Classic campaign detritus

This might have been the best campaign video from this year:

Economists move in herds....they do move in herds

A clever explanation about why most economists failed to foresee the current crisis. Sounds true to me...

Competence chic

The more people I talk to, the more of a consensus there seems to be about this Caroline Kennedy business--namely, that she is not qualified for the Senate and appointing her would be flagrantly nepotistic. This is my view as well, but I also think that Kennedy is choosing a particularly bad moment for this sort of thing, because we are just now ending the reign of cronyism and incompetence of someone who rose to power through sheer nepotism, and the country is hungry for a change to meritocracy in Washington DC. Merit, in other words, is "in"--which is unfortunate for children of Presidents looking for careers in politics.

Harper's

On the flight to LA I switched things up a bit and picked up a copy of Harper's instead of the Economist (my usual airplane fare). It was okay: a little more literary than the sort of thing I'm used to reading. The increased creative freedom of the writers turned out to be a double-edged sword, because sometimes you'd come across a truly memorable "gag" (as Bertie would call it)--for example, noting that a gambler's eyes had the "watchful opacity" of a security camera--but other times I felt it was just providing rope for the author to hang himself with, as with the not-so-impressive "everybody making out like a bandit with his own designer neckerchief pulled over his nose". That sounds like what I imagine Adbusters is full of.

In any case, there was an interesting article by one Scott Horton that outlines the political dilemmas entailed by prosecuting Bush et al with warcrimes, and how such a process might be designed. Ultimately he recommends a "two-part solution", where an investigative commission is formed in such a way that it enjoys broad public support--and has robust fact-finding powers such as top-level security clearance and supoena power--but that does not have the power to prosecute. Instead, at the end of the investigation it would make a recommendation for a formal prosecution if the facts supported it. From there the government would be in a position to decide if it should appoint a special prosecutor to make a case in the federal courts.

The young blogging elite

In response to Lindsay's comment: no, Ross Douthat is like 29. Matt Yglesias is my age, and Ezra Klein is somewhat younger, I think like 25. Maybe that serves to strip those blogs of the patina of old-guy wisdom they may have had...

Protocols of the Elders of Zion: Transition Edition!

From HuffingtonPost:

High-ranking officials with Barack Obama's transition team met for roughly two-and-a-half hours with a wide range of Jewish groups that encompassed nearly the entire ideological spectrum.

The meeting, which involved 29 organizations ranging from hawkish (Zionist Organization of America and, to a lesser extent, AIPAC) and conservative (the Orthodox Union) to Democratic (the National Jewish Democratic Council) and progressive (J Street, Peace Now), took place in the transition's Washington D.C. office on Thursday afternoon.

Reflecting the variety of viewpoints at the table, a host of foreign policy and domestic topics were raised for discussion.

I wonder if this will find its way into anti-Israel talking points as an undue example of Jewish influence in American politics. In any case, it's good to see all the ideological diversity on display: it should remind people--especially on the left--that being pro-Israel does not mean that you must be some kind of warmongering neocon:

Douthat, Greenwald, Torture

Ross Douthat, a (sane) conservative blogger at the Atlantic writes a searching, brutally honest post about his conflicted thoughts on the torture issue; and Glenn Greenwald proceeds to blow him out of the water. Says Greenwald:

I don't want to purport to summarize what he's written. It's a somewhat meandering and at times even internally inconsistent statement. Douthat himself characterizes it as "rambling" -- befitting someone who appears to think that his own lack of moral certainty and borderline-disorientation on this subject may somehow be a more intellectually respectable posture than those who simplistically express "straightforward outrage." In the midst of what is largely an intellectually honest attempt to describe the causes for his ambiguity, he actually does express some "straightforward outrage" of his own. About the widespread abuse, he writes: "it should be considered impermissible as well as immoral" and "should involve disgrace for those responsible, the Cheneys and Rumsfelds as well as the people who actually implemented the techniques that the Vice President's office promoted and the Secretary of Defense signed off on."

Nonetheless, Douthat repeatedly explains that he is burdened by "uncertainty, mixed together with guilt, about how strongly to condemn those involved," and one of the central reasons for that uncertainty -- one that is commonly expressed -- is contained in this passage:

But with great power comes a lot of pressures as well, starting with great fear: The fear that through inaction you'll be responsible for the deaths of thousands or even millions of the Americans whose lived you were personally charged to protect. This fear ran wild the post-9/11 Bush Administration, with often-appalling consequences, but it wasn't an irrational fear - not then, and now. It doesn't excuse what was done by our government, and in our name, in prisons and detention cells around the world. But anyone who felt the way I felt after 9/11 has to reckon with the fact that what was done in our name was, in some sense, done for us - not with our knowledge, exactly, but arguably with our blessing. I didn't get what I wanted from this administration, but I think you could say with some justification that I got what I asked for. And that awareness undergirds - to return to where I began this rambling post - the mix of anger, uncertainty and guilt that I bring to the current debate over what the Bush Administration has done and failed to do, and how its members should be judged.

This is the Jack Goldsmith argument: while what Bush officials did may have been misguided and wrong, they did it out of a true fear of Islamic enemies, with the intent to protect us, perhaps even consistent with the citizenry's wishes. And while Douthat presents this view as some sort of candid and conflicted complexity, it isn't really anything more than standard American exceptionalism -- more accurately: blinding American narcissism -- masquerading as a difficult moral struggle.

There is probably also some severe cognitive dissonace going on. Greenwald continues:

The moral ambiguity Douthat thinks he finds is applicable to virtually every war crime. It's the extremely rare political leader who ends up engaging in tyrannical acts, or commits war crimes or other atrocities, simply for the fun of it, or for purely frivolous reasons. Every tyrant can point to real and legitimate threats that they feared.

Ask supporters of Fidel Castro why he imprisoned dissidents and created a police state and they'll tell you -- accurately -- that he was the head of a small, defenseless island situated 90 miles to the South of a huge, militaristic superpower that repeatedly tried to overthrow his government and replace it with something it preferred. Ask Hugo Chavez why he rails against the U.S. and has shut down opposition media stations and he'll point out -- truthfully -- that the U.S. participated to some extent in a coup attempt to overthrow his democratically elected government and that internal factions inside Venezuela have done the same.

...

But none of those facts justify tyranny, terrorism or war crimes. There are virtually always "good reasons" that can be and are cited to justify war crimes and acts of aggression. It's often the case that nationalistic impulses -- or genuine fears -- lead the country's citizens to support or at least acquiesce to those crimes. War crimes and other atrocities are typically undertaken in defense against some real (if exaggerated) threat, or to target actual enemies, or to redress real grievances.

...

The laws of war aren't applicable only in times of peace, to be waived away in times of war or crisis. To the contrary, they exist precisely because the factors Douthat cites to explain and mitigate what our leaders did always exist, especially when countries perceive themselves at war. To cite those factors to explain away war crimes -- or to render them morally ambiguous -- is to deny the very validity of the concept itself.

Cowardice at the New York Times

The New York Times editorializes that "top officials" in the Bush administration should be investigated for their role in implementing a torture program, with the possibility of bringing charges--however, it somehow stops short of saying that Cheney and Bush should be held accountable as well:

Now, a bipartisan report by the Senate Armed Services Committee has made what amounts to a strong case for bringing criminal charges against former Defense Secretary Donald Rumsfeld; his legal counsel, William J. Haynes; and potentially other top officials, including the former White House counsel Alberto Gonzales and David Addington, Vice President Dick Cheney’s former chief of staff.

The report shows how actions by these men “led directly” to what happened at Abu Ghraib, in Afghanistan, in Guantánamo Bay, Cuba, and in secret C.I.A. prisons.

It said these top officials, charged with defending the Constitution and America’s standing in the world, methodically introduced interrogation practices based on illegal tortures devised by Chinese agents during the Korean War.

It's all quite baffling. Why shouldn't Cheney and Bush be investigated along with Rumsfeld and other "top officials"? If the torture programs was somehow carried out without the knowledge or approval of the elected officials in charge, then an investigation should bear that out. And if the elected officials did approve the programs, then they should be held at least as accountable as their underlings, if not more so. It simply does not make sense to believe that we should consider bringing charges against officials as high ranking as the Secretary of Defense, and yet at the same time also believe that the President that Secretary served under should get a free pass.

Of course, the editorial doesn't explicitly state that Cheney and Bush should be exempt--but the omission is glaring. I imagine that there was quite a heated discussion amongst the editorial board about how high to set the target--whether it would be "top officials", or Rumsfeld, or all the way up to Bush. I imagine that they believed, in the end, that calling for the investigation of Bush and his possible arrest for war crimes would be going too far, banishing the paper to the "angry left" and polarizing a debate that can only succeeed if it remains unpolarized. Maybe they're right.

However, at the end of the day, the press isn't doing its job if it refuses to take risks in speaking truth to power when the stakes are highest. I understand that a newspaper can only be persuasive to a large number of people if it remains, by and large, comfortably within the mainstream. But what is the point of saving up all that "persuasion capital" if you don't spend it on something as important as holding an American president responsible for war crimes? Maybe Barack Obama cannot let himself be perceived as trying to take down the soon-to-be ex-President, but there is no reason why the New York Times should have any reticence.

By refusing to "go there", the NYT reinforces the conventional wisdom that to hold President Bush himself accountable for war crimes is outside the mainstream and not a view that Serious People hold. But this conventional wisdom will have to be overturned if America is to even begin to rectify the abuses that have been going on since September 11.

Fine print

It looks like a new way to read the internets had been developed:



This, it seems to me, ought to revolutionize internet access, particularly for mobile devices. Think of it: now on the NYT, the entire paper can be right there on the front page, just at varying scales. So you'd have a headline and subhed, say, and then the entire article right underneath it. With something like the iPhone's two-fingered zoom, you could easily zoom to whatever scales you want. Neat!

UPDATE: As someone pointed out to me over lunch, this would actually be a pretty horrible UI. But: whatever!

Divine Right of Kennedys

Caroline Kennedy--who has never run for public office, has led a life largely in seclusion from the public eye, and who basically is a nobody with a not-nobody family--has decided that she will deign to be appointed Senator for the state of New York as Hillary Clinton's replacement.

I have no idea what kind of Senator Caroline Kennedy would be. But the idea of this person having such a sense of entitlement that she seriously thinks she deserves to be appointed to a seat in the Senate because the blood of the Kennedys flows through her veins is just too much. If Caroline Kennedy wants to start a career in politics, that's just fine--but she'll have to do it the old-fashioned way: by making a name for herself, and winning an election.

More on supply shock

Re the post below, Alex sez:

This domino effect idea is kind of hard for me to buy. It reminds me of the Y2K bug or something.

Basically, the disaster rests on the idea that if a bunch of consumers (car manufacturers) of some product (car parts) cease to exist, then the manufacturers of those products (car part manufacturers, natch) go out of business.

Uh, what? I thought that when demand goes down, even drastically, supply goes down to match, not to 0. Sure, they'll have a hard time for a while. But to me, the natural thing to happen would be the following: all suffer for a little while, until one fails, then another, then another. As these part manufacturers fail, business gets better and better for the rest, until we reach equilibrium, and the supply meets the demand. It's not like they'll all fail exactly simultaneously.

Why would this not happen? Admittedly, this is still very bad.

Apparently, it's a bit more complicated than that. I've found a better explanation of the supply shock phenomenon here--definitely worth a read.

The problem isn't so much that globally people won't be able to manufacture cars--it's that nobody will be able to manufacture cars in America for the next year or so. And this will cause all car manufacturers in America to shutter their plants--even the ones who were performing well, like Toyota, Honda, etc. Moreover, the problem is greatly exacerbated by the fact that we are in the midst of a once-in-a-century credit crisis: normally when companies encounter short term revenue shortfalls they simply borrow money to cover operating costs, but these days they can't get a loan, and so a short term revenue shortfall can spell doom for a company. Given a long enough horizon things will even out again, but most of the car manufacturing will have moved overseas by then.

In the end, the potential number of jobs lost is staggering: it could be as much as 200,000 just from the car companies alone, plus like 600,000 more from all the companies that support them. To put that in perspective: suppose that tomorrow, Adobe, Google, and Oracle all went out of business. Imagine how that would affect the economy of the Bay Area, and even California as a whole. You know how many people those three companies employ? About 90,000. So if all this really happens, it's going to be, like, Armageddon in the Rust Belt. And when you think about all that economic devastation, and the timing of it--coming as it does in the midst of a credit crisis and on the brink of recession, if not depression--a $20b loan seems like a small price to pay to keep the auto companies alive until things get stable again.

Take that, Alex

It seems that my age old argument--that the moral decisions you make in video games reflects, at some primal level, your actual moral character--has got legs.

I always pick the good guys, by the way.

Supply shock

A must-read article in the NYT--one of the few I've read that actually do a good job explaining a concept from economics. Apparently, one of the main risks of GM and Chrysler failing is that it will effectively destroy the entire car manufacturing industry in the United States, including companies like Toyota and Honda, which have factories in the South. The reason is because GM and Chrysler generate a lot of the revenue for parts suppliers--the companies that make axels and sparkplugs and such--and, do to the credit crisis, these parts suppliers can't borrow money to stay in business. But if they go out of business, then all the other car companies--Ford, Toyota, Honda, etc.--will suddenly not be able to buy parts, causing their assembly lines to stop:

As a result, the hypotheticals about the domino effect of the companies’ troubles through the vast network of auto supplier firms — which employ more than twice as many workers as the carmakers — are becoming real.General Motors and Chrysler, for example, owe their suppliers a total of roughly $10 billion for parts that have been delivered. G.M. has held off paying them for weeks, and Chrysler is paying in small increments. But the cash shortages at G.M. and Chrysler are getting more severe, according to their top executives and other officials.

...

Many of their suppliers are teetering on the verge of bankruptcy themselves, and do not have the luxury of extending credit much longer.

“I don’t think that suppliers will be able to get through the month without continued payments on their receivables,” said Neil De Koker, chief executive of the Original Equipment Suppliers Association in Troy, Mich., a trade group.

When suppliers big and small start failing, the flow of parts to every automaker in the country will be disrupted because as suppliers typically sell their products to both American and foreign brands with plants in the United States.

“There’s no question it will hit Toyota, Honda and Nissan too,” said John Casesa, principal in the auto consulting firm Casesa Shapiro Group.

“Many of the small suppliers will simply liquidate because they don’t have the resources to go reorganize in Chapter 11 bankruptcy,” Mr. Casesa said. “They’ll just go away.”

It is the dire scene laid out at the first set of Congressional hearings on an auto bailout in mid-November by Ford’s chief executive, Alan R. Mulally.

“Should one of our domestic competitors declare bankruptcy, the effect on Ford’s production operations would be felt within days, if not hours,” Mr. Mulally said.

...

In years past, suppliers have often been able to assist a troubled automaker by extending payment periods to get through tough times.

But by Mr. De Koker’s estimation, hundreds of suppliers no longer have that flexibility. They cannot borrow money in a frozen credit market, and they cannot buy raw materials without first being paid for parts they already shipped.

The Big Three, along with their foreign competitors, are what most people think make up the entire auto industry. But the car manufacturers are just the top of the pyramid.

While G.M., Ford and Chrysler employ 239,000 people in the United States, the country’s 3,000 or so auto suppliers have more than 600,000 workers.

If the bailout effort fails, and GM and Chrysler go under, can't the government work out some kind of plan to extend credit to the parts suppliers, so that they can keep feeding parts to the surviving car manufacturers in the US? At least that way GM and Chrysler wouldn't take everyone down with them...

PS: Here's a quote that doesn't bode well for the Mixed Metaphor Index:

“It’s like the dog chasing the tail,” said Tom Mullen....

“Everyone is stretched like a bungee cord,” he said. “We are waiting to hit the bottom of the river and waiting to be slingshot back up, hopefully."

I count four, with some pretty serious incoherence. What kind of a river slingshots you up when you get to the bottom of it?! First we're a dog, then we're sinking in rivers...there's even a bungee cord thrown in for good measure. Insanity.

Fast, slow

You hear a lot of metaphors in talk about the economy, and one of them is talk about it in terms of speed, as if it's a vehicle of some sort chugging along--so you get an economy that is in a slowdown, or that is in danger of overheating, or that is humming along nicely. But I never really grasped in what sense an economy could be like a vehicle like this.

Maybe it's something like this: in America you have a bunch of stuff--natural resources and factories and the like--and you have a couple of hundred million people standing around doing nothing. It's also the case that most of those people would like to have more stuff for themselves (including things which they, as human beings, definitely need, like food and shelter). And so a bunch of them get to work, using their individual time and energy to take the stuff that's there and work it into other stuff, which they can then trade for stuff that they want.

So the important things to keep track of here are two different rates: the first is the rate at which people make new stuff out of the stuff that's there, and the second is the rate at which they trade that stuff for other stuff. And, of course, the two rates are related: for example, if people are very willing to trade stuff they have for other stuff, then there's going to be a lot of demand for people to step up to the plate and start making that other stuff; contrarywise, if people are very reticent in their trading for other stuff, then the makers of this other stuff will soon find themselves without a trading partner, and will once again go idle.

Now, this relation between the two rates creates the potential for a vicious circle, because if lots of individuals decide to lower the rate at which they trade their stuff for other stuff, and makers of this other stuff go idle as a result, then these makers must lower the rate at which they trade their stuff for other stuff. And everybody else is watching this chain reaction slowly build, and so--since they as makers figure they may well go idle soon--they all decide to conserve the stuff they have by lowering the rate at which they trade it for other stuff. And so the rate of trading lowers across the board, causing there to be less of a need for making stuff to be traded, causing the rate at which stuff is made to go down. And so you have this suboptimal arrangement, where far more of those hundreds of millions of people are standing idle than need be.

So that is, I think, the way in which an economy could be said to be going "faster" or "slower". If it's faster, then that means the rate of making stuff and trading stuff is really high, and all those hundreds of millions of people are busy as bees, making stuff for the first half of the day and then trading that stuff for other stuff for the second half of the day (and on weekends, trading all day). But if the economy is "slow", then that means that the rates of making and trading stuff is low, and that--while lots of people are still busy as bees--there are also lots of people just standing around idle, not making any stuff and trying to keep their trading of stuff they have to an absolute minimum.

So that's the metaphor, I think. It is worth adding that the government, via a central banking system, can take steps to control the speed of the economy to interrupt the positive-feedback loops that occur, where increasing speed begets increasing speed and decreasing speed begets decreasing speed. If I understand it correctly, it does this in a very tricky way. Above, when I say that people exert time and effort to work stuff that's there into other stuff, which they then trade for stuff they want--well, as you have probably noticed, people tend not to directly barter, but to trade their stuff for an intermediary thing--dollar bills--which serve no other function besides being containers of value. So when there is a slowdown in the rate that people trade their stuff--their dollar bills--for other stuff, this rate can be effectively raised simply by increasing the overall number of dollar bills. The government does this by allowing banks to borrow into existence dollar bills, and charging the banks interest on those newly created bills. When the government lowers the interest rate, the banks borrow more, and thus they are able to spend more--that is, the banks are able to trade more of their stuff for other stuff, and all that extra trading propagates through the economy. If the economy is moving really fast, the government can slow it down by raising that interest rate, and thereby reducing the rate at which the banks trade their stuff (their dollar bills) for other stuff. Of course, by constantly creating dollar bills out of thin air, and thereby increasing the total number of dollar bills in existence, eventually prices start to go up, because everybody has more dollar bills in their pocket, and so everybody bids up the price of everything. This is inflation.

What's happening now--and the reason why people like Paul Krugman are saying that the federal government should run deficits of many hundreds of billions of dollars to get the economy sped up--is that we're in a so-called "liquidity trap". This just means that the usual mechanism for speeding up the economy--cutting that interest rate, thereby allowing banks to borrow into existence more dollar bills--doesn't work anymore, because that rate has already been cut to (virtually) 0%. Moreover, even when the big banks do borrow a bunch of dollar bills into existence, it doesn't help increase the rate of trading, because the banks are hoarding the dollar bills rather than using them to trade for stuff (first off, the banks are worried that the assets on their books will plummet in value, causing them to fail; second, they don't want to lend to anyone because they're afraid they won't get paid back). And so the only way now to increase the rate of trading is to have the government itself actually start doing a whole bunch of trading (i.e., trading dollar bills for things like subway systems, improved roads, etc., or just straight up giving dollar bills to people who will surely spend them, like the unemployed). This is called "stimulating the economy".

The last time there was a massive slowdown in the economy like this was the Great Depression. The thing that eventually got the economy back up to speed again was World War II, because it required the government to singlehandedly spend absurd amounts of money on war thingys. So now it looks like it's up to the government to spend and spend and spend.

It's all so strange. I remember my grandfather once told me that, during the Depression, some communities--communities with able workers and plenty of natural resources and factories and such all around--nevertheless found themselves mysteriously idle. There were no jobs and no one could borrow money. People were starving in the streets, and yet farms were throwing away truckloads of fruits and vegetables because they couldn't find buyers for them. There was a shortage of dollar bills! So: they printed their own script. And in no time economic activity started up--people started making stuff, and trading that stuff for other stuff (using their script as the intermediary). And lo, they were busy as bees once again.

There can be no doubt

...that Paul Krugman is the Nobel-prize winning economist for nerds.

PS: The comments for this post are pretty funny, too.