brainiac conspiracy

Infrastructure Spending

As any casual reader here knows, yours truly is a big proponent of it. However, there are always exceptions to any rule, and some types of infrastructure spending are far preferable to other types. The obvious question that planners and legislators need to ask before green-lighting these kinds of development deals is, "Who benefits most?" And the only suitable answer to justify such expenses, naturally, is "the public, period," not "the sporting public" or "neighboring businesses" or "the new downtown redevelopment zone." Unfortunately, it's hard for many people to make rational decisions when sports teams enter the discussion, most likely because of the mythic/talismanic influence these franchises exert on their host communities---and if your particular sports franchise is a proven monster money-maker (Yankees, Lakers, Cowboys, et al), a sizable public investment in a sports stadium might, repeat might, make financial sense in the long run, though a multi-use facility such as the Staples Center is a much smarter investment than, say, a football stadium that only hosts eight games a year and the occasional Super Bowl.

Bottom line, if you're tempted to spend a billion dollars of public money trying to lure a sports team to your city, use the money instead to buy a bunch of buses or a light-rail line that can be used to transport fans to the stadium site. If the franchise balks, you can always redeploy the buses/trains to other locations. You can't redeploy a billion-dollar stadium, though.

(Via.)

---Baron V

Light Blogging Afternoon

Posting will be sparse this afternoon because alcoholism. Celebrate our one-day cliff dive tonight, then pray Team Teabilly decides to fuck up the program for all the serious persons. It really would be for the best.

---Baron V

Grand Bargains

Who says our leaders aren't capable of forging them?

Banking regulators are close to a $10 billion settlement with 14 banks that would end the government's efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions [...]

The proposed settlement would also halt a separate sweeping review of more than four million loan files that the comptroller's office and the Federal Reserve required the banks undertake as part of a consent order in April 2011.

Under the terms of the order, the 14 banks had to hire independent consultants to pore through the loan records to determine whether the banks illegally charged fees, forced homeowners to take out costly insurance or miscalculated loan payment amounts. Consultants initially estimated that each loan would take about eight hours, at a cost of up to $250 an hour, to go through.

Of course they didn't hire any consultants that were genuinely independent because that would have run the risk of exposing serial criminality, hence prosecution, hence prison. So they offered up a settlement before the government wised up and started threatening to invoke federal RICO statutes.

Meanwhile, no grand bargains.

---Baron V

They're All Militants

Since we're the Good Guys, we don't ever kill innocent people:

House Intelligence Committee Chairman Mike Rogers (R-Mich.) on Monday said public reports about civilian casualties from U.S. drone strikes are politically motivated and "wildly wrong."

"I think that you would be shocked and stunned how wrong those public reports are about civilian casualties," Rogers said on the House floor.

"Those reports are wrong. They are not just wrong, they are wildly wrong. And I do believe that people use those reports for their own political purposes outside of the country to try to put pressure on the United States," Rogers said.

Meanwhile, wrongness:

Far more civilians have been killed by U.S. drone strikes in Pakistan's tribal areas than U.S. counter-terrorism officials have acknowledged, a new study by human rights researchers at Stanford University and New York University contends.[...]

The study authors did not estimate overall civilian casualties because of limited data . . . But it cites estimates by the Bureau of Investigative Journalism, which has reported extensively on drone strikes, of 474 to 884 civilian deaths since 2004, including 176 children.

Why are so many of our leaders such terrible human beings?

---Baron V

Random Thought

If Team Democrat refuses to cut a Cliff Deal---not just now, but forever---there's no need to wrangle over the debt ceiling in three months since the deficit will plummet by hundreds of billions of dollars, de facto raising the debt ceiling without the need for Teabilly consent (which of course will never be forthcoming). It's not terribly great policy in the near term, but it's smart politics inasmuch as it averts an even bigger policy disaster in the long term. So why isn't Team Democrat doing this?

---Baron V

Uppityness

It's what happens when the blah people gain a little bit of power. Why, they're liable to think they're just as good as Real Americans when what they really need is a strong dose of humility:

"Most of the blame still has to go to Republicans. They’ve had a brain freeze since the election. They have no strategy. They don’t know what they want. They have to decide what they want," Brooks said on NBC's "Meet the Press." "But if I had to fault President Obama, I would say that sometimes he governs like a visitor from a morally superior civilization.

"He comes in here, and he will not---he’ll talk with [House Speaker John] Boehner, [but] he won’t talk with the other Republicans. He hasn’t built the trust."

Meanwhile, morally superior civilization:

I am planning to vote for George W. Bush because he is a nice guy. As a nice guy he will attract and retain the loyalty of outstanding administration officials, and together they will promote policies that are smarter and bolder than we ever would expect, just from looking at Bush himself. As a nice man, he will prove remarkably adept at working with Congress, with Democrats, with the media and with all the other different people you need to handle as president.

---Baron V

Also a Bad Idea

Dear Mr. President: Kindly shut up:

“Well but again, David as you know, one of the proposals we made was something called chain CPI, which sounds real technical, but basically makes an adjustment in terms of how inflation is calculated for Social Security,” Obama told host David Gregory on “Meet the Press.” “Highly unpopular among Democrats, not something supported by AARP, but in pursuit of strengthening Social Security for the long-term, I’m willing to make those decisions.”

You know, at this point I'm almost ready to impeach this guy if it means we can have four years of President Biden instead of this tiresome and self-defeating Sensible Centrist™ shit. Unless the President really believes his own rap, in which case he deserves to be given the boot. Because voters.

---Baron V

They Were a Bad Idea Then

And perpetuating them any further would simply be advancing the cause of some of the most evil people to ever be entrusted with our government:

George W. Bush had just been elected on a pledge to cut taxes, but his plan did not get much traction among Democrats until then-Federal Reserve chairman Alan Greenspan warned Congress of a dangerous new specter---that the government would pay down the national debt, and there would be no place to park excess funds.

“At zero debt, the continuing unified budget surpluses currently projected imply a major accumulation of private assets by the federal government,” he declared.

Because, gee, then the government might have the money to pay for high-speed rail, or a new electrical grid, or for a lower Medicare eligibility age, and because the Richie Riches could create so much more wealth with that money, we needed to give it all back to them.

Fairly certain I've written this before, but until Team Democrat can wrap its collective brain around the reality that every single fucking policy initiative that originated in the last administration was either (a) corrupt, (b) incompetent, or (c) argued in bad faith, and needed to be terminated as soon as Team D took power; and that as long as Team D continues to evade that reality, they're simply going to keep shooting themselves in the foot by doing the Teabillies' heavy lifting for them. Let all the tax cuts expire, no conditions attached, then come back next year and pass a halfway-sensible spending bill based on new revenue projections.

---Baron V

Taking a Stab at It

In which Prof. DeLong is perplexed at our nation's outrage deficit:

There are lots of lessons to be drawn from the first age of globalization for the second. There are lots of lessons to be drawn from the high school-ization of America for the college-ization of America and for education elsewhere in the world. There are lots and lots of lessons to be drawn from the Great Depression for today.

But the political economy of Gilded Ages? Why the first Gilded age produces a Populist and a Progressive reaction and the second, so far, does not? There I throw up my hands and say that my economic historian training betrays me. I have no clue as to what is going on here.

Not an economic historian here, but I am guessing it is a confluence of factors:

1. We do have a social safety net now, however inadequate, which keeps millions of people (particularly seniors) out of poverty.
2. The unemployment level, while bad, is clearly not as bad as those of previous Panics/Depressions
(7.7 today < 25 in 1932).
3. Historically higher levels of homeownership are an effective buffer against homelessness/destitution.
4. Much smaller percentage of population engaged in agrarian enterprise, hence not "wedded to the land," hence a populace with greater social mobility. This is crucial as wealth has concentrated steadily in major metropolitan areas, so greater mobility affords greater opportunity to literally "follow the money" in search of gainful employment.
5. Also, a smaller agrarian workforce is less prone to seasonal employment/unemployment swings.
6. The political party that has historically provided safe haven for Progressive populist (farmer-labor) reformers has been partially captured by the forces of industry-capital.
7. The American public, arguably, is more effectively propagandized against populist reform measures by a corporate-media communications complex than at any time in our history. Granted, most 19th- and early 20th-century urban newspapers were rabid right-wing house organs, but their reach (pretty much limited to the core and inner-ring suburbs) was far smaller in scope, and their ability to impact public opinion much smaller. And prior to the 1930s, there was no radio to speak of, or TV to use as an additional propaganda tool. A cotton farmer in 1920s Arkansas, for instance, may never have read the warnings of the editors of the New York World that Bolsheviks and Wobblies were threatening his livelihood; in a simpler cash-and-carry economy, he knew from experience, and from the experiences of his neighbors, that bankers and commodities traders were his biggest threats. Today's Arkansas cotton farmer need only switch on his AM radio (in the hinterlands, still the only reliable radio signal absent satellite) and hear nothing all day but economic falsehoods and fabrications from Rush, Levin, Hannity et al. In the evening, he need only switch on CNN or ABC to hear Wolf and Cokie remind him that the reactionary rant he's listened to all day is simply one among many equally valid and competing opinions for policymakers to consider when crafting legislation. The net impact of this has been that millions of voters---particularly in rural areas---who would normally have been the most receptive to populist political appeals in the past have been scared/cajoled/persuaded/deceived into believing that redistributionist economic policies that are in their own best interests are, in fact, subversive if not downright traitorous.

So, summing up: The social safety net has helped. Unemployment is nowhere near as bad as it has been, or could be. Fewer workers stuck on the farm. A more educated workforce has more assets (real estate) to use as a hedge against destitution, as well as greater social mobility to leverage in search of employment. The former political refuge of populism (i.e., Team Democrat) has morphed into a corporatist advocacy group with a liberal social conscience. And a cable/radio media-industrial complex that most people rely on for their news and information has done the job its corporate sponsors have paid it to do, keeping Americans functionally ignorant of the principles of economics, and frightening them into opposing any attempts to alter the political status quo. I guess this is a long-winded way of saying that for Progressive-style populism to ever take root again in this country, the economy will need to hit its absolute rock bottom, with 30-percent unemployment, many millions more Americans living in homeless squatters' camps, food riots in major cities, etc. And even then, I'd be inclined to wager that Francisco Franco wins out in the end over Fightin' Bob LaFollette. At least, that's how I see it as long as the old white guys are running the Republic.

---Baron V

Consumer Choice

A new Peet's Coffee just opened a couple of blocks down the street from me. Good timing!

Baristas at a number of Starbucks locations in Washington, D.C., have been writing "Come Together" on coffee cups to encourage lawmakers to reach a deal ahead of the year-end deadline to prevent tax-rate increases and spending cuts. A spokesman for the coffee chain said Friday that the company would be expanding its effort to locations outside of Washington.

"Stores from across the country have been asking if they could join in and we have been saying 'absolutely yes,'" Starbucks spokesman Jim Olson said in an email according to Reuters. "Based on this unprecedented response, we are inviting all of our partners at U.S. stores to start signing their customers' cups with Come Together through next Friday."

---Baron V

Today's Worst Person

Third Way concern troll Jim Kessler:

When he meets with lawmakers, Kessler cites Lyndon Johnson’s Great Society, which built the safety net, and John Kennedy’s New Frontier, which spurred innovation and sent a man to the moon, as critical benchmarks. In the mid '60s, when these programs came into being, federal investment outpaced spending on entitlements 3 to 1; in 2012, that ratio was reversed, and in 2020, the nonpartisan Congressional Budget Office says spending on entitlements will dwarf government investments 6 to 1. “Entitlements are eating up the entire budget,” says Kessler. “We used to do great things---we sent a man to the moon, we built the highway system, we cured major diseases, and really invested in kids. Now we do what we can. The safety-net programs are critically important, but we’ve got to figure out a way to afford the safety net we spent a century trying to create.”

Yes, we used to do a lot of "big things" in this country because we had a simple policy mechanism in place to pay for them. Restore that simple policy mechanism, and we can do a lot of big things again while ensuring that our fellow citizens can spend their retirement years in dignity, free from fear of want and destitution. Put another way:

Liberals should spend their time in office figuring out how to implement a sticky liberal agenda, one which is hard to dislodge, not figuring out how to create a pot of money for Republicans to steal when it is their turn.

---Baron V

Freedom Breaks Out

I can recall a time in our recent history when the disclosure that government law-enforcement agencies had surreptitiously conspired to surveil, harass and disrupt the lawful actions of nonviolent protest movements would have been considered, well, a big fuckin' deal! In the Watergate era, revelations of this sort were an informational bombshell that eventually blew up a Presidency, and the patterns of illegality that were uncovered by our major media outlets in the wake of these disclosures spawned massive public Congressional investigations that resulted in tough new laws limiting the domestic reach of our burgeoning national-security state.

Nowadays, though, the disclosure that government law-enforcement agencies have surreptitiously conspired---in concert with major financial institutions---to surveil, harass and disrupt the lawful actions of nonviolent protest movements is routinely ignored by our major news organizations, and the only actions taken by Congress in response to disclosures of lawbreaking of this sort is to provide full legal cover for continued future lawbreaking. All of this has happened on the watch of a radical socialist President,
mind you.

Not sure how we should interpret this state of affairs, but if we heard that some foreign government's secret police were colluding with entrenched corporate interests to harass nonviolent political dissidents, while its state-sanctioned media outlets blacked out all coverage of it, we'd rightly condemn it as an authoritarian state where individual freedoms of speech, protest and association were not respected and, in fact, were being repressed. Good thing that kind of government can't ever happen here.

---Baron V

Probably The Best Way Forward

A key take-away, I think, from our prospective plummet off the Fiscal Cliff is the fact that the serious persons who are pleading with us not to do it have been wrong about pretty much everything else in the past. Which means that maybe, just maybe, it might actually work to the long-term benefit of the commonweal:

If the government does nothing for the entirety of 2013 to offset the tax hikes and spending cuts mandated as of January 1, the CBO forecasts a recession of more than 1 percent in the first half of 2013---but then 2 percent economic growth in the second half, accelerating even more in 2014. Over a decade, these measures will likely reduce deficits by as much as $10 trillion. We are so focused on the short-term pain of this cliff that we haven't taken sufficient measure of the long-term benefits.

No, the indiscriminate cuts are not the best way to balance the budget. Unemployment benefits are not extended. So the tens of millions of people already stretched to the edge will see moderate tax increases. Needed government programs will also be trimmed.

Yet, as dysfunctional as Washington is, the chance of nothing being done to address this over the next months is close to zero. No Congress would likely welcome the reality of 12 million people with no income.

But much of the rest---including reducing unnecessary defense spending and raising taxes on the wealthy---are measures that need enacting and now look likely to be.

So here we have what is labeled a worst-case scenario---going over the cliff---that yields long-term advantages, with its worst features easily remedied.

---Baron V

Light Blogging Day

More family crap to attend to in Goldwater Country today, so posts will be minimal. If you need something to do while I'm away, you could always make some plans for next week!

---Baron V

Manipulating Markets

It's also known sometimes as "distorting" markets, but there are often good reasons for governments to do it via the tax code. One reason is to encourage/incentivize private-sector investment in financial instruments that convey a high level of social utility, such as public transportation and infrastructure bonds, that afford the opportunity for capital improvements in roads, water works, electrical grids, etc., that state and municipal governments would otherwise find difficult to finance. How to incentivize? Well, making the interest income on these investments tax-exempt or tax-deferred is an excellent stimulative approach, so naturally, our leaders are discussing ways to get rid of such exemptions in the name of fiscal responsibility:

Higher utility bills could become a reality . . . if Washington decides to curb tax exemptions on municipal bond interest as part of a bid to avert the fiscal cliff, a move that House speaker John Boehner has said he's willing to consider. Eliminating, or even just curbing, the tax break could chase investors away from the bonds, raising borrowing costs for municipalities across the nation. To pay for that, cities would have to pass off the cost to residents in the form of higher rates, or by putting off needed improvements to infrastructure.

---Baron V

Phony Democracy

It's like what they have in countries like Mexico: You know, with a constitution and elections, and a President and a legislature and competing political parties, but it's just tacky window dressing to conceal the fact that the nuts and bolts of policy aren't actually decided by elections or Presidents or parties but by a bunch of unelected oligarchs who govern by throwing tantrums whenever they don't get what they want. Good thing that kind of government would never be allowed to exist here!

The stock market is getting increasingly skittish as the country approaches the fiscal cliff, but it may take a sharp plunge to snap lawmakers into striking a deal [...]

This steady decline is worrisome enough for market watchers, but Wall Street’s fears are unlikely to jolt lawmakers into action unless the Dow dives in a fiscal cliff panic, several senators said Friday.

“Sometimes a volatile market is what it takes to make them see the light,” said Sen. Tim Johnson (D-S.D.), chairman of the chamber's Banking,Housing and Urban Affairs Committee.

A market shock would “absolutely” add impetus to strike a cliff deal, said Ohio Republican Rob Portman. “People here are very attuned to the market,” Portman said. “We’ll see what it does Monday.”

---Baron V

Only Unhinged Marxists

Would be delusional enough to insist that we live in a nation that prioritizes private profits over public health and safety as a routine matter of policy:

Twenty-five years ago, the EPA and Wyoming officials agreed that polluting the water beneath Christensen Ranch was an acceptable price for producing energy there.

The Safe Drinking Water Act forbids injecting industrial waste into or above drinking water aquifers, but the EPA issued what are called aquifer exemptions that gave mine operators at the ranch permission to ignore the law. Over the last three decades, the agency has issued more than 1,500 such exemptions nationwide, allowing energy and mining companies to pollute portions of at least 100 drinking water aquifers.

Shortsightedness aside, I'll never understand why more people in this country haven't demanded over years that our natural resources be nationalized. It's bad enough that mining/energy companies are essentially given the mineral wealth for free, and it's even worse when taxpayers are left to shoulder the clean-up costs. Guess the decades-long PR campaign waged by industry and their friends in our policy and media elites to convince people that nationalization is a precursor to East German-style socialist tyranny has paid off handsomely because almost no one ever discusses it as an alternative. At the very least, you'd think there would be some active movement afoot to outlaw any resource-extraction method that degrades our drinking water, but au contraire, our leaders not only encourage it, they seem to enjoy bragging about it to their constituents.

---Baron V

Friday Night Music Blogging

Because we've always only been in it for the money.

---Baron V

Could Write This Every Day

And it seems as though I do, but it always bears repeating that much of what we deem "economic behavior" is not some series of self-correcting activities that, in the aggregate, seeks a state of equilibrium as in nature but a series of arbitrary decisions aimed at extracting profits and generating dividends for shareholders out of one or more sectors of the market. There are many means to accomplish this, of course, but one method involves the deliberate and intentional impoverishment of tens of millions of people via rent-seeking. It's lazy and cruel, and it rewards moral hazard, but it is ruthlessly effective, and when it happens, governments are justified to intervene on behalf of the injured parties---to impose equilibrium when markets have spun out of balance and have exacted social costs that are beyond the market's ability to absorb them. Unfortunately, we don't have that kind of government in this country:

People who are underwater on their home mortgages probably will accept “significantly” lower wages than other homeowners, according to a study published this month by the Federal Reserve Bank of Atlanta [...]

They cite data showing that 31.4 percent of U.S. homeowners were underwater in the fourth quarter of 2011. People in that situation tend to value employment more than those with significant housing wealth do, because without a job they would default on their home loan, Cunningham and Reed said. They thus are willing to accept lower wages than their counterparts.

Their study found that being underwater is associated with a wage decline of between a 5 percent and 9 percent.

---Baron V

Random Thought II

If I told you that the average American consumes 600 pounds of dairy products per year, you'd probably think I was pulling a number out of my butt. You would, however, be wrong, so considering that (a) most dairy products are loaded with fat and cholesterol, and (b) the Republic is suffering from an obesity crisis, would it be such a bad, bad horrible thing to remove government price supports and allow the price of these products to rise to a natural, i.e., non-manipulated level? It would be what we used to call a "market-based solution," one that disincentivizes unhealthy lifestyle choices that doesn't involve invoking junk-food taxes or similar legislative stunts. Yes, there would have to be some compensatory element to such a policy change that would "foam the runway" for dairy farmers, but on the other hand, a less-obese population should translate into lower health-care costs, which benefits everyone in society. Just a thought.

---Vitelius