Our historian-in-chief-takes the short view

Presumptive commander-in-chief Newt was all for the Iraq invasion.  No surprise there. Presumably, as a member of the Defense Policy Board, he was advising the administration as a historian, just as he did so selflessly for Freddie Mac. In an op-ed published in USA Today on October 16, 2002, Newt delved deep into his knowledge-hoard and came up with the perfect analogy for the prospective preemptive strike:

The only issue is whether the risks are greater now or whether the risks will be greater later. We learned with Adolf Hitler that moving early would have been less expensive and less dangerous and would have saved millions of lives.

The rest of the piece is unexceptionable party-hack boilerplate. The case for war is made in four simple points, QED:

Better Angels in the news

I have long been receptive to evidence that human life is improving -- growing less violent and more fulfilling for more people. I have rejected C.S. Lewis' warning against chronological chauvinism  -- against the assumption that we have more moral, political, social wisdom than our predecessors -- asserting that in fact contemporary international treaties and codas do embody ethics superior to those articulated in ancient scriptures. I have inveighed against boomer-bashing and idolization of the so-called greatest generation.  I have set my face against all forms of originalism.

Thanks to this confirmation bias, I knew the starting premise of Steven Pinker's  The Better Angels of Our Nature: Why Violence Has Declined -- that "violence has declined over long stretches of time, and today we may be living in the most peaceable era in our species' existence" -- before I cracked the book, having read various interviews, Pinker articles and responses.  And yet, within pages of the beginning, I could feel the book changing my world view - sweeping away the vestiges of ancestor worship, golden age nostalgia, boomer guilt, and who knows whatever other mental gestures of obeisance to outmoded authority.   This effect began to register in Pinker's preface:

How, in particular, are we to make sense of modernity of the erosion of family, tribe, tradition, and religion by the fores of individualism, cosmopolitanism, reason, and science?  So much depends on how we understand the legacy of this transition: whether we see our world as a nightmare of crime, terrorism, genocide, and war, or as a period that, by the standards of history, is blessed by unprecedented levels of peaceful coexistence (location 138)...The belief that violence has increased suggests that the world we made has contaminated us, perhaps irretrievably. The belief that it has decreased suggests that we started off nasty and that the artifices of civilization have moved us in a noble direction, one in which we can hope to continue (location 142).

The bettering angels of our nature

Steven Pinker's The Better Angels of Our Nature: Why Violence Has Declined sets out to prove and explain a simple factual premise: that violence of all kinds has decreased dramatically over the course of human history. From that one premise, momentous conclusions follow logically. Ridiculous as it may seem to start commenting on Pinker's case after reading no more than the preface, I can't resist: the terms in which he sets his task themselves have important political implications.

Against gratitude

Okay, not really. But I am personally uncomfortable with overt expressions of gratitude, and while I think this is mainly an emotional limitation on my part, there may be at least the ghost of a reasonable caveat in it.

As a teenager, I took a slightly unsavory pleasure in the science fiction of Robert Heinlein.  He not only entertained but also influenced and repelled me. He once wrote (through a character) that there was something sick at the heart of German civilization, and whether that's true or not, I think that the sickness he condemned clings to him, in a kind of gleeful authoritarianism. At the same time, some fragments of his cracker barrel wisdom stayed with me. One of his quirks, voiced by various favored characters, is an aversion to gratitude. As I recall at this distance, he cast it as a power play of the weak, a form of toadying, or guilt masquerading as love.  I think he's wrong to reduce gratitude to those impulses, though gratitude is certainly alloyed with them.  In a similar vein, though, he ridiculed worship, asking why an ominiscient, omnibenevolent  God would require the saccharine praise of human beings. That was the question that really stuck with me. It gets at the heart of gratitude, since worship is mainly an expression of gratitude to God.

Such gratitude is -- should be -- a spontaneous expression of love. That's how those who voice it understand it.  But why does it express itself in "saccharine" praise?  In a Thanksgiving post, Andrew Sullivan's Dish suggested an answer:

Ezra Klein, what about that Paradox of Power?

It's not often that I feel impelled to dispute a conclusion with Ezra Klein, but today is one of those occasions.

Noting the irony inherent in the fact-set that a) Republicans continue to make sympathetic noises about the Bowles-Simpson plan, b) Obama has floated plans that are both less substantive and to the right of Bowles-Simpson, and c) Republicans reflexively reject -- nay, demonize -- anything with Obama's stamp on it, Klein makes a case that Obama should press "reset" and throw his weight behind the plan:

Either way, there’s no reason Democrats should be rejecting Simpson-Bowles on behalf of the Republicans. And, to be fair, that’s not all that’s going on here: The Obama administration doesn’t like the defense cuts or Social Security reforms in Simpson-Bowles, and they’re skeptical that the tax reform process could really generate as much revenue as the document promises. So their thinking was that they could work off of the Simpson-Bowles proposal and come out with something better.

That’s pretty much what they tried to do in April. But because that plan had Obama’s name on it, it was dismissed as a liberal nonstarter. Their strategy, in other words, was a huge failure, and over the past year, they’ve watched the deficit debate move far, far, far to the right.

Let's leave aside for the moment the question of whether Obama stands to gain now by embracing Bowles-Simpson.  I think Klein misconstrues the cause of Obama's "huge failure" in the spring and summer of this year. The failure lay not in the composition of his plan nor in his abstention from wholehearted advocacy of Bowles-Simpson.  It stemmed from his agreement to negotiate under the debt ceiling deadline, which he not only accepted but embraced as "a unique opportunity to do something big."

Perry's historiography, Newt's 'compassion'

A couple of notes on tonight's GOP foreign policy debate:

1. Perry, good fundamentalist or imitation thereof,  trusts to God to destroy countries he regards as accursed. Asked to name a major threat to the country, he named China, and said that it is destined for the ash heap of history because it is "not a country of virtue." Exhibit A: the millions of abortions the government countenances or encourages. He thus revealed a historiography akin to that of Iranian President Mahmoud Ahmadinejad, who was infamously reported to have said (citing Ayatollah Khomeini) that Israel should be wiped off the map.  Literally, Ahmadinejad said, "The Imam said this regime occupying Jerusalem must vanish from the page of time." That was part of a broader recollection that Khomeini predicted the destruction of four regimes, three of which have in fact "vanished": the Shah's, the Soviet Union, and Saddam's.  Countries that are not "of virtue" get wiped off  the record -- i.e., end up in the ash heap.  Of course, that last image belongs to Marx, another theologian certain in his forecasts regarding history's inevitable course.

Obama's 60-yard punt, continued

Yesterday I suggested that if the Budget Control Act passed in early August was Obama's punt, it may be shaping up as a 60-yarder.  To sketch that out a bit further, consider Obama's short-term and long-term goals: a) to scratch out some immediate stimulus/employment improvement and so increase his chances of re-election; and b) to strike a deal for approximately $4 trillion in long-term deficit reduction, "balanced" by his lights.  Some thoughts on his progress:

a) Obama does want to cut $2-3 trillion in spending over ten years, including by controlling growth in Medicare and Medicaid spending. Approximately $2 trillion in cuts are now current law, or about to be.  If and when new revenue is put on the table, the sequestered cuts may be reduced and/or restructured, but they are there as a baseline.

b) He would be content with $1.2 -- $1.5 trillion in additional revenue over ten years, compared to what we'd have if all the Bush tax cuts were extended. That is roughly $2 trillion less than would result from letting all the Bush cuts expire.

c) He is seeking to get a (hopefully improved) version of his busted grand bargain with Boehner passed piecemeal by Dec. 31, 2012 -- to be built on thereafter if the election goes well and the economy recovers.

d) He is now the one holding "hostages"  -- the Bush tax cut expiration and the $600 billion in sequestered defense spending cuts.

Obama pulls a trigger -- and takes two hostages

After the deal that become the Budget Control Act was announced on July 31, I repeatedly voiced the fear that Obama would go wobbly on the $600 billion in defense cuts that would allegedly be triggered if the supercommittee failed:

My fear is that Obama will once again turn the trigger on himself -- in this case, the large (if back-loaded and ultimately unenforceable) defense cuts that go into effect automatically if the supercommittee can't agree on a package. Would any president really suffer the defense budget to be cut by fiat, even notionally?  Not this president, I fear.  Look again at his rationale for not squeezing another trigger last December -- the scheduled expiration of the Bush tax cuts:

And the reason is because this is a very unique circumstance. This is a situation in which tens of millions of people would be directly damaged and immediately damaged, and at a time when the economy is just about to recover.

A mandated $750 billion reduction in projected defense spending over ten years is also "a unique circumstance." I can just hear it: "I cannot allow the security of the United States to be compromised..."

Wrong!  While Panetta forms a contrapuntal-but-harmonious* chorus warning that the "sequestered" cuts would "tear a seam in the nation's defense," Obama has declared that he's perfectly ready to let those cuts go forward if Congress does not replace the automatic cuts with a "balanced" plan for equivalent or greater reduction. That's a two-fer: he is trying to make Republicans feel the brunt of the pressure to avoid a) the sequestered defense cuts and b) the expiration of all the Bush tax cuts. Now his own counterproposal comes into play: $1.5 trillion in new revenue combined with a very different package of cuts, including to Medicare. That, incidentally, should put paid to the "lack of leadership" charges: he has set the parameters, and can afford to wait until the GOP begins to approach them.  He has exposed the Nov. 23 deadline as an illusion; the only deadlines that matter are November 6, 2012, and December 31, 2012.

Was the Budget Control Act a 60-yard punt for Obama?

Like Paul Krugman, Jonathan Chait is pleased with the supercommittee failure:

[The Budget Control Act] forced Congress to agree to $1.2 trillion in deficit reduction, or else automatic budget cuts would go into effect. But the key detail was that the budget cuts would not happen until 2013. Meanwhile, the debt ceiling would be lifted through the 2012 election. Between now and then, the two parties can fight over what to do about the automatic budget cuts scheduled to take effect. That’s not really the important thing. The important thing is that the debt ceiling is no longer on the table.

The whole plan was to start talking about something other than the debt ceiling, in hopes that the tea party would find some different shiny object to pick up and try to smash with a rock. And it worked!

Progressives have pretty much given up their multidimensional chess fantasies about Obama in this bruising year, and Chait does not explicitly credit Obama for this not-bad outcome.  But basically he's crediting Obama with a 60-yard punt.  If you accept the premise that no budget mandates past 2012 in this year's legislation matter, then in the summer negotiations Obama achieved his chief goal -- raising the debt ceiling to carry him past the 2012 elections -- at a net cost of $21 billion cut out of the 2012 budget, or about 2/3 of 1% of outlays. 

I record, therefore we are

Re this astounding photo of an unmolested cop methodically macing a row of peaceful seated demonstrators at UC Davis:  I was struck by a sideshow that in effect gave us the show. It's this: Almost every single sideline spectator captured in the photograph is photographing it. This phenomenon first struck me while watching videos of the post-election uprising in Iran in June 2009: every confrontation between demonstrators and Basij was parenthesized by a half-moon of demonstrators holding up cell phones or digital cameras.  Perhaps a year earlier, I was at a wedding where half the audience rose to photograph the "I do."

Just before the Green Revolution broke, in May 2009, reporter Simona Weinglass published in TNR a fascinating account of rival tallies of the civilian death toll in Israel's assault on Gaza in early 2009. In one corner was Khalil Shaheen of the Palestinian Center for Human Rights (PCHR); in the other, retired Israeli intelligence officer Jonathan Dahoah Halevi. I was struck at the time by Weinglass's endnote:

Nate Silver's death knell for Obama's jobs measures

One nugget in Nate Silver's exhaustive statistical analysis of the degree to which each of  a broad range of economic variables have affected presidential elections since 1948 makes it pretty clear why Republicans are going to block almost every job-producing measure put forward by President Obama. It's this (charts omitted):

Another poorly performing variable is the unemployment rate. It has had essentially no relationship to election results at all.

However, while the unemployment rate had told us very little, the rate of change in the jobs market has been fairly meaningful. Here, for instance, is a comparison of election results to the rate of payroll jobs growth — the variable you often see highlighted when the government releases its jobs report on the first Friday of each month.

A core problem for Democrats?

James Clyburn, third-ranking House Democrat and Supercommittee member, indirectly points up what may be Obama's greatest failing:

Clyburn, in a separate “Political Capital” interview airing on the same program, said a large deal approaching $4 trillion isn’t likely. He said he sees a chance of a smaller package as long as Republicans agree to revenue increases.

“I’ve kind of given up on big and bold, but I’m never going to give up on balance,” said Clyburn, of South Carolina.

If Republicans insist on extending Bush tax cuts for the wealthy “then we probably won’t get a deal,” he said.

Clyburn, the third-ranking House Democrat, said he hopes President Barack Obama won’t relent as he did last year and allow the tax cuts of his predecessor to continue again.

“I have no idea whether he will or not,” Clyburn said. “I hold out hope that the president will hold fast.”

That is a pretty staggering lack of faith in the team leader, and you can't call it unjustified.  Putting lipstick on the Aug. 1 debt deal pig, the White House did voice a rather weak Obama promise -- not even really a promise, more like a statement of capability -- to veto any legislation that extends the Bush tax cuts for the wealthiest:

That sixties suburban sweet spot revisited -- again

A disturbing new study based on census data, previewed by the New York Times, shows how the rise in income inequality has literally changed the landscape in America:

In 2007, the last year captured by the data, 44 percent of families lived in neighborhoods the study defined as middle-income, down from 65 percent of families in 1970. At the same time, a third of American families lived in areas of either affluence or poverty, up from just 15 percent of families in 1970...

Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.

But the shift is more than just changes in income. The study also found that there is more residential sorting by income, with the rich flocking together in new exurbs and gentrifying pockets where lower- and middle-income families cannot afford to live.

The middle class paradise lost, I noted in a recent post, was lived by my wife (b. 1958) growing up on a leafy cul-de-sac lined with 1950s split levels in West Seneca, NY, an inner ring suburb of Buffalo.  Here's what the family recalled recently about neighbors' professions:

Fighting the elite tide

The power of elites is like entropy.  A robust society can keep inherited or socially acquired privilege in check for a season or six, but eventually the elites learn a trick too many. Life is a failing of the wing, said Marcus Aurelius, and that goes for societies too.

Cheering rejoinder: societies have very long life cycles, and democracy is a fountain of youth, or rather of regeneration.  When elites kill the golden goose, democracies self-correct -- cf. FDR from the left, and Thatcher from the right.

Question of the extended hour for the U.S.: can a democracy kill its own capacity for self-correction? E.g., by Citizens United, or by acclimating its citizens to torture as an entrenched instrument of "national security", or by a media establishment that debases public discourse, or by some tidal pull we don't yet fully understand toward ever-increasing income inequality?  There is a battle brewing between remaining democratic antibodies and the instruments of elite entrenchment that have built up since Reagan was elected.

Hope, frustrated

This lede brought a long-percolating bit of pattern recognition to the forebrain:

U.S. President Barack Obama sought to ratchet up pressure on China over its currency and trade policies, warning Chinese President Hu Jintao on Saturday that Americans were growing "impatient and frustrated" over economic relations.

This was, shall we say, not the first time Obama invoked or betrayed frustration -- his own, or Americans'.  There's Netanyahu (Nov. 8):

There's no doubt that Obama is frustrated and angry in the extreme with what he perceives to be Netanyahu's recalcitrance when it comes to Arab-Israeli peacemaking (Nov. 11).

Economic stagnation:

While protesters and police battled on the streets of Oakland, in the pre-recorded interview Leno asked Obama for his views of what was behind the Occupy Wall Street movement:

Look, people are frustrated. And that frustration expresses itself in a lot of different ways. It expressed itself in the tea party, it's expressing itself in Occupy Wall Street... Everybody needs to understand that the American people feel that no-one is looking out for them right now.

Running on hope and fear

As he has for nearly a year, Andrew Sullivan exhorts Obama to make a crusade of deficit reduction/tax reform:

I think a lot of the criticism of this president is piffle. I think he's done an extraordinary job in foreign policy and has kept this country afloat economically in times as perilous as the 1930s. But his refusal to back a specific plan to save our finances, and to do so before the crisis deepens, in order to reverse a potentially devastating confidence collapse in Europe ... this is failure of an historic kind. I understand why, politically, this is difficult. But this is a moment for transcending political constraints. This is a "Yes We Can" moment. This is why we supported him - because he seemed someone who could at times transcend politics, for the greater good.

He still can. The super-committee will almost certainly fail. Once that happens, the US will be telling the world it is less capable of grappling with its debt than Greece or Italy. Then what? If Obama seeks re-election just by not being a scary Republican, he will deserve to lose. We need him to campaign for Bowles-Simpson (or his variation thereof) and radical tax reform, and promise he will work with any Republican prepared to help finalize the deal - but that he will do it with Democrats alone if needs be. If that means ceding Medicare as an electoral advantage, so be it. We did not elect him to be a reactive defender of the Democratic machine. We elected him precisely because he said he wasn't that.

I worry that he is going to run on fear. He must run on hope - and a plan that entails risk but promise. This is the moment that will make his presidency. It is no time to think small.

Andrew is prone to apocalyptic thinking about the deficit.  But at least from April on, I'm not sure what he's expected Obama to do about it that he hasn't done. I could certainly see hitting Obama for negotiating badly --  but that's not Sullivan's point; he wants a crusade. Some questions:

Herman Cain on Libya: "The Spotted or Herbaceous Backson"?

I had deja vu when I listened to this exchange between the Milwaukee Journal Sentinel and Herman Cain:

Asked if he agrees with the president on Libya, Cain looks up and says, "OK, Libya." He then pauses for a moment.

"President Obama supported the uprising, correct?" he asks, speaking carefully. "President Obama called for the removal of Qaddafi - just want to make sure we're talking about the same thing before I say yes I agree, or no I didn't agree. I do not agree with the way he handled it for the following reason - nope, that's a different one."

Cain then pauses for about five seconds.

"I gotta go back and see - um, I got all this stuff twirling around in my head," he says. "Specifically, what are you asking me. Did I agree or not disagree with Obama?"

It was the "Specifically, what are you asking me" that triggered the prefiguration. It's in The House at Pooh Corner, Ch. 5, "In Which Rabbit has a Busy Day, and We Learn What Christopher Robin Does in the Mornings."

Münchau to EU: Signal now that Eurobonds are forthcoming

Today, an eponymous Wolf Munch Rock award (so named because the truth is hard to swallow) to Wolfgang Münchau, for an op-ed that's at once a primer on the dynamics of the European sovereign debt crisis  and a powerful brief (judged on its own terms) for issuing Eurobonds sooner and working out the political implications later.

First, for the uninitiated, Münchau spells out why it's so destabilizing for the solvency of member states to come in doubt -- and why the haircut for banks holding Greek debt may have exacerbated rather than relieved the markets' panic:

I am hearing from Berlin that the German government believes that the arrival of Mario Monti as Italian prime minister is all it will take to calm the markets. This unsurprisingly complacent view misjudges the underlying dynamic of the most recent events. The cause of the panic attack was the European Council’s decision on October 26 to renegotiate the private sector participation of Greek sovereign debt holders. With that decision European leaders destroyed what was left of a functioning eurozone government bond market. Investors interpreted it – correctly in my view – as a precedent. They then dumped their Portuguese, Spanish, Italian and even French government bonds. As of now, there is only one significant risk-free asset in the eurozone – German government bonds.
The German government bond market is large and liquid, but not large enough to sustain the world’s second largest economy. The presence of a risk-free asset can hardly be overstated in a modern financial system. Each insurance company, each pension fund needs to invest part of its income in such assets. Through a combination of short-sightedness and financial illiteracy, the European Council has now put itself in a position where it desperately needs Eurobonds, if only to assure the existence of a functioning financial sector.

Next, why the European Financial Stability Facility (EFSF) is inadequate:

A not-so-plain blog (post) about politics

Hmm. In a fit of absent-mindedness, Jonathan Bernstein may have just amended his theory of what makes democracy work, or what makes an elected democratic official a "good" one in a sense that goes beyond managing to stay in office a long time. Or perhaps he's just clarified a point that I don't believe was clarified before. Or just opened up a can of worms.

Let's start with the theory-qualifying snippet:

Where politicians and parties go wrong is when they adjust the policies they favor in order to be able to use the words that test well, and then mistakenly believe that the underlying policies are actually popular.

Most of us would not have any problem with that statement. But under Bernstein's theory of representation, it's not entirely clear that it matters whether "underlying policies" are popular, if the "words that test well" get the speaker elected or reelected. So, for a second time, let me pick a bone with the joyous cynicism animating Bernstein's celebration of a purely contractual relationship between elected official and voters.

Rick Perry's Book of Laughter and Forgetting

I am getting tired of reading that Perry is dealing with his debate melt-down with good humor. What he's doing is doubling down on the shtick that makes him capable of forgetting which federal government agency he'd do away with.  As with all of Perry's humor, it pastes a genial face on bullying, belittling reflex.

Immediately following the debate, Perry approached reporters with some do-it-yourself-damage control:

Romney vs. Romney on the auto bailouts

In tonight's CNBC debate in Michigan, did Romney not tie himself in knots trying to differentiate the "managed bankruptcy he recommended for GM and Chrysler in November 2009 from the bankruptcies that the Obama administration in fact managed on their behalf? To the tape:

My view with regards to the bailout was that whether it was by President Bush or by President Obama, it was the wrong way to go. I said from the very beginning they should go through a managed bankruptcy process, a private bankruptcy process.

We have capital markets and bankruptcy, it works in the U.S. The idea of billions of dollars being wasted initially then finally they adopted the managed bankruptcy, I was among others that said we ought to do that.

And then after that, they gave the company to the UAW. They gave General Motors to the UAW and they gave Chrysler to Fiat. My plan, we would have had a private sector bailout with the private sector restructuring and bankruptcy with the private sector guiding the direction as opposed to what we had with government playing its heavy hand.

A president displeasing left and right

Well-wishers of Obama who seek consolation in the course of FDR's first term are not likely to find much. The most obvious difference is that GDP growth was in double digits from 1933 through 1936, essentially ensuring Roosevelt a second term as long as there was no formidable third-party challenge.  Then too, FDR kicked off his term with a swift, dramatic success that staunched a catastrophe in progress: the bank rescue bill, which ended a panic and brought deposits flooding back into the banks.  For all its many failures, too, the New Deal by 1936 had quite visibly put millions of people back to work and very visibly built out the country's infrastructure. Finally, because the economy had bottomed out by the time FDR took office and growth had been strong in 1933-34, the Democrats won overwhelming majorities in the House and Senate in 1934, empowering a wave of landmark legislation, including the Social Security Act, signed in August 1935.

Perhaps the whole difference is here (large size here):

Nonetheless...the curve of economic freefall staunched and a raft of social welfare legislation passed while the President tacked back and forth between bold action and pulls back on the reins does lend an outline of faint resemblance to the two first terms.  The history rhymes a bit -- and Michael Hiltzik, who just published his The New Deal: A Modern History this September, has got to be conscious of that. Hence the occasional eye-rubbing passage such as this, surveying FDR's political standing in January 1936:

Vernacular alert, OWS edition

Here's Erik Erikson, fuming that the GOP's apparent nominee only pretends to be insane but isn't really:

...once he loses, Republican establishment types will blame conservatives for not doing enough for Mitt Romney, never mind that Mitt Romney has never been able to sell himself to more than 25% of the GOP voters. It’s not his fault though, it is the 75%’s fault.

Never mind Erikson's argument that Romney will lose the election because he's not a real conservative. I'm not convinced, but from his mouth to God's ears. What interests me is his turn of numerical phrase, "the 75%'s..."

We have a new way of framing subsections of the national community: "the XX%." The 99%, the 1%...pithy. And heartwarming. We all have multiple percentile siblings. College grads: the 32% (more or less).  The uninsured: the 17%. American children living in poverty: the 22%.  Evangelicals: the 26%. Dog owners: the 37%. Nonvoters: the 45%.  Residents of millionaire households: the 7%.  People with IQs under 100: the 49.99999%. Above-average Lake Wobegon children: The 99.9999%.  

Maybe a social network can take this up. Invite members to tick off percentile groups in which they claim membership. Virtual numeric communities!  Who says that social cohesion is slipping away?

A Kling-free future prosperity?

I sure hope Arnold Kling is wrong about the future of employment and wealth distribution in the U.S. --  and I suspect that he does too, as he seems gloomy about his own prognosis. Overviewing a long-range and recently accelerated squeeze on mid-level jobs,, he envisions an American society rather like that portrayed in Kurt Vonnegut's first novel, Player Piano (1952), in which a small uber-class of engineers rules a society in which the masses are consigned to "reeks and recs," a kind of permanent WPA for the superannuated.

Kling suggests that increases in productivity may no longer generate new kinds of jobs in sufficient numbers:

Stux chucks world into flux

Ever since I first encountered Jeffrey Goldberg crowing about Stuxnet, the cyber-weapon that reportedly set back Iran's nuclear program by 1-2 years, I've worried that by launching such weapons (or helping the Israelis launch them) the U.S. is sowing the wind and will reap the whirlwind.  The same might be said for our ever-expanding drone deployments. David Rothkopf fleshes out such fears:

"America still hasn't quite understood that we are opening Pandora's box. Take drones. We feel we can use them anywhere, soon others will be using them against us. There are dozens of countries around the world developing their own drone technology or buying what is out on the market. The same is true for technologies like those associated with Stuxnet," said the former senior diplomat who has worked closely throughout his career with the military and intelligence communities. Or as another journalist friend of mine put it who has been covering the issue closely, "The day after Stuxnet was like the day after Hiroshima. We had the technology and no one else did. But within a matter of a few years that had changed." So had the nature of modern warfare...and by extension of modern diplomacy and that's what is going to happen here.

In which Google quells a will to quibble

Funny thing happened on the way to a blog post:

I am reading (courtesy of Ezra Klein) William Easterly's wildly enthusiastic review of Nobelist economist Daniel Kahneman’s Thinking, Fast and Slow, about the workings of our unconscious and conscious thinking processes. I encounter a quick-summed conclusion that looks a little dicey to me:

Even worse, we don’t know what we don’t know. In one experiment, chief financial officers of corporations were asked to forecast the return on the Standard & Poor’s index over the following year, giving one number they were 90 per cent sure was too high and another they were 90 per cent sure was too low. The true number was outside their intervals 67 per cent of the time.

Wait, I think...what year? 2008, perhaps? To assess the 90% confidence level, wouldn't you want, say, 10 years?  And do I need to buy the book to check this out?

Nah... Google experiment cfos forcast S&P next year 90 percent. And lo:

Move Your Money -- if convenient and profitable

In honor of Bank Transfer Day, a redux of this 1/7/10  post, with updates, seems to be in order:
---
There is some merit in Arianna Huffington's Move Your Money campaign to induce individuals to transfer their funds from the megabanks so many of us use to local community banks. The plan is greatly strengthened by providing an online tool by which we can all check the financial strength of local community banks [UPDATE - neither of the two tools now offered show financial ratings, though one only shows institutions ranked "B" or better by the provider, IRA Bank Ratings.  For ratings on an A-E scale provided by Weiss Ratings, see this at TheStreet.com. Weiss's methodology is here. Disclosure: I have done media outreach work for Weiss.]

Like most Arianna productions, though, this one is an oversimplified morality play: big bank bad/small bank good. It's telling that one of her co-sponsors is a filmmaker and that she's openly inviting all of us to enact a real-life rerun of "It's a Wonderful Life." A few caveats:

• I thought we'd all got over "It's a Wonderful Life" rapture in the wake of the savings and loan crisis of the late eighties/early nineties, when over 700 S&Ls failed, costing U.S. taxpayers something like $150 billion. Thanks in part to deregulation in the early 80s that expanded S&Ls' lending authority and weakened accounting standards, many were subsequently run more by Potter principles than by George Bailey principles.  For that matter, consider the movie itself. But for the extreme virtue and fortitude of the hero, the angelic Building and Loan would have been absorbed by Potter's bank (which might have remained a community bank to this day, unless Potter proved more able than a handful of SuperPotters).
  
  
• Community banks are not exactly politically unconnected Davids going up against the industry Goliaths. The industry's trade association, the Independent Community Bankers of America (ICBA) was very effective in weakening the  Consumer Financial Protection Agency created by legislation passed in the House.  The ICBA succeeded in exempting community banks from CFPA examination and in preventing the CFPA from mandating that community banks offer "plain vanilla" loan products.

I am tired of this game...

That is, the breathless monthly elephant-groping over the unemployment numbers. Here's Politico, via email alert:

The unemployment rate fell to 9 percent in October from 9.1 percent in September, but the country added a disappointing 80,000 jobs, well below expectations that as many as 100,000 jobs would be created last month, according to data released by the Labor Department on Friday.

"Well below"? Twenty percent is well within the range of the typical revision of prior month's numbers. September's number, for example, was revised up today from 103,000 to to 158,000 -- almost triple the "disappointment" triggered by the margin below consensus for this month, while August was revised up from 0 to 57,000. Those upward revisions exceed the alleged job growth this month.

There's plenty of intelligent deep diving, of course.  Those who follow these numbers closely understand their ambiguities and uncertainties, and the cumulative nature of the light they shed.  But the headline snapshots, the insta-hardening of snap perceptions, are not helpful.

Another eurolesson in brinksmanship

Last week, I noted a rather painful contrast between Angela Merkel's brinksmanship (whatever you think of her policymaking) and Obama's lack thereof, lamenting that we couldn't substitute "Obama" and "Boehner" in this Times headline below:

Merkel Called Bankers’ Bluff to Win Europe a Debt Plan

Today, add to the roster of EuroRussian Roulette-meisters Greek Prime Minister George Papandreou, who sent the Eurozone into panic mode with his call for a referendum on the EU's latest rescue plan -- apparently to scare his domestic opposition into line.  From the FT's liveblog:

We may be half-drowning, but we're not stagnating

Some months ago, in an encounter with Tyler Cowen's ebook The Great Stagnation, I questioned Cowen's premise that technological transformation of human life has slowed down in recent decades, that is

whether we're living in an era in which transformative technological innovation is in short supply. Cowen does allow "the Internet" as the great exception, but points out that the leading-edge tech companies employ relatively few people, and that Internet innovation has been notoriously difficult to monetize. He is strangely silent, though, about the impact of interactive technology and computer technology more generally on production and commerce of all kinds -- just-in-time factory production, product customization, bar coding, all the incredible efficiencies of large-scale retail operations that wring out large profits on tiny margins -- and on interactive technology's role in globalizing production. He also doesn't consider transformative technologies hiding in plain sight: personal computers themselves (never mind the Internet) and cell phones. It's true, as Cowen says, that the basic physical components of middle class life in America don't look that much different than they did in the 1960s. But they are much different. And the differences have generated a lot of wealth, even if  the U.S. middle class hasn't garnered as large a share as it did in he previous generation.

That demurral is advanced at book length by MIT scholars Erik Brynjolfsson and Andrew McAfee in Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy. Brynjolfsson and McAfee argue that computer and network technology is indeed, like the steam engine and electricity before them, a "general purpose technology" (GPT), that is, one that accelerates economic progress in a world-transforming way.  IT's transformative power is an inevitable effect of Moore's Law: we have lived through a time of sustained exponential growth in processing power, which has brought us to the brink of self-driving cars, chap robots that function more or less as mini-factories, and viable automated translation and communication. While the landscape may not yet have been as visibly transformed as it was by prior GPTs, as Cowen argues, business processes have. Regarding  the Web and enterprise resource planning and CRM software, for example: