that divide us, and lift up an America that is truly indivisible, with liberty, and justice, for all. May God bless the memory of the great pastor of this church, and may God bless the United States of America.
Paul Krugman praises John Edwards's and Hillary Rodham Clinton's proposed stimulus packages, and criticizes Barack Obama's. I think Paul has got this one wrong.
Bear in mind that I don't yet believe that the case for a fiscal stimulus is strong--although I may well change my mind in a month or two. Congress and the president have a role to play in stimulus only if monetary policy has shot its bolt--which it has not--or if unemployment is rising rapidly and it is important to get cash quickly into the hands of people who will spend it and so keep the rise in unemployment from being as large. We are not there yet--at least I don't think so--but we may be there in three months.
And from this perspective the Barack Obama plan looks pretty good to me: it cuts a lot of identical $250 checks to people many of whom would spend it, and so boost employment. The checks could be in people's hands by April.
By contrast, the John Edwards and Hillary Rodham Clinton plans--well, a $30 billion housing crisis fund... anti-urban blight programs... helping local housing authorities... mortgage moratoriums... heating assistance... $5 billion in energy credits to encourage purchases of low emission vehicles and efficient appliances... funds to train and put to work people making public buildings more energy efficient...
These are all worthy. But this is not a bill that can be passed quickly--the housing provisions, at least, are one of those things where the devil is in the details of the drafting and where quick, clean passage and implementation is almost impossible. The proposal is not Obama's: we are going to stimulate demand by cutting a lot of identical checks via a refundable tax credit--a thing that the government can do well and quickly. And this, I think, matters a lot. A stimulus bill is likely to become a lobbyist-pleasing Christmas tree, ineffective and destructive. Obama's plan seems to me to have the best chance of avoiding that fate--if he could sign Pelosi and Reid up to move a clean, focused bill.
John Edwards and Hillary Rodham Clinton might respond that these stimulus packages are political rather than policy documents--acts of campaigning rather than acts of governance--and they are right, up to a point.
I think Paul Krugman has got this one wrong. He writes:
Responding to Recession - New York Times: John Edwards... driving his party’s policy agenda... has done it again on economic stimulus: last month, before the economic consensus turned as negative as it now has, he proposed a stimulus package including aid to unemployed workers, aid to cash-strapped state and local governments, public investment in alternative energy, and other measures. Last week Hillary Clinton offered a broadly similar but somewhat larger proposal. (It also includes aid to families having trouble paying heating bills, which seems like a clever way to put cash in the hands of people likely to spend it.) The Edwards and Clinton proposals both contain provisions for bigger stimulus if the economy worsens....
The Obama campaign’s initial response to the latest wave of bad economic news was, I’m sorry to say, disreputable: Mr. Obama’s top economic adviser claimed that the long-term tax-cut plan the candidate announced months ago is just what we need to keep the slump from “morphing into a drastic decline in consumer spending.” Hmm: claiming that the candidate is all-seeing, and that a tax cut originally proposed for other reasons is also a recession-fighting measure — doesn’t that sound familiar?
Bear in mind that I don't yet believe that the case for a fiscal stimulus is strong--although I may change my mind in a month or two, depending on how the data flow looks. The principal organization for successful stabilization policy is the Federal Reserve. Congress and the president have a role to play only in two situations: first, if monetary policy has shot its bolt and cannot do anything more--and we are far from that point--and second, if the Federal Reserve has been caught flat-footed in the wrong policy position, unemployment is rising rapidly, and it is important to get cash quickly into the hands of people who will spend it and so keep the rise in unemployment from being as large. We are not there yet--at least I don't think so--but we may be there in three months.
From this perspective Obama's plan looks pretty good:
Obama stimulus package emphasizes quick cash in hand: a $250 tax credit to 150 million workers to offset the payroll tax paid on the first $8,100 of earnings. He urged a further $250 tax credit per worker if employment declines three months in a row. He also would give a one-time, $250 payment to Social Security recipients who would not benefit from the tax credit, followed by another $250 payment if employment declines three months straight. The immediate relief would cost $45 billion, plus another $45 billion if the economy weakened...
The plan is clean: there is no place for lobbyists to hang ornaments on it--which means that quick passage is possible. The first $45 billion of checks could be cut and sent out with this April's tax refunds. It meets Elmendorf and Furman's http://www.brookings.edu/~/media/Files/rc/papers/2008/0110_fiscal_stimulus_elmendorf_furman/0110_fiscal_stimulus_elmendorf_furman.pdf requirements that a fiscal stimulus be timely and temporary. It does not do so well on "targeted"--it doesn't do a great job at making sure the money gets to people who will spend it and thus boost aggregate demand--but this is at least partly offset by its simplicity, which is indeed essential if we are going to get the timely and the temporary right.
John Edwards's and Hillary Rodham Clinton's plans look, to me, likely to be less effective. Consider Hillary Rodham Clinton's:
Talking Points Memo | Clinton offers economic stimulus plan: a $30 billion housing crisis fund to help states and localities deal with the fallout of foreclosures... ease the effects of vacant properties with anti-blight programs and helping local housing authorities buy and rent out vacant properties. Setting a 90-day moratorium on subprime mortgages of at least five years, or until housing lenders have converted mortgages into loans families can afford. The proposal also would increase the portfolio caps at Fannie Mae and Freddie Mac. Providing $25 billion in emergency energy assistance for families facing rising heating bills.... Providing $10 billion to extend unemployment insurance for those struggling to find work while supporting families. Providing $5 billion in energy efficiency by doing such things as giving tax credits to encourage purchases of low emission vehicles and efficient appliances windows and other clean technologies. She also proposes funds to train and put to work people making public buildings more energy efficient...
These are all worthy causes--things that the government should be spending more money on. But this is not a bill that can be passed quickly--the housing provisions, at least, are one of those things where the devil is in the details of the drafting and where quick, clean passage and implementation is almost impossible. Funds to train and put to work people making public buildings more energy efficient--well, those aren't timely. The proposal is not Obama's: we are going to stimulate demand by cutting a lot of identical checks via a refundable tax credit--a thing that the government can do well and quickly. And this, I think, matters a lot. As Stan Collender wrote last Thursday:
Christmas 2008 May Be Coming Early For Lobbyists | Capital Gains and Games: A tax lobbyist friend told me yesterday that he's gone into the economic stimulus business. In response to my inquiring look that begged for more information, he said that I'd be surprised how many industries and professions have tax reductions that they want in any economic stimulus package that is considered this year and are looking to him to come up with arguments that confirm they will, indeed, be stimulative. In other words, even though it hasn't yet been introduced, the economic stimulus that has become all the rage in Washington these days has already become a Christmas tree with everyone and anyone who has something they want to do trying to reframe that proposal in terms of its positive impact on the economy. In case anyone hasn't noticed, this includes the White House, with the president all but saying that the reason the economy may be slowing is because of uncertainty about whether the tax cuts enacted during his administration will be extended when they expire in 2010. None of this is suprising. Even though its chances of being enacted are small, an economic stimulus bill may be the only thing that actually moves through the legislative process this year. In lobbyist parlance: it may be the only train leaving the station in 2008. But no matter how good the messaging, loading up the bill with a variety of provisions is one of the things most likely to lead to its demise. It will be too big, too political, too expensive, and take far too long to debate and pass.
The best way to keep a stimulus bill from becoming a lobbyist-pleasing ineffective and destructive Christmas tree in which a lot of the money goes to people who won't spend it and a lot more to people who shouldn't get it is to keep the legislative vehicle simple and clean. Boosting employment in the short term by cutting a lot of identical checks by April if we need to is something congress and the IRS can do. And Obama's plan seems to me to have the best chance of doing that--if he can sign Pelosi and Reid up to move a clean, focused bill.
John Edwards and Hillary Rodham Clinton and their staffs--they don't seem to have grasped that governance is best when you ask congress to do things that are within its competence, and ask the administrative branch to do things that are within its competence. They might respond that these stimulus packages are political rather than policy documents--acts of campaigning rather than acts of governance--and they are right, up to a point.
Chris Hayes and Ezra Klein watch the toddlers on the bus--the American campaign press corps. The only solution I see is simply to shut them all down: the modern style of campaign coverage started by Teddy White in 1960 with his The Making of the President is pernicious and harmful. Its practitioners should all be sent to do something more useful. Proofreading Google Books comes to mind.
Here's Ezra Klein:
EzraKlein Archive | The American Prospect: THE PRESS CORPS: [I]t is a bit astonishing to watch the real-time narrative construction that went on at last night's debate. I must have heard the term "meltdown" in reference to Hillary 65 times. And I talked to reporters who would literally say, "I thought she did okay, but I just misjudged it" -- the aggregate conclusion of the corps became some sort of objective, or at least agreed-upon, truth that the outliers measured themselves against. Very, very odd. Particularly because the part that much of the press liked least -- her heated recitation of the programs she's fought for -- came off, to me, as one of her best moments.
Meanwhile, there is, on some level, an acknowledgment of the weirdness of all this. I was at a bar talking to some leftier members of the press last night when a reporter wandered up and asked if "we were discussing Hillary's meltdown, or talking about real things?" Most of the folks I talked to happily admitted how unbelievably awful and surreal the spin room is, but everyone was in there. At one point, I asked an older reporter why everyone was assembed together for this debate, and he turned to me and said, "there's no good reason. Reporters are creatures of habit, and all this is now habit"...
Here's Chris Hayes:
Why Campaign Coverage So Often Sucks: [A] quick thought about the psychology of the political press. Reporting at event like this is exciting and invigorating, but it's also terrifying... daunting and the whole time you think: "Am I missing something? What's going? Oh man, I should go interview that guy in the parka with the fifteen buttons on his hat." You fear getting lost, or missing some important piece of news, or making an ass out of yourself....
I realized for the first time yesterday, that this essential terror isn't just a byproduct of inexperience. It never goes away. Veteran reporters are just as panicked about getting lost or missing something, just as confused about who to talk to. This why reporters move in packs....
You're an outsider, standing on the edges observing the people who are there doing the actual stuff of politics: listening to a candidate, cheering, participating. So reporters run with that distance: they crack wise, they kibbitz in the back, they play up their detachment. That leads to coverage that is often weirdly condescending....
[T]he worst features of campaign reporting emanate from the kinds of psychological defenses that reporters erect to deal with their insecurities.... [M]any critiques of the political press express the belief that what's wrong with coverage stems from the superficiality and venality of those who are practicing it. That's certainly true... but just as you can't hope to fundamentally reform education by calling for a lot more of great teachers, you can't make political coverage better by simply hoping for better reporters. You need to deal with the structural issues that reinforce these tendencies (Oh, and fire the hacks)...
Chris Hayes's ideas on how to deal with the "structural issues":
Is Good Campaign Coverage Possible? - Christopher Hayes’ blog: I think we can all agree that day-in, day-out campaign coverage often sucks, but the question is why? There’s a number of reasons, but primarily I think the papers’ entire approach to covering campaigns is hopelessly flawed and puts reporters in a position in which they can’t help but produce trivinalia.... [The] reporter spends all day, every day, following the candidate.... It’s an awful existence.... [Y]ou sit through endless, mind-numbing hours listening to the candidate spew the same safe inanities, you inevitably start to snoop around for new “angles”... Al Gore sighed during the debate! The point is that all of this trivial bullshit is just a natural outgrowth of the need to break up the sheer monotony of the campaign.
Then... the longer a reporter spends with a campaign, the more likely they’ll develop either a kind of contempt for the candidate and the campaign or a strange version of stockholm syndrome....
Finally, we have the perenial complaint that the coverage focuses on the horse-race and the theater of the campaign and not on the issues.... [C]onsider the imbalance in expertise between a campaign and those who cover it. When Obama releases a tax plan, it’s a product of a team of policy experts.... who know the terrain inside and out. But the reporter who has to file the deadline piece about it doesn’t have any expertise on tax policy. So how could their coverage be anything but shallow?
All of these structural flaws have solutions, and herewith my humble recommendations:
Rotate reporters....
Go more for features.... The Times has been doing this, though, their feature coverage has tended to focused on such burning issues as what Hillary Clinton wrote in letters to a penpal 35 years ago....
Assign campaign coverage to beat reporters. When Obama released his tax plan, the article that ran in the TImes about the plan was authored by the Obama beat reporter Jeff Zeleny.... Meanwhile, the Times happens to have on staff the Pulizer-Prize-winning David Cay Johnston, who is unquestionably the single best tax reporter in the country...
There are two ways of making politics one's vocation: Either one lives 'for' politics or one lives 'off' politics.... He who lives 'for' politics makes politics his life, in an internal sense. Either he enjoys the naked possession of the power he exerts, or he nourishes his inner balance and self-feeling by the consciousness that his life has meaning in the service of a 'cause.'... He who strives to make politics a permanent source of income lives 'off' politics as a vocation....
The leadership of a state or of a party by men who (in the economic sense of the word) live exclusively for politics and not off politics means necessarily a 'plutocratic' recruitment of the leading political strata.... [P]olitics can be conducted 'honorifically' and then, as one usually says, by 'independent,' that is, by wealthy, men, and especially by rentiers. Or, political leadership is made accessible to propertyless men who must then be rewarded...
Weber wants to see a world in which the politically active live both "for" and "off" politics. He believes that if the politically active live only "for" politics--well, then we have a political class of rentiers and plutocrats, which is not healthy. It must be possible to not just make a difference but make a living off of politics if we are to have a healthy politics and a good society.
But just as it is bad to have a politically-active class that lives "for" but not "off" politics, so I believe it is probably worse to have a politically-active class that lives "off" but not "for" politics--in which the desires to make a difference and to help America are submerged beneath the desire to keep your paycheck coming." Consider the example of Perry Bacon, Jr., of the *Washington Post, who looks at a webpage[1] that starts:
Description: Email rumor
Circulating since: January 2007
Status: False
Subject: Fwd: Be careful, be very careful.
Barack Hussein Obama was born in Honolulu, Hawaii, to Barack Hussein Obama Sr. (black muslim) of Nyangoma-Kogelo, Siaya District, Kenya, and Ann Dunham of Wichita, Kansas. (white atheist ).... His mother married Lolo Soetoro -- a Muslim -- moving to Jakarta with Obama when he was six years old.... Obama takes great care to conceal the fact that he is a Muslim.... Since it is politically expedient to be a Christian when you are seeking political office in the United States, Obama joined the United Church of Christ to help purge any notion that he is still a Muslim...
and transforms it into:
Perry Bacon: Another e-mail, on a site called Snopes.com that tracks Internet rumors, starts, "Be careful, be very careful." It notes that "Obama takes great care to conceal the fact that he is a Muslim," and that "since it is politically expedient to be a Christian when you are seeking political office in the United States, Obama joined the United Church of Christ to help purge any notion that he is still a Muslim"...
omitting the "Status: False" that comes right before the beginning of Perry Bacon, Jr.'s quote.
How could anyone come to do this? The answer is that they are living "off" poitics and belong to an ethics-free organization also devoted to living "off" politics, and that they think that their editor Len Downie and their editor's boss Donald Graham will be pleased and will reward their smearing of Barack Obama. I do not find it explicable any other way.
Weber reaches a similar conclusion about the journalism of his day. Party officials who live "off" politics can still work for their causes and keep their jobs in the party apparatus whether elections are won or lost. Journalists have a harder task, because the structural pressures tend to squeeze the part that lives "for" politics out of existence. Indeed, Weber says, given the structural pressures on the industry what is remarkable is not that so many journalists are so bad ("failures and worthless men," "disdain and pitiful cowardice") but that there are a "great number of valuable and quite genuine men" in the profession:
Not everybody realizes that a really good journalistic accomplishment requires at least as much 'genius' as any scholarly accomplishment, especially because of the necessity of producing at once and 'on order,' and because of the necessity of being effective, to be sure, under quite different conditions of production. It is almost never acknowledged that the responsibility of the journalist is far greater, and that the sense of responsibility of every honorable journalist is, on the average, not a bit lower than that of the scholar, but rather, as the war has shown, higher.... Nobody believes that the discretion of any able journalist ranks above the average of other people, and yet that is the case. The quite incomparably graver temptations, and the other conditions that accompany journalistic work at the present time, produce those results which have conditioned the public to regard the press with a mixture of disdain and pitiful cowardice....
[T]he journalist career remains under all circumstances one of the most important avenues of professional political activity. It is not a road for everybody, least of all for weak characters, especially for people who can maintain their inner balance only with a secure status position.... [T]he journalist's life is an absolute gamble in every respect and under conditions that test one's inner security in a way that scarcely occurs in any other situation.... The inner demands that are directed precisely at the successful journalist are especially difficult. It is, indeed, no small matter to frequent the salons of the powerful on this earth on a seemingly equal footing and often to be flattered by all because one is feared, yet knowing all the time that having hardly closed the door the host has perhaps to justify before his guests his association with the 'scavengers from the press.' Moreover, it is no small matter that one must express oneself promptly and convincingly about this and that, on all conceivable problems of life--whatever the 'market' happens to demand--and this without becoming absolutely shallow and above all without losing one's dignity by baring oneself.... It is not astonishing that there are many journalists who have become human failures and worthless men. Rather, it is astonishing that, despite all this, this very stratum includes such a great number of valuable and quite genuine men, a fact that outsiders would not so easily guess...
As you can guess, my solutions are quite different from Chris Hayes's. I would suggest:
We now have an upward leap in the possibilities for civil society--the possibility of a thick and healthy political class of amateurs who who live, part-time, "for" politics without having to live "off" it. They won't have to rent out their souls--and so won't be subject to the same deformations--and their contempt for those who do rent out their souls cannot help but have a healthy influence. Encourage the growth of this class wherever possible
Cut the campaign press corps and the Washington insider press corps off at the knees both intellectually and financially: those who live "off" and not "for" politics and have no professional ethic that their business is to inform rather than mislead--don't encourage them. The sooner the Slates and the Washington Posts and the Times and the Newsweeks and the AEIs go out of business, the better.
Encourage the growth and financial viability of those who live for as well as off politics--the American Prospects, the Democracy Journals, the Cato Institutes, the Reasons, the Nations, the Independent Institutes, and so forth.
Encourage the growth and financial viability of those who have a solid sense of professional ethics--who are in the business of informing rather than entertaining or misleading: the Atlantics, the National Journals, the Financial Timeses, the Economists--as long as it stops trying to turn sections of itself into the Wall Street Journal editorial page--and so on.
The coming of the internet and with it the rise to dominance of Google may well have changed forever the underlying structural finances of the journalism business. Money follows attention, and attention may well follow Google-fu, and Google-fu may well follow the collective voting of the link-writing web-enabled amateur living-for-politics class. Those journalists who don't care about America but want to live "off" politics may find that they can keep making a living only through gaining the approval via link-driven collective Google-voting of those of those who live "for" politics and love America--or so the collapse of TimesSelect suggests.
Complex? No. As the late John M. Ford advised: Say what you mean. Bear witness. Iterate. If those who are interested in raising the level of the debate use the evolving mechanisms of the internet to read those who don't raise the level of the debate out of the conversation, things could turn around quite quickly.
[1] Note: Bacon claims that the webpage he viewed was at http://snopes.com/. But the only webpage at Snopes that is even close in subject does not contain Bacon's quotes and was last updated on March 15, 2007. The page that does contain Bacon's quotes is at About's Urban Legends page: http://urbanlegends.about.com/library/bl_barack_obama_muslim.htm.
Only seven distinct pages indexed on Google contain Bacon's quotes: "Be careful, be very careful" and "Obama takes great care to conceal the fact that he is a Muslim". They are:
Obsidian Wings: More Iowa: Random Iowa observations below the fold.... I tried to limit myself to non-obvious points... pardon the lack of polish.
Obama’s Ceiling:... Mathematically, [Obama's] victory has no significance. Politically, it’s too early to know.... But that said, the way he won tends to vindicate his candidacy’s argument... makes his case... that he possesses the most potential energy – i.e., he has the most potential to forge new political coalitions. In short, he risks a low floor, but promises a high ceiling. The way he won tonight... support[s] the latter... he expanded the pie, bringing in young and independent... [and] previously disengaged voters....
Am I Part of the Problem?: Many others have noted the ridiculousness of the Iowa caucuses... an event... whose importance is predicated entirely on the presumption of post-election spin and hype.... I have an easy defense though... it is THE story, so of course I’m going to write about it.... I contribute to the very post-election hype that I criticize and that allows it to exist... a classic collective action problem, from the media/blogger perspective.... [F]ix it... [by] changing... structural conditions... fight very hard to end Iowa’s first-in-the-nation status.
Hillary Ain’t Out: Obama’s win may well prove enormously significant. But don’t for a second think that Hillary is anywhere close to beaten.... money... organizational support... 49 states left to go... even though it’s the worst possible result for her... the Iowa loss now allows Clinton to play the underdog role, and shifts a lot of the spotlight (and scrutiny) toward Obama. It’s still obviously better to win. But the narrative will shift.... [T]he story will shift... to “can she fight back?” Doing well in later contests will allow her to seize the “Comeback Kid” mantle, which is the media’s favorite of all....
Change: For reasons I’ve stated with considerable snark, I don’t think Iowa shows us all that much.... Like any good, card-carrying liberal blogger, I’m skeptical of mindless praise of bipartisanship and unity and all that. But that said, the years 1994-2008 have been a nasty political era... there’s a broad sense of institutional failure, fueled in large part by Bush’s colossal failures and incompetence.... Though it might be hokey, Huckabee and Obama’s “Come Together” rhetoric works because (1) there is a thirst for it; and (2) they are more credible messengers because they haven’t been on the national scene. Accordingly, their victory tends to vindicate Mark Schmitt’s argument that Obama’s bipartisan rhetoric should be understood as an offensive political weapon rather than Broderish high wankery. (I’ve got a much longer post on this point in the queue).
Obama’s Code: I’m watching Obama’s acceptance speech as I type – and it’s very good. I’ve read a good bit about how Obama doesn’t really emphasize race and racial issues on the stump. But in listening to the beginning of the speech, I realize that maybe he does.... [H]e speaks with the cadences and phrase repetitions of black preachers... he uses language... simultaneously... (1) calling for political unity; (2) echoing the language of the civil rights struggle. In other words, he’s speaking to African-Americans without whites necessarily realizing it. Consider the following passage for instance, which I’ve already seen 5 times....
They said this day would never come. They said our sights were set too high. They said this country was too divided, too disillusioned to ever come together. But on this January night at this defining moment in history, you have done what the cynics said we couldn’t do.
True, he did mention Selma tonight. But take that for it’s worth. Note too that this passage is the intended soundbite, and it seems to work both ways...
Kudos to the Democratic caucus-goers of Iowa. They had a choice of at least five candidates--Obama, Edwards, Rodham Clinton, Richardson, Dodd--whom I or people I know and totally respect both know well and think would be likely to make superb presidents. A plurality chose Obama, with Edwards and Rodham Clinton gaining substantial support as well. This is a good situation--every serious Republican policy person I know would give at least one organ of generation and one eye and one toe to have in their current mix a candidate half as qualified as the least qualified of these three.
This is also a day which makes Thaddeus Stevens and Frederick Douglass kiss the sky and shout hosannas--a day for which they worked but did not believe would ever come. A day when the corn-fed white voters of a state--or at least the Democratic Party's enthusiastic faithful of a state--choose a Black man, Barack Obama, as the one whom they think is most qualified to be President of the United States of America.
This is a sign that our longest and deepest national nightmare may finally be coming to an end.
Thaddeus Stevens and Frederick Douglass would be ecstatic on the one hand, but on the other hand they would be sad that their party--the Republican Party--is MIA. And they would rain down curses on Richard Nixon, William Rehnquist, and Barry Goldwater, who turned the Republican Party into the misbegotten monster it is today, a monstrous horror that led Colin Powell in 1996 to recoil and give up before he started in his attempt to do on the Republican side what Barack Obama is doing on the Democratic side today.
On the other hand, maybe our long national nightmare is not over. Remember John McCain's line about Chelsea Clinton--that she "is so ugly because her father is Janet Reno." Didn't do McCain any harm in the Republican Party. Didn't do McCain any harm with America's establishment press corps. It was bad enough watching the Freak Show in the press and the Republican Party go after the sleazy hick from Arkansas with the zipper problem and his cold castrating l------ b---- of a wife. Are we now ready for the to go after the Muslim terrorist n----- from Chicago?
Three cures for three crises by J. Bradford Delong: Tuesday, Jan 01, 2008, Page 9:
A full-scale financial crisis is triggered by a sharp fall in the prices of a large set of assets that banks and other financial institutions own, or that make up their borrowers' financial reserves. The cure depends on which of three modes define the fall in asset prices.
The first -- and easiest to handle -- mode is when investors refuse to buy at normal prices not because they know that economic fundamentals are suspect, but because they fear that others will panic, forcing everybody to sell at fire-sale prices.
The cure for this mode -- a liquidity crisis caused by declining confidence in the financial system -- is to ensure that banks and other financial institutions with cash liabilities can raise what they need by borrowing from others or from central banks.
This is the rule set out by Walter Bagehot more than a century ago: Calming the markets requires central banks to lend at a penalty rate to every distressed institution that would be able to put up reasonable collateral in normal times.
Once everybody is sure that, no matter how much others panic, financial institutions won't have to dump illiquid assets at a loss, the panic will subside. And the penalty rate means that financial institutions can't profit from the investment behavior that left them illiquid -- and creates an incentive to take due care to guard against such contingencies in the future.
In the second mode, asset prices fall because investors recognize that they should never have been as high as they were, or that future productivity growth is likely to be lower and interest rates higher. Either way, current asset prices are no longer warranted.
This kind of crisis cannot be solved simply by ensuring that solvent borrowers can borrow, because the problem is that banks aren't solvent at prevailing interest rates. Banks are highly leveraged institutions with relatively small capital bases, so even a relatively small decline in the prices of assets that they or their borrowers hold can leave them unable to pay off depositors, no matter how long the liquidation process.
In this case, applying the Bagehot rule would be wrong.
The problem is not illiquidity but insolvency at prevailing interest rates. But if the central bank reduces interest rates -- and credibly commits to keeping them low in the future -- asset prices will rise. Thus, low interest rates can make the problem go away, while the Bagehot rule -- with its high lending rate for banks -- would make matters worse.
Of course, easy monetary policy causes inflation, and the failure to "punish" financial institutions that exercised poor judgment in the past may lead to more of the same in the future. But as long as the degree of insolvency is small enough that a relatively minor degree of monetary easing can prevent a major depression and mass unemployment, this is a good option in an imperfect world.
The third mode is like the second: A bursting bubble or bad news about future productivity or interest rates drives the fall in asset prices. But the fall in values is larger. Thus easing monetary policy won't solve this kind of crisis, because even moderately lower interest rates cannot boost asset prices enough to restore the financial system to solvency.
When this happens, governments have two options. First, they can simply nationalize the broken financial system and have the Treasury sort things out -- and ideally reprivatize the functioning and solvent parts as rapidly as possible. Government is not the best form of organization for financial intermediation in the long term, and even in the short term it is not very good. It is merely the best organization available.
The second option is simply inflation. Yes, the financial system is insolvent, but it has nominal liabilities and either it or its borrowers have some real assets. Print enough money and boost the price level enough, and the insolvency problem goes away without the risks entailed by putting the government in the investment and commercial banking business.
The inflation may be severe, implying massive unjust redistributions and at least a temporary grave degradation in the price system's capacity to guide resource allocation. But even this is almost surely better than a depression.
Since late summer, the US Federal Reserve has been attempting to manage the slow-moving financial crisis triggered by the collapse of the US housing bubble.
At the start, the Fed assumed that it was facing a first-mode crisis -- a mere liquidity crisis -- and that the principal cure would be to ensure the liquidity of fundamentally solvent institutions.
But the Fed has shifted over the past two months toward policies aimed at a second-mode crisis -- more significant monetary loosening, despite the risks of higher inflation, extra moral hazard and unjust redistribution.
As Fed Vice Chair Don Kohn recently put it: "We should not hold the economy hostage to teach a small segment of the population a lesson."
No policymakers are yet considering the possibility that the financial crisis might turn out to be in the third mode.
Long Bet Winner: Weblogs vs. The New York Times | Workbench: In 2002, blogging evangelist Dave Winer made a long bet with New York Times executive Martin Nisenholtz: "In a Google search of five keywords or phrases representing the top five news stories of 2007, weblogs will rank higher than the New York Times' Web site."...
Winer predicted a news environment "changed so thoroughly that informed people will look to [expert non-journalist] amateurs they trust for the information they want." Nisenholtz expected the professional media [like the New York Times] to remain the authoritative source for "unbiased, accurate, and coherent" information....
But Rogers Cadehead says that both were wrong. Today:
our most trusted source on the biggest news stories of 2007 is a horde of nameless, faceless amateurs who are not required to prove expertise in the subjects they cover.
Winer wins the bet [he made against Nisenholtz] 3-2, but his premise of blog triumphalism is challenged.... In the five years since the bet was made, a clear winner did emerge, but it was neither blogs nor the Times.
Wikipedia, which was only one year old in 2002, ranks higher today on four of the five [top] news stories [of 2007]: 12th for Chinese exports, fifth for oil prices, first for the Iraq war, fourth for the mortgage crisis and first for the Virginia Tech killings...
Congratulations to Jimmy Wales and company!
I'm going to have to revive my wikipedia account and start contributing...
An excellent piece from Steven Pearlstein, who is still at the Washington Post:
It's Not 1929, but It's the Biggest Mess Since: It was Charles Mackay, the 19th-century Scottish journalist, who observed that men go mad in herds but only come to their senses one by one. We are only at the beginning of the financial world coming to its senses after the bursting of the biggest credit bubble the world has seen. Everyone seems to acknowledge now that there will be lots of mortgage foreclosures and that house prices will fall nationally for the first time since the Great Depression. Some lenders and hedge funds have failed, while some banks have taken painful write-offs and fired executives. There's even a growing recognition that a recession is over the horizon. But let me assure you, you ain't seen nothing, yet.
What's important to understand is that, contrary to what you heard from President Bush yesterday, this isn't just a mortgage or housing crisis. The financial giants that originated, packaged, rated and insured all those subprime mortgages were the same ones, run by the same executives, with the same fee incentives, using the same financial technologies and risk-management systems, who originated, packaged, rated and insured home-equity loans, commercial real estate loans, credit card loans and loans to finance corporate buyouts. It is highly unlikely that these organizations did a significantly better job with those other lines of business than they did with mortgages. But the extent of those misjudgments will be revealed only once the economy has slowed, as it surely will.
At the center of this still-unfolding disaster is the Collateralized Debt Obligation, or CDO. CDOs are not new -- they were at the center of a boom and bust in manufacturing housing loans in the early 2000s. But in the past several years, the CDO market has exploded, fueling not only a mortgage boom but expansion of all manner of credit. By one estimate, the face value of outstanding CDOs is nearly $2 trillion. But let's begin with the mortgage-backed CDO.
By now, almost everyone knows that most mortgages are no longer held by banks until they are paid off: They are packaged with other mortgages and sold to investors much like a bond. In the simple version, each investor owned a small percentage of the entire package and got the same yield as all the other investors. Then someone figured out that you could do a bigger business by selling them off in tranches corresponding to different levels of credit risk. Under this arrangement, if any of the mortgages in the pool defaulted, the riskiest tranche would absorb all the losses until its entire investment was wiped out, followed by the next riskiest and the next. With these tranches, mortgage debt could be divided among classes of investors. The riskiest tranches -- those with the lowest credit ratings -- were sold to hedge funds and junk bond funds whose investors wanted the higher yields that went with the higher risk. The safest ones, offering lower yields and Treasury-like AAA ratings, were snapped up by risk-averse pension funds and money market funds. The least sought-after tranches were those in the middle, the "mezzanine" tranches, which offered middling yields for supposedly moderate risks.
Stick with me now, because this is where it gets interesting. For it is at this point that the banks got the bright idea of buying up a bunch of mezzanine tranches from various pools. Then, using fancy computer models, they convinced themselves and the rating agencies that by repeating the same "tranching" process, they could use these mezzanine-rated assets to create a new set of securities -- some of them junk, some mezzanine, but the bulk of them with the AAA ratings more investors desired. It was a marvelous piece of financial alchemy, one that made Wall Street banks and the ratings agencies billions of dollars in fees. And because so much borrowed money was used -- in buying the original mortgages, buying the tranches for the CDOs and then in buying the tranches of the CDOs -- the whole thing was so highly leveraged that the returns, at least on paper, were very attractive. No wonder they were snatched up by British hedge funds, German savings banks, oil-rich Norwegian villages and Florida pension funds.
What we know now, of course, is that the investment banks and ratings agencies underestimated the risk that mortgage defaults would rise so dramatically that even AAA investments could lose their value. One analysis, by Eidesis Capital, a fund specializing in CDOs, estimates that, of the CDOs issued during the peak years of 2006 and 2007, investors in all but the AAA tranches will lose all their money, and even those will suffer losses of 6 to 31 percent. And looking across the sector, J.P. Morgan's CDO analysts estimate that there will be at least $300 billion in eventual credit losses, the bulk of which is still hidden from public view. That includes at least $30 billion in additional write-downs at major banks and investment houses, and much more at hedge funds that, for the most part, remain in a state of denial.
As part of the unwinding process, the rating agencies are in the midst of a massive and embarrassing downgrading process that will force many banks, pension funds and money market funds to sell their CDO holdings into a market so bereft of buyers that, in one recent transaction, a desperate E-Trade was able to get only 27 cents on the dollar for its highly rated portfolio. Meanwhile, banks that are forced to hold on to their CDO assets will be required to set aside much more of their own capital as a financial cushion. That will sharply reduce the money they have available for making new loans. And it doesn't stop there. CDO losses now threaten the AAA ratings of a number of insurance companies that bought CDO paper or insured against CDO losses. And because some of those insurers also have provided insurance to investors in tax-exempt bonds, states and municipalities have decided to pull back on new bond offerings because investors have become skittish.
If all this sounds like a financial house of cards, that's because it is. And it is about to come crashing down, with serious consequences not only for banks and investors but for the economy as a whole. That's not just my opinion. It's why banks are husbanding their cash and why the outstanding stock of bank loans and commercial paper is shrinking dramatically. It is why Treasury officials are working overtime on schemes to stem the tide of mortgage foreclosures and provide a new vehicle to buy up CDO assets. It's why state and federal budget officials are anticipating sharp decreases in tax revenue next year. And it is why the Federal Reserve is now willing to toss aside concerns about inflation, the dollar and bailing out Wall Street, and move aggressively to cut interest rates and pump additional funds directly into the banking system.
This may not be 1929. But it's a good bet that it's way more serious than the junk bond crisis of 1987, the S&L crisis of 1990 or the bursting of the tech bubble in 2001.
Robert Hansen's Blog: The Stern Review on the Economics of Climate Change: Blistering Peer Reviews: In the latest issue of the Journal of Economic Literature, two papers deliver devastating reviews on the Stern Review on the Economics of Climate Change... by serious, mainstream economists: William Nordhaus of Yale and Martin Weitzman of Harvard. These are not individuals and articles that can or should be ignored. Of course, they will be ignored by the mainstream media – while at the same time Al Gore’s receipt of the Nobel Prize carries the media day....
I have always said that my objections to the prescriptions of the most vocal climate change advocates are on three levels: one, the climate models depend too much on positive feedbacks that are not understood; two, the models have not really been tested, but instead are calibrated to the historical data; and three, even if one accepts the models, one then has to move into the economics of optimal policy, and there the best analysis suggests relatively modest reductions in carbon emissions for the near term. I like to ask environmentalists to summarize their prescriptions with the appropriate tax per barrel of oil: tell me what you think the price of oil should be increased by, in order to recognize the impact of carbon.
But back to the reviews of the Stern Review. So the Stern Review made big headlines when it came out, as it was commissioned by the UK government and was ostensibly a serious analysis of the economics of climate change. Both Nordhaus and Weitzman deliver fatal blows.... Weitzman says: "However, in my opinion, Stern deserves a measure of discredit for giving readers an authoritative-looking impression that seemingly objective best-available-practice professional economic analysis robustly supports its conclusions, instead of more openly disclosing the full extent to which the Review’s radical policy recommendations depend upon controversial extreme assumptions and unconventional discount rates that most mainstream economists would consider much too low...."
To summarize the contrast: The Stern Review calls for a carbon tax of $350 per ton of carbon in 2015. Nordhaus’ model, which has been peer-reviewed many times, calculates the optimal carbon tax in 2015 to be ONE-TENTH of that, or only $35 per ton carbon. I find it useful to put these quantities in terms of something we understand more readily: $350 per ton carbon converts to $1 per gallon of gasoline, while $35 per ton carbon converts to 10 cents per gallon of gasoline. We are talking big differences here.
So what is wrong with the Stern Review’s economics? It is real simple – they use an extremely low interest rate, close to zero. Everything follows from this, and in my opinion, the assumption is crazy....
Another point in this criticism is the essential inter-generational fairness issue. Per capita income worldwide has been growing at around 1.3% over many decades – and this is the number that the Stern Review uses. At that growth rate, per capital world consumption will grow from today’s $10, 000 to about $130,000 in two centuries. Which generation is the relatively poor generation? Are we so sure that we are impoverishing our children and our children’s children? What about all the new technologies, institutions such as democracy and market economies, physical infrastructure, and knowledge that we are bequeathing them? Do we not think that people 200 years from now will enjoy more leisure, better health, better technology, and generally be better able to pursue life, liberty, and happiness?
Read the articles, they are really convincing. For most of the media, of course, that will be too difficult. Much easier to report on Al Gore winning an Academy Award – oops, I meant a Nobel Prize.
When RobinRobert Hansen argues that we should do little about climate change in the near future because "the climate models depend too much on positive feedbacks that are not understood... the models have not really been tested," he makes the decisive error of failing, as Tyler Cowen puts it, to recognize that on this issue uncertainty is not our friend.
And this is how RobinRobert misreads Marty. Because Marty's major point in his review is that uncertainty is not our friend and that because uncertainty is not our friend the Stern discount rate is not crazy:
Marty Weitzman: There is a general point here and a particular application to the economics of climate change. The general point is that from experience alone one cannot acquire sufficiently accurate information about the probabilities of tail disasters to prevent the expected marginal utility of an extra sure unit of consumption from becoming unbounded for any utility function having everywhere-positive relative risk aversion, thereby effortlessly driving [the conclusions of] cost-benefit applications of expected utility theory [to an endorsement of the generalized precautionary principle]. The degree to which this kind of "generalized precautionary principle" is relevant in a particular application must be decided on a case-by-case basis that depends upon... a priori knowledge.... In the particular application to the economics of climate change, where there is so obviously limited data and limited information about the global catastrophic reach of climate extremes for the case T > 6 C, to ignore or suppress the signiÖcance of rare tail disasters is to ignore or suppress what economic theory is telling us loudly and clearly is potentially the most important part of the analysis. While it is always fair game to challenge the assumptions of a model, when economic theory provides a generic result (like "free trade is Pareto optimal") the burden of proof is commonly taken as resting on whomever wants to overturn the theorem in a particular application. The take-away message here is that the burden of proof in the economics of climate change is presumptively upon whomever wants to model optimal-expected-utility growth under endogenous greenhouse warming without having structural uncertainty tending to matter much more than risk. Such a middle-of-the-distribution modeler needs to explain why the inescapably-thickened tails of the posterior-predictive distribution... rare disasters under uncertain structure, [are] not the primary focus of attention and does not play the decisive role in the analysis.
So Weitzman concludes that good policy today:
combines the gradualist climate-policy ramp of ever-tighter GHG reductions... with the option value of waiting for better information about the thick-tailed disasters... fnding out beforehand [whether] we are on a runaway-climate trajectory... [confronting] honestly the possible options of undertaking currently-politically-incorrect emergency measures if a worst-case nightmare trajectory happens to materialize... having some semblance of a game plan for dealing realistically with what might conceivably be coming down the road... supplement mainstream economic analysis of climate change (and mainstream ramped-up mitigation policies for dealing with it) by putting serious research dollars into... contingency planning for worst-case scenarios.... It may well turn out that... early detection is impossible... too expensive... comes too late... so we should stop stalling and start making serious down payments on catastrophe insurance by cutting CO2 e emissions drastically. But these are conclusions we need to reach empirically.... Instead of declaring immediate all-out war on greenhouse-gas emissions as advocated by Stern, maybe we would do better by steadily but surely ramping up GHG cuts over the next decade or two while simultaneously investigating seriously the nature of the runaway-climate disasters.... We can always come back in ten or twenty years time and declare all-out war on global-warming emissions then if we then think it is the best option.... The Stern Review has its heart in the right place -- it is not nice for us to play the role of nature's grim reaper by bequeathing the enormously unsettling uncertainty of a very small, but essentially unknown (and perhaps unknowable), probability of a planet Earth that in hindsight we allowed to get wrecked on our watch. However, Stern does not follow through formally on this really unsettling part of the global warming equation.... I don't mean to imply that there is some off-the-shelf turnkey consensus model of the economics of uncertain catastrophes that the Stern Review was negligent in not using.... But I think progress begins by recognizing that the hidden core meaning of Stern vs. Critics... is] tails vs. middle and about catastrophe insurance vs. consumption smoothing.
He tackle's Barone's claim that "maybe" the fall in social mobility in America is due to the fact that a high IQ genetic elite has risen to the top of the fair meritocracy that is our society. And Mark's head explodes:
Michael Barone: [P]olls show that Americans think their chances of moving up are better than a generation ago. Statistics tell a different story: There is a higher correlation today between parents' and children's income than in the 1980s, and the income gap between college graduates and non-graduated doubled between 1979 and 1997.
"America," concludes Parker, "is becoming a stratified society based on education: a meritocracy."... [This] is exactly what Richard Herrnstein and Charles Murray predicted for America in their controversial book The Bell Curve, published 11 years ago. Herrnstein and Murray noted that intelligence is both measurable and in some large but unquantifiable part hereditary, an unexceptionable finding for experimental psychologists but maddening to social engineers. As college education becomes open to all with the requisite intelligence, graduates will tend to marry graduates and produce children with similar intelligence, while others will tend to produce children without it.
"Unchecked, these trends," Herrnstein and Murray wrote, "will lead the U.S. toward something resembling a caste society, with the underclass mired ever more firmly at the bottom and the cognitive elite ever more firmly anchored at the top."... Are we there yet?... [M]aybe so.
Yet should we be so gloomy?... Not everyone has an emotional need to be on top: How many people, if they thought seriously about it, would really want the burdens of a CEO, however lavish the pay?... As Murray has written, all you need to do to avoid poverty in this country is to graduate from high school, get and stay married, and take any job. The intelligence needed to get a place in the cognitive elite may become more concentrated in a fair meritocratic society, but the personal behaviors needed to find a valued place in society are available to everyone. Meritocracy may mean less mobility, but that is bearable if, as Brooks says, "America is becoming more virtuous."...
The inheritance of inequality is strikingly large in America today: if the father's lifetime was 100% above the American average for his day, the son's lifetime income will on average be 65% above the American average for his day. That's a lot of inherited inequality. Is this unequal distribution of wealth, income, and status in the United States today the result of the fact that a genetic elite has risen to the top in a "fair" IQ-driven meritocracy?
No.
This high degree of inherited inequality isn't because high IQ genetic eliteness genes are being passed down from fathers to sons. As Samuel Bowles and Herbert Gintis (2002), "The Inheritance of Inequality," report:
The direct effect of IQ on earnings... presented in Bowles, Gintis, and Osborne (2002a)... is 0.15, indicating that a [one] standard deviation change in the cognitive score, holding constant... remaining variables... changes... earnings by about one-seventh of a standard deviation.... An estimate of the causal impact of childhood IQ on years of schooling... is 0.53 (Winship and Korenman 1999). A rough estimate of the direct and indirect effect of IQ on earnings... is then... 0.15+(0.53)(0.22) = 0.266....
h is the heritability of IQ.... The value cannot be higher than 1, and most recent estimates are substantially lower, possibly more like a half or less.... [C]ouples tend to be more similar in IQ than would occur by random mate choice.... [The] genetic correlation of parent and offspring [is] (1 + m)/2....
Using the values estimated above, we see that the contribution of genetic inheritance of IQ to the intergenerational transmission of income is (h2(1+m)/2)(0.266)2 = .035(1 + m)h2. If the heritability of IQ were 0.5 and the degree of assortation, m, were 0.2 (both reasonable, if only ball park estimates) and the genetic inheritance of IQ were the only mechanism accounting for intergenerational income transmission, then the intergenerational correlation [of lifetime income] would be 0.01, or roughly two percent the observed intergenerational correlation [of lifetime income between parents and children].
Two percent is simply not a large number. Factors that currently account for two percent of lifetime earnings inequality are simply not yet a big deal, and cannot be responsible for the fall in social mobility.
If there is ever to be a genetic elite, its members will surely exhibit two behavioral traits: a facility with math, and a near-intinctive tendency to do back-of-the-envelope quantitative checks of assertions. We can conclude only one thing from Barone's column: neither he nor his descendents (unless they get really lucky in their mates) are plausible candidates for membership in any "genetic elite".
It is worth pointing out that neither Richard Herrnstein nor Charles Murray are plausible candidates for membership in any "genetic elite" either. Let me turn the microphone over to impeccably right-wing Jim Heckman, who comments on The Bell Curve:
The Book fails for five main reasons. 1. The central premise of this book is the empirically incorrect claim that a single factor - g or IQ - that explains linear correlations among test scores is primarily responsible for differences in individual performance in society at large.... There is much evidence that more than one factor -- as conventionally measured -- is required to explain conventional correlation matrices among test scores.... They do not emphasize how little of the variation in social outcomes is explained by AFQT or g. There is considerable room for factors other than their measure of ability to explain wages and other social outcomes. 2. In their empirical work, the authors assume that AFQT is a measure of immutable native intelligence. In fact, AFQT is an achievement test that can be manipulated by educational interventions. 3. The authors[']... implicit assumption of an immutable g that is all-powerful in determining social outcomes leads them to disregard a lot of evidence that a variety of relevant labor market and social skills can be improved. 4. The authors present no new evidence on the heritability of IQ or other socially productive characteristics.... [T]hey... [compare] IQ... [to] a crude measure of parental environmental influences. This comparison is misleading. It fails to recognize the crudity of their environmental measures and the environmental component that is built into their measure of IQ, which biases the evidence in favor of their position. Moreover, the comparison as they present it is intrinsically meaningless. 5. Finally, the authors' forecast of social trends is pure speculation... the social policy recommendations have an ad hoc flavor to them.... The appeal to Murray's version of communitarianism as a solution to the emerging problem of inequality among persons is a deus ex machina flight of fancy that is not credibly justified.
On coming across: Why I’m not a proper political journalist:: In his op-ed today, Mark Halperin describes George W. Bush during the 2000 campaign as follows:
He came across as a man of principle who did not lust for the White House; he was surrounded by disciplined loyalists who created a cheerful cult of personality about their candidate.
Meanwhile, I didn’t do the up-close-and-personal stuff; I looked at what he actually said about policy. And from my point of view he “came across” as someone who lied, systematically and consistently, about taxes and Social Security. I did notice the cult of personality — but it scared me:
This suggests a terrible prospect. Soon we may have a president who lost the popular vote, who won the electoral vote only after bitter controversy, who needs to act with unprecedented humility and discretion to avoid ripping the country apart. But he will have surrounded himself with obsequious courtiers.
But you see, I’m just a shrill Bush-basher; we should leave judgments about character up to the professionals who thought Bush was a bluff, honest guy you’d like to have a beer with.
One thing worthy of note. Carlyle Group CEO David Rubenstein's reaction to George W. Bush:
David Rubenstein: you know if you said to me, name 25 million people who would maybe be President of the United States, he wouldn't have been in that category...
That was the reaction of everybody not on Bush's payroll who has met Bush I have talked to--everybody except our elite Beltway press, that is.
The Washington Monthly: SPEAK FOR YOURSELF....Responding to my suggestion earlier today that the American public increasingly opposes the Iraq war regardless of how well it's going, Tobin Harshaw of the Opinionator says:
It's a good point, but I suspect some will feel Mr. Drum shows a bit too much pleasure in making it.
Not only is this baseless (read the post and judge for yourself), it's craven. Even worse, it's bad writing...
A little backstory. Chris Suellentrop started the Opinionator http://opinionator.blogs.nytimes.com/ on January 24, 2006, and built a good reputation. Then somehow Tobin Harshaw showed up on it, grabbed top billing--it's listed as by "Tobin Harshaw and Chris Suellentrop"--and began trashing that reputation. We've seen him before.
As you may recall, last Friday there was a lot of discussion about revisions to the GISS global warming series of estimated average temperatures in the United States--a revision that changed the hottest year to date from 1998 (which in the old data was 1/100 of a degree hotter than 1934) to 1934 (which in the new data is 2/100 of a degree hotter than 1998) http://delong.typepad.com/sdj/2007/08/why-oh-why-ca-1.html. One surprising thing was that the New York Times's Opinionator weblog http://opinionator.blogs.nytimes.com/, run by the thoughtful and intelligent Chris Suellentrop, went way overboard on the story:
Among global warming Cassandras, the fact that 1998 was the “hottest year on record” has always been an article of faith.... James Hansen, the climate scientist who has long accused the Bush administration of trying to “silence” him.... [A] Y2K bug played havoc with some of the numbers.... Michael Ashe... explains.... "The changes are truly astounding. The warmest year on record is now 1934. 1998 (long trumpeted by the media as recordbreaking) moves to second place.... [T]he effect on the U.S. global warming propaganda machine could be huge...
This surprised me: "effect... huge," "havoc," the scare quotes around "silence," "data meltdown," et cetera seemed very out of place for a three-one-hundredths of a degree shift--either complete mendacity or total innumeracy, or both. So I swung by the Opinionator, and found:
The Opinionator is no longer written by Chris Suellentrop alone, but also by Tobin Harshaw, who wrote the post in question.
Tobin Harshaw also served as an enthusiastic stenographer for last Friday's Stupidest Man Alive nominee, Tom Nugent of National Review, who slipped a decimal points and wrote a totally off-the-rails piece about taxing university endowments http://delong.typepad.com/sdj/2007/08/sell-victoria-c.html--overestimating how much money such a tax might raise by a factor of ten.
It seemed that Harshaw had failed to do the slightest amount of quantitative due diligence on either story before he committed fingers to keyboard and thus electrons to the noosphere.
It struck me that here I had an interesting angle: an opportunity to strike while the iron is hot, and find out why the New York Times has employees for whom it is unthinkable that they eyeball a graph or look at a table or even add up twenty numbers to see if what they are about to say makes any sense at all. The quantitative innumeracy of so many journalists is a big problem, and it would be nice to gain more insight into why innumerate journalists don't regard it as a problem.
So I called Toby Harshaw. I don't think he did himself any favors: it seems to me that he and the New York Times have much bigger problems than simple innumeracy:
Brad DeLong: Good afternoon. I'm Brad DeLong, an economics professor calling from UC Berkeley. I read your Cassandra post about global warming data revisions, and had a couple of questions. Can you help me out?
Tobin Harshaw: Certainly.
Brad DeLong: Did you eyeball the data--either in a graph or a table--before you wrote your "Cassandra" post about GISS global warming data revisions?
Tobin Harshaw: Are you writing something about this?
Brad DeLong: I will be, yes.
Tobin Harshaw: Then no, I cannot speak to you. You will have to speak to our public relations department.
Brad DeLong: Why won't you talk to me?
Tobin Harshaw: Because I am not authorized to speak to the press.
Brad DeLong: Because?
Tobin Harshaw: Because that is our policy. Our policy is that editorial staff are not allowed to speak to the press.
Brad DeLong: Seriously? Why is that your policy?
Tobin Harshaw: I am not authorized to speak. You will have to speak to our public relations department.
Brad DeLong: So you cannot even explain why your policy is that you cannot explain what you write?
Tobin Harshaw: I will have to transfer you to the operator.
Brad DeLong: But surely you can at least give a reason for the policy that keeps you from explaining...
Tobin Harshaw: I've spoken to you clearly.
Brad DeLong: You have not.
Tobin Harshaw: I've explained to you that our policy is that I am not authorized to speak to the press.
Brad DeLong: Why aren't you authorized to explain and elaborate on what you wrote?
Tobin Harshaw: I am not authorized to say why I am not authorized. It is our policy...
Brad DeLong: You are sure?...
Tobin Harshaw: Goodbye Mr. DeLong.
I thought about calling public editor Clark Hoyt, but he picks up his voice mail about once a week.
FORTUNE Magazine: Warren Buffett gives away his fortune: 85% of his Berkshire stock [will go] to five foundations. A dominant five-sixths of the shares will go to the world's largest philanthropic organization, the $30 billion Bill & Melinda Gates Foundation.... Their foundation's activities, internationally famous, are focused on world health -- fighting such diseases as malaria, HIV/AIDS, and tuberculosis -- and on improving U.S. libraries and high schools.... Buffett's 2006 gift to the foundation, 500,000 shares, would be worth about $1.5 billion. With so much new money to handle, the foundation will be given two years to resize its operations. But it will then be required by the terms of Buffett's gift to annually spend the dollar amount of his contributions as well as those it is already making from its existing assets.... The [other] contributions will go to foundations headed by Buffett's three children, Susan, Howard, and Peter, and to the Susan Thompson Buffett Foundation. This last foundation was for 40 years known simply as the Buffett Foundation and was recently renamed in honor of Buffett's late wife, Susie, who died in 2004, at 72, after a stroke. Her will bestows about $2.5 billion on the foundation, to which her husband's gifts will be added. The foundation has mainly focused on reproductive health, family planning, and pro-choice causes, and on preventing the spread of nuclear weapons....
Because the value of Buffett's gifts are tied to a future, unknowable price of Berkshire, there is no way to put a total dollar value on them. But the number of shares earmarked to be given have a
Chris Hayes and Ezra Klein watch the toddlers on the bus--the American campaign press corps. The only solution I see is simply to shut them all down: the modern style of campaign coverage started by Teddy White in 1960 with his The Making of the President is pernicious and harmful. Its practitioners should all be sent to do something more useful. Proofreading Google Books comes to mind.