Thursday, December 20, 2012

Mainstream television: Still Going to Pretend Republicons are Responsible?

Now with the Boehner plan "B" fiasco this evening, it has become completely clear that the Republican House has people who are not willing to compromise in any way. So NBC, CBS, ABC, CNN, are you still going to pretend that both sides are equally responsible for the artificial budget mess?

Stay tuned....

Tuesday, November 27, 2012

The Supply Side Myth Destroyed Once Again

For those who tenaciously persist in supporting supply-side economic tenets, here is another dagger in your heart. A senior Congressional Research Service staffer and Ph.D. economist (University of Michigan) – Thomas Hungerford - recently authored an economic analysis of reductions in the top marginal tax rates since 1945 and their relationship to economic growth and development.  A central tenet of the Republican “con” is of course that tax cuts for the wealthy will have dramatic trickle down benefits that will massively stimulate the economy.

Before describing the results, I should note that the report, while initially released on September 14 by the CRS - a non-partisan arm of the Library of Congress (,  it was pulled back by Senate Republicans and Senate minority leader Mitch McConnell.  According to the New York Times, McConnell and other senators “raised concerns about the [report’s methodology] and other flaws.” More temperate Republicans of course note that the report is accurate and is difficult to refute

As soon as I read the author’s appendix (which referred to a variety of very careful multivariate tests and corrections for heteroscedasticity as well as auto-correlation in a time series analysis), I was convinced that the Kentucky senator’s methodological concerns were shaped by the same band of Republican analysts that served Karl Rove so well in Ohio during the presidential election.

After a series of time series analyses Hungerford concluded two things:

a)    first, that changes in the top marginal tax rates over a 65 year study period had virtually no discernible effect upon economic growth (savings, investment, or productivity growth) – thus clobbering empirically a central tenet of supply siders;  we appreciate this intuitively since during the 1950s the top marginal tax rate was above 90% and the per capita GDP increased by 2.4% during this period. while in the 2000s the highest marginal tax rate was below 40% yet real per capital growth in GDP was less than 1%;

b)   however, top tax rate reduction does increase the concentration of income at the top of the distribution. Thus, as Hungerford observes, the share of income accruing to the top 1/10th of 1 percent of U.S. families increased from 4.2% in 1945 to 12.3% by 2007.  In short, while marginal tax rate reductions for the wealthiest among us may have no discernible effect upon overall economic productivity, or the size of the entire economic pie, it certainly appears to have very direct effects upon the way in which that economic pie is sliced up – with larger and larger pie shares going to the wealthy.

Friday, November 23, 2012

President Obama: Invest in America and Bring on the Charts!

What should be the priorities of the Obama administration in Economic policy for the second term?

The FIRST priority is very simple: invest in America. As noted here repeatedly, the foundation of long-term economic growth in the private sector is government investment in public goods and services: infrastructure, education, research, and public health.

But now we have conditions that promise huge short-term benefits for government investment. We have a very sluggish economy, high unemployment, and record low interest rates. This is a classic situation of a Keynesian 'liquidity trap' where government spending can bring us out of a downturn. The spending on public goods and services will directly hire both government workers and private contractors, and, through the multiplier or ripple effect this will gain still more jobs. Furthermore, we have a crying need for investment in infrastructure. Not only can we benefit from upgrading our transportation, power and communication infrastructure, but it is now in crying need due to deterioration from delayed maintenance.

The arguments for government spending on investment now are overwhelming. The only thing holding them back is the misguided belief that austerity—cutting back on government—and tax cutting are a better way to get the economy to grow. That these policies will help is contradicted by recent evidence all over the world. Austerity policies in England and the Euro zone have put both into recession, where we have stayed out of returning to it. And tax cuts during the Bush administration did not produce growth, whereas tax increases in the Clinton administration did. And therecent report by the Congressional Research Service, suppressed by the Republicans, confirms the failure of tax cutting as a stimulus to economic growth.

The other argument is that public debt is a short term economic crisis. As Paul Krugman and others have argued, it is not, and long term we can grow out of debt, as we did after WWII. That is providing we have growth, which public investment together with private initiative and investment will create.

Because of the dominance of these "zombie ideas"—refuted but still quoted as God's truth—a SECOND priority is critical. The President must publicly and openly discredit the zombie ideas of Reaganism: the the unholy trinity of cuts—cutting taxes, government and regulation cuts. President Obama has not used the "bully pulpit" to rebut these arguments, and they are the foundation of the opposition.

To let opposition arguments go unanswered is bad politics, and disastrous politics when dealing with Reaganism. The TV press will not go into policy issues, as a rule, and only the President making an issue of them publicly will force public discussion. Here Obama can turn his professorial background to good use. He should have a series of press conferences which he introduces by advocating his own policies, such as the American Jobs Act, and then refute the Reaganist zombie ideas with charts of recent economic facts. When Ross Perot used charts in his debates with Cllinton and Bush I, he changed the national conversation, It is time for Obama to do the same. BRING ON THE CHARTS!

Saturday, November 10, 2012

Romney: Crushed by Science

It is a delicious irony that Romney and his campaign were, by all reports, truly shocked by their decisive, broad-based defeat by Obama.

If they were looking at those who average the polls, like Nate Silver and others, they shouldn't have been shocked at all. But they were ridiculing and insulting these, and insisting that they were completely confident that Democrats couldn't turn out the people which they claimed they could do.

They also ridiculed the Obama get-out-the-vote effort, in which I was an active soldier, as futile. This was in spite of the fact that research had shown the personal contact, such as takes place in door-to-door efforts, is by far the most effective.

In short, they "knew" that the results of research could be ignored in favor of their myths. This was a piece with the whole Republicon Party, and shows they are deeply flawed, not only in their policies, but also epistemologically: they don't believe in science, in learning from solid information and data. They can ignore reality—NOT, as Dana Carvey used say.

It is thus entirely just that they were ultimately defeated partly by their firm belief in their own counter-factual mythology.

Here are two great summaries of the Republicans being out of touch with reality. The first is by Rachel Maddow, from her show:

"Ohio really did go to President Obama last night. And he really did win. And he really was born in Hawaii. And he really is legitimately President of the United States. Again.

"And the Bureau of Labor Statistics did not make up a fake unemployment rate last month. And the Congressional Research Service really can find no evidence that cutting taxes on rich people grows the economy. And the polls were not skewed to oversample Democrats. And Nate Silver was not making up fake projections about the election to make conservatives feel bad. Nate Silver was doing math.

"And climate change is real. And rape really does cause pregnancy sometimes. And evolution is a thing. And Benghazi was an attack on us, it was not a scandal by us. And nobody’s taking away anyone’s guns. And taxes have not gone up. And the deficit is dropping, actually. And Saddam Hussein did not have weapons of mass destruction. And the moon landing was real. And FEMA is not building concentration camps. And UN election observers are not taking over Texas. And moderate reforms of the regulations on the insurance industry and the financial services industry in this country are not the same thing as Communism."

And Here Krugman hits the right's pertinacious ignoring of contrary information in its economic analysis:

"A lot of 1-percent Romney supporters believed that only the unwashed masses could actually believe that Obama was making more sense on economic policy. What’s so strange about this is that everything — everything — that has happened for the past decade has demonstrated the opposite. Modern Republicans are devotees of faith-based analysis on every front.

"On economics, in particular, they are devoted to supply-side fantasies that keep being refuted by evidence — and their reaction is to try to suppress the evidence. They’ve spent pretty much the whole past four years issuing dire warnings about inflation and soaring interest rates that keep not coming true; they cling to the belief that if only a Republican were in office we’d have a 1982-style recovery even though economists who actually studied past financial crises predicted the slow recovery in advance.

"The truth is that the modern GOP is deeply anti-intellectual, and has as its fundamental goal not just a rollback of the welfare state but a rollback of the Enlightenment."

Thursday, November 1, 2012

'Confidence' is a confidence game

Dean Baker writes a brilliant debunking of the Republicon line that the problem with the economy is 'confidence'. In fact as he documents here consumer spending is back up to pre-bubble levels. Investment in commercial buildings, where there is still a backlog from the bubble, is down, but not likely to return until vacant buildings start filling up. However, other investment, as indicated by investment in equipment and software is also almost up to pre-recession levels.

So no, Romney is not 'the confidence fairy', as Krugman puts it derisively, but just a confidence man.

ps. See this earlier post, also referring to a strong argument of Dean Baker against the 'confidence' claim.

Monday, October 29, 2012

Conservative calls out Romney as greatest liar in Presidential campaign history

Here is Norm Ornstein of the conservative think tank, American Enterprise Institute:

“I think there’s nobody like Romney,” says Ornstein. “Romney is like the Michael Phelps of presidential candidates. If you’re looking for gold medals in terms of audacious lying, and adamant refusal to turn over personal information, nobody comes close. I’m sure others would’ve liked to have done it, but the culture in the past was one where lying attracted some level of approbation and shame.”

What is outstanding here is not the observation, but the source, a respected observer of politics at a conservative think tanks. For a catalog of Romney's lies see Steve Benen's series at Maddowblog, Chronicling Mitt's Mendacity, now up to installment forty!

Friday, October 26, 2012

Yes, government is an engine of job creation!

Of all the damaging myths about the economy, the top one is probably that the government is not an engine of job growth. The latest evidence of this myth is a Washington Post column by Robert Samuelson attacking a New York Times editorial supporting the idea that government creates jobs, accusing it of having a 'flat earth' view of the economy.

But the 'flat earther' here is Samuelson. As we have discussed earlier in this blog, former World Bank economist Isabelle Tsakok in her book Success in Agricultural Transformation has looked across countries and history to identify what was necessary to transform from a poor economy with subsistence agriculture to a rich, modern society. In 100% of cases sustained investment by the government in public goods was key. These investments include in infrastructure, education, and research.

Her cases include the USA. The first huge investment was in the Erie Canal, which Thomas Jefferson labeled as "a little short of madness" as a big government, big debt project. But New York Gov. Dewitt Clinton got it funded by New York State government, and when it was built it reduced the price of Midwest grain by 90%, broke the trade barriers in Europe, enabling midwest grain to go all over the world and making New York the biggest city in the world. In other words, government investment in infrastructure was the key to making the US a world economic power.

And it didn't end there. There was a fellow in the then frontier West who aspired to be the DeWitt Clinton of his state. And when he was elected President, Abraham Lincoln in fact became the 'great investor' in the USA, with the homestead act, initiating the transcontinental railroad, the land grant colleges, and many other projects.

And this critical role of government investment in public goods remains the foundation of job growth in the US. The Apollo funded the creation of the microchip, foundation of the US computer industry. And DARPA, the defense department investment program, funded the beginning of the internet.

Samuelson's key argument is that while the government creates government jobs, that money could be used to create a private sector job. He writes, "Government is not creating jobs. It’s substituting public-sector workers for private-sector workers."

The huge blunder and hole in this argument is the assumption that the government job does nothing to leverage private sector jobs. But in the USA from the Erie Canal to the Internet, and from worldwide evidence over all of history cited by Tsakok, this assumption is the opposite of the truth. Government investment is in fact a necessary, critical engine of progress. Samuelson here is the flat earther, not the New York Times.

Wednesday, October 17, 2012

Investing in America: What Romney and Obama got right and wrong in the debate

In the second Presidential debate yesterday, the heart of Romney's economic case was wrong, and Obama pointed it out—partly, but only partly. Simply cutting taxes on the rich is not going to create a boom in economic growth and jobs; it never has.

But Romney is now arguing that his lowering of rates on the rich he is going to make revenue neutral from each income level—or that's what I think he's arguing, it's hard to tell. But how is this supposed to suddenly create jobs? If it's revenue neutral, then there is no more money in the hands of the 'job creators,' so why under Romney's theory would there be any more job growth? In reality, when there was such a restructuring of the tax code, in 1986 there was no significant impact on job growth in the subsequent five years, as Bruce Bartlett, who was a Reagan advisor, points out. He also links to a report of Martin Feldstein, Romney defender, who says that the 1986 restructuring had no effect on employment.

Obama's attack on the failure of 'trickle down' is on target. But his failure to articulate the key role of government is extremely disappointing. Here is what he said in answer to a question from a 'Barry':

"Barry, I think a lot of this campaign, maybe over the last four years, has been devoted to this notion that I think government creates jobs, that that somehow is the answer. That’s not what I believe.

"I believe that the free enterprise system is the greatest engine of prosperity the world’s ever known. I believe in self-reliance and individual initiative and risk-takers being rewarded. But I also believe that everybody should have a fair shot and everybody should do their fair share and everybody should play by the same rules, because that’s how our economy is grown. That’s how we built the world’s greatest middle class."

First of all, the government does create jobs. Every government job is a job with real pay. This isn't to say that every single government program is a good idea and every single federal employee is productive, but they are real jobs. As someone pointed out, the sight of a bunch of congressmen, who all have real federal jobs, saying that the government doesn't create jobs is on its face self-refuting and ridiculous.

One way these government jobs are important is that they contribute to consumer demand, the 'multiplier' or 'ripple effect', where the spending of employed people boosts the economy. This is why the Republicans blocking the American Jobs Act, which would have reversed the contraction of 700,000 state and local workers—teachers, firefighters, and police—has contributed to the stagnation of the economy.

But aside from creating demand, which is a cyclical issue, there is a critical role of government in creating jobs in the private sector. This is not simply a matter of "fairness," as Obama has it, but of government investment in public goods, which creates the conditions for economics growth and jobs in the private sector. This includes investment in infrastructure, education, and research.

As mentioned before in this blog, the book Success in Agricultural Transformation looked all around the world and throughout history to see what was necessary to change from a poor, subsistence agricultural economy to a modern prosperous one. And in every case sustained investment in public goods was necessary, and key. And in recent times, we have seen this continue in the US. The microchip was invented as part of the moon landing program, a public program. And the internet began as part of DARPA, a defence department research organization.

The point is that investment in education—and Romney has poo-pooed investment in teachers—infrastructure, research, and—yes—keeping the population healthy all are critical government functions that are necessary for economic growth. Such government investment was historically around 15%, but the Romney austerity goals would reduce it to 5%. This is a policy of eating our seed corn. So it is harmful in the short term, because we still need counter-cyclical stimulus, and disastrous in the the long term.

Obama's motto should be "Invest in America"; he needs to get with the program. And yes government both creates jobs directly, and is plays an essential role in enabling private sector growth to happen. Admittedly, Obama has at times emphasized that these are investments. But he doesn't seem to 'get' that this is a core, essential role of government. Romney's basic argument is that a dollar in the hands of the rich is always better than a dollar taxed and then invested by the government in teachers, researchers, infrastructure, and health. But all of history refutes this. Obama needs to counter Romney's magical 'Believe in America' by saying that if you really believe in America you have to invest in America. Romney doesn't believe in America, he believes in the wealthy.

Monday, October 15, 2012

Exposing the Romney Shell Game

One of the difficulties that Obama had in dealing with Romney is that at their core, Romney's proposals are a shell game. On most issues he has different positions or promises that are inconsistent, either blatantly or subtly. When attacked on one, he asserts an inconsistent or incompatible one—the one his current audience wants to hear, he thinks.

Make no mistake, Romney is a clever deceiver. That is because he creates so much confusion that he is hard to get a handle on. The best approach is what the late Ted Kennedy did, to start by calling him 'multiple choice,' by revealing the game that he is playing.

For example Romney made very clear that he has contempt for the 47%. He has also said that he cares for the 100%. Which one is the real Romney? We don't know, but we do know that at least one of them is lying.

Will Obama expose the game tomorrow night? I'm afraid the presidency may hang on it.

Wednesday, October 3, 2012

Obama fails to call 'liar' on Romney

Romney tonight, in the first debate lied his head off about his own policies. And Obama looked down, refusing to call 'liar'. Can he win like this? As I've said earlier in this blog, I've advocated the necessity of calling liar on Romney. Others have done it. I think Obama could have done a lot better, by putting Romney on the spot by asking for specifics, instead of just complaining about the vagueness of Romney. He'd better figure out the formula for the next two debates.

Sunday, September 23, 2012

Myth of the Free Market II: Milton Friedman Bamboozles the US

In a previous post, I noted that Milton Friedman re-labeled laissez faire economics, which advocates permitting big business monopolies, as "Free Market Economics." He thus somehow turned a defense of big business into a claim of protecting individual liberty.

His basic ploy was to slide between two views: 1.) the idea of an ideally competitive market, which has never existed, but can serve individuals efficiently in classical theory, and 2.) the view that any efforts by government that affect the market do more harm than good.

Paul Krugman, in a fascinating in-depth evaluation of Friedman's legacy, describes, so to speak, three Friedmans. The first was an innovative thinker who predicted the possibility of stagflation, and deserved his Nobel Prize.

The second Friedman was the inventor of 'monetarism,' the idea that a steady increase in the money by the Fed was much better than Fed responding to events. Krugman thinks that the economic analysis behind monetarism was in fact flawed and even dishonest. But in any case, the idea was tried from 1979 for three years and resulted in so much unemployment that it was officially abandoned, and not tried since.

The third Friedman was the promoter of laissez faire ideas, under the 'free market' brand he invented. For Friedman, every government intervention should be replaced by a market solution. In some cases Friedman had clever ideas like buying and selling pollution rights. But in all cases the market was better than the government. Krugman points out that "Friedman's laissez-faire absolutism contributed of an intellectual climate in which faith in markets and disdain for government often trumps the evidence."

It is the 'trumping of evidence' that is the core of the intellectual dishonesty on the right. Two of the examples that Krugman gives are particularly telling. One is "Conservatives continue to insist that the free market is the answer to the health care crisis in the teeth of overwhelming evidence to the contrary." The other is the great benefits of deregulation. Krugman, writing in 2007, cites the disasters involving California and Enron that came out of deregulation of the energy market. Of course, in another year he could point to the financial collapse.

What is particularly devastating against Friedman's free-market absolutism is Joseph Stiglitz's work. Stiglitz won the Nobel Prize in Economics by showing that when imperfect information is present, which it always is, markets are not efficient as Friedman claimed. Stiglitz explains: "The theories that I (and others) helped develop explained why unfettered markets often not only do not lead to social justice, but do not even produce efficient outcomes. Interestingly, there has been no intellectual challenge to the refutation of Adam Smith's invisible hand: individuals and firms, in the pursuit of their self-interest, are not necessarily, or in general, led as if by an invisible hand, to economic efficiency."

Stiglitz writes in his brilliant book The Price of Inequality, "I remember long discussions with [Friedman] on the consequences of imperfect information or incomplete risk markets; my own work and that of numerous colleagues had shown that in these conditions, markets typically didn't work well. Friedman simply couldn't or wouldn't grasp these results. He couldn't refute them. He simply knew that they had to be wrong. He, and other free-market economists, had two other replies: even if the theoretical results were true, they were 'curiosities,' exceptions that proved the rule; and even if the problems were pervasive, one couldn't rely on government to fix them."

To sum up, the myth of superiority of the superiority of 'free market' solutions is now contradicted by both evidence and uncontroverted theory. The superiority of solutions that avoid a government role is simply a myth, an emperor with no clothes. The question now is whether the emperor will be elected on Nov. 6.

Friday, September 14, 2012

Republican misconceptions about private and public debt

Here is a 27 minute video on why Romney is dangerously misguided in his thinking about debt and deficits, from Economist Isabelle Tsakok, Harvard PhD, 30 years at the World Bank. (And, full disclosure, my wife.)

Wednesday, September 12, 2012

Disappointment in American Electorate

Any straight-up comparison of the two major political conventions should convince even the tepidly interested potential voter that Republicans are in serious trouble. However, after weeks of canvassing for Senate Democratic candidate Elizabeth Warren in Massachussetts and  carefully attending to the words of "Blue Dog" working class folks in Fall River Massachussetts (a single-industry textile town for many years which, unlike Detroit, could not rebound after the collapse of that particular single-industry),  I am convinced that  many people are convinced by "fluff" and not "policy" and are strongly anti-intellectual to boot.

Elizabeth Warren's opponent, Scott Brown, won the so-called Kennedy seat after the last lion passed away and a special election was held. His Democratic opponent at that time, Martha Coakley, was and has been a superb attorney general for the state of Massachussetts - but her campaign was feckless  (reflecting the complete arrogance of the Democratic party who assumed that all she had to do was breathe and then glide into office); her Achilles-moment was when she referred to Curt Schilling as a "Yankees fan" (when he was the winning pitcher in the Red Sox route to the World Series championship - against the Yankees no less). Her ignorance was unforgiveable even though it had nothing to do with policy. 

Warren's campaign has focused very heavily upon policy esp. the notion that the tax structure in this country favors the very wealthy and that the hedge fund boys have gotten away with murder.  His has focused entirely upon his canvas workingman's coat and his small GMC truck. She has addressed issues of  substantive importance while he has studiously avoided identifiying himself as a a Republican, or talking about the Republican national platform, or focusing on specific policy issues. 

He runs away from his own party..but features a winsome smile and six-pack abs while signing Grover Norquist's "no tax" pledge and voting for Republicans most of the time. It seems clear to me that two factors are involved in his success to date: a) a clear pandering to a strong strand of anti-intellectualism (you know, the traditional "effete liberal" Spiro Agnew type of criticism which plays well among many white male Irish Catholics disposed to vote against a Harvard University white female professor); and, "localism" (rather than nationalism) in his discussion of key issues. Brown will happily talk about protecting the fishing industry in New Bedford while acting as if the depletion of fishing stocks is not a real problem. 

So..what do we learn about electoral politics from this case study??  In my view, you must relate local problems to the national condition (see C.Wright Mills The Sociological Imagination). Bill Clinton did this superbly in his speech. So did Tip O'Neill who made Reagan's presidency successful. You must also figure out ways of relating  "character issues" to policy. Clinton is eminently successful in doing that; most Dems. are not.

Thursday, September 6, 2012

Bill Clinton's Speech: Passionate rationality can move the public

I've been venting here for a long time about the need for higher level debate, and railing against the 'dumbing down' of the debate.

Repeatedly in this blog, I have emphasized that rebuttal is the heart of debate. Without rebuttals back and forth, you never have a debate, but just two monologues, or, worse, two sets of slogans.

It has been frustrating to me to see the reluctance of Obama to really engage in rebuttal, aside from his lengthy presentation to the Press Club. My most recent post on this theme was on the need to rebut Reaganism. Unfortunately, Bill Clinton couldn't do that, because he was to a serious extent a ratifier of Reagan's destructive ideas. But I am delighted that he punctured the balloon of lies that the Republicans had put out at their Convention.

Steve Benen's lovely piece at Maddowblog makes the same key point: Clinton showed you don't have to be afraid of laying out the facts in rebuttal. You do have to do it simply, and with emotion, but done right it is one of the powerful tools in politics.

Rationality is never conclusive, but it is way underestimated as a tool of politics.

Saturday, September 1, 2012

The Myth of the Free Market

I've been traveling, and now finally the mainstream press are calling 'liar' on Romney and Ryan—who is still more obvious about it.

However, I've been curious about the idea of the 'free market', which actually doesn't make much sense to me. Without government, you don't have much of functioning markets. Even traditional food markets aren't safe. So I asked the question, when did the term 'free market' come into use? The excellent Wikipedia article 'free market' tells the story.

Originally there was the term laissez faire economics. This was actually opposed to Adam Smith, wrongly labelled a free marketeer, as he supported competitive markets and opposed monopolies. If you follow up on the article on laissez faire you will see that originally the term originated when a French government official asked a business man how they could help business, and the business man said 'laissez nous faire', which translates 'let us do,' i.e., let us do whatever we want; leave us alone.

The laissez faire people like Allen Greenspan have argued that you can only have a 'coercive monopoly,' the bad kind that keeps others from competing, if the government backs one player. In other words the wealth of a person or company has no power to distort the market. Ha, ha, ha. Greenspan acknowledged that there was some flaw in his thinking when the financial system collapsed. This is certainly one of those flaws because money enables a person or company to buy out and crush competitors in many ways, as well as corrupt politicians.

The brilliant sales job of renaming laissez faire economics 'free market' economics was Milton Friedman's, in a book called Capitalism and Freedom. What was an idea that it's best that wealthy companies and individuals should be able to dominate small business and individuals suddenly become identified with individual liberty!

Next time someone talks about 'the free market', remember that they are not talking about competition, which is how it is usually sold, but for the freedom of the rich from any check on the power to get whatever they please.

p.s. Now see my follow up to this: Myth of the Free Market II, with more on Friedman, and how Stiglitz refuted him.

Thursday, August 2, 2012

How to Kill a Zombie—the Zombie Ideology of Reaganism

The presidential campaigns seem united in their belief that they should avoid any analysis of policy. Appeal to the heart, and the stomach, but not the head. Nary a chart to be seen in the deluge of campaign ads we in swing states are experiencing. Emotional appeal with heartrending or inspiring visuals, swelling music, and a few slogans are everything.

The history I have personally experienced tells me this is a mistake. People who may not follow the details of a policy debate are still influenced by whether experts regard an ideology as completely discredited. I witnessed this phenomenon with the discrediting of Marxism-Leninism in the ’60s and ’70s. My late teacher Sir Karl Popper argued that the claim of Marxists to be ‘scientific’ was bogus. Most people in Communist countries may have not heard his name, but intellectuals in those countries read The Open Society and Its Enemies, and they didn’t have a convincing reply to its arguments. As a result, Marxist intellectual leaders were disabled in their efforts to sell “we just have to do Marxism better.” The movement was hit from both heart—the moral and economic failure of policies—and the head.

Reaganism is now in the position that Marxism was in the ’70s. Both events and arguments have shown that it doesn’t work and won’t work. But it lives on with increasingly hysterical advocates, who buy its myths and passionately advocate them in spite of huge contrary evidence. Reaganism was and is typified by three things:

1. Reagan’s slogan from his first Inaugural, “government is not the solution to our problem; government is the problem.” 2. Cutting marginal tax rates on the rich is a key to economic growth. 3. Cutting federal government programs and regulations are always a good thing, unless the military is involved.

The truth is that Reagan’s slogan is not only wrong but ignorant. No American politician ever advocated government as “the solution.” And many solutions to social and economic problems require both the government and the private sector. Adam Smith, the pioneer advocate of free, competitive markets explicitly made the case that if government doesn’t prevent merchants from colluding to fix prices, markets won’t be competitive and benefit the consumer. Government regulation is in fact essential to creating and sustaining competitive markets. And Smith emphasized that banks in particular have to be regulated because otherwise financial booms and busts will result.

Further, our recent history flatly contradicts the ideas that low marginal tax rates are the key to economic growth. The chart comparing tax rates and economic growth since WWII shows the highest economic growth in the higher tax years, including Clinton vs G.W. Bush. I could go on and cite the flat income of the middle class since Reaganism has held sway, and so on, but my point here is not to again make the case against Reaganism. The Times’s Paul Krugman is doing that several times a day on his blog, and several times a week in his column. Rather the point is that Reaganism, like Marxism, has become a zombie ideology, which is dead but refuses to die, and has passionate partisans fighting for it, the zombie-in-chief now being Mitt Romney.

So how do you kill a zombie, a zombie ideology? It takes a triple hit: you have to publically discredit it through the heart, the stomach, and the head. It’s the head that is being neglected. It can be appealed to successfully by two institutions acting together, honorably. One of these is the President and his campaign. They need to pile on the evidence, with charts, of the death of Reaganism. The Democrats shouldn’t be afraid of charts, because they work for substantial minority of people, and that’s enough. Ross Perot used charts in 1992 and hugely influenced the campaign.

The Obama’s campaign also needs to pile on expert testimony, like manifestos from credible authorities like Nobel Prize winners and Republican apostates certifying that the Ryan budget would take a wrecking ball to the American economy. Appeals to the head shouldn’t be all of the deluge of ads, but it should be some of them. Is it really a good idea to have two billion dollars for the heart and stomach, and zero for the head? Appeal to the heart and the stomach, but the head too. You need a triple hit if you’re up against a zombie.

The second institution, which will come follow if the President takes the lead, is mainstream television journalism. Television journalists seem to have forgotten the word ‘why’. No TV journalist asks Romney why he thinks that cutting tax rates on the rich will work when the economy grew more under the higher rates of Clinton than the lower rates of Bush. When Romney responds to this question and to follow-ups, both his facial expression and his answer will speak volumes about the zombie status of Reaganism. Hitting the heart, the stomach and the head, that’s how you kill a zombie ideology.

Sunday, July 29, 2012

Why school choice has failed to improve schools.

Why has school choice failed to improve the schools? The concept, argued by Chubb and Moe in their influential book Politics, Markets, and America's Schools was that competition would improve quality in the same way that it has for say, cell phones. This led to a proliferation of Charter schools—paid out of public funds, but independently run—which parents can choose among.

But as Diane Ravitch is documenting extensively in her blog, with the help of a torrent of information from outraged teachers around the country, this effort has failed. There are a few charter schools which are outstanding, but many are worse than the regular public schools, and most are no better.

In spite of the evidence, today the idea that making schools more like businesses would improve their quality has such an appeal that the majority of politicians, including both Democrats and Republicans, are still backing the current trend of school reform, in spite of its demonstrable failure.

Economists have pointed out that many conditions are necessary for a market to work in a way that improves the quality of products and services. When these conditions are absent it is called market failure. If we are going to stop the misguided juggernaut of school choice, we need a good theory of why exactly school choice is an example of market failure.

Paul Krugman I think gave us good clue about educational market failure in his discussion of prison privatization, which has had similar arguments and similar popularity and failure. He argued is that the companies competing for prison building and management are "definitely not ...competing in a free market. They are, instead, living off government contracts."

You don't have a competitive market when there is only one buyer, namely the government. In education we do have more competitive markets, namely in private schools. The buyers of private school education are many parents spending their own money for their own children.

When the government is the only buyer you have what is called a Principle-Agent Problem. The 'principle', in this case parents are having their agent, namely the government, doing the buying of charter school organizations to run schools. The problem is that the agent starts acting on its own behalf, not on behalf of the principles, the parents and their children.

What happens is that government officials get bought off, and give phony arguments to try to get re-elected. Now there are always problems with government contracts, as well as with private ones, and there are many efforts to try to remedy this problem. But the difficulty is that the advocates of privatization pretend that they are free marketeers, and there is a smoke screen over everything. Thus democratic processes, which might counteract the principle-agent problems, are stymied.

Krugman vividly argues this for the case of prison privatization:

"As more and more government functions get privatized, states become pay-to-play paradises, in which both political contributions and contracts for friends and relatives become a quid pro quo for getting government business. Are the corporations capturing the politicians, or the politicians capturing the corporations? Does it matter?

"Now, someone will surely point out that nonprivatized government has its own problems of undue influence, that prison guards and teachers’ unions also have political clout, and this clout sometimes distorts public policy. Fair enough. But such influence tends to be relatively transparent. Everyone knows about those arguably excessive public pensions; it took an investigation by The Times over several months to bring the account of New Jersey’s halfway-house-hell to light.

"The point, then, is that you shouldn’t imagine that what The Times discovered about prison privatization in New Jersey is an isolated instance of bad behavior. It is, instead, almost surely a glimpse of a pervasive and growing reality, of a corrupt nexus of privatization and patronage that is undermining government across much of our nation."

The principle-agent problems are by no means the only market failure at work. As Ravitch points out in a recent blog post, the parents making the choice are usually the poorest and least educated, so that the 'perfect information' that is necessary for the ideal competitive market is absent. But the information problem, I would argue, goes far deeper than that. You can only judge an education system long term. It is much more difficult to assess than a consumer good like a cell phone. In fact it is one of the most difficult things to assess, period. For this reason, the government relying on good research and decades of experience by educators is the only hope, not school choice.

Thursday, July 19, 2012

"We're Broke." —What you mean 'We' Mitt?

One of the key planks in the current right wing con is the idea that "We're broke." Because of this, the argument goes, it is urgent to balance the budget and reduce the deficit. We can't raise taxes because that would hurt "job creators", so we have to savagely cut federal government outlays.

This reminds me of the old Mad Magazine cartoon of E. Nelson Bridewell, reproduced above (click to enlarge). The Lone Ranger and his trusted Indian companion Tonto are surrounded by hostile Indians. The Lone Ranger says to Tonto "Looks like we're finished." Tonto replies, "What you mean, We?"

The United States is today the richest country in the world by far. We have a 15.5 trillion dollar per year GDP. This is double the second largest economy, that of China, which has four times the population. On a per capita basis, we have five small countries ahead of us, but we are the richest of large countries.

Now China is investing 50% of its GDP in infrastructure, and growing at more than quadruple the rate we are. And we are investing only 15% of our GDP, according to these charts.

Admittedly we are very different economies, but at double the total income, do we really need to cut back on our small investments in our future?

Ah, the right wingers will say, you forgot about our crushing debt. That's what makes us have to cut back radically.

That reminds me of another tale from the past. A famous Hollywood director was interviewed by a journalist, who interviewed him on the set of his upcoming blockbuster, and saw him happily in command. The journalist asked him, "How can you be so happy when you are two million dollars in debt?" He answered, "What should I do, cut back on cigars?"

The point is that level of debt in itself is meaningless. The key factors are: 1. The ratio of debt and income, in this case, national income. If you have a high income, you can carry a high mortgage; if not not. You have to look at the ratio. Here our ratio is high, but it has been much higher in the past, during WWII, and we grew out of it successfully after the war. Further, as Paul Krugman points out, Great Britain in its glory years as an empire for half the time had debt at over 100% of GDP.

This points to: 2. Creditworthiness. If you have a brilliant nephew who has been accepted into MIT, then you might be willing to chip in a portion to send him to school. If he is a notorious goof-off, not so much. The US creditworthiness is shown by the willingness of others to lend us money. And the world is falling over themselves to lend money to us even at historically low interest rates.

So "We're" not broke. But yes, we middle class are broke. Our wealth has declined by 40% because of the Reaganomics—facilitated financial collapse and Reaganomics-induced flat income growth for the middle class for thirty years.

So we middle class are broke. But you're not Mitt. You've been raking it in. And you and the rest of you 1 percenters are sitting on 2 trillion dollars, not investing it.

Should you 1 percenters be taxed and the money invested in public goods? Yes, that is something that has proven historically to be oxygen to economic growth. It both creates demand and strengthens public and personal capital, a foundation for growth. Refusal to invest means American decline, and so the debt getting worse in comparsion to income.

So when you say "We're broke," right wingers. I say: What you mean 'we'. Yeah we middle class are broke, but not you. You need to pay up, and stop trying to bamboozle us into thinking that the cure is to make the middle class suffer more.

Thursday, July 12, 2012

When Republican became RepubliCON

Matt Miller Writes an appropriately outraged column on the latest House bill repealing the Affordable Care Act, AKA Obamacare.

He points out with complete accuracy that Obama passed the Republican health care plan. But the Republicans decided that instead of claiming credit, they would oppose it as the work of the devil.

I do think that the summer of 2010 was when the Republicans fully become RepubliCONS, losing all intellectual integrity, and just becoming a con to insure the short term (not long term) interests of the greedy rich.

Now in the irony of all ironies, Romney preaches against is own only claim to fame, and gives no coherent argument as to why, except to fool people and grab power.

Tuesday, June 26, 2012

How the Republicans put Winning over Principle on Health Care

In today's Washington Post, Ezra Klein puts together a fascinating history of how the Republicons organized a massive, coherent, and completely dishonest campaign against the Affordable Care Act. This has made it conceivable that the Supreme Court may rule against the individual mandate, something few thought possible when the act was passed.

As Klein explains, the individual mandate was invented by Republicans and was for twenty years the main Republican plan on health care, and was actually enacted and implemented in Massachusetts.

Once passed by the Democratic Congress and signed by President Obama, the Republicans completely reversed 20 years of advocacy. What is important to understand is that this had nothing to do with what was good policy to help people with health care. Instead, it was a ruthless and vicious effort to regain power, at the expense of the health of the nation.

Stupid and dishonest, but emotional arguments like 'death panels' suddenly arose, and they suddenly discovered that their own policy was a vicious attack on the constitution and what was a primarily private system—and the reason they had advocated it for 20 years—suddenly became a 'government takeover' of health care.

Incidentally, the famous 'broccoli' argument is stupid, and why Obama's advocate didn't answer it forcefully is beyond me. The argument was, if we can compel people to buy health insurance, then we can require them to buy broccoli, which would be obviously terrible and tyrannical. The problem with the argument is that there is no requirement to buy health insurance, there is a financial penalty if you don't. Under the commerce clause, could the government pass a law with a financial penalty if you didn't buy broccoli? Yes. Would it be stupid? Yes. Would it be unconstitutional? No. Somehow all the 'strict interpreters' like Scalia suddenly forget that they are supposed to be judging not what is wise, but what is in the constitution.

Again, zero intellectual integrity on the part of Republicons, including some on the Supreme Court. How many, we'll find out on Thursday.

Wednesday, June 20, 2012

The Ideology of Growing Polarization: A Republican Issue

One of “the-lie-is-more-compelling-than-the-truth” stories routinely advanced by the news media is the notion that increased partisanship infects the body politic of Republicans and Democrats alike. Under this view, uncritically advanced on major news networks, is the notion that the current ideological polarization between the Republican and Democratic parties has grown massively over the past decades (TRUE) but that both political parties are equally to blame for it (FALSE).

Perhaps the best rebuttal of this premise is the work of political scientists Jacob Hacker and Paul Pierson (Off Center: The Republican Revolution and the Erosion of American Democracy).  What they demonstrate quite clearly is that Republicans – far from eliciting broad public support for their actions – have managed to eke out victories on issue after issue – when Americans views of their actions range from dubious (see to downright hostile. That rebuttal of the Republican thesis had been recently underscored by Republicans like Norman Ornstein of the American Enterprise Institute in his book  (see ). Their point: the Republican Party has become an insurgent outlier in American politics, “unmoved by conventional understanding of facts, evidence, and science.”

These are tough words, but empirically, the evidence that Republicans have moved to the cliff’s edge ideologically while Democrats have retained a largely centrist position is unambiguous. For example, issues like a government “safety net” support for the poor are now extraordinarily divisive – not because registered Democrats have moved leftward in their views, but because Republicans have moved rightward big time. Thus, the PEW Research Center notes that the percent who agree that government should take care of people who can’t take care of themselves has diminished slightly from 79% to 75% among Democrats (between 1987 and 2012), but from 62% to 40% among Republicans, a major downslide. Similarly, the percentage who agree there needs to be stricter laws and regs to protect the environment has remained at the 94% level between 1992 and 2012 among Democrats but slid from 86% to 47% among Republicans. These types of trends characterize many of the social values driven policy issues…and reveal clearly that the oft-stated political divide attributable to both Republicans and Democrats is in fact a Republican “problem.” (see )

Friday, June 8, 2012

Judy Woodruff's disappointing interview with Romney backer Pawlenty

Judy Woodruff last night did a terribly disappointing interview with Tim Pawlenty, who is now national Co-chair of Romney's campaign.

What is terribly disappointing is that Woodruff failed to challenge Pawlenty on lies that have long been labeled as lies by reputable journalists who have looked into them.

A key example is the Romney lie that Obama promised that unemployment would below 8% if the stimulus passed. This has been checked into repeatedly over a period of more than a year by Glenn Kessler, of the Washington Post, with interaction with readers who worked on the issue as well. The claim has been thoroughly vetted and investigated, and Kessler in his Fact Checker gives it two out of four Pinocchios, indicating that it is seriously deceptive and misleading.

The bottom line on the claim is pretty simple. In January before Obama came to office Christina Romer and Jared Bernstein did a report with an estimate on the looming unemployment problem. The estimate they came up with was 8% without a stimulus, but they also said that it was very uncertain and could rise to 11%. This was not a promise, but a preliminary estimate, hedged with uncertainty. Furthermore, it was soon revised as Obama's economic advisers saw the true horrifying depth of the crash which had started under Bush.

Obama simply *never* promised that the stimulus would bring the unemployment level below 8%. And because the truth has been pointed out repeatedly to the Romney campaign, Romney's continually repeating a misleading falsehood has to count as a deliberate lie. As Kessler concludes, "Given that we first outlined the problems with this claim more than a year ago — and given that the facts are clearly known to the Romney campaign — it is distressing that Romney would continue hype it up into such a misleading assertion."

It is not the most bald-faced lie of Romney's campaign, but it is one of the most important, because it is the foundation of a deliberately deceitful core narrative that Romney and his campaign are using to try to win the election. This narrative continues with the assertion that the stimulus did no good. This conflicts with the non-partisan and respected estimates of the Congressional Budget Office, and as the linked article says, in a survey 80% of economic experts agree, and only 4% disagree that the stimulus helped.

Now these estimates are counter-factual ("what would have happened"), not hard facts—like what Obama said—so there is always room for argument. But Woodruff should have challenged Pawlenty on *why* he disagrees with the CBO and 80% of Economic experts. What is the basis for his disagreement?

It is very important, in my view, for the Woodruff and the NewsHour to make these challenges, both on the outright lie and on the view at odds with the overwhelming number of experts, precisely because they are respected fair minded. If the NewsHour will not convey the truth the the public, then they are enabling lies to poison the public debate. Surely, it is the duty of journalists to convey the truth to the public. Here is a case where a deliberate lie is being perpetuated, and not called out by Woodruff and the News Hour.

This is particularly important because Romney is systematically avoiding any tough interviews, only appearing on Fox. Pawlenty was a rare authorized spokesman willing to brave some questioning from more objective journalists. And he didn't get that questioning, which is terribly disappointing.

I am going to contact Woodruff, repeatedly, in order to try to get a response, and to urge her or one of her colleagues to do a story on the insistence of Romney to repeat what he and his campaign must know is false. Can you readers of this blog do so as well? One way is to comment on her article about he interviews of Bill Clinton and Tim Pawlenty, in which again she doesn't mention Pawlenty's perpetuation of the lie. Another way is to comment on their feedback form.

NOTE: Kessler originally gave Romney's claim 3 Pinocchios, but later pulled back to two. This was partly in response to a reader who noted that Obama had said that his stimulus plan would create 3.5 million new jobs by 2011. That indeed did not happen, as the economy continued to plunge sharply during the first three months of Obama, and only slowly has recovered. But Romney does not cite that failure for a good reason: though Obama's job creation record is weak, it is far better than the eight years of George W. Bush and Republican policies of tax cuts for the rich. On the other hand the unemployment rate is worse than under Bush, because of the continued overhang of the worst economic downturn since the depression. Thus the truth about Obama's failures is not as compelling as the lie. That they've chosen to repeatedly lie is a story. When is the NewsHour going to cover it?