Kevin Drum

Bernanke and Punchbowlism

| Thu Sep. 24, 2009 12:46 PM EDT

Legendary Fed chair William McChesney Martin joked that the Fed's job was "to take away the punch bowl just as the party gets going."  Translated, he meant that whenever the economy started to really get going, the Fed was obligated to raise interest rates and slam on the brakes before inflation got out of hand.  This also killed growth and caused recessions, but he figured it was the only choice he had.

Brad DeLong is afraid that this sentiment will make a comeback:

Central banks would prefer an effective system of regulation, but due to capture of legislatures by the banking sector they are unlikely to get it. Thus they are going to be driven to be always wondering whether they should be putting extra downward pressure on asset prices — with implications for employment and possibly growth.

The fact that "Punchbowlism" can be implemented by central banks by themselves makes it the default option.

"Central banks would prefer an effective system of regulation"?  You could have fooled me.  It strikes me that the Fed has been captured by the banking sector every bit as thoroughly as Congress has.  The Fed, after all, still has considerable influence.  If Ben Bernanke pulled out his shiniest, sharpest pitchfork and took to the podium with a really full-throated, sky-is-falling warning that we needed serious new financial regulations and then demanded that CONGRESS. MUST. ACT. NOW — well, Congress would probably act.  Not completely.  It's still Congress, after all.  But if Bernanke really put his back into it, he'd make some pretty serious waves.

But I have not, to put things delicately, noticed him doing any such thing.  On the contrary, he seems far more interested in protecting the Fed's turf, offering up weak-tea compensation proposals, slow rolling increased consumer protections, and pretending that a brand new committee devoted to "systemic risk" will somehow do what the Fed has never done before.  These are not the actions of a revolutionary who wants to remake the regulatory system.

I'm a Bernanke skeptic, so I guess my crankiness here can be discounted.  But I simply haven't seen any sign that he's really dedicated to root-and-branch regulatory reform.  I also rather doubt that he's very dedicated to "punchbowlism," frankly.  In fact, as near as I can tell, he's basically dedicated to getting us out of our current crisis (which is good!) and then tweaking the system just enough so that things can go back to the way they've always been (not so good).  I hope he proves me wrong.

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Kent Conrad on Healthcare

| Thu Sep. 24, 2009 10:40 AM EDT

This quote from Kent Conrad made the rounds of the blogosphere yesterday:

Let me just conclude for my progressive friends who believe that the only answer to getting costs under control and having universal coverage is by a government-run program. I urge my colleagues to read the book by T.R. Reid, "The Healing of America."

I had the chance to read it this weekend. He looks at the health-care systems around the world. And what he found is in many countries they have universal coverage. They contain costs effectively. They have high-quality outcomes, in fact higher than ours. They're not government-run systems in Germany, in Japan, in Switzerland, in France, in Belgium — all of them contain costs, have universal coverage, have very high quality care and yet are not government-run systems.

This has been sort of rattling around in my head ever since I saw it, but I couldn't quite put my finger on what I wanted to say about it.  But then I figured it out: it's completely, 100% batshit crazy.  I mean, is this actually breaking news to Conrad after (excuse me a moment while I google) 22 years in the Senate?  WTF?

Believe me: Conrad's "progressive friends" would be punch drunk with ecstacy if the United States adopted the healthcare system of (take your pick) Japan, France or Germany.  It would be beyond our wildest dreams.  Does Conrad really not know this?  Did he only find out this weekend that those other countries have terrific healthcare systems that contain costs, provide universal coverage, and boast very high-quality care?  What's going on?

Quote of the Day

| Wed Sep. 23, 2009 11:38 PM EDT

From Noah Shachtman, summing up Robert Gates's influence on the Pentagon so far:

After three years under Gates, the Defense Department is finally learning the right lesson: You wage war with the enemies you have, not the ones you wish you had.

In other words, quit obsessing about theoretical future world wars with China or Russia and figure out how to win today's wars in Iraq and Afghanistan instead.  The rest of Noah's profile of Gates is good too.

ACORN Strikes Back

| Wed Sep. 23, 2009 7:30 PM EDT

ACORN has filed a lawsuit against James O'Keefe and Hannah Giles, the two undercover filmmakers who taped ACORN workers providing advice about how to smuggle underage sex workers into the country from El Salvador:

The lawsuit asserts that neither O'Keefe nor Giles obtained consent from ACORN workers for videotaping them, as state law requires.

ACORN executive director Bertha Lewis told reporters in a conference call that ACORN, the Association of Community Organizations for Reform Now, does not support criminal activity and believes the filmmakers should have obeyed Maryland laws.

Points for chutzpah, I guess, but this is a bad idea on so many levels it hurts just to think about it.  All they're doing is extending the news cycle on this whole debacle, making fools of themselves with transparently petty arguments, and just generally showing less common sense than your average mafia don caught on a 60 Minutes sting.  At this point, ACORN needs to take their lumps, finish their internal investigation, and clean up their act.  In the meantime, the least they can do is avoid handing the Glenn Beck crowd free additional ammunition.  Fair or not, shooting the messenger isn't helping their cause.

Roving Wiretaps

| Wed Sep. 23, 2009 5:29 PM EDT

Via Atrios, here's Al Franken giving one of Obama's assistant attorney generals a hard time over the question of whether to extend a provision of the PATRIOT Act that's due to expire at the end of the year:

Franken, who opened by acknowledging that unlike most of his colleagues in the Senate, he’s not a lawyer, but according to his research “most Americans aren’t lawyers” either, said he’d also done research on the Patriot Act and in particular, the “roving wiretap” provision that allows the FBI to get a warrant to wiretap an unnamed target and his or her various and changing cell phones, computers and other communication devices.

Noting that he received a copy of the Constitution when he was sworn in as a senator, he proceeded to read it to [David] Kris, emphasizing this part:  “no Warrants shall issue but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”

“That’s pretty explicit language,” noted Franken, asking Kris how the “roving wiretap” provision of the Patriot Act can meet that requirement if it doesn’t require the government to name its target.

Great stuff.  So liberals, who normally believe in a living constitution that changes with changing times etc. etc., are now hauling out black letter critiques of longstanding federal law.  (Roving wiretaps have been legal for several decades.  The PATRIOT Act merely extended them to national security cases.)  At the same time, you can revel in, for example, Peter Thomson of the Federalist Society, blandly affirming that a Ninth Circuit Court (!) opinion was "based on solid legal ground" when it reasoned

that the particularity requirement of the “place” to be searched may be substituted with that of the “person” in a roving wiretap setting. Thus, a roving order authorizing a wiretap over all telephones used by a subject does particularly describe the “places” or telephones to be searched, albeit in an unconventional manner.

Italics mine.  Not the sort of reasoning the Federalist Society usually approves of, but any port in a storm, I suppose.

Personally, I'm inclined to stick to basic principles on this.  I really do believe in a constitution that adapts in obvious ways to changing times and technologies, and the framers pretty clearly didn't anticipate wiretaps of any sort, let alone wiretaps on mobile phones or worldwide packet networks.  "Place" has one meaning when the state of the art in communication technology is paper and quill pen, which can exist only in specific, well-defined locations, but quite a different meaning when you're tracking electronic signals through a globally distributed network and the access point to that network is entirely arbitrary and can exist literally anywhere on the planet.  Adapting to that reality doesn't strike me as constitutional overreach.  (Conversely, warrantless wiretaps are fundamentally corrosive regardless of type, but that's not an issue in this case.  Roving or not, these taps all require a judge's permission.)

There are some obvious safeguards that ought to be in place with roving taps, and I don't have any problem with tightening up the language if that needs to be done.  But given the reality of how technology has evolved, my instinct is that roving taps are a reasonable and constitutional response.  If I'm wrong, feel free to school me in comments.

UPDATE: It looks like I screwed up here.  Franken's issue is apparently not with roving wiretaps per se, but with "John Doe" wiretaps aimed at individuals who are described but not specifically named.  Sorry about that.

Chart of the Day

| Wed Sep. 23, 2009 4:02 PM EDT

From the CDC, here are the latest estimates about the accessibility of healthcare in America.  The share of the population that was forced to go without needed medical care during the past year because of cost has gone up from 4.5% in 1997 to 7.3% so far this year.  USA! USA!

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Saving the Planet

| Wed Sep. 23, 2009 1:36 PM EDT

Via Brad Plumer, Fiona Harvey of the Financial Times gets an early look at the upcoming World Energy Outlook report:

In the first big study of the impact of the recession on climate change, the IEA found that CO2 emissions from burning fossil fuels had undergone "a significant decline" this year — further than in any year in the last 40.

....Falling industrial output is largely responsible for the plunge in CO2 , but [...] for the first time, government policies to cut emissions have also had a significant impact. The IEA estimates that about a quarter of the reduction is the result of regulation, an "unprecedented" proportion. Three initiatives had a particular effect: Europe's target to cut emissions by 20 per cent by 2020; US car emission standards; and China's energy efficiency policies.

Europe's cap-and-trade system didn't start out very strongly, but the fact is that nobody really expected it to.  Phase 2, however, is working better, and Phase 3 will be better still.  If we learn from their experience, we can avoid the early stumbles and put in place a decent (and steadily improving) program right out of the gate.  Ten years ago would have been a good time to start, but failing that, this year will have to do.

Saving the Frogs

| Wed Sep. 23, 2009 12:46 PM EDT

Whenever a week is dominated by things like UN opening sessions, G20 meetings, senate markup sessions, and the like — well, you just know that's going to be a slow week.  When was the last time something genuinely interesting happened at a UN opening session, after all?  Thirty years ago when Yasser Arafat demonstrated his revolutionary cred by giving a speech with a gun holster at his hip?  (They made him leave the gun itself at the door.)

Meh. So let's pass some time talking instead about James Fallows' great obsession: boiling frogs.  To start, here's an excerpt from a piece Paul Krugman wrote a couple of months ago:

I'm referring, of course, to the proverbial frog that, placed in a pot of cold water that is gradually heated, never realizes the danger it's in and is boiled alive. Real frogs will, in fact, jump out of the pot — but never mind. The hypothetical boiled frog is a useful metaphor for a very real problem: the difficulty of responding to disasters that creep up on you a bit at a time.

Italics mine.  And Krugman is right: even though it's untrue that frogs will mindlessly poach themselves to death if you're careful to turn up the temperature on them slowly, it's a useful metaphor.  Still, it's not true.  So we should find another one.

But here's the thing: Fallows issued a worldwide call for good substitute metaphors two years ago.  Four days later he promised that winners would be announced in a couple of days.  And then....nothing.

So here's what I'm interested in.  The boiling frog cliche is untrue.  But it stays alive because, as Krugman says, it's a useful metaphor.  So why aren't there any good substitutes?

This is very strange.  Most useful adages and metaphors not only have substitutes, they have multiple substitutes.  "Look before you leap" and "Curiosity killed the cat."  "Fast as lightning" and "Faster than a speeding bullet."  Etc.  Usually you have lots of choices.

But in this case we don't seem to have a single one aside from the boiling frog.  Why?  Is it because it's not really all that useful a metaphor after all?  Because the frog has ruthlessly killed off every competitor?  Because it's not actually true in any circumstance, let alone with frogs in pots of water?  What accounts for this linguistic failure?

UPDATE: Hoo boy.  If Glenn Beck wasn't on Jim's shit list before, he sure is now.  He's also an idiot, of course.

The Rise of Glenn Beck

| Wed Sep. 23, 2009 11:32 AM EDT

From Vinnie Penn, Glenn Beck's partner in the late 90s, when both were Top 40 jocks at KC101 in New Haven, Connecticut:

He always knew how to work people and situations for attention. He could pick the most pointless story in the news that day and find a way to approach it to get phones lit up. That was his strong point — pissing people off. He was very shrewd on both the business and entertainment sides of radio. He's built his empire on very calculated button pushing.

This is from part 3 of Alexander Zaitchik's terrific profile of Beck at Salon.  If you're looking for an antidote to the Beck dreck that Time magazine recently passed off as journalism, this is it. Read part one here and part two here.

The Real Cost of Medmal

| Wed Sep. 23, 2009 10:41 AM EDT

In his column today, David Leonhardt makes a point about medical malpractice that doesn't get enough attention:

The fear of lawsuits among doctors does seem to lead to a noticeable amount of wasteful treatment. Amitabh Chandra — a Harvard economist whose research is cited by both the American Medical Association and the trial lawyers’ association — says $60 billion a year, or about 3 percent of overall medical spending, is a reasonable upper-end estimate. If a new policy could eliminate close to that much waste without causing other problems, it would be a no-brainer.

At the same time, though, the current system appears to treat actual malpractice too lightly. Trials may get a lot of attention, but they are the exception. Far more common are errors that never lead to any action.

After reviewing thousands of patient records, medical researchers have estimated that only 2 to 3 percent of cases of medical negligence lead to a malpractice claim.

This deserves more attention.  We can argue about the costs of defensive medicine forever. But I'm willing to tentatively accept $60 billion as a conversation starter.  It's never going to be possible to get a precise answer anyway since, as Leonhardt says later, virtually every incentive in our medical system is to do more.  Trying to isolate and quantify the blame for each particular unnecessary test just isn't possible.

Still, $60 billion is a reasonable enough guess, and trying to reduce that cost is, as Leonhardt says, a no-brainer.  Unfortunately, the real problem with our medical malpractice system isn't that it costs too much.  The real problem is that it's a lottery.  Some people get money they don't deserve because it's cheaper to settle with them even if their claims are frivolous.  But far more people who are victims of genuine malpractice never sue and never get a dime.  A genuinely fair reform, one that cut frivolous malpractice suits but also did a better job of compensating everyone who was genuinely injured, would almost certainly end up costing us more, not less.

Here's a little-known fact that helps to make this clearer.  If you're injured in a hospital, how do you know if you're the victim of malpractice?  After all, not every surgery has a positive outcome.  If yours didn't work out, that doesn't mean the doctor was negligent.

The answer is: you don't.  Unless you sue.  Most hospitals refuse to release their internal records unless you sue them and force disclosure via discovery or a subpoena.  This means two things.  First, lots of suits that look frivolous (because they're dropped quickly) aren't.  They were merely attempts to see the actual records of a case.  If there were an easier way to do that, the suit would never have been filed in the first place.

Second, despite our famously litigous nature, suing is a lot of work.  Most people don't want to do it just on the chance that there might have been some malpractice.  And most people don't.  Which means that lots of cases of malpractice are never discovered.

We could fix this pretty easily by making it much easier for patients to see the records of their own cases.  If we did, that would cut down on "frivolous" lawsuits and it would increase the number of justified lawsuits.  That would be fairer for everyone, but it probably wouldn't cut medical malpractice costs.  It would increase them.  That's why the medmal warriors never talk about this.  They like the idea of cutting back on frivolous suits, but they're much less keen on admitting that there's also a lot of genuine malpractive that goes completely unnoticed.

Even if we eliminated medmal suits entirely, the cost savings would be pretty modest.  Genuine reform, on the other hand, would likely cost us money.  That's why you never hear much about it.