Kevin Drum

The Nobel Effin Prize in Economics

| Mon Oct. 12, 2009 1:44 PM EDT

We all have pet peeves, and I'm afraid one of mine is people who insist on pointing out every year that the Nobel Prize in Economics isn't really a Nobel Prize.  It's actually the Sveriges Riksbank Prize in Economic Science in Honor of Alfred Nobel, it wasn't part of Nobel's original will, it's a party-crasher that was tacked on a mere 40 years ago, blah blah blah.

Come on, people.  It's awarded by Royal Swedish Academy of Sciences, just like the Physics and Chemistry prizes.  It follows the same rules as the other prizes.  The Nobel Foundation bought into the idea and lists it on their website along with all the other prizes.  (Yes, it's carefully referred to only as a "Prize," not  a "Nobel Prize," but still.)  And it's presented on the anniversary of Alfred Nobel's death at the same awards ceremony as all the others.  Don't believe me?  Here's Nobel Prize winner Paul Krugman at the awards ceremony last year right alongside all the "real" winners.  Hell, Krugman even looks a little bit like Alfred Nobel.

So it's a Nobel Prize.  End of micro-rant.  You may now continue with your previously scheduled Columbus Day festivities.

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Jingle Mail

| Mon Oct. 12, 2009 1:07 PM EDT

Time magazine reports on the rise of jingle mail:

Homeowners of a new and unattractive breed are plaguing the Federal Housing Administration these days. Known as "the walkaways," they are people who find themselves unable to meet their mortgage payments — and to solve the problem simply move out their belongings at night, drop their house key in the mailbox and disappear.

....The rate of mortgage foreclosures has tripled during the past ten years, to an estimated 3.77 per 1,000 mortgages. Most housing economists agree that the leveling off of home prices in many parts of the U.S. accounts for most of the increase. As long as home prices were rising, a homeowner who could not meet his payments could always sell out — usually at a profit. Now, with prices steady, an overextended homeowner must either sell at a loss or face foreclosure.

....Confides a leading West Coast banker: "Again and again I have to tell my branch managers that I would rather have a soundly conceived mortgage at 5¾% than one at 6¼% which goes bad." Unless the branch managers take this advice to heart, today's overambitious mortgages will create tomorrow's walkaways.

That's from 1962.  Good times.  (Via Felix Salmon via Mark Gimein.)

Running the Traps

| Mon Oct. 12, 2009 12:40 PM EDT

So what kind of options is President Obama getting from his military commanders regarding Afghanistan?  Here's Martha Raddatz of ABC News on the advice he's getting from Gen. Stanley McChrystal:

The three options are, option one: send no more troops to Afghanistan, considered a "high risk option;” option two: send 40,000 more troops, and option three: a major increase in troops, a number that has not been made public but that is far more than 40,000....We’re told that number is [...] well more than 60,000, but under 100,000. But this high option is not the one McChrystal favors.  He favors the middle option.

And here's the New York Times:

Officials said over the weekend that Gen. Stanley A. McChrystal, the top NATO commander in Afghanistan, had prepared options that include a maximum troop increase of about 80,000, a number highly unlikely to be considered seriously by the White House. Much of the official focus has been on a lower option that the general presented, for 40,000 additional troops.

A couple of months ago Rajiv Chandrasekaran wrote a piece in the Washington Post about the post-Petraeus Pentagon's focus on "a new kind of military leader," one who was "able to nimbly run the troops on the ground as well as the traps in Washington."  Stanley McChrystal was said to be just such a leader.

And apparently he is.  Nobody takes the 80,000 number seriously, and McChrystal certainly knew that would be the case.  Apparently he didn't even endorse it himself.  So why include it?  All part of nimbly running the traps in Washington, I imagine.  If you toss in a higher number, then the natural compromise figure becomes 40,000, the place he wanted to be all along.  It's one thing for Obama to eventually decide on a figure a little lower than the high-end option, but once everything has been properly leaked it's a lot harder for him to publicly defend a figure that's less than even McChrystal's pre-packaged "compromise" position.

This is all pretty obvious stuff and I don't want to make too much out of it.  But I'll repeat something I said earlier anyway: I'm not really thrilled at the idea of the Pentagon focusing its energies on promoting generals who are good Washington gameplayers.  If McChrystal truly doesn't favor the higher option, we'd all be better off if he just left it out and instead made the recommendation he really believes in.  Trying to box in the commander-in-chief may be business as usual when it comes to things like F-22 acquisitions or base closings, but I don't have to like it.  I especially don't have to like it when it comes to things a little more important than Lockheed-Martin's balance sheet.  And I don't.

Yanks and the Nobel

| Mon Oct. 12, 2009 11:29 AM EDT

This has sure been a good year for America in the Nobel Prizes.  I don't know if this is unusual or not, but Americans and American institutions are heavily represented in every single prize except Literature this year.  Congrats to the final two, Elinor Ostrom and Oliver Williamson, who apparently did groundbreaking work showing that social relationships can actually affect the workings of the free market.  Who knew?

The Empire Strikes Back

| Mon Oct. 12, 2009 10:50 AM EDT

AHIP, the insurance industry trade group, has apparently decided to hop off the healthcare reform bandwagon.  After months of claiming that they were on board, they released a report on Monday claiming that current proposals would raise insurance costs for middle class families by about $4,000 more than otherwise projected over the next decade.  It's a pretty standard lobbyist group effort: the report was written by an "independent" outfit (PricewaterhouseCooper, the same guys who wrote similar reports for the tobacco industry in the 90s), it makes several convenient assumptions, and in the end it comes up with a dramatic and surprisingly precise measure of financial doom for Joe Sixpack and his family.

So what's the deal?  Is AHIP really trying to kill healthcare reform?  Or is this just a shot across the bow?  There's no way to know for sure, but Jon Cohn offers up this thought in a postscript to a detailed look at the report:

A friend e-mails, asking if AHIP's motives are really as clear as they seem. As proof, the friend points to the passage in Ignani's cover letter calling for more system-wide cost control. AHIP didn't get a sweetheart side deal like the hospitals and drug industry did. And those sweetheart deals will almost surely mean less cost control. Maybe part of AHIP's agenda is simply to get more serious cost control, so they don't become scapegoats for high insurance premiums.

I have my doubts that AHIP is really all that dedicated to cost controls.  What's more, they did get a sweetheart deal of their own: in return for agreeing to various regulations on preexisting conditions, out-of-pocket caps, and so forth, they got a promise to include an individual mandate in the bill.  That mandate means more people will buy insurance and it's worth billion of dollars to the industry.

However, the Baucus bill has weakened that mandate.  So the problem may be not that they didn't get a sweetheart deal, but that they're afraid the deal is being watered down too much.  There's even a decent case to be made that they're right (i.e., that the individual mandate really ought to be stronger than it is in Baucus's markup).  I wouldn't be surprised if this report has been on the shelf for a while, with AHIP plugging in the final numbers and releasing it now as a way of warning congressional negotiators that full-scale war is coming unless their bribes are restored to the full level they thought they were getting in the first place.  If that's the plan, though, it might be backfiring.  Here's Carrie Budoff Brown at Politico:

This might be the first rift unfolding in public between an industry player and the White House and Senate Finance Chairman Max Baucus (D-Mont.)....Senate Finance Committee spokesman Scott Mulhauser called it "a health insurance company hatchet job, plain and simple."

"This report is untrue, disingenuous and bought and paid for by the same health insurance companies that have been gouging too many consumers for too long as they stand in the way of reform yet again," Mulhauser said in an emailed statement. "Now that health care reform grows ever closer, these health insurers are breaking out the same, tired playbook of deception to prevent millions of Americans from getting the affordable, accessible care they need."

Stay tuned.  AHIP seems to have pissed off quite a few people with this piece of gamesmanship.  We'll know shortly which side will pay a price for this.

Friday Cat Blogging - 9 October 2009

| Fri Oct. 9, 2009 2:40 PM EDT

Today is Domino day.  It's hard to get good pictures of a pure black cat like Domino, but the light was hitting her nicely when I took this picture and it shows her at her best.  So let us all admire Domino and her beautiful white whiskers today.  The other guy will be back next week.

And speaking of light, has anyone tried these new Pharox LED light bulbs?  They seem very cool.  Is the illumination good?  How much light do they give off compared to an ordinary 60 watt incandescent?  Do they come on immediately or do they need to warm up a bit like CFLs?  I know what the specs say, but I'm curious if anyone has any personal experience to share.

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COIN Yet Again

| Fri Oct. 9, 2009 2:13 PM EDT

Michael Crowley responds to my suggestion that the Obama administration wasn't really at fault for not realizing that the Pentagon planned to ask for a major troop increase in Afghanistan:

Even if you assume that only half the country needs COIN protection — the west and north are more stable then the south and east — you're still talking about a combined US and Afghan force of 300,000. McKiernan's requested force level, combined with the feeble Afghan National Army and police, wasn't even close to these levels. This would have been clear to someone like under secretary of defense for policy Michele Flournoy, a COIN expert (and former Nagl colleague) who participated in the initial review. Though I don't believe he was part of the same review process, I have to think that David Petraeus, the ultimate Yoda of COIN, chimed in as well.

....At the same time that the counterinsurgency idea was taking hold among the review team's members, Mullen and Gates were starting to question whether McKiernan was the right general to lead the effort in Afghanistan. If he was serious about counterinsurgency, some in the Pentagon wondered, how could he not want more forces?

I doubt this view would have been kept secret from Obama, who had to approve the decision to sack McKiernan. It just seems a little too convenient, then, for administration officials to say they're surprised by McChrystal's call for many more troops.

But this gets directly to my point: counterinsurgency doctrine says we need 300,000 troops or more in Afghanistan.  Obviously nothing even close to that is going to happen.  So given that we know we're pursuing a non-optimal strategy, does non-optimal mean 100,000 troops or 140,000 troops?  That's not at all obvious.

Back in March, Obama had already committed to a big increase in troops in order to better pursue a COIN strategy.  If the military believed we needed another big increase, it's inconceivable that they would have simply assumed that everyone in the White House knew this.  They would have said so directly and forcefully.  But they didn't, and contra Michael, it seems awfully convenient for them to come back now and say they're surprised everyone didn't get this from the start.

I don't want to take this argument too far.  There's no telling precisely who said what, or whether Obama was given fair warning that another big troop request was in the offing.  But if that was the plan, surely it's the military's responsibility to make sure it's crystal clear?  Or are we going to go through this again six months from now because "everyone knows" that 140,000 isn't enough troops either?

Fixing the World's Problems

| Fri Oct. 9, 2009 1:10 PM EDT

Prince Turki al-Faisal, Saudi Arabia's former intelligence chief, obviously didn't know that Barack Obama was about to be awarded the Nobel Peace Prize when he wrote his op-ed about Afghanistan in this morning's Washington Post, but he sure sets out some Nobel-worthy goals in his piece.  Here are two of his six bullets:

  • Fix the Durand Line. As long as this border drawn by the British is not fixed, Pakistan and Afghanistan will be at loggerheads and always suspicious of one another. A joint development project for the border area, announced by both Pakistan and Afghanistan, and supported by the United States and the world community, will direct people's eyes to the future rather than the past.
  • Push India and Pakistan to fix Kashmir. That is doable, once both countries see a determined effort by the United States in that direction. Both countries are beholden to the United States -- Pakistan for the military and financial support it receives and India for the nuclear energy agreement it has signed with Washington.

OK then!  Just fix two problems that are among the oldest, most intractable border disputes on the planet.  And then in his second term Obama will be freed up to negotiate that long-awaited peace treaty with Mars.

Snark aside, I guess it would be interesting to hear from some area experts on this.  In the case of Kashmir, a treaty seems at least theoretically doable since the objective issues at stake are quite solvable.  Sure, it's politically impossible — and neither side seems to have the slightest interest in U.S. involvement — but at least it's possible to conceive of solutions.

But the Durand Line?  I don't even know what a solution would look like in theory.  Neither Afghanistan nor Pakistan will ever agree to move the line substantially enough to unite the Pashtun areas in dispute, and without that there's hardly any point.  Obama would have to literally be a miracle worker to make any progress on this front.

On the bright side, by including these two bullets, al-Faisal makes his other four goals seem like cakewalks.  Maybe that was the point?

Mystery Guest Cat: Turkish

| Fri Oct. 9, 2009 1:01 PM EDT

It's Laura again. We're running a little late getting you Kevin and David's regular week-in-review podcast today, but don't worry, it's coming. In the meantime, a little light reading from the rest of the MoJo crew:

1) Conservative Muslims don't think so, but the technology behind synthetic hymens really is kind of cool.

2) Too bad virginity isn't the only thing being reclaimed these days: Medicare's repo men could be coming soon to a nursing home near you.

3) And speaking of shameless commerce: Did the Chamber break its own rules when it adopted a hard-line climate policy that scared off Nike?

Last, congrats to Turkish, a.k.a. Mystery Guest Cat #2, appearing naked as Levi Johnston in Kevin's Drum Beat newsletter today. [For Kevin's newsletter-exclusive weekly bonus post and mystery cat news, sign up here.]

From reader Patrick O'Grady: Turkish is two-and-a-half years old, unemployed, and fears losing his litter box to bankruptcy should that black spot on his nose turn out to be more than a simple beauty mark. Miss Mia Sopaipilla, being some six months younger, is certain that she will live forever and spends her days peering out the window, keeping a lookout for socialists bent on killing her granny. Turkish and Mia live in a tiny blue carbuncle on the fat red ass of Colorado Springs, Colorado, with their staffers Patrick and Shannon O'Grady. When not serving their feline overlords, Patrick dabbles in freelance cycling journalism; Shannon works for the Colorado Library Consortium.

Laura McClure hosts weekly podcasts and is a writer, editor, and sometime geek for Mother Jones. Read her recent investigative feature on lifehacking gurus here.

Exciting Trade Deficit News

| Fri Oct. 9, 2009 11:26 AM EDT

This is genuinely good news:

The U.S. trade deficit unexpectedly narrowed for the first time in four months in August, with exports rising to their highest level of the year and imports easing despite higher oil prices.

....The decline, the first since May, was a surprise on Wall Street. Economists surveyed by Dow Jones Newswires had expected a further widening in the deficit to $33.6 billion.

The recent resurgence of oil prices had been pushing the trade deficit back up, after a brief dip earlier in the year when the recession sapped demand for imports. However, exports have enjoyed a five-month uptrend, which bodes well for the economic outlook.

As with a lot of other hopeful indicators, there's no telling if this one will last.  But it's essential that it does.  Despite what Sarah Palin may think, the U.S. desperately needs a weaker dollar, lower consumption, and an end to the permanent current account deficit.  This news probably won't get a lot of attention, but it should.