Wednesday, October 29, 2008
Tuesday, October 28, 2008
To save you some effort, you can just forward along this:
The centerpiece of the McCain/Palin attacks on Obama these days is that he is a “socialist” who will raise taxes. Although he will lower taxes for 95% of Americans (unfortunately, in my view, since we are likely to face a trillion dollar federal budget deficit next year), it is true that he is proposing smaller deficits than McCain by raising some taxes on the wealthiest Americans. However, even those tax increases would still have no one paying higher federal taxes than they did under Clinton – and those were pretty good years for the economy.
Take the capital gains tax, which seems to be a Republican obsession (understandably, since it is relatively easy to convert most investment income into capital gains). A bit of history: In the Tax Reform Act of 1986, St. Reagan RAISED the capital gains tax to 28% where it stood for ten years until it was lowered to 20% in 1997. As you might recall, the decade from 1987 to 1997 was generally a good one for the economy – at least better than the subsequent decade. The capital gains tax was further lowered to 15% in 2003. Obama proposes to raise the capital gains tax back up to 20% for those making more than $250,000 – where it stood from 1997 to 2003 and significantly LOWER than the rate St. Reagan left us with. (Here is a Wall Street Journal op-ed by Obama economic advisors Jason Furman and Austan Goolsbee outlining Obama’s tax plans.)
Although Obama doesn’t propose to raise taxes fully to the levels that prevailed under Clinton, nonetheless we are being told they would destroy the economy and lead to “socialism.” OK, let’s take the extreme case. Let’s assume the tax rates that prevailed under Clinton. How did the economy do under Clinton? Let’s look at capital gains.
Forget the tax rates, did you even HAVE any capital gains?
The Dow Jones Industrial Average went up from 3253 to 10,587 under Clinton (325%). As of yesterday’s close, it has gone DOWN to 8175 under Bush (-22.8%).
The S&P 500 went up from 447 to 1342 under Clinton (300%). It has gone DOWN to 848 under Bush (-36.8%).
The NASDAQ went up from 700 to 2770 under Clinton (395%). It has gone DOWN to 1505 under Bush (-46.7%)
Let’s take the broadest measure of the market, the S&P 500: Would you rather pay a 20% tax on a gain of 300% or enjoy the benefit of a lower 15% tax rate on a … LOSS of 46%?
Staying with the economy, who would you most trust for advice on which candidate would be best for the economy? Of anyone in the country. My pick is easy: Warren Buffett. He is unquestionably the world’s greatest investor. His integrity and objectivity are beyond question. He has already committed to giving his vast wealth to the Gates Foundation (without even his name on some venerable institution as his legacy). He lives relatively simply in Omaha. He financial counsel is conservative, common-sense and practical. And has for years been warning against exactly the dangers that have brought our financial system to its knees.
Warren Buffett is supporting Obama. And Obama regularly seeks his counsel.
Who else might have credibility? How about the guy who broke the back of double-digit inflation during the Reagan years? That would be Paul Volcker, Fed chief from 1979 to 1987.
From the Wall Street Journal:
Mr. Volcker has emerged as a top economic adviser to Sen. Barack Obama during a presidential campaign dominated by a global financial crisis. Their growing bond is paying dividends for each man.
Mr. Volcker delivers gravitas and credibility to Sen. Obama, people in the Obama camp say, as well as ideas and approaches to the economic crisis. "Volcker whispering in Obama's ear will make even Republicans comfortable, because he's a hero of the right and a supporter of a strong dollar," says John Tamny, a supply-side economist and Republican.
… Mr. Volcker is just as well known for taming the runaway inflation of that era. His stock has risen in recent months as his gruff warnings about the risks of deregulating the financial sector have come to look prescient. His successor's reputation, meanwhile, has come under a cloud. Alan Greenspan is under criticism that the low interest rates and deregulatory ideology of his tenure contributed to today's crisis.
With nearly every day presenting a fresh financial emergency, Sen. Obama has persuaded Mr. Volcker, who travels the globe for economic meetings and occasionally disappears on fly-fishing trips, to be at the ready; Mr. Volcker now keeps a cellphone on him at all times. And though he still doesn't own a computer (his assistant prints out emails for him), he's gotten used to Sen. Obama's rapid-fire messages sent from a BlackBerry device.
The Obama-Volcker relationship continues to evolve, campaign advisers say. At the start, Sen. Obama sought advice from Mr. Volcker and other outside voices through his economic adviser, Austan Goolsbee, a 39-year-old University of Chicago professor. But starting with the demise of Bear Stearns Cos. in March and continuing today, Sen. Obama speaks directly and often with Mr. Volcker about the intricacies of the financial crisis and possible solutions. They've become "collaborators," as one aide puts it.
For example, when the U.S. Treasury put forth a plan to set up a $700 billion rescue fund to buy up toxic assets, Sen. Obama quickly backed it on the advice of Mr. Volcker. Like other prominent economists, Mr. Volcker also advocated early on for the recapitalization of banks. On this advice, Sen. Obama proposed direct equity infusions in banks in his frequent conference calls with Treasury Secretary Henry Paulson. The idea, initially rejected by Mr. Paulson, was finally proposed last week by the administration, in an effort to get banks lending again to businesses and each other.
Sen. Obama's team of economic advisers includes two former Treasury secretaries, Robert Rubin and Lawrence Summers, and in some decisions, Mr. Volcker doesn't reign supreme. The candidate's latest proposal, for example, a $60 billion stimulus package, was initially fought by the former Fed chief on the grounds that Americans were already overspending. Moreover, he is unlikely to take a long-term role in any Obama administration.
… But for now, and going into the campaign's final weeks, aides say Sen. Obama is increasingly relying on Mr. Volcker. His staff now routinely reviews policy proposals and speeches with Mr. Volcker. Conference calls and face-to-face meetings of the Obama economic team are often reorganized to accommodate his schedule. When the team discusses the financial crisis, "The most important question to Obama: What does Paul Volcker think?" says Jason Furman, the campaign's economic-policy director.
The two men have developed an ease with each other, say aides, even as their styles appear to differ: Sen. Obama, who tends to use the Socratic method from his law-school training, examines all points of view and debates them. With a more formal and direct demeanor, Mr. Volcker likes to go straight to solutions.
In last week's final presidential debate, after Republican John McCain raised questions about his rival's ties, Sen. Obama said, "Let me tell you who I associate with. On economic policy, I associate with Warren Buffett and former Fed Chairman Paul Volcker...who have shaped my ideas and who will be surrounding me in the White House."
Some Democrats have speculated that, if elected, Sen. Obama could name Mr. Volcker to a post, possibly even as Treasury secretary, for a limited time. Banking and Wall Street executives are pushing the two campaigns to name a new secretary shortly after the election to reassure markets during the transition. The Obama campaign wouldn't comment on possible appointments. "I just want to be helpful, because I believe Sen. Obama -- in his person, in his ideas and in his ability to understand and articulate both our needs and our hopes -- brings the strong and fresh leadership we need," Mr. Volcker said in an interview in New York. Mr. Volcker wouldn't provide details of his policy suggestions or his personal relationship with Sen. Obama. …
Starting in late summer 2007, Mr. Goolsbee had regular discussions with Mr. Volcker. He incorporated Mr. Volcker's ideas, including his early concern that the housing downturn would snowball into a larger financial crisis, into Sen. Obama's policy positions. In a September 2007 speech at Nasdaq, Sen. Obama predicted that because of oversight lapses and abusive practices that cause the public to doubt financial results, "the markets will be ravaged by a crisis in confidence."
In early January 2008, when Sen. Clinton was pounding her rival over his lack of experience and stature, Sen. Obama phoned Mr. Volcker to ask for his endorsement. … Mr. Volcker, a long-time Democrat who had mostly stayed out of partisan politics, agreed, and wrote out his statement in longhand.
The presidential candidate's first big economic address took place in March at Cooper Union in New York. Mr. Volcker's fingerprints were evident in the speech. The onetime central banker had long been vigilant about strong regulatory oversight; as Fed chairman he rejected big banks' attempts to repeal Depression-era laws to engage in more risky practices like investment banking. New financial institutions and instruments have since led to the repeal or relaxation of those laws, and Mr. Volcker told Sen. Obama that the
U.S. regulatory structure must be strengthened and updated for the 21st century.
With Mr. Volcker sitting in the front row, Sen. Obama told the audience at Cooper Union that the current financial-regulatory framework must be "revamped." He faulted deregulation for the growing economic
crisis. "Our free market was never meant to be a free license to take whatever you can get, however you can get it."
… In the past two months, financial crises have come one after another, picking up speed with the federal government's July effort to bolster big mortgage insurers Fannie Mae and Freddie Mac. As the contagion from the subprime mortgages and risky mortgage credit swaps threatened to topple other institutions, Sen. Obama asked for "emergency meetings" with his economic team, about a dozen advisers including Mr. Volcker and Mr. Buffett.
At the first group meeting in Washington in late July, Sen. Obama said he wanted to hear from each adviser on the worsening economic downturn and asked Mr. Volcker to go first. "The very health of the credit markets is at stake," Mr. Volcker said, according to one attendee. He urged strong action to restore confidence, particularly in the U.S. banking system. …
Ask yourself this: Who would you rather have advising the next president of the United States, Phil Gramm and Alan Greenspan (McCain’s economic heroes – both of whom pushed for deregulation of financial markets) or Warren Buffett and Paul Volcker (both of whom warned against it)?
Let’s turn to foreign policy.
Who is the most (the only?) credible remaining Republican voice on national security and foreign policy and the most trusted by political independents? That would probably be Colin Powell. Many of us lost respect for him when he failed his greatest test, publicly supporting Bush’s policies despite personal doubts. But at least he was a voice of reason within the Bush administration. He was outmaneuvered by Cheney and Rumsfeld and eventually forced out. And he has now at least partially redeemed himself with his endorsement of Obama.
Powell is a decades-long friend of McCain’s and even donated to McCain's campaign last year. Powell’s endorsement of Obama on Meet the Press is one of the best, most-thoughtful ones out there. (I particularly admire his defense of Muslim-Americans – a rare thing among any public figure these days.) I encourage you to watch or read it (it’s not too long and very much worth watching):
Here is the video:
The transcript is here.
There are simply too many great observations to quote. Watch or read the whole thing.
If Warren Buffett, Paul Volcker and Colin Powell aren’t enough, here are a few others:
Former Republican Senator Larry Pressler (R-SD) has come out for Obama:
Pressler, who said that in addition to casting an absentee ballot for Obama he'd donated $500 to the Illinois senator's campaign, cited the Democrat's response to the financial crisis as the primary reason for his decision. "I just got the feeling that Obama will be able to handle this financial crisis better, and I like his financial team of [former Treasury Secretary Robert] Rubin and [former Federal Reserve Chairman Paul] Volcker better," he said. By contrast, John McCain's "handling of the financial crisis made me feel nervous."
I find the Pressler endorsement particularly surprising – a former Republican Senate colleague of McCain’s. For Pressler, like Powell who is a long-time friend of McCain’s, that must have been particularly tough. What would have driven him to make it public?
(Maybe he feels, as Senator Thad Cochran (R-Miss) said, “The thought of [McCain] being president sends a cold chill down my spine. He is erratic. He is hotheaded. He loses his temper and he worries me.”)
Then there is Ken Adelman. His views mean nothing to me. He is the one who famously predicted that the Iraq war would be a “cakewalk.” (I always thought there was a certain contradiction between the claims that Iraq posed an imminent threat to the US while also militarily being a “cakewalk” to defeat. Of course, we invaded and occupied Iraq precisely because it was an easy military target – serving potentially as a very large aircraft carrier from which the US could dominate the Middle East – not because it was a threat to us.) I don’t know why Adelman is even taken seriously anymore. But, as George Packer recounts on his blog at The New Yorker, he has solid Republican credentials. And he is supporting Obama:
And then there is Christopher Buckley (author of the brilliant “Thank You For Smoking” and other novels and son of conservative legend William F. Buckley). He endorsed Obama in a blog post entitled, “Sorry Dad, I’m Voting for Obama”. I won’t post it all. But here is a bit:
First Colin Powell, Now…
Ken Adelman is a lifelong conservative Republican. Campaigned for Goldwater, was hired by Rumsfeld at the Office of Economic Opportunity under Nixon, was assistant to Defense Secretary Rumsfeld under Ford, served as Reagan’s director of arms control, and joined the Defense Policy Board for Rumsfeld’s second go-round at the Pentagon, in 2001. Adelman’s friendship with Rumsfeld, Cheney, and their wives goes back to the sixties, and he introduced Cheney to Paul Wolfowitz at a Washington brunch the day Reagan was sworn in.
In recent years, Adelman and his friends Cheney, Rumsfeld, and Wolfowitz fell out over his criticisms of the botching of the Iraq War. Still, he remains a bona-fide hawk (“not really a neo-con but a con-con”) who has never supported a Democrat for President in his life. Two weeks from now that’s going to change: Ken Adelman intends to vote for Barack Obama. He can hardly believe it himself.
Adelman and I exchanged e-mails today about his decision. He asked rhetorically,
Why so, since my views align a lot more with McCain’s than with Obama’s? And since I truly dread the notion of a Democratic president, Democratic House, and hugely Democratic Senate?
Primarily for two reasons, those of temperament and of judgment.
When the economic crisis broke, I found John McCain bouncing all over the place. In those first few crisis days, he was impetuous, inconsistent, and imprudent; ending up just plain weird. Having worked with Ronald Reagan for seven years, and been with him in his critical three summits with Gorbachev, I’ve concluded that that’s no way a president can act under pressure.
Second is judgment. The most important decision John McCain made in his long campaign was deciding on a running mate.
That decision showed appalling lack of judgment. Not only is Sarah Palin not close to being acceptable in high office—I would not have hired her for even a mid-level post in the arms-control agency. But that selection contradicted McCain’s main two, and best two, themes for his campaign—Country First, and experience counts. Neither can he credibly claim, post-Palin pick. …
Obama has in him—I think, despite his sometimes airy-fairy “We are the people we have been waiting for” silly rhetoric—the potential to be a good, perhaps even great leader. He is, it seems clear enough, what the historical moment seems to be calling for.For this sin, by the way, Buckley was essentially fired from the National Review that his father founded. (File under: Death of the Modern Conservative Movement.) I have the feeling his father would not have been able to pull the lever for a McCain/Palin ticket, either.
So, I wish him all the best. We are all in this together. Necessity is the mother of bipartisanship. And so, for the first time in my life, I’ll be pulling the Democratic lever in November. As the saying goes, God save the United States of America.
I could go on. But this, at least, should be enough to reassure your wavering Republican friends that Obama is not a terrorist-loving radical Muslim Marxist.
It’s OK to vote for him. You’re in good company.
Saturday, October 25, 2008
Or, at least, one can hope.
From UK’s Telegraph:
Republican fears of historic Obama landslide unleash civil war for the future of the party
Senior Republicans believe that John McCain is doomed to a landslide defeat which will hand Barack Obama more political power than any president in a generation.
By Tim Shipman in Durango,
Colorado 26 Oct 2008
Aides to George W.Bush, former Reagan White House staff and friends of John McCain have all told The Sunday Telegraph that they not only expect to lose on November 4, but also believe that Mr Obama is poised to win a crushing mandate.
They believe he will be powerful enough to remake the American political landscape with even more ease than Ronald Reagan did in 1980.
The prospect of an electoral rout has unleashed a bitter bout of recriminations both within the McCain campaign and the wider conservative movement, over who is to blame and what should be done to salvage the party's future.
Mr McCain is now facing calls for him to sacrifice his own dwindling White House hopes and focus on saving vulnerable Republican Senate seats which are up for grabs on the same day.
Their fear is that Democrat candidates riding on Mr Obama's popularity may win the nine extra seats they need in the Senate to give them unfettered power in Congress.
If the Democrat majority in the Senate is big enough - at least 60 seats to 40 - the Republicans will be unable to block legislation by use of a traditional filibuster - talking until legislation runs out of time. No president has had the support of such a
majority since Jimmy Carter won the 1976 election. President Reagan achieved his
political transformation partly through the power of his personality.
David Frum, a former Bush speechwriter, told The Sunday Telegraph that Republicans should now concentrate all their fire on "the need for balanced
"It's hard to see a turnaround in the White House race," he said. "This could look like an ideological as well as a party victory if we're not careful. It could be 1980 in reverse.
"With this huge new role for federal government in the economy, the possibility for mischief making is very, very great. One man should not have a monopoly of political and financial power. That's very dangerous."
In North Carolina, where Senator Elizabeth Dole seems set to loose, Republicans are running adverts that appear to take an Obama victory for granted, warning that the Democrat will have a "blank cheque" if her rival Kay Hagen wins. "These liberals want complete control of government in a time of crisis," the narrator says. "All branches of Government. No checks and balances."
Democrats lead in eight of the 12 competitive Senate races and need just nine gains to reach their target of 60. Even Mitch McConnell, the leader of Senate Republicans, is at risk in Kentucky, normally a rock solid red state.
A private memo on the likely result of the congressional elections, leaked to Politico, has the Republicans losing 37 seats.
Ed Rollins, who masterminded Ronald Reagan's second victory in 1984, said the election is already over and predicted: "This is going to turn into a landslide."
A former White House official who still advises President Bush told The Sunday
Telegraph: "McCain hasn't won independents, nor has he inspired the base. It's
the worst of all worlds. He is dragging everyone else down with him. He needs to
deploy people and money to salvage what we can in Congress."
The prospect of defeat has unleashed what insiders describe as an "every man for himself" culture within the McCain campaign, with aides in a "circular firing squad" as blame is assigned. …
Mr Frum argues that just as America is changing, so the Republican Party must adapt its economic message and find more to say about healthcare and the environment if it is to survive.
He said: "I don't know that there's a lot of realism in the Republican Party. We have an economic message that is largely irrelevant to most people.
"Cutting personal tax rates is not the answer to everything. The Bush years were largely prosperous but while national income was up the numbers for most individuals were not. Republicans find that a hard fact to process."
Other Republicans have jumped ship completely. Ken Adelman, a Pentagon adviser on the Iraq war, Matthew Dowd, who was Mr Bush's chief re-election strategist, and Scott McClellan, Mr Bush's former press secretary, have all endorsed Mr Obama.
But the real bile has been saved for those conservatives who have balked at the selection of Sarah Palin.
In addition to Mr Frum, who thinks her not ready to be president, Peggy Noonan, Ronald Reagan's greatest speechwriter and a columnist with the Wall Street Journal, condemned Mr McCain's running mate as a "symptom and expression of a new vulgarisation of American politics." Conservative columnist David Brooks called her a "fatal cancer to the Republican Party".
The backlash that ensued last week revealed the fault lines of the coming civil
Rush Limbaugh, the doyen of right wing talk radio hosts, denounced Noonan, Brooks and Frum. Neconservative writer Charles Krauthammer condemned "the rush of wet-fingered conservatives leaping to Barack Obama", while fellow columnist Tony Blankley said that instead of collaborating in heralding Mr Obama's arrival they should be fighting "in a struggle to the political death for the soul of the country".
During the primaries the Democratic Party was bitterly divided between Barack Obama's "latte liberals" and Hillary Clinton's heartland supporters, but now the same cultural division threatens to tear the Republican Party apart.
Jim Nuzzo, a White House aide to the first President Bush, dismissed Mrs Palin's critics as "cocktail party conservatives" who "give aid and comfort to the enemy".
He told The Sunday Telegraph: "There's going to be a bloodbath. A lot of people are going to be excommunicated. David Brooks and David Frum and Peggy Noonan are dead people in the Republican Party. The litmus test will be: where did you stand on Palin?"
Mr Frum thinks that Mrs Palin's brand of cultural conservatism appeals only to a dwindling number of voters.
He said: "She emerges from this election as the probable frontrunner for the 2012 nomination. Her supporters vastly outnumber her critics. But it will be extremely difficult for her to win the presidency."
Mr Nuzzo, who believes this election is not a re-run of the 1980 Reagan revolution but of 1976, when an ageing Gerald Ford lost a close contest and then ceded the
leadership of the Republican Party to Mr Reagan.
He said: "Win or lose, there is a ready made conservative candidate waiting in the wings. Sarah Palin is not the new Iain Duncan Smith, she is the new Ronald Reagan." On the accuracy of that judgment, perhaps, rests the future of the Republican
Thursday, October 23, 2008
1/ Wilco and Fleet Foxes doing a live version of “I Shall Be Released”. You just have to pledge to vote (as if we need an incentive). Or you can watch a (somewhat poor quality) video here:
2/ DJ Z-Trip’s Obama mix. A 55-minute DJ mix for Obama. Fun.
Tuesday, October 21, 2008
Let’s get the obvious out of the way. By most any metric, Obama won again. The usual snap polls:
CBS poll of independents on “Who won?:
The CNN poll found the same thing:
(More important, McCain’s favorable/unfavorable actually dropped from 51/44 to 49/49. Obama’s went up from 63/35 to 66/33. On “likeability” Obama swamped old Grumpy McNasty, 70 to 22.)
Pollster Stan Greenberg came up with a similar favorable/unfavorable result. McCain went from 54/34 before the debate to 50/48 after the debate. The Obama result was even more extreme (in the opposite direction). He went from 42/42 before the debate to 72/22 after the debate.
Remember, Obama didn’t have to “win” any of these debates on points or polls. He had to reassure American voters that he met the basic threshold level of stature, intelligence, competence, judgment, values and temperament to be president. He didn’t have to be better than McCain. He had to be competent and qualified. He met the test. As it turns out, he also did better than McCain. He and Biden clearly bested their rivals four for four.
Here is a Gallup summary of the three debates:
First debate: Obama 46% McCain 34%
Second debate: Obama 56% McCain 23%
Third debate: Obama 56% McCain 30%
As a CBS/New York Times poll release yesterday notes, Obama picked up some support among Republicans but made his big gains among independents.
But the narrative of the last debate is not really about polls. There were two major themes in the debate:
1/ McCain was boiling over with barely-restrained seething anger. His blinking, loud nasal inhaling, eye-rolling, eyebrow-twitching and other bizarre exhibitions were, for me, truly disturbing (and I mean that in the most literal sense – it was truly disturbing, like Captain Queeg in The Caine Mutiny). Don’t take my word for it. Check out this video compliation(one of many I could have chosen from)
2/ Joe the Plumber. McCain gave America its archetypal middle-aged angry white guy – which is the Republican party base these days – and gave him his 15 minutes of fame. America couldn’t get enough of Joe the Plumber, it seems. But like everything else in the McCain campaign, Joe the Plumber turned out to be a train wreck. Another unvetted wonder thrust upon the country by McCain’s lack of impulse control.
By now you know the basics: Samuel J. Wurzelbacher (i.e., “Joe”) of Holland, Ohio, as it turns out, did not have the required plumber’s license. Nor was he a member of the plumbers union or part of any apprenticeship program. Which essentially means he is an illegal worker. And our latest anti-tax hero happens to … owe back taxes. He is one of two employees of a small plumbing firm in Toledo, Ohio. By his own account, he hoped to buy the company some day and was angry that Obama would raise his taxes when he hit gold. But as MSNBC reported, "Ohio business records show the company’s estimated total annual revenue as only $100,000.” Net taxable income, of course, would be much lower than that. Which means that Mr. Wurzelbacher would actually receive a much bigger tax cut under Obama’s plan than under McCain’s plan.
But that didn’t prevent McCain and Palin from making “Joe” the new centerpiece of their campaign. As McCain said at a recent rally:
“Joe the Plumber is the average citizen, and Joe the Plumber is now speaking for me and small business people all over America. And they’re becoming aware that spreading … the wealth around [is] not what small business people want.”
(Never mind that Joe is not really a small business owner and that the actual owner of Joe’s business – along with Joe – would get a bigger tax cut under Obama.)
And the Disasta from Alaska went a step further:
“Senator Obama said he wants to quote ’spread the wealth.’ What that means is he wants government to take your money and dole it out however a politician sees fit. But Joe the Plumber and Ed the Dairy Man [ed. note: don’t ask] … think that it sounds more like socialism. Now is no time to experiment with socialism. To me, our opponent’s plans sound more like big government, which is the problem. Bigger government is not the solution.”
Now Obama is not merely Liberal, mind you, but a SOCIALIST! Cutting Joe’s taxes instead of those of, say, AIG executives is … SOCIALISM. And Joe is on board with all of this. Wow. This is getting confusing. Joe (not his real name) the (not really a) Plumber is worried that his business (which is not really his business) would pay higher taxes (which would actually be lower taxes – if he did pay taxes, which apparently he doesn’t all the time) if Obama became president. Because that would be socialism.
I want the vetting job on the McCain campaign. It would give me more time to write these blog posts.
But that is the low-hanging fruit. My favorite part of the legend of Joe the Plumber is the fact that, if Republican voter suppression efforts in Ohio were successful, Joe wouldn’t even be able to vote.
We pick up the story with from the New York Times:
Mr. Wurzelbacher is registered to vote in Lucas County under the name Samuel Joseph Worzelbacher.
"We have his named spelled W-O, instead of W-U," Linda Howe, executive director of the Lucas County Board of Elections, said in a telephone interview. "Handwriting is sometimes hard to read. He has never corrected it in his registration card."
No big deal, right? A misspelling of his name on his voter registration card. Sounds harmless enough.
The only problem is that the Republican party in Ohio just went to the US Supreme Court to try to disenfranchise anyone who registered to vote since January 1 whose voter registration information differs in any respect from other state or federal records. This is because the overwhelming majority of the more than 600,000 new voter registrations in Ohio this year are Democratic. Of course, local registrars, in the two weeks remaining before the election, could still go through the hundreds of thousands of (primarily Democratic) new voter registrations and try to prove that they are, indeed, legitimate voters. Not likely. Which means that, due to the misspelling of his name on his voter registration records, the Ohio Republican party would deny Joe the vote (and – just to add insult to injury – would also give him a smaller tax cut than Obama would). The Republican party assure us this isn’t anti-democratic (or anti-Democratic) – just trying to prevent “voter fraud.” We wouldn’t want some illegal worker who owes back taxes trying to commit voter fraud by … you know, actually voting.
No wonder Joe the Plumber has become the new centerpiece of the McCain/Palin campaign. John McCain couldn’t come up with a better example of everything the Republican party and his campaign stands for.
But in one respect Joe really could set a good example for the McCain/Palin campaign: In his 15 minutes, he has actually held a press conference. Which is something that Sarah Palin, in the eight weeks since she was named to the Republican ticket, still hasn’t done. This is probably the major under-reported story of this campaign. McCain and the Rove junior varsity actually think they can take their unqualified vice presidential nominee all the way from obscurity to election day without a single press conference. And it looks like they are actually getting away with it. There is still something like a 10% chance the McCain/Palin ticket could win, and given McCain’s health the Disasta from Alaska could end up the most powerful person on the planet – all without her ever holding even a single press conference. And just to really insult our intelligence, they actually have Palin out there asking audiences, “Who is the REAL Barack Obama?”
But in one key respect, Joe really is an appropriate symbol of the McCain/Palin campaign. The plumbers of Ohio have done poorly under Republican economic policies that McCain promises to continue. As (Nobel laureate) Paul Krugman writes:
Finally, apropos of nothing in particular, I can’t end a commentary on the last debate without passing along with actual, un-retouched photo from the debate:
[A]ccording to the May 2007 occupational earnings report from the Bureau of Labor Statistics, the average annual income of “plumbers, pipefitters and steamfitters” in Ohio was $47,930. … [T]heir real incomes have stagnated or fallen, even in supposedly good years. The Bush administration assured us that the economy was booming in 2007 — but the average Ohio plumber’s income in that 2007 report was only 15.5 percent higher than in the 2000 report, not enough to keep up with the 17.7 percent rise in consumer prices in the Midwest. As Ohio plumbers went, so went the nation: median household income, adjusted for inflation, was lower in 2007 than it had been in 2000.
… Ohio plumbers have been having growing trouble getting health insurance, especially if, like many craftsmen, they work for small firms. According to the Kaiser
Family Foundation, in 2007 only 45 percent of companies with fewer than 10
employees offered health benefits, down from 57 percent in 2000.
And bear in mind that all these data pertain to 2007 — which was as good as it got in recent years. Now that the “Bush boom,” such as it was, is over, we can see that it
achieved a dismal distinction: for the first time on record, an economic expansion failed to raise most Americans’ incomes above their previous peak.
Here is one from a different source:
Monday, October 20, 2008
Michael Markman referred me to this Web site, “When Obama Wins,” with things like:
When Obama wins, chickens will cross the road because they realize it's time for change.
When Obama wins, fortune cookies will really end with "in bed."
When Obama wins, everyone will know the difference between its and it's.
When Obama wins, jeans will always fit perfectly.
When Obama wins, there will be a chick in every car and pot in every garage.
Go ahead and dream of the world as you wish it was.
(I also love this Web site: “Things Younger Than McCain”. Among other things, Alaska, the peanut and jelly sandwich, the LP record, Dick Cheney, penicillin, 91% of America, Margaritas, the zip code, and duct tape are younger than McCain.)
So my candidate for “When Obama wins …”: Some sort of rationality will be restored to airport security. (I know, I know – but we can dream.)
Jeffrey Goldberg has a good piece in the new issue of Atlantic magazine on what he calls the “security theater” of the Transportation Security Agency. (Coincidentally, this is the same term I made up and have been using for years.)
Airport security in America is a sham—“security theater” designed to make travelers feel better and catch stupid terrorists. Smart ones can get through security with fake boarding passes and all manner of prohibited items—as our correspondent did with ease.
Here is a bit of it:
During one secondary inspection, at O’Hare International Airport in Chicago, I was wearing under my shirt a spectacular, only-in-America device called a “Beerbelly,” a neoprene sling that holds a polyurethane bladder and drinking tube. The Beerbelly, designed originally to sneak alcohol—up to 80 ounces—into football games, can quite obviously be used to sneak up to 80 ounces of liquid through airport security. (The company that manufactures the Beerbelly also makes something called a “Winerack,” a bra that holds up to 25 ounces of booze and is recommended, according to the company’s Web site, for PTA meetings.) My Beerbelly, which fit comfortably over my beer belly, contained two cans’ worth of Bud Light at the time of the inspection. It went undetected. The eight-ounce bottle of water in my carry-on bag, however, was seized by the federal government.
On another occasion, at LaGuardia, in New York, the transportation-security officer in charge of my secondary screening emptied my carry-on bag of nearly everything it contained, including a yellow, three-foot-by-four-foot Hezbollah flag, purchased at a Hezbollah gift shop in south Lebanon. The flag features, as its charming main image, an upraised fist clutching an AK-47 automatic rifle. Atop the rifle is a line of Arabic writing that reads Then surely the party of God are they who will be triumphant. The officer took the flag and spread it out on the inspection table. She finished her inspection, gave me back my flag, and told me I could go. I said, “That’s a Hezbollah flag.” She said, “Uh-huh.” Not “Uh-huh, I’ve been trained to recognize
the symbols of anti-American terror groups, but after careful inspection of your
physical person, your behavior, and your last name, I’ve come to the conclusion that you are not a Bekaa Valley–trained threat to the United States commercial aviation system,” but “Uh-huh, I’m going on break, why are you talking to me?” …
[Security expert Bruce] Schneier and I walked to the security checkpoint. “Counterterrorism in the airport is a show designed to make people feel better,” he said. “Only two things have made flying safer: the reinforcement of cockpit doors, and the fact that passengers know now to resist hijackers.” This assumes, of course, that al-Qaeda will target airplanes for hijacking, or target aviation at all. “We defend against what the terrorists did last week,” Schneier said. He believes that the country would be just as safe as it is today if airport security were rolled back to pre-9/11 levels. “Spend the rest of your money on intelligence, investigations, and emergency response.”
Schneier and I joined the line with our ersatz boarding passes. [Schneier … had made these boarding passes in his sophisticated underground forgery works, which consists of a Sony Vaio laptop and an HP LaserJet printer] “Technically we could get arrested for this,” he said, but we judged the risk to be acceptable. … Schneier took from his bag a 12-ounce container labeled “saline solution.”
“It’s allowed,” he said. Medical supplies, such as saline solution for contact-lens cleaning, don’t fall under the TSA’s three-ounce rule.
“What’s allowed?” I asked. “Saline solution, or bottles labeled saline solution?”
“Bottles labeled saline solution. They won’t check what’s in it, trust me.”
They did not check. As we gathered our belongings, Schneier held up the bottle and said to the nearest security officer, “This is okay, right?” “Yep,” the officer said. “Just have to put it in the tray.”
“Maybe if you lit it on fire, he’d pay attention,” I said, risking arrest for making a joke at airport security. (Later, Schneier would carry two bottles labeled saline solution—24 ounces in total—through security. An officer asked him why he needed two bottles. “Two eyes,” he said. He was allowed to keep the bottles.)
We were in the clear. But what did we prove?
“We proved that the ID triangle is hopeless,” Schneier said.
The ID triangle: before a passenger boards a commercial flight, he interacts with his airline or the government three times—when he purchases his ticket; when he passes through airport security; and finally at the gate, when he presents his boarding pass to an airline agent. It is at the first point of contact, when the ticket is purchased, that a passenger’s name is checked against the government’s no-fly list. It is not checked again, and for this reason, Schneier argued, the process is merely another form of security theater.
“The goal is to make sure that this ID triangle represents one person,” he explained. “Here’s how you get around it. Let’s assume you’re a terrorist and you believe your name is on the watch list.” It’s easy for a terrorist to check whether the government has cottoned on to his existence, Schneier said; he simply has to submit his name online to the new, privately run CLEAR program, which is meant to fast-pass approved travelers through security. If the terrorist is rejected, then he knows he’s on the watch list.
To slip through the only check against the no-fly list, the terrorist uses a stolen credit card to buy a ticket under a fake name. “Then you print a fake boarding pass with your real name on it and go to the airport. You give your real ID, and the fake boarding pass with your real name on it, to security. They’re checking the documents against each other. They’re not checking your name against the no-fly list—that was done on the airline’s computers. Once you’re through security, you rip up the fake boarding pass, and use the real boarding pass that has the name from the stolen credit card. Then you board the plane, because they’re not checking your name against your ID at boarding.”
What if you don’t know how to steal a credit card?
“Then you’re a stupid terrorist and the government will catch you,” he said.
What if you don’t know how to download a PDF of an actual boarding pass and alter it on a home computer?
“Then you’re a stupid terrorist and the government will catch you.”
I couldn’t believe that what Schneier was saying was true—in the national debate over the no-fly list, it is seldom, if ever, mentioned that the no-fly list doesn’t work. “It’s true,” he said. “The gap blows the whole system out of the water.” …
When Obama is president we will address actual security threats in a logical, rational manner.
Thursday, October 16, 2008
The Republican strategy from the beginning of this campaign has been to try to revive, for one more election, the culture wars they have used to divide the nation for decades. The choice of Sarah Palin as McCain’s VP nominee was all part of that culture war strategy. The culture wars are a legacy of the sixties, when the civil rights movement and the Vietnam war (along with sex and drugs and rock-and-roll) broke up the New Deal Democratic coalition that had been forged on the basis of economic interests. “Reagan Democrats” were lured away from the Democratic party through cultural wedge issues, with race dominating in the early decades of this strategy and guns, God and gays being the focus in more recent years. (Scary brown people still factor in, of course, through the immigration issue.) Since the culture wars date back to the sixties, I guess it is appropriate that the Republican focus this year is on an old leftie from the sixties.
Conservative writer Andrew Sullivan wrote a brilliant piece in Atlantic way back in December – when neither Obama nor McCain were frontrunners – that almost seems prescient in light of the Ayres attacks. I strongly encourage you to read the entire thing. But here is Sullivan’s key point:
Obama’s candidacy in this sense is a potentially transformational one. Unlike any of the other candidates, he could take America—finally—past the debilitating, self-perpetuating family quarrel of the Baby Boom generation that has long engulfed all of us. So much has happened in America in the past seven years, let alone the past 40, that we can be forgiven for focusing on the present and the immediate future. But it is only when you take several large steps back into the long past that the full logic of an Obama presidency stares directly—and uncomfortably—at you.
At its best, the Obama candidacy is about ending a war—not so much the war in Iraq, which now has a momentum that will propel the occupation into the next decade—but the war within America that has prevailed since Vietnam and that shows dangerous signs of intensifying, a nonviolent civil war that has crippled America at the very time the world needs it most. It is a war about war—and about culture and about religion and about race. And in that war, Obama—and Obama alone—offers the possibility of a truce.
… [H]ow do we account for the bitter, brutal tone of American politics? The answer lies mainly with the biggest and most influential generation in America: the Baby Boomers. The divide is still—amazingly—between those who fought in Vietnam and those who didn’t, and between those who fought and dissented and those who fought but never dissented at all. By defining the contours of the Boomer generation, it lasted decades. And with time came a strange intensity.
… McCain’s bipartisan appeal has receded in recent years, especially with his enthusiastic embrace of the latest phase of the Iraq War. And his personal history can only reinforce the Vietnam divide. But Obama’s reach outside his own ranks remains striking. Why? It’s a good question: How has a black, urban liberal gained far stronger support among Republicans than the made-over moderate Clinton or the southern charmer Edwards? Perhaps because the Republicans and independents who are open to an Obama candidacy see his primary advantage in prosecuting the war on Islamist terrorism. It isn’t about his policies as such; it is about his person. They are prepared to set their own ideological preferences to one side in favor of what Obama offers America in a critical moment in our dealings with the rest of the
world. The war today matters enormously. The war of the last generation? Not so
much. If you are an American who yearns to finally get beyond the symbolic
battles of the Boomer generation and face today’s actual problems, Obama may be
your man. …
Again, this was written when neither Obama nor McCain were the front-runners for their respective party’s nomination.
Obama has made the same point himself back during his primary battle with Clinton – he represents a break with the internecine psychodrama of the Baby Boomers.
So it’s not surprising that Republicans have been trying to find a way to drag Obama into an increasingly irrelevant culture war that the Boomers have been fighting for 40 years. It is hard to imagine a guy like Ayres being even remotely relevant to anything in this country at this time, given the extraordinary challenges we face, except in that context. Voters should be insulted with this line of attack, and the polls seem to indicate that they are. But since the Republicans have chosen this as the major focus of their presidential campaign, I guess it’s important to address it.
So, for the record, let’s dispel the most blatantly untrue McCain campaign claims about Obama and Ayres.
During last night’s debate, McCain made the following statements:
“Senator Obama chose to associate with a guy who in 2001 said that he wished he'd have bombed more. And he had a long association with him.”
“[Y]ou launched your political campaign in Mr. Ayers' living room.”
And, of course, Pit Bull Palin on numerous occasions has claimed that, “[O]ur opponent is someone who sees America as imperfect enough to pal around with terrorists who target their own country.” [Note the plural “terrorists.”]
It is one thing for McCain and Palin to try to accuse Obama of “guilt-by-association” with an old radical. But what they are doing is more sinister and reprehensible. As Frank Rich wrote last Sunday (and I can’t emphasize strongly enough, this is a MUST READ piece):
All’s fair in politics. John McCain and Sarah Palin have every right to bring up William Ayers, even if his connection to Obama is minor, even if Ayers’s Weather
Underground history dates back to Obama’s childhood, even if establishment
Republicans and Democrats alike have collaborated with the present-day Ayers in
educational reform. But it’s not just the old Joe McCarthyesque guilt-by-association game, however spurious, that’s going on here. …
What makes them different, and what has pumped up the Weimar-like rage at
McCain-Palin rallies, is the violent escalation in rhetoric, especially (though not exclusively) by Palin. Obama “launched his political career in the living room of a domestic terrorist.” He is “palling around with terrorists” (note the plural noun). Obama is “not a man who sees America the way you and I see America.” Wielding a wildly out-of-context Obama quote, Palin slurs him as an enemy of American
By the time McCain asks the crowd “Who is the real Barack Obama?” it’s no surprise that someone cries out “Terrorist!” The rhetorical conflation of Obama with terrorism is complete. It is stoked further by the repeated invocation of Obama’s middle name by surrogates introducing McCain and Palin at these rallies. This sleight of hand at once synchronizes with the poisonous Obama-is-a-Muslim e-mail blasts
and shifts the brand of terrorism from Ayers’s Vietnam-era variety to the radical Islamic threats of today.
That’s a far cry from simply accusing Obama of being a guilty-by-association radical leftist. Obama is being branded as a potential killer and an accessory to past attempts at murder. “Barack Obama’s friend tried to kill my family” was how a McCain press release last week packaged the remembrance of a Weather Underground incident from 1970 — when Obama was 8.
Where to start.
Who is Ayres? [h/t to Wikipedia for much of this] He was the son of the CEO of Commonwealth Edison, the largest electric utility in Illinois. In 1969, Ayres was a co-founder of the Weather Underground, which conducted a campaign of bombing public buildings during the late ‘60s and early ‘70s to protest the Vietnam war. Those bombings were preceded by communiqués that provided evacuation warnings, along with statements of the particular matter to which their attacks were allegedly responding. No one was ever killed in any of the bombings with which Ayres was associated (although some members of the Weather Underground blew themselves up by accident in Greenwich Village in 1970). He went “underground” from 1970 to 1980, when he turned himself in to authorities. While underground, federal charges against Ayres were dropped because of illegal activities by the FBI in the course of their investigations.
After emerging from underground, Ayres got a doctorate in education and became a professor of education at the University of Illinois at Chicago. Ayers worked with Chicago Mayor Richard M. Daley in shaping the city's school reform program, and was one of three co-authors of the Chicago Annenberg Challenge grant proposal that in 1995 won $49.2 million over five years for public school reform. In 1997 the City of Chicago awarded him its Citizen of the Year award for his work on the project. Since 1999 he has served on the board of directors of the Woods Fund of Chicago, an anti-poverty, philanthropic foundation established as the Woods Charitable Fund in 1941. While it is fair to say his political views are still toward the left wing of the political spectrum, over the last couple of decades he has become a respected member of the mainstream education establishment in Chicago.
Ayres attracted attention in 2001 when he published a book, “Fugitive Days: A Memoir,” dealing with his time in the Weather Underground. In the months before Ayers' memoir was published on September 10, 2001, the author gave numerous interviews with newspaper and magazine writers in which he defended his radical past, including a fateful interview with the New York Times that was conducted earlier but was published on September 11, 2001. The New York Times reporter quoted him as saying "I don't regret setting bombs" and "I feel we didn't do enough.” Obviously, those were inflammatory quotations in the context of the 9-11 attacks. Ayres immediately protested them in a letter to the editor:
[The Times reporters’] angle is captured in the Times headline: “No regrets for a love of explosives” (September 11, 2001). She and I spoke a lot about regrets, about loss, about attempts to account for one’s life. I never said I had any love for explosives, and anyone who knows me found that headline sensationalistic nonsense. I said I had a thousand regrets, but no regrets for opposing the war with every ounce of my strength. I told her that in light of the indiscriminate murder of millions of Vietnamese, we showed remarkable restraint, and that while we tried to sound a piercing alarm in those years, in fact we didn’t do enough to stop the war. …
I wrote about Vietnamese lives as a personal American responsibility, then, and the hypocrisy of claiming an American innocence as we constructed and stoked an intricate and hideous chamber of death in Asia. Clearly I wrote and spoke about the export of violence and the government’s love affair with bombs. Just as clearly [the
reporter] was interested in her journalistic angle and not the truth. This is not a question of being misunderstood or “taken out of context,” but of deliberate distortion.
Some readers apparently responded to her piece, published on the same day as the vicious terrorist attacks in New York and Washington, by associating my book with them. This is absurd. My memoir is from start to finish a condemnation of terrorism, of the indiscriminate murder of human beings, whether driven by fanaticism or official policy. It begins literally in the shadow of Hiroshima and comes of age in the killing fields of Southeast Asia. My book criticizes the American obsession with a clean and distanced violence, and the culture of thoughtlessness and carelessness that results from it. …
All that we witnessed September 11—the awful carnage and pain, the heroism of ordinary people—may drive us mad with grief and anger, or it may open us to hope in new ways. Perhaps precisely because we have suffered we can embrace the suffering of others and gather the necessary wisdom to resist the impulse to lash out randomly. The lessons of the anti-war movements of the 1960s and 70s may be more urgent now than ever.
To be clear, I am not defending Ayres’ actions 40 years ago (nor has Obama ever done so). But, also to be clear, Ayres never said as Republicans are now quoting him, that he wished he had undertaken more bombings 40 years ago. But, rather, he said he wished he had done more to stop the Vietnam war. And on that narrow point, I agree with him. Although I was just a junior high student at the time, I was aware of what was going on in Southeast Asia and I attended anti-war rallies. A couple of years ago, with my family, I visited the American War museum in Saigon. It brought tears to my eyes – quite literally. Dropping bombs on Hanoi was not heroic. Three million Vietnamese (and 58,000 Americans) died in that war. The streets of Saigon are still haunted by grotesque victims of our use of Agent Orange. From the Vietnamese standpoint, they were repelling the last of the Western powers to occupy their country. The Vietnamese never considered their country to be two countries. When the French pulled out in 1954, the Geneva Accords called for national elections in 1956 to reunify the country. The US didn’t allow those elections to take place because Ho Chi Minh would have won. So we fought to maintain the division of the country so the “communists” wouldn’t prevail. From the Vietnamese standpoint, we were just the latest in a long line of foreign occupiers. It was a tragedy for both countries. Based on my own travels in Vietnam, (to my amazement) the Vietnamese have forgiven us. Now let’s get over our own civil war over Vietnam.
In a recent article, the New York Times quotes Chicago Mayor Richard Daley saying of Ayres, “He’s done a lot of good in this city and nationally. This is 2008. People make mistakes. You judge a person by his whole life.” As the Times reports, “Daley, whose father was Chicago’s mayor during the street violence accompanying the 1968 Democratic National Convention and the so-called Days of Rage the following year, said he saw the bombings of that time in the context of a polarized and turbulent era.”
So what was Obama’s connection with Ayres? As Obama said in the debate last night,
Bill Ayers is a professor of education in Chicago. Forty years ago, when I was eight years old, he engaged in despicable acts with a radical domestic group. I have roundly condemned those acts. Ten years ago, he served and I served on a board that was funded by one of Ronald Reagan's former ambassadors and close friends, Mr. Annenberg. Other members on that board were the presidents of the University of Illinois; the president of Northwestern University, who happens to be a Republican; the president of the Chicago Tribune, a Republican-leaning newspaper.
Obama and Ayres lived in the same neighborhood. Obama taught constitutional law at the University of Chicago and Ayres taught education at the University of Illinois. Ayres was a respected member of the Chicago educational establishment. As Obama noted last night, Obama and Ayres were both connected with the Chicago Annenberg Challenge underwritten by the Annenberg Foundation set up in the 1990’s by the billionaire Walter Annenberg, who served as an ambassador under Presidents Nixon and Reagan. Annenberg was the country’s most generous philanthropist until Bill Gates and was knighted by the UK. Bill Ayres was one of the authors of the Chicago grant proposal. The board of the Chicago Annenberg Challenge was handpicked by Adele Smith Simmons, president of the John D. and Catherine T. MacArthur Foundation. In 1995, Obama was asked to be chairman of the board, quite an honor for the young attorney and University of Chicago constitutional law lecturer. (Ayres actually never served on the board.) As Obama correctly noted last night, it was a prestigious board that included prominent Republicans. Hardly a radical affiliation let alone a “terrorist” organization.
Ayres and Obama also both served on the board of the Woods Fund of Chicago, an offshoot of the Wood Charitable Fund. The fund works as a funding partner with nonprofit organizations seeking to increase opportunities for disadvantaged people in Chicago. Its board, like that of the Annenberg Challenge, is mainstream Chicago establishment. Obama attended a grand total of 12 meetings of the Woods Fund.
The most ridiculous of the Republican claims is, as McCain said last night, that Obama launched his political career in Ayres living room. In 1995, when Obama was running for state senator, the retiring incumbent, Alice Palmer, shuttled him around the district to make introductions. One of those meetings arranged by Palmer took place in Ayres' home. In my experience, a novice candidate for state senate would meet with a homeless person in his cardboard box if he was invited in. This is not the stuff of a terrorist cabal. It would be just as true to say that, “Obama had a long association with prominent members of the Chicago Republican establishment with connections to the Nixon and Reagan administrations and his political career was launched with their money.”
The New York Times has investigated the relationship between Obama and Ayres (including the archives of the Chicago Annenberg project) and concluded, “the two men do not appear to have been close. Nor has Mr. Obama ever expressed sympathy for the radical views and actions of Mr. Ayers, whom he has called “somebody who engaged in detestable acts 40 years ago, when I was 8”.”
There is nothing suspect or inappropriate about the casual association between Obama and Ayres. This is a guy, after all, who received the Citizen of the Year Award in Chicago in 1997.
But Ayres is a symbol of ‘60s radicalism and a pretext for an unseemly insinuation that Obama is somehow connected with “terrorism”. The fact that this has become the centerpiece of the McCain/Palin campaign with three weeks to go in a presidential contest taking place in the midst of a global financial crisis, when the country is fighting two wars, should tell you more about McCain and Palin than it does about Obama. Let’s bury the 40-year culture war in this country.
Enough Fear and Smear. Defeat Hate! Embrace Hope! Vote Obama!
Wednesday, October 15, 2008
The election of Barack Obama as president (assuming some Earth-shatterging event doesn’t intervene to prevent it) will be by far the biggest manifestation of that political re-alignment. But there are other, smaller manifestations. As an economics junkie, this week’s awarding of the Nobel Prize in economics to Paul Krugman is one.
When Milton Friedman won the Nobel Prize in 1976 it symbolized the mainstream intellectual acceptance of his “monetarist” school of economics (which was the focus of my own undergraduate studies) but also, more broadly, of a new conservative mainstream in politics and policy. His body of work certainly merited the Nobel Prize (although, ironically, the current global financial crisis is undermining some of his theories of the Great Depression – primarily his view that the Great Depression could have been avoided by the injection of liquidity into the system to prevent a fall of the money supply). As symbolism, let’s hope the award to Krugman is as enduring.
Most people know Krugman as a political pundit, primarily though his regular New York Times column. But I used to remind people that he was also a “Nobel-caliber” academic economist (and former colleague of Ben Bernanke at Princeton). Now that characterization is irrefutable. Most people don’t know, for example, that he was chief staffer for international economics at the Council of Economic Advisors early on in the Reagan administration (part of a team that Martin Feldstein assembled that included other young whiz-kids like Larry Summers and Greg Mankiw). Among other minor achievements, he wrote most of the 1983 Economic Report of the President. In 1991, he was awarded the John Bates Clark Medal, given by the American Economic Association to the top economists under 40 years old, and which many professional economists consider the be more prestigious than the Nobel Prize. Indeed, Krugman is the 12th Clark Medal recipient to go on and win the Nobel (including Friedman, Paul Samuelson, and Joseph Stiglitz).
Krugman’s Nobel Prize was awarded for his work on international trade and economic geography, particularly the integration of economies of scale into general equilibrium models. Back in 1992, long before he became known for his political commentary, he wrote an autobiographical essay on his career to date. Here is his own summary of the work that would later result in the Nobel Prize:
… I have worked and written on a lot of topics. It is, however, the idea of increasing returns that has been the most important theme in my work. And it is my work in helping to clarify the role that increasing returns plays in economics that is the main excuse I have for my existence. The idea of increasing returns is, of course, a very old one, going back at least to Adam Smith. Nonetheless, until the 1980s economics was heavily dominated by what we may call the Ricardian Simplification: the assumption of constant returns and perfect competition.
There is no mystery or shame involved in that domination: strategic simplification is the essence of all understanding except in the most fundamental physics. The constant returns-competitive model offers a remarkable if somewhat incomplete view of how the world works; in terms of economic policy, 95 percent of the time it would be a blessing if politicians could understand what's right about the constant returns model, not what's wrong with it. Nonetheless, the world isn't really characterized by constant returns, and it was essential to go beyond the Ricardian Simplification, if only to be able to say to the policymakers that we had explored that terrain and found little of use.
If one admits increasing returns into one's economic model, two other consequences follow. First, increasing returns are intimately bound up with the possibility of multiple equilibria. There can be multiple equilibria in constant-returns models, too, but they are rarely either plausible or interesting. By contrast, it is very easy to be persuaded of both the relevance and importance of multiple equilibria due to increasing returns. What technology will be chosen for high-definition television? Which city will be Europe's financial center? These are real and interesting questions. Second, once there are interesting multiple equilibria, you need a story about how the economy picks one. The natural stories involve dynamics -- the cumulation of initial advantages that may be accidents of history.
Speaking loosely, then, traditional economic analysis has -- for very good reasons -- focused largely on static models in which equilibrium is uniquely determined by tastes, technology and factor endowments. An economic analysis that takes increasing returns seriously will normally involve dynamic models in which the choice of equilibrium also reflects history.
All of this is fairly obvious, and indeed the history of thought in economics is littered with manifestos on the need to take into account increasing returns, multiple equilibria, dynamics, and the role of history. Nicholas Kaldor, for example, delivered strident attacks on constant-returns economics in the late 1960s; Thomas Schelling offered elegant little parables about dynamics and multiple equilibria in a series of papers during the 1970s. Nonetheless, it wasn't until the 1980s that increasing returns really got into the mainstream of economics. I wasn't the only one in the
movement: Paul Romer, in particular, wrote several papers I wish I had written
(I can think of no higher praise!) applying increasing returns to economic growth. But I think it's fair to say that my work first on trade and then on geography did as much as anyone's to really put increasing returns on the professional map.
In the new trade theory, the basic point was that increasing returns are a motive for specialization and trade over and above conventional comparative advantage, and can indeed cause trade even where comparative advantage is of negligible importance -- for example, among industrial countries with similar resources and technology. The pattern of specialization and trade caused by increasing returns is, however, somewhat arbitrary; one must appeal to historical accident to explain who produces what. This seems pretty obvious, yet until the new trade theorists got going it was not part of mainstream thinking. It is a fact of life that trained economists find it very difficult to see the obvious unless it has been encapsulated in a clear formal model. (That's not an attack on the enterprise of modeling: those
who believe that by engaging in fuzzy thinking they can widen their horizons almost always see even less). The few existing models of trade under increasing returns were somehow too awkward to be persuasive. My own view is that the problem was largely one of style, something I'll turn to shortly, and that my big contribution was to break through an intellectual style barrier. Whatever the reason, before 1980 the potential role of increasing returns in international trade was virtually ignored by economists; by 1987 or so it had become part of the standard story. That's a pretty big intellectual shift, and I think it's fair to claim that Elhanan Helpman and I deserve most of the credit.
In the area of economic geography, the basic point is that the economic landscape is covered with examples of agglomeration -- geographical concentrations of population and activity in general, like Los Angeles, concentration of particular types of business like Silicon Valley. These agglomerations are rarely explainable by special inherent resources of the site; they are, rather, examples of increasing returns at work. And the role of history in their formation is obvious: there has been no important commercial traffic on the Erie Canal since 1850, yet the head start that canal gave to New York City has allowed New York to remain the largest US city to this day. Again, all of this is obvious. And yet the apparent difficulty in modeling the
increasing-returns nature of agglomeration had excluded this obvious story from
the economic mainstream. Even today, the new economic principles textbook by
Joseph Stiglitz contains exactly one reference to cities in its 1200 pages -- a brief discussion of rural-urban migration in the Third World! I'm pretty sure this will change.
The geography models I have been writing since 1990 have inspired a growing number of followers, including a growing body of empirical work. It's a reasonable prediction that ten years from now the new economic geography will be as firmly established as the new trade theory. If so, I will have succeeded in bringing a quite large chunk of increasing-returns-based analysis into the heart of mainstream economics. That, I think, is my main achievement. What has made it possible, however, is not so much special insight -- both in trade and in geography it is possible to point to many people who have expressed similar ideas -- as style. Indeed, I regard the intellectual style I have developed as central to the whole enterprise.
As Krugman notes, he was known in part for his style – his ability to distill complex phenomena into workable models and ultimately into understandable prose. It was probably that ability, as much as his academic reputation, that caused the New York Times to enlist him as a regular columnist in 2000 (he was a regular contributor to Slate, Fortune and other publications before that). That was perhaps the peak of the Clinton-era glamorization of globalization – Thomas Friedman had published “The Lexus and the Olive Tree,” perhaps the Bible of that faith, the year before. Krugman was expected to write on international business, economics and policy. But a not-so-funny thing happened along the way – the Bush administration. By Krugman’s own account he couldn’t abide the mendacity of the Bush administration in silence and became perhaps its most prominent mainstream critic even during times when Bush enjoyed stratospheric approval ratings. And as we all recall, anyone who challenged Dear Leader in those years could be assured of the most vitriolic hate from the right-wing noise machine. Krugman was, indeed, demonized by the right – right up there with George Soros and Michael Moore.
People tend to evaluate political pundits based not on the accuracy of their observations but rather on their agreement with one’s own views. (How else can anyone explain the fact that Bill Kristol – who has been wrong about absolutely everything over the past decade – is still able to command an audience on a street corner, let alone a regular column in the New York Times.) The fact that the pundit is ultimately proven correct does not necessarily increase his credibility among his detractors – indeed, it might only inflame their hostility. That seems to be the case with Krugman. It would be hard to go back over his hundreds of columns over the last eight years and find almost anything of substance he has gotten wrong. It’s a truly extraordinary track record. It is even more impressive when you see those columns collected by subject, as was done in his book The Great Unraveling. In a short column he can generally address only one small aspect of a larger issue or set of issues. His columns often build on each other and illuminate a more complex subject or more general truth when read in sequence by subject. Alas, this is irrelevant to the radical right, which is becoming further unhinged as its grip on power is lost. Krugman’s Nobel Prize, as with anything that challenges their world view, is the object of scorn and rage – evidence of a broader liberal conspiracy rather than intellectual merit. But as Stephen Colbert famously observed (courageously in the presence of Bush), “reality has a well-known liberal bias.”
There is currently an attempt by the right to spin the global financial crisis with a narrative that blames it all on Fannie Mae, the Community Reinvestment Act, poor minorities, and ultimately on Congressional Democrats. This is a subject I hope to write about more. But given that it is the topic du jour, it seems appropriate to end with a few excerpts from Paul Krugman’s warnings about the housing bubble three years ago as an example of his track record on important policy matters.
From August 8, 2005 (“”That Hissing Sound”)
This is the way the bubble ends: not with a pop, but with a hiss.
Housing prices move much more slowly than stock prices. There are no Black Mondays, when prices fall 23 percent in a day. In fact, prices often keep rising for a while even after a housing boom goes bust.
So the news that the U.S. housing bubble is over won't come in the form of plunging prices; it will come in the form of falling sales and rising inventory, as sellers try to get prices that buyers are no longer willing to pay. And the process may already
Of course, some people still deny that there's a housing bubble. Let me explain how we know that they're wrong.
One piece of evidence is the sense of frenzy about real estate, which irresistibly brings to mind the stock frenzy of 1999. Even some of the players are the same. The authors of the 1999 best seller "Dow 36,000" are now among the most vocal proponents of the view that there is no housing bubble. …
Meanwhile, the U.S. economy has become deeply dependent on the housing bubble. The economic recovery since 2001 has been disappointing in many ways, but it wouldn't have happened at all without soaring spending on residential construction, plus a surge in consumer spending largely based on mortgage refinancing. Did I mention that the personal savings rate has fallen to zero?
Now we're starting to hear a hissing sound, as the air begins to leak out of the bubble. And everyone … should be worried.From August 29, 2005:
These days Mr. Greenspan expresses concern about the financial risks created by "the prevalence of interest-only loans and the introduction of more-exotic forms of adjustable-rate mortgages." But last year he encouraged families to take on those very risks, touting the advantages of adjustable-rate mortgages and declaring that "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.”
If Mr. Greenspan had said two years ago what he's saying now, people might have borrowed less and bought more wisely. But he didn't, and now it's too late. There are signs that the housing market either has peaked already or soon will. And it will be up to Mr. Greenspan's successor to manage the bubble's aftermath.
How bad will that aftermath be? The U.S. economy is currently suffering from twin imbalances. On one side, domestic spending is swollen by the housing bubble, which has led both to a huge surge in construction and to high consumer spending, as people extract equity from their homes. On the other side, we have a huge trade deficit, which we cover by selling bonds to foreigners. As I like to say, these days Americans make a living by selling each other houses, paid for with money borrowed from China.
One way or another, the economy will eventually eliminate both imbalances.
I could go on. But I want to leave some space for an example of the right-wing attacks he endured for his warnings about the housing bubble. Here is a gem from John Hindracker of the right-wing blog Powerline on the same day as the first of the two Krugman columns quoted above:
It must be depressing to be Paul Krugman. No matter how well the economy performs, Krugman’s bitter vendetta against the Bush administration requires him to hunt for the black lining in a sky full of silvery clouds. With the economy now booming, what can Krugman possibly have to complain about? In today’s column, titled That Hissing Sound, Krugman says there is a housing bubble, and it’s about to burst…
There are, of course, obvious differences between houses and stocks. Most people own only one house at a time, and transaction costs make it impractical to buy and sell houses the way you buy and sell stocks. Krugman thinks the fact that James Glassman doesn’t buy the bubble theory is evidence in its favor, but if you read Glassman’s article on the subject, you’ll see that he actually makes some of the same points that Krugman does. But he argues, persuasively in my view, that there is little reason to fear a catastrophic collapse in home prices.
Krugman will have to come up with something much better, I think, to cause many others to share his pessimism.
Congratulations on the Nobel Prize, Paul! Well, deserved. And keep up the courageous commentary.