Taken as a percentage of GDP, investment in research by the United States is at the lowest level in decades. Other nations such as Finland and Israel, known for their innovative and entrepreneurial economies, spend far more than the United States. Cuts in research spending won't hurt us now - they will hurt us in a decade or two. The time lag between benefit and cost makes such cuts a tempting political target. Enter the Ryan plan, which plans to cut "non-defense" research spending to trim our budget.
We're in a tough time economically, and our deficit is absolutely out of control. If someone was making the case to me that we just can't afford to increase R&D spending until our fiscal future is secure, I don't think I would find that argument unreasonable, although I wouldn't agree with it. What I do find to be unreasonable is the Republican insistence that the military needs to be spared all forms of spending cuts. It is the epitome of short sighted to cut general research spending in order to maintain our high current levels of military spending.
Mitt Romney plan will cut research spending, but he has promised to increase military spending (for what threat are our current forces insufficient, I wonder). Barack Obama has stated he will not spare the military from a greater plan to fix our budgetary crisis, but has nevertheless urged increased spending on research and development. Americans have been given a choice this election. They can think about the present, or they can think about the future. The central theme of pretty much every history book I've read ever,
is that great national powers which maintain high levels of military spending to the detriment of other areas of the economy quickly cease to be great powers.
Showing posts with label Economics. Show all posts
Showing posts with label Economics. Show all posts
Tuesday, August 21, 2012
Saturday, March 24, 2012
Sunday, February 26, 2012
Occupy The Middle Kingdom?
Income inequality isn't only a problem in America. I do believe that China's Gini coefficient (a measure of inequality) recently overtook the US. This will be tolerable to the legions of workers while China experiences the 10% growth that it currently enjoys. With a significant slowdown, it won't be tolerable.
Westerners tend to ascribe virtues of competence and wisdom to the Chinese government. If these leaders were wise, they would be starting to implement political reforms now. That way, pressure release valves are already in place when the system gets dealt a shock. Have they not been watching the news at all over the last year?
Westerners tend to ascribe virtues of competence and wisdom to the Chinese government. If these leaders were wise, they would be starting to implement political reforms now. That way, pressure release valves are already in place when the system gets dealt a shock. Have they not been watching the news at all over the last year?
Monday, February 13, 2012
Would Republicans be OK with Sharia law being applied to Christians?
Interesting hypothetical:
"Suppose the Muslim owner of a large company that employs Muslims and non- Muslims (or even just Muslims) wants to be exempt from insuring medical stuff except in cases where male employees see male doctors and female employees see female doctors. The owner find it objectionable that 'his money' should pay for anything he finds religiously repugnant, and this is his take on sharia law. Would Republicans have any objection?"
Call me crazy, but something tells me that John Boehner wouldn't exactly be rallying people to support the religious freedom of the Muslim business owner here. Many more hypothetical scenarios here. Again...the real story is that health insurance has no business being tied to employment status. Especially not in the increasingly liquid labor market that we live in. The link causes economic problems, ethical problems, and political problems.
"Suppose the Muslim owner of a large company that employs Muslims and non- Muslims (or even just Muslims) wants to be exempt from insuring medical stuff except in cases where male employees see male doctors and female employees see female doctors. The owner find it objectionable that 'his money' should pay for anything he finds religiously repugnant, and this is his take on sharia law. Would Republicans have any objection?"
Call me crazy, but something tells me that John Boehner wouldn't exactly be rallying people to support the religious freedom of the Muslim business owner here. Many more hypothetical scenarios here. Again...the real story is that health insurance has no business being tied to employment status. Especially not in the increasingly liquid labor market that we live in. The link causes economic problems, ethical problems, and political problems.
Monday, February 06, 2012
Indiana right-to-work, breaking the Union of the 1%.
Indiana just passed right-to-work legislation. The standard labor argument (against Mitch Daniels) is that all workers benefit from the actions of a worker's union, so they should all contribute. I'm not sure if that is true. There are some cases of overlap I'm sure, but one of the most important benefits of being in a union is protection from being laid off "unfairly". If a worker declined to pay union fees and didn't join the union, they face that risk. It's a calculation that any individual would need to make - but clearly, if the benefits of unionization are so great, theres no need for a law that forces a worker to join. I am always for greater individual freedom, so I definitely side with Mitch Daniels on this issue. Workers have the right to organize and join unions, but unions shouldn't have the right to force workers to join.
On a somewhat related note, consider what the essence of unionization is: it is undeserved economic influence; economic power at above-market rates. In a union, a collection of individuals organize within the framework of a larger group such that, by virtue of that organization, they become more influential than the sum of their parts. They increase their economic power not by increasing productivity, but by pressing political advantage into economic gain. Obviously, this leads to less efficient labor markets - and many others are hurt in consequence, including non-unionized workers.
Now stop and consider the entrenched financial and corporate elite in this country. The "1%" generally is a very productive group, and in a genuinely free market they would be compensated handsomely for their efforts. However, by virtue of their connections to politicians and their virtual ownership of government in general, the financial and corporate elite have been able to press their advantage. They have built a system from the inside that favors them unfairly. They are no different than factory workers who unionize and demand outrageous or unearned pay.
Wall Street and many entrenched corporations have economic power beyond that which their productivity deserves. Tax-payer bailouts and implicit government backing of too-big-to-fail institutions. A tax code, written by armies of lawyers and voted into being by bought politicians, which is insanely complex and riddled with loopholes that benefit the authors. Entrenched corporations (think: unionized workers) with their lobbyists buy themselves government subsidies and tax breaks; these are advantages that their smaller or newer competitors (think: non-unionized labor) don't enjoy. The power of the financial and corporate elite, like unionized workers in a factory, is greater than the sum of their parts. This is the Union of the 1%.
While Democrats are funded by traditional middle-class unions, Republicans are backed by the union on Wall Street - and as the financial crash in 2007 showed, the latter is more detrimental to the economy. So: want to do some union busting, and make our economy more competitive? Fine. Lets not stop with the middle class unions. We need to end corporate welfare. Simplify the tax code. Break up any company or bank that is implicitly backed by the taxpayers because it is too big to fail. Stop government subsidies and tax breaks to entrenched corporations. End attempts at regulating the internet. Re-write our ridiculous patent laws which have been woven into place by entrenched companies to keep out the competition. THAT is how you revitalize the American economy.
This is what Occupy Wall Street is all about. Americans have gone along with the de-unionization of the middle classes for decades, and the promised gains in living standards have absolutely failed to be realized. Now its time to end the union of Wall Street, of the entrenched interests, of the elites who own Washington.
On a somewhat related note, consider what the essence of unionization is: it is undeserved economic influence; economic power at above-market rates. In a union, a collection of individuals organize within the framework of a larger group such that, by virtue of that organization, they become more influential than the sum of their parts. They increase their economic power not by increasing productivity, but by pressing political advantage into economic gain. Obviously, this leads to less efficient labor markets - and many others are hurt in consequence, including non-unionized workers.
Now stop and consider the entrenched financial and corporate elite in this country. The "1%" generally is a very productive group, and in a genuinely free market they would be compensated handsomely for their efforts. However, by virtue of their connections to politicians and their virtual ownership of government in general, the financial and corporate elite have been able to press their advantage. They have built a system from the inside that favors them unfairly. They are no different than factory workers who unionize and demand outrageous or unearned pay.
Wall Street and many entrenched corporations have economic power beyond that which their productivity deserves. Tax-payer bailouts and implicit government backing of too-big-to-fail institutions. A tax code, written by armies of lawyers and voted into being by bought politicians, which is insanely complex and riddled with loopholes that benefit the authors. Entrenched corporations (think: unionized workers) with their lobbyists buy themselves government subsidies and tax breaks; these are advantages that their smaller or newer competitors (think: non-unionized labor) don't enjoy. The power of the financial and corporate elite, like unionized workers in a factory, is greater than the sum of their parts. This is the Union of the 1%.
While Democrats are funded by traditional middle-class unions, Republicans are backed by the union on Wall Street - and as the financial crash in 2007 showed, the latter is more detrimental to the economy. So: want to do some union busting, and make our economy more competitive? Fine. Lets not stop with the middle class unions. We need to end corporate welfare. Simplify the tax code. Break up any company or bank that is implicitly backed by the taxpayers because it is too big to fail. Stop government subsidies and tax breaks to entrenched corporations. End attempts at regulating the internet. Re-write our ridiculous patent laws which have been woven into place by entrenched companies to keep out the competition. THAT is how you revitalize the American economy.
This is what Occupy Wall Street is all about. Americans have gone along with the de-unionization of the middle classes for decades, and the promised gains in living standards have absolutely failed to be realized. Now its time to end the union of Wall Street, of the entrenched interests, of the elites who own Washington.
Friday, December 23, 2011
Stopping Keystone XL is the Best Policy for Energy Security.
Like a crazed heroin addict suffering through withdrawal, America is frantically tapping on its antecubital vein in eager anticipation of the next fix. Of course, Keystone XL hasn't been presented in this way. They say it's a bid for energy security, and that it will reduce our dependence on Venezuelan or Iranian oil. Lets just call it what it really is: giving more heroin to the addict. Building Keystone XL will be proof that America isn't ready to find help to get over its oil addiction, and it will be proof that we don't care about energy security, nor do we care about future generations.
Oil is traded on a global market, so any suggestion that Keystone XL is going to stick it to the Saudis by allowing America to import Canadian oil instead is absolutely ridiculous. In fact, the only way that Keystone XL will impact OPEC at all is if it significantly increased the global supply for oil - which it won't. The pipeline will bring in another 900,000 barrels per day. Considering that global production is about 85 MILLION barrels per day, excuse me, but whoop-de-fucking-do.
In fact, if I was OPEC I would WANT the Keystone XL project to come on-line. OPEC produces 30 million barrels per day and they are under intense international pressure to keep up unsustainable levels of production. They are using methods of oil extraction, because they are in such a rush, that will cause their wells to dry up more rapidly than they would if they could take things out a bit slower. Keystone XL will take the pressure off of OPEC. OPEC can just drop its own production by 900,000 barrels per day, global supply remains the same, the price doesn't budge, and OPEC sacrifices a tiny bit of income now for higher-endurance production in the future.
American politicians always harp about two things: energy security, and watching after our children. What could be more secure than leaving a giant untapped oil field in North America? What would be a better gift to leave our children? The truth is, global oil production right now is quite stable, and our economy is starting to turn around. We don't NEED the oil that Keystone XL would deliver right now, but it would allow us to continue our addiction. What if someday there is a world war of a geologic catastrophe? What if oil flies over 300 dollar per barrel, threatening even access to our military and basic civilian functions? Having a giant reserve in Canada waiting for us is the ULTIMATE energy security. It is a giant piggy-bank that our children could break in a dire emergency.
Even if Keystone XL went straight to American oil markets (it won't), and even if it could all be used for any purpose (it can't), it would only satiate 4.5% of American demand for oil. Another way to achieve energy security, which would be exactly equivalent to making Keystone XL, is to DECREASE our oil consumption by 4.5%. We can (actually, will be forced to whether we like it or not) build an economy that is less reliant on oil. Currently our development is a model of inefficiency. Our cities sprawl ever outward, fueled by cheap gasoline. Government continues to subsidize roads and highways, to connect every random distant suburb to its nearby strip-mall. Why not encourage more dense urban development? Why not push our cities to rely more on the foot, the bike, light rail, or trains - and away from the car? Why not encourage Americans to carpool more?
Well the real answer is this: we don't need to encourage any of these things because the market will do it for us. As long as oil prices remain high, we will begin to shift to a post-petroleum economy. Again, this is an inevitable transition. It makes no sense to me to delay that shift when world oil production is so stable right now. It makes no sense to raid a secure deposit of resources that our children may have a vital need for in the future because we want low-hanging fruit now.
Oil is traded on a global market, so any suggestion that Keystone XL is going to stick it to the Saudis by allowing America to import Canadian oil instead is absolutely ridiculous. In fact, the only way that Keystone XL will impact OPEC at all is if it significantly increased the global supply for oil - which it won't. The pipeline will bring in another 900,000 barrels per day. Considering that global production is about 85 MILLION barrels per day, excuse me, but whoop-de-fucking-do.
In fact, if I was OPEC I would WANT the Keystone XL project to come on-line. OPEC produces 30 million barrels per day and they are under intense international pressure to keep up unsustainable levels of production. They are using methods of oil extraction, because they are in such a rush, that will cause their wells to dry up more rapidly than they would if they could take things out a bit slower. Keystone XL will take the pressure off of OPEC. OPEC can just drop its own production by 900,000 barrels per day, global supply remains the same, the price doesn't budge, and OPEC sacrifices a tiny bit of income now for higher-endurance production in the future.
American politicians always harp about two things: energy security, and watching after our children. What could be more secure than leaving a giant untapped oil field in North America? What would be a better gift to leave our children? The truth is, global oil production right now is quite stable, and our economy is starting to turn around. We don't NEED the oil that Keystone XL would deliver right now, but it would allow us to continue our addiction. What if someday there is a world war of a geologic catastrophe? What if oil flies over 300 dollar per barrel, threatening even access to our military and basic civilian functions? Having a giant reserve in Canada waiting for us is the ULTIMATE energy security. It is a giant piggy-bank that our children could break in a dire emergency.
Even if Keystone XL went straight to American oil markets (it won't), and even if it could all be used for any purpose (it can't), it would only satiate 4.5% of American demand for oil. Another way to achieve energy security, which would be exactly equivalent to making Keystone XL, is to DECREASE our oil consumption by 4.5%. We can (actually, will be forced to whether we like it or not) build an economy that is less reliant on oil. Currently our development is a model of inefficiency. Our cities sprawl ever outward, fueled by cheap gasoline. Government continues to subsidize roads and highways, to connect every random distant suburb to its nearby strip-mall. Why not encourage more dense urban development? Why not push our cities to rely more on the foot, the bike, light rail, or trains - and away from the car? Why not encourage Americans to carpool more?
Well the real answer is this: we don't need to encourage any of these things because the market will do it for us. As long as oil prices remain high, we will begin to shift to a post-petroleum economy. Again, this is an inevitable transition. It makes no sense to me to delay that shift when world oil production is so stable right now. It makes no sense to raid a secure deposit of resources that our children may have a vital need for in the future because we want low-hanging fruit now.
Tuesday, December 06, 2011
How Doctors Die
Loved this.
Its a shame that Sarah Palin so completely poisoned the well with her "death panel" comments. A conversation about how we should approach patients at the end of life is something that this nation badly needs.
Its a shame that Sarah Palin so completely poisoned the well with her "death panel" comments. A conversation about how we should approach patients at the end of life is something that this nation badly needs.
Sunday, October 02, 2011
Apparently all it takes to be a NYT Columnist is a poorly considered opinion
This was such a weak article:
NYT: Is junk food really cheaper?
The column starts off with an argument that fast food is actually more expensive than natural food. As proof, the author picks an anecdote completely out of thin air. In his hypothetical case, for a family of four, fast food is more expensive than healthy food. Take that, statisticians! He goes on to make the really insightful point that there are lots of things people could do to live cheaper - like drink water instead of soft drinks. He then goes on to talk a lot about how the problem here is really cultural: people are lazy, and don't like to cook. His solutions include changing said culture. The column ends with a complete 180, culminating in vague references to statist political solutions to curb consumption of processed food.
The only useful thing he does is bring up the analogy with the anti-smoking campaign. Consider for a second: what would you say if, instead of taxing cigarettes to $ 8.00 per pack where they are now, the government was subsidizing them to $ 1.50 per pack? And then imagine some jackass wrote a NYT column about how we just have a crisis of culture and that the OBVIOUS solution was for people to just get some willpower and quit smoking. Never mind stopping government hand-outs to tobacco companies (in this hypothetical case).
This is the reality of the nation that we live in: the government essentially pays people to eat fast food and drink soda. That is the 100% truth. We can talk about culture, paternalism, and lots of other things but it really comes down to incentives. Whether or not fast food is cheaper than natural food is really irrelevant - thanks to subsidies, fast food is cheaper than it would otherwise be. Period. People would consume less processed food it it was appropriately priced. Food industry subsidies are an example of big-government corporate socialism at its worst.
Once we all agree that we shouldn't be paying people to eat unhealthy food, we can wade into the area of whether or not we should tax unhealthy food. I think reasonable people can BEGIN to disagree on that point. That being said, taxes have to come from somewhere. Why not tax things that we shouldn't be doing (smoking, eating unhealthy food) instead of taxing things that we should be doing (working hard / income taxation)? Especially when people expect the government to pay for their health care at the end of life, its not unreasonable for that government to try to discourage the most unhealthy behaviors. Whatever; like I said, taxing fast food is an issue we can debate; that we subsidize fast food is not a point for debate - its a travesty.
NYT: Is junk food really cheaper?
The column starts off with an argument that fast food is actually more expensive than natural food. As proof, the author picks an anecdote completely out of thin air. In his hypothetical case, for a family of four, fast food is more expensive than healthy food. Take that, statisticians! He goes on to make the really insightful point that there are lots of things people could do to live cheaper - like drink water instead of soft drinks. He then goes on to talk a lot about how the problem here is really cultural: people are lazy, and don't like to cook. His solutions include changing said culture. The column ends with a complete 180, culminating in vague references to statist political solutions to curb consumption of processed food.
The only useful thing he does is bring up the analogy with the anti-smoking campaign. Consider for a second: what would you say if, instead of taxing cigarettes to $ 8.00 per pack where they are now, the government was subsidizing them to $ 1.50 per pack? And then imagine some jackass wrote a NYT column about how we just have a crisis of culture and that the OBVIOUS solution was for people to just get some willpower and quit smoking. Never mind stopping government hand-outs to tobacco companies (in this hypothetical case).
This is the reality of the nation that we live in: the government essentially pays people to eat fast food and drink soda. That is the 100% truth. We can talk about culture, paternalism, and lots of other things but it really comes down to incentives. Whether or not fast food is cheaper than natural food is really irrelevant - thanks to subsidies, fast food is cheaper than it would otherwise be. Period. People would consume less processed food it it was appropriately priced. Food industry subsidies are an example of big-government corporate socialism at its worst.
Once we all agree that we shouldn't be paying people to eat unhealthy food, we can wade into the area of whether or not we should tax unhealthy food. I think reasonable people can BEGIN to disagree on that point. That being said, taxes have to come from somewhere. Why not tax things that we shouldn't be doing (smoking, eating unhealthy food) instead of taxing things that we should be doing (working hard / income taxation)? Especially when people expect the government to pay for their health care at the end of life, its not unreasonable for that government to try to discourage the most unhealthy behaviors. Whatever; like I said, taxing fast food is an issue we can debate; that we subsidize fast food is not a point for debate - its a travesty.
Tuesday, May 24, 2011
America as the no-vacation nation
Tuesday, May 17, 2011
Impressions from East Africa: historical development, communities, and finances
Imagine Tanzania in the year 1900. This is a land that is 50% larger than the state of Texas, supporting a population of maybe 3 million. There was no infrastructure, no centralized government, and really, no history of a centralized government. Contrast that to Qing China, the Manchurian dynasty which ruled China up to modern times. Qing China in 1900 was arguably still one of the great powers of the world even if it was quickly falling apart. Back then, the population of China was several hundreds of millions. There was a history of civilization going back four millennia and certainly a tradition of strong centralized government, despite the fact that China is so geographically large.
One of the things required to create a modern nation state and the appropriate institutions is a sufficient population density in the surrounding area. China apparently hit that necessary population density thousands of years ago, but we should remember that Tanzania was nowhere near that threshold even one hundred years ago. A great book that expounds on this topic is "Guns, Germs, and Steel" for anyone interested. Despite these great contrasts, GDP per person in China and Tanzania 30 years ago was not so different. The take-home point is this: strong economic and political development doesn't just happen by default. It can get hindered by any number of things.
Think back to Tanzania in 1900: sparsely populated, inaccessible, every community for themselves. These communities, like other small communities throughout history, would need to be close knit. Vertical ties may involve patronage from a chief or leader who has surplus resources. That leader can distribute those resources to neighbors and subordinates in order to strengthen ties and bonds between them. Horizontal ties would involve relationships between friends, relatives, and neighbors who are on equal footing. In a small self-sufficient society, it is all about hedging risk. Sometimes one family has a good hunt, or a good harvest. Another family may fail to find an animal, or will have crops which get killed by fungus. Obviously, if neighbors are willing to readily share everything they have, the risk gets hedged throughout the community as a whole and everyone is better off.
In a century, the population of Tanzania has increased by 10-fold or more. It has been thrown into the modern world, and expected to develop sound Western institutions of government. Are these aforementioned cultural survival traits just going to disappear in a single human lifetime? Vertical ties of patronage in 1900 are manifested in the modern world as endemic corruption. Horizontal ties between neighbors manifest as a lack of savings. Let me expound on this last point. When we were in Kenya, one Westerner was telling me that if any person makes money or has a big payday, they immediately go out and spend it on all of their friends at the bar or restaurant. An employee of this person didn't want to keep her money at her house. She was afraid a friend or family would ask for it, and she would be obligated to give it away. These two examples help illustrate a source of serious economic problems. Without savings, there can be no investment. Without investment, there is no productivity growth.
I do appreciate that this dynamic is a testament to the strength of the community in Tanzania and Kenya, which is a wonderful thing. I've figured out that it is a big part of the attraction that Colleen feels to east Africa. Really, it is the same for me. The palpable sense of community is something we just don't have in the West anymore for the most part, and its something one can never perceive from photos of Africa. One has to be there to feel that pulse. Not to denigrate my own culture, because I love the West and I think it is the pinnacle of human existence: but this resource-sharing dynamic in east Africa is more instinctively "normal", in the sense that humans are hard-wired to operate that way. Sharing of resources in small, close-knit communities has been the norm throughout human history.
The communal spirit is what enabled clans and small groups of people to survive, because everyone is hedging their successes and failures on their close relatives. Only with the advent of larger towns and cities using national currencies have people in the West in particular moved away from this. There is still an intense attraction to what they have in east Africa, because I believe our brains were designed to function in small communities like they have (and we used to have) instead of the relatively lonely and unfriendly places in which we live in the West. In fact I've read psychological studies which suggest that 150 people is the ideal community size for Homo sapiens; we can keep tabs on and socially interact with that many people.
The move from small self-sufficient community groups to larger cities and towns in the West occurred over an extended period of hundreds of years. This gradual transition allowed for the culture to adjust slowly. We were able to develop a norm of anti-corruption (even though it still happens everywhere). Since everyone was participating in government we began to think in terms of nation or kingdom instead of tribe or clan. Notice in places where political participation was forbidden by some group or another (Jews in Europe, African Americans in the USA) there remained into modern times sort of "tribal" (us versus them) schisms that we see in the news all the time in east Africa and are oh so shocked by. Tribal tendencies, xenophobia, racism - we are talking about the same thing. Barack Obama, show us your birth certificate!
Anyway. If I had one point to this post, I guess it would be this: many people look at the lack of economic development in Africa and think "what has gone wrong?" My reaction is completely different: How could they be anywhere else? There has been so much change in such a short amount of time in east Africa, there is just no way it could have happened smoothly. In east Africa we've been expecting them to make the sort of adjustments in 100 years that in the West we made over the last 700 and in China they made over the last 4,000. This isn't even adding in the complicated history of colonialism, the effect instability of neighbors has on local development, and the effect of poor government economic policies. I don't even need to think about colonialism to not be surprised by the current political and economic position in east Africa. Yet only 30 years ago China was every bit as poor as Tanzania. 70 years ago Italy still had endemic malaria, a high birth rate, and extremely high infant mortality. I don't know how the current situation could make anyone pessimistic about the future of Africa, because to me it makes perfect sense that Africans are where they are now given from where they have come.
Its all about where they are going, and I think the future is promising. Maybe I'm too optimistic, but its never smart to bet against humanity. Topic for another post.
One of the things required to create a modern nation state and the appropriate institutions is a sufficient population density in the surrounding area. China apparently hit that necessary population density thousands of years ago, but we should remember that Tanzania was nowhere near that threshold even one hundred years ago. A great book that expounds on this topic is "Guns, Germs, and Steel" for anyone interested. Despite these great contrasts, GDP per person in China and Tanzania 30 years ago was not so different. The take-home point is this: strong economic and political development doesn't just happen by default. It can get hindered by any number of things.
Think back to Tanzania in 1900: sparsely populated, inaccessible, every community for themselves. These communities, like other small communities throughout history, would need to be close knit. Vertical ties may involve patronage from a chief or leader who has surplus resources. That leader can distribute those resources to neighbors and subordinates in order to strengthen ties and bonds between them. Horizontal ties would involve relationships between friends, relatives, and neighbors who are on equal footing. In a small self-sufficient society, it is all about hedging risk. Sometimes one family has a good hunt, or a good harvest. Another family may fail to find an animal, or will have crops which get killed by fungus. Obviously, if neighbors are willing to readily share everything they have, the risk gets hedged throughout the community as a whole and everyone is better off.
In a century, the population of Tanzania has increased by 10-fold or more. It has been thrown into the modern world, and expected to develop sound Western institutions of government. Are these aforementioned cultural survival traits just going to disappear in a single human lifetime? Vertical ties of patronage in 1900 are manifested in the modern world as endemic corruption. Horizontal ties between neighbors manifest as a lack of savings. Let me expound on this last point. When we were in Kenya, one Westerner was telling me that if any person makes money or has a big payday, they immediately go out and spend it on all of their friends at the bar or restaurant. An employee of this person didn't want to keep her money at her house. She was afraid a friend or family would ask for it, and she would be obligated to give it away. These two examples help illustrate a source of serious economic problems. Without savings, there can be no investment. Without investment, there is no productivity growth.
I do appreciate that this dynamic is a testament to the strength of the community in Tanzania and Kenya, which is a wonderful thing. I've figured out that it is a big part of the attraction that Colleen feels to east Africa. Really, it is the same for me. The palpable sense of community is something we just don't have in the West anymore for the most part, and its something one can never perceive from photos of Africa. One has to be there to feel that pulse. Not to denigrate my own culture, because I love the West and I think it is the pinnacle of human existence: but this resource-sharing dynamic in east Africa is more instinctively "normal", in the sense that humans are hard-wired to operate that way. Sharing of resources in small, close-knit communities has been the norm throughout human history.
The communal spirit is what enabled clans and small groups of people to survive, because everyone is hedging their successes and failures on their close relatives. Only with the advent of larger towns and cities using national currencies have people in the West in particular moved away from this. There is still an intense attraction to what they have in east Africa, because I believe our brains were designed to function in small communities like they have (and we used to have) instead of the relatively lonely and unfriendly places in which we live in the West. In fact I've read psychological studies which suggest that 150 people is the ideal community size for Homo sapiens; we can keep tabs on and socially interact with that many people.
The move from small self-sufficient community groups to larger cities and towns in the West occurred over an extended period of hundreds of years. This gradual transition allowed for the culture to adjust slowly. We were able to develop a norm of anti-corruption (even though it still happens everywhere). Since everyone was participating in government we began to think in terms of nation or kingdom instead of tribe or clan. Notice in places where political participation was forbidden by some group or another (Jews in Europe, African Americans in the USA) there remained into modern times sort of "tribal" (us versus them) schisms that we see in the news all the time in east Africa and are oh so shocked by. Tribal tendencies, xenophobia, racism - we are talking about the same thing. Barack Obama, show us your birth certificate!
Anyway. If I had one point to this post, I guess it would be this: many people look at the lack of economic development in Africa and think "what has gone wrong?" My reaction is completely different: How could they be anywhere else? There has been so much change in such a short amount of time in east Africa, there is just no way it could have happened smoothly. In east Africa we've been expecting them to make the sort of adjustments in 100 years that in the West we made over the last 700 and in China they made over the last 4,000. This isn't even adding in the complicated history of colonialism, the effect instability of neighbors has on local development, and the effect of poor government economic policies. I don't even need to think about colonialism to not be surprised by the current political and economic position in east Africa. Yet only 30 years ago China was every bit as poor as Tanzania. 70 years ago Italy still had endemic malaria, a high birth rate, and extremely high infant mortality. I don't know how the current situation could make anyone pessimistic about the future of Africa, because to me it makes perfect sense that Africans are where they are now given from where they have come.
Its all about where they are going, and I think the future is promising. Maybe I'm too optimistic, but its never smart to bet against humanity. Topic for another post.
Saturday, May 07, 2011
Osama Bin Laden and the US economy
A few posts below, I wrote why I wasn't quite celebrating the death of Bin Laden:
Now there is all of this jubilation that bin Laden is dead, we got our revenge, fine. We're still fighting a war in Afghanistan, we haven't made much progress, and we're almost bankrupt as a nation. That was OBL's entire strategy. He knew he couldn't beat the United States in a conventional war, and he didn't try. His plan was to draw us in and bleed us with a thousand pin-pricks. Are we playing his game or our game? Did we play right into his hands? I'd be more willing to celebrate if OBL's strategy had failed.
Washington Post columnist Ezra Klein writes more about Bin Laden's war against the US economy. He reaches the same conclusion that I did. How could one not come to that conclusion? Pre-9/11 the US economy was running surpluses with a minuscule debt relative to GDP. We were arguably the first hyper-power in history. Now, when the dollar starts to fall, I'm reading WSJ articles about how this is almost certainly not the start of a collapse of American currency and its economy...certainly not, right? We're at the point where we have to reassure ourselves that an economic collapse is not imminent.
Now there is all of this jubilation that bin Laden is dead, we got our revenge, fine. We're still fighting a war in Afghanistan, we haven't made much progress, and we're almost bankrupt as a nation. That was OBL's entire strategy. He knew he couldn't beat the United States in a conventional war, and he didn't try. His plan was to draw us in and bleed us with a thousand pin-pricks. Are we playing his game or our game? Did we play right into his hands? I'd be more willing to celebrate if OBL's strategy had failed.
Washington Post columnist Ezra Klein writes more about Bin Laden's war against the US economy. He reaches the same conclusion that I did. How could one not come to that conclusion? Pre-9/11 the US economy was running surpluses with a minuscule debt relative to GDP. We were arguably the first hyper-power in history. Now, when the dollar starts to fall, I'm reading WSJ articles about how this is almost certainly not the start of a collapse of American currency and its economy...certainly not, right? We're at the point where we have to reassure ourselves that an economic collapse is not imminent.
Friday, May 06, 2011
Supermarkets aren't like schools
An interesting thought experiment. The most obvious flaw in it is that while people have to eat, they don't necessarily have to be educated. Not every child is born into a family with parents who, in a free market, would devote lots of resources (time, money) to ensure their children are educated.
The whole voucher for private school concept does not seem unreasonable to me as an alternative. However, the notion that we can just stop taxing people to fund education on some level is ludicrous. A free market in education will only work in families with parents who care.
I'm not willing to withhold opportunities to children who made the mistake of not being born into a family that values education. And if that means the rest of society has to pay to educate those children, I'm OK with that. An educated society is to the benefit of everyone in that society.
The whole voucher for private school concept does not seem unreasonable to me as an alternative. However, the notion that we can just stop taxing people to fund education on some level is ludicrous. A free market in education will only work in families with parents who care.
I'm not willing to withhold opportunities to children who made the mistake of not being born into a family that values education. And if that means the rest of society has to pay to educate those children, I'm OK with that. An educated society is to the benefit of everyone in that society.
Tuesday, April 26, 2011
Impressions from Tanzania, Part I
Warning: I am writing about things that I really know very little about. Anyone who has seen my political blog knows I do that all the time. Well, believe it or not, I didn't come all the way over here so I could write about the weather, and about what I did all day. My main objective is to get at least a superficial feel for the culture and the challenges that east Africans face.
One of the shocking things about being here is that you initially don't feel like you can just casually walk among some of the "poverty" that I've seen here. Some of the dwellings that are here would not be out of place in the set of the movie "District 9". Not only do we casually walk through these areas, nobody seems to care. Its not like the music stops, the DJ screeches the record, and everyone stares at us (and this is Colleen and I without Said escorting us). The people are usually indifferent, sometimes curious, but never shocked/insulted/hostile at our presence. I wondered before coming here if I would feel unsafe at all, but I really haven't, except for when traveling in crazy packed buses. By the way, I don't have any pictures from when walking through places like this because I don't want to offend anyone by blatantly taking pictures of them.
The reason I put the word poverty in quotes above is because these people are extremely poor by Western standards but they don't act like we are led to believe that poor people act. I'm not sure why there is such a gulf between distant perception and reality in this regard. I can't have been the only American with that impression, because I would confidently say that I am less easily influenced by others, and more skeptical in general, than most Americans.
The image we have of the third world from American television sets is a bunch of people sitting around with blank looks on their faces. In contrast, these people in Tanzania move like they are on a schedule. Everyone has a livelihood. Brick-making is a big one. Younger boys are constantly filling wooden wheel barrels full of rocks and then pulling them to the brick makers. Lots of people are working the fields. Machine and mechanic work is common. Carpentry and construction is too. Maybe the most common are merchants; it seems like every other person has a shop of some sort, or is selling stuff at market.
So there is an extremely intensive economy here, and it is surprising how intensive it is, given my preconceived notions, which I feel foolish for even having at all. It isn't a productive economy of course, at least not by our standards. It takes investment in capital to increase productivity. China only 30 years ago was a hugely unproductive economy, but now look where it is, thanks to investment and good government policies for business. The real challenge is to figure out a way to get the technical know-how and the capital in so that the people can take off. Obviously.
Colleen's friend Mary, who runs the school for special needs children, is a perfect example. She was an entrepreneur who had a vision and a dream of a school, but no money to buy land or build it. Colleen provided the initial catalytic boost and Mary has ran with the project, taking it beyond the level that any one person, whether it be the richest Westerner or the most motivated Tanzanian, could have on their own. When it comes down to it, Colleen didn't buy land or build a school. Anyone with money can do that. Colleen invested in a Tanzanian, and Mary turned that investment into something great for her people. This is an incredibly important distinction that must frequently be lost on people, especially western philanthropists.
Anyway, there is lots more to write about, but I'll stop there. The concluding theme to this post is that the people of Tanzania are far more wealthy than I ever imagined; as an American it is easy to forget that wealth means more than assets and cash on hand minus liabilities.
By the way, the rest of my travel posts can be found here.
Monday, April 18, 2011
The Ethanol Gridlock, and Orwellian Obama
The Economist had a good article a few weeks ago highlighting an anomaly: a case of "conservatives" like Grover Norquist (Americans for Tax Reform) defending big government. Every year, the United States spends billions of dollars to prop up the local ethanol industry with subsidies. At the same time, we impose a tariff on imported ethanol. The imported ethanol would mostly come from our Brazilian friends, who produce ethanol from sugarcane. In fact, Brazilian ethanol is at least 4 times more efficient than our corn-based stuff. That is why local ethanol producers need both help, in the form of subsidies, and hindrances on the competition, in the form of tariffs, to stay competitive at all.
These policies make Americans worse off in general, because we have to pay more for our ethanol (although that cost is hidden among government spending as a whole). Furthermore, corn prices are going up to never before seen levels, since we're converting so much of it to ethanol. The consequence has been devastating to people around the world, especially in nations poorer than our own. This is classic big government at its worst, and yet some of its most staunch defenders are conservatives. That such a no-brainer issue has been such a challenge to deal with is a discouraging foreshadowing of the spending battles to come. Big props to Republican Tom Coburn for fighting back against pseudo conservatives like Norquist, and trying to get this wasteful spending eliminated.
Ethanol subsidies are a form of tax expenditure, and eliminating these would save the federal government literally hundreds of billions of dollars. President Obama mentioned this as a goal in his budget speech the other night. Obama used the phrase "spending reductions in the tax code", in other words, reducing tax expenditures. Jon Stewart was making fun of Obama for using what he thought was Orwellian language to mask a call for tax increases in general, but Stewart misinterpreted what Obama was saying. Tax expenditures are just government spending by another name. Faux conservatives will try to obfuscate this point. They will accuse President Obama of trying to raise taxes, but he is really trying to eliminate big government subsidies. He is going to need all the help he can get, especially from honest Republicans like Tom Coburn.
These policies make Americans worse off in general, because we have to pay more for our ethanol (although that cost is hidden among government spending as a whole). Furthermore, corn prices are going up to never before seen levels, since we're converting so much of it to ethanol. The consequence has been devastating to people around the world, especially in nations poorer than our own. This is classic big government at its worst, and yet some of its most staunch defenders are conservatives. That such a no-brainer issue has been such a challenge to deal with is a discouraging foreshadowing of the spending battles to come. Big props to Republican Tom Coburn for fighting back against pseudo conservatives like Norquist, and trying to get this wasteful spending eliminated.
Ethanol subsidies are a form of tax expenditure, and eliminating these would save the federal government literally hundreds of billions of dollars. President Obama mentioned this as a goal in his budget speech the other night. Obama used the phrase "spending reductions in the tax code", in other words, reducing tax expenditures. Jon Stewart was making fun of Obama for using what he thought was Orwellian language to mask a call for tax increases in general, but Stewart misinterpreted what Obama was saying. Tax expenditures are just government spending by another name. Faux conservatives will try to obfuscate this point. They will accuse President Obama of trying to raise taxes, but he is really trying to eliminate big government subsidies. He is going to need all the help he can get, especially from honest Republicans like Tom Coburn.
Thursday, March 17, 2011
Congestion Pricing
We all know from experience that the severity of a 'traffic jam' is not linearly proportional to the number of cars. Instead, a traffic jam almost seems to be a product of a threshold effect. A given highway can handle any number of cars smoothly up to a certain point. Once that point is reached, additional cars rapidly cause the buildup of a traffic jam. Obviously this does not apply to jams caused by accidents or breakdowns, but most traffic jams aren't caused by those things. Most jams are caused by too many vehicles on too small of an artery.
The implication is that if we were to institute congestion pricing and reduce the overall number of cars by 20%, we may not be reducing the severity of the traffic jam by only 20%. The extra cars that don't show up because of congestion pricing may have been what pushed the highway over the traffic threshold had they been present. By getting rid of that extra 20% of the cars, we could potentially get rid of the majority of the traffic slowdown. This is sound policy on so many levels. Liberals and conservatives should all agree on this, but we don't have this policy yet. Too bad.
The implication is that if we were to institute congestion pricing and reduce the overall number of cars by 20%, we may not be reducing the severity of the traffic jam by only 20%. The extra cars that don't show up because of congestion pricing may have been what pushed the highway over the traffic threshold had they been present. By getting rid of that extra 20% of the cars, we could potentially get rid of the majority of the traffic slowdown. This is sound policy on so many levels. Liberals and conservatives should all agree on this, but we don't have this policy yet. Too bad.
Moving Beyond the Automobile: Congestion Pricing from Streetfilms on Vimeo.
Wednesday, March 02, 2011
(Another) Oil Bubble
Oil prices have been rising lately, probably caused by a multitude of factors. As the economic recovery quickens, demand will increase and so price along with it. Adding to the increases are all of the revolutions going on in the Middle East. Concerns are abound about Iran and Saudi Arabia in particular.
An important point that is often lost on people is that oil producers like Iran are in sort of a catch-22. In the event of an actual geopolitical crisis (a war, for example) with a subsequent disruption of oil supplies, the price of oil would indeed skyrocket. But if Iran isn't selling their oil, they don't benefit from that increased price. Thus it is in Iran's interest to increase tensions and concern of a geopolitical crisis without precipitating one. That way, the price of oil goes up and Iran makes a juicy premium on what it would have exported anyway.
Then you think about what would happen if there was actually a disruption: say a conflict in the Strait of Hormouz or a revolution in Saudi Arabia. The price of oil would skyrocket, possibly to close to 200 dollars a barrel. Consider though that both of those nations are heavily dependent on oil to keep their countries running. In the event of a disruption and subsequent price spike, that nation has a huge economic incentive to get their oil back to market ASAP to take advantage of the high prices. I don't care who takes over Saudi Arabia: you factor in the number of barrels they can export every day times a 200 dollar per barrel price, and its obvious that any disruption will be short lived.
Finally, I think its pretty clear that the demand for oil is pretty plastic. Americans waste a ton of fuel. Dressing warmer in the winter and heating homes less could save a lot. Carpooling, taking a bus, or riding a bike would save more. These are all things that we don't do now because gas is only 3 dollars a gallon; they are things we will do if gas hits 5-6 dollars a gallon. Adding to the flexibility of demand for oil is the fact that there *are* substitutes. Natural gas, nuclear power, and coal for example (the latter two could power cars via batteries).
Commodity speculators were almost certainly behind the spike of oil to 140 dollars per barrel that we saw a couple of years ago. A price at that level was not economically sustainable. With all of the aforementioned variables causing uncertainty in the oil market, the speculators no doubt will be at it again. All things being considered, we will almost certainly see another oil bubble soon. I suspect that prices over 130 dollars per barrel are not sustainable over the long term. If I had some financial assets I'd be ready to short anything above that. You'd have to be crazy to not short anything above $ 160 / barrel, which I wouldn't be surprised to see at some point in the next year or two.
An important point that is often lost on people is that oil producers like Iran are in sort of a catch-22. In the event of an actual geopolitical crisis (a war, for example) with a subsequent disruption of oil supplies, the price of oil would indeed skyrocket. But if Iran isn't selling their oil, they don't benefit from that increased price. Thus it is in Iran's interest to increase tensions and concern of a geopolitical crisis without precipitating one. That way, the price of oil goes up and Iran makes a juicy premium on what it would have exported anyway.
Then you think about what would happen if there was actually a disruption: say a conflict in the Strait of Hormouz or a revolution in Saudi Arabia. The price of oil would skyrocket, possibly to close to 200 dollars a barrel. Consider though that both of those nations are heavily dependent on oil to keep their countries running. In the event of a disruption and subsequent price spike, that nation has a huge economic incentive to get their oil back to market ASAP to take advantage of the high prices. I don't care who takes over Saudi Arabia: you factor in the number of barrels they can export every day times a 200 dollar per barrel price, and its obvious that any disruption will be short lived.
Finally, I think its pretty clear that the demand for oil is pretty plastic. Americans waste a ton of fuel. Dressing warmer in the winter and heating homes less could save a lot. Carpooling, taking a bus, or riding a bike would save more. These are all things that we don't do now because gas is only 3 dollars a gallon; they are things we will do if gas hits 5-6 dollars a gallon. Adding to the flexibility of demand for oil is the fact that there *are* substitutes. Natural gas, nuclear power, and coal for example (the latter two could power cars via batteries).
Commodity speculators were almost certainly behind the spike of oil to 140 dollars per barrel that we saw a couple of years ago. A price at that level was not economically sustainable. With all of the aforementioned variables causing uncertainty in the oil market, the speculators no doubt will be at it again. All things being considered, we will almost certainly see another oil bubble soon. I suspect that prices over 130 dollars per barrel are not sustainable over the long term. If I had some financial assets I'd be ready to short anything above that. You'd have to be crazy to not short anything above $ 160 / barrel, which I wouldn't be surprised to see at some point in the next year or two.
Tuesday, February 22, 2011
Bizarro Capitalism in Health Care
Thanks to Tyler Cowen for the link, here is an interesting article where the governor of New Hampshire is basically telling hospitals in his state that they need to stop expanding. A basic principle of macroeconomics is that supply and demand are inversely related. Only in the health care industry, apparently a world of bizarro capitalism, could increasing supply actually increase demand.
In fact, this is not a new phenomenon nor is it a novel observation. Health care resources tend to get concentrated in areas where everyone has access to insurance. The population in those areas tend to get more health care spending than they need, with no demonstrable increase in outcomes at all. Spending elsewhere is suboptimal. The net effect is that distribution of health resources is only tangentially tied to demand, and is certainly inefficient at any rate.
Anyway, sort of related. I got an email from a friend, which is an email that a med student apparently sent to President Obama. The student was on his emergency medicine rotation, which is what I am doing this month, so I figured I'd add it. I end up with a lot of similar sentiments after my shifts in the ED.
----------------------------------------------------------------------------------
Dear Mr. President:
During my shift in the Emergency Room last night, I had the pleasure of evaluating a patient whose smile revealed an expensive shiny gold tooth, whose body was adorned with a wide assortment of elaborate and costly tattoos, who wore a very expensive brand of tennis shoes and who chatted on a new cellular telephone equipped with a popular musical ringtone.
While glancing over her patient chart, I happened to notice t hat her payer status was listed as "Medicaid"! During my examination of her, the patient informed me that she smokes more than one costly pack of cigarettes every day and somehow still has money to buy pretzels and beer.
And, you and our Congress expect me to pay for this woman's health care? I contend that our nation's "health care crisis" is not the result of a shortage of quality hospitals, doctors or nurses. Rather, it is the result of a "crisis of culture", a culture in which it is perfectly acceptable to spend money on luxuries and vices while refusing to take care of one's self or, heaven forbid, purchase health insurance. It is a culture based in the irresponsible credo that "I can do whatever I want to because someone else will always take care of me".
Once you fix this "culture crisis" that rewards irresponsibility and dependency, you'll be amazed at how quickly our nation's health care difficulties will disappear.
Respectfully,
STARNER JONES, MD
In fact, this is not a new phenomenon nor is it a novel observation. Health care resources tend to get concentrated in areas where everyone has access to insurance. The population in those areas tend to get more health care spending than they need, with no demonstrable increase in outcomes at all. Spending elsewhere is suboptimal. The net effect is that distribution of health resources is only tangentially tied to demand, and is certainly inefficient at any rate.
Anyway, sort of related. I got an email from a friend, which is an email that a med student apparently sent to President Obama. The student was on his emergency medicine rotation, which is what I am doing this month, so I figured I'd add it. I end up with a lot of similar sentiments after my shifts in the ED.
----------------------------------------------------------------------------------
Dear Mr. President:
During my shift in the Emergency Room last night, I had the pleasure of evaluating a patient whose smile revealed an expensive shiny gold tooth, whose body was adorned with a wide assortment of elaborate and costly tattoos, who wore a very expensive brand of tennis shoes and who chatted on a new cellular telephone equipped with a popular musical ringtone.
While glancing over her patient chart, I happened to notice t hat her payer status was listed as "Medicaid"! During my examination of her, the patient informed me that she smokes more than one costly pack of cigarettes every day and somehow still has money to buy pretzels and beer.
And, you and our Congress expect me to pay for this woman's health care? I contend that our nation's "health care crisis" is not the result of a shortage of quality hospitals, doctors or nurses. Rather, it is the result of a "crisis of culture", a culture in which it is perfectly acceptable to spend money on luxuries and vices while refusing to take care of one's self or, heaven forbid, purchase health insurance. It is a culture based in the irresponsible credo that "I can do whatever I want to because someone else will always take care of me".
Once you fix this "culture crisis" that rewards irresponsibility and dependency, you'll be amazed at how quickly our nation's health care difficulties will disappear.
Respectfully,
STARNER JONES, MD
Tuesday, February 01, 2011
The evolution of overconfidence
In a free market that is influenced by evolved human behavioral overconfidence, there will always be bubbles, and always be spectacular crashes.
Friday, December 17, 2010
Cowen on Income Inequality
One of my favorite bloggers, economist Tyler Cowen, has a long piece about the great socioeconomic challenge that America is grappling with.
The cause of rising income inequality has been something I have been very interested in lately. Any philosophical justification of an increasingly progressive tax code, for me, requires accurate interpretation of the causes of that rising inequality. In other words, there needs to be a good reason for increasing taxes on 'the rich', which may be necessary in the future, beyond simply that "they have the money".
The cause of rising income inequality has been something I have been very interested in lately. Any philosophical justification of an increasingly progressive tax code, for me, requires accurate interpretation of the causes of that rising inequality. In other words, there needs to be a good reason for increasing taxes on 'the rich', which may be necessary in the future, beyond simply that "they have the money".
Wednesday, December 08, 2010
Obama's tax cut cave/compromise
The left is fully up in arms about Obama's compromise with Republicans regarding the extension of the Bush tax cuts. There are talks of Democrat Senators filibustering the bill, of primary challenges to Obama in 2012, and all other sorts of nonsense. I wish I had some insight into Obama's decision making process, because from our perspective it is very difficult to distinguish between Obama being spineless / indecisive and Obama having extraordinary strategic insight, a knack for predicting the outcome of political battles, and reacting appropriately.
I'm not a huge fan of Paul Krugman, because he is such a partisan. For months his NY Times opinion column has called for more fiscal stimulus and expansionary monetary policies in order to get the economy moving. I agree with him on the need for those programs! However, in the current political climate there is no way Obama is going to get another stimulus bill. There is no way he is going to get the GOP to go along with all sorts of other reasonable proposals that would improve the economic situation. The only remotely stimulating policy that Obama can get in the short term is an extension of the Bush tax cuts, and furthermore there is no way the GOP will let the cuts for the top 1% get decoupled from the rest. And yet Krugman has blasted Obama's compromise on these cuts as a policy sell out.
Every time the North Koreans do something provocative, there will inevitably be a bunch of loud people who puff up their chests and say its time to take a stand and "do something" about the DPRK. The South isn't afraid to fight, but the consequences of that fight are too great. Even if the ROK could conquer the DPRK in a week, the DPRK could still level Seoul in hours and kill tens of thousands of people. Obama, like the South Koreans, knows that it is stupid and rash to escalate a situation if unprepared for the consequences of escalation. That is why the South Koreans don't "stand up" to the North - because if the North calls the bluff, the South looks even worse. Likewise, the left is furious that Obama isn't "standing up" to the GOP. But what if he did, and the GOP called, and taxes went up for everyone? Obama would then have to either back down, and look far worse, or accept the damage to the economy and the middle class. And as he put it in his address to the nation the other night, Obama is not willing to let the middle class get hurt as a consequence of political theater in Washington.
Four more related tidbits:
1. I read that Obama and Pelosi pushed Reid to bring up the issue of the Bush tax cuts before the 2010 election and Reid refused b/c two Dem senators didn't want to be on record voting for tax increases before the election. This revelation makes all of this self-righteous indignation coming from Democratic congressmen about the issue even more humorous, since they are the reason the issue was punted in the first place.
2. In the 2008 election, everyone projected their own values onto Obama with regards to his message of "change", and of course he was willing to let everyone do that for political reasons. For many on the left, that meant a shift to left-wing progressive politics. It never meant that for me. "Change" never meant going from partisan and divisive right-wing politics to partisan and divisive left-wing politics. It meant going away from partisan and divisive politics. This tax cut compromise is vindicating my interpretation of what Obama actually based his presidential campaign on.
3. Who wins politically here? Certainly, Barack Obama. The long game on this issue is in the Democrats' favor anyway because they can just vote down or filibuster tax extensions for the wealthy in 2012, when the economy is stronger and Obama isn't up for re-election. Meanwhile, the Republicans just compromised with this supposedly radical left wing socialist president and greatly legitimized him in the process. When this goes through, the American people are going to recognize that Republicans were willing to hurt the economy to protect the wealthy and the Democrats were willing to hurt the economy to grandstand about the middle class. Meanwhile, Obama made a politically challenging decision that will benefit the American people.
4. The issue on which I remain the most torn is whether Obama is actually a strategic thinker or an indecisive leader. Clearly he has been naive at some points, but that doesn't really strengthen or weaken either scenario. Regarding health care reform, geopolitical dealings with Iran, and this tax cut compromise he has looked like a great strategic planner who figured out how to get the most he could given nontrivial political constraints. On other issues, especially with dealings with Israel and the Palestinians, he has looked incompetent, unprepared, and weak. The jury is still out for me.
I'm not a huge fan of Paul Krugman, because he is such a partisan. For months his NY Times opinion column has called for more fiscal stimulus and expansionary monetary policies in order to get the economy moving. I agree with him on the need for those programs! However, in the current political climate there is no way Obama is going to get another stimulus bill. There is no way he is going to get the GOP to go along with all sorts of other reasonable proposals that would improve the economic situation. The only remotely stimulating policy that Obama can get in the short term is an extension of the Bush tax cuts, and furthermore there is no way the GOP will let the cuts for the top 1% get decoupled from the rest. And yet Krugman has blasted Obama's compromise on these cuts as a policy sell out.
Every time the North Koreans do something provocative, there will inevitably be a bunch of loud people who puff up their chests and say its time to take a stand and "do something" about the DPRK. The South isn't afraid to fight, but the consequences of that fight are too great. Even if the ROK could conquer the DPRK in a week, the DPRK could still level Seoul in hours and kill tens of thousands of people. Obama, like the South Koreans, knows that it is stupid and rash to escalate a situation if unprepared for the consequences of escalation. That is why the South Koreans don't "stand up" to the North - because if the North calls the bluff, the South looks even worse. Likewise, the left is furious that Obama isn't "standing up" to the GOP. But what if he did, and the GOP called, and taxes went up for everyone? Obama would then have to either back down, and look far worse, or accept the damage to the economy and the middle class. And as he put it in his address to the nation the other night, Obama is not willing to let the middle class get hurt as a consequence of political theater in Washington.
Four more related tidbits:
1. I read that Obama and Pelosi pushed Reid to bring up the issue of the Bush tax cuts before the 2010 election and Reid refused b/c two Dem senators didn't want to be on record voting for tax increases before the election. This revelation makes all of this self-righteous indignation coming from Democratic congressmen about the issue even more humorous, since they are the reason the issue was punted in the first place.
2. In the 2008 election, everyone projected their own values onto Obama with regards to his message of "change", and of course he was willing to let everyone do that for political reasons. For many on the left, that meant a shift to left-wing progressive politics. It never meant that for me. "Change" never meant going from partisan and divisive right-wing politics to partisan and divisive left-wing politics. It meant going away from partisan and divisive politics. This tax cut compromise is vindicating my interpretation of what Obama actually based his presidential campaign on.
3. Who wins politically here? Certainly, Barack Obama. The long game on this issue is in the Democrats' favor anyway because they can just vote down or filibuster tax extensions for the wealthy in 2012, when the economy is stronger and Obama isn't up for re-election. Meanwhile, the Republicans just compromised with this supposedly radical left wing socialist president and greatly legitimized him in the process. When this goes through, the American people are going to recognize that Republicans were willing to hurt the economy to protect the wealthy and the Democrats were willing to hurt the economy to grandstand about the middle class. Meanwhile, Obama made a politically challenging decision that will benefit the American people.
4. The issue on which I remain the most torn is whether Obama is actually a strategic thinker or an indecisive leader. Clearly he has been naive at some points, but that doesn't really strengthen or weaken either scenario. Regarding health care reform, geopolitical dealings with Iran, and this tax cut compromise he has looked like a great strategic planner who figured out how to get the most he could given nontrivial political constraints. On other issues, especially with dealings with Israel and the Palestinians, he has looked incompetent, unprepared, and weak. The jury is still out for me.
Subscribe to:
Posts (Atom)