• Glenn Beck’s Melodrama


    Since Glenn Beck is in the news thanks to his trillion-person rally this weekend, it’s as good a time as any to ask a naive and unanswerable question. But here it is anyway: When did our taste in populist rabble-rousers decline so badly? Or has it? I don’t watch Beck very often, but I catch his act every once in a while, and the thing that always strikes me is how obviously phony it is. This isn’t a subtle thing, either. Every inflection is so plainly calculated that it’s like watching an old-time silent melodrama. 

    Of course, my experience with populist rabble-rousers is slim. Maybe William Jennings Bryan sounded the same way. Ditto for Billy Sunday and Father Coughlin and Joe McCarthy.

    But I still don’t quite get it. I know that conservatives used to have similar complaints about Bill Clinton’s shows of emotion, which they considered phony. But whether they were or not, he at least made them seem genuine. Beck almost seems to deliberately go out of his way to make his emotions obviously artificial.

    I dunno. Is this just the standard veneer of revivalist preachers, which I have no experience with? Are there conventions to this kind of thing, the way that opera singers emote conventionally and everybody knows how to interpret it? Or what? I just don’t get who it is who buys this stuff. To me, Beck practically seems to be openly mocking his audience.

  • The Worst Possible Greenhouse Gas Regulation


    Jon Chait notes a recent poll showing strong public support for EPA regulation of greenhouse gases:

    The paradox of climate policy is that the most popular policy responses are those that hide costs from consumers. Cap and trade is more popular than a carbon tax, and regulation is more popular than [cap and trade]. But cap and trade is more efficient than regulation, and a carbon tax is more efficient than cap and trade.1

    Well, yeah. The masses are easily fooled, aren’t they? That’s why credit card companies hide their fees, telephone companies charge you for an unlisted number, and airlines are willing to do almost anything to raise revenue other than increase the headline price of flying from one city to another.

    In any case, Jon takes this as an example of where American democracy ought to work: sure, the masses are ill-informed, but elites know better, and Congress should respond to those elites and end up substituting a carbon tax for EPA regulation.

    Maybe. But it depends on your definition of “elite,” doesn’t it? In the case of carbon regulation, the only elites who really matter are big corporations, and I think they’ve made the tactical calculation that EPA regs are less bad than either a carbon tax or a cap-and-trade system. They might change their minds at some point, but EPA is the devil they know, and its reach has known boundaries. Start mucking around with cap-and-trade and you’ve created an entirely new monster that you might not be able to control. So my guess is that Congress is responding to elites just fine. Unfortunately, as they usually do, they’re responding to the elites that actually matter, not the chattering classes that Jon is thinking of.

    1As longtime readers know, I’m not actually convinced of this. In a real-world comparison, I think cap-and-trade might actually be a better, more efficient choice than a straight tax. But I’ll leave that aside for the moment.

  • What Makes a Great Teacher Great?


    The LA Times has provoked the wrath of local teachers by posting a database of teacher performance based on a metric called “value added,” a measurement that supposedly controls for the quality of incoming students, English proficiency, individual behavior problems, and so forth. (Q&A here.) But a new EPI report says that value-added sucks anyway:

    One study found that across five large urban districts, among teachers who were ranked in the top 20% of effectiveness in the first year, fewer than a third were in that top group the next year, and another third moved all the way down to the bottom 40%. Another found that teachers’ effectiveness ratings in one year could only predict from 4% to 16% of the variation in such ratings in the following year. Thus, a teacher who appears to be very ineffective in one year might have a dramatically different result the following year. The same dramatic fluctuations were found for teachers ranked at the bottom in the first year of analysis.

    Education expert Kevin Carey agrees that value-added is a lousy metric:

    But, and this is an enormous caveat, everything else we currently use is worse. A teacher’s years of experience, their education credentials, their certification status, the prestige of their college or their college GPA, even in-class observations. None of these measures does as good of a job at predicting a student’s academic growth as a teacher’s value-added score. Yet, we continue to use these poor proxies for quality at the same we have such passionate fights about measures of actual performance.

    Still, it remains true that virtually everyone agrees that value added is “not all that great” (Carey’s conclusion). So what should we do instead? Carey says we just don’t know. We have lots of minimum standards for teaching quality (no uncertified teachers, no violence, no classroom drunks, no overuse of mimeographed worksheets, etc.) but we don’t know much about what makes a teacher stellar:

    What kind of teaching is as good as mimeographed worksheets are bad? We don’t really know. The qualifications-and-competence mindset doesn’t allow us to know. We can’t see it, and so gradually we allow policies and institutions and organizational cultures to evolve that pretend it doesn’t exist.

    ….There’s a natural tendency to proceed from here to the conclusion that we need to intensively study [great teachers like LA’s Zenaida Tan] so we can help others be more like them. And we should, this will be valuable research. But we ought not expect it will produce a new list of qualifications and competencies to which every teacher must adhere. Just as there are many different kinds of great writers and lawyers and artists, so too does great teaching come in all manner of variations. This should be seen as entirely positive for the teaching profession. The jobs worth having — and worth paying for — are those that can’t be wholly reduced to definable rules.

    Yet the union that purports to represent Tan has done nothing but oppose the creation of the only measures that accurately identify her value as a professional. In doing so, it helps depress the public understanding of all teachers as professionals. If the LA Times hadn’t performed these value-added calculations and published them, who would have? How long do great teachers have to wait to be recognized? How long are they going to be held hostage to a mindset that pretends they don’t exist?

    This is no surprise, I guess, since we have so little idea of what makes someone great at any profession. What makes a product manager great? Or a CEO? Or a magazine editor? Or a blogger? No one knows. If you go to the business section of your local Barnes & Noble you can find a hundred books with a hundred different vague and unhelpful answers based on little more than the author’s instincts. Talk to business professors and you’ll get some different answers, but probably not ones that are an awful lot more reliable.

    But the problem with teachers is that assessing their performance isn’t just hard, it’s even harder than any of those other professions. Product managers interact closely with a huge number of people who can all provide input about how good they are. CEOs have to produce sales and earnings. Magazine editors and bloggers need readers.

    But teachers, by definition, work alone in a classroom, and they’re usually observed only briefly and by one person. And their output — well-educated students — is almost impossible to measure. If I had to invent a profession where performance would be hard to measure with any accuracy or reliability, it would end up looking a lot like teaching.

    So this means we end up using things like value-added, even though we know they’re not very good. What other choice do we have, after all? Sara Mead recommends greater reliance on “validated and reliable observational tools, such as the Classroom Assessment Scoring System (CLASS), that look at teacher classroom behaviors and measure the extent to which teachers are implementing behaviors linked to improved student outcomes,” and that sounds like a good idea to me. But even if this works, it will take years or decades to produce usable results. What do we do in the meantime?

    The criticisms of value-added seem compelling. At the same time, if a teacher scores poorly (or well) year after year, surely that tells us something? At some point, we either have to use this data or else give up on standardized testing completely. It just doesn’t make sense to keep using it if we don’t bother taking the results seriously.

  • Obama and the Surge


    Marc Ambinder comments on Barack Obama’s primetime Iraq speech tonight:

    Now then: will he take the bait dangling from Republican hooks and give President Bush credit for the surge? He will telephone President Bush earlier in the day, presumably to thank the president for his judgment in a way that does not acknowledge that his own opposition to the surge was (in retrospect) incorrect. Officials make the argument that people read a lot into the surge, and that a number of different factors, some of them independent of the surge, contributed to the taming of the insurgency. Obama won’t get into those arguments there, but it will be interesting to see how he deals with the historical narrative that has President Bush mistakenly choosing to go to war in Iraq and then supporting a strategy that brought about its close more quickly.

    Since it’s a slow news day, let’s mull this over. First take: can you imagine anything that would piss off the liberal base more than acknowledging that the surge worked? You’d be able to hear the steam coming out of lefty ears from sea to shining sea. Second take: Even if he decided to do it anyway, would it be worthwhile? If he wants to be honest, Obama would have to at least mention all those other factors that Ambinder mentions, namely that the reduction in violence in 2007 was quite clearly the result of 4 S’s: Surge, Sadr ceasefire, Sectarian cleansing, and Sunni Awakening. But is this too much to talk about? And would it seem churlish to acknowledge the surge and then immediately try to take some of the credit away from it?

    Third take: Forget it. Not only would mentioning the surge piss off liberals, but it would also imply some kind of “victory” in Iraq, and surely Obama can’t be dimwitted enough to come within a light year of claiming that, can he? Of course not. Not with sporadic violence back in the news and Iraqi leaders still stalemated on forming a government five months after the March elections.

    So I’ll predict no direct mention of the surge. And since I’m usually wrong about this kind of stuff, I suppose you should try to lay down some money right away on Obama mentioning the surge tonight. But I still don’t think he’ll do it.

    POSTSCRIPT: And now for a usage question. What’s the right way to refer to four things that start with the letter S? Should it be 4 Esses? 4 Ses? 4 S’s? Or what? They all seem pretty awkward to me.

  • The Unlisted Phone Number Scam


    David Lazarus complains about one of his favorite bugaboos today, and since it’s one of mine too I’ll quote him:

    This month, Time Warner Cable more than doubled its fee for an unlisted number to a whopping $1.99 a month, or nearly $24 a year….That’s a recurring fee — now one of the highest of its type in the telecom industry — for something Time Warner isn’t doing for customers.

    ….Time Warner’s fee is all the more remarkable because the company doesn’t produce its own phone book. It pays Sprint to compile all its customers’ names and numbers, and to then pass them along to whichever phone company dominates a particular market for inclusion in that firm’s directory. Just to be clear: That’s $1.99 a month not to be in a phone book that Time Warner doesn’t even publish.

    AT&T’s and Verizon’s fees are a little more understandable. After all, they make extra cash selling ads in their phone books. The more people who choose not to be listed, the less valuable the directory becomes to advertisers, so the phone company wants to discourage people from leaving.

    But Time Warner isn’t in the phone book business. Its recurring fee for unlisted numbers is a money grab, pure and simple.

    This is one of my pet peeves not because I have to pay this fee — my phone number isn’t unlisted — but because it’s symptomatic of the looking glass way that we treat privacy in this country. Lazarus points out that the cost of unlisting a phone number is basically zero since it’s just a matter of flipping a flag in a database, and that the only reason Time Warner gets away with charging so much is because that’s what the market will bear. People who want unlisted phone numbers are willing to pay $24 per year in protection money to get one.

    For fly-by-night operators, this is annoying but fine. They have the right to collect information and publish it, whether it annoys me or not. But phone companies are regulated monopolies. If I want phone service, I have no choice but to contract with a tiny number of suppliers who then have privileged information about me. Should I also pay them protection money for withholding my Social Security number or my date of birth from their phone books? After all, their access to that data is all due to their privileged position too.

    As a society, we value privacy. We shouldn’t allow regulated utilities to decide who gets it and who doesn’t. Let the phone companies make money by selling services, not protection.

    (Also worth noting: as cell phones and Skype and Google Phone become more popular, the only people who will have to pay for unlisting their phone numbers are increasingly likely to be the old and poor. Do we really want to endorse what’s basically a $24/year tax on the most vulnerable segments of the population?)

  • What Happens When Summer is Over?


    Gallup got a lot of attention today for a news release reporting that the Republican lead over Democrats in the generic congressional poll had blown out from three points last week to ten points this week. It’s only one poll, but it was a pretty dramatic result.

    So I went over to Pollster.com to see what their latest poll aggregation showed. It’s on the right, with the period from June through August highlighted in pink for both 2009 and 2010. It’s not instantly obvious to the eye, but it turns out that pretty much the same thing happened both last year and this. During the three months of summer in 2009, Republicans went from -2 to +1, a change of three points. This year they went from +1 to +5, a change of four points.

    So what does the recent change mean? I don’t know, but if I had to guess I’d say it shows that conservative hysteria during a slow news season is a pretty effective attention getter, at least in the short term. Last year it was death panels and frenzied town hall meetings. This year it’s the Ground Zero mosque and a Glenn Beck rally on the Mall.

    So will they lose some of this lead as summer winds down and there’s a little more real news to report, as they did last year? Beats me. But I wouldn’t be surprised. This is shaping up to be a bad year for Democrats, but once August is over, everyone goes back to work, and the real campaigning begins, things might tighten back up a bit.

  • How Immigration Boosts Your Pay


    Felix Salmon points to a new research note from the San Francisco Fed about the effects of immigration on U.S. employment and productivity. The bottom line results are interesting: the author says that immigration has no effect on employment (“the economy absorbs immigrants by expanding job opportunities rather than by displacing workers born in the United States”); it has a strong upward effect on average income (“total immigration to the United States from 1990 to 2007 was associated with […] an increase of about $5,100 in the yearly income of the average U.S. worker”); and immigration improves an economy’s total factor productivity dramatically.

    Like I said: pretty interesting. But what I thought was even more interesting was the explanation that followed. Why does immigration increase average income? How does it increase productivity and efficiency? Here’s the scoop:

    The analysis begins with the well-documented phenomenon that U.S.-born workers and immigrants tend to take different occupations….Because those born in the United States have relatively better English language skills, they tend to specialize in communication tasks. Immigrants tend to specialize in other tasks, such as manual labor. Just as in the standard concept of comparative advantage, this results in specialization and improved production efficiency.

    If these patterns are driving the differences across states, then in states where immigration has been heavy, U.S.-born workers with less education should have shifted toward more communication-intensive jobs. Figure 3 shows exactly this….In states with a heavy concentration of less-educated immigrants, U.S.-born workers have migrated toward more communication-intensive occupations. Those jobs pay higher wages than manual jobs, so such a mechanism has stimulated the productivity of workers born in the United States and generated new employment opportunities.

    What’s really striking about this is that the very mechanism that provides the productivity boost — the fact that immigrants don’t speak English well and therefore push native workers out of manual labor and into higher-paying jobs — is precisely the thing that most provokes the immigrant skeptics. They all want immigrants to assimilate faster and speak English better, but if they did then they’d just start competing for the higher paying jobs that natives now monopolize.

    The usual caveats apply here. This is only one study. (Well, two actually, but still.) And in order to generate useful results the authors have to control for a whole menagerie of variables that can muck things up. There’s always a chance that some important variable got missed or that another one got controlled for incorrectly. So don’t take this as the last word. It does, however, join a growing literature that suggests immigration has no negative effect on wages and might actually have a positive effect. Interesting stuff.

  • Papers, Please


    Megan McArdle writes about the loan paperwork she had to fill out before buying a home recently:

    The underwriting standards have been very tight, in terms of the paperwork I have had to produce — in order to use money that we received as wedding gifts as part of our downpayment, for example, I needed to produce a copy of our license, an invitation, and the announcement from the Times.

    Say what? Just the fact that you have money in a bank account isn’t good enough? And what would have happened if the Times had declined to print an announcement?

  • End the FDIC!


    Mike Konczal dips into 15 years worth of financial regulation advice from the Cato Institute and is impressed with their consistency:

    With one exception [], there are no new ideas on financial market regulation as a result of the financial crisis. None….You would have no idea that we’ve just experienced the most major financial crisis since the Great Depression by reading their high-level policy suggestions. How cool is that?

    The only change is that in 2009 they aren’t calling for abolishing FDIC insurance….They do that every year except their latest version. I wonder why they’ve backed off that all of a sudden? Did the financial crisis show a lack of panic in the commercial banking system, and they suddenly support FDIC insurance? Or are they biting their tongues and sitting it out for a half decade or so before calling for it to be dismantled again?

    I’m guessing the latter. Still, I’m disappointed that they’ve turned out to be so craven on this vital issue of libertarian principle.

  • Who You Calling Racist?


    Is the Tea Party movement fundamentally bigoted? Ditto for modern Republicanism, which increasingly takes its cues from the tea partiers. Bob Somerby has been unhappy with sweeping liberal charges of racism against the entire movement for some time, and today, responding to a Digby post about Glenn Beck’s rally this weekend, he says so again:

    Obviously, it wasn’t an all-white audience, but it felt good to say so (or something). Most people weren’t in lawn chairs, but that conveys an image….That said, we were most struck by Digby’s focus on skin color, a mocking focus which then extended into her readers’ comments. (Along with mocking comments about the age and clothing of the people who attended Beck’s event, including some first-hand observations.)….The people at the event were pink skinned; they are also “dumb as dirt,” we were told in an earlier post. Sorry, but this is the type of language adopted by haters worldwide, language which will be aimed at hundreds of thousands or millions of folk at a time.

    Calling broad swathes of the electorate dumb and bigoted is probably not a great vote-getting strategy. But is it true? Here is Christopher Hitchens for the defense:

    One crucial element of the American subconscious is about to become salient and explicit and highly volatile. It is the realization that white America is within thinkable distance of a moment when it will no longer be the majority.

    ….This summer [] has been the perfect register of the new anxiety, beginning with the fracas over Arizona’s immigration law, gaining in intensity with the proposal by some Republicans to amend the 14th Amendment so as to de-naturalize “anchor babies,” cresting with the continuing row over the so-called “Ground Zero” mosque, and culminating, at least symbolically, with a quasi-educated Mormon broadcaster calling for a Christian religious revival from the steps of the Lincoln Memorial.

    What is the right way to talk about this? I think Bob has a point: calling people stupid racists just isn’t very bright. For the most part it probably isn’t true, and even to the extent it is, it’s bad electoral politics to harp on it. Calling an individual person racist for some particular action is fine if it’s justified. Ditto for specific groups with overtly racist agendas. But entire movements? Probably not.

    On the other hand, can we talk? You’d have to literally be blind not to notice that the Fox/Rush/Drudge axis has been pushing racial hot buttons with abandon all summer. There’s all the stuff Hitchens mentions, and you can add to that the Shirley Sherrod affair, the continuing salience of the birther conspiracy theories, the New Black Panthers, and Beck’s obsession with Barack Obama’s supposed sympathy with “liberation theology.” Are we supposed to simply pretend that it’s just a coincidence that virtually every week brings another new faux controversy that just happens to appeal to the widespread, inchoate fear of a non-white country that Hitchens writes about?

    For what it’s worth, I think this is a genuinely hard question. I don’t feel like putting my head in the sand and pretending that the leaders of the conservative movement don’t know exactly what they’re doing. On the other hand, like Bob, I’m not really on board with dismissing half the country as bozos and racists either.

    So how do you thread this needle? How do you talk honestly about all the racially charged paranoia oozing out from conservative leaders without also implicating half the country as willing racists? I’m not sure.

  • A Liberal Version of Social Security Private Accounts


    Andrew Biggs, a conservative who served on George W. Bush’s Social Security commission, has gotten some attention for writing a piece in National Review today explaining that privatization is no cure-all for Social Security’s problems:

    Personal accounts are a valid choice, and one I’ve supported in the past and continue to support. But accounts aren’t exclusive to tax increases or benefit cuts; they don’t, as I’ll explain, reduce the need for these other choices. One problem for the Bush administration’s reform drive in 2005 was that many congressional Republicans had bought into the idea that accounts reduce or eliminate the need for tax increases or benefit cuts. Finding out they don’t may have taken some wind out of their sails. Because of this, combined with some pretty shameless demagoguery from the left, Bush’s reform ideas didn’t even come up for a vote.

    Shameless demagoguery? Hold on a second. The left was indeed opposed to Bush’s plan, but a lot of the opposition was based on the fact that it was sold as a costless panacea, exactly the problem that Biggs himself identifies. My own position was (and is) that Social Security should simply be left alone for the time being, but that there are also some legitimate reasons to bite the bullet and shore up its financial position now — and if we do, “there’s nothing wrong with private accounts in theory as long as they’re properly accounted for, tightly regulated, and honestly funded.”

    Don’t believe it? Click the link and my proposal for Social Security reform with private accounts is right there. Would liberals accept this if it were presented honestly? I don’t know, because no one has ever tried it that way. But they might. The problem is that “honestly” almost unavoidably includes some tax increases, and that kind of honesty just isn’t acceptable to current Republican dogma. So we’re stuck. There’s the dishonest approach, which Democrats won’t accept because it’s dishonest, and there’s the honest approach, which Republicans won’t accept because it’s honest. It’s hard to see the middle ground here.

  • Meg’s Millions


    Ed Kilgore writes that eBay zillionaire Meg Whitman, currently running for governor of California, can present herself to voters as a moderate without suffering the wrath of the state’s famously rabid Republican right wing:

    Whitman has an advantage over most Republicans in choosing her general election strategy in this year of conservative vengeance against moderation: her virtually limitless money, which will bankroll not only her own campaign, but the get-out-the-vote efforts crucial to the entire GOP ticket. This has put something of a damper on right-wing demands on the former eBay exec at the Republican confab.

    ….Uniquely in the Republican politics of 2010, Meg Whitman has the freedom to swing towards the center if she wishes, so long as she keeps her checkbook open and meets the easy test of being more orthodox than Arnold Schwarzenegger. Conservatives may grouse and pine for a mighty warrior to smite the anchor babies and the tree-huggers and the abortionists of the Golden State, but they are signed on to eMeg’s wild money-fueled ride, wherever her cold-blooded pollsters take them.

    That’s true. But Meg has another advantage too: the virtual invisibility so far of her Democratic opponent. Here’s longtime state watcher George Skelton:

    There was a blond sitting at a Lake Tahoe waterfront bar recently who had Jerry Brown’s problem nailed. “Millions of Democrats are waiting for a reason to vote for Jerry Brown and he isn’t giving them one,” she said, interrupting the tortured analyses spewing from me and some other political junkies.

    The woman didn’t want to be identified by name. But, OK, she’s my wife. And she’s usually right about these things, largely because she has a normal life outside politics and punditry.

    I’d amend her assessment to include not only Democrats but also independents and moderate Republicans. They’re all waiting for the Democratic candidate to get a move on and finally tell them why he’d be a better governor than Republican political novice Meg Whitman.

    This is the damnedest campaign I’ve seen in a long time. Granted, Labor Day isn’t until next week, and Brown simply doesn’t have the kind of money that Whitman does. But so far I’ve barely heard a peep out of him, and the peeps I have heard have been nothing more than the most soporific kinds of generalities. It’s almost as if he’s decided he’s too tired to bother campaigning at all, and that’s really not the image a 72-year-old career politician wants to send out. I sure hope there’s some kind of deep strategy here that I’m not privy to. Whitman is a deeply cynical campaigner, but she has enough money to keep most of the public from seeing that. If Brown doesn’t start beating her up soon, it’s going to be too late.

  • Financial Journalism


    Ryan Avent on the role of financial journalists:

    There is a growing sense of despair among some economic writers that policymakers will not do much more to bolster the flagging global recovery. And critics who note the limits of policy intervention have a bit of a point—not all of the shortfall in demand and employment can be fixed by government intervention. But much of it can be and should be. And if it isn’t, that’s not because we lack the ability to conceive of helpful policies. It’s because policymakers are unwilling to do what they should be doing.

    It’s not the job of the economics journalist to take that as a given and declare that America will have to muddle through. It’s their job to correctly identify the problem, and name the names of those causing it.

    By “economic writers,” I assume Ryan is talking mostly about columnists and pundits here. And he’s right that it does, in fact, look as though political realities will prevent any serious additional government intervention to stimulate the economy. Those political realities include White House advisors who seem unsure what to do, a president who’s unwilling to speak up forthrightly about the mess we’re in, and a Republican Party that’s either deep in the ditch of 19th century economic principles or else figures its best chance to regain power is to make sure the economy stays in the tank. Or both. It’s hard to say without being able to read minds.

    But while columnists certainly have a responsibility to explain political realities to their readers, they have an even stronger responsibility to explain the economic realities as they see them. If they legitimately think there’s nothing more that can be done, fine. But if they don’t, they shouldn’t use politics as a cover for throwing up their hands. The federal government can’t wave a magic wand and make everything OK, but there are still plenty of things left in its armory. We don’t have to accept 8-10% unemployment for the next four years if we don’t want to.

  • What Should Obama Do?


    Paul Krugman writes today that if Republicans win control of Congress in November, they’re going to party like it’s 1994:

    So what will happen if, as expected, Republicans win control of the House? We already know part of the answer: Politico reports that they’re gearing up for a repeat performance of the 1990s, with a “wave of committee investigations” — several of them over supposed scandals that we already know are completely phony. We can expect the G.O.P. to play chicken over the federal budget, too; I’d put even odds on a 1995-type government shutdown sometime over the next couple of years.

    ….If I were President Obama, I’d be doing all I could to head off this prospect, offering some major new initiatives on the economic front in particular, if only to shake up the political dynamic. But my guess is that the president will continue to play it safe, all the way into catastrophe.

    Consider this an open thread regarding Krugman’s final paragraph. What could Obama do to help galvanize his base? Or shake up the political dynamic? Anything? Or is it all about the economy and Democrats are just doomed this year? What advice do you have for the White House?

  • Did Uncle Sam Cause the Housing Bubble?


    Matt Steinglass is arguing with his “Hayek-inflected” colleague W.W. about the origins and causes of the housing bubble. Roughly speaking, the two sides take the following positions:

    (a) Federal government policies played a strong role in promoting the housing bubble.

    (b) No, it was primarily the excesses of the private sector that powered the housing bubble.

    Just to be clear: by position (a) I don’t mean the kind of childish Fox News dimwittery that blames everything on the CRA and Fannie Mae. I mean the grown-up critique that more generally blames federal encouragement of homeownership, Fed monetary policy, federal tax policy, and various kinds of federal regulation of the financial industry. What’s interesting here is that these two positions can collapse into each other pretty quickly. Let’s rephrase them like this:

    (a) Government regulations encouraged the private sector to lever up and make lots of bad loans in the housing sector.

    (b) The financial industry used its enormous influence to lobby for deregulatory legislation, which allowed the private sector to lever up and make lots of bad loans in the housing sector.

    Both of these statements are more or less accurate. And of course, deregulation is merely shorthand for a different set of regulations and policies, so our two positions can collapse even further if we like:

    (a) Changes in government policy encouraged home buyers to borrow too much and encouraged the financial industry to lever up and make too many bad loans.

    (b) Changes in government policy encouraged home buyers to borrow too much and encouraged the financial industry to lever up and make too many bad loans.

    The difference here becomes more one of inflection than anything else. If the federal government created policies that allowed the financial sector to behave recklessly, whose fault was this? The government qua government? Or was it a specific and remediable failure of government caused by its capture by the financial industry? There’s a sense in which it doesn’t matter: government policy is government policy, and if federal regulations were too lax, that means the government was at fault.

    But in another sense, it makes all the difference in the world. If we use government in its traditional civics class sense, where policy changes are driven by politicians of different parties responding to different swathes of public opinion, that leads us to one set of possible fixes. But if we use government in the sense of a political institution that primarily responds to lobbying by the rich and powerful — which is my preferred sense — that leads us to quite a different set of possible fixes. In both cases, it’s quite accurate to say that “the government” played a big role in the problem, but they could hardly be more different in the kinds of solutions they suggest. The problem, then, is that when someone says this you have to listen more to the accent in which they talk than to the words themselves, and that can be pretty tricky. Caveat emptor.

  • Customer Service Blues


    Keith Humphreys says that dealing with the DMV is one of the most common ways that Americans interact with their government, and the fact that DMV performance is generally horrible makes people hate the entire enterprise of representative democracy. “DMVs undermine our faith that the public sector can do anything right or that it even cares if it does,” he writes, “and that undermines a basis for a democratic society.” Even granted that Keith was having a bad day (at the DMV, in case that’s not clear), Mark Kleiman has a question:

    If poor DMV performance threatens democracy, does the equally unhelpful attitude and operational design I’ve encountered in dealing with cable companies, power companies, health insurance companies, credit card companies, and USAir and United Airlines threaten capitalism?

    Excellent question! Here’s my best guess at an answer. People complain about customer service from big, faceless corporations all the time. But when they do, they complain about a specific corporation: “Time-Warner sucks,” “I hate Verizon,” “I’m never flying Delta again,” etc. In their minds, these are separate companies that have performed badly, but they don’t necessarily reflect badly on the entire enterprise of capitalism. Besides, in many of these cases there’s at least theoretically the possibility of taking your business elsewhere.

    In the case of governments, people don’t distinguish as well. If they have run-ins with the IRS (federal government), the DMV (state government), the zoning commission (city government), their trash pickup (county government), and the municipal water company (an independent agency), these are all “the gummint.” And, of course, in all these cases there’s not even a theoretical chance of dealing with anyone else. If you need a business license, the only place you can get it is the county clerk, and if their hours happen to be 9-5 on weekdays and they require you to show up in person and wait in a long line — well, that’s what you have to do.

    But it’s still a bit of a quandary. If I had to guess, I’d say that the average joe actually gets more grief from dealing with big corporations (cell phone provider, cable company, airlines, etc.) than from all levels of government combined. Most of us, after all, don’t interact with the government all that much aside from mailing them checks now and again. What’s more, there are institutional reasons that explain lousy customer service in both cases — though, ironically, they’re mirror images: lack of competition in the case of government (so they don’t have a lot of incentive to improve) and too much competition in the case of corporations (which forces them to cut service to the bone in order to stay price competitive on their main products).

    So which is worse? My mother was complaining last night about the LA Times’ inability to deliver her paper correctly. “How long has this been happening?” I asked. “About fifty years.” And recently it got even worse because they’ve installed a new payment system that’s shot full of bugs, leading to missed deliveries and bad billing. But then there’s my sister, who owns a condo and has spent the last several months fighting the County of Los Angeles, which recently decided to update its property records and determined that her garage (which is attached to the main building, not a separate structure) didn’t belong to her anymore and auctioned it off. That was after she’d called several times and was assured it was just a mistake and not to worry about it.1 So now her association has had to hire a lawyer of its own to straighten this out.

    Which is worse? My sister’s problem is certainly more severe, though it will eventually get cleared up. My mother’s is merely annoying, but chances are her service from the Times will stay terrible forever. Take your pick.

    1Quick hint for life improvement: whenever anyone tells you something is just a mistake and “not to worry about it,” start worrying. This is almost a certain sign that you should immediately panic and start burning up the telephone wires demanding a resolution in writing at the earliest possible time.

  • Quote of the Day: Glenn Beck, Scholar


    From Dick Armey, PhD University of Oklahoma, former economics professor at the University of North Texas, and former Republican majority leader in the House of Representatives:

    One of the things that we see as we look at Glenn Beck’s work that’s been fascinating to me, is we see a more true and accurate history of the United States, and we see it documented at levels of rigor that, in fact, one would expect out of Ph.D. dissertations — it is serious, scholarly work….[Liberal critics] don’t have to argue with Glenn Beck. They have to argue with his documentation and they can’t match that level of rigor.

    Somebody just shoot me now.

  • Friday Cat Blogging – 27 August 2010


    Today we have twin cats. In fact, until I put these side by side, I didn’t quite realize just how identical they were. And yes, for the nerd watchers among you, these are lids to comic book boxes. They are, apparently, much preferred as cat snoozing spots than the actual boxes themselves. And with that, I’m off to lunch. Have a good weekend, all.

  • The Tale of Fannie and Freddie


    Karl Smith has read the just-released Conservator’s Report on Fannie and Freddie and has a detailed post summarizing it. His conclusion:

    The wave of housing price increases was kicked off by changes in private label securitization. These changes left Fannie and Freddie with a smaller market share and lower absolute level of securitizations. Fannie and Freddie attempted to adjust their basic business practices to stay competitive in bubble markets and among aggressive borrowers.

    These adjustment left Fannie and Freddie exposed to a large decline in housing prices. This is exactly what happened and Fannie and Freddie reaped enormous losses because of their exposure.

    Had Fannie and Freddie stuck to their traditional role of guaranteeing low value traditional loans rather than trying to stay competitive in bubble areas their losses would have been substantially less.

    In short, attempting to subsidize the American dream for low and moderate income families may be a fundamentally bad policy. However, it does not appear to be either the origin of the housing bubble or the source of Fannie and Freddie’s trouble.

    Read the whole thing for the full story. Overall, it really does seem like the right take to me. Fannie and Freddie obviously made huge mistakes that are going to cost the taxpayers a boatload of money, but the evidence just doesn’t support the idea that they helped provoke the housing bubble. They were followers, not leaders. It was Wall Street that lit the fuse, not Fannie and Freddie.

  • Read My Lips, Don’t Look At My Record


    George Bush’s former budget director, Rob Portman, who’s doing well in his campaign for a U.S. Senate seat in Ohio, says voters really don’t care that he was part of the administration that helped wreck the economy over the past decade:

    “What the people in this plant want to know is what you are going to do for me going forward,” Mr. Portman said. “That is all they care about, and frankly that’s what voters care about.”

    “The world has moved on,” he added. “Maybe the Democrats haven’t.”

    Steve Benen is gobsmacked that Ohio’s voters seem eager to support Portman “despite his background of failure” — though in fairness to Ohio’s electorate, Portman has a long record as an Ohio congressman prior to his two years as an obscure official in the Bush administration, and that’s probably what most voters are responding to.

    More broadly, though, there’s no reason to be surprised anyway. As near as I can tell, Portman is right: policywise, voters really don’t care much about what you’ve done in the past. They only care about what you say you’re going to do in the future. They care about scandals in the past, and they generally seem to give politicians credit for the past policies of their parties — so Republicans get automatic credit for being budget hawks even if they’ve spent freely in the past and Democrats get credit for protecting Social Security even if they’ve voted to cut it in the past. Beyond that, though, voters don’t care much. They just vote for whoever talks the best talk.

    This is a pretty handy thing for politicians.