Monday, October 31, 2011

Even Paul Krugman thinks Max Boot sounds like Paul Krugman

I've poked fun at conservative defense writer Max Boot lately because of Boot's recent assertions that cutting defense spending would end up cutting American jobs in a soft economy. I noted that Boot sounded like liberal columnist Paul Krugman, and suggested that "mainstream conservative Republicans—whatever their fiscal rhetoric—have long favored the soft socialism of big defense spending."

Krugman sounds the same theme this morning, not mentioning Boot specifically, but otherwise making the same point. He calls this crowd "weaponized Keynesians," a term borrowed from Barney Frank.
First things first: Military spending does create jobs when the economy is depressed. Indeed, much of the evidence that Keynesian economics works comes from tracking the effects of past military buildups. Some liberals dislike this conclusion, but economics isn’t a morality play: spending on things you don’t like is still spending, and more spending would create more jobs.

Beyond that, there’s a point made long ago by the Polish economist Michael Kalecki: to admit that the government can create jobs is to reduce the perceived importance of business confidence.

Appeals to confidence have always been a key debating point for opponents of taxes and regulation; Wall Street’s whining about President Obama is part of a long tradition in which wealthy businessmen and their flacks argue that any hint of populism on the part of politicians will upset people like them, and that this is bad for the economy. Once you concede that the government can act directly to create jobs, however, that whining loses much of its persuasive power — so Keynesian economics must be rejected, except in those cases where it’s being used to defend lucrative contracts.
Right. I don't mind that Boot and his fellow hawks are making an economic argument for defense spending. I just wish they'd apply that same logic to the rest of government.

Sunday, October 30, 2011

Shut up and be happy, you ungrateful Occupy Wall Street protesters!

A conservative friend posted this to Facebook a couple of days ago, and it's been gnawing at me a bit:

The suggestion here being that the Occupy Wall Street crowd is selfish and ridiculous to be protesting.

This is both right and wrong. We should all be grateful in a cosmic sense for what we do have, of course. But "being a starving baby with ribs showing" shouldn't be the only grounds for complaint. (If it is, the Tea Party might want to pipe down as well.)

If you believe that your betters are tilting the playing field not through luck, not through accident, not merely through hard work, but through the greasing of palms and the escaping of the same rules that apply to you—then I think it's fine and appropriate to speak up.

This is a similar logic to those who suggest (say) American women shouldn't complain about disparities in the United States because, hey, Afghanistan! Burkhas! It's a logic that allows the people at the top to deflect the complaints (merited or not) of people in the middle and even people near the bottom—in in deflecting, serves those people at the top quite well.

It's also a logic at odds with the American Founding that conservatives like to claim as their unique heritage: The Founders might've been taxed without representation, but they were doing pretty well under the British, by and large. My conservative friend replies to this point that the Founders were concerned with "representation and consent of the governed. It wasn't simple materialism."

Well, exactly.

There are many Occupy Wall Street critics who have convinced themselves that the protests are, at foundation, envy by the poor of the rich. Perhaps there's some of that at work. But the most common complaint, as I understand it, is about governance. The fact that government is supposed to be accountable to people, but seems to be more responsive to moneyed interests—in ways that disadvantage many of us.

No: Things don't suck as much here as they might in other parts of the world. They might not suck as much as they did 100 or 200 years ago for many people. But it's not irrational to look at one's own time and place and ask if we could or should be doing better—and it's not selfish to push for that improvement if you can identify it.

Friday, October 28, 2011

The flat tax is bad

So says I in this week's Scripps Howard column with Ben Boychuk:
The flat tax is Republican-led class warfare. It makes the rich richer and the poor poorer, for no better purpose than making the rich richer and the poor poorer.

We have progressive taxation -- in which people with higher incomes pay a higher tax rate than those at the lower end of the scale -- for a reason: People on the low end are less able to pay. Flat taxes invert that logic, giving the rich a huge tax break and often burdening the poor.

The Tax Policy Center says a low-income family making $31,000 a year would lose its $5,147 tax return under Perry's plan, for example.

(Herman Cain's plan is worse. Nearly everybody making under $50,000 would see a huge tax increase.)

Perry's plan was unveiled the same day as a new Congressional Budget Office report showing economic inequality is widening in this country.

From 1979 to 2007, people in the richest 1 percent grew their after-tax income by 275 percent. The three-fifths of people in the middle class saw less than 40 percent income growth during the same period -- and the bottom fifth grew incomes just 18 percent.

The gap is getting bigger. Even before the recession, the middle class was being left behind. Perry's plan would exacerbate the problem -- and likely balloon the deficit even further.

"But I don't care about that," Perry says. He should.

In the new book "The Darwin Economy," economist Robert H. Frank points to research that high levels of income inequality are correlated to slow economic growth. "Larger shares (of income) for poor and middle-income groups were associated with higher growth rates," Frank writes.

Flat taxes burden the poor, make income inequality worse, and in so doing put a stranglehold on an already-strangled economy. Other than that, Mrs. Lincoln, how did you like the play?
Ben, in his portion of the column, points out that Perry's plan would let people opt to stay under the current tax structure. Fair point. The likely result of that is top earners would choose the flat tax and lower earners would stick with the current tax structure—meaning the Perry plan is to make the rich richer, and let the poor spin their wheels. That's not quite as awful as the picture I paint, but it seems kind of pointless—particularly in an era of ballooning deficits. Nobody's made a serious suggestion that I'm aware of that the problem with the economy is that rich people don't have enough money; I'm skeptical that such a plan would actually deliver good results for the rest of us.

Rich Lowry: The poor have only themselves to blame

I wondered where National Review editor Rich Lowry was going with this. He spends the bulk of his column conceding that, yes, the American Dream is "raggedy around the edges," that if you're born poor in America, you're all too likely to stay poor, that "picking the right parents" seems to make more of a difference here than it does in (say) Finland for your future economic prospects.

So, God bless Lowry for providing some conservative reality-based pushback to Paul Ryan's fantasy of an economically mobile society.

But Lowry arrives at the end of his column—just two paragraphs to go!—and concludes that despite all this, one shouldn't blame America's economic structure—really, the poor have only themselves to blame:
This stagnation is less a statement about the structure of America’s economy than about its culture. As Ronald Haskins, also of the Brookings Institution, wrote in an essay for National Affairs, “economic mobility is constrained above all by personal choices and behaviors.” He argues that society’s leaders “should herald the ‘success sequence’: finish schooling, get a job, get married, have babies.” If Americans finished high school, worked full-time at a job that matched their skills, and married at the rate they did in the 1970s, the poverty rate would be cut by 70 percent.

These old-fashioned bourgeois virtues, and particularly marriage, rarely figure in the public debate. Everyone is more comfortable talking about taxes or the banks, as the America Dream frays.
Let's unpack this a bit, using Finland—Lowry's comparison—as our guide a bit.

First of all, marriage, since that's the item that got my attention. While it's true that the marriage rate in the United States had declined in recent decades, it's also vastly truer that the marriage rate in the United States is much higher than in Finland: 7.5 marriages for every 1,000 people in the population in 2005, compared to Finland's rate of around 5 marriages per 1,000 people in the same year. The decline in marriage rates has happened in just about every developed country around the world (except Sweden, where the rate wasn't that high to begin with) but the United States remains one of the most marrying countries of them all. To a great extent, "old-fashioned bourgeois virtues" have held on tightly here—only it doesn't seem to make much of a difference in our economic mobility rates.

Maybe it's just the poor who aren't married? Nope. A 2004 study from the MDRC suggests that "through their early 30s, economically disadvantaged adults actually are more likely to marry than advantaged adults." The poor are attempting, at least, to embrace old-fashioned bourgeois virtues—but it's also true that those marriages more often end in divorce. That does give rise to a chicken-and-egg question, I suppose: Are the poor economically disadvantaged because they can't build stable marriages? Or can they not build stable marriages because they're economically disadvantaged? I don't know the answer to that question, but I have a hunch. But the overall point is this: The United States is a marrying country, and our poor are a marrying people. The evidence seems weighted against Lowry's point.

I'm going to skip the baby-making part, except to note that having a kid hasn't done anything to improve my economic prospects. Kids eat!

Let's focus on education, instead: It's true that the high school graduation rate in the United States is shamefully low—72 percent, compared to Finland's 92 percent. (It's worth noting that Finland also has a much higher rate of college graduates: 48.5 percent compared to America's 36.5 percent.) I'm skeptical Lowry and his fellow conservatives would recommend adopting the Finnish education system—it's European!—but I could be wrong.

For those who do graduate high school, how easy is it to find a "full-time job that matches their skills?" It's much more difficult these days than it was in the 1970s to find such a job that will pull you out of poverty. We already know that between the 1970s and now, the American economy shifted pretty radically, shedding manufacturing jobs and pushing more people to the service industry. Generally speaking, that's meant a shift to not-as-well-paying jobs: In September, a manufacturing-sector job in the United States paid $980.98 per week; a private-sector service job paid $756.96—provided you weren't in retail, which paid $496.12 per week. These are average wages, not median wages—which would provide a better picture of what a typical worker in those sectors make. Generally speaking, though, the type of full-time job that matches the skills of a high school graduate has shifted away from well-paying to not-as-well paying. That's assuming the jobs exist; the high unemployment rate suggests that's not always the case.

Making babies won't change that dynamic.

Maybe it doesn't make sense to blame taxes and bankers for that shift, but the issue is definitely one of economics—not just or even mostly, as Lowry tries to suggest, about poor people having bad habits. The numbers indicate that the poor are trying; the opportunities aren't there. Whose fault is that?

Thursday, October 27, 2011

Surprise me

Forgive me a brief, personal interlude, but something I've noticed about myself: I enjoy reading conservative writers like David Frum, Conor Friedersdorf, Rod Dreher, and Nicole Gelinas because, frequently, they stray off the reservation. I thought I just appreciated un-orthodoxy, but now I suspect that I enjoy reading them (too) because they sometimes agree with and confirm my own personal biases.

I'm trying to think of any writers I enjoy who might be described as A) liberal and B) unorthodox. No names come to mind. And that worries me about my own writing here, to be frank: I try to be on guard against hackery and tribalism, but it's damned hard to avoid those temptations when writing about politics.

Contrarianism for its own sake is just as lazy as any other unthinking ideological conformity, of course. But who can I read who will surprise me? How can I train myself to surprise myself on occasion?

Wednesday, October 26, 2011

Regulatory uncertainty: Still not the problem

Kevin Drum sums up a new report: "I'm not sure how many ways it's possible to debunk a single meme, but in this case it's a helluva lot. It turns out that (a) Obama has issued fewer regulations than Bush, (b) adjusted for inflation, they cost less than the average over the past 30 years, (c) this doesn't take into account the benefits of any of his regs anyway, and (d) only about 0.3% of mass layoffs during the Great Recession were related to new regulatory issues."

Read the whole thing.

Philadelphia: Does George Bochetto really pay more than half his income in taxes?

Stu Bykofsky, always the contrarian, uses his perch in the Philadelphia Daily News today to let the "Top 1 Percent" respond to the Occupy Wall Street protests. I found this excerpt to be particularly confounding:
How do the members of the "1 percent" feel? I asked three - Renee Amoore, Tom Knox and George Bochetto - each a local, unapologetic, self-made millionaire. They believe they already pay their "fair share" in federal taxes.

"I don't only pay the 35 percent," says Center City lawyer Bochetto, who was raised in an orphanage. "I also pay Social Security tax, state and city income tax, property tax. More than half of my income goes to the government. That's my fair share."

Due respect to Bochetto and his rise to riches from the orphanage. Good for him! But does he really pay more than half his income to the government? If so, he needs to hire a new accountant—immediately.

Why do I say that? Because the effective tax rate for the top 1 percent of earners—and this combines and includes federal, state, and local taxes—was 30.9 percent in 2008. Here's a chart from Citizens for Tax Justice:

Granted, this is a national overview that's several years old. And granted, Philadelphia can be a little tougher on the pocketbook than a lot of places. But is it so much tougher that Bochetto loses and additional 20 percentage points off his income? Really, really doubtful—especially since the Social Security taxes actually take a bigger bite out of the incomes of low-wage earners than they do millionaires like Bochetto.

We can argue about appropriate tax rates and the responsibility of the rich to help provide services and opportunities for the rest of us. But that argument should be grounded in reality instead of unchallenged hyperbole. Bykofsky didn't help anybody by quoting Bochetto uncritically today.

Did the Bush tax cuts increase or reduce revenue?

During my segment on the Morning in America show with Steve Hayward today, I tossed out the idea that—contrary to Laffer Curve expectations—the Bush tax cuts didn't actually increase revenue to government. That apparently resulted in some controversy after I left the air, with callers saying that I'm dead wrong on the topic.

The easiest response here is to note that before the Bush tax cuts were enacted in 2001 and 2003, the federal government had a surplus of money to fund its operations and pay down the country's debt. After the tax cuts were enacted, we started borrowing money on a full-time basis.

That's not proof on its own, of course, because we tacked on some new spending obligations during the Bush Era—most notably the wars in Iraq and Afghanistan, increased national security spending aside from those wars, and the expansion of Medicare benefits to cover prescription drugs.

So, hey, let's look at the revenues:

Bruce Bartlett writes: "According to a recent C.B.O. report, (The Bush tax cuts) reduced revenue by at least $2.9 trillion below what it otherwise would have been between 2001 and 2011. Slower-than-expected growth reduced revenue by another $3.5 trillion.

"Spending was $5.6 trillion higher than the C.B.O. anticipated for a total fiscal turnaround of $12 trillion. That is how a $6 trillion projected surplus turned into a cumulative deficit of $6 trillion."

But don't just take the CBO's word for it. Greg Mankiw, a Harvard economics professor, once called advocates of the lower taxes/higher revenue theory "charlatans and cranks": "I used the phrase 'charlatans and cranks' in the first edition of my principles textbook to describe some of the economic advisers to Ronald Reagan, who told him that broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue. I did not find such a claim credible, based on the available evidence. I never have, and I still don't."

Mankiw, of course, was one of George W. Bush's top economic advisers from 2003 to 2005. He wrote the paragraph above in 2007. And he was an advocate of the tax cuts—not because they raised revenues (he didn't believe they did) but because he believed they helped spur demand in the face of a challenging economy at the time. So: Not even Bush's own economic advisers who favored tax cuts believed they raised revenues. If that's the case, why should the rest of us?

On a related note: after I left the air Steve apparently chastised me a bit for not providing a top tax rate that's appropriate in a market economy like ours. Fair enough, I guess, but I think it's something of a mug's game to pick a number and stick to it. Different tax rates will be appropriate at different times, depending on the economy, the needs of government—being at war, for example, is more expensive than not being at war—and so forth. I'm not interested in confiscatory levels of taxation—unlike some liberals, I don't hearken back to the Eisenhower-era 90-percent marginal rate on top earners—but I also think we're a long way from there. Perhaps the answer "it depends" isn't rigorous enough, but it also has the advantage of being true.

Welcome "Morning in America" listeners!

Thanks to all of you who listened to me with Steve Hayward this morning. I co-write the RedBlueAmerica column with my conservative friend Ben Boychuk. We also co-produce a regular podcast—our latest episode is a discussion of the "Occupy Wall Street" phenomenon with City Journal's Nicole Gelinas. Give it a listen!

Tuesday, October 25, 2011

More guns, more death

Whenever a gun massacre happens—at Virginia Tech, say, or someplace else—we usually get a revival of the mostly neutered gun debate in this country. Some liberals decry lax gun laws, some conservatives suggest that if only everybody was armed you'd somehow see less gun violence.

A new study from the Violence Policy Center suggests the conservative analysis is wrong:
States with higher gun ownership rates and weak gun laws have the highest rates of gun death according to a new analysis by the Violence Policy Center (VPC) of just-released 2008 national data (the most recent available) from the federal Centers for Disease Control and Prevention’s National Center for Injury Prevention and Control.

The analysis reveals that the five states with the highest per capita gun death rates were Alaska, Mississippi, Louisiana, Alabama, and Wyoming. Each of these states had a per capita gun death rate far exceeding the national per capita gun death rate of 10.38 per 100,000 for 2008. Each state has lax gun laws and higher gun ownership rates. By contrast, states with strong gun laws and low rates of gun ownership had far lower rates of firearm-related death.

And here's the graphic overview:

This makes sense, of course, because the only purpose that guns have—when used—is to inflict injury and death. More guns naturally means guns will be used more, which naturally means more people will die. This isn't complicated.

This is particularly notable because, as Frank Bruni discusses in the New York Times today, there's a move among Republicans in Congress to force states with tight concealed-carry laws to recognize and allow concealed-carry permits from states with laxer regulations. (Thanks to the vagaries of Pennsylvania law, we in Philadelphia sometimes find ourselves awash in Florida-permitted guns ... with permit-holders often being people who have never been to Florida.) It's basically a law that would permit Wyoming to export its death rate to Massachusetts.

Second Amendment advocates, I suppose, will talk about Constitutional rights and the costs of freedom. But we should recognize those costs. Guns are not benign instruments.

Monday, October 24, 2011

Andrew Stiles is wrong: The problem with the economy is lack of demand.

At NRO, Andrew Stiles tries to prove the "regulatory uncertainty" canard is actually true:
A new Gallup survey asked small-business owners an open-ended question about what they viewed to be “the most important problem” facing the small-business community. It’s not “lack of demand,” as Democrats like to argue. In fact, 22 percent of respondents listed “complying with government regulations” as their top concern.
Here's the graphic that Stiles uses as supporting evidence:

Notice anything about items 2 and 3 on that list? "Consumer confidence" and "lack of consumer" demand" are parsed out as two different items, but the effect is the same: Consumers who aren't confident are consumers who aren't buying stuff—thus, they're not demanding the products that businesses provide. Add those two up, and 27 percent of small-business owners see some variation of the demand side as being the biggest problem with the economy.

Which is, ahem, more than say the same for "regulatory uncertainty."

Stiles is guilty of doing some cherry-picking, too, because later on in the same poll, business owners are asked what they need to see in 2012 in order for their business to thrive. Here's that graphic:

Check it out: The number of business owners who see regulations as the big problem suddenly drops by 10 percent when they have to name the thing that would make their business better.  Sales increases is No. 1. "Job creation" is No. 2—and I don't think it's a stretch to suspect that what business owners here want is for more of their customers to have jobs so they'll start buying stuff again.  Add in "improved economy" in at fourth place, and suddenly you have 37 percent of business owners suggesting that demand is what stands between them and success ... and just 12 percent citing government regulations.

Which makes intuitive sense. Businesses don't like dealing with paperwork and regulations, of course; no one does. But more business owners know that it's not the government that's holding them back right now. It's lack of demand. And we know why there's a lack of demand. Solve that, and we begin to move forward again.

At the pizza joint.

Taken at Lazaros Pizza House

On gay marriage: Civil liberties are not a zero-sum game

I respect Rod Dreher's work on most things, even though I disagree with much of it, because he's thoughtful and eloquent and tries to think outside his own biases. Except when it comes to matters of sexuality: Then turns a bit shrill. So it is today, when he posts the story of a U.K. "housing manager" who received a demotion for criticizing gay marriage—on his own time. Says Dreher: "Move along, nothing to see here. It didn’t really happen, and if it did, this man, History’s Greatest Monster, must have deserved it for his thoughtcrime."

This is part of the argument made by Dreher—and anti-marriage conservatives more generally—that allowing gay marriage will necessarily entail a restriction on the rights of Christians to hate gay marriage. There's just one problem with the evidence they marshal in support of the argument: It's almost always from Europe, and Europe has a very different tradition with regards to civil liberties than the United States.

For example: I’m from Kansas, home to the notorious Fred Phelps family—the folks who display a kind of homophobia far beyond what’s on display in Dreher's example. And a number of family members have been employed over the years as state or county civil servants—despite the fact that the family is held in very low esteem by the community at large. The state doesn't have the right to boot them for privately held opinions—even those that are publicly expressed—that don't interfere with the performance of their duties. What's more, we're the same country where the ACLU defends the rights of racists to march in public.

This isn't to say Dreher's nightmare scenario can't happen here: We must always be vigilant in defense of our rights. But it's much, much, much less likely to happen—and it's unlikeliness makes Dreher's concerns seem desperate instead of considered. The great thing about the First Amendment is that it protects people with wildly differing—even diametrically opposed—outlooks on life. In the United States, at least, civil liberties aren't a zero-sum game. In my ideal future, homophobic old housing managers will be able to keep their opinions and their jobs in the same society in which gays, lesbians, and transgender people are free to exercise their rights to marry each other. The day can't come too soon.

Mitt Romney, public health, and illegal immigrants

Kevin Drum takes stock of the "controversy" surrounding RomneyCare and the fact that illegal immigrants can get some medical care on the tab of Massachusetts taxpayers:
Somebody in a rival campaign presumably thinks this is a useful campaign issue because the slavering masses of the tea party base won't be appeased until illegal immigrants are literally writhing in the streets while doctors walk by and pointedly ignore them. Allowing them access to even last-ditch health services is unacceptable, even if the pointy-heads insist that we're saving money in the long run because it keeps them out of emergency rooms.
At the risk of sounding collectivist, one of the reasons we have public health efforts is because health is so often collective. That illegal immigrant writhing in the street—and this imagery might be unfortunate—might have a communicable disease, and refusing to offer care to that person might end up communicating that disease to you. Giving them a free dose of penicillin might stop the infection in its tracks ... unless, of course, we decide that the immigrant shouldn't get that dose because, goshdarnit, America!

We provide public health services to the public—including illegal immigrants—not just out of some misguided bleeding-heart do-gooderism, but because it also protects the rest of us from epidemic and death. Think of it this way, immigration hawks: It's like building an electrified border fence around your physical well-being.

Jonah Goldberg: Capitalism loves you, baby

Jonah Goldberg this morning delights in his own prescience in writing this 2008 column about how the children of capitalism are spoiled and ungrateful:
In large measure our wealth isn’t the product of capitalism, it is capitalism.

And yet we hate it. Leaving religion out of it, no idea has given more to humanity. The average working-class person today is richer, in real terms, than the average prince or potentate of 300 years ago. His food is better, his life longer, his health better, his menu of entertainments vastly more diverse, his toilette infinitely more civilized. And yet we constantly hear how cruel capitalism is while this collectivism or that is more loving because, unlike capitalism, collectivism is about the group, not the individual.

These complaints grow loudest at times like this: when the loom of capitalism momentarily stutters in spinning its gold. Suddenly, the people ask: What have you done for me lately? Politicians croon about how we need to give in to Causes Larger than Ourselves and peck about like hungry chickens for a New Way to replace dying capitalism.
Although I agree with Goldberg, generally, that market capitalism has generally been the best force for raising the living standards of the maximum number of people. But I think it's terribly weird that he would advance the idea—as he seems to here—that capitalism is an end unto itself. It's not: It's a means to an end; an imperfect means—and one can acknowledge that and still be a capitalist!—but likely the least-worst means.

Goldberg today places the column in the context of the Occupy Wall Street protests, and it's here that you start to see that he creates a bit of a straw man in dealing with critics of the free markets. While it's true that there are Marxists, socialists, and anarchists among the protesters, the movement has broad support beyond the fringe not because it opposes capitalism, but because it's asking an important question: Why has capitalism stopped working for us, the broad mass of Americans?

The answer the protesters have come up with is this: The wealthiest Americans and wealthiest American institutions have bent government to their will, so that while the rest of us are left to live with "austerity" and "creative destruction," the banks and banker bonuses are protected from their catastrophic mistakes with taxpayer dollars. The alternative? Letting them lay waste to the economy if they fail, making things even worse for the rest of us. As conservative commentators like Nicole Gelinas and Timothy Carney have noted, that's not free-market capitalism, properly understood—and, in fact, serves to undermine the discipline that markets usually impose when the possibility of failure is real. Corporatism is tearing at the foundations of capitalism, in other words.

It is not "spoiled" to point out when capitalism is coming unmoored from its foundations, or when it is failing to deliver the maximum good to the best number of people. (It's also not irrational to compare one's lot with one's contemporaries, instead of being grateful that conditions are better than they were 300 years ago.) The Occupy Wall Street folks are far from perfect, but they're giving voice to an important critique of the status quo that even serious advocates of the free market can agree upon.

Sunday, October 23, 2011

Bag O' Books: 'Moonlight Mile' by Dennis Lehane

Three thoughts about the novel 'Moonlight Mile' by Dennis Lehane:

• This is Lehane's most recent novel, but the first I've ever read. I'm not so ignorant of culture, though, that I don't know that his books have been adapted into acclaimed movies like "Mystic River" and "Gone Baby Gone," or that Lehane himself was a writer on "The Wire." Since I haven't read those earlier works, all I can say is that I can see how Lehane ended up so loved by Hollywood. His writing is cinematic—lean, funnier than I expected, full of violence. Plenty of internal monologues by the narrator—longtime Lehane hero Patrick Kinzie—that, in your head, you can easily hear as voiceover narration by Robert Downey Jr. It's easy, breezy fun.

• That said, this novel got me thinking about the distinction between genre fiction and literary fiction. "Moonlight Mile" seems a fairly straightforward pulp noir novel to me, yet Lehane seems to have crossed into the seemingly higher-brow literary fiction arena. (The distinction is artificial, but I wonder the same thing about music sometimes. Why is some music considered "pop" and ready for the Top 40 audience and other music, of great listenability, directed more to indie audiences? Sometimes it's quantifiable and sometimes it's not.) As best I can tell, Lehane gets the the more-coveted "literary fiction" label, at least to some extent, because lots of smart people like reading his stuff. Maybe genre distinctions are more about the audience and reader self-identification than about what a writer actually produces.

• Final thought: Lehane lards this novel with so many contemporary references— the band Pela, the TV show "Arrested Development," jokes about P. Diddy—that it's impossible to place this novel in any year besides, roughly, 2010. On one hand, Kinzie's constant name-checking helps us figure out who he is: He's not just a Chandleresque tough guy—he's an aging Gen X hipster with great taste in popular culture. But at times it almost seems to overwhelm the crime story (which has ... plausibility problems) and turn it into an episode of "Community." "Moonlight Mile" is a fun read, but it's also—despite the violence—light as a feather.

Drop out of school, become a billionaire

Michael Ellsberg argues in the New York Times that we should emphasize entrepreneurship over education:
I TYPED these words on a computer designed by Apple, co-founded by the college dropout Steve Jobs. The program I used to write it was created by Microsoft, started by the college dropouts Bill Gates and Paul Allen.

And as soon as it is published, I will share it with my friends via Twitter, co-founded by the college dropouts Jack Dorsey and Evan Williams and Biz Stone, and Facebook — invented, among others, by the college dropouts Mark Zuckerberg and Dustin Moskovitz, and nurtured by the degreeless Sean Parker.

American academia is good at producing writers, literary critics and historians. It is also good at producing professionals with degrees. But we don’t have a shortage of lawyers and professors. America has a shortage of job creators. And the people who create jobs aren’t traditional professionals, but start-up entrepreneurs.
College isn't for everybody, sure, but this line of attack rings false to me. The men—all men—mentioned here didn't have traditional educations, to be sure, but their knowledge base was heavily augmented in non-traditional ways not necessarily available to most Americans. Steve Jobs continued auditing classes at Reed College after he dropped out, and he learned the fundamentals of electronics in his father's workshop. Bill Gates went to an "exclusive prep school" in high school, and obtained free computer time at a time when computers weren't ubiquitous. Same for Paul Allen. Stone went to one of the most academically challenging high schools in Massachusetts, while Zuckerberg went to Philips Exeter Academy on his way to Harvard.

Point being: All these men received educations that gave them a pretty good knowledge foundation for their future work. All of these men were born to comfortably middle class families, often with parents personally deepening their child's knowledge base. And because of those middle class families, each of the men had a comfortable safety net to fall back into if their entrepreneurship failed. It's easier to start a business if you understand the world a bit, and if the failure of that startup won't ruin you for life.

Ellsberg is right to argue for alternatives to the higher education machine. And as a proud liberal arts grad, I'll even agree that maybe we could use a few less liberal arts degree holders. But his "college dropout" meme ignores that nearly all the men he names arrived at college having already had extraordinary educations. Would we know of any of them without those educations? Education is the foundation of entrepreneurship, not a substitution.

Friday, October 21, 2011

The problem of humanitarian interventions

Something I've been wrestling with since I posted my opposition to the Uganda intervention is whether I could ever support an American military intervention on purely humanitarian grounds. I came of political age around the time of the Rwandan genocide, and I can say that it truly troubled my conscience at the time—and angered me greatly that the West stood by and watched while an entire region descended into hell. If my framework for supporting a military intervention wouldn't allow the United States to get involved, then two possibilities exist: The United States should never intervene on humanitarian grounds, or the framework doesn't work.

Spencer Ackerman today gets at the trouble inherent with humanitarian interventions conducted under a doctrine known as "Responsibility To Protect" on his blog today:
The uncomfortable truth is that a belief in human rights is a disruptive force in global affairs. It scrambles ideological boundaries and takes people down intellectual roads they did not anticipate travelling. It's why the Responsibility To Protect is a force for -- let's strip it of euphemism -- war. Not because, say, Ken Roth or Samantha Power are warmongers; that's absurd. But because the world, and America, has yet to come to terms with the obligations that human rights place on nations, particularly hegemonic ones.

To support the R2P seems like a recipe for endless war; to oppose it, a recipe for endless injustice and impunity. The responsible work of intellectuals and policymakers is to bridle it, to make it commensurate with American capabilities and American interests; to shape a world in which America is not the only nation burdened with enforcing it; and not to avoid the circumstances in which it conflicts with American capabilities and American interests.
Which is to say, once again, that there's no perfect framework for deciding to support or oppose an American military intervention. My framework is very much biased against military adventures of most sorts, which makes it also biased against humanitarian interventions. My problem: I still think the United States and the world should've done something a generation ago in Rwanda. Picking and choosing which holocausts to send troops to halt is tricky business. But it's also necessary.* The difference between Rwanda and Uganda may be mostly that the Rwandan genocide burned hotter, faster, and with much greater immediate loss of life. Is that enough of a distinction? It feels like it to me, but your mileage may vary.

* Necessary, presuming the United States retains its ability to project power virtually anywhere in the world. That's not a given, and if America retreats closer to home, then a lot of this calculation makes no difference. You can't go where you can't go.

Thursday, October 20, 2011

The 'regulatory uncertainty' canard

Ben and I discuss whether regulatory uncertainty is holding back the U.S. economy in this week's column. My take:
Let's be honest: "Regulatory uncertainty" is a euphemism for "regulations." Businesses -- and their mostly Republican allies -- don't want them.

We have regulations for a reason. The Dodd-Frank law passed because the financial industry proved it couldn't police itself and nearly destroyed the American economy. Richard Nixon created OSHA at a time when 14,000 employees were dying in the workplace every year; that number dropped 60 percent over the next 30 years. Left to their own devices, businesses often cut corners, resulting in financial and even physical harm to the rest of us.

Overregulation can stifle the economy. The Obama administration recognizes this -- and in August announced a reform effort to reduce regulatory burdens on business by $10 billion a year, mostly by streamlining required health, labor and tax paperwork. Obama even alienated environmentalist supporters this fall by delaying new EPA ozone standards to save jobs.

The problem isn't regulatory uncertainty. The Economic Policy Institute in September reported that weekly hours for still-employed workers are still down from their last high in August 2007.

If businesses wanted to produce more widgets --but wanted to avoid the federal paperwork that goes with hiring more widget-making workers -- they'd increase the number of hours their existing employees are working. They aren't. That suggests that the problem is demand: Americans aren't buying stuff.

Why? They're digging themselves out of debt -- often in the form of mortgages that are now worth more than the houses those mortgages bought. Until that issue is adequately addressed, or until those mortgages are finally paid off over the next 30 years, America will continue to have a problem with demand.

"Regulatory uncertainty" offers a handy political club to use against Obama, though. The GOP, it seems, would rather win the presidential campaign with stale untruths rather than address our real problems.

Does intervening in Uganda meet the Mathis Test?

Ooh. Self-referential headlines are ugly, aren't they? But back when President Obama announced the United States would intervene in Libya's civil war, I set out a list of questions to help guide me through decisions on supporting or not supporting America's military interventions abroad. Now that Qaddafi is dead, it's a good time to apply those questions to America's latest intervention—the sending of 100 troops to Central Africa to aid the fight against the brutal Lord's Resistance Army.

Here are the questions, slightly revised:

A: Does the party against whom the United States is considering military action threaten U.S. security? No. The Lord's Resistance Army isn't attacking the United States or United States' interests. Now that the U.S. is getting involved, though, maybe that changes.

B: Is the party against whom the United States is considering action committing genocidal-levels of violence, such that even by the standards of war or civil war the conscience is shocked? Yes. The numbers are staggering. LRA's campaign of terror in Uganda has displaced 2 million people; the forces are said to have raped, mutilated, or abducted another 66,000 residents; and Michael Gerson's account is especially striking: "But (LRA leader Joseph) Kony’s crimes are vivid at close hand. When I was there in 2006, I talked to a boy forced by LRA rebels to execute his neighbors in order to break his ties with the past and to deaden his sympathy. I met another who was forced to bow in Kony’s presence — the rebel leader claims divinity — but who dared to look up in curiosity. The LRA soldiers took out one of the boy’s eyes in punishment." The conscience is shocked, and this violence is taking place on a widespread level to destabilize and horrify an entire region. It's important to note that humanitarian reasons—while significant—aren't as important as national security when weighing these questions. Answering "yes" here doesn't necessarily mean we should send the troops.

C: If the answer to (A) or (B) is "yes," are there non-military means that could effectively mitigate the threat? No. The Lord's Resistance Army is a non-state actor; sanctions wouldn't work in this case.

D: If the answer to (C) is "yes," do that. If the answer to (C) is "no," then: What is the desired end state of U.S. military action? A return to a previous status quo? Regime change? What? I'd have to say the death or capture of Joseph Kony. He claims divinity for himself; he runs the LRA as a cult of personality. Cut off the personality, and the cult is likely to be greatly diminished.

E: What is the worst-case scenario that could develop from U.S. military intervention? Is the scenario more or less threatening to U.S. security than the current threat? That LRA, which has ignored the U.S., becomes motivated to attack America and its interests because of the 100 U.S. troops that are helping track him down. From a security standpoint, the potential costs of blowback are more than the costs of doing nothing. But how likely is that blowback? We probably wouldn't know until the attack occurred.

F: Does the United States have the military and financial resources to bear the burdens of that worst-case scenario? Yes. At 100 troops, our footprint is light and the cost—as these things go—is unlikely to break the federal bank.

This series of questions doesn't produce a neat, mathematical "yes" or "no" answer. On the "for intervention" side, you have the serious of Kony's acts, the inability to address them through non-military means, and the relative cheapness of the operation from a U.S. perspective. On the "against intervention" side, though, you have the fact that Kony doesn't now threaten U.S. security—but that intervening raises the likelihood he will.

And that's, ultimately, why I come down against the U.S. deployment to Central Africa—though it's a closer call, in my mind, than the Libya intervention. The U.S. troops are supposedly going there on a training mission, to "advise" the African troops on how best to combat the LRA and pursue Kony; they only shoot if shot at. Being there makes it quite likely they'll be shot at, and shoot. At that point, we're at war, even if minor. To what good end?

The interesting thing about the deployment is that it is, apparently, an effort to help the countries of Central Africa help themselves, by training troops from those countries on how to pursue Kony and battle the LRA. That's going in the right direction. If there's a way to do that without putting armed U.S. troops in the field against this villain, I might well support that.

Final thought: This set of questions almost certainly leads to a U.S. foreign policy that is a good deal more risk-averse and less adventurous than we've had in the post-Cold War era. I'm OK with us. I want our leaders to clear a high bar before taking us to war.

John Yoo: Obama didn't kill Qaddafi enough

Torture advocate John Yoo gives Obama some credit for Qaddafi's downfall, but with a caveat:
But Obama does not get full credit, I think, because he took so long to intervene. Recall that the U.S. intervened only after the U.N. Security Council approved intervention. Obama chose to wait until Qaddafi had driven the rebels into a last holdout in Benghazi. He chose to restrain our operations along the lines set out by the Security Council, which forbade ground troops. This prolonged the ouster of Qaddafi into a full-blown civil war and resulted in more disintegration of the nation’s institutions than was necessary. To the extent that it is harder to get a new government to stand up and to collect and control Libya’s arms, part of the blame must also go to Obama’s delay because of his undue sensitivity to foreign opinion and the U.N.
Yoo doesn't really offer a basis for American intervention into Libya's foreign affairs that would demand unilateral American action, though. In the absence of a threat against Americans or U.S. soil—and Qaddafi posed none—President Obama was exceedingly wise to partner with other nations in the matter, lest the whole thing look like a bit of American empire-building ... a perception that might actually damage our interests in the Middle East, not strengthen them.

I don't think there was a sound American basis for intervening militarily. I feel certain that President Obama's decision to go to war there was constitutionally suspect, and that Congress was feckless in exercising its own power over the matter. For John Yoo, though, the world is endless ticking time bombs that can be solved only with the power of an unchecked Imperial Presidency. Whatever you think about that attitude, it is not keeping with the best traditions of American governance.

The British Empire was the 'good' empire, right? Right?

In the British case, wherever they sought to plant their flag, they were met with opposition. In almost every colony they had to fight their way ashore. While they could sometimes count on a handful of friends and allies, they never arrived as welcome guests. The expansion of empire was conducted as a military operation. The initial opposition continued off and on, and in varying forms, in almost every colonial territory until independence. To retain control, the British were obliged to establish systems of oppression on a global scale, ranging from the sophisticated to the brutal. These in turn were to create new outbreaks of revolt.

Over two centuries, this resistance took many forms and had many leaders. Sometimes kings and nobles led the revolts, sometimes priests or slaves. Some have famous names and biographies, others have disappeared almost without trace. Many died violent deaths. Few of them have even a walk-on part in traditional accounts of empire. Many of these forgotten peoples deserve to be resurrected and given the attention they deserve.

The rebellions and resistance of the subject peoples of empire were so extensive that we may eventually come to consider that Britain's imperial experience bears comparison with the exploits of Genghis Khan or Attila the Hun rather than with those of Alexander the Great. The rulers of the empire may one day be perceived to rank with the dictators of the 20th century as the authors of crimes against humanity.

Is it time to outlaw spanking?

The Welsh assembly seems to think so. And admittedly, I thought the idea sounded silly—like a bit of overwrought European do-gooderism, until I hit upon this quote:
Christine Chapman, one of the backbenchers who put forward a motion to the assembly to outlaw smacking, said she was delighted that members had backed the principle of a ban. She said: "This is a moral victory, an important step. But in the end we must get legislation against smacking."

Chapman said the UK was "out of step" with many countries around the world that had outlawed slapping. It was against the law to hit adults and it was "nonsensical" that it was deemed acceptable to hit children, she said.
And that's a good point. Generally speaking, it's illegal for me to hit a person not in my care—but it's legal (within parameters) for me to spank a small, mostly defenseless person who depends on me for life?

I haven't spanked my 3-year-old son for while. But. There was a short period of time, after he turned 2, in which he started hitting people when things didn't go his way. We tried everything we could think of in the non-violent spectrum: Time-outs, stern talks, that kind of thing. But he only stopped when I made the decision to respond to his hits with three quick swats to his backside, followed by a time-out. His hitting behavior subsided quickly after that; he doesn't really resort to fists today. And yes, I'm aware of the irony of teaching my son to stop hitting by ... hitting.

I certainly don't think I was abusing my child; and anybody who ever tried reasoning with a toddler will understand the challenges of doing so. What's more, I restricted the swats to a very specific scenario: He doesn't get spanked for other misbehaviors, or because I'm annoyed. For me, limited spanking was effective.

But "effective" is not the same thing as "right," of course, and I find the Chapman's logic about the illegality of hitting adults to be somewhat compelling. On the other hand, if an adult hit me and I responded by flipping him over and delivering three quick swats to the backside, what would the charges be? Would I even be charged? Tough to say.

In the end, I suspect most parents can find a proper route for their families. I think I have—the fact that I haven't spanked my son in a long time suggests to me that my parameters were correctly and effectively deployed. But your mileage may vary. And in any case, we have laws on the books aimed at the abusers among us, people who strike their children out of malice instead of a sense of guiding correction. That system is imperfect, and it obviously doesn't save every child from harm, but I don't think the best response is to make a criminal of every adult to delivers a smack to the butt of an obstinate child. There should be limits, but there shouldn't be a prohibition.

Wednesday, October 19, 2011

In the age of the Internet, why does it matter than I live in the city?

A friend passes on a link to this interview with Witold Rybczynski, author of "Harvest: How a Cornfield Became New Daleville." This passage stood out:
Think of the difference between “town” and “country” one hundred years ago. It was absolute and affected what you ate, how you lived, the amenities to which you had access, and much more. I would argue that today the differences between amenities, resources, etc. available to someone living in an exurb outside Denver or Pittsburgh, and living in downtown Denver or Pittsburgh, while they have not disappeared, are slight. The fact that information, medical care, education, entertainment, and so on have dispersed is significant. I am not aruing that there are no differences at all, but rather that they have, for most people, diminished to the point of being trivial. Nor is the balance weighted to the city, as it once was. Suburban Philadelphians, for example, have more choice in department stores or food stores, than those living in Center City. On the other hand, we all have equal access to Netflix and Amazon.
I've alluded to this phenomenon before. Thanks to the rise of the Internet, my arrival in Philadelphia from Kansas didn't offer as stark a difference as it might've, say, 15 years ago. When I got here, I mostly continued reading the same (online) newspapers and listening to the same (online) radio stations that I did before. As I wrote for Metropolis: "The miracle of the Internet is that it can bring you news, music and video from anywhere on the planet. The curse of the Internet, it turns out, is that it can bring you news, music and video from anywhere on the planet. It's easy to avoid the local culture."

Being cognizant of that dynamic doesn't entirely remove it from the equation. Because of that, I've had to think long and hard over the last couple of years—through unemployment and illness—about why we stay in Philadelphia instead of heading back to Kansas.

What can I say? I've seen the Philadelphia Orchestra live on several occasions. Philadelphia is not as blindingly white as the town I left. Nor as overwhelmingly Christian. And there's a vibrancy to Center City life—Rittenhouse Square buskers, food carts, and the ability to run into an amazing cross-section of people—that doesn't quite exist in rural areas. We don't have to own a car here. The differences are mostly smelled and tasted, and to some people they might seem marginal, but they are real, and they are not unimportant to us.

Professionally, too, there's a difference. There are more media opportunities on the East Coast than in Kansas, obviously, but I do my work on the Internet. Shouldn't matter, right? Wrong. Weirdly, my move to the Big City somehow put me on the radar of more organizations that wanted coverage through my Scripps Howard column than when I was in Kansas and doing it on more of a full-time basis. Go figure.

City life isn't for everybody, and it's not as "exotic" to a rural-raised man like myself as it once would've been, but it's still different enough.

Why so many cops at Occupy Philly?

Juliana Reyes reports police lamentations that they're spending so much of their time and energy on the Occupy Philly protests:
For the first week and a half that Occupy Philly held court in City Hall, the Police Department's entire Neighborhood Services Unit was detailed to the protest to watch over its participants. That means for that week and a half, the roughly 30-officer unit, whose responsibilities include responding to abandoned vehicle complaints, recovering stolen cars and investigating reports of short dumping and graffiti, didn't exist in the rest of the city.

NSU's Sgt. Frank Spires said that all 3-1-1 complaints, as well as direct calls to the unit, were shelved until the detail was over.
It's a shame that neighborhoods will go without the service—but is that necessary? Consider this: The entire Philadelphia Police Department has roughly 6,650 officers to police a city of 1.5 million people—roughly one officer per 225 residents.

The population at Occupy Philadelphia is ever in flux. But let's be generous and say there's as many as 500 people there during the day. (That may be an extremely high estimate: One Twitter observer counted 140 activists at Tuesday night's General Assembly.) That means there is one officer for every 17 protesters on the ground.

Now: Policing a protest is a little different at policing neighborhoods. And City Hall probably deserves a higher level of protection than many spaces. But there hasn't been much in the way of crime or violence at Occupy Philly—I'm certain it would be national news if it had happened—and there's no indication the campers are going to turn into an angry mob.

So why not put, say, half the Neighborhood Services Unit back on the streets doing their regular job? That way the unit can keep performing its duties—even at a reduced rate—and the protesters can enjoy a still-extraordinary level of police protection. As it stands, diverting the entire unit doesn't appear to be a smart use of the city's resources.

Yeah, I like 'Amelie.' What of it? (Or: It's OK if you like the 'Star Wars' prequels.)

This Guardian essay on the 10th anniversary of 'Amelie' has me a little defensive, casting the movie as syrupy and cloying:
Amélie didn't bother to adjust to the 21st century at all. It revelled in its Eurodisneyfication of Montmartre, as Libération's Philippe Lançon put it. At the start of a decade of strife and realpolitik, it was already a film out of time, for the dreamers only. There is a pivotal scene where Audrey Tautou realises there is a banal explanation for the man who appears repeatedly in the album of discarded photobooth headshots: he is a photobooth repairman. This peek-behind-the-curtain feels like a Wizard of Oz homage, but unlike Dorothy, it doesn't liberate Amélie. She still needs someone else to shove her out of clotted fantasia, even when it threatens her happiness.
You know what? I still love 'Amelie," still adore Audrey Tatou's performance in the film. It is charming and winsome—and yeah, more than a bit precious. But so what? It's a movie that delights me every time I see it—makes me feel better, and even sometimes makes me feel more ambitious about my own life. I don't want to subsist on a diet of sugar, no—and 'Amelie' is a movie I can't really watch more than every couple of years—but every once in awhile just the right dessert can be an amazing thing.

We sometimes brandish our tastes—in art, music, and movies—as weapons: Sometimes used defensively, to avoid others thinking poorly of us, and sometimes offensively, to put others in their place. But what's treacle to me might be inspiring to you. I'm not against appraising works of art, putting them in their context, and trying to render some judgement on their quality. But I think I want to be confident and humble about those judgements—I like what I like, but it's OK if you don't. And I like 'Amelie.'

I'm moved to this statement not just because of The Guardian's 'Amelie' essay, but also because of Drew McWeeney's piece at HitFix about watching 'Attack of the Clones' with his young son. I hate the 'Star Wars' prequels, but reading about McWeeney's son proved revelatory:
But amidst the fun, "Clones" introduces some darker notes regarding Anakin's fall, and I was surprised how much Toshi was invested in that particular story thread. Ever since The Moment in "Empire," he's been troubled by the idea of a good guy who becomes a bad guy, and he's watching Anakin closely. When Anakin found his mother just before she died and then went on his killing spree in the Tusken Raiders camp, Toshi actually stood up. He walked closer to the screen, upset, needing to see every detail of what was happening, and when the scene was over, he asked me to pause the movie.

"Daddy, those people took Anakin's mommy, right?"

"That's right."

"And they hurted her, right?"

"They did."

"So then he wanted to kill them all so they can't hurt anybody else, right?"

"Is that the right thing to do?"

"No." The way he said it, though, it was more a question than a statement. "But they shouldn't have killed his mommy."

He was still wrestling with it when Anakin confessed to Padme a few scenes later that he had killed all of the Tuskens, even the women and children. That made him ask me to pause again, and he was upset by what Anakin said. "Jedi are good guys, and they should do good things, and he killed little kids and mommies, and that's bad." We talked about the reasons why and he told me that he was sad for Anakin, but he was also mad at him. He's always thought of Anakin as a hero, and seeing him start his fall and giving in to anger and rage is upsetting him deeply.
This is, when you think about it, sophisticated stuff for a young child to be contemplating: Sometimes good people do bad things, and sometimes those bad things create consequences from which there are no escape.

I'm not an 'Attack of the Clones' fan. I doubt that I ever will be. But in somebody's life, that movie is doing the work of art: Moving a person to contemplate motives and existence beyond their own experience, and offering entertainment in the process. That is no small thing. Recognizing that tempers my own judgements: I don't like 'Attack of the Clones,' but it's OK if you do.

Is Goldman Sachs quarterly loss due to 'regulatory uncertainty?'

Maybe. But the New York Times doesn't offer any evidence to back up this assertion:
To improve their profitability, banks have three main options: increase revenues, cut expenses and reduce the shareholder base. But the first method is not working at a time when earnings have been crimped by regulatory uncertainty and economic woes.
The reason I ask the question is that "regulatory uncertainty" is one of those Luntzian phrases—like "death tax," say—that Republicans toss around cavalierly. And it's true that Dodd-Frank regulations are altering the investment banking landscape. But is that the reason Goldman Sachs lost $428 million during the quarter?

Consider the very next paragraph in the Times' article:
Goldman reported a loss of $428 million during the third quarter, compared with a $1.74 billion profit a year ago. The firm was punished by its holdings in stocks and bonds, losing $1.05 billion on its holdings in Industrial and Commercial Bank of China, a strategic investment the firm made in 2006. I.C.B.C. stock fell about 35 percent in the quarter, a paper loss that flowed through to Goldman’s results.
Well, wait. Why is I.C.B.C.'s stock falling so far, so fast? The Times doesn't explain. Fortunately, Bloomberg reported on the story in February:
Chinese banks’ loans to local governments are about 3.5 trillion yuan ($540 billion) more than the national auditor’s estimate, and the industry’s credit outlook could decline, Moody’s Investors Service said.

“The Chinese audit agency could be understating banks’ exposure to local governments,” Yvonne Zhang, a Moody’s analyst in Beijing, said in the report today. The “apparent absence of a clear master plan to deal with this issue” is likely to exacerbate problems and lenders may be left to manage a portion of the souring loans on their own, it said.

The nation’s first assessment of local government debt showed that 79 percent of the liabilities are bank loans and 8 billion yuan is overdue, Auditor General Liu Jiayi said June 27.

The additional 3.5 trillion yuan of loans, which account for about 7 percent of China’s 50.8 trillion yuan in outstanding local-currency loans, aren’t considered by the audit office as real claims on local governments, Moody’s said. That indicates the debt may be poorly documented and at greater risk for defaults, it said.
In other words, Chinese banks like I.C.B.C.—and it's not the only one faced with this problem—got a little credit crazy, made too many loans that may not get repaid and documented the whole process poorly. This is starting to sound familiar, isn't it?

In this scenario, Goldman Sachs is the late-50s woman on the verge of retirement who plans to live off her nest egg—only to find the nest egg has been wiped out because of bad investments. I'll leave it to others to engage in schadenfreude—except to say this: Maybe Goldman Sachs is part of the 99 percent after all!

Instead, I'll note this: Goldman's loss on I.C.B.C. is more than double its overall quarterly loss. Take that off the books, and the bank turns a profit of more than a half-a-billion dollars—not as huge as it's used to doing, no, but still considered a tidy sum in most parts. That Goldman took a loss, in other words, isn't due to "regulatory uncertainty," but to the breaks of the business—and, perhaps, it's own failure to do due diligence. But why blame your own bad business acumen when you can blame the government instead?

Tuesday, October 18, 2011

Commenter's Corner: Andrew on Starbucks and small-biz credit

This is in the comments on my Starbucks post, but I think Andrew S. offers some good and interesting commentary that I want to highlight:
It really doesn't reduce new and small businesses to charity cases. It treats CDFIs--and the services they provide in the form of technical assistance and low-cost credit--as charity cases which almost all of them have always been. That's the innovation. I think this effort does a good service by recognizing that not all sources of credit are the same and that getting a loan as a small business is not merely a matter of declaring your interest in getting one. If you have a sexy internet company with high growth potential, money can be easy to come by. If you want to start a lawncare business, not so much. The "technical assistance" part of the picture is important as well. There are lots of people with great ideas for starting their own businesses who don't really know how to use debt effectively. Coupling loans with that kind of education has proven extremely effective in the CDFI community. Kickstarter is great for some things, but it has high labor costs and it's an all-or-nothing payoff which is a terrible structure for a long term sustainable business to work with. Anyway, recognizing that the market has failed small business borrowers is a good thing, and recognizing that lenders who serve those borrowers will need subsidies to do so is also a good thing.

Michael Gerson on Uganda and the president's conscience

Michael Gerson offers what I think is the best defense of the president's decision to send 100 American soldiers to Africa to aid in the fight against the Lord's Resistance Army, but I think he makes a slight misstep at the end:
Some critics insist that military force should be used only to secure the narrowest definition of national interests. But it is the president, not his critics, who must live with the ethical consequences of inaction. And most presidents conclude, as Obama has done, that a broader national interest is advanced when America aids its friends and shows its decency.
I think most of us want our president to have a conscience. But the presidency isn't about the president's conscience—few men or women who hold the office will leave the White House with their souls unbruised, I suspect. The president, to some extent, is required to get away from the mushiness of his own feelings and make cold, clear-eyed decisions based on A) what is allowed and permitted by the Constitution and B) what best advances and defends the interests of the American people. There's a cost-benefit calculation involved in the latter decision, and Gerson may have convinced me it's worth it in this case, as long as the American footprint remains very small and limited. But I don't really much care about the president's feelings about this. It's the national interest that should matter, no matter how narrowly or broadly defined. The president's gut is not the same thing.

Starbucks becomes a microlender? (Or: Capitalism becomes a charity case)

Joe Nocera highlights Starbucks' new effort in the NYT:
Here’s the idea they came up with: Americans themselves would start lending to small businesses, with Starbucks serving as the middleman. Starbucks would find financial institutions willing to loan to small businesses. Starbucks customers would be able to donate money to the effort when they bought their coffee. Those who gave $5 or more would get a red-white-and-blue wristband, which Schultz labeled “Indivisible.” “We are hoping it will bring back pride in the American dream,” he says. The tag line will read: “Americans Helping Americans.”

It didn’t take long for Starbucks to find the perfect financial partner: Community Development Financial Institutions, or CDFIs. These are lenders, mostly under the radar, that specialize in underserved communities. Most, but not all, CDFIs are nonprofit, and their loan default rates are extremely low. “We specialize in expending credit, getting paid back, and paying back our investors,” says Mark Pinsky, whose organization, Opportunity Finance Network, acts as an umbrella group to the best of them.
It seems to me this is a variation on microlending, usually a developing-world phenomenon to help the poor develop their own businesses. It could be effective. But I'm worried about one thing: Starbucks' effort reduces new and small businesses, essentially, to charity cases.

And maybe that's the way it has to be in 2011 America. But—since I'm not a socialist, and want to actually see markets made to work for the maximum public good—I'd rather see Starbucks put its muscle behind a Kickstarter-style operation that lets entrepreneurs raise capital by going directly to the customers for their products. That lets businesses that have an actual market for their ideas rise to the top rather quickly, instead of going through a bureaucracy—even a well-intentioned one—that'll have more of a hit-miss rate. And Kickstarter-type operations strengthen capitalism by providing investors with a return on investment—even if that return is simply the product being manufactured—instead of the warm glow of nebulously "saving American jobs."

I'm grateful that Starbucks CEO Howard Schulz is thinking about this kind of stuff. But Starbucks didn't start out as a charity case; it created a product that people liked, and became fabulously successful doing so. For the next generation of businesses to succeed and provide jobs, they'll have to do the same thing. In this case, maybe it's better that we ask Americans to be investors instead of donors.

Dennis Prager: Occupy Wall Street is like Hitler

Dennis Prager goes there in his column for NRO today:
The major difference between Hitler and the Communist genocidal murderers, Stalin, Mao, and Pol Pot, was what groups they chose for extermination.

For Hitler, first Jews and ultimately Slavs and other “non-Aryans” were declared the enemy and unworthy of life.

For the Communists, the rich — the bourgeoisie, land owners, and capitalists — were labeled the enemy and regarded as unworthy of life.

Hitler mass-murdered on the basis of race. The Communists on the basis of class.
Yes, this is a column about the Occupy Wall Street movement. And it's clear that Prager would rather resort to tired old anti-Communist tropes rather than seriously examine the complaints of the protesters. Here's Prager, not getting it:
Being on the left means that you divide the world between rich and poor much more than you divide it between good and evil. For the leftist, the existence of rich and poor — inequality — is what constitutes evil. More than tyranny, inequality disturbs the Left, including the non-Communist Left. ... Non-leftists who cherish the American value of liberty over the left-wing value of socioeconomic equality, and those who adhere to Judeo-Christian values, do not regard the existence of economic classes as inherently morally problematic. If the poor are treated equally before the law, are given the chance and the liberty to raise their socioeconomic status, and have their basic material needs met, the gap between rich and poor is not a major moral problem.
I'll distill that last sentence down to three rules: If the poor get to play by the same rules as the rich, have an opportunity for economic mobility, and can feed and house themselves, there's no problem.

Here's the problem: At least two of those three conditions aren't met in America today. First: Do the poor get to play under the same rules as the rich? We already know that if a poor man and a rich man step into court charged with the same crime, the rich man is much more likely to walk away free. Beyond the arena of criminal law, though, I outsource my commentary to one of Andrew Sullivan's readers:
When the financial industry came to the brink of collapse because of the reckless behavior of these "too big to fail" corporations, we saw an amazing ability for our government to come together to bail them out. In return, they've repaid the favor by working night and day to lift the already watered-down provisions of the Dodd-Frank reforms so they can continue with their same insanity, and to basically act like spoiled, entitled brats towards those of us who saved their butts in the first place.

Contrast this with any legislation in Congress that might actually help out rank-and-file Americans, and suddenly everything becomes gridlocked and impossible to achieve. From out here, it appears that when you have a lobby on your side, government works, and if you don't, well tough luck.
Rich financial institutions get bailed out; regular Americans are left to flounder. One of the three legs on Prager's stool is looking mighty shaky.

How about the second leg? Can Americans live the Horatio Alger dream and transform themselves from nothing into something by dint of hard work? Maybe. But it doesn't seem to happen as often as it used to. The Brookings Institution (PDF) analyzed the situation in 2008:
The view that America is “the land of opportunity” doesn’t entirely square with the facts. Individual success is at least partly determined by the kind of family
into which one is born.
For example, 42 percent of children born to parents
in the bottom fifth of the income distribution remain in the bottom,
while 39 percent born to parents in the top fifth remain at the top. This is
twice as high as would be expected by chance. On the other hand, this
“stickiness” at the top and the bottom is not found for children born into
middle-income families. They have roughly an equal shot at moving
up or moving down and of ending up in a different income quintile than their parents.

There is less relative mobility in the United States than in many other
rich countries. One well-regarded study finds, for example, that the
United States along with the United Kingdom have a relatively low rate
of relative mobility while Canada, Norway, Finland, and Denmark
have high rates of intergenerational mobility. France, Germany, and
Sweden fall somewhere in the middle.

In sum: inequalities of income and wealth have clearly increased, but the
opportunity to win the larger prizes being generated by today’s economy
has not risen in tandem and has, if anything, declined.
In short: If you're born rich or poor, you're likely to remain rich or poor. Those born middle class have more mobility up or down—but remember, this is before it became clear what devastation was being wrought by the Great Recession. In any case, you have a better chance of rising up if you're born in a socialist hellhole like Canada than you are in the United States. The opportunities just aren't there like they used to be. The second leg of Prager's three-legged stool is also increasingly shaky.

Finally: Do the poor have their basic material needs met? Prager might have his strongest case here: America's poor are more likely to have cars, TVs, microwaves and other items that might be considered luxuries ... if one compares them to the very poorest people on earth. On the other hand, the U.S. Department of Agriculture (PDF) estimated in 2010 that 14.5 percent of all households were "food insecure" —meaning at some point in a year, there wasn't enough access to food "for an active,
healthy life for all household members." In 5.4 percent of households, some people had to do without meals because there wasn't enough money to buy food. But I acknowledge: Your mileage may vary whether you consider this an indictment of our entire society.

Still, it would seem by Prager's own estimation, we're facing a real problem of inequality in this country. The playing field isn't even and hard work (if you can find it) won't help you get ahead. Meanwhile, the rich can fail and still be fabulously successful—not because of nest eggs or smarts, but because the government had their backs.

I doubt that Prager would agree with this assessment. But in his leap to compare the OWS protesters to genocidal tyrants, he fails to consider that they might actually have something to protest against. He fails to contemplate that many of us who are sympathetic to the protesters don't hate the rich—we just don't want them consolidating their gains through government action unavailable to the rest of us. Some conservatives are sympathetic to that notion. Too bad Prager isn't.

Today in Philadelphia police corruption

A 21-year veteran Philadelphia police officer was arrested Monday and charged with theft, receiving stolen property, and related offenses.

Kevin Workman, 47, was arrested following an investigation conducted by the Internal Affairs Bureau and the District Attorney's Office. The Police Department did not provide further details about the case.

Monday, October 17, 2011

No, college doesn't guarantee you a good job. But that's missing the point of Occupy Wall Street.

Many of the protesters I have met are understandably ruffled that they are unemployed, and they often finish their remonstrations with a non-sequitur, delivered as if it were a knockout blow: “And I went to college!” Well, one might ask, “So what?” 

I first noticed this “college = good life” fallacy back in England. A close friend of mine was looking for a job straight out of college, and remained unemployed for six months while he searched for what he described as a “graduate job.” Outside of those careers that rely on specific skills and expertise — doctors, veterinarians, and so forth — I have never been sure quite what this term means. My friend has a degree in modern history. Congratulations! But there is no obvious career path for this qualification. Why should it lend itself more to working in, say, finance than to working in a 7-Eleven? Compare this attitude to that exhibited by another friend of mine — a recently naturalized American citizen. After her parents escaped from the Soviet Union in the mid-1980s and fled to the United States, her engineer father worked as a garbageman for five years until he found a job which tallied more closely with his abilities. At no point did he complain. Was it a waste of talent? Undoubtedly. Did he have a right to a “post-graduate job”? No. That’s just not how free economies work. 

Charles Cooke, who wrote this bit for NRO, is right. He's also missing the point, to some extent. The point being: That median incomes have stagnated and dropped in recent decades; that financiers and bankers—who presumably have MBAs that make them exquisitely qualified to do the work they do—have managed to live high on the hog at taxpayer expense while touting the virtues of the market for everybody else; that unemployment persists above 9 percent, and when you count people who are underemployed or who have simply given up looking for work, that number really doubles.

There's not enough jobs, and those jobs aren't paying very well. It's easy to mock the guy with the modern history degree. But there hasn't been an outcry in recent years—except in certain, seasonal agricultural fields that are usually served by immigrant labor—that there are plenty of jobs for taking if only people had the right qualifications. There are something like four or five job-seekers for every available job in the United States. Would the dynamic be different if there weren't so many liberal arts majors out there? I've seen no evidence for that.

Stu Bykofsky's really bad bicycling idea

 Traffic Court President Judge Thomasine Tynes, the new love of my life, wants to require the registration of bikes, just like other vehicles. When that idea was proposed two years ago by Councilmen Frank DiCicco and Jim Kenney, pedalists howled like coyotes.

How dare they be asked to register? Condensed, and translated, the cyclists said, kind of like Dr. Seuss: "We are green! We are keen! We do not pollute the air! Registration is not fair!"

Bicycling for Dummies 101 (There may be a quiz at the end): Under Pennsylvania law, bicycles are vehicles and must obey vehicular laws. That includes riding in the same direction as traffic, no blowing red lights, full stops at stop signs, no sidewalk-riding in business districts unless, chronologically, you are a child. (Acting like a child isn't good enough).

If bikes are vehicles, you logically can ask why they shouldn't be registered like other vehicles - and the judge has.

Tynes' reasons include the ability to return stolen bikes, raising revenue and law enforcement. Having a visible license plate would help cops find bicyclist hit-and-run artists. Just like cars.

Byko goes on to point out that states like Kansas have a law requiring bicycles to be registered. That may be, but I know of very few people who actually did that when they bought a bike—the few who did were die-hards who owned really expensive bicycles they'd want to trace in the event they were stolen. Registration worked as a means to assist bike owners, not—as in Byko's vision—to bring the weight of the state down on them.

Hey: I want to punch every bicyclist who brushes past me or my 3-year-old son on the sidewalk. It may happen if he ever gets knocked down. But Bykofsky's plan is too much—a scheme that would make outlaws of a great many bike owners, or force the rest into Philadelphia's soul-destroying bureaucracy. Bykofsky has written wistfully about the destruction of downtown Detroit and the possibilities for re-creating the city that such devastation has offered; his bike-registration plan would probably harm the vibrancy of Center City Philadelphia to such a degree that it would help bring about his dark vision.

We're at war in Afghanistan. We're at war *with* Pakistan.

FORWARD OPERATING BASE SHARANA, Afghanistan — American and Afghan soldiers near the border with Pakistan have faced a sharply increased volume of rocket fire from Pakistani territory in the past six months, putting them at greater risk even as worries over the disintegrating relationship between the United States and Pakistan constrain how they can strike back.

Ground-to-ground rockets fired within Pakistan have landed on or near American military outposts in one Afghan border province at least 55 times since May, according to interviews with multiple American officers and data released in the past week. Last year, during the same period, there were two such attacks.

Sunday, October 16, 2011

'The Beautiful Struggle,' Occupy Wall Street, and the task of preparing for adulthood

Today I finished Ta-Nehisi Coates' memoir of growing up in West Baltimore in the 1980s, "The Beautiful Struggle," and found myself quite unsettled. Coates is of my generation, but his urban upbringing is about a million miles away from my rural Kansas adolescence. He had aging Black Panthers, the crack epidemic, and Chuck D. I had Friday night high school football games, spinning donuts in the county fairgrounds parking lot, and hair metal. And yet, in some respects, I identified: I too was often lost in a sci-fi fog, not really seeing the world around me clearly, and sometimes I got by on what other people perceived as my potential smarts rather than on clearly and efficiently applying those smarts to the tasks at hand.

Why would that unsettle me? Because, frankly, I'm not sure I've ever emerged from that fog the way Coates seems to by the end of the book. That troubles me for myself, but that also troubles me as I seek to guide my own young son in his growing process. I don't expect that I'll resort to the belt-swinging methods used by Coates' father. But for whatever reasons, the book has me questioning myself: Am I a purposeful adult? Am I setting the right example for my son? Do I know how to give him the tools he'll need to become a purposeful adult? How, frankly, do I raise my son to be a man—and yet to be a feminist man, a wise man, eschewing misogyny and false power and adopting real responsibility? (It occurs to me that a return to the Mennonite church might provide some support on the latter front, believe it or not. Too bad I'm an unbeliever.) I am full of doubt.

The book—and if you're a fan of Coates' blogging, you really should read it—also brought to mind another issue: The kids at Occupy Wall Street.

I call them "kids" even though the ones I've seen on video (or in my own excursion to Occupy Philadelphia) are adults: Folks in their twenties and thirties. And yet it's easy to think of them as "kids." You don't see many people who have children of their own, nor are many of them walking away from 40-hour-a-week professional jobs to join the protest. The relative joblessness is a reason for the protest, yes, but it's also an enabler.

It's easy to cherrypick the loons and and starry-eyed utopians, of course, and conservative web sites have done a fantastic job at that. But a closer look reveals that many of the protesters aren't the radical fringe, exactly: They're scions of privileged middle-class upbringings, people for whom college was a given—and then, at the very least, a reasonably lucrative, reasonably fulfilling career after that. They look at the country that's been left to them on the cusp of adulthood, and see that everything they prepared for—during childhoods in Internet-swaddled, SUV-wrapped formative years—has disappeared, and that what's left is something they're not prepared to handle.

Don't get me wrong: There are very real issues of income inequality and the damage it does to our democracy at stake in these protests, and I'm glad Occupy Wall Street has managed to push those issues to a wider audience. But I can't help but wonder if a necessary and sufficient foundation of the protests is that we, as a society, have failed to be good at producing actual adults. We've gotten good at creating expectations without expecting much in return.

Conservatives, in particular, like to point and laugh at the childishness of protesters who seem to expect something for nothing. I suspect part of the problem here is narcissistic consumerism unleashed by the markets that conservatives love so. But I do wonder if we shouldn't be asking ourselves—again, and some more, ad infinitum—are we preparing our children to be responsible adults? Are we offering them the right examples? Are we teaching them how to roll with the punches, both real and metaphorical? And is this a question left to individuals, or something we need to work out more broadly, as a society?

Ta-Nehisi Coates grew into a man, in part, because the streets of West Baltimore forced him to literally understand how to take responsibility for his very life at a young age. But I don't think we need to plant our kids in crime and poverty in order to engender a sense of seriousness in them.

I am rambling here. These thoughts are half-formed an unfinished, and it may be that I don't give enough credit to the thoughtfulness and responsibility of the protesters. (As I've mentioned previously, I have been impressed by their ability to spontaneously create an orderly community, at least in Philadelphia.) But my sense of things is that the Occupy Wall Street protests have the blessing of forcing us to wrestle with real issues, and the curse of failing to put away childish things. And I wonder about my own role in that dynamic.

Update: I won't claim this as my best-ever post. But Coates' book hit me hard somehow. And I'm struggling to articulate why that is or what it should mean. Sometimes I have to write to work things out. And sometimes that means embarrassing myself publicly.