2010 - %3, July

The GOP's Economic Nihilism

| Sun Jul. 25, 2010 11:56 PM EDT

Martin Wolf on the future of fiscal policy in America:

My reading of contemporary Republican thinking is that there is no chance of any attempt to arrest adverse long-term fiscal trends should they return to power. Moreover, since the Republicans have no interest in doing anything sensible, the Democrats will gain nothing from trying to do much either. That is the lesson Democrats have to draw from the Clinton era’s successful frugality, which merely gave George W. Bush the opportunity to make massive (irresponsible and unsustainable) tax cuts. In practice, then, nothing will be done.

You should read the whole post. It's mostly a recap of the past 30 years of Republican economic nihilism, but it's a very clear, crisp recap. Wolf's conclusion is sobering:

This is extraordinarily dangerous. The danger does not arise from the fiscal deficits of today, but the attitudes to fiscal policy, over the long run, of one of the two main parties. Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic.

Our best hope, I think, is that Republicans nominate a Palin/Ryan ticket in 2012 and then go down to such an epic defeat that they finally get some sense knocked into them. On the other hand, the last time that happened we got Richard Nixon out of the deal. So maybe we're just doomed no matter what.

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Liberalism and Big Business

| Sun Jul. 25, 2010 2:03 PM EDT

As part of my therapy regime to reduce the pain in my neck and shoulders, I've been trying to blog less on weekends. In fact, I've been trying to stay away from the keyboard entirely on weekends. That should be pretty easy for the rest of the day, which will be dedicated to setting up my mother's new computer, which might be bad for my sanity but probably good for my shoulders.

In the meantime, though, I see that his trip to Vegas has prompted Matt Yglesias to double down on his argument against corporate regulation. Here's the original version:

Regulate business to prevent negative environmental externalities, sure. Basic safety, okay. But the idea that what we need is for a bunch of people to get together and say that it would be better to ban this and that and the other capitalist act between consenting adults just strikes me as the wrong way of going about things. Purely economic regulation of this sort doesn’t have a compelling track record, runs into all kinds of Hayek-esque knowledge problems, and is basically an open invitation down the road for regulatory capture and the use of rules to prevent the emergence of competition. Count me out. For me, it’s all about higher taxes to finance more and better public services. That’s my brand of liberal economics — take the rich people’s money and use it to pay for stuff, don’t tell them what to do with the companies they run.

And here he is on Saturday, responding to my post about the increasingly popular practice of checking job applicants' credit scores before hiring them. At first, he says, this sounds good:

But at the same time I try to adhere to the principle I outlined here and resist the urge to call for regulating the business practices of private firms when the issue isn’t pollution or some other case where the externalities are clear. After all, it seems like either this credit check business is a sound business practice (in which case allowing it is making the economy more efficient and ultimately building a more prosperous tomorrow) or else it’s an unsound business practice (in which case competition should drive it out).

The more I think about this, the more it bothers me. Which is odd, in a way, since I'm not really a ravenous supporter of micro-regulating the business community. For example, I'd like to see labor unions spend more time negotiating pay and benefits and a lot less time negotiating the kind of stultifying work rules that drive managers crazy. I agree with conservatives that Sarbanes-Oxley went too far and probably ought to be scaled back. And I agree with Matt that local zoning regs often become little more than hammers for NIMBYism and soft corruption.

So I get where this is coming from. Still, there are some fundamental questions here about how we expect businesses to treat both employees and consumers, and not all of those questions can be reduced to dollars and cents and higher marginal tax rates. Partly this is because, practically speaking, the rich and powerful are — well, they're rich and powerful and will never allow marginal rates to get too high. Short of another major depression, this just isn't likely to change dramatically.

It's also because we've gotten beyond the point where higher tax rates are even feasible as a leveling mechanism. According to Piketty and Saez, the income of the top 1% in the U.S. has more than doubled in the past three decades and the income of the top 0.1% has quadrupled. This during a time when per capita GDP has increased about 50%. In order to tax these incomes down to anywhere near the trend rate of growth for the whole economy would require top marginal rates of 70-80% or higher. Not only is that politically infeasible, but rates like this would almost certainly hurt economic growth as well.

But this isn't my biggest concern. It's true that income inequality can be partly addressed by progressive taxation, though I'd much prefer to see it addressed at the source since a healthy economy is one in which everyone benefits, not one in which a small plutocracy hoards the wealth and then doles it out to the working class if and when it can be persuaded to do so. More important is the fact that we liberals shouldn't view the relationship between businesses and individuals as solely economic transactions. There are core questions here of human dignity and basic fairness that exist quite aside from money.

Here's an example. Back in 1968, Congress passed the Truth in Lending Act. Among other things, it made credit card companies liable for charges on stolen credit cards over $50. In a purely economic sense, there's really no excuse for this. Why should a card company be responsible for your carelessness? If you're dumb enough to let someone steal your card and run up thousands of dollars in charges, it ought to be your responsibility. It's ridiculous to make a bank — and by extension, its customers — subsidize the losses of individuals who can't take care of their own finances.

Today, this argument would almost certainly carry the day. Even most liberals wouldn't fight it. It's as if we've been brainwashed against arguing that we should do something purely because it represents the way we think people deserve to be treated. We need graphs and charts and dueling models of economic distribution instead. 

But as recently as 40 years ago we didn't allow ourselves to be defined purely as pseudo-economic actors. Yes, there's an element of moral hazard in the $50 rule: people won't be as careful with their cards if they know someone else pays the bill if they get stolen. But we also recognized that, in fact, ordinary people are careful with their wallets and their credit cards regardless. And being responsible for thousands of dollars in charges could ruin an ordinary person. In fact, merely the fear of being responsible for losses like that from an everyday transaction can be debilitating. Businesses, on the other hand, can handle it. They can spread the losses among their customers, they have the resources to work on ways to reduce credit card fraud (which they did), and they can treat this responsibility as an ordinary cost of business, not a nightmare waiting to happen.

That's worth a lot. How much in dollars, I couldn't say. But there are rules and regulations we should put in place purely because they represent the way we think people should be treated. Potential employers shouldn't have access to my credit record because that's something I think we should treat as private. Banks shouldn't be able to retroactively raise interest rates on credit card balances because that's something I think is fundamentally unfair. Pharmaceutical companies shouldn't be allowed to sell drugs that don't work (even if they're safe) because I don't think sick people should be treated that way. Restaurants shouldn't be allowed to run filthy kitchens on the theory that an occasional outbreak of food poisoning isn't worth the cost of prevention. Farmers shouldn't be allowed to pay migrant workers two dollars an hour in scrip because I think adult human beings deserve better than that even if (or maybe especially if) they're desperate. I can't necessarily justify any of these things on purely economic grounds, and even if I could I'm not sure I'd want to. Because that's not truly why I believe them.

Even on the left, I feel like we've allowed ourselves to buy far too heavily into the homo economicus model of human interaction. But if I can be allowed to put on my old school lefty hat for a moment, that model just doesn't work when the power relations are too far out of whack. And to a large extent, businesses simply have the whip hand on too many things today. When you sign a form from your doctor agreeing to send all complaints to arbitration instead of to the civil court system, this isn't really an agreement between consenting adults. Once the AMA has convinced enough doctors to require this of all their patients, you no longer have a choice. You either give up your legal rights or else you go without medical services.

The alternative, of course, is political, not economic: pass a law that says access to courts is a basic right that can't be taken away even if your doctor or your credit card company or your employer forces you to sign a piece of paper to the contrary. Pass a law that prohibits employers from checking credit scores — even if that's economically efficient in some technical sense — simply because individuals ought to have a certain zone of privacy in their personal affairs. Pass a law that outlaws no-doc liar loans because they're bad for the country regardless of whether individuals can make money from them.

I'm rambling. Sorry. I wish I knew how to write this kind of thing better. But I just wanted to get it off my chest anyway. Corporations aren't people, and they can perpetuate unsound and unfair business practices for a lot longer than you'd think — leaving plenty of misery and personal havoc in their wake. We're perfectly justified in requiring them to treat people decently even if we don't have an economic justification for it. We used to understand that better than we do today.

The War on Grub

| Sun Jul. 25, 2010 11:07 AM EDT

Freedom to Forage: Can we still buy a 10-zillion calorie chili hot dog at a ballpark in Obama's America? Yes we can.Freedom to Forage: Can we still buy a 10-zillion calorie chili hot dog at a ballpark in Obama's America? Yes we can (Photo: Tim Murphy).Marion, AlabamaOver the course of this trip, we've occasionally heard conservative talk show hosts lament the demise of what I guess you could call the Freedom to Forage: Apparently, the Obamas (they're working together on this one) have unleashed something called the "Food Nazis," who are heck-bent on confiscating all of your greasy, lardy, breaded, delicious grub. It's unclear what their goal is, exactly, but nothing is safe from the Fried Reichnot family restaurants, not school cafeterias, not even ballparks.

Terrifying.

But also, well, baloney. The other day, Alex says he ordered a bacon cheeseburger that came with mashed potatoes and onion rings on top of the burger. That was an exceptional case, but only just so. In Atlanta, we stopped at The Varsity, a local fast-food joint that's become a go-to spot for politicians and celebrities; there were no fewer than a hundred other people in line when we got there, many of whom ordered The Varsity's signature dish: hot dogs slathered in chili and cole slaw, with a side of onion rings (at least Cole slaw and onion rings, can, if they go back far enough, trace their heritage back to vegetables). If this is the best the Food Nazis can do, Obama's not nearly as dangerous as conservatives make him out to be.

Besides, even if we assume Obama wants to ban fried oreos or something, there are obvious political obstacles: If Obama shuts down all of the diners, where will he (and GOP nominee Haley Barbour) go for photo-ops come 2012? What will they eat at the county fairarugula? Logistically, it's just an impossible proposition. So long as the political culture is so deeply connected to fast food culture (to say nothing of the legitimately terrifying food lobby), I think our chili hot dogs, half smokes, buttermilk biscuits, chicken and waffles, cheesesteaks, deep dish, pulled pork, and cisterns of sausage gravy aren't going anywhere. But we'll keep you posted.

Update: Right after I posted this, we drove to Montgomery to watch the Tampa Bay Rays' AA affiliate, the Biscuits. True to form, their mascot is fluffy buttermilk biscuit named Monte (that's him on the right; note that his tongue is actually a giant lump of butter). If Monte doesn't do it for you, check out his sidekick, Big Mo, an anthropomorphized strip of fried chicken. With any luck, Montgomery will have a whole generation of children who grew up idolizing a 1,500-calorie snack. Anyways, let that be further proof, if you needed it, that the South's heart-stopping culinary culture is still going strong.

The View From My Windshield: Peanut Lady

| Sat Jul. 24, 2010 9:48 PM EDT

Delta, Alabama—Blame it on the vegetarians. "My daughter, when she was two, refused to eat meat, but she looooved boiled [pronounced "bold"] peanuts," explains Wilma Alexander, aka "the Peanut Lady." "So we started to give her peanuts to get her more protein."

Not long after that, Wilma started hawking her wares at flea markets, then moved on to  a tent and a pickup truck. Her big break came after she recovered from knee replacement surgery, when a state agency gave her a grant to help build the operation. "They said 'you have a client base and everything,'" she says with a touch of pride.

Last spring, when she lost her her job at a gas station, she turned the stand into a full-time gig. She does a brisk business, considering that she's parked on the grass off to the side of an otherwise empty stretch of state highway 431, in an otherwise empty stretch of eastern Alabama.

So what's the secret to the perfect peanut? Wilma doesn't hesitate: "My method of cooking."

"We had a bold [boiled] peanut man a mile up the road and he didn't hurt our business one bit." And then she lets me in on a secret: "His niece used to come on all the way over here to have our peanuts. She said her uncle just didn't cook them right."
 

Quote of the Day: Mayberry Machiavellianism in Vegas

| Sat Jul. 24, 2010 2:26 PM EDT

From Jon Henke, tweeting from Right Online 2010, the conservative answer to Netroots Nation:

Everybody at #RO10 talks about limited government, but there is a frustrating lack of discussion of plausible policies to accomplish it.

I feel your pain, Jon. We on the left have noticed this too.

Corn on "Hardball": What Was Breitbart's True Motivation in the Sherrod Affair?

Fri Jul. 23, 2010 7:49 PM EDT

David Corn and Pat Buchanan joined guest host Chuck Todd on MSNBC's Hardball to discuss Andrew Breitbart's true motivation in propagating the lies and distortions surrounding Shirley Sherrod.

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

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Denying Sex Workers HIV Funds

| Fri Jul. 23, 2010 7:17 PM EDT

Today marked the end of the biennial International AIDS Conference in Vienna, where one crucial group remained absent from news headlines but not silent at the event. This is where Peninah Mwangi fits in. Mwangi's been a sex worker in Kenya for 15 years. During that time, she's also worked with the Bar Hostess Empowerment and Support Programme and the African Sex Worker Alliance to get sex work recognized as a job and to improve access to health and social services. For several years, both of Mwangi's groups have applied for HIV/AIDS prevention funding through the President's Emergency Plan for AIDS Relief (PEPFAR) and been denied. "We couldn't understand why we were denied. Many women were dying," Mwangi tells me on the phone. Then three years ago, a PEPFAR rep told her the reason: "We cannot fund you unless you get out of sex work."

PEPFAR's condemnation of sex work is why Mwangi is currently in Vienna for the AIDS conference. During the week-long summit, amidst discussion of new HIV prevention strategies and the lack of money to disperse them, about 100 sex workers from all walks of life and their advocates marched through the IAC conference center chanting "sex worker rights are human rights." The workers were not only making their marginalized presence known, they were protesting the PEPFAR anti-prostitution clause that keeps them from receiving US HIV/AIDS prevention funds.

Audio: How Green Is My Country?

| Fri Jul. 23, 2010 7:03 PM EDT

The race is on to develop sustainable solutions to climate change. From clean coal technology in Tianjin to the construction of Masdar City—a self-contained metropolis in the United Arab Emirates designed to be carbon neutral—countries around the world are devising new ways to reduce global dependency on fossil fuels. But as places like China and the U.A.E. move ahead with large scale green initiatives, is the U.S. lagging behind?

Need to Know’s Alison Stewart runs that question by Professor Bill Chameides, Dean of the Nicholas School of the Environment at Duke University. Professor Chameides writes about environmental issues and options for a more sustainable future on his blog, The Green Grok.

This podcast was produced by Need to Know for the Climate Desk collaboration.

A Few Facts on the Deficit

| Fri Jul. 23, 2010 4:32 PM EDT

The big Friday news dump this week is the Obama administration's projection that the federal budget deficit will reach a record $1.47 trillion this fiscal year. That is, the government will spend $1.47 trillion more than it takes in this fiscal year. There are a few things you should remember when you read about this:

  • The current deficit can be attributed almost entirely to the effects of the economic downturn (reduced tax revenue, increased transfer payments), the Bush tax cuts, and the wars in Iraq and Afghanistan. David Leonhardt and the Center for Budget and Policy Priorities both have good articles and charts on this.
  • The $1.47 trillion number is actually slightly better than the White House's February prediction. But the forecast for next year looks worse.
  • Despite stimulus spending, which most independent experts believe improved the job picture, there is still massive unemployment in the United States.
  • The median duration of unemployment is at its highest in 50 years.
  • Liberals and conservatives will be arguing about what all this joblessness means. Derek Thompson explains: "Does it mean we must increase the duration of unemployment benefits to protect this new class of unemployed, or does it mean we need to stop subsidizing joblessness? Does it mean we need to expand federal retraining programs, or does it mean federal retraining programs aren't working? Does it mean we need more stimulus, more state aid, more infrastructure projects, more public works...or does it mean it's time to stop everything, stand back, and let business be business?" (Liberals go for the first option in each pairing.) This argument can be summed up simply as stimulus vs. austerity. Right now, stimulus seems to be fighting a losing battle.
  • Conservatives don't have a record of caring about or reducing the budget deficit. They do have a record of caring about and reducing taxes on rich people.
  • We spend almost as much on our military as the rest of the world combined. (A lot of the other countries that are spending big bucks are our allies.) If you include non-Pentagon defense-related expenditures, US defense spending in fiscal year 2010 will be somewhere between $880 billion and $1 trillion—even more if you include the interest we're paying on debt from past wars. Even if you strip out all that stuff, we're going to be spending north of $700 billion on the Pentagon and the wars in Iraq and Afghanistan next year.
  • Long-term deficits are not the same as single-year deficits, and they have different causes. Our projected long-term deficits are driven almost entirely by the rapidly increasing cost of health care. (We're talking about increases driven by things other than the aging of the population.) If we could hold our health care costs at levels comparable to other countries', our long-term deficits would basically disappear. You can see this for yourself by using the Center for Economic and Policy Research's health care budget deficit calculator.
  • Social Security is not the problem.

1/3 of Counties Face Water Shortage Due to Climate Change

| Fri Jul. 23, 2010 3:51 PM EDT

Water Supply Sustainability by 2050 With Climate Change


 

A new report from Natural Resources Defense Council predicts that a third of all counties in the Lower 48 will face a higher risk of water shortages in 2050 due to climate change. More than ten percent of counties will face an "extremely high" risk of shortages. "The only way to truly manage the risks exposed in this report is for Congress to pass meaningful legislation that cuts global warming pollution," NRDC climate director Dan Lashof said in a press release. Good luck with that.

For a more detailed look at how global warming will parch the American West, check out these Mother Jones stories.

H/T San Antonio Current.