Economics: Too Wonkish

Okay, so I wrote a post a few days ago about how I was confident that I understood our economic condition and so knew the cure. Well, this Paul Krugman post makes me doubt that a little bit.

I don't actually remember what the IS curve is and what it means, nor do I fully understand the bond market - including how supply and demand works in that market. So maybe I need to consult my old macro-econ text book and see if I can figure it out.

Otherwise, maybe I'll need to just say that I get the basics, but beyond that, I trust Paul Krugman. Not a great place to be in, but since I am not an economist, that might be the best I can do. I'll report back for sure.

Marriage Equality!!!

New York State passed same sex marriage on Friday, June 24. My wife and I watched it streaming live, and the key moment being when Republican Senator Saland signaled that he would be approving not only the religious exemption amendment, but the full bill. As I said on Facebook, I have never been more proud and never been more happy about a piece of legislation. I think this is the civil rights issue of our generation and I am thrilled to see that attitudes are changing. It gives me so much hope to see that we can progress as a society.

If you want a great article on the behind-the-scenes push, read this article in the NY Times. It seems clear - and has seemed this way all along - that the person that deserves a huge amount of credit is Governor Cuomo. While the two previous governors also supported same sex marriage, Cuomo wanted to expend significant political capital to make it happen. And the bill passed largely because Cuomo is actually good at using his political capital strategically.

I also know that my boss, Speaker Quinn, spent a lot of her time lobbying to get the bill passed. And I can't wait for her wedding (not that I assume I will be invited, but just to know that it has happened will be great).

In the NY State Senate, Tom Duane has been lobbying his colleagues since before the 2009 vote. What is the most remarkable thing about his lobbying is that it seems to be full of patience and tolerance. In his speech on the floor he said there were not villains that night, only heroes. And from what I hear, that has been his message in meeting with his colleagues - he has asked them to show their support for his relationship with his partner but never made them feel like bad people for opposing it. I don't know if I could be that way, and it is more remarkable that he could.

I also think we need to thank Republican State Senate Majority Leader Dean Skelos. That a Republican would bring this to a vote, knowing it very well might pass, it amazing. It is even more remarkable when you consider it wasn't a given that Democrats would bring it to a vote in 2009. So even though I doubt Dean Skelos wants my thanks, he has them.

As for the non-villains, I will say I was disappointed with Senator Lanza's no vote and his explanation. And I have a lot of anger for Senator Diaz - his animosity against gay marriage seems to know no bounds. But I won't respond to either because I don't need to. We won.

Scientific American on Health Care

I love Scientific American for two reasons. One, it is amazing to see new advances - or theories - in science as they are unfolding. Two, in appropriate situations, they weigh in on policy and politics. When they do, I trust them because, more than anyone else, I feel they are free from ideology and base recommendations on science and data.

In this month's issue, they write about health care and what needs to be done to control costs. Here is what they say about Obamacare and Paul Ryan's plan:

Politicians have acknowledged the crippling cost of medicine, yet their proposals do little to fix these basic flaws. For instance, replacing Medicare benefits with vouchers that individuals can use to buy their own health insurance, as was recently proposed by House Committee on the Budget Chair Paul Ryan, merely shifts more of the financial burden to private citizens. And most of the cost-saving initiatives found in the Affordable Care Act are demonstration projects—not large-scale reforms. The factors that inflate health costs must be addressed widely and directly. Fortunately, promising solutions are beginning to emerge:

What they recommend is not particularly new, but they give these proposals more credibility: reduce fragmentation, phase out fee-for-service, and compare effectiveness of procedures.

Now, if we are really going to compare Obama v. Ryan, we would acknowledge that Obamacare does this stuff, albeit slowly, and Ryan's doesn't at all. But it is good to see the scientific community weighing in. And it is good to see that they support Democratic plans - although they clearly think they need to be more ambitious.

Ryan on Healthcare

Paul Ryan is getting a lot of attention for his budget plan, including his plan for medicare. I think what he is saying needs to be analyzed and responded to. So here is a good quote from WashtingtonStakeout (hat tip Paul Krugman - I didn't actually know this website).

There are three facts about medicare that you simply can’t dispute: 10,000 seniors are retiring everyday with fewer workers going into the workforce to pay for them; healthcare costs are skyrocketing at about four times the rate of inflation, which threatens medicare’s ability to give affordable care; and number three, the non-partisan experts agree that Medicare is going bankrupt. So Medicare’s status quo is bankruptcy and that threatens healthcare not only for current seniors but obviously for future seniors, so I believe a patient-centered healthcare system — reforms that put the patient at the center of the healthcare system, not the government — are the best for people who need healthcare and they’re best for the economy, and they’re the best way to avert a debt crisis.

To start, let's assume that his three facts are true; I don't see anything I disagree with. But even if all the things he says are true, his solution isn't the only option based on those facts.

If Medicare is going bankrupt, then we have a few options. One is to increase funding. Another is to decrease services - either by cutting spending on the government side, or, as Ryan proposes, by making it a voucher program and underfunding it. My main problem with Ryan's plan is how he describes it; he tries to say that by using vouchers, he won't be underfunding services and that markets will magically bring down prices so that services won't be cut. This is stupid. He is cutting costs by cutting services - plain and simple.

A fourth option would be to keep it government-funded but to change incentives and structures to bring down costs. What is driving increased medical costs is in part an aging population and in part unnecessary services driven by our for-profit, fee-for-service system. Obama's health care plan plays with fixes, but only does so as pilots - afraid to change too much too soon. It is a prudent approach, but it means health care costs won't change very soon - instead all we can expect is that it might bend the curve so that future costs are less than we are projecting.

In retrospect, I think maybe he shouldn't have been so prudent. By taking on health care and only expanding coverage and doing modest pilots on cost-control, he left the door open for conservatives like Ryan to talk about cost control and to propose terrible schemes like consumer choice.

Either way though, the point is that Ryan may be right that Medicare is not on solid footing, but his plan is the least fair, least effective and therefore least desirable option out there.

Post Tries to be Reasonable About Gay Marriage

I do find it interesting that even conservative papers like the Post are trying to make anti-same sex marriage arguments sound reasonable. They even acknowledge “the frustration of gay couples who insist that they be treated the same as everyone else.” Unfortunately, that’s not enough to convince them to allow it.

Of course, the editorial falls on two familiar but illogical arguments. First, they try to say that marriage as an institution promotes procreation and gay marriage will undermine procreation. The problem is that society - and government - is perfectly willing to accept heterosexual couples that are obviously marrying for love and have no plans to have children. If we were honest about wanting marriage to be only about children, there would be a question for couples seeking a license asking if they can and intend to have children. But there isn't because heterosexual love is okay, homosexual love isn't - but reasonable people don't want to say it that way.

Second, they argue that allowing marriage would prevent religious freedom. We do not condone racism, even if it is part of someone’s religion. Religious freedom is not unlimited. We should never condone bigotry, even if someone is hiding behind their religion. Unfortunately, it takes time to recognize bigotry.

Now, I am willing to accept exemptions for religions for now as a first step to get more people used to the idea. And after society gets used to idea, we might finally see opposition as illogical and only explainable as bigotry. And at that point, we won't need a religious exemption. And we'll be happy to promote marriage for love, whether it be heterosexual or homosexual.

On Growth

Dear Conservative,

I find Republican plans to grow the economy so frustrating. They are a one-trick pony with little understanding of what makes capitalism function.

Their one trick is of course tax cuts. In their mind, all capitalist systems need is less taxes and a government always gets out of the way. Granted, I think this is mostly an attempt at pandering to a base that is rabidly anti-government, but I am disappointed at how they either pander against their better judgment or don't have the judgment enough to know that government serves an important function.

The truth is that our capitalist system has been as successful as it has been because of certain government investments. Over the long-term, our government has invested in research, infrastructure, including roads, power, railroad, ports, as well as significant investment in education and the creation of a legal system and security that is necessary to protect confidence in a capitalist system.

As we are mired in a major recession, it is enraging that Republicans are in a race to the bottom as each trots out programs that will cut the most taxes and therefore have to gut government spending and program. They claim they are proposing pro-growth policies, but if they actually understood capitalism, they would favor the right kind of government spending to promote growth, instead of pretending that all government spending, excluding the military, is bad spending.

A real pro-growth policy would increase spending on these items: education, infrastructure and research - and maintain spending on our legal system. By investing in education, we'd further improve the quality of our workforce and make it more likely that new inventions and innovations start here. And big gains could be made in inner cities were education outcomes are so poor.

By investing in infrastructure - whether it is a smart grid or otherwise improved electricity transportation or rail, roads and ports - we'll be allowing our businesses to be more productive than they otherwise would be. We can set the groundwork for more cost-effective power distribution and usage and decrease costs for businesses. And whether it is high-speed rail or other forward-thinking and smart transportation items, we can similarly make our businesses more productive. And research can help our firms develop new technologies and medicines that will change the world - and bring profits to domestic firms.

All of these things should be considered public goods - things that otherwise would be under-produced in our capitalist system. And one of government's best roles is in providing public goods. Unfortunately, the Republican party is too ideological to see any role for government, which means the miss opportunities for actual pro-growth policies and actually helping our economy for the future.

Women - Stereotypes Need Apply

The recent news about Congressman Weiner has lead to discussions about why this happens to men and not women. Of course many of these discussions rely on generalizations and stereotypes - and this NY Times article is no different. When I see articles like this (or in a Political Science class I took in college studying leadership in politics), I often wonder how helpful and accurate the generalizations are. A statement like this seems way too comprehensive and therefore not accurate:

"There are certain men that the more visible they get, the more bulletproof they feel," Ms. Myers said. "You just don’t see women doing that; they don’t get reckless when they’re empowered."

Really? No women get reckless? But it is the quote that I find actually harmful:

"The shorthand of it is that women run for office to do something, and men run for office to be somebody," said Debbie Walsh, director of the Center for American Women and Politics at Rutgers University. "Women run because there is some public issue that they care about, some change they want to make, some issue that is a priority for them, and men tend to run for office because they see this as a career path."

The problem with generalizations is that they lead to stereotypes which then puts people into a box. Soon, we think all people in a category are a certain way or should be a certain way.

I realize that at first, this quote sounds good: women are the workhorses and men are the show-horses; women are about substance and men about style and ego. But actually it is pigeon-holing women. When you say women run for office to do something, men to becomes someone, you are essentially saying women shouldn't have ambition or ego.

And as this drives our expectations, when women do want to become someone, we bristle at that because she is acting unladylike. And as much as I didn't support Hillary Clinton's campaign (more on that in the future), I think she suffered from this.

And in fact, the reckless line creates the expectation that women won't do that and likely would make the backlash worse. And when I think back to my class on leadership, one of the articles identified differences in leadership styles between men and women where men are more commanding and women more about consensus. Again, this boxes women in.

The bottom line is that we should be very careful with generalizations and creating expectations about how people should act because of the group they are in. This way, they can be free to be who they are - women can be more interested in becoming someone or can be reckless and have only as much backlash as men get. Or they can continue to be the workhorses of government.

What Would Tell Me I am Wrong?

Dear Conservative,

I know you and I have a different perspective on how to improve the economy. I strongly believe that we need more fiscal stimulus and you believe that we don't and need to focus on cutting the budget instead. I get frustrated that the evidence is on my side and that you can't be looking at the evidence clearly to arrive at your position. It makes me crazy that you aren't challenging your assumptions.

So let me show you how it's done by challenging my assumptions. Here is the way I see it. We have high unemployment that isn't improving in any real way. So the two options for fixing that are monetary policy or fiscal policy.

Normally, to use monetary policy, the Federal Reserve would lower interest rates. This has the effect of making saving money less attractive than investing and spending money, having an expansionary effect. However, monetary policy will not work because interest rates cannot get any lower - they are at the zero bound (liquidity trap). In other words, it would take a negative interest rate to get people to decide to spend instead of save. So the only option is fiscal policy.

But what would it take to convince me that I am wrong? Any number of things. If unemployment were decreasing. Or if someone could show me that monetary policy would work (some say if we announced a policy to let inflation increase and promised to maintain it for a certain number of years). Or that fiscal policy will do more harm than good.

It seems conservatives (you) are trying to say that we should try neither monetary or fiscal policy - that things will get better if government gets out of the way. I thought the great depression proved that wrong.

There is also a mindset that if we cut budget deficits, the magic confidence fairy will allow for growth. But there is no evidence that current short-term budget deficits are causing investor concerns. Inflation and interest rates on government bonds remain low.

They (you) are also saying that fiscal policy will cause more problems, that more fiscal stimulus and the higher deficits that would go along with it will increase bond rates. But again bonds are very low right now.

In other words, I am convinced that I have already thought about what would convince me that I am wrong and none of those things hold. We are in a recession, and we need to take action to get out of it. Unfortunately, monetary policy won't work. And you won't let us pass fiscal stimulus. Maybe you should reconsider your position.

Update:
Further evidence that convinces me that I am not wrong: surveys by the US Chamber of Commerce and the National Federation of Small Business (hat tip, Jared Bernstein) shows that the economy or weak sales (respectively) are the biggest problems facing small businesses. Now, the NFSB finding speaks for itself, but the Chamber finding, where "the economy" is the biggest problem, needs some explaining. You'll see that the Chamber survey isn't really an attempt to figure out what businesses need, but to create a document they can use when lobbying Congress for tax cuts. Even with such a biased survey, businesses were more concerned with the economy - which I read as depressed sales (demand) - than with taxes.

Brooks on Fannie Mae

David Brooks has a column about Fannie Mae that is almost entirely accurate - except for one major distortion. Brooks talks about the problems of this particular public / private partnership. Fannie was a private lender with an implicit government guarantee and so was able to take big risks, make big profits, with the knowledge that they would be bailed out. And through lobbying and support from affordable housing-supportive congresspersons with pro-business congresspersons were able to prevent oversight and regulation.

All of this is true. But this following sentence is not true and I find it appalling:

Of course, it all came undone. Underneath, Fannie was a cancer that helped spread risky behavior and low standards across the housing industry. We all know what happened next.

Look, Fannie Mae's setup was very problematic (And if I remember right, George W. Bush wanted to increase oversight). They either need to be fully government-run or fully private with no government guarantee. There is an argument to be made that their role in providing liquidity to smaller banks is important for the housing market and can be done without making unsound loans.

But Fannie Mae did not spread risky behavior across the market. In fact, the evidence shows that Fannie Mae was late to the game when it came to risky loans. It had to play catch-up to the private groups like Goldman, et al. It frustrates me that this myth among conservatives, even moderates like Brooks, spreads without any evidence to back it up. The evidence is clear that the bulk of the risky behavior was in the private sector and started in the private sector.

Early 2012 Forecasting

My favorite site now by far for election forecasting is the NY Times 538 blog, which looks at politics through polling and statistics. They have had some good posts recently about the 2012 elections, so let's have a look. They are handicapping the Republican field in an interesting way and looking at Obama's chances given our economic situation.

First, the Republicans. The 538 blog feels that early polling can be a pretty good predictor of who will win the nomination. But in this case, they combine polling with name recognition to get an adjusted score. The theory here is that if a candidate polls well among the people who know him or her, then they have a good chance of winning. Looking back, this method fits the outcomes pretty well. So what do we see?

When the post was written, the two front-runners were Mitt Romney and Mike Huckabee - who has since declined to run. Depending on the exact model, Tim Pawlenty looks good, too. After that, Palin, Trump (also not running - big surprise), Bachmann, etc don't look as good. In future posts, the blog says that Herman Cain actually looks pretty good - good support among people who know him but also little election experience - so something to keep an eye on.

Now for Obama. The blog tells us that there is no clear relationship between unemployment and presidential election outcomes. However, the overall state of the economy will be a factor. Obama's current ratings are better than the state of the economy would suggest but this tends to change as we get closer to the election.

Of course it is going to come down to whether the economy is seen as improving slightly and whether voters blame Republicans for the economy or think Obama has had enough time to make improvements and therefore is responsible. My personal feeling is that Obama has a tough case to make. He asked for one stimulus and said that would be enough. It clearly wasn't. He didn't ask for another one, even though good economic analysis clearly showed the need for it.

He probably could not have gotten it, but because he didn't ask, he can't blame the anemic growth and lack of improvement in jobs on obstructionist Republicans. Instead, it looks like fiscal stimulus failed. He went weak and he might pay for it. In some situations, it doesn't pay to be moderate.

All might not be lost, since his foreign policy looks pretty strong. Things are improving in Afghanistan and troops are coming home from Iraq. Also, Bin Laden has been killed, and he looks pretty good on Egypt and Libya.

The 538 blog (and Intrade) thinks Obama is still the favorite. I feel that the Republican field is pretty weak - Romney is a hypocrite, Pawlenty is both boring and his plans are laughable*, and the rest of the field is crazy. That being said, the economy is not looking good and I feel that if he loses because of the economy, it's Obama's own fault.

*In the original version of this post, I called Pawlenty a liar. That isn't what I meant, but was tired and left it in there. I was meaning to refer to his laughable prediction that he could get 5 percent growth over 10 years. It isn't exactly lying, but he is a fool or purposely exaggerating what he can achieve.

Do Republicans Listen to Brooks?

As you probably know, I am a fan of David Brooks. I think he is good at reigning in the extreme elements of both parties and pointing out their excesses. I especially like him because as a conservative (I use the term loosely here), he gives me the sense that I could find some common ground with Republicans.

My question though is whether the party actually listens to him. I sense that Democrats like him, but as the Republican party gets more and more extreme, I wonder if his recommendations are just laughed at by the party.

Here are some parts from a recent column on the debt ceiling:

First, Republicans have to make a grand offer on raising the debt ceiling. This offer should include a bipartisan commitment to reduce the growth of Medicare spending. Republicans need Democratic fingerprints on a plan to restrain entitlements. In exchange, Republicans should offer to raise tax revenues on the rich. They should get rid of the interest deductions on mortgages over $500,000 and on second homes. They should close corporate loopholes and cap the health insurance deduction. They should offer a plan that follows the outline of the Simpson-Bowles report and what the now “Gang of Five” in the Senate is working on. (Senator Mark Kirk has a proposal roughly on this latter point.)

[Edit]

They need to lay out the facts showing that Medicare is unstable and on a path to collapse, as Representative Paul Ryan is doing. But they also need to enmesh Medicare reform within an agenda to build solid communities: more money for community colleges and technical schools, an infrastructure bank, a values agenda to shore up marriage and family cohesion, tax holidays to help the unemployed start businesses, tax reform to limit special interest power.

I can't see the Republican party doing anything to increase taxes. In fact, I see them allowing the status quo of budget deficits before they agree to fix the deficits with any tax increases. Also, the idea that Republicans would support community colleges or infrastructure banks, even though they are pro-growth policies, is also unbelievable.

The fact is, the Republicans have backed themselves into a corner by saying all government spending is bad and all taxes are too high. The only solutions this leaves them are serious and unpopular cuts. The sort of moderate, smart, and reasonable policies that Brooks proposes do not fit in with Republican rhetoric, which means I doubt that the party listens to him at all - unfortunately.


Side Note: I strongly disagree though with Brooks' love for Paul Ryan. Instead, I side with Paul Krugman who has shown quite convincingly that Ryan's plan, while acknowledging Medicare's unsustainable future, chooses to put costs onto seniors to solve the problem.

America Proportional

Ralph Nader's (and others') talk about the lack of third parties made me want to spend more time on that notion - on our plurality / winner-take-all / first-past-the-post system as compared to a proportional system*.

As a first, and I think very fun, step, let's consider all the possible different parties that could exist in our system if we were starting from scratch. In my mind, the list of parties might look like the following:

On the Right
- Libertarian party
- Tea Party
- Conservative party
- Christian Coalition party
- Pro-Business / Pro-Growth party

On the Left
- Communist party
- Socialist party
- Liberal party
- Progressive party
- Blue Dog party

In a proportional system, all these parties would be likely to have some level of success getting votes to have membership in the elected body. But we don't have a proportional system. So let's imagine these parties in a winner-takes-all system, which is what we have.

For argument's sake, let's say that one group, the Progressive party, has the most support, if only by a small amount. (My choice wasn't totally random, I chose the Progressives because I think that's where I would vote, but for this exercise it could be any party.) So if the progressive party has the most support, two of the parties on the right would have every incentive to get together to beat out the Progressives.

For example, the Conservative party might link up with the Tea party, seeing that they have a lot in common and would hate to see a party on the left win. Well now that those two parties have linked and are in the lead, the Progressives might decide to link with another party so that a group on the right doesn't win. So they link up with the Liberal party.

This back and forth would continue until there are two parties competing for the one position because each party would rather help create a winning party on their side, even if it means compromise, then allow a party on the other side to win (this simple rationality and strategic decision-making didn't seem to appeal to Ralph Nader).

In a proportional system, you don't face that choice because all parties receive seats based on their votes. The only pressure toward fewer parties that I can see would result if the top vote-getting party gets the first opportunity to create a government. In that case, you might see parties merge to create the biggest party.

But besides that scenario, in a proportional system, the coalition-forming and governing comes after the election. If the above-listed parties were in a proportional system, and the Progressive Party received the most votes, they would have to see if they could create a majority governing coalition with other (likely left-leaning) parties.

What seems clear to me is that in a plurality system, strategic decisions (not corruption) lead to a two-party system. If people in this country want more parties, they should fight for a proportional system. I think they know that will never happen, so instead they resort to charges of corruption.

I also think compromise and incremental policy-making is a natural result in either structure. The difference, to my mind, is that in a plurality system the coalitions form before the elections and in a proportional system the coalitions form after the elections. Either way, those governing need to make decisions that are popular with a majority of the people. Those on the extreme or in the minority never like this, but it is a fact of popular government.

So when you find yourself with a belief that is in the minority, you should bemoan not the type of government or the candidates or the number of parties, but the fact that more people don't agree with you. And then you should try to change their minds. Perhaps by debating with them.


*For the purposes of this post, I am referring specifically to a party-proportional system, like that in Israel.

A Little History, A Little Lite

I just finished reading EH Gombrich's A Little History of the World. The book has a lot of good things about it, and a few negatives. It is a fast read and an easy general history of the world. And each little piece of history you get can prompt you to do further research to get more in depth.

However, because it is so fast, it is very superficial. And times it is very clear that the summary is less than accurate - or just too superficial to be useful. In those cases - or all cases - further research is probably necessary. (The most clear example is the American Civil War. I wouldn't go to this book for a description of that anyway, but when you see what is lacking in that description, you can imagine what is lacking in other descriptions.)

Granted, this book is meant for children, so the lack of depth should be considered in that context. However, children shouldn't be given inaccurate information just for the sake of brevity.

But probably the biggest deficiency of the book is the western focus. When dealing with other cultures outside of Europe, it recognizes some of their accomplishments, but through omission suggests that there wasn't much of interest going on.

The book hardly talks about Russia before the communist revolution. And its coverage of China and the Middle East is similarly lacking. And Africa and South America aren't even covered except to talk about how they were colonized.

A less western-focused book could have talked more about the other great civilizations including the Inca and the Maya, more of the Chinese dynasties, Muslim culture beyond just the conquests, the major African civilizations, and the native tribes in North America.

Considering the strong deficiencies, I am not sure if I would recommend this book to my child (when old enough to read it). I guess as long as he understands what is lacking and will do further research, I would be okay with it. But here's hoping for another author to complete a similar book that includes non-western cultures more. And finds a better way to be brief but more accurate - or admit where he is being too general.

Inside Job: A Review

This year's Oscar for Best Documentary went to Inside Job. Since I read (although didn't quite finish) Sorkin's Too Big to Fail, which is about the financial collapse, I thought I would like the movie even more. I didn't.

The movie tells a one-sided story about the financial collapse, blaming it all on Wall Street. Since Paul Krugman has actually blamed a global savings glut for the bubble and the recession, I have to accept that the documentary is not telling the full truth.

But I do believe that the financial industry along with moderate and conservative politicians and many economists, bear significant blame for the size of the recession and the need for a bailout. So I am only slightly offended that the movie beat up on those parties that called for deregulation.

What really bothered me about the movie though was that the interviewer was not very good at asking good tough questions. His questions were too broad and vague and he often allowed people to simply disagree without any explanation. He probably thinks this made the respondents just look stupid when you compare their answers to the evidence. But I think it doesn't give the interviewees a fair shake and at the same time it missed an opportunity to really get the interviewees.

For example, when talking about executive compensation, he asks if it is excessive. The industry lobbyist was able to simply say, "no". Instead he should have asked whether the compensation rewarded bad behavior by rewarding short term profit without punishing long term risk and loss.

Similarly, he asked about conflicts of interest among economists. The economists would just say no and were never pushed. Instead of asking whether it impacted objectivity when an economist was writing about complex derivatives but also being paid by companies that made a lot of money on derivatives, the interviewer just asked where the economist got his compensation from.

The whole movie had the feel of wanting to beat up on the guilty parties instead of having a real dialogue with them. It seemed to actually try to avoid conversation and using tricks to tell the viewer to hate the person on screen. In fact, most people it wanted to portray negatively refused to appear on screen, which seemed to work fine for those making the movie since they made it seem like those how refused were trying to hide something. But it would have made a better movie had they been able to convince those people that they would have had a real conversation.

As for how it won an Oscar, I wonder if Hollywood was overjoyed to see a movie that made other really rich people look like monsters and made the Hollywood-types - also very rich - feel superior. Just a hunch.

The one thing I hadn't known or thought about before seeing the movie was the issue of conflicts of interest among economists. I think it is a serious issue, but it is one that permeates so many other industries that need to be regulated (conflicts in the pharmaceutical industry has been getting attention lately, but we know that revolving door issues affect many government programs' effectiveness). An across the board - for all industries - conflicts of interest policy is much needed.

On Truman

I finished watching the American Experience documentary on Harry Truman and I have to say that I am thoroughly unimpressed. Maybe if I read McCullough's book I'll understand why people seem to love Truman, but I doubt it. Let's look at his record.

The Good
It seems Truman deserves a good deal of respect for his position on civil rights. He was ahead of his time and so took a pro-civil rights position at great political risk. He integrated the military and supported anti-lynching laws. Though his position was the right one, he wasn't wildly successful.

The Marshall Plan is probably Truman's proudest accomplishment. American aid helped get western Europe through the post-war years and prevented what might have been a move to communism. However Truman, wisely and rightly, gave credit to Secretary of State John Marshall.

Truman is also famous for the saying, "The Buck Stops Here." Accountability is a great thing, but shouldn't be considered a major feat or accomplishment.

The Bad
I already talked about the atomic bomb and how he could have and should have had it dropped on military targets first instead of two large cities leading to the deaths of tens of thousands of civilians.

He was also seemingly anti-union in practice. After the end of the war, there were battles between businesses and unions. Business wanted an end to price controls and unions wanted higher wages. It seemed that Truman hated when unions went on strike. In fact, he proposed - illegally - to draft railroad union members if they went on strike. I'm sure conservatives like this, but I don't.

His conduct during the Korean War was terrible. His decision to advance beyond the 38th parallel when China made it clear they would intervene if the UN / US force did so was appalling. He seemed to blame that situation on MacArthur. Granted, MacArthur was amazingly insubordinate, but the blame for the tens of thousands of American deaths that resulted from the advance beyond the 38th parallel lays entirely with Truman. There was no reason to advance and every reason to think it would be a grave mistake.

Truman was also the first president to have to deal with the communist threat, and he used scare tactics that would persist for decades to achieve his foreign policy goals. But those same tactics boxed him in domestically where he required federal employees to take loyalty oaths. And this same rhetoric arguably gave rise to to Senator Joseph McCarthy. A more wise and able president could have presented the threat to communism in a way that didn't allow for people on the far left - ones who had no desire to overthrow the government - to have their lives ruined.

Maybe it is unfair, but there are other small examples that leave me with a low impression of him. His own draft speech against unions, portrayed in the documentary, was amateurish and extreme. Even more so was his letter to the journalist that attacked his daughter's signing.

And I can't get over his relationship with his wife. She seemed to treat him badly and maybe didn't even respect him. Yet he always seemed to grovel and flatter her. Sure, patience is a virtue, but being a doormat is not.

Conclusion
Overall, I don't see enough good from President Truman to have a high opinion of him. In fact, I get every impression that he was in over his head - which he himself thought at times. Although he originally was elevated to president after Roosevelt died, he ran for his own term in 1948.

I have long thought that President Bush was in over his head and should not have ran for president. Even more so with Sarah Palin. The "everyman" should not be president. Only extraordinary men and women should be president. This doesn't mean ivy league, but it does mean people that are smart and well-educated and well-informed on history and current events.

After watching this movie, I have to think that Truman was in over his head, as was Bush. And neither should have put the country at risk by running for president when they felt - or should have felt - under-qualified.

Dear Conservative: Stimuls or What? Update

Dear Conservative, (Update)

(This was a crappy post and so I want to re-write it.)

I am baffled by the Republican (your) response to this recession. The economic data tells us that fiscal stimulus is the only solution. We are up against the zero bound for interest rates, rendering monetary fixes useless (unless we change inflation expectations, which isn't going to happen and why QE2 was so ineffective).

So explain to me why another stimulus is a bad idea. Either you don't think government should do anything (which puts you farther right than Greenspan and Bernake) or you only support monetary policy and so are okay with ineffective policy and ultimately a lasting recession.

Maybe you don’t feel quite prepared to talk about this; that you aren’t that well versed on economics - specifically liquidity traps - and so for now you trust your party. Fine. Let’s do this. We’ll read two books. One by liberal Paul Krugman. The other by Fed Chairman (appointed by George W. Bush) Ben Bernake. Deal?

Deja Vu

As you might guess, I have less time to read the news and blog these days. But one place I still check in on is Paul Krugman's blog. When it comes to economics, budget, and spending issues - including health care - he has the most clear writing and the best analysis.

Yet it seems to me he spends a lot of time repeating himself. I don't blame him of course. I think it stems from the fact that he makes obvious points that fail to make any traction. Take a recent post explaining that federal spending as a percent of GDP has increased recently in large part because GDP growth has slowed so much and because spending on the safety net increased to deal with the recession. I swear I have read this at least a few times. (It is also true that much of the budget debt we have is due to Bush policies - and Krugman has made this point as well.)

In another post, Krugman makes the point that the health care plan we have is as conservative as it can be if we want to have something close to universal coverage. I am sure Krugman has made this point before as well.

It is a shame that Krugman, and those making similar points, are not being heard.

Welcome Back Mr. President

This is the president I voted for! This is what I want from him. He lays out a clear vision of the government he wants and he attacks the Republican (Paul Ryan) plan.

Maybe I misjudged him. Maybe he was right to keep quiet and get the small compromise victories of the tax deal and the 2011 budget and save the big government discussion for the real big compromise. And maybe this compromise would not have happened had he been as vocal as I would have liked. Maybe.

Let's hope though that Obama doesn't let this be the one time he speaks about his vision. He needs to keep hammering home what a deficit plan should look like. Not everyone will read this speech. But if he talks enough about it, people will know what he wants and may be convinced he is right. But they can only do that if they hear him often.

Mandate and Overreach

If I have learned anything from Obama's election followed by Republican victories in the mid-terms, it is that both sides are bound to misinterpret their victories. Barack Obama, and the Democratic Party, saw the election as a mandate on liberal policies (as opposed to short term correction from bad Bush policies and a victory over an inferior candidate). So they went big and they went hard. They passed a health care reform that was complicated and let Republicans define it as excessively liberal and an overreach.

Looking back, I think Democrats should have focused entirely on the financial crisis, the economy and financial reform. And they could have also made small improvements on health reform.

Republicans though seem to similarly think that there is a huge mandate to reform government. They are talking about drastic cuts to current spending and major changes to entitlement programs and government regulation like EPA. John Boehner seems to be playing it smart and not overreaching on his election. He reached a decent compromise (one I am not happy about, but was good for him), instead of allowing for a government shut-down. There was a lot of talk about how Republicans would be blamed for a shut-down - talk I found nauseating, but probably true. I don't think the 2010 elections were a signal that the public wants serious cuts in programs.

That being said, we'll see if the Republicans can maintain discipline. There is a fight coming up around the debt ceiling, and there is a good chance they will overreach and draw a backlash. (There is also a good chance that the opposite happens; that they extract major concessions from the craven Democrats.)

My basic point is that rarely does public opinion change so much to warrant major policy changes. Those rare examples usually come from major upheavals like the Great Depression - and as bad as this financial crisis has been, it doesn't seem to be having the same widespread impact, thankfully. Politicians should instead realize that the public is often ready for incremental change. If you want to go bigger, you can, but be prepared for a backlash and hope that your changes withstand it.

Budget Deal: When Bipartisanship Sucks

I like to think of myself as a moderate - or at least as a reasonable person supportive of compromise and happy when compromise happens. However, the recent budget deal does not make me happy - and for two reasons.

First, to the extent that we have a debt problem that needs to be addressed, it is a long term problem. Our current spending levels are unsustainable only in the long term considering the trends we see in our entitlement programs, especially Medicare and Medicaid. But there is no evidence of short term problems; bond markets are not signifying that they are worried about American debt.

And yet, if you listen to our dialogue, you would think the problems are short term and immediate. Republicans have done a great job at framing the issue about something that has to be addressed now.

Whether or not deficit spending is dangerous right now is especially important since we are in a recession where monetary policy is largely ineffective (as we are up against the zero bound). Since deficit spending is not a problem, the ideal policy, if we were actually smart and objective, would be to deficit spend (fiscal stimulus) right now to help get the economy going while addressing the long term problems.

We are of course doing the opposite. We are cutting spending now, when we need it most, and not addressing future issues at all. And Paul Ryan's plan, which pretends to be addressing those issues, cuts taxes as much as revenues, leaving us in the same place long term we are now (the plan also uses unbelievable forecasts about employment and discretionary spending).

The second reason this budget deal depresses me is that Democrats, especially the President, have not been standing up for Democratic causes and they have not been making the case I made above. Instead, they have ceded the issue, accepting that we need to make cuts. And Democrats have refused to point out that as Republicans talk about making sacrifices, they are really asking the poor and middle class to make sacrifices while pushing for the rich to get rewards.

I would feel much better about compromise if Democrats were at least defending their position before accepting a deal. There is a real argument for why cuts shouldn't happen now, and nobody in government is making them.