Americans look to 2009 for a renewal of pride, peace, and prosperity. The world looks to soon-to-be President Barack Obama to restore American leadership in the regulation of the international financial system, in the effort to prevent environmental degradation and global climate change, and in the promotion of the rule of law and norms of decency everywhere. As we toast the the new year, we hope America can rise, phoenix-like, from the ashes of the Bush presidency.
In addition to our other New Year's Resolutions, let us all commit ourselves to do our part to make this happen. I pledge to be more engaged with politics and my community, to be more environmentally conscious, and to be better citizen of my country and our world. For the first time in many years, I believe that making an extra effort can actually make a difference. So I am looking forward to 2009 and I think it will be a very good year.
Wednesday, December 31, 2008
Happy New Year!
Tuesday, December 30, 2008
Blagojevich to Fill Senate Seat with Burris
So Blagojevich is set to appoint Roland Burris to the Senate to fill Obama's seat. This is expected in about 90 minutes. Apparently he is an African-American and was formerly attorney general for Illinois. This is a very crass political move to appoint an African-American in the hopes that the Senate won't dare refuse to seat him. He would be the only African-American in the Senate. We will see what the Senate does. The senate has said it would not seat Blagojevich's appointment. If other Dems in Illinois approve of him, this may put an end to that issue.
I think Blagojevich would have done far better to have announced that he would appoint whomever the legislature selected.
Monday, December 29, 2008
Sarah Palin's Grandson is Born; No Wise Men to be Seen
So, Bristol Palin's first child was born yesterday. The news reports are thick with information. The first name is Tripp (what an unfortunate name for a boy, he will be tripped a lot in school) and the last name is Johnston, after the father. Now my first thought was, oh, they got married then? Actually, no. Bristol and Levi are still not married. They still plan to get married, according to various articles I reviewed this afternoon.
I am surprised. I thought fundamentalist christians got all goofy about virginity before marriage and about legitimacy of children. You know, the whole shotgun marriage thing. Apparently none of that is part of the "family values" routine today. Nor is anyone concerned about divorce. The "family values" issues are down to banning abortions, preventing teenagers from getting contraception, and freaking out about gay people.
The amazing thing is that fundamentalists and conservative christians simply refuse to admit that they are actively participating in dramatic social changes about the meaning of family and marriage. Fifty years ago, the idea that we would praise a 17-year-old girl for becoming an unwed mother - rather than have an abortion or give the child up for adoption would be a shocker. The idea of waiting until after the child is born for a wedding (why, so she can fit into a nice dress?) would also have been unthinkable then. And nobody would have paraded young Levi and his pregnant Bristol around holding hands until they were married. Instead, they were being offered up as examples for youth today, presumably because they were not having an abortion. This is why the GOP's claims about family and tradition are going nowhere today.
Sunday, December 28, 2008
Where the Obama Administration Must Turn its Attention
There is yet another heartbreaking article in the paper today about Arab and African families smuggling very very young poor girls to America to work as their slaves. This crime is among the very worst crime that human beings can commit. It is a long process of inhumanity and exploitation that destroys these girls emotionally, spiritually, and physically. This kind of cruelty makes me far angrier than murder. The perpetrators - both husbands and wives - belong in prison for a very long time, and their possessions should be given to the slaves, who should also be given legal status. The Bush administration has turned a blind eye to this problem, even deporting these girls as illegal aliens back to their own countries once they are discovered, thus helping to victimize them further. Similar slavery has crept into America as sex slavery and in garment factories. We need action now. I am optimistic that the Obama administration will step up action domestically. This is part of what a Labor Department is supposed to do. It sometimes happens that otherwise well-meaning liberals say we should "understand" this "cultural practice." The same idiotic arguments are made about female genital mutilation.
These practices should not be hard to stamp out in the United States. More importantly, stopping these crimes should be a priority, far more important than the endless "war on drugs" that takes up so much of our law enforcement efforts with almost no effect.
Wednesday, December 24, 2008
Issues in Constitutional Interpretation and their Bearing on the California Constitution
In a blogger post, I made a very truncated and opaque reference to textualism and non-textual interpretations and it was requested that I expand a bit. Since it's useful in terms of this incoming administration too, here goes. This is a broad primer but could be helpful to those who are not used to seeing constitutional arguments in print.
The great chief Justice John Marshall who sat from 1801-1835 wrote famously in McCulloch v. Maryland (1819) "We must never forget that it is a constitution we are expounding." These words remind us that a constitution is somehow different from a statute, so the philosophy of interpretation should be different. This may cause more confusion than it solves. (In this same case, he wrote the even more famous quote, "the power to tax is the power to destroy.")
How one approaches constitutional interpretation depends a lot on what you think a constitution is supposed to be. I will miss some, but broad schools of thought are textualism, structuralism, originalism, the "living constitution," and others with less well known names. Judicial interpretation of the constitution is also constrained or to some extent must be negotiated within a set of legal maxims or "canons of interpretation" of longstanding authority, most with Latin names. For example, the "inclusio unius est exclusio alterius" principle, that means that by listing (including) certain items, one is impliedly excluding other non-listed items. This is why the 9th Amendment explicitly states that the listing of certain rights in the Bill of Rights shall not be construed, "to deny or disparage others held by the people." In other words, don't apply the inclusio unius principle to the bill of Rights. Conservative scholars rarely take heed of this interpretive maxim.
Broadly speaking, textualism is the belief that the text (sometimes the "plain meaning" of the text) should govern. Textualists take the constitution literally, as they see it. The theory is quite modern in some sense, based on the notion of positive law (law written by the legislature) not natural law (law supposedly preexisting the constitution). It holds that a legislature can only produce a text, and that text must itself produce meaning. Things such as legislative history are not helpful because they undermine the text, which is all we can look to. Textualists employ grammatical analysis often. One criticism of textualists is that they allow for interpretations that were never intended. Another criticism of textualism is that it is too limiting. It is more appropriate to statutes, not constitutions. An originalist interpretation of the 8th amendment prohibition against cruel and unusual punishment would insist that it must be both cruel and unusual to be forbidden. Cruel and common, or unusual but not cruel, would be permissible. A textualist would also note that because the constitution discusses "capital crimes" in other places, it is textually impermissible to include that capital punishment violates the 8th amendment.
Originalism is often confused with textualism, but is distinct. It argues that words must be given their original, intended meaning. So they rely on historical discussion of what was intended. Most non-textualists accept the value of "legislative intent," but few go so far as originalists. An originalist interpretation of the 8th amendment bar on cruel and unusual punishment asks what that was supposed to mean in the 18th century. So if it was considered cruel and unusual then, it would be barred, but later modern judgments of cruelty do not matter. The best medical care available in 1791 would be considered cruel to administer today; this would not matter to originalists.
Structuralists seek to gain meaning from the structure of the constitution. Structuralists believe that the constitution was intended to have three separate but co-equal branches of government. They interpret limitations of power in regards to this overall scheme. The "unitary executive" model (the idea that the president has inherent executive powers that are unchecked) flows from this idea. Other structuralist ideas would be to interpret the bill of Rights as a limitation on the preceding powers of government, rather than (as textualists might) an equal text to be balanced against the equally relevant original text. So a structuralist might see the First Amendment as a limitation on the power to grant copyrights, while a textualist would view the First Amendment as intended to be balanced with the copyright power. Structuralism views the 8th amendment bar on cruel and unusual punishment as a limitation on executive authority. Structuralism does not explain its reach.
The "living constitution" attributed to various sources, and associated often with Laurence Tribe, philosophically rejects the "dead hand of history" approach. The argument is that it is nonsensical to argue that the 8th amendment would mean something different today - if the same text were enacted today - than it does because the text was enacted 220 years ago. This view argues that the constitution can only be interpreted through modern eyes, because that is all we have. It argues that the constitution is foremost a political document balancing powers, rights, and duties, so is meant to be interpreted as best suits our present situation. For these people, the 8th amendment bar on cruel and unusual punishment is a limitation on that which we consider to be cruel and unusual. The criticism is that this is approach standardless and results-oriented.
I should add that there are two broad arguments made about law in general. One is that predictability in judicial interpretation is the foremost value. A person who cannot predict what the law will be is subject to tyranny. Better an ossified 18th century interpretation that we can predict than an unpredictable subjective 21st century interpretation. This is often called favoring "bright line" rules. The criticism is that this is just arbitrariness. The competing view is that we should not have bright line rules, but standards. A bright line rule is one that says "the speed limit is 55 mph." All speed rules are like that now. A standard is "speed must be reasonable." Until the 1970s, most speed rules were like that. Our laws mix standards and bright line rules all the time. Standards allow for evolution and interpretation, but eschew easy predictability.
These issues bear on proposition 8 in many ways. The text of prop 8 says that only a marriage between a man and a woman is valid. Thus, a plain textual interpretation means that any gay marriage, even if validly entered into beforehand, is now void. An originalist interpretation would be that it was clearly intended to re-establish the pre-2008 law banning gay marriage. However, the canons of interpretation state that a law shall not be retroactive unless it is clearly intended to be so. This argument can go either way. I think that prop 8 does not say it is meant to be retroactive, which it could have said.
A structuralist would say that that applying prop 8 to annul existing marriages is a violation of the separation of powers. Divorce and annulment are within the province of the judiciary, not the legislature. Also, it is a violation of due process for the same reason. A "living constitution" is what the court embraced in declaring gay marriage legal in the first place. It reasoned that we now stand at a place where it is impossible to see discrimination against gays as fair or just. Jerry Brown's argument is largely structuralist.
Tuesday, December 23, 2008
Evidence-Based Initiatives
The Obama administration will have more respected scientists in key positions than any previous administration. Steven Chu, Nobel laureate physicist and Director of the Lawrence Berkeley National Laboratory, will be the Secretary of Energy. John Holdren, physicist and former President of the AAAS, will be Director of the White House Office of Science & Technology Policy. Jane Lubchenco, marine biologist and another former AAAS President, will lead NOAA.
NASA might not be so lucky. While I have heard no word yet on any changes at NASA, I understand that Michael Griffin, the current Director of NASA, is said to be on rather bad terms with the Obama transition team. Apparently, Obama is not particularly keen on Bush's Mars initiative or human space exploration in general. (Understandably, that has to take a back seat to the economy and other concerns.) Nevertheless, Obama's strong words in support of science are wonderful to hear.
Whether it's the science to slow global warming, the technology to protect our troops and confront bioterror and weapons of mass destruction, the research to find life-saving cures, or the innovations to remake our industries and create twenty-first century jobs—today, more than ever before, science holds the key to our survival as a planet and our security and prosperity as a nation. It's time we once again put science at the top of our agenda and worked to restore America's place as the world leader in science and technology.
I am especially pleased that Obama (finally) put a physicist in charge of the Department of Energy. Since President Carter established the Department, Energy Secretaries have been lawyers, financiers, and businessmen. Chu will be the first Energy Secretary to view energy from both the scientific and commercial vantage points. At last we will have a Secretary who measures energy in Joules as well as kilowatt-hours.
Friday, December 19, 2008
Go, Jerry!
Shortly before the relevant legal deadline expired today, California Attorney General Jerry Brown filed a lengthy legal brief with the California Supreme Court asking the court to overturn Proposition 8 in its entirety. Brown contends that the right to marry is "inalienable" and further contends that such a right may not be eliminated by the initiative process. This move was a surprise in that Brown had previously said he would defend the new law despite his personal misgivings, which an Attorney General is usually expected to do.
RbR will be pleased to learn that--among other things--the brief argues explicitly that an amendment which eliminates basic rights is impermissible because the California constitution was designed to prevent such, "tyranny of the majority." (RbR raised this exact issue over a month ago.)
Rick Warren
Rick Warren is a Southern Baptist who runs the 10,000 member "Saddleback Church" in benighted Orange County, California. He is the author of pop-Christian books like "The purpose driven life." He is popular with many fundamentalists and evangelicals (these two words have distinct meanings, but are frequently conflated by the press, so I see no reason to explain the difference here). Barack Obama asked him to give the invocation at the inauguration. A long-time civil rights pastor will give the benediction later. I am not sure what the difference is between a benediction and an invocation in this context. Both are public prayers that seem, to me, to be somewhat out of place in a secular inauguration. But tradition matters a great deal in such things. As anyone knows who is not hiding under a rock, liberals and gay rights groups are up in arms over the choice.
I am glad they are giving Obama flak for it. Obama must not ever believe that the base of his party may be taken for granted. On the other hand, it's a 2 minute prayer he's offering Warren, not any substantive role in anything. The more gay rights groups complain, oddly, the more "successful" the gesture will be in making evangelicals who voted for Obama feel good. The fact that evangelicals will get symbolic gestures of unity, but not real policy input, is my takeaway from this.
I wish Barack Obama had, instead, invited a more progressive minister to give this invocation. Fundamentalist preachers like Rick Warren probably do more to keep people from the good news of the gospel than any other force save. Here is his advice on how to conclude a sermon (from "The Christian Post")":
• Use an argument. Anticipate the objections the audience might have and logically refute them.
• Use a warning. Warn them of the consequences of disobedience.
• Use indirect conviction. Arouse moral indignation and then turn it on them. A good example is the story of Nathan and David (2 Samuel 12).
• Use pleading. Express God’s love and concern for them and others.
• Use vision. Paint a picture of what is possible if they obey God. Help them to have faith.
• Use encouragement. Tell them they can do this with God’s power.
Here's what's wrong. Power and obedience. Calling the congregation the "audience." Pushing emotional levers in "the audience." Using God's love as some sort of rhetorical device. It's all some sort of public theater and salesmanship.
In most Christian traditions, the liturgy (meaning "public work or service") is a collective work of the congregants, not a show. They read, sing, and pray together as a community. In my tradition, the gospel is symbolically moved from the altar to the midst of the congregation for reading (many Protestants don't have altars in their churches, however, just pulpits). Then the pastor seeks to explicate the gospel reading. The sermon is not really the focus of worship. The real liturgical high point comes later, the closer communion in terms of bread and wine. The object of the sermon or the worship is not to elicit a commitment from the "audience" to obey, but to invite the congregation to a deeper contemplation of themselves and of God.
An invocation is meant generally to invite the audience (this is an audience) to contemplate the larger meaning of the events unfolding on the stage. I am afraid that Rick Warren and other fundamentalists may be singularly unsuited to this task. He will instead see how much proselytizing he can get away with.
Franken Takes the Lead
At 7:15 AM PST, Democratic challenger Al Franken passed incumbent Republican Senator Norm Coleman in the final stages of the "Great Minnesota Recount." At this point the main recount is complete and the state canvassing board is currently poring over each challenged ballot. They have about 350 ballots remaining, all of which were challenged by Coleman--which implies Franken is poised to gain more votes as those challenges are rejected. The board is expected to finish today.
Meanwhile the MN Supreme Court has ordered approximately 1,500 possibly improperly rejected absentee ballots to be reviewed by the counties--a victory for the Franken campaign--although since all parties must agree before a previously-rejected absentee ballot is opened and counted, few votes are likely to be added. Once that extra process is complete, a winner will be certified... Then the court challenges can begin in earnest.
[Update: an hour later, at 8:15 AM PST, Franken is ahead by +80.]
[Update #2: by the end of the day, Franken was ahead by +251 votes. The canvassing board resumes work on Monday.]
Thursday, December 18, 2008
The Final installment: Obama's Cabinet
Well, the nominations have been fast a furious. Obama wants to get people in place before Christmas, which makes sense. Government practically comes to a stand still over the holidays. So here is what we have as of today.
There are several other posts that Obama is filling as part of his transition. MSNBC has a really good run down. So check that out.
Why do I even bother?
I tend to check CNN.com a lot, but recently I've begun wondering why. Here's what they show right now:
What's the lead? That it's hard to tell your child (s)he has cancer? Wow, shocking! But there's more! Donald Trump is calling a lawbreaker a bad name! Obama was cool in college! Drew Peterson is getting married again! A deer keeps getting back on the ice! And not one, but two links to Simon Cowell lashing out at Paula Abdul!
What website should I be going to for the news? Any suggestions?
A Look Back at US Govt Party Control
This chart from wikipedia is a bit strange, but it captures all of the information.
It shows the obvious, that Democrats have had more time in control over the US Govt since 1939 than Republicans. But it fails to capture the "boll weevil" Democrats or the Southern Conservative Democrats who gave Republicans an effective majority in the House and Senate in the 1980s. It also shows how unusual Clinton's presidency was in modern history - a Democrat with a Republican Congress.
Wednesday, December 17, 2008
Unintended Consequences?
I just saw a story on CNN about veterans having trouble getting jobs when they leave the military. The vets who were being interviewed were saying things like "it used to be that employers went out of their way to hire vets but now they just want someone who will increase their productivity." I find it hard to believe that employers didn't want to increase productivity before. And this got me wondering why it is that vets don't increase productivity anymore. Here is my purely speculative answer - really intended to illicit a further discussion from our more militarily connected Citizens:
Tuesday, December 16, 2008
Iowa Power, Activate! Form of - a Secretary. Shape of - a Committee Chairman!
So, Tom Harkin (D-IA) will be the Chairman of the Senate Agriculture Committee. And Tom Vilsack, former Democratic Governor of Iowa, will be the new Secretary of Agriculture. It's going to be All Ethanol, All The Time, I think. Iowa farmers will be well rewarded for their support of the Democrats this year, that's for sure.
On another odd note, it seems that North Dakota, Massachusetts, and California have the distinction that both senators from those states will chair one of the 15 standing committees in the Senate. Seniority does funny things.
Hill Battles Begin - and the Filibuster is Discussed
So, Pelosi has made it plain to Rahm Emmanuel and Obama that she expects to speak for the Democrats in the House in their negotiations. She will do what she can to torpedo any attempt by Obama to forge his own House coalition. Expect similar words from Harry Reid, although the Senate is always harder to control.
We discussed earlier on this blog that reaching out to Republicans is almost irrelevant now, as they are all but irrelevant. The goal is just to reach out to a handful of 2 or 3 Senators. Or, as Nate Silver suggested yesterday (and I've been bitching about since George Mitchell screwed the pooch in 1993) bar the "gentleman's filibuster" and require a real filibuster. Beyond that, the whole issue will be negotiating within the Democratic caucus to find the right balance. It helps that there are several new Senators that owe their election to Obama, and four more who will owe their appointments to him. Pelosi wants to be the dealmaker, not someone who is sidelined by moderates in the Senate and the WH. We shall see how the new Congress governs soon enough.
I suspect that Silver's recent call is going to be amplified by others to really crack down on the filibuster (his political analysis is very cutting edge numerically, but otherwise conventional). The legitimacy of filibustering is at an all-time low with a huge Democratic majority in the Senate and a mandate for serious action in the midst of a sudden and dramatic recession. Also, the large Democratic majority and likely results in 2010 suggest that Democrats have less insittutional reason in the short run to protect the gentleman's filibuster.
For those who don't know, until about 1970, a filibuster had to be real (reading endlessly). Cloture (the right to end debate) did not originally exist. It was just a waiting game. Filibuster usually broke evnetually. Then around 1900, there was created a 2/3 vote to invoke cloture. In 1975, this was lowered to 60 votes, but the act of filibustering was made easier (to remove the unseemly spectacle). Debate could be put on hold while the Senate took up other business. So a filibuster could essentially remain in place while the Senate proceeded to other business. The result has been the unexpected and unanticipated creation of real supermajority requirement in the Senate.
Let me repeat that, the filibuster as we see it today was NOT part of Madison's plan, nor anyone else's. And for nearly 200 years, the basic rule was that a handful of senators could block a piece of legislation for a while at enormous cost of political capital, but the general principle was majority rule. Erosion of this principle has been a serious cause of failed government in Washington. It also seems to have encouraged the executive to "go it alone" as much as possible under Bush, because of the deadlocked Senate. The senate should, I believe, revert to earlier rules on filibuster that relegate it to a rare high-cost tactic. I was in favor of this, btw, even when the Dems were in the minority, although I confess that I was happy at that time with the results of a bad rule (blocked GOP legislation).
Saturday, December 13, 2008
Update: Obama's Cabinet, On the Full Moon
Here is an update. The pale green boxes are expected to announced in the next week. The dark green have been announced, with the exception of Tom Daschel. I forgot to change to color.
UPDATE
Tuesday, December 16
Ok, the Washington Post is reporting that Xavier Becerra may not be the nominee for Trade Rep after all. Apparently, Latino groups are unhappy and Becerra may opt to stay in the House. I left his name there, but it is now in question.
Also, Sen. Specter has said that he will hold up Eric Holder's (no pun intended) nomination hearings until Jan 15. After all of the antics that the Attorneys General have pulled over the last 8 years, and all of the financial corruption that has been demonstrated in the last weeks, they are delaying Holder's nomination to further investigate his role in a single presidential pardon of Mark Rich? Look, the guy did deals with Iran during the Hostage Crisis. That was bad. But Lewis Libby who had his 30 month prison sentences commuted, assisted in the outing of a CIA agent. So . . . game even. Game over.
Looks like the Republicans want to fight yesterday's wars. Tisk tisk. Such animosity toward the Clintons still exists . . .talk about beating a dead horse and holding a grudge!
Cars Costs and Why People Aren't "Buying American"
The Republicans who killed the Big Three bail out did so because they refused to vote for any interference in the market that would impose more constraints on management than labor. Their argument is that the main reason the Big Three are in trouble is because the unions have inflated labor costs to such an extent that the Big Three are getting beat by the foreign auto makers operating plants in the US (the Japanese companies like Honda in particular) who have non-union workforces and can under sell their American competition as a result.
Friday, December 12, 2008
Deadlock and Disaster
California is now projected to have a $42 Billion budget deficit over the next eighteen months. That is an enormous shortfall. The legislature is meeting in special session but has been unable to fill the hole. California is one of the few states that requires a 2/3 supermajority to pass a budget, but the parties have been unable to reach a compromise.
Although Democrats have strong majorities in both houses, they remain a handful of votes shy of the votes required to pass a budget by themselves. But the Democrats refuse to make crippling cuts in health care and education, while the Republicans refuse to raise taxes--and the two parties cannot borrow their way out of the problem this time because, in order to win the voters' approval to borrow their way out of the last fiscal crisis, they had to add a provision to the referendum that forbade a repeat performance.
The 2/3 supermajority requirement was intended to force compromise, but instead has created total deadlock in Sacramento. The effects are being felt in every county and city. So much is on the line, from police, to roads, to schools, to basic food, shelter, and health care for millions of people! And pretty soon, the only government employees able to draw a salary will be the state legislators themselves. (Naturally, the only agreement the two parties have reached so far is to reject legislation that would have docked their own salaries.) The legislature was so polarized this year that their original budget was the tardiest in history--and now even that herculean effort was for nothing. The system is so close to breaking you can feel it.
One might hope the voters could just "throw the bums out" but exquisite gerrymandering has led to a situation where nearly all seats in the Assembly and State Senate are safe. Worse still, since in most districts the primary election is the only one that matters, candidates must play to the bases of their parties, pushing them to the extremes rather than drawing them to the middle. (Fortunately,
Californians are trying a new redistricting system starting in 2010 which will at least lead to different problems instead of the usual.) And as if all that were not enough, strict term limits have ensured that legislators have little experience, little opportunity to make friends across the aisle, and little strength with which to buck their party's power structure.
Things are so bad that I would call for a State Constitutional Convention, except that would require a 2/3 vote of the legislature--and if they could muster a 2/3 vote, they could pass a budget. When both sides of the State legislature hold their breath until they pass out, is there any recourse except remedial Federal action? Is there even such a thing? What can we do if the legislature simply refuses to pass a budget?
John Cole Wins the Internet
Here's John Cole's suggestion for how to get Senate Republicans on board for bailing out the auto industry:
What If Instead of GM, We Started Calling Them Terri Schiavo Motorworks?That's all I have to say.
Thursday, December 11, 2008
What do you mean, auto companies in bankruptcy by the end of the year?
The press is reporting that Detroit auto companies may not survive until the end of the year. I don't really understand. It's not a person sick with a disease. A company has bills to pay but can't pay them? It just doesn't pay. Someone tries to collect? They say no. Any efforts against a company require judicial process. And that ain't fast. So this impending crisis is nonsense. Bankruptcy may happen, but it never has to happen tomorrow. All GM or Chrysler have to do is not file for bankruptcy through the first week of January. A new congress takes office on January 3, then the votes will certainly be there to pass this bill as is.
What is horrifying is that the reason for the failure is the insistence by the GOP senators that huge salary cuts take place within two years. Huge salary cuts for management? Cuts for the massively overpaid people who screwed up? I don't think most people realize how much these people at the top earn, and how many hundreds and thousands of families could be employed if these salaries were reduced to normal ranges. No, say the Republicans - just huge salary cuts for the employees! And the very next moment these same people are saying that we should not be micromanaging the auto industry or nationalizing it. So the logic seems to be that we shouldn't interfere with business decisions except their business decision to make a deal with their union.
This shows you just how very anti-employee the Republicans really are. They really do want to turn this country into a place where a handful of very rich people (them) work for millions, while the rest of the public works for minimum wage. I can't wait until January 3rd.
Wednesday, December 10, 2008
More Political News
Hi Everyone,
There are a couple of political stories of note that are getting overwhelmed by the Blagojevich stuff. First, Democrat Mary Jo Kilroy has won the Ohio 15th District after a prolonged counting process in which the Republicans were pushing for the suppression of as many votes as possible. This is a watershed event. This district includes the Northwestern Suburbs of Columbus. The biggest of these, Upper Arlington used to be known as a place where politics ranged "from far right to utter darkness." The rest of the district is rural and exurban Ohio with all the predictable lower income, white, Christian right voters. For this district to go Democratic is a very bad sign for the Ohio GOP. This means that Columbus is going blue and that big blue spot in the middle of the state is spreading. It also means that Republicans are being pushed into their strongholds in the rural counties on the Indiana border (aka "the I-75 corridor") and the Appalachian counties along the Ohio river. Given the demographic trends in Ohio, that's not enough of the state to ensure victory in state wide elections.
Second, Ken Coleman may defeat Al Franken when all the recounts are over but it seems that he could win only to do the perp walk. It seems that the FBI is investigating whether Coleman was funneling bribes through his wife's salary at an insurance company where she worked. The thing is, this is one of the main attacks that Franken made against Coleman in a particularly nasty campaign. Republicans of course accused Franken of make it all up. Coleman even sued Franken for defamation of character in response to another attack ad that Franken ran. Apparently, the FBI thinks at least one of Franken's charges against Coleman is worth taking seriously.
Tuesday, December 09, 2008
Rod Blago-to-jail-ovich
Can you believe the accusations leveled against Rod Blagojevich? Trying to basically sell the US Senate seat? Trying to get concessions from the Tribune? I mean, is he even from Chicago? Kudos to Mr. Fitzgerald for doing this even though Blagojevich probably is (or was...) a friend/patron of Obama. I hope US Attorney Fitzgerald gets some major promotion in the Justice Dept for this and for Scooter Libby.
In the past few years we've seen corruption and scandal from: Murkowski (AK), Spitzer (NY)(prostitute), Blagojevich (IL)(corruption), McGreevey (NJ)(gay sex scandal), Ryan (IL)(another sex scandal), Romer (CO)(another sex scandal). Corruption and scandal in statehouses, esp among Dems, is a problem. I'm sure I've missed some. If I had to try to find a common thread, and there may not be one, it would be that most of these affected states have statehouses in small towns that are not commercially important tot he state. Romer in CO is an exception. I wonder if that breeds corruption.
The "New" Defense Strategy
Secretary of Defense Robert Gates has published an article which appears in the Jan/Feb edition of Foreign Affairs. The article is worth reading for what it says and what it does not. Here is my analysis. Note: All quotes are from the article. Let's start with the first paragraph:The defining principle of the Pentagon's new National Defense Strategy is balance. The United States cannot expect to eliminate national security risks through higher defense budgets, to do everything and buy everything. The Department of Defense must set priorities and consider inescapable tradeoffs and opportunity costs.
This bold beginning actually says next to nothing. "Balance," which Gates defines here as the ability to fight conflicts of various shapes and sizes, has been part of our military strategy for years. (The most recent term for this was, "Full Spectrum Operations.") The Defense Department has never deluded itself that it should, or even could, "do everything and buy everything": They have always set priorities. The real question is what those priorities should be. Remember that Rumsfeld was not infamous for playing Santa Claus, but for canceling prized weapons systems programs and re-prioritizing the entire acquisition programme to match his view of warfare. Finally of course, if you only demand consideration of those "tradeoffs and opportunity costs" that were "inescapable" anyway, you haven't done anything.The United States' ability to deal with future threats will depend on its performance in current conflicts. To be blunt, to fail -- or to be seen to fail -- in either Iraq or Afghanistan would be a disastrous blow to U.S. credibility, both among friends and allies and among potential adversaries.
Gosh, well we sure had better hope Gates is wrong about this, because although the Republican establishment continues to live in denial, the truth is we have already failed -- or already have been seen to have failed -- in both Iraq and Afghanistan. Rather than focusing myopically on these regions, or even on this current sort of conflict, we should be re-focusing our efforts on the rest of the globe. It is supposed to be a global war on terror, right?[W]e must not be so preoccupied with preparing for future conventional and strategic conflicts that we neglect to provide all the capabilities necessary to fight and win conflicts such as those the United States is in today. Support for conventional modernization programs is deeply embedded in the Defense Department's budget, in its bureaucracy, in the defense industry, and in Congress. My fundamental concern is that there is not commensurate institutional support -- including in the Pentagon -- for the capabilities needed to win today's wars and some of their likely successors.
This is where Gates has it backward. He is making the same mistake as his predecessors: desperately trying to overhaul the entire bureaucracy to fight "today's wars." What has been sorely lacking is an honest, global assessment of unconventional threats that are unlike today's wars, or yesterday's wars. Had such an assessment been done under Bush I, or Clinton, then Gates we would not have been ill-prepared under Bush II. Gates thinks he is being forward-thinking by trying to prepare for a "prolonged, worldwide irregular campaign," but that is just his catch-all term for future unconventional conflicts, all of which he seems to suppose will be similar to those of today. [E]ven with a better-funded State Department and U.S. Agency for International Development, future military commanders will not be able to rid themselves of the tasks of maintaining security and stability. To truly achieve victory as Clausewitz defined it -- to attain a political objective -- the United States needs a military whose ability to kick down the door is matched by its ability to clean up the mess and even rebuild the house afterward.
Again, I disagree. To use language conservatives may grasp, cleaning up and rebuilding are not "core competencies" of the military. The military should focus on providing military security, not political or economic stability. The notion that soldiers can do everything better than civilians is dangerous and wrong, as we have seen over nearly six long years in Iraq.Why was it necessary to go outside the normal bureaucratic process to develop technologies to counter improvised explosive devices, to build MRAPs, and to quickly expand the United States' ISR capability? In short, why was it necessary to bypass existing institutions and procedures to get the capabilities needed to protect U.S. troops and fight ongoing wars?
At last we are getting somewhere. Gates is mostly right here... But hopefully he understands that the solution is to improve the bureaucracy, not to eliminate it. Making the Defense Department dance to the whims of the current Secretary of Defense was Rumsfeld's cardinal sin. Gates should not institutionalize that dictatorial prerogative just because he -- like all Secretaries before him -- truly believes his particular priorities make a special case. That's a sure way to lose all sense of "balance."We should look askance at idealistic, triumphalist, or ethnocentric notions of future conflict that aspire to transcend the immutable principles and ugly realities of war, that imagine it is possible to cow, shock, or awe an enemy into submission, instead of tracking enemies down hilltop by hilltop, house by house, block by bloody block.
I applaud the initial idea that we must never forget that real war is "ugly." But when you pick apart what Gates is really saying, you find the same tired agenda: Gates thinks we should disregard all other military experts' views of future warfare concepts in favor of the counterinsurgency strategies now currently in vogue (thanks to Petraeus). Again, Gates claims to favor "balance" while in truth skewing our polices toward fighting conflicts like those in Iraq.
Gates makes the classic mistake of planning to fight the last war. This may be because Gates fails to grasp that, all ideology aside, with our new President taking office soon, the misadventure in Iraq is now essentially over. (May meaningful troop withdrawals begin soon!) Worse still, Gates fails to understand that Afghanistan cannot be fought with the same counterinsurgency strategies employed recently in Iraq. Finally, we need to start thinking again about other places where dangers mayarise, like South America, Southeast Asia, Africa, and even Russia. We missed Al-Qaeda because we were looking after old threats, not looking for new ones. We cannot afford to be caught off guard again.
Monday, December 08, 2008
Cao-abunga!
On Saturday, political neophyte Republican Anh "Joseph" Cao stunned everyone by defeating longtime Democratic incumbent Rep. William Jefferson for his seat in Congress. Although Jefferson had been indicted on bribery charges (recall $50,000 found in his freezer) nevertheless he had been widely expected to win re-election in his highly Democratic district in Louisiana. Cao's narrow victory is a triumph for democratic values (with a little "d") and also happens to remove an embarrassment to our Democratic values (with a big "D").
Cao will also now become the first Vietnamese-American to serve in Congress. Moreover, the Republicans appear to have held onto the other seat contested in Louisiana over the weekend, despite massive Democratic efforts to wrest it away. And we all remember that last year, Republican Piyush "Bobby" Jindal was the surprise winner in the Louisiana Governor's race, incidentally also making him the first-ever Indian-American state Governor.
Of course, both upsets were assisted by miserably low turnout, but that is also a testament to the disgust with which Louisianans have come to view their government. The Democratic Party which used to rule Louisiana evidently has begun falling apart--or has become so corrupt it simply cannot continue--while the Republican Party has wisely been working to build a new image for itself. Cao and Jindal are young, urban, and (of course) not white. The old, rural racists that used to form the core of the Republican party in Louisiana appear to have been put out to pasture, or at least to have slipped into the shadows.
House Minority Leader Boehner called Cao "the future" of the Republican Party. I would say rather that Cao and Jindal represent one possible future for the Republican Party. Sarah Palin and Mike Huckabee represent another. Cao's victory also shows once again that, as LTG likes to remind us, "All politics is local."
A Whole New Day for Employees in America
Today, word comes of a mass layoff in Chicago. Apparently, Bank of America was involved in a process that laid off 300 people on three days' notice from a factory, in violation of federal and state law requiring greater notice or severance pay. A local union is staging a sit-in at the factor, a "peaceful occupation." President-elect Obama voiced support for these workers yesterday. Governor Blagojevich did so today, and announced that Illinois would stop doing business with B of A for a time. It doesn't hurt that this is all happening right before Christmas. For the first time in as long as I can remember, working people have allies in government. Can you imagine what Bush or McCain would do? Call out the National Guard, perhaps?
The minor labor action is also a foretaste of the public anger that will come if huge bailouts are granted to keep corporations afloat while tens of thousands of regular people (who actually need the money) are hurting really badly. People are willing, just barely, to see taxpayer money go to powerful corporations that are "too big to fail" because they fear for their jobs. But we want to see some small fraction of that money go to keeping regular employees at their jobs - at least for a little longer while there are no other jobs to be had.
Sunday, December 07, 2008
Eric Shinseki - VA Secretary
This is so awesome. Remember that Eric Shinseki was the general who correctly told Congress that it would take some 300,000 troops to win the war in Iraq and occupy the country, and for that he was fired by Bush and Rummy. Elevating him to a cabinet position is a wonderful slap in the face to the outgoing administration, and a terrific signal to the military that Obama will not forget those who spoke up and spoke truthfully about the war.
Thanks, Dr. Obama: The Right Prescription for America
Today, the Obama transition team unveiled a massive public works program as a national economic stimulus. For the first time really since the Great Depression, we will invest heavily in rebuilding our infrastructure. This was the base of spending in the 1930s that we relied on for sixty years thereafter. Eisenhower followed with building the interstates in the 1950s. In the 1960s, there was a further explosion of public expenditures on universities, libraries, schools, and parks that built on earlier efforts. Unfortunately, the Republican efforts in the 1980s and 1990s to scale back government meant cannibalizing capital expenditure budgets and allowing infrastructure to crumble. Now our schools are dilapidated, our universities are increasingly inadequate, our roads are crumbling, our bridges are (in Minnesota) literally falling down. Saving a few bucks for rich taxpayers in the 1980s will cost us hundreds of billions now.
This will set our country on the right footing for the 21st century. From beautiful Hoover Dam, to the TVA, to the Golden Gate Bridge, and to sidewalks all around US streets bearing the proud stamp of the WPA, the large infrastructure effort of the 1930s employed millions of people. It provided enough economic support to the working class to begin to re-establish demand.
It also made terrific things. Roosevelt brought electricity to rural areas for the first time, since private power companies would not pay to string wire long distances at great expense for relatively few customers. Dams, roads, bridges, and university buildings were constructed everywhere. And what's more, the construction of that period was done with great civic pride, with a sense of beauty. So many of the trails and roads in national parks were built in this time period.
This national effort during the Great Depression made it possible for democracy and capitalism to weather the political winds of fascism and socialism that took down so much of the rest of the world. I am very excited by this, and I have been talking about this kind of effort for years. This is terrific for the Midwest in particular, where state budgets have been decimated and a large skilled blue-collar workforce needs employment. We really, really need to do this. For the first time in a very long time, we need a government that can Think Big and Act Big. At last we're going to get it.
Friday, December 05, 2008
Teetering on the Brink
Today, we learn that more than half a million Americans lost their jobs in November alone. According to the NYTimes, the GDP is likely now to decline this quarter on an annualized basis of 4%. We also hear now that the number of households behind on their mortgages (or in foreclosure) is 10%, up from 4-6% last quarter. These are getting to be depression-sized numbers. There is no official definition of a "depression" but various economics folks on the web suggest it is a term meant to compare with the Great Depression, and should not be used until the GDP drops by 10% or more. As some wag said, a recession is when your neighbor is out of work, but a depression is when you are out of work. We may be headed that way if nothing is done.
Meanwhile, like old James Buchanan, George Bush is just watching the union burn, counting down the days until he exits (for those who don't get the reference: President James Buchanan was still in office when South Carolina seceded from the Union on December 18, 1860, in response to the election of Abraham Lincoln. By the time Lincoln took office on March 4, 1861, the whole Deep South had left the Union. Buchanan did nothing to save the union during these months of lame duckery).
So here we stand, teetering on the brink of serious global depression. What do I mean by "teetering on the brink?" Well, fear and anxiety are rising everywhere, and business activity is grinding to a halt, but the psychology of depression has not yet arrived. The public and business largely still believe that Barack Obama and the new Congress will do whatever it takes to avoid a depression, and will succeed in doing so. So most people and economists are still predicting and expecting a year or so of belt-tightening followed by an expansion in 2010 or 2011. This can be a self-fulfilling prophecy. If we all act like the economy will recover, it may. If we act like it won't, stop spending, pull all money out of investments, and hunker down for a storm, we will bring on the storm.
To use an analogy, the definition of heat is the speed of particles in motion. In a sense, heat is motion. In the same sense, somewhat counterintuitively, motion is heat. Bear with me. The economy heats up when we all start "moving" - spending, engaging in economic activity. It cools down when we slow down. Microwave radiation heats up food not the way a stove does (by conduction or radiation) but by agitating the particles inside food so that they move faster. Moving faster, they heat up. The economy will heat up or cool down if we engage in economic activity or withdraw from it. And we will behave (as a group) in rational ways in response to our expectations about the future. So we have a chance, Obama has a chance, to capitalize on those expectations, pour money on the fire, and let it start burning again.
Thursday, December 04, 2008
Turmoil in Canada
The Canadian conservatives just won a very narrow election, slightly improving their position from a few years ago but nonetheless being forced into running a minority coalition government. Stephen Harper last week proposed a set of responses to the financial crisis that involved cutbacks - including cuts to public financing of campaigns - but nothing much in the way of economic stimulus. As a result, the Liberals, New Democrats, and Bloc Quebecois have decided to form a new coalition government to oust Harper and the conservatives (the largest single party in the parliament) and establish a new prime minister without a new election to rule for another 18 months, at least. It is apparently unprecedented in Canadian politics for this to happen without an election intervening. To avoid a no-confidence motion that would have brought down the government, Harper got approval from the Governor General to suspend parliament for a couple of months.
This is one of those "wow" moments. Suspend parliament? Replace the Prime Minister without election? BOTH sides are claiming there is an attempted coup d'etat by the other.
The Governor General is the acting head of state in place of the Queen, and is technically appointed by Queen Elizabeth II and is her representative and serves at her pleasure -- although in practice she is appointed by the Canadian govt and approved by the Queen and apparently by custom serves approximately five years. The current occupant of that post is a black woman named Michaëlle Jean.
It is interesting to think about how this sort of parliamentary system contrasts with the American system of fixed times for elections with its planned long interregnum between election and taking office (see other posts on this blog). There are clearly pluses and minuses to both systems.
Wednesday, December 03, 2008
The Great Minnesota Recount Continues...
The Minnesota Secretary of State (and Star Tribune) reports figures assuming all challenges will be upheld (i.e., no challenged ballots will count). The Franken campaign reports figures assuming no challenges will be upheld (i.e., all decisions by precinct judges during the recount will stand). Here are the statistics as of 16:30 PST:
All Challenges Valid: Coleman +273
No Challenges Valid: Franken +22
Number of Challenges: 6,092
Percentage complete: >93% (last update was 12/2/2008 8:00pm)
One good thing: everything is being done out in the open, and standards are uniform and clear. This may be the best-managed recount in US history.
Anglican Communion Update
Four dioceses (of about 80) and dozen or so parishes, for maybe a total of 100,000 souls (of a total membership beween 2 and 2.5 million) are formally leaving the Episcopal Church over what we could just call the gay thing. These few dissenters are going to form their own "Anglican" church and may ask for its recognition from other Anglican churches. Most other churches in the Anglican communion will probably not do so for institutional reasons, although some will do so. Recognizing this move would be a license for further splits elsewhere.
But before the National Review gets carried away by this "bold conservative" move, let's take a step back. This is not a schism or a "reformation" as some are calling it. It's just a few people walking out the door. The only question left is the disposition of church property. The position of the Episcopal church is that members can leave the church, but they can't take the buildings with them. In the end, although it may take time, this principle will likely be upheld.
Also, this isn't just about the so-called gay agenda. Two of these dioceses refsuse to ordain women also. It's sort of fun that these four aren't a happy marriage. The Ft. Worth diocese with its Anglo-Catholic bent won't recognize the women ordained by the Pittsburgh diocese with its Evangelical bent. This is not a recipe for a happy new church, but probably a swift disintegration.
I'm sorry it has to come to this, because it's easier to teach to those within a group than outside of it, but it will actually free up the Episcopal church to some extent. With these people absent, the Episcopal general convention in February 2008 will probably go the final mile to embrace gay clergy and parishioners. No need to try to compromise when the other partner has left the building. This is way overdue.
Nationalize GM
The current management of GM has run the company into the ground, and now they say they will fail in the next few weeks. Ford and Chrysler are much better off. A bridge loan will only prolong the agony. What we need is different. The Federal government should buy GM (cheap right now, I imagine) and install new management, firing current management with just a standard employee severance package, no more.
This will ensure better management and fair treatment of labor and retirees. Nothing else will do that. Bankruptcy rules are too biased in favor of preserving existing management to do the job properly. Also, they encourage canceling of pensions and union contracts to keep the company alive. This is not useful. If GM recovers, great - we can sell it off and get our money back. If not, we can make sure the employees get the best deal they can out of it.
The main argument against nationalizing corporations is the notion that the free market management is more efficient. This is plainly not the case in GM - their management has been consistently failing for years. We can do better.
Tuesday, December 02, 2008
A little more about the Sociology of the Financial Crisis
After being pilloried for my prior post on this subject, I was pleasantly suprised to read that Michael Lewis,whom I was pointing to, is actually writing very similar things right now, just as I rather predicted he would. Of course, he gets paid for his writing so does a better job. And I am mindful of Samuel Johnson's comment that "no man but a blockhead ever wrote except for money." The point to be made is that people, character, and culture mattered a great deal in what happened on Wall Street. Reductionism - blaming it all on Fannie Mae and Freddie Mac (McCain) or on deregulation (Obama) - is dangerous. I hope Geithner and Volcker know not just what they are dealing with, but who.
Limits of the Meritocratic Experiment
The United States is not much of a meritocracy... except when compared with almost every other society on earth. Throughout our history, men (usually men) of wealth have been able to advance socially and politically, and barriers to gaining that wealth have been lower, at least in terms of family connections, the right school, the right pedigree, or plain corruption and cronyism. Nonetheless, it is fair to say that the halls of power in Washington were, by the early-to-mid-twentieth century, largely restricted to those with wealth and connections. The right university (usually Harvard and Yale) mattered a lot, but those too were restricted by legacies and such. Jews, Catholics, Latinos, Asians, blacks, and women were formally or informally excluded for much or all of this period. The 1950s and 1950s saw the first real openings, which gradually began to have an impact in the 1970s and 1980s.
The impact has been stunning. If you read biographies of people who were in positions of power at universities, business, and government in the 1950s, you see what privilege meant. You will see professors who finance their own research, people who took years abroad traveling, and so forth. Getting a job on Wall Street was about who your father knew as much as anything else. Social classes were much more rigid. The contrast even between a successful resume of 1970 and 2008 is dramatic.
This is with I think we see in the Obama appointees. Contrast Obama's academic career with his predecessor GWBush. No gentleman's C's at Yale for Obama. His whole team is like this. Their careers took off in the somewhat cutthroat world of the 1980s and the go-go '90s. We will see if this new somewhat-meritocracy does well. I hope so. Certainly, it is drawing from a broader talent pool than before.
On the other hand, there is something unsettling about these new pathways to success. You have to work your way up now, but there is too little time to do that. So in many places I perceive increased value of patronage. It is no accident that various Obama appointees are described as "so-and-so's protege." For example, people dispute whether Geithner, at 47, is Summers' or Rubin's protege. Not to pick on Geithner, but I'll wager that his swift career advancement depended as much on the approval of a couple of powerful people whom he had to cultivate as on his talent. The wager I am making is that there were equally-talented people in his cohort at Treasury who did not advance because they didn't become someone's golden boy. That is probably true of most of the new Obama appointees. It is largely true in the military as well. This contrasts with the histories of past administrations, where one can see that some people chosen because of their family connections outside the administration rather than personal connections within it.
It is also true that the corridors to power remain highly restricted to the ivy league schools. If Harvard and Yale grads are removed from Obama's appointments, few are left. The excessive purchase of those schools on power has actually increased over time. What has changed is the admission criteria to those have become more democratic, more meritocratic. The reason that Harvard and Yale remain so over-selected is the problem of patronage and proteges. A very talented graduate of Berkeley or Michigan doesn't know professor X who can get them a job with his friend Y so she can become a protege of Z. Even in academia (where harvesting talent should more obviously take precedence over cultivating proteges) the right recommendation is becoming ever more important to career advancement, not less. That is because so little else differentiates the mass of recent graduates now.
There is a warning here for Obama. The charge of 'elitism' comes from this ivy league filter. Nixon and Reagan resisted the "east coast establishment," as they called it, and drew more heavily from rural and western areas. GWBush, who is a full-fledged member of the east coast establishment, nonetheless empowered those outside it by rewarding people who came up through a parallel set of "christian" universities, law schools, and bible colleges. This was a very unfortunate reaction, because there is very little talent to draw on there. The resulting incompetence is killing us in Iraq, literally. Yet if ordinary people get this sense that they are excluded from the fortunate few, this will have such political implications.
Elitism is a real danger where meritocracy becomes attenuated after the beginning of one's career. I think that within institutions we need to find a way to seek out merit beyond personal networks. Meritocracy has not truly been achieved if, in some cases, one has only exchanged the rule of success from "who your father knows" to "who you know." As a country, we should work to find mechanisms to identify talent outside of personal patronage networks. Affirmative action, as initially conceived, was meant to do this in a crude way, to allow non-white-males to be evaluated (at least at the first instance) for actual talent. That is the beginning, not the end, of where we need to go as a society.
Ironically, Barack Obama is, himself, not of this world. His biography shows that he was admitted to privileged institutions, but shows very little reliance on knowing the right people. I wonder how keenly aware he is of this distinction.
Monday, December 01, 2008
The Blog Layout Thread
Six weeks ago, I changed the look of the blog somewhat to celebrate the 2008 elections. We could leave the blog as is or revert to the previous layout... Or perhaps we should try something new. Rather than (again) just coming up with the design myself, I thought I should ask this blog's contributors to suggest backgrounds, fonts, formats, and color schemes. I am open to almost anything. Well, anything but "Daily Kos Orange."
Obama's Cabinet as of December 1, 2008
No big surprises. He has named Gen. James Jones as his National Security Adviser. That is not a cabinet post, but worth mentioning. Susan Rice will serve as UN Ambassador, former Assistant Secretary of State under Albright.
So here is how it looks as of Today. Still a long way to go to fill all of these posts!
Interregnum
It is sensible to have a pause between election and inauguration, to permit an orderly transition and to certify election results. For example, it took 34 days to resolve the dispute over Florida's electoral votes in 2000. But 77 days? (As Pombat has asked, is it really necessary to give the outgoing Administration enough time to smash all the dishes?)
While President-Elect Barack Obama takes pains to remind us that we only have, "one President at a time," it is evident that pretty much everyone--from the financial markets to foreign governments--thinks that person is Obama. As a result, Obama is now announcing policies and holding press conferences nearly every day, because the nation is in crisis and desperately needs leadership.
Allowing time to plan for the holidays and possible recounts means that we cannot move the transition too early. But we could at least move Inauguration Day up to Jan. 3rd, to coincide with the first meeting of the new Congress. At least we would not be treading water all January.
Wednesday, November 26, 2008
Did the Dinosaurs Fail?
The dinosaurs ruled the Earth far longer than any that have come after them, including the birds (now believed to be their descendants). They are no longer here, but they lived very well during their time and by almost any measure they were a great success.
Citigroup, Lehman Brothers, Merrill Lynch, AIG, and the others may not survive the mortgage crisis. They may go extinct or be forced to evolve into smaller and lighter firms. But they made incredible amounts of money for their investors and by almost any measure they were a great success.
A better analogy might be the saber-toothed tiger. Saber-toothed tigers evolved and re-evolved many times: Each time they gradually became dominant, their teeth getting longer and longer, until they finally undid themselves when their teeth became too long to sustain.
Just because something comes to an end does not mean it was unsuccessful, especially insofar as its original investors are concerned. And runaway adaptations are not necessarily aberrations, but can be normal patterns in an evolutionary process. Just something to think about.
Deep Thought
When Arte Moreno bought the "Los Angeles" Angels, the first thing he did was to lower the cost of beer at Angels Stadium. This move immediately won him the hearts of skeptical fans, and for a year or so after that, he could do no wrong in their eyes.
In a similar vein, I think Barack Obama's first move as President should be to remove the idiotic "no liquids" rule on commercial airline travel. Think that would convince some McCain voters that he's a pretty good guy?
Happy Thanksgiving everyone! If you have travel plans, I hope it all goes well.
How Los Angeles Copes with an Economic Downturn
So, I read this in today's New York Times online. While I regret supporting the cultural imperialism of NYC, I can't help it because the LA Times has been getting worse by the day. I think we're on our fourth new format in a year, this with more ads and more color. Pretty soon the text of the Sunday version will be indistinguishable from the ad inserts.
Apparently, neighboring Santa Monica is banning exercise on the green fairways that run down the middle of many of its streets except for jogging. I'm not sure what to make of it. It is honestly hard to imagine that it is such a priority that anyone would divert public resources, much less that it would attract attention from a newspaper on the other edge of the continent. At least we can conclude that suffering from the financial crisis remains subdued north of Montana Blvd.
Tuesday, November 25, 2008
I'm Super (thanks for asking)
So, word has come that Robert Gates has agreed to continue on as Defense secretary. Well, that bites. No real change in the military, then. How long will he stay on? Don't ask, don't tell.
Sociology of a Financial Crisis
Michael Lewis, now perhaps famous for “Moneyball,” wrote an excellent book about his time as a young trader on Wall Street in the 1980s called “Liar’s Poker.” I strongly recommend it to anyone who is interested in this current financial crisis. Everything about the book is out of date or not specifically relevant except its depiction of the culture in the financial sector. That corporate culture is very important, however, because it is the result of choices about how to structure financial firms, and reinforces those choices.
All of Lewis’s books, whether about football, baseball, or what have you, are really about what are euphemistically termed “market failures.” The argument being made through these book-long parables is really more subtle, that many markets behave the way they do because the participants behave in ways that you would not expect if you were approaching the economic problems from a blank slate. It is very surprising to find out that this is true even in what would appear to be the most sophisticated market, the market for financial instruments. It is worth recalling at this juncture that until the 1970s, seats at the NYSE were routinely inherited. The vast majority of its participants, even today, went to a handful of schools. Compared to the amount of money flowing through their doors, the number of firms with market power is vanishingly small. With apologies to Peter O’Toole: The market is a human thing; it does what we do, for our reasons.
Any time some official or pundit proclaims on television or in print that “nobody could have seen this [crisis] coming,” I grind my teeth a little. That’s not true. Even excluding those who professionally gainsay conventional wisdom for academic or journalistic reasons, or those who regularly predict doom, many people genuinely understood that the financial boom connected to the real estate market could not last forever. Some even predicted its downfall. One can do archaeological expeditions through academic journals or magazines and find these people. This does not mean that those individuals were peculiarly prescient or intelligent, although some may have been. The point is that in the financial markets, these people were regarded as cranks or naifs. I had a similar conversation with a well-known real estate attorney in 2006 about the boom, and I hazarded the opinion that the price of the median house could not continue to dramatically exceed the purchasing power of the median home-buyer. I saw the condescending smile. In the real world, I was told, property values climb almost every year, and this was reality. That phrase “in the real world” is crucial. People on the ground had a visceral experience of the boom , and total disdain for outside views and “ivory tower” concepts.
Why were these prognosticators derided and ignored? That is the crucial question.
I don’t think it was necessarily “groupthink,” the concept that everyone just bought into the same ideas. I think there was an evolutionary process by which those who hazarded other ideas were corrected or flushed out. The risks of mortgage-backed securities and other extremely abstract derivative instruments were not ignored by everyone. Each firm had professional risk managers, some of whom were likely smart enough to wonder why mortgage-backed securities were supposed to be an exception to every financial rule. Many realized the problems inherent in buying and selling instruments that nobody understood how to value. But anyone who spoke up too loudly would be dismissed.
The culture of Wall Street proved deadly. Have any of you ever spent much time with a certain kind of arrogant East Coast college graduate? I never went to school anywhere that anyone ever boasted about their grades until I met New Yorkers at my law school. I never met more irritating people to play poker with, because they wanted to win and humiliate other people, not have fun with the group. At my firm, we are in the process of moving to year-round casual dress. The turmoil involved In allowing adults to dress themselves the way they want is striking. And there is resistance. Apparently one recent interviewee from NYU law school said, “I didn’t go to school for seven years so I could wear jeans.” The incredible set of class and cultural concepts that inform this comment is mind-boggling. These same people at firm retreats think that “business casual” means everything except the tie. The status-consciousness is shocking. Everything screams “I wanna be a big shot. “ When I read “Liar’s Poker,” I kept thinking, “I know these people!” As a Californian, I am culturally allergic to uniform of a super-dark woolen suit and a bright pink/purple tie in a windsor knot. The picture I am trying to draw is not meant to be cartoonish. It’s not just “assholes.”
These attitudes in college are reinforced by the Wall Street job market these kids are training for. Here’s the Wall Street concept in a nutshell. In a bull market, the slow get trampled; the brave run with the bulls. This is the crucial insight. In each firm, individual traders – often recruited right out of school with no long-term experience and no sense of perspective – were rewarded for success only. And the rewards were six-figure bonuses with which to buy apartments in Manhattan that exceed the size of a shoebox. The way to get the big numbers in your account was to do what everyone else was doing: take big risks. Since those risks were just on paper, they were fine. In the real world, you see, values kept going up. And the trading desks were littered with the discarded nameplates of those who lost their nerve and sold too early. This risk-taking was encouraged with a hyper-masculinized atmosphere that Lewis describes so well. Those failed were flushed out of the system; nothing was learned from them or about them except that they were regarded as losers.
To draw another analogy, there is a scam in sports betting where a firm sends mailers with predictions to people and asks them to pay money for more predictions after they are proven right. Of course, the firm just sends out opposite predictions to equal numbers of people. Week after week, a small subset will, by chance, happen to have received the proper predictions. These people then buy in to the supposed wisdom of the scammers. Success in the derivatives market had this element of randomness to it, but random success was rewarded with the title of genius and big shot. And they ate it up.
This culture was pervasive within these firms, I believe. Management at the very top faced the same dilemmas. If their firm did not pay out the six-figure bonuses or show the double and triple-digit gains that other firms did, the management would be replaced by boards who knew that, in the real world, you should not pay academic naysayers any mind. Those who are there now are those who took the biggest gambles. This may be the best reason to demand that these executives be dismissed.
Note that the hyper-masculinized atmosphere supposedly rewards courage, but all it really rewarded was conformity. The courageous thing would have been to say “no.” Those who did were no doubt called pussies or worse. They certainly didn’t stay on the trading floor. Slow and steady didn’t win the race; it got fired.
How can a market develop these unhealthy tendencies? The teaching tool of the market is failure. There is no other. In a long bull market, there were more successes than failures. As a friend of mine who is a corporate lawyer in New York likes to say, “It doesn’t take brains to make money in a bull market. “ But these traders thought they were geniuses, and had the beamers to show it. Hubris does not begin to describe it.
Alan Greenspan confessed that he didn’t understand how the market could lack self-correcting mechanisms that would correctly value the risk. He put too much faith in the abstraction of the market, no doubt being very dismissive of anyone who suggested that these firms had developed internal incentives that were self-destructive.
Another stream that fed this culture was the fact that financial sector employees, in particular the leaders of these firms, lacked a decent liberal education that might have given them pause. Business schools and finance programs tend to produce students who are shrewd, good with numbers, and very clever at constructing and understanding finance, but not people with great perspective on life, the universe, and everything. There is something inherently suspect in the intellectual curiosity and breadth of any person who wants to devote every waking moment (that is usually what it takes) to succeed in the financial world. For this reason, I think, professors in these areas are usually much better educated with much better perspective, but they don’t get to pass it on. And, of course, they are ignored as cranks or naifs if they question the prevailing wisdom of go-go-go!
Here’s the conversation I imagine about this financial boom. In an episode of The Simpsons, Homer becomes the head of the Stonecutters (read: Masons) and lives like a god with everyone obedient to him. Lisa tries to warn him about this:
Lisa: Remember Dad, all glory is fleeting.
Homer: So?
Lisa: Beware the Ides of March.
Homer: No.
Lisa: Dad I know you think you're happy now, but it's not gonna last forever!
Homer: Everything lasts forever.
I do not think it is likely that Wall Street culture will change much. After all, Barack Obama’s appointees in the financial world, like 47-year old Timothy Geithner, look just like this same Wall street crowd. They are all Yale and Harvard grads, all immersed in the same culture. They have all been socialized to believing, if nothing else, that Wall Street is so incredibly important (this is why Citicorp gets bailed out but GM doesn’t – these people think the “real America” is on Wall Street. That is the inverse of Sarah Palin’s rural snobbery. Only Barack Obama himself seems to realize that the health of Wall Street firms is not intrinsically important, but only instrumental to building a strong middle class. He alone did not participate in the Big City Culture. His first night in NYC, he reports, he slept on the street. Imagine that.
What needs to happen in New York City is a dramatic change in lifestyles for traders. The end of easy money has to mean that people who work on trading floors earn more normal salaries. Long term health and stability has to replace easy money as the way to go. I doubt this will happen short of a very serious depression, the way the 1930s finally killed the spirit of the 1920s and kept it under wraps until the 1980s. That gives me pause about what may have to happen here.
More on the Tyranny of the Majority In California
Recently, I posted an argument that Prop 8 was a perfect example of what the men who wrote the US constitution were trying to avoid. I argued that direct democracy was inherently prone to the tyranny of the majority. Law Talking Guy defended direct democracy in two ways (as I understood him). First he pointed to several policy changes achieved through direct democracy that he presumed would be seen as universally good things but which had been held up by grid-lock in the legislature. To this I responded that there are of course examples of referenda doing things that everyone on this blog would agree are beneficial but that does not mean they are not examples of tyranny of the majority - it only means that in those cases, we were on the winning side.
Second, he contested my assertion that the men who wrote the US constitution saw direct democracy as inherently flawed. He said "I don't think the Federalists were overly opposed to public participation of this sort as ipso facto evil." However, there is considerable evidence that they did think direct democracy was - if not "ipso facto evil" at least a very bad choice of institutions that should be avoided.
Here is a quotation from Federalist 10.
From this view of the subject it may be concluded that a pure democracy, by which I mean a society consisting of a small number of citizens, who assemble and administer the government in person, can admit of no cure for the mischiefs of faction. A common passion or interest will, in almost every case, be felt by a majority of the whole; a communication and concert result from the form of government itself; and there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths.
Here is a link to a wikipedia site that itself refers to a number of quotations by prominent American political thinkers at the time of the Constitution's establishment who saw direct democracy as deeply flawed. Some of my favorites are:
Pure democracy cannot subsist long nor be carried far into the departments of state - it is very subject to caprice and the madness of popular rage" - John Witherspoon
"That a pure democracy if it were practicable would be the most perfect government. Experience has proved that no position is more false than this. The ancient democracies in which the people themselves deliberated never possessed one good feature of government. Their very character was tyranny; their figure deformity." - Alexander Hamilton.
Direct democracy is not bad because it produces a single bad result - like Prop 8. It's bad because it fails to protect the rights of minorities against the fluctuating whims of the majority. Sometimes we will find ourselves on the winning side of those whims and we think direct democracy is great. But when we are on the losing side we realize how obnoxious it is to make laws in this way. If I only complain when direct democracy hurts my side, I'm a hypocrite. If I think the problem with direct democracy is that sometimes the wrong majority wins, I'm missing the point.
Monday, November 24, 2008
Too Small to Fail: How My Baby Girl Explains the Current Financial Crisis
My little girl (8 months old) has developed a behavior that I like to call “baby deathwish.” If she sees something she wants, she lunges for it. It doesn’t matter where that object of desire is, or what lies between her and her goal. In the morning she sits facing me lying against my bent knees, and invariably spies my alarm clock four feet away. She tries to reach it, but her tiny arms don’t go four feet. So she hurls herself towards it, heedless of the precipitous drop off the side of the bed and the hard wooden floor. Restraining her can be surprisingly difficult. Similarly, she will try to launch herself off the couch and will someday succeed in toppling her high chair with the imbalance, again utterly heedless of the long drop to the wooden floor. So far, she has not worked out the principle that crying a lot may get me to bring the desired item towards her.
Now, we could teach baby deathwish not to do this. All we have to do is let her fall on her head. If we allow her to fall, she will likely learn to stop launching herself off precipices. If we pursue this laissez-floor attitude, she will stop this behavior… one way or another. For reasons that I hope do not need explaining, we do not employ this strategy. Let’s just say she’s “too small to fail.”
My baby does not just provide an example of risk-taking without consequences. She also resembles the investment banker in other ways. We are amazed at almost any sign of real sentience, and praise her for almost everything she does well, even making poop in her diaper. We then clean up her diaper, and her, without complaint.
Our greatest current desire as parents is to see her start crawling, then running, making all of these behaviors even more dangerous.
Then there are the sublime messes which are also totally predictable, but we do not prevent. This past week, she has discovered that it is fun to blow bubbles through her solid food while eating in order to form a Jackson-Pollock-like spray pattern. At the end of the feeding, the area around her rembles a binomial distribution of splattered puree – one concentration in front of where I am sitting, another in front of whatever other thing caught her attention the most. There is as little subtlety in investing in a bull market. So long as the input (puree du anything) is sufficiently endless, there will be waste. Once again, we are unwilling to teach our baby the value of food by limiting the available amount to that which she can use.
So that’s it. Our financial sector has had all the self-control of an infant, and the government has coddled it in exactly the same manner. Well, I think the diaper genie is finally full. Target is out of pampers , and there’s no more Boudreaux’s Buttpaste in the tube. It’s time to let the financial sector go head-bonk. The problem is a credit crisis, and the government would do better to set up its own bank than finance these Wall Street bankers who refuse to lend money. It’s time for adults to step in here.
No Soup For You
Over the weekend, the US Government committed taxpayers to another rescue package for Citigroup. The Feds will guarantee over three hundred billion dollars of bad investments and give Citigroup another $20 billion in cash, on top of the $25 billion they already got. (Note that $25 billion the same amount that Congress and the Treasury denied the Big Three automobile companies last week...)
For this second bailout, there are at least a few strings attached this time. According to Citigroup, the corporation has agreed to pay no more than $0.01 per share for common stock for the next three years. (Bloomberg says the last quarterly dividend was $0.16 per share.) Furthermore, the LA Times says the US Government will have the right to veto all future executive pay packages. Not detailed in the article, however, was the all-important question of exactly who has that authority.
Unfortunately it appears that no real punishment has been meted out to any current executives--no pay cuts, no firings, no need to leave the corner office. And lest you think those measures would be petty or unfair, remember that Citigroup already announced last week that it would cut 52,000 jobs (a sixth of its workforce!) and as recently as four days ago, Citigroup CEO Vikram Pandit told investors not to worry about Citigroup's plummeting share price because everything was just fine.
Apparently, Citigroup is "too big to fail" while the Big Three are not. But Citigroup now has about 250,000 employees (after the firings go through) whereas the Big Three employ 355,000 directly and many more indirectly. Can you really argue that GM or Ford has been managed any worse than Citigroup? How can the government continue to find billions for Wall Street and nothing for Detroit?
I am not saying we should bail out the automakers. But my tolerance for Wall Street bailouts is now officially gone. How can it be fair that the top executives at these firms--the ones who screwed up--get to keep their jobs and big salaries while the rest of their employees suffer? I am so sick of getting the same smug lecture that we "have to" rescue these Wall Street firms from their own mistakes or the world will end. If the situation is that dire, why doesn't our government use it to leverage big concessions from these firms? Where is the pain?
And come to think of it... Where is the please and the thank you? Everyone knows these firms have no mercy on those who owe money to them... Just look at all the foreclosure signs out there... So now that they owe us bigtime, when do we get to watch the eating of crow and humble pie? At least the CEOs of the Big Three swallowed their pride and went to Washington hat-in-hand to endure hours of angry Congressional hearings (even if they did fly down on private jets). For $700 billion, can we at least hear a little begging?
Saturday, November 22, 2008
President Obama's "Last Cabinet"
I was inspired by USWest's comments on the previous post to construct the portrait she suggested. Thanks to Leonardo da Vinci, Paint Shop Pro, and a bout of insomnia. (Click to enlarge.)
Of course this begs the question, who will be Judas?
Friday, November 21, 2008
Obama's Cabinet as of Today, 10 am
I like visuals. With all of these appointments to Obama's cabinet, I think it is a good idea to actually see how things are shaping up. It will also give us an idea of how quickly he is selecting people. So I made this, such as it is.
(Click to expand)
Pale yellow indicates no selection as of this time.
Dark green indicates a selection has been made and the name of the nominee is placed underneath.
The light green is questionable. We aren't yet sure of the status of HRC.
Where I placed the posts around the table is random.
Update: 2:16 PM: He's named one more, finalized HRC, and is rumored to be considering Richardson for Commerce.
(Click to expand)
