Kevin Drum

Red Scares and Green Tech

| Sat Feb. 13, 2010 8:41 PM EST

It's almost unfair not to let Tom Friedman be my spokesman for a post about the "we're in a green race with China" crowd, but I'll go with Bob Herbert instead:

Two weeks ago, as I was getting ready to take off for Palo Alto, Calif., to cover a conference on the importance of energy and infrastructure for the next American economy, The Times’s Keith Bradsher was writing from Tianjin, China, about how the Chinese were sprinting past everybody else in the world, including the United States, in the race to develop clean energy.

That we are allowing this to happen is beyond stupid. China is a poor country with nothing comparable to the tremendous research, industrial and economic resources that the U.S. has been blessed with. Yet they’re blowing us away — at least for the moment — in the race to the future.

Brad Plumer thinks this idea is way overblown:

This notion that we're in a race with China to see who can develop solar panels and wind turbines the fastest isn't really accurate. If China zooms ahead and figures out how to make really cheap wind turbines, that doesn't hurt anyone — it just makes the enormous task of cutting global carbon emissions that much easier.

Dave Roberts agrees with Brad, but tweets:

I don't dispute political merit, tho I'm not convinced it will work.....

What sayeth the hive mind? As near as I can tell, Brad is almost certainly right on the merits. If China produces lots of green tech, that's good for everyone. Sure, it would be nice if this stuff were made in the U.S. by U.S workers, but the competitiveness of American manufacturing vs. Chinese manufacturing goes way deeper than solar panels, and in the short to medium term there's probably not a lot that's going to change our relative advantages in this area.

But — is Dave right about the political merits of the "race" metaphor? I haven't made up my mind on this, but I've lately become more receptive to the idea that, for better or worse, the only way to get Americans to take this stuff seriously is to kick it old school and start hauling out that old time Cold War evangelism. Frame green tech as a matter of vital economic and national security superiority over the Reds and quit worrying overmuch about whether that's really technically accurate. Just figure that it's close enough, it's language everyone understands, and it'll do a better job of motivating development than a couple hundred more PowerPoints about receding glaciers.

This is pretty much how Sen. Lindsey Graham (R–SC) does it, though he talks more about "energy independence" than about a green race with China. But those are just two sides of the same coin, and if one works then so does the other. But will it work? On the one hand, Graham obviously has a better feel for how to talk to centrists and conservatives than we lefties do. On the other hand, so far he doesn't seem to be much making headway with them.

But it's worth thinking about. Arguing endlessly with Sean Hannity and James Inhofe about whether or not snowstorms are evidence of global warming sure doesn't seem to be getting us very far. Maybe it's time for a rethink.

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Earnings Manipulation for Pros

| Sat Feb. 13, 2010 12:30 PM EST

The Wall Street Journal has a fascinating little story today. A pair of Stanford researchers examined half a million earnings reports and concluded that companies routinely adjust their earnings upward. How did they figure this out? It turns out that a favored way of doing this is to use accounting adjustments to boost your earnings per share ever so slightly — say, from 5.4 cents to 5.5 cents, which then gets rounded up to 6 cents. And a difference of a penny a share in the headline earnings number makes a noticeable difference in your stock price:

The authors' conclusions rest on a simple piece of statistical analysis. When they ran the earnings-per-share numbers down to a 10th of a cent, they found that the number "4" appeared less often in the 10ths place than any other digit, and significantly less often than would be expected by chance. They dub the effect "quadrophobia."

....In their most intriguing finding, the authors found that companies that later restate earnings or are charged with accounting violations report significantly fewer 4s. The pattern "appears to be a leading indicator of a company that's going to have an accounting issue," Mr. Grundfest said.

So here's your pro investing tip for the day: If you're thinking of buying stock, check to see if the company has too few threes or fours in the first decimal place of their earnings-per-share numbers over the past few years. If they do, buy the stock! These guys know how to please the analysts. But don't hold on too long! Eventually they'll restate and you'll be screwed. Timing is everything.

How the Game is Played, Part 576

| Fri Feb. 12, 2010 6:40 PM EST

A few hours ago Felix Salmon wrote a post about the fate of financial reform in the Senate:

Are there really Republicans who would stick their neck out and filibuster a financial-reform bill aimed at reining in Wall Street? Voting against it is one thing, but killing it with a filibuster is surely not a vote-winner anywhere in the US right now.

I mentally shrugged when I read that because the answer is pretty obvious: Republicans will simply portray any Democratic bill not as something that reins in Wall Street, but as a convoluted Beltway boondoggle that puts government bureaucrats in charge of the banking system, kills off credit to Main Street, stifles economic growth, destroys jobs, and shovels money into the hands of favored interest groups. Fox and Rush and the Journal will all sing along, tea partiers will start demonstrating against it, and before long it will get to the point that not only will Republicans filibuster it, but half the Democratic caucus will join in.

In other words, just another day at the office. But no! Apparently I'm still not cynical enough. A few minutes later I was reading Jon Chait's blog, and it turns out that the right-wing "Committee for Truth In Politics" — George Orwell would be pleased by the homage — is already running TV ads that don't merely portray the reform bill as bad for the economy, but specifically as a bailout for Wall Street bankers. The ad has been running in ten states for the past week, according to the Campaign Media Analysis Group. Factcheck.org has the dope here.

And that, boys and girls, is how the game is played.  Just portray a bill meant to rein in banks as a bill meant to bail out banks and see if the noise machine plays along. If it doesn't, try something else. Maybe suggest that instead of protecting consumers, it will remove consumer protections. Or that instead of regulating derivatives, it will set them free. Simple. Why bother making up complicated lies when simple ones will do just fine?

Friday Cat Blogging - 12 February 2010

| Fri Feb. 12, 2010 3:00 PM EST

Today we have an exciting double feature of cat videos. On the left, Domino jumps onto my lap. Exciting! On the right, Inkblot heads out to his favorite spot to.....well, I don't want to give away the ending. You'll have to watch to see what he does when gets there. It's always the same — though I'm not sure just what the attraction of that exact spot is. Plus the whole thing is accompanied by authentic neighborhood background sounds! Just remember: the key to enjoying this kind of thing is to have low expectations.

And in other news, we have this:

A poll of 2,524 households found that 47.2% of those with a cat had at least one person educated to degree level, compared with 38.4% of homes with dogs.

"We don't know why there is this discrepancy," [said Dr Jane Murray, a lecturer in feline epidemiology at Bristol University]...."Our best guess is that it's to do with working hours and perhaps commuting to work, meaning people have a less suitable lifestyle for a dog."

Pshaw. It's because people of discriminating taste prefer cats. Let's not sugar coat this in order to be politically correct. And now, on with the show!

Quote of the Weekend: Valentine's Day Edition

| Fri Feb. 12, 2010 2:56 PM EST

From Dan Drezner, offering some Valentine's Day advice:

My dear readers, if you are so lucky as to find a soulmate that shares an enthusiasm for a particular movie genre —  zombies, for example — then enjoy that shared interest to the hilt on a date movie.  Otherwise, do the right thing and go rent The Philadelphia Story.

Roger that.

The American Internet

| Fri Feb. 12, 2010 2:31 PM EST

Nancy Scola uses Iran's recent ban on Gmail as an occasion to say this:

I've been squawking recently about the rising time of anti-Internet rhetoric that is at its core anti-American Internet rhetoric, and how that's something that those of us who love the Internet should perpare ourselves to deal with. We saw it with China, when they responded to a possible Google pullout by complaining that the World Wide Web is hopelessly flooded with American content, and we see it again and again in Cuba, where the Castro regime argues that the content on the Web is so skewed toward American interests that they just don't want it for their people. From the perspective of Beijing or Havana, it's as if you turned on a TV in New York City and 470 of 500 channels were running Latin American telenovelas. More local, non-English content would be good for everyone involved.

Maybe this is a nit, but I'd say it's more "anti-American internet rhetoric" than "anti-American internet rhetoric." After all, the internet isn't like turning on a TV in New York and getting mostly non-English channels. My bookmark bar includes the New York Times and the Wall Street Journal and McClatchy because I chose them. And I chose them because I'm an American who wants English-language news. They aren't forced on me. If I were Chinese and wanted Chinese-language content, I'd go out and find it, and that's what my browser would be filled with.

Likewise, taking the Cuban government at face value when they say the Web is skewed is pernicious. Their problem isn't that there's no Cuban content on the internet, their problem is that given a choice, Cubans apparently like American content better than that of the Castro brothers. But that's a problem with the Castros, not the internet. Ditto for Iran. Gmail doesn't have an American viewpoint. It's an email service. Its content is only American if you use it to send email to Americans.

Scola's concern is real: more local content is good, and complaints about how the internet is run have to be taken seriously. But a lot of it is just posturing by authoritarian regimes. As Scola says, "This can't be just about Google, and the hope is that a defense of the global web will emerge as a core value held by freedom-loving people everywhere, that OneWebDay, will emerge as the same sort of global celebration as EarthDay has become. The battle lines are pretty quickly being drawn."

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Dumping Medina

| Fri Feb. 12, 2010 1:36 PM EST

Dave Weigel tweets:

May I just say that Beck and the conservative blogosphere are doing themselves proud by dumping Medina.

Ah, the soft bigotry of low expectations. Debra Medina has flirted with 9/11 trutherism, apparently thinks there's Soviet brainwashing afoot in the Texas police, believes Texas should be nullifying more federal laws, has been forced to deny that she's a Bilderberger, and has been disowned as a nutjob by Glenn Beck. Glenn Beck! And of course she's an unknown candidate running for governor against two longtime conservative stalwarts, so dropping her like a hot potato is pretty much cost-free. If you can't dump someone like that, who can you dump?

On a more serious note, Dave looks at the bigger picture:

I think because the mainstream media were slow to cover the Tea Parties as anything but a ridiculous joke, there’s been a lot of overcompensating that imbues these activists with fresh, bold, out-of-nowhere political tactics. But that the fact is that some people on the political fringes have made lateral moves from Alex Jones-listening or Obama birth certificate-sleuthing or Bilderberg-obsessing into the Tea Party Movement. And if Glenn Beck hadn’t decided to see how far Medina wanted to go with this, she’d be on track to get into a gubernatorial run-off.

FWIW, I don't think the tea party movement has any more chance of a long political life than Sarah Palin. Of course, for those of you who think I'm dismissing Palin too cavalierly, that might be bad news.

Calling the Tea Partiers' Bluff

| Fri Feb. 12, 2010 12:43 PM EST

Rep. Paul Ryan's budget plan — which guts Medicare, slashes Social Security payments, taxes health insurance, and makes deep cuts in every other area of the federal budget except for national defense — is, as Bruce Bartlett says, "politically ludicrous." But he still thinks it's a useful proposal since it forces conservatives to put their money where their mouths are. Literally:

According to the CBO, under the Ryan plan federal debt as a share of the gross domestic product (GDP) would rise from 61% this year to 100% in the year 2045 before falling to zero in 2080....Ryan achieves this result without any tax increase at all — 100% of the debt reduction comes from lower spending. It is, in short, the budgetary Holy Grail for the tea party crowd.

....In my opinion, support for the Ryan plan must be the minimum requirement for anyone who considers themselves members of the tea party brigade and any politician seeking its endorsement. If those like former Alaska governor Sarah Palin, the current darling of the tea party crowd, are unwilling to immediately and unequivocally endorse the Ryan plan or put forward something equally serious and comprehensive, then in my opinion they have no credibility on the budget and no right to oppose the sorts of tax increases that I believe are unavoidable.

....The next time I see pictures of a tea party crowd I will be looking carefully for signs that say "Abolish Medicare," "Raise the Retirement Age" and "Support the Ryan Plan!" I won't hold my breath waiting.

Bruce is right. If Axiom I is "Taxes must not go up" and Axiom II is "The budget must be balanced," then Ryan's plan is pretty much unavoidable. For a long time conservatives have accepted Axiom I but not Axiom II, and this has been a huge electoral winner for them. But now they all say they accept Axiom II too. Paul Ryan is calling their bluff.

Quote of the Day: Health Insurance

| Fri Feb. 12, 2010 12:17 PM EST

From Austin Frakt, a health economist at Boston University:

The evidence that insurance and the access to care it facilitates improves health, particularly for vulnerable populations (due to age or chronic illness, or both) is as close to an incontrovertible truth as one can find in social science.

No argument from me. Routine access to medical care is cheaper than emergency room visits, promotes preventive medicine, reduces pain, increases mobility and employability, lowers stress, prevents medical bankruptcies, and — unless none of this stuff matters at all — almost certainly lengthens lives.

Betting on Brad

| Fri Feb. 12, 2010 11:30 AM EST

A while back I made a joke about cities financing themselves via collateralized parking meter obligations. Just a joke, guys! But today, in the art-imitates-art category, Nick Baumann reports that Cantor Fitzgerald, a Wall Street investment firm, is planning to start selling a way to bet on the success or failure of Hollywood films:

"This is such a bad idea on so many levels," says Lynn Stout, a law professor at UCLA and an expert in derivatives, the category of financial instruments that includes Cantor's proposed box office futures. "What they want to do is basically open up a casino for people who want to make money for predicting the next blockbuster."

....Let’s say you were responsible for Gigli, and you realized during filming that it was shaping up to be one of the worst movies ever made. Instead of writing off the $54 million you’d shelled out to make the film, you could simply buy up a stack of futures contracts priced on the assumption that the movie would tank. Then, to nudge that failure along, you could slash the marketing budget, or decide to add 30 more dreadful minutes to the final cut. Played correctly, a studio could inflict a movie like Gigli on the world and still turn a profit. If box office futures trading happens, being a Hollywood insider would take on a whole new meaning.

This sounds like a great way to finally destroy one of America's few remaining big export industries. Lenin said once that capitalists would sell communists the rope to hang them with, but he was wrong. The communists are gone, so we're selling it to each other, and even a world historical economic meltdown won't convince us to stop. It's like watching a coke addict knocking over the bystanders as he barrels out of rehab to track down his old crack dealer.