Friday, December 30, 2011

Keynes Was Right

December 29, 2011


“The boom, not the slump, is the right time for austerity at the Treasury.” So declared John Maynard Keynes in 1937, even as F.D.R. was about to prove him right by trying to balance the budget too soon, sending the United States economy — which had been steadily recovering up to that point — into a severe recession. Slashing government spending in a depressed economy depresses the economy further; austerity should wait until a strong recovery is well under way.

Unfortunately, in late 2010 and early 2011, politicians and policy makers in much of the Western world believed that they knew better, that we should focus on deficits, not jobs, even though our economies had barely begun to recover from the slump that followed the financial crisis. And by acting on that anti-Keynesian belief, they ended up proving Keynes right all over again.

In declaring Keynesian economics vindicated I am, of course, at odds with conventional wisdom. In Washington, in particular, the failure of the Obama stimulus package to produce an employment boom is generally seen as having proved that government spending can’t create jobs. But those of us who did the math realized, right from the beginning, that the Recovery and Reinvestment Act of 2009 (more than a third of which, by the way, took the relatively ineffective form of tax cuts) was much too small given the depth of the slump. And we also predicted the resulting political backlash.

So the real test of Keynesian economics hasn’t come from the half-hearted efforts of the U.S. federal government to boost the economy, which were largely offset by cuts at the state and local levels. It has, instead, come from European nations like Greece and Ireland that had to impose savage fiscal austerity as a condition for receiving emergency loans — and have suffered Depression-level economic slumps, with real G.D.P. in both countries down by double digits.

This wasn’t supposed to happen, according to the ideology that dominates much of our political discourse. In March 2011, the Republican staff of Congress’s Joint Economic Committee released a report titled “Spend Less, Owe Less, Grow the Economy.” It ridiculed concerns that cutting spending in a slump would worsen that slump, arguing that spending cuts would improve consumer and business confidence, and that this might well lead to faster, not slower, growth.

They should have known better even at the time: the alleged historical examples of “expansionary austerity” they used to make their case had already been thoroughly debunked. And there was also the embarrassing fact that many on the right had prematurely declared Ireland a success story, demonstrating the virtues of spending cuts, in mid-2010, only to see the Irish slump deepen and whatever confidence investors might have felt evaporate.

Amazingly, by the way, it happened all over again this year. There were widespread proclamations that Ireland had turned the corner, proving that austerity works — and then the numbers came in, and they were as dismal as before.

Yet the insistence on immediate spending cuts continued to dominate the political landscape, with malign effects on the U.S. economy. True, there weren’t major new austerity measures at the federal level, but there was a lot of “passive” austerity as the Obama stimulus faded out and cash-strapped state and local governments continued to cut.

Now, you could argue that Greece and Ireland had no choice about imposing austerity, or, at any rate, no choices other than defaulting on their debts and leaving the euro. But another lesson of 2011 was that America did and does have a choice; Washington may be obsessed with the deficit, but financial markets are, if anything, signaling that we should borrow more.

Again, this wasn’t supposed to happen. We entered 2011 amid dire warnings about a Greek-style debt crisis that would happen as soon as the Federal Reserve stopped buying bonds, or the rating agencies ended our triple-A status, or the superdupercommittee failed to reach a deal, or something. But the Fed ended its bond-purchase program in June; Standard & Poor’s downgraded America in August; the supercommittee deadlocked in November; and U.S. borrowing costs just kept falling. In fact, at this point, inflation-protected U.S. bonds pay negative interest: investors are willing to pay America to hold their money.

The bottom line is that 2011 was a year in which our political elite obsessed over short-term deficits that aren’t actually a problem and, in the process, made the real problem — a depressed economy and mass unemployment — worse.

The good news, such as it is, is that President Obama has finally gone back to fighting against premature austerity — and he seems to be winning the political battle. And one of these years we might actually end up taking Keynes’s advice, which is every bit as valid now as it was 75 years ago.

Monday, December 12, 2011

Coming to America…soon!

December 11, 2011

Depression and Democracy


It’s time to start calling the current situation what it is: a depression. True, it’s not a full replay of the Great Depression, but that’s cold comfort. Unemployment in both America and Europe remains disastrously high. Leaders and institutions are increasingly discredited. And democratic values are under siege.

On that last point, I am not being alarmist. On the political as on the economic front it’s important not to fall into the “not as bad as” trap. High unemployment isn’t O.K. just because it hasn’t hit 1933 levels; ominous political trends shouldn’t be dismissed just because there’s no Hitler in sight.

Let’s talk, in particular, about what’s happening in Europe — not because all is well with America, but because the gravity of European political developments isn’t widely understood.

First of all, the crisis of the euro is killing the European dream. The shared currency, which was supposed to bind nations together, has instead created an atmosphere of bitter acrimony.

Specifically, demands for ever-harsher austerity, with no offsetting effort to foster growth, have done double damage. They have failed as economic policy, worsening unemployment without restoring confidence; a Europe-wide recession now looks likely even if the immediate threat of financial crisis is contained. And they have created immense anger, with many Europeans furious at what is perceived, fairly or unfairly (or actually a bit of both), as a heavy-handed exercise of German power.

Nobody familiar with Europe’s history can look at this resurgence of hostility without feeling a shiver. Yet there may be worse things happening.

Right-wing populists are on the rise from Austria, where the Freedom Party (whose leader used to have neo-Nazi connections) runs neck-and-neck in the polls with established parties, to Finland, where the anti-immigrant True Finns party had a strong electoral showing last April. And these are rich countries whose economies have held up fairly well. Matters look even more ominous in the poorer nations of Central and Eastern Europe.

Last month the European Bank for Reconstruction and Development documented a sharp drop in public support for democracy in the “new E.U.” countries, the nations that joined the European Union after the fall of the Berlin Wall. Not surprisingly, the loss of faith in democracy has been greatest in the countries that suffered the deepest economic slumps.

And in at least one nation, Hungary, democratic institutions are being undermined as we speak.

One of Hungary’s major parties, Jobbik, is a nightmare out of the 1930s: it’s anti-Roma (Gypsy), it’s anti-Semitic, and it even had a paramilitary arm. But the immediate threat comes from Fidesz, the governing center-right party.

Fidesz won an overwhelming Parliamentary majority last year, at least partly for economic reasons; Hungary isn’t on the euro, but it suffered severely because of large-scale borrowing in foreign currencies and also, to be frank, thanks to mismanagement and corruption on the part of the then-governing left-liberal parties. Now Fidesz, which rammed through a new Constitution last spring on a party-line vote, seems bent on establishing a permanent hold on power.

The details are complex. Kim Lane Scheppele, who is the director of Princeton’s Law and Public Affairs program — and has been following the Hungarian situation closely — tells me that Fidesz is relying on overlapping measures to suppress opposition. A proposed election law creates gerrymandered districts designed to make it almost impossible for other parties to form a government; judicial independence has been compromised, and the courts packed with party loyalists; state-run media have been converted into party organs, and there’s a crackdown on independent media; and a proposed constitutional addendum would effectively criminalize the leading leftist party.

Taken together, all this amounts to the re-establishment of authoritarian rule, under a paper-thin veneer of democracy, in the heart of Europe. And it’s a sample of what may happen much more widely if this depression continues.

It’s not clear what can be done about Hungary’s authoritarian slide. The U.S. State Department, to its credit, has been very much on the case, but this is essentially a European matter. The European Union missed the chance to head off the power grab at the start — in part because the new Constitution was rammed through while Hungary held the Union’s rotating presidency. It will be much harder to reverse the slide now. Yet Europe’s leaders had better try, or risk losing everything they stand for.

And they also need to rethink their failing economic policies. If they don’t, there will be more backsliding on democracy — and the breakup of the euro may be the least of their worries.

Class Matters. Why Won’t We Admit It?

December 11, 2011


Durham, N.C.

NO one seriously disputes the fact that students from disadvantaged households perform less well in school, on average, than their peers from more advantaged backgrounds. But rather than confront this fact of life head-on, our policy makers mistakenly continue to reason that, since they cannot change the backgrounds of students, they should focus on things they can control.

No Child Left Behind, President George W. Bush’s signature education law, did this by setting unrealistically high — and ultimately self-defeating — expectations for all schools. President Obama’s policies have concentrated on trying to make schools more “efficient” through means like judging teachers by their students’ test scores or encouraging competition by promoting the creation of charter schools. The proverbial story of the drunk looking for his keys under the lamppost comes to mind.

The Occupy movement has catalyzed rising anxiety over income inequality; we desperately need a similar reminder of the relationship between economic advantage and student performance.

The correlation has been abundantly documented, notably by the famous Coleman Report in 1966. New research by Sean F. Reardon of Stanford University traces the achievement gap between children from high- and low-income families over the last 50 years and finds that it now far exceeds the gap between white and black students.

Data from the National Assessment of Educational Progress show that more than 40 percent of the variation in average reading scores and 46 percent of the variation in average math scores across states is associated with variation in child poverty rates.

International research tells the same story. Results of the 2009 reading tests conducted by the Program for International Student Assessment show that, among 15-year-olds in the United States and the 13 countries whose students outperformed ours, students with lower economic and social status had far lower test scores than their more advantaged counterparts within every country. Can anyone credibly believe that the mediocre overall performance of American students on international tests is unrelated to the fact that one-fifth of American children live in poverty?

Yet federal education policy seems blind to all this. No Child Left Behind required all schools to bring all students to high levels of achievement but took no note of the challenges that disadvantaged students face. The legislation did, to be sure, specify that subgroups — defined by income, minority status and proficiency in English — must meet the same achievement standard. But it did so only to make sure that schools did not ignore their disadvantaged students — not to help them address the challenges they carry with them into the classroom.

So why do presumably well-intentioned policy makers ignore, or deny, the correlations of family background and student achievement?

Some honestly believe that schools are capable of offsetting the effects of poverty. Others want to avoid the impression that they set lower expectations for some groups of students for fear that those expectations will be self-fulfilling. In both cases, simply wanting something to be true does not make it so.

Another rationale for denial is to note that some schools, like the Knowledge Is Power Program charter schools, have managed to “beat the odds.” If some schools can succeed, the argument goes, then it is reasonable to expect all schools to. But close scrutiny of charter school performance has shown that many of the success stories have been limited to particular grades or subjects and may be attributable to substantial outside financing or extraordinarily long working hours on the part of teachers. The evidence does not support the view that the few success stories can be scaled up to address the needs of large populations of disadvantaged students.

A final rationale for denying the correlation is more nefarious. As we are now seeing, requiring all schools to meet the same high standards for all students, regardless of family background, will inevitably lead either to large numbers of failing schools or to a dramatic lowering of state standards. Both serve to discredit the public education system and lend support to arguments that the system is failing and needs fundamental change, like privatization.

Given the budget crises at the national and state levels, and the strong political power of conservative groups, a significant effort to reduce poverty or deal with the closely related issue of racial segregation is not in the political cards, at least for now.

So what can be done?

Large bodies of research have shown how poor health and nutrition inhibit child development and learning and, conversely, how high-quality early childhood and preschool education programs can enhance them. We understand the importance of early exposure to rich language on future cognitive development. We know that low-income students experience greater learning loss during the summer when their more privileged peers are enjoying travel and other enriching activities.

Since they can’t take on poverty itself, education policy makers should try to provide poor students with the social support and experiences that middle-class students enjoy as a matter of course.

It can be done. In North Carolina, the two-year-old East Durham Children’s Initiative is one of many efforts around the country to replicate Geoffrey Canada’s well-known successes with the Harlem Children’s Zone.

Say Yes to Education in Syracuse, N.Y., supports access to afterschool programs and summer camps and places social workers in schools. In Omaha, Building Bright Futures sponsors school-based health centers and offers mentoring and enrichment services. Citizen Schools, based in Boston, recruits volunteers in seven states to share their interests and skills with middle-school students.

Promise Neighborhoods, an Obama administration effort that gives grants to programs like these, is a welcome first step, but it has been under-financed.

Other countries already pursue such strategies. In Finland, with its famously high-performing schools, schools provide food and free health care for students. Developmental needs are addressed early. Counseling services are abundant.

But in the United States over the past decade, it became fashionable among supporters of the “no excuses” approach to school improvement to accuse anyone raising the poverty issue of letting schools off the hook — or what Mr. Bush famously called “the soft bigotry of low expectations.”

Such accusations may afford the illusion of a moral high ground, but they stand in the way of serious efforts to improve education and, for that matter, go a long way toward explaining why No Child Left Behind has not worked.

Yes, we need to make sure that all children, and particularly disadvantaged children, have access to good schools, as defined by the quality of teachers and principals and of internal policies and practices.

But let’s not pretend that family background does not matter and can be overlooked. Let’s agree that we know a lot about how to address the ways in which poverty undermines student learning. Whether we choose to face up to that reality is ultimately a moral question.

Helen F. Ladd is a professor of public policy and economics at Duke. Edward B. Fiske, a former education editor of The New York Times, is the author of the “Fiske Guide to Colleges.”

Friday, December 9, 2011

All the G.O.P.’s Gekkos

December 8, 2011


Almost a quarter of a century has passed since the release of the movie “Wall Street,” and the film seems more relevant than ever. The self-righteous screeds of financial tycoons denouncing President Obama all read like variations on Gordon Gekko’s famous “greed is good” speech, while the complaints of Occupy Wall Street sound just like what Gekko says in private: “I create nothing. I own,” he declares at one point; at another, he asks his protégé, “Now you’re not naïve enough to think we’re living in a democracy, are you, buddy?”

Yet, with the benefit of hindsight, we can see that the movie went a little off at the end. It closes with Gekko getting his comeuppance, and justice served thanks to the diligence of the Securities and Exchange Commission. In reality, the financial industry just kept getting more and more powerful, and the regulators were neutered.

And, according to the prediction market Intrade, there’s a 45 percent chance that a real-life Gordon Gekko will be the next Republican presidential nominee.

I am not, of course, the first person to notice the similarity between Mitt Romney’s business career and the fictional exploits of Oliver Stone’s antihero. In fact, the labor-backed group Americans United for Change is using “Romney-Gekko” as the basis for an ad campaign. But there’s an issue here that runs deeper than potshots against Mr. Romney.

For the current orthodoxy among Republicans is that we mustn’t even criticize the wealthy, let alone demand that they pay higher taxes, because they’re “job creators.” Yet the fact is that quite a few of today’s wealthy got that way by destroying jobs rather than creating them. And Mr. Romney’s business history offers a very good illustration of that fact.

The Los Angeles Times recently surveyed the record of Bain Capital, the private equity firm that Mr. Romney ran from 1984 to 1999. As the report notes, Mr. Romney made a lot of money over those years, both for himself and for his investors. But he did so in ways that often hurt ordinary workers.

Bain specialized in leveraged buyouts, buying control of companies with borrowed money, pledged against those companies’ earnings or assets. The idea was to increase the acquired companies’ profits, then resell them.

But how were profits to be increased? The popular image — shaped in part by Oliver Stone — is that buyouts were followed by ruthless cost-cutting, largely at the expense of workers who either lost their jobs or found their wages and benefits cut. And while reality is more complex than this image — some companies have expanded and added workers after a leveraged buyout — it contains more than a grain of truth. One recent analysis of “private equity transactions” — the kind of buyouts and takeovers Bain specialized in — noted that business in general is always both creating and destroying jobs, and that this is also true of companies that were buyout or takeover targets. However, job creation at the target firms is no greater than in similar firms that aren’t targets, while “gross job destruction is substantially higher.”

So Mr. Romney made his fortune in a business that is, on balance, about job destruction rather than job creation. And because job destruction hurts workers even as it increases profits and the incomes of top executives, leveraged buyout firms have contributed to the combination of stagnant wages and soaring incomes at the top that has characterized America since 1980.

Now I’ve just said that the leveraged buyout industry as a whole has been a job destroyer, but what about Bain in particular? Well, by at least one criterion, Bain during the Romney years seems to have been especially hard on workers, since four of its top 10 targets by dollar value ended up going bankrupt. (Bain, nonetheless, made money on three of those deals.) That’s a much higher rate of failure than is typical even of companies going through leveraged buyouts — and when the companies went under, many workers ended up losing their jobs, their pensions, or both.

So what do we learn from this story? Not that Mitt Romney the businessman was a villain. Contrary to conservative claims, liberals aren’t out to demonize or punish the rich. But they do object to the attempts of the right to do the opposite, to canonize the wealthy and exempt them from the sacrifices everyone else is expected to make because of the wonderful things they supposedly do for the rest of us.

The truth is that what’s good for the 1 percent, or even better the 0.1 percent, isn’t necessarily good for the rest of America — and Mr. Romney’s career illustrates that point perfectly. There’s no need, and no reason, to hate Mr. Romney and others like him. We do, however, need to get such people paying more in taxes — and we shouldn’t let myths about “job creators” get in the way.

Monday, December 5, 2011

Send in the Clueless

December 4, 2011


There are two crucial things you need to understand about the current state of American politics. First, given the still dire economic situation, 2012 should be a year of Republican triumph. Second, the G.O.P. may nonetheless snatch defeat from the jaws of victory — because Herman Cain was not an accident.

Think about what it takes to be a viable Republican candidate today. You have to denounce Big Government and high taxes without alienating the older voters who were the key to G.O.P. victories last year — and who, even as they declare their hatred of government, will balk at any hint of cuts to Social Security and Medicare (death panels!).

And you also have to denounce President Obama, who enacted a Republican-designed health reform and killed Osama bin Laden, as a radical socialist who is undermining American security.

So what kind of politician can meet these basic G.O.P. requirements? There are only two ways to make the cut: to be totally cynical or to be totally clueless.

Mitt Romney embodies the first option. He’s not a stupid man; he knows perfectly well, to take a not incidental example, that the Obama health reform is identical in all important respects to the reform he himself introduced in Massachusetts — but that doesn’t stop him from denouncing the Obama plan as a vast government takeover that is nothing like what he did. He presumably knows how to read a budget, which means that he must know that defense spending has continued to rise under the current administration, but this doesn’t stop him from pledging to reverse Mr. Obama’s “massive defense cuts.”

Mr. Romney’s strategy, in short, is to pretend that he shares the ignorance and misconceptions of the Republican base. He isn’t a stupid man — but he seems to play one on TV.

Unfortunately from his point of view, however, his acting skills leave something to be desired, and his insincerity shines through. So the base still hungers for someone who really, truly believes what every candidate for the party’s nomination must pretend to believe. Yet as I said, the only way to actually believe the modern G.O.P. catechism is to be completely clueless.

And that’s why the Republican primary has taken the form it has, in which a candidate nobody likes and nobody trusts has faced a series of clueless challengers, each of whom has briefly soared before imploding under the pressure of his or her own cluelessness. Think in particular of Rick Perry, a conservative true believer who seemingly had everything it took to clinch the nomination — until he opened his mouth.

So will Newt Gingrich suffer the same fate? Not necessarily.

Many observers seem surprised that Mr. Gingrich’s, well, colorful personal history isn’t causing him more problems, but they shouldn’t be. If hypocrisy is the tribute vice pays to virtue, conservatives often seem inclined to accept that tribute, voting for candidates who publicly espouse conservative moral principles whatever their personal behavior. Did I mention that David Vitter is still in the Senate?

And Mr. Gingrich has some advantages none of the previous challengers had. He is by no means the deep thinker he imagines himself to be, but he’s a glib speaker, even when he has no idea what he’s talking about. And my sense is that he’s also very good at doublethink — that even when he knows what he’s saying isn’t true, he manages to believe it while he’s saying it. So he may not implode like his predecessors.

The larger point, however, is that whoever finally gets the Republican nomination will be a deeply flawed candidate. And these flaws won’t be an accident, the result of bad luck regarding who chose to make a run this time around; the fact that the party is committed to demonstrably false beliefs means that only fakers or the befuddled can get through the selection process.

Of course, given the terrible economic picture and the tendency of voters to blame whoever holds the White House for bad times, even a deeply flawed G.O.P. nominee might very well win the presidency. But then what?

The Washington Post quotes an unnamed Republican adviser who compared what happened to Mr. Cain, when he suddenly found himself leading in the polls, to the proverbial tale of the dog who had better not catch that car he’s chasing. “Something great and awful happened, the dog caught the car. And of course, dogs don’t know how to drive cars. So he had no idea what to do with it.”

The same metaphor, it seems to me, might apply to the G.O.P. pursuit of the White House next year. If the dog actually catches the car — the actual job of running the U.S. government — it will have no idea what to do, because the realities of government in the 21st century bear no resemblance to the mythology all ambitious Republican politicians must pretend to believe. And what will happen then?

Monday, November 28, 2011

Things to Tax

November 27, 2011


The supercommittee was a superdud — and we should be glad. Nonetheless, at some point we’ll have to rein in budget deficits. And when we do, here’s a thought: How about making increased revenue an important part of the deal?

And I don’t just mean a return to Clinton-era tax rates. Why should 1990s taxes be considered the outer limit of revenue collection? Think about it: The long-run budget outlook has darkened, which means that some hard choices must be made. Why should those choices only involve spending cuts? Why not also push some taxes above their levels in the 1990s?

Let me suggest two areas in which it would make a lot of sense to raise taxes in earnest, not just return them to pre-Bush levels: taxes on very high incomes and taxes on financial transactions.

About those high incomes: In my last column I suggested that the very rich, who have had huge income gains over the last 30 years, should pay more in taxes. I got many responses from readers, with a common theme being that this was silly, that even confiscatory taxes on the wealthy couldn’t possibly raise enough money to matter.

Folks, you’re living in the past. Once upon a time America was a middle-class nation, in which the super-elite’s income was no big deal. But that was another country.

The I.R.S. reports that in 2007, that is, before the economic crisis, the top 0.1 percent of taxpayers — roughly speaking, people with annual incomes over $2 million — had a combined income of more than a trillion dollars. That’s a lot of money, and it wouldn’t be hard to devise taxes that would raise a significant amount of revenue from those super-high-income individuals.

For example, a recent report by the nonpartisan Tax Policy Center points out that before 1980 very-high-income individuals fell into tax brackets well above the 35 percent top rate that applies today. According to the center’s analysis, restoring those high-income brackets would have raised $78 billion in 2007, or more than half a percent of G.D.P. I’ve extrapolated that number using Congressional Budget Office projections, and what I get for the next decade is that high-income taxation could shave more than $1 trillion off the deficit.

It’s instructive to compare that estimate with the savings from the kinds of proposals that are actually circulating in Washington these days. Consider, for example, proposals to raise the age of Medicare eligibility to 67, dealing a major blow to millions of Americans. How much money would that save?

Well, none from the point of view of the nation as a whole, since we would be pushing seniors out of Medicare and into private insurance, which has substantially higher costs. True, it would reduce federal spending — but not by much. The budget office estimates that outlays would fall by only $125 billion over the next decade, as the age increase phased in. And even when fully phased in, this partial dismantling of Medicare would reduce the deficit only about a third as much as could be achieved with higher taxes on the very rich.

So raising taxes on the very rich could make a serious contribution to deficit reduction. Don’t believe anyone who claims otherwise.

And then there’s the idea of taxing financial transactions, which have exploded in recent decades. The economic value of all this trading is dubious at best. In fact, there’s considerable evidence suggesting that too much trading is going on. Still, nobody is proposing a punitive tax. On the table, instead, are proposals like the one recently made by Senator Tom Harkin and Representative Peter DeFazio for a tiny fee on financial transactions.

And here’s the thing: Because there are so many transactions, such a fee could yield several hundred billion dollars in revenue over the next decade. Again, this compares favorably with the savings from many of the harsh spending cuts being proposed in the name of fiscal responsibility.

But wouldn’t such a tax hurt economic growth? As I said, the evidence suggests not — if anything, it suggests that to the extent that taxing financial transactions reduces the volume of wheeling and dealing, that would be a good thing.

And it’s instructive, too, to note that some countries already have financial transactions taxes — and that among those who do are Hong Kong and Singapore. If some conservative starts claiming that such taxes are an unwarranted government intrusion, you might want to ask him why such taxes are imposed by the two countries that score highest on the Heritage Foundation’s Index of Economic Freedom.

Now, the tax ideas I’ve just mentioned wouldn’t be enough, by themselves, to fix our deficit. But the same is true of proposals for spending cuts. The point I’m making here isn’t that taxes are all we need; it is that they could and should be a significant part of the solution.

Friday, November 18, 2011

When Failure Is Good

November 17, 2011


It’s a bird! It’s a plane! It’s a complete turkey! It’s the supercommittee!

By next Wednesday, the so-called supercommittee, a bipartisan group of legislators, is supposed to reach an agreement on how to reduce future deficits. Barring an evil miracle — I’ll explain the evil part later — the committee will fail to meet that deadline.

If this news surprises you, you haven’t been paying attention. If it depresses you, cheer up: In this case, failure is good.

Why was the supercommittee doomed to fail? Mainly because the gulf between our two major political parties is so wide. Republicans and Democrats don’t just have different priorities; they live in different intellectual and moral universes.

In Democrat-world, up is up and down is down. Raising taxes increases revenue, and cutting spending while the economy is still depressed reduces employment. But in Republican-world, down is up. The way to increase revenue is to cut taxes on corporations and the wealthy, and slashing government spending is a job-creation strategy. Try getting a leading Republican to admit that the Bush tax cuts increased the deficit or that sharp cuts in government spending (except on the military) would hurt the economic recovery.

Moreover, the parties have sharply different views of what constitutes economic justice.

Democrats see social insurance programs, from Social Security to food stamps, as serving the moral imperative of providing basic security to our fellow citizens and helping those in need.

Republicans have a totally different view. They may soft-pedal that view in public — in last year’s elections, they even managed to pose as defenders of Medicare — but, in private, they view the welfare state as immoral, a matter of forcing citizens at gunpoint to hand their money over to other people. By creating Social Security, declared Rick Perry in his book “Fed Up!”, F.D.R. was “violently tossing aside any respect for our founding principles.” Does anyone doubt that he was speaking for many in his party?

So the supercommittee brought together legislators who disagree completely both about how the world works and about the proper role of government. Why did anyone think this would work?

Well, maybe the idea was that the parties would compromise out of fear that there would be a political price for seeming intransigent. But this could only happen if the news media were willing to point out who is really refusing to compromise. And they aren’t. If and when the supercommittee fails, virtually all news reports will be he-said, she-said, quoting Democrats who blame Republicans and vice versa without ever explaining the truth.

Oh, and let me give a special shout-out to “centrist” pundits who won’t admit that President Obama has already given them what they want. The dialogue seems to go like this. Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?” Mr. Obama: “I support a mix of spending cuts and tax hikes.” Pundit: “Why won’t the president come out for a mix of spending cuts and tax hikes?”

You see, admitting that one side is willing to make concessions, while the other isn’t, would tarnish one’s centrist credentials. And the result is that the G.O.P. pays no price for refusing to give an inch.

So the supercommittee will fail — and that’s good.

For one thing, history tells us that the Republican Party would renege on its side of any deal as soon as it got the chance. Remember, the U.S. fiscal outlook was pretty good in 2000, but, as soon as Republicans gained control of the White House, they squandered the surplus on tax cuts and unfunded wars. So any deal reached now would, in practice, be nothing more than a deal to slash Social Security and Medicare, with no lasting improvement in the deficit.

Also, any deal reached now would almost surely end up worsening the economic slump. Slashing spending while the economy is depressed destroys jobs, and it’s probably even counterproductive in terms of deficit reduction, since it leads to lower revenue both now and in the future. And current projections, like those of the Federal Reserve, suggest that the economy will remain depressed at least through 2014. Better to have no deal than a deal that imposes spending cuts in the next few years.

But don’t we eventually have to match spending and revenue? Yes, we do. But the decision about how to do that isn’t about accounting. It’s about fundamental values — and it’s a decision that should be made by voters, not by some committee that allegedly transcends the partisan divide.

Eventually, one side or the other of that divide will get the kind of popular mandate it needs to resolve our long-run budget issues. Until then, attempts to strike a Grand Bargain are fundamentally destructive. If the supercommittee fails, as expected, it will be time to celebrate.

Monday, November 14, 2011

Vouchers for Veterans

November 13, 2011


American health care is remarkably diverse. In terms of how care is paid for and delivered, many of us effectively live in Canada, some live in Switzerland, some live in Britain, and some live in the unregulated market of conservative dreams. One result of this diversity is that we have plenty of home-grown evidence about what works and what doesn’t.

Naturally, then, politicians — Republicans in particular — are determined to scrap what works and promote what doesn’t. And that brings me to Mitt Romney’s latest really bad idea, unveiled on Veterans Day: to partially privatize the Veterans Health Administration (V.H.A.).

What Mr. Romney and everyone else should know is that the V.H.A. is a huge policy success story, which offers important lessons for future health reform.

Many people still have an image of veterans’ health care based on the terrible state of the system two decades ago. Under the Clinton administration, however, the V.H.A. was overhauled, and achieved a remarkable combination of rising quality and successful cost control. Multiple surveys have found the V.H.A. providing better care than most Americans receive, even as the agency has held cost increases well below those facing Medicare and private insurers. Furthermore, the V.H.A. has led the way in cost-saving innovation, especially the use of electronic medical records.

What’s behind this success? Crucially, the V.H.A. is an integrated system, which provides health care as well as paying for it. So it’s free from the perverse incentives created when doctors and hospitals profit from expensive tests and procedures, whether or not those procedures actually make medical sense. And because V.H.A. patients are in it for the long term, the agency has a stronger incentive to invest in prevention than private insurers, many of whose customers move on after a few years.

And yes, this is “socialized medicine” — although some private systems, like Kaiser Permanente, share many of the V.H.A.’s virtues. But it works — and suggests what it will take to solve the troubles of U.S. health care more broadly.

Yet Mr. Romney believes that giving veterans vouchers to spend on private insurance would somehow yield better results. Why?

Well, Republicans have a thing about vouchers. Earlier this year Representative Paul Ryan famously introduced a plan to convert Medicare into a voucher system; Mr. Romney’s Medicare proposal follows similar lines. The claim, always, is the one Mr. Romney made last week, that “private sector competition” would lower costs.

But we have a lot of evidence about how private-sector competition in health insurance works, and it’s not favorable. The individual insurance market, which comes closest to the conservative ideal of free competition, has huge administrative costs and has no demonstrated ability to reduce other costs. Medicare Advantage, which allows Medicare beneficiaries to buy private insurance instead of having Medicare pay bills directly, has consistently had higher costs than the traditional program.

And the international evidence accords with U.S. experience. The most efficient health care systems are integrated systems like the V.H.A.; next best are single-payer systems like Medicare; the more privatized the system, the worse it performs.

To be fair to Mr. Romney, he takes a somewhat softer line than others in his party, suggesting that the existing V.H.A. system would remain available and that traditional Medicare would remain an option. In practice, however, partial privatization would almost surely undermine the public side of these programs. For example, one problem with the V.H.A. is that its hospitals are spread too thinly across the nation; this problem would become worse if a substantial number of veterans were encouraged to opt out of the system.

So what lies behind the Republican obsession with privatization and voucherization? Ideology, of course. It’s literally a fundamental article of faith in the G.O.P. that the private sector is always better than the government, and no amount of evidence can shake that credo.

In fact, it’s hard to avoid the sense that Republicans are especially eager to dismantle government programs that act as living demonstrations that their ideology is wrong. Bloated military budgets don’t bother them much — Mr. Romney has pledged to reverse President Obama’s defense cuts, despite the fact that no such cuts have actually taken place. But successful programs like veterans’ health, Social Security and Medicare are in the crosshairs.

Which brings me to a final thought: maybe all this amounts to a case for Rick Perry. Any Republican would, if elected president, set out to undermine precisely those government programs that work best. But Mr. Perry might not remember which programs he was supposed to destroy.

Monday, November 7, 2011

Here Comes the Sun

November 6, 2011


For decades the story of technology has been dominated, in the popular mind and to a large extent in reality, by computing and the things you can do with it. Moore’s Law — in which the price of computing power falls roughly 50 percent every 18 months — has powered an ever-expanding range of applications, from faxes to Facebook.

Our mastery of the material world, on the other hand, has advanced much more slowly. The sources of energy, the way we move stuff around, are much the same as they were a generation ago.

But that may be about to change. We are, or at least we should be, on the cusp of an energy transformation, driven by the rapidly falling cost of solar power. That’s right, solar power.

If that surprises you, if you still think of solar power as some kind of hippie fantasy, blame our fossilized political system, in which fossil fuel producers have both powerful political allies and a powerful propaganda machine that denigrates alternatives.

Speaking of propaganda: Before I get to solar, let’s talk briefly about hydraulic fracturing, a k a fracking.

Fracking — injecting high-pressure fluid into rocks deep underground, inducing the release of fossil fuels — is an impressive technology. But it’s also a technology that imposes large costs on the public. We know that it produces toxic (and radioactive) wastewater that contaminates drinking water; there is reason to suspect, despite industry denials, that it also contaminates groundwater; and the heavy trucking required for fracking inflicts major damage on roads.

Economics 101 tells us that an industry imposing large costs on third parties should be required to “internalize” those costs — that is, to pay for the damage it inflicts, treating that damage as a cost of production. Fracking might still be worth doing given those costs. But no industry should be held harmless from its impacts on the environment and the nation’s infrastructure.

Yet what the industry and its defenders demand is, of course, precisely that it be let off the hook for the damage it causes. Why? Because we need that energy! For example, the industry-backed organization declares that “there are only two sides in the debate: those who want our oil and natural resources developed in a safe and responsible way; and those who don’t want our oil and natural gas resources developed at all.”

So it’s worth pointing out that special treatment for fracking makes a mockery of free-market principles. Pro-fracking politicians claim to be against subsidies, yet letting an industry impose costs without paying compensation is in effect a huge subsidy. They say they oppose having the government “pick winners,” yet they demand special treatment for this industry precisely because they claim it will be a winner.

And now for something completely different: the success story you haven’t heard about.

These days, mention solar power and you’ll probably hear cries of “Solyndra!” Republicans have tried to make the failed solar panel company both a symbol of government waste — although claims of a major scandal are nonsense — and a stick with which to beat renewable energy.

But Solyndra’s failure was actually caused by technological success: the price of solar panels is dropping fast, and Solyndra couldn’t keep up with the competition. In fact, progress in solar panels has been so dramatic and sustained that, as a blog post at Scientific American put it, “there’s now frequent talk of a ‘Moore’s law’ in solar energy,” with prices adjusted for inflation falling around 7 percent a year.

This has already led to rapid growth in solar installations, but even more change may be just around the corner. If the downward trend continues — and if anything it seems to be accelerating — we’re just a few years from the point at which electricity from solar panels becomes cheaper than electricity generated by burning coal.

And if we priced coal-fired power right, taking into account the huge health and other costs it imposes, it’s likely that we would already have passed that tipping point.

But will our political system delay the energy transformation now within reach?

Let’s face it: a large part of our political class, including essentially the entire G.O.P., is deeply invested in an energy sector dominated by fossil fuels, and actively hostile to alternatives. This political class will do everything it can to ensure subsidies for the extraction and use of fossil fuels, directly with taxpayers’ money and indirectly by letting the industry off the hook for environmental costs, while ridiculing technologies like solar.

So what you need to know is that nothing you hear from these people is true. Fracking is not a dream come true; solar is now cost-effective. Here comes the sun, if we’re willing to let it in.

Friday, November 4, 2011

Oligarchy, American Style


November 3, 2011


Inequality is back in the news, largely thanks to Occupy Wall Street, but with an assist from the Congressional Budget Office. And you know what that means: It’s time to roll out the obfuscators!

Anyone who has tracked this issue over time knows what I mean. Whenever growing income disparities threaten to come into focus, a reliable set of defenders tries to bring back the blur. Think tanks put out reports claiming that inequality isn’t really rising, or that it doesn’t matter. Pundits try to put a more benign face on the phenomenon, claiming that it’s not really the wealthy few versus the rest, it’s the educated versus the less educated.

So what you need to know is that all of these claims are basically attempts to obscure the stark reality: We have a society in which money is increasingly concentrated in the hands of a few people, and in which that concentration of income and wealth threatens to make us a democracy in name only.

The budget office laid out some of that stark reality in a recent report, which documented a sharp decline in the share of total income going to lower- and middle-income Americans. We still like to think of ourselves as a middle-class country. But with the bottom 80 percent of households now receiving less than half of total income, that’s a vision increasingly at odds with reality.

In response, the usual suspects have rolled out some familiar arguments: the data are flawed (they aren’t); the rich are an ever-changing group (not so); and so on. The most popular argument right now seems, however, to be the claim that we may not be a middle-class society, but we’re still an upper-middle-class society, in which a broad class of highly educated workers, who have the skills to compete in the modern world, is doing very well.

It’s a nice story, and a lot less disturbing than the picture of a nation in which a much smaller group of rich people is becoming increasingly dominant. But it’s not true.

Workers with college degrees have indeed, on average, done better than workers without, and the gap has generally widened over time. But highly educated Americans have by no means been immune to income stagnation and growing economic insecurity. Wage gains for most college-educated workers have been unimpressive (and nonexistent since 2000), while even the well-educated can no longer count on getting jobs with good benefits. In particular, these days workers with a college degree but no further degrees are less likely to get workplace health coverage than workers with only a high school degree were in 1979.

So who is getting the big gains? A very small, wealthy minority.

The budget office report tells us that essentially all of the upward redistribution of income away from the bottom 80 percent has gone to the highest-income 1 percent of Americans. That is, the protesters who portray themselves as representing the interests of the 99 percent have it basically right, and the pundits solemnly assuring them that it’s really about education, not the gains of a small elite, have it completely wrong.

If anything, the protesters are setting the cutoff too low. The recent budget office report doesn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, found that almost two-thirds of the rising share of the top percentile in income actually went to the top 0.1 percent — the richest thousandth of Americans, who saw their real incomes rise more than 400 percent over the period from 1979 to 2005.

Who’s in that top 0.1 percent? Are they heroic entrepreneurs creating jobs? No, for the most part, they’re corporate executives. Recent research shows that around 60 percent of the top 0.1 percent either are executives in nonfinancial companies or make their money in finance, i.e., Wall Street broadly defined. Add in lawyers and people in real estate, and we’re talking about more than 70 percent of the lucky one-thousandth.

But why does this growing concentration of income and wealth in a few hands matter? Part of the answer is that rising inequality has meant a nation in which most families don’t share fully in economic growth. Another part of the answer is that once you realize just how much richer the rich have become, the argument that higher taxes on high incomes should be part of any long-run budget deal becomes a lot more compelling.

The larger answer, however, is that extreme concentration of income is incompatible with real democracy. Can anyone seriously deny that our political system is being warped by the influence of big money, and that the warping is getting worse as the wealth of a few grows ever larger?

Some pundits are still trying to dismiss concerns about rising inequality as somehow foolish. But the truth is that the whole nature of our society is at stake.

Friday, October 21, 2011

Party of Pollution

October 20, 2011


Last month President Obama finally unveiled a serious economic stimulus plan — far short of what I’d like to see, but a step in the right direction. Republicans, predictably, have blocked it. But the new plan, combined with the Occupy Wall Street demonstrations, seems to have shifted the national conversation. We are, suddenly, focused on what we should have been talking about all along: jobs.

So what is the G.O.P. jobs plan? The answer, in large part, is to allow more pollution. So what you need to know is that weakening environmental regulations would do little to create jobs and would make us both poorer and sicker.

Now it would be wrong to say that all Republicans see increased pollution as the answer to unemployment. Herman Cain says that the unemployed are responsible for their own plight — a claim that, at Tuesday’s presidential debate, was met with wild applause.

Both Rick Perry and Mitt Romney have, however, put weakened environmental protection at the core of their economic proposals, as have Senate Republicans. Mr. Perry has put out a specific number — 1.2 million jobs — that appears to be based on a study released by the American Petroleum Institute, a trade association, claiming favorable employment effects from removing restrictions on oil and gas extraction. The same study lies behind the claims of Senate Republicans.

But does this oil-industry-backed study actually make a serious case for weaker environmental protection as a job-creation strategy? No.

Part of the problem is that the study relies heavily on an assumed “multiplier” effect, in which every new job in energy leads indirectly to the creation of 2.5 jobs elsewhere. Republicans, you may recall, were scornful of claims that government aid that helps avoid layoffs of schoolteachers also indirectly helps save jobs in the private sector. But I guess the laws of economics change when it’s an oil company rather than a school district doing the hiring.

Moreover, even if you take the study’s claims at face value, it offers little reason to believe that dirtier air and water can solve our current employment crisis. All the big numbers in the report are projections for late this decade. The report predicts fewer than 200,000 jobs next year, and fewer than 700,000 even by 2015.

You might want to compare these numbers with a couple of other numbers: the 14 million Americans currently unemployed, and the one million to two million jobs that independent estimates suggest the Obama plan would create, not in the distant future, but in 2012.

More pollution, then, isn’t the route to full employment. But is there a longer-term economic case for less environmental protection? No. Serious economic analysis actually says that we need more protection, not less.

The important thing to understand is that the case for pollution control isn’t based on some kind of aesthetic distaste for industrial society. Pollution does real, measurable damage, especially to human health.

And policy makers should take that damage into account. We need more politicians like the courageous governor who supported environmental controls on a coal-fired power plant, despite warnings that the plant might be closed, because “I will not create jobs or hold jobs that kill people.”

Actually, that was Mitt Romney, back in 2003 — the same politician who now demands that we use more coal.

How big are these damages? A new study by researchers at Yale and Middlebury College brings together data from a variety of sources to put a dollar value on the environmental damage various industries inflict. The estimates are far from comprehensive, since they only consider air pollution, and they make no effort to address longer-term issues such as climate change. Even so, the results are stunning.

For it turns out that there are a number of industries inflicting environmental damage that’s worth more than the sum of the wages they pay and the profits they earn — which means, in effect, that they destroy value rather than create it. High on the list, by the way, is coal-fired electricity generation, which the Mitt Romney-that-was used to stand up to.

As the study’s authors say, finding that an industry inflicts large environmental damage compared with its apparent economic return doesn’t necessarily mean that the industry should be shut down. What it means, instead, is that “the regulated levels of emissions from the industry are too high.” That is, environmental regulations aren’t strict enough.

Republicans, of course, have strong incentives to claim otherwise: the big value-destroying industries are concentrated in the energy and natural resources sector, which overwhelmingly donates to the G.O.P. But the reality is that more pollution wouldn’t solve our jobs problem. All it would do is make us poorer and sicker.

Thursday, October 20, 2011

Famous Quotes…

We live in a real scary time!  Consider some of these quotes…

Top Ten Scary Quotes by the Religious Right

Last week, HNN editor Maggie Ardiente put out a call for the scariest quotes ever made by leaders of the Religious Right in history … and we received dozens of suggestions! Thanks to everyone who participated.

Here are the top ten scary-but-true quotes made by religious conservatives in America:

10. "It is not possible for there ever, in the United States of America, to be a separation between God and government because God is the source of every single right which government has a sacred duty to protect ... not a single one of our unalienable rights will be safe in the hands of a president who believes that we evolved from slime and we are the descendants of apes and baboons ... look at the nation states in the 20th century which rejected the creator God of the Judeo-Christian tradition – Nazi Germany, Stalinist Russia, Communist China. The one thing all of these secular states share in common is dead bodies." Bryan Fischer, American Family Association

9. “We should invade their countries, kill their leaders and convert them to Christianity. We weren’t punctilious about locating and punishing only Hitler and his top officers. We carpet-bombed German cities; we killed civilians. That’s war. And this is war.” Ann Coulter

8. “The ‘wall of separation between church and state’ is a metaphor based on bad history, a metaphor which has proved useless as a guide to judging. It should be frankly and explicitly abandoned.” William Rehnquist

7. "The message of the Declaration of Independence is under attack from the ACLU and atheists because it refuted the lie about a constitutional mandate for ‘separation of church and state.’ Atheists have filed numerous lawsuits in the courts of activist judges to try to eliminate our right to acknowledge God in public places, in the Pledge of Allegiance to the Flag and in Ten Commandments monuments. The atheists are trying to change American history, expunge all reference to religion from textbooks and make us a completely secular nation. History proves America was founded by religious men who believed that a divine Creator is basic to good government." Phyllis Schlafly, Eagle Forum

6. “Go back to what our founders and our founding documents meant — they’re quite clear — that we would create law based on the God of the bible and the Ten Commandments.” – Sarah Palin

5. “If you say God scattered Israel, Jews will really be offended. They go, ‘Oh, God scattered us?’ Uh huh. ‘Well, I thought the evil guys did.’ Well, you are under the discipline of God because of your perversion and sin." Mike Bickel, International House of Prayer

4. “We took the Bible and prayer out of public schools, and now we're having weekly shootings practically. We had the 60s sexual revolution, and now people are dying of AIDS." Christine O'Donnell

3. “Atheists are parasites in the sense that they are benefiting from everything that religious culture has built in America, but they are doing nothing to add energy into the system." Rabbi Daniel Lapin, American Alliance of Jews and Christians

2. “AIDS is not just God's punishment for homosexuals; it is God's punishment for the society that tolerates homosexuals." Jerry Falwell

1. “I don’t know that atheists should be considered citizens, nor should they be considered patriots. This is one nation under God.” George H. W. Bush

Friday, October 14, 2011

Fear the future (if the GOP controls it)

October 13, 2011

Rabbit-Hole Economics


Reading the transcript of Tuesday’s Republican debate on the economy is, for anyone who has actually been following economic events these past few years, like falling down a rabbit hole. Suddenly, you find yourself in a fantasy world where nothing looks or behaves the way it does in real life.

And since economic policy has to deal with the world we live in, not the fantasy world of the G.O.P.’s imagination, the prospect that one of these people may well be our next president is, frankly, terrifying.

In the real world, recent events were a devastating refutation of the free-market orthodoxy that has ruled American politics these past three decades. Above all, the long crusade against financial regulation, the successful effort to unravel the prudential rules established after the Great Depression on the grounds that they were unnecessary, ended up demonstrating — at immense cost to the nation — that those rules were necessary, after all.

But down the rabbit hole, none of that happened. We didn’t find ourselves in a crisis because of runaway private lenders like Countrywide Financial. We didn’t find ourselves in a crisis because Wall Street pretended that slicing, dicing and rearranging bad loans could somehow create AAA assets — and private rating agencies played along. We didn’t find ourselves in a crisis because “shadow banks” like Lehman Brothers exploited gaps in financial regulation to create bank-type threats to the financial system without being subject to bank-type limits on risk-taking.

No, in the universe of the Republican Party we found ourselves in a crisis because Representative Barney Frank forced helpless bankers to lend money to the undeserving poor.

O.K., I’m exaggerating a bit — but not much. Mr. Frank’s name did come up repeatedly as a villain in the crisis, and not just in the context of the Dodd-Frank financial reform bill, which Republicans want to repeal. You have to marvel at his alleged influence given the fact that he’s a Democrat and the vast bulk of the bad loans now afflicting our economy were made while George W. Bush was president and Republicans controlled the House with an iron grip. But he’s their preferred villain all the same.

The demonization of Mr. Frank aside, it’s now obviously orthodoxy on the Republican side that government caused the whole problem. So what you need to know is that this orthodoxy has hardened even as the supposed evidence for government as a major villain in the crisis has been discredited. The fact is that government rules didn’t force banks to make bad loans, and that government-sponsored lenders, while they behaved badly in many ways, accounted for few of the truly high-risk loans that fueled the housing bubble.

But that’s history. What do the Republicans want to do now? In particular, what do they want to do about unemployment?

Well, they want to fire Ben Bernanke, the chairman of the Federal Reserve — not for doing too little, which is a case one can make, but for doing too much. So they’re obviously not proposing any job-creation action via monetary policy.

Incidentally, during Tuesday’s debate, Mitt Romney named Harvard’s N. Gregory Mankiw as one of his advisers. How many Republicans know that Mr. Mankiw at least used to advocate — correctly, in my view — deliberate inflation by the Fed to solve our economic woes?

So, no monetary relief. What else? Well, the Cheshire Cat-like Rick Perry — he seems to be fading out, bit by bit, until only the hair remains — claimed, implausibly, that he could create 1.2 million jobs in the energy sector. Mr. Romney, meanwhile, called for permanent tax cuts — basically, let’s replay the Bush years! And Herman Cain? Oh, never mind.

By the way, has anyone else noticed the disappearance of budget deficits as a major concern for Republicans once they start talking about tax cuts for corporations and the wealthy?

It’s all pretty funny. But it’s also, as I said, terrifying.

The Great Recession should have been a huge wake-up call. Nothing like this was supposed to be possible in the modern world. Everyone, and I mean everyone, should be engaged in serious soul-searching, asking how much of what he or she thought was true actually isn’t.

But the G.O.P. has responded to the crisis not by rethinking its dogma but by adopting an even cruder version of that dogma, becoming a caricature of itself. During the debate, the hosts played a clip of Ronald Reagan calling for increased revenue; today, no politician hoping to get anywhere in Reagan’s party would dare say such a thing.

It’s a terrible thing when an individual loses his or her grip on reality. But it’s much worse when the same thing happens to a whole political party, one that already has the power to block anything the president proposes — and which may soon control the whole government.

Monday, October 10, 2011

This is a MUST READ!

Krugman hits the nail on the head, again.

October 9, 2011

Panic of the Plutocrats


It remains to be seen whether the Occupy Wall Street protests will change America’s direction. Yet the protests have already elicited a remarkably hysterical reaction from Wall Street, the super-rich in general, and politicians and pundits who reliably serve the interests of the wealthiest hundredth of a percent.

And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park.

Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.

Nonetheless, Eric Cantor, the House majority leader, has denounced “mobs” and “the pitting of Americans against Americans.” The G.O.P. presidential candidates have weighed in, with Mitt Romney accusing the protesters of waging “class warfare,” while Herman Cain calls them “anti-American.” My favorite, however, is Senator Rand Paul, who for some reason worries that the protesters will start seizing iPads, because they believe rich people don’t deserve to have them.

Michael Bloomberg, New York’s mayor and a financial-industry titan in his own right, was a bit more moderate, but still accused the protesters of trying to “take the jobs away from people working in this city,” a statement that bears no resemblance to the movement’s actual goals.

And if you were listening to talking heads on CNBC, you learned that the protesters “let their freak flags fly,” and are “aligned with Lenin.”

The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.

Last year, you may recall, a number of financial-industry barons went wild over very mild criticism from President Obama. They denounced Mr. Obama as being almost a socialist for endorsing the so-called Volcker rule, which would simply prohibit banks backed by federal guarantees from engaging in risky speculation. And as for their reaction to proposals to close a loophole that lets some of them pay remarkably low taxes — well, Stephen Schwarzman, chairman of the Blackstone Group, compared it to Hitler’s invasion of Poland.

And then there’s the campaign of character assassination against Elizabeth Warren, the financial reformer now running for the Senate in Massachusetts. Not long ago a YouTube video of Ms. Warren making an eloquent, down-to-earth case for taxes on the rich went viral. Nothing about what she said was radical — it was no more than a modern riff on Oliver Wendell Holmes’s famous dictum that “Taxes are what we pay for civilized society.”

But listening to the reliable defenders of the wealthy, you’d think that Ms. Warren was the second coming of Leon Trotsky. George Will declared that she has a “collectivist agenda,” that she believes that “individualism is a chimera.” And Rush Limbaugh called her “a parasite who hates her host. Willing to destroy the host while she sucks the life out of it.”

What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.

Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.

This special treatment can’t bear close scrutiny — and therefore, as they see it, there must be no close scrutiny. Anyone who points out the obvious, no matter how calmly and moderately, must be demonized and driven from the stage. In fact, the more reasonable and moderate a critic sounds, the more urgently he or she must be demonized, hence the frantic sliming of Elizabeth Warren.

So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.

Friday, October 7, 2011

Occupy Wall Street? You betcha!!!


When will the media finally figure out they can no longer ignore the protestors on Wall Street?  They deserve at least as much attention as they’ve given the ‘tea-baggers’ they so dearly love…

October 6, 2011

Confronting the Malefactors


There’s something happening here. What it is ain’t exactly clear, but we may, at long last, be seeing the rise of a popular movement that, unlike the Tea Party, is angry at the right people.

When the Occupy Wall Street protests began three weeks ago, most news organizations were derisive if they deigned to mention the events at all. For example, nine days into the protests, National Public Radio had provided no coverage whatsoever.

It is, therefore, a testament to the passion of those involved that the protests not only continued but grew, eventually becoming too big to ignore. With unions and a growing number of Democrats now expressing at least qualified support for the protesters, Occupy Wall Street is starting to look like an important event that might even eventually be seen as a turning point.

What can we say about the protests? First things first: The protesters’ indictment of Wall Street as a destructive force, economically and politically, is completely right.

A weary cynicism, a belief that justice will never get served, has taken over much of our political debate — and, yes, I myself have sometimes succumbed. In the process, it has been easy to forget just how outrageous the story of our economic woes really is. So, in case you’ve forgotten, it was a play in three acts.

In the first act, bankers took advantage of deregulation to run wild (and pay themselves princely sums), inflating huge bubbles through reckless lending. In the second act, the bubbles burst — but bankers were bailed out by taxpayers, with remarkably few strings attached, even as ordinary workers continued to suffer the consequences of the bankers’ sins. And, in the third act, bankers showed their gratitude by turning on the people who had saved them, throwing their support — and the wealth they still possessed thanks to the bailouts — behind politicians who promised to keep their taxes low and dismantle the mild regulations erected in the aftermath of the crisis.

Given this history, how can you not applaud the protesters for finally taking a stand?

Now, it’s true that some of the protesters are oddly dressed or have silly-sounding slogans, which is inevitable given the open character of the events. But so what? I, at least, am a lot more offended by the sight of exquisitely tailored plutocrats, who owe their continued wealth to government guarantees, whining that President Obama has said mean things about them than I am by the sight of ragtag young people denouncing consumerism.

Bear in mind, too, that experience has made it painfully clear that men in suits not only don’t have any monopoly on wisdom, they have very little wisdom to offer. When talking heads on, say, CNBC mock the protesters as unserious, remember how many serious people assured us that there was no housing bubble, that Alan Greenspan was an oracle and that budget deficits would send interest rates soaring.

A better critique of the protests is the absence of specific policy demands. It would probably be helpful if protesters could agree on at least a few main policy changes they would like to see enacted. But we shouldn’t make too much of the lack of specifics. It’s clear what kinds of things the Occupy Wall Street demonstrators want, and it’s really the job of policy intellectuals and politicians to fill in the details.

Rich Yeselson, a veteran organizer and historian of social movements, has suggested that debt relief for working Americans become a central plank of the protests. I’ll second that, because such relief, in addition to serving economic justice, could do a lot to help the economy recover. I’d suggest that protesters also demand infrastructure investment — not more tax cuts — to help create jobs. Neither proposal is going to become law in the current political climate, but the whole point of the protests is to change that political climate.

And there are real political opportunities here. Not, of course, for today’s Republicans, who instinctively side with those Theodore Roosevelt-dubbed “malefactors of great wealth.” Mitt Romney, for example — who, by the way, probably pays less of his income in taxes than many middle-class Americans — was quick to condemn the protests as “class warfare.”

But Democrats are being given what amounts to a second chance. The Obama administration squandered a lot of potential good will early on by adopting banker-friendly policies that failed to deliver economic recovery even as bankers repaid the favor by turning on the president. Now, however, Mr. Obama’s party has a chance for a do-over. All it has to do is take these protests as seriously as they deserve to be taken.

And if the protests goad some politicians into doing what they should have been doing all along, Occupy Wall Street will have been a smashing success.

Monday, October 3, 2011

A little US History…

The U.S. Passed Mandatory Health Insurance In 1798 Under President And Founding Father, John Adams

July 3, 2011

By Matthew Desmond

Many people who oppose the “Patient Protection and Affordable Care Act”, also known as ‘Obamacare’, say the Founding Fathers wouldn’t have wanted the Government to make health insurance mandatory for private employees.

This is simply not true. In 1798, under 2nd President and Founding Father John Adams, the United States passed a law requiring mandatory health insurance for any private employees working on Maritime vessels. The bill was called “An Act for The Relief of Sick and Disabled Seamen

It’s safe to assume that John Adams, who was the first Vice President of this country, the 2nd President of this Country, one of the Founding Fathers, and was a key negotiator in the peace treaty between the United States and Britain, had a pretty clear idea of what the Founding Fathers would have been alright with.

Via Forbes;

The ink was barely dry on the PPACA [Patient Protection and Affordable Care Act] when the first of many lawsuits to block the mandated health insurance provisions of the law was filed in a Florida District Court.

The pleadings, in part, read -

The Constitution nowhere authorizes the United States to mandate, either directly or under threat of penalty, that all citizens and legal residents have qualifying health care coverage.

State of Florida, et al. vs. HHS

It turns out, the Founding Fathers would beg to disagree.

In July of 1798, Congress passed – and President John Adams signed -“An Act for the Relief of Sick and Disabled Seamen.” The law authorized the creation of a government operated marine hospital service and mandated that privatelyemployed sailors be required to purchase health care insurance.

Keep in mind that the 5th Congress did not really need to struggle over the intentions of the drafters of the Constitutions in creating this Act as many of its members were the drafters of the Constitution.

And when the Bill came to the desk of President John Adams for signature, I think it’s safe to assume that the man in that chair had a pretty good grasp on what the framers had in mind.

Read more at;

Wednesday, September 28, 2011

Denialist Demagogues and the Threat to Science

by Donald R. Prothero

Shortly after Texas Governor Rick Perry announced his candidacy for President of the United States, he made additional news by not only topping the field of GOP Presidential candidates in denying climate change, but upping the ante by claiming it was all made up by a conspiracy of greedy scientists. The same position has been articulated by all the GOP candidates except Jon Huntsman. That one of these people could very well win the presidency in 2012 should worry us with not only their ignorance of science, but the even more alarming tactic of using ad hominem and “shoot the messenger” tactics to try to discredit the overwhelming consensus of climate scientists around the world.

That consensus is well represented in James Powell’s new book, The Inquisition of Climate Science, a masterful compilation of nearly all the evidence, not only for the reality of anthropogenic global warming, but especially answering point-by-point the ridiculous attempts by climate deniers to cloud and distort the issues by raising one bogus charge after another. As many people have noted, the global warming deniers use many of the same tactics that creationists use to attack evolutionary science. These tactics include quote-mining statements out of context (the entire “climategate” email kerfuffle, which Powell shows was nothing more than careless use of language); and cherry-picking data and repeating discredited statements even though they’ve been debunked (such as the false meme about “it’s been cooling since 1998,” perpetuated by right-wing media again and again). There are many other similarities between the tactics of evolution-deniers and climate change-deniers, many of which are documented in Powell’s book in great detail.

As Powell points out, the idea that climate scientists are a global left-wing conspiracy to get rich and enforce a liberal agenda is laughable on the face of it. In my own career, I have come to know hundreds of natural scientists (geologists, biologists, chemists, and physicists in many subspecialties), and if there’s one thing they almost all share, it’s a lack of interest in politics and economics, let alone a unified socialist-communist agenda. Many got into science specifically because they weren’t interested in economics and politics, and had a gift or love for doing science instead. What they are committed to is a sincere love of the truth, and a willingness to make sacrifices of their time, money, and even comfort and personal safety to find out what is really true about nature, no matter whose agenda it might support. Only rarely do most of us think about possible political or economic implications of our research. Typically scientists try to downplay those aspects because they don’t want to attract attention or controversy! If you doubt this, just look at all the negative comments that scientists heaped on Carl Sagan or Stephen Jay Gould because they were willing to be public figures and occasionally step into the political spotlight!

As Powell argues persuasively, the very idea that a scientific community, which is built upon the foundation of peer review and challenging accepted ideas and always double-checking each other's work (especially if you disagree), would be able to put together a giant conspiracy about the data and cover it up—and that normally conservative organizations, from the insurance companies and big corporations such as General Electric and the U.S. military (all of whom have acknowledged the reality of global warming and are planning their futures around the projections of climate scientists) would all be in on the conspiracy—is ridiculous in the extreme. This shows a complete lack of understanding of science and how the scientific community really works.

Order Merchants of Doubt from Amazon

This is a classic case of the pot calling the kettle black, because global warming denialism is entirely a PR campaign and a right-wing/energy company conspiracy, not a legitimate movement that arose from dissenting climate scientists. As Oreskes and Conway documented from memos leaked to the press and published in their book Merchants of Doubt, in April 1998 the right-wing Marshall Institute, SEPP (Fred Seitz’s lobby that aids tobacco companies and polluters), and ExxonMobil, met in secret at the American Petroleum Institute’s headquarters in Washington, D.C. There they planned a $20 million campaign to get “respected scientists” to cast doubt on climate change, get major PR effort going, and lobby Congress that global warming wasn’t real and was not a threat. Then there was the famously cynical 2002 memo from GOP pollster and spinmeister Frank Luntz to the Bush White House:

The scientific debate is closing [against us] but not yet closed. There is still a window of opportunity to challenge the science… Voters believe that there is no consensus about global warming within the scientific community. Should the public come to believe that the scientific issues are settled, their views about global warming will change accordingly. Therefore, you need to continue to make the lack of scientific certainty a primary issue in the debate, and defer to scientists and other experts in the field.

Powell also documents that the climate science community is not “leftist” or “pursuing a socialist agenda.” In my own career, I have known both conservative and liberal scientists (but no outright communists or socialists), despite the claim that we’re all left-wingers. Some of the leading figures in climate research, such as Kerry Emanuel at MIT, are staunch Republicans. Again, global warming cannot be a left-wing ideology if it is accepted and acted upon by such major conservative organizations as insurance companies, major corporations, and the U.S. military. There are scientists who do have strong political opinions, but as scientists we try our best to prevent our political biases from influencing our scientific results. We’re human, of course, so occasionally research with a political agenda does get published—but then the rest of the scientific community will jump in and criticize it, so we don’t get away with our biases for very long. Finally, the idea that scientists do this to get rich is the most absurd charge of all. Most scientists must endure a grueling 5–7 years in graduate school on miserably small stipends to earn their Ph.D. Then we must live on paltry teachers’ salaries or even more tenuous “soft-money” grant funds to eke out a living. Most of the scientists in faculty posts don’t make six-figure incomes until they are near retirement, if ever. Meanwhile, people who spend much less time in grad school, such as lawyers and MBAs and politicians, make the really big bucks.

As Powell puts it (p. 189):

Scientists…show no evidence of being more interested in politics or ideology than the average American. Does it make sense to believe that tens of thousands of scientists would be so deeply and secretly committed to bringing down capitalism and the American way of life that they would spend years beyond their undergraduate degrees working to receive master’s and PhD degrees, then go to work in a government laboratory or university, plying the deep oceans, forbidding deserts, icy poles, and torrid jungles, all for far less money than they could have made in industry, all the while biding their time like a Russian sleeper agent in an old spy novel? Scientists tend to be independent and resist authority. That is why you are apt to find them in the laboratory or in the field, as far as possible from the prying eyes of a supervisor. Anyone who believes he could organize thousands of scientists into a conspiracy has never attended a single faculty meeting.

Powell’s main point is that the current right-wing attack on climate science is very similar to how the Inquisition threatened Galileo because he spoke truth to power. Ironically, Rick Perry even managed to further emphasize his ignorance of science when in a recent debate that he said1 he admired Galileo and how he “was outvoted for a while.” Bad analogy, Rick! If Perry actually knew any science, he would realize that Galileo was championing an unpopular scientific idea (heliocentric solar system) that was “outvoted” by the conservative power of that time, the Catholic Church and the Inquisition. Eventually, scientific truth won out, not the political delusions of the conservatives.

As Powell documents, the right-wing fringe has gone to extreme lengths in their hostile attitude toward legitimate science. The FBI has reported2 a sharp increase in death threats and hate mail and intimidation against prominent climate scientists such as Michael Mann, James Hansen, and others. Australian climate scientists have also received death threats.3 The transition from conservative climate denialist to a dangerous anti-Semitic hate group is not difficult. One white supremacist website posted Michael Mann’s picture and those of other climate scientists and labeled it “Jew”. (In fact, most climate scientists are not Jewish, but the facts don’t matter to racists and anti-Semites). Another climate scientist told ABC News that he found a dead animal placed on his doorstep, and now he must travel with a bodyguard.4 As Mann said, “Human-caused climate change is a reality. There are clearly some who find that message inconvenient, and unfortunately they appear willing to turn to just about any tactics to try to suppress that message.”

Human-caused climate change is a reality. There are clearly some who find that message inconvenient, and unfortunately they appear willing to turn to just about any tactics to try to suppress that message.

—Michael Mann

Even more frightening are the right-wing politicians and pundits who actually target prominent scientists for intimidation. Sen. James Inhofe of Oklahoma is one of the most brazen. He listed the name of 17 prominent climate scientists5 and claimed that they engaged in “potentially criminal behavior” for violating the Federal False Statements Act. This is the classic tactic of McCarthy-style witch hunting, or analogous to how conservative authorities (such as the Inquisition) threatened Galileo with torture when he dared speak scientific truth to power. It has a tremendously chilling effect on science, not to mention what it does to the personal lives of hardworking scientists and their families. Of course, it is an entirely baseless charge, since the truth lies with the scientists, and it is Inhofe who is distorting reality. Nevertheless, an anti-scientific troglodyte like Inhofe is capable of wasting a lot of scientists’ time and money fighting and defending charges in court or in Congress, not to mention the fact that all these scientists could now be targets of gun-toting crazy right-wingers.

Scariest of all is Virginia Attorney General Ken Cuccinelli. As Powell explains in detail, even before his election in 2008, he was known to be an extreme right-winger, and now he is abusing the powers of his office to push his agenda. He is suing6 to release all the raw data and emails collected by Michael Mann when he worked at the University of Virginia. (Mann is now at Penn State, so Cuccinelli cannot touch him there). Cuccinelli hopes to find some sort of “smoking gun” of conspiracy along the lines of the East Anglia “Climategate” scandal. This is despite the fact (as six independent commissions showed), there was nothing amiss in the emails, and no conspiracy was discovered, just careless and colloquial language quoted out of context. Given the right wing’s scientific incompetence and misinterpretation of the East Anglia data, there’s no reason to think that they will have any better ability to interpret Mann’s data, should they release it. Instead, we can expect that they will find things that fit their preconceptions without any scientific expertise to judge the data in the first place. Cuccinelli is trying to claim that Mann committed fraud and should return all the research money he received, along with legal fees and triple damages. Cuccinelli’s actions are part of a right-wing witch-hunt by an extremist politician who is using his relatively obscure position as state attorney general to further his political career. It is consistent with all the other ways he is using his office for political gain and street cred in the right-wing fringe. His crusades have ranged from the silly (trying to cover the naked breast of the crude sketch of the goddess on the Virginia state seal) to the serious. The latter include directing public universities to remove sexual orientation from their anti-discrimination policies, attacking the Environmental Protection Agency, filing a lawsuit challenging federal health care reform, and trying to reverse George Mason University’s policy about concealed weapons on campus. Polls7 show that the voters of Virginia are tired of his antics and want him to work on the job that most state attorney generals are paid to do: prosecuting criminals and corporations on the behalf of the state and enforcing state laws, not tilting at right-wing windmills.

One of the more measured and non-partisan analyses came from Nobel Prize-wining economist Paul Krugman:8

Jon Huntsman Jr., a former Utah governor and ambassador to China, isn’t a serious contender for the Republican presidential nomination. And that’s too bad, because Mr. Hunstman has been willing to say the unsayable about the G.O.P.—namely, that it is becoming the “anti-science party.” This is an enormously important development. And it should terrify us. I could point out that Mr. Perry is buying into a truly crazy conspiracy theory, which asserts that thousands of scientists all around the world are on the take, with not one willing to break the code of silence. I could also point out that multiple investigations into charges of intellectual malpractice on the part of climate scientists have ended up exonerating the accused researchers of all accusations. But never mind: Mr. Perry and those who think like him know what they want to believe, and their response to anyone who contradicts them is to start a witch hunt. So how has Mr. Romney, the other leading contender for the G.O.P. nomination, responded to Mr. Perry’s challenge? In trademark fashion: By running away. In the past, Mr. Romney, a former governor of Massachusetts, has strongly endorsed the notion that man-made climate change is a real concern. But, last week, he softened that to a statement that he thinks the world is getting hotter, but “I don’t know that” and “I don’t know if it’s mostly caused by humans.” Moral courage! Of course, we know what’s motivating Mr. Romney’s sudden lack of conviction. According to Public Policy Polling, only 21 percent of Republican voters in Iowa believe in global warming (and only 35 percent believe in evolution). Within the G.O.P., willful ignorance has become a litmus test for candidates, one that Mr. Romney is determined to pass at all costs. So it’s now highly likely that the presidential candidate of one of our two major political parties will either be a man who believes what he wants to believe, even in the teeth of scientific evidence, or a man who pretends to believe whatever he thinks the party’s base wants him to believe. And the deepening anti-intellectualism of the political right, both within and beyond the G.O.P., extends far beyond the issue of climate change. Now, we don’t know who will win next year’s presidential election. But the odds are that one of these years the world’s greatest nation will find itself ruled by a party that is aggressively anti-science, indeed anti-knowledge. And, in a time of severe challenges — environmental, economic, and more — that’s a terrifying prospect.

Order The Inquisition of Climate Science from Amazon

As a counter to the GOP’s inquisition of climate scientists, let us remember that in the last year or so, UC Berkeley physicist Richard Muller re-examined all the temperature data from the NOAA, East Anglia Hadley Climate Research Unit, and the Goddard Institute of Space Science sources. Even though Muller started out as a skeptic of the temperature data, and he was funded by the Koch brothers and other oil company sources, he carefully checked and re-checked the research himself. When the GOP leaders called him to testify before the House Science and Technology Committee last spring, they were expecting him to discredit the temperature data showed real change. Instead, Muller shocked his GOP sponsors by demonstrating his scientific integrity and telling truth to power: the temperature increase was real, and the scientists who had demonstrated climate was changing were right.9

This is the essence of the scientific method at its best. There may be biases in our perceptions, and we may want to find data that fits our preconceptions about the world, but if science is done properly, we get a real answer, often one we did not expect. That’s the true test of when science is giving us a reality check: when it tells us something we do not want to hear, but is inescapable if one follows the scientific method and analyzes the data honestly.

Thomas Henry Huxley said it best over 150 years ago: “Sit down before fact as a little child, be prepared to give up every preconceived notion, follow humbly wherever and to whatever abysses nature leads, or you shall learn nothing.”

About the Author


DR. DONALD R. PROTHERO is Professor of Geology at Occidental College in Los Angeles, and Lecturer in Geobiology at the California Institute of Technology in Pasadena. He earned M.A., M.Phil., and Ph.D. degrees in geological sciences from Columbia University in 1982, and a B.A. in geology and biology (highest honors, Phi Beta Kappa) from the University of California, Riverside. He is currently the author, co-author, editor, or co-editor of 25 books and over 250 scientific papers, including five leading geology textbooks and three trade books as well as edited symposium volumes and other technical works. He is on the editorial board of Skeptic magazine, and in the past has served as an associate or technical editor for Geology, Paleobiology and Journal of Paleontology. He is a Fellow of the Geological Society of America, the Paleontological Society, and the Linnaean Society of London, and has also received fellowships from the Guggenheim Foundation and the National Science Foundation. He has served as the Vice President of the Pacific Section of SEPM (Society of Sedimentary Geology), and five years as the Program Chair for the Society of Vertebrate Paleontology. In 1991, he received the Schuchert Award of the Paleontological Society for the outstanding paleontologist under the age of 40. He has also been featured on several television documentaries, including episodes of Paleoworld (BBC), Prehistoric Monsters Revealed (History Channel), Entelodon and Hyaenodon (National Geographic Channel) and Walking with Prehistoric Beasts (BBC). Check out Donald Prothero’s page at Shop Skeptic.



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