Kevin Drum - June 2010

Where Will Recovery Come From?

| Sat Jun. 12, 2010 11:17 AM EDT

The LA Times does a good job framing yesterday's economic news:

Retail sales unexpectedly tumbled in May in the biggest drop in eight months, raising a vexing question for the nation's still-shaky economy: If consumers are not going to lead the way back to prosperity and additional stimulus spending by the government isn't likely, what's going to keep the recovery alive?

Last month, Americans slashed spending on everything from cars to clothing to building materials, the Commerce Department reported Friday. Auto sales fell almost 2%, a major drop for a single month.

I'm probably oversimplifying, but whenever I see news like this I keep thinking the same thing: the rich can only do so much. Recovery has to be built primarily on the backs of middle class consumer spending, and the only way for that to rise steadily is for (a) employment to go up, (b) wages to go up, (c) borrowing to go up, or (d) savings to go down. But employment is forecast to remain sluggish, wages are pretty flat and likely to remain so (thanks to high unemployment), consumers are still deleveraging, and although savings rates have recovered, they need to recover more to get back anywhere near historical levels. Add to that the likelihood that housing prices are going to drop some more now that the new home buyer's tax credit has expired, and there's really nothing left to drive long-term economic expansion. The millionaire class may be recovering nicely, but they just don't spend enough to do the job on their own.

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Friday Cat Blogging - 11 June 2010

| Fri Jun. 11, 2010 2:09 PM EDT

I took these pictures a couple of days ago. Both Inkblot and Domino were absolutely entranced by something in this bush in our backyard, but for the life of me I can't figure out what it was. They stared, they got up on their hind legs and thought about climbing up the trunk, they meowed, they even ignored the camera. And me? I looked and looked and couldn't see anything. Maybe it was a cleverly camouflaged green grasshopper. Or maybe it was something from the cat dimension. Hard to say.

And I have a special extra treat for you today! Would you like to see a picture of the headquarters of Mother Jones' global publishing empire in beautiful downtown San Francisco? No? Well how about a picture of a cute little girl holding a cute little orange kitten inside the headquarters of Mother Jones' global publishing empire in beautiful downtown San Francisco? That's what I thought. Just click here.

UPDATE: Aha! Turns out I wasn't looking up high enough. But a few minutes ago Inkblot was outside looking entranced once again, and I found what he was looking at. Click for photographic evidence of nature red in tooth and claw.

Calling a Truce in the Culture Wars

| Fri Jun. 11, 2010 2:01 PM EDT

Mitch Daniels says the next president will "have to call a truce on the so-called social issues. We’re going to just have to agree to get along for a little while" until the economy improves. Ramesh Ponnuru comments:

A lot of people will cheer that statement: Truces are usually popular, and most people see the economic issues as more important than the social ones at this moment. But I'm not sure how a truce would work. If Justice Kennedy retired on President Daniels's watch, for example, he would have to pick someone as a replacement. End of truce.

Point taken. But the funny thing is that we already have a president who's called the truce Daniels wants to see: Barack Obama. That doesn't mean no one cares about social issues anymore, it just means that Obama has done everything humanly possible to keep them dialed down, both during the 2008 campaign and during his 17 months in office. And for the most part he's succeeded.

(For better or worse. His sluggishness on DADT and other LGBT issues, for example, is directly due to his much broader desire to avoid culture war issues and concentrate instead on things like economic stimulus, healthcare, financial reform, and foreign policy.)

Obama's strategy, in general, is to (a) use soothing rhetoric that acknowledges both sides in culture war issues, and (b) do his best to avoid taking substantive action on them. So far he's managed it pretty well.

Chart of the Day: The World's Worst Brand

| Fri Jun. 11, 2010 12:42 PM EDT

Via Felix Salmon, this chart from BrandIndex shows the changing fortunes of three global companies that have fallen on hard times lately. The score comes from responses to the question "If you've heard anything about the brand in the last two weeks, was it positive or negative?" BP is still lagging a bit behind long-term champ Goldman Sachs, but they're catching up fast. Give it another few days and they should be the least popular brand in the world.

Magical Thinking From the GOP

| Fri Jun. 11, 2010 12:21 PM EDT

Jon Chait rips into Lamar Alexander's Wall Street Journal op-ed about energy today, and I won't try to summarize it. Go read it and have a laugh. Still, I have to disagree with Jon. The best part of the op-ed is actually this sentence from bullet point #6:

Find a way for utilities to make money from the CO2 produced by their coal plants.

Shazam! There's just gotta be something we can do with all that CO2! I dunno. Freeze it and sell it to Spinal Tap for their live shows? Mount a campaign to increase soda sales a hundred million percent? Build a time machine and then hire some alchemists to figure out how to turn it into liquid gold?

Honest to God, where does this stuff come from? What's worst about it is that, relatively speaking, Alexander is one of the good guys. As Chait says, "He's one of the moderate Republicans! Most of them just deny the science of climate change altogether. The moderate position is that we can fix the problem via magic."

The Return of Zero Based Budgeting

| Fri Jun. 11, 2010 11:55 AM EDT

Stan Collender says that, like the shark from Jaws, Zero Based Budgeting is back. By itself, that would be boring. But he adds this interesting twist:

Georgia Republican Governor Sonny Perdue is being heavily criticized by Tea Partiers for vetoing a bill this week that would have imposed zero based budgeting in his state. Perdue's reasoning was that ZBB didn't work the last time it was tried in the state — when Democratic Governor Jimmy Carter proposed it....Doesn't this show how much GOP politics have changed? Perdue's primary reason for vetoing ZBB — that it's a failed Democratic idea — would have been more than sufficient before.

I dunno. I guess they've forgotten about Jimmy. Or something. But frankly, this fits perfectly into the tea party worldview because it's (a) simplistic and superficially appealing, and (b) stupid. The reason ZBB doesn't work is simple human nature: if you ask a department head to justify her entire budget from scratch, she'll run around manically the first year putting together a gigantic document that does just that. Much time will be spent, actual work will be sacrificed, and believe you me, the budget will be justified. And the next year? No problem. Just pull out last year's doorstop, edit a few things here and there, and drop it on your superior's desk. Done.

It's a dumb idea. Perdue is right to leave it on the ash heap of history where it belongs.

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The World of Hypertasking

| Fri Jun. 11, 2010 11:32 AM EDT

Is manic multitasking good or bad for us? I don't know, but Tyler Cowen says he's suspicious of research showing reduced performance for hypertaskers because they always impose a particular kind of multitasking on the test subjects:

I'm simply not convinced or even moved in my priors by these studies. I can't operate a German Waschmaschine (imposed on me), and that's without an internet connection running in the background.1 Nor would I do well if confronted by, say, the open internet windows of Brad DeLong, or his devices, whatever they may be, and in the broader scheme of things surely he counts as intellectually close to me. Yet overall my life runs quite smoothly.

To sound intentionally petulant, the only multitasking that works for me is mine, mine, mine! Until I see a study showing that self-chosen multi-tasking programs lower performance, I don't see that the needle has budged.

Obviously there's something to this. When you choose a particular kind of multitasking and adapt to it, your performance might be dramatically different than it is when you're multitasking in an unfamiliar environment that someone else dictates.

Still, I'd caution against trying to draw too many conclusions from personal experience, and that goes double for someone like Tyler. The problem is that Tyler is not just a smart guy. He's not just a top 1% smart guy. He is, as near as I can tell, approximately a top thousandth of one percent smart guy. He's off the charts smart, and that means his brain is nowhere within light years of being a good proxy for the vast majority of the rest of us. In diluted form, this also applies to the kind of people who read this blog (or Tyler's): we might not all be supergeniuses, but we skew pretty bright and educated. Our experiences, our brains, our level of self-control, and our demographic breakdown just isn't typical — and it's double plus untypical of your average teenager.

Beyond that, of course, most of us are also pretty poor judges of our own performance. The problem with multitasking is that most people think they're pretty good at it, just like most people think they're above average drivers. But you might not be! Just sayin'.

Now, this works in the opposite direction too. Nick Carr, who wrote The Shallows, thinks his attention span has diminished since he started using the internet heavily. Me too. But guess what? Maybe it's just because we're aging and our interests have changed. Or maybe we're engaging in rose-colored hindsight, overestimating just how focused we were in the past. Who knows?

What I can say is that I'm pretty firmly in the camp that thinks the internet and its increased focus on multitasking almost certainly has both a good and bad side. Reduced attention span is bad. Gracefully handling frequent interruptions is good. Why pretend otherwise? But these discussions always seem to break down pretty quickly between one side that thinks a bunch of fogeys are telling kids to get off their lawns and an opposite side that thinks we're becoming a nation of distracted goof offs. I just don't get this. Research is good. We should do more of it. That research is almost certain to suggest both positives and negatives from heavy use of the internet and heavy investment in multitasking, and there's not much point in scoffing at whichever half you happen to dislike. We should welcome research that helps us understand what's going on, and hopefully starts to give us some guidance about how each of us personally can figure what works and what doesn't in a modern, hyperactive environment that, let's face it, isn't going to go away. Just don't expect all the news to be good.

For more, see Jonah Lehrer here. He has a nice discussion of the general issues, one that distinguishes between internet use and multitasking, along with a reply from Carr.

1I'm actually not sure what this example has to do with anything, to be honest. I'd probably have a hard time figuring out how to work a German washing machine too. Still, consider the double-sided nature of what this might mean. On the one hand, some things in life are just hard to figure out whether or not you're multitasking. On the other hand, perhaps this suggests that although people can find a multitasking routine that suits them for day-to-day use, it also makes it harder for them to respond to new and unforeseen problems that require them to tear themselves away from their routine. Maybe.

For another view on this, talk to any computer programmer and ask them about interruptions. Be prepared for an earful when you do, though.

Recession Finally Over, Just Not For You

| Fri Jun. 11, 2010 9:49 AM EDT

Good news! The recession is over:

Unemployment remains at near-record levels, and most Americans are struggling to rebuild their battered finances. But the country's wealthy are once again doing just fine, thank you.

....Last year the number of millionaires bounced up sharply, new data show. And after that decline and rebound, the millionaire class held a larger percentage of the country's wealth than it did in 2007.

....The [Boston Consulting Group's] latest report on wealth, one of the first broad depictions of how wealth shifted in 2009, indicates that the number of U.S. households with at least $1 million in "bankable" assets climbed 15% last year to 4.7 million after tumbling 21% in 2008.

Well, you know what I mean: the recession is over for everyone who counts. As for the rest of you, it's time to suck it up. We need austerity, people, not out-of-control spending. So stop whining, OK?

Balls and Strikes and the Roberts Court

| Fri Jun. 11, 2010 5:00 AM EDT

During his confirmation hearings for the Supreme Court in 2005, John Roberts assured senators that his job as a judge was merely "to call balls and strikes." It was a familiar, homey allusion, deliberately designed to suggest that ideology didn't — or anyway, shouldn't — play a role in deciding cases. He would be interpreting the plain meaning of the law, not making up his own.

But as fond as conservatives are of this kind of imagery, it's mostly a myth. Recently the Constitutional Accountability Center took a look at Supreme Court rulings during the Roberts era, but instead of looking at hot button social issues they looked at the kinds of rulings that, although they get less attention, actually take up the bulk of the court's time: those involving business and corporate law. The results were pretty startling.

A good guidepost to these rulings is the position taken by the United States Chamber of Commerce, which bills itself as the "voice of business." Roberts's record? In the past five years he's sided with the Chamber 70% of the time. In close cases he's sided with the Chamber a stunning 90% of the time. As an umpire, it turns out that if you're filing a case against the business community Roberts has declared a strike zone only a few inches wide.

And Roberts isn't alone. Samuel Alito and Antonin Scalia also sided with the Chamber over 70% of the time. (Alito sided with the Chamber a stunning 100% of the time in close cases.) Clarence Thomas took their side 68% of the time. And "centrist" Anthony Kennedy? He clocked in around 66%.

The kinds of regulatory issues involved in these cases are, in the long run, more important than all but the most explosive culture war cases. They include things like Citizens United, which allowed corporations to spend unlimited sums in political campaigns; Ledbetter v. Goodyear, which effectively eliminated the right to sue for race or gender pay discrimination; and Exxon v. Baker, which slashed the damage award in the Exxon Valdez oil spill case by 80%. And those are only the big ones. You can add in hundreds of other, smaller cases that have slowly but steadily chipped away at the right to hold corporations accountable over the past three decades.

And what about liberals on the court? Well, Souter and Breyer sided with the Chamber nearly half the time, and even Stevens and Ginsburg favored business interests more than a third of the time. The lesson here is that, contrary to what conservatives want everyone to think, they don't just "call balls and strikes" or "rely on the plain meaning of the constitution." Ideology matters. In fact, when it comes to business issues, conservative judges make far more fervent ideologues than liberals. Caveat emptor.

UPDATE: Want to read more about the whole "balls and strikes" analogy? Sure you do! Check out Aaron Zelinsky's Yale Law Journal essay, "The Justice as Commissioner: Benching the Judge-Umpire Analogy," where he says Supreme Court justices aren't like umpires, they're more like the commissioner of baseball.
 

Is the BP Oil Spill Good for Corn Farmers?

| Fri Jun. 11, 2010 12:49 AM EDT

The BP oil spill is bad enough already. But I'm here to make it even worse. Here is Robert Bryce in Slate today:

The most disgusting aspect of the blowout in the Gulf of Mexico isn't the video images of oil-soaked birds or the incessant blather from pundits about what BP or the Obama administration should be doing to stem the flow of oil. Instead, it's the ugly spectacle of the corn-ethanol scammers doing all they can to capitalize on the disaster so that they can justify an expansion of the longest-running robbery of taxpayers in U.S. history.

....Why does the ethanol business need federal help? The answer is so disheartening that after five years of reporting on the corn-ethanol scam, I find it difficult to type, but here goes: The corn-ethanol industry needs to be bailed out by taxpayers because the industry was given too much in the way of subsidies and mandates. And now the only way to solve that problem is — what else? — more subsidies and mandates. The BP mess provides the industry with the opening it needs to win those subsidies from the federal government.

....The strongest indication that an ethanol bailout is imminent came last Friday when Agriculture Secretary Tom Vilsack (former governor of Iowa, the nation's biggest ethanol-producing state) said, "I'm very confident that we're going to see an increase in the blend rate." The "blend rate" refers to the federal rule that limits ethanol blends to no more than 10 percent for standard automobiles. Commonly known as "E10," the fuel contains 90 percent gasoline and 10 percent alcohol. The Obama administration bailout, which would come via approval from the EPA, will likely allow gasoline retailers to blend up to 15 percent ethanol into U.S. gasoline supplies.

Three years ago, responding to an increase in corn ethanol subsidies, I wrote: "Can anyone think of any other single policy that has as many simultaneous baneful effects? Are we complete morons?" The answer, apparently, is yes. Read Bryce's whole piece to get the entire grim story.