Kevin Drum

Quote of the Day

| Mon Aug. 10, 2009 1:04 PM EDT

From an editorial in Investors Business Daily about the pitfalls of healthcare reform:

People such as scientist Stephen Hawking wouldn’t have a chance in the U.K., where the National Health Service would say the life of this brilliant man, because of his physical handicaps, is essentially worthless.

Ditto for the Prince of Wales, no doubt. Via Bookman/TPM/Atrios.

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The Crazy Base

| Mon Aug. 10, 2009 12:52 PM EDT

Ramesh Ponnuru at The Corner:

If you were a Democratic leader who wanted to lay the groundwork to cut Republicans and moderate Democrats out of the legislative process, wouldn't you be portraying the critics of your health-care legislation as unreasonable racist nuts right about now? In September you could say that you really wanted to work with Republicans but unfortunately they are all being intimidated out of working for the common good by their crazy base. All the more reason for Republicans to do what they should be doing anyway: to make the case against the legislation in as measured, civil, and sensible a way as we can.

Well, it's a nice thought.  A little late, though.  I can't wait to see if any of Ponnuru's fellow Cornerites take the bait.

The Financialization of America

| Mon Aug. 10, 2009 12:42 PM EDT

Matt Yglesias says it's unlikely we can effectively rein in stratospheric compensation levels in the finance industry.  The guys who work on Wall Street are just too smart: "You don’t get to be an important person in the world of finance without being really, really, really good at figuring out ways to pay yourself a lot of money. That’s what the field is all about."  Then this:

That said, we compensation reform aside, we actually have a well-established method of taking market distributions of income and trying to transmogrify it into a more just, useful, and welfare-enhancing deployment of social resources — taxes and public services....It strikes me as ultimately unlikely that the political process will be able to micromanage high finance in a way that strikes people as meeting the claims of justice. But the political process very much can collect tax revenues and use that revenue to finance things that we currently “can’t afford” like more widespread provision of health care services, better rail transportation, cleaner streets, more police officers, more and better pre-kindergarten, etc.

There's something to this, and since the share of national income hoovered up by the super-rich is about three times higher today than it was 30 years ago, I don't have a big problem with taxing that income at a higher rate.  But there's a limit to how effective that can be.  For a whole bunch of reasons, marginal tax rates higher than 50% or so are pretty unlikely, and effective tax rates at that level are probably impossible.  After all, those Wall Street guys are pretty good at tax planning, too.

Overall, there's not much question that Wall Street bankers are going to continue to be paid astronomical sums as long as the firms they run are making astronomical profits.  And that's the key problem.  Tax policy can help — though it's a pretty broad brush — but the fundamental problem is that the finance sector in the U.S. is so damn big.  And it's seemingly an unstoppable juggernaut: Wall Street income may have been down last year, but even the biggest economic collapse since World War II hasn't made even a medium term dent.  A mere year later, the overall size and profitability of the finance industry is on track to be about the same size as it was during the boom years.

In the light of all this, tax policy can work only on the margins, and putting in place a "pay czar" for Wall Street will do nothing except generate a few juicy headlines here and there.  Compensation follows money flows just as surely as the tide follows the orbit of the moon, and the only way to reduce Wall Street compensation is to reduce the size and profitability of Wall Street.  Unfortunately, no one wants to talk about that.  So instead we get a pay czar.

The Alaskan Way of Life

| Mon Aug. 10, 2009 11:34 AM EDT

Kim Murphy of the LA Times reports from rural Alaska:

This summer Takotna, population somewhere between 46 and 61, has become one of the best-known villages in Alaska — thanks to the $18.7-million airstrip the federal government is funding on the edge of town. The 3,300-foot gravel runway, complete with night lighting, will replace the short one on a wind-swept hill where several planes have crashed.

....In an era of dwindling public revenue, even Alaskans increasingly wonder how much they can afford to support those who choose to live miles from civilization....According to the Institute for Social and Economic Research at the University of Alaska, about $1.4 billion a year in state and federal government subsidies, purchases and wages goes to more than 200 far-flung villages in the state — from the frigid Arctic coastal plain to the soggy, impenetrable tundra of the deep Alaskan interior. Federal dollars help pay for airline service and mail delivery, subsidize electricity rates and fund health clinics, among other things.

"Even Alaskans" wonder how they can support this?  Spare me. For the most part, "Alaskans" don't.  The federal government does.  Alaskans could support these communities out of oil revenues, of course, but they choose instead to divvy up that cash into annual Christmas presents for themselves and then let the rest of the country support them.  See Charles Homans for more on this.

There's nothing unusual about this, of course.  On a per capita basis, rural America receives far more federal cash and far more federal development aid than the rest of the country, but they're also the ones who yell the loudest about big government and high taxes and standing on your own two legs.  Alaska just stands out more because their version of this hypocrisy is performed on a somewhat more spectacular scale.

The Many Moods of Sarah Palin

| Mon Aug. 10, 2009 10:24 AM EDT

Sarah Palin, Friday:

The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama's "death panel" so his bureaucrats can decide, based on a subjective judgment of their "level of productivity in society," whether they are worthy of health care. Such a system is downright evil.

Sarah Palin, Sunday:

There are many disturbing details in the current bill that Washington is trying to rush through Congress, but we must stick to a discussion of the issues and not get sidetracked by tactics that can be accused of leading to intimidation or harassment.

Indeed.  Obama's evil death panels would kill my baby Trig, but let's be sure to keep the discourse civil.

Documenting the Atrocities

| Sun Aug. 9, 2009 8:20 PM EDT

James Fallows on the healthcare "debate":

Nearly fifteen years ago, after the collapse of the Clinton health-reform effort, I spent a lot of time working on an Atlantic article (and subsequent book chapter) about how, exactly, the discussion of the bill had become so unmoored from reality and finally determined by slogans, stereotypes, and flat-out lies.

It's better to do that after the fact than not to do it at all....But if there's a chance, it would obviously be better still to keep the current debate from ending up in the same intellectual/political swamp in which the previous one drowned.

By all means, let's document it now, in real time.  Let's start with the "Dems want to kill granny" meme.  Its starting point is clear, I think: July 16, 2009, when Betsy McCaughey went on Fred Thompson's radio show and said, "Congress would make it mandatory — absolutely require — that every five years people in Medicare have a required counseling session that will tell them how to end their life sooner....All to do what's in society's best interest or in your family's best interest and cut your life short."

From there it entered chain email hell and took on a life of its own.  But when did it hit the mainstream and become an acceptable topic of soberminded, bien-pensant he-said/she-said journalism?  I'd date that to August 8, 2009, when Charles Lane wrote in the Washington Post that although the right-wing agit-prop is "rubbish" — nicely establishing his non-wacko credentials — he's pained to say that after a careful reading of the House healthcare bill, supporters of Section 1233 might have some 'splainin to do after all:

I think they protest too much: If it's all about obviating suffering, emotional or physical, what's it doing in a measure to "bend the curve" on health-care costs?....Indeed, the measure would have an interested party — the government — recruit doctors to sell the elderly on living wills, hospice care and their associated providers, professions and organizations. You don't have to be a right-wing wacko to question that approach.

Indeed not!  Not anymore, anyway. Tout Washington now has license to talk earnestly about this as if it were actually a sensible topic of conversation.  Thanks, Charles!

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Howl

| Sun Aug. 9, 2009 5:38 PM EDT

After several weeks spent ginning up ferocious opposition to healthcare reform, culminating in a relentless and coordinated effort to incite howling mobs to shut down town hall meetings across the country, I would like to congratulate the conservative movement for their ingenious strategy of blaming the whole thing on "SEIU thugs."  Seriously.  It's brilliant.  Yadollah Javan would be proud.

Global Warming Update

| Sun Aug. 9, 2009 4:34 PM EDT

The latest on the climate front:

Bjorn Lomborg, an influential figure among climate change sceptics, has thrown his weight behind a drive to forge a global deal to halt rising world temperatures at a summit in Copenhagen this year.

“It’s incredibly important. We need a global deal on the climate,” Mr Lomborg told the Financial Times....“If that disappoints some people who are sceptics, I am not the least bit unhappy.”

Hey, that's great!  Except, um, for what comes next:

He is concerned that the United Nations-led consensus that a climate treaty must focus on cuts in greenhouse gas emissions from rich countries is mistaken. “It’s a costly way to achieve very little,” he said.

Instead, Mr Lomborg argues, there are cheaper ways of halting temperature rises. These include tackling sources of climate change other than carbon dioxide, such as methane and soot; investing in new tech­nologies; adapting to the effects of climate change; planting more forests; and weighing up whether emissions cuts are cheaper to do now or later.

So what exactly is new here?  Lomborg has always accepted the fact of climate change, he's just argued that halting it isn't as important as cleaning up drinking water in Africa or tackling malaria or doing more agricultural research or whatnot.  He's never denied global warming, he just thinks it's not that big a deal.

So it sounds like nothing much has changed on that front.  The U.S. military, however, is slowly but surely starting to see reality:

The changing global climate will pose profound strategic challenges to the United States in coming decades, raising the prospect of military intervention to deal with the effects of violent storms, drought, mass migration and pandemics, military and intelligence analysts say.

....An exercise last December at the National Defense University, an educational institute that is overseen by the military, explored the potential impact of a destructive flood in Bangladesh that sent hundreds of thousands of refugees streaming into neighboring India, touching off religious conflict, the spread of contagious diseases and vast damage to infrastructure. “It gets real complicated real quickly,” said Amanda J. Dory, the deputy assistant secretary of defense for strategy, who is working with a Pentagon group assigned to incorporate climate change into national security strategy planning.

....Ms. Dory, who has held senior Pentagon posts since the Clinton administration, said she had seen a “sea change” in the military’s thinking about climate change in the past year. “These issues now have to be included and wrestled with” in drafting national security strategy, she said.

Well, that's going to pose a problem for conservatives, isn't it?  What are they going to do when four-star generals start telling them they need to take climate change seriously?  Their heads will explode.

Which wouldn't be such a bad outcome, I suppose, would it?

Dealing With Corporate America

| Sun Aug. 9, 2009 1:47 PM EDT

Today I stormed the halls of corporate America.  And got my butt kicked.  Here's my sad but all-too-common tale.

My cell phone battery has slowly deteriorated into a state of decrepitude so pronounced that even I began to notice it.  Obvious solution: buy a replacement.  But then I got some junk mail from Verizon telling me that I had a $100 credit coming my way if I upgraded my phone.  Hurrah!  Why buy a new battery if I can get a whole new phone for free?

So I went to the Verizon store and picked one out.  Not much different from my current phone, but it had a couple of handy new features.  And since it retailed for $99.95, I'd get it for free!  Except, there's a problem:

I'm sorry, Mr. Drum, but you can't get that phone.

Why not?

It's only available if you're on a nationwide plan.

But I am on a nationwide plan.  I can call anywhere in the U.S. and Canada for one low monthly charge.

Sorry.  I didn't mean nationwide, I meant Nationwide™.

Oh.  Well, can I switch to a Nationwide™ plan?

Yes, but not like the one you currently have.  The cheapest Nationwide™ plan has more minutes than your current plan and costs $10 more per month.

So my free phone will actually cost me $240 over the life of the two-year contract?

Um, yeah.  Pretty much.

And why can't this new phone work on my existing plan?

Well, Verizon is really trying to get everyone to switch to the Nationwide™ plan.

Great.  I actually went into the store steeling myself for the fact that my "free" phone wouldn't actually be free.  There'd be a "transfer charge" or some alleged government waste disposal fee — or something — and I'd end up paying twenty or thirty bucks for one reason or another.  But $240?  My cynicism wasn't up to that.

So instead I got a cheap replacement phone.  No new features, just a slightly different shape.  A wee bit smaller and lighter.  Plastic case instead of metal, so it'll probably break before long.  But it works on my current plan, so it's really free.

Sort of.  Actually, it cost me $50.  Why?  It took me a while to decipher what the clerk was telling me, but even though it's a $79 phone (regular price, not any kind of special deal) and I had a $100 credit, I was required to pay $50 at the register and then send in my receipt to get a $50 mail-in rebate.  So now I have to do that.

What's really remarkable about all this is that I suspect most people don't even complain about it.  It's just the way corporations treat us these days and complaining about it is useless.  It's not as if any other cell phone company would have treated me any better, after all.  They make their money on people who buy high-minute plans and send lots of text messages and download tunes and upgrade to email and broadband.  I don't do any of that, so they don't really care about my business.  And why should they?

End of rant.  But since every post is required to have a political point of some kind these days, here it is for this one: there was nothing unusual about my experience.  Barely even anything to get upset about, really.  So if you wonder why I'm not bothered by the idea of government-funded healthcare, that's why.  Frankly, my dealings with the government, on average, are better than most of my dealings with corporations.  The government might sometimes provide poor customer service just because they lack the motivation to do better, but corporate America routinely provides crappy customer service as part of a deliberate and minutely planned strategy.  I'll take my chances with the feds.

Robots in Our Future

| Sun Aug. 9, 2009 11:59 AM EDT

Gregory Clark says that although unskilled laborers have done relatively well for the past two centuries, that's about to change:

The economic problems of the future will not be about growth but about something more nettlesome: the ineluctable increase in the number of people with no marketable skills, and technology's role not as the antidote to social conflict, but as its instigator.

....[In] recent decades, when average U.S. incomes roughly doubled, there has been little gain in the real earnings of the unskilled. And, more darkly, computer advances suggest these redoubts of human skill will sooner or later fall to machines. We may have already reached the historical peak in the earning power of low-skilled workers, and may look back on the mid-20th century as the great era of the common man.

I recently carried out a complicated phone transaction with United Airlines but never once spoke to a human; my mechanical interlocutor seemed no less capable than the Indian call-center operatives it replaced. Outsourcing to India and China may be only a brief historical interlude before the great outsourcing yet to come — to machines. And as machines expand their domain, basic wages could easily fall so low that families cannot support themselves without public assistance.

With the march of technology, the size of a future American underclass dependent on public support for part of its livelihood is hard to predict: 10 million, 20 million, 100 million? We could imagine cities where entire neighborhoods are populated by people on state support.

Of course, this is roughly the argument people made in the 19th century too: if machines can spin cotton and mine coal and harvest crops, what's left for unskilled laborers to do?  The answer, of course, turned out to be: something else.  Productivity increased so dramatically during the Industrial Revolution, and with it the quantity of goods produced, that everyone stayed employed even though population increased and the labor content of most commodities went down.  The nature of the work changed, but 10% of a thousand, it turned out, kept as many people employed as 50% of two hundred.

So is Clark just engaged in neo-Ludditeism?  Maybe.  But there really does seem to a fundamental difference between machines that take the place of muscle power and machines that take the place of brain power — though it's hard to say for sure since we haven't really seen what computers can do yet.  Probably a lot more than most people think, though.  Clark's IVR transaction with United Airlines may seem trivial — an example of automated phone hell, in fact — but Thomas Newcomen's atmospheric engine seemed barely worth the trouble too at the time.

The only reason the Industrial Revolution didn't put millions of people out of work is that it created lots of new jobs that required just enough human judgment that they couldn't be done by machine.  But once computers can provide that judgment, then what's left?  According to Clark, high taxes on everyone else.  Don't anyone tell Newt Gingrich.