Kevin Drum

The Future of the Supreme Court

| Fri Aug. 6, 2010 11:20 AM EDT

Elena Kagan was only barely confirmed to the Supreme Court yesterday, continuing a recent trend of court picks becoming ever more partisan. Jon Chait comments:

Kagan’s meager tally is five fewer than Sonia Sotomayor last year, 15 fewer than John Roberts got in 2005 and pales in comparison to the 96-3 coronation of Ruth Bader Ginsburg in 1993. That trend has many legal observers lamenting a Supreme Court confirmation process on a steady trajectory toward complete polarization and a seemingly inevitable filibuster.

....And this has all taken place in a landscape where Obama has merely been replacing liberal justices with other, possibly less liberal, justices. Can you imagine what will happen if one of the five conservatives retires on Obama's watch? It's entirely possible that Senate Republicans will simply refuse to confirm any more justices, period.

So what happens if this becomes institutionalized? It means that no president with a Senate controlled by the opposite party will ever be able to place someone on the Supreme Court. So then what? Perhaps the new norm will become automatic recess appointments without even the pretense of a Senate hearing. And since recess appointments only last through the end of a president's term (assuming he continually reappoints his candidates at the beginning of each new Congress), this would place a premium on justices resigning only when a congenial president is in office (already a well accepted norm) and doing it early in his first term in order to give the new folks at least seven or eight years on the bench. Keep this up for a couple of decades, and you'd essentially end up with a system in which incoming presidents replaced virtually the entire court during their first year.

Needless to say, no one would like this system much. But it's the inexorable end game unless something changes. So perhaps some change is in order?

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Senate Norms Take Yet Another Hit

| Fri Aug. 6, 2010 10:48 AM EDT

Xinhua/zumapress.comXinhua/zumapress.comPeter Diamond, one of Barack Obama's nominees for an empty Fed seat, was "sent back" by the Senate yesterday. But what does that mean, anyway? BusinessWeek explains what happened after Diamond was approved last week by the Senate Banking Committee:

Under Senate rules, all nominations that aren’t completed before a lengthy recess go back to the White House and have to be resubmitted unless the Senate unanimously agrees to hold onto them and act later, Stewart said. Routinely, the Senate does agree to retain the nominations.

If a single senator objects, the name goes back to the president’s office. In Diamond’s case, at least one senator did that. Stewart said he didn’t know the identity of the lawmakers.

Italics mine. So yet another Senate norm gets tossed on the ash heap of history. Nice work, Republicans. As an aside, note that the "Stewart" in the passage above is Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell, and the proposition that he doesn't know who held up Diamond's nomination is pretty unlikely. It was Richard Shelby, the increasingly cranky senator from Alabama who, as near as I can tell, is still nursing a farrago of grievances over the fact that Senate Democrats weren't willing to capitulate completely to his notions of how the financial reform bill should have looked. His reason for opposing the noted MIT economics professor? "I do not believe the current environment of uncertainty would benefit from monetary policy decisions made by board members who are learning on the job," Shelby said mysteriously, and it's true that Diamond isn't an expert on macroeconomics — though Wikipedia tells me that he is an expert on government debt and capital accumulation, capital markets and risk sharing, optimal taxation, search and matching in labor markets, and social insurance. In any case, last night I decided to go to bed rather than investigate this further, but today Matt Yglesias provides the requisite googling:

Governor Kevin Warsh, who George W Bush appointed in 2006 to no controversy, is 40 and has a JD but no advanced degree in economics or academic research in the field at all. Elizabeth Duke who Bush also nominated and who Shelby doesn’t seem to have a problem with has no advanced degree in any subject and has a bachelor’s degree in drama. Daniel Tarullo, who Barack Obama appointed and who was confirmed with no controversy, has a JD and a MA, but again no PhD. Sandra Pianalto, President of the Cleveland Fed, has an MBA and a MA but no PhD.

Not that there needs to be a rule that FOMC members should have PhDs in economics. But the point is that Diamond would clearly raise the level of macroeconomic expertise on a board that’s currently dominated by bankers and bank regulators.

So Shelby is, to use a technical term, just being a prick. Diamond is perfectly well qualified, but apparently has views (for example, that deflation is bad and Social Social Security taxes should go up) that Shelby doesn't like. So he's going to force Obama to renominate him just because he can. Ladies and gentlemen, the United States Senate. Greatest deliberative body in the world. Don't let anyone tell you otherwise.

Is Google a Little Bit Evil?

| Fri Aug. 6, 2010 4:00 AM EDT

"Net neutrality" is a principle that's guided internet development for decades. Put simply, it means that everyone has equal access to the net. If you send an email to Aunt Martha, it has the same priority as my Google search for Lady Gaga videos or Rupert Murdoch's latest multibillion dollar internet television startup. Data is data, and it all goes over the net equally quickly.

But net neutrality has been under attack from years. The battle lines shift, and sometimes get a little too complex to follow in detail, but the outline is pretty simple. Companies in the content business generally support net neutrality. They want their data delivered as fast as anyone else's without having to pay any special fees. Conversely, companies like Verizon or AT&T, who supply the pipes, want it to go away. They love the idea of being able to charge higher fees for better service.

During the Bush era, the FCC began to back off on net neutrality but still issued a set of "principles" that it expected service providers to adhere to. Then, last April, a court ruled that the FCC had no authority to regulate net neutrality at all. A month later, FCC chairman Julius Genachowski announced that he would try to reclassify internet providers in order to re-impose net neutrality rules on them, but this is a regulatory process that will take, at a minimum, months to complete.

In the meantime, net neutrality may be on the verge of unraveling completely. Google, once a fierce advocate of net neutrality and a company whose informal motto is "Don't be evil," has apparently decided that maybe just a little bit of evil is OK after all:

Google and Verizon, two leading players in Internet service and content, are nearing an agreement that could allow Verizon to speed some online content to Internet users more quickly if the content’s creators are willing to pay for the privilege.

....Such an agreement could overthrow a once-sacred tenet of Internet policy known as net neutrality, in which no form of content is favored over another. In its place, consumers could soon see a new, tiered system, which, like cable television, imposes higher costs for premium levels of service.

Any agreement between Verizon and Google could also upend the efforts of the Federal Communications Commission to assert its authority over broadband service, which was severely restricted by a federal appeals court decision in April.

The problem here is obvious: once Google does this, they set off an arms race. Can Yahoo or Microsoft really afford to be second class citizens? Or Disney or Fox? Not likely. Before long, pretty much every deep-pocketed content provider has signed a deal for special treatment and we officially have a two-tier internet. On one tier are the companies with money. On the other tier are all the rest of us. And make no mistake: if the major content providers get guarantees of better service, every other content provider will almost certainly end up with worse service than they have now.

I have a vested interest in this, of course, since Mother Jones isn't big enough or deep-pocketed enough to pay for top tier service, and that means that in two or three years delivery of this blog could end up pretty molasses-like. In a less parochial vein, I think the lesson of history is pretty clear: when common carriers are allowed to discriminate, the result is disastrous for everyone except the folks who currently dominate their market. If you have a startup search company that outperforms Google, but only if it's as fast as Google, well, what are the odds that Google won't pay to make sure that its service is always faster than yours? After all, ad revenue depends on getting eyeballs by hook or by crook, and it turns out they aren't quite as committed to not being evil as we once thought.

I'm not a net neutrality purist. I can see the case for offering tiered service for things like on-demand video streaming, which simply can't work commercially unless providers can guarantee reliable delivery. Beyond that, though, a free and open internet has worked pretty well and we abandon it at our peril. Time is running out on the FCC, and in any case, the FCC was never the right place for this anyway. Congress is. If we want to keep net neutrality in anything like its current form, Congress needs to get off its duff and set the rules of the road once and for all. Markey-Eshoo is a pretty good place to start.

Myths and Realities About the Tea Party

| Fri Aug. 6, 2010 12:56 AM EDT

In his triumphant return to the Washington Post, Dave Weigel debunks five myths about the tea party:

  1. The tea party isn't a reaction to President Obama, it's a reaction to the bank bailouts.
  2. The tea party is racist.
  3. Sarah Palin is the leader of the tea party.
  4. The tea party is bad for Republicans.
  5. The tea party will transform American politics.

I think Dave is 90% correct. These are all myths, with the partial exception of #4. In the short term, he's right: "The tea party movement is giving Republicans a dream of an electorate, one in which surveys find more GOP-inclined voters enthusiastic about casting ballots than voters who lean Democratic. Democrats have done some damage to the tea party brand — its favorability has fallen in polls — but in general, the presence of a new political force that is not called Republican and is not tied to George W. Bush has given the GOP a glorious opportunity to remake its image, at a time when trust in the party is very low."

True. But in the longer term I think the tea party movement is more dangerous to Republicans than he lets on. There's a limit to how crazy a party can get and still win elections even occasionally, and the tea partiers are very rapidly taking the GOP to that point and beyond. It's probably a net benefit in 2010 — though even that's debatable — but beyond that I suspect it's almost pure millstone.

I'll have more on this in the next issue of the magazine. If I understand our production timetable properly, that shouldn't be too far off. But don't hold me to it. I might not have as good a handle on MoJo's print schedule as I think.

The Month in Review

| Thu Aug. 5, 2010 7:25 PM EDT

Here's a rough recap of the past month in news hysteria:

Week of July 12: New Black Panthers
Week of July 19: Shirley Sherrod, JournoList
Week of July 26: Ground Zero mosque
Week of August 2: Birthright citizenship
Upcoming Week of August 9: Gay marriage? Michelle's vacation in Spain? Take a guess!

Quite a summer we're having, no? Am I missing anything? What have liberals gotten hysterical about lately?

Quote of the Day: Minutemen in Utah

| Thu Aug. 5, 2010 5:19 PM EDT

From Economist reporter Andreas Kluth, after visiting a meeting of the Minutemen in Utah:

I had expected to be slightly scared. I was not. Instead, the atmosphere was somewhere between that of an Alcoholics Anonymous meeting and a geriatric home.

Better than the opposite, I suppose.

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Crop Circles on Wall Street

| Thu Aug. 5, 2010 3:36 PM EDT

You've all heard of the Mandelbrot set, right? It's the fractal image shown on the right. It looks pretty ordinary, but if you zoom in you start to see a lot more detail. Zoom some more, and there's even more detail. You can zoom forever, and you'll keep finding more detail no matter how fine a microscope you use, much of it surprising and unpredictable. (Try it!)

Well, it turns out you can do much the same with stock market trading charts. Take a look at the chart for a single day's trading and you'll see a pattern. Zoom in to a single hour and you'll see a different pattern. Zoom in again to a single minute, or a single second, and you'll see something different still.

So how far down can you go? Last year's "flash crash," which saw the Dow plummet nearly a thousand points in a few minutes, was widely blamed on high-frequency traders who use computer algorithms to execute trades at very high speeds, and that made some folks at Nanex curious about what was really going on. Alexis Madrigal tells the story:

Most stock charts show, at best, detail down to the one-minute scale, but Nanex's data shows much finer slices of time. The company's software engineer Jeffrey Donovan stared and stared at the data. He began to think that he could see odd patterns emerge from the numbers. He had a hunch that if he plotted the action around a stock sequentially at the millisecond range, he'd find something. When he tried it, he was blown away by the pattern. He called it "The Knife."

....High-frequency traders do employ algorithms to look for patterns in the market and exploit them, but their goal is making winning trades, not simply sending quotes into the financial ether....The algorithms we see at work here are different. They don't serve any function in the market. University of Pennsylvania finance professor, Michael Kearns, a specialist in algorithmic trading, called the patterns "curious," and noted that it wasn't immediately apparent what such order placement strategies might do.

Donovan thinks that the odd algorithms are just a way of introducing noise into the works. Other firms have to deal with that noise, but the originating entity can easily filter it out because they know what they did. Perhaps that gives them an advantage of some milliseconds. In the highly competitive and fast HFT world, where even one's physical proximity to a stock exchange matters, market players could be looking for any advantage.

Donovan calls these patterns "crop circles," and he gives them all names: Castle Wall, The Waste Pool, Depth Ping, Boston Shuffle, BOTvsBOT, etc. Most of them involve sending out thousands of quotes per second, and you can see them all here. If Donovan is right, this isn't even high-frequency trading, which is iffy enough. It's high-speed quote stuffing and market spoofing designed primarily to screw up other traders, something that John Bates, a former Cambridge professor and the CTO of Progress Software, calls "algorithmic terrorism." That's a wee bit melodramatic, but it's still a nasty look at what's happening in our financial markets these days. This kind of behavior is hardly new, but it's certainly gotten a lot faster and a lot harder to detect.

Breitbart's Latest

| Thu Aug. 5, 2010 1:36 PM EDT

Meet Dr. Kevin Pezzi, the latest addition to Andrew Breitbart's stable of internet stars. Seriously. Click the link. You want to meet this guy. You can thank me later.

What They Know

| Thu Aug. 5, 2010 1:22 PM EDT

The Wall Street Journal is running a good series this week on privacy in the digital age called "What They Know." This is from their piece today on cell phone tracking:

Global-positioning systems, called GPS, and other technologies used by phone companies have unexpectedly made it easier for abusers to track their victims. A U.S. Justice Department report last year estimated that more than 25,000 adults in the U.S. are victims of GPS stalking annually, including by cellphone.

....There are various technologies for tracking a person's phone, and with the fast growth in smartphones, new ones come along frequently. Earlier this year, researchers with iSec Partners, a cyber-security firm, described in a report how anyone could track a phone within a tight radius. All that is required is the target person's cellphone number, a computer and some knowledge of how cellular networks work, said the report, which aimed to spotlight a security vulnerability.

The result, says iSec researcher Don Bailey, is that "guys like me, who shouldn't have access to your location, have it for very, very, very cheap."

If you don't want to be tracked and think you might be, remove the battery from your phone. That's what domestic-violence shelters do: "As soon as victims arrive at shelters run by A Safe Place, 'we literally take their phones apart and put them in a plastic bag' to disable the tracking systems, says Marsie Silvestro, director of the Portsmouth, N.H., organization, which houses domestic-violence victims in secret locations so their abusers can't find them."

More generally, though, what do they know? The answer is: a lot. Probably more than you think, and the Journal's series is a good reminder that if you care about privacy, you should care at least as much about the private sector as you do about the government. Beyond cell phones, the Journal uncovers plenty of other good stuff too. For example, here's a story about the skyrocketing use of browser cookies to track your movements across the internet, and here's a graphic that shows which sites are the biggest abusers. The winner?, with and not far behind. Wikipedia is the only site they surveyed that uses no tracking cookies at all.

There's plenty of other good stuff at the main site, including advice on how to avoid being tracked (or, at least, how to avoid being tracked as much). It appears to be 100% accessible to nonsubscribers and it's well worth checking out.

How is Obama's Record on Trade?

| Thu Aug. 5, 2010 11:41 AM EDT

Dan Drezner tallies up Barack Obama's record on foreign policy, and as usual he's pretty underwhelmed on the subject of trade:

3) Trade: Blech. Let me repeat that — blech. I understand that the administration is on barren political terrain when dealing with this issue. Still, the phrase "Obama administration's trade agenda" is pretty much a contradiction in terms at this point. The Doha round is dead, and the only trade issue that has the support of policy principals is the National Export Initiative — and you know what I think about that. Unlike the other three issues, the administration hasn't even bothered to put much effort onto this one — though the recent pledge to get the Korea-U.S. Free Trade Agreement (KORUS) ratified is promising. GRADE: F

I don't expect to make much headway with Dan on this subject, but I think he's all wet here for two reasons. The first is that "barren political terrain" he acknowledges. No president can reasonably be expected to put a ton of political muscle behind a lost cause, and major progress on, say, the Doha round, was pretty clearly a lost cause from the day Obama entered office. In the face of a catastrophic global recession, there was never even the slightest chance of gaining support either at home or abroad for any major trade initiatives, and it's simply not reasonable to expect Obama to put any energy behind it. Not only would it have gone nowhere, it might even have been counterproductive. Better to wait until the global climate provides at least a bit of a tailwind.

Second, this isn't a classroom, where you get an F for not showing up. In politics, you get an F for actively damaging things. Obama hasn't done that. He's simply ignored trade as an issue. But he hasn't done any harm, and under the circumstances that's quite possibly about as much as a trade enthusiast could have hoped for.

I think Dan will be on firmer ground in a few years. When the economy picks up and trade issues get pushed back into the foreground, what will Obama do? We won't know until it happens, and in the meantime his (lack of) performance should earn him an Incomplete, not an F.