Kevin Drum

How to Read Poll Results

| Mon Apr. 6, 2009 12:01 PM EDT
Consider the poll question below, from a CNN survey emailed to me this morning.  If it is to be believed, 95% of all Americans have an opinion about Turkey.  Question: Is it to be believed?  Do you think 95% of Americans could even find Turkey on a map?

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Larry's Problems

| Mon Apr. 6, 2009 11:48 AM EDT
Ezra Klein comments on the recent disclosures of Larry Summers' Croesus-like wealth, garnered in the years before he went to work for the White House:

We now know that in 2008, Summers received more than $5 million from the hedge fund D.E Shaw and more than $2.7 million in speaking fees from other Wall Street firms — including $135,000 for a single appearance before Goldman Sachs. These are sums that would make Tom Daschle positively blush, and they likely would have posed a serious threat had Summers been named Secretary of the Treasury.

Really?  Robert Rubin ran Goldman Sachs.  Paul O'Neill was CEO of Alcoa.  John Snow was CEO and chairman of CSX.  Henry Paulson was another Goldman CEO.

Every one of these gentlemen make Larry Summers look like a pauper.  So why would petty cash levels of consulting and speaking fees have caused him any headaches?  I thought his problem wasn't money, but his deeply held belief that girls can't do long division and we should ship all our toxic waste to Chad.  In the face of that, who cares about a lousy few million bucks?

Voice Mail

| Mon Apr. 6, 2009 11:15 AM EDT
Responding to a recent New York Times piece about the demise of voice mail, Matt Yglesias says, "If you leave a message on my office voicemail, forget about it. I’m not even entirely sure I know how to check it." James Joyner agrees: "I often forget to check my voice mail for days on end and my wife simply won’t check a message, preferring to return any missed calls that show up on her mobile."  And Andrew Sullivan warns us: "I check my voice mail once a week. Just so you know."

I've never had quite the aversion to voice mail that these folks do1, but still, I understand.  Death to voice mail.  One thing, though: I hope everyone who hates voice mail at least records an outgoing message warning callers that a callback is unlikely and providing some other way of getting in touch.  It's one thing not to like voice mail, but it's quite another to have it on your phone and then just leave people hanging wondering why they never heard back from you.

1True story: I once wrote a remarkably full-featured piece of Windows software solely to keep track of voice mail at work.  It started out as a project to teach myself SQL programming and sort of mushroomed from there.  What a waste.  But it was fun at the time.

Fun With Phosphates

| Mon Apr. 6, 2009 10:46 AM EDT
The blogosphere had a few laughs last week at the expense of RedState head honcho Eric Erickson, who warned that revolution was coming and told residents of Washington state, "I’d be cleaning my gun right about now waiting to protect my property from the coming riots or the government apparatchiks coming to enforce nonsensical legislation."  The subject was.....phosphate-free dishwasher detergent.

Seriously.  But guess what?  This story isn't quite the stuff of populist wrath Erickson thinks.  Yes, Spokane has banned the dishwasher detergent with phosphates and Washington state will follow suit next year.  And yes, residents of Spokane have been sneaking into Idaho to buy boxes of Cascade and Electrasol.  But check this out, from today's LA Times:

For those inclined to chuckle at the travails of distant, desperate people with dirty dishes, consider this: The detergent industry has pledged to make every automatic dishwashing soap sold in the U.S. and Canada nearly phosphate-free by mid-2010.

With 12 states — including Washington — phasing in low-phosphate laws by the end of next year and four others considering them, industry officials say they are gearing up to produce a new generation of products that will clean dishes while not harming lakes and streams. (The California Legislature passed a phosphate law last year, but Gov. Arnold Schwarzenegger vetoed it.)

The pledge marks a significant turnaround for an industry that until recently not only opposed such laws but also warned that many phosphate-free dishwashing detergents didn't work the way consumers expected them to.

But plenty soon will be available, said Dennis Griesing, vice president of government affairs for the Washington, D.C.-based Soap and Detergent Assn.

So here's the deal.  Phosphates really are a danger, creating runoff that kills fish and plants.  And Spokane has a uniquely bad problem with phosphates.  And apparently it's entirely possible to create phosphate-free detergents.  The industry just didn't feel like doing it.

But now their hands are being forced.  And guess what?  It turns out they can do it after all.  Imagine that.

Poverty and Stress

| Mon Apr. 6, 2009 12:11 AM EDT
The Washington Post reports today on a research project headed by Gary Evans, a professor of human ecology at Cornell University.  Evans decided to investigate the influence of stress levels on cognitive impairment in children:

"We know low-socioeconomic-status families are under a lot of stress — all kinds of stress. When you are poor, when it rains it pours. You may have housing problems. You may have more conflict in the family. There's a lot more pressure in paying the bills. You'll probably end up moving more often. There's a lot more demands on low-income families. We know that produces stress in families, including on the children," Evans said.

For the new study, Evans and a colleague rated the level of stress each child experienced using a scale known as "allostatic load." The score was based on the results of tests the children were given when they were ages 9 and 13 to measure their levels of the stress hormones cortisol, epinephrine and norepinephrine, as well as their blood pressure and body mass index....The subjects also underwent tests at age 17 to measure their working memory, which is the ability to remember information in the short term. Working memory is crucial for everyday activities as well as for forming long-term memories.

"It's critical for learning," Evans said. "If you don't have good working memory, you can't do things like hold a phone number in your head or develop a vocabulary."

When the researchers analyzed the relationships among how long the children lived in poverty, their allostatic load and their later working memory, they found a clear relationship: The longer they lived in poverty, the higher their allostatic load and the lower they tended to score on working-memory tests. Those who spent their entire childhood in poverty scored about 20 percent lower on working memory than those who were never poor, Evans said.

This is, in a sense, discouraging news.  You can't solve problems unless you first understand the objective reality underlying them, so if Evans's results are confirmed it will be good in that sense.  But stress?  What would it take to make the lives of poor children substantially less stressful?  The resources to tackle that could be harder to marshal than the resources to eradicate poverty itself.  If stress really turns out to be a significant factor in the cognitive development of poor children, addressing the problem may have just gotten harder, not easier.

Sean Hannity Is Right Yet Again

| Sun Apr. 5, 2009 6:02 PM EDT
On Friday, in Strasbourg, President Obama said:

I know that there have been honest disagreements over policy, but we also know that there's something more that has crept into our relationship.

In America, there's a failure to appreciate Europe's leading role in the world. Instead of celebrating your dynamic union and seeking to partner with you to meet common challenges, there have been times where America's shown arrogance and been dismissive, even derisive.

But in Europe, there is an anti-Americanism that is at once casual but can also be insidious. Instead of recognizing the good that America so often does in the world, there have been times where Europeans choose to blame America for much of what's bad.

Ali Frick, who, like Obama, has a foreign sounding name and obviously hates America, notes with a sneer that Sean Hannity chose to highlight only the second paragraph of this before declaring that "the liberal tradition of 'blame America first,' well, that's still alive."  Nice try, Ali.  But Hannity is right: Obama may have blamed Europe second, but he blamed America first, didn't he?  What's the problem?

Also worth noting: Mike Huckabee fulsomely agreed with Hannity, and everyone knows that he's the friendly, cuddly version of right-wing nutcasery.  Since Huckabee didn't object, that must mean Hannity was being fair and balanced, as usual.

(But seriously: Sean Hannity is still obsessing over Bill Ayers and Jeremiah Wright?  Jeebus. Can't he come up with some slightly fresher canard to hurl into the insane-o-sphere five nights a week?  Like maybe Obama is a golem or something?  He's not going to keep this up for eight years, is he?)

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Adventures in Tax Policy

| Sun Apr. 5, 2009 5:13 PM EDT
A couple of weeks ago my monitor died and I had to go out and get a new one.  Unfortunately, it didn't work: its native resolution wasn't supported by my graphics card and it looked fuzzy and jittery and just generally unacceptable.  I got another one a couple of days later but didn't return the bad monitor immediately, and then I was out of town last weekend, and yada yada yada, so it wasn't until today that I finally got around to taking it back

Which turned out to be a surprisingly shrewd move on my part.  You see, back when I bought it California's state sales tax was 5%.  On April 1st, however, as part of the compromise package designed to repair our $14 billion (or whatever) state budget deficit, the sales tax rate went up to 6%.  So when Micro Center's automated refund software calculated how much it owed me, it recalculated the sales tax and decided that in addition to the $176.55 I originally paid via credit card, I was owed an additional $1.49 in cash (see photographic evidence below).  The guy running the register, wisely recognizing that it was futile to argue with the machine, just laughed and handed me the extra dough.

Feeble-minded cash register software aside, I have to say that it speaks well for Micro Center that they didn't waste my time or theirs fussing over this.  Which didn't surprise me.  In fact, I do all my computer shopping there precisely because, unlike Fry's, which deliberately makes the return process as painful as possible, Micro Center has never given me any hassle at all on the rare occasions when I need to return something.  So credit where it's due.  And, apparently, even where it's not.

Should Dick Keep His Trap Shut?

| Sun Apr. 5, 2009 12:17 PM EDT
Via ThinkProgress, I see that David Axelrod hit back today against Dick Cheney's recent criticisms of Obama's foreign policy.  George Bush, by contrast, has said that Obama "deserves our silence," which prompted this from Axelrod: "He's behaved like a statesman. And as I’ve said before, here and elsewhere, I just don’t think the memo got passed down to the vice president."

I've been mulling this ever since Cheney started spouting off a few weeks ago, and I still haven't really made up my mind about it.  Does an outgoing administration owe an incoming one silence?  I don't think that's always been the case (historians please correct me here if I'm wrong), and I wonder if it really should be.  Sure, it would be unseemly for ex-presidents and their staffs to engage in partisan feeding frenzies after they leave office, but is there really any reason why they should all take vows of silence?  If Cheney thinks torture and warrantless wiretapping are vital to the nation's security, then maybe he should go ahead and say so.  Why not?

Obviously this isn't the best time to bring this up, since after eight years of wrecking the country most of us really do think the Bushies ought to take a nice, long time out.  But just in general, and assuming it's done in moderation, I'm not sure I see the harm in former administration mucky mucks continuing to express their (sincerely held!) opinions.  Let a thousand flowers bloom and all that.

Eat the Creditors

| Sun Apr. 5, 2009 11:52 AM EDT
When big financial companies go bust (or are bailed out), shareholders usually lose nearly everything.  Which is as it should be.  But how about creditors and other counterparties?  So far, Uncle Sam has mostly been keeping them whole. It's not 100% clear to me why this is, but it appears to be motivated by a fear of domino effects (creditor banks would take huge losses, so they'd go bust and their creditors get wiped out, and before long the whole world is wiped out) combined with a fear that it will become impossible for banks to raise money if bondholders smell even a whiff of danger.

Maybe.  But Tyler Cowen points out that one of the services creditors provide the economy is keeping companies honest.  Regulators can only do so much, and creditors are the ones with an incentive to keep a gimlet eye on their investments and pull back when companies start looking like bad risks.  But what incentive do they have to do that in the financial sector if the feds are always going to bail them out anyway?

This is the standard moral hazard problem, and the more it becomes institutionalized (after 30 years of bailing out Latin America, S&Ls, Mexico, Asia, LTCM, and AIG) the worse it gets.  Tyler doesn't think bankruptcy will work, so he tosses out a couple of other ideas:

The key to effective regulatory reform is to find a credible means of imposing some pain on creditors.

Here is one possibility. The government has restricted executive pay at A.I.G. and banks receiving government funds, but this move fails to recognize that the richest bailout benefits go to creditors. Restricting compensation at these creditor firms would have more force — if it is done transparently, in advance and in accordance with the rule of law. A simple rule would be that some percentage of bailout funds should be extracted from the bonuses of executives on the credit or counterparty side of transactions.

Such a rule would make lenders more conservative, which would generally be a good thing. To make sure that this measure doesn’t choke off economic recovery, a workable plan would impose compensation restrictions only after the economy improves and banks are recapitalized.

Here is another option: Even in good times, when there is no threat of insolvency on the horizon, credit agreements should provide for the possibility of a future, prepackaged bankruptcy. Those agreements should require that the creditors themselves would suffer some of the damage — even if the government stepped in to bail out the afflicted firm.

There is a risk that these sacrifices will not be extracted when the time comes, but the prospect might still check the worst excesses of leverage.

The central issue here appears to be credibility: these kinds of things only work if creditors believe the government will have the guts to follow through with them when the time comes.  So that means we need something like the equivalent of the guy who tosses his steering wheel out the window in a game of chicken.  But what would it be?  What could we do today that would credibly persuade creditors we're going to hold their feet to the fire tomorrow when systemic risk rears its ugly head again?  Suggestions?

Quote of the Day - 4.5.09

| Sat Apr. 4, 2009 11:11 PM EDT
From the Wall Street Journal, about a guy who just finished building a spectacular $24 million home in Toronto with a private concert hall:

Jim Stewart, who will only say he is in his 60s, is a top-shelf classical violinist who earned his millions writing calculus textbooks.

You can earn millions writing calculus textbooks?  Seriously?