Kevin Drum - November 2010

Israelification

| Tue Nov. 16, 2010 1:01 AM EST

So what would a better security system look like for our airports? Several readers suggested "Israelification" — which initially struck me as problematic. It's pretty intrusive, isn't it? According to Rafi Sela, president of a global transportation security consultancy, no it's not. The following summary, in an interview with Sela in the Toronto Star, describes the 6-layer security protocol Israel uses:

The first layer of actual security that greets travellers at Tel Aviv's Ben Gurion International Airport is a roadside check. (1) All drivers are stopped and asked two questions: How are you? Where are you coming from? "Two benign questions. The questions aren't important. The way people act when they answer them is," Sela said. Officers are looking for nervousness or other signs of "distress" — behavioural profiling.

....Once you've parked your car or gotten off your bus, you pass through the second and third security perimeters. (2) Armed guards outside the terminal are trained to observe passengers as they move toward the doors, again looking for odd behaviour. (3) At Ben Gurion's half-dozen entrances, another layer of security are watching. At this point, some travellers will be randomly taken aside, and their person and their luggage run through a magnometer.

....You are now in the terminal. (4) As you approach your airline check-in desk, a trained interviewer takes your passport and ticket. They ask a series of questions: Who packed your luggage? Has it left your side? "The whole time, they are looking into your eyes — which is very embarrassing. But this is one of the ways they figure out if you are suspicious or not. It takes 20, 25 seconds," said Sela.

....(5) At the check-in desk, your luggage is scanned immediately in a purpose-built area....The screening area is surrounded by contoured, blast-proof glass that can contain the detonation of up to 100 kilos of plastic explosive [and] all the screening areas contain 'bomb boxes'. If a screener spots a suspect bag, he/she is trained to pick it up and place it in the box, which is blast proof. A bomb squad arrives shortly and wheels the box away for further investigation.

....(6) You now finally arrive at the only one which Ben-Gurion Airport shares with [U.S. and Canadian airports] — the body and hand-luggage check....It's fast — there's almost no line. That's because they're not looking for liquids, they're not looking at your shoes. They're not looking for everything they look for in North America. They just look at you," said Sela. "Even today with the heightened security in North America, they will check your items to death. But they will never look at you, at how you behave. They will never look into your eyes ... and that's how you figure out the bad guys from the good guys."

Of course, Israel has one smallish airport to worry about, not dozens of huge ones, and it's possible that their system can't be scaled up adequately to work in the United States. Also, although Sela doesn't really mention it, Israel engages in unapologetic and intrusive racial profiling, which simply wouldn't pass constitutional muster in the United States. I don't know how much of a difference that makes, or whether you could import the Israeli system without it. (It's worth noting too that TSA does use behavioral profiling in a program called SPOT — Screening of Passengers by Observation Techniques. However, it got a pretty negative review from the GAO earlier this year. Whatever it is that SPOT is doing, either it's not the same as what the Israelis do or else we just don't do it very well.)

Anyway, I'm not endorsing anything in particular here. But I asked earlier for a better airport security plan, so I thought I'd pass along one possible answer. At least if we have the alternatives on the table we have something more to talk about than just the idiocy of the 3-ounce container rule.

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Assignment Desk II: Airport Security

| Mon Nov. 15, 2010 8:40 PM EST

I just read what seems like the millionth article/blog post/rant about how stupid our airline security procedures are. The latest versions are inspired by the growing use of backscatter scanners that display a vague outline of what you look like naked; the increasingly intrusive patdowns that TSA is performing on passengers who refuse to go through the backscatter machines; and a cell phone video (no longer available, apparently) of a TSA agent trying to pat down a 3-year old girl going through a meltdown.

I'm glad to see these rants. Maybe eventually it means we'll actually make some changes to our security theater. But what I haven't seen is an informed take on what airport security ought to look like. We all hate taking off our shoes and pulling out our laptops and being limited to three ounces of liquid and not being allowed to meet people at the gate anymore — we hate all of that. But if it's all useless, what should we do instead? Shouldn't someone write that article?

UPDATE: More here.

Triumph of the Cretins

| Mon Nov. 15, 2010 4:42 PM EST

This is insane. James O’Keefe secretly records a New Jersey teacher in a private conversation complaining that another teacher had called a student a nigger but kept his job anyway — and the first teacher is suspended and has her pay docked.

This defies belief. O'Keefe is a cretin, but why the district superintendent and the school board caved in on this is hard to fathom. The cynicism on one side and the cowardice on the other is truly staggering.

Reining in the Superbugs

| Mon Nov. 15, 2010 2:44 PM EST

Via Austin Frakt, Aaron Kesselheim and Kevin Outterson have an op-ed in the Boston Globe about the spread of antibiotic-resistant "superbugs." The problem, they note, is largely due to overuse of antibiotics, which spurs the evolution of the superbugs:

Right now, drug companies have financial incentives to maximize sales to turn a profit as quickly as they can — as soon as a new antibiotic hits the market, it’s in a race against the patent clock and competitors. To maximize profits, some companies market antibiotics for conditions that aren’t necessarily proven to respond to that treatment — like minor ear aches in children. And doctors are willing to prescribe them, especially if faced with a patient or parent who is demanding a quick fix.

....We need incentive-based policies that ensure that antibiotics are not oversold and their usefulness undermined. Under our proposal, payment for new antibiotics would be conditioned on meeting conservation and resistance targets set by the government....Instead of being subject to the traditional patent period, the manufacturer would earn revenue on the drug by showing that careful marketing and infection-control activities had slowed the rate at which resistance had developed.

I don't have the chops to evaluate the specific plan that Kesselheim and Outterson propose. But something along these lines urgently needs to be done. There's just one problem: it requires a considerable amount of government intervention because free markets on their own provide no incentive to care about this problem. In other words, it requires death panels. That does not bode well for the prospect of bipartisan action to do anything about this.

Assignment Desk

| Mon Nov. 15, 2010 2:18 PM EST

There's been a lot of pundit stategerizing about the lame duck session that started today, but I have a question: just how much is it possible, even theoretically, to get done? I figure there's a maximum of 20-25 calendar days available before final adjournment, and as we all know, Republicans have loads of procedural roadblocks available to them that eat up calendar time. So what's the most that can get done? Two bills? Maybe three? Is more than that even conceivable?

Any congressional wonks care to weigh in on this and set expectations for us?

Orszag on Social Security

| Mon Nov. 15, 2010 1:15 PM EST

It's natural to be pleased when some famous and well-regarded person agrees with you completely. So naturally I'm pleased that Peter Orszag's view of the Simpson-Bowles Social Security proposal is nearly identical to mine. Nice work, Peter!

But seriously: he's right. Overall, it's a fairly progressive plan:

Compared with the benefits promised by the current system, the recommended benefits for the poorest 20 percent of recipients would increase by about 5 percent, while those for the wealthiest retirees would fall by almost 20 percent. Furthermore, the plan would not create private accounts within Social Security — the most controversial issue that came up when reform was last debated in 2005. Why not lock in a reform when private accounts are off the table?.

....All of which suggests that Democrats in Congress should support the basic construct of the Bowles-Simpson proposal, while arguing for some changes to improve it. That has not, however, been their reaction thus far.

As Orszag also notes, the biggest flaw in the plan is that it raises the retirement age from 67 to 68. This is regressive, unfair to low-income workers with shorter life expectancies, and could be easily eliminated by rebalancing the entire plan so it has roughly a 50-50 split between revenue increases and benefit reductions. But that's fairly easily done. Bottom line: liberals should be giving the Social Security reform section of the Simpson-Bowles plan a little more love than they have so far.

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Deficit Politics

| Mon Nov. 15, 2010 12:58 PM EST

Ryan Avent wonders why the deficit has become such a big deal suddenly. Maybe it's because the bond market is panicking? Nope. The bond market is quite calm at the moment. Then maybe it's because the public is panicking? Apparently not, according to survey data anyway:

It actually looks as though the public doesn't care about the deficit either, at least relative to the state of the general economy. So why is the deficit such a big issue right now, at least in Washington?

The short answer is that President Obama has given the press a nice news peg in the form of the impending release of a report from his deficit reduction commission. Another question, then, is why the president felt the need to appoint a deficit reduction commission. And the answer there is some combination of "the deficit actually needs to be addressed" and "the president felt there was a political weakness that needed defending". Why the president felt a weakness on deficits is another, mysterious issue.

I don't think this is quite right. Leaving aside whether it was a good or bad idea, the deficit commission was a response to deficit hysteria, not the cause of it. And I don't think it was all that mysterious, either: it was basically a response to an excellent political game played by Republicans. Think about it: if you're opposed not just to a single initiative from the opposing party, but to every initiative from the opposing party, what's a handy umbrella for expressing that uniform opposition? Answer: deficit panic. After all, just about everything Democrats propose can be spun as a deficit buster. And it's pretty easy to to gin up the Republican base with talk of eventual doomsday and devalued currency. The deficit is just a perfect issue for Republicans and they did a great job of getting the maximum mileage out of it.

So you have to give Republicans an attaboy for playing the game well. The question is why Team Obama felt like they had to respond. And here I suspect Ryan is basically right. Obama probably really does believe the long-term deficit needs to be addressed, and he's pretty famous for listening to his inner technocrat even if it annoys his base and makes for poor politics. And he probably really did believe that the existence of the commission would take some of the air out of the Republican attack. This is more mysterious, since there was never any chance of that happening. There's no way that a nonbinding commission was ever going to have the slightest effect on what Republicans knew was a very effective line of attack against Democrats.

But it's too late now. As Ryan says, it all might have made some sense if Obama could have spun "medium-term deficit reduction as a means to create the fiscal room for more stimulus." But he never even tried to do that, and the moment when he could have pulled it off is long gone. Too bad. It would have been good politics and good policy.

Good Economic News of the Week

| Mon Nov. 15, 2010 12:03 PM EST

Since I posted a big ol' stew of bad economic news last night, it's only fair to perk up the start of your week with some good economic news:

U.S. retail sales surged in October, rising above expectations on robust car sales and solid spending for a broad array of merchandise going into the holiday shopping season.

Separately, inventories at U.S. businesses in September rose above expectations, a sign of confidence among companies in the economic recovery as the holiday shopping season grew nearer. Retail sales rose 1.2% last month....The increase was the biggest since March and the fourth in a row. September sales rose 0.7%, revised up from a previously estimated 0.6% increase.

I don't know if this is sustainable or not. Without a big drop in unemployment and steady wage gains, I doubt it, since consumers are still deleveraging and look to be doing so for a while now. Still, it's good to see. I guess all that regulatory uncertainty isn't holding back businesses after all.

"Outspoken and Unified"

| Mon Nov. 15, 2010 2:19 AM EST

According to a report in the Wall Street Journal, criticism of the Fed over its bank bailouts had largely died down earlier this year. Then they announced their quantitative easing program. Still, things remained relatively quiet:

But last week, potential GOP presidential candidate Sarah Palin delivered a stinging speech on the move and then, in a Facebook post, criticized Mr. Obama for defending the Fed.

Last Tuesday evening, about 20 economists and others met over sea bass at the University of Pennsylvania Club in Manhattan and hashed out a broad strategy. [Paul] Ryan, who has gained notice for a plan to balance the federal budget through deep spending cuts, joined the group as they discussed ways to encourage the GOP's new House majority to unite behind what they describe as a "sound money policy."

"We talked about the importance of the right being outspoken and unified on this," said a participant. Mr. Ryan couldn't be reached Sunday.

Over the weekend, organizers began discussions with possible GOP presidential candidates, including former Massachusetts Gov. Mitt Romney and former House Speaker Newt Gingrich. On Tuesday, Mr. Boskin and another signer, Paul Singer, head of hedge fund Elliott Management, will brief GOP governors at a conference in San Diego.

So there you have it. Sarah Palin makes a speech about technical monetary policy and within a few days the entire Republican establishment is scurrying around to make sure that everyone has their monetary policy marching orders. Zhou Xiaochuan, Arkady Dvorkovich, and Wolfgang Schaeuble should be very pleased.

Financial Crisis Not Over Yet

| Sun Nov. 14, 2010 10:01 PM EST

This weekend served up a heaping helping of my entire personal stew of economic nightmares. So here it is, your global economic news for the weekend:

LA Times: Commodities tumble on fears that China will try to slow its economy. "The fast-running bull market in commodities hit a wall Friday as prices plunged on fears that China will try to slow its economy to tame inflation. Rumors of another Chinese interest-rate hike started a chain reaction of selling across financial markets worldwide...."

Financial Times: Concern grows as Dublin spurns help. "Irish officials insisted on Sunday that they did not need fiscal assistance from the European Union, even as pressure mounted on Dublin to accept aid and present plans to restructure its banking system....Behind the scenes, the ECB has put pressure on Dublin to take steps within days that would provide an urgently needed boost to confidence in Ireland’s public finances and struggling banking system."

Wall Street Journal: Credit Fears, QE2, Elections Prompt Muni Selloff. "Investors sold off long-term municipal bonds in the past week, sending a shiver through a normally stable market....In recent months, with reports of financial woes in Harrisburg, Pa., and of some municipal borrowers walking away from debts, some investors have begun to question whether government borrowers are as reliable as investors' presumed about repaying loans."

Financial Times: Nervousness as bonds braced for Greek tests. "Eurostat, the Commission’s audit unit, is set to revise upwards Greece’s 2009 budget deficit figure to about 15.3 per cent of gross domestic product from the current estimate of 13.6 per cent of GDP....This could spark a sell-off in the Greek and other peripheral bond markets as investors are increasingly nervous about the ability of the weaker eurozone economies to turn round their economies and restore growth.....David Owen, chief European financial economist at Jefferies, the investment bank, said: [] 'If investors start to sell bonds of Spain and Italy in the way they have been selling Greek, Irish and Portuguese bonds, then the crisis will take on a whole new dimension.'"

All of these are trouble spots for the world economy. Throw in Eastern Europe and hot money flows into developing countries and you've got an even half dozen shocks that could send us into another tailspin. Hopefully none of them will happen. But all it would take is for one or two of them to unfold badly. Keep your fingers crossed.