Kevin Drum - July 2013

How a Trade Pact Between Europe and America Might Really Be Aimed at China

| Tue Jul. 23, 2013 10:04 PM PDT

I've mentioned before that TTIP—the trade pact between Europe and America that's currently under negotiation—is likely to have a fairly modest impact on trade itself. That's because trade between Europe and America is already pretty free. Rather, the most important effect of TTIP is likely to be in the areas of regulatory harmonization and the removal of various non-tariff barriers, including some contentious negotiations over IP law.

Dan Grant agrees, but suggests a way of looking at this that I haven't seen elsewhere:

So if the TTIP isn’t especially controversial and its member states seem inclined to smooth off its rough edges, why is it significant?

China.

The TTIP isn’t just about lowering trade barriers between America and Europe; it’s also about setting rules. It will harmonize regulations for the entire trade area....America and Europe will set the rules for the global standard of free market enterprise.

....China’s trade record with other countries has been marred by claims of dumping, unsafe products, and consistent complaints over intellectual property rights violations, but the consequences to Beijing have been marginal. The creation of a massive trade bloc has the potential to change this dynamic. A robust TTIP advantages U.S. and EU companies, boosting their competitiveness and expanding their market share. Billions of dollars worth of Chinese products would be less competitive in the U.S. and EU markets. China could see its exports bottled up within its shores.

....Even though the Western press has largely overlooked this dimension of the TTIP, Beijing most assuredly has not. Intermittent claims of a potential trade cold war are bubbling up in Chinese media, and they’re likely to intensify as the TTIP negotiations advance....In light of such points, it’s important to note that the establishment of the TTIP should not be interpreted as an overtly aggressive move against China. Instead, it’s an opportunity for Beijing to formally make common cause with the developed economies of the world.

I don't have the foreign affairs chops to really evaluate this, but it's an interesting idea. Click the link to read Grant's entire argument.

UPDATE: Evan Soltas has more on this subject here.

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Quote of the Day: Nine Months Is an Eternity in Apple-Land

| Tue Jul. 23, 2013 6:36 PM PDT

From Piper Jaffray analyst Gene Munster, commenting on sales of the iPhone 5:

This is a tired product, it's been out three quarters.

He's not wrong, but it's still a pretty astonishing statement, isn't it? In any case, Munster was actually using this as a defense of Apple's second straight quarter of mediocre results. iPad sales were down 14 percent and Mac sales were down 7 percent, but iPhone sales were up 20 percent. That's nothing to write home about, but it's better than last quarter. And while the softness of iPad sales isn't too surprising considering the huge channel inventory glut at the end of last quarter, it's still bad news.

Overall, revenue was flat and earnings were down 22 percent from last year. Despite all this, Apple beat expectations, which just goes to show that expectations aren't what they used to be. I'm certainly not writing off Apple or anything, but at the moment it sure looks like it's not just the iPhone 5 that's tired. I think Apple looks tired. Perhaps they've succumbed to the imperial headquarters disease.

House Will Hold Vote to Defund NSA Phone Records Program

| Tue Jul. 23, 2013 2:37 PM PDT

None of the American newspapers I read seem to think this is worth putting on the front page, but the Guardian reports that there's serious movement afoot to restrict the NSA's ability to collect domestic phone records:

Congressional opposition to the NSA's bulk surveillance on Americans swelled on Tuesday as the US House prepared to vote on restricting the collection of US phone records and a leading Senate critic blasted a "culture of misinformation" around government surveillance.

Republican congressman Justin Amash prevailed in securing a vote for his amendment to a crucial funding bill for the Department of Defense that "ends authority for the blanket collection of records under the Patriot Act." The vote could take place as early as Wednesday evening.

....The amendment would prevent the NSA, the FBI and other agencies from relying on Section 215 of the Patriot Act "to collect records, including telephone call records, that pertain to persons who are not subject to an investigation under Section 215."....Its outcome is difficult to predict. The vote by itself will not restrict the surveillance, it would simply include Amash's amendment in the annual Defense appropriations bill, which the House is considering this week; the Senate must also approve the bill before it goes to President Obama's desk.

Amash's amendment allows the NSA to spend money executing a FISA court order only if the court order includes the following sentence:

This Order limits the collection of any tangible things....to those tangible things that pertain to a person who is the subject of an investigation described in section 501 of the Foreign Intelligence Surveillance Act of 1978.

The Supreme Court ruled decades ago that no warrant was necessary to collect phone records, and the NSA phone record program originally operated without a warrant under George Bush. However, that changed in 2006, and presumably phone companies would be unwilling to provide bulk metadata in the future without a warrant. So if this amendment passes, it would most likely put an end to the sweeping collection of domestic phone records.

It's not clear yet whether passage is likely, or whether it would survive the Senate if it does. But this is a genuine bipartisan effort, not just a symbolic vote that's doomed to failure. Regardless of what happens, it's worthwhile holding this vote just to find out where everyone stands on this.

Today's Obamacare Poll Weirdness

| Tue Jul. 23, 2013 11:02 AM PDT

Here's yet more poll weirdness. This is from a National Journal poll about Obamacare:

Given the choice to either repeal the law, wait and see how it takes effect, or add money to aid its implementation, only 36 percent of adults picked outright repeal....And when told that an independent Congressional Budget Office study had determined that repealing Obamacare would actually increase the deficit....42 percent said “Congress should repeal the program to expand coverage because the government can’t afford it at a time of large budget deficits.”

Is this a typo? As written, it suggests that 36 percent of American want to repeal Obamacare, but when they learn that this would increase the deficit, the number goes up to 42 percent. That can't be right, can it? What am I missing here?

UPDATE: Alex Roarty, who wrote the National Journal article, emails with the following clarifications:

There are two main points that, I think, explain the discrepancy. First, the question that yielded the 36 percent repeal figure gave respondents three possible answers (along with letting them say they were unsure). The question that gave the 42 percent figure allowed only one of two responses (along with the unsure response).

So it's safe to assume the extra possible answer siphoned some of the people in favor of outright repeal -- some of the 30 percent who elected to "wait-and-see to make changes" would likely pick immediate repeal if only given a choice between that and retaining the law ad infinitum.

Second — and I think this gets more to the heart of your question — yes, people were told that the independent Congressional Budget Office had determined that repealing Obamacare would increase the deficit. They were also told that "Republicans want to repeal the health care law partly because they say it will cost too much, especially as more people begin to receive benefits." So, basically, people could choose to believe the CBO was wrong.

Pitting a partisan talking point versus a independent report obviously tips the scale (usually these types of questions set up a Republican vs. Democrat message). But I should probably have noted that respondents were also told the GOP version of things, which obviously influences the responses.

So there you have it.

Republicans Are Really, Really Not Happy With Their Leaders

| Tue Jul. 23, 2013 10:21 AM PDT

Here's a chin scratcher from a recent ABC/Washington Post poll:

Is this due to moderates who think the GOP leadership has become a captive of the tea party? Or is it due to tea partiers who think the leadership is selling out to the moderates?

Or, worse yet, is it both? Another poll, please.

Apparently Undergraduate Finance Students Believe in ESP

| Tue Jul. 23, 2013 9:25 AM PDT

Via Andrew Sullivan, Chris Dillow points us toward a weird experiment in a fourth-year finance class at the Autonomous University of Barcelona. One student flipped a coin five times and a group of 20 students predicted heads or tails for each toss. Then a second group of students was told that there would be another set of five coin tosses. The best and worst guessers from the first group would try their luck again, and everyone in the second group would earn money for each coin flip that the worst guesser got right.

But there's more! If students in the second group were willing to pay for the privilege, they could instead earn money for each coin flip that the best guesser got right. There's no reason to do this, of course, since guessing is just guessing. Nonetheless, 82 percent of the students paid to switch to the better guesser.

But there's even more! Just to add some baroque complexity to the whole thing, students in the second group had to say beforehand how much they'd pay to switch from the worst guesser to the best guesser, and they had to provide a different payment depending on how good the guessers were. For example, maybe you'll pay one euro to switch to a guesser who outpredicted the worst guesser by two flips, but you'll pay two euros to switch to a guesser who outpredicted the worst guesser by three flips. Then the best and worst guessers were introduced, along with their guessing records, and the professors employed yet another baroque method to decide which students were allowed to switch. Apparently they did this solely to get a matrix of prices from the students. Here's what they got:

Sure enough, students were willing to pay more depending how much better the top guesser was compared to the worst guesser. So what does this all mean? Here are some guesses:

  1. Fourth-year finance students in Barcelona have no clue about the independence of coin tossing events.
  2. FYF students like to play mind games with their professors.
  3. FYF students believe in telekinesis.
  4. FYF students believe in supernatural forecasting abilities. (N.B. This would explain much Wall Street behavior.)
  5. FYF students in this class didn't really understand the experiment.
  6. FYF students are skeptical sorts and figured there was a trick involved in all this.
  7. The sample size was too small to be meaningful.
  8. Something else about the methodology invalidates the results.

Feel free to add your own guesses in comments.

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The Latest Republican Threat: Obamacare or Your Life

| Tue Jul. 23, 2013 8:08 AM PDT

A few weeks ago, Republicans unveiled their latest brainstorm: a menu of concessions that President Obama could choose from in order to avoid a debt limit crisis. Privatizing Medicare would get him a debt limit increase for the rest of his term. Cutting SNAP and block granting Medicaid would buy him a couple of years. Means testing Social Security would get him a few months.

The whole thing was childish enough that it died a quick death even among tea partiers. So now they have a new rallying cry: repeal Obamacare or they'll shut down the government. Ed Kilgore comments:

I'm not sure congressional Republicans really want to enter a promising midterm election year just having engineered another phony crisis, but I also don't know if they can put this particular genie back in the bottle. It's taken a few years, but the GOP has managed to talk itself into a very firm belief that this national version of Mitt Romney's Massachusetts health plan is a satanic abomination that will either, depending on which talking point they are following at any particular moment, crash and burn taking the entire U.S. economy down with it, or succeed in seducing Americans to sell themselves into the voluntary slavery of "socialized medicine."

At a time when major elements of the GOP's conservative "base" are already convinced—because they hear it constantly from conservative media gabbers—that the only thing standing in the way of total victory for The Cause is the weakness of GOP lawmakers, the "kill Obamacare or shut down the government" war cry could quickly get way out of hand. It doesn't help that so many conservatives continue to believe, notwithstanding all the evidence to the contrary, that a government shutdown would show Americans how little they actually miss Big Government.

In a sense, I suppose this was inevitable. Republicans are convinced that once Obamacare goes into effect on January 1, it will become popular pretty quickly and repeal will be off the table forever. So the closer we get to D-Day, the more desperate they get to derail it.

For what it's worth, I think Republicans are right to believe this. Behavioral economics taught us a long time ago that people react a lot more strongly to losing something than they do to not getting it in the first place. Once guaranteed issue and community rating and subsidies and all the rest have been in place for a year, even tea partiers will be loath to see them taken away.

So it's now or never. I don't know if cooler heads will prevail on this, but the appeal of combining debt ceiling hostage theatrics with repeal of the hated Obamacare is pretty obvious. We might be hearing about this for a while.

John McCain Gets Some Military Advice He Probably Didn't Want to Hear

| Mon Jul. 22, 2013 9:03 PM PDT

John McCain, who never met a war he didn't like, got into a heated exchange last week with Army Gen. Martin Dempsey, the chairman of the Joint Chiefs of Staff. McCain, who was unhappy because Dempsey declined to tell him what private advice he had given President Obama about intervention in Syria, subsequently threatened to put a hold on Dempsey's nomination for a second term.

Today McCain got his answer in a letter to the Senate Armed Services Committee. After laying out five options for military intervention in Syria, Dempsey made his feelings clear:

All of these options would likely further the narrow military objective of helping the opposition and placing more pressure on the regime. We have learned from the past 10 years; however, that it is not enough to simply alter the balance of military power without careful consideration of what is necessary in order to preserve a functioning state. We must anticipate and be prepared for the unintended consequences of our action. Should the regime' s institutions collapse in the absence of a viable opposition, we could inadvertently empower extremists or unleash the very chemical weapons we seek to control.

I know that the decision to use force is not one that any of us takes lightly. It is no less than an act of war. As we weigh our options, we should be able to conclude with some confidence that the use of force will move us toward the intended outcome....Deeper involvement is hard to avoid.

Translation: You guys thought Afghanistan and Iraq were both brilliant ideas, didn't you? Cakewalk city. Maybe this time you should think a little harder. Something tells me this wasn't the private advice McCain was hoping to hear.

Nate Silver Didn't "Fit In" at the Times Because....He Was Right Too Often?

| Mon Jul. 22, 2013 3:42 PM PDT

Why did Nate Silver leave the New York Times? Public editor Margaret Sullivan thinks that part of the reason is that he was never fully accepted by the paper's old guard:

I don’t think Nate Silver ever really fit into the Times culture and I think he was aware of that....His entire probability-based way of looking at politics ran against the kind of political journalism that The Times specializes in: polling, the horse race, campaign coverage, analysis based on campaign-trail observation, and opinion writing, or “punditry,” as he put it, famously describing it as “fundamentally useless.”

....The first time I wrote about him I suggested that print readers should have the same access to his writing that online readers were getting. I was surprised to quickly hear by e-mail from three high-profile Times political journalists, criticizing him and his work. They were also tough on me for seeming to endorse what he wrote, since I was suggesting that it get more visibility.

Even for those of us who are pretty cynical about political reporting, this is astonishing. If I were editor of the Times, I'd do whatever it took to find out who those three are, and then fire them instantly. Whoever they are, they shouldn't be trusted to cover the pig races at a country fair, let alone write about politics for the most influential newspaper in the country.

At the same time, this tidbit from Politico about Silver's decisionmaking process while he was weighing competing offers from the Times and ESPN worries me just a little:

Silver had told The Times that he wanted to expand to weather, economics and anyplace else at The Times that had statistics and numbers he could bring to life....Nate will appear on the air on ESPN and ABC, and will get “verticals,” or web hubs, devoted to a variety of new topics. He’s very interested in education, so there’s been a lot of conversation about that.

Silver has done a great job with sports and campaign polling. But these are fairly unique areas. In the case of sports, Silver has a lot of subject matter expertise to go along with his number crunching. In the case of campaign polling, you don't really need that much. You can get by with a pretty pure data-driven approach to the whole thing.

But weather, economics, and education? I'm skeptical that you can just parachute into those fields and add a lot of value. They're far more complex, are already heavily populated with sophisticated statistical modeling, and generally require some serious subject matter expertise in addition to raw number-crunching skill.

It's possible that I'm just overreacting to a brief throwaway mention in the Politico piece. If all Silver is trying to do is improve on mainstream news reporting of number-heavy topics, that shouldn't be too hard. Still, I'd hate to see the basic 538 model get naively overextended into anything that has lots of numbers attached to it. It's one thing when bloggers (like me) throw up simple wonk-lite analyses of complex topics. After all, no one really takes us seriously as experts. But the 538 brand is all about expertise. It's inherent in everything that appears there. I hope Silver is careful about what he takes on as he extends his brand.

Today's Fluff: M&M's and Royal Babies

| Mon Jul. 22, 2013 1:47 PM PDT

When Marian came home from Virginia, she did not bring me a Virginia ham or Virginia peanuts. She brought me an M&M's chocolate bar. I've never seen such a thing before, so I cracked it open to see what was inside. Answer: it's a chocolate bar with mini-M&M's embedded in it. The mini-M&M's, of course, are candy shells with chocolate inside, so the whole thing is basically a chocolate bar with bits of candy in it.

Now, I can see the case for M&M's. They're handy finger food, and they famously melt in your mouth, not in your hands. But that's because they're bits of chocolate surrounded by a candy shell. The chocolate bar is bits of candy surrounded by a chocolate shell. I don't understand the point of this.

And before anyone gets peevish with me, yes, I know this is my third fluffy, nonpolitical post in a row. But this is important! What is the point of an M&M's chocolate bar?

And as long as we're on fluffy news, my sister writes to castigate me for blogging about "quantum whatevers" when there's a new royal baby to talk about. It's a boy! According to the Guardian, "The names of the baby will be announced in due course." But you probably want to read the Daily Mail for this kind of news anyway.

Things are obviously getting out of control around here. At this point, how about if we just treat this as an open thread for whatever trivia happens to be occupying your mind at the moment?