2009 - %3, July

The Clue for Solving the 18 1/2 Minute Watergate Mystery

| Wed Jul. 29, 2009 11:34 AM EDT

On Wednsday, I reported that the National Archives is considering using a CSI-ish procedure that could produce clues as to what was said during the infamous 18 and 1/2 minutes missing on one of Nixon's Watergate tapes. The story got much attention, and several Watergate historians--who often don't agree on anything--told me they each are hoping that the testing yields something.

The procedure, which is rather straightforward and can be done relatively quickly, would try to determine if there are tell-tale indented impressions on one of the two pages of Nixon chief of staff Bob Haldeman's notes from this meeting--impressions that might have come from possibly missing notes that correspond to the 18 and 1/2 minute gap.

Today, I received an image of that particular page.

Does it literally hold the key to solving this Watergate mystery?

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Cui Bono?

| Wed Jul. 29, 2009 11:27 AM EDT

Mike Konczal has a nice primer over at the Atlantic about high frequency trading.  You're likely to hear a lot more about this subject in days to come, so it's worth a few minutes to head on over and read it.

There are two aspects of HFT that are drawing attention.  The first is just the basic effect of ultra-fast, high-volume trading on equity markets in the first place.  The second is "front running," the allegation that big players are able to gain access to stock prices a few milliseconds before the rest of us via flash orders, thus allowing them to enter orders early and make guaranteed profits.  Konczal's conclusion:

As the debate unfolds, remember to ask yourself, (1) whose information is being exploited by whom and how, (2) does this make financial markets stronger and more efficient — say by providing liquidity — during a downturn when markets need them the most, and (3) what is this doing to the price mechanism — is it helping prices converge to fundamental values or driving them further away? The evidence currently looks like HFT is doing bad things on all three accounts.

As Konczal points out, if you ask the HFT community what benefit HFT provides, the answer is usually "liquidity."  But this is an answer that should be treated very skeptically indeed.  Major stock exchanges are not notably illiquid except under very specific, limited circumstances, and HFT traders aren't obligated to provide liquidity under these circumstances anyway.  And they won't.  They'll just flee, like everyone else.

So: cui bono?  As near as I can tell, HFT is just a pure, artificial money spinning machine with no value at all to the wider financial community.  In fact, as Konczal points out, it's quite likely to make markets weaker and less driven by fundamentals.  This is worth keeping your eyes on.

Eco-News Roundup: Wednesday, July 29

| Wed Jul. 29, 2009 7:00 AM EDT

Blue-Marble-ish posts on our other blogs, for your Wednesday morning reading pleasure:

Obama not following doctor's orders? Obama's GP thinks the president is wrong about healthcare.

O'Reilly: oh, really? Bill O'Reilly thinks Americans don't live as long as Canadians because "we have ten times as many people as you do. That translates to ten times as many accidents, crimes, down the line." Really.

Cash for kidneys: The case for paying people to donate organs might be logical, but Kevin Drum isn't convinced.

Blue Dogs won't budge: Lawmakers who oppose a public healthcare option often represent the very districts that would benefit most from such a plan.

Community Rating

| Tue Jul. 28, 2009 8:35 PM EDT

Scott Lemieux isn't happy with the compromise healthcare bill being put together in the Senate:

The normal justification for passing a compromise bill is that once a new system is entrenched it can be tweaked later. But I don't think it applies in this case. The public option is the core of the reform; a Blue Dog bill isn't so much half a loaf as a few meaningless crumbs. And far from making a public option more viable in the future, if anything, passing something that could be called health-care reform will reduce the impetus to pass actual reform. And, worse, a bill with no public option will further entrench the insurance industry and make it easier for them to block actual reform in the future.

Ezra Klein disagrees.  Partly this is because a public option would cover only a small fraction of the currently uninsured ("That's not a gamechanger, it's a tweak"), but mostly because he thinks what really matters isn't how they're covered, but merely that they're covered:

What has kept health-care reform at the forefront of liberal politics for decades is moral outrage that 47 million of our friends and neighbors are uninsured. That medical costs are one of the leading causes of bankruptcy in the United States. That an unemployed machinist gets screwed by fly-by-night insurance schemes while a comfortably employed banker need never worry. That the working class ends up in emergency rooms with crushing chest pains because they didn't have health insurance and didn't get prescribed cheap blood pressure medications five years before.

One of these days I need to think this through more rigorously, but I have a slightly more idiosyncratic view that's closer to Ezra's than Scott's.  Both coverage and a public option are important, but I think what's more important than either one is a simple change that — to my surprise — hasn't attracted any real opposition: community rating on a national scale.  Basically, this means that insurance companies have to take all comers at the same price.  They're allowed to adjust premiums for things like age and gender, but they can't refuse you due to preexisting conditions.  If your blood pressure is high or you have a family history of breast cancer, they still have to accept your business.

This hardly solves every problem.  In particular, it doesn't do much to rein in costs.  But if you combine (a) Medicare, (b) our current employer-based insurance regime, and (c) community rating along with subsidies for low-income families, you've essentially institutionalized universal healthcare insurance.  Not everyone will take advantage of it — there will always be a few people who go without coverage even if it's affordable — and you still a need a few other things like out-of-pocket caps.  Still, it's basically a statement that everyone in the country can and should be covered.  And once that becomes a cultural norm, it will never go away.

It will also, I suspect, eventually turn the private healthcare insurance industry on its head.  But maybe not.  That's the part I haven't thought through completely.  But if there's any single thing that's critical, it's moving public opinion in the direction of viewing healthcare as a universal prerogative.  Community rating plus low-income subsidies doesn't get us 100% there, but it gets us pretty far along.

Phew, China and U.S. Sign Memorandum

| Tue Jul. 28, 2009 8:13 PM EDT

After a series of negotiations that primarily focused on the economy, ace global ambassador Hillary Clinton managed to convince her Chinese counterparts to sign off on a "memorandum of understanding" in which the planet's #1 (China) and #2 (U.S.) polluters pledge to cooperate so that a comprehensive climate change agreement can be reached in time for December's Copenhagen climate conference.

But will the memorandum actually do anything? At this point, that's unclear. But at least it's a start, which is surely better than hardcore diplosquabbling, as was the case for Clinton in India last week.

My prediction: India will be the biggest thorn in America's side this December, and Brazil won't make the conference a cakewalk either.

The Not-So Fertile Crescent

| Tue Jul. 28, 2009 7:22 PM EDT

Last week came news that the Colorado River may go dry. Could the Fertile Crescent be next?

Akio Kitoh of Japan's Meteorological Research Institute thinks so—he forecasts that the Crescent will disappear in this century.

Several factors have contributed to the depletion of the once-lush Mesopotamian marshes, where the Euphrates and Tigres rivers converge. Dams constrict water flow, drought grips the area, and Iraqis are increasingly draining the water for agricultural purposes.

There have been efforts to make the area fertile once again. But if conditions don't change dramatically, the cradle of civilization may eventually be no more.

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Pro-Lifers Hijack Health Care Reform

| Tue Jul. 28, 2009 2:50 PM EDT

One of the most controversial issues related to the health care debate currently raging in Congress is whether the government plan, like most private plans, should cover the cost of abortions. And compromise on the issue may be impossible as Republicans and some moderate Democrats continue their campaign to distract the public by focusing on divisive issues like abortion. Dana Goldstein of the American Prospect writes today about the smear campaign, disseminated by conservative media outlets like Fox News, to portray health care reform as a tacit approval of government subsidized abortion:

Abortion is far cheaper and safer than pregnancy and childbirth and prevents society from shouldering the cost of children parents aren't prepared to care for. President Obama has said his health-reform goals are to offer Americans more health choices, bring down costs, and make our society, as a whole, a healthier one. In that context, abortion coverage is a no-brainer.

If every American were going to be covered by government-funded health insurance, we wouldn't be debating this topic. While constantly grandstanding on abortion, our political elites have been surprisingly adept at making sure women with the ability to pay -- in other words, the daughters, sisters, and girlfriends of politicians -- will always have access to abortion. But by maintaining a system full of inequities, in which women with fewer options and resources are more likely to rely on the new public plan, Democratic leaders have allowed abortion opponents, once again, to hijack a policy debate. And that, sadly, is uniquely American.

More than torpedoing compromise, though, pro-lifers from both sides of the aisle are actively trying to get abortion spiked from any bill that moves through Congress. Last month, 19 Democrats wrote to House Speaker Nancy Pelosi saying that they would not “support any healthcare proposal unless it excludes abortion from the scope of any government-defined or subsidized health insurance plan."

And President Obama is staying out of it. Louisiana Republican John Fleming claimed recently that "by being silent on this issue [Obama is] actually making an affirmative statement in favor of taxpayer abortions." That wouldn't be so bad, but instead it's something much worse. As Ezra Klein points out today, the health care discussion is being run by centrist Democrats and conservative Republicans. So by staying silent on the issue, Obama is not effectively condoning government subsidized abortion; he's letting it die on the table.

Quote of the Day

| Tue Jul. 28, 2009 2:37 PM EDT

From Bill O'Reilly, responding on the air to Canadian viewer Peter Gillies, who noted that Canadians have higher life expectancies under their healthcare system than we do under ours:

Well that's to be expected, Peter, because we have ten times as many people as you do. That translates to ten times as many accidents, crimes, down the line.

Note that this wasn't just an off-the-cuff howler.  O'Reilly chose to air Gillies' letter and had his response all teed up on the prompter.  Here are the alternatives for how this happened: (a) Not a single person on his staff noticed that this was nonsensical.  (b) Someone noticed but didn't have guts to tell O'Reilly he was wrong.  (c) Someone noticed, told O'Reilly, but was unable to convince him that he'd flubbed his fourth grade arithmetic.  (d) O'Reilly does this stuff all by himself and doesn't show it to anyone before airtime.  I'm going with (b).

Selling Your Kidney

| Tue Jul. 28, 2009 1:24 PM EDT

Oddly enough, a persistently popular topic of conversation in the blogosphere concerns the ethics of paying people to donate kidneys.  It just goes to show the power of Virginia Postrel, who donated one of her kidneys to a friend and has written about it frequently since then.

The idea, frankly, makes me very, very queasy.  Offering large sums of money to people in desperate straits to sell a kidney?  I'm just not there.  But today, Ilya Somin takes on three common objections to "exploiting the poor" in an effort to persuade doubters like me:

I. Poor People Are Allowed to Take Much Greater Risks for Pay. Many organ market critics may be unaware of the fact that the risks of donating a kidney (the main proposed organ market) are actually very small....If it is somehow wrong to allow poor people to assume these very minor risks in exchange for pay, why should they be allowed to brave vastly greater dangers for money? Military personnel, firefighters, police officers, and others accept far greater risks to life and limb than kidney donors do.

....II. Is Preventing "Exploitation" Important enough to Justify Killing Thousands of People?....80,000 lives per year in the US alone could be saved by legalizing kidney markets. Even if you find the "exploitation" of poor people in organ markets morally repugnant, you have to ask whether following that moral intuition is so important that it justifies sacrificing all those lives.

....III. Organ Sales are Actually Good for Poor Donors. Given the minimal risks of organ donation, it is highly likely that kidney markets will actually benefit poor donors far more than they could conceivably harm them. The logic isn't complicated. After all, one of the main problems that poor people face is lack of money....If the poor person reasonably believes that the risk is worth it, I don't see why the government should force her to choose otherwise.

This is all very logical, as libertarian arguments tend to be, and the fact that my instincts scream that this is a bad idea is hardly a persuasive counterargument.  But I'll make a few others as well.

First: entering a generally risky profession is different than being coerced to do a specific act because you're feeling specifically desperate at a specific time.  At least, it feels quite different to me.  The other two arguments, baldly utilitarian though they are, strike me as more persuasive.

Second: Would this would be a global market?  My discomfort with the idea is doubled or tripled at the idea of luring the poor in Bangladesh or Liberia into donating kidneys.  Am I right to feel this way?

Third: I'll admit that my moral sense is affected by how much a kidney is worth.  (I'm taking Somin's word for the fact that the risk involved is actually fairly small.)  If the going price were $10,000, that seems like a bad deal.  If it were $100,000 — well, that really could make a difference to a poor family.  Hmmm.

Fourth: This one is by far my most important objection: right now both the law and the taboo against selling organs applies to all organs.  But if we make an exception for kidneys, does that weaken the taboo and make it more likely that markets will develop in other organs?  Obviously it wouldn't for donations that would kill you, but how about corneas?  You've got two of 'em, after all.  Or maybe a piece of one lung?  Or a chunk of something else.  And then another chunk.  Would venture capitalists start insisting on organ donations from entrepreneurs to prove their seriousness before they put up money of their own?  Could a bank ask a bankruptcy judge to demand a kidney donation in order to pay off a loan?

I'm not generally a big fan of slippery slope arguments, but they do have their place.  History suggests that once the rich and powerful figure out a way to exploit the poor in one way, they'll pretty quickly start pushing the envelope in related directions as well.  So, yeah, this makes me pretty nervous.

But it's not as if my mind is made up.  Mainly, things are kind of slow today so I thought I'd toss in a post on an offbeat topic and let everyone talk about it.  Obviously, for example, you might feel quite differently about the whole thing depending on what kind of regulatory regime was put in place.  Comments?

A Supposedly Fun Thing That Seems To Kill Whales

| Tue Jul. 28, 2009 12:42 PM EDT

Guest blogger Mark Follman writes frequently about current affairs and culture at markfollman.com.

I took notice back when David Foster Wallace chronicled the cultural dark side of going on a cruise. But ultimately it’s the environmental dark side of the industry that makes me know I’ll Never Do It at All.

Over the weekend, an adult fin whale—a threatened species in Canada—turned up dead in the waters at a cruise ship terminal in Vancouver. The rare marine giant was impaled on the bow of the “Sapphire Princess,” a Princess Cruises’ ship arriving from Alaska.