Kevin Drum

Chart of the Day

| Fri Jun. 12, 2009 12:51 PM EDT

Via Andrew Gelman at the Monkey Cage, here's a cool chart showing changes in attitudes toward gay marriage at the state level.  (The original paper is here.)  Andrew says there's all sorts of cool statistical wizardry involved in creating it ("multilevel regression and poststratification"), but the bottom line is not just that attitudes toward gay marriage are becoming more liberal everywhere, but that they're becoming more liberal fastest in the states that were most liberal to begin with.  Andrew is surprised by this ("I generally expect to see uniform swing, or maybe even some 'regression to the mean'") but I don't think I am.  My guess is that there's some kind of positive feedback for these kinds of things, where more liberal attitudes feed on themselves as the resulting change turns out to be fairly obviously benign or even beneficial.  Andrew has a couple of other plausible explanations too.  For now, though, just revel in some cool chartmaking and the good news it conveys.

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TV Talk

| Fri Jun. 12, 2009 12:07 PM EDT

Two pieces of TV news today.  First, Alex Tabarrok is puzzled by the bizarrely high price of HDMI cables for Blu-Ray players:

Why don't any stores stock cheap HDMI cable?  I knew cables were a ripoff yet I could not find reasonably priced cables at Best Buy, Radio Shack, Target or even Wal-Mart.  Ordinarily, we would expect competition to push prices down but in this case it seem as if the mere existence of Monster is anchoring high prices everywhere but online.

My best guess is that this is an unusually strong version of the hidden fee model of Laibson and Gabaix.  In that model, firms overprice one aspect of service — such as a hotel charging exorbitant rates for telephone service — as an idiot tax.  Crucially, the idiot tax is matched by an IQ-subsidy; the price of the hotel room is lower than it would be without the idiot tax — so the idiots don't know to shop elsewhere and the high-IQ types are, in fact, drawn to stores with an idiot tax.  Thus, buy your blu-ray player at places such as Best Buy which sell a lot of expensive cable as well as massively overpriced extended warranties.

Maybe so.  Another possibility is path dependence: back when I managed a Radio Shack store (about 30 years ago), 10% of my store's sales came from stuff like cables and electronic parts.  However, they accounted for upwards of 50% of the store's profits because the margins were fantastically high.  We got away with this because the absolute prices were so low: people will shop around for the best price on a stereo or a computer, but they just don't care about saving a few dollars on stuff like cables and batteries.  The same thing is true for USB cables, which are bizarrely overpriced in places like Office Max or Staples, or high-tech razor blades at your local supermarket.  My guess is that even now, when the price of things like cables and razor blades is high enough to make it worth shopping around, inertia keeps everyone thinking that this stuff is basically cheap and not worth hassling over.

But I admit that the lack of competition is still surprising.  For a few stores to overcharge is understandable.  Maybe even for most stores.  But all of them?  Last year I made the rounds of every retail store in the area after I got annoyed at the price of a simple Cat-5 network cable, and there wasn't a single place that sold them for a reasonable price.  Not one.  It was almost like there was a cartel or something.  (And the cartel worked!  I didn't feel like waiting the few days it would take to order online, so I went ahead and bought an expensive one.  Their fiendish strategy turned out to be remarkably effective.)

And the second piece of TV news?  Something that's close to my heart: broadcasters have promised Congress that by September they will have standards in place that prevent commercials from being wildly louder than the TV programs they're embedded in.  Hooray!  It's only taken them 40 years to finally address this.  "We get it," an industry flack told Congress about loud ad complaints. "As a matter of pure economics, we do not want to lose viewers."

The bad news, however, is that the industry's sweet talk has convinced Congress to halt work on legislation to force broadcasters to address this.  Too bad.  Like the Do Not Call list, this is one of those things where ideology plays no role for me.  I don't care if this is liberal, conservative, libertarian, or anything else.  I just want it to stop, and I don't care a whit whether or not it's a justified interference in the free market.  JUST MAKE IT STOP!

China's Economy

| Fri Jun. 12, 2009 11:11 AM EDT

The United States needs to reduce its trade deficit, but arithmetic being what it is, that can happen only if other countries reduce their trades surpluses.  That means Germany and Japan, but most of all it means China — and as the chart on the right shows, China's exports are indeed down.  Good news?  Not really: as Brad Setser has pointed out in the past, this only produces a declining trade surplus if imports also go up — or at least decline at a slower rate than exports.  Ed Hugh delivers the bad news:

The decline [in exports] was the biggest since Bloomberg data began in 1995. And more to the point as far as Brad is concerned China’s imports dropped 25.2 percent last month, compared with a 23 percent fall in April. Hence China just one more time ran an increased trade surplus (up to $13.4bn in May from $13.1bn in April), and it is no clearer to me than it is to Brad how a country running a trade surplus can be leading a surge in global demand. Indeed this months data, far from prodiving evidence of an accelerating “recovery” continues to point towards ongoing weakness in global demand, just like the evidence we are receiving from Germany and Japan.

Ed has more at the link, including some detail about China's imports that provides even more cause for gloom, but the bottom line is that there's not much hope in the short term that China will be leading a global recovery.  Their economy isn't rebalancing, it's just falling.  No green shoots here.

Quote of the Day

| Thu Jun. 11, 2009 4:42 PM EDT

From New York governor David Paterson, explaining to legislators why they should settle their leadership fight and get back to business:

“Think of the lobbyists who have invested in themselves to try to persuade legislative leaders and legislators on issues.”

Give him credit for thinking outside the box, anyway.

Drill Baby Drill

| Thu Jun. 11, 2009 2:15 PM EDT

Matt Yglesias notes that public support for serious action on global warming has fallen recently:

The trouble is that what the public wants is basically a fantasy — a policy that will let us avoid paying the costs involved in coping with the climate crisis. I understand why people want a policy like that — I want one too. The problem is that it can’t happen.

Au contraire!  The Republican Party has just what the public is asking for:

Democrats in Congress [] seem determined to make our energy situation even worse....Instead, the American Energy Act will produce more energy, lower fuel bills, create more jobs, yield a cleaner environment, and lead to a more secure nation. Can there be any doubt what path is best for the country?

See?  Energy policy is easy when you're willing to avoid actual reality and instead simply engage in pipe dream pandering.  That's today's GOP at work.

Brown Shoots

| Thu Jun. 11, 2009 1:41 PM EDT

The World Bank is fantastically gloomy about the prospects for the global economy this year:

The World Bank publicly released an update on Thursday [for] 2009, saying it expected the global economy to contract by "close to 3%." That is sharply worse than the World Bank's March estimate of a 1.75% contraction. Mr. Zoellick said that while there are signs of an easing of the recession in wealthy countries, developing nations are suffering from a drop in exports, remittances and foreign investment.

....Mr. Zoellick described the global downturn as occurring in "waves." In the first wave, the financial crisis battered the U.S. and Europe. As markets in wealthy countries dried up, a second wave, hit developing nations. Now a third wave is weakening financial institutions in those countries, which could produce a fourth wave that could further undermine financial institutions in the U.S. and Europe.

Italics mine.  That's a huge change in just three months.  Zoellick didn't provide any details about why the Bank's forecast has plummeted so dramatically since March, but their economists must be seeing some pretty sizeable deteriorations to drive a change this large.

On the bright side, the IMF thinks that the recovery in 2010 will be stronger than they previously thought.  I sure hope so.

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What the Iranian Election Means

| Thu Jun. 11, 2009 12:52 PM EDT

I don't have any special comment about the upcoming Iranian election pitting hardline incumbent Mahmoud Ahmadinejad against moderate reformer Mir Hossein Mousavi, but I thought Marc Lynch's musing was worth passing along.  Here it is:

The Iranian election has already captivated the Arab public sphere — it has been all over the headlines and the TV stations. I imagine that many of the Arabs who see democracy as an important and positive issue find this Iranian election inspiring (as they did Khatemi's 1997 campaign). The Arab public may regard a Mousavi victory as the same kind of opportunity to rethink relations with Iran as Obama's victory offered for relations with the United States. Arab leaders may find it harder to mobilize opposition to Iran with the seemingly reasonable Mousavi in office than with the cheerfully inflammatory Ahmedenejad.

....Of course, if Ahmedenejad wins, the reverse effect may take hold. When George W. Bush defeated John Kerry in 2004, a very wide swathe of Arab public opinion concluded that this meant that the American people really did bear responsibility for Bush's unpopular policies. If the U.S. is really a democracy, they asked, then didn't Bush's victory mean that his war on terror and invasion of Iraq really did represent the American popular will? If Ahmedenejad wins, the same dynamic may hit Iran in the Arab world: the Iranian people had the chance to correct their policies, and chose to continue as they were. That might lead to a hardening and deepening of anti-Iranian sentiment, at least among elites and leaders.

Payday Lending for Rich People

| Thu Jun. 11, 2009 11:30 AM EDT

Felix Salmon has the story here.  I found it unaccountably entertaining.  Cashing out Daddy's art collection after blowing through your inheritance has never been easier.

Getting to 17%

| Thu Jun. 11, 2009 11:22 AM EDT

The Waxman-Markey bill requires a 17% drop in carbon emissions by 2020.  Joe Romm explains how we can get there:

Clean energy deployment from the stimulus....carbon dioxide emissions will be some 2% lower in 2020 than in 2005....Obama’s recent fuel economy deal....Let’s call that another 2% emissions drop....Then we have Waxman-Markey itself.  It achieves huge energy efficiency savings....That’s another 5% drop.

....Let’s say 1% of the target will be met with domestic offsets....Let’s say 1% of the target will be met with international offsets....cofiring biomass....2% of the 2020 target.

That's about 13% already, and the rest of the reduction can be met simply by utilizing existing gas-fired electric plants at a higher rate than we do now:

It now appears likely that, thanks to unconventional supplies, natural gas alone could meet a great deal of the Waxman-Markey CO2 target for 2020 — without requiring gobs of new power plants to be sited and built or thousands of miles of new transmission lines.

....Today, dirty coal plants are being “dispatched” (or utilized) to provide electricity by grid operators first, while natural gas plants that could provide electricity with far lower emissions of carbon dioxide remain unutilized or underutilized — even though their electricity costs are only slightly higher.  This is occurring in at least two regions of the country, according to a major under-reported May study by the Energy Information Administration, “The Implications of Lower Natural Gas Prices for Electric Generators in the Southest.”  A cap on CO2 emissions and even a low price of CO2 will switch the dispatch order, generating large emissions savings at low cost (if the gas is available, as now seems likely).

Joe suggests that a carbon price of around ten bucks a ton — which is pretty low — is all that we'd need to motivate utilities to change the dispatch order of their plants enough to meet the rest of the 17% target.

Bottom line: meeting the Waxman-Markey targets for 2020 is pretty easy.  We'll have over a decade to start getting ready for the harder measures it takes to make serious cuts.  Doom mongers, take note.

The AMA Takes a Shocking Stand

| Thu Jun. 11, 2009 2:20 AM EDT

The AMA has announced that it will oppose the creation of a public option in any kind of healthcare reform.  This is not exactly a shocker, since the AMA has opposed pretty much every step toward national healthcare ever proposed — including Medicare.  Remember Operation Coffee Cup?

Still, they really ought to have better reasons than this:

In comments submitted to the Senate Finance Committee, the American Medical Association said: “The A.M.A. does not believe that creating a public health insurance option for non-disabled individuals under age 65 is the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”

If private insurers are pushed out of the market, the group said, “the corresponding surge in public plan participation would likely lead to an explosion of costs that would need to be absorbed by taxpayers.”

The AMA's love affair with private insurance companies is truly a thing of wonder.  It's like these guys have collective Stockholm Syndrome.  Or collective battered wife syndrome.  Or something.  Given how much misery private insurers cause for most doctors, I sometimes wonder what they'd have to do to finally cause the AMA to turn on them. Start paying all claims in zlotys?  Demand that doctors have bar codes tattooed on their foreheads?  Insist that all waiting rooms show nothing but reruns of House?

Probably not even that.  Doctors must figure that the more pain private insurers cause them, the more it shows they really love them.  So back to the arguments, such as they are.  (1) A public plan wouldn't drive out private insurers unless it turns out that private insurers are actually less efficient than the post office.  In which case they'd deserve it.  (2) Nor would a public plan restrict choice — unless the AMA's members deliberately tried to sabotage it by refusing to participate.  (3) And there would only be a surge in signups if the public plan turned out to be a better deal, which would likely mean lower overall costs even if a greater percentage of those costs was paid for out of taxes.

But who cares?  Honestly, if the graybeards of the AMA didn't oppose a public plan it would probably make me rethink my support for it.  The fact that they are opposing it just means that all is right with the world.

UPDATE: Apparently the AMA is backing off slightly on its opposition to a public plan. They now say they're willing to consider "a federally chartered co-op health plan or a level playing field option for all plans" — whatever that means.  Sounds like pretty weak tea to me.  I think we can still safely say they're opposed to anything that would have a serious chance of being effective.