Both candidates gave speeches on the economy a few weeks back, and I think they were both right, which is unfortunate for the country.
Romney is right that Obama’s policies haven’t improved the economy enough. Granted, Republicans have stood in the way of the few things Obama has proposed. But what he proposed was relatively modest and he has barely made the case that unemployment is our biggest problem and that his proposals are big enough to handle it.
On the flip side, Obama is right that Romney’s policies won’t help the short term problem of high unemployment. More importantly, his policies are a return to those of George W. Bush. And remember, even without considering the crash (which was the result of ultra-free market policies of Clinton and Bush), Bush's economic record is one of very slow growth.
In other words, if Obama is elected and Republicans control at least one chamber, we are looking at the status quo - Obama paying limited attention to unemployment and having his small proposals blocked. But if Romney is elected, he'll let loose the free market, which won't improve short term growth or put us on a path to high medium term growth, but will lead to more risk and possibly more bail outs.
This is why we need Bernake and the Fed to act like the grownups and get us out of this. Unfortunately, they don't see an urgency or any serious problems.
Monday, July 30, 2012
Romney and Bain: More Thoughts
This is a post I drafted a month or so ago. Ezra Klein has written much better posts on this topic, but I still want to post my thoughts for posterity.
The debate around Mitt Romney's time at Bain and how it qualifies him for president continues and I have some more thoughts.
First, his time at Bain is definitely fair game since that seems to be the only thing he talks about that qualifies him for president. Romney is saying that because of his time at Bain Capital, he knows how businesses work and he knows what it will take to get the economy going again.
To be clear, I don't actually think that is true. The economy is a huge complicated system and especially during a major recession the focus should be on macroeconomics instead of microeconomics. So if we wanted the best person for the economy, we would elect a macro-economist instead of a businessman.
I understand many people might not agree with that though. So let's think about what knowing about businesses would help Romney do? I agree with President Obama that by knowing only about businesses, Romney will miss all of the other important constituencies that a president needs to think about.
For example, Romney might have learned that regulations get in the way of business. In fact, that does seem to be something he believes strongly. But by only seeing things from the business's perspective means he wouldn't understand why the regulations are necessary. Lots of businesses would rather there weren't anti-pollution regulations or safe workplace regulations, but they protect lots of people and compensate for major and known negative externalities.
Also, Romney might have learned that taxes are bad for businesses. Again, this is something Romney has said. But only thinking about the business would mean he doesn't understand why taxes are necessary - he might be blind to all of the necessary services that tax revenues support from education and transportation to health and security.
My point is that Romney's experience at Bain isn't particularly helpful for a president because of how limiting it is. Better experience would be if Romney had been a state governor. If he had been, he might have seen how important things like healthcare are and might have proposed legislation that could extend coverage and might be a national model. And if he had done that, he could talk about it and show how he cares about helping everyone.
But based on the way Romney is campaigning, it seems like he hasn't done that and it seems that his only experience is at Bain Capital.
The debate around Mitt Romney's time at Bain and how it qualifies him for president continues and I have some more thoughts.
First, his time at Bain is definitely fair game since that seems to be the only thing he talks about that qualifies him for president. Romney is saying that because of his time at Bain Capital, he knows how businesses work and he knows what it will take to get the economy going again.
To be clear, I don't actually think that is true. The economy is a huge complicated system and especially during a major recession the focus should be on macroeconomics instead of microeconomics. So if we wanted the best person for the economy, we would elect a macro-economist instead of a businessman.
I understand many people might not agree with that though. So let's think about what knowing about businesses would help Romney do? I agree with President Obama that by knowing only about businesses, Romney will miss all of the other important constituencies that a president needs to think about.
For example, Romney might have learned that regulations get in the way of business. In fact, that does seem to be something he believes strongly. But by only seeing things from the business's perspective means he wouldn't understand why the regulations are necessary. Lots of businesses would rather there weren't anti-pollution regulations or safe workplace regulations, but they protect lots of people and compensate for major and known negative externalities.
Also, Romney might have learned that taxes are bad for businesses. Again, this is something Romney has said. But only thinking about the business would mean he doesn't understand why taxes are necessary - he might be blind to all of the necessary services that tax revenues support from education and transportation to health and security.
My point is that Romney's experience at Bain isn't particularly helpful for a president because of how limiting it is. Better experience would be if Romney had been a state governor. If he had been, he might have seen how important things like healthcare are and might have proposed legislation that could extend coverage and might be a national model. And if he had done that, he could talk about it and show how he cares about helping everyone.
But based on the way Romney is campaigning, it seems like he hasn't done that and it seems that his only experience is at Bain Capital.
Saturday, June 09, 2012
American Lion or Lamb?
American Lion: Andrew Jackson in the White House
by John Meacham
When I was on vacation in Charleston, South Carolina, I saw a pair of paintings of presidents playing cards. One is of Republican presidents and the other Democratic presidents, and both feature the ostensible founder of the party - back to the painting - playing with the modern presidents in that party. So the Republican painting has Abraham Lincoln playing with Teddy Roosevelt, Nixon, Eisenhower, Ford, Reagan, and both Bushes. The Democrat painting has Andrew Jackson playing with Wilson, FDR, Truman, Kennedy, LBJ, Carter, and Clinton.
On first look, it poses what might be an interesting question: what would it be like if the modern presidents were able to talk with the founder of their party? But on thinking a little more, the real question is whether the current presidents have anything in common with their founder?
Andrew Jackson, the founder of the Democratic party, initiated the Native American removal policy - forcibly sending Native Americans west of the Mississippi - ended the Second Bank of the United States, prevented state nullification of federal laws but supported slavery and states rights generally. And he was ostensibly a war hero, having fought the battle of New Orleans in the War of 1812.
He was also a populist - the first frontiersman elected president - and very popular among the general population. He greatly expanded the presidency, exercising the veto much more often and setting an agenda independent of Congress.
John Meacham's book, American Lion, focuses on Jackson's White House years, and therefore only gives us the briefest overview of his early life and elections. We learn a little about his fights and duels, the battle of New Orleans, his wife and her passing, the failed election where John Quincy Adams won in the House of Representatives, and his election in 1828 and the creation of the Democratic Party.
Then we are taken through his presidency in some more detail. Meacham shows us the controversy over his Secretary of War John Eaton and his wife, which divides his supporters. And in fact, this one of the great weaknesses of this book (which inexplicably won the Pulitzer Prize). Meacham spends far more time on the gossip and familial / staff battles over Secretary Eaton than he does on other far more important topics. Having said that, he does seem to cover the issue fairly; neither side looks very good. Eaton's wife does come off as unpleasant but the others look uptight and elitist.
Meacham covers all of the major issues of the presidency: nullification and the tariff, Native American Removal, the ending of the Second Bank's charter, the dispute between America and France over war debt. But in some cases he is too brief (Native American Removal and the tariff) but in all cases he spends less time on them than he does the Eaton affair.
But worse than that is the lack of objectivity in this book. Meacham spends countless paragraphs telling the reader that Jackson was a great leader and his men and the public generally loved him and trusted him to save them. The author would have benefited from more show and less tell.
And on the other side, he glosses over major areas of concern. He doesn't talk at all about the impact of the closing of the Second Bank of the United States. Once it is ended, it is of no importance to the author. There is only a quick sentence at the end of the book that some think its closing caused a major recession. The reader would have benefited from a discussion and analysis of the impact.
The same is true of Native American removal. He talks about why Jackson did it but is too fair. And then barely talks about the mass suffering and deaths from the actual implementation. He quickly blames it on Jackson's successor, Martin Van Buren who was president when it actually happened. Is it fair to blame it on Van Buren? Did Jackson have a safer plan that Van Buren didn't implement? Again, the reader would have benefited from more discussion of this.
The author might argue that the book is only about the White House years. But both of these things happened in the White House years and their longer-term impacts should be discussed.
Overall, the book is a pretty fast read. It might be fine for someone who just wants a quick overview of Jackson's presidency (which is what I was looking for). However, if you have a little more time, reading one of the other bios is probably worth it. I plan to read HW Brand's book sometime in the future to get a much better understanding of Andrew Jackson.
So what would the 20th Century Democratic presidents think of their party's founder? Or what should liberals and progressives think of Andrew Jackson? Native American removal is a stain on our history. And Jackson was very wrong on the issue of slavery at a time when the abolition movement was growing. There isn't enough information to make any decision about the Second Bank of the US.
And yet he handled nullification in a way that avoided - or as we know only delayed - secession and civil war. And he expanded the president's powers in a way that makes perfect sense by making it co-equal with Congress. I think we can recognize the scale of his impact but say his policies were not progressive and therefore not positive. I think the modern Democratic presidents would agree. That doesn't mean it would be an unpleasant card game though.
by John Meacham
When I was on vacation in Charleston, South Carolina, I saw a pair of paintings of presidents playing cards. One is of Republican presidents and the other Democratic presidents, and both feature the ostensible founder of the party - back to the painting - playing with the modern presidents in that party. So the Republican painting has Abraham Lincoln playing with Teddy Roosevelt, Nixon, Eisenhower, Ford, Reagan, and both Bushes. The Democrat painting has Andrew Jackson playing with Wilson, FDR, Truman, Kennedy, LBJ, Carter, and Clinton.
On first look, it poses what might be an interesting question: what would it be like if the modern presidents were able to talk with the founder of their party? But on thinking a little more, the real question is whether the current presidents have anything in common with their founder?
Andrew Jackson, the founder of the Democratic party, initiated the Native American removal policy - forcibly sending Native Americans west of the Mississippi - ended the Second Bank of the United States, prevented state nullification of federal laws but supported slavery and states rights generally. And he was ostensibly a war hero, having fought the battle of New Orleans in the War of 1812.
He was also a populist - the first frontiersman elected president - and very popular among the general population. He greatly expanded the presidency, exercising the veto much more often and setting an agenda independent of Congress.
John Meacham's book, American Lion, focuses on Jackson's White House years, and therefore only gives us the briefest overview of his early life and elections. We learn a little about his fights and duels, the battle of New Orleans, his wife and her passing, the failed election where John Quincy Adams won in the House of Representatives, and his election in 1828 and the creation of the Democratic Party.
Then we are taken through his presidency in some more detail. Meacham shows us the controversy over his Secretary of War John Eaton and his wife, which divides his supporters. And in fact, this one of the great weaknesses of this book (which inexplicably won the Pulitzer Prize). Meacham spends far more time on the gossip and familial / staff battles over Secretary Eaton than he does on other far more important topics. Having said that, he does seem to cover the issue fairly; neither side looks very good. Eaton's wife does come off as unpleasant but the others look uptight and elitist.
Meacham covers all of the major issues of the presidency: nullification and the tariff, Native American Removal, the ending of the Second Bank's charter, the dispute between America and France over war debt. But in some cases he is too brief (Native American Removal and the tariff) but in all cases he spends less time on them than he does the Eaton affair.
But worse than that is the lack of objectivity in this book. Meacham spends countless paragraphs telling the reader that Jackson was a great leader and his men and the public generally loved him and trusted him to save them. The author would have benefited from more show and less tell.
And on the other side, he glosses over major areas of concern. He doesn't talk at all about the impact of the closing of the Second Bank of the United States. Once it is ended, it is of no importance to the author. There is only a quick sentence at the end of the book that some think its closing caused a major recession. The reader would have benefited from a discussion and analysis of the impact.
The same is true of Native American removal. He talks about why Jackson did it but is too fair. And then barely talks about the mass suffering and deaths from the actual implementation. He quickly blames it on Jackson's successor, Martin Van Buren who was president when it actually happened. Is it fair to blame it on Van Buren? Did Jackson have a safer plan that Van Buren didn't implement? Again, the reader would have benefited from more discussion of this.
The author might argue that the book is only about the White House years. But both of these things happened in the White House years and their longer-term impacts should be discussed.
Overall, the book is a pretty fast read. It might be fine for someone who just wants a quick overview of Jackson's presidency (which is what I was looking for). However, if you have a little more time, reading one of the other bios is probably worth it. I plan to read HW Brand's book sometime in the future to get a much better understanding of Andrew Jackson.
So what would the 20th Century Democratic presidents think of their party's founder? Or what should liberals and progressives think of Andrew Jackson? Native American removal is a stain on our history. And Jackson was very wrong on the issue of slavery at a time when the abolition movement was growing. There isn't enough information to make any decision about the Second Bank of the US.
And yet he handled nullification in a way that avoided - or as we know only delayed - secession and civil war. And he expanded the president's powers in a way that makes perfect sense by making it co-equal with Congress. I think we can recognize the scale of his impact but say his policies were not progressive and therefore not positive. I think the modern Democratic presidents would agree. That doesn't mean it would be an unpleasant card game though.
Wisconsin Recall
I didn't like the California recall election in 2003, where Gray Davis was recalled and Arnold Schwarzenegger was elected. And I don't like the recall in Wisconsin. Short of illegal activity, elected officials should serve out their terms. If we had recall elections for every elected or executive official that is unpopular at some point in their term, officials would never be able to govern.
Fortunately, these things happen infrequently, and I hope it stays that way. And frankly, I am kind of glad Scott Walker won the recall because it will give other groups in other states pause before trying this. If Walker had lost, Republicans likely would have reacted by going after Democratic governors in every state they could.
While someone is governing, all energy should be going towards policy debates. We should save the politics for the elections. Recalls threaten to make everything about politics and elections never-ending.
The recall was also just bad strategy on the Democrat's part. They could have moderated Scott Walker with protests and other tactics to bring down his polling numbers. In fact, there was a time when Walker was at least talking about finding consensus and moderating a bit because of those tactics. He may not have been genuine, but he at least felt chastened and compelled to say those things.
But now that he won the recall decisively, he will feel no need to moderate and will only be more aggressive - more far-right. And worse, he is being discussed as a potential national candidate. Before the recall effort, he looked like a buffoon who went too far. Now the press is calling him a conservative hero. Granted, I think the press greatly exaggerates things, but the point is that wouldn't have been said 6 months ago.
There is also evidence that many people voted for Scott Walker simply because they didn't agree with the recall effort. This means that his overwhelming victory is partly based on moderates disagreeing with Democrats' tactics and therefore exaggerating Walker's overall support. This makes Scott Walker stronger than he should be. Overall, this was really bad strategy.
Fortunately, these things happen infrequently, and I hope it stays that way. And frankly, I am kind of glad Scott Walker won the recall because it will give other groups in other states pause before trying this. If Walker had lost, Republicans likely would have reacted by going after Democratic governors in every state they could.
While someone is governing, all energy should be going towards policy debates. We should save the politics for the elections. Recalls threaten to make everything about politics and elections never-ending.
The recall was also just bad strategy on the Democrat's part. They could have moderated Scott Walker with protests and other tactics to bring down his polling numbers. In fact, there was a time when Walker was at least talking about finding consensus and moderating a bit because of those tactics. He may not have been genuine, but he at least felt chastened and compelled to say those things.
But now that he won the recall decisively, he will feel no need to moderate and will only be more aggressive - more far-right. And worse, he is being discussed as a potential national candidate. Before the recall effort, he looked like a buffoon who went too far. Now the press is calling him a conservative hero. Granted, I think the press greatly exaggerates things, but the point is that wouldn't have been said 6 months ago.
There is also evidence that many people voted for Scott Walker simply because they didn't agree with the recall effort. This means that his overwhelming victory is partly based on moderates disagreeing with Democrats' tactics and therefore exaggerating Walker's overall support. This makes Scott Walker stronger than he should be. Overall, this was really bad strategy.
So Timid
I really don't understand why Democrats are so timid and why Republicans are so brave. I am especially confused because Republican positions are mostly unpopular generally. And in many cases, Democrats could make a really strong argument if they had some courage.
Take the recent testimony before Congress by Ben Bernake. The summary is that Republicans pressed him for less action - less monetary stimulus - while Democrats did not press him to do more.
This is crazy. Republicans are saying the economy is in bad shape because of Obama, while opposing both fiscal and monetary policy - opposing everything that could actually help. And Democrats are doing nothing.
In a previous post, I had argued against someone who thought that the problem is that Democrats want fiscal stimulus and Republicans want no stimulus. Maybe I was wrong. Maybe it is only the liberal economists that want monetary stimulus, but liberal politicians want... nothing? fiscal stimulus? I don't know what they want because they are barely saying anything.
I just continue to be amazed that Republicans are strongly arguing for far right policies. And all Democrats can muster are a few general populist messages but are too scared to articulate an approach from the left. Paul Ryan has a far right budget plan. Where is the plan from the left?
This is why Republicans can win in November: not because their ideas are more popular, but because Democrats lack the courage to have a real debate.
Take the recent testimony before Congress by Ben Bernake. The summary is that Republicans pressed him for less action - less monetary stimulus - while Democrats did not press him to do more.
This is crazy. Republicans are saying the economy is in bad shape because of Obama, while opposing both fiscal and monetary policy - opposing everything that could actually help. And Democrats are doing nothing.
In a previous post, I had argued against someone who thought that the problem is that Democrats want fiscal stimulus and Republicans want no stimulus. Maybe I was wrong. Maybe it is only the liberal economists that want monetary stimulus, but liberal politicians want... nothing? fiscal stimulus? I don't know what they want because they are barely saying anything.
I just continue to be amazed that Republicans are strongly arguing for far right policies. And all Democrats can muster are a few general populist messages but are too scared to articulate an approach from the left. Paul Ryan has a far right budget plan. Where is the plan from the left?
This is why Republicans can win in November: not because their ideas are more popular, but because Democrats lack the courage to have a real debate.
Tuesday, June 05, 2012
Great Minds
Great minds think alike, right? That saying is probably more often invoked by a lesser mind to associate with a great mind. That might be the case here.
A while ago, I wrote a post wondering if we would get out of the recession faster with a Republican as president because they would actually try stimulative policies so they could stay in power whereas Republicans oppose stimulus mostly to keep Obama from being successful.
Ezra Klein wonders the same thing, in a much more thorough and better written post.
A while ago, I wrote a post wondering if we would get out of the recession faster with a Republican as president because they would actually try stimulative policies so they could stay in power whereas Republicans oppose stimulus mostly to keep Obama from being successful.
Ezra Klein wonders the same thing, in a much more thorough and better written post.
Monday, June 04, 2012
Another Extreme Example
Ezra Klein linked to a post where Tyler Cowen posts the following comment from another site:
Let that sink in. Republicans are opposing Milton Friedman policies.
Too many people are trying to say the two sides are equally to blame. But this example makes it perfectly clear, contrary to the commenter, that the Republicans have gone off the reservation and won't even agree to Democrat suggestions that line up with old Republican positions - positions that used to be far to the right at the time.
It’s incredibly frustrating. The political and policy world falls into two camps:This is silliness. Actually what is happening is that the Republican v. Democrat debate was over whether to use monetary or fiscal policy (respectively). Now the debate is whether to do anything. Milton Friedman is too liberal for the Republicans, which shows how far right they have gone. While Democrats are openly calling for more monetary policy.
Those who believe no stimulus is necessary, everything is supply-side. Those who believe stimulus is necessary but only fiscal stimulus can or should supply it.
It’s like people completely forgot the existence of Milton Friedman, and decided to revert to the stupidest possible version of New Keynesianism, where interest rates are the only lever of monetary policy and the printing press is something that only functions when rates are above zero.
I feel like to both the centre left and the right, Milton Friedman is too heretical now — too right-wing for the left obviously and too left-wing for the right. Consequently, everything about monetarism has been stripped out of the public consciousness and we are left with vulgar Keynesianism and vulgar Austrianism.
We truly live in a Dark Age of economics.
Let that sink in. Republicans are opposing Milton Friedman policies.
Too many people are trying to say the two sides are equally to blame. But this example makes it perfectly clear, contrary to the commenter, that the Republicans have gone off the reservation and won't even agree to Democrat suggestions that line up with old Republican positions - positions that used to be far to the right at the time.
Wishful Thinking as Usual
According to an article on Politico, President Obama thinks the Republican craziness will end after he wins reelection. He thinks that the craziness stems from trying to prevent him from being reelected. His wishful thinking and refusal to understand the current Republican thinking is distressing.
First, the Republicans want to prevent any accomplishments for him period. They don't want him to have a lasting record and don't want Democrats to have anything to campaign on.
But more importantly, the party itself has gone hard to the right. And there are only two things that will moderate the party.
One is big election losses that would make the party realize how unpopular their positions really are - from an insistence that all budget balancing come from program cuts to disbelieving global warming, and from immigration reform to opposing even civil unions.
The other thing that would moderate the party would be winning the upcoming elections and actually imposing their crazy agenda.
But a victory by Obama and a divided or Republican Congress will not moderate the party. Believing otherwise is naive. And I had hoped the president had learned his lesson after the debt ceiling debacle.
First, the Republicans want to prevent any accomplishments for him period. They don't want him to have a lasting record and don't want Democrats to have anything to campaign on.
But more importantly, the party itself has gone hard to the right. And there are only two things that will moderate the party.
One is big election losses that would make the party realize how unpopular their positions really are - from an insistence that all budget balancing come from program cuts to disbelieving global warming, and from immigration reform to opposing even civil unions.
The other thing that would moderate the party would be winning the upcoming elections and actually imposing their crazy agenda.
But a victory by Obama and a divided or Republican Congress will not moderate the party. Believing otherwise is naive. And I had hoped the president had learned his lesson after the debt ceiling debacle.
Sunday, June 03, 2012
Bully Romney?
A story surfaced recently that Romney bullied someone in high school and possibly chose one person because he was gay. I don't think whether Romney bullied means anything about whether he would be a good president. But how he has responded does say something about how he will be as president.
The reason I don't think it matters whether he bullied is because lots of kids bully. I was pretty mean at times. Kids don't really get how much they hurt other people and so without proper supervision and instruction, kids will be mean and kids will bully. It doesn't necessarily mean that a kid that bullies will be a mean person as an adult.
But it does matter how Romney handles it - and he didn't handle it well. He was a little bit contrite and apologetic, which is nice, but at the same time a bit dismissive. He says he was involved in "pranks and hijinks". That shows that Romney doesn't really take it seriously and hasn't learned anything.
What he should have learned is that kids bully but they shouldn't and we should try to prevent it. Good work is being done here in NYC (see Respect for All) thanks to leadership from the NY City Council. We do it by educating teachers and students about what is acceptable and how it affects people.
A Romney that takes it seriously and that learned from his youth would say that he is deeply sorry for any hurt he caused and he wishes he could go back in time and talk to that young Romney. And as importantly, he would say that he is committed to having or promoting programs that deal with this issue to prevent bullying in schools. He did apologize but he definitely didn't talk about this issue more broadly.
No one should be bullied and we should work and aspire to preventing it. Romney is not up to the challenge and I wonder if he even thinks it is a problem.
The reason I don't think it matters whether he bullied is because lots of kids bully. I was pretty mean at times. Kids don't really get how much they hurt other people and so without proper supervision and instruction, kids will be mean and kids will bully. It doesn't necessarily mean that a kid that bullies will be a mean person as an adult.
But it does matter how Romney handles it - and he didn't handle it well. He was a little bit contrite and apologetic, which is nice, but at the same time a bit dismissive. He says he was involved in "pranks and hijinks". That shows that Romney doesn't really take it seriously and hasn't learned anything.
What he should have learned is that kids bully but they shouldn't and we should try to prevent it. Good work is being done here in NYC (see Respect for All) thanks to leadership from the NY City Council. We do it by educating teachers and students about what is acceptable and how it affects people.
A Romney that takes it seriously and that learned from his youth would say that he is deeply sorry for any hurt he caused and he wishes he could go back in time and talk to that young Romney. And as importantly, he would say that he is committed to having or promoting programs that deal with this issue to prevent bullying in schools. He did apologize but he definitely didn't talk about this issue more broadly.
No one should be bullied and we should work and aspire to preventing it. Romney is not up to the challenge and I wonder if he even thinks it is a problem.
Saturday, June 02, 2012
On Consistency
A major theme for opponents of Mitt Romney has been his huge change on many issues - moving from being a very moderate Republican to a very conservative one. There has been some debate recently about whether consistency really matters to voters.
Before I get to whether I think it affects voters actual decisions, I will say that it certainly affects my thinking and I think it is worth the press covering the fact that positions have changed. It matters because it gives a sense of the candidate's character. For example, President Obama recently changed his position on same sex marriage. Many people though wondered how genuine his position has been on this.
There is some evidence he favored same sex marriage while a state senator, then changed his position when he had more national ambitions. And his comments that his position is "evolving" seemed just ridiculous. So many believe that he changed his mind to support same sex marriage only when it was right politically.
John Kerry faced bad press over his changed position on the Iraq War, and maybe rightly so. He supported it before he opposed it.
Mitt Romney is also facing questions about his changed positions on gun control, abortion, gay rights, health care, auto industry bailout and more that I am probably forgetting. All of this reinforces the image of someone who will change any position if it means becoming president. If he can go from becoming a moderate to a "severe" conservative, than what does he really stand for.
So I think all of these examples say something about the character of the candidate. But it also says something about being an elected leader in a representative democracy. Voters want to elect someone who agrees with them. But they also want to elect someone who has real convictions and strong character.
Ideally, they want both. In the GOP primary, Romney won because the only candidates that were more consistent had other much bigger flaws. I think if there had been someone more consistently conservative and with good credentials, they would have chosen that person.
The question is which do they prefer when those two cannot go together? I agree with the Monkey Cage that ultimately they want someone that agrees with them now. Democrats are happy that Obama finally supports same sex marriage and Democrats were happy when Kerry changed his mind on Iraq - as Democratic and independent voters had done. And Republicans would far prefer a Romney that changed all of his positions to follow a party that is turning hard right than if Romney had stood fast to most of his moderate beliefs. (Which is why Huntsman had little chance).
The problem is that candidates often have to follow the voters. When voters change their minds, we blame the politicians for being just as fickle as the voters are. Maybe that isn't fair. Or maybe it is. Maybe it makes sense to chose someone whose judgement is sound and doesn't have to change their minds and is right from the beginning. Probably a bit naive, but a good goal, I think.
Before I get to whether I think it affects voters actual decisions, I will say that it certainly affects my thinking and I think it is worth the press covering the fact that positions have changed. It matters because it gives a sense of the candidate's character. For example, President Obama recently changed his position on same sex marriage. Many people though wondered how genuine his position has been on this.
There is some evidence he favored same sex marriage while a state senator, then changed his position when he had more national ambitions. And his comments that his position is "evolving" seemed just ridiculous. So many believe that he changed his mind to support same sex marriage only when it was right politically.
John Kerry faced bad press over his changed position on the Iraq War, and maybe rightly so. He supported it before he opposed it.
Mitt Romney is also facing questions about his changed positions on gun control, abortion, gay rights, health care, auto industry bailout and more that I am probably forgetting. All of this reinforces the image of someone who will change any position if it means becoming president. If he can go from becoming a moderate to a "severe" conservative, than what does he really stand for.
So I think all of these examples say something about the character of the candidate. But it also says something about being an elected leader in a representative democracy. Voters want to elect someone who agrees with them. But they also want to elect someone who has real convictions and strong character.
Ideally, they want both. In the GOP primary, Romney won because the only candidates that were more consistent had other much bigger flaws. I think if there had been someone more consistently conservative and with good credentials, they would have chosen that person.
The question is which do they prefer when those two cannot go together? I agree with the Monkey Cage that ultimately they want someone that agrees with them now. Democrats are happy that Obama finally supports same sex marriage and Democrats were happy when Kerry changed his mind on Iraq - as Democratic and independent voters had done. And Republicans would far prefer a Romney that changed all of his positions to follow a party that is turning hard right than if Romney had stood fast to most of his moderate beliefs. (Which is why Huntsman had little chance).
The problem is that candidates often have to follow the voters. When voters change their minds, we blame the politicians for being just as fickle as the voters are. Maybe that isn't fair. Or maybe it is. Maybe it makes sense to chose someone whose judgement is sound and doesn't have to change their minds and is right from the beginning. Probably a bit naive, but a good goal, I think.
Jobs Numbers: Ouch
I am so depressed about the really bad jobs numbers released yesterday. I know that one data point doesn't tell a full picture. But this is one bad data point - or set of data points. The number of jobs added were half what was predicted and previous months numbers were reported down.
If things don’t really speed up in the coming months, there is a good chance Romney will be our next president. And what really depresses me is that Romney has worse, not better plans, to help the economy.
I understand that the economy hasn't gotten better under President Obama, and he deserves his fair share of the blame. He has been silent on monetary policy and extremely meek on fiscal policy. He must know that more fiscal stimulus will help, but he assumes it is unpopular and unlikely to pass and so he won't call for it. So the voters don't know why the economy isn't getting better.
So the voters will punish the current president - somewhat fairly - but in return get a president who's ideas to help the economy are much worse. Our only hope is that Romney - and other Republicans are more Keynesian than they let on.
There is some evidence of this. Romney said he doesn't want to cut the budget too much too soon and put us back into a recession. And it seems like other Republicans want to prevent stimulus to prevent Obama's re-election. Disgusting as this all is, there is hope that when in power, Republicans might actually do the right thing (as they have in the past). So that is our best case scenario right now. Pretty unfortunate, no?
If things don’t really speed up in the coming months, there is a good chance Romney will be our next president. And what really depresses me is that Romney has worse, not better plans, to help the economy.
I understand that the economy hasn't gotten better under President Obama, and he deserves his fair share of the blame. He has been silent on monetary policy and extremely meek on fiscal policy. He must know that more fiscal stimulus will help, but he assumes it is unpopular and unlikely to pass and so he won't call for it. So the voters don't know why the economy isn't getting better.
So the voters will punish the current president - somewhat fairly - but in return get a president who's ideas to help the economy are much worse. Our only hope is that Romney - and other Republicans are more Keynesian than they let on.
There is some evidence of this. Romney said he doesn't want to cut the budget too much too soon and put us back into a recession. And it seems like other Republicans want to prevent stimulus to prevent Obama's re-election. Disgusting as this all is, there is hope that when in power, Republicans might actually do the right thing (as they have in the past). So that is our best case scenario right now. Pretty unfortunate, no?
Monday, May 28, 2012
Taxes and Fairness
I heard someone say recently that it isn't fair to tax money twice. This person is of course referring to taxes on dividends and investments. The theory is that the income from the company is already taxed, and that income is then used to pay dividends to investors. So the investors should not then be taxed.
I feel like there is some nuance as to when the income is actually being taxed twice - in other words only when it is dividends and not when the stock value appreciates and the stock is sold, but I need to think that through some more. But that isn't even the real point. The real issue is over how we understand fairness.
Now, on one level, I could just say that we have different understandings of this very subjective term "fair" and leave it at that. But you know I can't really do that. So let's look at what is fair or unfair about taxing investments.
First of all, who would this tax be unfair to? Who gets hurt by being taxed twice? The money is being taxed twice, but money is inanimate, so it can't feel oppressed or burdened. So it must be unfair to the investor. The person who is investing is typically wealthy, so why is it unfair to tax their money? Is it more fair to tax what someone earns through work than what someone earns without doing work but by giving someone money? I would think it the other way around. I would rather tax the investor than the worker - the teacher, the police officer, the farm worker, the construction worker, the miner, etc. Or I would rather tax them both and at the same progressive rates.
In fact, let's compare apples to apples. Say there is someone who goes to work everyday as a Wall Street trader and makes $5 million a year in salary and bonuses. And there is someone else who has a trust fund or made a ton of money they earned previously and makes $5 million a year from investments. Why should the investor who stays home everyday while his money is working pay less taxes? I can't think of a good reason.
But does the person really think it is unfair to the investor? Maybe what they really mean is that it provides a negative incentive to the investor. I am sure there are some more detailed analysis by economists on how a higher tax rate - or a tax at all - on investments will affect the level of investment. But let's look at one simple example instead.
Imagine someone with net worth of $250 million. Let's say his name is Bitt Nomrey. Now, would he refuse to invest that money just because there were taxes on the income? A 15% tax rate didn't stop Mitt Romney from investing. Would a 30% tax rate stop him?
Sure if the taxes were 90% he might not invest. But if the taxes were the same as our current income tax rate, he would definitely invest the money. He makes income, pays some taxes, but still retains the overwhelming amount of what he earned from the investments.
So I ask again, who is this unfair to? Or how does it affect investor choices?
I feel like there is some nuance as to when the income is actually being taxed twice - in other words only when it is dividends and not when the stock value appreciates and the stock is sold, but I need to think that through some more. But that isn't even the real point. The real issue is over how we understand fairness.
Now, on one level, I could just say that we have different understandings of this very subjective term "fair" and leave it at that. But you know I can't really do that. So let's look at what is fair or unfair about taxing investments.
First of all, who would this tax be unfair to? Who gets hurt by being taxed twice? The money is being taxed twice, but money is inanimate, so it can't feel oppressed or burdened. So it must be unfair to the investor. The person who is investing is typically wealthy, so why is it unfair to tax their money? Is it more fair to tax what someone earns through work than what someone earns without doing work but by giving someone money? I would think it the other way around. I would rather tax the investor than the worker - the teacher, the police officer, the farm worker, the construction worker, the miner, etc. Or I would rather tax them both and at the same progressive rates.
In fact, let's compare apples to apples. Say there is someone who goes to work everyday as a Wall Street trader and makes $5 million a year in salary and bonuses. And there is someone else who has a trust fund or made a ton of money they earned previously and makes $5 million a year from investments. Why should the investor who stays home everyday while his money is working pay less taxes? I can't think of a good reason.
But does the person really think it is unfair to the investor? Maybe what they really mean is that it provides a negative incentive to the investor. I am sure there are some more detailed analysis by economists on how a higher tax rate - or a tax at all - on investments will affect the level of investment. But let's look at one simple example instead.
Imagine someone with net worth of $250 million. Let's say his name is Bitt Nomrey. Now, would he refuse to invest that money just because there were taxes on the income? A 15% tax rate didn't stop Mitt Romney from investing. Would a 30% tax rate stop him?
Sure if the taxes were 90% he might not invest. But if the taxes were the same as our current income tax rate, he would definitely invest the money. He makes income, pays some taxes, but still retains the overwhelming amount of what he earned from the investments.
So I ask again, who is this unfair to? Or how does it affect investor choices?
Foreign Policy Platform
I feel that coming of age during eight years of a George W. Bush presidency and four years of an Obama presidency (and having learned a bunch about Bill Clinton's eight years), has provided some great tests on foreign policy ideas. And from those tests, I think we should have learned much better what we should and should not do in the foreign policy arena. Below is my foreign policy platform based on what we have learned in the last decade or two (though really going back as far as Korea and Vietnam as well).
To summarize, I think we should take a long view of history. Making dramatic changes in the short term is extremely costly and difficult. Instead, we should do what we can to alleviate suffering, prevent massive human rights abuses, and support oppositions to oppressive governments while realizing the new government may not be perfect. And when change isn't as fast as we want, we should not lose heart and give up on future chances for change. We should always try to understand the feelings on the ground. And when something requires too much resources, we should seek containment.
So let's look at some examples. First, human rights abuses. I think we should have been involved in Rwanda, Bosnia and Kosovo, South Sudan, Darfur, Libya, and now Syria. In each case, human rights abuses were happening or likely to happen.
Of course, how much help we can and should give is an issue. I agree with Samantha Power (as you probably know if you have read this blog before) that we could have done far more in Rwanda. It may or may not have required boots on the ground, though I think we could have done that with a small amount of international troops. Syria though may be a little more difficult. I feel like we are doing too little right now. Though since I am not immersed in the details, I should say that maybe real change would require too much support and focusing on the long term and not over-committing in the short term is justified.
In Tunisia, Egypt, and Libya, we supported real movements that were seeking change. But we are not committed to creating real democracy right now so we don't have to provide a lot of resources.
Compare that to Iraq where we invaded - originally because of WMD but changing the rationale to creating democracy and overthrowing a tyrant. And because we invaded, we were responsible for creating a very positive outcome. The resources required to even get to something close to that were enormous: 5,000 American soldiers died, many more injured, and billions in deficit spending.
Some of these (Tunisia, Egypt, Libya) might not become democracies right away. In fact, in Egypt, the choices are sad - a former Mubarak supporter or a more radical Islamist / Muslim Brotherhood member. If Egypt goes backwards, we shouldn't lose heart. This rebellion was a step forward and should be creating conditions for Egypt to eventually - today or further down the road - establish lasting democracy and rule of law. Same goes for Libya.
In places like North Korea and Iran, I think we should focus on containment. There is little threat of immediate action from either of those governments and the possibility of a very costly conflict once one starts - Korea even more so than Iran. And yet there are folks in the Romney team - notably the crazy John Bolton - that desperately want war in Iran and probably North Korea as well.
Instead, if we focus on the long term, on preventing them from attacking other countries and focusing on making their regimes difficult and create conditions for democracy down the road, we can avoid large short term costs and pave the way for big long term benefits.
I know this sounds kind of vague. But let's look at the Soviet Union. In many cases, we focused on preventing the spread of communism as much as we could. In some cases, we tried too hard (Vietnam). In some cases, we did a lot then walked away (Afghanistan). and in some cases we did the absolute wrong thing (Iran, Chile, Cuba, etc) by supporting capitalist murderous dictators over more democratic but leftist oppositions. But over the long term, the Soviet Union eventually collapsed. And we should have faith, while proactively creating the conditions, for the same things to happen in North Korea and Iran (or at least for Iran to be more democratic and more focused on the rule of law).
This platform contrasts with a few things. First, it contrasts with the opposition against Obama's efforts (supporting European leadership) in Libya and delayed support in Egypt, which suggested that we shouldn't have done anything because it might not turn out to be democratic (or more might not be as open to US influence). I reject both of these. The two candidates in Egypt might not be perfect, but having choices is better than having no choices and no liberty. Or at least it should be to a country that claims to be a model for the world.
It also contrasts with those that think genocide and mass murder in other countries are not our concern. Every time we say "never again", and every time we let it happen anew. And we let it happen because we let those who say it isn't our business align with those who want to pretend it isn't happening because they are too weak to do something.
Finally, it contrasts with major conflicts like the ones we saw in Vietnam and Iraq (and maybe even Afghanistan and Korea). The costs were far too high and the benefits too small. We should avoid these conflicts as much as possible. And yet, I fear we might not be able to. It is much easier to convince the public that there is a threat and that war is necessary. And with a Republican administration - especially one that can't decide whether it likes warmongers like Bolton or more moderates like Colin Powell - possible in 2012, we might be headed to more big conflicts. If so, that will be very sad indeed, and many young Americans will pay the price. And the benefits will be small indeed.
To summarize, I think we should take a long view of history. Making dramatic changes in the short term is extremely costly and difficult. Instead, we should do what we can to alleviate suffering, prevent massive human rights abuses, and support oppositions to oppressive governments while realizing the new government may not be perfect. And when change isn't as fast as we want, we should not lose heart and give up on future chances for change. We should always try to understand the feelings on the ground. And when something requires too much resources, we should seek containment.
So let's look at some examples. First, human rights abuses. I think we should have been involved in Rwanda, Bosnia and Kosovo, South Sudan, Darfur, Libya, and now Syria. In each case, human rights abuses were happening or likely to happen.
Of course, how much help we can and should give is an issue. I agree with Samantha Power (as you probably know if you have read this blog before) that we could have done far more in Rwanda. It may or may not have required boots on the ground, though I think we could have done that with a small amount of international troops. Syria though may be a little more difficult. I feel like we are doing too little right now. Though since I am not immersed in the details, I should say that maybe real change would require too much support and focusing on the long term and not over-committing in the short term is justified.
In Tunisia, Egypt, and Libya, we supported real movements that were seeking change. But we are not committed to creating real democracy right now so we don't have to provide a lot of resources.
Compare that to Iraq where we invaded - originally because of WMD but changing the rationale to creating democracy and overthrowing a tyrant. And because we invaded, we were responsible for creating a very positive outcome. The resources required to even get to something close to that were enormous: 5,000 American soldiers died, many more injured, and billions in deficit spending.
Some of these (Tunisia, Egypt, Libya) might not become democracies right away. In fact, in Egypt, the choices are sad - a former Mubarak supporter or a more radical Islamist / Muslim Brotherhood member. If Egypt goes backwards, we shouldn't lose heart. This rebellion was a step forward and should be creating conditions for Egypt to eventually - today or further down the road - establish lasting democracy and rule of law. Same goes for Libya.
In places like North Korea and Iran, I think we should focus on containment. There is little threat of immediate action from either of those governments and the possibility of a very costly conflict once one starts - Korea even more so than Iran. And yet there are folks in the Romney team - notably the crazy John Bolton - that desperately want war in Iran and probably North Korea as well.
Instead, if we focus on the long term, on preventing them from attacking other countries and focusing on making their regimes difficult and create conditions for democracy down the road, we can avoid large short term costs and pave the way for big long term benefits.
I know this sounds kind of vague. But let's look at the Soviet Union. In many cases, we focused on preventing the spread of communism as much as we could. In some cases, we tried too hard (Vietnam). In some cases, we did a lot then walked away (Afghanistan). and in some cases we did the absolute wrong thing (Iran, Chile, Cuba, etc) by supporting capitalist murderous dictators over more democratic but leftist oppositions. But over the long term, the Soviet Union eventually collapsed. And we should have faith, while proactively creating the conditions, for the same things to happen in North Korea and Iran (or at least for Iran to be more democratic and more focused on the rule of law).
This platform contrasts with a few things. First, it contrasts with the opposition against Obama's efforts (supporting European leadership) in Libya and delayed support in Egypt, which suggested that we shouldn't have done anything because it might not turn out to be democratic (or more might not be as open to US influence). I reject both of these. The two candidates in Egypt might not be perfect, but having choices is better than having no choices and no liberty. Or at least it should be to a country that claims to be a model for the world.
It also contrasts with those that think genocide and mass murder in other countries are not our concern. Every time we say "never again", and every time we let it happen anew. And we let it happen because we let those who say it isn't our business align with those who want to pretend it isn't happening because they are too weak to do something.
Finally, it contrasts with major conflicts like the ones we saw in Vietnam and Iraq (and maybe even Afghanistan and Korea). The costs were far too high and the benefits too small. We should avoid these conflicts as much as possible. And yet, I fear we might not be able to. It is much easier to convince the public that there is a threat and that war is necessary. And with a Republican administration - especially one that can't decide whether it likes warmongers like Bolton or more moderates like Colin Powell - possible in 2012, we might be headed to more big conflicts. If so, that will be very sad indeed, and many young Americans will pay the price. And the benefits will be small indeed.
Romney Will Gut, Not Streamline Government
David Brooks had the most ridiculous column last week. In the column, he claimed it was people like Romney - private equity folks - that took an inefficient American business system and turned companies around and made them and the system more streamlined. Brooks then claims Romney plans to do the same thing with the federal government.
Paul Krugman takes Brooks to task on his point about private equity making America more efficient. I don't know who is right about the history, but I don't think that is the main point.
Even if we can accept that Romeny and the rest of private equity vastly improved efficiency in American business, it is clear that this isn't Romney's goal with government.
Actually, I don't know what Romney's real goal is, other than to be president for the sake of being president. But anyway, if we look at his policy and budget proposals and his support for Paul Ryan's budget, it is clear he doesn't want to streamline government. Mitt Romney wants to gut government. Read this post by the Center on Budget and Policy Priorities, or almost any recent post by Ezra Klien on the Ryan / Romney budget. The cuts necessary to meet all of his goals are draconian.
But the worst part about Brooks' column is that he attributes something to Romney that I have never heard Romney say. In other words, Brooks is trying to soften Romeny's plans in a way that Romeny isn't trying. Romney has never said his cuts will streamline and improve service provision. Instead, Romney makes it clear he wants a smaller government that does a lot less - less for veterans; less for low income seniors, families and children; and less for public education and investment.
What makes this particularly disappointing is that Brooks had in the past criticized Republican's budget plans that are hurting our future by disinvesting in our youth while investing too much in our seniors. I think we should be doing both (taking care of seniors and investing in our future), but the point is that there was a time that Brooks understood how bad at least part of the Republicans plans were. For some reason, Brooks is no longer talking about that and worse, is pretending that somehow these draconian cuts will actually make things better. So disappointing.
Paul Krugman takes Brooks to task on his point about private equity making America more efficient. I don't know who is right about the history, but I don't think that is the main point.
Even if we can accept that Romeny and the rest of private equity vastly improved efficiency in American business, it is clear that this isn't Romney's goal with government.
Actually, I don't know what Romney's real goal is, other than to be president for the sake of being president. But anyway, if we look at his policy and budget proposals and his support for Paul Ryan's budget, it is clear he doesn't want to streamline government. Mitt Romney wants to gut government. Read this post by the Center on Budget and Policy Priorities, or almost any recent post by Ezra Klien on the Ryan / Romney budget. The cuts necessary to meet all of his goals are draconian.
But the worst part about Brooks' column is that he attributes something to Romney that I have never heard Romney say. In other words, Brooks is trying to soften Romeny's plans in a way that Romeny isn't trying. Romney has never said his cuts will streamline and improve service provision. Instead, Romney makes it clear he wants a smaller government that does a lot less - less for veterans; less for low income seniors, families and children; and less for public education and investment.
What makes this particularly disappointing is that Brooks had in the past criticized Republican's budget plans that are hurting our future by disinvesting in our youth while investing too much in our seniors. I think we should be doing both (taking care of seniors and investing in our future), but the point is that there was a time that Brooks understood how bad at least part of the Republicans plans were. For some reason, Brooks is no longer talking about that and worse, is pretending that somehow these draconian cuts will actually make things better. So disappointing.
The Socialist
Since Obama became president, conservatives started calling him a socialist. It is so absurd it almost doesn't deserve a response. And yet it persists. And worse, I have seen people I know actually make this claim (mostly through Facebook). So I have to respond.
Here's the thing. I am far more liberal than Barack Obama. And I am definitely not a socialist. So by the laws of logic, Obama cannot be a socialist. I hope that clears things up.
Here's the thing. I am far more liberal than Barack Obama. And I am definitely not a socialist. So by the laws of logic, Obama cannot be a socialist. I hope that clears things up.
Gotcha!
There is no such thing as a "gotcha question". I know everyone knows this. But I can't help writing about it. So far, I have only heard Republicans use this phrase. Hopefully Democrats know better.
When Republicans claim this, it is either in situations where they don't know the answer and are embarrassed that they don't know the answer, or it is questions they don't want to answer. Sarah Palin often used the phrase for the former reason. Many Republicans use it for the latter reason when they want to hold a position that the base likes but the general population wouldn't like. Or if they have changed their position on something and don't want to talk about it.
The bottom line is that Republicans use this to try to avoid answering questions - to avoid transparency on what they know and / or what they believe.
Having said all of that, I can think of only one small exception. When the press asks if someone is interested in being vice president or in running for president / higher office in distant elections. This is such an uninteresting question that at best provides information that is not that useful and at worst almost no likelihood that the person answering is being completely honest.
In fact, I think that is why the press likes the question so much. They like making politicians squirm, but only on meaningless issues that don't really inform voters. Which is why they will spend so much time asking every Republican under the sun if they want to be VP but won't ask them how they will speed up the recovery and which economists support them.
When Republicans claim this, it is either in situations where they don't know the answer and are embarrassed that they don't know the answer, or it is questions they don't want to answer. Sarah Palin often used the phrase for the former reason. Many Republicans use it for the latter reason when they want to hold a position that the base likes but the general population wouldn't like. Or if they have changed their position on something and don't want to talk about it.
The bottom line is that Republicans use this to try to avoid answering questions - to avoid transparency on what they know and / or what they believe.
Having said all of that, I can think of only one small exception. When the press asks if someone is interested in being vice president or in running for president / higher office in distant elections. This is such an uninteresting question that at best provides information that is not that useful and at worst almost no likelihood that the person answering is being completely honest.
In fact, I think that is why the press likes the question so much. They like making politicians squirm, but only on meaningless issues that don't really inform voters. Which is why they will spend so much time asking every Republican under the sun if they want to be VP but won't ask them how they will speed up the recovery and which economists support them.
Monday, May 21, 2012
Romney's Qualifications
I was planning to write a post about Romney's claim that he is more qualified to be president because of his business experience. The point was going to be that Romney's time as governor was better experience than his time at Bain Capital, especially because the government does not engage in private equity. Of course Romney doesn't want to talk about his time as governor because it would remind his base of a time when he was far less conservative.
But I never got around to writing that post, and good thing. Ezra Klein wrote a much better post on what Romney should have learned at Bain Capital to make him a better presidential candidate.
Klein's post is great - and you should read the whole thing because it really gets at the Bain Capital issue well. And yet it doesn't actually tell us anything new about Romney or the Republican Party.
Romney and the Republicans have shown, through the issues they focus on and the positions they choose, that they are exclusively concerned about the rich. They talk all about tax cuts - for everyone, but they won't agree unless the wealthy are included - and removing regulatory burdens.
But they have not demonstrated any support for the unemployed. They complain that benefits are too generous, including unemployment insurance. They have no plan to provide universal health care. And they have no urgency in bringing unemployment down, especially if it means the possibility of higher inflation.
So yes, Romney should have learned from Bain Capital about the things that face middle income and lower income households. But he had many opportunities to do that. He could have learned how hard getting through college can be by realizing how comparatively easy it was using his trust fund. But he didn't. And this says something about him and who he sympathizes with.
But I never got around to writing that post, and good thing. Ezra Klein wrote a much better post on what Romney should have learned at Bain Capital to make him a better presidential candidate.
“I know how business works,” Romney likes to say. “I know why jobs come and why they go.” That’s overstating the case. But while Romney’s perspective at Bain was biased toward creating short-term profits rather than creating value or employment, it was a look at the ferocity of modern, global, financialized capitalism, and Romney surely recognizes its realities in a way many of us don’t.
[edit]
What he could have learned from that experience is that, just as creative destruction is important for moving an economy forward, a safety net is important for catching those who are left behind. As head of Bain, Romney fired a lot of workers who were perfectly good at their jobs, who were committed to their companies, who had families they needed to support. That was his job as head of a private-equity giant. But his job as president of the United States would also be to look out for those workers.Klein goes on to say that Romney's plans do not help people caught up in creative destruction and therefore he didn't learn the right lessons from Bain Capital.
Klein's post is great - and you should read the whole thing because it really gets at the Bain Capital issue well. And yet it doesn't actually tell us anything new about Romney or the Republican Party.
Romney and the Republicans have shown, through the issues they focus on and the positions they choose, that they are exclusively concerned about the rich. They talk all about tax cuts - for everyone, but they won't agree unless the wealthy are included - and removing regulatory burdens.
But they have not demonstrated any support for the unemployed. They complain that benefits are too generous, including unemployment insurance. They have no plan to provide universal health care. And they have no urgency in bringing unemployment down, especially if it means the possibility of higher inflation.
So yes, Romney should have learned from Bain Capital about the things that face middle income and lower income households. But he had many opportunities to do that. He could have learned how hard getting through college can be by realizing how comparatively easy it was using his trust fund. But he didn't. And this says something about him and who he sympathizes with.
Saturday, May 19, 2012
On Inflation
Among liberal economists, there is widespread belief that much more should be done to deal with high unemployment. Another fiscal stimulus is popular though everyone is resigned to the fact that it won't happen with the current Congress (and mute president).
Since fiscal policy is not an option, many liberal economists want more efforts on monetary policy. Granted, the federal reserve and Ben Bernake have been doing a lot, but to little effect on unemployment. What everyone seems to be saying then is that while the fed is meeting one of its two mandates (inflation) but not its other mandate (unemployment) it should do more towards the mandate it isn't meeting. The way to do this is the fed can relax its strict price stability goal and allow inflation to rise a bit in order to bring unemployment down.
The best articulation of how to achieve this is from Justin Wolfers and Betsy Stevenson. I won't explain it here, though it is very accessible so I encourage you to read it. Instead, I want to look at the things people site in opposition to doing this. There are some reasonable concerns.
First, Paul Volker, who broke the back of inflation during the early 1980s while Fed chair under Reagan, is worried that once you use inflation as policy, the expectations become ingrained. This makes it less effective as a policy in the future and also more difficult to control.
Ben Bernake echoes this when he talks about his reluctance to damage the feds reputation for price stability. If one time the fed diverges from its rigid price stability, the market will be less convinced of their price stability goals and therefore preventing inflation would be more costly.
The way Volker articulates it is more convincing. I think I still agree with Paul Krugman on this one - why worry about a potential problem in the future instead of the actual problem you have now? And yet the more I think about it, the more I wonder if it is dangerous in the long term.
Second, Ben Bernake also seems to think that any extra efforts by the Fed, whether it be QE3 or allowing inflation to rise, would cost a lot but get little in return. For example, letting inflation rise from 2% to 4% might only get a decrease of 0.25% in unemployment. I made up the numbers, but that is how I understand what he is saying. This one is really hard to argue against because I have not nearly enough economics training to say the models he is using are wrong. The best I can do is trust the many economists I read that think this isn't the case.
Third is general uncertainty. Paul Samuelson and Noah Smith make this point. We don't really know whether Volker and Bernake or Krugman, et al are right. Everyone has models. Some have a better track record than others (ie Krugman's liquidity trap), but even those we don't know for sure if they will continue to be right.
So there are real reasons to be cautious about more aggressive monetary policy. These issues all give me pause. I think I continue to lean towards doing more in the face of such terrible unemployment. But there are real risks and we should keep that in mind.
Since fiscal policy is not an option, many liberal economists want more efforts on monetary policy. Granted, the federal reserve and Ben Bernake have been doing a lot, but to little effect on unemployment. What everyone seems to be saying then is that while the fed is meeting one of its two mandates (inflation) but not its other mandate (unemployment) it should do more towards the mandate it isn't meeting. The way to do this is the fed can relax its strict price stability goal and allow inflation to rise a bit in order to bring unemployment down.
The best articulation of how to achieve this is from Justin Wolfers and Betsy Stevenson. I won't explain it here, though it is very accessible so I encourage you to read it. Instead, I want to look at the things people site in opposition to doing this. There are some reasonable concerns.
First, Paul Volker, who broke the back of inflation during the early 1980s while Fed chair under Reagan, is worried that once you use inflation as policy, the expectations become ingrained. This makes it less effective as a policy in the future and also more difficult to control.
Ben Bernake echoes this when he talks about his reluctance to damage the feds reputation for price stability. If one time the fed diverges from its rigid price stability, the market will be less convinced of their price stability goals and therefore preventing inflation would be more costly.
The way Volker articulates it is more convincing. I think I still agree with Paul Krugman on this one - why worry about a potential problem in the future instead of the actual problem you have now? And yet the more I think about it, the more I wonder if it is dangerous in the long term.
Second, Ben Bernake also seems to think that any extra efforts by the Fed, whether it be QE3 or allowing inflation to rise, would cost a lot but get little in return. For example, letting inflation rise from 2% to 4% might only get a decrease of 0.25% in unemployment. I made up the numbers, but that is how I understand what he is saying. This one is really hard to argue against because I have not nearly enough economics training to say the models he is using are wrong. The best I can do is trust the many economists I read that think this isn't the case.
Third is general uncertainty. Paul Samuelson and Noah Smith make this point. We don't really know whether Volker and Bernake or Krugman, et al are right. Everyone has models. Some have a better track record than others (ie Krugman's liquidity trap), but even those we don't know for sure if they will continue to be right.
So there are real reasons to be cautious about more aggressive monetary policy. These issues all give me pause. I think I continue to lean towards doing more in the face of such terrible unemployment. But there are real risks and we should keep that in mind.
Thursday, May 17, 2012
Debt and Deficits
I have written about debts and deficits before, but I want to put all of my thoughts on this in one post.
Republicans, including GOP candidate Romney, are making deficits and debt the big issue right now and are blaming Obama. There are so many things wrong with this.
First, the short term deficits are not Obama's fault. They are mostly the result of the recession and Bush policies (tax cuts and wars). One of the main drivers of current deficits and debt is the depressed tax revenue due to the recession. Also, spending has increased on safety net programs like food stamps and unemployment insurance, while much other spending is down (which is actually hurting the recovery). And of course the Bush tax cuts were not paid for and have contributed significantly to the debt.
In fact, the only thing you might blame on Obama is the stimulus and the bail outs. I don't know how much impact the bail outs have had, though Bush deserves as much of the credit for that as Obama. The stimulus was Obama's decision, and the right one. But this is a one-time expense, as opposed to what the Republicans are trying to say which is that Obama has grown government leading to continued deficits. The stimulus isn't that kind of spending.
These factors though are not long term debt problems. When the economy improves, revenue will increase and safety net spending will decrease. And there will be no more stimulus or bail outs.
But Republicans also make it seem like the debt problem is an immediate one. It is not. There is no risk from our current debt or deficits. We do have a different immediate problem - unemployment but Republicans do not seem interested in dealing with that. Maybe they will if they take over control of the government. Right now, they are happy to let unemployment continue so that it hurts Obama.
We do have a debt problem. However, it is in the long term. And it has nothing to do with the current factors driving our debt - revenue, safety net, etc. Instead, our long term debt problem is due to health expenses (medicaid and medicare) and maybe social security. Though to be fair, Republicans do have a plan to deal with that, though they achieve it by putting more costs on seniors instead of reforming health care.
Having said all this, Republicans are showing that they are using deficits to get gut government spending. If they were actually concerned about deficits, they wouldn't call for tax cuts. In fact, they might even call for some modest revenue increases (a truly balanced approach that the public supports). Instead, they are gutting government programs while also calling for tax cuts, making little progress on the deficit.
All of this means that Republicans, including Romney, are lying about the cause of the deficits, the timing on when the problem with the debt will affect us, and their actual intent on solving the problem. All of this is obvious and demonstrable.
And yet I have not seen an effective response from Obama or the Democrats. So instead, the public will think the deficits are Obama's fault, that deficits are an immediate problem, and that deficits can be solved with tax cuts. Awesome.
Republicans, including GOP candidate Romney, are making deficits and debt the big issue right now and are blaming Obama. There are so many things wrong with this.
First, the short term deficits are not Obama's fault. They are mostly the result of the recession and Bush policies (tax cuts and wars). One of the main drivers of current deficits and debt is the depressed tax revenue due to the recession. Also, spending has increased on safety net programs like food stamps and unemployment insurance, while much other spending is down (which is actually hurting the recovery). And of course the Bush tax cuts were not paid for and have contributed significantly to the debt.
In fact, the only thing you might blame on Obama is the stimulus and the bail outs. I don't know how much impact the bail outs have had, though Bush deserves as much of the credit for that as Obama. The stimulus was Obama's decision, and the right one. But this is a one-time expense, as opposed to what the Republicans are trying to say which is that Obama has grown government leading to continued deficits. The stimulus isn't that kind of spending.
These factors though are not long term debt problems. When the economy improves, revenue will increase and safety net spending will decrease. And there will be no more stimulus or bail outs.
But Republicans also make it seem like the debt problem is an immediate one. It is not. There is no risk from our current debt or deficits. We do have a different immediate problem - unemployment but Republicans do not seem interested in dealing with that. Maybe they will if they take over control of the government. Right now, they are happy to let unemployment continue so that it hurts Obama.
We do have a debt problem. However, it is in the long term. And it has nothing to do with the current factors driving our debt - revenue, safety net, etc. Instead, our long term debt problem is due to health expenses (medicaid and medicare) and maybe social security. Though to be fair, Republicans do have a plan to deal with that, though they achieve it by putting more costs on seniors instead of reforming health care.
Having said all this, Republicans are showing that they are using deficits to get gut government spending. If they were actually concerned about deficits, they wouldn't call for tax cuts. In fact, they might even call for some modest revenue increases (a truly balanced approach that the public supports). Instead, they are gutting government programs while also calling for tax cuts, making little progress on the deficit.
All of this means that Republicans, including Romney, are lying about the cause of the deficits, the timing on when the problem with the debt will affect us, and their actual intent on solving the problem. All of this is obvious and demonstrable.
And yet I have not seen an effective response from Obama or the Democrats. So instead, the public will think the deficits are Obama's fault, that deficits are an immediate problem, and that deficits can be solved with tax cuts. Awesome.
Tuesday, May 15, 2012
Where I Change My Mind on the Filibuster
Ezra Klein had a good piece on the filibuster today, and I think I have changed my mind. I don't think it is unconstitutional, as his piece suggests (instead, I am convinced by this piece at the Monkey Cage). What convinced me to change my mind is the point that the founders considered and dismissed the idea that legislation should require a super-majority.
In the past, I have felt that the filibuster helped prevent very Republican policies from being implemented. I have a good memory of the Bush years when Democrats needed and used the filibuster. I think it moderated, to a degree, Bush policies - and potentially moderated judicial appointments. Roberts and Alito are not moderates, but they are - or at least Roberts is - less conservative than people that could have and would have been appointed without the threat of a veto.
But I do think requiring a super-majority for legislation favors conservative causes generally - not because Republicans are bad people and use filibusters more frequently (the graph at Wonkbook doesn't show an obvious pattern - I would need to crunch the numbers to come to a real conclusion). Instead, I think it helps conservative causes because it prevents government action.
Conservatives more often want to prevent government from getting involved. In Robert Heinlein's science fiction book The Moon is a Harsh Mistress, one of the protagonists, a libertarian, makes a speech calling for the new lunar government to have high standards - super-majorities - for any law and low standards for erasing a law. I think that illustrates conservative views pretty well. Conservatives would be happy when in power to pass fewer laws and more importantly, when not in power to prevent laws from being passed.
So it is that I change my mind on filibusters. But I must say, there will be times, possibly as early as 2012 with a Republican president and Republican Congress and an abolished filibuster, that we will wish we had the ability to filibuster crazy conservative legislation.
In the past, I have felt that the filibuster helped prevent very Republican policies from being implemented. I have a good memory of the Bush years when Democrats needed and used the filibuster. I think it moderated, to a degree, Bush policies - and potentially moderated judicial appointments. Roberts and Alito are not moderates, but they are - or at least Roberts is - less conservative than people that could have and would have been appointed without the threat of a veto.
But I do think requiring a super-majority for legislation favors conservative causes generally - not because Republicans are bad people and use filibusters more frequently (the graph at Wonkbook doesn't show an obvious pattern - I would need to crunch the numbers to come to a real conclusion). Instead, I think it helps conservative causes because it prevents government action.
Conservatives more often want to prevent government from getting involved. In Robert Heinlein's science fiction book The Moon is a Harsh Mistress, one of the protagonists, a libertarian, makes a speech calling for the new lunar government to have high standards - super-majorities - for any law and low standards for erasing a law. I think that illustrates conservative views pretty well. Conservatives would be happy when in power to pass fewer laws and more importantly, when not in power to prevent laws from being passed.
So it is that I change my mind on filibusters. But I must say, there will be times, possibly as early as 2012 with a Republican president and Republican Congress and an abolished filibuster, that we will wish we had the ability to filibuster crazy conservative legislation.
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