Saturday, February 28, 2009
The 2% Illusion
...This is going to be some trick. Even the most basic inspection of the IRS income tax statistics shows that raising taxes on the salaries, dividends and capital gains of those making more than $250,000 can't possibly raise enough revenue to fund Mr. Obama's new spending ambitions.
Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and "the wealthiest 2%." Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That's about 7% of all returns; the data aren't broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% -- about 1.65 million filers making above $388,806 -- paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income....
...But let's not stop at a 42% top rate; as a thought experiment, let's go all the way. A tax policy that confiscated 100% of the taxable income of everyone in America earning over $500,000 in 2006 would only have given Congress an extra $1.3 trillion in revenue. That's less than half the 2006 federal budget of $2.7 trillion and looks tiny compared to the more than $4 trillion Congress will spend in fiscal 2010. Even taking every taxable "dime" of everyone earning more than $75,000 in 2006 would have barely yielded enough to cover that $4 trillion.
Fast forward to this year (and 2010) when the Wall Street meltdown and recession are going to mean far few taxpayers earning more than $500,000. Profits are plunging, businesses are cutting or eliminating dividends, hedge funds are rolling up, and, most of all, capital nationwide is on strike. Raising taxes now will thus yield far less revenue than it would have in 2006....
The Realist Chas Freeman
Chas Freeman, who has reportedly been offered and accepted a job as chairman of the National Intelligence Council, offered his take on the Tiananmen Square protests of 1989 on a listserv in 2006....
...For myself, I side on this -- if not on numerous other issues -- with Gen. Douglas MacArthur. I do not believe it is acceptable for any country to allow the heart of its national capital to be occupied by dissidents intent on disrupting the normal functions of government, however appealing to foreigners their propaganda may be. Such folk, whether they represent a veterans' "Bonus Army" or a "student uprising" on behalf of "the goddess of democracy" should expect to be displaced with despatch from the ground they occupy. I cannot conceive of any American government behaving with the ill-conceived restraint that the Zhao Ziyang administration did in China, allowing students to occupy zones that are the equivalent of the Washington National Mall and Times Square, combined. while shutting down much of the Chinese government's normal operations. I thus share the hope of the majority in China that no Chinese government will repeat the mistakes of Zhao Ziyang's dilatory tactics of appeasement in dealing with domestic protesters in China....
Are We All Socialists Now? Not at All
...No, the world is converging ever more visibly, not toward socialism, but toward what I (following Charlotte Twight’s usage) have for many years been calling participatory fascism. The hallmarks of this system are, on the political side, the trappings of democracy (parties, elections, procedural niceties, etc.), and, on the economic side, the form of private property rights (though not much of the substance that characterizes the real thing).
The beauty of this system is that the political system can easily be corrupted so that the power elite retains a firm hold on the state, despite the appearance that they rule only with the consent of the governed. The major political parties appear to compete, but for the most part they coalesce and conspire; on the basics, they are in complete agreement. The apparent “consent” they enjoy they actually manufacture by their control of the mass media, the schools and universities, and other key institutions, and no political opinion outside the 40-yard lines ever receives a hearing in serious political circles. (Remember how the oligarcos rolled their eyes when Ron Paul managed to get in an occasional word during the debates last year?)
And while the ruling establishment retains an iron grip on state power, it allows entrepreneurs just enough room for maneuver so that innovators can continue to produce the new products, new methods of production, new raw materials, and new organizational forms that move the economy forward. The most enterprising entrepreneurs can still get rich, although even they will see a large chunk of the fruits of their labors ripped away by the state. Productivity will increase sufficiently to keep a growing supply of creature comforts and amusements flowing to the masses, who are content with these things, along with the illusion of security that state functionaries induce in the people....
Robert Scheer: This is Fascism
Robert Scheer: I don't think the idea of nationalizing, as it's now being called--which means bailing out these banks, setting them straight, then letting them go private again, which is the model that everybody is using, and the people who get screwed are the people whose retirement funds had common or preferred shares and they get wiped out, and these bankers come out richer than ever at the other end--that's not a leftist idea and it's not socialism. This is what we used to, in Comparative Economic Systems, call fascism. It's putting government at the service of the big financial interests. That's what happened in Italy, that's what happened in Germany, that's what happened in Japan. . . .
Tony Blankley: What I don't understand is how my colleagues on this show, who I believe were for Obama, are now saying he's leading a fascist regime. Did he mislead them a few weeks ago when he was still running? . . .
Less Fire, More Ice
The global warming speculation has more holes in it than Al Gore's oversized carbon footprint has square miles. Deeply infected with statistical and common sense problems, the climate change argument is beginning to crumble. Suddenly what many considered irrefutable evidence has more in common with fables than scientific work:
• The famed hockey stick chart that supposedly shows Earth's temperature rising sharply in response to the industrial age is not an accurate measure of what has actually occurred. This stick, used by the United Nations' Intergovernmental Panel on Climate Change to scare the public into believing that human activity is causing the Earth to warm, has been revealed to be in error.
The unmasking happened five years ago when Canadian researchers Stephen McIntyre and Ross McKitrick crunched the numbers and uncovered a fundamental mathematical flaw in the computer program that University of Massachusetts geoscientist Michael Mann used to create the chart.
Mann and his co-researchers also conveniently left the Medieval Warm Period and Little Ice Age out of the temperature chart, a deception, whether intended or not, that renders their entire work unreliable.
• Global temperatures peaked in 1998, a fact that contradicts the assertion that man's continued pumping of carbon dioxide into the atmosphere is making the planet hotter. This was not predicted by the climate models that say we're headed for a warm period....
• In 2007, it was learned that the placement of temperature stations across the U.S. had skewed readings. Equipment at a site in Oregon was found to be just 10 feet from an air conditioning exhaust vent. The sensor at another Oregon station is located on a rooftop near an air conditioning unit. A Tahoe, Calif., station is located next to a drum where trash is burned.
Climate change and the return of original sin
...The promoters of this Lenten carbon fast – the Christian charity, Tearfund – say the idea for turning Lent into an environmentalist publicity stunt came from another Miliband. It says that when Ed’s brother, David Miliband, was minister for the environment, he met with the bishop of Liverpool and informed him that the Church has ‘a major role to play in changing people’s hearts and minds’. In the spirit of having a conversion on the road to Damascus, the good bishop saw the light; Tearfund says ‘a lightbulb switched on in the bishop of Liverpool’s head, and he thought that during Lent we should call for a carbon fast’.
The campaign for a carbon fast is a morally illiterate attempt to recycle the practice of fasting during Lent as a form of environmentally correct behaviour. The aim is to provide religious authority to the condemnation of everyday behaviour that green moralists find objectionable. So, the tips offered to those embarking on the carbon fast include: don’t drink water from a plastic bottle; forget about having your morning latte (it uses too much water apparently); turn down the lights; eat ‘slow food’ (fast food is too carbon-intensive); and give the dishwasher a break (1). Through rebranding these environmentalist rituals as moral obligations, campaigners hope to invest their cause with meaning.
The carbon fast is a semi-conscious attempt to turn environmentalism into a caricature of a religion. The idea of original sin has been reinvented as a wicked act of ‘carbon emission’. There are a number of ways that the green sinner can gain absolution. Those with lots of money can win redemption by purchasing ‘carbon offsets’; the rest of us will have to go through various rituals: recycling garbage, avoiding disposable nappies, using reusable bags, all of which provide proof of our sacrifice and faith. Those most committed to the faith will go further, of course, and stop eating meat and having babies. Those who refuse to embrace any of the above rituals are stigmatised for their moral depravity and denounced for committing crimes against the planet. The main purpose of the carbon fast, it seems, is to make people feel guilty about the fact that they have a life.
Increasingly, environmentalism is less about managing nature than pursuing a moral crusade to manage, and alter, human behaviour....
Couple told they cannot have their children back after being wrongfully accused of abuse to take court battle to Europe
A couple forced to give up three children for adoption despite a judge ruling they may have been wrongly accused of abuse yesterday vowed to take their legal fight to Europe...
....The couple's nightmare started in October 2003 when Mrs Webster took their second son to hospital with a swollen leg.
He was found to have a number of small fractures which doctors said could be caused only by physical abuse.
The following year they were permanently removed and put up for adoption after a one-day court hearing.
Medical experts later concluded that the injuries were not caused by violent twisting and shaking, but were symptoms of rare case of scurvy.
Mr Webster, 35, and his 27-year-old wife fled to Ireland in 2006 to stop their fourth child, Brandon, being taken into care at birth.
The Appeal Court ruled on Wednesday that even though the Websters 'may well' have been victims of a miscarriage of justice the adoption order on their eldest three children could not be revoked because the youngsters are now settled with their adoptive parents....
Watching boomers in turmoil is worth a recession
...For the children of the Baby Boomers, there is a special delight in watching the world economy shake itself to pieces like a two-dollar pram at this particular moment. Our elders, who bought prosperity and nice pensions at our expense and pulled the ripcords on their “Freedom 55” parachutes without leaving any behind in the passenger cabin, are getting it in the neck just when they thought a secure old age, with money for travel and expensive pastimes, was a safe bet. I’m willing to watch my meagre savings suffer from market turmoil in exchange for contemplating the dilemma of those who are now between 55 and 65.
These are people who started their working lives at a time when labour unions were strong, taxpayers outnumbered retirees nearly 10 to one, housing was as cheap as borscht and the basic personal exemption covered most of a living wage. They congratulated themselves on building an elaborate “social safety net” at the expense of their children. Their great numbers have allowed their preferences and superstitions to dominate culture and media. They’re the ones who burned through tonnes of pot and then launched a War on Drugs when they grew bored with it; they drove mighty-bowelled Mustangs and Thunderbirds in their youth, and only started worrying about the environment when they no longer needed a capacious backseat to fornicate in; they espoused and took full advantage of sexual liberation, but were safely hors de combat by the time AIDS reared its head. The first time I see one shopping for dog food, I doubt I’ll be able to suppress a laugh. ...
Obama to Venture Capitalists: Drop Dead!
The costs associated with taxation extend far beyond the amount of tax collected. First, there are significant incentive-based costs, which are generally referred to as efficiency costs. These costs emerge because taxes alter relative prices and thus the incentives for productive behavior and affect a wide range of decisions regarding savings, investment, effort, and entrepreneurship. These costs vary widely by the type of tax.
One main method for quantifying these costs is referred to as the marginal efficiency cost (MEC). It calculates the cost of raising one additional dollar of tax revenue using different types of taxes. Estimates of the marginal efficiency costs of both American and Canadian taxes indicate that consumption and payroll (wage and salary) taxes are much less costly (and thus more efficient) than taxes on capital or the return to capital. For example, a study by the Department of Finance for the OECD (1997) concluded that corporate income taxes imposed a marginal cost of $1.55 (MEC) for one additional dollar of revenue compared to $0.17 for an additional dollar of revenue raised through consumption taxes.
Similarly, one of the most widely cited calculations of marginal efficiency costs (MEC) is that by Harvard Professor Dale Jorgensen and his colleague Kun-Young Yun (1991). Their estimates of the MEC of select US taxes indicate significant variation in the economic costs of different taxes and support the Canadian findings. Specifically, capital-based taxes (MEC = $0.92) and corporate income taxes (MEC = $0.84) were shown to impose much higher costs than other, more efficient types of taxes such as the sales tax (MEC = $0.26)....
Climate Science in A Tornado
...Citing data from the University of Illinois' Arctic Climate Research Center, as interpreted on Jan. 1 by Daily Tech, a technology and science news blog, the column said that since September "the increase in sea ice has been the fastest change, either up or down, since 1979, when satellite record-keeping began." According to the center, global sea ice levels at the end of 2008 were "near or slightly lower than" those of 1979. The center generally does not make its statistics available, but in a Jan. 12 statement the center confirmed that global sea ice levels were within a difference of less than 3 percent of the 1980 level.
So the column accurately reported what the center had reported. But on Feb. 15, the Sunday the column appeared, the center, then receiving many e-mail inquiries, issued a statement saying "we do not know where George Will is getting his information." The answer was: From the center, via Daily Tech. Consult the center's Web site where, on Jan. 12, the center posted the confirmation of the data that this column subsequently reported accurately.
The scientists at the Illinois center offer their statistics with responsible caveats germane to margins of error in measurements and precise seasonal comparisons of year-on-year estimates of global sea ice. Nowadays, however, scientists often find themselves enveloped in furies triggered by any expression of skepticism about the global warming consensus (which will prevail until a diametrically different consensus comes along; see the 1970s) in the media-environmental complex. Concerning which:
On Feb. 18 the U.S. National Snow and Ice Data Center reported that from early January until the middle of this month, a defective performance by satellite monitors that measure sea ice caused an underestimation of the extent of Arctic sea ice by 193,000 square miles, which is approximately the size of California. The Times ("All the news that's fit to print"), which as of this writing had not printed that story, should unleash Revkin and his unnamed experts.
Monday, February 23, 2009
While New York Bleeds Washington Thrives
As the nation's most populous metro area feels Wall Street's pain, the fourth-largest -- Washington -- is barely sensing the recession. In fact, Moody's Economy.com estimates that metro Washington's economy will actually grow 2.5% from mid-2008 through mid-2010. New York's economy is expected to shrink 4.2%....
The True Origins of This Financial Crisis
...There really is not any question of which approach is factually correct: right on the front page of the Times edition of December 21 is a chart that shows the growth of homeownership in the United States since 1990. In 1993, it was 63 percent; by the end of the Clinton administration, it was 68 percent. The growth in the Bush administration was about 1 percent. The Times itself reported in 1999 that Fannie Mae and Freddie Mac were under pressure from the Clinton administration to increase lending to minorities and low-income home buyers--a policy that necessarily entailed higher risks. Can there really be a question, other than in the fevered imagination of the Times, of where the push to reduce lending standards and boost homeownership came from?
The fact is that neither political party, and no administration, are blameless; the honest answer, as outlined below, is that government policy over many years caused this problem. The regulators, in both the Clinton and Bush administrations, were the enforcers of the reduced lending standards that were essential to the growth in homeownership and the housing bubble.
There are two key examples of this misguided government policy. One is the CRA. The other is the affordable housing "mission" that the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac were charged with fulfilling.
As originally enacted in 1977, the CRA vaguely mandated regulators to consider whether an insured bank was serving the needs of the "whole" community. For sixteen years, the act was invoked rather infrequently, but 1993 marked a decisive turn in its enforcement. What changed? Substantial media and political attention was showered upon a 1992 Boston Federal Reserve Bank study of discrimination in home mortgage lending. This study concluded that, while there was no overt discrimination in banks' allocation of mortgage funds, loan officers gave whites preferential treatment. The methodology of the study has since been questioned, but, at the time, it was highly influential with regulators and members of the incoming Clinton administration; in 1993, bank regulators initiated a major effort to reform the CRA regulations.
In 1995, the regulators created new rules that sought to establish objective criteria for determining whether a bank was meeting CRA standards. Examiners no longer had the discretion they once had. For banks, simply proving that they were looking for qualified buyers was not enough. Banks now had to show that they had actually made a requisite number of loans to low- and moderate-income (LMI) borrowers. The new regulations also required the use of "innovative or flexible" lending practices to address credit needs of LMI borrowers and neighborhoods. Thus, a law that was originally intended to encourage banks to use safe and sound practices in lending now required them to be "innovative" and "flexible." In other words, it called for the relaxation of lending standards, and it was the bank regulators who were expected to enforce these relaxed standards.
The effort to reduce mortgage lending standards was led by the Department of Housing and Urban Development through the 1994 National Homeownership Strategy, published at the request of President Clinton. Among other things, it called for "financing strategies, fueled by the creativity and resources of the private and public sectors, to help homeowners that lack cash to buy a home or to make the payments." Once the standards were relaxed for low-income borrowers, it would seem impossible to deny these benefits to the prime market. Indeed, bank regulators, who were in charge of enforcing CRA standards, could hardly disapprove of similar loans made to better-qualified borrowers.
Sure enough, according to data published by the Joint Center for Housing Studies of Harvard University, the share of all mortgage originations that were made up of conventional mortgages (that is, the thirty-year fixed-rate mortgage that had always been the mainstay of the U.S. mortgage market) fell from 57.1 percent in 2001 to 33.1 percent in the fourth quarter of 2006. Correspondingly, subprime loans (those made to borrowers with blemished credit) rose from 7.2 percent to 18.8 percent, and Alt-A loans (those made to speculative buyers or without the usual underwriting standards) rose from 2.5 percent to 13.9 percent....
...In 1992, an affordable housing mission was added to the charters of Fannie and Freddie, which--like the CRA--permitted Congress to subsidize LMI housing without appropriating any funds. ...
...Fannie and Freddie used their affordable housing mission to avoid additional regulation by Congress, especially restrictions on the accumulation of mortgage portfolios (today totaling approximately $1.6 trillion) that accounted for most of their profits. The GSEs argued that if Congress constrained the size of their mortgage portfolios, they could not afford to adequately subsidize affordable housing. By 1997, Fannie was offering a 97 percent loan-to-value mortgage. By 2001, it was offering mortgages with no down payment at all. By 2007, Fannie and Freddie were required to show that 55 percent of their mortgage purchases were LMI loans, and, within that goal, 38 percent of all purchases were to come from underserved areas (usually inner cities) and 25 percent were to be loans to low-income and very-low-income borrowers. Meeting these goals almost certainly required Fannie and Freddie to purchase loans with low down payments and other deficiencies that would mark them as subprime or Alt-A.
The decline in underwriting standards is clear in the financial disclosures of Fannie and Freddie. From 2005 to 2007, Fannie and Freddie bought approximately $1 trillion in subprime and Alt-A loans. This amounted to about 40 percent of their mortgage purchases during that period. Moreover, Freddie purchased an ever-increasing percentage of Alt-A and subprime loans for each year between 2004 and 2007. It is impossible to forecast the total losses the GSEs will realize from a $1.6 trillion portfolio of junk loans, but if default rates on these loans continue at the unprecedented levels they are showing today, the number will be staggering. The losses could make the $150 billion savings and loan bailout in the late 1980s and early 1990s look small by comparison....
...In a very real sense, the competition from Fannie and Freddie that began in late 2004 caused both the GSEs and the private-label issuers to scrape the bottom of the mortgage barrel. Fannie and Freddie did so in order to demonstrate to Congress their ability to increase support for affordable housing. The private-label issuers did so to maintain their market share against the GSEs' increased demand for subprime and Alt-A products. Thus, the gradual decline in lending standards--beginning with the revised CRA regulations in 1993 and continuing with the GSEs' attempts to show Congress that they were meeting their affordable housing mission--came to dominate mortgage lending in the United States....
Sunday, February 22, 2009
Don't let anyone tell you the American dream has faded. the truth is the U.S. is still minting lots of millionaires. Glenn Goss is one of them.
Goss retired four years ago, at 42, from a $90,000 job as a police commander in Delray Beach, Fla. He immediately began drawing a $65,000 annual pension that is guaranteed for life, is indexed to keep up with inflation and comes with full health benefits.
Goss promptly took a new job as police chief in nearby Highland Beach. One big lure: the benefits.
Given that the average man his age will live to 78, Goss is already worth nearly $2 million, based on the present value of his vested retirement benefits. Looked at another way, he is a $2 million liability to Florida taxpayers....
...They're creating a nasty social problem as well. America, in case you hadn't noticed, is dividing into two nations. The 22.5-million-strong public sector (that includes retirees) is growing ever larger, and enjoying ever greater wages and benefits often guaranteed by state constitutions.
In private-sector America your job, assuming you still have one, hangs on the fate of the economy. If your employer ever offered a pension for life, like young officer Goss is receiving, odds are it has stopped doing so, or soon will. Those retirement accounts you scrimped and saved to assemble? Unless they are invested in Treasurys, they aren't doing too well. In private-sector America the math leads to the grim prospect of working longer and living poorer.
In public-sector America things just get better and better. The common presumption is that public servants forgo high wages in exchange for safe jobs and benefits. The reality is they get all three. State and local government workers get paid an average of $25.30 an hour, which is 33% higher than the private sector's $19, according to Bureau of Labor Statistics data. Throw in pensions and other benefits and the gap widens to 42%.
For New York City's 281,000 employees, average compensation has risen 63% since 2000 to $107,000 a year. New Jersey teaching veterans receive $80,000 to $100,000 for ten months' work. In California prison guards can sock away $300,000 a year with overtime pay.
Four in five public-sector workers have lifetime pensions, versus only one in five in the private sector. The difference shifts huge risks from government to private-sector workers....
Watch out, quangocrats – our patience is running out
...Sooner or later these things will exhaust the patience of great masses of people, and rouse them to profound anger.
I don’t mean the repeated lies of the government, or the folly of a prime minister who appears not to understand the destruction he has brought upon us, or the shameless greed of the bankers who have ruined us, or the corruption of parliament, the profligacy of Eurocrats, the rape of the voting system, though there is enough of it about to make us all feel sick with fury. Those things don’t exactly have a great unifying theme, a clear indication of Them and Us. The people responsible are all over the place; they don’t have an easily identified status, occupation and address at which to direct united public fury.
There is one group that does, however. It is the vast and growing army of state sector workers – public servants, civil servants, whatever you call them: I mean the actual providers and arrangers of public services. You can find them in any town hall or local authority premises and in the bloated offices of quangos. Of course, I know that some of them are indispensable and truly inspiring and we are all grateful to them – good nurses, social workers, doctors, teachers and good administrators as well. Others are pretty much good enough, and conscientious. But there are all too many who are not.
Whoever they are, however, and whatever they do, these public servants are distinguished by three facts, unique (when united) to them: first, the taxpayer pays for them, second, their jobs and their pensions are protected (by the rest of us) and third, it’s extremely difficult, if not impossible, to sack them. Some of them do crucially important things, and some of them do those important things well; but many of them do important things badly, and a lot of them do things that do not need to be done at all, least of all at public expense, and with impunity. Think of those transgender sexual inclusion outreach workers, that potato promotion quango and the irresponsible mentality that promotes such waste.
Predicting public unrest is usually best avoided. All the same, I’d like to put a case in which one might well expect it. (Supporting evidence available upon request, or indeed upon regularly following the news or looking at the TaxPayers’ Alliance website.)
If, for example, very large numbers of state sector people are indeed doing wasteful non-jobs, which we don’t want to pay anyone for doing; if the government keeps on creating these jobs despite constant, informed protest; if so many state sector people are so deeply, institutionally incompetent and yet very rarely face the consequences of their failure and indeed can sue for large payoffs (as in the case of Baby P in Haringey); if they get secure pensions and security of employment; if they can take early retirement; if they do regularly take such very early retirement on full pensions; if more and more of them are getting as good as or better pay than private sector workers; if our earnings will soon be very highly taxed to pay for public sector pensions; if (unlike public sectors workers) we are forced to carry on working, in any job we can get, by the disappearance of our pensions and savings; if therefore our retirements will be impoverished while theirs are safe; if they in their swollen numbers vote for the government that hires and backs them, depriving us of political redress; and, finally, if we are in the beginning of a very serious long-term recession, and Britain faces the highest debt in Europe as a result of throwing many billions at the public sector, without very much result, then what would you expect? ...
Obama Administration Maintains Bush Position on 'Extraordinary Rendition' Lawsuit
The Obama Administration today announced that it would keep the same position as the Bush Administration in the lawsuit Mohamed et al v Jeppesen Dataplan, Inc.
The case involves five men who claim to have been victims of extraordinary rendition -- including current Guantanamo detainee Binyam Mohamed, another plaintiff in jail in Egypt, one in jail in Morocco, and two now free. They sued a San Jose Boeing subsidiary, Jeppesen Dataplan, accusing the flight-planning company of aiding the CIA in flying them to other countries and secret CIA camps where they were tortured.
A year ago the case was thrown out on the basis of national security, but today the Ninth U.S. Circuit Court of Appeals heard the appeal, brought by the ACLU.
A source inside of the Ninth U.S. District Court tells ABC News that a representative of the Justice Department stood up to say that its position hasn't changed, that new administration stands behind arguments that previous administration made, with no ambiguity at all. The DOJ lawyer said the entire subject matter remains a state secret.
This is not going to please civil libertarians and human rights activists who had hoped the Obama administration would allow the lawsuit to proceed....
Obama administration tries to kill e-mail case
WASHINGTON (AP) — The Obama administration, siding with former President George W. Bush, is trying to kill a lawsuit that seeks to recover what could be millions of missing White House e-mails....
Obama Backs Off a Reversal on Secrets
SAN FRANCISCO — In a closely watched case involving rendition and torture, a lawyer for the Obama administration seemed to surprise a panel of federal appeals judges on Monday by pressing ahead with an argument for preserving state secrets originally developed by the Bush administration....
...During the campaign, Mr. Obama harshly criticized the Bush administration’s treatment of detainees, and he has broken with that administration on questions like whether to keep open the prison camp at Guantánamo Bay, Cuba. But a government lawyer, Douglas N. Letter, made the same state-secrets argument on Monday, startling several judges on the United States Court of Appeals for the Ninth Circuit.
“Is there anything material that has happened” that might have caused the Justice Department to shift its views, asked Judge Mary M. Schroeder, an appointee of President Jimmy Carter, coyly referring to the recent election.
“No, your honor,” Mr. Letter replied.
Judge Schroeder asked, “The change in administration has no bearing?”
Once more, he said, “No, Your Honor.” ...
Son of Dallas’ Pastor T.D. Jakes arrested for indecent exposure
The son of T.D. Jakes — the Dallas megachurch pastor who’s called homosexuality a “brokenness” and declared that he would never hire a sexually active gay person — was arrested in a gay sex sting in Kiest Park in January, according to Dallas police reports....
Saturday, February 21, 2009
The rise of scientific authoritarianism
Scientific authoritarianism, as I am using it here, holds that political decisions should be compelled by the political preferences of scientists. It is a very strong form of the ‘linear model’ of science and decision-making that I discuss in my book, The Honest Broker. Hansen believes that the advice of experts, and specifically his advice alone, should compel certain political outcomes.
He opens his op-ed with this statement: ‘A year ago, I wrote to Gordon Brown asking him to place a moratorium on new coal-fired power plants in Britain. I have asked the same of Angela Merkel, Barack Obama, Kevin Rudd and other leaders.’
Collectively, Brown, Merkel, Obama and Rudd lead about 500million people. The idea that one person’s policy views should carry so much weight in democratic societies is an indication that Hansen believes that expertise should carry decisive weight in decisions. Hansen is not even a citizen of Germany, Australia or the United Kingdom, so the mere fact that he is asking the leaders of these countries to act based on his say-so is an expression of scientific authoritarianism.
Rather than making the case for his preferred policy, Hansen’s argument includes his complaint that policymakers have not followed his advice, which Hansen seemingly believes should take precedence over all other views. Indeed, he dismisses the views of the public as being too poorly informed, too distracted or unsophisticated to contribute to decision-making on the climate issue: ‘The public, buffeted by weather fluctuations and economic turmoil, has little time to analyse decadal changes. How can people be expected to evaluate and filter out advice emanating from those pushing special interests? How can people distinguish between top-notch science and pseudo-science?’ ...
Thursday, February 19, 2009
Satellite sensor errors cause data outage
As some of our readers have already noticed, there was a significant problem with the daily sea ice data images on February 16. The problem arose from a malfunction of the satellite sensor we use for our daily sea ice products. Upon further investigation, we discovered that starting around early January, an error known as sensor drift caused a slowly growing underestimation of Arctic sea ice extent. The underestimation reached approximately 500,000 square kilometers (193,000 square miles) by mid-February....
...On February 16, 2009, as emails came in from puzzled readers, it became clear that there was a significant problem—sea-ice-covered regions were showing up as open ocean. ...
Wednesday, February 18, 2009
O ye of little faith! This economic crisis is evidence that the market is working
...So amid all the doom-mongering and recanting, I have an assertion to make. The market has not failed. The present collapse is evidence that the market is working. Confidence bubbles are an inherent feature of a free market system. Panics — confidence vacuums — are an inherent feature too. The test of the theory of market capitalism is whether the system provides from within itself the means to prick both.
It does. The first — a confidence bubble — has been pricked. We are now sucking ourselves the other way: into a confidence vacuum. In time this too will be pricked. The market will steady.
The bubble that has just burst was based, worldwide, on financial services. Financial services are a product. It is true they are a product critical to the efficient functioning of the market (so is electricity, so is oil) but that just makes them an unusually important product. From time to time products fail in any market. They may fail through force majeure — droughts, floods, pestilence. They may fail due to inherent flaws — airships, Thalidomide, blue asbestos. Or they may fail through ignorance, trickery or the credulity of human beings — Madoff, the property bubble, the repackaging of sub-prime debt.
The present financial crash has been precipitated by product failure of the third kind. Trade in financial instruments too opaque for even those who traded in them to assess them properly, and bonus incentive schemes that acted against the interests of the companies offering them, fuelled a banking bubble that has now burst.
But ask: what pricked it? Did politicians rumble the trade? Did governments, or international forums or symposiums, provide the sharp instrument? Did academic research and expertise expose the dodgy product? Did statutory regulators apply the pin? No, the free market wised up and pricked this bubble. Politicians and finance ministers (if they had had the power) would have tried to keep it inflated. The market puffed itself up, and then, without intervention — despite intervention — the market let itself down. The speed with which this has happened has been awful, but however inconvenient for many or catastrophic for a few, correction is not a failure of the market, but a success....
Regime Uncertainty Exemplified in the Fannie/Freddie Debacle
The February issue of Vanity Fair has an interesting article on the politicking associated with the Fannie/Freddie debacle. Toward the end of the story (p. 146), the author, Bethany McLean, describes a late-stage episode in this tale that nicely exemplifies the concept of regime uncertainty. I proposed the idea of regime uncertainty in a 1997 article about the extraordinary duration of the Great Depression. I argued there that the Roosevelt administration’s overt hostility toward investors as a class, especially after 1935, created fears about the security of private property rights and, indeed, about whether the economy would continue to be based on such rights or, instead, would be subjected to some species of collectivist takeover or dictatorship. The idea of regime uncertainty, however, may also be applied in many other contexts where the same kind of uncertainty tends to paralyze long-term investors, as it did in the latter half of the 1930s....
Is the U.S. Going Broke?
...The real liability facing our government is $70 trillion. This represents the present value difference between all the government's projected future spending obligations and all its projected future tax receipts. This fiscal gap takes into account Uncle Sam's need to service official debt--outstanding U.S. government bonds. But it also recognizes all our government's unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.
Given current policies, each of the 78 million boomers can expect, on average, to receive $50,000, in today's dollars, from these programs in each and every year of retirement. Multiply 78 million boomers by a $50,000 annual payment and you get close to $4 trillion per year. This helps you see why our nation's true indebtedness is so extraordinarily high.
There are other obligations, too, that aren't calculated into the national debt, or even in the $70 trillion, but for which the government remains at risk. House prices haven't stopped falling. They are down 20% from their peak two years ago. But they remain 70% above their value in early 2000. That was the year prices started going crazy. If the price pendulum swings back to 2000, we'll see the mortgage default rate, currently at a record 9%, soar. We'll also see more Americans file for personal bankruptcies and default on their credit cards. This will put many more financial institutions under water. The Federal Deposit Insurance Corp. has $45 billion on hand to cover bank failures, such as that of Indymac earlier this year, which cost the FDIC $9 billion. Large-scale bank failures could leave the FDIC short hundreds of billions of dollars. The total of insured deposits in this country is $4.5 trillion....
Monday, February 16, 2009
Rubber Stamping Rape
...[Former Guantanamo prison guard Brandon Neely] describes body searches undertaken for no legitimate security purpose, simply to sexually invade and humiliate the prisoners. This was a standardized Bush Administration tactic – the importance of which became apparent to me when I participated in some Capitol Hill negotiations with White House representatives relating to legislation creating criminal law accountability for contractors. The Bush White House vehemently objected to provisions of the law dealing with rape by instrumentality. When House negotiators pressed to know why, they were met first with silence and then an embarrassed acknowledgement that a key part of the Bush program included invasion of the bodies of prisoners in a way that might be deemed rape by instrumentality under existing federal and state criminal statutes....
Sunday, February 15, 2009
Dark Green Doomsayers
...In the 1970s, "a major cooling of the planet" was "widely considered inevitable" because it was "well established" that the Northern Hemisphere's climate "has been getting cooler since about 1950" (New York Times, May 21, 1975). Although some disputed that the "cooling trend" could result in "a return to another ice age" (the Times, Sept. 14, 1975), others anticipated "a full-blown 10,000-year ice age" involving "extensive Northern Hemisphere glaciation" (Science News, March 1, 1975, and Science magazine, Dec. 10, 1976, respectively). The "continued rapid cooling of the Earth" (Global Ecology, 1971) meant that "a new ice age must now stand alongside nuclear war as a likely source of wholesale death and misery" (International Wildlife, July 1975). "The world's climatologists are agreed" that we must "prepare for the next ice age" (Science Digest, February 1973). Because of "ominous signs" that "the Earth's climate seems to be cooling down," meteorologists were "almost unanimous" that "the trend will reduce agricultural productivity for the rest of the century," perhaps triggering catastrophic famines (Newsweek cover story, "The Cooling World," April 28, 1975). Armadillos were fleeing south from Nebraska, heat-seeking snails were retreating from Central European forests, the North Atlantic was "cooling down about as fast as an ocean can cool," glaciers had "begun to advance" and "growing seasons in England and Scandinavia are getting shorter" (Christian Science Monitor, Aug. 27, 1974). ...
What Charles Darwin Owes to Adam Smith
..."Intelligent design is to evolutionary biology what socialism is to free-market economics."...
Darwin and the Right
...Herein should lie Darwin’s appeal to the right: The English naturalist gave scientific validity to the revolutionary idea that order can be spontaneous, neither designed by nor beholden to an all-powerful authority. The struggle for existence that drives natural selection according to Darwin has nothing predetermined about it. In fact, he maintained that the presence of certain habits, values and institutions, including religion—themselves part of man’s adaptation to the environment—can impact evolution. The instinct of sympathy, for instance, drives some stronger members of the human species to help weaker ones, thereby mitigating the struggle for existence.
It is fascinating that conservatives who advocate for a spontaneous order—the free market—in political economy and decry social engineering as a threat to progress and civilization should resent Darwin’s overwhelming case for the idea that order can design itself. In an essay in the British publication The Spectator, the conservative science writer Matt Ridley reflects on the paradox that the left has claimed Darwin even though leftist political ideas contradict his basic teaching: “In the average European biology laboratory you will find fervent believers in the individualist, emergent, decentralized properties of genomes who prefer dirigiste determinism to bring order to the economy.”...
Saturday, February 14, 2009
How Government Created the Financial Crisis
...Monetary excesses were the main cause of the boom. The Fed held its target interest rate, especially in 2003-2005, well below known monetary guidelines that say what good policy should be based on historical experience. Keeping interest rates on the track that worked well in the past two decades, rather than keeping rates so low, would have prevented the boom and the bust. Researchers at the Organization for Economic Cooperation and Development have provided corroborating evidence from other countries: The greater the degree of monetary excess in a country, the larger was the housing boom.
The effects of the boom and bust were amplified by several complicating factors including the use of subprime and adjustable-rate mortgages, which led to excessive risk taking. There is also evidence the excessive risk taking was encouraged by the excessively low interest rates. Delinquency rates and foreclosure rates are inversely related to housing price inflation. These rates declined rapidly during the years housing prices rose rapidly, likely throwing mortgage underwriting programs off track and misleading many people....
...Other government actions were at play: The government-sponsored enterprises Fannie Mae and Freddie Mac were encouraged to expand and buy mortgage-backed securities, including those formed with the risky subprime mortgages...
Instead of stimulus, do nothing – seriously
Oakland, Calif. - As we wait to see how the politicians in Washington will alter the stimulus package the Obama administration is pushing, many questions are being raised about the measure's contents and efficacy. Should it include money for the National Endowment for the Arts, Amtrak, and child care? Is it big enough to get the economy moving again? Does it spend money fast enough? Hardly anyone, however, is asking the most important question: Should the federal government be doing any of this?
In raising this question, one risks immediate dismissal as someone hopelessly out of touch with the modern realities of economics and government. Yet the United States managed to navigate the first century and a half of its past – a time of phenomenal growth – without any substantial federal intervention to moderate economic booms and busts. Indeed, when the government did intervene actively, under Herbert Hoover and Franklin D. Roosevelt, the result was the Great Depression.
Until the 1930s, the Constitution served as a major constraint on federal economic interventionism. The government's powers were understood to be just as the framers intended: few and explicitly enumerated in our founding document and its amendments. Search the Constitution as long as you like, and you will find no specific authority conveyed for the government to spend money on global-warming research, urban mass transit, food stamps, unemployment insurance, Medicaid, or countless other items in the stimulus package and, even without it, in the regular federal budget. ...
...The US government has shown repeatedly that as an economic manager it is not to be trusted. What we need most are authorities wise enough to follow the dictum, "First, do no harm." The stimulus package will do enormous harm. The huge debt burden it entails, by itself, ought to condemn the measure. America is already drowning in debt. But the measure will also wreak harm in countless other directions by effectively reallocating resources on a grand scale according to political priorities, rather than according to individual preferences and economic rationality. As our history shows, the economy can recover strongly on its own, if only the politicians will stay out of the way.
The Last Eight Years
In selling his big-spending ideas for reviving the U.S. economy, President Obama has chastised “the same policies that, for the last eight years, doubled our national debt, and threw our economy into a tail spin.” We couldn’t agree more with the president. Unfortunately, he seems unaware that exploding the size of government, as he is proposing to do with this stimulus package, is a remarkably Bush-esque ideal....
OBAMA'S EDUCATION CHIEF PRESIDED OVER A SYSTEM WITH OVER 500 STUDENT BEATINGS BY STAFF
CBS 2, Chicago - Hundreds of students have allegedly been beaten by teachers, coaches and staff at Chicago Public Schools. . . An exclusive CBS 2 investigation discovered . . . at least 818 Chicago Public School students since 2003 to allege being battered by a teacher or an aide, coach, security guard, or even a principal. In most of those cases - 568 of them - Chicago Public School investigators determined the children were telling the truth.
The 2 Investigators found reports of students beaten with broomsticks, whipped with belts, yard sticks, struck with staplers, choked, stomped on and pushed down stairs. One substitute teacher even fractured a student's neck. But even more alarming, in the vast majority of cases, teachers found guilty were only given a slap on the wrist....
Shut Up, They Said
...The biggest bailout news this week wasn't the ritual shaming of bank CEOs Wednesday on Capitol Hill. The real political cudgels were wielded in a February 10 letter that Big Labor sent to Wall and K Streets: Any business that takes a bank rescue dollar must give up its rights to free political speech and free association.
Anna Burger, chair of the Change to Win federation, wrote that financial services firms and their trade group should "immediately cease all lobbying and advocacy" against "card check" legislation that would end the secret ballot in union elections. The letter was sent to Steve Bartlett, the head of the Financial Services Roundtable, with helpful copies to Congressman Barney Frank and Senator Christopher Dodd, who happen to have life or death power over the banks....
...But if Big Labor wants to limit speech, why stop at the bankers? The unions, including those that belong to Change to Win, get plenty of government money for their affiliates to run job training and other programs. For that matter, many employees of companies that have received bailout cash -- General Motors or Chrysler, say -- use some of their wages to pay union dues. The unions then use those dues to become major political players at election time -- to the tune of $450 million in the last election cycle, and that's the amount they admit to spending. If banks can't lobby against card check, the United Auto Workers ought to be banned from politics too...
Obama's shock doctrine
...It did what governments actually do in a crisis – it seized new powers over the economy. It dramatically expanded the regulatory powers of the Federal Reserve and injected a trillion dollars of inflationary credit into the banking system. It partially nationalised the biggest banks. It appropriated $700bn with which to intervene in the economy. It made General Motors and Chrysler wards of the federal government. It wrote a bail-out bill giving the secretary of the treasury extraordinary powers that could not be reviewed by courts or other government agencies.
Now the Obama administration is continuing this drive toward centralisation and government domination of the economy. And its key players are explicitly referring to heir own version of the shock doctrine. Rahm Emanuel, the White House chief of staff, said the economic crisis facing the country is "an opportunity for us". After all, he said: "You never want a serious crisis to go to waste. And this crisis provides the opportunity for us to do things that you could not do before" such as taking control of the financial, energy, information and healthcare industries.
That's just the sort of thing Naomi Klein would have us believe that free-marketers like Milton Friedman think. "Some people stockpile canned goods and water in preparation for major disasters," Klein wrote. "Friedmanites stockpile free-market ideas." But that is exactly what American left-liberals have been doing in anticipation of a Democratic administration coming to power at a time when the public might be frightened into accepting more government than it normally would. For instance, the Centre for American Progress, run by John Podesta, who was President Bill Clinton's chief of staff and President-elect Obama's transition director, has just released Change for America: A Progressive Blueprint for the 44th President.
Paul Krugman, the Bush-bashing New York Times columnist, endorsed Emanuel's enthusiasm: "Progressives hope that the Obama administration, like the New Deal, will respond to the current economic and financial crisis by creating institutions, especially a universal healthcare system, that will change the shape of American society for generations to come."
Arianna Huffington had called Klein's book "prophetic". As the Obama team began drawing up plans, she proved just how right she was, declaring: "A crisis is a terrible thing to waste. And it might be this particular crisis that will make it possible for the Obama administration to do some really innovative, bold things on healthcare, on energy independence, on all the areas that have been neglected."...
True Cost of Stimulus: $3.27 Trillion
...Rep. Paul Ryan (R-WI) asked the Congressional Budget Office to estimate the impact of permanently extending the 20 most popular provisions of the stimulus bill. What did the CBO find? As you can see from the table below, the true 10 year cost of the stimulus bill $2.527 trillion in in spending with another $744 billion cost in debt servicing. Total bill for the Generational Theft Act: $3.27 trillion....
‘Temporary’ measures take on longer life
...These increases are supposed to be only for a limited period, generally this year and next. In budget-speak, however, they raise the "baseline" amounts allocated for these programs. Any attempt to bring the new baselines back down to pre-stimulus levels will undoubtedly be greeted with howls about "cuts" that would hurt the poor, the infirm, students, researchers and police. (Already, some House Democrats are complaining about "cuts" made in the pie-in-the-sky levels of spending contained in their original version of the stimulus bill.)
The program also contains an array of tax breaks that are supposed to be temporary but will be similarly difficult to rescind. Any effort to do so will be denounced as a harmful tax increase in the middle of a recession or recovery, depending on the state of the economy at the time.
If 30 tax breaks and spending increases in the House stimulus bill were extended — and each one has its own constituency and lobbyists — the Congressional Budget Office estimates that would add $1.7 trillion to federal deficits over 10 years....
Spend Or Starve
...Boorish manners are one thing, but McCaskill's nastiness extends to deceptiveness regarding the financial crisis. Appearing on "Meet the Press" on Sunday, the senator contended that some of the spending in Congress' $789-billion-plus stimulus package "was makeup for a starvation diet under the Bush administration."
Starvation? Bruce Bartlett, who crafted economic policy for Jack Kemp and Presidents Reagan and George H.W. Bush, wrote a book, titled "Impostor," charging the second Bush with unprecedented profligate spending.
The number of pork-barrel projects enacted approached 50,000 from 2001 to 2005 and cost $111 billion, Bartlett noted, citing Citizens Against Government Waste figures. By comparison, in the previous five years under Bill Clinton, there were fewer than 12,000 pork programs, costing $70 billion.
Bartlett's biggest indictment concerns the Bush expansion of Medicare to include a prescription drug benefit, the long-term cost of which was pegged at $18.2 trillion as of 2005, "equivalent to 1.9% of the gross domestic product forever." The Medicare trustees' most recent forecast of the program's costs is "$21.8 trillion, of which $10 trillion would occur during the first 75 years."
If that's a drastic diet, what would a well-fed Uncle Sam look like?...
Saturday, February 07, 2009
The madness of crowds
...I'm less definitely a skeptic than Tyler--I'm more concerned by the composition of the stimulus than by its size. But Tyler's concerns are not unreasonable. Many of the concerns raised about the stimulus are not unreasonable. And the response to requests for better evidence are too often being met by enraged proponents metaphorically jumping up and down and screaming "Concede! Concede! Concede!" This is not usually the activity of someone who has solid empirical evidence and an irrefutable model backing him up. If the evidence is so overwhelming, why not just lay it out? What, exactly, is the model we're using; what are the assumptions about things like marginal propensity to consume; and what is the empirical evidence backing up these estimates? What's the justification, other than "it's a good way to fool the American people into supporting spending I want", for packaging so much permanent spending as stimulus, rather than debating those programs on their own merits?...
Debating Democratic Tax Cheats
...Mr. Daschle’s tax dodging…reveals how the political culture in Washington is fundamentally corrupt. As a senator, he constantly voted to expand the size and scope of government, and he expected the rest of us to pay the bills, stating in 1998 that, “the I.R.S. should enforce our laws to the letter.” Yet like Treasury Secretary Geithner and Charles Rangel, chairman of the House Ways and Means Committee, Mr. Daschle viewed compliance as optional. Unlike ordinary Americans, Mr. Daschle and other members of the political class will not have to worry about being harassed by the I.R.S. Washington insiders have a get-out-of-jail-free card that enables them to feign embarrassment, pay the back taxes and interest, but avoid any penalties or legal consequences. Best of all, they also can generate campaign contributions while in office and become rich out of office by making the tax code even more onerous for the rest of us. Nice work if you can get it....
Ex-Journalists’ New Jobs Fuel Debate on Favoritism
WASHINGTON — Republicans have long accused mainstream journalists of being on the payroll of President Obama and the Democratic Party, a common refrain of favoritism especially from those on the losing end of an election (see Bush vs. Gore, Clinton vs. Bush and Bush vs. Dukakis).
But this year the accusation has a new twist: In some notable cases it has become true, with several prominent journalists now on the payrolls of Mr. Obama and the Democratic Congressional leadership.
An unusual number of journalists from prominent, mainstream organizations started new government jobs in January, providing new kindling to the debate over whether Mr. Obama is receiving unusually favorable treatment in the news media.
These are not opinionated talkers in the vein of Chris Matthews, the MSNBC host who last year flirted with a run for the Democratic nomination for the Senate — and who more recently said he would do “everything I can to make this thing work” for Mr. Obama.
Rather, they are, for the most part, more traditional journalists from organizations that strive to approach the news with objectivity. ...
Tom Daschle's Washington
...But Mr. Daschle's embarrassment of riches is a typical story, and in fact is the result of the liberal ideology his critics have been advocating for decades. The main story of the Obama Presidency so far isn't the contradiction between Mr. Obama's campaign promises and the messier reality of his nominees. That was always inevitable. The real story is the massive transfer of power and wealth now underway from the private sector to the political class. Mr. Daschle could make so much money and achieve such prominence because he was expected to be a central broker in that wealth transfer.
Alston & Bird, the white-shoe law firm that took in Mr. Daschle, is a lobbying shop. Any normal person would therefore consider Mr. Daschle, who does not have a law degree, to be a lobbyist. But he was not technically a lobbyist under Beltway rules, and while it is still unclear exactly what services he performed as "Special Public Policy Advisor" to pile up $2.1 million, we do know he consulted for the insurance conglomerate UnitedHealth Group.
Mr. Daschle cashed in to the tune of nearly a quarter million dollars from various health-care businesses. The Health Industry Distributors Association paid $14,000 to hear him speak in March 2008 about "the impact an Obama administration will have on the industry." America's Health Insurance Plans, the insurers' lobby, gave $20,000 for another speech, as did health-care consulting firms, hospital systems and pharmacy boards.
Mr. Daschle's critics say he breached some fanciful code of honor separating corporate America and government. Please. Business groups spend to get intelligence and minimize political risk. In the case of Mr. Daschle, he was trading less on his career in "public service" than his proximity to and early support for Mr. Obama. While he was the recipient of industry generosity, the going wager was that he'd be White House Chief of Staff.
What Mr. Daschle's lucrative career as influence peddler really illustrates is how much Washington is now expanding its reach over the economy. Politicians and their staffers can make or break fortunes by slipping a rider into a "must pass" bill or dispensing billions of dollars in subsidies to favored constituencies. Naturally businesses are going to protect their interests and hire lobbyists to get the decisions to come out their way....
Fiscal Policy, the Great Depression, and World War II
...So why did U.S. involvement with World War II seemingly end the depression? Two reasons: (1) The draft conscripted 22 percent of the prewar labor force. Forcing people to work at low wage, high-risk jobs can always reduce unemployment, which is why slave societies never face an unemployment problem....
The DNA of Politics
...Three political science professors—John Alford, Carolyn Funk, and John Hibbing—have studied political attitudes among a large number of twins in America and Australia. They measured the attitudes with something called the Wilson-Patterson Scale (I am not the Wilson after whom it was named), which asks whether a respondent agrees or disagrees with 28 words or phrases, such as “death penalty,” “school prayer,” “pacifism,” or “gay rights.” They then compared the similarity of the responses among identical twins with the similarity among fraternal twins. They found that, for all 28 taken together, the identical twins did indeed agree with each other more often than the fraternal ones did—and that genes accounted for about 40 percent of the difference between the two groups...
...Genes also influence how frequently we vote. Voting has always puzzled scholars: How is it rational to wait in line on a cold November afternoon when there is almost no chance that your ballot will make any difference? Apparently, people who vote often feel a strong sense of civic duty or like to express themselves. But who are these people? James Fowler, Laura Baker, and Christopher Dawes studied political participation in Los Angeles by comparing voting among identical and fraternal twins. Their conclusion: among registered voters, genetic factors explain about 60 percent of the difference between those who vote and those who do not...
...The gene-driven ideological split that Alford and his colleagues found may, in fact, be an underestimate, because men and women tend to marry people with whom they agree on big issues—assortative mating, as social scientists call it. Assortative mating means that the children of parents who agree on issues will be more likely to share whatever genes influence those beliefs. Thus, even children who are not identical twins will have a larger genetic basis for their views than if their parents married someone with whom they disagreed. Since we measure heritability by subtracting the similarity among fraternal twins from the similarity among identical ones, this difference may neglect genetic influences that already exist on fraternal twins. And if it does, it means that we are underestimating genetic influences on attitudes.
When we step back and look at American politics generally, genes may help us understand why, for countless decades, about 40 percent of all voters have supported conservative causes, about 40 percent have backed liberal ones, and the 20 percent in the middle have decided the elections. On a few occasions, the winning presidential candidate has won about 60 percent of the vote. But these days we call a 55 percent victory a “landslide.” It is hard to imagine a purely environmental force that would rule out a presidential election in which one candidate got 80 percent of the vote and his rival only 20 percent. Something deeper must be going on....
BOOKS: Taking measure of West's decline
...He considers the growth of social pathologies and the decline of cultural, moral and aesthetic standards in Britain more far-reaching and alarming than similar processes in the United States. He believes that the policies of the British welfare state have made a large contribution to these phenomena leaving "many people in contemporary Britain with very little of importance to decide for themselves. … They are educated by the state (at least nominally) … the state provides for them in old age and has made savings unnecessary … they are treated and cured by the state when they are ill; they are housed by the state if they cannot otherwise afford decent housing. Their choices concern only sex and shopping.
"No wonder the British have changed in character, their sturdy independence replaced by passivity, querulousness, or even, at the lower reaches of society, a sullen resentment that not enough has been … done for them. For those at the bottom, such money as they receive is, in effect pocket money, … reserved for the satisfaction of whims. As a result they are infantilized. If they behave irresponsibly — for example by abandoning their own children … — it is because both the rewards for behaving responsibly and the penalties for behaving irresponsibly have vanished." ...
Thursday, February 05, 2009
How Government Prolonged the Depression
...The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.
Even comparing hours worked at the end of 1930s to those at the beginning of FDR's presidency doesn't paint a picture of recovery. Total hours worked per adult in 1939 remained about 21% below their 1929 level, compared to a decline of 27% in 1933. And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover at all, remaining 25% below its trend level throughout the New Deal, and per-capita nonresidential investment averaged about 60% below trend. The Great Depression clearly continued long after FDR took office....
...The downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court's 1937 decision that upheld the constitutionality of the National Labor Relations Act. These wage hikes led to further job loss, particularly in manufacturing. The "recession in a depression" thus was not the result of a reversal of New Deal policies, as argued by some, but rather a deepening of New Deal polices that raised wages even further above their competitive levels, and which further prevented the normal forces of supply and demand from restoring full employment. Our research indicates that New Deal labor and industrial policies prolonged the Depression by seven years.
By the late 1930s, New Deal policies did begin to reverse, which coincided with the beginning of the recovery. In a 1938 speech, FDR acknowledged that the American economy had become a "concealed cartel system like Europe," which led the Justice Department to reinitiate antitrust prosecution. And union bargaining power was significantly reduced, first by the Supreme Court's ruling that the sit-down strike was illegal, and further reduced during World War II by the National War Labor Board (NWLB), in which large union wage settlements were limited by the NWLB to cost-of-living increases. The wartime economic boom reflected not only the enormous resource drain of military spending, but also the erosion of New Deal labor and industrial policies....
The Big Bank Bailout: Are You Next?
...The damage had been mounting so swiftly that in the midst of a global stock-market rout that ate 18% of the Dow, Treasury Secretary Hank Paulson was forced to import a plan he once considered practically un-American. Paralleling a program authored by U.K. Prime Minister Gordon Brown, it called for the U.S. government to take partial ownership of nine leading banks and offer to buy pieces of hundreds of others. On Oct. 13, the nine bank bosses, assembled in the Treasury's imposing boardroom, were each handed a piece of paper with the terms: $25 billion of preferred shares each from Citigroup, JPMorgan Chase, Wells Fargo and Bank of America. In return for the capital, the U.S. would collect a 5% dividend in the first five years. Although Wells Fargo chairman Richard Kovacevich resisted, Paulson gave the bankers no choice. It's partial nationalization, although in announcing the bailout Oct. 14, Paulson deliberately avoided using that term....
Monday, February 02, 2009
Treasury Nominee's Tax Returns Scrutinized
Timothy Geithner, President-elect Obama's nominee for Treasury secretary, failed to pay tens of thousands of dollars on his tax returns and employed a housekeeper whose legal immigration status lapsed while working for him. That's according to the Obama transition team and documents released Tuesday by the Senate Finance Committee, which is vetting Geithner's nomination.
Geithner admitted to making a mistake in his personal tax returns from 2001 to 2003. He learned of the error on his returns back in November, when he was being vetted for possible nomination to the Obama Cabinet. The mistake resulted in a $34,000 shortfall in his taxes....
...During his time with the IMF, Geithner was required to pay both Social Security and Medicare taxes for himself as both employer and employee. It appears that Geithner forwarded some tax payments but not others. For instance, he owed Social Security tax to the U.S. government. He did forward the employee portion to the IRS, but did not send the portion normally paid by the employer, which he was also supposed to do....
Health nominee latest Obama pick to hit tax snag
US President Barack Obama's pick to usher in healthcare reform was the latest cabinet nominee to face questions over his tax returns as the White House sought to downplay the revelation.
For over three years, Tom Daschle, Obama's choice to head the Department of Health and Human Services, did not pay more than 128,000 dollars in back taxes, along with 12,000 dollars in interest, US media reported Saturday.
The back taxes were due to unreported consulting income, questionable charitable contributions and his failure to report car and driver services provided by a wealthy friend....
Sunday, February 01, 2009
Deficit worse than it looks due to accounting tricks
...President Lyndon Johnson, to make the deficit numbers during the Vietnam War less scary, adopted the "unified budget," under which Social Security's surplus was mingled with general revenues, thereby reducing disguising, really the deficit's size. That, Cooper says, was the "original sin" in the budgeting sleight-of-hand that prevents the public from knowing, and Congress from being compelled to act on, facts about the entitlement programs' unfunded liabilities promises to future beneficiaries that future taxpayers may not be willing to pay.
Cooper, who has an unshakable appetite for unappetizing numbers, wishes more Americans were similarly eccentric and would read the 188-page 2008 Financial Report of the United States Government the only government document that calculates what deficit and debt numbers would be if the government practiced, as businesses must, accrual accounting.
Under such accounting, future outlays to which beneficiaries are entitled by existing law are acknowledged as expenditures before they are paid. Were the Social Security surplus sequestered for accounting purposes, reflecting the truth that it is already obligated, and were there similar treatment of the other entitlement programs' liabilities, the deficit for the fiscal year that ended Sept. 30 would have been $3 trillion rather than $454.8 billion. The report's numbers show that the true national debt is $56 trillion, not the widely reported $10 trillion....