Posts tagged ‘GWB’

Some Predictions I Made in 2007

Blogging has been light during the holidays, but here are some predictions I made back in 2007 I feel pretty good about (note these were made a year before Obama was elected)

What I will say is that folks who have enthusiastically supported the war should understand that the war is going to have the following consequences:

  1. In 2009 we will have a Democratic Congress and President for the first time since 1994.
  2. The next President will use the deficits from the $1.3 trillion in Iraq war spending to justify a lot of new taxes
  3. These new taxes, once the war spending is over, will not be used for deficit reduction but for new programs that, once established, will be nearly impossible to eliminate
  4. No matter what the next president promises to the electorate, they are not going to reverse precedents for presidential power and secrecy that GWB has established.  Politicians never give up power voluntarily.  [if the next president is Hillary, she is likely to push the envelope even further].  Republicans are not going to like these things as much when someone of the other party is using them.

1.  The prediction was 100% correct, and in fact even went further as the donkeys gained a filibuster-proof majority in the Senate, at least for a year.  Though the war likely had little to do with the outcome, which was driven more by the economy

2.  Dead-on.  Five years later Obama still blames the deficit on Bush.  This is no longer true -- Obama has contributed far, far more than Bush to the deficit -- but the Republicans' fiscal irresponsibility during their tenure have robbed them of any credibility in criticizing Obama

3.  Mostly true (and usually a safe bet with government).   Tax increases were deferred for four years due to an economy I had not foreseen would be so bad, but they are coming.  At the time, it seemed logical to blame a lot of the deficit issues on war spending.  Today, though, 1.3 trillion is barely 8% of the debt and is almost trivial to more recent money wasting activities.

4.  Absolutely true.  In spades.  The only thing I missed was I thought Obama might be less likely to go overboard with the whole executive authority and secrecy thing than Hillary, but boy was I wrong.  Obama has absolutely embraced the imperial presidency in a way that might have made Dick Cheney blush.  Accelerated drone war, constant ducking of FOIA and transparency, increased use of treason laws to prosecute whistle blowers, claiming of power to assassinate Americans on the President's say-so, accelerated warrant-less wiretapping, using executive orders to end-run Congress, etc. etc.  And I never guessed how much the media which so frequently criticized  Bush for any expansions in these areas would roll over and accept such activity from a President of their party.

One Year Later

I think my post from Inauguration Day one year ago holds up pretty well, though I caught a lot of grief for it at the time  [a few spelling errors fixed]

OK, I was really going to remain silent today, because no one seems to want to hear a rant about today's imperial coronation.  But as I sit here watching the press coverage and waiting for John the Baptist to show up, and as I observe the general cultish hysteria and the swooning of normally serious adult people, I just can't help myself.  For a libertarian like myself, its like watching people line up at 3am to be the first to be in the store when McDonald's switches its fountain drinks from Coke to Pepsi.   Heck, I was creeped out by the cult following of Ron Paul this year, a politician I agree with a lot, so I certainly am going to get the willies from the love-fest for an admitted statist like Obama.

I am not enough of a historian to speak for much more than the last thirty years, but the popularity of non-incumbent political candidates has typically been proportional to 1) their personal charisma and 2) our lack of knowledge of their exact proposals.  Seriously, can you name any other difference (on the plus side) between Obama and Hillary other than these two?  We forget, but GWB was the unknown newcomer in 1992.  As was Clinton and Carter.  Reagan was an exception, but was running against an incumbent who really had a terrible four years, and Bush I was an exception as well, though he was running against one of the weakest candidates and campaigns the Democrats have fielded in 50 years.  Folks are excited about Obama because, in essence, they don't know what he stands for, and thus can read into him anything they want.  Not since the breathless coverage of Geraldo Rivera opening Al Capone's vault has there been so much attention to something where we had no idea of what was inside.  My bet is that the result with Obama will be the same as with the vault.

There is some sort of weird mass self-hypnosis going on, made even odder by the fact that a lot of people seem to know they are hypnotized, at least at some level.  I keep getting shushed as I make fun of friends' cult behavior watching the proceedings today, as if by jiggling someone's elbow too hard I might break the spell.  Never have I seen, in my lifetime, so much emotion invested in a politician we know nothing about.   I guess I am just missing some gene that makes the rest of humanity receptive to this kind of stuff, but just for a minute snap your fingers in front of your face and say "do I really expect a fundamentally different approach from a politician who won his spurs in "¦. Chicago?  Do I really think the ultimate political outsider is going to be the guy who bested everyone at their own game in the Chicago political machine?"

Well, the spell will probably take a while to break in the press, if it ever does "” Time Magazine is currently considering whether it would be possible to put Obama on the cover of all 52 issues this year "” but thoughtful people already on day 1 should have evidence that things are the same as they ever were, just with better PR.   For God sakes, as his first expenditure of political capital, Obama is pushing for a trillion dollar government spending bill that is basically one big pork-fest that might make even Ted Stevens blush, a hodge-podge of every wish-list of leftish lobbyists that has been building up for eight years.  I will be suitably thrilled if the Obama administration renounces some of the creeping executive power grabs of the last 16 years, but he has been oddly silent about this.  It seems that creeping executive power is a lot more worrisome when someone else is in power.

It has been suggested by some that today is less a cultish coronation but a big victory party in the battle against racism.  Well, I am certainly willing to accept it on those terms.  I have been arguing for years that it is time to declare victory on the worst aspects of race and gender discrimination, and move on to problems of interest to all races (like individual freedom or giving kids options to escape crappy public schools).   Unfortunately, I fear that too many folks in power are dependent on the race/gender/class wars continuing, so you and I may think we are declaring victory, but those with power over our lives have not.

GWB: Leftish Icon?

If it wasn't for his reactions (Patriot Act, Gitmo, Iraq, Afghanistan) to 9/11, shouldn't GWB be a leftish icon?  (source)

200912_blog_edwards291

Ironically, the current Congress renewed most of the Patriot Act, Obama will most likely not close Gitmo any time soon, I see no movement out of Iraq, and Obama has doubled down on Afghanistan.    GWB may have been the worst president in recent memory (since at least Nixon) for libertarians, though Obama seems to be on a trajectory to surpass him.

This Argument Works for a Libertarian...

I think this kind of argument might work for a libertarian, but I am not sure it is a very strong argument for a liberal Democrat that wants to do more rather than less of what Congress and the GWB administration did over the last 8 years to worsen the recession.

Personally, though, I'd say Obama has been remarkably restrained about the whole thing, especially when it comes to our disastrous fiscal situation.  In a mere eight years, George Bush and the Republican Party managed to take a thriving economy and a federal surplus and turn it into a hair's breadth escape from Great Depression II and an endless fiscal sinkhole.  Rome may not have been built in a day, but it didn't take much longer than that for the modern Republican Party to bankrupt America.

Particularly hilarious is that Drum blames the cost of the useless but expensive stimulus bill on GWB.  Huh?  And blaming Republicans for Fannie and Freddie is a real joke.

As you might imagine, the deficit in his world is all from tax cuts and not above-inflation increases in spending.  The basic picture he shows is absurd - money is fungible, so any trillion dollars of the government spending could be blamed for the deficit - it just depends on what spending you consider incremental.  Stupid analysis.  Though it is interesting that at least two of the major drivers even by their slanted analysis - Bush tax cuts and Afghanistan - are policy issues Obama was presented with opportunities to reverse and chose not to.

I Feel Like I'm Taking Crazy Pills

Just as a brief aside, it is sometimes entertaining to be a libertarian without an affiliation to either the Coke or Pepsi party.  It's amazing, from the perspective of standing off to the side on a point of the political spectrum that most civics books don't even acknowledge exists**, how much of political discourse is team-loyalty politics rather than meaningful policy discussion.

The posts that happened to set me off down this path were a pair from Kevin Drum about poor Barney Frank having to meet rowdy protestors and a lament on the frustrations of cloture in the Senate, but I am not particularly singling him or the left out.  In fact, I read Drum because he is less bad on the team politics angle than others.  I force myself to read a couple of political blogs on the left and right to see what they are saying.  A few observations:

  • Both teams are absolutely convinced that they are occupying the high ground and it is the other side that is resulting to personal attacks, negative campaigning, astroturfing, whatever.  Seriously, its really hilarious -- I see exactly the same posts written about "our side is losing because we don't resort to the low tactics of the other side" written by bloggers on both sides of the political spectrum on the same day.
  • Both teams are absolutely convinced that the media does not give their side the coverage or respect they deserve.
  • Both teams are guilty of trying to block dissent through clever rhetorical games without having to actually answer policy critiques.  Team red did it with the Iraq war, saying it was wrong to criticize a President in wartime, a useful concept when it is combined with the theory that the President can declare any time to be wartime.   Team blue takes a different approach, by claiming any opposing argument on subjects like climate or health care are being raised as part of plots funded by nefarious interest groups, and so therefore don't deserve a response.
  • Both teams hold up wacky members of the opposing team's fringes and attempt to portray them as representative of the mainstream opposition.  (OK, I may have been guilty of this once or twice myself)
  • Both teams can be loud and strident where they are energized and ticked off (this is a good thing).  Both teams have recently compared the opposition president to Hitler.   Both teams have been "obstructionist" as the minority in Congress.  Both teams have dreamed of changing the filibuster rules in the Senate while in the majority.  Both teams have freaked at suggestions the filibuster rules in the Senate would be changed while in the minority.  Both teams have promised bipartisanship when they were in the majority and not delivered on it.  Both teams have members who are corrupt.  Both teams have members who have had affairs.
  • Both teams have supposed evil genius schemers in the background (Rahm Emanuel meet Karl Rove).  Both teams have found it convenient to make concerted personal attacks on individual opponents (Sarah Palin meet Bill Clinton).
  • Both teams have promised respect for the Constitution in the Executive office and not delivered on it.  Both teams have promised a less interventionist foreign policy and never delivered on it (people forget GWB first campaigned almost as an isolationist against Clinton's Kosovo interventions).  Both teams have Presidents who are addicted to signing statements.  Both teams have really gone after selected Supreme Court nominees.
  • Both teams have Congressmen who support ethanol subsidies, which thoughtful people agree are stupid.  Both teams have Congressmen who support farm subsidies, which thoughtful people agree are stupid.  Both teams have Congressmen who support trade interventions (e.g. sugar tariffs) which thoughtful people agree are stupid.  Both teams have actively supported ratcheting up the war on drugs, which some thoughtful people may agree with but I think is stupid.  Both teams have voted in the last 15 years for major government interventions in medicine, education, and limitations on personal freedoms in the name of security.  When team blue was in power, it supported a law that was basically the Patriot Act, but had it voted down due to team red opposition.  When team red was in power, it forcefully pushed through the Patriot Act which it had previously opposed, this time against the opposition of team blue members who had previously supported it.

All this is not to say that libertarians are necessarily better people.  If we had a real team that wasn't a political joke, we'd probably engage in similar behaviors.  Of course, the difference is that we would be trying to lower the stakes of the political game rather than continue to raise them.

** Footnote: I don't know about you, but my civics textbooks in elementary school described a 2-dimensional political spectrum that ran from "fascism" on the political right to "communism" at the extreme of the left.  How does a libertarian even place himself on a spectrum that ranges from totalitarian statism to totalitarian statism?   I haven't seen such textbooks lately, so I don't know if this "heads statism wins, tails freedom loses" approach to the political spectrum still exists.

By the way, I have been reading a book called The Vampire Economy by Gunter Reimann, published in 1939.  It is a description of the economic policy of Nazi Germany, a subject that gets very little coverage because, frankly, later Nazi atrocities are such a magnet for attention.

I challenge anyone to read that book and find any substantial point of differentiatoin between Hitler's economy and a strongly socialist country.  And the section on strong-arming the banking industry for political goals was especially entertaining the context of the last 2 administrations.

Hitler approached his later war with Russia as an ideological war to the finish between polar opposites, but in fact it was really a feud between blood brothers.

Full Quote Referenced in the Title from Zoolander: "The man has only one look, for Christ's sake! Blue Steel? Ferrari? Le Tigra? They're the same face! Doesn't anybody notice this?  I feel like I'm taking crazy pills!"

Taxing People With No Money

Update:  Over the weekend, without comment, the Obama team pulled down the language below and put up new, vaguer language without the "required."  Discussion and a screen shot of the original is here.

How do you tax people with who have no money?  Why, you take their labor by force.  It worked when we dragged Africans over here against their will in the 19th century, and it can work today.  From the Obama transition site:

The Obama Administration will call on Americans to serve in order to meet the nation's challenges. President-Elect Obama will expand national service programs like AmeriCorps and Peace Corps and will create a new Classroom Corps to help teachers in underserved schools, as well as a new Health Corps, Clean Energy Corps, and Veterans Corps. Obama will call on citizens of all ages to serve America, by developing a plan to require 50 hours of community service in middle school and high school and 100 hours of community service in college every year.

So what was that about no tax increase for people making under $250,000?  Because my guess is that most high school and college kids made close to zero, but here is Obama seeking to expropriate 50-100 hours of their labor.  Sure looks like a tax to me.  By law, high school kids, by DOL rules, can work up to 1200 hours per year.  For kid that works every hour she can, this is about a 4% tax.  Kids that work less pay a higher effective tax rate, up to infinite for kids not working at all  (hey, this tax is even regressive).  Also, richer kids trying to get into top colleges will be the least affected, as they are already volunteering at a level close to this, so most of the burden of this tax will fall on the poor.

I remember when I was slammed by Obama supporters during the election when I said that his call for "universal" community service meant that he was going to mandate it.  Carefully avoiding being clearer about what he meant before the election, Obama sure has not wasted any time making sure everyone understands he is talking about government coercion here, not volunteerism.

PS- I thought this site was fake, because it was amazing to me to see Obama's intentions stated so baldly after he so strenuously avoided clarifying his position during the election.  But the Huffpo and other sites link to this site as if it is real, so I will treat it as such.

PPS - Here is Obama's pledge on taxes from the same site:

Middle class families will see their taxes cut "“ and no family making less than $250,000 will see their taxes increase. The typical middle class family will receive well over $1,000 in tax relief under the Obama plan, and will pay tax rates that are 20% lower than they faced under President Reagan. According to the Tax Policy Center, the Obama plan provides three times as much tax relief for middle class families as the McCain plan.

OK, we are not going to take more money, we are just going to take your labor directly.

Update: Radley Balko adds the chilling speech implications of such a program:

So who gets to decide what constitutes "community service"?  Who gets to decide which causes and organizations will be credit-worthy, and which ones won't?

Something tells me that you'd be more likely to get one of Obama's vouchers by going door to door for one of ACORN's living wage campaigns than, say, volunteering for a libertarian nonprofit organization that advocates against things like government-mandated community service.

Obama supporters will say, no problem, we trust Obama.  Hmm.  The folks who wrote our Constitution designed our government assuming all politicians would be knaves.  Writing laws that depend on the good intentions, fairness, correct incentives, and intellectual capacity of the government folks who run it are doomed to failure.  Would Democrats have been happy to have GWB deciding what community service their kids were forced to endure?  I doubt it.  Well, we don't live in an autarky, and sooner or later GWB's party will be back and making exactly those decisions under such a program.

Progressivism as Deep (little-c) Conservatism

At least in economic policy, progressives like Barack Obama are deeply conservative.  They want industries, jobs, real earnings, and class positions to be stable and predictable.  No one ever believes me when I say this, but look at the policies.  Trade protectionism protects current industry incumbents and workers, at the cost of poorer future performance due to lack of competition.  Unions attempt to lock in current jobs through numerous controls on work rules, slow or stop changes in technology and work processes that have the effect of eventually castrating the company (think GM).  Socialized medicine tries to lock in the current standard of care for everyone, while reducing the possibility of future improvements.  Redistribution attempts to lock in the current standard of living for everyone while reducing the possibility of future improvements.  I discussed this more European model last week.

I like how Shannon Love summarized it in the context of Obama:

Obama has no concept of business as a creative and experimental endeavor. On some deep unconscious level, he assumes that material wealth is something akin to a natural phenomenon for which no group of humans can take credit. Therefore, he sees distribution as the only serious economic issue and ignores how politics interferes with the actual process of wealth creation.

Though to be fair, I am not sure McCain or GWB understand this either.     (or here in 2005)

I always laughed at Democrats that tried to woo me to their party.  Now I laugh at Republicans too.  MoveOn may get mileage out of attacking Bush, but he has done more for the left/liberal cause than Clinton.  Clinton had NAFTA, welfare reform, and (moderated by an aggresive Republican Congress) fiscal sanity.

Maybe Its 1850 Again

In 1850, the hottest topic in politics was slavery.  But an awkwardness developed in the political parties.  The Democrats were pretty clearly the pro-slavery party, or at least the conservative maintain the status quo party.  But the Whigs, their opposition, were internally split on slavery.  What that meant was that there was no obvious home for the voters who were against the expansion of slavery into the territories, or more radically, were for slavery's abolition.  A Free Soil third party emerged, but the US has always seemed to seek out a two-party equilibrium.  In just a few years, the Whigs collapsed, and the anti-slavery wing merged with the Free Soilers to form the Republican party.  In the end, having no real contrast among the two major parties on the major issue of the day was unstable.

The only faint hope from this election for libertarians, particularly those concerned with economic freedom issues, is that it may finally highlight to lack of choice we have on these issues between the two major parties.  A few examples like Jeff Flake notwithstanding, the Republican party under GWB and McCain have become virtually indistinguishable from the Democrats on most economic freedom issues.  While I might have had hope 15 years ago that the Republicans could reinvent themselves as classical liberals, I now think this is demonstrated to be hopeless.  Unfortunately, an 1850's style breakup of the party seems unlikely too.  So I guess I don't have much hope after all.

Postscript: Remember, it was Republicans who did this:

The chief executives of the nine largest banks in the
United States trooped into a gilded conference room at the Treasury
Department at 3 p.m. Monday. To their astonishment, they were each
handed a one-page document that said they agreed to sell shares to the
government, then Treasury Secretary Henry M. Paulson Jr. said they must
sign it before they left.

"They weren't allowed to negotiate.
Mr. Paulson requested that each of them sign. It was for their own good
and the good of the country, he said, according to a person in the
room."

At least one banker objected. "But by 6:30, all nine chief
executives had signed "” setting in motion the largest government
intervention in the American banking system since the Depression."

The Panic Imperative

Eric Posner writes:

Many legal academics claimed that courts should serve as fire walls
against the conflagration of fear. When the government locks someone
up, the courts should realize that in many cases either government
officials have panicked or are violating someone's civil liberties
merely to assure frightened citizens that something is being done. For
that reason, courts should treat the government's justifications with
skepticism, and never ever trust the executive branch.

These arguments have not yet surfaced in the current crisis. The
specter of fear is everywhere, not just on Wall Street. And the scale
of the government's reaction is no less than what it was after
9/11"”that is what probably scares ordinary people the most. Yet no one
who believes that the government exploited fears after 9/11 to
strengthen its security powers is now saying that the government is
exploiting financial crisis fears in order to justify taking control of
credit markets. No one who thinks that government would use fear to
curtail civil liberties seems to think that government would use fear
to curtail economic liberties. Why not?

No one, except me of course.  From my October 1 discourse with a Democratic friend:

I find it surprising that you take this administration
on faith in its declaration of emergency in the financial sector.
You've lamented for years about the "rush to war" and GWB's scare
tactics that pushed, you felt, the nation into a war it should not be
fighting, all over threats of WMD's that we could never find.  You
lamented Democrats like Hillary Clinton "falling for this" in Congress

But now the mantra is the same - rush, rush, hurry, hurry, fear,
fear, emergency, emergency. Another GWB declared crisis in which the
country needs to give the administration unlimited power without
accountability and, of course, stacks of taxpayer dollars to spend.  A
decision that has to be made fast, without time for deliberation.
Another $700 billion commitment.     And here the Democrats go again.
Jeez, these guys may have the majority in Congress but it is sure easy
for GWB to push their buttons when he wants to.  Heck, Pelosi is acting
practically as the Republican Whip to get GWB's party in line.

This is Iraq without the body bags, and without the personal honor
of brave soldiers in the trenches to give the crisis some kind of
dignity.

Fake but Accurate -- Now Coming to the Hard Sciences

Most of us remember the famous "fake but accurate" defense of Dan Rather's story on GWB using forged National Guard documents.  If the post-modernism movement were to have an insignia, their tag line  (their "E. Pluribus Unum') could well be "fake but accurate." 

I have written for a while that post-modernism seems to be coming to the hard sciences (I differentiate the hard sciences, because the soft sciences like sociology or women's studies are already dominated by post-modernist thinking).  For example, I quoted this:

For
those of you who cling to scientific method, this is pretty bizarre
stuff. But she, and many others, are dead serious about it. If a
research finding could harm a class of persons, the theory is that
scientists should change the way they talk about that finding. Since scientific method is a way of building a body of knowledge based on skeptical testing, replication, and publication, this is a problem.The tight framework of scientific method mandates figuring out what would disprove the theory being tested and then looking for the disproof.
The thought process that spawned the scientific revolution was
inherently skeptical, which is why disciples of scientific method say
that no theory can be definitively and absolutely proved, but only
disproved (falsified). Hypotheses are elevated to the status of
theories largely as a result of continued failures to disprove the
theory and continued conformity of experimentation and observation with
the theory, and such efforts should be conducted by diverse parties.Needless to say postmodernist schools of thought and scientific method are almost polar opposites.

So here is today's example of fake but accurate in the sciences, not surprisingly also from climate science:

While the critic's advice - to use trained statisticians in studies
reliant on statistics - may seem too obvious to need stating, the
"science is settled" camp resists it. Mann's hockey-stick graph may be
wrong, many experts now acknowledge, but they assert that he
nevertheless came to the right conclusion.

To which the critics,
and doubtless others who want more rigourous science, shake their heads
in disbelief. They are baffled by the claim that the incorrect method
doesn't matter because the answer is correct anyway. With bad science, only true believers can assert that they nevertheless obtained the right answer.

A huge number of physicists and geologists who actually take the time to look into the details of climate science come away being shocked at the scholarship.  Take a world class physicist, drop him into a discussion of the details of the Mann hockey stick analysis, and in an hour you will have a skeptic.

Crazy?  Remember the words of from National Center for Atmospheric Research (NOAA) climate researcher and global warming action promoter, Steven Schneider:

We
have to offer up scary scenarios, make simplified, dramatic statements,
and make little mention of any doubts we have. Each of us has to decide
what the right balance is between being effective and being honest.

The Bailout is Back

So what does it take to overcome the opposition of Congressmen who said they opposed the bailout bill as too expensive, too big of a giveaway, and too much of a moral hazard?  Why, more moral hazard (in the form of higher FDIC insured balances), increased spending, and, incredibly, money for alternative energy.  Are these guys a joke or what?  (HT Hit and Run)

By the way, I had a conversation yesterday with a very anti-Bush, anti-Iraq-War Democrat -- the sort that can't get through a five minute conversation without making a Dick Cheney crack.  She was lamenting the failure of the bailout package in the House and excoriating Republicans for being so ignorant and narrow-minded.  My response was:

I find it surprising that you take this administration on faith in its declaration of emergency in the financial sector.   You've lamented for years about the "rush to war" and GWB's scare tactics that pushed, you felt, the nation into a war it should not be fighting, all over threats of WMD's that we could never find.  You lamented Democrats like Hillary Clinton "falling for this" in Congress

But now the mantra is the same - rush, rush, hurry, hurry, fear, fear, emergency, emergency. Another GWB declared crisis in which the country needs to give the administration unlimited power without accountability and, of course, stacks of taxpayer dollars to spend.  A decision that has to be made fast, without time for deliberation.  Another $700 billion commitment.     And here the Democrats go again.  Jeez, these guys may have the majority in Congress but it is sure easy for GWB to push their buttons when he wants to.  Heck, Pelosi is acting practically as the Republican Whip to get GWB's party in line.

This is Iraq without the body bags, and without the personal honor of brave soldiers in the trenches to give the crisis some kind of dignity.

Think Again

Been smugly thinking that you were smart enough not to take out an interest only mortgage to finance a house at the peak of the market?  Or savvy enough not to invest your savings in a mortgage portfolio or some sort of interest rate swap?

Sorry, think again.  Because GWB and the US Congress have decided to force you to be an investor in crappy, devalued investments.  To the tune of at least $700 billion.

Four years ago, privatization of Social Security was scuttled in large part because Congress thought it unfair to toss the average taxpayer into the volatile marketplace with his/her retirement savings.  Now, the government is forcing us all to participate in the financial markets, but only allowing us to invest in the worst assets.  Just great.

Thoughts on the Lehman Bankrupcy

While I am not happy to see a historic company go bankrupt, and have vague but unspecific worries about some kind of general cascading financial problem, I am happy to see the government let Lehman go bankrupt without any sort of special intervention or bailout for a number of reasons:

  • Bailouts create awful incentives for other large companies managing their risk portfolios
  • I know many small business people who have gone bankrupt, and I once lost my job in a company bankruptcy.  There is no reason Lehman equity holders and managers should be immune from the same process just because their company is large and old. 
  • Lehman's management has failed to get a positive return from the assets in their care.  A bailout only keeps these assets under the same management.  A bankruptcy puts these assets in the hands of new parties who hopefully can do a better job with them. 
  • I strongly suspect that the hole in Lehman's balance sheet from underwater assets like certain mortgages is large compared to its equity but small compared to its total assets.  If this is true, equity holders will end up with nothing, but most creditors should come out close to whole when everything is unwound.

Like Megan McArdle, I found Obama's recent reaction to the Lehman bankruptcy to be wrong-headed but unsurprising.  Obama is blaming recent financial problems on an overly laissez faire approach by GWB in general (LOL,that's funny) and a lack of strong enforcement by the SEC in particular. 

But one has to ask, what laws were not enforced?  My sense is that these are all perfectly lawful portfolios of mortgages in which the one mistake was systematically being too generous in giving out credit.  Mr. Obama's party has always been a strong advocate of pushing banks to be more generous with credit, particularly to the poor, and of promoting home ownership as a national goal.  If anything, financial institutions are struggling because they were too aggressive in these goals.  McArdle writes:

This was not some criminal activity that the Bush administration should
have been investigating more thoroughly; it was a thorough, massive, systemic
mispricing of the risk attendant on lending to people with bad credit.
(These are, mind you, the same people that five years ago the Democrats
wanted to help enjoy the many booms of homeownership.) Lehman, Bear,
Merrill and so forth did not sneakily lend these people money in the
hope of putting one over on the American taxpayer while ruining their
shareholders and getting the senior executives fired.  They got it
wrong.  Badly wrong.  So did everyone else.

It appears from further Obama statements talking about lack of enforcement for predatory lending laws that the Democrats want to get back on the rollercoaster of whipsawing banks between charges of redlining (you are not lending enough to the poor) and predatory lending (you are lending too much to the poor).

Postscript:  While in retrospect there may turn out to have been laws broken, in situations like this, particularly when a management team is trying to head off a liquidity crisis, these tend to be of the reporting and disclosure ilk.  We saw back during the Enron failure that people tend to assume law-breaking of some sort to be the cause of a major bankrupcy or collapse, and to satisfy this notion the government aggresively pursued Enron executives.  But nothing for which Enron was prosecuted had anything to do with their failure -- all the violations were about disclosure and accounting methodologies.  The company would have still crashed, probably faster, without these violations.

Update:  More here

Follow-up on Habeas Corpus and Gitmo

I got a lot of email this weekend telling me why I was short-sighted in supporting the Supreme Court's decision on habeas corpus rights for detainees.   First, I will observe that I have great readers, because all of the email was respectful.  Second, I will say that I am open to being convinced that I am wrong here, but I have not been so convinced yet. 

I got a lot of email about past precedents and settled law on this.  What I don't seem to be communicating well is that I understand and agree with past precedent in the context of other conflicts, but that the concept of "combatant" as currently used by the GWB administration is so different than in the past as to defy precedent.  The folks sitting in Gitmo are not uniformed Wermacht officers captured in the Falais Gap.  They are combatants generally not because they were caught firing on our troops but because the Administration says they are combatants.  New situations often require new law, and as I said before, when in doubt, I will always side for protection of individual rights against the government.

I'm not going to get into an anecdotal battle over the nature of individual Gitmo detainees.  I can easily start rattling off folks who were detained for extended periods for no good reason, and I am sure one can rattle off names of hard core bad guys who none of us would be happy to have walking the streets.  The place where reasonable people disagree is what to do with this mixed bag.  Gitmo supporters argue that it is better to lock up a few good guys to make sure the really bad guys are off the street.  I would argue in turn that this is exactly NOT how our legal system works.  For good reasons, our system has always been tilted such that the greater harm is locking up the innocent rather than releasing the guilty.

It may be a faulty analogy, but I considered the other day what would have happened had the US government taken the same position with active communist part members in the 1950's.  Would it really have been that hard to have applied the same logic that has a number of Gitmo detainees locked away for years to "communist sympathizers?"

I think this Administration, time and time again, has exhibited a strong streak of laziness when it comes to following process.  It doesn't like bothering to go through channels to get warrants, even when those warrants are usually forthcoming.  And it doesn't want to bother facing a judge over why detainees are in captivity, something that every local DA and police officer have to deal with every day.

Update: More, from Cato and George Will, here.  There are certain people who I find it to be a sort of intellectual confirmation or confidence builder to find them on the other side of an issue from me.  John McCain is quickly falling into to this camp for me, at least vis a vis individual rights questions.

On Presidential Power

While I find the torture recommendations in John Yoo's memos awful, they worry me less than the general assumptions embodied in them about presidential power.  After all, the issue of allowable tortures is a narrow issue that can be dealt with efficiently through Congressional legislation, and is almost certainly something to be disavowed by the next administration.

Based on historical precedent, what is less likely to be disavowed by the next administration are the broader definitions of presidential power adopted by GWB.  It is in this enhanced theory of presidential power where the real risk to the nation exists, and, unfortunately, there are all too few examples since George Washington's declining to run for office a third time of president's eschewing power.  Already, folks on the left are crafting theories around using the imperial presidency to address their favored issues, such as the University of Colorado's proposal for implementing greenhouse gas controls by executive fiat.

Experience is in the Eye of the Beholder

Via TJIC, on Hillary:

In 1973 she worked for a non profit.

In 1974 she was a government employee.

In 1975 she failed the D.C bar exam, and married Bubba.

In 1976 she joined the Rose Law Firm, and somehow made partner
three years later in 1979, despite rarely appearing in court "¦a
stunningly quick rise!

Oh, and Bubba became the Governor of Alabama in 1976, but that's unrelated.

In 1976 she was made, through political appointment by Jimmy
Carter, head of a government funded non-profit corporation which did
nothing but launch lawsuits.

In 1978 she laundered $100,000 of bribes through cattle
trading contracts. Despite having never engaged in cattle trading
before, she somehow managed to pick the two best times to trade each
day: she bought cattle contracts at the absolute lowest price each day,
and sell them at the absolute highest price. After laundering the
bribes, she quite cattle trading forever.

From 1993 to 2001, Hillary attempted, from her unelected
position, to socialize American health care, and routinely violated
open meetings laws.

In 2000 Hillary carpet-bagged her way into a senatorship.

Women's groups seem to be supporting Hillary's contention that being married to the President counts as presidential experience.  Wow!  If that is the case, the glass ceiling is exploded!  Melinda Gates has 20 years of experience as Microsoft CEO!

I'd like to say that I would love to see someone who has actually tried to run his/her own business running for the White House, but most of the candidates who claim to have business experience seem to have the politically-connected rent-seeking business experience (e.g. GWB) rather than the real try to make a business work against the general headwind of government bureaucratic opposition type of experience.

Does Anyone Really Believe This?

James Pethokoukis argues that we might have spent a lot of the $1.3 trillion cost of the Iraq war on containment of Iraq had we fought the war.

I will admit I have not seen the studies, but I declare right now that there is NO WAY.  If we really would have spent $150 billion a year containing Iraq in absence of a war, we should be spending similar magnitudes today on other similar regimes on which we have chosen not to declare war, like Iran, North Korea, Venezuela, etc.  But demonstrably we are not.  One might argue that oil prices would be lower, I guess, but one could also argue that the post-9/11 recession would not have been as deep without a war.  I am sure there is a broken window fallacy in here somewhere.  This reminds me nothing so much as the tortured economic studies that purport to show a gullible populace that it makes sense to build a billion dollar stadium for the hapless Arizona Cardinals because the city will make it all back in future revenues.  Sure.

I am not going to argue the justifications for the Iraq war here.  What I will say is that folks who have enthusiastically supported the war should understand that the war is going to have the following consequences:

  1. In 2009 we will have a Democratic Congress and President for the first time since 1994.
  2. The next President will use the deficits from the $1.3 trillion in Iraq war spending to justify a lot of new taxes
  3. These new taxes, once the war spending is over, will not be used for deficit reduction but for new programs that, once established, will be nearly impossible to eliminate
  4. No matter what the next president promises to the electorate, they are not going to reverse precedents for presidential power and secrecy that GWB has established.  Politicians never give up power voluntarily.  [if the next president is Hillary, she is likely to push the envelope even further].  Republicans are not going to like these things as much when someone of the other party is using them.

Is This Really The Replacement We Want?

Regular readers know that I am a critic of the Bush administration for any number of failings, perhaps most importantly its flaunting of the separation of powers and its attempts to avoid scrutiny by hiding behind the war and calls on patriotism.  In this post, aimed mostly at the drift in the Republican party, I threw in this  observation:

in response to a Republican President thought to be over-reaching,
secretive, and overly fond of executive power, they seem ready to
nominate Hillary Clinton, who may be one of the few people in the
country more secretive and power-hungry.  Anyone remember how she
conducted her infamous health care task force?  I seem to remember she
pioneered many of the practices for which Democrats tried to impeach
Dick Cheney this week.

Q&O links an article from the National Review which goes further on Hillary:

If grumbling about a basketball story seems excessive, it's also
typical of the Clinton media machine. Reporters who have covered the
hyper-vigilant campaign say that no detail or editorial spin is too
minor to draw a rebuke. Even seasoned political journalists describe
reporting on Hillary as a torturous experience. Though few dare offer
specifics for the record--"They're too smart," one furtively confides.
"They'll figure out who I am"--privately, they recount excruciating
battles to secure basic facts. Innocent queries are met with deep
suspicion. Only surgically precise questioning yields relevant answers.
Hillary's aides don't hesitate to use access as a blunt instrument, as
when they killed off a negative GQ story on the campaign by
threatening to stop cooperating with a separate Bill Clinton story the
magazine had in the works. Reporters' jabs and errors are long
remembered, and no hour is too odd for an angry phone call. Clinton
aides are especially swift to bypass reporters and complain to top
editors. "They're frightening!" says one reporter who has covered
Clinton. "They don't see [reporting] as a healthy part of the process.
They view this as a ruthless kill-or-be-killed game."...

It's enough to make you suspect that breeding fear and paranoia within
the press corps is itself part of the Clinton campaign's strategy. And,
if that sounds familiar, it may be because the Clinton machine, say
reporters and pro-Hillary Democrats, is emulating nothing less than the
model of the Bush White House, which has treated the press with thinly
veiled contempt and minimal cooperation. "The Bush administration
changed the rules," as one scribe puts it--and the Clintonites like the
way they look. (To be sure, no one accuses the Clinton team of outright
lying to the press, as the Bushies have done, or of crossing other
ethical lines. And reporters say other press shops--notably those of
Rudy Giuliani and John Edwards--are also highly combative.)

The only quibble I have is the distinction that Hillary is not lying, but Bush is.  That seems, at least to this libertarian, to be a silly statement.  There is no reason to believe Hillary is any more or less mendacious than GWB.  Though I will say, with the right audience, Hillary can be surprisingly honest and open about her aims:

10/11/2007:  "I have a million ideas. The country can't afford them all."

June, 2004:  "We're going to take things away from you on behalf of the common
good," she told San Franciscans in June 2004. As first lady, she said:
"We must stop thinking of the individual and start thinking about what
is best for society."

The Silicon Valley of Begging

Stephen Dubner's roundtable on the Economics of Street Charity got me thinking about a recent experience visiting Boulder, Colorado, an odd but lovely town in which I used to live.

Here in Phoenix, most of our panhandlers show little or no innovation.  They are still using the "will work for food" or "Vietnam vet" cardboard signs that were an innovation years ago, but now are tired and hard to believe.  All the signs were generic.  None of them seemed tailored to the local audience. 

So where is the innovation in begging occurring?  Someone must have first thought of the "will work for food" come-on which I presume was so initially successful, since everyone copied it, just as they copy any successful innovation in the marketplace?

My vote for the Silicon Valley of Begging is Boulder, Colorado, and specifically on the Pearl Street Mall.  I have recently visited homeless capital Santa Monica, and San Francisco, as well as New York and Boston, and none of their beggers hold a candle to those in Boulder.  Here is why:

  • Their come-ons were unique -- I never saw the same one twice
  • Their come-ons were well tailored to the local audience.  "Need Money for Pot" is not going to get one anywhere in Oklahoma, but it is very likely to elicit a chuckle and a buck from a UC college student or sixties-survivor Boulder resident.  Given that President Bush has about a 0.01% approval rating in Boulder, many of the come-ons led one to believe that giving the beggar a buck would show one's disdain for GWB.

Holy Security State, Batman!

Hollywood may like to criticize GWB for his over-eager and intrusive anti-terrorism precautions, but they sure seem ready to take a page out of the homeland security book when it comes to protecting their CD sales:

In Florida, the new legislation requires all stores buying second-hand
merchandise for resale to apply for a permit and file security in the
form of a $10,000 bond with the Department of Agriculture and Consumer
Services. In addition, stores would be required to thumb-print
customers selling used CDs, and acquire a copy of state-issued identity
documents such as a driver's license. Furthermore, stores could issue
only store credit -- not cash -- in exchange for traded CDs, and would
be required to hold discs for 30 days before reselling them.  (HT Overlawyered)

Requiring thumbprints from customers just to sell used CD's?  Are they nuts?  Can you imagine if they tried to apply this to anything else?  You'd have to have a retina scanner to use eBay.  Freaking totally insane.  I can buy a gun, an aircraft, and a shopping cart full of rat poison without a thumbprint but I need to go through the jailhouse booking routine to sell a CD?

By the way, note how insane the requirements on resellers are.  For example, having to hold a disc 30 days before selling.  Why?  I am sure for a lot of hot music products the value goes down about 50% a month.

Of course, we all know the reason why.  This is about politically powerful incumbents protecting their business from competition.  In this case, music companies don't want to have to compete with their own CDs showing up on the aftermarket.  Well you know what -- suck it up.  Car companies have had to deal with this problem for years.  I am sure they would love laws that make it difficult for anyone to buy a used car (or maybe they wouldn't - a healthy secondary market gives consumers the ability to trade up to new models frequently, something music sellers should consider).

Think about the recycling angle, by the way.  The best recycling plan is to reuse an item for its original use.  We all remember Hollywood giving Al Gore a big wet kiss at the Oscars, and congratulating themselves for being more green than the rest of us schmucks  Except, of course, when it hits the bottom line.  "Hey you little guys out there, don't resell those CD's, we want to make sure you throw them out and buy new.  After all, we can't keep our private jets flying without selling lots more CDs."

From the Left: OK, Real Wages Are Growing

I know that my short-term memory isn't very good (a result of my Y chromosome, by my wife's explanation) but I could have sworn that the big issue in the last election from the left (beyond the war of course) was the indictment that real wages were not increasing -- i.e. that the average worker's wages were growing more slowly than inflation.

Now, this hypothesis was mostly bullshit, particularly when you factored in benefits with wages, but economic facts have never stood in the way of a little populist class demagoguing.  However, now it appears that when push comes to shove, no one on the left really believed any of it.

The other day, Kevin Drum posted this:

At the Democratic debate yesterday, Tom Vilsack
proposed a slow reduction in future Social Security benefits by
switching from wage indexing to price indexing

A number of folks, most on the left, called it a really bad idea.  Drum himself didn't have a definitive opinion, but seemed to think the idea at least screwy.  Why?  Well, these folks all thought that a shift from wage to price indexing would reduce benefits, and in fact that is what Vilsack thought -- he proposed it as a way to help close the future cash flow gap in Social Security.  Am I understanding this right?  Because the only way that this switch could reduce benefits would be if wages were growing faster than prices!  Surely I must be missing something?  Do we really have a bunch of Democrats all criticizing a plan because everyone universally assumes wages increase faster than prices?  Doesn't this contradict their whole meme in the election?

So I followed a link in one of these posts to the Center for Budget and Policy Priorities (I don't know how they would describe themselves politically, but looking at their body of work on the home page, you won't confuse them with Cato).  Apparently, this re-indexing scheme was also proposed by GWB (I missed that) and this site was criticizing his plan because it would reduce benefits.  And yes, there was the key line (emphasis added):

Under current law, initial Social Security
  benefits for each generation of retirees grow in tandem with average wages in the economy.  This ensures that each generation receives Social Security benefits that reflect the living standards of its times.  Full "price indexing" would make a change in the Social Security benefit formula so that initial Social Security benefits would keep pace only with prices, rather than wages, from one generation to the next.  Because prices increase more slowly than wages, this would result in progressively larger benefit reductions over time

There you have it.  Democrats and the left criticizing a plan because they assume wages go up faster than prices, so re-indexing from wages to prices would reduce benefits.  In fact, the folks I read accept this fact as so fundamental, everyone just assumes it to be true.  Is this wildly hypocritical or what?

Open Up to Cuba

The Bush administration is in the unenviable but not historically unprecedented position of not really being able to accomplish much of anything over the next two years.  Bush's credibility is such that a solid majority in Congress may oppose any plan he suggests, just because he suggested it.  Also, it is unlikely that any third-rail-type reforms will be considered in a presidential election cycle.  And I am generally OK with government legislative inaction.  In fact, it would be great if the Democrats chose to pursue impeachment hearings, not because Bush is any more or less a lying sack of shit than other politicians, but because it would divert Congress onto an enforced lassaiz faire path on every other issue.

However, one thing Bush could productively accomplish is to open up relations with Cuba.  If we are ready to pull out of Iraq after five years, even at the cost of being seen as "losing," we should be ready to reconsider our cold war with Cuba after over 46 years.  After all, our cold war with Russia, if dated from the end of WWII, only lasted 44 years.  We trade freely with communist China, and even with communist Vietnam, despite the fact that we were in a shooting war with them more recently than the Castro takeover.  And what have we accomplished?  Cuba is nowhere close to an anti-communist revolution, and its people suffer.  In fact, I think the embargo on Cuba, by turning Cuba's attention away from its natural trading partner the US, causes it to look for allies in places like Venezuela.

I think history has proven time and time again the power of open commerce and interchange in bringing closed, unfree societies into the modern age.  I can't for the life of me figure out why we still pursue the proven-pointless embargoes against Cuba except:

  • The sugar lobby like it that way
  • The Cuban expat community, operating on wounded latin pride, have stubbornly made it clear that anyone who suggests opening up to Cuba will lose the typically tight vote for Florida's key electoral votes.

With GWB's lame-duckracy and his brother moving on from the Florida governor's mansion, no Bush has to run for election in Florida again. With Castro's death (I'm not dead yet - yes you are, you'll be stone dead in a moment) the anti-Castro movement in the expat community loses focus, and might be reshaped into what it should be, that is pro-Cuba rather than anti-Castro.  I think these two stars are lining up to provide a unique opportunity to do something about Cuba, and in fact might be a useful step in counterpoint to Hugo Chavez's recent actions. 

Proposal: No New Federal Funds to Louisiana

We have a federal system in this country, so Louisianans are welcome, I guess, to run their state any way they please.  However, in light of recent events, I propose that the US Government stop sending any of our federal tax money to the state.  Maybe we could send the money instead to a country with a better government that is more likely not to use it corruptly, like maybe Haiti.

All of this is in light of recent events.  I guess most will consider the 1991 gubernatorial election between a convicted felon and a Klansman old history (the felon won).  More recently I think anyone who isn't just looking to blame every problem in the world on GWB would come to the conclusion that local Louisiana government had more to do with the worst aspects of Katrina (both before, in the corrupt levee districts and after, in the pathetic disaster response) than any other public entity.  The final straw comes today as the Congressman who was found with $90,000 in bribe money in Tupperware in his freezer (and god knows whatever he carried off with the aid of the National Guard during Katrina) was apparently reelected. 

Maybe we can find a better investment than sending our money to Louisiana.  Anyone have any Enron stock for sale?

Flash: Labor Market Works Like It Always Does

During the last election, politicians and pundits made a lot of hay trying to argue that the labor market was somehow broken and not functioning like it always has.  First, the argument was that we were having a "jobless recovery."  Then, when employment took off, the argument was that wages were somehow broken and trailing productivity.  Whether this was a secret plot by GWB or by Wal-Mart was never quite made clear.

Well, it turns out that the job market works like it always has.  In a cyclical economic recovery, employment and productivity gains always precede wage gains.  Wages tend to go up late in the cycle, after excess available labor is soaked up:

After four years in which pay failed to keep pace with price
increases, wages for most American workers have begun rising
significantly faster than inflation.

With energy prices
now sharply lower than a few months ago and the improving job market
forcing employers to offer higher raises, the buying power of American
workers is now rising at the fastest rate since the economic boom of
the late 1990s.

The average hourly wage for workers below
management level "” everyone from school bus drivers to stockbrokers "”
rose 2.8 percent from October 2005 to October of this year, after being
adjusted for inflation, according to the Bureau of Labor Statistics. Only a year ago, it was falling by 1.5 percent.

I am not one to really accept the "active bias in media" argument (I believe in a more passive bias based on reporters failing to apply skepticism to stories that fit their view of the world).  However, the bias crowd predicted that reported economic news would suddenly improve after the election and that certainly seems to be the case.

One final note - be careful of folks who are claiming that wages have not kept up with inflation for years.  Make sure they are using "total compensation, including benefits" and not just "wages."  The former number has consistently outpaced inflation.  These numbers diverge because the portion of compensation paid out in non-cash benefits has been growing as a percent of total compensation.

Countdown: 8 Days Until Your First Ammendment Rights Are Put on Hold

Eight days from now, all of our first amendment rights will be put away in a box for 60 days, hopefully to be retrieved after the election is over.  During those 60 days, and in an astronomical violation of the intent of our Constitution and Bill of Rights, none of us, unless we are operating under the banner of certain organizations like official political parties, will be able to pay to publicly criticize the *cough* fine *cough* men and women who serve as elected officials in this country.  Once the election is over and their jobs are safe and the criticism is moot, then you will get your speech back.

Thank you very much John McCain, Russ Feingold, all the Congressmen who voted for this, GWB who signed it, and the Supreme Court who astoundingly declared it constitutionally A-OK.

Update: Here is an example.  I use it because the people involved are try to fund ads to support a law I absolutely oppose (I have no desire to give the Feds more power over the free movement of US citizens across state lines).  But I totally support their right to advocate their position on TV.  In this case, their public speech is great even for folks like me who oppose what they support, because I didn't even know this proposed legislation existed until they started talking about.  Their ad informs me, even if it is sending me the message that I need to counter their message.  And that is what political dialog should be in a free society.

I am constantly irritated by efforts to ban a certain speaker from speaking or to drown out their message with taunts and chanting.  If you think someone is advocating something so terrible - let him talk.  If you are right in your judgment, their speech will likely rally people to your side in opposition.  As I like to tell students who want to ban speakers from campus -- Hitler told everyone exactly what he was going to do if people had bothered to pay attention.