Kevin Drum - March 2012

Iranian Sanctions Look Like They're Biting Hard

| Tue Mar. 6, 2012 10:29 AM PST

So how are those Iranian oil sanctions going? Stuart Staniford took a crack at figuring it out yesterday, but luckily for me I got busy with other stuff and didn't link to his post. "Luckily" because he's now spent several hours obsessing even more over Iranian production data and has what he thinks is a more reliable look at how much oil Iran is producing. The chart is below. Stuart's conclusion:

My interpretation of the [data] is that Iran used to be able to produce about 4mbd of oil. They voluntarily reduced production following the 2001 recession (in line with the behavior of other OPEC nations at the time). However, while the reduction at the end of 2008 may also have been voluntary, the fact that they've made no increase in production in 2011 — the opposite in fact — suggests they've lost the capacity to produce (or at least export) that much oil. I assume this is due to western sanctions.

Whether the sanctions are "working" depends on whether you think we ought to be pressuring Iran over its nuclear program. But that's certainly what the Obama administration wants to do, and judged on their own terms it looks like the sanctions are working. If Iran really has been forced to reduce production by 400,000 bbd, that comes to about $40 million per day, or $14 billion per year. Depending on how you count, that amounts to about 2-3% of GDP.

UPDATE: But even if oil production is down, isn't that more than made up for by higher prices caused by the sanctions in the first place? Maybe. It depends on how much oil Iran sells on the spot market and how much is tied up in long-term contracts. I'm not sure if anyone really knows that, and I don't know what the terms of Iran's long-term contracts are anyway. So this is, admittedly, a bit of a crapshoot. Either way, though, Iran certainly seems to be selling less than they could if the sanctions didn't exist.

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New Frontiers in Nasty Book Reviews

| Tue Mar. 6, 2012 9:54 AM PST

I see that the hounds have been let loose on Amazon today. Matt Yglesias has a new eBook out, The Rent is Too Damn High, and according to the chart accompanying the Amazon page it's already garnered 24 one-star reviews. Not bad! This reviewer explains what's up:

If you purchase this book, you'll be putting money in the pocked of a ghoul who revels in the deaths of people he disagrees with politically. Of course, if this is your intention, you're no better than he.

A few days ago Matt tweeted something nasty about Andrew Breitbart after his death, so now Breitbart's fans — who obviously haven't read the book and don't care about it — are surging into Amazon to take their revenge. Isn't the internet wonderful?

I haven't read the book myself because I'm swamped with other stuff, so I can't say anything in particular about it. However, I'm familiar with Matt's general argument that the high price of city living is an obvious sign that there's high demand for housing in cities, which means that we ought to loosen up zoning and construction regulations and allow more housing to be built. Since cities are engines of economic growth, and bigger cities are even bigger engines, this would be good for everyone. If you want to read his full argument, which I imagine is pretty cogent, it will only set you back $3.99 thanks to the marvel of the Kindle eBook publishing model.

But none of this matters at Amazon itself. Their review section is merely a place to piss on your political enemies. I suppose that's nothing new, but this is certainly a starker example than usual. Caveat lector.

Driverless Cars Will Be a Boon to Pedestrians

| Tue Mar. 6, 2012 9:26 AM PST

Atrios:

My prediction is that a whole lot of public money will be spent setting up a "driverless car" system that will never actually work.

...adding, I'm sure such a thing would be quite possible (near future if not now) if we built up such a system from scratch. That's not going to happen.

I'll take that bet! The link goes to an odd piece in the Atlantic worrying that in an era of driverless cars everything will be optimized for cars, not people. But that makes no sense. One of the core functions of any driver, human or otherwise, is to avoid running over pedestrians. A driverless car that couldn't do that would be worthless.

My guess is that a big part of the disagreement over the future of driverless cars boils down to a disagreement over how smart computers can get. I think they're going to get pretty smart, and that within a decade or two operating a car will be child's play for them. There will be a transition period that's likely to be messy — though probably no messier than today's all-human traffic nightmare — but eventually you won't even be allowed to drive a car. Every car on the road will be automated, and our grandchildren will be gobsmacked to learn that anything as unreliable as a human being was ever allowed to pilot a two-ton metal box traveling 60 miles an hour.

When that happens, it will be a golden age for pedestrians. Sure, cars won't need signals at intersections, but neither will people. If you want to cross a road, you'll just cross. The cars will slow down and avoid you. You could cross blindfolded and be perfectly safe. You'll be able to cross freeways. You'll be able to walk diagonally across intersections. You'll be able to do anything you want, and the cars will be responsible for avoiding you. Your biggest danger will come from cyclists and other pedestrians, not cars.

That's my guess, anyway.

Raw Data: Romney Gaining Ground With Conservatives

| Tue Mar. 6, 2012 8:40 AM PST

The latest ABC/Washington Post poll is in, and it demonstrates an eternal truth: maybe money can't buy you happiness, but it can buy you the Republican nomination for president. Compared to a week ago, Mitt Romney has made huge strides among conservatives of all stripes, including those who describe themselves as very conservative. His favorability ratings are up about ten points among conservatives, compared to no change for Santorum and no change for Gingrich except among the very conservative.

Oddly, although Romney's favorables are up a lot among conservatives, and flat among moderates, this hasn't translated into much improvement among Republicans. I'm not sure how the math works out there. Maybe there's a mistake in the calculations somewhere.

Holder: Oversight is a Good Idea if You're Killing U.S. Citizens, But That Doesn't Mean We're Going to Allow Any

| Mon Mar. 5, 2012 10:37 PM PST

Attorney General Eric Holder gave a speech today that, among other things, explained at length why the Obama administration believes it has the authority to unilaterally order the killing of a U.S. citizen abroad. Adam Serwer has a good summary here, but I want to focus narrowly on the questions of due process and oversight raised in the speech. Here's Holder:

Let me be clear: an operation using lethal force in a foreign country, targeted against a U.S. citizen who is a senior operational leader of al Qaeda or associated forces, and who is actively engaged in planning to kill Americans, would be lawful at least in the following circumstances: First, the U.S. government has determined, after a thorough and careful review, that the individual poses an imminent threat of violent attack against the United States; second, capture is not feasible; and third, the operation would be conducted in a manner consistent with applicable law of war principles.

....Some have argued that the President is required to get permission from a federal court before taking action against a United States citizen who is a senior operational leader of al Qaeda or associated forces. This is simply not accurate. “Due process” and “judicial process” are not one and the same, particularly when it comes to national security. The Constitution guarantees due process, not judicial process.

This is, as far as I know, legally correct. "Due process" doesn't always mean a traditional trial. However, the "balancing approach" toward due process that Holder mentions earlier in the speech is generally meant to keep full-blown trials from being required even for fairly minor offenses, something that could grind the criminal justice system to a halt. It's not meant to demean the due process required for something as serious as targeting someone for killing. As Holder acknowledges, "An individual’s interest in making sure that the government does not target him erroneously could not be more significant." Clearly, then, whatever procedure is used here, even if it's not a conventional jury trial, needs to be of the most careful and serious sort. And Holder recognizes this, saying that there should be "robust oversight" of the executive branch in cases like this. So what does that mean?

Which is why, in keeping with the law and our constitutional system of checks and balances, the Executive Branch regularly informs the appropriate members of Congress about our counterterrorism activities, including the legal framework, and would of course follow the same practice where lethal force is used against United States citizens....These circumstances are sufficient under the Constitution for the United States to use lethal force against a U.S. citizen abroad.

That's it! The executive branch "informs" Congress. That's the robust oversight Holder agrees is necessary for cases like this.

I'm glad Holder gave this speech. I'm glad that he expanded (a bit) on the three circumstances that govern the Obama administration's decisions to kill U.S. citizens abroad. I'm glad he agrees that these decisions are "extraordinarily weighty" and "among the gravest that government leaders can face."

Nonetheless, even more than a thousand words of throat clearing can't hide the fact that Holder simply provided no evidence that the rigor of the executive branch's due process procedures matches his rhetoric; no evidence that these procedures are consistently followed; and negative evidence that there's any reasonable oversight of the process. Merely informing Congress is the farthest thing imaginable from rigorous, independent oversight.

Holder's job, of course, was an impossible one. The Obama administration, like the Bush administration before it, has made a deliberate decision that actions like this are authorized by a combination of the 2001 AUMF and the president's inherent commander-in-chief powers. By definition, this means that any oversight which limits his actions, even potentially, is unacceptable. And yet, a significant chunk of the public thinks oversight of the executive branch is a good idea. This means that lip service must be paid.

It's a circle that can't be squared. Publicly, Holder has to say that oversight is essential, but in private the actual procedures themselves have to remain toothless. There was never any way to camouflage that, and Holder didn't even really try. If he truly thinks, as he said, that this is "not a departure from our laws and our values," he has a funny idea of what our laws and values are.

POSTSCRIPT: This post wasn't about my own position on this topic, but here it is. I agree that we're at war. Like it or not, the AUMF is an extremely broad grant of authority. I agree that stateless terrorists pose unique challenges. I agree that targeting them for killing is sometimes necessary, even if they're U.S. citizens. I agree that Holder's three principles form a good starting point for deciding when a targeted killing is justified.

But it's simply not tolerable to take the view that the entire world is now a battlefield, and therefore battlefield rules of engagement apply everywhere. If you want to kill a U.S. citizen outside of a traditional hot battlefield, there needs to be independent oversight. The FISA court performs this function for surveillance, and we know from experience that it rarely gets in the government's way. But at least it's technically independent and forces the executive branch to follow its own rules. It's the absolute minimum that we should require for targeted killings too.

Breaking: Demand Curves Slope Downward, Even in Healthcare

| Mon Mar. 5, 2012 4:49 PM PST

This is supposedly a surprising result:

Doctors who have easy computer access to results of X-rays, CT scans and MRIs are 40 to 70 percent more likely to order those kinds of tests than doctors without electronic access, according to a study to be published in the March issue of the journal Health Affairs.

....Researchers found that doctors who did not have computerized access ordered imaging tests in 12.9 percent of visits, while doctors with electronic access ordered imaging in 18 percent of visits, a 40 percent greater likelihood. Doctors with computerized access were even more likely — about 70 percent more likely — to order advanced imaging tests, such as PET scans, which experts said are most commonly used to detect cancer, heart problems, brain disorders and other central nervous system disorders.

Hmmm. This is.....exactly what I would have predicted if I'd ever actually thought about this. Computerized access to imaging results does two things: it lowers the cost (in time and hassle) of using the results and it makes the results a lot more useful. I use a thesaurus way more than I used to for exactly the same reason: an electronic thesaurus is less hassle and it's more useful thanks to hyperlinks that allow me to quickly trace through a word tree to find what I'm looking for. So of course I use it more than I ever used my paper copies.

Anyway, it's the next step that's more counterintuitive anyway. The authors suggest that although electronic records are supposed to lower healthcare costs in general, they might not. Although some costs will go down, others — thanks to things like wider use of imaging results — will go up. So it might be a wash.

Which is fine with me. I never bought the notion that electronic records would really restrain costs much anyway. I just think they're a good idea because they'll reduce medical errors and make life more convenient. I've been with Kaiser Permanente for the past few years, and their extensive computerization of everything really does streamline the whole process of dealing with the healthcare system. I'm totally sold, regardless of whether they're saving any money by doing it.

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Living With a Nuclear Iran

| Mon Mar. 5, 2012 12:26 PM PST

In an important piece in the Washington Monthly today, Paul Pillar argues that we could live with a nuclear Iran. "An Iran with a bomb," he says, "would not be anywhere near as dangerous as most people assume, and a war to try to stop it from acquiring one would be less successful, and far more costly, than most people imagine."

Pillar's argument is basically twofold. First, he contends that both history and the bulk of the evidence suggest that Iranian leaders aren't suicidal or maniacal. They'd be deterred from launching an attack on Tel Aviv by the same thing that deters all the rest of us: fear of massive retaliation that would turn their country into a glassy plain. Second, he's skeptical that a nuclear Iran would "throw its weight around" any more than the current version of Iran. "A rich body of doctrine," he says, suggests that nukes are useful in deterring aggression — something that's probably much on Iran's mind these days — but "much less useful in 'shielding' aggressive behavior outside one’s borders."

I think he's right on both counts. But I was disappointed that he didn't spend more time on the argument that's always seemed most compelling to me: that a nuclear Iran would spark an arms race in one of the most unstable regions on the planet. Here's what he has to say about that:

To be sure, the world would be a better place without an Iranian nuclear weapon. An Iranian bomb would be a setback for the global nuclear nonproliferation regime, for example, and the arms control community is legitimately concerned about it. It would also raise the possibility that other regional states, such as Saudi Arabia or Egypt, might be more inclined to try to acquire nuclear weapons as well. But that raises the question of why these states have not already done so, despite decades of facing both Israel’s nuclear force and tensions with Iran.

....Indeed, the alarmists offer more inconsistent arguments when discussing the dynamics of a Middle East in which rivals of Iran acquire their own nuclear weapons. If, as the alarmists project, nuclear weapons would appreciably increase Iranian influence in the region, why wouldn’t further nuclear proliferation—which the alarmists also project—negate this effect by bestowing a comparable benefit on the rivals?

As a notable non-expert in nuclear proliferation theory, I don't have a lot to add to this. But it does seem like it deserves a little more than just a couple of paragraphs. Nuclear proliferation isn't necessarily driven by sober logic, and other states might acquire nukes just because they're scared. And while most governments, no matter how odious, are pretty rational about their own self-preservation, not all of them are all the time. More countries with more nukes would almost certainly increase the odds that someone, sometime, would do something crazy.

Now, if I had to guess, I'd say the main obstacle in the way of growing proliferation is simply that it's harder and more expensive than it looks. Saudi Arabia might be able to do it, but could Syria? Or Lebanon? Or even Egypt? Maybe, but it's far from a certainty.

In any case, I think this probably deserves more discussion, if for no other reason than the fact that it's Barack Obama's primary argument for preventing Iran from going nuclear. You might not need to convince me that it's a bad argument, but you sure need to convince him.

The Rich Are Rebounding Nicely, Thank You Very Much

| Mon Mar. 5, 2012 10:52 AM PST

The wealthy took a big hit during the Great Recession, but have they recovered since then? In a word, yes. Emmanuel Saez updates his statistics for income gains among the rich and the rest:

Top 1% incomes grew by 11.6% while bottom 99% incomes grew only by 0.2%. Hence, the top 1% captured 93% of the income gains in the first year of recovery...It is likely that this uneven recovery has continued in 2011 as the stock market has continued to recover...This suggests that the Great Recession will only depress top income shares temporarily and will not undo any of the dramatic increase in top income shares that has taken place since the 1970s.

The chart below shows income gains among top earners. Even there, recovery has been uneven. Income rebounded nicely for the top 1%, but that's about it. Even the merely well off, those with incomes over $100,000, gave back some of the small gains of the past couple of years. As with past recessions, the very richest took the steepest hit at first, but within a few years they'll probably bounce back to even higher peaks than before. Mike Konczal has more here.

Quote of the Day: Pay Attention to Target 2!

| Mon Mar. 5, 2012 9:39 AM PST

From Tyler Cowen:

As a general rule of thumb, any time you see an article about “Target 2,” it is important.

No, this is the not the next retail innovation following the invention of SuperTarget and Target Greatland. Target 2 is the clearing system for European banks, and for its first couple of years (it replaced the old system in 2007) it was every bit as boring as that sounds. But as you may recall, the core of the European financial crisis is a persistent imbalance in trade deficits, and the mirror image of a trade imbalance is a capital account imbalance. In other words, some countries are net exporters of money (Germany, France, the Netherlands) and some are net importers (Spain, Greece, Italy, etc.) During the boom years, commercial banks funded all these flows, but the music stopped playing on that game some time ago, and ever since then central banks have taken up the slack. In particular, the German central bank has become the funder of last resort to the ECB, which in turn is the funder of last resort to central banks in other countries.

And it turns out that the Germans are getting increasingly nervous about this. One solution — the one that would actually work — is to address the trade deficits at their root, which means also addressing Germany's trade surplus. That's not going to happen. Wolfgang Münchau picks up the story:

Instead, the Bundesbank prefers to solve the problem by addressing the funding side. [Jens Weidmann, president of the Bundesbank] proposed last week that Germany’s Target 2 claims should be securitised. Just think about this for a second. He demands contingent access to Greek and Spanish property and other assets to a value of €500bn in case the eurozone should collapse. He might as well have suggested sending in the Luftwaffe to solve the eurozone crisis. The proposal is unbelievably extreme.

It also tells us something else: by seeking insurance against a collapse of the euro, the Bundesbank tells us it no longer regards the demise of the euro as a zero-probability event. If the Bundesbank seeks insurance, so should everybody else.

Does this mean that Germany itself is no longer 100% committed to the euro, and in turn that the eurozone is eventually doomed? Maybe! Stay tuned, and keep your eyes peeled for further action on the Target 2 front.

My Forecast: Barack Obama Will Be Reelected and He Won't Do Much

| Mon Mar. 5, 2012 8:46 AM PST

David Fahrenthold and Peter Wallsten write in the Washington Post today that Barack Obama is still a political Rorschach test:

If President Obama wins a second term, he will finally endorse same-sex marriage. Gay rights groups are almost certain. He will also make a new, historic effort to fight climate change — environmentalists are pretty sure. And Obama will finally do just what the Congressional Black Caucus wants. According to some members of the Congressional Black Caucus.

Conservative groups are equally confident that Obama, freed from the fear of losing his reelection bid, would deliver on far-reaching left-wing dreams. GOP candidate Mitt Romney forecasts a runaway spending spree. Newt Gingrich envisions a “war” on the Catholic Church. The National Rifle Association predicts a crackdown on gun owners.

There's really something pretty remarkable about this. You'd think that after three years in office — three years in which, frankly, Obama has governed pretty much the way he said he would — both sides would have cooled down. Nobody on the left would think he's the savior of mankind and no one on the right would think he's the second coming of Karl Marx. But apparently some on both sides still do.

What makes this even weirder is that even if you do think that, deep down, Obama is either hero or heretic, it's hard to believe that anyone really believes the stakes are all that high. Aside from the fact that second-term presidents rarely get very much done in the first place (cf. George Bush on Social Security and immigration reform), Obama is almost certain to face a Republican House and absolutely certain to lack a filibuster-proof majority in the Senate. Even if he wanted to, he couldn't declare war on the Catholic Church and he couldn't pass a historic climate change bill.

Now, Obama will be able to consolidate the implementation of Obamacare if he wins reelection, and I suppose that many on the right have decided this is tantamount to the end of history. Because, you know, an accidental, wildly-expensive, crazy-quilt system that does a terrible job of delivering actual healthcare to actual people is part of the fabric of America handed down by the Founding Fathers. Go figure.

Anyway, here's my prediction: Obama will be reelected and will serve out a relatively uneventful second term. Yes, Obamacare will become the law of the land, and it's even possible that some kind of immigration reform will end up passing if the Republican brain trust finally figures out that their war on Hispanics isn't working out any better for them than it did for Pete Wilson. Probably not, though. Some kind of long-term debt and taxes deal is also possible, but I'd be hard pressed to bet money on it. Foreign affairs are a crapshoot, of course, but let's face it: for all the big talk, Obama's approach to national security isn't really all that different from Mitt Romney's. By 2017 I imagine all this will seem pretty obvious.