2010 - %3, August

Cred Trumps Cash In Florida Senate Primary

| Tue Aug. 24, 2010 10:02 PM EDT

In Florida's bruising Democratic senatorial primary, party credentials ultimately trumped big money. On Tuesday night, Rep. Kendrick Meek claimed the Democratic Party's nomination to the Senate, handily defeating his opponent, billionaire real estate developer and political dark horse Jeff Greene.

With nearly 40 percent of precincts reporting, Meek led Greene by 23 points. Despite being outspent by a five-to-one margin, Meek's support from party luminaries like President Barack Obama and former President Bill Clinton helped pave the way to victory. Meek was also helped by what state officials predict will be a dismal voter turnout, likely no more than 20 percent, the St. Petersburg Times reports. With rain and thunderstorms keeping all but the most avid voters at home, that means moderates who would've picked Greene didn't hit the polls, while committed and active Democrats, who mostly backed Meek, did.

Meek now faces Florida governor Charlie Crist, a Republican turned independent, and conservative darling Marco Rubio in November's general election. It's a race Meek begins at a disadvantage: A hypothetical poll by Public Policy Polling for the three-way race shows Rubio leading with 40 percent, Crist with 32 percent, and Meek in third with 17 percent.

Greene's defeat tosses cold water on the 2010 election season's anti-incumbent theme, as well as the rise and success of wealthy, self-funded candidates. (See: Meg Whitman and Carly Fiorina in California and Ron Johnson in Wisconsin.) In Greene's case, his lavish spending on his campaign boosted his name recognition from practically zero to relatively well known. But that wasn't necessarily a good thing. For instance, when on Monday I asked Hugo Vasquez, a parking lot attendant in Fort Lauderdale, about the primaries, Greene's was the only name he knew, from the commercials and the Internet and the newspaper stories. But Vasquez added, "He's the guy with the yacht, who went to Cuba, yes? He said he went to visit the Jewish community, but c'mon—who believes that?"

In a way, the Meek-Greene race featured two campaigns with opposite trajectories. While Greene's campaign quickly gained steam, with ads for the candidate appearing both in Florida and outside the state and the national media latching onto his colorful past, recurring controversies ultimately sunk his run for office. In the past week or so, his chances at winning had all but disappeared. Meek, on the other hand, was criticized for his campaign's slow start. But he built momentum through the primary campaign, secured crucial endorsements, and cruised to an easy victory on Tuesday.

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Who You Calling a Statist?

| Tue Aug. 24, 2010 6:47 PM EDT

Conor Friedersdorf argues that although Matt Yglesias is a liberal, he's not entirely a liberal:

Mr. Yglesias favors deregulating various professional cartels, ending the legally proscribed monopoly on buses that some urban public transit agencies enjoy, reforming America's absurd system of agricultural subsidies, and making it easier for developers to build in accordance with the local demand for real estate, rather than government imposed zoning restrictions....Why does he favor some policies that conservatives like? And can we identify more of them for the sake of strategic alliances? We'll never know if, upon learning that he is a liberal, we automatically presume that he is a "statist," or even more absurdly, that he prefers tyranny to liberty.

In response to a similar argument yesterday, Mark Levin came out with all guns blazing:

This is so pathetic. So a liberal blogger favors regulation [I assume Levin actually means deregulation here –ed] in some respect, and this proves to Friedersdork that my characterizing the general left-wing enterprise as statist is unhelpful — to Friedersdork. So, the fact that the liberal blogger isn't advancing big-government arguments ALL THE TIME demonstrates the inaccuracy of referring to his agenda as statist.

Levin is a loon. Equating the liberal project with tyranny is deranged, his tone is consistently obnoxious (note the childish reference to "Friedersdork," one of his favorite bits of juvenilia), and he barely even pretends to offer arguments. He just screams into the microphone for a few hours a day.

And yet.....I actually think he has the better of things here. Let's face it: people like Matt and me aren't even as centrist as your average DLC Democrat of the mid-90s, let alone sympathetic in any serious way to most conservative arguments. I'm in favor of full-blown European style national healthcare, for example. Matt favors astronomical tax rates on the rich. It's true that neither of us has any intrinsic love for a big state per se, but it's still the case that a big state is pretty integral to attaining most of our preferred policy outcomes. And that's true even if there are a few modest areas where we might usefully team up with conservatives — though even there it's worth noting that of the three things Conor mentions, at least two of them (ag subsidies and zoning) are so wildly unlikely to change that favoring reform is sort of a freebie. It's the kind of thing where you can take a contrarian philosophical stand without any serious risk that you're ever going to be called to account for it.

Now, it's true that I'm generally in favor of reducing or eliminating government programs that don't work. Who isn't? But self-interest plays a big role here, even if we don't always like to admit it. Like Matt, I think we should eliminate ag subsidies. But that's a pretty easy stand to take since I'm not a farmer. Earlier today I suggested we do away with Fannie Mae because we subsidize housing too much. I can afford that too, since I already own a home and don't need any help buying one. High tax rates on the rich? That wouldn't affect me much, so I'm OK with it. National healthcare? That would be pretty handy in case I ever want to quit my job, so that's also in my self-interest. Fighting global warming? Well — fine. That wouldn't really do me any good since I don't have children and I'll be dead before climate change causes me any personal grief. So there's no self-interest at work there. On the other hand, I make enough money that a carbon tax wouldn't really inconvenience me much, so I'm not exactly taking a heroic stand by advocating one.

It's useful to know where you can find political allies. If you can find liberals who favor charter schools, less regulation of small businesses, and an end to Fannie Mae, that's well and good. But that's 10% or less of my worldview. I also favor high marginal tax rates on the rich, national healthcare, full funding for Social Security, more spending on early childhood education, stiff regulations on the financial industry, robust environmental rules, a strong labor movement, a cap-and-trade regime to reduce carbon emissions, a major assault on income inequality, more and better public transit, and plenty of other lefty ambitions that I won't bother to list. If we could do all that without a bigger state, that would be fine. But we can't. When it's all said and done, if we lived in Drum World I figure combined government expenditures would be 40-45% of GDP and the funding source for all that would be strongly progressive. "Statist" is an obviously provocative (and usually puerile) way to frame this, but really, it's not all that far off the mark. It wouldn't be tyranny, any more than Sweden is a tyranny, but it would certainly be a world in which the American state was quite a bit bigger than it is now.

Greenland Begins Whale Hunt, Illegally

| Tue Aug. 24, 2010 5:40 PM EDT

Humpback whales, who've been absent from Greenland waters for 60 years and are only now beginning to find their way back, will be rewarded for their recovery with harpoons. That's because the IWC has granted Greenland an aboriginal quota to kill 27 humpback whales starting in October. But the hunters aren't waiting for the season to start, as BlueVoice director Hardy Jones reports at the Huffington Post:

"[From the air] an hour out of Keflavik, I realized the humpbacks that have now become targets of the hunt were swimming a mere vertical mile below me. I had come to know this stock of whales in the Caribbean at Samana Bay and out on the Silver Banks. They were extraordinarily friendly toward me as I filmed them underwater. We looked at each other eye-to-eye, each knowing the other was aware of the other. The idea of their being harpooned is appalling to me. Along most of their migratory route off the eastern seaboard of the United States, the humpbacks are protected. In response to protection, they've become increasingly friendly and curious toward the whale watchers who now are part of a multimillion dollar business for charter boat owners, hotels, restaurants and transport companies. They approach boats and eyeball passengers with astonishing trust. That trust will now be rewarded by a harpoon."

I also know these humpback whales and, like Hardy, I cringe at the thought that emerging relationships based on years of hard-won trust are about to be destroyed, certainly for the remainder of my lifetime, and at the cost of the whales' lives.

Aboriginal hunts of marine mammals provide food for people who eat outside a cash economy. But as Hardy discovered in Nuuk, some Greenlanders aren't honoring the noncommercial terms of the IWC that allow them to kill for themselves but not for sale. Without having to look far, Hardy found whale meat for easy, open sale in markets and restaurants.

"In the supermarket I found packaged whale meat. In a Thai restaurant I found whale sushi and whale and Rangoon Whiskey soup. In a greasy spoon burger/pizza joint I found whale steak. The Inuit of Greenland complain that they do not have enough whale to sustain themselves. They may be having a hard time getting whale meat because the big money guys are sucking it all up for the more lucrative commercial trade."

I Was a Virtual Taliban

| Tue Aug. 24, 2010 5:31 PM EDT

So there are these things that are called video games, see, and one of the most popular types of video games is the first-person shooter, in which you shoot people. Among other things.

There's this other thing called war, see, and America's waging one in Afghanistan in which American soldiers shoot Taliban insurgents. Among other things. And the Taliban shoot back.

You can see where this is going. Or, at least, the gaming company Electronic Arts (EA) can see it: They're in the middle of a roll-out campaign for Medal of Honor, an Afghanistan-based first-person shooter (FPS) game in which you can assume the role of "Tier 1 Operator, an elite warrior and relatively unknown instrument of the US Military that operates under the National Command Authority to take on missions no one else can handle."

Or, in multi-player mode, you can assume the role of a Taliban insurgent.

This isn't treason; it's capitalism run amok.

Part of me wonders why that isn't a huge offense to the same crowd that opposes an Islamic center in Lower Manhattan. Sure, it's gotten some play on Fox News, along with the usual mainstream media handwringing. And even a few (foreign) politicians have weighed in against little Johnny getting his cyber-jihad on. But some conservatives love the game's concept. "If millions of Americans are exposed to a platform that accurately defines our enemy as the dregs of the modern world (while allowing a small percentage of sick individuals to actually enjoy the option to become them), conservatives should move on," writes right-leaning pop-culture blogger Douglas Ernst. (He adds: "Any video game company that allows me to put a few 5.56mm rounds into facsimiles of Taliban cavemen is ahead of the power curve in my book.")

For its part, EA claims to be interested in occupying a view from nowhere, ideologically. "We do stir up some feelings, although it's not about the war, it’s about the soldiers," game producer Patrick Liu told a gaming magazine. "We can't get away from what the setting is and who the factions are but, in the end, it's a game, so we're not pushing or provoking too hard."

No. They're pushing just hard enough to make ungodly sums of money. This isn't treason; it's capitalism run amok. Video game producers court controversy in their designs; every group with a political-moral axe to grind pumps out its press-release condemnations; the media outlets dutifully report the controversy and see a bump in traffic; the video games see a bump in sales; the anti-game groups see a bump in donations.

Then, a sequel!

Flickr/ diametrik (Creative Commons)Flickr/ diametrik (Creative Commons)EA routinely nets $4 billion annually in revenues. A large share of that comes from the Medal of Honor franchise: The series' website lists 14 previous games, most of which were World War II-based scenarios that enabled players to be Nazis, trying to improve on the 1,000-year reich's real-life batting record. (The series is the brainchild of filmmaker and war-porn obsessive Steven Spielberg.) And what does the new title represent to EA? Just "another step towards our goal of regaining leadership in the FPS segment," CEO John Riccitiello told shareholders on an earnings conference call in early August. EA has already lined up pop-rockers Linkin Park to provide a No. 1 single for Medal of Honor's soundtrack, and the company's also cut a product-placement deal with Jeep.

Translation: Medal of Honor is war profiteering of the first order, up there with the likes of KBR and Erik Prince's House o' Premium Trigger-Pullers.

Not that we should be surprised at EA's chutzpah. The company shows its loyalty to fans of the "shooter genre" with a rewards program known as the "Gun Club," where perks include early access to virtual weapons like the M24 sniper rifle. "Using their existing EA profile as their Gun Club membership profile, gamers will access content that just might give them an edge in battle," the firm writes in a characteristically breathless press release.

EA also has a peculiar notion of a diversified product inventory. Its lineup of other games includes Shank, "a bloody story of revenge...through a violent, pulp-fiction lens," and my favorite, DeathSpank: Thongs of Virtue, wherein you "explore the North Pole and the high seas to locate six mystical thongs to bring peace and harmony to the universe." A co-creator of the Thongs franchise says, "Bigger, longer, harder—these were the words that drove us while we created the follow up to our introduction to the DeathSpank universe."

Indeed. What does the DeathSpank/Shank/Medal of Honor universe tell us about the folks at Electronic Arts? Just that they're good capitalists. But what does that universe, and its profitability, tell us about ourselves? That we're virtually screwed.

Chart of the Day: Housing Prices Since WWII

| Tue Aug. 24, 2010 4:23 PM EDT

In what Matt Yglesias calls "the department of stuff people are wrong about," the New York Times reports the following:

In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.

“People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.

That chart at the bottom of this post, constructed from Case-Shiller data, shows the reality: home prices have actually been pretty steady over time. In fact, if you look at a fifty-year period after World War II, home prices were absolutely steady. In 1947 the Case-Shiller index stood at 110, and in 1997, adjusted for inflation, it stood at 110 again.

So here's the question: why do people think that home price appreciation is a law of nature, when it so clearly isn't? Here are a few theories:

  • People are really bad at math. A 10% annual rise over ten years is a 150% increase. That's pretty crazy. But most people have no sense for how numbers like that compound.
     
  • People are bad at adjusting for inflation. If you bought a $20,000 house in 1947 and sold it in 1997 for $150,000, that seems like a tidy profit. In fact, it's zero profit. Adjusted for inflation those numbers are identical. But despite all the complaining we do about inflation, most people don't realize just how much it adds up to over the years. (It's that pesky compounding problem again.)
     
  • In some areas, housing prices really have increased a lot. The house I grew up in cost $16,000 in 1959. Adjusted for inflation that comes to about $120,000 today. But even after the recent downturn it would sell for at least three times that amount now. In Orange County, housing really has been a pretty profitable business in the postwar era.
     
  • We have a very human tendency to overreact to startling news. You hear a story about a neighbor who bought a house and sold it five years later for a 50% profit and you remember it. Newsweek runs a story about the Southern California housing bubble of the 70s that jump started the Proposition 13 tax revolt and you remember it. Your property tax bill keeps showing a higher assessed value every year and you remember it. You hear about one square mile of Tokyo being more valuable than the entire state of Oregon and you remember it.

    But what you don't remember is that another neighbor lost money on his house (he didn't crow about it, after all) or that the Southern California housing market cooled off in the 80s (and the Detroit market had been falling the entire time) or that your assessed value is basically just tracking inflation (the math is too hard) or that the Tokyo story was bogus to begin with (and the Tokyo property bubble collapsed shortly after that anyway). And you never even notice the occasional story that provides the big picture in the first place — partly because they don't often get written and partly because they're not very interesting even when they are. So we end up retaining lots of bits and pieces suggesting that housing prices always rise and downplaying or not noticing the news that tells us otherwise.

Add your own theories in comments. This really does seem like a belief that simply won't die regardless of how much evidence there is to the contrary, and that's something that's probably distorted the housing market every bit as much as all the government intervention in the world.

TSA's Frisky New Pat-Downs

| Tue Aug. 24, 2010 3:43 PM EDT

If you're traveling this summer and don't want a TSA agent to see your graphic full-body scan, you might have to opt for a grope. Reports have surfaced that passengers who've refused to go through the TSA's expensive and invasive body scanners have been treated to a more rigerous pat-down. "If anybody ever groped me like that in real life, I would have punched them in their nose,” one male traveler told the Boston Globe. “It was extremely invasive.. actually probing and pushing and seeing if I was concealing something in my genital area.”

The new "enhanced" pat-downs are different in that screeners are using the front of their hands to probe sensitive areas instead of the backs of their hands as they had previously. Another difference is screeners will use a sliding motion to move their hands over passengers' bodies instead of a patting motion. As one female passenger said, screeners touched her face, hair, and underneath and between her breasts in their search for weapons. These new pat-downs are currently being used at Boston's Logan airport and Las Vegas's McCarran airport, but the TSA plans to roll them out nationally. And in case there was any doubt, these touchy-feely pat-downs are just for those who refuse to have their bodies scanned. If you go through a regular metal detector, one source says, you would only get the regular, back-of-hand pat-down.

I can't say which I'd prefer less: being personally probed and prodded by a TSA agent, or having my body graphically scanned knowing the image has the potential to be saved. Despite the TSA blog's bold declaration that "TSA has not, will not and the machines cannot store images of passengers at airports," a lawsuit turned up evidence from DHS that the machines had indeed stored more than 2,000 images for "test purposes." The Electronic Privacy Information Center has filed a motion to immediately halt TSA's use of scanners pending an investigation, but until then, the agency's stance is clear: get scanned or face the consequences.

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Should the Feds Exit the Housing Market?

| Tue Aug. 24, 2010 12:53 PM EDT

Speaking of housing, Dean Baker is unhappy with the likely resolution to the collapse of Fannie Mae and Freddie Mac, and I think he makes a pretty good point. Fannie and Freddie are in the business of buying 30-year fixed rate loans from the banks that originate them, and if it simply did that and nothing more as a fully public institution it would probably be OK. They'd be taking on interest rate risk, but it would be the mirror image of the interest rate risk on the broader federal debt. Overall, the federal government would be pretty well hedged on this bet.

Alternatively, we can simply get rid of them entirely:

We know that the private sector can and does issue mortgages without government support. This is demonstrated by the existence of the jumbo mortgage market. Jumbo mortgages exceed the size limits set for a loan to be purchased by Fannie and Freddie. Even in the current environment the spread is only 90 basis points (9/10ths of a percentage point) compared with the Fannie/Freddie backed conformable mortgages, and it is typically much less.

Dean believes — and I agree — that we should choose one of these alternatives. Either Fannie and Freddie are public institutions guaranteed by the federal government, with the risk of running them fully transparent, or else the secondary mortgage market is entirely private and everyone knows there's no government guarantee behind it. But that's not where the conversation is going:

Instead, the consensus seems to be to design some hybrid model in which private profit-making banks will decide which mortgages will get a government guarantee. We are assured by the housing finance wizards that the government regulators will effectively police the private banks. The basic issue is the problem of moral hazard: Private banks have incentive to issue the guarantee to the worst junk around, since they can will make money on the process and the risk goes to the government. It is difficult to believe that anyone who has lived through the crisis of the last three years would want to re-establish this sort of situation.

Status quo bias is hard to overcome, unfortunately. My own tentative take is that Fannie and Freddie should simply be phased out over a period of years and allowed to die. Regulated private markets can probably sustain housing just fine these days, and I'm just not sure we need a huge federal bureaucracy to provide homebuyers with a slight interest rate bonus.

More generally, I think we provide home buyers with too many bennies already, and we'd probably all be better off if we allowed the market to set prices here without the distorting influence of federal supports. I'm fine with the government getting involved when there's a clear market failure (as there was when Fannie Mae was first set up) or if there's some need to make a benefit universal (as with Social Security or Medicare). But I don't think either of those applies to the contemporary housing market, so why not just get the feds out of the mortgage business altogether? I'm open to good arguments to the contrary, but I haven't really heard any yet.

UPDATE: RIP $pread?

| Tue Aug. 24, 2010 12:50 PM EDT

This week the country's only sex worker-operated trade magazine, $pread, announced that it needs $30,000 or the magazine gets it:

After all these years, five all-volunteer years to be exact, we have come to the conclusion that an all-volunteer magazine is simply unsustainable in the current publishing climate. Short of a donation of $30,000, we will be unable to sustain the magazine past January.

Last week, I interviewed Will Rockwell, the editor-in-chief of the New York-based publication, to get his take on industry myths, decriminalizing prostitution, and more. Some highlights:

MJ: How does $pread tackle myths [about sex workers]?

WR: $pread publishes a range of experiences in the sex industry. For some people it's all a field of roses; for some of us, it was our best option among limited options, and others experienced violence at the hands of the police and a stigmatizing culture. In all cases, $pread provides a forum for sex workers to speak for themselves.

MJ: Have you ever been in a scary or dangerous situation while working that you think could have been prevented or helped if prostitution was decriminalized?

WR: I was once shorted out of an entire night's pay by a client who told me he was going to call security on me if I didn't leave. I decided against calling the police, because every case I heard of involved the police arresting the sex worker. Instead, I had to let a rape go unpunished.

MJ: Why do you think prostitution has yet to be decriminalized in this country?

WR: Sex work has yet to decriminalized in the US because people fear what is most familiar: We know our fathers and husbands are clients of sex workers, and our sisters, cousins, and friends find a way to pay the rent when two or three jobs aren't enough to make ends meet.

Read the full interview here.

$pread's Crime and Punishment Issue as well as its Race Issue are slated for publication by January, before the mag closes its doors indefinitely.

Score One for the Terrorists

| Tue Aug. 24, 2010 12:38 PM EDT

International aid continues to pour into Pakistan in the wake of devastating floods that have killed some 2,000 people so far. And early fears that Islamist charities are leading the aid effort are being realized. ABC news correspondent Jim Sciutto reports from a camp near the city of Nowshera:

Doctors in white coats tested children’s temperatures and blood pressures, looking for the signs of water-borne diseases, from acute diarrhea to potentially deadly cholera. Their mothers sat nearby, batting away the flies. Volunteers doled out food and water. The camp was indistinguishable from several now operating across Pakistan, except for its sponsor: this one is run and funded by the charity arm of Lashkar-e-Taiba, the terrorist group behind the 2008 Mumbai attacks, which killed 166 people.

Pakistani officials insist that the aid effort won't be hijacked by extremists. But that seems to be exactly what's happening—and it's hard to dismiss the terrorists' aid camps when they seem to be operating so effectively. Sciutto's reporting should help dispel any notion that the extremist aid infrastructure is unable or unprepared to tackle a humanitarian effort of this magnitude. This particular camp’s well-oiled efficiency casts serious doubt on government claims, and provides some damning evidence that the battle for Pakistani hearts and minds rages on in the wake of the disaster.

About that DOI Revolving Door ...

| Tue Aug. 24, 2010 12:02 PM EDT

In the nearly three months since the Deepwater Horizon disaster began, the Department of Interior has been come under fire for maintaining a too-cozy relationship with the companies it is supposed to regulate. Among the chief criticisms has been the revolving door between the department and the industries its various components are supposed to regulate. Here's yet another stellar example of what was standard operating procedure at the agency: an oil and gas industry advocacy group has just named former Bureau of Land Management field manager (and ethics probe target) Steven Henke as its new president.

The Farmington Daily Times reported last month that Henke, who left BLM's Farmington, N.M. office in May, will now head the New Mexico Oil and Gas Association. The BLM is the division of Interior that oversees development of natural resources on federal lands. Until May 21, 2010, Henke was the senior official at that office, managing approximately 160 employees.

He was "ideal choice" for the new post because of how well he worked with industry while he was at BLM, the article notes. Henke is quoted in the piece as saying he hopes he will be "afforded the opportunity to sit at the table with policy makers and legislators to describe the impact and the role." I would venture that he will, given that these are largely the same policy makers he was employed by just a few months ago.

Henke also happened to be the subject of a probe by the Department of Interior's inspector general, prompted by a General Accounting Office report that indicated that Henke was "too close to unnamed oil and gas industry officials and made decisions to benefit companies based on personal relationships, rather than the good of BLM."

The Project on Government Oversight obtained the IG's June 7 report, which found that Henke took gifts like golf tickets, lodging and meals from Williams Exploration and Production, misused BLM travel funds to attend the 2007 PGA Championship in Tulsa, Okla. as a guest of the same company, and, in 2007, solicited approximately $8,000 in donations from that company for youth baseball teams (the report blanks out a few words, but the implication is that the funds were for the sports team of a child or other relation to Henke). The report also notes that another company, Merrion Oil & Gas, gave an internship to a child or other relation of Henke. None of these gifts, all from "prohibited sources," were listed in his financial disclosure reports.

The IG report concludes, however, that it could find "no evidence of any corrupt or official acts Henke took to benefit the company in exchange for the things of value he received." The investigation was referred to the U.S. Attorney for the District of New Mexico, who declined to prosecute the case. And since Henke retired from the federal government as of May 21 of this year, the case is now officially closed. So, rather than being punished for ethics violations, Henke was rewarded with a (presumably lucrative) job shilling for the oil and gas industry.