01 November 2012

Endorsement.

The Economist will most likely reveal its endorsement for America's 2012 presidential election today.  I need to decide and record who I support, and why, if only to prove to myself that I'm not The Economist's mindless stooge.  So while I reserve the right to alter my view based on what they or anyone else might say, I want to reveal my own 2012 endorsement here, now.

It's Obama.

Let's get this out of the way: I'll freely concede that I'm drawn toward Romney by the tribal instinct to see a fellow Mormon in the White House.  A President Romney would probably be too circumspect to ever invite President Monson over to the Oval Office, but I want that to be a possibility.  I want to see the photos of Secret Service details in white suburbans outside the temple in Chevy Chase.  I think it would be a fitting capstone to the unprecedented visibility Mormons have enjoyed in the public eye over the last couple years, and it could (just maybe!) help more of the public at large to feel some spark of pride for America's scrappy homegrown religion.  Which is mine.  Which I love.  I even think that affinity could nudge me, subconsciously maybe, to overlook some of Romney's biggest weaknesses.

The problem is that I don't know which weaknesses are his and which he has imported wholesale from the debilitating groupthink of the Republican party as currently constituted.  I haven't really studied his whole record, but I suspect that I would have little to object to in a Mitt Romney circa 2004 running for President.  But in 2012 I have to deal with his disavowal of universal health care, his refusal of the 10-to-1 spending cuts to tax increases hypothetical, and all the wacky things he's said about China and Israel, among others.  Climate change.  Immigration.  Which of these things would he really stick to as president?  I hope none of them, and if he thinks he can get elected he must be betting on many moderate voters hoping the same thing.  But I don't know, and that uncertainty is bad for America's relations with the world's governments and businesses.  It also just makes me feel yucky about the state of our political discourse.  I hate that Romney has to base his election strategy on the the belief that people will assume he's lying.

Maybe Romney would preside over the country similarly to the way he governed Massachusetts -- as a wonky pragmatic centrist.  I pray such will be the case if he's elected.  If he's not, I pray that it'll jolt the Republicans into an overhaul of the system which has nominated electable moderates like Romney and John McCain only after forcing them to transform into chest-thumping far-right blowhards.

Obama is not a perfect candidate.  He's been ineffective at collaborating with Congress (mostly not his fault, but a reality) while being frighteningly adept at expanding executive power.  I can think of terrifying things about a second Obama term.  None is scarier than the prospect of the GOP maintaining its status quo.

08 February 2012

Something I wrote a while ago at byupr.com on Occupy Wall Street.

also here: http://www.byupoliticalreview.com/?p=102650

Wall Street was occupied for almost 2 months before the protesters were evicted last week, and it’s way past high time Eternal Regression weighed in.  I know there are a lot of strong opinions about the Occupy Wall Street movement, but I hope to be fair and even-handed.  It is my aim that no matter what corner of the political spectrum you hail from, you can find something in this column that makes your blood boil.  Just kidding.  Kind of.

Fact: any decentralized movement invites appropriation by uninformed wackos, and there are a lot of them in OWS.

Other Fact:  any economic system invites abuse by unscrupulous powermongers, and there are a lot of them in our current iteration of capitalism.

Less obvious fact: there is an essential conversation hiding in all of this that reasonable people need to have.  Let’s be those reasonable people.

On Occupy Wall Street

Full disclosure: most Occupy Wall Street rhetoric I’ve encountered drives me CRAZY.  It’s shrill, it’s self-righteous, and the proposals being made tend to outweigh the knowledge of the people making them.  (I feel the exact same way about the Tea Party, as does my esteemed Political Review colleague Brandon Rollins)  Of course, it’s a pretty amorphous group: the protesters have gone out of their way to avoid appointing any kind of authorized spokesperson, so nutcases and clowns have eagerly hopped aboard.

(On a local note, I’ve seen sidewalk-chalk injunctions around campus to “OQπ Provo.”  Clever!  But I’ve also seen chalk urging passersby to “OQTπ Provo.”  Can someone tell me what that means?)

That said, there are reasonable people involved, including some of the movement’s central figures.  (Here’s one of the more intelligent lists of demands I’ve found).  While OWS may be giving expression to a preexisting undercurrent of organic populist rage (more on that later), its brand has a definite and verifiable genesis.  In July of this year, the beautifully designed Canadian anti-consumerism magazine Adbusters created the hashtag #OccupyWallStreet and registered the domain name occupywallstreet.org in support of their campaign to make 17 September a day of protest against Wall Street . . . and the rest is history.  So inasmuch as Kalle Lasn, the editor of Adbusters, can be seen as the architect of OWS (although he’s been careful not to style himself as such), I’m interested in what he says its goals are.  In an interview with Forbes magazine, he said

We would like to see a 1% Robin Hood tax on all financial transactions. We want to push for that. We want to kill some of the global casino and one way to do that is to slow down the fast money, the derivatives markets, the credit default swaps and exotic financial products that wiped us out in 2008; a way to slow that market is with a tax.

This idea, a version of which also currently favored by some European leaders, is essentially a “Tobin tax” -- the brainchild of an economist who got both the Nobel prize and the John Bates Clark medal.  You can debate its merits, but anti-capitalist war-cry it is not (as evidenced by the fact that The Economist deems its merits at least worthy of debate).  The folks at Adbusters may oppose consumerism’s gaucheness and ubiquity, but they’re invested in the system of free exchange; they’ve got to sell magazines, after all (at a newsstand price of $8 an issue), and I would guess their success with OWS has sparked a circulation boom.  Behind the impassioned, marketable façade, they’re gunning for more of a readjustment than a revolution. 

My point is that right-wingers who dismiss the self-proclaimed 99% as a rabble of Maoist loonies oversimplify.  And what’s more, they do so at their peril.  No less a pro-market source than The Economist reports that over the last three decades, the average incomes of the top 1% of earners in America really have skyrocketed (although income inequality among the other 99% has stayed roughly the same).  Many detractors of OWS will no doubt argue that this level of income inequality doesn’t matter, but there have been signs that the protests manifest a more broad-based malcontent.  Polls suggest that public support for the protesters is waning, but the defeat of right-wing-darling ballot initiatives in Ohio and Mississippi this month is being hailed by many as a bellwether pointing toward general dissatisfaction with the Tea Party agenda.  Whether and when the Occupy movement will engage in the more traditional elements of the democratic process -- you know, elections -- is an open question, but the above-cited interview with Mr. Lasn suggests that he, for one, isn’t too keen on the idea.  He insists OWS is “not going to hop into bed with the Democratic Party the way the Tea Party did with the Republicans. Once you do that, you’re dead.”

But is the Tea Party dead?  To me they look alive enough to have completely paralyzed Congress.  In my experience, their sympathizers tend to be dismissive of the Occupy movement and rabid in their defense of free markets.

On the Free Market

Full disclosure again: I like the free market.  I think that in a broad sense it’s probably the most powerful force in the world for bringing more economic freedom to more people. 

As an economics major, I interact with a lot of people who also love the free market.  In fact, I interact with a lot of people who maintain an almost religious loyalty to it.  People of this ilk, in my experience, tend to be those who drip with the most disdain when talking about OWS protesters.  To them, “regulate” is an an unambiguously naughty word and every imbalance in the world exists because of the constraints placed on the free market rather than in spite of them.

Like I said, I like the free market.  But only really new or really ideological students of economics can sincerely support removing all of its fetters.  That’s because the neoclassical economic model only predicts efficient resource allocation in a market where certain assumptions are met: all consumers are rational and have perfect information, all transactions are costless, and all property rights are clearly defined and unfailingly upheld, to name a few.  Have you ever lived in this world?   In the world I live in, market failures (the breakdown of the neoclassical assumptions) must be attenuated by governments that can protect property rights and set up the rules of the game to favor the dispersal of information (e.g. education) and the reduction of transaction costs (e.g. financial markets).

Because law enforcement and free information are public goods, a totally unrestricted market will naturally undersupply them, and since those things are necessary for the market to function properly, its efficiency will be compromised.  But no government, no matter how strong, can conjure up a perfect free-market world where all the assumptions hold -- and even if it could, the neoclassical model assures only allocative efficiency, and makes no claims about equity.  It maximizes the size of the proverbial pie, but might give a few people huge slices and leave mere crumbs for the rest, which I’m not comfy with.  The point is, I think the some naïvely die-hard free-market cheerleaders fail to see that markets and governments depend on each other to survive, and they work best when each curbs the excesses of the other.

So here’s the conversation I want to have.

In his book Supercapitalism, former Clinton labor secretary Robert Reich presents this tension as the characterizing trait of democratic capitalism.  Ideally, the free-market responds to the needs of consumers, and the democratic process responds to the needs of citizens.  But almost every consumer in America is also a citizen.  Reich argues that the system worked reasonably well in the 50s and 60s, that nostalgic time when upward mobility was regular if not meteoric and society was stable if boring.  In the last few decades, technological advances have accelerated the pace of commerce.  This has not only made companies more accountable to their consumers and investors, but widened the base of investors.  In the first half of the century, the stock market was the exclusive realm of society’s upper echelon, whereas now most middle-class people invest in the stock market in a variety of ways, including through their retirement accounts. 

The upshot is that companies are driven to provide more and more value to their investors, in the form of less stable jobs with fewer benefits for their employees, less regard for communities or the environment, and yes, lobbyists who persuade government officials to champion the company’s well-being.  While the results have been fabulous for consumers -- more quality products at better prices than ever before -- the very things that have led to that consumer value have in some cases taken away from our quality of life as citizens.

The story Reich tells (published in 2007, just before the crash) looks awfully prescient in light of the Occupy protesters’ complaints -- income inequality, high unemployment, inadequate education, corporate malfeasance in various and sundry forms.  Many point to the middle of the 20th century as a golden time when jobs were stable, incomes were good, and the American dream was accessible.  But one of the main hallmarks of that era was that government and business leaders (as well as labor leaders) worked hand-in-hand to create that stability, and it was in the best interests of all parties to do so.  It was common for government regulations on a given industry to be drafted by the corporate leaders in it.  A few big firms dominated each industry, and the government helped keep out new (and especially foreign) competitors.  If the government and big business are in bed together now, the 50s and 60s saw them positively spooning.

But things changed.  Despite the best efforts of industry figures (both public and private), nearly all industries over the last few decades became more competitive -- largely through improving technologies -- and began favoring the consumers who bought from them over the citizens they employed.  As I said before, this has by no means been an unambiguously bad thing, since companies have increased their value for investors and customers manifold.  But there has been no corresponding technologically-driven acceleration in the power of governments to respond to citizens, and as a result the balance of power has shifted.

I don’t advocate a return to the mid-century oligopoly system (even if I thought it were possible, which I don’t).  And yet some kind of change is in order -- not an overthrow of democratic capitalism, but a tune-up.   The rules that provided so much stability and social mobility 60 years ago simply don’t function the same way in today’s changed world.  I don’t know what the outlines of a “superdemocracy” to balance out the excesses of supercapitalism would look like, and it would probably have as many different faces as people talking about it. But it’s a conversation we’re overdue for, and OWS is the biggest piece of evidence I’ve seen so far that our country is ready to renegotiate the link between democracy and capitalism.  I don’t like most of what the protesters say.  Railing against corporate greed is useless; corporations are designed to maximize profit, and it just so happened that in the 50s corporate profit was more or less aligned with the overall social good.  We need is to exercise our rights as citizens to design a system where those interests overlap again, and I see the Occupy protests as an opportunity to start doing so.

So far, I think the Occupy movement has been good for our democracy’s health.  By effectively using media (both old and new), they’ve claimed the mantle of the silent majority and made political entrepreneurs aware of new constituencies. And they’ve amplified the range of ways to contribute to public discourse, inspiring a number of interesting ideas for adaptations of their method.  The protesters’ declaration states that when the democratic system fails, “it is up to the individuals to protect their own rights, and those of their neighbors; [and] that a democratic government derives its just power from the people”.  That may be boilerplate, but it’s pretty solid, and we don’t all have to identify with the protesters’ anti-corporate zeal to accept their invitation to build our “citizen muscles” up to something nearer the level of our consumer ones.

Sure, there are freeloaders, hooligans, and outright morons who count themselves among the Occupy protesters.  And of course there are plenty of robbers, cronies, and other manner of weasels who work on Wall Street.  Let’s move past that.  Painting either side with that broad of a brush is irresponsible, counterproductive, and frankly boring.  What we have is a historic opportunity to address the demonstrably suboptimal way our political and economic systems interact.  It’s not about the hippies or the fat cats.  It’s not about the absolute evil of capitalism of the existential threat of socialism.  It’s about living in a world that has changed more in the last century than at any other time in its history, deciding what we expect of our country, and talking about how to achieve it.  When people’s passionate commitment to the mythologies of either the right or the left make them incapable of reasonable, civil discourse, those beliefs are socially destructive and will lead to a country where everyone is worse off.  In an interview with The New Republic, the aforementioned Adbusters chief Kalle Lasn said of the Occupy Wall Streeters, “They have been successful in launching a heavy duty conversation in America about the state of America … . It doesn’t get any better than that.”  See?  There’s at least one thing even Kalle Lasn and I agree on.  Let’s build from there.

02 October 2011

The No-Brainer.

Let me say some words sure to make you swoon: Tax Reform.

I know; I know. You’re swooning, but it’s more likely from stupefying boredom than from ardent passion. Assuming you’ve even made it past that sleepytime first paragraph, you may already be suffering from increased drowsiness and slower metabolic cycles. If you’re a politician, you might well be fast asleep.

And that last bit worries me. As near as I can tell, tax reform is getting ignored in the political arena precisely because it’s too sensible. At the buffet table of election-cycle rhetoric, the most popular items are the juiciest -- words like Ponzi Scheme, Class Warfare, and Throwing People Under a Bus. Tax Reform is the nondescript jar of bran, attracting nobody’s attention, but absolutely necessary to make things flow smoothly.

In 2010, President Obama set up an independent commission to identify “policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.” One of the star ideas in its report (known as Simpson-Bowles after the committee’s co-chairs) was to simplify our nation’s labyrinthine tax code.

They gave lots of good reasons. For starters, the report found embedded in the tax code $1.1 trillion worth of “tax expenditures,” a mildly disguised form of government spending that benefits certain groups by requiring fewer taxes from them, in the form of deductions or exemptions. Those tax expenditures become opaque channels for influence-peddling, encouraging corruption. The report also condemned the current tax code as “hopelessly confusing and complicated,” noting the high cost of searching for loopholes or employing tax preparers to do so. The code “presents individuals and businesses with perverse economic incentives instead of a level playing field.”

I agree with all these criticisms: a complicated tax code is by nature regressive. That, is the poor are the most likely to pay the nominal rate they’re assigned, since they can’t afford to hire accountants with the expertise to guide them through the Enchanted Loophole Forest. The similarly complex corporate tax code reduces the competitiveness of American firms by diverting resources away from productive enterprises and into the search for tax credits and exemptions. And of course there’s the incentive to pour money into lobbying Congress for more government largesse in the form of tax expenditures. By eliminating loopholes in the tax code, the government can lower rates for everyone, cut back incentives for corruption, and actually bring in more tax revenue than before. The big losers are the interest groups who profit from the impenetrability of the current system. And accountants, I guess. Sorry, accountants.

Simpson-Bowles estimated that simplifying the tax code would lead to $785 billion in deficit reduction over the next eight years. That’s a not insignificant amount, even against the $15 trillion national debt. But tax reform’s more important effect is to reduce inefficiencies that constrict our business climate. A clearer, leaner tax code should decrease evasion rates since audits are simpler and therefore cheaper. It should spur the growth of businesses, which can put less money into unproductive tax lawyers and more into expanding their services. Above all, it’ll allow us to gather more revenue while lowering overall tax rates -- so everyone has something to crow to their constituents about.

In fact, that’s one of my favorite things about tax reform -- a lot of people agree on it. A lot of diverse people. Alan Simpson and Erskine Bowles, the co-chairs of that committee whose report I’m talking about, are a former Wyoming Republican senator and a former Clinton Chief of Staff, respectively. (Although, really, no title could convey greater credibility than a name like Erskine, am I right?) The suggestions of the committee, including tax reform, were strongly championed during the debt crisis by a bipartisan group of consensus-minded senators calling themselves the Gang of Six. I perceive a general dearth of angry ideologues hollering about how much they hate the idea of reforming the tax code.

And that seems to be the problem with the idea. If we can’t yell about it, why talk about it at all? In a political climate that treats compromise like a stinky old sock, tax reform stays at the bottom of everyone’s list precisely because it’s on everyone’s list. As Congress sweats over ways to cut the deficit in the next few months, reforming the tax code should be a no-brainer. Democrats can point to increased government revenues that can help keep social programs afloat. Republicans can point to lower tax rates and a more business-friendly environment, both of which will help drive economic recovery. Both can pat themselves on the back for helping trim the deficit. But it’ll only happen if politicians think a piece of sensible, bipartisan progress will be an asset rather than a liability in the minds of constituents. That’s an admittedly big “if”, especially with the 2012 election looming. But this could also be an opportune moment for tax reform – the rotten aftertaste of gridlock is still strong in the electorate’s mouth. I can only speak for this voter, but after the debt crisis goat rodeo, sensible bipartisan progress is looking pretty good.

19 July 2011

On governance in the Information-Overload Age.

There’s been a lot of wringing of hands lately about how broken the American political system is, and the decline of the objective ideal of the media, and whether democracy even still makes sense anymore. All of which, I think, are important and thought-provoking things for us to be wringing our hands over. Let’s wring those hands for all they’re worth.

But we Americans are bush leaguers. I’m in Argentina right now , where political fatalism is a kind of national pastime. The president continues consolidating power and muzzling or coopting the press, while she coasts to victory after victory on a wave of welfare and patronage. People are so inured to bad behavior in government that their default assumption is that every candidate is corrupt, and in a country where voting is mandatory, this indifference translates into a benefit for the incumbent -- the devil we know over the devil we don’t. Corruption and disrespect for the rule of law raise the cost of transactions, hampering the healthy function of the market and inhibiting a more equitable distribution of the wealth that, despite it all, continues pouring into the country. The popular conception (and here I’m just repeating what I’ve heard a lot of people say) is that the money the government raises from agricultural export taxes goes into welfare programs for poor but able-bodied people, discouraging them from seeking employment and making them into loyal supporters (and, according to some, thugs and goons) of the government. Thus the government continues to win elections without doing anything to substantially improve the lot of its citizens. An Argentine friend of mine averred to me last week his sincere belief that “This country will never change.” Nor is he by any means alone.

But I’m an American, dammit, and an insistence on always seeing a glimmer of hope in everything has been pounded into me from all sides since birth. For one thing, Argentina’s growth has averaged something like 8% over the last decade, as the government will be proud to tell you. (I happen to be of the opinion that this growth has happened largely in spite of, and not because of, many of the government’s policies, and is precariously dependent on China’s voracious demand for Argentine soybeans. But that’s another post.) If nothing else, this is a good sign for those who believe that economic well-being often brings with it cleaner democracy.

I’m probably one of those people, and I’ll tell you why. Because when people are richer, they tend to consume more of everything, including education and news, and a more informed and engaged electorate is bound to make better decisions. A brilliant paper by Claudio Ferraz and Frederico Finan of Berkeley found that in an election coming shortly after a national audit of local government performance in Brazil, towns with a radio station were more likely to vote corrupt politicians out of office. Hooray for media! An even higher-tech (but unproven) idea comes from India, where the New York Times reports that the chief minister of Kerala state installed a webcam in his office, broadcasting to the internet 24/7. Is it going to eradicate corruption? No. Is it a political gimmick? Almost certainly. But in a certain sense it sets the bar a bit higher for everyone else, and more immediately, it reflects the potential for technology to make government more transparent.

I know, I know. We’re also concerned, like I mentioned at the beginning, that we’ve become too saturated in media, that the signal-to-noise ratio has become imperceptibly weak, that the deafening barrage of ideological voices of every timbre allows us each to retreat into our own echo chamber and bark all the more loudly from the comfort of our detachment from reality. I recognize that these are legitimate concerns, and I’m not blind to them. But back to the Indian governor’s camera stunt -- to me it points up the consistent ability of individual human ingenuity to adapt existing resources to new problems. Everyone, not just collectively but individually, wants to live in a country that is governed cleanly, that gives them the opportunity to learn and work and be safe and full. And I think we’re making progress toward that goal, not just in America but in the world, and I think the difficulties associated with all the world’s information being at everyone’s fingertips all the time are outweighed by the opportunities, because we will take that raw material in our hands and make it into something not only useful but beautiful. Maybe this is just because I’m from a country whose pedigree of irrational hopers far outclasses that of its international footballers. I’m convinced the end of the world is still a ways off -- the Argentines still have a long time to polish their political fatalism. But with a little luck and maybe some webcams in high places, that national pastime might just get ever more challenging .

20 May 2011

On throwing, and getting thrown, under a bus.

Mitt Romney had strong opinions about Obama's speech about (and to?) the Middle East.  Nor was he alone.  The stars of the Republican firmament lined up to deride the president's appalling betrayal of such a beloved ally.  But did the Arab world erupt in celebration of this slap in Israel's face?  No.  It yawned.

That's because Obama hardly said anything new.  The speech was a much-needed clarification of his oft-murky policy, and it even inspired.  But it merely gave voice (albeit a very important official voice) to things everyone already knows about the conflict and its presumed resolution.  The temperature of the Republican response indicates the strength of the American (or at least conservative) public's attachment to Israel.  In an election season, everyone wants to be seen as the most hyperbolic clamorer for America's commitment to Israel's specialness.

I love Israel's specialness.  That sounds snarky, but I don't mean it to.  I sincerely regard it as a special place; I would love to go there someday; and I in no way intend for any of my comments in this post or ever to smell even remotely like anti-Semitism.

But that special place, given its current leaders' actions, is also a national security liability to the United States.  As Israeli governments obstruct Palestinian statehood, they sharpen one of the most powerful recruiting tools available to terrorist organizations who target the United States and its citizens.  I don't pretend that the occupation of the Palestinian territories is the cause of terrorism.  I think it has a lot more to do with widespread systemic failures in the Arab world, notably in education and corruption.  But in the volatile mix of the Middle East's many problems, Palestine acts as a catalyst for extremism-- and more particularly, for the direction of that extremism against the United States.  Why not do everything we can to take that catalyst out of the mix?

Right now I'm not even talking about the justice or morality or predestination of either camp's position.  I'm not even advocating any particular final solution.  At the risk of oversimplifying, I'm talking about American lives.  As long as terrorism exists, Americans at home and abroad will be targets of it.  As long as the Palestinian territories are occupied, there will be more terrorism.  As long as the peace process stalls, the Palestinian territories will be occupied.  It is in the interests of American lives to remove obstacles to the peace process.

Which are legion.  One is Hamas's refusal to acknowledge Israel's right to exist.  One is Israel's refusal to allow Palestinan refugees to return to their homes.  One is the corruption and division within the Palestinian Authority.  There is probably no end to this list, and over most of these things on it we as Americans have little or no control.

But one of the biggest roadblocks to the peace process is continued settlement construction in the West Bank.  While Israeli governments bless the developers building new Jewish suburbs of East Jerusalem -- on land the Palestinians expect to become part of their country someday -- the Palestinians have trouble seeing them as sincere negotiators.  Stopping construction would deprive the naysayers in the Palestinian camp of one more excuse for their reticence.  Meanwhile, I don't see how the construction of new Israeli settlements in the West Bank makes America safer (if you can, let me know; I'm interested to hear it), and I can think of a lot of ways it hurts us.  The benefits to pressuring Israel to stop settlement construction seem to far outweigh the costs.

You might be saying we have little control over where the Israelis build settlements, and you might be right right.  But we send an awful lot of money to them every year, and we could conceivably specify that some of those dollars will only flow to an Israel that only builds within its own borders.  Maybe Israel would decide they value their new settlements more than American money, and it wouldn't work.  But I haven't even heard anyone propose that we try.

Why is there no politician urging us to make at least some of the aid we send to Israel conditional on the halting of settlement construction?  I'm not even talking about demolition, much less any kind of abandonment of the special relationship we have with Israel.  Just Stop Building New Settlements. We are still committed to Israel's existence and security, that I don't question; but I hope we are not committed to (or bound by) their caprices, especially when they undermine our own security.   I'm mostly looking at you, GOP: your irrational and exclusive obsession with Israel runs counter to your much-vaunted national security pedigree -- heck, call it a spending cut; that's pretty popular right now.  I haven't even heard any Democrats propose any kind of substantive pressure on Israel either.  Can we make this a conversation?  Or does AIPAC money talk louder than American lives?

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