Where we're at now

Just a brief and not particularly original thought as I try to process Senate passage of this travesty of a tax bill.

While Trump's election has the feel of a perfect storm catastrophe, perfect storms are usually the result of a a long sequence of dysfunctions, and the total corruption of the Republican party was bound to lead to catastrophe at some point. I recall Jonathan Chait saying as much as an episode of debt ceiling legislative terrorism loomed in (IIRC) 2013. His point was not that that particular crisis would lead to default, but that a party always willing to go to the brink in defense of an ideology cooked up to serve the narrow interests of the superrich would lead us over the cliff at some point. Put another way, if it had not been completely evident before, it was evident after Obama's reelection that the fever would not break.

In some ways it's a consolation to view our plight not as an accident that a breath of wind could blown off course but as a reckoning with pathologies we've been collectively grappling with at least since the Reagan era (and far earlier, as every origin has multiple origins behind it).

Short history of the decline and fall of American democracy

I switched on Twitter for 15 minutes at 7:00 a.m. this morning and felt I was watching democracy die before my eyes as a fascist and possibly traitorous president threatened to prosecute Obama.

That led me to a flash review of our decline and fall as the narrative has taken shape in my mind in recent years:

• The Kochs plotted long and hard, building their network of extremist think tanks, fake news sources, astroturf advocacy groups and corporate lobbying groups.


• Reagan ripped the lid off inequality and disinherited the middle class with a cocktail of tax cuts for the wealthy, deregulation, weakened antitrust enforcement and union-bashing.


• Rupert Murdoch and Roger Ailes prepped 30-40% of the population for fascism with twenty years of progressively more extreme gaslighting.

Customer Relationship Management, Murdoch style

Print publications, as everyone knows, have been hurting for some time, and many resort to revenue boosters as desperate as those of broke cities looking to jack up parking violation revenue.  For years, I've held off from tempting 1-year offers from the Economist because they won't let you pay by check -- they want your credit card for automatic renewal. I can accept a reasonable bump-up when a new subscriber offer expires, but I don't want it to be unilateral.

For arrogance and customer manipulation, though, nothing beats The Wall Street Journal in the Murdoch era. My online subscription just expired, and when I tried to click through to an article I was bumped to a subscribe page offering a decent combined print-and-online rate ($5.99/week). It's a great time for me to renew, I figured, because my credit card expires in August. I filled out my credit card info, but never pulled the trigger. The terms are unacceptable on several counts.

First, the fee is billed weekly, so they'd be coming after me for my new credit card info right away. Worse is what they do with it.  This offer was dangled before me, an existing online customer, as an "introductory" one -- which makes partial sense, as I have not subscribed to the print edition for some time.  At page bottom, however, is this caveat:

In which Timothy Egan completes Tyler Cowen

Methinks that there's a circularity to Tyler Cowen's argument that lack of trust in government would undermine the effectiveness of traditional stimulus measures to boost public employment:

Various policies that are being put on the table, including forms of fiscal and monetary stimulus, try to accelerate this repair process. They would all be likely to underperform, partly because the public, rightly or wrongly, doesn’t see them as ways to rebuild confidence. We have become skeptical of our own macroeconomic authorities and abilities, and that, in turn, makes successful policy harder to pull off. 

For instance, there is a good case to be made for monetary expansion, given the current low rate of inflation and high rate of unemployment. But if fear of inflation puts off the American public, such a policy will again underperform, relative to what we have learned in textbooks. There won’t be a credible commitment to see the monetary stimulus through, as people panic that resulting inflation will be used to redistribute wealth. (Although Sweden and Switzerland have had effective monetary policies recently, both of those countries have especially high rates of trust in government.)

First, lack of trust stems in part from lack of effective government. Timely and sufficient stimulus would (or would have) demonstrably improved the economy and so boosted trust that government can act effectively.

Tidbits from La Seduction: dinner with uncuddly Rupert, titters over DSK

Elaine Sciolino's La Seduction: How the French Play the Game of Life, published all of eleven months ago, sheds occasional interesting sidelights on events of the past year. One is the m.o. of Rupert Murdoch.  Writing of the strenuous efforts of Jean-David Levitte, France's ambassador to the U.S. during the runup to war in Iraq, to repair France's image in the U.S. after the French declined to join Bush's invading coalition. Here's Levitt's version of dinner with Rupert:

Most of his work went nowhere. The most brutal attacks came from Fox News, which night after night drove home the point that America had saved France from tyranny in World War II and that the French were traitorous ingrates and supporters of terrorism. At one point former secretary of state Henry Kissinger tried to mend fences by arranging a dinner at his home for Levitte and Rupert Murdoch, the owner of Fox. “I asked Murdoch to stop the French bashing,” Levitte claimed. “He looked at me coldly and said, ‘As long as it sells, I will continue’ I spent the rest of the evening charming his lovely wife, Wendy  (p. 268).

I guess we only have Levitt's side of this conversation, but it does sound like the brutal old huckster, doesn't it?  So glad he's captured one of this country's two major parties as well as playing master puppeteer to the British government for two or three decades.

"You are too shallow, Hastings...to sound the bottom of the after-times"*

There is a certain strain of conservative British fantasist that pits the folly of the common people, Coriolanus-like, against the beleaguered wisdom of leaders. George MacDonald, in The Princess and Curdie,  portrays a benevolent king gradually worn down by the recalcitrant foolishness and greed of his people.  In Tolkien's Lord of the Rings, battle-hardened chieftains keep the faith and hold the line against the encroachments of Mordor as their people weaken.  C.S. Lewis has more of a feel for the ways in which the powerful and ruthless deceive and enslave common folk, but he too betrays a weakness, in the Dawn Treader vignette of the Dufflepods ruled by a fallen star, for the vision of the wise ruler bemusedly enduring the follies of his simple subjects  (though Lewis is more consistently smitten by the fantasy of a contented and submissive populace willingly ruled by wise and benevolent monarchs).

Perhaps it is in this spirit that Sir Max Hastings laments that voters in the western democracies will punish at the polls leaders who tell them the hard truth about "the scale of upheaval and the sacrifice necessary to meet it."  Suggesting that "we get the political leaders we deserve" -- which may in some ultimate sense be true -- Hastings seems blithely unaware of the first axiom of political science: economic conditions (absent all-encompassing catastrophe) shape the dominant public perceptions of leaders everywhere. There's not much point in excoriating "pampered European and American voters" for blaming "bad news" on leaders currently in power. All electorates everywhere do that, to the extent that they're free to choose at all. 

Hostile takeover: Screwtape at News Corp.

Anthony Lane, reviewing various memoirs and other evidence of the culture and ethos at Murdoch's sleazy British tabloids, recounts an incident from Piers Morgan's memoir in which a victim of deliberate misrepresentation in the News of the World refuses to take it as a joke.  Lane sums up:

Such is the quintessence of the tabloid: to bruise and bully, and then to back off, exclaiming, Come on, we're only having a laugh. Can't you take a joke? The British sense of humor is both an invaluable broadsword and an impenetrable shield.

Screwtape lives, and still stalks the sceptered isle! C.S. Lewis  fans will recall the savvy counsel of this senior devil, provided to a junior colleague charged with tempting a Briton to perdition:

How the Journal editorialists measure Murdoch

Felix Salmon and Joe Nocera have effectively exposed the moral bankruptcy of the Wall Street Journal editorial board's aggressive defense of Murdoch and News Corp.  But leaving aside the apologists' they-did-it-toos and  it-wasn't-so-bads and we-know-our-boss-for-an-honest-man modes of denial, let's focus for a moment on the editorial board's expression of its true credo (my emphasis):

Our readers can decide if we are a better publication than we were four years ago, but there is no denying that News Corp. has invested in the product. The news hole is larger. Our foreign coverage in particular is more robust, our weekend edition more substantial, and our expansion into digital delivery ahead of the pack. The measure that really matters is the market's, and on that score Mr. Hinton was at the helm when we again became America's largest daily.

To be fair, this market fundamentalism from the Journal's opinion wing long predates the Murdoch takeover.  In an odd way, it suggests good faith in their defense of bad faith practices The market was measure for every scandal the Journal editorialists explain away even as the paper's top-notch reporters were breaking them. They pooh-poohed, in turn, the equity research scandal, the options back payments scandal, the insurance broker kickback scandal, and the subprime mortgage scandal. They were relentless in defense of corrupt investment bankers and analysts, corrupt insurance brokers, corrupt top executives and boards, and corrupt mortgage underwriters.

A short history of America's rightward turn

In Jane Mayer's long chronicle of the billionaire Koch brothers' 30-year campaign to mainstream extreme libertarian ideas by founding and funding up think tanks, PACs and astroturf activist groups, and one observation struck me as a capsule history of American politics since 1980.

The source is a former friend of the Charles Koch, Gus diZerga, who met Koch in a John Birch society book store decades ago. The Kochs' father, founder of the conglomerate the sons have built into one of the country's largest privately held companies, was a charter Bircher and fed his boys tales of communist conspiracy from early childhood. DiZerega, once steeped in Birchite paranoia, wrote in a Beliefnet essay:

As state socialism failed...the target for many within these organizations shifted to any kind of regulation at all. 'Socialism' kept being defined downwards.

Over the same period, I'd add, media kept being defined downwards, so that now fringe froth has a mass market.Contiguous with the career of the Kochs is Rupert Murdoch's progressive corruption of media throughout the anglosphere.

What Ailes Democracy in America

Nate Silver, delving into the cross tabs of the NYT/CBS Tea Party poll and noting that 59% of partiers have a positive impression of Glenn Beck (compared with 18% of the population as a whole), draws this conclusion:

Academic studies have found that FOX News in fact has quite a bit of ability to persuade voters and reformulate public opinion. That Beck (whose program debuted one day before Barack Obama's inauguration) has become one of its prominent voices may help to explain why the tea-parties have become so influential, and why public opinion appears to have shifted so dramatically within the past 18 months. FOX may, or may not, have a role in directly promoting the tea-parties. But its opinion programming has become the water-cooler around which the tea-partiers gather.

Perhaps there will always be a Father Coughlin (or a passel of them) to channel the rage of the paranoid and the ignorant, particularly in times of 10% unemployment, but I still find this disturbing.  Fox, like the Palins and Bachmanns it empowers, is a danger to democracy, a relentless amplifier of lies. And while I guess the U.S. had ample capacity to home-grow toxic political media, it still strikes me that Rupert Murdoch has managed to degrade political discourse on three continents (I assume he's done it in Australia as well as the UK and US). 

Bad call of the month

WSJ, 1/15/2010

Volcker Voices his Views in a Vacum

Paul Volcker is talking. But is anyone listening? [snip]

The two speeches highlighted Mr. Volcker's predicament. Having been viewed as a crucial supporter of Mr. Obama during his presidential run, he appears to have diminishing influence in the White House. And while revered by Wall Street critics on the left and right, his most deeply held views are having limited influence among policy makers.

"It's clear that the ideas Paul Volcker is pushing now are not shared by the administration," said Douglas Elliott, an economic studies fellow at the Brookings Institution, a public-policy organization. Given the difficulty of hiving off bank-lending units from their trading operations, adds Mr. Elliott, "I agree with the administration on that one."

Obama, 1/21:

... I’m proposing a simple and common- sense reform, which we’re calling the Volcker rule, after this tall guy behind me. Banks will no longer be allowed to own, invest or sponsor hedge funds, private-equity funds or proprietary trading operations for their own profit, unrelated to serving their customers.

Actually, the Journal had a story  a few weeks ago which, while noting that Volcker's main ideas had not become Administration policy, also reported that Volcker was methodically, patiently building support for them. But WSJ online l has so eviscerated its search engine in the Murdoch era (and ditto for Factiva as offered through the Journal subscription) that I can't find it.

WSJ OK - a vintage expose

When liberal blogs reference information from the Wall Street Journal - such as Bob Davis' recent exposure of the incoherence of McCain's economic thinking - it's often prefaced with phrases like "even the WSJ acknowledges" or "reported in the WSJ of all places."

Many people, it would seem, know the WSJ primarily by its radical-right op-ed section, famous for equally rabid support of imperial adventure, torture, tax cuts and deregulation to the point of zero. But that's only half the story. The WSJ is a completely schizophrenic paper. Its reporters do much of the world's best investigative business journalism, regularly delving deep into the way individual companies and whole industries game the systems in which they operate.

Today's front-page expose, Nonprofit Hospitals, Once for the Poor, Strike it Rich, by John Carreyrou and Barbara Martinez, is vintage Journal reporting. The article details how many well-heeled hospitals have gamed their non-profit status, receiving far more in tax breaks than they give back in charity care. Carreyrou and Martinez look at several hospitals that offer luxury care primarily to the wealthy and well-insured, pay their execs like in a manner comparable to that of publicly-owned for-profit companies, and build up enormous assets.

Abuse of nonprofit status stems largely from loose definitions of the "community benefits" that hospitals must provide to justify their tax exemptions. For example:

St. Louis-based BJC HealthCare, counts the salaries of its employees as a community benefit. BJC, which runs 14 hospitals in Missouri and Illinois, says on its Web site that it provided more than $1.8 billion in benefits to various communities in 2004. Its payroll, including its CEO's $1.8 million compensation, accounted for $937 million of that figure, while charity care represented $35 million, according to BJC.

Some, of course, serve mainly Medicaid and uninsured patients - and generally have trouble making ends meet. Then there's Exhibit A, Norwestern Memorial in Chicago:

At some nonprofits, the good times are reflected in new facilities and rich executive pay. Flush with cash, Northwestern Memorial Hospital in Chicago has rebuilt its entire campus since 1999 at a cost of more than $1 billion. In October, it opened a new women's hospital that features marble in the lobby, birthing rooms with flat-screen televisions, 1,000 works of art and a roof topped with 10,000 square feet of gardens. In 2006, Northwestern Memorial's former chief executive officer, Gary Mecklenburg, received a $16.4 million payout.

But Northwestern Memorial has been frugal in its spending on charity care, the free treatment for poor patients that nonprofit hospitals are expected to provide in return for the federal and state tax breaks they receive. In 2006, Northwestern Memorial spent $20.8 million on charity care -- less than 2% of its revenues and a fraction of what it received in tax breaks. By comparison, the hospitals run by Cook County, where Northwestern Memorial is located, spent 14% of revenues on charity care....

Around Chicago, Northwestern Memorial is known as a hospital that attracts the well-heeled. It's a short walk from the Magnificent Mile, the famous thoroughfare lined with expensive shops and restaurants. At Northwestern Memorial's new Prentice Women's Hospital, expectant mothers can watch TV or browse the Internet on 42-inch flat-screen televisions, order room service 24 hours a day and page nurses and doctors via a wireless system. Some birthing rooms have views of Lake Michigan. Only 6% of Northwestern Memorial's patient revenues come from Medicaid.

The article is not a hatchet job. Many of the well-heeled, thriving hospitals featured doubtless provide substantial community benefit. But it does highlight the way elite hospitals exploit the loose definitions of 'community benefits' to operate at margins that for-profit companies -- not to mention inner city hospitals that serve primarily Medicaid and uninsured populations -- can only envy.

The article also has implications for the candidates' healthcare plans. Like insurance companies and doctors, hospitals exploit perverse incentives to jack up costs - profiting handsomely as they do their bit to make per capita American healthcare spending almost double that of other industrialized countries:

...much of the industry's profit growth comes from strategies it honed to increase profits. Among them: demanding upfront payments from patients; hiking list prices for procedures and services to several times their actual cost; selling patients' debts to collection companies; focusing on expensive procedures; and issuing tax-exempt bonds and investing the proceeds in higher-yielding securities.

Untaxed investment gains have greatly increased some hospitals' cash piles. Ascension Health, a Catholic nonprofit system that runs 65 hospitals, mostly in the Midwest and Northeast, reported net income of $1.2 billion in its fiscal year ended June 30, 2007, and cash and investments of $7.4 billion. That's more cash than Walt Disney Co. ha

Rupert Murdoch took over Dow Jones in December 2007. So far, he has not touched the kind of in-depth investigative reporting exemplified here - though he did grumble, while the acquisition was pending -- that Journal features are often "too long." We'll see whether News Corp ownership -- not to mention the grim economics of the newspaper industry -- erode this indispensable watchdog over time.