This morning the National Rifle Association finally made an official statement in response to the Sandy Hook elementary school killings. They say the problem is not enough guns. Guns should be allowed in schools, and in fact that each school should have armed guards.
I am surprised they said anything, but the nature of their response is no surprise, Conservative anti-crime, pro gun folk always believe problems are solved by being tougher, meeting force with greater force, and they have dominated much of the debate in this country the last couple decades.
I don't think putting armed guards at schools is the best answer, but, in the spirit of compromise, I'm ok with armed guards at schools - if the NRA pays for it. Pay for the armed guards with a tax on guns and ammunition. As a taxpayer I am not interested in spending one more dime to support their narrow view of the world. Let the folks that love their guns pay for the consequences of easily available guns.
12/29/12 addendum - Interesting factoid relevant to the NRA arguments that guns aren't the problem, people are. The economist notes that on the same day 26 people died at Sandy Hook Elementary a fellow in Henen province in China, burst into a classroom and injured 23 kids, but no one died. The difference between 26 dead and 23 injured? Sandy Hook shooter had guns, the fellow in China only had a knives. (Econ 12/22/12 p.12)
Friday, December 21, 2012
Thursday, December 20, 2012
Tax Simplification
Now that the election is over, and the fiscal cliff is looming, tax policy is back on the pundit's lips. There is broad agreement across the political spectrum that our tax system is way to complex, often unfair and subjects government to unpredictible wild fluctuations in income. Unfortunately, there are also tax breaks for particular interest groups spread across the political spectrum that makes changes to the system very difficult.
In generall all the proposal's I have heard don't really address the basic underlying flaw I see in the tax system that makes it so complex and convoluted. In the 100 years since the income tax was reinstated (it had existed briefly during the time around the Civil War) the entire system has been based on drawing a distinction between invested capital and income from labor. The theory is you don't want to tax capital because it can be invested to create jobs and wealth.
The distinction is false to begin with because it looks backward to focus on where money came from rather than looking forward to see what the money is actually being used for in. So a wealthy guy with lots of Capital gain can use $500,000 of his wealth for personal living expenses and pay 14% tax on that money, while a person who makes $500,000 in a year by working really hard and long hours is taxed at something like 30% or more on the full amount the income, even though he may invest $300,000 of it.
So in fact our tax system sometimes punishes money being used for investment and rewards the personal consumption of converting investment to personal use.
What if we changed the whole underlying assumption of the tax law, allowed people to create capital accounts, and any money going into a capital account, or generated by the capital account, has no tax consequences? Only money that comes out of the account for personal use is taxed, and it is taxed just like any other income that goes to personal expenses. We target the tax benefit exactly on money being used for investment to reward investment and wealth creation, and target the tax on money used for personal expenses to cover the costs of government.
There could be minimal complexity with maintaining the capital account. All the government would care about is when money goes to personal expenses. As long as you keep pouring the income from the investment back into investment you don't have to engage in complex tax accounting. There would have to be some rules to control the tendency of taxpayers to try to cover personal expenses with transactions in the capital account to avoid taxes, but that would be vastly simpler than the current system involving millions of pages of laws covering depreciation, deductions, characterizing income etc.
We couldn't do this overnight. It would be way to disruptive. So we start by allowing people to create capital accounts while we started closing loopholes and tax benefits in existing law. The capital account would make investing vastly simpler and more efficient so over time investments would migrate into the capital account system. Eventually we could abolish the old system without causing massive disruption in the economy.
This is not an idea that will be an easy sell in Washington. It will take a long term, broad based effort by citizens to raise the idea to a level of credibility that a politician who values his job will be willing to sponsor it.
In generall all the proposal's I have heard don't really address the basic underlying flaw I see in the tax system that makes it so complex and convoluted. In the 100 years since the income tax was reinstated (it had existed briefly during the time around the Civil War) the entire system has been based on drawing a distinction between invested capital and income from labor. The theory is you don't want to tax capital because it can be invested to create jobs and wealth.
The distinction is false to begin with because it looks backward to focus on where money came from rather than looking forward to see what the money is actually being used for in. So a wealthy guy with lots of Capital gain can use $500,000 of his wealth for personal living expenses and pay 14% tax on that money, while a person who makes $500,000 in a year by working really hard and long hours is taxed at something like 30% or more on the full amount the income, even though he may invest $300,000 of it.
So in fact our tax system sometimes punishes money being used for investment and rewards the personal consumption of converting investment to personal use.
What if we changed the whole underlying assumption of the tax law, allowed people to create capital accounts, and any money going into a capital account, or generated by the capital account, has no tax consequences? Only money that comes out of the account for personal use is taxed, and it is taxed just like any other income that goes to personal expenses. We target the tax benefit exactly on money being used for investment to reward investment and wealth creation, and target the tax on money used for personal expenses to cover the costs of government.
There could be minimal complexity with maintaining the capital account. All the government would care about is when money goes to personal expenses. As long as you keep pouring the income from the investment back into investment you don't have to engage in complex tax accounting. There would have to be some rules to control the tendency of taxpayers to try to cover personal expenses with transactions in the capital account to avoid taxes, but that would be vastly simpler than the current system involving millions of pages of laws covering depreciation, deductions, characterizing income etc.
We couldn't do this overnight. It would be way to disruptive. So we start by allowing people to create capital accounts while we started closing loopholes and tax benefits in existing law. The capital account would make investing vastly simpler and more efficient so over time investments would migrate into the capital account system. Eventually we could abolish the old system without causing massive disruption in the economy.
This is not an idea that will be an easy sell in Washington. It will take a long term, broad based effort by citizens to raise the idea to a level of credibility that a politician who values his job will be willing to sponsor it.
Saturday, December 15, 2012
California as the Bellweather of Republican Irrelevance
For my entire life I have heard constant talk about how what's hot in California will be the norm everywhere else in a few years. Whether that is broadly true across the spectrum of human activities is doubtful, but California certainly is a pop culture leader. It has also been the leader in politics.
The anti-tax revolution started in California with Propsition 13 in 1978, then was picked up by Conservatives across the country. California had Republican Governors from the early 1980's until the late 1990's and Republicans dominated the legislature. Nationally domination of Congress began the the mid-1990's.
Both in California and nationally the Republican movement was marked by an absolute certainty they were right about all things, a disdain for ideas not their orthodoxy, and an unwillingness to compromise.
In California the movement began to collapse when they backed draconian immigration laws in the Mid-1990's and was accelerated by their inflexible ideological approach that gridlocked the legislature for years. The obtructionist tactics of the Republicans fired up their base but over time aliented non-ideological voters. Republican influence has gradually shrunk to the point that every state wide office is held by a Democrat and the Democrats have super majorities in both legislative houses.
Nationally the Republican decline appears to have begun with the collapse of the economy in 2008 after years of dominating government. They had a short revival in 2010, but their obstructionist tactics over the following 2 years have pushed more and more voters away from them, even as it fired up the true believers.
I imagine they are taking comfort from the fact they still hold the majority in the House, but I saw a statistic the other day that lumping together all the votes in all house races Democrats actually got half a million more votes than Republicans. The only reason Republican's have a majority is because they gerrymandered so many districts to create protected havens for themselves.
I think the masterminds of the Republican party, the Rupert Murdoch, Karl Rove and the like, have trapped the party in a spiral of obstructionist behavior that will continue to alienate voters and push them toward California style irrelevance.
The country would be better off if we had a rational and pragmatic Republican party, but I don't see anyone wresting control of the party from the manipulators at the top any time soon.
The anti-tax revolution started in California with Propsition 13 in 1978, then was picked up by Conservatives across the country. California had Republican Governors from the early 1980's until the late 1990's and Republicans dominated the legislature. Nationally domination of Congress began the the mid-1990's.
Both in California and nationally the Republican movement was marked by an absolute certainty they were right about all things, a disdain for ideas not their orthodoxy, and an unwillingness to compromise.
In California the movement began to collapse when they backed draconian immigration laws in the Mid-1990's and was accelerated by their inflexible ideological approach that gridlocked the legislature for years. The obtructionist tactics of the Republicans fired up their base but over time aliented non-ideological voters. Republican influence has gradually shrunk to the point that every state wide office is held by a Democrat and the Democrats have super majorities in both legislative houses.
Nationally the Republican decline appears to have begun with the collapse of the economy in 2008 after years of dominating government. They had a short revival in 2010, but their obstructionist tactics over the following 2 years have pushed more and more voters away from them, even as it fired up the true believers.
I imagine they are taking comfort from the fact they still hold the majority in the House, but I saw a statistic the other day that lumping together all the votes in all house races Democrats actually got half a million more votes than Republicans. The only reason Republican's have a majority is because they gerrymandered so many districts to create protected havens for themselves.
I think the masterminds of the Republican party, the Rupert Murdoch, Karl Rove and the like, have trapped the party in a spiral of obstructionist behavior that will continue to alienate voters and push them toward California style irrelevance.
The country would be better off if we had a rational and pragmatic Republican party, but I don't see anyone wresting control of the party from the manipulators at the top any time soon.
Wednesday, December 12, 2012
How to Control Public Sector Compensation
Politicians will never be able to effectively control public sector compensation in a democracy, since public employee organizations will always be much more involved than the average taxpayer. Public sector compensation needs to be controlled by constitutional provisions that provide an automatic limitation to keep Government from overly burdening the private sector.
Every Jurisdiction authorized to impose taxes should be required to either:
1. Adopt an ordinance explicitly linking public employee compensation to average private sector compensation within the jurisdiction, or
2. Submit an audited report at least once every five years to the public comparing average private sector compensation within the jurisdiction with average public sector compensation (mean, median and mode).
Maximum compensation in every jurisdiction should be the amount paid to the highest elected official in the jurisdiction.
Public employees should be catagorized in two catagories:
1. Career public servants who's compensation level is linked directly to private sector compensation within the jurisdiction.
2. Learning experience positions paid at or near minimum wage. Every citizen in the jurisdiction is entitled to such a position for a period of up to 1 year, after one year they can continue in the position but the longer they are in such position, the more controls on their behavior they must accept.
Every Jurisdiction authorized to impose taxes should be required to either:
1. Adopt an ordinance explicitly linking public employee compensation to average private sector compensation within the jurisdiction, or
2. Submit an audited report at least once every five years to the public comparing average private sector compensation within the jurisdiction with average public sector compensation (mean, median and mode).
Maximum compensation in every jurisdiction should be the amount paid to the highest elected official in the jurisdiction.
Public employees should be catagorized in two catagories:
1. Career public servants who's compensation level is linked directly to private sector compensation within the jurisdiction.
2. Learning experience positions paid at or near minimum wage. Every citizen in the jurisdiction is entitled to such a position for a period of up to 1 year, after one year they can continue in the position but the longer they are in such position, the more controls on their behavior they must accept.
Sunday, December 9, 2012
Defense spending - The Public Must Lead the Politicians
In the aftermath of the election Washington has settled into the same partisan gridlock that marked the last couple years. The relative power of Democrats and Republicans has shifted, Democrats may push through some modest tax increases on rich folks but likely without really addressing the problem that created our fiscal imbalance.
The fundemental problem is defense spending. The deficit exists because we spend enormous amounts of money on defense but are not willing to impose the taxes to pay for it.
Republican's caused the problem with tax cuts coupled with increases in defense spending by both President Reagan and President Bush II. The economy blowing up after the Bush II years was just the icing on the cake.
But Democrats are afraid to confront the problem. They fear being painted as weak on defense, so in fact often go meekly along with increases in defense spending.
Democrats need to suck it up and start engaging the public on what purpose our massive defense spending serves. We spend, per taxpayer, 4 to 5 times more on defense than taxpayers of any country other than Isreal and a couple of tiny belligerent dictatorships in the third world. It is not because we live in a dangerous neighborhood (like Isreal), most of those we perceive to be potential enemies are half a world away. Much of our defense spending is on maintaining the ability to fight two wars on the other side of the world. Why do we need the capability to fight wars on the other side of the world? To protect our economic interests around the world. We aren't the worlds cop, we don't step in when genocide is going on, we step in when our economic interests are threatened.
Osama Bin Ladin didn't send terrorists to bomb a synagogue or a church, he went after the World Trade Center as his primary target, and the Pentagon as his secondary target. The building that represents our economic interests around the world and the brain of the military that protects those interests.
I don't really have a problem with us having overwhelming military superiority, I do have a problem paying extra to protect private investments around the world, when the wealthy folk that own those investments and are making lots of money have been paying less and less to support our defense spending even as our spending increased.
The Democrats need to ask themselves, would the average voting taxpayer, if he/she understood who was financing our military and who was benefiting, really have a problem with someone standing up to talk about the folks that benefit from our military paying a fair share for that benefit?
But this is an issue, like gay marriage, serious career politicians won't touch with a 10 foot pole. Two many vested interests with the money and lawyers to bury their political careers.
If we want to really solve the deficit the public needs to lead the politicians into serious discussion about what we want our Military to do and who should pay for it.
The fundemental problem is defense spending. The deficit exists because we spend enormous amounts of money on defense but are not willing to impose the taxes to pay for it.
Republican's caused the problem with tax cuts coupled with increases in defense spending by both President Reagan and President Bush II. The economy blowing up after the Bush II years was just the icing on the cake.
But Democrats are afraid to confront the problem. They fear being painted as weak on defense, so in fact often go meekly along with increases in defense spending.
Democrats need to suck it up and start engaging the public on what purpose our massive defense spending serves. We spend, per taxpayer, 4 to 5 times more on defense than taxpayers of any country other than Isreal and a couple of tiny belligerent dictatorships in the third world. It is not because we live in a dangerous neighborhood (like Isreal), most of those we perceive to be potential enemies are half a world away. Much of our defense spending is on maintaining the ability to fight two wars on the other side of the world. Why do we need the capability to fight wars on the other side of the world? To protect our economic interests around the world. We aren't the worlds cop, we don't step in when genocide is going on, we step in when our economic interests are threatened.
Osama Bin Ladin didn't send terrorists to bomb a synagogue or a church, he went after the World Trade Center as his primary target, and the Pentagon as his secondary target. The building that represents our economic interests around the world and the brain of the military that protects those interests.
I don't really have a problem with us having overwhelming military superiority, I do have a problem paying extra to protect private investments around the world, when the wealthy folk that own those investments and are making lots of money have been paying less and less to support our defense spending even as our spending increased.
The Democrats need to ask themselves, would the average voting taxpayer, if he/she understood who was financing our military and who was benefiting, really have a problem with someone standing up to talk about the folks that benefit from our military paying a fair share for that benefit?
But this is an issue, like gay marriage, serious career politicians won't touch with a 10 foot pole. Two many vested interests with the money and lawyers to bury their political careers.
If we want to really solve the deficit the public needs to lead the politicians into serious discussion about what we want our Military to do and who should pay for it.
Friday, November 30, 2012
Reforming Proposition 13
I voted for Proposition 13, the ballot measure in 1978 that completely restructured California's tax laws. In the decade + leading up to 1978 property values had been shooting up, so property taxes had also been rising rapidly threatening some peoples ability to continue to own their home, and the legislature had been frozen in partisan gridlock. Conservative Republicans alarmed over the growth of government had evolved toward a philosophy summarized in the phrase "starve the beast" and Prop 13 seems to have been developed with that philosophy.
Prop 13 was sold as saving peoples homes, but the people that drafted it had a much larger agenda. They inserted a little noticed clause that required a 2/3 vote to authorize almost any new tax, or increase an existing tax. That clause has crippled California's ability to finance needed infrastructure. The University system that was at that time widely considered the model for the world, the system that provided top quality, inexpensive education to the State residents, has morphed into a system that leaves students without well to do parents so indebted upon graduation they risk being financially crippled for life. Our roads, bridges and freeways have deteriorated to the point we lose billions of dollars a year in lost productivity, and damage to our vehicles.
Some are fighting to get the pendulum swinging back the other direction. To return to pre-Prop 13 days where governments have great freedom to tax as they see fit..
What if instead we stop the pendulum swing and develop a law that provides long term stability?
Prop 13 has two main impacts:
1. It limits the authority of taxing entities to increase the value of the property, so rather than being taxed at the actual current value, you are taxed at the value at which you bought the house, plus a maximum of 2% per year. This protects homeowners from increases in the expenses they build into their budgeting, but the corollary effect is if inflation exceeds 2% governments revenue is cut.
2: It requires a 2/3 vote to impose additional taxes.
These two limitations decimated local governments finances when they took effect, and so the State stepped in and started creating the horribly complex and disfunctional revenue system the state now endures.
How do we fix it without going back to the old system that undermined peoples ability to own a house?
1. We should keep the 2% per year limitation in place, but give government a lien on the house that entitles them to a piece of the sales pie to the extent housing market inflation has exceeded 2% per year.
2. We should repeal the 2/3 vote requirement and replace it with a limitation that the maximum vote that can be required to enact a tax cannot exceed the percentage of the vote that enacted the vote requirement.
Prop 13 was sold as saving peoples homes, but the people that drafted it had a much larger agenda. They inserted a little noticed clause that required a 2/3 vote to authorize almost any new tax, or increase an existing tax. That clause has crippled California's ability to finance needed infrastructure. The University system that was at that time widely considered the model for the world, the system that provided top quality, inexpensive education to the State residents, has morphed into a system that leaves students without well to do parents so indebted upon graduation they risk being financially crippled for life. Our roads, bridges and freeways have deteriorated to the point we lose billions of dollars a year in lost productivity, and damage to our vehicles.
Some are fighting to get the pendulum swinging back the other direction. To return to pre-Prop 13 days where governments have great freedom to tax as they see fit..
What if instead we stop the pendulum swing and develop a law that provides long term stability?
Prop 13 has two main impacts:
1. It limits the authority of taxing entities to increase the value of the property, so rather than being taxed at the actual current value, you are taxed at the value at which you bought the house, plus a maximum of 2% per year. This protects homeowners from increases in the expenses they build into their budgeting, but the corollary effect is if inflation exceeds 2% governments revenue is cut.
2: It requires a 2/3 vote to impose additional taxes.
These two limitations decimated local governments finances when they took effect, and so the State stepped in and started creating the horribly complex and disfunctional revenue system the state now endures.
How do we fix it without going back to the old system that undermined peoples ability to own a house?
1. We should keep the 2% per year limitation in place, but give government a lien on the house that entitles them to a piece of the sales pie to the extent housing market inflation has exceeded 2% per year.
2. We should repeal the 2/3 vote requirement and replace it with a limitation that the maximum vote that can be required to enact a tax cannot exceed the percentage of the vote that enacted the vote requirement.
Monday, November 12, 2012
Remarks regarding gun policy
We all recall the horrific shooting in Arizona that left former Representative Gabby Giffords with devastating long term injuries, and killed many other people. The following is an excerpt from the remarks of Gabby Giffords husband , astronaut Mark Kelly, made at the sentencing hearing of Jared Loughner in Tucson, Arizona Nov. 8, 2012.
“Your decision to commit cold-blooded mass murder also begs of us to look in the mirror. This horrific act warns us to hold our leaders and ourselves responsible for coming up short when we do, for not having the courage to act when it’s hard, even for possessing the wrong values.
“We are a people who can watch a young man like you spiral into murderous rampage without choosing to intervene before it is too late.
“We have a political class that is afraid to do something as simple as have a meaningful debate about our gun laws and how they are being enforced. We have representatives who look at gun violence, not as a problem to solve, but as the white elephant in the room to ignore. As a nation we have repeatedly passed up the opportunity to address this issue. After Columbine; after Virginia Tech; after Tucson and after Aurora we have done nothing.,,,,
“In this state we have elected officials so feckless in their leadership that they would say, as in the case of Governor Jan Brewer, “I don’t think it has anything to do with the size of the magazine or the caliber of the gun.” She went on and said, “Even if the shooter’s weapon had held fewer bullets, he’d have another gun, maybe. He could have three guns in his pocket” – she said this just one week after a high capacity magazine allowed you to kill six and wound 19 others, before being wrestled to the ground while attempting to reload. Or a state legislature that thought it appropriate to busy itself naming an official Arizona state gun just weeks after this tragedy occurred, instead of doing the work it was elected to do: encourage economic growth, help our returning veterans and fix our education system...."
Wednesday, November 7, 2012
Voting to shape public policy....
...sometimes feels like trying to create an ice sculpture with a wrecking ball.
Wednesday, October 31, 2012
Is the Right ever Right?
As I contemplate Mitt Romney's assertions that the way to solve the health care problems is through the private sector, and the way to cure the economy is through cutting government and coddling rich taxpayers, it makes me cast my mind back over the last couple decades to contemplate how the Right's policy ideas have worked out.
Perhaps some Conservative readers can comment on some policies of the right that have actually worked, but all I see from history and the data is a consistent ability to be wrong.
In the early 1980's Ronald Reagan sold the country on the notion his tax cuts benefitting wealthy folks would "trickle down" to the benefit of everybody else. Well, the data is in. Seems like Mr. Reagan underestimated the ability of wealthy people to find and plug leaks, because they got very wealthy while the rest got nothing other than a big jump in the National debt because of all the taxes the rich folks didn't pay.
Also in the 1980's the right began belittling those with the temerity to suggest our actions are causing climate change, a position which Mr. Romney still espouses. Even if the cause and effect is still somewhat unproven, is the conservative response to potential catastophe to ignore it because its not 100% certain?
Beginning in the 1980's Republicans took the lead in the movement to institutionalize discrimination against gays. They discovered it was an issue that paid big dividends for them at the ballot box, eventually playing a big part in the Republican's taking over Congress and holding it from 1995 to 2007. It also helped George Bush get elected, and reelected in 2000 and 2004. Now even Republican's are beginning to realize that policy is fundementally inconsistent with the freedoms our country was found on. It more and more looks like one of those policies that is going to make people 50 years down the road ask "what were they thinking?"
Once they got hold of Congress in 1995 Conservatives doubled down on the Reagan tax cuts for the wealthy, changed the Capital Gains tax law to turn the housing market into a speculator's casino, and removed the regulations that prevented banks from using our deposits on insanely stupid and speculative investments. By the time they were being shown the door in 2007 we were descending into an economic collapse than nearly took the whole world economy down.
In the early 1990's they beat back the Clinton effort to bring some sanity to our health care market, which for decades has been most noteworthy for its ability to suck up lots of money and provide mediocre care in return (or no care for 50 million people or so). Two years ago they were unable to beat Mr. Obama's push for universal coverage, but they certainly made it much more complicated (and in the end probably more expensive) than it needs to be.
Let us not forget the Republican notion if we just invade Iraq and topple the regime (the same Regime Republican's propped up in the 1980's as a counterweight to Iran) we would be welcomed as heroes and create a democratic country that would solve all our problems with the middle east. No walk softly and carry a big stick for modern Republicans.
Mitt, like most of the Republican's I know, seems a nice fellow, with a nice family and good intentions. I just wish he, and other Republicans, would spend a little more time cultivating the ability to expand their reality beyond their own experiences and ideology.
Perhaps some Conservative readers can comment on some policies of the right that have actually worked, but all I see from history and the data is a consistent ability to be wrong.
In the early 1980's Ronald Reagan sold the country on the notion his tax cuts benefitting wealthy folks would "trickle down" to the benefit of everybody else. Well, the data is in. Seems like Mr. Reagan underestimated the ability of wealthy people to find and plug leaks, because they got very wealthy while the rest got nothing other than a big jump in the National debt because of all the taxes the rich folks didn't pay.
Also in the 1980's the right began belittling those with the temerity to suggest our actions are causing climate change, a position which Mr. Romney still espouses. Even if the cause and effect is still somewhat unproven, is the conservative response to potential catastophe to ignore it because its not 100% certain?
Beginning in the 1980's Republicans took the lead in the movement to institutionalize discrimination against gays. They discovered it was an issue that paid big dividends for them at the ballot box, eventually playing a big part in the Republican's taking over Congress and holding it from 1995 to 2007. It also helped George Bush get elected, and reelected in 2000 and 2004. Now even Republican's are beginning to realize that policy is fundementally inconsistent with the freedoms our country was found on. It more and more looks like one of those policies that is going to make people 50 years down the road ask "what were they thinking?"
Once they got hold of Congress in 1995 Conservatives doubled down on the Reagan tax cuts for the wealthy, changed the Capital Gains tax law to turn the housing market into a speculator's casino, and removed the regulations that prevented banks from using our deposits on insanely stupid and speculative investments. By the time they were being shown the door in 2007 we were descending into an economic collapse than nearly took the whole world economy down.
In the early 1990's they beat back the Clinton effort to bring some sanity to our health care market, which for decades has been most noteworthy for its ability to suck up lots of money and provide mediocre care in return (or no care for 50 million people or so). Two years ago they were unable to beat Mr. Obama's push for universal coverage, but they certainly made it much more complicated (and in the end probably more expensive) than it needs to be.
Let us not forget the Republican notion if we just invade Iraq and topple the regime (the same Regime Republican's propped up in the 1980's as a counterweight to Iran) we would be welcomed as heroes and create a democratic country that would solve all our problems with the middle east. No walk softly and carry a big stick for modern Republicans.
Mitt, like most of the Republican's I know, seems a nice fellow, with a nice family and good intentions. I just wish he, and other Republicans, would spend a little more time cultivating the ability to expand their reality beyond their own experiences and ideology.
Monday, October 29, 2012
Simple Economic Truths
Wealthy people have more money than they have needs or wants, so they save their money and invest to try to make more money. Their investment funds economic growth.
Lower income people have more needs and wants than money, so they save little and spend a lot. But the money they spend on needs and wants generates economic growth.
To little money to invest stifles the economy. But so does to little growth in the spending money in the pockets of lower income people.
Republican's obsess about the first part of this equation, but ignore the second part.
Asset bubbles are an indicator that too much wealth is going to the folks who's wants and needs are fulfilled. There is not enough consumer demand to support new business, so the folks with extra money laying around start buying up existing assets hoping to sell to someone else for a higher price.
Asset bubbles have been a hallmark of the US economy for the last decade and a half, but Republican's still don't get it. Our economy is weak because too much money is concentrated in the hands of people whose every need and want is satisfied, and not enough is getting into the pockets of people with needs and wants.
Lower income people have more needs and wants than money, so they save little and spend a lot. But the money they spend on needs and wants generates economic growth.
To little money to invest stifles the economy. But so does to little growth in the spending money in the pockets of lower income people.
Republican's obsess about the first part of this equation, but ignore the second part.
Asset bubbles are an indicator that too much wealth is going to the folks who's wants and needs are fulfilled. There is not enough consumer demand to support new business, so the folks with extra money laying around start buying up existing assets hoping to sell to someone else for a higher price.
Asset bubbles have been a hallmark of the US economy for the last decade and a half, but Republican's still don't get it. Our economy is weak because too much money is concentrated in the hands of people whose every need and want is satisfied, and not enough is getting into the pockets of people with needs and wants.
Friday, October 26, 2012
Republican Marketing Genius
The fact that Mitt Romney is in a dead heat with Obama is evidence Republican's are very good at Marketing. Consider these facts:
1. There are always significantly more registered Democrats than Republicans.
2. Empirical historical and economic data show that over the last century the country generally suffers economically when Republicans run the show, and generally does well when Democrats run the shoe.
3. Empirical historical and economic data show that over the last century the countries national debt generally shoots up after Republican's have run the show, and levels off or falls when Democrats have run the show.
4. Within the recent memory of most voters Republicans controlled Congress from 1995 to 2007 and created the conditions that caused the financial collapse of 2008-09 which bogged us down in recession.
5. Mitt Romney's stated economic theories are rooted in beliefs and assumptions identical to the theories the Republican's put into effect between 1995 and 2007 (and also between 1919 to 1933 that led to the great Depression), and indistinguishable from George W. Bush's campaign rhetoric.
6. Barack Obama took office in January of 2009 when the economy was in free fall. The economy shrunk something like 4% in the couple months before he took office and we were losing a million jobs a month. He was like a Dr. who arrived at the scene of a crash as the patient was bleeding out. His administration stopped the bleeding and has the patient well on the way toward recovery. We have now had a couple of years of modest growth while Japan, Europe and the other large economies also sucked into the economic collapse we spawned in 2008-09 are still mired in recesssion.
7. After Republican's took over the House in 2011 their publicly stated policy was to prevent Obama from having any success that would help him get re-elected. They put their policital agenda ahead of the countries business. They played the major role in making the 2011-13 Congress statistically the most do-nothing Congress in history.
On these objective facts the Republican's should get obliterated in this election. The vast majority of voters who are not political and are most interested in figuring out who is going to do the best job for the country should, on these simple facts, vote for Obama and the Democrats.
But it is the facts that have been obliterated.
I thought the Republican's made a crucial mistake about a year ago when they decided to have 12 or 13 televised debates to choose their candidate. I thought it would educate the public about the nonsense of many of their positions. To some extent it did, Republican's have garnered alot of votes over the last couple decades by appealing to voters prejudices about gays, or their outrage about abortion. Both of those issues have lost most of their ability to generate more votes than they lose for Republicans (for the moment).
But the much bigger problem for Republican's in this election was economic. They controlled all the levers of Government in the years leading up to the worst financial collapse since the great Depression. How does one distract voters who lived through those years from that simple, damning fact?
Their answer, which seems to be working, is to inundate the public in politics until they are sick of it. Endless debates, coupled with unprecedented advertsing blitzes on every possible media, have created a sort of fact fatigue. Voters have jobs to do, families to take care of, and want to have some fun. They don't want to spend their spare time sorting through the overwhelming avalanche of information that has descended on us all.
Once fact fatigue is in place the simple principles of marketing that business Republican's are so very good at can be effective. Appeal to emotions with simple messages, and happy images.
It reminds me of the US auto industry that used their marketing expertise to sell us tail fins and images while the rest of the world was developing better cars. Eventually the US auto industry hit a crisis point where a critical mass of consumers realized the US auto industry were selling lousy cars. The US auto industry has never fully recovered.
So when will voters realize the Republican party is selling lousy economics?
Not yet evidently. A tip of the hat to Republican marketing, a razzberry for putting marketing ahead of good policy.
1. There are always significantly more registered Democrats than Republicans.
2. Empirical historical and economic data show that over the last century the country generally suffers economically when Republicans run the show, and generally does well when Democrats run the shoe.
3. Empirical historical and economic data show that over the last century the countries national debt generally shoots up after Republican's have run the show, and levels off or falls when Democrats have run the show.
4. Within the recent memory of most voters Republicans controlled Congress from 1995 to 2007 and created the conditions that caused the financial collapse of 2008-09 which bogged us down in recession.
5. Mitt Romney's stated economic theories are rooted in beliefs and assumptions identical to the theories the Republican's put into effect between 1995 and 2007 (and also between 1919 to 1933 that led to the great Depression), and indistinguishable from George W. Bush's campaign rhetoric.
6. Barack Obama took office in January of 2009 when the economy was in free fall. The economy shrunk something like 4% in the couple months before he took office and we were losing a million jobs a month. He was like a Dr. who arrived at the scene of a crash as the patient was bleeding out. His administration stopped the bleeding and has the patient well on the way toward recovery. We have now had a couple of years of modest growth while Japan, Europe and the other large economies also sucked into the economic collapse we spawned in 2008-09 are still mired in recesssion.
7. After Republican's took over the House in 2011 their publicly stated policy was to prevent Obama from having any success that would help him get re-elected. They put their policital agenda ahead of the countries business. They played the major role in making the 2011-13 Congress statistically the most do-nothing Congress in history.
On these objective facts the Republican's should get obliterated in this election. The vast majority of voters who are not political and are most interested in figuring out who is going to do the best job for the country should, on these simple facts, vote for Obama and the Democrats.
But it is the facts that have been obliterated.
I thought the Republican's made a crucial mistake about a year ago when they decided to have 12 or 13 televised debates to choose their candidate. I thought it would educate the public about the nonsense of many of their positions. To some extent it did, Republican's have garnered alot of votes over the last couple decades by appealing to voters prejudices about gays, or their outrage about abortion. Both of those issues have lost most of their ability to generate more votes than they lose for Republicans (for the moment).
But the much bigger problem for Republican's in this election was economic. They controlled all the levers of Government in the years leading up to the worst financial collapse since the great Depression. How does one distract voters who lived through those years from that simple, damning fact?
Their answer, which seems to be working, is to inundate the public in politics until they are sick of it. Endless debates, coupled with unprecedented advertsing blitzes on every possible media, have created a sort of fact fatigue. Voters have jobs to do, families to take care of, and want to have some fun. They don't want to spend their spare time sorting through the overwhelming avalanche of information that has descended on us all.
Once fact fatigue is in place the simple principles of marketing that business Republican's are so very good at can be effective. Appeal to emotions with simple messages, and happy images.
It reminds me of the US auto industry that used their marketing expertise to sell us tail fins and images while the rest of the world was developing better cars. Eventually the US auto industry hit a crisis point where a critical mass of consumers realized the US auto industry were selling lousy cars. The US auto industry has never fully recovered.
So when will voters realize the Republican party is selling lousy economics?
Not yet evidently. A tip of the hat to Republican marketing, a razzberry for putting marketing ahead of good policy.
Wednesday, October 24, 2012
Health Care Policy - Hiring Caregivers - An Example
Republican's are convinced that Government should have no role in in health-care - at least that is what they profess on the campaign trail. My experience has been that it is private business that is not good at balancing making a profit with good care.
Some years ago I was handling care for a loved one who had a debilitating disease that eventually required almost constant care. At a point, as her needs got more acute, I had to start hiring caregivers to take care of her during periods I could not cover.
There are many private sector companies offerring to provide caregivers for a fee. I turned to a private company first, since that is the easiest and quickest solution. It didn't take long for me to learn you don't get much for your money with private company caregivers. The problem is built into the market. The companies don't want you to get to chummy with a particular caregiver, since you could hire them directly at probably 60% of what you were paying the company, so they moved the caregivers around constantly to keep them from forming relationships with the patients. This not only disrupted the ability of the patient to bond with the caregiver, it also meant every couple days a new caregiver would arrive who knew nothing about the patient, or the patients needs, or the routines of the household. Because the caregivers were being moved around so much they lost interest in forming relationships with the patients and saw no reward in doing good work. They were just punching a clock, doing as little as they could, getting out of the house as soon as they could.
So although it took a lot of my time, I ended up interviewing and hiring caregivers directly. I found the County maintained a list of caregivers. The county did background checks, and provided for bonding as a requirement for a caregiver to be on the list, and set a specific amount as the minimum the caregiver could be paid. Over the next year or so I found a number of really hardworking, caring caregivers on the county list.
At one point I got really busy and didn't feel like I had time to interview people, so I hired another company. I had the same experience as with the first company. So I went back to interviewing.
Now other folks I know around my age are confronting the problem of caring for an aging parent. They often live a long way from the parent, or work all day, so they hire companies to provide assistance. They have the same problems. No continuity in care. Caregivers pushed by the companies to get in and get out quickly so the company can send them to a bunch of different people in a day. So the caregivers do little beyond show up for awhile.
Unfortunately the option I used is generally no longer available because those county offices that maintained caregiver lists have been decimated by budget cuts, impelled by the financial collapse of that other "free" market on Wall Street.
Some years ago I was handling care for a loved one who had a debilitating disease that eventually required almost constant care. At a point, as her needs got more acute, I had to start hiring caregivers to take care of her during periods I could not cover.
There are many private sector companies offerring to provide caregivers for a fee. I turned to a private company first, since that is the easiest and quickest solution. It didn't take long for me to learn you don't get much for your money with private company caregivers. The problem is built into the market. The companies don't want you to get to chummy with a particular caregiver, since you could hire them directly at probably 60% of what you were paying the company, so they moved the caregivers around constantly to keep them from forming relationships with the patients. This not only disrupted the ability of the patient to bond with the caregiver, it also meant every couple days a new caregiver would arrive who knew nothing about the patient, or the patients needs, or the routines of the household. Because the caregivers were being moved around so much they lost interest in forming relationships with the patients and saw no reward in doing good work. They were just punching a clock, doing as little as they could, getting out of the house as soon as they could.
So although it took a lot of my time, I ended up interviewing and hiring caregivers directly. I found the County maintained a list of caregivers. The county did background checks, and provided for bonding as a requirement for a caregiver to be on the list, and set a specific amount as the minimum the caregiver could be paid. Over the next year or so I found a number of really hardworking, caring caregivers on the county list.
At one point I got really busy and didn't feel like I had time to interview people, so I hired another company. I had the same experience as with the first company. So I went back to interviewing.
Now other folks I know around my age are confronting the problem of caring for an aging parent. They often live a long way from the parent, or work all day, so they hire companies to provide assistance. They have the same problems. No continuity in care. Caregivers pushed by the companies to get in and get out quickly so the company can send them to a bunch of different people in a day. So the caregivers do little beyond show up for awhile.
Unfortunately the option I used is generally no longer available because those county offices that maintained caregiver lists have been decimated by budget cuts, impelled by the financial collapse of that other "free" market on Wall Street.
Sunday, October 21, 2012
And The Greatest Generation begat the Greediest
A few years ago there was a lot of celebrating the WW II generation that was reaching the end of their time. It was a whole generation who went to war as a country, instead of hiring people who need the money, to defeat facism. The people who stayed home endured rationing, the nation took on an enormous debt, and millions of soldiers died.
Then after the war was won that generation came home, had lots of babies, and dominated the country from 1945 until 1980. They supported candidates who voted to impose heavy tax burdens, particularly on the wealthy, to pay down the war debt. They believed in our democratic Government because they had seen how government had saved the world from greedy, power hungry fascists, and many were old enough to remember how big business had blown up the world economy in the 1920's.
Then their kids grew up. As the 1980's dawned the kids began to dominate politics, just by sheer weight of numbers. They elected people to Congress who cut taxes, but somehow forgot to cut expenses to match the lost revenue so the country began sinking into debt again. They bought into the notion that business is good and government is bad. Then they cut taxes again, and again, still ignoring the fact the National debt continued to rise.
Here are some statistical facts from an Economist article (*) that sparked this blog.
In 1981 the federal tax rate for a median income American household was 18%. Today it is 11%. The drop in tax rate correlates with a rise in Federal debt. Boomers also supported politicians who granted an expensive prescription drug benefit without bothering to figure out how to pay for it. One economist calculates the average baby boomer can expect 2.2 million dollars in net transfers from the Federal Government (SSN, Medicare etc) over their lifetime. Those aged 65 in 2010 may receive 333 billion more than they pay in taxes, 17 times more than what someone who was 25 in 2010 is likely to receive.
The debt involves more than just money. Annual spending on infrastructure (roads, bridges etc) dropped form more than 3% of GDP in the early 1960's to less than 1% today. We have a big infrastructure debt.
There is no quick fix. By 2030 the over-65 voting age population in the US will rise from the current 17% of total voters to 26%. Older voters won't like inflation. so the Fed will have limited powers to inflate the national debt away.
We boomers have painted ours kids into a corner.
* Economist, September 29, 2012, p.75 "Sponging Boomers"
Then after the war was won that generation came home, had lots of babies, and dominated the country from 1945 until 1980. They supported candidates who voted to impose heavy tax burdens, particularly on the wealthy, to pay down the war debt. They believed in our democratic Government because they had seen how government had saved the world from greedy, power hungry fascists, and many were old enough to remember how big business had blown up the world economy in the 1920's.
Then their kids grew up. As the 1980's dawned the kids began to dominate politics, just by sheer weight of numbers. They elected people to Congress who cut taxes, but somehow forgot to cut expenses to match the lost revenue so the country began sinking into debt again. They bought into the notion that business is good and government is bad. Then they cut taxes again, and again, still ignoring the fact the National debt continued to rise.
Here are some statistical facts from an Economist article (*) that sparked this blog.
In 1981 the federal tax rate for a median income American household was 18%. Today it is 11%. The drop in tax rate correlates with a rise in Federal debt. Boomers also supported politicians who granted an expensive prescription drug benefit without bothering to figure out how to pay for it. One economist calculates the average baby boomer can expect 2.2 million dollars in net transfers from the Federal Government (SSN, Medicare etc) over their lifetime. Those aged 65 in 2010 may receive 333 billion more than they pay in taxes, 17 times more than what someone who was 25 in 2010 is likely to receive.
The debt involves more than just money. Annual spending on infrastructure (roads, bridges etc) dropped form more than 3% of GDP in the early 1960's to less than 1% today. We have a big infrastructure debt.
There is no quick fix. By 2030 the over-65 voting age population in the US will rise from the current 17% of total voters to 26%. Older voters won't like inflation. so the Fed will have limited powers to inflate the national debt away.
We boomers have painted ours kids into a corner.
* Economist, September 29, 2012, p.75 "Sponging Boomers"
Thursday, October 18, 2012
Taxing Corporations and Dividends is Not Double Taxation
Mitt Romney argues that the 14% tax rate he pays is fair, even though most of the rest of the citizens of this country pay a much higher percentage of our income. Mitt says that his 14% is fair because his income is dividend income, and the Corporation has already paid Corporate taxes, so he is in effect being taxed twice.
Leaving aside the fact the Corporate Income Tax is so chock full of loopholes many Corporations pay little or no tax, Mr. Romney's argument is even more fundamentally false.
Corporations are not real. They are a fiction created by the law in order to encourage people to make big, risky investments. A Corporation allows the owners to make big investments, if they do well they get the profits, if it really goes bad, they get to dump calamitous losses on society, instead of absorbing it themselves.
Examples?
Think of the financial collapse we went through a few years ago. The Bankers and Brokers that made tons of money on the stupid business ideas that caused the crash are all still sitting on most of the money, because they operated within Corporations. Their corporations may now be bankrupt, or defunct, but the people who owned and ran the Corporation still have all the money they made. Who bore the risk of loss? The homeowners who lost their homes. The investors that lost much of their wealth. The workers out of a job.
Think of the thousands of plots of land all over this country that are so contaminated with hazardous chemicals they have to be fenced off from public access until someone spends millions to clean up the mess. Generally the mess was made by Corporations that made people very wealthy. The Corporations may be gone, the owners are probably still very wealthy, but it is often government who ends up cleaning up the mess.
That is why Corporations pay Corporate taxes. To compensate society for the risk society is taking that other people will end up paying the price for Corporate folly. Corporate taxes are not a substitute for every citizens obligation to pay their fair share of taxes for running government, they are a cost of doing business as a Corporation.
It is very easy for anyone to avoid Corporate taxes, you just dump the corporation and do business as a partnership. But rich folks don't do that, because if they do, they might actually have to pay for the messes they create.
Mitt should know this. The self proclaimed great businessman who understands how business works has undoubtedly had lots of discussions in his life about whether a business should incorporate or operate as a partnership. But I guess he calculates a lot of regular folk don't, so he can make the argument and get some votes.
Leaving aside the fact the Corporate Income Tax is so chock full of loopholes many Corporations pay little or no tax, Mr. Romney's argument is even more fundamentally false.
Corporations are not real. They are a fiction created by the law in order to encourage people to make big, risky investments. A Corporation allows the owners to make big investments, if they do well they get the profits, if it really goes bad, they get to dump calamitous losses on society, instead of absorbing it themselves.
Examples?
Think of the financial collapse we went through a few years ago. The Bankers and Brokers that made tons of money on the stupid business ideas that caused the crash are all still sitting on most of the money, because they operated within Corporations. Their corporations may now be bankrupt, or defunct, but the people who owned and ran the Corporation still have all the money they made. Who bore the risk of loss? The homeowners who lost their homes. The investors that lost much of their wealth. The workers out of a job.
Think of the thousands of plots of land all over this country that are so contaminated with hazardous chemicals they have to be fenced off from public access until someone spends millions to clean up the mess. Generally the mess was made by Corporations that made people very wealthy. The Corporations may be gone, the owners are probably still very wealthy, but it is often government who ends up cleaning up the mess.
That is why Corporations pay Corporate taxes. To compensate society for the risk society is taking that other people will end up paying the price for Corporate folly. Corporate taxes are not a substitute for every citizens obligation to pay their fair share of taxes for running government, they are a cost of doing business as a Corporation.
It is very easy for anyone to avoid Corporate taxes, you just dump the corporation and do business as a partnership. But rich folks don't do that, because if they do, they might actually have to pay for the messes they create.
Mitt should know this. The self proclaimed great businessman who understands how business works has undoubtedly had lots of discussions in his life about whether a business should incorporate or operate as a partnership. But I guess he calculates a lot of regular folk don't, so he can make the argument and get some votes.
Wednesday, October 17, 2012
The Spooky October Stock Market
Weird things are happening in the Stock Market. Normally stocks go down in the summer and up in the winter.
This last summer, starting about July, stocks started broadly increasing in price despite the fact not many people were trading. The increase has continued into the fall.
What raises this fact to the level of being weird is that each month for the last few months has seen headlines in the financial press about the billions of dollars being pulled out of stock mutual funds by retail investors.
So stock prices keep trending up even though huge chunks of retail investors are abandoning the stock market.
What is going on?
Is it that the money being pulled out by retail investors is being replaced by Corporations - flush with cash but afraid to invest - buying back their own shares? This would have a multiple short term benefit for corporate management, it keeps remaining investors happy that the stock price is up, it qualifies management for bigger bonuses to the extent the bonus is dependant on stock price, and it also boosts up the value of stock management already holds.
But how long can Corporations prop up stock prices when retail investors are bailing? The retail bail-out is not unexpected, people traditionally move out of stocks as they near retirement for the safety of bonds, and big chunks of the baby boomer generation are at or near retirement. What happens to the Corporations when they can no longer prop up their stock price and their market value plummets?
Is the bail out of stocks going to be like a dam breaking instead of a trickle over the top of the dam? Are we about to see an October market freak out like October of 1929, or October of 1987?
This last summer, starting about July, stocks started broadly increasing in price despite the fact not many people were trading. The increase has continued into the fall.
What raises this fact to the level of being weird is that each month for the last few months has seen headlines in the financial press about the billions of dollars being pulled out of stock mutual funds by retail investors.
So stock prices keep trending up even though huge chunks of retail investors are abandoning the stock market.
What is going on?
Is it that the money being pulled out by retail investors is being replaced by Corporations - flush with cash but afraid to invest - buying back their own shares? This would have a multiple short term benefit for corporate management, it keeps remaining investors happy that the stock price is up, it qualifies management for bigger bonuses to the extent the bonus is dependant on stock price, and it also boosts up the value of stock management already holds.
But how long can Corporations prop up stock prices when retail investors are bailing? The retail bail-out is not unexpected, people traditionally move out of stocks as they near retirement for the safety of bonds, and big chunks of the baby boomer generation are at or near retirement. What happens to the Corporations when they can no longer prop up their stock price and their market value plummets?
Is the bail out of stocks going to be like a dam breaking instead of a trickle over the top of the dam? Are we about to see an October market freak out like October of 1929, or October of 1987?
Tuesday, October 16, 2012
Stocks do better when Democrats run the show
(Comments sparked by Economist Article of Oct. 6, 2012, p.84 discussing a study by Barclay's capital)
Many would probably assume that periods when we have a Republican President would be good for the Stock Market. But, interestingly, since 1929 the average price change on stocks, adjusted for inflation, during the 40 years we have had Republican President's is....slightly less than zero per year. The 44 years where we have had Democratic Presidents, on the other hand, average about 7% increase.
Even if you look only at the years where a Repubilican President's party controlled both houses of Congress, the real average return on stocks is negative.
Predictably, given that bonds do well when investor's retreat from equities when the economy is weak, bond prices when we had Republican President's averaged a gain in bond values of 1.9% while Democrats saw a loss of just under 1%.
The inflation rate has been slightly higher under Democratic Presidents than Republican Presidents (3.5% to 3%), but far from enough to explain away the Republicans poor record.
The advantage to Democratic Presidents goes beyond prices to income. The article cites calculations * that the top 20% of earners, between 1952 and 2004, did better under Democratic President's than Republican Presidents (1.37% to 0.92%). So did the poor (bottom 20%) who gained 1.56% a year under Democrats, and lost 0.32% under Republicans.
A big part of the Republicans problem is that somehow they just seem to be running the show when calamitous collapses in stock prices occur. In 1929 Herbert Hoover was President, in 1973-74 it was Richard Nixon, in 1987 Ronald Reagan and in 2001 and again in 2008 it was George Bush. Democratic Presidents seldom see stock market crashes, Roosevelt in 1935-36 is the only one even beginning to rise to the level of the classic Republican collapses. But that still hardly explains the underlying huge gap over the years.
So why are the facts so hard on Republicans? The simple answer suggested by the facts is that Republicans are incompetent at managing the economy. Business Republicans love money, so they try too hard to cultivate it. Perhaps Republicans are like one of those people we all know who love plants but kill everything they try to grow because they over water and overfeed.
* "Unequal Democracy: The Political Economy of the New Gilded Age" (Larry Bartel's)
Many would probably assume that periods when we have a Republican President would be good for the Stock Market. But, interestingly, since 1929 the average price change on stocks, adjusted for inflation, during the 40 years we have had Republican President's is....slightly less than zero per year. The 44 years where we have had Democratic Presidents, on the other hand, average about 7% increase.
Even if you look only at the years where a Repubilican President's party controlled both houses of Congress, the real average return on stocks is negative.
Predictably, given that bonds do well when investor's retreat from equities when the economy is weak, bond prices when we had Republican President's averaged a gain in bond values of 1.9% while Democrats saw a loss of just under 1%.
The inflation rate has been slightly higher under Democratic Presidents than Republican Presidents (3.5% to 3%), but far from enough to explain away the Republicans poor record.
The advantage to Democratic Presidents goes beyond prices to income. The article cites calculations * that the top 20% of earners, between 1952 and 2004, did better under Democratic President's than Republican Presidents (1.37% to 0.92%). So did the poor (bottom 20%) who gained 1.56% a year under Democrats, and lost 0.32% under Republicans.
A big part of the Republicans problem is that somehow they just seem to be running the show when calamitous collapses in stock prices occur. In 1929 Herbert Hoover was President, in 1973-74 it was Richard Nixon, in 1987 Ronald Reagan and in 2001 and again in 2008 it was George Bush. Democratic Presidents seldom see stock market crashes, Roosevelt in 1935-36 is the only one even beginning to rise to the level of the classic Republican collapses. But that still hardly explains the underlying huge gap over the years.
So why are the facts so hard on Republicans? The simple answer suggested by the facts is that Republicans are incompetent at managing the economy. Business Republicans love money, so they try too hard to cultivate it. Perhaps Republicans are like one of those people we all know who love plants but kill everything they try to grow because they over water and overfeed.
* "Unequal Democracy: The Political Economy of the New Gilded Age" (Larry Bartel's)
Wednesday, October 10, 2012
Income Inequality - Good or Bad?
Is income inequality good or bad?
The answer seems to depend on what goal you are seeking to achieve.
If your goal is to maximize the economic strength and vitality of the United States, history shows pretty clearly it is bad. In the last 100 years the two periods where income inequality rose rapidly ended in the two most crippling economic collapses, the great depression and the great recession. The long period from the late -1930's to early 1980's where income inequality was falling or stable at lower levels was marked by a very long period of pretty stable and strong growth.
The average American should be against income inequality. A survey from about a year ago found the average American, if they had an income of $70,000 a year, felt comfortable and secure and was willing to commit more time to enjoying life. Because for average Americans wealth is not about competition or power, its about creating a life for themselves and their family. So their goal should be a strong and vital economy for the United States.
On the other hand, if your pre-eminent goals are personal maybe income inequality is good (if you are on the up side of inequality). Psychological studies found some years ago that most rich people care more about relative wealth than absolute wealth. What motivates them is to be much wealthier than everyone else, rather than to achieve any particular amount of wealth or security. There is no magic number at which they are ready to enjoy life and family, because what motivates them is the competition to garner personal wealth and the power to goes with wealth. They don't really care what is good for the country, if it gets in the way of their personal ambitions.
It is sort of like they just want to be a big fish, and if the pond has to shrink for them to be a big fish, so be it. So, unfortunately for the rest of us, our pond has been shrinking because the folks who like income inequality have dominated the public discourse the last few years.
Sunday, October 7, 2012
Businessmen as Presidents
History suggests businessmen don't make very good Presidents. In the last 100 years we have had, by my reckoning, 5 Presidents whose primary qualification according to the way they characterized themselves was their success as business people.
The first three were Republicans.
First wealthy newspaperman Warren G. Harding from 1921 to 1923. He died in office in 1923 as his administration was engulfed by the Teapot Dome corruption scandal. He was replaced by Calvin Coolidge. Silent Cal was a career Republican politician and seems to have been a pretty smart guy. He managed to defuse and deflect the scandal from the Harding administration and, since the economy was doing reasonably well get re-elected in 1925. His term in office was marked by a hands off, business knows best attitude, during which stock market and housing bubbles began to really inflate. Coolidge choose not to run in 1929.
With Coolidge bowing out Republican Herbert Hoover, a successful mining engineer who had moved into politics and served in both the Harding and Coolidge administrations rode the still bubbling euphoria of the roaring twenties into office. Within a year the bubbles began collapsing and the nation began sinking into what came to be the Great Depression. Hoover tried to use business friendly free market economic policies to stop the slide, they only made it worse. He reduced income tax rates, and, believing in limited government, vetoed a series of efforts attempting to develop a coordinated national response to the deepening crisis. By the 1932 election thousands of banks had failed, the unemployment rate was nearing 25%, businesses were failing across the country and the nations deficit was skyrocketing. Coolidge lost to Roosevelt and we did not have another Republican President until Ike 20 years later.
The next businessman President was a Democrat, Jimmy Carter, the Peanut Farmer. Although Carter wasn't truly a big business candidate, and didn't necessarily ascribe to the notion the free market is self correcting and government is bad, his administration began in a period of economic stagnation and he managed to do little to turn the tide.
The next business man President was George Bush Jr. (Although his Dad had considerable business experience, he did not market himself as a businessman). Mr. Bush, as we all know, took over a country with a balanced budget and a strong economy and walked out the door eight years later with the housing market in a shambles, Lehman Brothers having just collapsed, over 4 million people having lost their jobs in the months before he left and the deficit skyrocketing.
The first three were Republicans.
First wealthy newspaperman Warren G. Harding from 1921 to 1923. He died in office in 1923 as his administration was engulfed by the Teapot Dome corruption scandal. He was replaced by Calvin Coolidge. Silent Cal was a career Republican politician and seems to have been a pretty smart guy. He managed to defuse and deflect the scandal from the Harding administration and, since the economy was doing reasonably well get re-elected in 1925. His term in office was marked by a hands off, business knows best attitude, during which stock market and housing bubbles began to really inflate. Coolidge choose not to run in 1929.
With Coolidge bowing out Republican Herbert Hoover, a successful mining engineer who had moved into politics and served in both the Harding and Coolidge administrations rode the still bubbling euphoria of the roaring twenties into office. Within a year the bubbles began collapsing and the nation began sinking into what came to be the Great Depression. Hoover tried to use business friendly free market economic policies to stop the slide, they only made it worse. He reduced income tax rates, and, believing in limited government, vetoed a series of efforts attempting to develop a coordinated national response to the deepening crisis. By the 1932 election thousands of banks had failed, the unemployment rate was nearing 25%, businesses were failing across the country and the nations deficit was skyrocketing. Coolidge lost to Roosevelt and we did not have another Republican President until Ike 20 years later.
The next businessman President was a Democrat, Jimmy Carter, the Peanut Farmer. Although Carter wasn't truly a big business candidate, and didn't necessarily ascribe to the notion the free market is self correcting and government is bad, his administration began in a period of economic stagnation and he managed to do little to turn the tide.
The next business man President was George Bush Jr. (Although his Dad had considerable business experience, he did not market himself as a businessman). Mr. Bush, as we all know, took over a country with a balanced budget and a strong economy and walked out the door eight years later with the housing market in a shambles, Lehman Brothers having just collapsed, over 4 million people having lost their jobs in the months before he left and the deficit skyrocketing.
Friday, October 5, 2012
Romneys Health Care Fairy Tale
The Republican party has staked out such a fantasy based position on Health Care that it has allowed Obama to occupy the middle of the road where one can make decisions based on facts and data rather than having to cater to ideology.
This is a bit of a problem for Romney, who is a pragmatic guy, as far as I can see. He really wants Obama's job but has to be very careful about what he says to avoid irritating either his base who believe a fairy tale view of how good healthcare works, or the middle of the road voters who pay at least some attention to facts and data.
So the formula he has hit on is to avoid direct discussion of the realities of Health Care in favor calling Obama the "government" health care guy, and himself the "private sector" health care guy, and then piling up platitudes about how wonderful the private sector is at health care, and how bad government is at health care.
If this turns out to be politically the best thing Romney can do, it will be because voters are to busy to realize how wrong this approach is, and it will limit Romney's ability to actually move the countries creaking health care system to a better place. The historical evidence shows pretty clearly the private sector is pretty bad at doing Health Care. At the end of WW II, when many Western industrialized countries were moving toward Government health care, Congress pushed the US into a system based on employers providing private insurance for their employee's. Ever since we have maintained one of the most privatized health care systems in the industrialized world.
60 years down the road our health care system is a mess. For decades, the cost of healthcare has inflated far more rapidly that inflation in general, to the point we now pay twice as much for healthcare per person as do citizens of any other country in the world ($15,000 a year in the US as against about $7,000 per year in the next most expensive countries). Yet there are 30 or 40 countries where people live longer, another 30 or 40 where they have lower infant mortality rates. And employers, the backbone around which our system was designed, are scrambling to get out from under the constantly inflating health insurance premiums.
The flaw in Romney's theory of healthcare is simple to spot. A fundemental requirement to make a free market work efficiently is buyers who are not acting under compulsion. When we go out to buy a car, if it is too expensive we just walk away, or go buy a used car, or a bike, or take a bus. When enough of us just walk away the industry has to find a way to lower costs to survive.
We don't have those options with healthcare. If we have a child with cancer, we can't just walk away until the price comes down. In the purchase of medical services (by $ amount - healthy people don't use much health care - sick people use almost all of it) most of the buyers are acting under compulsion - the threat of serious debilitation or death. So a key market force that controls costs is missing in a private medical marketplace.
Contradicting Romneys "Government is bad" position, we have an example of a government run health care system here in the United States that is far more efficient than the private sector medical providers, both in terms of cost per patient, and overall health outcomes. The Veterans Adminstration Hospital system has no private component.
Many of those countries who spend less than half of what we spend per person per year have government run systems that their voters are very happy with, (England, Canada and Sweden come to mind immediately) and their citizens live longer than we do and have lower infant mortality rates.
The Fairy Tale Romney is selling will have serious consequences if he is elected. Even if he is just saying what he needs to say to get elected, he is boxing himself in. The fundemental rule for Doctors is to "first, do no harm." Romney will have a hard time even meeting this standard if he becomes President.
This is a bit of a problem for Romney, who is a pragmatic guy, as far as I can see. He really wants Obama's job but has to be very careful about what he says to avoid irritating either his base who believe a fairy tale view of how good healthcare works, or the middle of the road voters who pay at least some attention to facts and data.
So the formula he has hit on is to avoid direct discussion of the realities of Health Care in favor calling Obama the "government" health care guy, and himself the "private sector" health care guy, and then piling up platitudes about how wonderful the private sector is at health care, and how bad government is at health care.
If this turns out to be politically the best thing Romney can do, it will be because voters are to busy to realize how wrong this approach is, and it will limit Romney's ability to actually move the countries creaking health care system to a better place. The historical evidence shows pretty clearly the private sector is pretty bad at doing Health Care. At the end of WW II, when many Western industrialized countries were moving toward Government health care, Congress pushed the US into a system based on employers providing private insurance for their employee's. Ever since we have maintained one of the most privatized health care systems in the industrialized world.
60 years down the road our health care system is a mess. For decades, the cost of healthcare has inflated far more rapidly that inflation in general, to the point we now pay twice as much for healthcare per person as do citizens of any other country in the world ($15,000 a year in the US as against about $7,000 per year in the next most expensive countries). Yet there are 30 or 40 countries where people live longer, another 30 or 40 where they have lower infant mortality rates. And employers, the backbone around which our system was designed, are scrambling to get out from under the constantly inflating health insurance premiums.
The flaw in Romney's theory of healthcare is simple to spot. A fundemental requirement to make a free market work efficiently is buyers who are not acting under compulsion. When we go out to buy a car, if it is too expensive we just walk away, or go buy a used car, or a bike, or take a bus. When enough of us just walk away the industry has to find a way to lower costs to survive.
We don't have those options with healthcare. If we have a child with cancer, we can't just walk away until the price comes down. In the purchase of medical services (by $ amount - healthy people don't use much health care - sick people use almost all of it) most of the buyers are acting under compulsion - the threat of serious debilitation or death. So a key market force that controls costs is missing in a private medical marketplace.
Contradicting Romneys "Government is bad" position, we have an example of a government run health care system here in the United States that is far more efficient than the private sector medical providers, both in terms of cost per patient, and overall health outcomes. The Veterans Adminstration Hospital system has no private component.
Many of those countries who spend less than half of what we spend per person per year have government run systems that their voters are very happy with, (England, Canada and Sweden come to mind immediately) and their citizens live longer than we do and have lower infant mortality rates.
The Fairy Tale Romney is selling will have serious consequences if he is elected. Even if he is just saying what he needs to say to get elected, he is boxing himself in. The fundemental rule for Doctors is to "first, do no harm." Romney will have a hard time even meeting this standard if he becomes President.
Tuesday, October 2, 2012
What history says about Romney Ryan economics
The Republican party claims cutting taxes, regulations and the size of government will bring back prosperity. Here are some easily documented historical facts useful in evaluating the Romney/Ryan plan:
The formula of cutting taxes, cutting regulations and cutting the size of government as an economic growth tool has has been widely advocated by Conservatives in most democratic countries for the last 100 years, and from time to time a Conservative government gains sufficient control to implement the policies. The results have not been good.
In the United States it is the formula the Republican party in the United States rode into power in 1919. Republicans controlled both houses of Congress from 1919 to 1933 and we had Republican Presidents from 1921 to 1933. Their business friendly, low tax policies produced bubbles in stocks and housing, followed by a financial crash in 1929 and the Great Depression. By the time Republicans were ushered out of power in 1933 unemployment was around 25%, millions of Americans had lost their life savings as thousands of banks collapsed, millions more had lost their homes to foreclosure and the Government had gone from a balanced budget with no debt to large federal deficits.
Democrats controlled Congess for most of the next next 62 years. Then in 1995 Republicans again advocating cutting taxes, regulations and the size of Government took control of both houses of Congess. They held control until 2007. We also had a Republican President from 2001 through 2007. The period of Republican domination started with a growing economy and a shrinking National Debt. By the time voters brought Democratic majorities back in 2007 the national debt was skyrocketing, and the economy was caught up in the downward spiral that culminated in the Financial collapse of 2008 and the Great Recession, and once again lots of people lost big chunks of their savings, lost homes to foreclosure, and lost their job.
Comparing these two Republican orchastrated financial collapses is instructive. Unlike 2007, when the Republicans were being shown the door by the voters just as the collapse began, the Republicans continued to control both houses of Congress and the Presidency between 1929 and January of 1933. President Herbert Hoover was convinced that the private sector would pull us out of the downturn, so continued with the Republican polices that reduced the influence of government, lowered taxes and eliminated regulations. It didn't work. The circumstantial case is strong that a big part of the reason the recession that followed the 1929 crash turned to a depression rather than a bad recession was because of the Republican policies. It appears voters made the connection - for the 47 years from 1933 to 1980 Democrats controlled both houses on Congress for 38 of those years out of 47 years.
Beyond the historical evidence from US history, the Romney/Ryan plan ignores economic studies that have looked at the effect of cutting government. The International Monetary Fund commissioned a study that looked at 173 times in the last couple decades where developed countries cut government spending. They found that in a situation like we are currently in, with very low interest rates, cutting government spending causes a drop in GDP and a rise in unemployment.
Britain, the country whose economic system is most like ours, bought into something very like the Romney-Ryan plan when they elected a Conservative government in May of 2010. The Conservative governing philosophy, like Herbert Hoovers in the 1930's, has been to rely on the private sector to drive economic recovery through lowering taxes, and cutting government and regulations. Instead of recovery, GDP growth has turned negative and Britain has been in recession for the last three quarters (the last quarter was surprisingly bad according to the BBC).
Supporters of the Romney/Ryan campaign cite the "Reagan" recession in the early 1980's as evidence their plan will work. It is a false comparison. Unlike our current economy, the slowdown in the early 1980's was not a product of a private sector financial collapses, it was caused by high interest rates. The Federal funds rate, which is currently effectively 0%, was 20% in June of 1981. The recession was a product of the fact neither business nor consumers could afford to borrow money at rates above 20%. When inflation cooled off, the Fed lowered interest rates and suddenly business and consumers could afford to borrow and expand and the economy took off.
In short the recovery in the early 1980's was in an environment of interest rates falling from historically high levels coupled with low consumer debt. That recipe is not available to us right how. We have historically high consumer debt and interest rates have hovered at near zero for a couple years. The current conditions could not be more different.
If Mr. Romney and Mr. Ryan get elected, and do what they say they are going to do, history is pretty clear there is a high likelyhood we will be back in recession within a year, and at risk of a serious depression.
The formula of cutting taxes, cutting regulations and cutting the size of government as an economic growth tool has has been widely advocated by Conservatives in most democratic countries for the last 100 years, and from time to time a Conservative government gains sufficient control to implement the policies. The results have not been good.
In the United States it is the formula the Republican party in the United States rode into power in 1919. Republicans controlled both houses of Congress from 1919 to 1933 and we had Republican Presidents from 1921 to 1933. Their business friendly, low tax policies produced bubbles in stocks and housing, followed by a financial crash in 1929 and the Great Depression. By the time Republicans were ushered out of power in 1933 unemployment was around 25%, millions of Americans had lost their life savings as thousands of banks collapsed, millions more had lost their homes to foreclosure and the Government had gone from a balanced budget with no debt to large federal deficits.
Democrats controlled Congess for most of the next next 62 years. Then in 1995 Republicans again advocating cutting taxes, regulations and the size of Government took control of both houses of Congess. They held control until 2007. We also had a Republican President from 2001 through 2007. The period of Republican domination started with a growing economy and a shrinking National Debt. By the time voters brought Democratic majorities back in 2007 the national debt was skyrocketing, and the economy was caught up in the downward spiral that culminated in the Financial collapse of 2008 and the Great Recession, and once again lots of people lost big chunks of their savings, lost homes to foreclosure, and lost their job.
Comparing these two Republican orchastrated financial collapses is instructive. Unlike 2007, when the Republicans were being shown the door by the voters just as the collapse began, the Republicans continued to control both houses of Congress and the Presidency between 1929 and January of 1933. President Herbert Hoover was convinced that the private sector would pull us out of the downturn, so continued with the Republican polices that reduced the influence of government, lowered taxes and eliminated regulations. It didn't work. The circumstantial case is strong that a big part of the reason the recession that followed the 1929 crash turned to a depression rather than a bad recession was because of the Republican policies. It appears voters made the connection - for the 47 years from 1933 to 1980 Democrats controlled both houses on Congress for 38 of those years out of 47 years.
Beyond the historical evidence from US history, the Romney/Ryan plan ignores economic studies that have looked at the effect of cutting government. The International Monetary Fund commissioned a study that looked at 173 times in the last couple decades where developed countries cut government spending. They found that in a situation like we are currently in, with very low interest rates, cutting government spending causes a drop in GDP and a rise in unemployment.
Britain, the country whose economic system is most like ours, bought into something very like the Romney-Ryan plan when they elected a Conservative government in May of 2010. The Conservative governing philosophy, like Herbert Hoovers in the 1930's, has been to rely on the private sector to drive economic recovery through lowering taxes, and cutting government and regulations. Instead of recovery, GDP growth has turned negative and Britain has been in recession for the last three quarters (the last quarter was surprisingly bad according to the BBC).
Supporters of the Romney/Ryan campaign cite the "Reagan" recession in the early 1980's as evidence their plan will work. It is a false comparison. Unlike our current economy, the slowdown in the early 1980's was not a product of a private sector financial collapses, it was caused by high interest rates. The Federal funds rate, which is currently effectively 0%, was 20% in June of 1981. The recession was a product of the fact neither business nor consumers could afford to borrow money at rates above 20%. When inflation cooled off, the Fed lowered interest rates and suddenly business and consumers could afford to borrow and expand and the economy took off.
In short the recovery in the early 1980's was in an environment of interest rates falling from historically high levels coupled with low consumer debt. That recipe is not available to us right how. We have historically high consumer debt and interest rates have hovered at near zero for a couple years. The current conditions could not be more different.
If Mr. Romney and Mr. Ryan get elected, and do what they say they are going to do, history is pretty clear there is a high likelyhood we will be back in recession within a year, and at risk of a serious depression.
Friday, September 28, 2012
The Fundamental Fiscal Weakness in Democracy - the fiction of Public Service
California is in a fiscal mess. The roots of the problem are a problem fundamental to all governments. How to fairly compensate public employee's. Private sector compensation is controlled by consumer's voting with their dollars. If your product is inferior, or too expensive, people stop buying it, so you have no income stream to overpay yourself and your associates. No business can claim a right to force people to buy what they are selling.
But Government can force people to buy what they are selling. In any government where voters have no real power Government employees can go on for decades living a good life at the expense of everyone else, as happened in the Soviet Union. But even in a true democratic government, government has an inherent power that is hard for voters to control. In addition to California's current problems with employee compensation, the whole problem in the Euro zone rests on public employee compensation levels that exceed taxpayer willingness to fund.
The problem is built into the ways voters interact. California is a good example. In the late 1970's Republicans in the state started trying to restrain the growth of Government spending by limiting governments ability to tax. The problem with this approach is it aimed at the wrong target. Instead of aiming at limiting employee compensation, it just cut revenue to the state. In essence it treated a symptom, not the underlying disease. What that accomplished was to cut lots of lower end employee's and public services without touching the way public employee compensation was determined. In fact it set up a situation where programs began competing for public money, so the whole process became less about what served the public, and more about who could generate political clout.
At a point years ago California's legislature started creating "compensation" committee's to determine fair compensation for government officials. The committee's have three problems. 1. They are composed mostly of politically connected people who generally anticipate spending part of their working life as government employee's, so it is hard to be completely objective.
2. They tried to compete with the private sector on salary. What they end up doing is competing with the most successful private sector enterprises who pay the most money for any particular skill, even though that enterprise may pay much lower for other skills not as important. In short the public sectors salaries tend to reflect cherry picking the highest salaries paid for a particular skill across all industries.
3. But most crucially, 80 years ago or so public employers bought into the notion they should set an example for the private sector with a guarantee to all employees of a comfortable retirement. The system has evolved to a point where public sector retirement is vastly more expensive than taxpayers are willing to fund.
The result in California is a state where the obligations greatly exceed it's income, and taxpayers are unwilling to approve higher taxes. Why should they? When the average California probably makes $45,000 to $50,000 a year, what are they to think when 50 employees of the State Department of Corrections make 10 times as much, and will continue to make as much when the retire? When literally millions of State employees will draw more in retirement than the average taxpayer makes? When tuition at the State's Universities is so expensive the average Californian can no longer afford to attend.
Republican's on the National level have taken the same tack - seeking to limit government by limiting income, while not doing much to limit government salary and benefits. They have managed to cover up the fundamental weakness of their strategy for 30 years by pumping up the US economy for 30 years with deficit spending on defense, at the expense of programs that actually impact peoples daily lives. Defense spending does produce a boost to the economy, as it puts people to work, but in the end it doesn't produce wealth, it produces a big military that is probably going to cost us a lot more money as we try to put all that military might to some useful purpose (although it unequivocally makes a lot of defense contractors very rich) and then as we care for physically and emotionally crippled veterans for the rest of their lives.
Our Democracy needs provisions built into the Constitution to create a direct link between the level of public sector compensation and the average private sector compensation.
But Government can force people to buy what they are selling. In any government where voters have no real power Government employees can go on for decades living a good life at the expense of everyone else, as happened in the Soviet Union. But even in a true democratic government, government has an inherent power that is hard for voters to control. In addition to California's current problems with employee compensation, the whole problem in the Euro zone rests on public employee compensation levels that exceed taxpayer willingness to fund.
The problem is built into the ways voters interact. California is a good example. In the late 1970's Republicans in the state started trying to restrain the growth of Government spending by limiting governments ability to tax. The problem with this approach is it aimed at the wrong target. Instead of aiming at limiting employee compensation, it just cut revenue to the state. In essence it treated a symptom, not the underlying disease. What that accomplished was to cut lots of lower end employee's and public services without touching the way public employee compensation was determined. In fact it set up a situation where programs began competing for public money, so the whole process became less about what served the public, and more about who could generate political clout.
At a point years ago California's legislature started creating "compensation" committee's to determine fair compensation for government officials. The committee's have three problems. 1. They are composed mostly of politically connected people who generally anticipate spending part of their working life as government employee's, so it is hard to be completely objective.
2. They tried to compete with the private sector on salary. What they end up doing is competing with the most successful private sector enterprises who pay the most money for any particular skill, even though that enterprise may pay much lower for other skills not as important. In short the public sectors salaries tend to reflect cherry picking the highest salaries paid for a particular skill across all industries.
3. But most crucially, 80 years ago or so public employers bought into the notion they should set an example for the private sector with a guarantee to all employees of a comfortable retirement. The system has evolved to a point where public sector retirement is vastly more expensive than taxpayers are willing to fund.
The result in California is a state where the obligations greatly exceed it's income, and taxpayers are unwilling to approve higher taxes. Why should they? When the average California probably makes $45,000 to $50,000 a year, what are they to think when 50 employees of the State Department of Corrections make 10 times as much, and will continue to make as much when the retire? When literally millions of State employees will draw more in retirement than the average taxpayer makes? When tuition at the State's Universities is so expensive the average Californian can no longer afford to attend.
Republican's on the National level have taken the same tack - seeking to limit government by limiting income, while not doing much to limit government salary and benefits. They have managed to cover up the fundamental weakness of their strategy for 30 years by pumping up the US economy for 30 years with deficit spending on defense, at the expense of programs that actually impact peoples daily lives. Defense spending does produce a boost to the economy, as it puts people to work, but in the end it doesn't produce wealth, it produces a big military that is probably going to cost us a lot more money as we try to put all that military might to some useful purpose (although it unequivocally makes a lot of defense contractors very rich) and then as we care for physically and emotionally crippled veterans for the rest of their lives.
Our Democracy needs provisions built into the Constitution to create a direct link between the level of public sector compensation and the average private sector compensation.
Tuesday, September 25, 2012
Nattering Nabob of Negativism
This delightful phrase was coined by Spiro Agnew, Nixon's first vice President. I am old enough to remember Spiro. My impression of him at the time was he was one of those big jovial guys who build their career around networking and platitudes while avoiding actual hard work. As Vice President he seemed to spend all his time playing golf and conjuring up clever phrases. Of course history remembers Agnew as the only vice President in history forced to resign for taking bribes.
Agnew coined the phrase "Nattering Nabobs of Negativism" to refer to the media who dared to criticize the administrations policies, particularly in regard to the Viet-nam war. In one of those odd reversals that happen in history, now the person most deserving of being called a Nattering Nabob of Negativism is - Mitt Romney, the Republican nominee for President.
Romney has not had much positive to say about anything, probably because he tends to insert foot in mouth when he does. His economic plan has never consisted of anything more than vague generalities designed to sound good without actually risking offending anyone with facts. To show off his wise approach to foreign policy he took a trip a month or two ago in which he managed to insult the Brits by (wrongly) informing them they were disorganized and their Olympic's were going to have major problems, he said our number one enemy was Russia (evidently forgetting about folks like Al-Queda, North Korea and Iran) and irritated most of the middle east by placing the blame for the Palestinians plight entirely on the shoulders of the Palestinians. (He seems to particularly like to pick on the Palestinians)
So his campaign has come to consist entirely of sitting back, waiting for Obama to do something, or say something, then criticizing him vociferously. I am beginning to think if a video of Obama tying his shoelace made its way onto U-Tube within hours sound bites from Romney would be on all the networks passionately explaining why the way Obama ties his shoelace is wrong and puts the United States at risk.
Agnew coined the phrase "Nattering Nabobs of Negativism" to refer to the media who dared to criticize the administrations policies, particularly in regard to the Viet-nam war. In one of those odd reversals that happen in history, now the person most deserving of being called a Nattering Nabob of Negativism is - Mitt Romney, the Republican nominee for President.
Romney has not had much positive to say about anything, probably because he tends to insert foot in mouth when he does. His economic plan has never consisted of anything more than vague generalities designed to sound good without actually risking offending anyone with facts. To show off his wise approach to foreign policy he took a trip a month or two ago in which he managed to insult the Brits by (wrongly) informing them they were disorganized and their Olympic's were going to have major problems, he said our number one enemy was Russia (evidently forgetting about folks like Al-Queda, North Korea and Iran) and irritated most of the middle east by placing the blame for the Palestinians plight entirely on the shoulders of the Palestinians. (He seems to particularly like to pick on the Palestinians)
So his campaign has come to consist entirely of sitting back, waiting for Obama to do something, or say something, then criticizing him vociferously. I am beginning to think if a video of Obama tying his shoelace made its way onto U-Tube within hours sound bites from Romney would be on all the networks passionately explaining why the way Obama ties his shoelace is wrong and puts the United States at risk.
Thursday, September 20, 2012
Convention logic
I try to avoid watching political conventions, they are about as useful to good political decision making as watching 20 hours of car commercials is to wise auto shopping. The primary goal of a convention is not to let facts get in the way of building a fan base.
But, to some extent you can't avoid them. The snippits I caught of speeches from the Republican convention were, as with all convention speeches, a continuing string of vague and misleading factual assertions mixed with glittering generalities.
But, I guess I did get a sense of the Republican argument that Mitt and Paul should be elected. What it comes down to is the Republican's whose screwball policy ideas implemented when they controlled Congress from 1995 to 2007 effectively shot our country in the foot are now trying to blame Obama for the limp - so they can get back into power and continue with the same policies.
But, to some extent you can't avoid them. The snippits I caught of speeches from the Republican convention were, as with all convention speeches, a continuing string of vague and misleading factual assertions mixed with glittering generalities.
But, I guess I did get a sense of the Republican argument that Mitt and Paul should be elected. What it comes down to is the Republican's whose screwball policy ideas implemented when they controlled Congress from 1995 to 2007 effectively shot our country in the foot are now trying to blame Obama for the limp - so they can get back into power and continue with the same policies.
Sunday, September 16, 2012
Republican objections to QE3
The Fed's decision to begin another round of creating money to buy assets (QE3) brought howls of protest from Republicans even though the Stock market leaped up to new highs in response. Normally one thinks anything that makes the stock market happy will make Republican's happy.
I am frequently critical of Republican's, but I share at least some of their doubts about QE3.
I am frequently critical of Republican's, but I share at least some of their doubts about QE3.
While QE3 is a bit of an opportunity for stock traders, I don't think the stock market leaping up in response to QE3 is really something to celebrate for the country. The stock market uptick in response to QE3 may turn out to be largely fake money.
Trading in stocks and bonds falls within the generic term "investing". But, although some investments produce jobs by investing in people creating food, shelter or other things necessary or useful, trading on stock markets is also often just gamblers shuffling money back and forth (with the more sophisticated picking the pockets of the unsuspecting) and producing nothing.
The hope is QE3 will produce the jobs kind of investment, but based on the initial stock market response I suspect the outcome will be a lot more of the gambling than production. To the extent investment turns out to be gambling it does long term damage to the economy by creating instability and uncertainty.
However, I am not critical about the Fed's choice. I think it was a tough call. I read a blog yesterday by a commentator arguing the Fed was doing QE3 because Congress has been unwilling to do anything and QE3 was the only tool available to the Fed to try to juice up the economy. Lot of truth in that I believe.
The hope is QE3 will produce the jobs kind of investment, but based on the initial stock market response I suspect the outcome will be a lot more of the gambling than production. To the extent investment turns out to be gambling it does long term damage to the economy by creating instability and uncertainty.
However, I am not critical about the Fed's choice. I think it was a tough call. I read a blog yesterday by a commentator arguing the Fed was doing QE3 because Congress has been unwilling to do anything and QE3 was the only tool available to the Fed to try to juice up the economy. Lot of truth in that I believe.
Thursday, September 13, 2012
CNN - The Epitome of Lame Stream Media
Conservatives have for the last decade or so derisively referred to traditional news networks as the "lame stream media". The phrase began life as an effort to undermine the ability of the media to question Conservative ideology with facts. Rather than challenging the media's facts, Conservatives focused on undermining their credibility. The phrase "lame stream media" was a brilliant propaganda ploy that built on decades of Conservative assertions the media had a liberal bias.
This tool of political propaganda has been wildly successful. Managed Conservative propaganda on Fox news started attracting more and more viewers at the expense of traditional news networks. In response the traditional networks began focusing on ratings and have become obsessed with presenting all views rather than testing views with facts. They bite their tongue to avoid offending Conservatives, while going out of their way to offend liberals to prove they are "unbiased".
I saw a classic example on CNN last night. Wolf Blitzer was interviewing Bob Woodward about his new book. The interview highlighted an assertion Woodward makes in the book that, essentially, Obama is an ineffective leader, unlike Reagan, Clinton or Bush Jr. Blitzer focused on this assertion which is essentially the kind of character assassination common in no holds barred politics - make some ambiguous and unprovable allegation about some character defect that will appeal to a segment of the audience outside your normal audience. You don't need to have actual data to back it up. I believe in this case it served both Woodward and CNN to indulge in this bit of slander, Woodward trying to sell his book to Conservatives (since the left worships Woodward for his role in Watergate they are already going to buy the book) and CNN trying to hold onto Conservative's by talking trash about Obama.
A good, serious journalist would have challenged Woodward with some facts. (See below for some of the questions that occurred to me almost immediately). Instead he threw out a couple softball questions to allow Woodward to make some vague supporting arguments for his thesis. Basically Woodward's judgment was based on the failed debt deal of last summer saying Obama "could have done..."... this, or that. Woodward's reasoning was about as compelling as that of a couple fan's sitting in a bar downing beers complaining about what their teams coach should have done. Classic couch potato armchair quarterbacking, not even remotely related to serious journalism.
The fact is CNN is no longer about serious journalism, they are about entertainment. Once they started losing viewers to Fox News serious factual investigation took a back seat to market share. Their first priority now is not offending anyone - or more accurately, offending everyone equally to counter the claim they are biased.
We now have in this country a partisan right wing media (most prominently Fox news), a useless lamestream media who focus on representing all opinions regardless of how lacking in factual support, and a partisan left wing media (most prominently MSNBC).
It is a sad day for american journalism when the two fellows, John Stewart and Steven Colbert, who are best at puncturing political posturing are on a comedy channel.
Questions a serious journalist might have asked Bob Woodward about his assertion Obama has not made things happen:
What about Obama care, the most contentious piece of legislation passed in recent memory.
Don't incontrovertible basic facts demonstrate Obama been swimming against the tide for his entire administration? He started with an economy collapsing like a house of cards, which has been aggravated by a Republican house dedicated to preventing him from accomplishing anything? Isn't the only President one can really compare Obama to FDR, the only other President to face anything like the circumstances Obama faced?
What did Bush do to show such superior leadership? How is it you regard him as a better President when on simple, objective facts Bush started with a balanced budget, a healthy economy and had a Republican Congress to work with from 2001 to 2007, the period when he was supposedly showing such leadership, On top of that when 9/11 happened the nation rallied behind Bush in the face of an external threat. Wasn't Bush swimming with the tide?
What did Clinton do domestically that showed such great leadership? His health care effort was a disaster and thereafter he got things done by co-opting Republican (stupid) ideas and making them his. The 1996 Capital Gains cuts that triggered the bubbles in stocks, the housing market and anything else people could invest in over the next decade had Clinton's signature on it, and he crowed about his role in the legislation. The 1998 repeal of Glass-Steagal that allowed Banks to make stupid bets that blew up the world economy had Clinton's signature on it, and he crowed about his role in the legislation. Wasn't Clinton's success in domestic policy a function of the fact he was very adept at turning around and swimming with the tide to keep his popularity up? Is that good leadership - adopting bad ideas, moderating them a little bit, then claiming the credit?
Wasn't Reagan the ultimate swimming with the tide guy? Didn't he start with a weak economy due to the Fed's high interest rates imposed to fight inflation, that was going to get better no matter what Reagan did once the Fed began bringing interest rates down? He had spent much of his life on Television hosting "Death Valley Days", he was a master performer who knew how to use TV. Didn't the fact there were only three networks at that time give him a captive audience every time he went on TV (which was often) to sell his ideas?
Isn't your effort to compare Obama's leadership ability just a transparent attempt to generate buzz about your books and maybe get some conservatives to buy your book by trashing Obama?
This tool of political propaganda has been wildly successful. Managed Conservative propaganda on Fox news started attracting more and more viewers at the expense of traditional news networks. In response the traditional networks began focusing on ratings and have become obsessed with presenting all views rather than testing views with facts. They bite their tongue to avoid offending Conservatives, while going out of their way to offend liberals to prove they are "unbiased".
I saw a classic example on CNN last night. Wolf Blitzer was interviewing Bob Woodward about his new book. The interview highlighted an assertion Woodward makes in the book that, essentially, Obama is an ineffective leader, unlike Reagan, Clinton or Bush Jr. Blitzer focused on this assertion which is essentially the kind of character assassination common in no holds barred politics - make some ambiguous and unprovable allegation about some character defect that will appeal to a segment of the audience outside your normal audience. You don't need to have actual data to back it up. I believe in this case it served both Woodward and CNN to indulge in this bit of slander, Woodward trying to sell his book to Conservatives (since the left worships Woodward for his role in Watergate they are already going to buy the book) and CNN trying to hold onto Conservative's by talking trash about Obama.
A good, serious journalist would have challenged Woodward with some facts. (See below for some of the questions that occurred to me almost immediately). Instead he threw out a couple softball questions to allow Woodward to make some vague supporting arguments for his thesis. Basically Woodward's judgment was based on the failed debt deal of last summer saying Obama "could have done..."... this, or that. Woodward's reasoning was about as compelling as that of a couple fan's sitting in a bar downing beers complaining about what their teams coach should have done. Classic couch potato armchair quarterbacking, not even remotely related to serious journalism.
The fact is CNN is no longer about serious journalism, they are about entertainment. Once they started losing viewers to Fox News serious factual investigation took a back seat to market share. Their first priority now is not offending anyone - or more accurately, offending everyone equally to counter the claim they are biased.
We now have in this country a partisan right wing media (most prominently Fox news), a useless lamestream media who focus on representing all opinions regardless of how lacking in factual support, and a partisan left wing media (most prominently MSNBC).
It is a sad day for american journalism when the two fellows, John Stewart and Steven Colbert, who are best at puncturing political posturing are on a comedy channel.
Questions a serious journalist might have asked Bob Woodward about his assertion Obama has not made things happen:
What about Obama care, the most contentious piece of legislation passed in recent memory.
Don't incontrovertible basic facts demonstrate Obama been swimming against the tide for his entire administration? He started with an economy collapsing like a house of cards, which has been aggravated by a Republican house dedicated to preventing him from accomplishing anything? Isn't the only President one can really compare Obama to FDR, the only other President to face anything like the circumstances Obama faced?
What did Bush do to show such superior leadership? How is it you regard him as a better President when on simple, objective facts Bush started with a balanced budget, a healthy economy and had a Republican Congress to work with from 2001 to 2007, the period when he was supposedly showing such leadership, On top of that when 9/11 happened the nation rallied behind Bush in the face of an external threat. Wasn't Bush swimming with the tide?
What did Clinton do domestically that showed such great leadership? His health care effort was a disaster and thereafter he got things done by co-opting Republican (stupid) ideas and making them his. The 1996 Capital Gains cuts that triggered the bubbles in stocks, the housing market and anything else people could invest in over the next decade had Clinton's signature on it, and he crowed about his role in the legislation. The 1998 repeal of Glass-Steagal that allowed Banks to make stupid bets that blew up the world economy had Clinton's signature on it, and he crowed about his role in the legislation. Wasn't Clinton's success in domestic policy a function of the fact he was very adept at turning around and swimming with the tide to keep his popularity up? Is that good leadership - adopting bad ideas, moderating them a little bit, then claiming the credit?
Wasn't Reagan the ultimate swimming with the tide guy? Didn't he start with a weak economy due to the Fed's high interest rates imposed to fight inflation, that was going to get better no matter what Reagan did once the Fed began bringing interest rates down? He had spent much of his life on Television hosting "Death Valley Days", he was a master performer who knew how to use TV. Didn't the fact there were only three networks at that time give him a captive audience every time he went on TV (which was often) to sell his ideas?
Isn't your effort to compare Obama's leadership ability just a transparent attempt to generate buzz about your books and maybe get some conservatives to buy your book by trashing Obama?
Tuesday, September 11, 2012
Mr. Romney's unusual view on honesty to voters
My most vivid recollection of last winters debates was a response by Mr. Romney. He was challenged because a questioner thought Mr. Romney had ignored his question to make a statement the questioner thought was unrelated. Mr Romney responded to the challenge by saying it was his prerogative to say what he choose to say rather than answer the question. I thought at the time it was an extraordinary statement. Sure candidates talk around embarrassing questions all the time, so it is not like Mr. Romney was behaving unusually. But most candidates at least pay lip service to forthrightness as they dodge and weave.
I took Mr. Romney's statement to mean two things -
1. He was either not comfortable about making false statements about what he was doing or was not going to waste the time inventing a charade to pretend he was answering the question.
2. More importantly he feels no need to disguise the fact he is willing to mislead voters to try to get them to vote for him.
Recently his campaign again exhibited this truly extraordinary disrespect for voters. He has evidently been running adds in a number of swing states that a whole pack of independent fact checkers, from bloggers up to the New York times, have said are essentially lies.
His campaigns official response? Not to challenge the fact checkers facts or logic (which suggests the fact checkers are right on the facts). Instead the campaign simply said they were not going to let fact checkers dictate their campaign strategy and they have continued to run the ads.
In a sense Mr. Romney's evident disdain for the need to tell voters the truth makes perfect sense in the Republican world of Fox news, Rush Limbaugh etc who operate from the basic presumption that anyone who disagree's with them is wrong and evil. It is really a sign of how that rabid wing of the Republican party has become so disproportionately powerful in the party that a fundamentally pragmatic guy like Romney, who clearly is not an accomplished liar, has to be willing to lie to hope to get elected.
I took Mr. Romney's statement to mean two things -
1. He was either not comfortable about making false statements about what he was doing or was not going to waste the time inventing a charade to pretend he was answering the question.
2. More importantly he feels no need to disguise the fact he is willing to mislead voters to try to get them to vote for him.
Recently his campaign again exhibited this truly extraordinary disrespect for voters. He has evidently been running adds in a number of swing states that a whole pack of independent fact checkers, from bloggers up to the New York times, have said are essentially lies.
His campaigns official response? Not to challenge the fact checkers facts or logic (which suggests the fact checkers are right on the facts). Instead the campaign simply said they were not going to let fact checkers dictate their campaign strategy and they have continued to run the ads.
In a sense Mr. Romney's evident disdain for the need to tell voters the truth makes perfect sense in the Republican world of Fox news, Rush Limbaugh etc who operate from the basic presumption that anyone who disagree's with them is wrong and evil. It is really a sign of how that rabid wing of the Republican party has become so disproportionately powerful in the party that a fundamentally pragmatic guy like Romney, who clearly is not an accomplished liar, has to be willing to lie to hope to get elected.
Subscribe to:
Posts (Atom)