New Digs

Same blog, New Address.

The US is Looking Better Everyday

Crossposted to We Are Cyborgs:

Remember the days when it was fashionable for US citizens to look to our neighbors to the north and wish our country was a bit more like theirs? The days when the Rove-Bush conservatism looked unending while Canada added gay marriage rights to its already enviable socialized health care system? Feels like just yesterday doesn’t it?

These days not only does the US have an Obama white house to boast about while liberal Canadians lament a thus far thwarted attempt to oust conservative Prime Minister Stephen Harper, but recently Canadian policy makers came through with the sort of technologically backwards, consumer-unfriendly decision we typically fear from US lawmakers. In a battle over Internet Service Providers’ right to throttle bandwidth, a practice typically used to limit users’ ability to utilize P2P file sharing protocols like bittorrent, the Canadian Radio-television and Telecommunications Commission refused to prohibit the practice. This is a big deal, in essence they are saying that an ISP can dictate how you use the internet connection you pay for.

Recently in the United States Comcast was confronted for throttling bittorrent traffic and the FCC ruled that Comcast was in the wrong and must cease throttling torrent traffic. It’s nice to see our country headed in the right direction but it would be even nicer to see both countries doing so.

twoflags

David Sirota Thinks I’m Right Wing/Ignorant

So I wasn’t planning on posting this weekend, but this is just too good to pass up. I got called out by Arch- Blogospheric Defender of Progressive Values in the United States David Sirota on the front page of Open Left. Mr. Sirota is the author of The Uprising and Hostile Takeover and a syndicated column and is currently leading a campaign to pressure the Obama administration to maintain the “Buy American” provisions in the economic stimulus package.  I responded to a post on the Buy American campaign to suggest the idea of economic patriotism was “silly.”

This Is Not Me

Memo To David Sirota: This Is Not Me

In response, Mr. Sirota suggests I am offering “a pure form of the right-wing/ignorant argument against Buy America.” He suggests I lack “a basic, grade-school level understanding of economics.” He kindly offered me a free-course in Economics 101. (Although in all honesty I preferred the course I was given by Professor Clausing.) I am impressed that Mr. Sirota learned economics in grade-school, but I think he may have forgotten a little something since then. As I see it, there are three big problems with Buy American provisions in the stimulus, which I outline in my comments on OpenLeft:

1. Inefficienies and distortions in the market resulting from political choices – If American firms can’t compete for government projects and then expand capacity to fill government orders, they may not maintain competitiveness in the time after the order is filled. Although I am not of a critic of all industrial policy, there are good reasons for the government not to get too involved with setting up restrictions on where spending goes. Foreign companies will lobby to be exempted by the rules and gain a competitive advantage and there will be tons of loopholes and wrangling over what constitutes an “American Made” product.

2. Loss of efficiency in the spending towards desired outcomes – Spending money on American products only makes sense if the multiplier effect is greater than the efficiency gains of buying foreign products. Some spending is likely to create jobs, while others would be better used for other kinds of investments (as with the staplers vs. teachers comparison).

3. Justification for autarkic spending by other nations – If France, China and Germany follow the logic of keeping all stimulus domestic we would all be worse off than if we had all done the opposite. The US has an important leadership roll to play in the global financial crisis and it will make it more difficult for us to argue that other nations should puruse stimulus plans – especially when the US is seen as the cause of the crisis – than if our plan is also open. There is no reason for all nations to resort to closing their boarders in response to the crisis, which would only exacerbate the situation.

As hypothetical readers of this blog may remember, I have called Mr. Sirota out as a hack in the past, but I am surprised to see him actually respond. It is precisely this tendency to group all who disagree with him as Right Wing automatons mindlessly spouting establishment propaganda that so irritates me, so I suppose it shouldn’t come as such a shock. As a matter of blogger ethics, I think it’s unfair to quote just the first part of someone’s comment who isn’t able to respond.

UPDATE: I liked this post from a fellow wordpress blogger titled, “The Sheer Idiocy of David Sirota.”

Questions on Amy Ruiz

So it seems the questions about the improper hiring of Amy Ruiz constitute the most serious allegations Sam Adams is facing.

I don’t think this is something that Amy Ruiz needs to feel guilty about. It may have been her understanding that she was hired for her competence and it is even possible she is a very capable public servant. The question here is whether she was improperly hired, in spite of other better qualified candidates, because she was investigating Adams’ affair with Breedlove.

These interviews with Portland Mercury do much to set the record straight, but I don’t think answer that key question. Of course, the Mercury is engaged in a battle for their credibilty (which I think is unnecessary). The onus is on the mayor’s administration to demonstrate that Amy Ruiz wasn’t hired to stymie her ongoing investigation. At best, the mayor should apologize for what is an uncomfortably tone deaf understanding of how the hire would look in public.

Honestly, I think Amy Ruiz is as much a victim in this as Bob Ball. If the mayor asked you to take a gig as a policy planning analyst, and you thought you could be an asset to the city, wouldn’t you take the gig? The appearence of impropriety is the fault of the employer, not the employee.

Yes We Can…Continue the Bush Administration’s Horrible Financial Policies

Another (possible) tale on the perils of post-partisanship. It seems there is bad news from the new treasury secretary on the emerging policy on dealing with the financial crisis:

Mr. Geithner declined to provide any specific details or to address rising calls for the creation of a government institution to buy or guarantee the declining assets at several of the nation’s largest banks. He discouraged speculation that the plan would include the nationalization of some banks.

“We have a financial system that is run by private shareholders, managed by private institutions, and we’d like to do our best to preserve that system,” he said.

But bank stocks surged on hopes the government was moving toward creating a “bad bank” to purge toxic assets from balance sheets that are rapidly deteriorating as the economy worsens. On Wednesday, the Federal Reserve cautioned that the economy was still spiraling downward on many fronts.

Paul Krugman refers to the policy as Hankie Pankie II. The plan to create a bad bank doesn’t deal with the possibility of zombie banks, or moral hazard. It leaves the people who got us into this situation in charge.

Arthur Jensen Has Had His Say

Arthur Jensen Has Had His Say

The plan has led some responsible, well informed commentators to suggest Tim Geithner still thinks he’s working in the private sector:

I’ve been closely following the various (new & improved!) bailout plans for the big banks — from the modified TARP to the recapitalizations to the “bad bank” plan.

I’ve noticed something I find a bit disturbing about our new Treasury Secretary: He has not yet fully come to terms with his new job, role — and boss. Granted, he’s been in the job for only two days. But given the extraordinary circumstances the financial sector and the economy is in, it is important for the Treasury Secretary to get up to speed as soon as possible. [Snip]

No! Defending these idiots was your old gig. In the new job, you no longer work for the cretins responsible for bringing down the global economy. Please stop rationalizing their behavior, and preserving the status quo!

Yesterday’s 13% surge in bank stocks is a clue as to what an obscene taxpayer giveaway this “bad bank” plan is — its free money for the firms that caused the problems, many of whom still have the same incompetent  management in place that caused the problem. Purging toxic assets from bank balance sheets, without punishing the management, shareholders and creditors of these institutions for their horrific judgment will only encourage more of the same in the future. Its moral hazard writ large.

Perhaps the emerging, elite oriented, hesitant position that seems to be gathering steam as administration policy is the result of a lack of Team of Rivals on economic policy.

he deep ideological divide that is emerging in the economics profession between those who worried about manic neoliberalism and Bob Rubin-style turbo-charged tilts towards an increasing unregulated finance industry is not hitting the Obama administration – because it is only hiring one side of that divide.

As best I can tell Obama is stacking his team with those who George Soros disdainfully calls “market fundamentalists.”

I sincerely hope that Obama’s famed lack of partisanship is something other than technocratic centrism. The current crisis requires strong leadership, not an outsourcing of the policy to the same group of policy makers that created the conditions for the original problem. We need more Robert Reich, Paul Krugman and Joe Stiglitz and less Larry Summers, Hank Paulsen, and Tim Geithner.

Why No Republicans in the House Voted for the Stimulus

The Democrats’ fiscal stimulus package failed to garner even a single vote from the Republicans, even after President Obama met with the entire Republican caucus and invited Congressional leadership over for a post-vote cocktail party. I appreciate the genteel, almost quaint notion that negotiation between parties could be facilitated by an honest, face to face encounter, but I hope no one at the White House anticipated a different result.

Media coverage of politics, like media of coverage of sports, tends to try to place every event in the context of a personality driven narrative. Of course, this make for more interesting journalism, but if we really wanted to get a better understanding of sports or politics, we would spend less time focusing on personalities and more time focusing on the basics of how the game is played. In sports, this means that journalists tend to over-estimate the importance of easily measured, readily observed skills (PPG in basketball, W-L in baseball) that may belie their actual value. In politics, this means journalists tend to focus on the soap opera of alliances and confrontations, instead of the structural incentives facing political actors. (Incidently, it is also why baseball stat geeks and political officiandos both love Nate Silver.)

In this case, the Republicans had no incentive to vote for the fiscal stimulus package and no amount of bipartisan happy talk – or even genuine policy negotiation – was going to change their minds. For politicians, its not about meetings and cocktail parties – it’s always about their next election. This doesn’t make the Republicans evil; in fact the opposite, they are acting exactly as we would expect them to act given their situation. Their personality doesn’t even really come into it. In this case, Republicans had every incentive to vote against the bill and very few incentives to vote for the bill, regardless of it’s content or how deeply Obama gazed into their eyes. Their eyes are on 2010, when they all must face re-election.

In all likelihood, the stimulus package will have had some positive effect on the economy by next fall, but no matter how well it works it is unlikely the economy will be doing well. The question voters will be asking is, “do we give the democrats credit for improving the economy, or do we fault the democrats for not improving the economy enough?” The Republicans, I think wisely, believed that voters will choose the latter, and penalize the Democrats for having spent all this money without getting the economy back on track.

Obama wasn’t after Republican votes in the house just to stoke his bipartisan credentials. The move for Republican support was mostly about getting political cover. The stimulus is like the bailout – no matter how well designed it is, it is a necessary evil and there will be details within it that are simply bad publicity (ie, taxpayer money will go to a ridiculous sounding project). The party line vote means that no matter what happens in the next two years, if the economy is still doing poorly in fall of 2008 (as almost everyone thinks that it will, no matter what the government does) the Republicans can run against the failed Democrat [sic] Tax and Spend approach to fixing our economy. They will not own the outcome of the economy in any way, shape, or form.

The most salient political fact is that the adminstration didn’t need the Republicans and the Republicans didn’t need the administration. The fact of the matter is that the success or failure of the policy will ultimately determine it’s political impact. As a government without the need to negotiate with the minority, it simply doesn’t matter what the opposition might say – it only matters if you can produce results.

Surely, the administration are hoping to make the Republicans in the House look extreme and stubborn, and contrast Obama’s gregariousness and popularity with Mitch McConnell’s…. neither of those things. This is undoubtedly a savvy move, at least in the short term. However, political commentators and strategists – particularly those in the media – should be more clear in recognizing that power drives politics, not personalities.

Of Limited Political Utility

Of Limited Political Utility

Whether or not the package as currently constructed is well designed is a subject for another post (say, later today). As for the politics of the bailout – it’s messaging content and the efficiency of the use of political capital – I think it depends on what Obama’s strategy is going forward. If he pivots off the vote to push an aggressive agenda, while framing the Republicans as the party of thoughtless opposition, he is headed in the right direction. If he doubles down on the attempt to gain bipartisan consensus, he is headed for serious trouble.

Partisanship is an inevitable outcome of the American political system – it is a feature, not a bug. Certainly we can disagree without be disagreeable, but no one should kid themselves about the prospect for a new era of good feelings between parties. Bipartisanship is the Batting Average of politics – the only people who think it’s important are the people who don’t understand the way the game works.

UPDATE: Atrios said it best:

If I were advising the Republicans I would’ve told them to vote against the stimulus package. I would tell them to make the point clearly that if they were in charge, the bill would be a different bill. They’re a competing political party and they need to, you know, highlight the fact that their vision for America is actually different. I appreciate that members of both parties don’t always toe the line completely, but on a bill as big as this it makes perfect sense for it to play out as it did.

Of course the flip side is that Dems should’ve pushed the best plan that could pass the Senate instead of pushing some pointless fantasy about bipartisanship.

Carter Praises Obama on Mitchell Pick

This is sure to get the AIPAC crowd’s panties in a twist.

“I have total confidence in him,” Carter said of Mitchell.

“What about Hillary Clinton, the secretary of state?” Blitzer asked.

“I think she’ll comply with the policies established by the president. As will George Mitchell,” Carter replied.

Carter also said he “spent a long time with President Obama” the evening before the five living presidents met at the White House January 7.

As Rosalynn Carter and David Axelrod took notes, they talked policy, he said.

“I would say he was most interested in the Middle East because I had been to that region twice in the previous year and had met with some people that others usually don’t meet with as you probably know, Carter said.

Friend’s of Israel should realize that there is more to promoting Israel’s interests than toeing the Israeli line. We have the ability to push the Israeli government to make political choices that they have agreed need to be taken, but their political system doesn’t have the ability to allow them to make. Putting pressure on Israel and the Palestinians simultaneously changes the incentives on both sides, and is an absolutely necessary precondition to peace in the region.

I should say that my belief that Obama would take a different line on Israel than the Clinton’s would have was an important part of my support for him in the primaries and I think everything he has done thus far has vindicated that belief. It’s good to see Jimmy Carter agrees with me.

People interested in the future of the conflict should check out Prospects for Peace, a fantastic blog on the situation that always has thoughtful, pragmatic takes.

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