Wednesday, March 25, 2009

Angry Americans just want to be left alone?

Since I live overseas, maybe I'm truly out of touch with the U.S., but...  Is American's prevailing sentiment right now really anger?  FOX would like us to think so.  Indeed, on the same day as "America is Burning," FOX's political priest Father Jonathan counseled us to do the Christian thing and relinquish our anger at high taxation and big government.  And every day Bill O'Reilly and Glenn Beck tell us how angry we are, and demand to know why we aren't even more outraged (at Big Gubument, naturally). 

I dunno, I would say the prevailing sentiment right now is fear, or uncertainty, about our economic future.  Do populist uprisings against government happen when government is the only institution taking an interest in the problems of unemployment, shrinking incomes, and home mortgage defaults?  I don't think so.

Talk radio, FOX and their coterie of ultra-conservative bloviators would like us to think that U.S. popular will favors tax cuts, less gov't spending, and letting this recession (depression?) work itself out, eventually, however long it takes.  Free-market purists preach (with almost sado-masochistic anticipation) our need to experience prolonged "pain" before our economy can recover.  But "feel the pain!" issn't much of a populist rallying cry.

In tough times, people generally expect more gov't spending, not less -- not least of which should go toward unemployment benefits.  If all these populists (wherever they are) with their pitchforks and torches burn down state and federal budgets, who will help them then?  Do Americans really just want to be left alone to deal with this crisis?

America Is Burning

By Patrick Dorinson

March 23, 2009  |


America is on fire and it is out of control. It is a fire of populist anger that left unchecked will likely rage throughout this year and into the election year of 2010.


Unlike the wildfires we have every year here in California and throughout the West, it is not consuming acres of forest and people's homes — unless you count the huge drop in home values. It is consuming America's trust and confidence in the very institutions that we count on to guide this nation.


Politicians of both parties are trying feverishly to contain this fire. It is burning in many locations and just like a wildfire it is threatening to grow into one big conflagration that will destroy all before it.


Hell, I know why they're doing it. They are deathly afraid that it will also consume the thing the value most — their careers. And let's face it. This is about playing for political advantage for the coming battles over the Obama agenda and saving one's own hide.


The people are angry about bonuses and bailouts being paid for with their money. So am I. But I am equally as angry at the numbskulls in Congress who act as mere bystanders or worse, as this fiscal house of cards collapses all around them. Barney Frank wants to make public the list of those who got bonuses from AIG, no doubt so that the media can camp out in front of their homes and harass these folks for days taking their eye off who is really responsible — Congress.


Just the other day Connecticut Democrat Senator Chris Dodd said, "The public confidence in our ability is being adversely affected — not just mildly, but seriously." What a great grasp of the obvious Senator. Now you can go home.


Their plan for fighting the blazes amounts to lighting backfires which are meant to consume the fuel in the fire's path and slow it down so it eventually burns itself out for lack of nourishment. The fuel in this case is voter anger. But any experienced wildfire firefighter will tell you that lighting backfires is very tricky and rarely done because if the wind or other conditions change quickly, instead of controlling the fire you could make it worse.


Our fearless leaders desperately want to change the subject and in a rare bipartisan frenzy are tripping over themselves to get in front and lead the mob. AIG and any other company that received TARP funds are be hauled from the court of public opinion, dragged to the media public square and executed in the tax guillotine. That's their idea of a backfire.


And it's not just AIG bonuses or the smorgasbord of bailouts being served at the Treasury Department cafeteria. Years of profligate spending at all levels of government and pie-in the-sky political promises to get elected, have finally come home to roost.


In every state, every city, every county and every village, hamlet and town politicians are scrambling to fill empty coffers by raising taxes on anything and everything.


    Illinois plans a 50% increase in both personal and corporate taxes


    Hoboken New Jersey wants to raise property taxes 47%.


    Massachusetts is planning an increase of 19 cents a gallon gas tax


And here in California we are being asked to go to the polls on May 19 and agree to tax and borrow ourselves into oblivion because the politicians have failed miserably to do their jobs. Sound familiar?


Keystone Kops fiscal planning in Washington, state and local governments plans  to tax anything they can, loss of assets earned over a lifetime and a home that is probably worth less today than it was when it was bought are all contributing to this anger and mob mentality.


But if either political party or President Obama think they can light the backfire and incite the mob and then somehow direct its anger into a political advantage they are even more out of touch with the American people than I thought.


And if all these fires now raging across America ever combine together into one huge populist inferno, there won't be an incumbent politician standing—just ashes.


Bloggers note: Here are a few old movie clips on today's themes. The first is the great speech by Broderick Crawford as Willie Stark in "All The King's Men". If we ever got one of these — look out America!


The second is from John Ford's classic "Young Mr. Lincoln" starring Henry Fonda. If President Obama really wanted to emulate Lincoln he might try this movie version approach to dealing with the mob.

Thursday, March 19, 2009

Re: W. Williams: U.S. Prosperity Lost

Yes, sure, that cost of taxes is passed on to consumers, but government needs to pay the bills. It needs tax revenue from somewhere.

I know you have bought into this Business vs. Government dialectic, but really, business gets a lot from government, therefore gov't deserves its tax revenues.

Government registers and protects business patents, lobbies foreign gov'ts on business's behalf and negotiates foreign trade deals (which helps our exporters), regulates and punishes unfair competition (which hurts honest businesses), guarantees bank deposits, punishes insider trading and manipulation of financial reporting (which hurts honest shareholders and employees), educates businesses' workforce (a "free" benefit to the private sector), provides roads, bridges, ports, and other infrastructure (which lowers transaction costs and stimulates trade), provides police to protect businesses' assets and employees, and even provides "free" medical care to businesses' workers (like Wal-Mart employees on Medicaid).

Then there are things like disaster relief, clearing snow, putting out fires, stopping mudslides, etc. -- all paid for by gov't.

In addition, government provides a great boon to business in the form of the Census Bureau. U.S. Census data is mined and sifted by just about every consumer products company in America, trying to figure out who their customers are, what they want, how much they earn, where they live, etc. This top-notch market research is provided "free" by gov't to the private sector -- research which the private sector on its own would never, could never, buy for itself.

Moreover, gov't spends $ billions on basic scientific research which, again, most companies do not have the resources to invest in themselves. (Only a few big companies, like IBM, still do basic scientific research). And yet businesses take advantage of that basic research when they do their applied science, and make a profit from it.

Or look at satellites and GPS technology: how do you think those satellites got up there? The private sector can't afford rockets, and it certainly didn't spend the money to bring rocket science and satellite technology to the point where it is today. You can thank Big Gov't for that.

Or look at your son-in-law: government provides him financing and incentives to develop land and building projects, turning unproductive land into productive land, employing people, and eventually providng tax revenue.

And although I'm generally against it, you know that gov't frequently provides tax subsidies and tax holidays for business to invest in their city/state, in the belief that this creates more jobs and wealth than it costs taxpayers in subsidies.

I could go on and on. Walter Williams, as usual, oversimplifies and is way off base. He acts like all gov't does is leech off business, and gives nothing in return. Nothing could be farther from the truth.

As for "life's essentials," I have my doubts about Americans buying only essential consumer goods. Our erstwhile economic boom wasn't driven by Americans buying baloney and canned tomato soup, and saving all their money to invest in business ventures and equities; it was driven by them buying flat screen TVs and other electroncis, expensive SUVs, gaudy McMansions, vacations, and trendy clothes. Profligate spending (financed by tech and housing bubbles), low interes rates, and gov't borrowing have driven our economy for the past 30 years. You don't seem to realize what our country has become, and what makes it go. You baby boomers have transformed the America of your parents which saved and produced into our superficial, consumer-driven culture, which spends and throws away. Where plastic, throwaway things are the measure of a man's worth and a company's bottom line.

But back to taxing businesses: it is always a fine line, a tradeoff between allowing business to flourish and providing for the general welfare (including the welfare of business). Absolutist arguments about the "evil" of taxation or "taxation is stealing" are juvenile and get us nowhere. Contrary to your assertion, "having your cake and eating it too" is advocating lower taxation without any corresponding reduction in gov't services. (Exhibit A: the Reagan and Dubya years). You'd be better served to concentrate your anger on spending, not taxes. Tell your gov't representatives exactly what spending you disapprove of. Don't advocate "starving the beast" and running up our nat'l debt without addressing spending.


On Wed, Mar 18, 2009 at 11:07 PM, <Mom> wrote:

This is my point. Raising taxes on businesses only passes the cost onto consumers and that is what Obama is asking. Get money from business and in addition have consumers pay higher prices and more tax on that price. It's called having your cake and eating it too. Poor and middle class people need to consume life's essentials and those essentials are going up in price. How does that get the rich guy?

Prosperity Lost

Wednesday, March 18, 2009

Likud lobby's libel of Amb. Freeman

You should watch the refreshingly truthful interview on Fahreed Zakaria's show last Sunday with Amb. Charles Freeman. 

He's such a calm, measured man.  If I had just been the victim of an organized character assassination funded by agents and sympathizers of a foreign political party, I would be spitting mad and naming names.  But I suppose such restraint typifies Chas Freeman's career as a U.S. diplomat and public servant. 

As German philosopher Arthur Schopenhauer noted: "All truth passes through three stages.  First, it is ridiculed.  Second, it is violently opposed.  Third, it is accepted as being self-evident."  Unfortunately, when it comes to the manifest truth about the pernicious influence of the "Likud lobby" on U.S. foreign policy, we are still in stage 1 or 2.

Of Patriots and Assassins
By Patrick J. Buchanan
March 17, 2009 | MSNBC

During Nixon's historic trip to China in 1972, his interpreter and I, free for a few hours, conscripted a driver to take us on a tour of Beijing. Somewhere in my files are photos from that day we toured the grim city of Chairman Mao in the time of the Great Proletarian Cultural Revolution.

The interpreter: Charles Freeman -- the same Charles Freeman Adm. Dennis Blair chose to chair the National Intelligence Council that prepares National Intelligence Estimates on critical national security issues such as Iran's nuclear program.

Educated at Yale and Harvard Law, Freeman has served his country in Delhi, Taipei, Bangkok and Beijing. He was Ronald Reagan's deputy assistant secretary of state for Africa and Bill Clinton's assistant secretary of defense for international security affairs. George Bush I named him ambassador to Saudi Arabia. Freeman was our man in Riyadh when Gen. Norman Schwarzkopf and 500,000 U.S. troops arrived to evict the army of Saddam Hussein from Kuwait.

In 1997, Freeman succeeded George McGovern as president of the Middle East Policy Council -- and he began to speak out.

He opposed the bombing of Serbia and said aloud what few privately deny:  Reflexive support for Israel's repression of the Palestinian people is high among the reasons America is no longer seen as a beacon of liberation in the Arab and Muslim world.

Freeman echoed the Obama of yesterday, who bravely blurted, "Nobody is suffering more than the Palestinian people."

At MEPC, however, Freeman committed a great crime. He published "The Israel Lobby and U.S. Foreign Policy" by Stephen Walt and John Mearsheimer, which went onto the New York Times best-seller list -- and put Freeman on AIPAC's enemies list.

Hence, when his name surfaced as Blair's choice to chair the NIC, the Israel Firsters went berserk, with Steven Rosen declaring him to be a "textbook case of the old-line Arabism" that infected the Department of State when Gen. George Marshall was secretary.

And who is Rosen?

A former fixture at AIPAC, Rosen faces imminent federal criminal prosecution under the Espionage Act for transferring top-secret Pentagon documents to the Israeli Embassy. Rosen's accomplice, Larry Franklin, is serving a 12-year sentence.

Picking up the Rosen dog whistle, the neocommentariat came howling. To Gabriel Schoenfeld, late of Commentary, Freeman is a "China coddling Israel basher." Tom Piatak of Chronicles found no fewer than five blogs from National Review Online, in two hours, savaging Freemen, two by Jonah Goldberg and two by Michael Rubin.

Rich Lowry of NR calls Freeman "Chas of Arabia," a diplomat of "odious" views, a "lap dog" and "blinkered ideologue" who enjoys "pandering to and making excuses for the world's dictators and terrorists."

To The New Republic's Jonathan Chait, Freeman is a "fanatic." To Jeffrey Goldberg of Atlantic, formerly of the Israeli Army, Chait's piece was dead on. To TNR ex-publisher Marty Peretz, Freeman is a "bought man." To Michael Goldfarb of The Weekly Standard, Freeman is a "shill for the Saudis," who defends "corrupt Arab states that foment and support terror."

Freeman is denounced as a shill of Saudi Arabia -- by people who have spent careers shilling for the Israeli lobby and Likud.

Within this smear bund (Murray Rothbard's phrase), who has given America a tenth of the patriotic service and loyalty of Chas Freeman?

What were the specific charges? That, in private life, Freeman advised a Chinese company. Would the Israel Firsters have used that argument against Al Haig or Henry Kissinger?

Saudi contributions to MEPC should disqualify Freeman, they say. But what did they say when Douglas Feith, Richard Perle, David Wurmser and the rest with inextricable ties to Israel stove-piped to the press the cherry-picked War Party propaganda lies about a "Prague connection" between Mohammed Atta and Iraqi intelligence, yellow cake from Niger, Saddam and al-Qaida, Saddam and the anthrax attacks, "mushroom clouds," "aluminum tubes" and WMD?

Who among them questioned State's decision to hand the Iran portfolio to Dennis Ross of the Washington Institute for Near East Policy, a creation and front of AIPAC?

Realizing the assaults would not end, Freeman last week withdrew, saying, "I do not believe the National Intelligence Council could function effectively while its chair was under constant attack by unscrupulous people with a passionate attachment to the views of a political faction of a foreign country."

The foreign country is Israel; the political faction Likud.

Nor did Freeman shrink at naming the source of the noxious campaign of slander against him.

"The tactics of the Israel lobby plumb the depths of dishonor and indecency and include character assassination, selective misquotation, the willful distortion of the record, the fabrication of falsehoods and an utter disregard for the truth."

"A lobby," Steve Rosen confided in an AIPAC internal memo, "is like a night flower; it thrives in the dark and dies in the sun."

Yes, and long ago, Al Smith addressed the age-old problem of the Rosens within: "The best way to kill anything un-American is to drag it out into the open, because anything un-American cannot live in the sunlight."

Well done, Ambassador Freeman.

Monday, March 16, 2009

Gun control won't stop school shootings? Killer stats

Let's focus on multiple-victim school shootings for a minute, since John Lott (see below) compares a "string" of 4 school attacks in Germany from 2002-2006 to America's school shooting carnage. By my count, 14 multiple-victim shootings occurred in U.S. schools (12 of them in K-12) during the same period. 

Anyway, in Germany handguns are legal to buy if you're over 18 years old; and rifles if you're over 21. Yet Germany's gun laws are supposedly "strict," meaning you can't get a gun license if you have a criminal record. Germans, especially rural hunters, love their guns, and German politicians are afraid to take them away. Sounds a lot like the U.S. to me.

By expanding Lott's chosen period to cover 4 more years, and all U.S. schools (not just K-12), I get 123 killed and 193 wounded in 39 multiple-victim shootings. (All my sources are hyperlinked). Lott makes no mention of U.S. students wounded by gun violence, some of whom were made disabled or brain dead. Nor does Lott mention several Columbine-style rampages that were thwarted when student-killers' plans were discovered. The casualty figures could have easily been much, much greater.

Notice how many school multiple-victim shootings there were after Columbine, which spurred schools to use metal detectors and get more serious about deterring gun violence. Also notice how many there were before Columbine (these attacks actually stretch back to 1966); and yet Columbine is cited as the event that triggered so many copycat attacks. Indeed, Harris and Klebold were the real copycats, continuing a 30-year tradition of multiple-victim U.S. school shootings.

Finally, look where the shootings happened: everywhere. But mostly in rural (supposedly more peaceful) areas. Was this because of more lax security, or easier access to hunting firearms, or both? If you look at single-victim shootings, you see many more occurring in urban schools to settle some vendetta. It's the white boys in the suburbs and backwoods who commit multiple gun murders at school.

If gun control isn't the answer, then what is? Everything else has been tried, from metal detectors to school security guards to preparedness drills in case of rampage murders. (And you thought those old "duck and cover" drills were nuts). Gun control -- or outright banning guns -- is the simplest, most direct way to attack this deadly problem. It is probably the only way.

I'm not arguing that Americans have more murder in their hearts than do people of other nations (although some would, like the late Charlton Heston); we Americans simply have easier access to more and deadlier firearms.

Multiple-Victim School Shootings in the U.S., Feb 1996 - Feb 2008:
  1. Frontier Middle School, Moses Lake, WA, Feb 1996: 3 killed, 1 critically wounded.
  2. Bethel Regional HS, AL, Feb 1997: 3 killed, 2 wounded.
  3. Pearl HS, MS Mar 1997: 2 killed, 7 wounded.
  4. Stamps, AK, Dec 1997: 2 wounded.
  5. Westside MS, Jonesboro, AK, Mar 1998: 5 killed, 10 wounded.
  6. Stranahan HS, Fort Lauderdale, FL, Feb 1998: 2 killed, including shooter.
  7. Philadelphia Elementary, Pomona, CA, Apr 1998: 2 killed, 1 wounded.
  8. Parker Middle School, Edinboro, PA, Apr 1998: 1 teacher killed, 3 students wounded.
  9. Thurston HS, Springfield, OR, May 1998: 3 killed, 23 wounded. (Shooter expelled a day prior for bringing gun to school).
  10. Armstrong HS, Richmond, VA, June, 1998: 2 wounded by 2 student shooters.
  11. Columbine HS, Littleton, CO, Apr 1999: 15 people killed, including the killers, 23 wounded.
  12. Heritage HS, Conyers, GA, May 1999: 6 students wounded.
  13. Fort Gibson Middle School, OK, Dec 1999: 4 students wounded.
  14. Heath HS, Paducah, KY, Dec 1997: 3 killed, 5 wounded.
  15. *Buell Elementary, Mount Morris, MI, Feb 2000: 1st grader killed 6 y.o. classmate with uncle's gun after an argument.
  16. Beach HS, Savannah, GA, Mar 2000: 2 killed.
  17. Santana HS, Santee, CA, Mar 2001: 2 killed, 13 wounded.
  18. Granite Hills HS, El Cajon, CA, Mar 2001: 5 wounded.
  19. Ennis, TX, May 2001: 2 killed, including shooter, 17 hostages taken.
  20. Appalachian School of Law, Grundy, VA, Jan 2002: 3 killed, 3 wounded.
  21. Martin Luther King JHS, NY, NY, Jan 2002: 2 seriously wounded.
  22. University of Arizona, Tucson, Oct 2002: 4 killed, including shooter.
  23. John McDonough HS, New Orleans, LA, Apr 2003: 1 killed, 3 wounded.
  24. Rocori HS, Cold Spring, MN, Sep 2003: 2 killed.
  25. Ballou HS, Washington, DC, Feb 2004: 1 killed, 1 wounded.
  26. Randallstown, MD, May 2004: 4 wounded.
  27. Salt Lake City, UT, May 2004: 2 killed, including shooter (suicide).
  28. Red Lake HS, MN, Mar 2005: 10 killed, including shooter.
  29. Campbell County HS, Jacksboro, TN, Nov 2005: 1 killed, 2 seriously wounded.
  30. Pine Middle School, Reno, NV, Mar 2006: 2 wounded.
  31. Essex Elementary School, VT, Aug 2006: 2 killed, 3 wounded, including shooter.
  32. Platte Canyon HS, Bailey, CO, Sep 2006: 2 killed, 6 hostages taken.
  33. Shepherd University, Shepherdstown, WV, Sep 2006: 3 killed, including shooter.
  34. West Nickel Mines Amish School, Paradise, PA, Oct 2006: 6 killed, including shooter, 5 wounded.
  35. Virginia Tech University, Blacksburg, VA, Apr 2007: 33 killed, including shooter, 15 wounded.
  36. Delaware State University, Sep 2007: 1 killed, 1 wounded.
  37. Success Tech Academy, Cleveland, OH, Sep 2007: 1 killed (shooter suicide), 4 wounded.
  38. Louisiana Technical College, Baton Rouge, Feb 2008: 3 killed, including shooter.
  39. Northern Illinois University, DeKalb, Feb 2008: 6 killed, including shooter, 18 wounded.


*Not a multiple-victim shooting; but particularly awful.

Additional Sources:,2933,300976,00.html

By John R. Lott, Jr.
March 12, 2009 | Fox News

Inevitably, the massacres in Germany and Alabama over the last two days have produced more calls for gun control. Already the attack in Alabama is being used to call for a new assault weapons ban, even though there are no published academic studies by economists or criminologists showing that the previous ban reduced violent crime.

The Alabama shooting spree left 11 people murdered, as the killer went from one house to another shooting members of his family and others inside. Three victims were shot from the window of the killer's moving car.

At least 9 students and 3 teachers were killed at the public school near Stuttgart, Germany. Three other people were killed at other locations.

Unfortunately, the latest German attack is just another in a string of horrible K - 12 public school shootings in that country. In 2002, 16 people were killed at an attack in Erfurt. There were two other smaller multiple victim public school shootings in 2002 alone. In 2006, 11 students were wounded in Emsdetten. Germany has had the two worst multiple victim K - 12 school shootings in the world. The last seven years of German school shootings make the United States seem peaceful by comparison: though the US has almost five times as many students as Germany, a total of thirty-seven people were killed during all multiple victim K-12 shootings in the US during the eight years from the Fall of 1997 to the summer of 2005.

Yet, Germany already has some of the strictest gun control laws in Europe and much stricter gun control laws than are being publicly discussed in the United States. It might not get much attention because it doesn't fit the template of gun violence in the U.S., but during the last seven years, other European countries — including France, Finland, and Switzerland — have experienced multiple-victim shootings. The worst outside of Germany have involved 14 murders, and all these killings have occurred in places where guns were banned.

We all want to take guns away from criminals, but gun control is more likely to disarm potential victims relative to criminals and make crime easier to commit.
Multiple-victim public shootings are terrifying and they drive much of the gun control debate, but they make up just a tiny fraction of one percent of the murders in the United States, Europe, or the rest of the world. The problem is that the gun control laws that come out of these crimes not only make crime go up, they also make multiple victim public shootings more likely. Research shows that police are the single most important factor for reducing crime, but even the police themselves understand that they virtually always arrive on the crime scene after the crime has occurred. Letting law-abiding citizens defend themselves not only deters some crimes from occurring, but it is the surest way of reducing the carnage when attacks do occur.

Unlike most public shooting scenarios, where citizens are allowed to carry concealed handguns, the Alabama killer presumably knew whether or where his family member victims had guns in their homes.

The few shots that he fired in public were from the open window of his speeding car, but even here privately owned guns potentially could have made a difference.

ABC News reports:

"McLendon fired several shots at the Bradley TrueValue Hardware store before heading out of town for Geneva, 12 miles away.
"We were just business as normal, and all of a sudden there were bullets flying and glass was everywhere," owner David Bradley told the Dothan Eagle newspaper. "We realized what it was and grabbed our guns, but then he was gone."

The crimes that are stopped rarely get much news coverage and surely not the coverage given to the horrific killings.

Europe is rushing to adopt even more gun control laws. Let's hope the calls for more gun control in the US are given more thought. If not, the "cures" will disarm law-abiding citizens and make the disease of violence even worse.

Friday, March 13, 2009

FT: Economic growth and happiness

It's usually during bad times that we pay attention to thoughts like these.  That's too bad.

Now is the time for a less selfish capitalism

By Richard Layard

March 11, 2009 |  Financial Times

What is progress? The Organisation for Economic Co-operation and Development has been asking this question for some time and the current crisis makes it imperative to find an answer. According to the Anglo-Saxon Enlightenment, progress means the reduction of misery and the increase of happiness. It does not mean wealth creation or innovation, which are sometimes useful instruments but never the final goal. So we should stop the worship of money and create a more humane society where the quality of human experience is the criterion. Provided we pay ourselves in line with our productivity, we can choose whatever lifestyle is best for our quality of life.

And what would that involve? The starting point is that, despite massive wealth creation, happiness has not risen since the 1950s in the US or Britain or (over a shorter period) in western Germany. No researcher questions these facts. So accelerated economic growth is not a goal for which we should make large sacrifices. In particular, we should not sacrifice the most important source of happiness, which is the quality of human relationships – at home, at work and in the community. We have sacrificed too many of these in the name of efficiency and productivity growth.

Most of all we have sacrificed our values. In the 1960s, 60 per cent of adults said they believed "most people can be trusted". Today the figure is 30 per cent, in both Britain and the US. The fall in trustworthy behaviour is clear in the banking sector but can also be seen in family life (more break-ups), in the playground (fewer friends you can trust) and in the workplace (growing competition between colleagues).

Increasingly, we treat private interest as the only motivation on which we can rely and competition between individuals as the way to get the most out of them. This is often counterproductive and does not generally produce a happy workplace since competition for status is a zero-sum game. Instead, we need a society based on positive-sum activities. Humans are a mix of selfishness and altruism but generally feel better working to help each other rather than to do each other down.

Our society has become too individualistic, with too much rivalry and not enough common purpose. We idolise success and status and thus undermine our mutual respect. But countries vary in this regard, and the Scandinavians have managed to combine effective economies with much greater equality and mutual respect. They have the greatest levels of trust (and happiness) of any countries in the world.

To build a society based on trust we have to start in school, if not earlier. Children should learn that the noblest life is the one that produces the least misery and the most happiness in the world. This rule should apply also in business and professional life. People should do work that is useful to society and does not just make paper profits. And all professions – including journalism, advertising and business – should have a clear, professional, ethical code that its members are required to observe. It is not for nothing that doctors form the group most respected in our society – they have a code that is enforced and everyone knows it.

So we need a trend away from excessive individualism and towards greater social responsibility. Is it possible to reverse a cultural trend in this way? It has happened before, in the early 19th century. For the next 150 years there was a growth of social responsibility, followed by a decline in the next 50. So a trend can change and it is often in bad times (such as the 1930s in Scandinavia) that people decide to seek a more co-operative lifestyle.

I have written a book about how to do this and there is room here for three points only. First we should use our schools to promote a better value system – the recent Good Childhood report sponsored by the UK Children's Society was full of ideas about how to do this. Second, adults should reappraise their priorities about what is important. Recent events are likely to encourage this and modern happiness research can help find answers. Third, economists should adopt a more realistic model of what makes humans happy and what makes markets function.

Three ideas taught in business schools have much to answer for. One is the theory of "efficient capital markets", now clearly discredited. The second is "principal agent" theory, which says the agents will perform best under high-powered financial incentives to align their interests with those of the principal. This has led to excessive performance-related pay, which has often undermined the motive to work well for the sake of doing a good job and introduced unnecessary tension among colleagues. Finally, there is the macho philosophy of "continuous change", promoted by self-interested consulting companies, which disregards the fundamental human need for stability – in the name of efficiency gains that are often not realised.

We do not want communism – as research shows, the communist countries were the least happy in the world and also inefficient. But we do need a more humane brand of capitalism, based not only on better regulation but on better values.

Values matter and they are affected by our theories. We do not need a society based on Darwinian competition between individuals. Beyond subsistence, the best experience any society can provide is the feeling that other people are on your side. That is the kind of capitalism we want.

Lord Layard is at the London School of Economics Centre for Economic Performance. He has written 'Happiness' (2005) and co-authored 'A Good Childhood' (2009)

Thursday, March 12, 2009

Ames: AL shooting another battle in long war

This will drive my conservative friends nuts....

If Ames has misdiagnosed the disease, he's certainly right about the symptoms & warning signs repeating over and over.

Tuesday, March 10, 2009

90's fads return: Kooks, guns, and unmarked choppers

Now that a Democrat is back in the White House, Chuck Norris and Glenn Beck assure us that it's cool to be an armed, paranoid, separatist freak again! It's back to the 90's, with MC Hammer pants, 90210, and hiding in the woods in your camos with a cache of guns, watching the sky for unmarked black choppers!

Lock and load: the wingnuts are back, baby!

In other news, we have yet another rampage shooting at a church, which would have been a lot worse if the attacker's gun hadn't jammed. This trend disturbs me. I'm all for God & Guns, but not shooting at God with guns. Let's remember the real enemy: the federal government! (This excludes our heroic armed forces, whom I support 100% as they defend our freedom -- which is under dire threat from within! -- in Iraq and Afghanistan.),2933,506886,00.html

Friday, March 6, 2009

Crisis infects 'responsible' homeowners, prolongs recession

This is one big reason why the recession will not go away soon.  It will get worse.  Defaults and late payments on mortgages have spread beyond sub-prime ARMs, and are now affecting "responsible," "qualified" home owners with fixed-rate mortgages and (formerly) steady incomes. 

Like it or not, the mainstay of the U.S. economy is buying stuff (consumption), so until people are able and willing to buy stuff again, (and they won't be able as long as they are unemployed and/or underwater on their mortgages), the recession will continue.  This fact informs the logic of Obama's stimulus bill: the government must buy LOTS of stuff in bankrupt/spooked consumers' stead, in order to get business orders up and people employed again, so that consumers can start buying lots of stuff again. 

The problem is that people who have lost their jobs because other people lost their homes and stopped buying stuff, are now losing their homes and have stopped buying stuff, thereby adding to the viscious cycle.  This is a mess, folks.  I don't know if the stimulus bill will work, but I haven't heard any better ideas. 

Foreclosures are spreading by epidemic proportions, expanding beyond a handful of problem states and now affecting almost 1 in every 8 American homeowners.

It's an economic role-reversal: The economy, driven down by the collapse of the housing bubble, is causing the housing crisis to spread.

Figures released Thursday show that nearly 12 percent of all Americans with a mortgage — a record 5.4 million homeowners — were at least one month late or in foreclosure at the end of last year.

That's up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007. In addition, the numbers now include many once-qualified borrowers who took out fixed-rate loans.

Data from the Mortgage Bankers Association also showed that a stunning 48 percent of homeowners who have subprime, adjustable-rate mortgages are behind on their payments or in foreclosure.

The reckless lending and borrowing practices in states like Florida, California and Nevada that were the epicenter of the problem are no longer driving up the nation's delinquency rate.

Instead, foreclosures are being fueled by a spike in defaults in places such as Louisiana, New York, Georgia and Texas, where the economy is rapidly deteriorating and unemployment is climbing.

"It's jobs. People are losing their jobs left and right," said Houston real estate agent Michael Weaster.

On Thursday, the Labor Department said new unemployment claims last week totaled 639,000, lower than expected, but still at elevated levels.

That trend highlights one of the biggest challenges confronting the Obama administration's mortgage-relief plan launched this week. While the $75 billion plan could help change the loan terms or refinance up to 9 million homeowners, unemployed borrowers will have a hard time qualifying.

The key to the housing market is what kind of workers are losing their jobs. Unemployment for people with college degrees, some college education or technical training — those most likely to own homes and have prime fixed-rate loans — has nearly doubled over the past six months, according to the bankers association.

To give debt-burdened homeowners a little more muscle to negotiate with their lenders, the House on Thursday passed a bill 234-191 that would to give bankruptcy courts the power to reduce mortgage payments.

The legislation would give bankruptcy judges — who now can modify loans for cars and student loans but not for primary residences — new power to cut the interest rate and principle on a home mortgage.

The Senate is expected to take up the measure in a couple of weeks.

The only bright spot in the foreclosure report was that the devastation wrought by subprime ARMs is waning. Their 30-day delinquency rate continues to fall and is at the lowest point since the first quarter of 2007. Most of those types of loans have made their way through the system as lenders stopped originating them in the first half of 2007.

That offers little comfort to Florida, where 60 percent of homeowners who have a subprime ARM are at least one payment behind and 1 in 5 of all mortgage holders are not current on their loans.

And while the worst is not over for Florida, the problems appear to be just beginning in once-healthy markets like Houston and New York.

The number of unsold homes in Houston skyrocketed to a 17-month supply in February from eight months in January because homeowners fear they will be in financial straits soon or already are, said Weaster, of Century 21.

And in the New York area, where the financial industry is handing out pink slips like ticker tape, homeowners who once had good credit are defaulting at an increasing clip.

Wednesday, March 4, 2009

Sirota: 'Too big to fail' means too big to be private

Or, as Nassim Taleb said, if it might have to be bailed out tomorrow, nationalize it today.  As Sirota explains, there is free-market thinking behind this prescription.  It's about keeping a clean separation between what is government's, and what is the private sector's, without all this quasi-national bailout baloney and airs of "protecting capitalism" with no-strings government financing.

If It's 'Too Big To Fail,' Then It's Too Big To Be Private

By David Sirota

March 3, 2009


I appeared yesterday at the top of Neil Cavuto's Fox News show to discuss the potential for financial industry nationalization. You can watch the clip here. I tried to use the opportunity to float a fairly simple - and old-fashioned - concept: If something is "too big to fail," then it's too big to be in private hands.

The term "too big to fail" is a euphemism for any institution that is so important to the entire nation's most basic well being, that society cannot let that institution fail. This is why one of the foundational principles of civilized society has always been nationalization - ie. government control - of the institutions that are "too big to fail": institutions like the military, whose failure would mean a basic loss of national security; law enforcement, whose failure would mean a basic loss of civil order; and infrastructure construction, whose failure would mean the crumbling of commerce. The government, as the most powerful representative of society as a whole, runs these institutions/services because they are too important to be allowed to fail.


Unfortunately, the hard-right and center-right ideologues who ran the government for the last 30 years gutted the basic laws and enforcement mechanisms (financial regulations, anti-trust prosecutions, etc.) that prevented a myriad of financial institutions from becoming "too big to fail."


The American Insurance Group is the best example of this - a company that, as the New York Times notes, essentially based its business on a risky scheme to sell insurance to other corporations against colossal housing market failure. This allowed huge banks and investment houses to effectively offload their own absurdly risky housing investments by "insuring" those investments against loss with AIG - a shuffling of paper and deep-frying of books that let those banks leverage themselves even more, sans regulation. When the housing bubble burst and the banks called in their insurance, AIG was asked to pay up, and it couldn't, because it never expected to have to back up its insurance policies. But because AIG was so big - because it had so singularly cornered the market on such insurance and had essentially become the insurer of last resort - it couldn't eventually pay up, its failure would result in a cataclysmic ripple effect of defaults.


So now everyone is focused on the short-term question: Should we temporarily nationalize AIG and the biggest banks, or should we keep forcing taxpayers to get all the downsides of nationalization (ie. throwing money at the companies) without any of the upsides (i.e. ownership of the companies, power to throw out management, etc.)? Obviously, I'd say the former, but I'd go a step further: When it comes to an AIG - a company that is effectively ensuring the rest of the economy against loss - we shouldn't temporarily nationalize it, we should permanently nationalize it, or at least its core functions.


As I wrote in an earlier post, we shouldn't be afraid of permanent nationalization, because it is - thankfully - already all around us. Indeed, in some sectors of the economy, we have embraced nationalization thanks to an era where our government at least considered the possibility that if a function or service or entity is too big to fail, it is too big to be private.


That era's government believed a minimum retirement benefit and health insurance for the elderly is a "too big to fail" kind of function - too important to be subjected to the whims of the private marketplace. So we now have government-run Social Security and Medicare. That era's government also created the Pension Benefit Guaranty Corporation, which nationalized the catastrophic insurance of pension plans. It forces corporations to pay premiums that underwrite a fund that pays out the pensions of companies that go bankrupt. The government deemed that function - catastrophic pension insurance - as a "too big to fail" kind of function, understanding that if the service was in private for-profit hands, there would be a risk of that private venture overleveraging itself, and then failing when it needed to pay out retirement benefits to millions of Americans.


Now, clearly, it's time to resurrect the principle that if something is too big to fail, it's too big to be private. We can resurrect that principle both through far tougher regulation that prevents individual private institutions from ever becoming so singularly important to our nation,* and by nationalizing the few core functions and services that are probably best left to the government as insurer of last resort. In the former category, that means much stronger financial regulation, and in the latter category it means some kind of nationalization of basic market insurance (and, I might add, health insurance).


If ever there was a time that the country was ready for this kind of back-to-what-made-us-great argument, that time is now.


* A key point here is the word singular: There is some safety in diversification and numbers - for instance, if a crucial function of the economy is handled by multiple businesses, then the failure of one of those businesses should (theoretically) pose much less danger to the overall economy than if that business was so singularly or monopolistically crucial as in the case of AIG.

Monday, March 2, 2009

Economy, Iraq pullout plan boost Army recruitment

Down economy boosts military

Enlistment figures spike

By Bryan Bender

March 1, 2009  |  Boston Globe

Sunday, March 1, 2009

DC Johnston on REAL tax reform

Pulitzer-prize winning journalist and author, David Cay Johnston, is the foremost expert (outside of those who sell tax shelters) on America's crooked tax system, which favors the wealthy and corporations. 

For example, did you know that today more than 25 percent of corporate profits go through the Cayman Islands?  Did you know that the four major U.S. sports leagues receive more in taxpayer subsidies than they do in profit?  Did you know that security alarms cost about $1.8 billion per year, every time the police have to go investigate an alarm, when over 90 percent of calls are for false alarms? 

So, here's a DCJ two-fer for you:

Study: Networks favor GOP candidates

Well, well, well, whaddya know?  Big ups to my Hoosiers!

Not that this study is going to change anybody's mind one bit, if they've already decided that the corporate-owned network media (for some inscrutable reason) favors Democrats.

'Liberal bias?'  IU professors find network TV election coverage favors Republicans

February 24, 2009

The myth of Social Security's insolvency

There Is No Social Security Crisis
By Paul Waldman
February 24, 2009 |

There's a time-tested way to curry favor with the permanent Washington establishment. That is, having David Broder praise you for being "responsible" and being considered a Very Serious Person by the Sunday shows. All you need to do is proclaim ominously that entitlements are a ticking time bomb, a looming storm on the horizon, a hungry beast ready to devour our nation's finances, or whatever metaphor you find most frightening. The more unpleasant the solution you propose -- tax increases are good, but benefit cuts are even better -- the more the Beltway Brahmins will approve.

So yesterday's White House entitlement's summit, which appeared, when announced, to repeat the conventional doomsday wisdom, wasn't too much of a surprise. And indeed, at various times over the past couple of years, President Obama has seemed to suggest that he will be addressing this thorny long-term problem, leading to no end of heartburn among progressives who view Social Security as one of the cornerstones of the American social contract.

But as he has made clear, Obama is not unsheathing his blade to begin hacking away at our government pensions. Nonetheless, because conservatives will continue to conflate issues that should be separate and to further the assault on Social Security launched at the program's enactment in 1935, it's an opportune time to get a few things straight. The most important is this: There is no Social Security crisis.

If there is an "entitlement crisis," it's a crisis in Medicare. But as Ezra Klein explains so well, there really isn't a Medicare crisis, either. Medicare's funding problem is a problem of the ballooning cost of health care in general; fix that, and you've fixed the Medicare problem.

The myth of the "Social Security crisis" is so pervasive and so pernicious that it's necessary for those of us who actually believe in the program to respond to the crisis-mongers whenever we can. And they've got muscle -- witness the recent round of full-page newspaper ads featuring a looming iceberg and screaming headlines about the $56 TRILLION!!! we're supposedly in the red (these are funded by hedge-fund billionaire Pete Peterson, the Daddy Warbucks of the entitlement fear factory). So let's examine what the crisis-mongers say, and what the truth is.

For years, we've been told that Social Security is "going broke." It is also often said that at some future point, the program will "run out of money." Just last week, The Washington Post said matter-of-factly that "Social Security is projected to run out of money by 2041." This implies that at some future date, elderly recipients of Social Security will receive checks in the amount of $0, all the money having disappeared.

This is simply bogus. The truth is that the system is quite healthy and can meet all its future obligations with only minor adjustments or perhaps no adjustments at all, depending on what happens to the economy over the coming decades.

Before we get to that, let's remember how Social Security works. The payroll tax on today's workers is used to pay out benefits to today's retirees. When you retire, your benefits will be paid by people working then. (Of course, to many conservatives, a system built on this kind of mutual obligation is redder than Joe Stalin's underwear.) For some time now, the taxes being paid in have exceeded the benefits being paid out. What's left over goes into that famous "Social Security trust fund," also known as the Social Security surplus. The trust fund is still growing; in 2007, $179.3 billion was added to the fund, bringing its total to over $2 trillion.

If we weren't concerned about the future of the program, we could just take every bit of the collected Social Security taxes and pay them out in (extremely generous) benefits. That wouldn't be very smart, though, because that would leave us with nothing left over for the day when we start collecting less in taxes than we need to pay in benefits.

Enter the baby boomers, that endlessly self-absorbed, blood-sucking leech of a generation (I kid). Boomers have just begun to retire; in a few years, their numbers will cause the system to pay out more than it pays in. According to the Social Security trustees, who are responsible for overseeing the system, this will happen in 2017.

The prophets of doom believe that this date -- 2017, remember it, because they'll always bring it up -- is when the sky will tear loose from its moorings and begin hurtling toward our heads. But here's the thing: The period of benefits exceeding tax payments that is supposed to begin that year is exactly the reason why the Social Security surplus exists in the first place. We keep adding to the surplus every year precisely so that it will be there to draw on when we need it. And the baby boomers' retirement is when we'll need it.

But ah, you say, what happens when the trust fund is exhausted? Isn't that when all hell breaks loose, as the system truly "goes broke"?

No. The system will never "go broke." If you listen to the most commonly used estimate (we'll get to its inherent problems in a moment), the trust fund will run out in 2041, 32 years from now. "Even if a trust fund's assets are exhausted, however," the trustees write, "tax income will continue to flow into the fund. Present tax rates are projected to be sufficient to pay 78 percent of scheduled benefits after trust fund exhaustion in 2041 and 75 percent of scheduled benefits in 2082."

Like anyone else, I'd much prefer getting 100 percent of my benefits, rather than 75 percent of my benefits. But a "broke" system would give you zero percent, so if 75 percent is what the system can pay, I'll take it. A system that pays 75 percent of benefits isn't great, but it's not a disaster either.

Now we get to the reason why the system may actually be able to pay all its benefits. If you're going to make a prediction about tax revenues coming in over the next 75 years, as the Social Security Trustees must, you're going to have to make some assumptions about the economy. The stronger the economy is, the more people will be employed and the more they'll be earning, so the more tax revenue we'll have. The weaker the economy is, the less revenue we'll have. So what do the trustees assume about the strength of the economy? It turns out that their assumptions are remarkably pessimistic.

The trustees actually make three sets of predictions: a "high cost" prediction (the pessimistic one), a "low cost" prediction, and an "intermediate" prediction. The intermediate prediction is the one that gives us the 2041 date for the exhaustion of the trust fund. But it isn't just the "high cost" prediction that is pessimistic -- all three are.

As bad as things are right now, it's important to remember that the economy is going to recover from our current crisis. And after it does, we'll experience up periods and down periods, just as we have before. Although nobody can say what the economy is going to be like 30 or 40 years from now, the best tool we have to predict long-term economic growth is past performance.

But for some reason, the trustees are of the opinion that in the upcoming decades, the economy is going to grow at a far slower rate than it has. Although gross domestic product growth averaged 3.1 percent from 1966 to 2006, all three of the trustees' projections assume GDP growth lower than that. Even the optimistic "low cost" projection assumes that GDP will average 3.1 percent only until 2017, after which it predicts that growth will slow, averaging 2.9 percent for the rest of the 75-year window they're projecting. The "intermediate" projection assumes that economic growth will average 2.1 percent after 2017.

That's a prediction of pretty anemic growth, but that's the "intermediate" projection which everyone uses when talking about the future of Social Security. And perhaps it will prove true. But it seems that it wouldn't be too radical to assume that the "low cost" projection -- the one in which the economy over the next 75 years looks a lot like it has in recent decades -- is the one that will be closer to reality.

And what happens if you accept that low-cost projection? When does the Social Security trust fund run out in that case? Never. It never runs out (here's the graph, if you're interested).

The Social Security trustees aren't the only ones who have tried to crunch these numbers; the Congressional Budget Office estimates that the trust fund will be exhausted in 2049, not 2041, and that at that point tax revenues will cover 84 percent of benefits, not 78 percent. But looking at all the various projections, one has to conclude the following:

At some point, somewhere between 30 and 70 years in the future, the Social Security trust fund may be exhausted. If it is exhausted and taxes are not raised, beneficiaries will see a reduction in benefits that will be meaningful, though not catastrophic.

If that's how you understand the issue, it suggests that a fix to ensure that benefits end up where they're supposed to needn't be anything radical. You could raise the cap on Social Security taxes, for instance (the tax is only paid on the first $106,800 of income, meaning most people pay it on 100 percent of their salaries, while Alex Rodriguez pays it on less than 4 percent of his salary). If, on the other hand, you think the system is in crisis and is going broke, you're going to favor much more painful solutions.

Thankfully, President Obama seems to understand the difference between a manageable problem and a looming calamity. "Social Security, we can solve," he recently told The Washington Post with a dismissive wave of his hand. But we know that the conservatives will continue to harp on the myth of the Social Security crisis. One positive result of the economic meltdown is that they've been deprived of the main weapon they had in their arsenal on this issue: an alternative proposal. Until last year they had an analysis of the problem (the program is going broke) and a solution (privatize it). They could claim, however disingenuously, that they were offering a painless alternative: Put Social Security funds in the stock market, and everyone will get rich.

No one's going to say that now, of course, and probably not for a long time to come. Former President Bush's 2005 attempt to partially privatize Social Security was a spectacular flameout, and that was when the stock market was riding high. So all the Social Security Chicken Littles have to offer now is tax increases (unpopular) and benefit cuts (really unpopular).

The real problem is not that their solution to the crisis is unpalatable. It's that there is no crisis. Don't let them tell you otherwise.