Kevin Drum - August 2011

The Great Credit Card Bubble

| Sun Aug. 14, 2011 6:46 PM EDT

A couple of days ago I got an offer in the mail for a Chase Sapphire card. Normally I don't even open these things, but this one came in such an opulent bit of packaging that I wanted to see what was inside. Answer: nothing much. It was just a box designed to look thick and inviting with only a few pieces of paper inside.

But having opened it, I went ahead and read the offer. Here's the deal: Chase is so anxious for me to try their card that if I sign up they'll give me 100,000 bonus points if I spend $500 in the first three months — something that's obviously not much of a problem. Once I've done that, I can cash in those points for $1,000.

In other words, Chase is basically willing to pay me $1,000 just to try their card. As near as I can tell, there are no gotchas, and a quick Google search seems to confirm this. Merely getting me to give Sapphire a try is worth a thousand bucks to them.

So what's going on here? Either (a) we're in the middle of some kind of fantastic credit card bubble and it's going to burst soon, or (b) the high-end credit card business is so insanely lucrative that paying people $1,000 just to sign up is worth it to them. I'm not sure which one I fear the most.

Advertise on MotherJones.com

Rick Perry's $4.5 Million Friend

| Sun Aug. 14, 2011 3:35 PM EDT

Shortly after his previous company declared bankruptcy in 2008, a guy named David Nance started up a new venture, Convergen LifeSciences Inc. He himself invested only $1,000 in Convergen, but was able to get the company off the ground with a $4.5 million investment from a venture capital fund.

Venture capital folks usually prefer founders to have a wee bit more skin in the game than that, but this was a very special venture fund: the Emerging Technology Fund, a $200 million fund created by Rick Perry to invest taxpayer money in Texas startup companies. And David Nance was a very special founder: he had donated more than $100,000 to Perry's campaigns over the previous decade. So even though a regional panel turned down Nance's original application, when he appealed to a statewide advisory committee his application was approved unanimously.

More details here, based on reporting from the Austin American-Statesman here. Apparently this came up as an issue in Perry's last campaign, but details were sparse at the time and the American-Statesman's reporting only surfaced a couple of months ago. As always, it's good to have friends in high places.

Via Mark Kleiman.

Facebook and the Decline of Ideas

| Sun Aug. 14, 2011 11:53 AM EDT

Neal Gabler writes today that we no longer care much about big, exciting ideas, the kind that we used to hear from Albert Einstein, Reinhold Niebuhr, Daniel Bell, Betty Friedan, Carl Sagan and Stephen Jay Gould. "We are living in an increasingly post-idea world — a world in which big, thought-provoking ideas that can’t instantly be monetized are of so little intrinsic value that fewer people are generating them and fewer outlets are disseminating them, the Internet notwithstanding. Bold ideas are almost passé."

I was almost on the verge of nodding along to this, but then Gabler unloaded his big idea: it's all the internet's fault.

In the past, we collected information not simply to know things....But if information was once grist for ideas, over the last decade it has become competition for them....The collection itself is exhausting: what each of our friends is doing at that particular moment and then the next moment and the next one; who Jennifer Aniston is dating right now; which video is going viral on YouTube this hour; what Princess Letizia or Kate Middleton is wearing that day. In effect, we are living within the nimbus of an informational Gresham’s law in which trivial information pushes out significant information, but it is also an ideational Gresham’s law in which information, trivial or not, pushes out ideas.

....It is certainly no accident that the post-idea world has sprung up alongside the social networking world. Even though there are sites and blogs dedicated to ideas, Twitter, Facebook, Myspace, Flickr, etc., the most popular sites on the Web, are basically information exchanges, designed to feed the insatiable information hunger.

....Of course, one could argue that these sites are no different than conversation was for previous generations, and that conversation seldom generated big ideas either, and one would be right. But the analogy isn’t perfect. For one thing, social networking sites are the primary form of communication among young people, and they are supplanting print, which is where ideas have typically gestated....To paraphrase the famous dictum, often attributed to Yogi Berra, that you can’t think and hit at the same time, you can’t think and tweet at the same time either, not because it is impossible to multitask but because tweeting, which is largely a burst of either brief, unsupported opinions or brief descriptions of your own prosaic activities, is a form of distraction or anti-thinking.

Well, look, maybe blogging and tweeting have degraded my ability to think so dramatically that I just can't see Gabler's point even though it's staring me in the face. But does he really think that high school sophomores use Twitter and Facebook as replacements for the deep thoughts and sophisticated conversations they used to have? That they used to sit around debating Niebuhr and Friedan but don't anymore because they're too busy with their Tumblr pages? Maybe that's how things were at Gabler's high school, but they sure weren't at mine.

Honestly, I think I liked this genre better back when people blamed TV for the decline and fall of American youth. I always thought the anti-TV crowd at least had a point: television really did crowd out things like books and magazines, which were better suited to big ideas and complex arguments than the tube. But social networking? As near as I can tell, it's mostly crowding out in-person gossip and....television. That seems like a much more benign trade.

In any case, the alleged decline of the big league public intellectual is usually dated to the 70s and 80s, a decade before Mark Zuckerberg was even born. So the rise of TV is at least plausibly a culprit, chronologically anyway, for the decline of big ideas. But Facebook? I don't see it. It's just the whipping boy of the moment, always good for a tut-tutting op-ed aimed at older readers who don't like Facebook to begin with and get a warm glow from seeing their prejudices confirmed.

For what it's worth, I do think that the rise of the media omnivore is changing the way we think, in some ways for the worse. But it's hard for any of us to really understand what's going on because we're still in the middle of a huge transition: television and the internet and social networking are supplanting older, maturer forms that we knew how to exploit thoroughly, but they haven't themselves yet matured to the point that we really know how to exploit them anywhere near as deeply. So we're naturally nervous: big ideas may or may not have been more common half a century ago than they are now, but at least back then we knew where to find them and we had a widely understood set of social conventions about how to discuss them. We haven't yet really figured that out for electronic media, and that makes the discussion of big ideas chaotic enough and inchoate enough that it can often seem as if the ideas themselves don't exist anymore. But I suspect they do. We just have to learn how to talk about them in a new language.

UPDATE: In the field of economics, anyway, Jared Bernstein thinks Gabler is right about the inability of big ideas to gain traction these days. But he implicates a different culprit:

The financial crash of the 2000s revealed a confluence of many powerful and socially disruptive forces: levels of income inequality not seen since the dawn of the Great Depression, stagnant middle-class living standards amidst strong productivity growth, solid evidence that deregulated markets were driving a damaging bubble and bust cycle, deep repudiation of supply-side economics, and most importantly, even deeper repudiation of the dominant, Greenspanian paradigm that markets will self-correct.

We may not, in my lifetime, witness another historical moment where these destructive forces are so clearly revealed. What’s more, there were economic thinkers arguing for a new paradigm....And yet, at least from where I sit today, we let the moment pass....Why did we squander the opportunity? Not because there were so much information on the web. It is, at least in part, because the concentration of wealth and power blocked the new ideas from a fair hearing.

Read the rest!

Pawlenty in Trouble!

| Sat Aug. 13, 2011 6:10 PM EDT

Chris Cillizza reports that Michele Bachmann won the Ames straw poll:

Bachmann took 4,823 votes, narrowly escaping a major upset at the hands of Texas Rep. Ron Paul who won 4,671 votes. Former Minnesota governor Tim Pawlenty placed third with 2,293, a showing that is likely to raise questions about his ability to continue in the contest.

Wait a second. Everyone expected Bachmann to win, and likewise, everyone knows that Ron Paul has a demonstrated (and meaningless) ability to round up his tiny band of fanatical troops for events like this. So third place isn't too bad for Pawlenty, is it? Or was the "Pawlenty in trouble" media narrative already so set in stone that it didn't matter how well he did?

(For the record, I think Pawlenty is toast. Still, his showing in Ames wasn't too bad.)

UPDATE: My Twitter feed is full of people who think Pawlenty's showing puts him right on the edge of viability. I don't quite get this, but maybe it makes sense given how much time he put into Iowa. Still, I can't help but think that it's basically a reaction to everything else about the Pawlenty campaign, not to the straw poll itself.

UPDATE 2: Well, I guess everyone else was right. Pawlenty is out.

Why Rick Perry Can Win

| Sat Aug. 13, 2011 3:40 PM EDT

My skepticism about Rick Perry is below. For a very good rebuttal, see Erica Grieder here. Perry's not especially smart, she says, but he's shrewd. (I agree.) Conservative, but not the far-right zealot we think. Not a culture warrior, but a straightforward business conservative. Bottom line: "Perry is not an idiot and not an ideologue. Democrats, you misunderestimate this one at your peril." It's one of the best, most clear-eyed takes on Perry that I've seen, and it comes from someone who's followed him closely.

Why Rick Perry Won't Win

| Sat Aug. 13, 2011 2:21 PM EDT
Texas Gov. Rick Perry

Editor's Note: On Thursday, January 19, CNN reported that Texas Gov. Rick Perry would drop out of the presidential race and endorse former Speaker of the House Newt Gingrich. Back in mid-August, at the height of the GOP's Perry-mania, Kevin Drum saw this all coming.

A few days ago I rashly said, "For the record, I don't think Rick Perry can win the Republican nomination, and I know that he can't beat Obama in a general election." Unsurprisingly, a lot of people wanted to know just what made me so sure of that. So with Perry now officially in the race, I guess it's time to explain myself.

Before I get to that, though, I have a mealymouthed caveat or three. First, if the economy is bad enough, anyone can win. And right now, the odds of the economy being bad enough are a little too close for comfort. Second, in recent years you could lose a lot of money continually underestimating the lemming-like power of the Republican Party to dive off ever-higher cliffs. Third, it's absolutely true that you can make a pretty good case that none of the current GOP candidates can possibly win the nomination. And yet, someone will.

And there's more. Perry is unquestionably a very good, very shrewd politician. He has access to lots of money. And he can deliver a pretty good speech. My beloved wife just finished listening to his announcement speech and told me, "He's my favorite Republican right now." When I grimaced, she just gave me a scary look. Scary because it's the look that means she sees something that's invisible to a committed partisan like me.

But enough of that. I've covered my ass enough. Here are the top 10 reasons why, despite all this, I think Perry is a weaker candidate than he's being made out to be:

  1. Everyone looks good before they get into the race. Remember how great Tim Pawlenty was supposed to be? But just wait a few months for Perry to get beat up by his opponents, for the oppo research to kick in, for all the big profiles to start appearing, and for a gaffe or two to get some play. He'll start to look distinctly more human then.
  2. He's too Texan. Sorry. Maybe that's fair, maybe it's not. But even in the Republican Party, not everyone is from the South and not everyone is bowled over by a Texas drawl. Perry is, by a fair amount, more Texan than George W. Bush, and an awful lot of people are still suffering from Bush fatigue.
  3. He's too mean. He'll have a hard time pretending he's any kind of compassionate conservative, and outside of Texas you still need a bit of that. Aside from being politically ruthless and famous for holding grudges, Perry's the kind of guy who almost certainly executed an innocent man, never pretended to care about it, and brazenly disbanded a commission investigating it. This famously produced the following quote in a 2010 focus group: "It takes balls to execute an innocent man." In Texas, maybe that works. In the rest of the country, not so much.
  4. He's too dumb. Go ahead, call me an elitist. I'm keenly aware that Americans don't vote for presidents based on their SAT scores, but everything I've read about Perry suggests that he's a genuinely dim kind of guy. Not just incurious or too sure about his gut feelings, like George W. Bush, but simply not bright enough to handle the demands of the Oval Office. Americans might not care if their presidents are geniuses, but there's a limit to how doltish they can be too.
  5. He's too smarmy. He might be fine one-on-one, but on a national stage Perry looks like a tent revival preacher or a used car salesman. Again: This might play okay in Texas and a few other places, but it will wear thin quickly in most of the country.
  6. He's too overtly religious. Even Bush soft pedaled his religious side for the masses during his first campaign and did most of his outreach to the evangelical community quietly. Outside the Bible Belt, Perry's fire-and-brimstone act is going to be hard to take.
  7. Policywise, he's too radical, even for Republicans. "Social Security is a Ponzi scheme" goes over well with a certain segment of the tea party, but not with most of the country. Nor does most of the country want to get rid of Medicare and turn it over to the states. Nor do they think global warming is a hoax, and they don't really think all that kindly of people who muse publicly about seceding from the union. Bush was able to soften his hard Texas edge with a genuine passion for education. I'm not sure Perry can do that.
  8. Despite conventional wisdom, about half of the GOP rank-and-file aren't tea party sympathizers (see Question 3G here). Of the half who are, Perry is going to have to compete with Michele Bachmann and possibly with Sarah Palin. Mitt Romney, on the other hand, has the noncrazy half of the party almost to himself. Huntsman isn't going to provide him with any serious competition there, and Pawlenty is rapidly becoming a non-factor too. I think this is an extremely underappreciated dynamic right now. Yes, Republican primary voters tend to be more conservative than the party as a whole, but there are still going to be a lot of non-tea-partiers who vote, and they don't have a lot of good choices other than Romney. What's more, a fair number of tea partiers like Romney too (see Question 19 here). This is a pretty good base to work from.
  9. Perry's campaign is going to be heavily based on the "Texas miracle." But this looks a lot less miraculous once you put it under a microscope—and pretty soon it won't just be churlish lefties pointing this out. You can be sure that the rest of the Republican field will be hauling out their own microscopes before long.
  10. Republicans want to beat Obama. They really, really want to beat Obama. Romney is still their best chance, and down deep I think they know it.

All that said, I might be wrong. But I'd still advise everyone to take Perry with a few more grains of salt than they have been. It's easy for us urban liberals to just cynically assume that the tea partyized GOP will nominate whoever's the dumbest, toughest, meanest, godliest sonofabitch in the field, but I'm not so sure. Perry may come out of the gate strong, but he might not wear well once the national spotlight is on him.

UPDATE: Why Rick Perry Can Win.

Advertise on MotherJones.com

Headline of the Day: Obama the Anti-American

| Sat Aug. 13, 2011 10:21 AM EDT

From the Wall Street Journal today:

What Happened to Obama? Absolutely Nothing.
He is still the same anti-American leftist he was before becoming our president. 

This is from Norman Podhoretz, still fighting the Weathermen and the Panthers after half a century. And in case you're wondering: no, the Journal's copy desk didn't invent the "anti-American" line. It's right there in the text.

The Real Problem With Economic Policy

| Sat Aug. 13, 2011 10:07 AM EDT

From today's LA Times:

As he confronts the threat of another recession and turmoil in the financial markets, President Obama is being advised by an economic team that is noticeably short on big-name players — potentially hurting his ability to find solutions and sell them to Wall Street, Congress and the American public.

"When you ask about the economic team, it's kind of like, 'What economic team?'" said Edward Mills, a financial policy analyst with FBR Capital Markets. "They are very thin at a very critical time."....Some analysts worry that the White House might not have enough economic expertise to fashion new proposals for boosting growth.

I get that daily newspapers need to have something new to say each day. Ditto for cable news. And blogs too! But can we please ditch the pretense here? Sure, Obama has lost most of his economic team and hasn't replaced them all. That's a legitimate story. But does anyone seriously think that this is having any effect at all on his ability to "find solutions and sell them to Wall Street, Congress, and the American public"?

Come on. Obama's current team is probably more in tune with Wall Street than the old one, and the American public responds to comforting narratives, not the quality of the economic analysis behind them. (When they respond at all, that is.) But none of that matters anyway. Obama's problem isn't a lack of bright ideas, it's the fact that the Republican-controlled House has no interest in acting on proposals to spur job growth or stimulate the economy. If it doesn't cut taxes on the rich or slash pesky regulations on big corporations, they're not going to give it the time of day. This is not exactly a big secret in Washington.

Barack Obama could have the reincarnated ghosts of Milton Friedman and John Maynard Keynes running his economic policy shop and it probably wouldn't make any difference. Republicans are bound and determined to do nothing to seriously address our faltering economy, and that's that. This is what's standing in the way of getting anything done, and pretending otherwise is a disservice to the news-consuming public.

Friday Cat Blogging - 12 August 2011

| Fri Aug. 12, 2011 2:05 PM EDT

Today's theme was going to be shadowy cats, but instead it's cats with Marian. It's more cats than Marian, of course, since Friday is catblogging day, not Marianblogging day. Besides, I kind of like being married and don't want to do anything to put that in jeopardy. The cats, however, are their usual camera hog selves and have no problem showing off their feline virtues to the world. So here they are. Have a good weekend, everyone.

It Looks Like the Stimulus Worked After All

| Fri Aug. 12, 2011 12:21 PM EDT

Conservative economist Douglas Holtz-Eakin has a chart he's fond of that demonstrates just how ineffective the 2009 stimulus was. Basically, it shows that the stimulus cost $260 billion and produced only an extra $268 billion in GDP. Personally, I'd take even that, but his point is that the stimulus produced no Keynesian multiplier effect at all. It was just a 1:1 replacement of revenue from one source to another.

But as you may recall, the US Bureau of Economic Analysis recently revised its GDP estimates from late 2008 and 2009, and it turns out the economy was doing much worse than we thought. And if you don't recall this, Michael Linden wants to remind you about it today. He also wants to remind Douglas Holtz-Eakin about it. Because it turns out that when you redo Holtz-Eakin's favorite chart using the corrected data, it suggests that the stimulus bill produced about $544 billion in extra GDP. In other words, a multiplier effect of about 2x.

I suppose there are two ways to respond to this. Holtz-Eakin could admit that he was wrong. Or he could invent a reason that his old chart is no good and then scurry back to his computer to produce a brand new chart using a different methodology that, once again, shows that the stimulus didn't work. We'll see which way he chooses.