Kevin Drum

Catching Up To My Brain

| Tue Jun. 23, 2009 6:16 PM EDT

Over at The Opinionator they round up some blog reaction to Barack Obama's increasingly tough talk on Iran and then say this:

At Mother Jones, Kevin Drum remarked on the shift in tone on Iran without being so fazed by it.

Reading this reminded me of one of the dangers of blogging: it's such a conversational medium that you sometimes forget which parts you've said aloud and which parts you haven't.  I've been emailing and chatting (and just thinking) about Iran the same as everyone else, and one of the things I've been emailing and chatting and thinking about is the strong likelihood that the Iranian regime is going to crack down ever harder as the protests continue, producing ever greater brutality and ever greater bloodshed.  So far, for good and sound reasons, Obama has taken a restrained tone toward this, but if it continues he's obviously going to react ever more strongly and more concretely.  And he'll have to do it without either overpromising or actively making things worse for the protesters.  It's already a tough tightrope to walk, and it's going to get tougher.

So the reason I wasn't fazed by Obama's statement today is because I've been expecting it all along.  And unless the opposition has already fizzled, I expect Obama's position to get even more difficult.  I haven't actually said any of that on the blog, however, which might make my reaction today seem a little jaded.  Really, though, it wasn't: it was just the natural endpoint of a conversation I've been having for the past week outside the blog.  Now, with this post, I'm letting the blog catch up to my brain.  Finally.

Advertise on MotherJones.com

Getting Incentives Right

| Tue Jun. 23, 2009 5:36 PM EDT

Martin Wolf has a bit of an odd column today.  His basic point is that financial bubbles are generally caused by too much borrowed money:

At the heart of the financial industry are highly leveraged businesses....In a highly leveraged limited liability business, shareholders will rationally take excessive risks, since they enjoy all the upside but their downside is capped: they cannot lose more than their equity stake, however much the bank loses. In contemporary banks, leverage of 30 to one is normal. Higher leverage is not rare.

....A solution seems evident: let creditors lose. Rational creditors would then charge a premium for lending to higher-risk operations, leading to lower levels of leverage. One objection is that creditors may be ill-informed about the risks being run by banks they are lending to. But there is a more forceful objection: many creditors are protected by insurance backed by governments. Such insurance is motivated by the importance of financial institutions as sources of credit, on the asset side, and suppliers of money, on the liability side. As a result, creditors have little interest in the quality of a bank’s assets or in its strategy. They appear to have lent to a bank. In reality, they have lent to the state.

So far, so good. Even rational managers and shareholders have a big incentive to take outsize advantage of cheap money if it produces many years of great returns and only occasional big losses.  Ditto for lenders — especially if, in the case of catastrophe, they can expect to be protected by central bank guarantees of various sorts.  But then the column ends with this:

The unpleasant truth is that, today, the incentive to behave in this risky way is, if anything, even bigger than it was before the crisis. [Yikes! –ed.]

Regulatory reform cannot end with incentives. But it has to start from incentives. A business that is too big to fail cannot be run in the interests of shareholders, since it is no longer part of the market. Either it must be possible to close it down or it has to be run in a different way. It is as simple — and brutal — as that.

Wolf's focus on abuse of leverage is right on target, as is his observation that regulation by itself isn't enough to stop it.  Regulators will inevitably become captured, banks will figure out ways to get around them, and politicians will do nothing to stop it since that would run the risk of hurting the economy with an election coming up.  (And there's always an election coming up.)

So what's the answer?  The academic paper that inspired the column suggests that reforming executive compensation in the financial sector is part of the answer, but Wolf himself doesn't really follow that up.  So we're not left with much.  Saying that big banks "cannot be run in the interests of shareholders" is a provocative statement, but following that up by suggesting only that they need to be "run in a different way" isn't a very provocative response.  Perhaps this column was a season finale cliffhanger and we have to wait until next week for the mind blowing conclusion?

Quote of the Day

| Tue Jun. 23, 2009 1:48 PM EDT

From Barack Obama, asked why he won't spell out the consequences of further violence in Iran right now:

"I know everybody here is on a 24-hour news cycle. I'm not. OK?"

Good for him.  Obama was noticeably tougher toward the Iranian regime in his press conference today ("The United States and the international community have been appalled and outraged by the threats, the beatings and imprisonments of the last few days"), but he remained firm in his refusal to say anything that would allow the regime to pretend that the protesters are in any way tools of Western powers:

The Iranian people are trying to have a debate about their future. Some in Iran — some in the Iranian government, in particular, are trying to avoid that debate by accusing the United States and others in the West of instigating protests over the elections.

These accusations are patently false. They're an obvious attempt to distract people from what is truly taking place within Iran's borders.

This tired strategy of using old tensions to scapegoat other countries won't work anymore in Iran. This is not about the United States or the West; this is about the people of Iran and the future that they — and only they — will choose.

This is obviously becoming a harder line to walk as events progress in Iran, and I expect it to become harder still over the next few days.  So far, though, Obama has done pretty well.

Best in Blog: 23 June 2009

| Tue Jun. 23, 2009 1:28 PM EDT

Three MoJo stories we're liking today:

1) Shock and Audit: The Hidden Defense Budget

Mother Jones dissected the defense budget so you don't have to. You thought $600 toilet seats were bad? Here's how the Pentagon really spends money. Read more.

2) China Corners the Keffiyeh Market

How did a pro-Palestine American hipster trend force the last Palestinian keffiyeh maker to shutter his business? Read more.

3) 98% of Eco Products Not Eco

A study of 4,000 "eco-friendly" consumer products found rampant greenwashing among almost all of them. Will Congress clamp down on misleading claims? Read more.

Plus: Check out the comments on Kevin's "Obama Derangement Syndrome Watch" post.

Obama the Cheerleader

| Tue Jun. 23, 2009 12:49 PM EDT

Tyler Cowen provides us with a Three Word Explanation:

Median voter theorem.

It's my first-cut account of a lot of what is going on in the newspaper headlines.  Yet somehow I rarely see it mentioned, even when I read very prominent social scientists commenting on current policy.

By this, I assume Tyler is suggesting that the reason big-ticket programs like national healthcare and climate change legislation have bogged down lately is because the median voter hasn't changed much over the past few years.  Congress and the presidency may have changed hands, but public opinion has shifted only slightly, and that means there's not really a very big appetite for dramatic change.

Barack Obama, of course, is the guy who has the job of changing this.  But can he?  Here's something written about Obama before last November's election:

Watching him in action for the past year, one thing has become more and more clear: He doesn't seem inclined to use his oratorical skill to truly shape public opinion. He's only using it to win votes.

....It's not clear yet if he gets this. His speeches soar, but they rarely seem designed to move the nation in a specific direction. Is he pushing the public to support cap and trade even though it might cost them a few dollars? Or merely to vote for "change"? It's sometimes hard to tell.

This is hardly an original concern. Liberal pundits have been stewing for months over the question of whether Obama is too cautious to win big victories, too invested in a narrative of bipartisan unity to get his hands dirty in a real street fight. As a former community organizer he understands the power of direct action, but does he understand how to shift public opinion on a national scale? And is he willing to try?

That was me back in October.  I'm still wondering. It's not so much that I think Obama has to abandon his bipartisan approach and approach politics as an endless blood sport, but that he needs to engage with the public much more sharply than he has until now.  When he talks, people listen, but I don't get the sense that they light up congressional switchboards the next day. One of these days, they need to start.

The Future of Engagement

| Tue Jun. 23, 2009 11:34 AM EDT

If the Iranian regime successfully beats back the challenge of Mir Hussein Mousavi and millions of protesters, what happens next?  Matt Yglesias says it makes engagement with Iran impossible:

The hope behind an engagement strategy was that the Supreme Leader might be inclined to side with the more pragmatic actors inside the system—guys like former president Rafsanjani and former prime minister Mousavi. With those people, and most of the Iranian elites of their ilk, now in open opposition to the regime, any crackdown would almost by definition entail the sidelining of the people who might be interested in a deal. Iran would essentially be in the hands of the most hardline figures, people who just don’t seem interested in improving relations with other countries.

But what if Mousavi wins?  Jonah Goldberg says it doesn't matter:

If the forces of reform and democracy win, Obama's plan to negotiate with the regime is moot, for the regime will be gone. And if the forces of reform are crushed into submission by the regime, Obama's plan is moot, because the regime will still be there.

Put me on Matt's side.  If Khamenei wins, Obama's engagement policy probably becomes impossible, both on practical and moral terms.  But if Khamenei falls, what's the problem?  Sure, "the regime will be gone," but there will be a new regime in its place.  Engagement would most likely be on hold for a while as it finds its feet, and it's possible that even in the longer term the new regime would find it impossible to negotiate with the U.S.  But it's also possible that they'd be more likely to negotiate with the U.S.  We don't know, and neither does Goldberg, who never explains why he thinks Obama would find it impossible to engage with a new regime in Iran.  He just seems to hope it's true.

Advertise on MotherJones.com

Neda

| Mon Jun. 22, 2009 4:24 PM EDT

"Neda," it turns out, is Neda Agha-Soltan, a 26-year-old native of Tehran who was shot dead during Saturday's clashes at Azadi Square.  Borzou Daragahi of the LA Times reports from Tehran:

Security forces urged Neda's friends and family not to hold memorial services for her at a mosque and asked them not to speak publicly about her, associates of the family said. Authorities even asked the family to take down the black mourning banners in front of their house, aware of the potent symbol she has become.

But some insisted on speaking out anyway, hoping to make sure the world would not forget her. Neda Agha-Soltan was born in Tehran, they said, to a father who worked for the government and a mother who was a housewife. They were a family of modest means, part of the country's emerging middle class who built their lives in rapidly developing neighborhoods on the eastern and western outskirts of the city.

Like many in her neighborhood, Neda was loyal to the country's Islamic roots and traditional values, friends say, but also curious about the outside world, which is easily accessed through satellite television, the Internet and occasional trips abroad....But she was never an activist, they added, and she began attending the mass protests only because of a personal sense of outrage over the election results.

"She was a person full of joy," said her music teacher and close friend Hamid Panahi. "She was a beam of light. I'm so sorry. I was so hopeful for this woman." The Lede has more, including a report that Basij militia members and police officers broke up a memorial service for Soltan on Monday by violently beating and arresting the protesters.

Thrilling Land Use Post

| Mon Jun. 22, 2009 2:51 PM EDT

When someone says "land use policy," what do you think?  Time for a beer?  Time to clip my toenails?  Worthwhile Canadian initiative?

I feel your pain.  And yet: it's important!  Here are two examples.  First, from Kaid Benfield at NRDC, there's urban land use:

It's quite possible that California's new land use and transportation planning law, SB375, has been a game-changer....Suddenly people who two years ago wouldn't give smart growth advocates the time of day are talking about things like transit-oriented development and growth boundaries (if they still haven't caught on to revitalization and walkability, unfortunately), and mainstream enviros are beginning to seek ways to increase neighborhood density instead of opposing it.

....Smart growth and smart transportation choices can reduce the amount Americans need to drive — as measured in vehicle miles traveled (VMT) — by 10 percent per capita from 2005 levels. A 10 percent reduction in per capita VMT would reduce annual transportation emissions by 145 million metric tons of carbon dioxide (MMTCO2) in the year 2030, equivalent to the annual emissions of about 30 million cars or 35 large coal plants.

And now, rural land use.  In particular, an amendment to an appropriations bill last week that would have banned federal scientists from considering land use changes when calculating greenhouse gas emissions.  It failed, but only barely.  Michael O'Hare comments:

This is a particularly vile attempt to protect the corn industry at the expense of the planet by short-circuiting the science Obama promised would guide his administration....I can't be too clear or flatfooted about this: there is no respectable or responsible view that growing biofuel feedstock on land that could be used for food does not cause an indirect land use discharge of greenhouse gas, and corn ethanol is the biofuel with the largest indirect land use change effect.

....This is not a close scientific call even though the size of the LUC effect for a given fuel is subject to debate, it's a disagreement between people who will say anything for money and people who know what they're talking about....If we are willing to make stuff up and stifle the science with legislation like this, countries like India and China, and the Europeans, have no reason to get on board, especially after the last eight years of Bush administration denial and ignorantism and stasis on climate. It will be a catastrophe.

Mike wrote that last week, and as I said, the amendment ended up failing in committee.  But only by 30-29, and it's coming back to the floor this week.  Mike has more here on what you can do about this.

Google Reader Bleg

| Mon Jun. 22, 2009 1:23 PM EDT

I guess I should have done this over the weekend, but I have a technical bleg.  I use Google Reader for my RSS feeds, and it seems to work fine for every RSS feed except one: mine. Here's the problem: Instead of showing up a few minutes after I write them, my posts seem to sit in limbo for a few hours and then show up in batches all at once.  I've checked the feed itself, and it goes out within a few minutes of publishing a post, so the problem appears to be with the reader, not the feed.

Some people seem to have this same problem and some people don't.  So two questions.  First: if you use Google Reader, does this happen to you?  Second: does anybody have any idea what might cause this?  Thanks!

Obama Derangement Syndrome Watch

| Mon Jun. 22, 2009 12:55 PM EDT

I guess I shouldn't really be surprised at anything Andy McCarthy says these days, but he somehow manages to surprise me anyway with some regularity.  Here he is telling us the real reason Barack Obama has been restrained in his public statements about Iran:

The fact is that, as a man of the hard Left, Obama is more comfortable with a totalitarian Islamic regime than he would be with a free Iranian society.

Believe it or not, it goes downhill from there: McCarthy thinks Obama actually wanted to make a statement supporting the mullahs, but that wouldn't have gone over well with Joe Sixpack.  So he did the next best thing and stayed quiet.  Still, "Obama has a preferred outcome here, one that is more in line with his worldview, and it is not victory for the freedom fighters."

Also worth noting is that in the spirit of true paranoids everywhere, McCarthy manages to twist his theory so that it explains all of Obama's actions, both past and future.  No matter what Obama does — whether he speaks up or not — it will be in service of his overarching hard Left ideology and the volcanic anger and resentment that controls his life.

Somebody really needs to have a little chat with Rich Lowry.  I don't expect a lot from National Review these days, but McCarthy's public descent into madness isn't pretty to watch and doesn't do the magazine any favors.  Maybe it's time to ask him to work out his issues a little more privately.

UPDATE: I missed this the first time around, but to his credit, Lowry does respond to McCarthy here.  Remarkably (or not, perhaps), McCarthy then digs himself in even deeper here.  "I detect in your post a sense that I'm this close to the fringe," he says.  Well, there's no need to sense what I'm saying in my post, Andy.  You are batshit crazy.