Wednesday, November 30, 2011

Payroll Tax Fictions

In a piece at Politico, John Podesta takes Republicans to task for not embracing an extension of the payroll tax cuts, while simultaneously--and quite unintentionally--demonstrating why policymakers can't be counted on to solve economic problems.

Podesta argues--in typical ideologue fashion--that the Republicans only care about the fabled "top 1%," that they think only this portion of the citizenry matter, at all:
This vote also exposes the GOP to an inconvenient truth about the difference between conservatives and progressives. They argue the top 1 percent are the most important drivers of the economy; we insist a strong middle class is the engine of economic growth.
It's a truly fascinating delusion, given that it requires nearly half of the voting public--those that vote Republican--to be mindless drones, conditioned to vote again and again against their own interests. Of course, it's a patently false claim. Note that Podesta merely asserts it--that the GOP thinks the the top one percent are the chief drivers of the economy--but doesn't do anything in the way of backing it up.

And, in keeping with a now-fashionable technique for faulty arguments, Podesta switches from "GOP" to "conservative," as if the terms were interchangeable. They're not, of course. But it's an exercise in futility explaining this simple reality to those who will not listen, who are unconcerned with actual facts.

But he's not identified any kind of "inconvenient truth," regardless. Moreover--given that Republicans already accepted a payroll tax holiday in the past, not to mention extensions of unemployment benefits--he's basically fabricating the point, entirely. For we can all recognize that tax holidays and benefit extensions cannot simply go on forever. Can't we?

And that's the real inconvenient truth here: people like Podesta aren't worried about paying bills and don't care how empty the treasury is, because their entire game is class warfare, nothing more.

Now, Podesta supports his position on the benefits of extending the payroll tax holiday with the opinions of Mark Zandi, who claims--I kid you not--that extending these tax break will create three-quarters of a million new jobs in 2012. Hell, let's just do away with the taxes entirely and create a couple of million more jobs!

But I digress. John Tamny at RealClearMarkets has an excellent piece on Zandi--from way back in June--and his economic prowess. Some highlights:
Regarding Social Security tax cuts, implicit there is Zandi's thoroughgoing Keynesian view that "more money in people's pockets" will drive up consumer spending, with a boost to GDP the end result. What he misses is that temporary tax cuts, far from driving up economic growth, merely reschedule it. Assuming what's hard to assume, that Americans will fall for a near-term increase in their take home pay, any increased consumption in the present would be matched by a decrease later on when the tax cut is revoked... 
Keynesians such as Zandi always seem to leave out that with all consumption, production must come first. And if the productive don't "consume" the fruits of their productivity, it should be stressed that no act of saving ever detracts from demand. Consumption delayed is merely a shift of consumptive ability to other individuals, and even better, money saved is often capital supplied to entrepreneurs and businesses that will use it to expand, and hire new workers... 
Secondly, and as mentioned earlier, governments can't create economic growth as much as they can reschedule it. This lesson has been learned the hard way once again by Washington through temporary measures meant to stimulate housing and automobile purchases. In the near-term the subsidies surely did boost purchasing, though at the expense of future demand; recent limp demand for housing and autos yet another example of the faulty nature of the temporary tax cuts that inexplicably appeal to Zandi.
Read the rest, it's worth it.

But to simplify, what Zandi is tragically wrong about--like most progressives--is the idea that the government can simply create growth via policy, the idea that the economy is a simple thing and turning this valve over here--or adding an extra foot of pipe--will have an entirely predictable result over there.

It's why we're knee-deep in a pathetic recovery, because policy wonks in Washington think they have a full understanding of something that is beyond their ken.

Cheers, all.

Cheer when they finally go, don't cry

Article first published as Crocodile Tears and Personal Power on Technorati.

Following Barney Frank's announcement that he will not seek re-election in 2012, there has a been a cacophony of regretful and remorseful statements from politicians and pundits throughout the land, lamenting the news. The President remarked that "the House of Representatives will not be the same without him [Frank]," and that is surely true. But it would be no less true for a host of other Representatives and Senators, if they were to step down as well.

Barney Frank has been in office for over thirty years, yet he is not even close to being the longest-serving member of Congress. Currently, that honor belongs to Representative John Dingell, in office for over fifty-five years. He is followed closely by Daniel Inouye. Then there is John Conyers--in office for over forty-five years--and Charlie Rangel (forty years), Bill Young (also forty years), Thad Cochran (thirty-eight years), Pete Stark (the same), and Don Young (also the same). Leahy, Baucus, Grassley, Harkin, and Waxman are right up there, as well.

We tend to accept this as, somehow, a Good Thing. Politicians with such longevity are often thanked for their long careers as public servants, are referred to by monikers like "elder statesman," and are held in high esteem, simply because they have maintained their hold on power. Charlie Rangel was censured by the House only a year ago for multiple ethics violations, but recently received the full support of his fellow Democrats in office at a fund-raising event, indicating that his transgressions were meaningless, compared to his years of service.

And this is a bed we--the voters--have willingly made for ourselves; we vote again and again for the same person and why? Because seniority has its privileges, because long-serving Congresspersons have a better hold on power, are better able to deliver the goods, so to speak. But in doing so, the sovereign power of the people, which is supposedly exercised by government agents, is warped and twisted into the personal power of these elected representatives.

They have more power than the typical rank and file member of Congress by virtue of their seniority. If they are replaced, the new member loses all of that accrued power, is forced to begin anew. And what do they do with that power? They insure their hold on it, whenever possible, as was the case with McCain-Feingold, the legislation at the center of the Citizens United decision of the SCOTUS. And they create channels of access for friends and supporters, as has been the case for board positions at institutions like Fannie Mae and Freddie Mac. These are powers they were not meant to have, powers that exceed what was granted.

So, do not lament the loss of an entrenched politician, applaud it, no matter the Party involved. For their Party's loss, their constituents' loss, is the nation's gain. It's a net decrease in the power available to be exercised over us all. And that is truly a Good Thing.

Cheers, all.

Monday, November 28, 2011

Narcissism: the new black

Forget all you've read by sociologists and historians determined to identify various generational groups with clever monikers like "baby boomers," "gen x-ers," and "generation y." It's poor thinking, weak analysis disguised by terminology, the worst kind of pop history. People are not conditioned by the year of their birth, anymore than they are conditioned by the stars in the sky. And while there certainly are identifiable social trends  at various moments in time, the moments vary by location and the trends, themselves, vary as well. So just because someone was born in 1965, it does not follow that the person is a some sort of slacker, with no knowledge of or interest in things like politics or the economy.

It would be great if things were this easy, if we could identify what moves people, what they care about, how they behave solely on the basis of when they were born. But we can't. The generalizations fall apart in short order. For instance, many would argue that "generation y," now becoming young adults, are the driving force behind the Occupy movements and that this reflects a selflessness uncommon among the previous generations like the x-ers and the baby boomers, yet harkening back to the "greatest generation" of the War years. There's even a book that advances the theory: Millennials Rising: The Next Great Generation. But it's based on assumption after assumption and supported by cherry-picked data, as are the arguments for all generation-based groupings of this sort.

The fact of the matter is that people are individuals. Group-think is a reality, no doubt, and individuals can sometimes find themselves swept in cultural zeitgeists (some individuals, anyway), but such things are not pre-determined by the year of one's birth. And significant trends in social behavior--regardless of the source--cut across generational lines. They always have. If they didn't, they couldn't be significant. We like to think this isn't the case, to romanticize about the past to create a narrative with identifiable heroes. For the youth are always excellent choices for such a role.

The Civil Rights Movement, for instance, is portrayed this way. Yet, the participants were not all college kids and the like. Remember too, that forms of participation can vary, based on a host of factors. A housewife living in Cleveland simply could not contribute in the same ways as a college student going to school in Georgia. But it does not follow that the latter cared more or was more significant. The Abolitionist Movement of the 19th century--being more distant in time--perhaps makes this issue more obvious.

So, lets look at an obvious social trend in today's climate that knows no generational bounds: narcissism. From YouTube videos to Tweets, to Facebook status updates, to arrogant blog posts, the 'net has proven to be a bastion of self-promotion. Or as some would say, a bastion of "freedom." For what else is more indicative of unfettered freedom than a platform from which to exclaim "me, me, me"? No group is unaccounted for here. True, younger people are more plentiful, but again this is partly a consequence of specific circumstances and opportunity.

There is place, however, where equality of opportunity exists for most all adults: the roadways of the nation. And it is here that this profound cult of narcissism is most evident. Cars today come equipped with many features; every new model comes with even more. But some features--like a braking system--have been around for a long time and are unlikely to go away anytime soon. Every driver has to learn how to use the brakes. It's just something so basic and--obviously--so necessary, from the standpoint of safety and courtesy. After all, allowing yourself to coast into the car in front of you in order to stop would just be downright rude.

How about turn signals? They've been available since 1940, or so. Prior to that--and even after turn signals became standard features--drivers were instructed to make hand signals when turning. Turn signals are safety features: they alert other drivers of a coming change in course, of a likely decrease in speed. There's no reason--ever--to not signal when making a turn. And yet...WHY IS IT THAT NOBODY BOTHERS TO USE THEM ANYMORE?!? I'll tell you why: because they're so wrapped up in their own little world that they can't be bothered which such mundane activities that provide them with no clear benefits.

So, the next time you're out for a drive, use your stinking turn signal. Ass.

Cheers, all.

Tuesday, November 22, 2011

Who's your favorite Newt?

Is it the take-no-prisoners, remorseless front man for the 1994 GOP revolution? Or maybe it's the not-so-behind-the-scenes not-really-a-lobbyist Washington insider? Or perhaps, the newly mature candidate who refuses to point fingers at his fellow Republican candidates, the one that has recaptured the public's admiration? Or maybe it's the literary giant with so many wonderful seminal works carrying such original titles like A Contract With The Earth?

Me, my favorite Newt is the one that had the good sense to hide from the Aliens:


The other ones? I don't have much use for any of them, to be honest.

Newt's an interesting guy, no doubt. And he has done some good work for the nation and for his own political party. He's also stepped in it more times than I can count. And as Jennifer Rubin notes, he's got a couple of deep-seated personality problems, to put it mildly:
This routine reveals two of Gingrich’s central flaws: an impulsiveness that convinces him every loopy idea that comes into his head is pure gold and a complete lack of honesty in coming clean (as in the Freddie Mac episode, when he insists he wasn’t “lobbying”).
But for some reason, large portions of the media and the punditry still like him, still believe he's "one of the adults in the room."

I think he's a modern version of Jeremy Bentham, a man gifted with some insights and a formidable intellect, but plagued by a tendency to believe his sometimes superficial and naive observations are actually novel and deep. And oddly enough, I'd bet that if Newt heard he had been compared to Bentham, he'd take it as a great compliment.

Cheers, all.

A Tale of Two Committees

Reading the various opinion pieces on why the Super Committee failed can cause a serious case of the dizzies. Here is a couple being hyped by RealClearPolitics on its Tuesday home page:

First, there's Eugene Robinson's piece which--predictably--blames the Republicans for the failure, wholly and completely. A sample:
That is basically where the subcommittee talks stood -- Democrats ready to give and take, Republicans willing only to take -- until the eleventh hour, when Sen. Patrick Toomey, R-Pa., presented to his supercolleagues a proposal for tax reform that some commentators hailed as a breakthrough. It was, in fact, nothing of the sort. 
Toomey's plan would actually cut tax rates, including for the wealthy, with a promise to raise them again if that's what is needed to boost tax revenue by $250 billion over the next decade. 
Puh-leeze.
Mr. Robinson assumes, of course, that all of the projected spending in the future is both necessary and good. Thus, if Democrats agree to a reduction in projected increases--read that carefully--they are negotiating in good faith. And that's the problem with this Super Committee nonsense: no real spending cuts are actually being discussed, there's no meat to be found, anywhere. The Republicans had largely surrendered this argument and thus are trapped in the paradigm wherein having a slower rate of growth than what was planned is a actually a cut. Almost all media sources are equally ignorant in this regard, having allowed the doublespeak of Washington to become standard fare. And the typical citizen--not being fluent in doublespeak--is often duped into believing such nonsense.

Next, we have Jeb Hensarling's piece at the WSJ. In contrast to Mr. Robinson, he places all of the blame squarely on Democrat shoulders. Of course, since he was a Republican member of the Committee, that's hardly surprising. A sample from his piece:
Republicans were willing to agree to additional tax revenue, but only in the context of fundamental pro-growth tax reform that would broaden the base, lower rates, and maintain current levels of progressivity. This is the approach to tax reform used by recent bipartisan deficit reduction efforts such as the Bowles-Simpson fiscal commission and the Rivlin-Domenici plan. 
The Democrats said no. They were unwilling to agree to anything less than $1 trillion in tax hikes—and unwilling to offer any structural reforms to put our health-care entitlements on a permanently sustainable basis. 
Unfortunately, the committee's challenge was made more difficult by President Obama. Since the committee was formed, he has demanded more stimulus spending and issued a veto threat against any proposed committee solution to the spending problem that was not coupled with a massive tax increase.
Hensarling obviously sees this all from a very different perspective than Mr. Robinson. He sees the Republicans more than prepared to increase revenues, but not to the degree that the Democrats were pushing for. The Bush tax cuts--extended by Obama--are the crux of the issue. For the Republicans, keeping this cuts as they are is vital, though they are willing to eliminate various deductions and the like which would--theoretically--lead to more revenue. For the Democrats, not letting these tax cuts expire means automatically lowering future revenues by an identifiable amount.

Thus, the taxation lie that I have addressed previously rears its ugly head once more.

Beyond that, Hensarling has a valid point, with regard to the President. Obama has no desire to be constrained by supposed cuts; he want to spend more and more and more. And he has plenty of support for that goal in Congress. That's the real tragedy, here. Ultimately, this is all a charade, nothing but bread and circuses for the masses and a convenient propaganda tool for the coming elections.

As a nation, we should--at some point--have the courage to stand up and say "Enough! No more games!" But I fear we won't, especially since pundits like Mr. Robinson continue to dominate the media, pundits who parrot Washington talking points and doublespeak, either because they don't understand what's really going on or because they're just too lazy to bother with figuring it out.

Cheers, all.

Monday, November 21, 2011

Best reason yet to throw 'em all out

It appears to be all but over: the Super Committee won't get a deal done in time to stave off automatic cuts to Defense spending and Medicare. Why? Because the two sides can't agree on fundamentals: should the debt be reduced primarily by cutting spending or primarily by raising revenue.

But let's consider what we're really talking about, here. The Debt Ceiling agreement--the Budget Control Act of 2011--was signed into law on August 2nd of this year. The terms were relatively simple, as far as legislation goes: the debt ceiling was raised in return for some $917 billion in spending cuts across the next ten years, coupled with another $1.2 trillion in cuts that would be hammered out by the vaunted Super Committee. If the Super Committee falls short of that goal, the difference would be made up in automatic across the board spending cuts. Obviously, if the Super Committee does nothing--which now seems to be the case--the full $1.2 trillion in cuts happen.

Still, those cuts are across the next ten years. For persepctive, the federal budget for 2012--submitted by the Obama administration--was for over $3.7 trillion. Here's a chart from the CBO with projected budgets:


Having budgets of over $3 trillion a year looks to be a foregone conclusion. So, the total $2.1 trillion in spending cuts over ten years means cuts of $200 billion a year. That's not even a ten percent cut. And it says nothing about emergency spending or the actions that future Congresses might take, since they will not be permanently constrained by this agreement, at all. In other words, it's a drop in the bucket. But the Super Committee can't get it done.

However, that's not the most troubling thing here, in my opinion. This is (from the first link):
Rather than making a final effort at compromise, members of the special deficit-reduction committee spent their final hours casting blame and pointing fingers, bracing for the reaction from financial markets that are already jittery over the European debt crisis... 
Almost every congressman has left Washington for the week-long Thanksgiving break, so the legislative reaction to the committee’s failure will not come until early next month. The impasse leaves a host of other must-pass items, such as extensions for unemployment insurance and the payroll tax holiday, without any vehicle for passage before year’s end.
The bastards aren't willing to step up to the plate and do their stinking jobs. The administration is more worried about reelection than it is anything else, as are many Representatives and Senators. The rest look more interested in turkey and football than in solving the nation's problems.

Maybe it is time to throw them all out...

Cheers, all.

Sunday, November 20, 2011

Better Palinization than Socialization

Kathleen Parker--in an opinion piece as the Washington Post--stays in the overplayed game of criticizing Republicans for their supposed anti-intellectualism:
It takes courage to swim against the tide of know-nothingness that has become de rigueur among the anti-elite, anti-intellectual Republican base. Call it the Palinization of the GOP, in which the least informed earns the loudest applause.
I can't help but notice the stupidity of this argument in the context of the Occupy movements and all the comparisons of it to the tea party movement. We can, I think, take it is a given that the fans of the Occupy movement are mostly on the left, are more likely to be Democrats, while the the supporters of the tea party movement are mostly on the right--with some notable exceptions--and are more likely to be Republicans.

Now, I know many of the people involved in or sympathetic to the Occupy movement are not morons. Far from it, in some cases. Yet, the rank and file really don't have a clue about what should be done, except in ridiculously general terms. They don't have any answers. Hell, most of them don't really have any questions. The Occupy movement, itself, is founded on a simplistic idea of protesting perceived unfairness, nothing more. Contrast this with the tea party movement as it originated. The people has very specific criticisms, generally founded on an intellectual framework rooted in the ideas of people like Friedrich Hayek, James Madison, and John Locke. People can certainly take issue with the conclusions drawn from that framework, with the thinkers themselves, but it can't be set aside as "anti-intellectualism."

However, Ms. Parker is also arguing that being under-informed is another aspect of this anti-intellectualism. In that regard, she singles out Herman Cain:
The latest to this spectacle is Herman Cain, who has figured out how to turn his liabilities into assets. After fumbling for an answer during an editorial board meeting to a simple question about his position on Libya, a lead news item since February, Cain blamed — who else? — the media.
The problem wasn’t that he had no idea. The problem, he said, was that he likes to think before he speaks. Besides, there are so many countries out there.
 
“Who knows every detail of every country on the planet?” he asked a crowd in Nashua, N.H., a few days later. “The people that get on the Cain train, they don’t get off because of that crap.”
To be fair, Cain should have a better grasp of such things, if he wants to be taken seriously. Of course, he current Vice President has hardly demonstrated a top-notch intellect, what with thinking FDR was President in 1929 and that he spent a lot of time on TV. And I seem to remember McCain catching a lot of flack for not knowing the difference between a Sunni and a Shiite. But he was never held up as a poster child of anti-intellectualism.

But Ms. Parker also addresses Global Warming Climate Change and the common idea on the right that it's some sort of hoax. It is--in my opinion--a difficult topic. Any disagreement with the self-proclaimed experts can  earn one the "climate change denier" label. And there's not much to do about that. So what happens? People that recognize the dangers of assuming man can predict the future of the global climate and can control that future really have no toe-hold in the debate. They may know that "hoax" is an improper characterization, but may also recognize that it's the best they can hope for, with regard to some measure of the population.

The question is, does that feed anti-intellectualism? I guess the best way to answer that is with a comparison.  Consider the minimum wage. Anyone that understands economics--even on a basic level, even according to a flawed traditional paradigm--knows that increasing the minimum wage will have one demonstrable effect: it will tend to decrease employment (raise the unemployment rate). There's really no argument to be had there. Even Paul Krugman knows this. Yet, politicians on the left (Democrats) have no problem championing the idea of increasing the minimum wage and dismissing the one tangible consequence as not true, unproven, or not absolute. Why? Because it helps with their overall agenda.

So, excuse me if the hoax talk is not all that troubling to me, with regard to Climate Change. The most important issue is pulling the rug out from under people that actually think they can control the future of the climate, that think they have the wherewithal to remake society in order to achieve that goal, no matter the cost...in dollars, lives and freedom.

Regardless, it's politics. It's not evidence of anti-intellectualism, anymore than obfuscation with regard to the minimum wage, fear-mongering seniors over Medicare and Social Security, or misleading the public in a vote about public unions is.

Cheers, all.

Same old song with a few new lines

In the NYT today, Pulitzer Prize winner Nicholas Kristof offers some mindless cheering, some conspiracy claptrap, and this gem of a claim:
The high ground that the protesters seized is not an archipelago of parks in America, but the national agenda. The movement has planted economic inequality on the nation’s consciousness, and it will be difficult for any mayor or police force to dislodge it.
Rather than poking holes in the "high ground" bit with example after example of Occupy movement folks behaving badly, I'd just like to make one point, with regard to the idea that, somehow, this movement is responsible for planting "economic inequality on the nation’s consciousness":

IS STUPID! Is stupidest theory I ever heard!


Where have you been for the last, oh, several decades or so, Mr. Kristof? Economic or income inequality has been a topic of media probing for that long, at least, and a staple of leftist ideology for much longer than that. The only people pointing to such an achievement by the Occupy movement, the only pondering this are the people that have been bitching about it all along. Geeze.

Cheers, all.

Saturday, November 19, 2011

Dems to Rangel: all is forgiven, give us a hug

Dana Milbank at the Washington posts notes the real reason why the public doesn't approve Congress: zero accountability and very little integrity. Representative Charlie Rangel--after being the first Congressman censured by the House since 1983--held a fundraiser and received all the support he could handle:
“Last night marked a momentous evening in my campaign for re-election,” Rangel wrote Thursday in a letter to supporters. “At a special event in Washington, Democratic leaders including Nancy Pelosi, Steny Hoyer, James Clyburn, Sandy Levin, John Con­yers, Emmanuel Cleaver, and Steve Israel stood by my side and pledged their unwavering support on my behalf. I am so humbled and grateful for their involvement.”
This a man that--less than a year ago--had been censured by the Pelosi-led house for a litany of violations:
With 170 Democrats joining all but two Republicans, the chamber approved the condemnation for 11 rules infractions that included 17 years of unpaid taxes on property in the Dominican Republic, more than $500,000 in undisclosed financial assets and inappropriately raising millions of dollars for a New York City college from corporations with business before the Ways and Means Committee.
Let's think on the tax issue for a moment. He failed to pay taxes for seventeen years. And for every one of those years, he was a sitting Congressman. For every one of those years, he was on the House Ways and Means Committee, the group responsible for writing the tax code. For three of those years, he chaired Ways and Means. For four of those years, he served on the Joint Committee for Taxation. For two of those years, he chaired the Joint Committee. Yet, he didn't pay the taxes that he owed and actually had the audacity to claim it was because the tax code was "confusing."

Even after the censure, Rangel insisted he had done no wrong. And apparently he hadn't, at least as far as the rest of the Dems in the House are concerned. Because they seem to have no problem standing up for him, now. If a censure meant anything, Rangel would be a pariah, given his total lack of contrition. But clearly, it's no better than a trip to the penalty box in the NHL.

Consequences? We don't need no stinkin' consequences!

Cheers, all.

Do you even know what you just said?

That's a question I'd like to ask Charles Blow, after reading his latest piece at the NYT. Entitled "The Decline of American Exceptionalism," Blow notes that there is more doubt among citizens--particularly young ones--than in the past, with regard to the idea that there is an American Exceptionalism:
Perhaps even more striking was that, among young people (those ages 18 to 29), the percentage of Americans who believed that their culture was superior was lower than young citizens of Germany, Spain and Britain. 
Even if you put aside the somewhat loaded terminology of cultural superiority, Americans simply don’t seem to feel very positive about America at the moment. A Time Magazine/Abt SRBI poll conducted last month found that 71 percent of Americans believed that our position in the world has been on the decline in the past few years.
Blow even offers a "solution" to this problem, though it's basically just a series of tired, worn-out cliches:
Is exceptionalism an anointing or an ethos? If the answers are grit and ethos, then we must work to recapture them. We must work our way out of these doldrums. We must learn our way out. We must innovate our way out. 
We have to stop snuggling up to nostalgia, acknowledge that we have allowed a mighty country to be brought low and set a course to restitution. And that course is through hard work and tough choices. You choose greatness; it doesn’t choose you.
But what he never does is identify the why behind this changing perception. Maybe he thinks it's obvious, that it's simply the current climate of political divisiveness and the slumping economy. Newsflash: the divisiveness we see today is nothing new, despite all the articles bemoaning the lack of respect and decorum from one side of the aisle or the other. Politics have been divisive in this country since day one.

As to the economy, we've had downturns before, and we'll have them again. No, those don't seem like plausible ones. Maybe the reason for this change is simply one Blow doesn't want to face. What's different in the past few years? Could it be a Chief Executive that spends his days talking down America, apologizing to every nation on the planet for American actions across the past two hundred years? Nah, that can't be it...

Cheers, all.

Balancing budgets and cutting waste equals "austerity economics"?

With everyone hot and heavy over the "austerity" measures forced on Greece by the EU--and the threats of more of the same for other member nations--it's no wonder the term has become so prominent in political discourse. Even gravitas-laden pundits are using it. For instance, here is Robert Reich making a bold--if mind-numbingly ignorant--statement at HuffPo. The piece is entitled "Stop the Austerity Train Wreck." Reich whines about budget cuts, then offers a series of fixes for what ails the economy. The first one:
No cuts before jobs are back -- until unemployment is down to 5 percent.
He appears to be serious. And this is a guy that was actually Secretary of labor under Clinton, has been a professor at Harvard, and is currently at UC Berkeley. Yet, his grasp of the economy is like that of an undergrad in an introduction to macro class, as he seems to believe that economic growth can only be incentivized by government spending. Sure, there's an argument to be had about that, but the absolute is complete nonsense. NO cuts? No matter what? And never mind that the "cuts" on the table are hardly of an "austere" sort.

His third proposition (the second is just mumbo-jumbo about creating jobs) is--if possible--even sillier:
To pay for this, raise taxes on the super-rich. It's only fair. Never before has so much income and wealth been concentrated at the very top, and taxes on the top so low. Go back to the 70 percent marginal tax we had before 1980. And include more tax brackets at the top. It doesn't make sense that any income over $375,000 is taxed at the same 35 percent, even if it's a billion dollars. And tax all sources of income at the same rate, including capital gains.
Forget the "tax the rich" meme for a moment and consider just the final bit. Reich would have capital gains taxed as ordinary income, on the same progressive scale as all income. That's a recipe that would have one demonstrable consequence: the stagnation of capital. It would remove incentives to release capital, to reinvest. There is no surer way to stymie economic growth. Yet, Reich would have us believe that this is a recipe to restore prosperity. On what planet?

There is no doubt--in my opinion--that there are issues to be addressed on Wall Street and in corporate America. And--again, in my opinion--there are ways to make sure some wealthy people and some companies aren't getting a free ride at the expense of everyone else. First and foremost would be getting rid of tax breaks, subsidies, and loopholes. Reich actually seems to understand this. But the restriction of capital via punitive taxation is just stupid.

Beyond all of that, the language of criticism--austerity measures/economics--is inappropriate. Sure, there are libertarians and the like that would love to see truly massive cuts to government spending, that would love to see various entitlements eliminated completely. But that's not what's really on the table in DC and in the Super Committee. Simply seeking to insure that the government stops routinely spending more than it takes in, trying to slow the auto-growth of across the board spending, and wanting to slash waste and useless programs is not austerity economics. Mr. Reich has spent enough time in college classrooms; he should have learned to get his terminology right, by now.

Cheers, all.

Friday, November 18, 2011

Shrum a Corzine Panegyrist?


Bob Shrum--a man who has demonstrated a keen political mind in the past, even if fundamentally wrong--has come out with a piece defending Jon Corzine in The Week. Shrum shows his hand in the opening paragraph:
Friendship has its claims; so does fairness. And in the wake of the bankruptcy of brokerage firm MF Global, the media's portrayal of Jon Corzine, MF's ex-CEO and a former Democratic senator and governor in New Jersey, strikes me as profoundly unfair — and not just because he's a friend.
From there, he traces Corzine's political career, noting again and again what a principled man Corzine was and is. But he says little about MF Global, instead urging caution before rushing to judgment, and actually predicting vindication for Corzine in the end:
I don't know precisely what happened there — and by the way, neither do all those who are rushing to judgment not just about the firm, but about the man. I know Jon Corzine. He was a client who became a friend. Again and again in politics, I've seen his integrity and his commitment to high standards. And I believe that after all the headlines fade, and the process comes to an end, that is one thing about him that will not change.
To read Shrum, one would think that the criticism Corzine is receiving is somehow misplaced and based on assumption, alone. But that's nonsense. We know--for instance--that Corzine was the one that pushed the risk envelope for MF Global in an attempt to remake it in Goldman Sachs' image. And we know that Corzine got preferential treatment for MF Global from the New York Federal Reserve, thanks to political connections, treatment that it clearly did not deserve. And we know that in the weeks before the collapse of MF Global, Corzine was still touting the company, claiming that it was fully prepared for whatever might happen in Europe and remained strong.

Beyond all of that, MF Global under Corzine exemplifies the greed of the elite writ small. After screwing up an entire State, Corzine set out to make himself a bundle...because after all, he's a man of modest means, right? And in order to do so, he seemingly ignored every lesson learned from the mortgage meltdown. That's not a man of deep principles, it's a man of profound arrogance. Shrum's arguments are clearly those of a dear friend, trying to defend the indefensible, nothing more.

Cheers, all.

Political career first, Country second...or maybe third

Charles Krauthammer, writing for National Review Online, details the transparent political motivations behind the Obama administration's decision to delay the building of the Keystone XL oil pipeline. The construction of the pipeline would create thousands of jobs, plus lessened U.S. reliance on Middle East oil, but apparently those reasons are insufficient to trump the needs of the administration:
President Obama decreed that any decision must wait 12 to 18 months — postponed, by amazing coincidence, until after next year’s election.
Why? Because the pipeline angered Obama’s environmental constituency. But their complaints are risible. Global warming from the extraction of the Alberta tar sands? Canada will extract the oil anyway. If it doesn’t go to us, it will go to China. Net effect on the climate if we don’t take that oil? Zero.
Danger to a major aquifer, which the pipeline traverses? It is already crisscrossed by 25,000 miles of pipeline, enough to circle the Earth. Moreover, the State Department had subjected Keystone to three years of review — the most exhaustive study of any oil pipeline in U.S. history — and twice concluded in voluminous studies that there would be no significant environmental harm.
As Mr.Krauthammer notes, this is hardly the first time political considerations have superseded the country's needs for the administration:
Obama’s decision to wind down the Afghan surge in September 2012 is militarily inexplicable. It comes during the fighting season. It was recommended by none of his own military commanders. It is explicable only as a talking point for the final days of his reelection campaign.
At the height of the debt-ceiling debate last July, Obama pledged to veto any agreement that was not long term. Definition of long term? By another amazing coincidence, any deal large enough to get him past Election Day (and thus avoid another such crisis next year).
Tuesday it was revealed that last year the administration pressured Solyndra, as it was failing, to delay its planned October 28 announcement of layoffs until November 3 — the day after the midterm election.
Given that Canada will still be producing oil and given that China will be happy to buy it, the administration's stance here is inexplicable--outside of its political needs--especially in light of its recognition of the strategic importance of having a presence in the Pacific. After all, the biggest competitor there is China, by far. So on the one hand, we are attempting to offset China's influence, while on the other hand, we're providing them with the tools for that influence at out own expense. 

This is no way to set national policy, in my view, especially given the sluggish economy and the potential problems of the European debt crisis on the horizon. A project like the Keystone pipeline is a no-brainer...for anyone except a first-term President in dire straits, it would seem.

Cheers, all.

Sympathy for capitalist dogs?

The collapse of Jon Corzines's MF Global--previously discussed here--was bad news for a lot of folks, from employees of the company (half lost their jobs straight away), to stockholders, to customers. There still remains some $600 million of missing customer funds, plus--since the bankruptcy filings--all accounts have been frozen.

Reuters reported yesterday that some of the frozen monies will be released, much to the great relief of many customers, no doubt. For a fair number of customers, it's been nearly three weeks since they could access their own funds. We're not talking about investments that people made with MF Global, we're talking about--in many cases--straight up cash accounts. And in some cases, these accounts were essential for people doing business.

John Crudele at the New York Post interviewed four MF Global customers who also happen to be commodity traders. Their accounts at MF Global were their business accounts; MF Global merely held their assets--as a brokerage firm--so they could trade on the floor. Since the collapse, they've been essentially locked out:
All of them were stung hard — not only because their money at MF disappeared overnight but also because they couldn’t even get on the floor of the exchange to conduct business. 
Their IDs had been revoked.
Commodities brokers getting screwed. Some people might say that they deserve their fate, that they're part of the "Wall Street Elite." But they're not all that elite. They work for a living--albeit in paper--and put in long hours. They risk their money--when they have access to it--on a daily basis. They have families, too:
Moe [one of the traders] had to draw $75,000 from a line of credit on his house to stay in business after his firm’s money — which also happened to be his personal dough — disappeared into MF’s rat hole. 
Two other traders I’ll call Meeny and Miney are middle-age guys, still paying for their kids’ college educations. Eeny, the fourth trader, is in his mid-30s and has two small children.
But these are also the same kinds of people getting mocked and jeered by the crowds at the Occupy movements. They are--for some--the enemy. And why? Because of the way they choose to earn their living. Do we know that they're all perfectly honest? No. But what we do know is that they got screwed because of Jon Corzine's arrogance and stupidity, and because the New York Federal Reserve gave MF Global special treatment because of Corzine's connections in Washington, D.C.

And to think, the admin was seriously considering Corzine for the post of Secretary of the Treasury.

Cheers, all.

Thursday, November 17, 2011

The Siga-SEIU connection

Michele Malkin, writing for National Review Online, delves deeper into the Siga scandal, addressed here previously.

We were already aware--thanks to the work of LA Times journalist David Willman--that the administration had rigged the game, in order to insure Siga would receive a fat contract to supply the government with a possibly useless and untested Smallpox vaccine. And it appeared that Obama campaign contributor Ronald Perelman was simply getting his "just" rewards. But Malkin has noted a new player: former head of the SEIU, Andy Stern:
After pouring some $60 million of workers’ dues into Democratic coffers, Stern was rewarded by Obama with a cozy spot on the White House deficit panel and dozens of visits to 1600 Pennsylvania Avenue — including at least seven with the president, one with Vice President Joe Biden, and meetings with Obama chief of staff Rahm Emanuel, Biden chief of staff Ron Klain, OMB director Peter Orszag, health-czar aide Jennifer Cannistra, and Valerie Jarrett’s former high-powered aide and Chicago fundraiser Tina Tchen. 
In a classic access-buying maneuver, Siga placed Stern on its board of directors in June 2010. Four months later, Siga nabbed an estimated $3 billion contract.
And shortly thereafter, Siga stock went through the roof, as I noted with this handy chart:


I'd bet dollars to donuts that Stern is one of those that made a nice little profit, just before the nosedive.

Regardless, the Siga story--like the Solyndra one--doesn't look like it will go away anytime soon, despite the lack of coverage from the major media outlets. It's obscenely obvious influence-peddling and cronyism. I'd guess that the administration thought no one would bother to look closely at this stuff, since people involved--like Obama's Assistant Secretary for Preparedness and Response, Nicole Lurie, at HHS and the Secretary of Energy, Steven Chu--are so tragically ill-prepared to explain their questionable actions.

At the very least, a major house-cleaning is in order, to given the appearance of concern, if nothing else.

Cheers, all.

The taxation lie that just won't go away

It's becoming increasingly painful to read the same wrong-headed, sophomoric "analysis" on taxation, again and again. Here is Michael Tomasky at the Daily Beast singing the same lame tune, once again:
So what do I mean when I say they want to add $3.7 trillion to the deficit? I mean that they want to make the Bush tax cuts permanent. The cost of the Bush tax cuts over the next 10 years comes to $3.7 trillion.
It's amazing. They repeat this nonsense and pat themselves on the back, because they think they're "in the know."

Get this, Mr. Tomasky and others: the economy is not static. You can't say what government revenues will be down the road, based on the income tax rate by simply looking at the declared incomes of the most recent tax year. It doesn't work. It's never worked. Why? Because--again--it's about the incentives, not the rate. And it's about future economic conditions that are unknown, not a simplistic projection based on current conditions.

Regardless, there are two ways to lower the debt, that much is obvious: 1) decrease expenditures and 2) increase revenues. But a simple look at history shows us that revenues increase when the economy is doing well, not the other way around. Here's an article from last year by Kurt Brouwer at MarketWatch. A simple look at the charts, and reality is clear:

(courtesy of the WSJ)

Note that revenue--as a percentage of GDP--stays relatively flat, even as the top marginal rates have been slashed. That's the incentives kicking in. Another:

(courtesy of the Heritage Foundation)

Revenues, it is clear, are driven by the economy, not the rates.

Yet somehow--in the warped view of people that consider themselves knowledgeable in the field--revenues can simply be increased by upping tax rates. And somehow, the economy  will not be affected, one way or the other (or, in the minds of the truly ignorant, upping tax rates will grow the economy). Nevermind whether or not lowering rates helps economic growth, the question is what does increasing rates do, because that is what is being proposed, argued for, demanded.

Of course, we know what's behind all of this: demagoguery and class warfare. Facts are ignored, history is ignored, all for the sake of appearances. Those insisting that not increasing tax rates will "cost" the government revenues are most concerned with looking good, with demonstrating that their point of view is fair, even as it is logically untenable.

Cheers, all.


Wednesday, November 16, 2011

Concise analysis of Ohio ballot measures

Sean Trende of RCP--an Ohio resident, himself--has offered up an excellent critique of the over-the-top happy dances performed by pundits on both sides of the political spectrum in the aftermath of the Ohio vote last week. Recall that Issue 2--a law that limited the collective bargaining rights of public flames--was soundly defeated, while another issue--that blocked any sort of individual mandate for healthcare--easily passed. The margins were eerily similar, the former going down 61 to 39 percent, the latter passing 66 to 34 percent.

Thus, voters simultaneously swatted the union-busting GOP and the freedom-stealing administration. Or at least that was how the results were cast, depending on the ideology of the pundit. The pundits on the left explained the healthcare mandate vote by suggesting voters were confused by the language on the ballot (looked pretty clear to me). The pundits on the right explained the collective bargaining rights vote by suggesting that voters...were confused.

But here's the thing: the pundits on the right have a bit of a point. As Trende notes, the advertising campaign--launched by groups that wanted the law repealed--was intended to create fear, fear that there would not be enough police officers and firefighters:
To put this in perspective, I live in Delaware County, Ohio. It’s something of a new-growth, high-end suburban county adjacent to Columbus. It has voted Republican in every presidential election since 1920, including a 20-point win for John McCain in 2008. Delaware voted to approve Issue 2, but by a surprisingly narrow 54 percent to 46 percent margin. It wasn’t unusual to see “Vote No on 2” signs in front of houses that were probably valued above $500,000. It seems reasonably clear that these voters didn’t reject it because of a wider anti-corporate backlash. 
Instead, they most likely cast “No on 2” ballots because the anti-Issue 2 forces, after initially toying with an advertising campaign consistent with the conventional wisdom about the topic, ultimately framed the issue as one of public safety. You can find the complete “We Are Ohio” advertisement archives here. Let’s focus on the “home stretch” ads that were running on TV when people were paying the most attention, in October and later: 
Here’s one featuring an elderly Ohioan discussing how firefighters saved her great-granddaughter Zoey, stating that Issue 2 “makes it illegal to negotiate for enough firefighters to do their job.” She also steals something of a page from the Tea Party handbook, railing against “politicians in Columbus” for making decisions for firefighters. She includes a brief line about these politicians turning their backs on the middle class.
No doubt, some of the people voting against the issue were doing so because they simply believed that the Governor was trying to stick it to the public sector unions to justify tax cuts for the wealthy, but it's only reasonable to allow that many more were swayed by the advertising campaign, above.

What about the pundits on the left? Do they have a point, too? Well, maybe a tiny one. As I noted, the language was hardly confusing, but it also never specifically mentioned Obamacare. So, certainly some voters might not have realized that they were voting against Obamacare, for all intents and purposes.

However, allowing that scenario suggests that what they thought they were voting against was more government intrusion into their lives. And really, the vote against Issue 2 can be cast in a similar light: voters were voting down a measure that seemed to be about limiting the options of their local communities and public employees, in deference to the State government.

So maybe, just maybe, the Ohio vote was more about freedom from government, than it was anything else. Except for maybe States' Rights. If I'm on the left, I'm not sure I'd be pointing to Ohio as some sort of watershed moment...

Cheers, all.

Mackey speaks and it's worth it to listen

Some time ago, the CEO of Whole Foods--John Mackey--found himself in a bit of a dust up. He had the audacity to take issue with Obamacare in an opinion piece in the WSJ. The response to his well-reasoned arguments was a call form the progressive left to boycott his stores. The boycott didn't really go anywhere, didn't do much of anything, aside from getting a little press, due to a "Boycott Whole Foods" Facebook page (which topped out at less than 20,000 "likes").

Now, Mackey is at it again, in a piece that will likely stir similar responses from the same places. This time, however, he's taking aim squarely at the Federal Government, questioning it's expansion and spending wholesale. Mackey argues that the real cause of economic slowdown is a decrease in economic freedom, and he's got a pretty good point:
So why is our economy barely growing and unemployment stuck at over 9%? I believe the answer is very simple: Economic freedom is declining in the U.S. In 2000, the U.S. was ranked third in the world behind only Hong Kong and Singapore in the Index of Economic Freedom, published annually by this newspaper and the Heritage Foundation. In 2011, we fell to ninth behind such countries as Australia, New Zealand, Canada and Ireland. 
Note how this claim is supported by the Nile Gardiner piece I spoke of before. Gardiner quotes from this article in the WSJ, authored by Johnny Munkhammar, a member of the Swedish Parliment. Mr. Munkhammar argues--in direct contrast to the progressive left--that the success of Sweden is all about increased economic freedom, not socialist policies:
By the late 1980s, though, Sweden had started de-regulating its markets once again, decreased its marginal tax rates, and opted for a sound-money, low-inflation policy. In the early 1990s, the pace quickened, and most markets except for labor and housing were liberalized. The state sold its shares in a number of companies, granted independence to its central bank, and introduced school vouchers that improved choice and competition in education. Stockholm slashed public pensions and introduced private retirement schemes, keeping the system demographically sustainable. 
These decisive economic liberalizations, and not socialism, are what laid the foundations for Sweden's success over the last 15 years.
Mackey offers a littany of fixes and adjustments to create more economic freedom, chief among these being substantial tax reform:
In addition, tax reform is essential to jobs and prosperity. Most tax deductions and loopholes should be eliminated, combined with significant tax rate reductions. A top tax rate of 15% to 20% with no deductions would be fairer, greatly stimulate economic growth and job creation, and would reduce deficits by increasing total taxes paid to the federal government. 
Why would taxes collected go up if rates go down? Two reasons—first, tax shelters such as the mortgage interest deduction used primarily by more affluent taxpayers would be eliminated; and secondly, the taxable base would increase considerably as entrepreneurs create new businesses and new jobs, and as people earn more money. Many Eastern European countries implemented low flat tax rates in the past decade, including Russia in 2001 (13%) and Ukraine in 2004 (15%), and experienced strong economic growth and increased tax revenues.
This is, perhaps, the hardest pill for those with a progressive viewpoint to swallow: that revenues do not simply increase in direct proportion to an increased tax rate. The wrong-headed assumption that they do is at the heart of the "tax the rich" policy, currently so prevalent among Democrats, liberals, and progressives (led, of course, by the current administration). The reason for their failings on the issue--aside from the ease of invoking class warfare for political points--is their lack of understanding with regard to the role of incentives, something I have noted before.

Really, the time is long past to clean up the tax code. It's thousands and thousands of pages long, and to what end? Every Congress considers new tax laws, new tax breaks, and new taxes. Sometimes, simplification is the best answer, for no other reason. In this case, simplification would also likely increase revenues and lessen the government's reach, both good things, positive things.

Mackey has plenty of other suggestions, as well. All are worth reading, especially since they emanate from someone firmly grounded in reality, when it comes to the economy and doing business therein.

Cheers, all.

The Coming Scramble and Odd Men Out

In a recent entry, I talked about the administration's shifting focus, away from Europe and towards Asia and the Pacific, with regard to future economic policy. And--in fact--I even gave them a bit of an "attaboy" for their recognition of where the future will likely lead. But I concluded with a warning, of sorts:
But it's not enough to know where the action is, when it comes to the world economy. Just as important is a means of access, which necessitates some level of control. In this regard, the naval bases of the Indian Ocean are critical. Kaplan rightly notes that the cultivation of friendship with the many nations in control of such is critical. Once again, sea power will become the standard, something that China seems well aware of.
Justin Logan at the Cato Institute has penned this excellent essay on the same topic. However, he's opted for a slightly different viewpoint, insofar as he is suggesting that the U.S. will get snookered by Asian nations--much as it has been supposedly snookered by NATO nations--into footing a majority of the military bill:
The desire to focus on the Asia-Pacific is sound, but the administration's policies there are not. The impulse to reassure America's Asian allies that the U.S. commitment to their security is rock solid perversely makes it likely that they will continue to free-ride on America's exertions — in an era when Washington has less and less money to spend.
He also notes an unarguably true and cogent economic reality in this regard:
In a 1966 article, economists Mancur Olson Jr. and Richard Zeckhauser showed that in the provision of collective goods (like security) in organizations (like alliances), the largest members will tend to bear a "disproportionately large share of the common burden." When a group declares something a common interest, it is rational for the poorer members to shirk and allow the wealthier members to carry a disproportionate portion of the load.
As should be obvious, this reality goes well beyond things like defense spending. Looking at it through the prism of "largest members" equating to "wealthiest members" yields more juicy tangents than I have time to address. However. Mr. Logan is missing something, here. While there may be a "common burden," when it comes to security in the Pacific Rim, that does not mean that a sharing of the burden is a sound idea.

The fact that the U.S. foots most of the bill for NATO translates into something else: power. The U.S.--it must be admitted--controls NATO. The organization has never and will never act against what is in the best interests of the U.S. And other member-nations will--for the most part--follow the lead of the U.S.

And though these other nations in NATO have truly benefited from not having to fund their militaries at the same rate as the U.S., look where they are now. Moreover, there is a dependence created by this process. Often, this is sore spot for the dependent nation, but it remains a truth.

Ms. Clinton, Mr. Logan, and I all agree: the Pacific Rim (and Indian Ocean corridors) is a region of critical importance for the world economy. A heavy U.S. presence in this economic sphere of influence is a necessity.

But Ms. Clinton recommends simple reassurance to the nations there that the U.S. will be available for security needs. Mr. Logan suggests that the U.S. balk on such commitments, thus forcing these nations to chip in a fair share or at least some share. Me? I think that if other nations want to depend on the U.S. for security, we should oblige them. But on our terms, not theirs. Access and control go hand in hand with security in my view, and that's exactly how it should be. Other nations--in Europe and elsewhere--will be the odd men out, at the end of the day, since they have already forfeited their ability to demand either access or control.

Cheers, all.

Tuesday, November 15, 2011

Too much fiction to even be revisionism

Paul Krugman's NYT op-ed from last week was a thing of beauty, for people that are big fans of fantasy world-building. A sample of Mr. Krugman's prowess in the realm of fictional histories:
The attempt to create a common European currency was one of those ideas that cut across the usual ideological lines. It was cheered on by American right-wingers, who saw it as the next best thing to a revived gold standard, and by Britain’s left, which saw it as a big step toward a social-democratic Europe. 
It’s true that all European countries have more generous social benefits — including universal health care — and higher government spending than America does. But the nations now in crisis don’t have bigger welfare states than the nations doing well — if anything, the correlation runs the other way. Sweden, with its famously high benefits, is a star performer, one of the few countries whose G.D.P. is now higher than it was before the crisis.
I had a great deal to say about these portions of Krugman's piece, but unfortunately I didn't do it right away. Much to my chagrin, I've now also read Nile Gardner's excellent response in the Telegraph to the Krugman fantasy and I just wouldn't feel right making pretty much the exact same arguments that Mr. Gardner has already made. So I won't, I'll just quote a bit of his piece and clap loudly from the sidelines:
Krugman cites Sweden as an example of a social welfare success in Europe, but fails to mention two important points. Firstly, in recent years, Sweden has begun rolling back the welfare system and government expenditure while adopting important free market reforms. Secondly, Sweden decided to stay out of the eurozone, another key reason why it has so far kept out of the financial mess engulfing southern Europe. As Johnny Munkhammar, a Swedish member of parliament noted in a piece for The Wall Street Journal in January, Sweden owes its success not to welfare statism but to reforms that have increased economic freedom, including greater competitiveness in the provision of health care and other public services... 
I don’t recall “American right-wingers” cheering on the rise of the single currency, and the growth of a European superstate. Quite the opposite, in fact. British-style Euroscepticism has always been fashionable among US conservatives who have long admired Lady Thatcher’s views on Europe, but mocked and derided by the State Department and by the Left. American liberals in contrast have long been among the biggest supporters of the European Project.
Yep, that's about it. Sweden is not the poster child of socialism and American conservatives really weren't all that enamored of the Euro. Really, they weren't much interested in it at all, except as a foil for the occasional joke.

For years now, it has been the American Left that has glorified the Euro as a means of "tsk-tsking" proponents of free-market capitalism, arguing that the Euro would supplant the Dollar as the world's chief currency, arguing that China would dump its Dollars for Euros and thereby destroy the U.S. economy.

Krugman--in his continued wild-eyed attempts to remain relevant--has entered the fiction business full bore. Too bad there aren't any vampires or boy wizards in there.

Cheers, all.

Solyndra, Solyndra, Solyndra

I really think the brewing scandal with Siga and Smallpox vaccines is something that needs further investigation. It's likely--in my unbiased opinion--that there's a lot more to it. But dammit, the Solyndra scandal just won't go away. On top of everything else, now we have this:
The Obama administration urged officers of the struggling solar company Solyndra to postpone announcing planned layoffs until after the November 2010 midterm elections, newly released e-mails show.
If that's a fair reading of these e-mails--and I see no reason to assume it's not--then what else is there to say? The White House was clearly using the DOE, manipulating it for political purposes. The lines of communication go clearly from Solyndra to the DOE to admin officials like Carol Browner--Obama's Director of the Office of Energy and Climate Change Policy--and Ron Klain, Biden's former Chief of Staff.

These aren't low-level staffers or nameless bureaucrats, they're political appointees tasked with doing what the President and Vice-President want done. Granted, "Klain" is a bit of an odd name, but the man is just not a Mr. Poon.


He is--or was--someone that took his marching orders from the top. And this is no less true of Ms. Browner.

All that said, politics is a dirty business. And using the power of the office in this manner--controlling the release of information--is hardly grounds for impeachment. Really, it's barely worth a mention on its own. But coupled with all of the other Solyndra issues, it tends to support the idea that Solyndra was nothing but a give-away from the beginning, that the success or failure of the company was never even a consideration. All that mattered was that it got the money the administration wanted it to get (that tracks pretty well with Siga, too).

And aside from demonstrating the vacuous nature of the administration's objectives in these fields (and profound lack of economic acumen), it makes one truth abundantly clear: the Obama administration is nothing special, when it comes to graft, corruption, influence peddling, and transparency (or lack thereof). It's better then some, no doubt. But worse than many more, it would appear. Hardly "change we can believe in"...

Cheers, all.

Monday, November 14, 2011

More on the Obama-Siga-Smallpox game

I noted the new scandal in my previous blog post, about the drug maker Siga and the rather large no-bid contract it was receiving from the government to make Smallpox vaccines. Again, here is the whole story at the LA Times. Look at these bits from the story:
The Obama administration official who has overseen the buying of Siga's drug says she is trying to strengthen the nation's preparedness. Dr. Nicole Lurie, a presidential appointee who heads biodefense planning at Health and Human Services, cited a 2004 finding by the Bush administration that there was a "material threat" smallpox could be used as a biological weapon... 
On Oct. 13, 2010, Siga announced that the government intended to award it a contract for ST-246 worth as much as $2.8 billion... 
In early December, officials completed a required "justification for other than full and open competition," which said an antiviral against smallpox was needed within five years and Siga was the only company able to meet that timetable.
Note that the Obama administration is playing up the bio-threat angle, thus justifying Project Bioshield, the Bush-era program that is at the root of the initiative and the source of funding. And pay particular attention to the date of Siga's announcement.

Now look at this article from July of last year:
In an email to The Los Angeles Times, Obama White House spokesman Nick Shapiro said Project BioShield "has demonstrated limited success in providing incentive for private-sector (vaccine) developers and has not provided a robust pipeline of medical countermeasures." 
A little over a year ago, the administration was frowning at Project Bioshield, even as the Siga deal was in the pipeline. Then, when the Siga deal hit some snags, the admin lent a helping hand, ostensibly justifying these actions by noting the importance and urgency of Project Bioshield-related programs.

To say it all smells funny might be the understatement of the...week?

Cheers, all.


And the hits just keep on coming...

2012 can't get here fast enough for the Obama administration. It seems that every week brings out another scandal, of one form or another.

This week, it's a a drug scandal involving another big-time Obama campaign donor. LA Times writer David Willman lays it all out.

The short version: the government has awarded a no-bid contract to a drug company--whose principal shareholder is Ronald Perelman--to manufacture a Smallpox drug that may not work and is unlikely to ever be needed.

Currently, the U.S. holds enough Samllpox vaccines in storage to inoculate the entire U.S. population. This is, some might say, kind of overkill, given that the past reported case of Smallpox was in 1977 and the WHO certified the disease as eradicated in 1979. But there is a fear that samples of the disease still in existence could be used as biological warfare agent. Thus, nations like the U.S. keep quantities of the Smallpox vaccine in storage. Luckily, the vaccines keep for quite a while--decades, according to Willman's story--so the cost is not what it might be.

However, the vaccine only works--and we know it does work--if it can be given within four days of infection. thus, distribution of the vaccines could become a problem if an epidemic was underway.

Enter Siga and Perelman.

Under Bush, Project Bioshield was launched to make sure the nation was prepared for biological threats from terrorists or other nations. Smallpox was and is a chief concern in this regard. Perelman saw an oportunity, apparently, and bought up sufficient Siga stock to take control of the company and set it on a course to profit from the program.

What Siga has come up with is a pill that can treat people who have been infected with Smallpox past the four day window. And for this, Siga was awarded a contract to deliver 1.7 million doses at $255 per dose (that's over $433 million dollars). But to make that happen, the game had to be rigged in Siga's favor, as there was at least one competing company.

All the evidence currently shows that the Department of Health and Human Services has done everything it can do to make sure Siga gets the contract. And that--of course--is corruption. And cronyism.

Meanwhile, at Siga shareholders made a small fortune--those who were in the know, at any rate--since negotiations began. Siga stick (SIGA) over the last five years:


It's almost junk, now. And no doubt this story and the fallout will drive down even farther.

Cheers, all.

Sunday, November 13, 2011

Over-determined History

I don't believe in pre-determination. I reject the idea that the future is already written, that we are powerless to change it, and that it cycles forward on its own. Free will is--in my opinion--not only one of the best Rush songs, but also the essential component of life, of civil society, and of liberty.

That said, there is a notion--in reference to understanding history--that I very much do accept: major events are over-determined

How many times have you played the game of wondering how a subtle--or not-so-subtle--change to the past would impact the present? Wondered how a time traveling assassin could change the course of the modern world by going back to 1936 and killing Adolf Hitler? Or perhaps going back even farther and taking out Brutus  and company before they left for the Roman Senate on the morning of March 15th, 44 BC?

Could the Holocaust and WWII have been averted? Might Rome have never fallen? 

Some might posit more obscure moves, perhaps sinking the ships of Columbus, thus delaying the exploration and colonization of the New World by decades or more. Or going back to Athens and talking the Greeks out of War with Persia, thus creating a completely different line of demarcation between the Orient and the Occident. 

Roger Zelazny wrote a short story on this subeject in 1975. Entitled "The Game of Blood and Dust," it was about two aliens that traveled into Earth's past changed things, then came forward in time to see the results. Each was allowed three moves. One played the role of "Dust," whose goal was to have a lifeless present Earth, while the other played the role of "Blood," whose goal was a present earth full of life and civilization. A couple of games were detailed, with the first being won by Dust and the second being won by Blood (and being our actual present Earth). Wonderful stuff and very thought-provoking.

But in my view, ultimately meaningless. Despite the specific roles of specific people in history, the path of history itself cannot be so easily manipulated to achieve drastically different results. World War II--for instance--was coming in the late 1930's. Killing Hitler would not avert it, nor would have a host of other actions.

The War was a consequence of factors that were truly legion. Like strands of a great tapestry, they were drawn together and woven to lead to that moment. Cutting one would have little impact in the whole.

Strictly speaking, an event is over-determined if there are two or more sufficient causes for that event. Consider a pot of water on a stove's burner. Assume the burner is turned to "hi." The water will soon boil, right? But if the burner is turned of, it will not. But assume that the temperature in the room is also being steadily increased. And assume a plug-in heating element has also been put in the pot. Now, there are three distinct potential causes for a boiling pot of water. Cancelling out one of them will not stop the water from boiling. Thus, the event--when it happens--is over-determined.

Free will and choice are still present, it's just that the choices have already been made to set the stage for some events. Too many choices by too many people across too much time. That's an over-determined event in history.

And we may be on the cusp of another such moment, as concerns the EU in particular and European civilization in general. Recently, I noted a piece by Niall Ferguson, wherein he suggested that Europe was doomed to collapse and that the collapse--the end--would happen quickly when it came. Ferguson is at it again, with this piece that outlines where he sees the EU crisis going:
As a result, according to the new president of the European Central Bank, Mario Draghi, a “double dip” recession in Europe is now all but inevitable. And that’s lousy news for U.S. exporters targeting the EU market. 
But there’s more. Europe’s problem is not just that governments are overborrowed. There are an unknown number of European banks that are effectively insolvent if their holdings of government bonds are “marked to market”—in other words, valued at their current rock-bottom market prices. In our interconnected financial world, it would be very odd indeed if no U.S. institutions were affected by this. Just as European institutions once loaded up on assets backed with subprime U.S. mortgages, so most big U.S. banks have at least some exposure to eurozone bonds or banks. One institution—MF Global, run by former Goldman Sachs CEO Jon Corzine—just blew up because of its highly levered euro bets. Others are biting their fingernails because it is suddenly far from clear that the credit default swaps they have bought as insurance against, say, a Greek default are worth the paper they are written on.
Ferguson sees bad news for the U.S. too, this is true, but not nearly as bad as what may be in store for Europe.

Currently, EU leaders are frantically looking for ways to avert this crisis, to save Italy and the Euro, even as Greece seems to have been--for all intents and purposes--written off. And if they can't, the shockwaves of will reverberate through other nations, including France and Germany, and may bring down their economies and governments, as well.

I hope they find a workable solution, I really do. But suppose this collapse is simply over-determined?

Cheers, all.

Finally, a Pay-per-view worth the jingle!

Pacquiao-Marquez III. The hype had been going on for what seemed like a year. And last night in Vegas, it finally happened. And it was another classic. No knockouts, no knockdowns, but plenty of action as the two best pound-for-pound fighters in the world--in my opinion--played a masterful game of chess. With punches.

In the end, Pacquiao won with a majority decision, and deservedly so. Both fighters had their moments, but Pacquiao outworked Marquez in most rounds. Of course, let's remember that Marquez came up in weight for the fight and is some six years older than his opponent. So the loss is still--in a way--another impressive victory for Marquez.

On the undercard, there were a number of snoozers--most especially Bradley's easy win over Casamayor--and one gem of a match: Prescott-Alvarado. Prescott--the guy that dropped Amir Khan in one--was all over Alvarado for much of the fight. By the 7th round, Alvarado's face was a bloody mess. Then things started to change. The inside exchanges--which Prescott had been dominating--started to favor Alvarado, as he ripped Prescott with short uppercuts from both sides. In the 10th the air was electric, as the pulp-faced Alvarado unleashed a series of devastating uppercuts that put Prescott out on his feet. The referee rightly jumped in and stopped the fight before serious injury occurred.

Really, this fight was worth the price of the pay-per-view alone. It was one of the best fights I think I have ever seen, keeping me riveted in my seat throughout, because it was obvious--even in the early rounds--that Alvarado was not prepared to go quietly. He lost round after round, but made small adjustments, looking for the right formula for success. This should be the fight of the year. Shades of Chavez-Taylor I (fight of the year in 1990 and fight of the decade for the nineties).


Cheers, all.