Kevin Drum - December 2010

Living in Fox's World

| Mon Dec. 6, 2010 2:24 PM EST

A friend from Virginia emails about Obama's deal with Republicans on extending the tax cuts:

I hate to say this but I do have my ear to the ground with a lot of "regular" folks and the way this impending "deal" is being described by most of them is that Republicans are pushing to keep the tax cuts which create jobs and the Democrats are pushing to extend unemployment benefits so lazy people can sit on their asses a while longer and live off those of us who work hard.

Is this because (a) this is just how America rolls, (b) Democrats don't know how to communicate with the American public, (c) Fox News now controls our country completely, (d) something else, or (e) all of the above?

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The Problem With Clickthroughs

| Mon Dec. 6, 2010 2:04 PM EST

Ezra Klein writes about the famously low clickthrough rates for online advertising, and the famously low rate cards that go along with them:

At the beginning of Ken Auletta's "Googled," Auletta talks with Mel Karmazin, then the CEO of Viacom. Karmazin is aghast at Google's campaign to measure the effectiveness of advertising by tallying clicks. "I want a sales person in the process, taking that buyer out for drinks, getting an order they shouldn't have gotten," he frets. And if that's too subtle, Karmazin continued: "You don't want to have people know what works. When you know what works or not, you tend to charge less money than when you have this aura and you're selling mystique."

It's more evidence that the greatest advertising campaign of all time was for...advertising. Another way to phrase Karmazin's comment is, "the thing you need to know about the advertising business is that the people we're selling advertisements to are basically idiots and we routinely fleece them." And he said it to a reporter, knowing it would go into a book. It's straight gangster. The brand is so strong that the people behind it can freely admit the con at its heart.

I wonder what's really going on here? Karmazin's trash talk aside, it's not like it was ever a big secret that mass-market advertising has always been a very hit or miss game. And outside of late night TV, very little of that advertising has ever been based on the idea that people see your ads and instantly get into their cars and go buy your product. It's been about brand positioning, customer education, long-term loyalty, and so forth.

So why is internet advertising so different? Why don't advertisers accept that its benefits are largely immeasurable too? Are they blinded by the supposed precision of clickthrough rates? Or have they measured online advertising campaigns the same way they measure other kinds of advertising campaigns (measurements that are imperfect but still widely known and used) and found it wanting?

In other words, is online advertising genuinely less effective? Or does it just seem less effective because of the most common metric used to evaluate it? I imagine this is something that's been studied in some depth, but if it has been, it's odd that I almost never see anything about this in the non-trade press. What's the deal?

Ranking the Presidents

| Mon Dec. 6, 2010 1:56 PM EST

The Gallup poll below is being touted as a "ranking" of modern presidents, and it puts John F. Kennedy at the top. (I guess Eisenhower doesn't count as "modern.") This is obviously crazy, but when I clicked the link I discovered that it wasn't really a ranking of who was the best president, it was a ranking of retrospective job approval ratings:

That's not quite so crazy. It's probably still wrong, but not crazy. Kennedy did some popular things, handled the White House with style, and was assassinated before his administration had time to become widely loathed, which it likely would have been had he stayed in office for a full eight years. He never really had a chance to outlast his honeymoon, and LBJ ended up taking the hit for Vietnam and 60s unrest more generally.

In any case, the innate good sense of the American public is shown by George W. Bush's low ranking. I just hope that as time goes by, people remember what a bad president he was. He's not a president who deserves to benefit from the rosiness of faded memories.

Learning the Ropes

| Mon Dec. 6, 2010 1:00 PM EST

Dan Eggan writes in the Washington Post today about how tea party favorites like Francisco "Quico" Canseco are spending their first few days in Washington DC:

After winning election with an anti-Washington battle cry, Canseco and other incoming Republican freshmen have rapidly embraced the capital's culture of big-money fundraisers, according to new campaign-finance reports and other records.

....The aggressive fundraising efforts underscore the financial pressures facing new members of Congress even before they take their seats. The contributions also represent a symbolic challenge for the Republican class of 2010, many of whom gained office by running against the ways of official Washington and monied interests.

I'm not exactly scandalized by this, but it's still a warning sign to tea partiers everywhere: guys like Canseco will support your hot button issues for precisely as long as they align with the interests of the guys who are bankrolling him. As soon as those interests diverge, you'll be left in a ditch. Don't say you haven't been warned.

Progress Report: Democrats Still Idiots

| Mon Dec. 6, 2010 2:13 AM EST

The New York Times reports that a deal on tax cuts is imminent:

Rather than extending the tax rates only on income described by Democrats as middle class — up to $250,000 a year for couples and $200,000 for individuals — the deal would also keep the rates for higher earners, probably for two years.

....Administration officials said the negotiations were focused on the question of extending the tax rates for one or two years, with a three-year extension highly unlikely, even though that time frame would probably eliminate the tax fight as an urgent issue in the 2012 elections....Democrats say they would not mind the issue coming up during Mr. Obama’s re-election bid, because they see it as politically helpful to them in painting Republicans as defenders of the rich. The debate, of course, could cut the other way, with Republicans again portraying Democrats as seeking to raise taxes.

You know, I'm in a foul mood lately. And that means maybe I overreact to stuff a wee bit sometimes, though I try to keep the blog on a more or less even keel.

But it's getting harder every day. I mean, WTF? What in God's name are the morons who pass for leaders of the Democratic Party thinking? If they've finally backed themselves into a corner where they're forced to extend all the Bush tax cuts, then OK. I'm resigned to it. But they're seriously planning to extend the tax cuts for two years, even though that means restarting the fight during the 2012 campaign season, "because they see it as politically helpful to them in painting Republicans as defenders of the rich"?

And they think this why? Because they all stuck together so well this time around? Because they wowed the American public in 2010 with their argument that Republicans were defenders of the rich? Because two years from now centrists and Blue Dogs will suddenly decide to grow a spine in the face of tea party competition? Because they think Republicans will cower in fear and Fox News will suddenly embrace sweet reason the next time Democrats try this tack? Because they think that vilifying the rich only failed this year because it was so soon after an epic financial meltdown caused by the rich? Because they're not as smart as a pair of New York Times reporters, who immediately understood that, yes, perhaps Republicans would have some modest success "again portraying Democrats as seeking to raise taxes"?

I dunno. Someone help me out. Am I missing something? Is there some reason to think that Dems are going to wage this battle any more effectively in 2012 than they did this year? Or is this every bit as addlebrained as I think it is?

POSTSCRIPT: I almost forgot the constructive criticism part of this post. Sorry about that. Here it is: if you're going to extend the tax cuts, extend them for three years. Let's have this conversation next in 2013, OK?

POSTSCRIPT 2: The only non-moronic spin I can think of for this strategy is that 2012 is a presidential election year, not a midterm. And somehow, Barack Obama's silver tongue will carry the day in a way it couldn't when he himself wasn't campaigning. That is, perhaps, just barely plausible. But I sure wouldn't bet the ranch on it.

Israel's Future

| Sun Dec. 5, 2010 1:39 PM EST

Bernard Avishai writes about the steady deterioration of Israel's infrastructure despite respectable economic growth:

In case after case, rightist coalitions have insisted the money was simply not there, and so Western standards for "quality of life" remained out of reach; the country's most responsible citizens have shrugged, more or less, and returned to work, knowing that rates of participation in Israel's workforce is actually among the lowest in OECD nations, around 57%, because of the amount of money supporting ultra-orthodox "learning."

The Carmel brush fires have suddenly given all of this frustration a powerful symbol — a kind of Katrina event. Just who have the governments been serving?

Perhaps the signal moment came on Channel Two Friday evening, when the fires were at their worst, and the newscast's most forceful commentator, Amnon Abramovich, let loose with what a great many in the audience was thinking. "If you are not a settler or a Haredi lobby," he said (I am paraphrasing),"you might as well forget getting anything from the Israeli government in recent years."

I don't know Israel well enough to weigh in on this, but it certainly squares with an awful lot that I've read in recent years. The steady rise of ultra-orthodox influence in Israel seems to be every bit as dangerous to its future as anything happening in the West Bank or Gaza — though the two are so tightly related that I imagine it's hardly possible to speak of them as separate phenomena in the first place.

I'd be interested in comments on this. But for obvious reasons, please be extra careful to keep them civil.

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Controlling Healthcare Costs

| Sat Dec. 4, 2010 8:53 PM EST

Yuval Levin thinks that the Simpson-Bowles deficit commission's failure to take on healthcare is its biggest weakness. I agree! But then he goes on to say this:

Obamacare itself cannot just be reformed, because it is deeply rooted in exactly the wrong idea about how to control health-care costs....It puts into practice the notion that the way to make health-care financing more efficient is to make it a centralized system managed largely by the government, so that the only way to really squeeze costs is to tighten price controls.

If you do not think that this is how economic efficiency happens, then you cannot expect any form of this approach to address the basic problem with American health care, and indeed you would expect this approach to result in lower quality and less readily available care.

It's remarkable that conservatives can continue saying stuff like this. Every other advanced country in the world has a centralized healthcare system that largely controls costs via government mandates. And guess what? It demonstrably works. Every other advanced country in the world has significantly lower costs than ours and provides more readily available care, and nearly all of them provide healthcare that's at least as good or better than ours.

The chart on the right has been making the rounds lately, and it shows the healthcare cost situation pretty clearly. We've always been near the top of the pack compared to other countries, but around 1980 U.S. healthcare costs started to explode. While other countries have seen their costs rise about 50% or so over the past 30 years, ours have skyrocketed, nearly doubling as a percent of GDP.

If you break this down, you can try to figure out exactly which costs are responsible for this rise. But the big picture is clear: other countries had centralized systems that controlled costs and we didn't. And the centralized systems worked: they reined in costs while continuing to provide extremely high-quality healthcare. You might not like that from an ideological perspective, but from a practical one you can hardly deny that it worked pretty well.

Incentives and the Business Cycle

| Sat Dec. 4, 2010 7:56 PM EST

Matt Yglesias suggests that it's hard to forge agreement on fiscal stimulus because liberals are afraid that "temporary" tax cuts will be demagogued when liberals try to let them expire and conservatives are afraid that "temporary" spending hikes will be demagogued when conservatives try to let them expire:

At the state and local level, anyone who’s thinking seriously about the issue ought to see that the middle of a recession is a terrible time to implement major cutbacks in public spending. But at the same time, people who believe in good faith that state and local spending is above the optimal level will understandably agree with Rahm Emannuel that you don’t want to let a good crisis go to waste. After all, were center-left Keynesian economics bloggers issuing table-thumping condemnations of state and local spending increases in 2004-2007? Bemoaning the fact that we’d entered a new “dark age” of macroeconomic understanding where policymakers didn’t realize that under the circumstances states and municipalities ought to be trimming its workforce and accumulating huge surpluses? I think I missed that.

I'm not sure this bears close inspection. At the federal level, center-left types fought an entire national election in 2000 based largely on the idea that times were good and the federal government should be accumulating surpluses. It was a pretty big deal, and as you'll recall, we center-lefties lost that election and George Bush proceeded to piss away the surplus and run up more debt than any president in history. On the spending side, center lefties recently passed a big healthcare overhaul that was largely funded by cuts in Medicare spending, and instead of applause for their fiscal sobriety they got hammered for it by Republicans during the 2010 midterms. In other words, on the federal level center-left types have proven over and over that they are willing to be pretty responsible on spending and budgetary issues despite getting clobbered for it. But the opposite isn't true of conservatives and taxes. One need look no further than the national-level dogfight going on right now over the expiration of the deficit-busting tax cuts that originally got George Bush into the White House. No conservative who wants to win reelection even dares consider taking a responsible position on this.

But how are things at the state level? What happens when center-lefties try to restrain spending and build up surpluses during good times? They very quickly learn a harsh lesson: if you accumulate money in a rainy-day fund, conservatives will promptly demand that it be "returned to the taxpayers." That happened here in California as far back as 1978 and was a big reason for the passage of Proposition 13. And if you allow a temporary tax cut to expire, your career might be over. This happened here in California as recently as 2003, when Gray Davis got tossed out on his ear for allowing the car license fee to automatically revert to its old level when the state budget got out of balance. 

Nobody is an angel in this fight, and certainly liberals could do a better job of speaking out for spending restraint during boom times. But conservatives have made it largely pointless to build up federal surpluses or state rainy day funds even when lefties are feeling in a responsible mood. At the same time, conservatives have also made it career-threateningly dangerous to allow even temporary tax cuts to expire. It's true that there's always a steady hum of background pressure from interest groups to maintain spending levels, much of it from the left, but for the most part the really pointed incentives come from the conservative side and simply aren't symmetrical: they always run in favor of tax cuts and against spending restraint.

The whole idea of trying to balance budgets over the business cycle is practically a center-left platitude. The fact that it doesn't happen very often is attributable in small part to basic human nature (nobody likes to restrain spending when money is available) and in very large part to the fact that conservatives flatly won't let it happen.

Terrorism and Fear

| Sat Dec. 4, 2010 3:12 PM EST

Apparently the National Park Service is trying to think of ways to bring a higher level of security to the Washington Monument in order to protect it against terrorist attacks. But Bruce Schneier has a different idea. He thinks we should just shut it down:

Let it stand, empty and inaccessible, as a monument to our fears.

An empty Washington Monument would serve as a constant reminder to those on Capitol Hill that they are afraid of the terrorists and what they could do. They're afraid that by speaking honestly about the impossibility of attaining absolute security or the inevitability of terrorism — or that some American ideals are worth maintaining even in the face of adversity — they will be branded as "soft on terror."

....Terrorism isn't a crime against people or property. It's a crime against our minds, using the death of innocents and destruction of property to make us fearful. Terrorists use the media to magnify their actions and further spread fear. And when we react out of fear, when we change our policy to make our country less open, the terrorists succeed — even if their attacks fail. But when we refuse to be terrorized, when we're indomitable in the face of terror, the terrorists fail — even if their attacks succeed.

I don't have any special opinion about the Washington Monument. Maybe we should just shut it down. But that particular issue aside, I think Bruce's attitude needs some major pushback.

There's a certain class of people to whom his prescription sounds great. Refuse to be terrorized! Stop being such babies! I'm a member of that class. I would happily accept a slightly increased risk of terrorist attack in return for a less intrusive security regime. I think we're way too willing to let fear rule our culture. On a purely personal level, this stuff infuriates me.

But those of us who feel that way really have an obligation to understand just how out of the mainstream we are. I'm willing to bet that most of us are a bit nerdy, sort of hyperanalytical, maybe even slightly Aspergers-ish. We're comfortable — too comfortable, probably — viewing the ebb and flow of human lives as an accounting exercise. We're also very sure of ourselves, generally pretty verbal, and we have soapboxes to shout from.

And, at a guess, we represent maybe 10% of the population. At most.

Fear of violence is not a problem unique to America. It's not a problem with the modern era. It's not a problem of a political class grown suddenly cowardly. Human beings simply value physical security very, very highly. All human beings. They will do almost anything to feel secure from physical threats. Look at Israel. In order to protect themselves from attacks that caused a bit over 200 deaths in the peak year of 2002, they have embarked on a campaign of regular military offensives, a massive wall construction project, the steady takeover of Arab sections of Jerusalem, and a campaign of relentless oppression against Palestinians in occupied territories. Like it or not, that's how people eventually react to campaigns of terror. It's worth a lot not to get to that point.

I need to be clear here. I'm not pretending that our reaction to potential acts of terror has been correct or proportional or anything else. It hasn't been, and our overreaction has been damaging on a number of levels. I'm only saying that we hypereducated types need to at least try to understand how most people react to the prospect of directed violence. If, for example, I hear one more person compare the number of deaths from terrorism to the number of deaths from car accidents, I think I'm going to scream. Human beings react differently to accidental death than they do to deliberate attacks from other human beings. This is human nature 101. If you honestly think that the car-terrorism comparison is persuasive to anyone, you are so wildly out of touch with your fellow humans that there's probably no hope for you.

Liberals lost massive amounts of trust among ordinary voters in the 60s and 70s by not taking crime seriously. The result was catastrophic: a massive overreaction led by conservatives that was made possible because liberals didn't have the credibility to offer any pushback at all. In fact, it was worse than that: for a good many years, liberal opposition to crime measures probably made them more popular. That's what happens when you fall too far out of touch with the lived experiences of everyday people.

So: is airport style security at the Washington Monument an overreaction? Maybe. Constructive alternatives would be welcome. But just telling the little people to suck it up and accept that sometimes people are going to die at the hands of terrorists? That's about the worst, most condescending argument you could possibly invent. It ignores human nature; it ignores the fact that terrorism does, in fact, terrorize; and it ignores the historical reality of what happens when societies are attacked. It's an argument that needs to go away.

POSTSCRIPT: On the other hand, I agree almost entirely with this. Go figure.

Social Security and the Very Serious People

| Sat Dec. 4, 2010 2:12 PM EST

Karl Smith ventures a guess about why elite pundits and analysts obsess so much over Social Security even though its solvency problem is fairly easy to solve. He thinks they obsess over it because its solvency problem is so easy to solve:

I think Very Serious People concentrate on Social Security because they can understand it. The program is relatively simple and the math straightforward. The ultimate driver of most projections — that there will be more retirees than workers — makes sense.

Reasoning about long term health care costs and affects, economic growth rates, global convergence, the importance or lack thereof of skill biased technological change, etc is more difficult and therefore I think people shy away from it.

When giving talks to business leaders and government officials about economics and taxation there is a sudden confidence that comes over them when the subject of Social Security comes up. They immediately feel as if they know the right questions to ask and could even potentially push back on some of the things I am saying. This confidence makes them want to steer the conversation in this direction.

There might be something to this. As pushback, I'd note — and perhaps you've seen this in action yourself? — that opinion mongers don't generally have any problem pushing simplistic solutions to fantastically complex problems. So I'm not sure Social Security's relative simplicity really explains much. On the other hand, it's true that there's a class of problems that are not only hard, but also seem hard to ordinary people, and things like healthcare and globalization might fall into those categories. By contrast, there's a different class of problems that are hard, but seem pretty simple to lots of people. Most foreign affairs problems fall into this category, as do issues of race, crime, and immigration oftentimes. Social Security might actually be in a very rare third category, problems that seem pretty simple and really are pretty simple. (Simple, not easy, as Ronald Reagan was fond of saying.)

Anyway, Prof. Smith was responding to Prof. Krugman, who suggests that elites are gung ho about cutting Social Security as a way of demonstrating seriousness because they themselves don't rely on Social Security and don't know an awful lot of people who do. So they're eager to support things like raising the retirement age. After all, it doesn't much affect those of us who sit on our butts for a living and can retire early anyway because we have plenty of savings.

If I had to guess, I'd say Krugman explains about half the elite response, Smith explains about a quarter, and then there's another quarter explained by pure partisan bile and ideological purity. But that's just a guess.