Tuesday, July 26, 2011
The most rational explanation for Obama's speech is that he's positioning himself for failure. He's explaining his position so that when Congress fails to lift the debt ceiling, Americans will blame the Republicans and not him. Maybe in the meantime some small deal can arise. But I expect a week from now we'll be bracing for disaster.
Remarkably uninsightful. Great stretches of media commentary puzzle me about markets in information. How does such a defective product even exist? There must be a lot of demand for commentary one agrees with, however dumb. (Comments that try to turn this straight line against the RC will be deleted.) The fact that makes Chait's analysis look silly, beyond his admission he's doesn't know what Obama's up to, is that the financial markets evidently expect with some confidence that a debt limit deal of unspectacular proportions will be reached, a crowd prediction with which I concur. I also doubt a non-long term deal will result in S&P downgrading the US to AA status, which would be a big deal but one the markets apparently do not expect either.
My guess is Obama is positioning himself not for failure but to take credit among the credulous for the compromise between the Senate and House that will eventually emerge from negotiations. Then he'll say something like, I'm glad you guys finally listened to the adult in the room and decided to compromise, as I said you should do all along. Nobody with half a brain will believe that spin, but most people don't pay that much attention to politics, and in normal times, they shouldn't. I also suspect he'll say something like, I called on the American people to light up the switchboards of Congress, just like Reagan used to do, and they did. I doubt much switchboard lighting up is occurring in fact. Persons of Congress will deny a popular uprising, but of course they would.
The O's approach is rather lame, but remember many so called "independents" are just people who haven't a clue and are just the sort who could be influenced by this sort of nonsense. So O is not bracing for failure so much as making a pitch to the dimmer half of the herd of independent voters. And to give Chait and also O some credit, at the same time he does buy a put so to speak on a complete meltdown, unlikely though that may be. In that event he can say, instead of, good thing you listened to me!, You should have listened to me! So he can take credit, or place blame, depending on what others accomplish or fail to. This is called leadership.
In 2007, Norwegian Justice Minister Knut Storberget proposed extending Norway's absolute maximum criminal sentence of 21 years to 30 years for genocide, crimes against humanity and terrorism. That proposal didn't go anywhere. The maximum criminal sentence in Norway is 21 years.
Now 32-year-old Anders Behring Breivik stands accused of killing 76 individuals, many of them teenagers, in a vicious rampage that began with a bombing in Oslo Friday. If convicted, he can expect to be a free man in his 50s.
I guess if you're going to be a mass murderer, that's the country to be it in.
Monday, July 25, 2011
Wendi Deng Murdoch ’97MBA’s top-ten list of What I Learned at the Yale School of Management probably does not include pie-blocking. Or slapping. But those are the skills that put Murdoch in the global spotlight this week as she tried to defend her husband, Rupert, from a shaving-cream-pie-wielding protester in London.
"It is a bit scary... that the U.S. economy is holding the world hostage for a relatively minor ideological point of view," Mikio Kumada, Executive Director of LGT Capital Management told CNBC on Monday. "If you look at it from a global perspective...we know that they have to cut spending and raise taxes in some form."
If the markets are calm, who am I to disagree?
Sunday, July 24, 2011
Of course, it’s early, and as a useful Gallup analysis shows, an incumbent’s ratings in the twelfth quarter of his presidency are more predictive than are those in the tenth, the quarter that Obama has just completed. But it’s not too early to see the basic options for 2012. If the economy perks up even modestly, Obama wins. If not, we’re in for a repeat of 1980, when a majority of the electorate was willing to fire the incumbent, but not unless they felt comfortable with the challenger—a sentiment that didn’t crystallize until the pivotal Carter-Reagan debate. So if the Republicans manage to nominate a mainstream conservative who seems reasonable, they may well win. If they nominate Palin or Bachmann, they’ll commit creedal suicide, as each party ends up doing about once a generation. As for Rick Perry—the Republican flavor du jour—it remains to be seen whether he can become the party unifier who energizes the Tea Party base and Main Street conservatives without repelling the moderates and independents who will decide a close election.
Saturday, July 23, 2011
Eric Posner and Adrian Vermeule argue that President Obama should raise the debt ceiling on his own:
PRESIDENT OBAMA should announce that he will raise the debt ceiling unilaterally if he cannot reach a deal with Congress. Constitutionally, he would be on solid ground. Politically, he can’t lose. The public wants a deal. The threat to act unilaterally will only strengthen his bargaining power if Republicans don’t want to be frozen out; if they defy him, the public will throw their support to the president. Either way, Republicans look like the obstructionists and will pay a price.
Where would Mr. Obama get his constitutional authority to raise the debt ceiling?
Our argument is not based on some obscure provision of the 14th amendment, but on the necessities of state, and on the president’s role as the ultimate guardian of the constitutional order, charged with taking care that the laws be faithfully executed.
I hate to raise the fascism charge, but if it fits, why not? This is not the ridiculously overused and misused fascist charge of the left, but the far more powerful one of the classical liberal. I am sure that Posner and Vermeule would say, "Oh come on! Presidents have take such actions in the past and the country still has its liberties." It is true that Presidents have done this before, but they have helped weaken the country's liberties. Lincoln, Wilson, and Roosevelt made the government bigger and relaxed the restraints on its actions. If Posner and Vermeule's encouragement is taken to heart, one day we might become a fascist, or if you will, neo-fascist country.
I am not sure exactly when these movements toward excessive presidential power first occurred. Certainly, it had happened by the New Deal. Almost certainly not by the end of the 19th Century (except for some excesses from Lincoln). Perhaps Woodrow Wilson and World War I did it. But the country became less free at this time, and the connection with big government is no accident.
The debt ceiling issue requires the parties to negotiate. And it is part of the tradition of liberal democracy that such negotiation is better than imposition, especially by Presidents.
Perhaps Obama would get away with it politically, although perhaps not. I am not as sure as Posner and Vermeule that the country wants an unlimited debt ceiling increase. In any event, if Obama took the action the way that Posner and Vermeule say he should do it, the best response might be for the Republicans to watch him do it. And then with the debt ceiling issue put to the side, to bring impeachment proceedings in the House.
In the end, let me leave you with the words of someone -- Justice Robert Jackson -- who resisted such presidential excessiveness, when Truman seized the steel mills during the Korean War. No doubt, Posner and Vermeule would have approved of Truman's action. But the Supreme Court said no, and the country was not the worse for it.
While I believe that Justice Jackson's concurrence has had too much of an influence on constitutional law, since I don't believe he correctly captures the constitutional allocation of power, his political theory has something to say for it and explains what would be so dangerous if Obama disregarded the law. As Jackson said,
With all its defects, delays and inconveniences, men have discovered no technique for long preserving free government except that the Executive be under the law, and that the law be made by parliamentary deliberations.
Friday, July 22, 2011
This is what I wanted to say.
The event had the feel of an unsubtle satire dreamed up by some snotty 1970s aging-hippie movie director—Robert Altman, say—to prove that political candidates are just pretty-boy airheads engaged in a show-biz sham. In addition to the lifted lamp of Lady Liberty and the overdone backdrop, there was the handsome candidate and his excellent hair, tossed Kennedily by a gentle wind off the river. There was the lovely wife wreathed in smiles, accompanied by a raft of offspring who looked as if Madame Tussaud’s “Brady Bunch” exhibit had sprung wondrously to life.
Large speakers played a boneless soundtrack of soft New Age rock, part Kenny G, part early 1980s porno. On a video screen across from the stage, solitary words shimmered in and out of focus against a western landscape: Vitality. Comfort. Home. Tough. Calm. (You’re getting sleepy, sleepy . . . ) A recorded voice familiar from a dozen car commercials read the words as they appeared. Then another voice directed everyone’s attention to a point 100 yards away, across the endless lawn. The cameras turned. And there they were: a line of grinning Huntsmans, lined up and holding hands. At a cue from an inconspicuous advance man, the family began walking, slowly, slowly, hand in hand across the lawn. All that stood between them and the massed rank of cameras was a towering monument in the center of the field, dedicated to the veterans who had liberated the death camps in World War Two.
The music thrummed. The Huntsman flotilla drew closer still, at the pace of an old Clairol commercial. And just as the little voice inside everyone’s head was silently screaming, “Don’t do it, please don’t don’t don’tdon’t do it,” they did it: The entire family paused in front of the statue and gazed heavenward, some with their arms around each other, some bowing their heads. And then, toeing a line of masking tape the advance men had laid down for them just out of sight, they resumed their march toward the stage, into the bright dawn of America’s tomorrow. It took forever.
I continue to be unwholesomely fascinated by how uninsightful the good Doktor Professor is. Here is another example. Krugman (or his ghostwriter -- I still have a hard time believing he actually writes these things) seems to think that economic prosperity is simply a matter of spending, of demand. He doesn't seem to have any appreciation that it matters what the spending is spent on. You could call this the Keynesian disease and I think it comes partly from the way some macroeconomists of a certain age were trained. They pay attention to big models and the interaction of macro-variables, such as savings and investment. It's like a farmer who thinks Soil + Water + Fertilizer + Labor = Harvest. It might, but it could be if for example you are paying your workers by the hour instead of by the bushel, your harvest will be a lot less. Micro matters.
I on the other hand am impressed by how easy it is to spend money and have nothing to show for it. I manage to do this all too frequently, so do private businesses and government has elevated it to a religion. Work in government for a few years and you will see that wasting money is the rule not the exception. I do think though that we may have been through in the past few decades an era of low-hanging fruit, as Tyler Cowen explains, which created the illusion that just by spraying money about indiscrimately, you could expect a good return. For what I suspect were just underlying factual and historical reasons, such as having a gigantic, incredibly fertile continent not yet in possession of a big interstate highway system, or, half the population (the female half) not in the workforce, or, being at the beginning of a technological revolution made possible by improbably brilliant science in the 20th century, not well-planned-out spending by government was indeed somewhat productive in the post WW2 era, or seems to have been anyway, though it's difficult or impossible to actually measure. Sadly, there is no particular reason to think we are so situated now. Take a billion dollars now and give it to government and instead of some nice highways and bridges you are going to get environmental impact statements, lawsuits, reports, pensions and pleas for more money. Shovel ready means a lot of money is ready to be buried. On top of this is government's natural tendency to make more of itself and build up the infrastructure for doing so, the way tumors vascularize themselves. So even if fifty years ago you coud think government spending would inevitably lead to growth or at least some meaningful economic activity, there's no reason to think this now. Krugman or his ghostwriter seems blissfully unaware of this. If he were a farmer, he would throw seeds, fertilizer and water on a randomly chosen field, or rather that of a favored constituent, and then wonder why all he got was weeds. And then say, we must not be throwing enough seeds, water and fertilizer on the field.