Kevin Drum - December 2009

History is Rhyming

| Mon Dec. 14, 2009 11:52 AM EST

The LA Times reports today that the Obama administration wants to expand the war in Afghanistan to include drone attacks on Pakistani cities the size of San Francisco:

The prospect of Predator aircraft strikes in Quetta, a sprawling city, signals a new U.S. resolve to decapitate the Taliban. But it also risks rupturing Washington's relationship with Islamabad.

The concern has created tension among Obama administration officials over whether unmanned aircraft strikes in a city of 850,000 are a realistic option. Proponents, including some military leaders, argue that attacking the Taliban in Quetta — or at least threatening to do so — is crucial to the success of the revised war strategy President Obama unveiled last week.

"If we don't do this — at least have a real discussion of it — Pakistan might not think we are serious," said a senior U.S. official involved in war planning. "What the Pakistanis have to do is tell the Taliban that there is too much pressure from the U.S.; we can't allow you to have sanctuary inside Pakistan anymore."

Boy, those comparisons of Afghanistan to Vietnam just get more facile and ridiculous every day, don't they?

Advertise on MotherJones.com

Chart of the Day: The Killing Fields

| Mon Dec. 14, 2009 11:22 AM EST

Via Ezra Klein, here's an estimate from the Institute of Medicine of how many people die each year because they lack health insurance.  The number goes up every year as the population increases and the percentage of people covered by health insurance decreases, so it's probably up to around 25,000 this year.  Seems like we ought to do something about this, doesn't it?

Harry and Joe

| Mon Dec. 14, 2009 12:17 AM EST

Harry Reid, October 27th:

"Joe Lieberman is the least of Harry Reid's problems. I don't have anyone that I've worked harder with, have more respect for, in the Senate than Joe Lieberman. As you know, he's my friend....Sen. Lieberman will let us get on the bill, and he'll be involved in the amendment process."

November 2nd:

Reid’s staff has told anxious liberals that Lieberman has given the Democratic leader assurances that he will not wreck the reform bill because of Reid’s decision to include the public option, according to two sources briefed on the issue.

December 8th:

Sen. Joe Lieberman (I-CT) [...] just gave his Democratic colleagues some breathing room. Lieberman said he's open to both the Medicare buy-in idea, and a separate proposal to extend the private system that insures federal employees to individuals and small businesses.

Today:

Senator Joseph Lieberman (I-Conn.) informed Senate Majority Leader Harry Reid (D-Nev.) in a face-to-face meeting on Sunday that he will vote against a health care bill that includes a public option or a provision that would expand Medicare, a Democratic Senate aide tells the Huffington Post.

I wonder how Reid's lifelong friendship with Lieberman is faring tonight?

Quote of the Day: Financial Engineering

| Sun Dec. 13, 2009 5:52 PM EST

From Paul Volcker, during a Q&A at the Future of Finance Initiative:

A few years ago I happened to be at a conference of business people, not financial people [...] and I found myself sitting next to one of the inventors of financial engineering. I didn't know him, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity.

Much to my surprise, he leaned over and whispered in my ear that it does nothing — and this was from a leader in the world of financial engineering. I asked him what it did do, and he said that it moves around the rents in the financial system — and besides, it's a lot of intellectual fun.

It's funny, but for all the talk that this subject has received, I've really heard no one seriously contest this point.1  The inventors of modern financial engineering, far from defending their handiwork, instead seem to be intent on keeping their heads down and hoping that, in the end, Congress loses the desire to do anything serious to stop them.  It's probably a pretty good strategy.

1Of course, I might have missed something.  Has anyone made a serious, thorough defense of modern financial engineering anywhere?

Taibbi vs. Obama

| Sat Dec. 12, 2009 9:23 PM EST

Matt Taibbi's long polemic about Barack Obama's economic team in the current issue of Rolling Stone has attracted its share of both support and derision in the blogosphere over the past couple of days.  Big surprise, eh?  Digby rounds up some of the reaction here.

Well, after reading the piece this afternoon you can basically count me among the supporters.  Is it over the top?  Of course it is.  Are there some matters of interpretation that I think Taibbi gets a bit wrong?  Sure.  For example: the conceit of the piece is that Obama chose to build his economic team around people who were acolytes of Bob Rubin, and this strikes me as misguided.  Basically, Obama chose to build his economic team around mainstream Democratic economists with previous government experience, and virtually all of these guys have ties to each other and therefore to Rubin.  That's every bit as bad — maybe worse, in fact — but it changes the problem from one of personal influence to one of systemic influence.  There's a real difference there.  What else?  Taibbi spends a lot of time on Rubin pal Michael Froman, who led Obama's search for an economic team during the transition, and this leads him to say that Tim Geithner was "hired to head the U.S. Treasury" by Froman.  But that's kind of silly.  At the cabinet level, Obama didn't need Froman's advice.  He chose Geithner all on his own.  Taibbi also commits one of my pet peeves, suggesting that the bailout may eventually cost taxpayers $23 trillion.  That's ridiculous.  He also fails to emphasize enough that virtually all of the bailout money was directed by the Fed and virtually all of it predates Obama's presidency.

But look: this is all just nitpicky bullshit.  Taibbi's piece is basically about how the finance industry owns Congress and the Obama administration, and that's basically true.  In fact, I have a piece coming out in a week or so in the print magazine that makes pretty much the same point.  My approach is different, and my language is all PG-rated, but my conclusions are pretty much the same.  The finance industry, through both standard lobbying and what Simon Johnson calls "intellectual capture," has, over the decades since Reagan was elected, convinced nearly everyone that what's good for Wall Street is good for America, and that what's bad for Wall Street would be catastrophic for America.  Everything else follows from that.

So, sure, I think Taibbi overstates Rubin's influence and thereby understates the real systemic problem here, but hey — it's his article, not mine.  Generally speaking, he gets his facts right and he gets the big picture right: Obama's team is nearly as dedicated to the economic status quo as Republicans are.  Ditto for many — though not all — Democrats in Congress.  It's worth reading.

POSTSCRIPT: One more thing.  Here's the final paragraph of Taibbi's piece:

What's most troubling is that we don't know if Obama has changed, or if the influence of Wall Street is simply a fundamental and ineradicable element of our electoral system. What we do know is that Barack Obama pulled a bait-and-switch on us. If it were any other politician, we wouldn't be surprised. Maybe it's our fault, for thinking he was different.

I don't think Obama has changed, or that he pulled a bait-and-switch.  In fact, I'd say his moderate, mainstream centrist approach to the economy was pretty clear during the campaign.  I vote instead for the influence of Wall Street being a "fundamental and ineradicable element of our electoral system."

Taibbi vs. Obama

Sat Dec. 12, 2009 8:43 PM EST

Matt Taibbi's long polemic about Barack Obama's economic team in the current issue of Rolling Stone has attracted its share of both support and derision in the blogosphere over the past couple of days.  Big surprise, eh?  Digby rounds up some of the reaction here.

Well, after reading the piece this afternoon you can basically count me among the supporters.  Is it over the top?  Of course it is.  Are there some matters of interpretation that I think Taibbi gets a bit wrong?  Sure.  For example: the conceit of the piece is that Obama chose to build his economic team around people who were acolytes of Bob Rubin, and this strikes me as misguided.  Basically, Obama chose to build his economic team around mainstream Democratic economists with previous government experience, and virtually all of these guys have ties to each other and therefore to Rubin.  That's every bit as bad — maybe worse, in fact — but it changes the problem from one of personal influence to one of systemic influence.  There's a real difference there.  What else?  Taibbi spends a lot of time on Rubin pal Michael Froman, who led Obama's search for an economic team during the transition, and this leads him to say that Tim Geithner was "hired to head the U.S. Treasury" by Froman.  But that's kind of silly.  At the cabinet level, Obama didn't need Froman's advice.  He chose Geithner all on his own.  Taibbi also commits one of my pet peeves, suggesting that the bailout may eventually cost taxpayers $23 trillion.  That's ridiculous.  He also fails to emphasize enough that virtually all of the bailout money was directed by the Fed and virtually all of it predates Obama's presidency.

But look: this is all just nitpicky bull****.  Taibbi's piece is basically about how the finance industry owns Congress and the Obama administration, and that's basically true.  In fact, I have a piece coming out in a week or so in the print magazine that makes pretty much the same point.  My approach is different, and my language is all PG-rated, but my conclusions are pretty much the same.  The finance industry, through both standard lobbying and what Simon Johnson calls "intellectual capture," has, over the decades since Reagan was elected, convinced nearly everyone that what's good for Wall Street is good for America, and that what's bad for Wall Street would be catastrophic for America.  Everything else follows from that.

So, sure, I think Taibbi overstates Rubin's influence and thereby understates the real systemic problem here, but hey — it's his article, not mine.  Generally speaking, he gets his facts right and he gets the big picture right: Obama's team is nearly as dedicated to the economic status quo as Republicans are.  Ditto for many — though not all — Democrats in Congress.  It's worth reading.

POSTSCRIPT: One more thing.  Here's the final paragraph of Taibbi's piece:

What's most troubling is that we don't know if Obama has changed, or if the influence of Wall Street is simply a fundamental and ineradicable element of our electoral system. What we do know is that Barack Obama pulled a bait-and-switch on us. If it were any other politician, we wouldn't be surprised. Maybe it's our fault, for thinking he was different.

I don't think Obama has changed, or that he pulled a bait-and-switch.  In fact, I'd say his moderate, mainstream centrist approach to the economy was pretty clear during the campaign.  I vote instead for the influence of Wall Street being a "fundamental and ineradicable element of our electoral system."

Advertise on MotherJones.com

Chart of the Day: Healthcare Spending

| Sat Dec. 12, 2009 2:43 PM EST

Yesterday the Office of the Actuary for Medicare released its estimate of national healthcare costs if the Senate healthcare plan is adopted.  Unsurprisingly, it shows that total spending will rise: the bill, after all, would cover about 30 million more people, so you'd expect spending to go up at first.

But there's more to the story — although you won't learn this by listening to Fox News.  The bill also reduces the growth in expenditures over time, and this means that within a few years we're covering a lot of additional people for no net increase in spending.  Jon Cohn explains:

The underlying trend is in the right direction. As more time passes, it's more likely we'll save money. Why do I say that? It has to do with two competing trends that explain how the Medicare Actuary arrives at its bottom line [i.e., more people being covered drives spending up, but increased efficiencies drive spending down –ed.]

....According to the projection, under reform the government will reduce its spending on Medicare significantly. Establishing a commission on the cost of Medicare will reduce it further, although not by much in the early years. And a tax on the most expensive health insurance plans will curb spending in the private sector.

Over time, the cumulative effect of these changes will grow, so that the gap between what we'd spend on health care without reform and what we'd spend with it will shrink. In 2019, the last year of the projection, the difference — that is, the amount of extra money our society devotes to health care — is a measly $23 billion out of more than $4.5 trillion total.

....But the actual price may be even lower, at least as time goes forward. The Medicare Actuary does not project beyond the 2019 window. But it's reasonable to assume that if the trend holds until 2019, it will hold for a few years beyond, to the point where medical care spending really would come down.

The Medicare Actuary might not go beyond 2019, and Jon might not go beyond 2019, but I'm happy to.  The chart above starts in 2014, when the spending provisions of the bill kick in, and then extends the trend line out to 2026.  It's based on nothing but a simple extrapolation, but it shows graphically what Jon and the Medicare Actuary talk about in words: a decade after the reforms kick in, we'd be providing healthcare to at least 30 million more people and spending no more than we would if we did nothing.  Unless you're a Republican, that's a pretty good deal.

Friday Cat Blogging - 11 December 2009

| Fri Dec. 11, 2009 3:04 PM EST

I've been fighting off my cats this week.  Domino has taken to jumping up on my desk and making a nuisance of herself because she wants me to vacate my chair so she can sleep in it.  I finally got tired of this, so I decided to put her pod on the desk and see if she'd be satisfied with that instead.  As you can see, it worked.  So then I put a pillow on the floor next to my desk, put the pod on the pillow, and drew her attention to that.  She seems very happy, and now mostly leaves me alone.

Unfortunately, as you can also see, nature abhors a vacuum and cats abhor an empty spot from which to annoy their humans.  Domino may be happy with her pod, but now Inkblot is the one jumping up on my desk trying to get me out of the chair.  He's never been attracted to pods, so I'm not sure what the solution is going to be if he keeps this up.  Suggestions?

China's Problems

| Fri Dec. 11, 2009 2:52 PM EST

Dan Drezner points to a piece in the New York Times about growing discontent with China in the developing world:

China has long claimed to be just another developing nation, even as its economic power far outstripped that of any other emerging country. Now, it is finding it harder to cast itself as a friendly alternative to an imperious American superpower. For many in Asia, it is the new colossus.

“China 10 years ago is totally different with China now,” said Ansari Bukhari, who oversees metals, machinery and other crucial sectors for Indonesia’s Ministry of Industry. “They are stronger and bigger than other countries. Why do we have to give them preference?”

To varying degrees, others are voicing the same complaint. Take the 10 Southeast Asian nations in the Association of Southeast Asian Nations, known as Asean, a regional economic bloc representing about 600 million people. After a decade of trade surpluses with Asean nations that ran as high as $20 billion, the surplus through October totaled a bare $535 million, according to Chinese customs figures, and appears headed toward a 10-year low. That is prompting some rethinking of the conventional wisdom that China’s rise is a windfall for the whole neighborhood.

Vietnam just devalued its currency by 5 percent, to keep it competitive with China. In Thailand, manufacturers are grousing openly about their inability to match Chinese prices. India has filed a sheaf of unfair-trade complaints against China this year covering everything from I-beams to coated paper.

I don't have any lengthy comment about this, other than the obvious: China looks scary to some people today because they project its current growth rates into the far future and then assume that everything else in the world will stay the same.  But as China becomes more highly developed, it's going to encounter the same problems maintaining growth that everyone else does.  What's more, it's going to start developing a lot more rivals, both overseas and nearby.  That's going to make its foreign policy way trickier than it is today.  They're already getting a taste of that in Copenhagen, where American representatives are getting occasional breathing spells from the usual attacks as climate activists bash China instead.  It's only going to get worse for them in the future.

The Problem From Hell

| Fri Dec. 11, 2009 1:45 PM EST

Over at Democracy in America, one of the Economist's teeming masses of anonymous bloggers1 takes a deeper look at Willis Eschenbach's claim that climate data was cooked in Darwin and concludes:

So, after hours of research, I can dismiss Mr Eschenbach. But what am I supposed to do the next time I wake up and someone whose name I don't know has produced another plausible-seeming account of bias in the climate-change science? Am I supposed to invest another couple of hours in it? Do I have to waste the time of the readers of this blog with yet another long post on the subject? Why? Why do these people keep bugging us like this? Does the spirit of scientific scepticism really require that I remain forever open-minded to denialist humbug until it's shown to be wrong? At what point am I allowed to simply say, look, I've seen these kind of claims before, they always turns out to be wrong, and it's not worth my time to look into it?

Well, here's my solution to this problem: this is why we have peer review. Average guys with websites can do a lot of amazing things. One thing they cannot do is reveal statistical manipulation in climate-change studies that require a PhD in a related field to understand. So for the time being, my response to any and all further "smoking gun" claims begins with: show me the peer-reviewed journal article demonstrating the error here. Otherwise, you're a crank and this is not a story.

This, of course, gets to the nub of the problem: climate deniers claim that the scientific community is engaged in a wide-ranging conspiracy (or, more subtly, "groupthink") designed specifically to keep them out of the literature.  The fact that their stuff isn't peer-reviewed has nothing to do with its quality, only with the fact that they aren't part of the community.

Now, I don't really know what the answer to this is.  It's a feature of every conspiracy theory that the very fact that experts don't take you seriously is evidence that the conspiracy exists.  So this isn't going to stop.  But what to do?  From a scientific point of view, you don't want to shut out legitimate dissent, but you also don't have the time to deal with every one of the hundreds of cranks who claim to have found an anomaly in your data.  From a public opinion point of view, you don't want to be so dismissive that even reasonable people think you're being a jerk, but you also don't want to give this stuff enough oxygen that you're implicitly saying it's legitimate criticism.  This tightrope is especially difficult to navigate since everyone's self interest (including mine) leads them in the direction of desperately preferring to believe that climate change isn't real.2  So you have to deal with that.

Climate change: it's the public policy problem from hell.  It's the scientific problem from hell.  It's the PR problem from hell.  If you had a classroom assignment to dream up a problem what would be almost impossible to solve given the realities of human nature and global institutions, climate change would be it.  It makes healthcare reform look like a walk in the park.

1And look: if you won't allow these guys to blog under their own names, shouldn't you also ban them from using the words "I" or "me," or from directly arguing with other anonymous Economist bloggers?  This really makes no sense.

2I can't tell you how many times I've wished the deniers were right.  I read their stuff with a combination of contempt for their crankery leavened with a teensy bit of hope that maybe they're onto something this time and the globe really isn't warming.  Because it would make a whole bunch of liberal projects a lot easier if greenhouse gases weren't a problem.