Has anyone else noticed how Leon Panetta, once a liberal congressman, has been totally captured by the defense/intelligence establishment? First as CIA Director, now Secretary of Defense, he has become the ultimate cold warrior/neocon. At CIA he seemed to defend and even justify CIA abuses and protected those involved in waterboarding and other crimes. I'm sure that many liberals such as myself had hoped he would change the culture at the CIA and hold to account those who violated laws and policies. While the CIA seems to have backed off on torture, things such as rendition seem to continue. As Secretary of Defense he recently said that Medicare and Social Security should be cut before defense, a truly mind boggling statement by a Democrat. Also, the Defense Department has brought pressure to bear on the Iraqi government to extend the presence of US forces in Iraq beyond the December deadline for withdrawal (negotiated by President Bush). In response, Shiite militia leader Sadr has vowed to attack US forces should they remain beyond the deadline. Panetta seems to also favor extending the time for the reduction of troops in Afghanistan.
Panetta seems emblematic of the Obama Administrations failed policies in defense and intelligence. They have failed to prosecute torturers and have adopted military/defense policies that seem only marginally better than the Bush regime. I have not commented on Afghanistan to any extent previously because I have been somewhat undecided. I am hoping that the President has acted tough in order to protect his political flank from attack for being soft on terrorism and will return to a rational policy after 2012, but there is no guarantee that this will happen. I think it is clear from the "surge" in Afghanistan that no military success is possible, especially with the Karzai government in power. We should draw down our troops as quickly as possible from Iraq this year and Afghanistan next year. Unfortunately, Panetta doesn't seem to be the man for that job. He seems much more hawkish than Gates, who was a traditional Republican Cold Warrior.
Now that the Democrats have failed miserably in the debt ceiling debate, they finally are talking about jobs, jobs, and jobs. Of course all they are doing is talking so far. One exception is Representative Jan Schakowski who has prepared an actual jobs bill, which, of course, will get nowhere in the Republican dominated House. Others are talking about things like an infrastructure bank and people are talking about the need to rebuild infrastructure--bridges, roads, pipelines, water plants, etc. The Republican's recent shutdown of most of the FAA, cutting off funding for about 70,000 construction jobs, is indicative of how much they care about this issue--hardly a whit.
Because of the debt ceiling imbroglio, the FAA shutdown was overlooked by many. There is a 10% tax on airline tickets which goes to fund the FAA. This money pays for FAA employees and airport improvement construction projects. There were two main sticking points between the parties--the method for voting for union representation and subsidies (a whopping $13.5 million) for airlines to service rural areas. The Republicans want to make it more difficult to vote in union representation and wanted to do away with the subsidies. Eventually the Democrats agreed to do away with the subsidies and the Republicans agreed to not make the union issue part of the funding bill. Another interesting aspect is that when the FAA stopped collecting the tax, the airlines raised their prices so that consumers still paid the same amount for their tickets. In effect, the government was indirectly subsidizing the airlines. So what we got during the shutdown was no decrease in fares, a shutdown in construction jobs, and a reduction in airline safety. Way to go, Congress.
To return to the point of infrastructure spending, conservatives seem unlikely to support much of anything. Here is my idea. Speed up withdrawal of forces from Iraq and Afghanistan. It costs about one million per year to keep one soldier in the field. Removing 1,000 soldiers saves $1 billion per year. Removing 50,000 saves $50 billion. Take the savings and spend it on infrastructure on bases here in the United States instead of bases overseas. New barracks, roads, other facilities, and replace worn out military equipment manufactured in the US. How could any conservative oppose this?
In my previous post I discussed Obama's failure as a negotiator. One thing I should have mentioned. Obama always seems eager to make a deal, any deal. He seems to prefer a bad deal to no deal at all. As long as you project that attitude, all you will ever get is a bad deal. Obama needs to show sometime that he is willing to accept no deal ahead of a bad deal. He should walk away from some negotiations. Unless and until he does that, he will come out on the losing end.
Finally, in reviewing my previous post I noticed a bad typo and was unable to correct it. The word processing function at this blog site has not always been the best, so it comes as no surprise that after posting, when I try to go back to edit, I am unable to do so. Anyway, I want to apologize for any typos and misspellings which get past me. As vigilant as you may be, there will always be some unnoticed misteaks that get bbuy.
Friday, August 12, 2011
Tuesday, August 2, 2011
THE DEBT CEILING BILL
Framing The Debate And Campaigning As Policy
There are several different things we can learn from this fiasco. One, which should have been obvious by now to the Democrats, is that you should never let you opponent frame the debate. From the beginning it has been the Republicans, especially the Tea Party Republicans, who have set the parameters and the agenda for the debate. Most everyone seems to have forgotten that the Republicans ran on a jobs program in 2010; specifically how the Democrats hadn't created any. As usual with Republicans these days, that was a lie. No matter, thanks to that, an energized base and low turnout among previous Obama voters, the GOP took over the House decisively. Once in office, the GOP has completely ignored jobs, focusing on such things as Planned Parenthood, abortion, funding for NPR, and other such "vital" issues of the day. First with the threatened government shutdown in April, as the continuing budget resolution was expiring, now with the debt ceiling issue, the Republicans have managed to stay on message and completely driven the debate. The Republicans are very good at constantly repeating the same refrain, using the same buzz words over and over again, and attacking the Democratic positions with fervor. Facts and logic need not apply. The Republicans have a very smart adiviser named Frank Luntz, who is very good at using focus groups to find the right words and phrases which resonate with voters. These words/phrases are constantly repeated over and over again by Republicans of all stripes until they become adopted by the media and even the Democrats themselves.
The Democrats, on the other hand, usually ignore Republican words and actions, especially in the early phase of the debate, and rarely, if ever, prepare a counter message or do anything to attack the errors in the Republican message. The lesson the Democrats keep ignoring time and time again is that you cannot let such things go unchallenged, yet they continually do just that. Polls after the 2010 election showed that jobs was the number one issue for Americans, but the Republicans ignored that and acted as if the deficit was number one. The Democrats never really challenged that. Once the narrative gets established, it is very hard to dislodge.
The media today, outside of those ideologically driven, see their job as to present both sides of a story, regardless of whether one side is true and the other side is untrue. They are not interested in finding out the truth, but presenting the two sides and then telling us who is doing well with their position and who isn't. Rarely do we ever see a clear analysis of the accuracy of each side's position or the likely outcome of the various positions being promoted. Numerous examples abound. It wasn't until well after the health care bill was established that I saw an article pointing out that it was nearly identical to the bill adopted by Massachusetts while Romney was governor. And even then it only came about when Romney's opponents attacked him for adopting such an approach. The fact that the individual mandate was originally a conservative Republican idea, I discovered doing research on my own; I never saw anything on that during the time the bill was being considered. During this whole debt ceiling issue, did anyone in the mnedia ask any economists what the likely outcome would be if there was a substantial cut in government spending? Only today, after its adoption, did I see an estimate of over 1 million jobs lost in the next 18 months as a result of this abomination of a bill.
The Republicans have been in full campaign mode since last December and their campaign has become their policy. The have employed campaign rhetoric and the result is a bill which is based on nothing but rhetoric. It has no real rationale, a very fuzzy goal, and a poorly constructed mechanism for implementation. It is, in short, a travesty. Representative Emmanuel Cleaver, leader of the Black Caucus, called it "a sugar-coated Satan sandwich."
Today in a speech the President began talking about the need to address the jobs problem. He should have been doing this for the last year or more. Once again we see how this administration has missed the boat. It seems as if the administration is doing a lot of navel gazing and ignored the basic issues which are critical for both policy and electoral success.
The Tea Party As A Revolutionary Movement
Please bear with me as I go political scientist here. When we look at revolutionary and/or anti-colonial movements, they share many similarities. They are united behind a narrow, simply defined goal--the overthrow of the established order. The movement is made up of "true believers" who have a religious fervor about the righteousness of their cause. Things are seen in terms of armed struggle. As a result, they see everything in black and white terms and as a zero sum game--any loss for one side is a gain for the other and any gain for one is a loss for the other. No quarter is given and none is expected in return. Compromise is generally shunned, except as a tactic to achieve the over arching goal. In fact, compromise is seen as weakness, something to be exploited when shown by the opposition. Because the true believers share the same goals and beliefs, dissent is usually not tolerated once a decision is made. This is heightened by the frequent presence of a charismatic leader heading the revolution. The leader of the opposition is objectified and vilified.
Once these groups achieve power, they are usually failures at governing, especially in a democratic setting. Many begin democratic, but turn autocratic quickly. What they find is that overthrowing a government is much easier than running a government. Before you had only one main goal, now you have many important goals. Before you didn't have to compromise or take into account the needs of other groups, now you have to in order to have effective government. It is much easier to tell your followers to attack a bridge and see it carried out than to tell your followers to build a bridge and see it carried out. Followers become distracted by other issues such as money, prestige, or the quest for power. Once the original foe is vanquished, you no longer have the same thing to rally your supporters against. It is much easier to rally people against something than to rally them for something. Governments tend to be much larger and more complex than revolutionary armies. Outcomes before were clearly defined and easily measured. You win or lose a battle, take a position or not, etc. With government, outcomes are not so easily defined or achievable. Unexpected consequences are the norm, not the exception. It is harder to tell if an outcome as a victory or a defeat; outcomes are often mixtures of both.
This is just a brief rundown, but you can see how the Tea Party Movement shares many of the attributes of a revolutionary movement. Like a revolutionary movement, they take no prisoners, are not interesting in compromise, and have no idea how to govern. They show real signs of autocracy. There main goals are to defeat Obama and shrink government down to a few core programs such as defense. One of the big failures of Obama is his failure to understand the nature of his opposition. The Tea Party was driving the GOP in the House and he should not have expected that a fair deal could be reached with them.
Obama's Failure As A Negotiator
Here is an analogy for the way I see how the President treated the negotiations. Obama is having an argument with an opponent and the opponent calls out the President, demanding that they have a showdown at such and such a place and time. The President agrees, telling his opponent that he will not be armed and will ignore what his supporters are telling him to do. Upon arriving for the showdown, Obama's opponent demands the President to give him A,B,C, and D by tomorrow morning. The President replies that he can give only A and B. The opponent then pulls out a gun and holds it to the President's head. The President says, if you shoot me, you could be arrested for murder, so I will give you A,B,C, and D but I cannot give it all to you until a week from tomorrow. The opponent agrees and then leaves. The next day the President tells everyone what a good deal he got because his opponent will have to wait a while to get what he wants, and his opponent did not shoot the President.
What to me seems inexplicable, is how President Obama, over and over, will give up bargaining chips at the start of negotiations without getting anything in return. Another thing he frequently does is to tell his opponent what his final position is and it actually is his final position. In negotiations you should never start out with your final position.
In the instance of the debt ceiling, while a number of Democrats were mulling over the possibility of the possibility of the President utilizing the 14th Amendment to avoid default, almost immediately the President took it off the table. In doing so he lost one of his biggest bargaining chips. He should have said I want a clean bill that only deals with raising the debt ceiling for the
next two years. If you give me anything else, I will veto it and invoke the 14th Amendment in order to avoid default. Why he went from a clean bill as originally stated, to his idea of a grand design is incomprehensible. By doing so, he was playing on the Republicans fields, and making the issue cutting the deficit instead of raising the debt ceiling and avoiding default. He should have painted Republicans as out to ruin the economy while ignoring jobs. He should have said over and over again that their efforts would cost jobs, not create them. Even in his idea of a grand design, he bungled it badly. He said it should be $1 dollar in revenues for every $3 dollars in cuts. That is 75% cuts, 25% revenues. The Republicans began at 85% to 15%, cuts to revenues. The President should have started at 50/50, at the very least, and threatened to veto anything less. We ended up with a bill of all cuts and no revenues.
Another major error he made was to state that Medicare and Social Security were "on the table". By putting those two issues in play he alienated his own party and gave up a major issue that favors the Democrats. Not even Tea Partiers want to have cuts in Medicare benefits. By offering to put Medicare and Social Security in play in the negotiation, President Obama was throwing away one of the greatest political advantages the Democrats have over the Republicans. Almost every Republican voted for the Ryan Budget which would replace Medicare with a voucher system that will cost seniors an estimated $6000 more per year in medical expenses. This idea is opposed by about 70% of the public. By offering to negotiate Medicare/Social Security, the President will find it hard to present himself as a defender of those programs.
This is one of the worst examples of negotiation I have ever been aware of. It is horrendously bad and it ensures that the Republicans will continue this tactic with every major issue. Personally, I find it hard to do anything for the Presidnet's re-election other than to vote for him.
There are several different things we can learn from this fiasco. One, which should have been obvious by now to the Democrats, is that you should never let you opponent frame the debate. From the beginning it has been the Republicans, especially the Tea Party Republicans, who have set the parameters and the agenda for the debate. Most everyone seems to have forgotten that the Republicans ran on a jobs program in 2010; specifically how the Democrats hadn't created any. As usual with Republicans these days, that was a lie. No matter, thanks to that, an energized base and low turnout among previous Obama voters, the GOP took over the House decisively. Once in office, the GOP has completely ignored jobs, focusing on such things as Planned Parenthood, abortion, funding for NPR, and other such "vital" issues of the day. First with the threatened government shutdown in April, as the continuing budget resolution was expiring, now with the debt ceiling issue, the Republicans have managed to stay on message and completely driven the debate. The Republicans are very good at constantly repeating the same refrain, using the same buzz words over and over again, and attacking the Democratic positions with fervor. Facts and logic need not apply. The Republicans have a very smart adiviser named Frank Luntz, who is very good at using focus groups to find the right words and phrases which resonate with voters. These words/phrases are constantly repeated over and over again by Republicans of all stripes until they become adopted by the media and even the Democrats themselves.
The Democrats, on the other hand, usually ignore Republican words and actions, especially in the early phase of the debate, and rarely, if ever, prepare a counter message or do anything to attack the errors in the Republican message. The lesson the Democrats keep ignoring time and time again is that you cannot let such things go unchallenged, yet they continually do just that. Polls after the 2010 election showed that jobs was the number one issue for Americans, but the Republicans ignored that and acted as if the deficit was number one. The Democrats never really challenged that. Once the narrative gets established, it is very hard to dislodge.
The media today, outside of those ideologically driven, see their job as to present both sides of a story, regardless of whether one side is true and the other side is untrue. They are not interested in finding out the truth, but presenting the two sides and then telling us who is doing well with their position and who isn't. Rarely do we ever see a clear analysis of the accuracy of each side's position or the likely outcome of the various positions being promoted. Numerous examples abound. It wasn't until well after the health care bill was established that I saw an article pointing out that it was nearly identical to the bill adopted by Massachusetts while Romney was governor. And even then it only came about when Romney's opponents attacked him for adopting such an approach. The fact that the individual mandate was originally a conservative Republican idea, I discovered doing research on my own; I never saw anything on that during the time the bill was being considered. During this whole debt ceiling issue, did anyone in the mnedia ask any economists what the likely outcome would be if there was a substantial cut in government spending? Only today, after its adoption, did I see an estimate of over 1 million jobs lost in the next 18 months as a result of this abomination of a bill.
The Republicans have been in full campaign mode since last December and their campaign has become their policy. The have employed campaign rhetoric and the result is a bill which is based on nothing but rhetoric. It has no real rationale, a very fuzzy goal, and a poorly constructed mechanism for implementation. It is, in short, a travesty. Representative Emmanuel Cleaver, leader of the Black Caucus, called it "a sugar-coated Satan sandwich."
Today in a speech the President began talking about the need to address the jobs problem. He should have been doing this for the last year or more. Once again we see how this administration has missed the boat. It seems as if the administration is doing a lot of navel gazing and ignored the basic issues which are critical for both policy and electoral success.
The Tea Party As A Revolutionary Movement
Please bear with me as I go political scientist here. When we look at revolutionary and/or anti-colonial movements, they share many similarities. They are united behind a narrow, simply defined goal--the overthrow of the established order. The movement is made up of "true believers" who have a religious fervor about the righteousness of their cause. Things are seen in terms of armed struggle. As a result, they see everything in black and white terms and as a zero sum game--any loss for one side is a gain for the other and any gain for one is a loss for the other. No quarter is given and none is expected in return. Compromise is generally shunned, except as a tactic to achieve the over arching goal. In fact, compromise is seen as weakness, something to be exploited when shown by the opposition. Because the true believers share the same goals and beliefs, dissent is usually not tolerated once a decision is made. This is heightened by the frequent presence of a charismatic leader heading the revolution. The leader of the opposition is objectified and vilified.
Once these groups achieve power, they are usually failures at governing, especially in a democratic setting. Many begin democratic, but turn autocratic quickly. What they find is that overthrowing a government is much easier than running a government. Before you had only one main goal, now you have many important goals. Before you didn't have to compromise or take into account the needs of other groups, now you have to in order to have effective government. It is much easier to tell your followers to attack a bridge and see it carried out than to tell your followers to build a bridge and see it carried out. Followers become distracted by other issues such as money, prestige, or the quest for power. Once the original foe is vanquished, you no longer have the same thing to rally your supporters against. It is much easier to rally people against something than to rally them for something. Governments tend to be much larger and more complex than revolutionary armies. Outcomes before were clearly defined and easily measured. You win or lose a battle, take a position or not, etc. With government, outcomes are not so easily defined or achievable. Unexpected consequences are the norm, not the exception. It is harder to tell if an outcome as a victory or a defeat; outcomes are often mixtures of both.
This is just a brief rundown, but you can see how the Tea Party Movement shares many of the attributes of a revolutionary movement. Like a revolutionary movement, they take no prisoners, are not interesting in compromise, and have no idea how to govern. They show real signs of autocracy. There main goals are to defeat Obama and shrink government down to a few core programs such as defense. One of the big failures of Obama is his failure to understand the nature of his opposition. The Tea Party was driving the GOP in the House and he should not have expected that a fair deal could be reached with them.
Obama's Failure As A Negotiator
Here is an analogy for the way I see how the President treated the negotiations. Obama is having an argument with an opponent and the opponent calls out the President, demanding that they have a showdown at such and such a place and time. The President agrees, telling his opponent that he will not be armed and will ignore what his supporters are telling him to do. Upon arriving for the showdown, Obama's opponent demands the President to give him A,B,C, and D by tomorrow morning. The President replies that he can give only A and B. The opponent then pulls out a gun and holds it to the President's head. The President says, if you shoot me, you could be arrested for murder, so I will give you A,B,C, and D but I cannot give it all to you until a week from tomorrow. The opponent agrees and then leaves. The next day the President tells everyone what a good deal he got because his opponent will have to wait a while to get what he wants, and his opponent did not shoot the President.
What to me seems inexplicable, is how President Obama, over and over, will give up bargaining chips at the start of negotiations without getting anything in return. Another thing he frequently does is to tell his opponent what his final position is and it actually is his final position. In negotiations you should never start out with your final position.
In the instance of the debt ceiling, while a number of Democrats were mulling over the possibility of the possibility of the President utilizing the 14th Amendment to avoid default, almost immediately the President took it off the table. In doing so he lost one of his biggest bargaining chips. He should have said I want a clean bill that only deals with raising the debt ceiling for the
next two years. If you give me anything else, I will veto it and invoke the 14th Amendment in order to avoid default. Why he went from a clean bill as originally stated, to his idea of a grand design is incomprehensible. By doing so, he was playing on the Republicans fields, and making the issue cutting the deficit instead of raising the debt ceiling and avoiding default. He should have painted Republicans as out to ruin the economy while ignoring jobs. He should have said over and over again that their efforts would cost jobs, not create them. Even in his idea of a grand design, he bungled it badly. He said it should be $1 dollar in revenues for every $3 dollars in cuts. That is 75% cuts, 25% revenues. The Republicans began at 85% to 15%, cuts to revenues. The President should have started at 50/50, at the very least, and threatened to veto anything less. We ended up with a bill of all cuts and no revenues.
Another major error he made was to state that Medicare and Social Security were "on the table". By putting those two issues in play he alienated his own party and gave up a major issue that favors the Democrats. Not even Tea Partiers want to have cuts in Medicare benefits. By offering to put Medicare and Social Security in play in the negotiation, President Obama was throwing away one of the greatest political advantages the Democrats have over the Republicans. Almost every Republican voted for the Ryan Budget which would replace Medicare with a voucher system that will cost seniors an estimated $6000 more per year in medical expenses. This idea is opposed by about 70% of the public. By offering to negotiate Medicare/Social Security, the President will find it hard to present himself as a defender of those programs.
This is one of the worst examples of negotiation I have ever been aware of. It is horrendously bad and it ensures that the Republicans will continue this tactic with every major issue. Personally, I find it hard to do anything for the Presidnet's re-election other than to vote for him.
Friday, July 15, 2011
THE SHALLOWNESS OF CONSERVATIVE SCHOLARSHIP--A CRITIQUE OF COLE AND OHANION
Whenever conservatives want support for their policies of free market capitalism, they often cite a study by two UCLA economists on the New Deal. The article is New Deal Policies and the Persistence of the Great Depression by Cole and Ohanion (you can find it on-line, via Google). It runs about 75 pages. In short, it proposes that the Great Depression was lengthened by New Deal policies, specifically the National Industrial Recovery Act (NIRA), which inflated prices and thus reduced demand for goods.
The good professors have prepared a number of impressive looking formulas to support their contention; I will leave their dissection to real economists. However, even if their mathematical models are correct, their analysis is fatally undermined by a number of false premises and outright distortions. For those interested, my analysis follows, and will be longish to cover the many shortcomings in the Cole and Ohanion article.
Their argument is based on a number of assumptions, some stated, others underlying, which do not hold up. First, their study focuses solely on the NIRA and posits that this was the most important and central facet of New Deal policies. Any reading of New Deal history shows that they have way over emphasized the importance of the NIRA, both in substance and as to its role. An underlying assumption is that FDR had a coherent ideology and set of policies, of which the NIRA was the center post. FDR was no ideologue and many of the New Deal policies were ad hoc, including the NIRA. A little background is in order. FDR and his advisers thought that the major problem was over production (when, in fact, it was lack of demand). The US had been in a deflationary spiral for about 3 years and prices and wages had both plummeted. However, the courts had ruled unconstitutional government efforts to enact any laws governing wages, hours, or, in some cases, even restricting child labor. The NIRA was an attempt to address this problem by requiring companies engaged in interstate commerce to reach agreement with the federal government over working conditions and production. Thus, it tried to reduce production and inflate the economy. The law was passed during the 100 Days, but it was not until September/October of 1933 that agreements had been hammered out with those industries which participated. The law was declared unconstitutional in May, 1935 (Schecter vs. US, or the "sick chicken" case). The law had ceased to be effective even before May, 1935, so it was only really influential for about a year.
By agreeing to the NIRA, a company was allowed to post a blue sticker and people were encouraged to do business only with those companies who had taken part. However, not every major company did participate. Ford Motors, as one large example, never participated. And with those who did sign agreements, there was a serious problem in enforcing compliance with the agreements. Thus, we have a law that was in actual effect for only about a year and which covered only a portion of manufacturers and retailers. Arthur Schlesinger in The Coming of the New Deal, Chapters 6-10 has a comprehensive account of the NIRA and its implementation.
Just from this short background sketch, it is obvious of some glaring weaknesses with the Cole and Ohanion study. By focusing on only a portion of the economy and legislation that was only in actual effect for about a year, it seems beyond plausibility to think that this one law was responsible for lengthening the Great Depression. According to Cole and Ohanion's own article, agriculture employed 30% of all workers at this time. When you consider those engaged in the service industry, the unemployed, and those not participating in NIRA, it is obvious that this law affected much less than one half of the economy for only a year. Further, the authors suppose that the NIRA was affecting the economy even after it was declared unconstitutional. They propose that 75% of manufacturers were still affected by the NIRA after 1935, a percentage they seemed to have pulled out of thin air. Even if their number is close to correct, because it only affected a segment of the economy, it would mean only a third of the economy, at most, would have been affected by the NIRA after 1935. However, even a third would undoubtedly be vastly over stated, since many industries never complied with their agreements in the first place and most all ceased following them after the court decision.
Another problem with Cole and Ohanion is that the NIRA was never that important to begin with. It was only one of many bills which sought to address the problems of the Depression. Cole and Ohanion totally ignore all the jobs programs such as PWA, WPA, and CCC. They ignore things like the the Social Security Act which included unemployment insurance. They totally ignore the Agricultural Adjustment Act, which FDR considered one of the most important aspects of the New Deal, and the whole agricultural portion of the economy. They ignore the TVA and the REA and their importance in economic development. In short, by focusing on one small aspect of the New Deal, their analysis is woefully incomplete and pretty much worthless.
Another problem with Cole and Ohanion is other assumptions they make. They assume that the economy would have recovered on its own without any government action. And yet, this is the position which the Hoover Administration took. As a result, unemployment went from about 3.5% to about 25% and the GDP dropped around 40% over three and on-half years because of government inaction. It was only in the last six months or so of the Hoover Administration, when it was obvious that classical economic theory had totally failed, that he belatedly tried to stimulate the economy with the RFC (Reconstruction Finance Corporation), which never actually accomplished much of anything. Cole and Ohanion look at the New Deal as if it were something apart from the history which preceded it. They ignore the deflationary spiral which preceded it, the total collapse of the economy which made a normal recovery next to impossible. In congressional hearings prior to FDR taking office, economists and business leaders admitted that their ec0onomic theories had failed and they were at a loss about what to do next. FDR was an experimenter who had few fixed ideas. He staffed his administration with people who often had opposing views about how to restore the economy and he would sometimes play one off against another. He was the ultimate pragmatist who relied on what worked. Cole and Ohanion state that by 1939 unemployment had dropped to 11% from 25% and yet they count FDR's policies as having failed and lengthened the Depression. They don't mention that by 1939 the GDP had almost doubled since FDR took office in 1933. That's some failure.
Like most of the Chicago school, they ignore the whole issue of demand. They assume that higher profits by companies would lead to more employment, totally ignoring the demand function. As we see today with companies sitting on record profits, lack of demand suppresses hiring much more than profits encourage it. In their analysis they never look at things like household income or other measures of demand/consumption. They do include a little on consumption, but it is almost an after thought.
Finally, in their analysis they put a lot of emphasis on monopoly and strikes and lay the 1937 recession to strike activity. They ignore the fact that 1937 was the only year that FDR cut back on spending and had a balanced budget and that it was the first year of the collection of social security taxes. Social Security did not make its first payments until 1940, so it was a temporary drag on the economy. Also, it is ironic that they fault the FDR Administration for failing to enforce monopoly statutes prior to 1940, since to regulate business this way violates one of the basic tenets of conservative economics that the market should be free to police itself. I wonder if they are quick to criticize Reagan and Bush for failing to restrict monopolies? Hence, in addition to using a very short sighted analysis, they seem intellectually inconsistent if not outright dishonest.
I believe the fact that conservatives, even so-called intellectual conservatives, rely on such flawed scholarship is a testament to the bankruptcy of their theories. So much of core conservative values today are based on belief, and not evidence. Time and again I see the same statements made over and over again, without any supporting evidence; as if repeating something often enough will make it true. It is worth remembering something said by an unnamed top Bush official (I believe it probably was Karl Rove). To paraphrase, when a journalist pointed out something he said that was incorrect, the official said to the effect, "You live in a reality based world. We create our own reality." Is it any surprise that conservatives are largely coincident with fundamentalist Christians?
The good professors have prepared a number of impressive looking formulas to support their contention; I will leave their dissection to real economists. However, even if their mathematical models are correct, their analysis is fatally undermined by a number of false premises and outright distortions. For those interested, my analysis follows, and will be longish to cover the many shortcomings in the Cole and Ohanion article.
Their argument is based on a number of assumptions, some stated, others underlying, which do not hold up. First, their study focuses solely on the NIRA and posits that this was the most important and central facet of New Deal policies. Any reading of New Deal history shows that they have way over emphasized the importance of the NIRA, both in substance and as to its role. An underlying assumption is that FDR had a coherent ideology and set of policies, of which the NIRA was the center post. FDR was no ideologue and many of the New Deal policies were ad hoc, including the NIRA. A little background is in order. FDR and his advisers thought that the major problem was over production (when, in fact, it was lack of demand). The US had been in a deflationary spiral for about 3 years and prices and wages had both plummeted. However, the courts had ruled unconstitutional government efforts to enact any laws governing wages, hours, or, in some cases, even restricting child labor. The NIRA was an attempt to address this problem by requiring companies engaged in interstate commerce to reach agreement with the federal government over working conditions and production. Thus, it tried to reduce production and inflate the economy. The law was passed during the 100 Days, but it was not until September/October of 1933 that agreements had been hammered out with those industries which participated. The law was declared unconstitutional in May, 1935 (Schecter vs. US, or the "sick chicken" case). The law had ceased to be effective even before May, 1935, so it was only really influential for about a year.
By agreeing to the NIRA, a company was allowed to post a blue sticker and people were encouraged to do business only with those companies who had taken part. However, not every major company did participate. Ford Motors, as one large example, never participated. And with those who did sign agreements, there was a serious problem in enforcing compliance with the agreements. Thus, we have a law that was in actual effect for only about a year and which covered only a portion of manufacturers and retailers. Arthur Schlesinger in The Coming of the New Deal, Chapters 6-10 has a comprehensive account of the NIRA and its implementation.
Just from this short background sketch, it is obvious of some glaring weaknesses with the Cole and Ohanion study. By focusing on only a portion of the economy and legislation that was only in actual effect for about a year, it seems beyond plausibility to think that this one law was responsible for lengthening the Great Depression. According to Cole and Ohanion's own article, agriculture employed 30% of all workers at this time. When you consider those engaged in the service industry, the unemployed, and those not participating in NIRA, it is obvious that this law affected much less than one half of the economy for only a year. Further, the authors suppose that the NIRA was affecting the economy even after it was declared unconstitutional. They propose that 75% of manufacturers were still affected by the NIRA after 1935, a percentage they seemed to have pulled out of thin air. Even if their number is close to correct, because it only affected a segment of the economy, it would mean only a third of the economy, at most, would have been affected by the NIRA after 1935. However, even a third would undoubtedly be vastly over stated, since many industries never complied with their agreements in the first place and most all ceased following them after the court decision.
Another problem with Cole and Ohanion is that the NIRA was never that important to begin with. It was only one of many bills which sought to address the problems of the Depression. Cole and Ohanion totally ignore all the jobs programs such as PWA, WPA, and CCC. They ignore things like the the Social Security Act which included unemployment insurance. They totally ignore the Agricultural Adjustment Act, which FDR considered one of the most important aspects of the New Deal, and the whole agricultural portion of the economy. They ignore the TVA and the REA and their importance in economic development. In short, by focusing on one small aspect of the New Deal, their analysis is woefully incomplete and pretty much worthless.
Another problem with Cole and Ohanion is other assumptions they make. They assume that the economy would have recovered on its own without any government action. And yet, this is the position which the Hoover Administration took. As a result, unemployment went from about 3.5% to about 25% and the GDP dropped around 40% over three and on-half years because of government inaction. It was only in the last six months or so of the Hoover Administration, when it was obvious that classical economic theory had totally failed, that he belatedly tried to stimulate the economy with the RFC (Reconstruction Finance Corporation), which never actually accomplished much of anything. Cole and Ohanion look at the New Deal as if it were something apart from the history which preceded it. They ignore the deflationary spiral which preceded it, the total collapse of the economy which made a normal recovery next to impossible. In congressional hearings prior to FDR taking office, economists and business leaders admitted that their ec0onomic theories had failed and they were at a loss about what to do next. FDR was an experimenter who had few fixed ideas. He staffed his administration with people who often had opposing views about how to restore the economy and he would sometimes play one off against another. He was the ultimate pragmatist who relied on what worked. Cole and Ohanion state that by 1939 unemployment had dropped to 11% from 25% and yet they count FDR's policies as having failed and lengthened the Depression. They don't mention that by 1939 the GDP had almost doubled since FDR took office in 1933. That's some failure.
Like most of the Chicago school, they ignore the whole issue of demand. They assume that higher profits by companies would lead to more employment, totally ignoring the demand function. As we see today with companies sitting on record profits, lack of demand suppresses hiring much more than profits encourage it. In their analysis they never look at things like household income or other measures of demand/consumption. They do include a little on consumption, but it is almost an after thought.
Finally, in their analysis they put a lot of emphasis on monopoly and strikes and lay the 1937 recession to strike activity. They ignore the fact that 1937 was the only year that FDR cut back on spending and had a balanced budget and that it was the first year of the collection of social security taxes. Social Security did not make its first payments until 1940, so it was a temporary drag on the economy. Also, it is ironic that they fault the FDR Administration for failing to enforce monopoly statutes prior to 1940, since to regulate business this way violates one of the basic tenets of conservative economics that the market should be free to police itself. I wonder if they are quick to criticize Reagan and Bush for failing to restrict monopolies? Hence, in addition to using a very short sighted analysis, they seem intellectually inconsistent if not outright dishonest.
I believe the fact that conservatives, even so-called intellectual conservatives, rely on such flawed scholarship is a testament to the bankruptcy of their theories. So much of core conservative values today are based on belief, and not evidence. Time and again I see the same statements made over and over again, without any supporting evidence; as if repeating something often enough will make it true. It is worth remembering something said by an unnamed top Bush official (I believe it probably was Karl Rove). To paraphrase, when a journalist pointed out something he said that was incorrect, the official said to the effect, "You live in a reality based world. We create our own reality." Is it any surprise that conservatives are largely coincident with fundamentalist Christians?
Sunday, July 10, 2011
AN APPRECIATION OF DOGS
The recent passing of my brother's dog has reminded me just how important the canine species is to homo sapiens. I am blessed with two wonderful dogs. The first is a miniature or Italian greyhound and the second is a lovable mutt who seems to be part shepherd and either husky, malamute, and who knows what else. The Italian greyhound is the best behaved dog I have had and the second is the best all around dog I have ever had.
There is an old saying in politics that if you are in Washington D.C. and need a friend, then get a dog. However, I don't think that should be limited to Washington. There is no better friend than a dog. Charles DeGaulle reportedly said something to the effect that, "The more I learn about people, the more I appreciate dogs." The vast majority of dogs, it is sad to say, is better than the vast majority of people. Most people harp on a dog's loyalty, but that is only a small part of their value. We can learn a lot from dogs. Mark Twain said to the effect that, "If you bring in a stray dog and feed it, you will have a friend for life. And that, my friends, is the main difference between a man and a dog." The way I phrase it is that if you are nice to a dog and treat it well, it will like you and be nice back. However, that is not true for far too many humans. Dogs don't care what you look like, how much money you have, what kind of car you drive, what clothes you wear. What is important to them is how well you treat them, or in short, the nature of your character. It has been said that virtue is its own reward. That's important to remember, since it doesn't seem to be rewarded very often in modern society. Dogs appreciate the virtuous person, more than our fellow humans do. Dogs live in the moment, they do not dwell in the past nor worry about their future. It does not take much to make a dog happy; meet his/her basic needs and throw in some exercise and play and a dog is as content as can be. These are important life lessons we would all do well to heed.
If you are a dog owner or are considering becoming one, I recommend that you watch the show The Dog Whisperer on the National Geographic Channel. Not only do you learn a lot about dogs, you learn a lot about people and life. One thing which I find particularly instructive is that when people are having problems with their dogs, very often it is the owner who has the problem, not the dog. Dogs have an amazing ability to pick up our feelings and emotions, even when we are not aware of them ourselves. Many times the Dog Whisperer will find that an owner will communicate anxiety and/or fear which the dog feeds off of. After watching the show, I have seen this with some other dog owners.
Scientists are finding out that dogs are much smarter than was previously thought. A border collie recently was found to know/understand over 300 separate words. Even your average dog without any training can pick up a couple of dozen words. Stanley Koren, who has written several dog books and has a Phd. in Psychology, estimates that dogs have the equivalent intelligence of a 3 or 4 year old human. And, when it comes to picking up cues from humans, dogs may be even better than many humans. An experiment which I found very interesting showed that in this regard dogs are smarter than chimps. Dogs instinctively know what it means when a human points; chimps do not understand the significance of that motion. The experiement was done with a dog that had not interacted with humans before, yet that dog knew what pointing meant while the chimp did not.
Yet we must remember one of my adages. A dog is a dog, nothing more, nothing less. By that I mean that while they share their lives with us, treasure our companionship, and give us their love, they are not little humans. Some people seem to want to anthropomorphize their pets. Because they are dogs, they do have distinct instincts and needs which differ from our own. Thus, they are nothing more than dogs. On the other hand, dogs have shown themselves to be much smarter than previously thought and are truly a boon companion. So, a dog is truly an important species which contributes greatly to human welfare. Researchers have found that the mere act of petting a dog lowers one's blood pressure and reduces anxiety. That is why they have therapy dogs, not therapy any other animal. Throughout human history dogs have helped us, guarding our flocks, herding our sheep, aiding us in our hunting. Dogs can sniff out drugs, explosives, and even cancer. They can help find trapped survivors in disasters, corpses under rubble and, of course, provide immense help to the disabled. What other animal does so much for us?
Finally, I want to pass along two of my favorite dog stories. The first one from a book recounts the story of a feral dog who would scavange the trash cans behind a restaurant. Someone noticed that the dog would take some food a short distance away and eat it, then take some other food and trot off. Curious, the observer decided to follow the dog to see what he did with the food he didn't eat immediately. The dog trotted along into a nearby woods and after a half mile or so came to a hole in the ground and dropped the food into the hole. The observer watched the dog do this a couple of days in a row and finally approached the hole. Inside an abandoned mine another dog had fallen in and was unable to get out. The first dog must have heard the cries of the trapped animal and dutifully brought food to it every day, proving that dogs certainly have a nobleness of purpose.
The second story is from a TV show I saw about dogs. The teller of the tale is now a veterinarian and he told of how he grew up on a farm with a family dog. One day he and his older brother decided to go with their father out to fix some fence. The brother put his bike in the back of their pick up truck and rode in the back with their dog. As their work was finishing, the brother decided to take his bike and ride back, as that was why had had brought it. After a bit the father, younger brother and the dog in the back began the drive back over a dirt road. All of the sudden the dog jumped out of the truck and began running alongside the truck, barking loudly. The boy and his father couldn't understand this unusual behavior, slowed down a bit, but kept going. Suddenly the dog sped up and ran in front of the truck. Although the father slammed on the brakes, he couldn't stop in time and ran over the dog, killing him. However, in doing so, he stopped in time to avoid running over his older son. He had fallen off his bike and was hurt, lying in the middle of the road at the bottom of a small rise. Because of the nature of the road, the driver wouldn't have been able to see his son in time to stop, but the dog somehow knew that the boy was in danger and ultimately sacrificed his life for that of the boy's. You can have no better friend than a good dog.
There is an old saying in politics that if you are in Washington D.C. and need a friend, then get a dog. However, I don't think that should be limited to Washington. There is no better friend than a dog. Charles DeGaulle reportedly said something to the effect that, "The more I learn about people, the more I appreciate dogs." The vast majority of dogs, it is sad to say, is better than the vast majority of people. Most people harp on a dog's loyalty, but that is only a small part of their value. We can learn a lot from dogs. Mark Twain said to the effect that, "If you bring in a stray dog and feed it, you will have a friend for life. And that, my friends, is the main difference between a man and a dog." The way I phrase it is that if you are nice to a dog and treat it well, it will like you and be nice back. However, that is not true for far too many humans. Dogs don't care what you look like, how much money you have, what kind of car you drive, what clothes you wear. What is important to them is how well you treat them, or in short, the nature of your character. It has been said that virtue is its own reward. That's important to remember, since it doesn't seem to be rewarded very often in modern society. Dogs appreciate the virtuous person, more than our fellow humans do. Dogs live in the moment, they do not dwell in the past nor worry about their future. It does not take much to make a dog happy; meet his/her basic needs and throw in some exercise and play and a dog is as content as can be. These are important life lessons we would all do well to heed.
If you are a dog owner or are considering becoming one, I recommend that you watch the show The Dog Whisperer on the National Geographic Channel. Not only do you learn a lot about dogs, you learn a lot about people and life. One thing which I find particularly instructive is that when people are having problems with their dogs, very often it is the owner who has the problem, not the dog. Dogs have an amazing ability to pick up our feelings and emotions, even when we are not aware of them ourselves. Many times the Dog Whisperer will find that an owner will communicate anxiety and/or fear which the dog feeds off of. After watching the show, I have seen this with some other dog owners.
Scientists are finding out that dogs are much smarter than was previously thought. A border collie recently was found to know/understand over 300 separate words. Even your average dog without any training can pick up a couple of dozen words. Stanley Koren, who has written several dog books and has a Phd. in Psychology, estimates that dogs have the equivalent intelligence of a 3 or 4 year old human. And, when it comes to picking up cues from humans, dogs may be even better than many humans. An experiment which I found very interesting showed that in this regard dogs are smarter than chimps. Dogs instinctively know what it means when a human points; chimps do not understand the significance of that motion. The experiement was done with a dog that had not interacted with humans before, yet that dog knew what pointing meant while the chimp did not.
Yet we must remember one of my adages. A dog is a dog, nothing more, nothing less. By that I mean that while they share their lives with us, treasure our companionship, and give us their love, they are not little humans. Some people seem to want to anthropomorphize their pets. Because they are dogs, they do have distinct instincts and needs which differ from our own. Thus, they are nothing more than dogs. On the other hand, dogs have shown themselves to be much smarter than previously thought and are truly a boon companion. So, a dog is truly an important species which contributes greatly to human welfare. Researchers have found that the mere act of petting a dog lowers one's blood pressure and reduces anxiety. That is why they have therapy dogs, not therapy any other animal. Throughout human history dogs have helped us, guarding our flocks, herding our sheep, aiding us in our hunting. Dogs can sniff out drugs, explosives, and even cancer. They can help find trapped survivors in disasters, corpses under rubble and, of course, provide immense help to the disabled. What other animal does so much for us?
Finally, I want to pass along two of my favorite dog stories. The first one from a book recounts the story of a feral dog who would scavange the trash cans behind a restaurant. Someone noticed that the dog would take some food a short distance away and eat it, then take some other food and trot off. Curious, the observer decided to follow the dog to see what he did with the food he didn't eat immediately. The dog trotted along into a nearby woods and after a half mile or so came to a hole in the ground and dropped the food into the hole. The observer watched the dog do this a couple of days in a row and finally approached the hole. Inside an abandoned mine another dog had fallen in and was unable to get out. The first dog must have heard the cries of the trapped animal and dutifully brought food to it every day, proving that dogs certainly have a nobleness of purpose.
The second story is from a TV show I saw about dogs. The teller of the tale is now a veterinarian and he told of how he grew up on a farm with a family dog. One day he and his older brother decided to go with their father out to fix some fence. The brother put his bike in the back of their pick up truck and rode in the back with their dog. As their work was finishing, the brother decided to take his bike and ride back, as that was why had had brought it. After a bit the father, younger brother and the dog in the back began the drive back over a dirt road. All of the sudden the dog jumped out of the truck and began running alongside the truck, barking loudly. The boy and his father couldn't understand this unusual behavior, slowed down a bit, but kept going. Suddenly the dog sped up and ran in front of the truck. Although the father slammed on the brakes, he couldn't stop in time and ran over the dog, killing him. However, in doing so, he stopped in time to avoid running over his older son. He had fallen off his bike and was hurt, lying in the middle of the road at the bottom of a small rise. Because of the nature of the road, the driver wouldn't have been able to see his son in time to stop, but the dog somehow knew that the boy was in danger and ultimately sacrificed his life for that of the boy's. You can have no better friend than a good dog.
Monday, June 13, 2011
THE IMPORTANCE OF BEING RICH/EARNEST
Not too long ago I was watching the most recent movie version of Oscar Wilde's great satire, The Importance of Being Earnest. I can't say that I am very exceptionally well read in English language plays, but I can't imagine there has ever been many, if any, better satires of society than this comedy.
For those who aren't familiar with the work or may have forgotten, Wilde's comedy skewers English society of his time in a most delightful way. Even the title is a delicious, ironic play on words. The main character pretends to be named Earnest when he is not. And the underlying theme is the double entendre of earnest, i.e., sincere, which the characters pretend to be, but are not. In short, the play holds up 19th Century English society as a model of artifice and shallowness. Additionally, we have characters with the name of Jack Worthing, who is required to show his worthiness, a vicar named Chasuble, and Miss Prism who is anything but prismatic. Lady Bracknell, who seems quite brackish, is one of my favorite characters in all of literature. To say she commands respect and obeisance would not say the half of it. To say she demands respect and obeisance is closer to the truth. Better yet, for someone to show anything except respect and obeisance would be, to her, absolutely unthinkable. It would be the same as a zebra with spots instead of stripes--unnatural.
The play shows characters who are tightly bound by the mores of society. So much so, in fact, that they do not realize it. A most telling point comes when Lady Bracknell checks on Jack's "worthiness" by asking him a series of questions to see if he rates high enough for Bracknell's niece's hand in marriage. He must be of the proper stock, you know. He seems to fall short until Lady Bracknell learns that he has a very large income resulting from his inheritance. Immediately Mr. Worthing is deemed qualified. I believe that Wilde is telling us that phony hypocrisy was at the core of English society. Birthright status was deemed all, except when trumped by wealth.
I mention all this because I believe it speaks to many of the ills in today's America. How ironic that our Revolution was forged, in part, due to a revulsion to the idea of an inherited nobility. Thus, we have the Declaration of Independence proclaiming that all men are created equal. This was a truly revolutionary thought at a time when the "divine right of kings" was still the predominant viewpoint in the world. And yet now, it would seem, there is a major segment in our society which believes that wealth indicates superiority, even when that wealth is hereditary. If someone is rich, it is because they deserve it; if someone is poor, it is because they aren't worthy or deserving. The move in the last 15 to 20 years to abolish the estate tax is nothing less than an attempt to perpetuate an aristocracy of the very wealthy. The tax cuts for the rich and the even more preposterous cuts proposed by the Ryan budget and now Republican candidate Pawlenty will lead to a much greater consolidation of wealth in fewer and fewer hands, at the expense of the rest of us. We are well on our way to becoming a third world country and a nation of haves and have nots. And yet, like the characters in Earnest, too many Americans can't see how they are being manipulated by the modern day mores of our society, as reinforced by conservative media. Like those characters, they cannot even envision questioning the way things are and whether they should be any different.
For those who aren't familiar with the work or may have forgotten, Wilde's comedy skewers English society of his time in a most delightful way. Even the title is a delicious, ironic play on words. The main character pretends to be named Earnest when he is not. And the underlying theme is the double entendre of earnest, i.e., sincere, which the characters pretend to be, but are not. In short, the play holds up 19th Century English society as a model of artifice and shallowness. Additionally, we have characters with the name of Jack Worthing, who is required to show his worthiness, a vicar named Chasuble, and Miss Prism who is anything but prismatic. Lady Bracknell, who seems quite brackish, is one of my favorite characters in all of literature. To say she commands respect and obeisance would not say the half of it. To say she demands respect and obeisance is closer to the truth. Better yet, for someone to show anything except respect and obeisance would be, to her, absolutely unthinkable. It would be the same as a zebra with spots instead of stripes--unnatural.
The play shows characters who are tightly bound by the mores of society. So much so, in fact, that they do not realize it. A most telling point comes when Lady Bracknell checks on Jack's "worthiness" by asking him a series of questions to see if he rates high enough for Bracknell's niece's hand in marriage. He must be of the proper stock, you know. He seems to fall short until Lady Bracknell learns that he has a very large income resulting from his inheritance. Immediately Mr. Worthing is deemed qualified. I believe that Wilde is telling us that phony hypocrisy was at the core of English society. Birthright status was deemed all, except when trumped by wealth.
I mention all this because I believe it speaks to many of the ills in today's America. How ironic that our Revolution was forged, in part, due to a revulsion to the idea of an inherited nobility. Thus, we have the Declaration of Independence proclaiming that all men are created equal. This was a truly revolutionary thought at a time when the "divine right of kings" was still the predominant viewpoint in the world. And yet now, it would seem, there is a major segment in our society which believes that wealth indicates superiority, even when that wealth is hereditary. If someone is rich, it is because they deserve it; if someone is poor, it is because they aren't worthy or deserving. The move in the last 15 to 20 years to abolish the estate tax is nothing less than an attempt to perpetuate an aristocracy of the very wealthy. The tax cuts for the rich and the even more preposterous cuts proposed by the Ryan budget and now Republican candidate Pawlenty will lead to a much greater consolidation of wealth in fewer and fewer hands, at the expense of the rest of us. We are well on our way to becoming a third world country and a nation of haves and have nots. And yet, like the characters in Earnest, too many Americans can't see how they are being manipulated by the modern day mores of our society, as reinforced by conservative media. Like those characters, they cannot even envision questioning the way things are and whether they should be any different.
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