Wednesday, February 27, 2008

There appears to be a New Country

by Ken Houghton

I'm late with this—just finishing five days of flu—but can someone please explain how Brad DeLong, Tyler Cowen, and McMegan, to name three, have decided that there is a new country called "Northern Mexico"?

For some strange reason, I can't find it on the Penn World Tables. And certainly that trio would never cherry-pick data.

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How to Diminish the Influence of Economics

by Tom Bozzo

1. Expend energy railing against the "Patriot Employer Act," co-sponsored by Barack Obama. What's to hate about it? From the Economist's Free Exchange blog (h/t Mark Thoma):
There is much to dislike in the bill. Essentially, it offers employers a tax credit, worth one percent of taxable income, in exchange for adherence to a set of economic limitations. Among them are: a minimum wage, minimum standards on retirement and health plans, and protections for workers and headquarters based in America.

Yeah, that Obama sure is History's Worst Monster for wanting to give corporations a modest tax incentive to do that sort of stuff. (They do need to hire a Frank Luntz type to come up with a better short title for the bill, though.)

A couple of European academics go much further in calling this package "reactionary, populist, xenophobic and just plain silly." It perhaps goes without saying that, were Willem Buiter and Anne Sibert somehow to lose their sinecures, they wouldn't have to pray to the gods of health that they not get too sick for a while. Or perhaps they're just part of a movement, which I've found curious, of neoliberal Euroeconomists who seem want to show their pals at Chicago how tough they are. Or, as Charlie Stross put down New Labour:
And lo, in the thrusting entrepreneurial climate of the early nineties a new government came into power with the remit to bring about the triumph of true socialism by privatising the post office and air traffic control systems...

And it might be prudent to verify that the U.S. doesn't get thrusted by its entrepreneurial climate before frothing at the mouth about the evils of populism.

(Cross-posted to Scatterplot.)

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Tuesday, February 26, 2008

If this is The Biggest Obama Problem

by Ken Houghton

Greg Mankiw finds the one issue on which McCain might beat Obama:
In 2000, McCain ran for president and reiterated his longstanding opposition to ethanol subsidies. Though it crippled his chances in Iowa, he argued that ethanol was a wasteful giveaway. A recent study in the journal Science has shown that when you take all impacts into consideration, ethanol consumption increases greenhouse gas emissions compared with regular gasoline. Unlike, say, Barack Obama, McCain still opposes ethanol subsidies.

But Mankiw cites the "reporting" of David Brooks. So maybe he's wrong? Sadly, no:
Support Next Generation Biofuels

* Deploy Cellulosic Ethanol: Obama will invest federal resources, including tax incentives, cash prizes and government contracts into developing the most promising technologies with the goal of getting the first two billion gallons of cellulosic ethanol into the system by 2013.

* Expand Locally-Owned Biofuel Refineries: Less than 10 percent of new ethanol production today is from farmer-owned refineries. New ethanol refineries help jumpstart rural economies. Obama will create a number of incentives for local communities to invest in their biofuels refineries.

On the other hand, if the worst Mankiw can say is that we might turn the Farm Belt into a rejuvenated, energy-producing economy, I think I can live with that.

Tom Adds: Especially for a corn-belt Senator, Obama's position is quite reasonable. Here's what he said in response to a question regarding the latest science on biofuels' net GHG emissions:
We've seen on ethanol, which is the area where you've heard the most concern expressed, that we have seen increased efficiency but ultimately cellulosic ethanol is probably going to be the only way that we can achieve the sorts of major savings that are necessary. So my policies will be guided by the science and I'm not interested in promoting approaches that actually contribute to greenhouse gases. If we have not seen advances in technology that allow us to make aggressive steps in this area, then we will try different strategies.

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Where I'll be the morning of March 9th

by Ken Houghton

Robert Legault's memorial service.

Maybe more later, but go to Making Light and read there now.

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The Logic of Privatization Ain't That Inexorable, Bud

by Tom Bozzo

Konstantin Magin of UC-Berkeley has a little Economist's Voice article given the provocative title, "Why Liberals Should Enthusiastically Support Social Security Personal Accounts." You can Read the Whole Thing via a guest registration step, but Magin's argument is, in summary:
  1. Lots of people don't own stocks, and
  2. Therefore they're foregoing stock market returns, which are
  3. Really, really good, especially over the long haul,
  4. Really, really! so
  5. Private Social Security accounts would let everyone in on the bounty at negligible risk [*], while simultaneously solving the problem that politicians raiding the Lockbox imperils the payment of future benefits. It's a win-win!
Under Magin's assumptions, I can easily construct a system that should both perform better and appeal more to liberals: allow the Social Security trust fund to buy stocks with the same amount of money as might be put in private accounts, holding the assets in the Social Security Trust Fund. That would have the following benefits:
  1. It would add at least a couple tenths of a percentage point to the average return through reduced administrative expenses, which is especially beneficial for individuals who by virtue of low wages (and hence low early-career account balances) could pay out their entire returns in expenses for some time unless the expenses were subsidized.
  2. The trust fund (unlike individuals) wouldn't especially care about the performance over any particular 30-year period, so it could improve the fairness of the system in a way liberals would like by absorbing fluctuations in realized returns; beneficiaries wouldn't get differential payouts by virtue of choosing to be born at times that put them on the job market in more- or less-favorable stretches.
  3. Even sane conservatives should like it (notwithstanding the public ownership of private property) because those super-duper returns should allow promised benefits to be paid out without future payroll tax increases, or hey maybe even future tax reductions!
In the end, liberal opposition to Social Security privatization wasn't predicated on the idea that it's a bad thing to have stocks in one's portfolio. I, for one, have a lot of retirement money in stocks! Rather, the actual privatization proposals that were floated were Trojan horses with repeal of the New Deal as the primary goal.

[*] Assuming the assumed distribution of returns is correct, and that the program is set up in such a way that prevents the returns being dissipated by middlefolks or by bad investment choices by individuals, which are big assumptions.

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Monday, February 25, 2008

Dep't of Unstable Business Models

by Tom Bozzo

Here's a decent, if sometimes spinful ("the Internet is perhaps the biggest enemy"), article on Peak DVD. Here's a telling quote:
Media companies, aware of investor concerns about the future of their cash cow, say the problems are overblown. Their position in part: DVDs will continue as a giant profit center because the Internet — despite the “marketing hocus pocus” of the telecommunications industry, in the words of one Fox executive — will remain too slow for widespread downloading to catch on for the foreseeable future.
Betting on the continued craptacularity of the U.S. Intertubes may have seemed a sure-enough thing while the Bushies have been content to see the Telecommunications Act of 1996 stood on its head, but all things must pass. Relatedly:
“Wal-Mart has indicated it is getting bored with older library titles,” said Stephen Prough, the co-founder of Salem Partners, a small investment bank that specializes in film catalogs. “When there is little to no consumer demand at a $6 price point, you’ve got problems.”
Depends on the meanings of "you" and "problems." The obstacles to serving consumer demand at lower price points (via those Internets) are largely contractual.

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Sunday, February 24, 2008

Liberals Love Snow White--So Did Hitler!

by Ken Houghton

Via My Loyal Reader, this is either another data point for the paperback edition of Liberal Facism, or proof that A. Hitler really is a better artist than J. Cameron:
Hitler is known to have owned a copy of Snow White, the classic animated adaptation of a German fairy tale, and to have viewed it in his private cinema....

"Hitler had a copy of Snow White," [William Hakvaag, the director of a war museum in northern Norway] said. "He thought this was one of the best movies ever made."

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Obama's Performance in the Wisconsin Open Primary: A Feature and Not a Bug

by Tom Bozzo

Madison-based ChicagoBoy Dan's conclusion that Obama should face a tougher challenge in the general election than he has in the swing-state primaries is just about in the "well, duh" category — at least unless (or until) the U.S.S. McCain gets capsized by the captain's blatant prevaricating and/or his crankiness makes the Kewl Kids of the press fall out of creepy-old-man love. However, one thing that ain't quite so, according to the available data, is that there was an unusual surge in crossover voting in this year's Wisconsin primary.

Using advanced research tools, I discovered that, according to CNN's exit polling, voters on the Democratic side of the 2008 primary ballot were 62% Democrats, 28% independents, and 9% Republicans. In 2004, the CNN exit poll estimated that the Democratic primary electorate was 62% Democrats, 29% independents, and 9% Republicans. (CNN's poll suggests 23% of the Republican primary voters were independents and 5% were Democrats; they didn't poll the uncontested 2004 primary.) So, with turnout up around 33% over 2004, there were proportional surges in all three groups. And per CNN, Obama did in fact carry the Democrats — and the exit poll result should be considered confirmed by Obama's wide margins in Very Liberal Madison and Pretty Liberal Dane County. Had the Democratic surge been pro-Hillary, she'd have won the state.

Given the fraction of Republican identifiers, it should be clear enough that they were far from decisive thanks to the 17 percentage-point margin. The independents, I'd assume in the absence of evidence to the contrary, presumably would vote their actual preferences. Those may well be for the contest they'd like, rather than necessarily the candidate they'll vote for in November, but it can't hurt Obama to have drawn five times McCain's independent vote. Likewise, to the extent the Republican and independent votes were "strategic," it's far from clear how it benefits McCain for that portion of the electorate to have given him what every poll says will be the tougher opponent.

Last, the thing that's especially canny about Obama's campaign is that the Kumbaya post-partisan rhetoric is wrapped around a solidly solid center-left platform — which, in a "What's the Matter With 'What's the Matter With What's the Matter With Kansas'" way that I find agreeable — happens to be popular and thus doesn't require a move to the center. And let's not forget, Cass Sunstein may have less than an economic mind when it comes to polarization, but he's a pro-gay-marriage, anti-corporate-rights liberal.

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Saturday, February 23, 2008

Does Better in Open Primaries? Check.

by Ken Houghton

Dan from Madison at Chicago Boyz lays out the reality I've suspected for a while, in just a few sentences:
I think that something more sinister is up though. I believe that tons of Republicans crossed over and voted for Obama. Being an open primary there really is no way to tell how many did cross over, but the total lack of interest in a pretty much already decided Republican contest had to contribute to many conservatives and other HRC haters to cast votes for Obama. I am guessing that this is happening all across the country as well. The Dems may very well win this fall, but I believe they are in for a tougher fight than they may have bargained for.

He then confirms something I've long suspected about Obama's primary support:
Since I hate the woman from Hades so much I decided to vote for Obama, to do my part to keep her out of the White House.

I would hardly suggest that Dan is not a "rational voter." But it's difficult not to notice that his vote gets counted as much as Tom's in deciding "margin of victory—and, hence, apportionment of delegates.

Which is the rules as they are, which I'm told we have to follow, at least unless they pertain to superdelegates.

And then throws us a scary idea to those of us who have been watching his Trusted Advisors (Sunstein, Goolsbee, etc.):
Not that he will be much better, but I do think that he will have to turn drastically to the center during the general campaign - if he is the winner of the D primary.

Note: Dan from Madison notes that he lives in Dane County, so he's part of that 67-31 split, as well as the overall 75-25 D-R voting in the state.

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Friday, February 22, 2008

In Other News No One Could Have Predicted...

by Ken Houghton

The Administration "failed to inform" the Poodle's Government of its extralegal activities:
[Mr. Miliband] had to make a humiliating apology to the [House of] Commons after it emerged that the US failed to tell British officials that two CIA rendition flights carrying suspected terrorists landed on the island of Diego Garcia in 2002. Six years on, one of the suspects is still being held by the US at Guantanamo Bay in Cuba. The other has been released.

Mr Miliband denied there was a deliberate cover-up and said he believed the US had acted "in good faith". However, Gordon Brown, attending an EU summit in Brussels, expressed his "disappointment" and said Washington's failure to disclose the flights earlier was "a very serious issue".

"The US has expressed regret that it did not admit at the time to these renditions through Diego Garcia," he added. "We have to assure ourselves these procedures will never happen again."

So the next time Condi talks about an "administrative error," we know what she means.


Maine Tobacco Dealers set to go out of Business, thanks to Supreme Court

by Ken Houghton

If a 17-year-old tries to buy cigarettes in a store in Bangor, the clerk is required by Federal law to check his or her ID, and refuse the sale.

If that same 17-year-old buys cigarettes over the Internet (without paying state taxes), The Supreme Court believes that's a Great Idea:
The US Supreme Court on Wednesday struck down key portions of a Maine state law aimed at preventing minors from purchasing cigarettes and other tobacco products over the Internet or through other mail-order services. The vote was 9-0.

At issue was whether the 2003 state law was preempted by federal efforts to deregulate the shipping industry nationwide.

In agreeing with the shipping companies, the high court said Maine's law, while well intentioned, interfered with a congressional determination to prevent shipping companies from becoming mired in conflicting state regulations. Instead, Congress sought to leave it to the competitive marketplace to determine which services companies might offer or decline to offer.

"To allow Maine to insist that the carriers provide a special checking system would allow other states to do the same," writes Justice Stephen Breyer in the court's 11-page decision. "To interpret the federal law to permit these, and similar, state requirements could easily lead to a patchwork of state service-determining laws, rules, and regulations." [emphases mine]

I leave it to The Rest of the Story to explain to me what is so special about requiring a confirmation that local retailers are required to make.

Meanwhile, tobacco dealers who rent space and pay taxes and check ID (or get fined for not doing so) in Maine are wondering why they got rogered.

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Oops, He Did It Again?

by Ken Houghton

Michael Isikoff notes that John McCain either is lying now, or did so under oath.

Maybe Ann Coulter's claim that she is preparing for impeachment proceedings isn't so farfetched as we initially thought.

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State and Local Tax Deductibility Re-Revisited

by Tom Bozzo

Apropos of (almost) nothing, Felix Salmon expresses some hope that President Obama will end the federal income tax deduction for state and local taxes, suggesting that as a policy matter, the deduction "really makes no sense" and making a progressive's case that — like itemized deductions generally — the benefits largely accrue to the well-to-do.

Now, the CBO study that Felix cites was commissioned by the "ranking member of the Senate budget committee," a.k.a. Sen. Judd Gregg, Republican of New Hampshire. Could he be a closet progressive tax-raiser? In late '04, we found Jonathan Weisman of the Washington Post reading the 2003 Economic Report of the President. It turns out that there's a political agenda to this tax policy change:
Then comes the Washington Post's Jonathan Weisman with the answer:

In crafting a broad [tax reform] agenda for his second term, Bush is trying to adhere strictly to economic theory...

In a speech... at the American Enterprise Institute, N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, spoke repeatedly of "standard economic theory," "textbook economic theory" and "scholarly literature in economics" to bolster his arguments.

Well, that makes me feel a lot better. I won't be screwed as a payoff to even fatter cats, but simply as a matter of inexorable economic logic. Notes Weisman:

In the February 2003 Economic Report of the President, the White House held that the deductibility of state and local taxes -- especially property taxes -- "lowers the price of local public services" and unfairly favors local government services over privately provided services. [emphasis added and changed from the 2004 post]

And here's what I had to say about that:
It's true enough that the tax deduction for property taxes insulates me from the full brunt of my $7,690 property tax bill [those were the days!] in an amount determined by my marginal federal income tax rate. So I'll demand more services from the city than I would in the absence of deductibility because part of my would-be cost is effectively pushed off onto the upper-income Federal taxpayer. (Which is to say, I'm subsidizing my own consumption of local government services. I shall write myself an indignant letter.)

...[T]he ERP logic begs the question of whether it makes any sense to raise the price of local services. An almost equally well-known result of "standard economic theory" is that private interests will underprovide collective goods (law enforcement, for instance). For public services that are not quite pure collective goods, the question is whether we are actually over-consuming anything such that we should get a price signal to use less. For instance, given that roughly half of the Madison tax bill goes to the school district, is there really a problem that Madison's schoolchildren are getting "too much" primary and secondary education? Of course, since the quality and quantity of public services helps support Madison's high property values, there's some tradeoff between the size of our tax bills and our property wealth.

For another, the idea that it's "unfair" to support local provision of public services over private services -- which private firms may or may not deign to provide -- is a matter of religion and not economic theory... Does living on a 5,500-sq. ft. urban lot, without so much as an indoor parking space... and thus relying on the nearby public parks to burn off excess toddler energy, create a material unfair burden on Rainbow Play Systems, compared to the alternative of needing to provide my own "park" on a one-acre lot out in [exurban] Cardinal Point Estates? If your answer leans to the affirmative, please account for the cost of the non-private provision of the roads between the 'burbs and the rest of the world and re-answer.

The CBO raises a related issue of the extent to which there are regional or national spillovers for local expenditures:
  • Whether the deduction is an efficient use of federal resources depends on the nature of the benefits from any services at the state and local level that it subsidizes.
    • To the extent that state and local taxes are payments by residents of those jurisdictions for services that they themselves receive from their state and local governments, the rationale for a federal subsidy is weak.
    • In contrast, if state and local taxes pay for services that have spillover benefits that are regional or national in nature, then a federal subsidy may be desirable to ensure that an adequate volume of such services is produced.
State and local taxes mostly pay for a few big things: public K-12 and higher education, transportation, health and welfare services, public safety, and community development. While the CBO director doesn't make the judgment, it should be obvious enough that the major expenditures have material "spillover benefits" and so the standard public goods argument for subsidy applies.

It's also perhaps worth remembering that, while its effect isn't included in the CBO calculations, lower-income taxpayers get an implicit state-and-local tax deduction via the federal standard deduction. I don't mean to say pity the poor upper-middle class, though. Rather, a proper "reform" would ideally address the entirety of the issue, which the deduction for itemizers isn't. To give Felix his due, I don't dispute the possibility that the tax system could be improved by applying generally lower rates to broader income. But a truly equitable, and socially efficient, solution would not only have to address the tax policy side of the issue, but also the local spending side — via, for instance, direct federal subsidies to replace the implicit subsidies from the current-law income tax. And good luck getting cloture on that.

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Thursday, February 21, 2008

Career Path Question

by Tom Bozzo

Gotta say, the Washington Post's version of the McCain-Iseman story has some features that the McCain maybe-not-denial-denials don't begin to address. For instance:

Iseman, 40, who joined the Arlington-based firm of Alcalde & Fay as a secretary and rose to partner within a few years, often touted her access to the chairman of the Senate commerce committee, according to several other lobbyists who spoke on the condition of anonymity. [emphasis added]
Now, lobbying isn't exactly rocket science, so the Post is perhaps not quite saying that Iseman was hired as department secretary and rose to full professor within a few years. [*] Reading between the lines, though, it could be worse in that what makes lobbyists worth the money is precisely their ability to sell access to officials. She couldn't have had any to start, otherwise she wouldn't have been hired as a secretary, eh? With a B.A. in education as her sole listed educational credential, she wouldn't appear to have started off as an underemployed telecoms wonk, either.

So what's the precipitating event that gets her onto the partnership track? Just asking.

[*] Assuming, of course, that the Post's account is accurate.

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Mr. McCain Passes the Audition

by Ken Houghton

Arthur Sulzberger Jr. begins and ends the search for its next Op-Ed columnist:

“I don’t know anything about it,” Mr. McCain said. “Since it was in The New York Times, I don’t take it at face value.”

while Mike Huckabee flashes back to Willy S.
“You know, I’ve campaigned now on the same stage and platform with John McCain for 14 months; I only know him to be a man of integrity,” Mr. Huckabee said, according to NBC. “Today he denied any of that was true, I take him at his word. I have no further comment other than that. I think for me to get into it is completely immaterial. Again, I only know him what I know him to be, and that’s a good and decent and honorable man.”

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Isn't the Market Always Right in CNBC land?

by Ken Houghton

Headline on CNBC scroll: "IS $100/BARREL OIL JUSTIFIED?"

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'Essentially Honorable'

by Tom Bozzo

So says one of McCain's Arizona buddies about the guy. Our neighbor the 91-year-old, Obama-supporting, retired political science professor — he does drive a Prius, admittedly — described McCain as a "good man" at a recent dinner. After some interrogation, I determined that McCain was getting credit from having spent his time as a POW getting tortured and all.

Now, with the latest revelations, we have (among other things):
I ask only that this game be played under Clinton Rules. And please, oh please, let some DC pap have snapped a picture of Iseman and McCain together. I'd be dying to see the expression of regret on his face.

Added: See analysis from Josh Marshall.


Wednesday, February 20, 2008

Waiting for the DeLong response

by Ken Houghton

via Dr. Black, more evidence that the Obama organization has the sharper tacks.

Mr. Popularity

by Tom Bozzo

Based on the 2004 Wisconsin primary results, when the neighbors cast more votes for Dean and Kucinich (together) than John Kerry, I'd wondered if McCain would come in behind Edwards or some other recently-withdrawn Democrat. As it turns out, there were only 20 votes for Democrats other than Obama and Clinton in our ward (Madison ward 66), and McCain got 47. So with a theoretically contested Republican primary, McCain got fewer votes than George W. Bush running uncontested in the non-event '04. Well, Republican turnout was up a bit over '04, with 79 total votes cast.

McCain's victory speech was simply awful, in a delightful way, for its Reverse Mary Poppins framing of his candidacy: the stern granddad who'll administer the spoonful of medicine so that nobody goes around getting too hopeful. While the one gauzy McCain ad I'd caught before the election showed him strolling with Ronald Reagan, he's positioning himself more as a Republican Walter Mondale. Malaise forever! [*]

On the Democratic side, Obama's margin was wider than I'd expected, 890 to 270. Barkley Rosser was right about Dane County, which overall went for Obama 67%-31%. Now, Dane County's Deaniac, Edwardsite, and Kucinichian majority ended up uniting behind Kerry and then some in the general election, helping to overcome strong Republican turnout for Bush and make Kerry's margin a little less slim than Gore's. But I think Paul Soglin's right that Obama would not be as dependent on rolling up a huge margin in Dane County to offset our wingnutty neighbors to the east, and I doubt the Democratic nominee won't need our electoral votes.

[*] Which is unfair to Mondale, I know.

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Tuesday, February 19, 2008

FL, MI, and and Leadership: My Last (I hope) Obama Post

by Ken Houghton

Dr. Black summarizes the issue:
As I've written before my biggest problem with Clinton isn't Clinton - I like her! - it's some of the people she surrounds herself with. Aren't they supposed to be the ones who know what they're doing?

Given Tom's recent posts, especially this one, I suspect he has no problem with that summary. (It appears that Hilzoy is in the ABC camp. Not absolutely certain about Scott. Patrick is an optimist. YMMV.)

But the consensus claim is that Obama works to solve issues, reaches across, finds compromises, all that noise. The "miracle" of a unanimous vote in the Illinois Senate is frequently invoked.

So while his wife continues to do her best Sherry Palmer imitation*, and Obama continues to win states (the two today coming as a surprise to no one, save possibly Barkley at Econospeak), it becomes clear that he could actually show his ability to lead.

I raised the issue last night at Brad DeLong's place. The current situation is that Democratic voters in Florida and Michigan are going to get less of a say in the selection of a candidate than Republican cross-overs in Iowa and Wisconsin are. And Obama supporters are happy with this. The most they will talk about is "do-overs." Scott trivializes them as "straw polls." (Campaign slogan: "1.7 million Floridians don't count")

Now, it's possible that a Democrat wins the White House without winning Michigan and Florida—but it's not the way to bet. And no sane Democrat should want to p*ss off people who actually went out in the mild of January in Michigan to vote.

But Hilzoy and Scott and a lot of other people—probably the same people who were righteously piqued that John Kerry gave up the fight for Ohio—are getting on their high horses about not seating FL and MI delegates because they broke DNC rules.

The irony is so thick that one has to laugh. Hillary Clinton fights for the rights of the voters in two states to have their votes counted, and this is evil.

And Barack H. Obama has a chance to lead. If he does it quickly.

The speech runs something like this:
"My fellow Democrats,

"Through no fault of their own, the voters of Florida and Michigan have been disenfranchised. Local Democratic Party organizers decided—in direct contravention of the national rules—to hold primaries at a time when they were told not to do so.

"Neither John Edwards nor my current opponent campaigned in either state, save to attend a victory celebration after the ballots were cast.

"But the people of those states—more than 2.1 million Democrats—voted.

"And now our choices are to disenfranchise them, to pretend they did not participate in the process, or to welcome them.

"I join now with my opponent in welcoming them, in asking that the delegates from the great states of Florida and Michigan be seated with the representatives of the forty-eight other states and the District of Columbia. It is not the fault of the voters that they voluntarily participated in the primary process.

"It is, however, the fault of their leaders that those primaries were held when they were held.

"Accordingly, I can for the so-called superdelegates from those states not to be seated for the first round of voting.

"Order and discipline must be maintained in the Democratic Party. And it is the responsibility of the party's leaders—not its voters—to ensure that irregularities do not occur.

"The leaders of Florida and Michigan are good people. Jennifer Granholm, Bob Graham, and the other Democrats who care deeply about their state had the best of intentions when they moved their primaries. But they were warned, and did not heed that warning.

"It is on them—not the voters—that the consequences must fall.

"So today I join my opponent in urging that the elected delegates from those two states be given their rightful place at and during the Convention, and that the punishment should fall where it belongs—upon the party leaders who deliberately disrupted their citizen's legitimate exercise of their democratic rights.

I will do everything in my power to ensure that the elected delegates from the states of Florida and Michigan are seated. The people's votes should not be "

Note the breakdowns: Obama loses virtually nothing by doing that, especially if Edwards's Florida delegates vote his way. (He's at a slight disadvantage in Michigan, but that could be balanced by 35% of the delegates being "uncommitted"—and therefore his for the taking if he supports them.)

But he has to do it while we can all still pretend it "makes a difference"—before Ohio, Pennsylvania, and Texas mark the official end of the "race."

Y'all keep telling me that Obama is a "leader," and that he finds solutions. Right now, he's got a great chance to prove it: within his own party, making certain that voters are not disenfranchised.

Obama has been conspicuously silent about the voters of two large, fairly populous states who were disenfranchised not by some Grand Republican Conspiracy, but rather by his own party. Let's see him lead.

If he does, this will certainly be my last Obama post. When he doesn't—or if he waits until the nomination is clearly his and then throws those voters (including nearly 570,000 in Florida who voted for him, and nearly 250,000 in Michigan who indicated a willingness or desire to do so) a bone—then I can be forgiven for posting the next Sherry Palmer* Michelle Obama slagging of any possibility that the Democratic process will not elect her husband.

*To be clear, I've only seen the first season of 24, and am thinking of the Sherry Palmer who kept manipulating her husband and his staff. I've heard she came back in later seasons, but cannot speak to them.

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Cold Day Ending

by Tom Bozzo

Ken's series of posts notwithstanding, I voted for Obama this evening. Just before 5:30, I put the 881st accepted ballot in the reader, suggesting that by 8:00 there would be a fair number more votes cast than the 1125 in the 2004 primary. My reasons are old-fashioned: I like his proposed policies on balance a little better than Clinton's, and I think he's run a much better campaign so far.

There's no question that the Republicans will send out the hounds regardless of who gets the nomination, but Obama's 50-state campaign shrewdly attacks a McCain candidacy at its areas of putative strength — appeal to independents and pan-partisan moderates — which is really non-evil Rovianism. Early indications are that Obama would force McCain to contest previously safe states like Virginia when the Republicans have dissipated tens of millions of dollars on candidates who can barely get their trophy wives to vote for them.

Much of the Obama backlash is risible. The meme that he's the candidate of pretty words and no substance doesn't hold water given the broad array of issues for which he's established more-or-less detailed positions. Others may, of course, think otherwise, but David Brooks's "the candidate's a lib—" column in today's NYT ought to be proof enough that I'm at least getting the solidly left-of-center-left candidate I think I am.

That's not to say that there's anything wrong with promoting hope. We got into this mess, in no small part, by forces that played first on apathy (it doesn't matter whether you vote for Bush or Gore; they're sides of the same coin) and later fear ('Don't Change Horsemen in Mid-Apocalypse'). And one thing was for sure at the polling place, there were a lot of young people registering to vote for the first time. Bryan Caplan might deplore the extension of the franchise to non-believers in Caplanism, and maybe some of those kids will cast votes that I wouldn't. But I'd have to think that it's harder to assemble 51% of the electorate for preservation of the current corporatist oligarchy the more people actually have their say.

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Once More on Cuba

by Ken Houghton

Brad DeLong spares no love for Fidel Castro's country (and almost less for Chris Bertram), and expands on this in Comments:
Wrong comparison: Cuba in 1960 is like Costa Rica, northern Mexico, Puerto Rico, or Portugal. The fact that we today think of Cuba as in the same basket as Guatemala, Haiti, or the Dominican Republic is Castro's doing, and is worth thinking about.

As a thought-experiment, following is some data from the Penn World Tables 6.2. First, a comparative table of Cuba against the other Caribbean countries (click to enlarge):

Notes: I start in 1970 because that's where the PWT data does for Cuba, Haiti, and Puerto Rico. Haiti only has data through 2000, and the divisor on gains is adjusted accordingly. (Anyone wishing to argue that Haiti experienced massive growth from 2000-2003? I didn't think so.)

No one would pretend it has been all growth. Indeed, it's messy, although per capita GDP grows.

And a fairly steady investment price level since ca. 1988 (or, if you prefer, since around the fall of the Berlin Wall):

None of this is to pretend that Cuba has been all bread and roses. But romanticizing the Bautista regime ("Cuba in 1960 is like Costa Rica, northern Mexico, Puerto Rico, or Portugal") does very little good.

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I Channel Scott Lemieux (not a hockey-related post)

by Ken Houghton

Statistical Modeling, Causal Inference, and Social Science has a post (two, actually) about "tied" Presidential elections.

They state reality, without conclusion:
Four straight close elections in the 1870s-80s, five close elections since 1960, and almost none at any other time.

Care to discuss the post-mortem (as it were) on Treason in Defence of Slavery and the Southern Strategy, anyone?

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U.S. Foreign Policy and Dictatorships

by Ken Houghton

In the context of my Tim Curry-reference post, and via Dan Drezner (via Brad DeLong; nothing original from me today), Parade lists the "top ten" dictators in the world.

Among the leaders are such stalwarts in the war on terror as:
  1. King Abdullah of Saudi Arabia (only #4, despite providing the funding and 15 of the 19 hijackers for 11 Sep 2001),
  2. Hu Jintao of China (#5, despite having Most Favored Nation trading status),
  3. Pervez Musharaf (#8),
  4. Islam Karimov of Uzbekistan (#9, another, post 11 Sep 2001 ally),
  5. Muammar al-Qaddafi of Libya (#11, oil for Arms), and
  6. surrogate torturer Bashar al-Assad of Syria (#12).

Cuba (personified by R. Castro) comes in 18th in this popularity contest, just behind Hosini Mubarak of Egypt, who gets $2 billion a year in aid from the US--65% of which appears to be military. (Mubarak is the successor to Sadat.)

"Carter, Begin, and Sadat/ Brezhnev, Deng, and Castro..."

by Ken Houghton

The last remaining leader of "I Do the Rock"* is retiring.

Can we stop throwing money at Radio Marti now, the way Tom's candidate sensibly wants?

*Feel fortunate that YouTube is blocked here, or I would be embedding the song, assuming there's a video out there.You can thank my Loyal Reader for the embed.

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New Day Rising?

by Tom Bozzo

Election morning here is kicking off with signs that there is a powerful light source in the sky, so I imagine preparations for a high turnout won't be in vain. A few well-bundled peds have already made their way to the polling place, where Suzanne will be manning the kids' preschool's bake sale table shortly.

Over here in the 66th ward [warning: large PDF map], the second most interesting question is whether John McCain will outpoll the Democrats who've dropped out of the race. (Results for Dane County will be posted here.) In '04, like Dane County, we broke narrowly for Kerry — 341 votes to 309 for Edwards — and even Dean (270) and Kucinich (123) considerably outpolled George W. Bush, who picked up 56 votes amid light turnout for the uncontested Republican contest. And we aren't the most liberal ward in the city by a long shot.

Polling of the race suggests that Obama will roll up a double-digit margin over HRC, and that's
consistent both with the chatter over snow-shoveling and the open primary format.

Added: Suzanne was voter #225 just after 9 A.M., so turnout is brisk but the short ballot is keeping the line short.

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Monday, February 18, 2008

The Movie to See if You're Only Seeing One....

by Ken Houghton

Congratulations to Steve (and Laura, without whom...) on the #1 Movie in America. And the Japanese poster is Way Cool.

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Sunday, February 17, 2008

Honesty from a Corporation

by Ken Houghton

It had been a while since I looked at U.S. Food Policy, but the largest beef recall in U.S. history reminded me I might be missing something. Indeed, Parke Wilde first discussed animal abuse captured on video which, at its best, would be cruel, only a week ago.

Slaughtering cows that cannot otherwise stand increases the risk of BSE ("mad cow disease") in the food supply. Which is just one reason that bad treatment is also Bad Business Practice.

Another bad business practice is quoted at USFP:
The most ridiculous sentence in today's article comes from the Hallmark official who had the unpleasant job of reconciling the company's earlier untrue claims with the facts:
"We certainly wouldn't have failed to disclose that if we knew it was in the public record," he said.

I feel much better about domestic, let alone international, food processing standards now. In the nine months since Paul Krugman wrote "Yesterday I did something risky: I ate a salad," the stakes have only gotten higher.

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Saturday, February 16, 2008

Surprise Me? Or Find a Better Writer/Editor?

by Ken Houghton

Some of the following is clearly true:
A commission established to study same-sex civil unions in New Jersey has found in its first report that civil unions create a "second-class status" for gay couples, rather than giving them equality....

[Gay rights advocates] say civil unions, in practice, do not offer the legal protections that marriage does. The commission largely agreed with them.

So far, so good. And no great surprises. Indeed, one of the major barricades is also not a surprise:
The commission also finds that many people in the state do not understand civil unions, which create a "second-class status."

while another shouldn't be, but is:
For instance, the commission found that many companies in the state that are self-insured -- and therefore are regulated by federal, rather than state, law -- refuse to provide health insurance to the partners of their employees.

While employers in Massachusetts could legally do the same thing, most do not, according to the report.

Employers generally want to keep their better workers, so there is an element of surprise there, though it may be more a timing issue as businesses adjust to the presence of civil unions among their staffs.

On the other hand, this seems badly written, or at least improbable:
The commission's report says the misunderstanding of civil unions makes it more difficult for a child to grow up in New Jersey with gay parents, or to be gay themselves.

If anyone can explain why either of those would be more difficult now than it was a year ago, I'm willing to hear explanations. Or even rational speculation. Meanwhile:
Gay rights advocates say the civil unions do not deliver and have pledged to push lawmakers to vote to allow marriage. Gov. Jon S. Corzine has said he would be willing to sign such a bill into law but doesn't want the issue to be taken up before the presidential election in November.

Sadly, I understand the reasoning. It is left as an exercise whether it should be viewed as correct.

In the meantime, happy near-anniversary to several neighbors who, after many years of commitment, will be celebrating their first legal year together soon.

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Even Citizenship Demand Curves Slope Downward

by Ken Houghton

If I were Mr. Mochi-Tsuki* or Suzanne Johansson, I wouldn't even be amused:
The first is that the wait for citizenship and green cards is up — way up. Citizenship and Immigration Services reported in January that the average time to process a citizenship application had risen to 18 months, from seven, and that green cards would now take a year, instead of six months or less.

It was a sorry moment for the agency, which jacked up its fees last year with a promise to use the new money to end vast paperwork backlogs. The opposite happened: the agency is drowning in applications from people who filed before the increase to avoid being gouged.

The term "gouged" seems somehow more accurate than a discussion involving the title of this blog, since the price increase provided no promise of better service or higher quality.

Then again, Jim Cramer argued this week [may be PDF link] that inflation at fast-food restaurants is a good thing ("This is a remarkable development—companies passing on costs with prices sticking and consumers accepting."), so maybe we should just consider this another aspect of creeping inflation—though probably one that will not appear in the CPI.

*Who is a great guy with a wonderful, brilliant wife. And I would be saying both of those things even if he hadn't once helped me to survive a homework assignment in DiffyQ that could have driven a Ph.D. candidate insane.

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Friday, February 15, 2008

Quote Which I Hope Will Pre-empt Ken's Next Obama Post

by Tom Bozzo

The Rude One, on Mark Penn:
It's sad, really, how badly Penn wants to be Karl Rove when he's just, at the end of the day, like every cartoon villain who thinks he can control dark forces that will make him blow up or become a dessicated corpse...

And so it's even sadder that Hillary Clinton invested so much of her presidential ambitions in this wannabe intellectual... who says smart sounding things like calling groups of people shit like "Impressionable Elites" and "Permissive Parents," spouting vaguely coherent pop sociology like, "Numbers help you land on something that is incontrovertibly true." Well, that is until they don't.

The reason that Barack Obama has a movement behind him is that he went for a unifying movement. Clinton, listening to Penn, who saw how Rove eked out "wins" through targeting small, specific groups, is now in the position of trying to string together the Caffeine Crazies and the Unisexuals and the Working Retired into a crazy patchwork of a majority while creating the illusion of a movement.
And if that isn't enough, let's just say: Terry McAuliffe! And, unlike 19-year-old volunteers, these are Genuine Insiders paid lots of HRC's donors' money for this Quality Strategery.

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DeLong links to Hilzoy, who reminds me why DeLong Smackdown is necessary

by Ken Houghton

Yes, it's another Clinton/Obama post. Feel free to skip, or wait for Tom's comment and read from there to here.

(On the plus side, Tom's attempt at pre-emption has saved me from having to discuss Mark Penn, about whom the less said the better, unless you are Lee Papa, which none of [the rest of] us is. Even if Papa does seem to share the ObamaNation double-standard that Their Man can go on Faux News every day, but HRC agreeing to debate him on there is Evil Calculated Pimping.)

Hilzoy continues the Cult* of Obama with a slagging of the HRC campaign almost worthy of Mr. Papa if he were taking his meds. And I blame Brad DeLong: partially because she does.

We learn, for instance, that "Hillary Clinton's seven years in the Senate have been pretty undistinguished." (Tom, for instance, knows better.) Of course, in fairness, Hilzoy disagrees with Tom about Terry McAuliffe's value: "Various Clinton insiders, including (according to Greene) Terry McAuliffe and Maggie Williams -- tried to get [Patty Solis Doyle] fired [after 2006]."**

When Hilzoy adds commentary, it is strange:
[T]he NYT story Greene quotes says that the campaign spent "$27,000 for valet parking, paid as much as $800 in a single month in credit card interest and — above all — paid tens of thousands of dollars a month to an assortment of consultants and aides."

$27,000 in valet parking, in a state that includes NYC, which was visited multiple times, in multiple locations, by multiple cars holding multiple people over multiple months? The only thing amazing about that is that it the number was so low.

Consultants? For someone doing a lot of internal polling, and probably preparing for a national run and higher office? I know Hilzoy and I do everything out of the goodness of our hearts, but the Mark Penns and Mark Kleimans get paid. (Unfortunately or not, they get paid win or lose. As Toby Ziegler says in the first episode of the second season of The West Wing (roughly) "I"m a political consultant." "How many races have you won." "None."

In fairness, the $800 in interest charges looks suspicious. The rest looks like the two make-up sessions for which John Edwards's campaign paid $400 ($200 each, which NYCites will assure you is a bargain) that have been miraculously transformed into "haircuts."

Then there is the evil of HRC herself. HIlzoy quotes Josh Greene—"[A]bove all, Clinton prizes loyalty and discipline, and Solis Doyle demonstrated both traits"—as if this were unique. (See Todd Purdum's Vanity Fair piece on Obama, for instance. Or find me any politician on the national stage who doesn't prize loyalty and discipline above all.***)

Hilzoy then invokes Brad DeLong's 2003 piec—the one I discussed extensively here,; the one that self-described "progressive" HRC haters (and, now, Obama supporters) continually invoke as "proof" of her evil. (In this, they are rather similar to the people who take Obama's admission of cocaine use in his younger days as defining his abilities and accomplishments.) The one that, until October of 2007, was missing its key paragraph (even if the 'graf was, allegedly, "hoisted from the archives"):
t is hard to tell how much power Hillary Rodham Clinton had. Certainly she did not effectively manage the process. But I did see Ira Magaziner in action. And it seems to me that the process was impossible to manage as long as Ira Magaziner was involved, and perhaps she did not have the power to fire him.

She did, presumably, have the power to fire Sollis Doyle, and has the power to fire Mark Penn, and much of Hilzoy's post is devoted to "she didn't do it, so she's a Bad Leader" ranting.****

After quoting the two articles at length, Hilzoy coming to rather a interesting conclusion:
[DeLong] later decided that he had been unfair: according to "her people", "she has done an awful lot more over the past fifteen years, and done almost all of it very successfully."

The sarcasm quotes around "her people" are, I hasten to note, not Brad DeLong's, and my previous, abundant respect for Hilzoy declines because of them. It is only the next sentence that causes that respect to fall off the cliff:
I have never really known what that "awful lot more" was, so I've never felt competent to judge what Hillary Clinton's people say.

Yes, this is the same woman who said (before inserting some long quotes from two others) that "Hillary Clinton's seven years in the Senate have been pretty undistinguished."

Quoting my fellow sufferer of Hansen's Disease:
I have read and heard plenty of good arguments making the case that Hillary Clinton will not be an ideal or even a good President. I've heard and read plenty of good arguments that she won't be the best candidate.

I have yet to read or hear a good argument making the case that Obama will be an ideal or a good President or even a better one than Clinton.

Mostly I've heard and read are arguments based entirely on the hope that he will be any or all of those things.

And I've heard and read a lot arguments based entirely on the fear of what the Presidential campaign will be like if Clinton's the nominee.

The end of the first, and the last, appears to be near the center of Patrick's analysis that left him "on balance I’m impressed. Not transported. Not uncritical. But impressed." with Obama. (The posting of Elise Matthesen's Straw Man, is presumably another story, one only compounded by Patrick's .*****)

Indeed, the closest thing we had to why Obama will make a good President was Hilzoy's post (cited with distinction by Patrick, Tom, and amanda as the first comment to Lance's post.) As Lance notes, "it basically makes a case I never doubted, that Obama has been one of the good guys." (My own doubts are public knowledge, and based on the public comments and publications of his circle of advisors, public [David Cutler, Cass Sunstein] and private [e.g., the "strong women" cited in Purdum's article]—but those are doubts that Obama is more a progressive Democrat than HRC, not that he'll do less harm than the Republican nominee.)

But Hilzoy's "Actually, I think we can" now appears to be selective advocacy presented as reasoned analysis.

I won't be crying that HRC (and especially Mark Penn) got out-triangulated. But it would be nice if people who claim to be Obama supporters were really more than HIllary bashers. (Tom, as noted before, does not fall into the latter category. I had hoped—apparently erroneously—that he was not alone in that.)

*Yes, Patrick, I'm calling it that; since your source asks why a man who continually invokes his religious beliefs is tagg[ed] with the term messiah,, I rest the case and await being pilloried)

**Hilzoy, among others, clearly agrees that it would have been better if HRC had followed that advice. But then I suppose she would have had to find something else about which to write.

***Barrack Obama, after all, is married to Michelle, who declared that she "might" support HRC if her husband loses the nomination, and then offered the bromide that "everyone in this party is going to work hard for whoever the nominee is."
****For the record, I'll go with DeLong and Ezra Klein on this one:
[T]he Clinton team has run a pretty good campaign. [B]etter, indeed, than what I thought they'd run. It may or may not prove to be enough, and looking back, there will surely be identifiable mistakes and botched opportunities.

which one can say of any campaign, even Obama's. Not that I would, since Lance and I already may be the only lepers left in the colony.

*****I assume it is clear that no one would accuse me of considering Obama a "starry-eyed idealist." If it isn't, see here. Warning: it's long.

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A Great find from 26econ

by Ken Houghton

Aaron Schiff's Economics Blog Directory is an invaluable time-wastera marvelous source of information (even if he doesn't list this blog).

Today's find is Sex, Drugs, and Water Utilities, the title of which I assume is a riff on Diane Coyle's great book (what Freakonomics should have been, and published four years earlier).

It appears to be a Sole Proprietorship, run by one David Zetland, a Ph.D. student in Davis, California. And it's not immune to noting that economic incentives can mitigate, but more often exacerbate, spillover costs and other negative externalities.

Today's sample is the effect of the state of Indiana on fishing in the Gulf of Mexico. Examining the Chicago Tribune article, Zetland notes the direct answer:
There's no free lunch. Pay farmers to grow something and they will. Besides the direct costs (fuel, machinery, etc), there are indirect costs (externalities) that others (people, fish) bear. If the farmers do not bear these costs, they grow too much and we all suffer.

And what externality is causing the seasonal "dead zone" in the Gulf of Mexico?
Indiana, Illinois, Iowa, Missouri, Arkansas, Kentucky, Tennessee, Ohio and Mississippi were the worst contributors to the dead zone.

The nine states represented one third of the 31-state Mississippi River drainage basin, but were responsible for more than 75 percent of the nitrogen and phosphorous that deplete oxygen from the Gulf, killing fish, crabs, clams and shrimp.

The excessive amount of nitrogen in the Gulf was mainly caused by corn and soybean farming, and the overabundance of phosphorous was primarily caused by animal manure on pasture and rangelands, the survey said.

"Conventional thinking has been that the pasture and rangelands don't contribute as much as the cultivated cropland," said Richard Alexander, a research hydrologist and lead investigator on the study. "The thinking has been that the row crops would contribute more phosphorous."

Conventional thinking appears to be wrong, but the economic incentives to the farmers work only one way, the ethanol boondoggle. Zetland again:
[A]gricultural runoff from these states (now running at full steam to grow as much government pork ecological disaster life-affirming, lovely ethanol-enhancing corn as possible)

Somehow, "teach a man to fish, and he won't be able to find any" is not the way I remember that old adage. Who could have predicted this? Tom.

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Thursday, February 14, 2008

Trying to Win on the Road

by Ken Houghton

I have been watching in (somewhat mock) horror as Hillary Rodham Clinton gets triangulated out of the race for the Presidency and Roger Clemens—who for the past ten-plus years has shown the same trends and the same physical changes as Barry Bonds, in a much more fragile position—denies having used steroids.

But if Howard Bryant is to be believed—always an open question—Roger is about to get, well, rogered.*

I believe it was Gerald Wilkins, after "losing" a slam-dunk contest to Michael Jordan when the All-Star Game was in Chicago, who most poignantly observed, "It's difficult to win on the road in the NBA."

If Bryant's description of Wednesday's hearing is correct, Wilkens description applies aptly to Clemens's position :
As titillating, tawdry and undignified as the blood feud between Roger Clemens and Brian McNamee has been, the real showdown Wednesday before Congress is not between Clemens and McNamee, but between Clemens and former U.S. Sen. George Mitchell.

Let me be clear: The Mitchell Report, as it currently stands, is the Black Sox Scandal of the 21st Century. Despite that, as Bryant notes:
When Mitchell, union head Donald Fehr and baseball commissioner Bud Selig testified in Room 2154 of the Rayburn Building on Jan. 15, Mitchell was praised for his "fair and impartial" report, produced under the difficult circumstances of not having the players' cooperation. Mitchell's approach, methodology, findings and conclusions went unchallenged. No member of the committee probed with specific questions about the information gathering process on Clemens, even though each knew within a month that Clemens, and McNamee, would testify before them.

The normally-astute National Law Journal ran an op-ed two week's ago discussing the legend-in-his-own-mind Mitchell Report. It was a relatively balanced piece—certainly better than the ESPN coverage—but it still suffers from an attempt to be "fair and balanced." Especially egregious is this statement, whose sentiment is assumed throughout the piece:
It appears that Major League Baseball needed to have a George Mitchell not only conduct a vigorous investigation but also identify alleged wrongdoers.

The short answer is, well, yes, that would have been a good idea.

Let's be clear: the Mitchell investigation was not "vigorous" and did not "identify" any wrongdoers who were not found by other means.

The bulk of the "report" is based on two New York-based people who worked in the clubhouses of the Yankees (Brian McNamee) and Mets (Kirk Radomski). Note that the links are both to extant court cases that involve public testimony.

Mitchell had no subpoena power. He started by speaking with people under indictment and people they implicated as having dealt with them directly. His information came (primarily) second-hand from the Mcnamees and Radomskis and Jason Grimsley.

The result was by no means "vigourous"—it couldn't be, given the constraints. The result was what Mitchell always does: a report that made his paymasters (in this case, the baseball owners) happy that they had "identified the problem," that it was relatively limited, and that they themselves were not complicit.

And the thing is, Cohen and Gershman know everything I'm saying. While they open with:
Not surprisingly, the credibility of the now-famous Mitchell Report that publicly identified 85 baseball players as having used illegal drugs is about to be tested

they never support the claim in the report. Indeed, the closest they come is to say that it "would have appeared less credible" without including those 85 often-unsubstantiated names. Indeed, Cohen and Gershman are clear-sighted in the true purpose of the report:
It appears that Major League Baseball needed to have a George Mitchell not only conduct a vigorous investigation but also identify alleged wrongdoers. However, given the protocol he chose, there may be innocent victims whose protestations will be heard but, in most cases, not believed.

At least this time, some lawyers know the truth, and are telling it—even if it is by what they do not say. One can only wish Congress had acknowledged the same.

*Sorry, started this yesterday and don't feel like changing all the tenses throughout. But having now seen The Daily Show medley of clips of people discussing Clemens's bum and its bleeding, I don't feel much of a need to change anything else, either.

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Battlepanda Joins Yet Another 'Unity Movement'

by Ken Houghton

At least she's getting paid:
it's conceptualized as a site where the liberals, libertarians and even disaffected Republicans can come together on neutral territory and have productive conversations.

But I won't be adding it to my reading list. YMMV.

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I Won't, But Hank Paulson Will

by Ken Houghton

Biggest lie of the day, as printed by CNBC "Breaking News":
PAULSON: Congress deserves raise for passing the stimulus package.

UPDATE: My Loyal Reader suggests that the caption should have read "praise" not "raise." Certainly that makes intuitive sense give the opening statement, which uses neither word but does declare, the evidence notwithstanding:
Four weeks ago, recognizing the downside risks to our economy and that the short-term cost of doing nothing was too high, President Bush called for an economic growth package to provide a temporary boost to our economy as we weather the housing correction.

The Congress responded with bipartisanship, cooperation and speed to pass an economic growth package that is temporary, broad-based and will assist our economy quickly. We have demonstrated to the nation and the world that we can come together to address the needs of the American people as we weather the housing downturn.

Yesterday, the President signed the economic package into law and Treasury is already working to send payments out to more than 130 million American households.

The IRS will manage the current tax filing season and simultaneously prepare to issue these additional payments starting in early May. Payments will be largely completed this summer, putting cash in the hands of millions of Americans at a time when our economy is experiencing slower growth. Together, the payments to individuals and the investment incentives for businesses will help create more than half a million jobs by the end of this year. [emphasis mine]

There are a lot of words there, so the chance of there being more lies than words is near zero. But it is likely that the caption should have read "praise."

Anyone have a screen shot?

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Wednesday, February 13, 2008

Look at the Evidence

by Ken Houghton

Amazingly, school vouchers work as a transfer mechanism for money, but don't improve education.
To make it local-ish (for Tom, at least):
To support his idea, Mr. [Sol] Stern pointed to Milwaukee’s experiment with school vouchers.

"Milwaukee’s public schools still suffer from low achievement and miserable graduation rates, with test scores flattening in recent years," Mr. Stern wrote. "Violence and disorder throughout the system are as serious as ever. Most voucher students are still benefiting, true; but no 'Milwaukee Miracle,' no transformation of the public schools, has taken place."

and this is not exactly coming from one of the Milwaukee experiment's detractors:
[Stern's] 2003 book, “Breaking Free: Public School Lessons and the Imperative of School Choice,” relied on his own trips to Milwaukee to measure the impact of the voucher system on public schools there. In the book, he found much to praise about vouchers, saying they would give needed competition to the failing schools. But now he says more recent evidence has fallen short.

The opposition fails Economics 101:
In his online opposition, Mr. [Jay P.] Greene [like Stern, a Fellow at the Manhattan Institute] said he was particularly bothered because the essay was being widely interpreted as setting up a choice between vouchers and curriculum changes.

"There’s no reason you can’t have both — just like you like brownies and ice cream," Mr. Greene said. "You shouldn’t be made to choose."

When you reallocate funds from the school system to the vouchers, you limit the monies available for curriculum changes.

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Newsflash: Murphy Brown Exonerated!

by Anonymous

From the archives of "news articles that should be in The Onion, but aren't," here's a gem from the Montreal Gazette.

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Tuesday, February 12, 2008

Root Cause Analysis: Why Obama Does Not Mean Hope

by Ken Houghton

Peter Dorman at EconoSpeak attempts to find the "intellectual roots of Obamaian Post-Partisanship."

The result pretty much explains my no-secret at all antagonism to seeing Obama as a purveyor of "hope":
Cass Sunstein. Sunstein has been cited as an advisor to Obama, and he has written extensively on the dangers of a world in which people only communicate with those they already agree with....

...I know how important it is to listen with an open mind to those whose point of view challenges your own. You do yourself and the quality of your thinking no favor when you live and converse in an echo chamber.

But there are two problems with the let’s-all-get-along school. First, there is the issue of power....

Second, what counts as moderation in America is often hopelessly skewed to the right, even by the standards of other capitalist countries. I generally distrust corner solutions—all this or all that—and look for blending and balancing, but if John Edwards is too far to the left to be taken seriously, I’m a speck on the thin edge of the political distribution, several sigmas out. In this respect, the Sunstein/Obama analysis is correct, but radically incomplete. We need to really extend the conversation to the vast regions beyond the pale of approved discourse. The resulting zone of consensus will be moderate by the standards of intelligent human thought but extreme with respect the political constraints we live under today.

So far I could have written this, if I could write that well. But he doesn't discuss Cass Sunstein's public statements, which in themselves exemplify the "partisanship" he studies. Sunstein on Obama in September of 2006:
As a member of the University of Chicago Law School community, where economic analysis reigns, he knows a lot about how markets work, and he is hardly committed to left-wing orthodoxies about either the economy or the culture.

Sunstein praises Obama at length, attacking Sean Wilentz for noting that
Dreams From My Father contains composite characters and other fictionalized elements—not exactly a portrait of sterling honesty or authenticity.

Talking about liberals with Salon, Sunstein says:
Liberals are sometimes defined as people who can't take their own side in an argument. I actually don't think there's a difference, though. I would say that there are many liberals who think that, in the last few elections, to vote for a Republican presidential candidate is just mindless, that there's no rational reason that people would vote Republican. If liberals are thinking that, there's probably a problem. I think many liberals think that to vote for Bush, some part of their brain is on fire and the rest of it isn't functioning, or that they've been fooled in some way, or that they're not paying attention. So I think that a lot of liberals are in an echo chamber where they share a set of views, some of which are probably wrong.

He attacks Wilentz for making the obvious connection (and not because its obvious):
In Wilentz' account, the delusional "Obama-awed commentators" have failed to learn the true lesson of the Bush Administration, which is that the last time America opted for intuition-based governance, it produced a "catastrophic presidency."

Sunstein, of course, was immune to that:
In contrast, in 2000 I had high hopes for President Bush. I thought he could be a very good president. I think he has failed terribly in part because his White House is [They started out somewhat open-minded on these issues, somewhat diverse, and after discussion the diversity was squelched and the extremism was increased.].

we have to wonder if this is the same man who told Salon
[S]avvy political entrepreneurs are creating the conditions of our experiment because they want to decrease internal diversity. Karl Rove could be described as a "polarization entrepreneur." [emphasis mine]

The evidence that they started out "open-minded" is notably lacking, which is why when Sunstein declares in his TNR piece that
Wilentz is right to say that some members of the press were excessively generous to Bush's candidacy, perhaps because they preferred him to the not-terribly-fun Al Gore. Many of Bush's supporters, in the press and elsewhere, have been disappointed, but they were hardly deluded.

we have to wonder what he thinks he himself was.

And, finally, we need to understand why we have to understand the other side:
As a law professor I would say, If you think there's nothing to be learned from Justice [Antonin] Scalia's opinions, then there's a real problem. Because some of his opinions are really good. And some of them are even right. And those that are wrong, you improve your thinking a lot if you grapple with what he has to say.

Great: my thinking will be improved,* even as my rights are further constricted. I believe this is what Sunstein means when he refers to Obama as "the visionary minimalist." So what is the case here? Much straw, little fire:
Unlike most Democratic senators, he acknowledges that large increases in the minimum wage might "discourage employers from hiring more workers," which helps explain his enthusiasm for the Earned Income Tax Credit, an anti-poverty policy with Republican roots that supplements wages but does not have disemployment effects. Rejecting the orthodoxy of many Democrats, Obama does not want to excise religion from the public sphere. He insists only that "[w]hat our deliberative, pluralistic democracy does demand is that the religiously motivated translate their concerns into universal, rather than religion-specific, values." In 2005, Obama voted with Republicans in favor of the Class Action Fairness Act, which increases the rights of defendants in class action suits. After he received an e-mail from a pro-life doctor, Obama softened his website's harsh rhetoric on abortion, writing: "[T]hat night, before I went to bed, I said a prayer of my own--that I might extend the same presumption of good faith to others that the doctor had extended to me." [italics mine; emphases his]

For someone who talks a lot about reaching out to the other side, Sunstein fluffs a lot of Republicans, even from over thirty years ago.

Teresa has joined the list of those who are convinced Obama will be the nominee for the Democratic Party. So the answer to my semi-rhetorical question at the end of Caroline's endorsement on the basis of her pragmatism ("When did Democrats become Republicans?") appears more and more to be "when they nominated one."

Fortunately, either alternative is MUCH worse.

It will be nice, for the first time in eight Presidential elections, to be able to vote for a member of the Ancestral Party—even if he is passing.

*Can't I just outsource legal analysis to Scott or Bean, who actually spent time learning the background that Sunstein appears to prefer to actual consideration of the results of those decisions? Isn't Chicago the place where specialization is part of the Pentateuch?

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Marshall Jevons confirms part of my suspicion

by Ken Houghton

If I weren't still buried in health data, with a side trip to MLB, one of the things I wanted to work out was whether the current "Small Government Republican" administration would have positive job growth without its additions of government jobs.

(For context, it was common belief among my cohorts in the Government Practice at PwC that government employment would decline by about 30% in the next 20 years. Since that was ca. 2001, we're more than 1/3 of the way there.)

Fortunately, Marshall Jevons presents the evidence graphically. What might have been expected to be a 7-10% decline is nowhere to be found.

So not only are they pouring sand in the gas tank, they are adding to the weight of the car. And heavier cars, as any physicist or Stata user can tell you, get lower performance.

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On HRC, and John McCain's Cognitive and Vision Defects

by Tom Bozzo

As reported by Judith Davidoff of the Cap Times, Chelsea Clinton does a good job explaining why I wouldn't be upset if HRC manages to pull her campaign out of its current doldrums.

Reference #1.

Reference #2.

Reference #3.

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Monday, February 11, 2008

How Finance interferes with Watching Football

by Ken Houghton

Real football, that is.

Pleasantly catching up last night on the Premier League games of the weekend (most of which were missed because of the East Coast version of a "hoedown" for kids; don't ask).

Aston Villa performed marvelously against Newcastle (spelling corrected by my Loyal Reader; actually, I was thinking of this one), tying the game early in the second half, followed by a hat trick from Norwegian John Carew (the last a penalty kick).

Looked as if it might have been a fun game to watch, except for one thing:

Both teams wore the jersey of their sponsor. For Villa, something called, which is meaningless for me.* But Newcastle's sponsor is Northern Rock.

It's difficult to imagine a team with Northern Rock on their jerseys beating almost anyone right now.

*It's a UK-based online casino, apparently. Since only an idiot would play a casino game online, I'm afraid I can't tell you if it's a good one.

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Tom's Favorite Homebuilder has Familial Problems

by Ken Houghton

Barry Rithholtz relays a story that must send shivers down NAR spines:
The daughter of Vice Chairman and co-founder Bruce Toll informed the company last month that she and her husband "did not intend to make settlement" on a $2.47 million home they had previously agreed to purchase, the company said in a regulatory filing.

Metropolitan Opera Broadcast buffs, such as the proprietor of this blog, can start worrying now.

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Time to Go Long Subprime?

by Ken Houghton

Yes, this post is snarky, but BSC formed a "work-out" team back in January/February of 2007—and then appears to have downsized most of them just as the HOPE NOW program was initiated.

So when we see at Housing Wire that Bear—the #2 originator of MBS—is short $1 billion worth of securities, after having been long $1 billion in August, is it possible that this is the light at the end of the tunnel?

Or just sleight of hand, as the Bloomberg article notes:
In an interview after Molinaro's remarks, Bear Stearns spokesman Russell Sherman said the New York-based firm's subprime trades are a "hedge" against potential losses on investments in higher-rated mortgages, he said.

"We are using short positions to offset other long positions in our mortgage inventory," Sherman said. He didn't provide details on specific trades.

Nor should he. But the implication is that they are short the securities that have a chance of appreciating, and long securities that have nowhere to go but down.

So maybe it's not an indicator at all. 2010 is looking more and more as if it will be something other than The Year We Make Contact. (R.I.P. Roy Scheider)

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We're #1, Please Kill Me Now

by Tom Bozzo

Some climate data as of 2/11/07...

CitySnowfall (in.)
since July 1, 2007
Heating degree days (F)
since July 1, 2007
Wilmington, DE6.92,694
Binghamton, NY44.13,935
Syracuse, NY71.03,718
Madison, WI75.54,550

You have that right, folks, despite being relatively free of lake-effect snow by virtue of geography and prevailing winds, we are snowier than Syracuse for the winter-to-date, with another 3-4" expected tonight. Looking around, I have to head to the Lake Superior snowbelt to find someplace materially snowier.

It perhaps goes without saying that if I wanted to live in Syracuse, I could have had twice the house for half the price, access to the Stickley factory outlet, etc.

(Note to Mom: pack boots.)

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Sunday, February 10, 2008

The CSM usually knows better than to publish utter nonsense

by Ken Houghton

But there is always the exception:
Clinton versus Obama is shaping up as one of the titanic clashes of recent history, note experts. It's Walter Mondale against Gary Hart in 1984, Jimmy Carter versus Ted Kennedy in 1980, even John F. Kennedy versus Lyndon B. Johnson in 1960 – rolled into one.

1984 was so close that Gary Hart received just over 30% of the delegates, while the "primaries" of 1960 were clearly secondary in decision-making to the convention itself (Note, for instance, that Richard Nixon got more votes in the Democratic primaries than LBJ did.)

Of 1980, Kennedy/Carter revealed the weakness of the incumbent and led to one of Kennedy's best, most prescient speeches ever:
The Grand Old Party thinks it has found a great new trick, but 40 years ago an earlier generation of Republicans attempted the same trick. And Franklin Roosevelt himself replied, "Most Republican leaders have bitterly fought and blocked the forward surge of average men and women in their pursuit of happiness. Let us not be deluded that overnight those leaders have suddenly become the friends of average men and women."

"You know," he continued, "very few of us are that gullible." And four years later when the Republicans tried that trick again, Franklin Roosevelt asked "Can the Old Guard pass itself off as the New Deal? I think not. We have all seen many marvelous stunts in the circus, but no performing elephant could turn a handspring without falling flat on its back."

The 1980 Republican convention was awash with crocodile tears for our economic distress, but it is by their long record and not their recent words that you shall know them....

Eight years later, Lloyd Bentsen noted:
You know, if you let me write $200 billion worth of hot checks every year, I could give you an illusion of prosperity, too. (Laughter and applause) This is an administration that has more than doubled the national debt, and they've done that in less than eight years. They have taken this country from the No. 1 lender nation in the world to the No. 1 debtor nation in the world. And the interest on that debt next year, on this Reagan-Bush debt of our nation, is going to be $640 for every man, woman, and child in America because of this kind of a credit-card mentality. So we go out and we try to sell our securities every week, and hope that the foreigners will buy them. And they do buy them. But every time they do, we lose some of our economic independence for the future.

Which is why another CSM article is so scary, just in its header:
Congress is likely to try other economic boosts. The GOP wants to extend the Bush tax cuts set to expire in 2010.

Which will it be?

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