From an attorney friend who's long been more pessimistic than me1 about the possibility that the Supreme Court might overturn Obamacare:

Dalia Lithwick posted an updated piece after the arguments — the gist of which was that they really might strike it down. She didn't mention her "no they really won't" piece (I wouldn't expect her to yet, but it's interesting how fragile her previous piece's argument seems to be).

Toobin's hair on fire response is interesting because I think legal watchers deep down believed that the Court would not be so superficial as to unhinge established jurisprudence for an ideological cause. It's a fun parlor game, but they figure that when sobriety prevails the court will bow to precedent where — as here — the issue is squarely within existing precedent. Well, no, and they are perfectly free to channel right wing bullshit points such as inactivity vs. activity.  I think this really rattled Toobin to see justices behaving like congressmen from Alabama in their arguments.

Lithwick points out that no one on the right discussed the case law. I mean .... why, who needs it!?

I'm still sticking with my guess that the individual mandate survives. But I'll confess that I'm sure not thinking it'll be a 7-2 decision any longer.

1Yeah, the Supreme Court is a political body and always has been. I've never thought otherwise. But I had a hard time believing they could be so brazenly political that they'd overturn a law so plainly supported by past precedent. Just goes to show that it's almost impossible to be too cynical these days.

Virtually everyone agrees that today's arguments before the Supreme Court were a disaster for the Obama administration. Adam Serwer tells us why:

Solicitor General Donald B. Verrilli Jr. should be grateful to the Supreme Court for refusing to allow cameras in the courtroom, because his defense of Obamacare on Tuesday may go down as one of the most spectacular flameouts in the history of the court.

Stepping up to the podium, Verrilli stammered as he began his argument. He coughed, he cleared his throat, he took a drink of water. And that was before he even finished the first part of his argument. Sounding less like a world-class lawyer and more like a teenager giving an oral presentation for the first time, Verrilli delivered a rambling, apprehensive legal defense of liberalism's biggest domestic accomplishment since the 1960s—and one that may well have doubled as its eulogy.

This is just bizarre. Verrilli is an experienced guy. He's been involved in loads of Supreme Court cases and has personally argued more than a dozen. So what on earth happened? So far I haven't seen anyone even take a stab at trying to figure it out. How could Verrilli possibly be unprepared for the questions he got, given that the conservative arguments against Obamacare have been extremely public and obvious for well over a year? Everyone in the world knew what to expect. Everyone except Verrilli, apparently.

This is just mind-boggling.

Dan Malouff reports that enclosed malls are shutting down all over the Washington DC metro area. Atrios comments:

There's an absolutely absurd amount of retail floor space in this country, so this isn't all that surprising.

But there are two things going on here. First, as the chart on the right shows, there was a big spike in construction of retail space between 2004 and 2007 that was unsustainable, and the Great Recession unsustained that spike with extreme prejudice. So in one sense, no, it's not that surprising that a bunch of retail space has shut down recently.

At the same time, the long-term trend is up, up, up, and the recent bursting of the retail bubble, which was part of the wider commercial real estate bubble, seems to have run its course. (Knock wood.) But despite that, enclosed malls are still shutting down, part of a trend that's been going on for years. Here in my neck of the woods, for example, I don't think a new enclosed mall has been built in the past 20 years. But that doesn't mean retail is dead. During that same period, three gigantic open-air retail centers have opened within five miles of my house, each with over a million square feet of retail space. For some reason, enclosed malls are out and open-air "power centers" (or "lifestyle centers" or whatever they're calling them these days) are in.

I actually find this a little inexplicable. Here in Southern California it makes at least a bit of sense, since the weather is generally pretty good. Outside the sunbelt, though, not so much. What's more, these outdoor malls are a pain to navigate. In a typical enclosed mall, parking forms a ring around the structure itself, which is fairly compact and walkable. But the outdoor malls are often just the opposite: a gigantic parking lot with stores in an outer ring. This means that it's a long walk if you want to visit more than one store.

So why are enclosed malls on the outs? They're good in all weather, and they're convenient if you want to shop at a bunch of different stores. Open air malls are neither. On the other hand, if you want to shop at one store, and park close to it, they're a better option. And they're outdoors. If you like walking around in the fresh air, they're pretty appealing.

In any case, I've never entirely understood this trend. But it's been going on for a long time, so it's more than just a short-term fad. Enclosed malls are dead. Long live the outdoor mall.

Matt Yglesias writes that new EPA rules will soon spell the end of new construction of coal-fired power plants:

The new rules will mandate that all new power plants generate no more than 1,000 pounds of carbon dioxide per megawatt of electricity produced. That's a standard that your basic renewables can of course easily meet as can nuclear plants. It also conveniently draws the line such that natural gas, whose price has plummeted lately amidst the North American Fracking Boom, fits in under the standard as average gas-fired plants emit between 800 and 850 pounds per megawatt. But coal plants on average emit almost 1,800 pounds per megawatt, way outside of the acceptable range. The result is that barring some miraculous new innovation in the creation of cost-effective carbon sequestration technology, there aren't going to be any more coal-fired plants built in the United States. The face of new fossil fuel based electricity will be gas (which is considerably cleaner than coal), and the alternative to gas in the event that the gas boom ends will be renewables.

Back in 2010, the power industry was in the middle of a boom in construction of coal-fired plants. "Building a coal-fired power plant today," said Severin Borenstein, director of the Energy Institute at the University of California at Berkeley, "is betting that we are not going to put a serious financial cost on emitting carbon dioxide." And that was a good bet! In fact, cap-and-trade legislation had collapsed earlier that year amid mutual recriminations, which meant that putting a price on carbon was dead for the forseeable future.

But in the long run, power companies were just trying to beat the clock. One of the most compelling arguments in favor of cap-and-trade was simple: it's better than allowing the EPA to hand down a bunch of hamhanded command-and-control rules, but if cap-and-trade fails, that's exactly what will happen. And guess what? That's exactly what's now happened.

So it was a good bet, all right, and power companies were smart to get started on as many coal-fired plants as they could. They knew that any plants they built would be profitable as long as carbon emissions remained unregulated, and they also knew that EPA would likely shut down the construction boom for good before long. So it was build, baby, build. We'll be paying the price for this for years to come.

From Justice Anthony Kennedy, generally believed to be the key swing vote on the individual mandate, during oral arguments today:

Can you create commerce in order to regulate it?

I'm not sure what the context for this was, and on its own it doesn't make a lot of sense. What commerce is the government supposedly creating? But it's a bad sign, and CNN legal analyst Jeffrey Toobin had a dismal appraisal of this morning's session:

"This was a train wreck for the Obama administration," he said. "This law looks like it's going to be struck down. I'm telling you, all of the predictions including mine that the justices would not have a problem with this law were wrong... if I had to bet today I would bet that this court is going to strike down the individual mandate."

....Toobin also said he thought Justice Kennedy, the perennial swing vote, was a "lost cause" for supporters of the health care reform law.

Urk. Fasten your seat belts.

Has there been any public controversy in recent memory as disheartening as the Trayvon Martin case? I don't mean the killing of Martin itself, though. That's certainly disheartening, but it's hardly unique. I'm talking instead about the political reaction to it.

A week ago, the worst I could say about right-wing reaction to the Martin case was that conservatives were studiously ignoring it. But that was a week ago. Since then, conservatives have entered the arena with a vengeance.

But why? At first glance, there's no obvious conservative agenda here. They might, in the abstract, want to defend the "Stand Your Ground" laws that have suddenly drawn the public's attention since the Martin shooting. But the shooting itself? There's no special conservative principle at stake that says neighborhood watch captains should be able to shoot anyone who looks suspicious. There's no special conservative principle at stake that says local police forces should barely even pretend to investigate the circumstances of a shooting. There's no special conservative principle at stake that says young black men shouldn't wear hoodies.

But as Dave Weigel points out today, the conservative media is now defending the shooter, George Zimmerman, with an almost messianic zeal. There's a fake photo of Trayvon Martin making the rounds, and even after it was debunked it's still making the rounds:

Why is the fake photo so popular? It's part of a new cottage industry of "truth about Trayvon" content, calibrated to convince people that they really shouldn't worry about the implications of this killing. Why, the kid wasn't even a saint! He might have been shot after brawling with the man who creeply followed him around the gated community? The Drudge Report has become a one-stop shop for Trayvon contrarianism.

Unfortunately, it's not really a cottage industry at this point. More like a mammoth, smoke-belching factory. When I opened my LA Times this morning, for example, I found Jonah Goldberg staring back at me, explaining that we shouldn't really care about Trayvon Martin because:

Martin's tragic death is a statistical outlier. More whites are killed by blacks than blacks killed by whites (or "white Hispanics"). And far, far more blacks are killed by other blacks. Indeed, if we're going to use the prism of race to analyze murder rates, then the real epidemic is that of black murderers.

Quite so. And that, it turns out, is the conservative principle that's actually at stake here: convincing us all that traditional racism no longer really exists (just in "pockets," says Goldberg) and that it's whites who are the real racial victims in today's America. Heh indeedy.

Aaron Carroll writes today that although the individual mandate is getting all the attention, the Supreme Court's ruling on Obamacare's expansion of Medicaid is even more important:

The way the ACA is written, unless states comply with these expansions, they stand to lose all Medicaid funding....Florida, along with 26 other states, is bringing a case to court based on the Constitution’s Spending Clause. Basically, the federal government has the right to make states accept certain conditions for which they will be given federal funds. If they don’t accept the conditions, then they don’t get the money. This is how Medicaid began, as an optional program states could agree to join. All of them did, obviously.

But now the law has changed, and those against the ACA’s new policy argue that this is an unfair expansion of a program that in practical terms is no longer optional. Medicaid is so fundamental to states’ operations now, they assert, that it can’t be considered funding that states can refuse if they choose not to agree to the new regulations. Because they will lose not only the new funding but all Medicaid funding if they don’t expand the programs, they say the actions of the federal government are coercive.

Aaron is right that this part of the case is far more fundamental than the court's ruling on the mandate. If the mandate is overturned, it would place moderate new limits on Congress's regulatory power. It wouldn't even necessarily be disastrous to Obamacare: there are other ways to implement an effective mandate that are unquestionably constitutional, after all. The problem is that right now Democrats don't have the votes to pass one of those other ways. But that's a political problem, not a fundamental constitutional problem.

The Medicaid changes are quite different, though. For decades, Congress has implemented national programs not by explicitly forcing the states to go along, but by making funding available only to those states that agree to follow federal rules. Critics have long argued that this is a subterfuge: Congress does this in cases where they don't have the constitutional power to make a program mandatory on a national basis, so instead they extort cooperation by sucking out tax dollars from the states and then agreeing to give them back only if the states go along. But subterfuge or not, courts have always ruled that this is constitutional.

So if the Supreme Court overturned the Medicaid changes, it would be a genuine earthquake. At worst, it would make hundreds of programs instantly unconstitutional and expel the federal government from playing a role in dozens of policy areas. At best, the federal government could still start programs this way, but could never change them once they'd become entrenched and were no longer "optional." This would freeze policy in place in a way that would be disastrous.

This, of course, is why most observers haven't paid a lot of attention to this part of the case: it's nearly inconceivable that the court is willing to produce this kind of bedlam. It would overturn decades of very clear precedent and produce chaos at both the state and federal levels. And unlike overturning the mandate, overturning Congress's ability to fund national programs this way would quite likely provoke a genuine constitutional crisis. I don't think anybody believes the court is really in a mood to do this. So even if they do overturn the Medicaid provisions (unlikely), they're almost certain to do so on very narrow terms that don't have a broad impact on Congress's general ability to make federal grants conditional on Congress's rules.

But I guess we'll see. If this part of the law gets upheld, but by only a 5-4 vote, it would mean that Medicaid is safe but that the court is really and truly feeling its oats. This part of the program will be argued tomorrow, and it's worth a watch.

The Wall Street Journal reports that, at least for the moment, companies with performance goals for their CEOs are actually paying their CEOs based on whether they meet those goals:

Preliminary results highlight how corporate directors, under new scrutiny from shareholders, are tying more CEO pay to corporate performance. When companies miss targets, directors are holding the line.

"The pressure from shareholders clearly has had an effect here," discouraging boards from using their discretion to boost pay, says Robin Ferracone, executive chair of Farient Advisors LLC, a Pasadena, Calif., compensation consultant.

....That is a shift from a few years ago, compensation consultants say, when directors would often overlook missed targets and award big bonuses anyway. That dynamic has changed under pressure from investors and the Securities and Exchange Commission.

One of the worst aspects of "pay for performance" CEO compensation is that quite often it's rigged outrageously in favor of the CEO. There's almost no way to lose. And then, on the off chance that you do poorly anyway, the board decides that it was just bad luck and you shouldn't be deprived of the bonus you've been counting on all year. So they make it up to you. After all, we're all one big happy family on mahogany row, right?

But if the Journal is to be believed, company boards are actually holding their rock-jawed titans of capitalism to their promises these days. Good to hear. I wonder how long it will last?

The Economist writes about some promising applications of behavioral economics, especially those popularized by the book Nudge:

The book, first published in 2008, is about the potential for behavioural economics to improve the effectiveness of government. Behavioural economists have found that all sorts of psychological or neurological biases cause people to make choices that seem contrary to their best interests....That theory is now being put to the test [...] in several countries including Denmark, France and, above all, Britain, where David Cameron has established a Behavioural Insights Team, nicknamed the Nudge Unit.

The Nudge Unit has been running dozens of experiments and the early results have been promising. In one trial, a letter sent to non-payers of vehicle taxes was changed to use plainer English, along the line of “pay your tax or lose your car”. In some cases the letter was further personalised by including a photo of the car in question. The rewritten letter alone doubled the number of people paying the tax; the rewrite with the photo tripled it.

Changes to language have had marked effects elsewhere, too. A study into the teaching of technical drawing in French schools found that if the subject was called “geometry” boys did better, but if it was called “drawing” girls did equally well or better. Teachers are now being trained to use the appropriate term.

At the risk of sounding peevish, I have to ask: in what way is any of this stuff behavioral economics? Trying to figure out better ways of persuading people to do things used to go under the rubric of rhetoric, politics, or salesmanship. When did we suddenly decide that the kind of thing that marketing people have been doing for the past century is now a wholly-owned subsidiary of economics?

I remember having the same problem with Freakonomics when it first came out. It was all interesting and breezily written, but most of it was nothing more than the application of clever statistical techniques to figure out how different incentives affect people's actions. But unless we've all agreed that anything involving the study of human incentives is, by definition, economics, the title of the book is seriously misleading. Only a few of the chapters dealt with subjects traditionally viewed as economics.

I've got nothing against the study of nudging. We should do more of it! But the steady colonization of economics into every area of human behavior should be put to a hard stop. I suppose that hardnosed politicians are more likely to listen to a "behavioral economics" pitch than a "marketing" pitch, but that's not much of an excuse. Just because it uses math and deals with human behavior doesn't make it economics.

UPDATE: Richard Thaler, one of the co-authors of Nudge, tweets: "Not true of the book. The article is just a thin slice." I didn't really mean to implicate the book itself, which I haven't read, with the Freakonomics problem, so apologies for that.

Over the past few years it's become fashionable in sophisticated political circles to argue that presidential campaigns themselves barely matter. What matters is the economic fundamentals. When the economy is strong, the incumbent party wins. When the economy is lousy, the incumbent party loses. All the rest is just a bunch of sound and fury, signifying nothing.

I've long had some problems with this attitude. I don't think there's any question that the state of the economy matters, and I agree that political journalists probably ought to pay more attention to this than they usually do. At the same time, it's easy to go overboard. For one thing, political scientists have come up with a lot of different models, and they don't all rely on the same economic measures. Nor do they make the same predictions. Nor do they even claim (in most cases, anyway) to explain more than about 60-70% of the variance in how well the parties do. So even if the models are accurate, there's plenty of scope for other factors to influence presidential elections too.

But are they accurate? It's easy to be impressed by a model that accounts for past election results with high accuracy. That's a nice looking regression line, pal! But it's quite another thing for your model to predict elections in advance, and that's the acid test for any election model. Until now I've never seen anyone do a systematic review of actual predictions by the various models, but today Nate Silver filled that void, taking a look at model predictions since 1992. The results aren't pretty:

In total, 18 of the 58 models — more than 30 percent — missed by a margin outside their 95 percent confidence interval, something that is supposed to happen only one time in 20 (or about three times out of 58).

Across all 58 models, the standard error was 8 points of vote margin or 4.6 points of incumbent vote share. That was much larger than the error that the models claimed they would have — about twice as large, in fact....The “fundamentals” models, in fact, have had almost no predictive power at all. Over this 16-year period, there has been no relationship between the vote they forecast for the incumbent candidate and how well he actually did.

Nate argues that the state of the economy does have some predictive power. He figures it at about 40%, but says that most current models don't even do that well because they're poorly designed. That doesn't surprise me: this is a really hard subject with lots of hard-to-answer questions. What matters most, the absolute state of the economy or whether it's on an upswing/downswing? Should we look at GDP growth or unemployment? Or something else, like disposable income? Do voters respond to some variables, like inflation, only when they get above a certain level? Etc. This is hard stuff, and we don't have a whole lot of data points to work with.

What's more, common sense suggests that other things matter too. For example, I just can't accept as coincidence that since 1950 incumbent parties have nearly always won after one term in office and nearly always lost after two terms. If I used that as my only rule, I'd have an accuracy rate of 87%. (Though only 80% if you count Al Gore as the popular-vote winner in 2000.)

All of this is one reason why I'm reasonably optimistic about Obama's chances in November. Yes, the economy is still in weak shape. But it's improving, which I suspect is at least as important as its absolute level. What's more, his party has been in power for only one term and he's a strong candidate running against a weak Republican field. Put all that stuff together, and I think his odds look pretty good.

Bottom line: the economy matters, but it's probably wise not to get too deterministic about these things. Monocausal explanations are often appealing, but just as often wrong. The world is a complicated place.