Kevin Drum

Mickey and the Unions

| Mon May 3, 2010 12:05 PM EDT

Some guy named Robert "Mickey" Kaus has an op-ed in the LA Times today. Apparently he's "a blogger and the author of The End of Equality," as well as "a candidate for U.S. senator in the Democratic primary." How about that.

And guess what? To go along with the more decorous name, we also have a more decorous Mickey. The op-ed is basically his usual anti-union spiel, but pitched to persuade the median liberal LA Times reader. For example, check this out:

I don't mean we should embrace the right-wing view that unions are always wrong. Unions have done a lot for this country; they were especially important when giant employers tried to take advantage of a harsh economy in the last century, not only to keep down wages but to speed up assembly lines and, worse, force workers to risk their lives and health. If you think about it, unions have been the opposite of selfish. By modern standards they've been stunningly altruistic, lobbying for job safety rules and portable pensions and Social Security and all sorts of government services that, if they were really selfish, they might have opposed, because if the government will guarantee that your workplace is safe and your retirement is secure, well, then you don't need a union so much, do you?

Huh. It's been a while since I've heard Mickey make any concessions like that. What's more, when he's in this mode, I don't even find very much to disagree with in the rest of his piece. Union work rules did explode out of control in the 50s and 60s. Teachers shouldn't be effectively impossible to fire. Pensions for California state employees, especially public safety workers, are pretty rich. On the other hand, he also writes this:

When I was growing up in West L.A., practically everyone went to public schools, even in the affluent neighborhoods. Only the discipline cases, the juvenile delinquents, went off to a military academy. It was vaguely disreputable. Now any parent who can afford it pays a fortune for private school. The old liberal ideal of a common public education has been destroyed. And it's been destroyed in large part not by Republicans but by teachers unions.

You know, the first area of the country to ditch public schools en masse was....the South. And the area of the country with the weakest teachers unions is....the South. It wasn't teachers unions that drove parents out of public schools in LA. It was mostly a combination of court-ordered busing, massive growth in the number of low-income students, and plain old racism. If unions played a role, it was a pretty modest one.

Still, I agree that job protection regs got out of hand long ago. Ditto for work rules and public sector pensions. If you stick to that stuff but maintain strong and genuine support for the role of unions in bargaining for wages, benefits and basic working conditions in the private sector, then I'm pretty much on board. Unfortunately, the union bashers never stop there. No matter how reasonable they sometimes sound, what they really want is the end of unions. And I'm not on board with that.

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Ethics Hearings for Ensign?

| Mon May 3, 2010 11:13 AM EDT

It's not clear to my why this has taken so long, but apparently Senate Democrats are at least considering holding ethics hearings on Sen. John Ensign (R–Nev.):

“If it is true that indeed he did make these payoffs and all that kind of stuff, then I would think the honorable thing would be to resign,” Sen. Tom Harkin (D-Iowa) said in an interview.

....Harkin’s public declaration — the first of its kind by a sitting senator — comes as Ensign’s Senate colleagues stand to make life more difficult for him. The bipartisan Senate Ethics Committee is not ruling out holding public hearings in the case, a move that some believe could help drive Ensign from office. A number of senators signaled to Politico they’d be supportive of seeing Ensign sit before a public forum to address the allegations, something that has not been done since the Keating Five scandal in 1991.

....Other Democratic senators are supportive of such a step. West Virginia Sen. John Rockefeller, who backed public hearings on Packwood, said he “would have to be consistent” with Ensign. “Situations change, but people don’t,” he said.

A third Democratic senator, speaking on the condition of anonymity, said he’d back public hearings on Ensign as well, “but I would hope he would do the right thing before then, which is to [resign].”

The craziness of the 90s gave both sides pause about the use of ethics charges as political weapons, and I get that nobody is thrilled about diving into that particular cesspool again. But come on. This isn't just an affair or an undeclared golf trip or something like that. There's considerable evidence to suggest that Ensign not only had an affair with an aide's wife and covered it up, but that he deliberately paid off the aide in a way calculated to evade IRS disclosure laws and then used his influence to try and get his aide outside employment. This is crazy bad stuff. If the ethics committee can't hold hearings on that, they might just as well disband themselves.

Hispanics and the GOP

| Sun May 2, 2010 9:34 PM EDT

Least surprising headline of the day:

Conservative Latinos Rethink Party Ties

"Many Hispanic-Americans," says this WSJ story about Arizona's new immigration legislation, "say they feel stung by a law they allege invites racial profiling, incites hatred and discriminates against all Latinos." Ya think?

Behind the Scenes at Copenhagen

| Sun May 2, 2010 6:58 PM EDT

In yet another case of politicians forgetting to turn off a microphone, it turns out that some of the private negotiations on the final day of the Copenhagen summit were accidentally recorded. All the big guns were there: Barack Obama, German chancellor Angela Merkel, French president Nicolas Sarkozy, Indian Prime Minister Manmohan Singh, and a Chinese negotiator, He Yafei. From a story in last week's issue of Der Spiegel, here's part of the conversation:

"The IPCC report comes to 2 degrees," said Merkel. "And it also says that we have to reduce (carbon dioxide emissions) by 50 percent."

She wanted to make it clear to Chinese delegation leader He Yafei and Indian Prime Minister Singh that they also had to do their part to achieve the 2-degree target. "Let us suppose there is a 100 percent reduction — (e.g.) no CO2 in the developed countries anymore," even then you would have to "reduce carbon emissions in the developing countries" in order to reach the 2-degree goal, the visibly irritated chancellor said. "That is the truth."

When the Indian leader absolutely refused to accept any concrete targets in the Copenhagen Protocol, Merkel dropped the diplomatic etiquette. "But then you do not want legally binding!" she yelled at the leader of a nation with over a billion people. Singh literally shouted back: "That's not fair!" His Chinese colleague, Deputy Foreign Minister He Yafei, added calmly and in polished English: "The current formulation would not be agreed."

And here, via Google Translate, is the rest of the conversation in this week's issue:

Then Sarkozy reacted sharply and accused China lack of will for climate protection. "In aller Freundschaft" and "with all due respect to China," the West has committed to cut greenhouse gases 80 percent. "And in return, China, which will soon be the largest economy in the world says to the world: engagement apply to you, but not for us." Then Sarkozy, added: "That is not acceptable!" This is about the essentials. "We must respond to this hypocrisy."....[He Yafei responded]: "I heard President Sarkozy to talk about hypocrisy. I avoid such concepts."

I'll bet American politicians wish they could just airily dismiss criticism by saying they "avoid such concepts."

In any case, this recording suggests that the initial reports were more or less right: the Chinese and the Indians were just flatly not willing to make any commitments. As a result, according to the story from last week, Merkel has pretty much given up on climate change:

The collapse of the Copenhagen summit has permanently shaken up Merkel. She [...] left Denmark feeling frustrated. She had rarely experienced such a humiliation. She won't let that happen to her again, she has told herself ever since. Irregularities committed by the Intergovernmental Panel on Climate Change (IPCC) also annoyed the chancellor. Although these errors have not altered the urgent and key messages, she has angrily said among her close advisers that the IPCC's poor communication has made it more difficult to promote climate protection.

Yeesh. Things are really grim on the climate front all over. (Via David Roberts on Twitter.)

CBO vs. CMS on Healthcare Reform

| Sun May 2, 2010 5:13 PM EDT

Last week the CMS actuary released a report about the cost of healthcare reform that seemed to come to more negative conclusions than the CBO. I didn't post about it because, to a first estimate, it seemed pretty similar to the CMS actuary's report from last November. We already went through a big left-right brouhaha about what it meant back then, and I didn't really feel like going through it again.

But Jim Lynch, a professional actuary who I've corresponded with before, was annoyed that no one was really trying to compare the CMS and CBO reports on an apples-to-apples basis, so he went ahead and did it himself. Result: contrary to what you may heard, it turns out they both pretty much agree with each other. He's got the overall results in both table and chart form, so naturally I'm reproducing the prettier chart here. You can click the link for the whole story, but here's the meat of it:

The table tells you that the two arbiters were within 1% on the cost of new coverage — stuff like Medicaid and CHIP expansion. CBO saw things slightly rosier than the Office of the Actuary. It also tells you that the actuarial office projected more cost savings and a lower net cost than the CBO did,

....If anything, the Office of the Actuary seems to like the bill more than CBO. This is particularly true if you look at coverage cost by year, as the following chart does....The table shows that the costs don’t really start building until 2014. For the first two years, the actuaries project higher costs, as the red line is above the blue one. But starting in 2016, the actuaries project lower costs. That’s why the red line falls below the blue one.

To summarize: The actuaries project lower coverage costs overall, and they project costs to decelerate faster than CBO does.

It's worth noting that a big part of the supposed disagreement between CBO and CMS involves the question of whether the cost saving measures in the healthcare bill will work. But that's an issue where neither agency really has any more expertise than anyone else. It's mostly a question of pure political will, and on that score your guess is as good as mine — or theirs.

In any case, the bottom line is that there's very little disagreement here. Roughly speaking, we'll see a trillion dollars in increased costs and half a trillion dollars in cost savings. The remaining cost is paid for via a variety of taxes and fees. Pretty simple.

Working in the Cloud

| Sun May 2, 2010 12:54 PM EDT

So I've been reading more about cloud computing and just generally thinking about the whole thing, and for some reason I've gotten sort of intrigued with it. Here in the U.S., our web infrastructure sucks so badly that I don't think it's really very feasible as a full-time lifestyle yet, but it's getting there. Eventually we'll have routine access to, say, 10mbs wireless everywhere and 100 mbs in most places, and then it becomes a real option.

As part of all this, I've been trying to figure out if I can do away with all desktop applications except my browser. A few years ago this wouldn't have been anywhere near feasible, but I'm not much of a power use these days and my needs are simpler. (Plus browser-based apps have gotten a lot better.) So I started simplifying, and to my surprise it turned out to be easier than I thought it would be. My email is already browser-based since I use Opera, and of course my RSS feeds are too (Google Reader). Google Maps replaced my mapping software a long time ago. I turned off TweetDeck and loaded HootSuite instead. I got rid of Word and Notepad and set up Google Docs. I started using Pixlr as a replacement for Photoshop. I'm still saving documents locally, but changing that would obviously be an easy task.

So how's it working out? I've only been doing this for a few days, but it's (a) suprising how easy it was and (b) frustrating that the web apps all have some drawbacks. HootSuite basically works fine, but its use of real estate is atrocious and it doesn't have an option to pop up a window when new tweets come in. But maybe that's a crutch I don't need anymore. We'll see. Google Docs is Google Docs, and basically works fine — though it lacks features here and there that you get in Office. And if all I want to do is to make a quick note, it takes a lot more clicks and a lot more time than just powering up Notepad for a few seconds. Pixlr is an amazing program, built to look and act like Photoshop and with a pretty stunning array of features. I'm sure it lacks some of Photoshop's advanced features, but so far I haven't found a single thing I need that it doesn't do — and one or two minor things that it does better. Unfortunately, it's Flash-based. As a demonstration of what you can accomplish with Flash it's pretty amazing, but hey — it's still Flash. So it crashes my browser whenever I save an image. And it has no access to the clipboard. Until I figure out what's going on, I'll have to stick with Photoshop. [Update below.]

So what does that leave? Video editing, which I haven't checked into yet. And general media manipulation (iTunes/Media Player), which I also haven't checked into yet. But I assume browser-based versions of both are available, especially for the simpleminded kind of work I occasionally do.

All in all, I was surprised at just how competent all this stuff was. Pixlr, in particular, is pretty stunning if I could just figure out how to keep it from crashing. But it looks to me like anyone who's not a power geek — and maybe even the geeks — could use free online apps for a surprising amount of their daily routine. At this point, then, I guess the next step is to check into online storage. I've had an ADrive account forever, but I really only use it when I need to send friends files that are too large to email. Ideally, especially while I'm still experimenting, I suppose I'd like some way to replicate my directory structure somewhere and save files simultaneously both locally and remotely when I work on them. I'm not sure yet if anyone provides a simple way of doing that.

Right now I'm just playing around, trying to see how well life with just a browser works. I'm so deskbound that this doesn't matter much in a practical sense, but if I were a mobile user it would. So how's all this stuff working out for you road warriors out there?

UPDATE: Hey, pretty good tech support from the Pixlr creator! Turns out I needed to install a new version of the Flash viewer, and after that everything worked fine. So I'll be road testing it for the next week or so after all.

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Election Season in California

| Sun May 2, 2010 12:05 PM EDT

Michael Hiltzik today on the hell we can expect from upcoming elections here in California:

To recap, this year stands to yield one of the greatest bumper crops in history in self-serving electoral cash.....Pacific Gas & Electric continues to outdistance the field, having spent $28.5 million so far on what I like to think of as the "Immunize PG&E from Competition" initiative, or Proposition 16 on the June 8 ballot. By PG&E standards the runner-up, Mercury Insurance, is a piker — it has donated only $3.5 million to what I've deemed the "Let Mercury Trash Consumer Protection Laws" initiative, or Proposition 17.

Bringing up the rear but running very strong is the oil industry, which has raised $1.2 million to collect signatures for an initiative, aimed for the Nov. 2 ballot, which would suspend the state's greenhouse gas restrictions.

And this doesn't even count the unbelievable money-fest going on between Silicon Valley zillionaires Meg Whitman and Steve Poizner to win the Republican primary for governor. Luckily, since I'm not a Republican, I can view their contest philosophically.

Anyway, read the whole thing, just to get sense of how completely screwed up the political culture in California is. Pay special attention to Proposition 16, which is one of the sleaziest efforts I've ever seen — and I've been voting in California for three decades now.

Friday Cat Blogging - 30 April 2010

| Fri Apr. 30, 2010 2:53 PM EDT

Today is "favorite things" day. (Actually, that's most days around here.) On the left, Domino is stretched out in the 10 am sunny patch and looking at me suspiciously because she wants to get on with her nap. On the right, Inkblot is eating breakfast. This is, I admit, not the most flattering picture I've ever taken of him, but I thought everyone would enjoy the hint of tongue action. Happy weekend, humans!

Quote of the Day: Laura Bush

| Fri Apr. 30, 2010 2:29 PM EDT

From Laura Bush, in an interview with Ladies Home Journal:

George loves to tell the story of how all his Midland friends would come to the Oval Office and say, "I can't believe I'm here." And then they looked at him. Couldn't believe he was there either.

I think I understand how they felt.

Prop Trading and the Volcker Rule

| Fri Apr. 30, 2010 2:11 PM EDT

Mike Konczal interviews Jane D’Arista, a research associate at PERI, about the Volcker Rule and its proposed ban on proprietary trading by banks, the part of their business in which they borrow money to trade on their own accounts:

Prop trading only works if [banks] can borrow enough to substantially leverage their own capital. They have to set up a situation in which the cost of borrowing is lower than the return on the assets or derivatives in which they are investing. One example is what they are doing right now — borrowing very cheaply from the Federal Reserve and earning 200 basis points, let’s say, on buying Treasury securities.

....The only way prop trading is profitable is if the scale is enormous, especially in periods of low interest rates when margins are thin. Also because there is — has to be — a maturity mismatch to generate that margin. Except in rare periods when yield curves are inverted, low interest rates are available if borrowing is short-term lending and the desired higher rates on investment are available on longer-term assets. There is a liquidity risk if something happens in the market and the cost of rolling over the short-term borrowing rises....Every time there’s been a shock — Franklin National in 1975, Continental Illinois in 1984, Long Term Capital Management in 1998 — one or more big institution was not able to cover its position because its short-term funding disappeared and central bank liquidity had to be rushed to the rescue.

....Now people might say if we remove the prop trading desk from the firm its no less risky because it will be outside the firm, its like were not going to make it less risky, it will just move it around. What should people think in terms of taking the prop desk out of firms that have access to the fed window?

....What’s important about the ban on banks is that you end the channel through which the backup to the Fed creates the moral hazard that supports excessive risk. If the amount of funding banks can supply to one another and to other financial institutions is curtailed, prop trading will have to shrink because the repo market will shrink.

That’s what section 610 of the Dodd bill would do, shrink the repo market. It would restrict loans by banks to other financial institutions, requiring that the same limit on loans to a non-financial borrower in relation to capital that has been in effect for over a hundred years also apply to financial borrowers. In the case of financial institutions, the limit would apply to credit exposures involving repos, securities purchases and sales and a very broad list of derivatives.

....The growth of the offshore banking market and the invention of the domestic repo market [in the 90s] dramatically raised the amount of intra-sectoral borrowing and brought the issue into focus....About the same time, the Gramm-Leach-Bliley act gave permission to banks to borrow more for both necessary and other reasons — that is, to increase the share of non-deposit liabilities on their balance sheets. So they set up this whole interconnection game in which they borrow from one another and, in the process, are creating liquidity by monetizing debt. Of course, its all on paper — its all a pyramid — and in the end it can collapse and did.

The solution is to limit the funding that goes into prop trading as well as banning the trading itself for those institutions that have access to the Fed. And if that were done — if section 610 became law — even the investment banks wouldn’t be able to engage in excessive proprietary trading because they couldn’t get the funding to do so.

The whole thing is a little long and wonky, but worth a read. And while you're at it, if "off balance sheet" is a mystery to you, you might want to check out Mike's interview with UMass lecturer Jennifer Taub as well. It's good tutorial stuff.