Friday, January 28, 2011

The Face of the New GOP

This article provides interesting background on Ryan: Apparently, his idea of "fiscal responsibility" is to advocate for another great transfer of wealth from the bottom and middle to the top. Among the ideas of this acolyte of Ayn Rand:
  • Reduce tax rates, eliminate taxes on capital gains, dividends and interest, and abolish the corporate tax, the estate tax and the alternative minimum tax. (The average tax cut for the top 1 percent of the population (with incomes over $633,000) would be $280,000. The richest one-tenth of one percent, who had incomes over $2.9 million in 2009, would pocket $1.7 million a year in tax breaks.
  • Unravel employer-based healthcare plans by eliminating the tax credit.  
  • Eliminate traditional Medicare and cut Medicaid.
  • Cut $100 billion out of "non-security discretionary spending" this year - requiring cuts of 20 percent in everything from the FBI to cancer research, Pell grants for students, Head Start and grants to public school districts.
It appears "compassionate conservativism" has died a natural death and is being replaced by Social Darwinism and survival of the richest.

Wednesday, January 26, 2011

State of the Union

Yesterday, I happened to catch most of the Republican response to the SOTU speech. One thing I found fascinating was the series of myths that continued to be utilized as if they were unquestionable truths. The first was the rather obvious, and reported, reference to the cost of the healthcare reform package -- which appears to actually cut the deficit, not increase it. But the much more important mythology revolves around an ideology that continues to be promoted as if it is received truth -- essentially that government is the problem and markets the solution. Even after the latest financial crisis, and the fact that unemployment and foreclosures remain high, there appears to be a general belief among conservatives (and unfortunately a more center-right post-mid term election Obama administration) that we must now deal with the deficit and long term debt over working to stimulate the economy in any way. This belief, which stands in stark contradiction to sensible analysis of the causes of the crisis including financial deregulation, poor risk management and lack of effective oversight, essentially argues that more of the same will save us. It is backed by two rather absurd assumptions: 1. The stimulus did nothing to help the recovery, but rather hindered it (an argument completely unsupported by any credible economists) and 2. Somehow the crisis accelerated under Obama. The rewriting of history is a popular modern political strategy for both parties, but conservatives have come to assume a public that has the memory of Leonard in the 2000 movie Memento. And they seem right. Ryan appeared to argue last night that Obama took a small financial mess and made it into a full-blown crisis, a ridiculous claim that stretches the edges of credulity, if similar arguments haven't been used effectively for years. Remember that surplus we had when Bush entered office; that never happened. Remember those weapons of mass destruction we never found -- well we went in there to spread democracy and freedom anyway.

The most troubling aspect of the new common sense to me is the complete lack of empirical evidence to support their claims. Economic research tends to show that government intervention, while it may lower profitability and technological advancement in the short run (in some cases), tends to reduce inequality, lessen the magnitude and frequency of financial crises and lead to more robust and sustained growth. That is exactly the case in the BRIC countries today -- and the model used by not only China but the four tigers to grow rapidly over the past decades (irrespective of their financial crisis of 1997-8). It is also worth noting that it was the model employed by the United States, with the federal government subsidizing new technology and strategic goods, placing barriers to trade that helped these nascent ("or infant") industries grow and helped maintain comparative advantages to this day in international trade arrangements. While America has always been fearful of the dangers of excessive government power (as they should be), there is also the fear of excessive corporate and financial market power that should now be thought of in a similar light. Is tyranny of the market really that different than the tyranny of a crazy King who doesn't care much for a colony across an ocean? Can we really trust those ideas and people that got us into this mess to get us out, particularly if they plan to just give us more of the same? When (if ever) will a real populist movement emerge to challenge this myopic view?

Monday, January 24, 2011

Investment Just Another Name for Spending to GOP

In preparation for the State of the Union address, Republicans showed up on the Sunday talk shows to warn that they seek cuts in all areas of the economy: "Investment" in silly luxuries like education, infrastructure and technology is just a democratic trick to try to help those who are unemployed, underemployed or working for meager wages (i.e., the lazy and "illegal immigrants"). Obviously in these difficult times of soaring corporate profits and growing wealth at the top, it is still unfathomable to either raise taxes on the richest Americans or seek to stimulate the economy through approaches that worked for the better part of 30 years, until the stagflation crisis of the 70s. The underanalyzed (at least outside of academia) language games of conservatives have altered political debate in this country away from even a modicum of reason or sanity; continuing unabated by truth, an even cursory understanding of economics or a reasonable discussion of the growing underclass in America. "Social justice" is just another word for "socialism," (as is government stimulus spending or tax hikes), talking about race is "race baiting," talking about social class is engaging in "class warfare," all democrats are "tax and spend" addicts and the deficits they continuously accumulate while they are in the White House become magically based on the policies of those who inherit them. Now "investment," one of the pillars of neoliberal discourse for the past 30 years, is a bad word itself and many Republicans are seriously considering letting states go bankrupt. When will the madness end? Maybe when they outlaw the democratic party itself and can simply spew their destructive policies with no resistance at all.

Friday, January 14, 2011

So That Explains It?

News that astronomer signs are misaligned by as much as a month (due to "wobble" in the earth) has sent people into identity crises that rival that following news the earth was not the center of the universe and that Liberace was gay: Tauruses are trying to be less aggressive and not as impressive in bed, Scorpios less vindictive and Virgos less accommodating. People who have long wondered why daily horoscopes have not led them along the path to success and fortune are reading a paragraph down, hoping happiness is just around the corner. Historians are now trying to determine if this explains the Reagan presidency and the continued success of boy bands. Lawsuits against the Psychic Discovery Network are being filed at record levels, though they have hired the leading global warming doubter PR firm to challenge the new theory.

Sunday, January 09, 2011

Sparking Uprising?

It is still unclear whether the shooting of Arizona Democratic Congresswoman Gabrielle Giffords was politically motivated, but it is clear that the increasingly bellicose rantings of conservative leaders and popular culture personalities could be leading the country along a very dangerous course. Impassioned political discourse has always been part of the American experience and it often leads to more healthy manifestations of democratic participation and debate. Yet one wonders if we are on the verge of a return to the political violence of the 60s, where assassinations and massive violence confronted attempts to alter American politics. Today, tea party candidates and personalities like Glenn Beck and Bill O'Reilly are capitalizing on popular discontent in ways that could have dangerous implications.

Some examples from a New York Times article today (

- Sarah Palin's infamous "cross hairs" map that included gun targets focused on a number of close races, including that of Giffords
- Sharron Angle speaking of "domestic enemies" in the Congress and "Second Amendment remedies"
- Rick Barber using a political ad to "gather your armies"
- Michael Steele saying he hoped to send Nancy Pelosi to the "firing line" last year
- Glenn Beck claims that Obama faced an assassination attempt

The general discourse of socialism, tyranny and fascism employed by the right since Obama's run to the presidency are clearly absurd exaggerations of a President who many on the left see as essentially a centrist. But the larger issue is whether it is irresponsible to use rhetoric that could incite violence for political ends. The harm principle Supreme Court decision against "yelling fire in a crowded theatre" showed us that there are limits to freedom of speech. Several decision since fortified this position, including the Scheneck case establishing the clear and present danger precedent and the more recent hate speech legislation. Political discourse on both ends of the political spectrum should I believe be held to two standards: 1) Does not incite violence and 2) Has some semblance of truth attached to it. The latter is particularly necessary in political advertising, the largely unregulated sphere where manipulation, lies and fear mongering reign supreme -- often helping to decide elections. The public must hold politicians responsible for the ramifications of their words and demand a more reasoned, though not necessarily civil, level of dialogue. Civility is too often used as a cynical ploy to cut off real debate, as was the case post-911, but some responsibility to what we say and what it means does seem a reasonable demand.

Friday, January 07, 2011

Bringing Out the Dead

Obama announced yesterday that he is naming William Daley as his new Chief of Staff and will announce today that Gene Sperling will become the head of the National Economic Council. Daley previously served as Commerce Secretary under bill Clinton and was key in orchestrating NAFTA. Sperling worked at NEC in the past and was instrumental in passage of the Financial Modernization Act of 1999 -- that many blame as a key factor in the 2007 financial crisis (as it repealed large portions of the Glass-Steagal Act that helped stabilize banking during the Great Depression). Both of these Clinton-era figures are thus heavily implicated in policies that many would agree augured the troubles to come in the financial sector and broader economy.

Both also appear to be big friends of business. Daley has spent the past seven years working for J. P. Morgan, after several other stints with other large corporations. In a December 2009 op-ed for the Washington Post, Daley wrote that top Democrats need to "acknowledge that the agenda of the party's most liberal supporters has not won the support of a majority of Americans—and, based on that recognition, to steer a more moderate course on the key issues of the day, from health care to the economy to the environment to Afghanistan." And the Chamber of Commerce, which gave 93% of its campaign contributions to Republicans, heralded the choice.

So what happened to the Obama of two years ago, who turned his back on the DLC and defeated their candidate (Clinton) in stunning fashion? He appears to have gone the way of so many other democrats -- suffering a setback and quickly disavowing all that he proclaimed to believe in. What worries me the most is what happened the last time we brought political veterans out of retirement to run the country ...

Thursday, January 06, 2011


ESP has generally sat alongside UFO sightings, flouridation, Kennedy assassination conspiracy theories, life on Mars and the like, as the ranting of lunatics. That was until now, as a respected Psychological journal is planning to publish a paper that claims ESP does in fact exist. Daryl J. Bem, a ienowned emeritus professor at Cornell, has been testing the ability of college students to accurately sense random events, like whether a computer program will flash a photograph on the left or right side of its screen for over 10 years: The studies include more than 1,000 subjects who were tested by, among other things, categorizing pictures and finding pornographic images they couldn't see. Like much of the work in randomized social science research, the methods are open to major questions. Just because kids find pornographic images they can't see at a rate of 53% versus 50% does not really indicate any strong ability to see into the future. Nor does reversing the order of a classic memory test by finding that students had much better success at memorizing words they later studied. This sort of silliness would probably be completely ignored, but for the respect these experiments hold in general. For example, in the increasingly popular world of cognitive science, subjects are hooked up to machines that look at their brain activity while they are offered various stimuli -- after which major claims are sometimes made about what this says about human nature; without acknowledging that experiments are about as realistic as reality based TV. In any case, maybe ESP does exist. If you have it, feel free to email me with the winning lottery numbers for the next draw.

Wednesday, January 05, 2011

Payoff is Sweet

The House of Representatives will change hands today and already Republicans are getting ready to pay back their corporate sponsors ( First a quick look at the numbers. Candidates spent a whopping $4.2 billion on campaign TV ads alone ( in this midterm election. Outside groups increased their spending from $16 million in 2006 to over $80 last year ( And the Chamber of Commerce spent $31.7 million dollars, with 93 percent going to Republicans. On top of all this, unreported contributions have climbed precipitously based on the Citizens vs. The United States Supreme Court decision. Now Republicans are going to offer their payback, just as they did when Bush II entered office as the first corporate-sponsored President in history. Darrell Issa, the incoming chair of the House Oversight and Government Reform Committee, sent out letters to 150 trade associations, companies and think tanks asking what federal regulation is hurting economic growth.

Issa is apparently troubled by expanded oversight in areas including  food production, energy production, and finance. "Is there something that we can do to try to ease that [regulatory] burden and stimulate job creation?" said an Issa spokesperson. "Is there a consistent practice or regulation that hurts jobs? Until you have all the facts, you really can't make a lot of determinations and judgments." The irony, of course, is that profits are up and companies are doing okay -- they're just not hiring workers. And given the environmental and financial crises that persist to this day, is it really wise to turn the clock back and give corporations more carte blanche to do as they please? I suppose when they are flipping the bill for your election/reelection it does.

In economic terms, moral hazard refers to a situation where individuals or groups act less responsibly because they are covered for losses. A classic example would be buying insurance on a new bike that pays 100% if the bike is stolen. The person with that insurance is less likely to take steps to protect that bike from theft, given that there is no cost to replacing it except time. I believe we have a moral hazard problem today that is systemic. Corporations spend money to ensure that they are not held culpable for their behavior: through lobbying and campaign financing, lining the court with friends of business, influencing the public sphere (media) and all levels of education from Kindergarten to the University and even running for office. With all of these protections in place, the financial sector even feels comfortable handing out huge bonuses in the middle of a financial crisis and spending gads of money to ensure that no regulation is put into place to protect against collapse in the future. And yet people continue to believe government is the problem. Hmm . . .

Monday, January 03, 2011

Economic Arguments Against Small Government

I often write in this blog about the social justice and empirical arguments against the "small government" discourse. I thought I would add a few economic insights that support the claim that we need a strong government in some instances to deal with market imperfections. Three that are well-known in economic circles are the issue of externalities, market power and asymmetries of information and power.

Externalities are a key issue in economics, as they are benefits and costs not accounted for in the pricing system of supply and demand. Common externalities include pollution, health and inequality/poverty. The market does not account for these externalities and thus generally is unable to properly deal with them. As regards the most important externality today -- pollution and global warming -- some economists argue technology and science will save us from the long term effects of carbon emissions and the cutting down of forests. Yet the acceleration in environmental degradation appears to be beyond the power of science alone to handle the looming crisis. Government intervention is thus necessary to regulate market activity and ensure that these negative externatilities are accounted for. There are also positive externalities associated with public goods like education. If we privatize these goods, market interests often undermine the positive side effects of those institutions. We already see this in education with the diminution of civics education, physical education and the humanities -- all undermining the broader goals of education to spread freedom and democracy.

The second issue is market power and it is governments alone that can regulate industries to ensure the monopolies, oligopolies and cartels don't form that raise prices above their natural levels. It is clear that market power has again concentrated across the globe with the rise of multinational corporations and the inability of current global governance to regulate them. Corporations were once given their charters by states with an explicit clause that they must serve the public good. Without government intervention to ensure that corporations (like Microsoft), or groups of corporations (like the gas companies) don't gain too much power thus raising prices, cutting production and, often, cutting jobs. Market power leads to excessive profits without the concommitant economic benefits for the nation or society at large.

Finally is the issue of asymmetries of power and information. The first relates to issue discussed above, with excessive power not only undermining the market for goods but democracy itself. We see that today with lobbying and campaign financing, where the interests of huge corporations and industries like the financial sector working to undermine the will and interests of the people. But asymmetries of knowledge can be just as important -- as consumers are left without sufficient information to make wise choices and have any say in the decisions that affect their lives.

All three of these issues fundamentally undermine the argument for limited government intervention. Regulation, oversight and enforcement are all important aspects of ensuring that corporate interests don't trump those of the public at large. Yet beyond that, without government intervention, externalities, market power and asymmetries also undermine the effectiveness of markets themselves, undercutting economic efficiency and economic growth. What surprises me the most is the disingenuous nature of economic debates in the West today that fail to account for these three economic issues and their huge role in the financial crisis we continue to be mired in. A more honest accounting of the truth of the global market economy today might lead to more sensible economic policies that can restore some sanity to policy debate and action.