David Warsh has done some interesting investigative pieces about Shleifer. The link in the article below gives an update of Shleifer, but he may underestimate Shleifer's wealth by quite a bit.
http://www.economicprincipals.com/issues/2008.06.01/320.html
The article linked here suggests the wealth of Shleifer may be immense. To his credit, Shleifer still does active economics work, but still ....
Monday, July 14, 2008
Fiscal Shamity
Due to the advertising you see on the left, EconoSpeak has a karmic debt to repay concerning the Peterson Institute. In that light, please deplore with me the free pass given to Peterson’s fear mongering in today’s NY Times. All the usual obfuscations were served up: bogus projections of Social Security, the lumping together of Social Security and Medicare, the specter of a supposedly-unprecedented increase in the percentage of retirees in the population. The headline reflects the tone of the article: swallow the gunk without asking any questions.
As for the present, a fiscal deficit of 4% of GDP (first quarter 2008) is entirely reasonable for an economy sinking into a recession. (Spending priorities are bonkers, but that’s another matter.) Long term, Social Security doesn’t need to be fixed; health care does, but this is not primarily a fiscal issue. And the real monster in the closet is the current account deficit, which goes completely unmentioned by either Peterson or his interviewer.
A billion dollar PR budget can’t turn this sludge into syrup.
As for the present, a fiscal deficit of 4% of GDP (first quarter 2008) is entirely reasonable for an economy sinking into a recession. (Spending priorities are bonkers, but that’s another matter.) Long term, Social Security doesn’t need to be fixed; health care does, but this is not primarily a fiscal issue. And the real monster in the closet is the current account deficit, which goes completely unmentioned by either Peterson or his interviewer.
A billion dollar PR budget can’t turn this sludge into syrup.
Sunday, July 13, 2008
A Brief History of Privatization: Fannie Mae and Ginny Mae as Exemplars?
I am writing this to provoke a conversation rather than as a demonstration of my expertise. Here was one of the first New Deal agencies go under. What was the interest in privatizing Fannie Mae during the Johnson administration? Was it the Democrats close ties with the savings and loan industry?
Because these two agencies had apparent (but nonexistent) government guarantees, they apparently had an advantage over banking interests. For a long time, well before anyone fretted about housing crises, there was a great deal of antagonism toward these agencies. During that period, I was wondering what the elimination of these two agencies would mean for housing. Now that they are in trouble, the government stands ready to rescue the investors -- another instance of the Bear Stearns syndrome. But barely anything to help the poor souls who were victimized.
On a personal note, my daughter was wanting to buy a home about a couple years ago. Her friends sent her to stay broker to explain how she could fudge her nonexistent income and get a home. She was told she could create a good credit score, even as she had no credit.
Okay, here is my central question: has there ever been a privatization that has worked to the benefit of society?
Because these two agencies had apparent (but nonexistent) government guarantees, they apparently had an advantage over banking interests. For a long time, well before anyone fretted about housing crises, there was a great deal of antagonism toward these agencies. During that period, I was wondering what the elimination of these two agencies would mean for housing. Now that they are in trouble, the government stands ready to rescue the investors -- another instance of the Bear Stearns syndrome. But barely anything to help the poor souls who were victimized.
On a personal note, my daughter was wanting to buy a home about a couple years ago. Her friends sent her to stay broker to explain how she could fudge her nonexistent income and get a home. She was told she could create a good credit score, even as she had no credit.
Okay, here is my central question: has there ever been a privatization that has worked to the benefit of society?
Can Tax Cuts Lower Economic Growth?
Free Exchange claims tax cuts raise income growth:
Exuberant Rationality has one objection:
Let me suggest another. The claim that tax cuts lead to more output via incentive effects presumes that we are talking about fiscally neutral reductions in taxes and government spending. What we got from the Reagan and Bush 43 administrations – and what is proposed by McCain – is a reduction in taxes that is much larger than any proposed reduction in government spending (government spending as a share of GDP actually rose under Bush43). The impact of this fiscal stimulus was a reduction in the national savings rate, which lowers long-term growth.
As Exuberant Rationality notes, fiscal restraint might entails less public investment in infrastructure and education. As a pro-growth liberal, I’m in favor of more public investment in infrastructure and education as less investment likely would hurt long-term growth.
Mr Drum also appears to easily reject supply-side economics. There seems to be a temptation lately to label anyone who even dares mention supply-side economics, without immediately deeming it the silliest idea born to a napkin, an economic heretic. That's unfortunate. True, with the exception of very high marginal tax rates, a tax cut will generally not pay for itself. But there exists ample empirical evidence that cutting income taxes does increase growth. Thus, the long-run impact of a permanent tax cut is still up for debate. The effect of lower-income tax rates on labour supply is mixed. But it does seem, at the very least, lower tax rates decrease the amount of tax evasion. Writing off supply-side economics as a blatant fallacy is as much of a 1990s relic as wearing a goatee.
Exuberant Rationality has one objection:
it seems wrong-headed to keep taxes this low when government debt is ridiculously high and growing faster than ever, our infrastructure is in dire need of maintenance, and fee-based services (such as publicly-provided higher education) are becoming more expensive.
Let me suggest another. The claim that tax cuts lead to more output via incentive effects presumes that we are talking about fiscally neutral reductions in taxes and government spending. What we got from the Reagan and Bush 43 administrations – and what is proposed by McCain – is a reduction in taxes that is much larger than any proposed reduction in government spending (government spending as a share of GDP actually rose under Bush43). The impact of this fiscal stimulus was a reduction in the national savings rate, which lowers long-term growth.
As Exuberant Rationality notes, fiscal restraint might entails less public investment in infrastructure and education. As a pro-growth liberal, I’m in favor of more public investment in infrastructure and education as less investment likely would hurt long-term growth.
Saturday, July 12, 2008
A Little Insight into the May Trade Report
The headline in the NY Times says the improvement is the result of a weak dollar, but, as usual, we learn more from folks like Brad Setser and Menzie Chinn, along with a quick perusal of weekly petroleum delivery data from our hardworking friends at the US Energy Information Agency.
For once, oil imports are down, even on a value basis. A 10% physical decline in imports is consistent with a 6% decline in total physical consumption. A rough cut at the EIA delivery data, however, shows a decline of only about 1% from April to May. The interesting information is not the total, though, but the composition. Motor vehicle and aircraft fuel were up, but were more than offset by large declines in heating fuels. There is no evidence of seasonality in these series, so we can’t jump to conclusions, but it may not be unreasonable to suppose that this boost to the US trade position is less sustainable than a similar reduction in travel might be. Those who follow these fuel data more closely than I do should feel free to chime in.
Meanwhile, if Chinn is right and contemporaneous measures may be overstating GDP, some to all (or even more than all) of the trade improvement could be attributable to a US slowdown. This is entirely in line with economic theory, but it is not such good news: if the US has to bring down its trade deficit substantially on the back of its economic growth, we are in for one long, miserable ride.
Actually, it’s worse than that, since, in the context of existing financial fragility, a slump in the real economy portends disorder in financial markets. One reason among many: the longer and deeper the incipient recession, the further and faster housing prices will fall, and the greater will be the default risk so liberally distributed across a range of credit instruments. And to return to my repeating nightmare, it is near certain that any serious implosion of US financial markets will morph almost immediately into a dollar crisis. If I were Ben Bernanke I’d be laying in a supply of my favorite hard stuff.
For once, oil imports are down, even on a value basis. A 10% physical decline in imports is consistent with a 6% decline in total physical consumption. A rough cut at the EIA delivery data, however, shows a decline of only about 1% from April to May. The interesting information is not the total, though, but the composition. Motor vehicle and aircraft fuel were up, but were more than offset by large declines in heating fuels. There is no evidence of seasonality in these series, so we can’t jump to conclusions, but it may not be unreasonable to suppose that this boost to the US trade position is less sustainable than a similar reduction in travel might be. Those who follow these fuel data more closely than I do should feel free to chime in.
Meanwhile, if Chinn is right and contemporaneous measures may be overstating GDP, some to all (or even more than all) of the trade improvement could be attributable to a US slowdown. This is entirely in line with economic theory, but it is not such good news: if the US has to bring down its trade deficit substantially on the back of its economic growth, we are in for one long, miserable ride.
Actually, it’s worse than that, since, in the context of existing financial fragility, a slump in the real economy portends disorder in financial markets. One reason among many: the longer and deeper the incipient recession, the further and faster housing prices will fall, and the greater will be the default risk so liberally distributed across a range of credit instruments. And to return to my repeating nightmare, it is near certain that any serious implosion of US financial markets will morph almost immediately into a dollar crisis. If I were Ben Bernanke I’d be laying in a supply of my favorite hard stuff.
Falling from the Period of Financial Distress into the Panic and Crash
In 1972, Hyman Minsky described the "period of financial distress," in a paper in a journal that no longer exists (Reappraisal of the Federal Reserve Discount Mechanism, vol. 3, pp. 97-136), "Financial Instability: The Economics of Disaster." Charles P. Kindleberger picked up on this and followed Minsky's analysis in his famous book, _Manias, Panics, and Crashes: A History of Financial Crises_, the 4th edn of which appeared in 2000 (the last one by him; he is now dead, but the pubbers have others hacking away at it for more editions, gag). The period of financial distress is a gradual decline after the peak of a speculative bubble that precedes the final and massive panic and crash, driven by the insiders having exited but the sucker outsiders hanging on hoping for a revivial, but finally giving up in the final collapse. According to Appendix B of Kindleberger's 2000 edition, 37 of the 47great historical speculative bubbles exhibited such a period before the final crash, even though all the theoretical models predict a crash immediately following the peak with no such period.
In 1991 I published the first mathematical model of such a phenomenon in my book _From Catastrophe to Chaos: A General Theory of Economic Discontinuities_ (Kluwer, Chap. 5), still my most cited work at over 150 according to Google Scholar, although nobody seems to have noticed this particular contribution in the book. In 1997, I published a paper describing this model (and related matters) in a paper that reproduced a plenary lecture given in 1996 in Berkeley, "Speculations on Nonlinear Speculative Bubbles," Nonlinear Dynamics, Psychology, and Life Sciences, Oct. 1997, vo. 1, no. 4, pp. 275-300. This paper has never been cited. More recently I have coauthored a paper that has been under long review by a journal (now under a long revise and resubmit, still waiting for an answer) with Mauro Gallegati and Antonio Palestrini, "The Period of Financial Distress in Speculative Markets: Interacting Heterogeneous Agents and Financial Constraints" (available at my website: http://cob.jmu.edu/rosserjb), that lays all this out in much more up-to-date mathematical modeling.
So, why am I boring all of you with this self-citation? Well, Dean Baker is constantly claiming credit for his forecasts of doom and gloom. It looks like we might be finally reaching the big crash in the US mortgage market after a period of distress that started last August (if not earlier). I and my coauthors are the only people to have provided actually formal models of this phenomenon, beyond the verbal and historical discussions provided by the brilliant Minsky and Kindleberger (both of whom I knew, but both of whom are now dead). I have been forecasting this in unpublished lectures all over the globe for years, but never have put it up into the blogosphere. So, I am claiming credit, to the extent it is due, although the basic ideas were clearly laid out earlier by Minsky and Kindleberger.
I will add one more story. Three years ago I presented an earlier version of the still-unpublished paper with Gallegati and Palestrini in Tokyo at Chuo University. In the middle of the presentation the biggest earthquake in 13 years hit Tokyo, in fact right at the moment I said the word, "crash." Some of the Japanese in the audience blamed me, not entirely humorously, for having caused it.
In 1991 I published the first mathematical model of such a phenomenon in my book _From Catastrophe to Chaos: A General Theory of Economic Discontinuities_ (Kluwer, Chap. 5), still my most cited work at over 150 according to Google Scholar, although nobody seems to have noticed this particular contribution in the book. In 1997, I published a paper describing this model (and related matters) in a paper that reproduced a plenary lecture given in 1996 in Berkeley, "Speculations on Nonlinear Speculative Bubbles," Nonlinear Dynamics, Psychology, and Life Sciences, Oct. 1997, vo. 1, no. 4, pp. 275-300. This paper has never been cited. More recently I have coauthored a paper that has been under long review by a journal (now under a long revise and resubmit, still waiting for an answer) with Mauro Gallegati and Antonio Palestrini, "The Period of Financial Distress in Speculative Markets: Interacting Heterogeneous Agents and Financial Constraints" (available at my website: http://cob.jmu.edu/rosserjb), that lays all this out in much more up-to-date mathematical modeling.
So, why am I boring all of you with this self-citation? Well, Dean Baker is constantly claiming credit for his forecasts of doom and gloom. It looks like we might be finally reaching the big crash in the US mortgage market after a period of distress that started last August (if not earlier). I and my coauthors are the only people to have provided actually formal models of this phenomenon, beyond the verbal and historical discussions provided by the brilliant Minsky and Kindleberger (both of whom I knew, but both of whom are now dead). I have been forecasting this in unpublished lectures all over the globe for years, but never have put it up into the blogosphere. So, I am claiming credit, to the extent it is due, although the basic ideas were clearly laid out earlier by Minsky and Kindleberger.
I will add one more story. Three years ago I presented an earlier version of the still-unpublished paper with Gallegati and Palestrini in Tokyo at Chuo University. In the middle of the presentation the biggest earthquake in 13 years hit Tokyo, in fact right at the moment I said the word, "crash." Some of the Japanese in the audience blamed me, not entirely humorously, for having caused it.
Friday, July 11, 2008
Blackwater the Main Reason Iraq Wants US Out
Juan Cole reports that the main reason Prime Minister al-Maliki is holding up a Status of Forces Agreement with the US has been the refusal of the US to rein in its private mercenaries, especially the wildly overpaid and out-of-control folks at Blackwater. In September, 2007 Blackwater personnel gunned down 17 innocent Iraqis in Nisour Square, an incident that triggered outrage among the Iraqis and demands that the perpetrators be brought to justice. But they have not been as they have immunity under current agreements, something that now appalls the Iraqis of all factions. To add insult to injury, less than a month after this incident, the US State Department granted Blackwater a $92 million contract to guard US personnel in Iraq. Why are we hiring mercenaries at many times the salaries of US military to carry out functions that until very recently were always carried out by US military personnel?
Unfortunately most in the US are unaware of how outrageous Blackwater is, or the deep links of its founder and CEO, Eric Prince, to the current administration. So, in October 2007 a drunken Blackwater employee killed a bodyguard of the Iraqi Vice President, doing so by firing from a balcony in the Iraqi Ministry of Justice. Even more striking is that Blackwater personnel view themselves as superior to US military personnel. In 2007 there was an incident in the Green Zone where a Blackwater employee crashed an SUV into an army vehicle. The army seized the SUV, but the Blackwater employee disarmed the US army soldiers and forced them to lie on the ground until he recovered the Blackwater vehicle. All of this is simply outrageous and out of control (and Barack Obama has yet to speak against it). I fully sympathize with the demand by Ayatollah Ali Sistani of PM al-Mailiki that under these circumstances Iraq should not grant the US a Status of Forces Agreement that allows Blackwater personnel immunity from prosecution for this sort of conduct.
Unfortunately most in the US are unaware of how outrageous Blackwater is, or the deep links of its founder and CEO, Eric Prince, to the current administration. So, in October 2007 a drunken Blackwater employee killed a bodyguard of the Iraqi Vice President, doing so by firing from a balcony in the Iraqi Ministry of Justice. Even more striking is that Blackwater personnel view themselves as superior to US military personnel. In 2007 there was an incident in the Green Zone where a Blackwater employee crashed an SUV into an army vehicle. The army seized the SUV, but the Blackwater employee disarmed the US army soldiers and forced them to lie on the ground until he recovered the Blackwater vehicle. All of this is simply outrageous and out of control (and Barack Obama has yet to speak against it). I fully sympathize with the demand by Ayatollah Ali Sistani of PM al-Mailiki that under these circumstances Iraq should not grant the US a Status of Forces Agreement that allows Blackwater personnel immunity from prosecution for this sort of conduct.
Life in an Alternative Universe
The panel last night was very interesting. The hall was very, very big and quite full. I am guessing 600 people or more, which two large screens with projections of the speaker's image (or his power points). During my talk, I mostly focused on a couple people in the front row who were squirming and scowling with everything that David Himmelstein and I said.
We must've done quite well because the number of people sympathetic to single-payer rose by 400% after the talk -- from two to eight. Many people came up to congratulate David (who did an extraordinary job) and me. What I think they meant was that we did not sound like the caricatures that they would expect after having been immersed in Fox TV.
Seemingly thoughtful libertarians would come up and tell me horrendous things that the government is doing. My favorite was that California is imprisoning families for homeschooling because they refuse to submit to state indoctrination. These people seem quite intelligent, but live in an alternative universe in which there ideas go unchallenged.
The next debate will be a bit different since my "partner" will not be someone like David Himmelstein, but someone selected because is a black woman who works in the ghetto in New Orleans. She is also a Republican Party operative in a state.
We must've done quite well because the number of people sympathetic to single-payer rose by 400% after the talk -- from two to eight. Many people came up to congratulate David (who did an extraordinary job) and me. What I think they meant was that we did not sound like the caricatures that they would expect after having been immersed in Fox TV.
Seemingly thoughtful libertarians would come up and tell me horrendous things that the government is doing. My favorite was that California is imprisoning families for homeschooling because they refuse to submit to state indoctrination. These people seem quite intelligent, but live in an alternative universe in which there ideas go unchallenged.
The next debate will be a bit different since my "partner" will not be someone like David Himmelstein, but someone selected because is a black woman who works in the ghetto in New Orleans. She is also a Republican Party operative in a state.
Thursday, July 10, 2008
The Quiet Revolution
‘The Quiet Revolution’ was the title of a book written by former Australian Deputy Prime Minister and Treasurer Jim Cairns under the Whitlam Government (1972-1975). He was a prominent leader of the Australian anti-Vietnam war movement and a deep skeptic of conventional politics and economics.
The revolution Jim Cairn’s advocated in this book so many decades ago would be a timely, essential and peaceful one. Either we engage in one like this, he urged, or face unavoidable annihilation. On page 7 Cairns describes what he terms “four cataclysmic equations” of our time. These, he says, are:
1. Limited or finite material resources and unlimited human demands upon them;
2. Nuclear power – not just bombs – can destroy the human race;
3. Technological industrialism creates huge industrial structures which become more and more centrally controlled and democracy disintegrates; and
4. Technological industrialism creates human problems and needs faster than it solves them or can provide for them.
“There can be no solution at all to any of these problems until the mass of the people who have no, or little power, decide to get power in some way and exercise it. There can be no solution even if they get power and exercise it unless they do it with responsibility and humane values.” Cairns says.
It may not be clear to many people but Jim Cairn’s revolution did not cease when undemocratic right-wing forces ousted Cairns and his government from power. (See my previous post on Econospeak ‘A Coup in Australia and the CIA). He warned that the changes to the economic structure would occur regardless of who was in power and probably only when people were forced to change their values and way of life by the very circumstances we create.
I note that Wikipedia has an article also called“The Quiet Revolution” that refers to “the 1960s period of intense change in Quebec, Canada, characterized by the rapid and effective secularization of society, the creation of a welfare state (État-providence) and a re-alignment of Quebec's politics into federalist and separatist factions…”
Wikipedia also has a somewhat inaccurate article on Cairns. (The Khemlani loan affair paragraph does not mention the forged documents employed by the CIA and fed to the hostile mainstream press as a scheme to get rid of Cairns).
'The Quiet Revolution' by Jim Cairns. First published 1972. Revised edition 1975. Widescope International Publishers Pty Ltd. PO Box 339 Camberwell, Victoria, Australia, 3124. National Library of Australia card number and ISBN 086932 007 6
The revolution Jim Cairn’s advocated in this book so many decades ago would be a timely, essential and peaceful one. Either we engage in one like this, he urged, or face unavoidable annihilation. On page 7 Cairns describes what he terms “four cataclysmic equations” of our time. These, he says, are:
1. Limited or finite material resources and unlimited human demands upon them;
2. Nuclear power – not just bombs – can destroy the human race;
3. Technological industrialism creates huge industrial structures which become more and more centrally controlled and democracy disintegrates; and
4. Technological industrialism creates human problems and needs faster than it solves them or can provide for them.
“There can be no solution at all to any of these problems until the mass of the people who have no, or little power, decide to get power in some way and exercise it. There can be no solution even if they get power and exercise it unless they do it with responsibility and humane values.” Cairns says.
It may not be clear to many people but Jim Cairn’s revolution did not cease when undemocratic right-wing forces ousted Cairns and his government from power. (See my previous post on Econospeak ‘A Coup in Australia and the CIA). He warned that the changes to the economic structure would occur regardless of who was in power and probably only when people were forced to change their values and way of life by the very circumstances we create.
I note that Wikipedia has an article also called“The Quiet Revolution” that refers to “the 1960s period of intense change in Quebec, Canada, characterized by the rapid and effective secularization of society, the creation of a welfare state (État-providence) and a re-alignment of Quebec's politics into federalist and separatist factions…”
Wikipedia also has a somewhat inaccurate article on Cairns. (The Khemlani loan affair paragraph does not mention the forged documents employed by the CIA and fed to the hostile mainstream press as a scheme to get rid of Cairns).
'The Quiet Revolution' by Jim Cairns. First published 1972. Revised edition 1975. Widescope International Publishers Pty Ltd. PO Box 339 Camberwell, Victoria, Australia, 3124. National Library of Australia card number and ISBN 086932 007 6
A Stranger an a Nearby Land
We just returned from Mexico, but Las Vegas seems much more foreign to me. The airport with a casino with loud and glaring videos advertising the main casinos in town. The lobby of the hotel is a casino. I see people sitting on top of their slot machines putting money in, but nobody looks very happy. Many of the other casinos look like a larger version of something that parents would set up for a children's birthday party -- gaudy and patently phony. I have a hard time imagining what the attraction would be.
There are two other large conventions in the hotel. The National Strength and Conditioning Association and a national pawnbrokers association. I was talking to a fireman from the first convention, or just got back from Chico. Incidentally, the awful picture that was on the main page of the Washington Post was from Paradise, about 12 miles from Chico. Much of the town is under evacuation orders. Driving to the Sacramento Airport, when we got a little closer to the fire, the visibility was not much more than 100 yards.
Last I heard, Freedomfest had 1300 paid participants at almost $500 apiece. The meeting has 120 booths. Some are people making investment pitches, but most are very conservative organizations, such as Cato and Heritage Foundation. Both Ron Paul and Bob Barr have booths as well.
I know almost nobody here. I did spend a couple of afternoons with Milton Friedman's son, David, when he was younger and less famous. In later years, he showed no sign of recognition when I encountered him.
A number of sessions are devoted to debunking environmentalism. I do not know if the people are offended by the idea of environmental disruption or government programs to supposedly mitigate the problem. Gold and the dollar seem to be of major concern. People like Steve Forbes and Richard Viguerie will be talking about politics.
There is a strange feeling in being immersed in an alternative universe -- stranger still in an environment like Las Vegas.
There are two other large conventions in the hotel. The National Strength and Conditioning Association and a national pawnbrokers association. I was talking to a fireman from the first convention, or just got back from Chico. Incidentally, the awful picture that was on the main page of the Washington Post was from Paradise, about 12 miles from Chico. Much of the town is under evacuation orders. Driving to the Sacramento Airport, when we got a little closer to the fire, the visibility was not much more than 100 yards.
Last I heard, Freedomfest had 1300 paid participants at almost $500 apiece. The meeting has 120 booths. Some are people making investment pitches, but most are very conservative organizations, such as Cato and Heritage Foundation. Both Ron Paul and Bob Barr have booths as well.
I know almost nobody here. I did spend a couple of afternoons with Milton Friedman's son, David, when he was younger and less famous. In later years, he showed no sign of recognition when I encountered him.
A number of sessions are devoted to debunking environmentalism. I do not know if the people are offended by the idea of environmental disruption or government programs to supposedly mitigate the problem. Gold and the dollar seem to be of major concern. People like Steve Forbes and Richard Viguerie will be talking about politics.
There is a strange feeling in being immersed in an alternative universe -- stranger still in an environment like Las Vegas.
An Advisory to Intro Macro Teachers
Tuck away this latest post by Menzie Chinn, who has illuminating things to say about the reliability of GDP and CPI estimates.
Wednesday, July 9, 2008
300
Tyler Cowen on his blog links to a statement of 300 economists for McCain and wonders if there is an allusion to the movie intended. I would just point out that Thermopylae was a defeat for the Greeks. I'm forming an Economists for Xerxes group. Any takers?
So who do we find among the doomed Spartans? Becker, Lucas, Mundell - no surprises really.....Bring It On!
So who do we find among the doomed Spartans? Becker, Lucas, Mundell - no surprises really.....Bring It On!
No Limit to the Supply of Dumb Oil Ideas
I could blog every day on the harebrained schemes being cooked up to deal with rising oil prices, but in the interest of efficiency I’ll focus only on the worst. Certainly holding its own among the goop at the bottom of the $136 barrel is this suggestion from Harry Reid, according to today’s New York Times:
How patriotic this sounds, until you realize that the US exports virtually no oil, consuming all it produces and then another 150%. But even if we did export some of the off shore supply, so what? Suppose we export 100,000 barrels we would have consumed and then import an extra 100,000 barrels to make up for it, how would this affect energy prices, the current account, global warming or Reid’s majority in the 111th congress?
He [Reid] also hinted at a potential element of compromise legislation: that any oil produced from wider access to federal lands off shore be reserved for domestic use and barred from export.
How patriotic this sounds, until you realize that the US exports virtually no oil, consuming all it produces and then another 150%. But even if we did export some of the off shore supply, so what? Suppose we export 100,000 barrels we would have consumed and then import an extra 100,000 barrels to make up for it, how would this affect energy prices, the current account, global warming or Reid’s majority in the 111th congress?
Tuesday, July 8, 2008
Neoliberal Priorities
The air continues to be horrible, filled with ash as well as smoke. Today the fire crew lost control of one of the nearby fires. I assume it will get worse today since the temperatures between 108 and 110.
People are being evacuated. Dormitories are being opened for the evacuees.
I had to go to the dentist about 5 miles away. Even though I wore a mask and peddled slowly, I still felt tired when I came home.
Close to 20,000 people are fighting fires in the state, and the fire season is not yet begun.
A few National Guard people have been assigned to the fires, but we know where many of the rest are.
The state faces a $15 billion deficit. No stimulus package here. The Republicans have enough votes to block any tax increases and vowed to do so.
The whole tragedy seems to be an experiment in neoliberalism: inadequate public resources to meet unexpected problems, fires here, flooding in the Midwest, inadequate regulation of everything from food to finance. We are in an election year and I have not heard one politician saying anything reasonable.
People are being evacuated. Dormitories are being opened for the evacuees.
I had to go to the dentist about 5 miles away. Even though I wore a mask and peddled slowly, I still felt tired when I came home.
Close to 20,000 people are fighting fires in the state, and the fire season is not yet begun.
A few National Guard people have been assigned to the fires, but we know where many of the rest are.
The state faces a $15 billion deficit. No stimulus package here. The Republicans have enough votes to block any tax increases and vowed to do so.
The whole tragedy seems to be an experiment in neoliberalism: inadequate public resources to meet unexpected problems, fires here, flooding in the Midwest, inadequate regulation of everything from food to finance. We are in an election year and I have not heard one politician saying anything reasonable.
Obama versus McCain on Social Security
This morning's Washington Post has a front page, above the fold story by Perry Bacon, Jr. on "Candidates Diverge on How to Save Social Security." The story does briefly quote Dean Baker to the effect that it does not need "saving" now, a view I hold along with Bruce Webb and others on the basis that reality has more closely tracked the low cost projection under which there are never even any deficits, in comparison to the MSM blared intermediate cost projection under which they appear in 2017, with "bankruptcy" in 2041. The storyline hews to this, quoting unnamed "experts" to criticize Obama for "only covering half the cost of the 75 year shortfall." As it is, Obama is sticking with his primary season proposal, to charge social security taxes on those making more than $250,000 per year, otherwise no changes, no benefit cuts, no privatization. McCain is for some muddled version of Bush's muddled plan: raise the retirement age, cut future benefits, "allow" young people to transfer their taxes into private accounts, but no tax increases.
While I support no change, Obama's plan is the least damaging of any put forth by any of the candidates during the primary season. McCain's plan is a route to destroying social security as his allowing of private accounts with no tax increases will certainly bring on a fiscal crisis for the system, which will probably not happen at all if it is just left alone. We already have the voluntary tax-incentivized IRAs and so forth, but the privatizers want a mandatory private accounts system for their Wall Street buddies to manage. I say, if we insist on having mandatory private accounts, then do it as the Swedes do, a separate add-on system to social security, supported by its own set of new taxes, which is certainly not what McCain is proposing.
While I support no change, Obama's plan is the least damaging of any put forth by any of the candidates during the primary season. McCain's plan is a route to destroying social security as his allowing of private accounts with no tax increases will certainly bring on a fiscal crisis for the system, which will probably not happen at all if it is just left alone. We already have the voluntary tax-incentivized IRAs and so forth, but the privatizers want a mandatory private accounts system for their Wall Street buddies to manage. I say, if we insist on having mandatory private accounts, then do it as the Swedes do, a separate add-on system to social security, supported by its own set of new taxes, which is certainly not what McCain is proposing.
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