The Economist of July 14. 2012 (p. 71) contained an entertaining and information article on some recent findings in psychological research. Researchers have found:
1. Give a person an icy drink at a party and it causes them to be more likely to perceive other guests are giving them the cold shoulder. On the other hand a warm drink makes people feel more warm towards others (hence the popularity down through history of the coffee shop?).
2. A Canadian study found that subjects who sat at a slightly wobbly table next to a wobbly table were more likely to opine that relationships of celebrities were unstable. They also were more likely to rate stability as a more important factor in their own relationships.
Friday, August 24, 2012
Tuesday, August 21, 2012
A plea to Republicans to step outside their political comfort zone
For most of us our political ideas don't result from long years of studying the alternatives. We don't chose a party because we have studied how Republican or Democratic ideology has worked in the real world, we go with the ideology we find emotionally comfortable. In some cases our emotional comfort zone is defined by our personality, in some cases it is defined by the social environment in which we are raised. For most of us our emotional comfort zone - whether we are Democrats or Republican's, is an amalgam of these two factors. Once we have made that emotional choice both parties have volumes of logic we can adopt to reinforce our choice.
That's why political advertising is often so grossly misleading. It is aimed at our emotions, not our deliberative intellect. Political ads don't represent an attempt to help us study facts and determine what an intelligent choice would be, they are aimed at lighting a fire under our emotional comfort zone. Often it doesn't matter much. Both parties will do well enough that they will cancel out the really bad ideas the other party puts forward. But not always. There is a core issue in the current election that is one of those exceptions - it matters greatly.
I was a Republican for many years. It was my emotional comfort zone. I voted for Richard Nixon, and Ronald Reagan and George Bush senior for President. But my profession exposed me to historical facts and economic data that eventually caused me to leave the party in 1992 because it was becoming apparent to me that Republican economic ideas were based in ideology, not reality.
I write to make a plea to Republicans to step outside their emotional comfort zone and take a hard look at how current Republican economic orthodoxy measures up against history and economic data.
Mitt Romney and Paul Ryan are basing their campaign on the notion the way to bring back prosperity is to cut taxes, cut the size of government and cut regulations on business. The campaign is very adept at building logical explanations to make the case that business is not creating new jobs because of regulations and government interference, that if we cut taxes on the wealthy it will spark investment, that if we cut the size of government it will free up the private sector to step up and put us all to work.
But, as former Chief Justice Oliver Wendell Holmes once said, a page of history is worth a volume of logic. Here are some easily documented historical facts useful in evaluating the Romney/Ryan plan:
It's formula of cutting taxes, cutting regulations and cutting the size of government is exactly the same formula the Republican party put forth in the 12 years they controlled both houses of Congress from 1995 to 2007 (adding control of the Presidency in the last six years) that led to a huge expansion in the National debt, produced pretty mediocre GDP numbers along with bubbles in the stock and housing markets, and ended in the most spectacular economic crash since the Great Depression.
The formula is also the same formula that caused the Great Depression. Republicans took over both houses of Congress in 1919, added the Presidency in 1921, and controlled all three until 1933. They cut taxes, cut regulations and cut government. The result was eight years of mediocre growth during which bubbles in housing and the stock market developed, followed by a crash in 1929.
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. 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. By the time the Republicans were shown the door in 1933 unemployment was near 25%, 5000 banks had failed, foreclosures were rampant in all part of the country. The circumstantial case is strong that a big part of the reason the recession that followed the 1929 crash turned to a depression was because of the Republican policies. Voters certainly made the connection. In the 47 years from 1933 to 1980 Democrats controlled both houses on Congress for 38 of those years.
1921-1933 and 1995-2007 were the only times in the last 100 years where Republicans controlled all the levers of the Federal Government (other than 1953-54 - which was also followed by a recession).
Beyond the circumstantial evidence of US history, the Romney/Ryan plan ignores slam-dunk evidence from Economic studies that have looked at the effect of cutting government. The international monetary fund 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, there was nearly a 100% correlation between cutting government spending and a drop in GDP and a rise in unemployment.
The Romney/Ryan plan is very similar to the policies the Conservatives rode into power in Britain a couple years ago. They started cutting government, and many Brits were sure the recovery from the 2008 crash would now take off. Instead, predictably ,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). The unemployment rate in Britain has been trending up and is at about 8%. Although the unemployment rate actually dropped a little last month, one has to suspect that drop related to the massive government spending on preparing and hosting the Olympic's rather than being evidence of an economic rebound.
The evidence the Romney/Ryan campaign offers to support their plan is the booming recovery following the "Reagan" recession in the early 1980's. It is a totally false comparison. It's like saying you should eat an orange by just picking it up and biting into it like you would an apple. The cause of the recession in the early 1980's was extremely high interest rates - the Fed had interest rates up near 20% at one point in their effort to battle inflation. The recession was a product of the fact business could not afford to borrow money to operate or expand. When inflation cooled off, the Fed lowered interest rates and suddenly business could afford to borrow and expand. What President Reagan did that contributed to the rapid recovery was, not cut government spending, but to spend a lot more Government money by greatly increasing defense spending.
In short the recovery in the early 1980's the Romney/Ryan plan offers as its principal justification 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.
In my 47 years as a voting citizen I have never seen either party building their platform around ideas as demonstrably wrong as the Romney/Ryan economic plan. If Mr. Romney and Mr. Ryan get elected, and do what they say they are going to do, it appears to me almost a certainty we will be back in recession within a year, and at risk of a serious depression.
I am not asking that you take my word for it. But I am asking that you, please, step outside your emotional comfort zone for awhile and start doing your own research. Instead of nodding your head and indulging in the emotional comfort you feel when Conservatives tout the Romney/Ryan plan, look for provable facts they offer to support the plan, and check the facts. Look into the history of the great Depression, the great recession. Look at what has happened in Britain since the David Cameron took over. Look for economic studies that have looked at what happens to GDP and the employment rate when Government's cut spending.
Please.
That's why political advertising is often so grossly misleading. It is aimed at our emotions, not our deliberative intellect. Political ads don't represent an attempt to help us study facts and determine what an intelligent choice would be, they are aimed at lighting a fire under our emotional comfort zone. Often it doesn't matter much. Both parties will do well enough that they will cancel out the really bad ideas the other party puts forward. But not always. There is a core issue in the current election that is one of those exceptions - it matters greatly.
I was a Republican for many years. It was my emotional comfort zone. I voted for Richard Nixon, and Ronald Reagan and George Bush senior for President. But my profession exposed me to historical facts and economic data that eventually caused me to leave the party in 1992 because it was becoming apparent to me that Republican economic ideas were based in ideology, not reality.
I write to make a plea to Republicans to step outside their emotional comfort zone and take a hard look at how current Republican economic orthodoxy measures up against history and economic data.
Mitt Romney and Paul Ryan are basing their campaign on the notion the way to bring back prosperity is to cut taxes, cut the size of government and cut regulations on business. The campaign is very adept at building logical explanations to make the case that business is not creating new jobs because of regulations and government interference, that if we cut taxes on the wealthy it will spark investment, that if we cut the size of government it will free up the private sector to step up and put us all to work.
But, as former Chief Justice Oliver Wendell Holmes once said, a page of history is worth a volume of logic. Here are some easily documented historical facts useful in evaluating the Romney/Ryan plan:
It's formula of cutting taxes, cutting regulations and cutting the size of government is exactly the same formula the Republican party put forth in the 12 years they controlled both houses of Congress from 1995 to 2007 (adding control of the Presidency in the last six years) that led to a huge expansion in the National debt, produced pretty mediocre GDP numbers along with bubbles in the stock and housing markets, and ended in the most spectacular economic crash since the Great Depression.
The formula is also the same formula that caused the Great Depression. Republicans took over both houses of Congress in 1919, added the Presidency in 1921, and controlled all three until 1933. They cut taxes, cut regulations and cut government. The result was eight years of mediocre growth during which bubbles in housing and the stock market developed, followed by a crash in 1929.
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. 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. By the time the Republicans were shown the door in 1933 unemployment was near 25%, 5000 banks had failed, foreclosures were rampant in all part of the country. The circumstantial case is strong that a big part of the reason the recession that followed the 1929 crash turned to a depression was because of the Republican policies. Voters certainly made the connection. In the 47 years from 1933 to 1980 Democrats controlled both houses on Congress for 38 of those years.
1921-1933 and 1995-2007 were the only times in the last 100 years where Republicans controlled all the levers of the Federal Government (other than 1953-54 - which was also followed by a recession).
Beyond the circumstantial evidence of US history, the Romney/Ryan plan ignores slam-dunk evidence from Economic studies that have looked at the effect of cutting government. The international monetary fund 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, there was nearly a 100% correlation between cutting government spending and a drop in GDP and a rise in unemployment.
The Romney/Ryan plan is very similar to the policies the Conservatives rode into power in Britain a couple years ago. They started cutting government, and many Brits were sure the recovery from the 2008 crash would now take off. Instead, predictably ,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). The unemployment rate in Britain has been trending up and is at about 8%. Although the unemployment rate actually dropped a little last month, one has to suspect that drop related to the massive government spending on preparing and hosting the Olympic's rather than being evidence of an economic rebound.
The evidence the Romney/Ryan campaign offers to support their plan is the booming recovery following the "Reagan" recession in the early 1980's. It is a totally false comparison. It's like saying you should eat an orange by just picking it up and biting into it like you would an apple. The cause of the recession in the early 1980's was extremely high interest rates - the Fed had interest rates up near 20% at one point in their effort to battle inflation. The recession was a product of the fact business could not afford to borrow money to operate or expand. When inflation cooled off, the Fed lowered interest rates and suddenly business could afford to borrow and expand. What President Reagan did that contributed to the rapid recovery was, not cut government spending, but to spend a lot more Government money by greatly increasing defense spending.
In short the recovery in the early 1980's the Romney/Ryan plan offers as its principal justification 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.
In my 47 years as a voting citizen I have never seen either party building their platform around ideas as demonstrably wrong as the Romney/Ryan economic plan. If Mr. Romney and Mr. Ryan get elected, and do what they say they are going to do, it appears to me almost a certainty we will be back in recession within a year, and at risk of a serious depression.
I am not asking that you take my word for it. But I am asking that you, please, step outside your emotional comfort zone for awhile and start doing your own research. Instead of nodding your head and indulging in the emotional comfort you feel when Conservatives tout the Romney/Ryan plan, look for provable facts they offer to support the plan, and check the facts. Look into the history of the great Depression, the great recession. Look at what has happened in Britain since the David Cameron took over. Look for economic studies that have looked at what happens to GDP and the employment rate when Government's cut spending.
Please.
Sunday, August 19, 2012
Did Mr. Bush's bellicose foreign policy hurt tourism?
The Economist (6/30/12 p.33) noted that for the first time in history a tourism agency to promote tourism in the US has been created - Brand USA.
Although the US is the second most visited country in the world (behind France) a study by a consultancy group found that the US share of world tourism spending fell by a third between 2000 and 2010, from 17.2% to 11.6%. Global travel between 2000 and 2009 increased by 31%, yet the number of visitors to the US fell from 26 million to 24 million, which the consultancy calculates as amounting to $214 Billion in lost revenue to US Businesses over the decade.
There were three primary reasons the consultants who did the study cited for the drop:
1. We are so culturally dominant we have turned much of the rest of the world into us, so we are perceived as not that different.
2. Other countries like China, India, Vietnam or Brazil are now perceived to be the "new" world.
3. Visitors were turned off by the "brash and arrogant" American's.
There doesn't appear to me to be much we can do about the first two items on the list. But how could we suddenly start being perceived as "brash and arrogant" starting in about 2000? Hmmmmm. What changed in 2000?
Although the US is the second most visited country in the world (behind France) a study by a consultancy group found that the US share of world tourism spending fell by a third between 2000 and 2010, from 17.2% to 11.6%. Global travel between 2000 and 2009 increased by 31%, yet the number of visitors to the US fell from 26 million to 24 million, which the consultancy calculates as amounting to $214 Billion in lost revenue to US Businesses over the decade.
There were three primary reasons the consultants who did the study cited for the drop:
1. We are so culturally dominant we have turned much of the rest of the world into us, so we are perceived as not that different.
2. Other countries like China, India, Vietnam or Brazil are now perceived to be the "new" world.
3. Visitors were turned off by the "brash and arrogant" American's.
There doesn't appear to me to be much we can do about the first two items on the list. But how could we suddenly start being perceived as "brash and arrogant" starting in about 2000? Hmmmmm. What changed in 2000?
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