From a neighbor in MoCo Maryland:
The Future of the GOP
February 8, 2010, 3:09 pm
Henry Olsen’s piece in National Review is a tour de force and worth reading for those interested in the future of the political parties and particularly the dangers that Republicans face in the coming years.
I agree with his advice to Republicans, and most of his analysis of the situation.
First, the analysis. Olsen is right that Republicans have significant demographic challenges ahead. He essentially agrees that there is an “emerging Democratic majority,” a thesis put forth several years ago by Ruy Teixiera and John Judis in a book of the same name. In a nutshell, the thesis is that Democrats have strength in growing demographic groups such as Hispanics and professional educated voters, while Republicans’ strengths are concentrated in the shrinking groups, the elderly and white working class voters. Olsen also in on the same page as Karl Rove and George W. Bush in identifying the need of Republicans to find a way to attract a greater share of the Hispanic vote to go with their existing coalition. Olsen’s account of the Whigs’ inability to knit together their voters and the new German and Irish immigrants points to how a party can not only falter, but self-destruct under such circumstances.
But Olsen does not draw out how difficult a project it will be to create this broader coalition. Bush made strides in this direction, attracting significant Hispanic support in Texas and in each of his presidential elections (particularly in 2004). But the populist vs. elite camps of the party are deeply divided on immigration and may make Olsen’s broader tent impossible.
Olsen’s identifying the immigration issue, plus his call for a conservative pragmatism, seems right. The GOP needs more Bob McDonnells and Scott Browns, not wide-eyed, good government types or stodgy conservatives, but people with a mix of conservatism and at least a part of the populism that is mainstream in the middle class. Of course, it is always good advice to find candidates who can unite your base and reach out to some fellow travelers. And it is easier when your party is in opposition and different factions can unite around what they are against rather than what they stand for.
The part of Olsen’s thesis I am more skeptical of is his account of a growing middle of unaffiliated voters. Olsen notes this divide, the possibility of future Ross Perots and other populist Independents who appeal to the space between the two polarized parties. Here, Olsen is right that we are seeing a growing share of the electorate not identifying with one party or the other. But it is also true that most Independents have strong tendencies toward one party or the other in their voting histories. There are still very few voters who are completely up for grabs from either party. Our campaigns then focus on turning out base voters and Independents who lean toward their party, rather than persuading an undecided middle.
So Olsen’s advice for Republicans makes a lot of sense, but the danger for Republicans is not so much from a middle party taking their support, but rather from the demographic challenges that they face over the next 20 years. Republicans are not likely to self-destruct like the Whigs and be replaced by another party. More problematic for the GOP is the possibility that the Democratic base (both its core members and Independents who lean toward it) grows slowly over time and the Republican base shrinks so that only in very good Republican years can the party hope to win the presidency and command a majority.
Image by peterw8.
A Misleading Statistic on Taxing Small Businesses
February 8, 2010, 11:01 amPresident Obama has proposed letting most of the Bush tax cuts expire at the end of 2010 for households with incomes above $200,000 ($250,000 for couples) while permanently extending the tax cuts for all other households. For high-income taxpayers, the president’s proposals would increase explicit marginal tax rates by 3 to 4.6 percentage points on ordinary income and 5 percentage points on dividends and capital gains. The restoration of a phase-out provision would add another 1.2 percentage points to the true marginal rates. These rate increases would result in higher taxes on the business investment financed by the affected households, posing an obstacle to the capital formation that sustains the productivity and wages of American workers.
In congressional testimony last week, Treasury Secretary Timothy Geithner downplayed the problem, noting that “97 percent of small business owners who file individual income tax returns will be spared an increase in their tax rates.” The Center on Budget and Policy Priorities (CBPP) recently advanced the same argument that only 3 percent of small business owners would face higher rates.
As I have noted elsewhere, however, what matters is the fraction of investment and income subject to the higher marginal tax rates, not the fraction of firms or owners facing those rates. Framing the issue correctly paints a dramatically different picture. As a rough first cut, IRS data reveal that 48 percent of the net income from sole proprietorships, partnerships, and S corporations (the “small businesses” referred to by Secretary Geithner and CBPP) reported on tax returns went to households with incomes above $200,000 in 2007. That number should be reduced slightly to reflect that some of those households (married couples with incomes between $200,000 and $250,000 and taxpayers on the alternative minimum tax) would not be subject to the higher marginal rates. But, the relevant fraction is clearly far, far above 3 percent.
Moreover, the impact on “small” businesses is only part of the story. The rate increases would also apply to interest, dividends, and capital gains paid by corporations (“big” businesses), raising the tax burden on those firms’ investments. The impact on big firms is important because, as Amy Roden and I recently noted, they, no less than small firms, create jobs and contribute to economic growth. Again using IRS data for a first cut, 47 percent of the interest income, 60 percent of the dividends, and a staggering 84 percent of the net capital gains reported on tax returns went to households with incomes above $200,000 in 2007.
Many factors, including revenue concerns, must be considered in deciding whether to extend the Bush tax cuts for high-income households (or for other households). But, it is clear that allowing the rate cuts at the top to expire would impose additional tax burdens on a large volume of corporate and non-corporate investment. An irrelevant “3 percent” statistic should not be allowed to obscure that reality.
The Technology Standpoint vs. the Investor Standpoint
February 8, 2010, 11:00 amJonathan Zittrain is not a fan of how Apple develops its products for the marketplace:
The iPhone’s hybrid model of centrally controlled outside software is already moving beyond the smart phone. This is the significance of the iPad. It could have been built either like a small Apple Macintosh—open to any outside software—or as a big iPhone, controlled by Apple. Apple went with the latter.
But why assume “it could have been built either” way? From a technology standpoint, Zittrain is probably correct. But he overlooks the investor perspective. For Apple investors, the type of platform developed around the iPad matters greatly in the potential returns on investment. Apple has invested over $4 billion since 2005 in its platforms and products—investments that might not have been made were it not for Apple’s innovative hybrid model.
UPDATE: Jim DeLong has a fantastic review of Zittrain’s influential book (The Future of the Internet — and How to Stop It) here. DeLong analyzes the broader intellectual movement of which Zittrain is a part. Of note:
First, there is the movement’s one-sided understanding of economics. No one in its world must make a living, or worry about a return on investment. Large companies don’t help solve problems in organizing human effort; they are malevolent entities. Movement thinkers assume cooperation must be altruistic: if money is involved, it does not count. They are obsessed with the idea that things must be free-not just cheap, or available to anyone willing to pay the price, but free. The towering importance of markets as institutions that facilitate human cooperation is not part of their intellectual or moral arsenal.
A Second Schools Stimulus?
February 8, 2010, 9:19 amThis morning’s New York Times has an important article about schools and the expensive implications of the American Recovery and Reinvestment Act. The stimulus provided about $80 billion to the nation’s schools designed to primarily help our K-12 education system weather the recession. Districts and schools used this money to preserve jobs and existing programs (something I’ve lamented since they were also supposed to use it for reform). At the local level, these funds were seen as a godsend—quick, easy money that enabled schools to largely continue going about their pre-downturn business.
However, state budgets typically continue to suffer long after a national recession ends and education budgets can take even longer to bounce back. So districts’ and schools’ need for quick, easy federal money will extend into the future. The problem is that this $80 billion has almost entirely been used up already.
A number of new studies referenced in the article found that some states used their entire allotments virtually immediately. Others spread it over last school year and this school year. According to one analysis, on average, states have only 14 percent of their funds left to apply to the school year that will begin this fall.
So we should fully expect a growing chorus advocating for a second schools stimulus. They’ll note that the first one saved hundreds of thousands of jobs—thereby contributing to the economic turnaround—and that unless we repeat it, those jobs and maybe more will be lost. At the end of last year, House Democrats introduced such a bill (with a $23 billion price tag), but it didn’t move very far. I wouldn’t be surprised to see a committee hearing and vote in short order.
Does Going to Church Increase Your Income?
February 8, 2010, 8:48 amPurveyors of the prosperity gospel imply that if you have faith, God pretty much has to bless you with financial wealth. Stated so baldly, it’s easy to see that the claim is hokum—were all those poor apostles lacking in faith?
But the simplistic formula that faith equals fabulous wealth may still disguise an intriguing half-truth concerning religion and prosperity. In a piece adapted from their essay in the Heritage Foundation volume Indivisible, the AEI’s Arthur Brooks and Robin Currie discuss some intriguing evidence that religious practice, at least of the Judeo-Christian variety, does have positive economic consequences. This seems to go beyond the idea that religious traditions and ideas can give rise to wealth-producing institutions. There seems to be something about such religious communities that, in real time, enhances the economic prospects not just of its practitioners, but even of the neighbors of practitioners.
Brooks and Currie suggest four reasons for this:
—Religious faith builds healthy social bonds. Social capital, political scientist Robert Putnam called it. Strong connections among us strengthen social cohesion and sense of community. These bonds encourage honesty, dependability, responsibility, accountability, loyalty, sacrifice, generosity, trustworthiness, and transparency. Expectations of good behavior create a “virtuous cycle” in which trade and commerce flourish.
—Faith develops robust human capital. Skills acquired through education and training, when coupled with hard work and perseverance, produce economic value and boost material well-being. Religious people, data show, tend to attain higher education levels. In short, those who live in religious communities do better materially than those who live in secular communities because they’re better educated.
—Faith encourages entrepreneurship. The Judeo-Christian ethic, with its emphasis on private ownership of property, exercising talents, and stewarding resources, paves the way for enterprise, achievement, and fulfilling potential. Many scholars say these are characteristics of Western nations informed by the Judeo-Christian ethic.
—Faith promotes constructive behavior. Emile Durkheim, a Jewish-born sociologist, abandoned the faith of his parents at an early age. In his classic study “Suicide,” however, Durkheim concluded that people of faith who adhered to the constraints of their religious group tend to live happier, more productive lives and contribute to societal well-being.
All this is, of course, contrary to the prevailing meme that the devotedly religious tend to be poor and backward—you know, clinging to their gods, guns, and religion … And yet the evidence is mounting that there’s a positive correlation, maybe even a causal relation, between the observance of some religions and economic well-being. Let’s hope that more economists begin to take notice.
The Pseudo-Scientists of Earthism
February 8, 2010, 8:47 amKenneth P. Green’s recently raised points about saving “climate science” from itself are certainly well taken. By all means, let us rescue good science from the politico-charlatans and at last find how much “there” is really there in regard to climate change.
It will be a formidable task. But before the rescue party sets out—everything in its season—there needs to be a time of staring; a time of drinking in the spectacle, the enormity, as Dr. Johnson might have put it, of what has happened.
I do not mean mere delight in discomfiture (although, I confess, that is fun that some science is “settled” on what is little more than a thumb-sucking term paper). I mean a sober appreciation of how shameless, how contemptuously self-righteous, how immune to scorn the Climategate perpetrators are. It’s not that they don’t get it; it’s just that they don’t care.
They don’t care what the unwashed, the unannointed in the religion of Earthism think. They do not appreciate how exquisitely they fit Goethe’s observation that “as soon as anyone belongs to a narrow creed in science, every unprejudiced and true perception is gone.” And most of all, they do not seem to understand the damage they have done to honest science in the public eye.
Ralph Bennett writes the Automobility column for American.com
Obama Administration Breaks Another Phony Pledge for Transparency
February 5, 2010, 2:20 pmWhether it was promising repeatedly to put all healthcare negotiations on C-SPAN or to not hire lobbyists, President Obama has now shown several times his willingness to break his word.
The latest example comes from the president’s Department of Interior, which has refused to release its own tabulations showing Americans support offshore drilling by a 2-to-1 margin, which was recently confirmed thanks to two requests made by American Solutions under the Freedom of Information Act (FOIA).
In April last year at a forum on offshore drilling, Interior Secretary Ken Salazar said that President Obama directed him “to make sure that we have an open and transparent government” and that “these are not decisions that are going to be made behind closed doors.” Salazar went on to say that President Obama wanted to make sure that the Department of the Interior was “maximizing the opportunity for the public to give us guidance on what it is that they want to do.”
But the latest FOIA revelation shows again that the Obama administration is not serious about openness and transparency, nor was it serious when it said that it cared about getting public input in the offshore drilling comment period.
G-7’s Feast of Seal Meat
February 5, 2010, 1:17 pm
As we wait for the onset of the second winter blizzard, a little diversion. One does not often look to the Financial Times for great humor, though it comes unintended on occasion with quotes on economics from politicians. But this morning’s edition does contain a delicious (no pun intended from later account here) story of Canada’s host plans for a meeting of the G-7 finance ministers this weekend. It is will take place in Iqaliut (I know you’ve heard of it) in the Canadian Northwest Province, just south of the Arctic Circle. Iqaliut, with a average temperature of –40C this time of year, has a population of only 6,200 people but is surrounded by a population of some 1.5 to 2 million seals—and therein hangs the tale. Canada is determined to showcase Inuit Indian culture—igloos, dog sledding, and of course, seals. The “community feast” on Saturday will include the usual caribou, jerky, muskox, but it will also offer plentiful supplies of seal meat, including possibly raw seal heart as well as cooked tenderloins. The delegates will also be given sealskin mittens and waistcoats. All of this will create a kind of Arctic hell for the Europeans, who have mounted a worldwide campaign against seal hunting and all elements of “seal culture” including food and clothing. What to do? One awaits with gleeful anticipation press reports of how the prissy EU ministers balance the politeness expected of guests against the fury of NGOs at home if they are seen munching away on seal tidbits. But as the Canadian health minister, himself an Inuk, has declared, “This is how we live and who we are. Imagine if we said to you that we wanted to take away your cows and your pigs.” Ouch and oink! Have a good blizzard.
Let It Snow, Let It Snow
February 5, 2010, 9:58 am
As Washington, D.C., prepares for a major snowstorm, we’re reminded that handling severe winter weather can be a big test for politicians. In 1969, 15 inches of snow fell in New York City, killing 42 people and injuring hundreds more. The city was unprepared, with the city’s chief environmental officer upstate and unreachable. According to Vin Cannato’s biography of New York City Mayor John Lindsay, 40 percent of the city’s snow plow equipment didn’t function. “For three days, the city was in a state of near paralysis,” provoking a municipal crisis that almost cost the dapper mayor his job. There were allegations that the poorer parts of the city were ignored as available equipment plowed wealthier parts of the city.
Alan Ehrenhalt, the great chronicler of Chicago politics, notes a similar snowstorm in Chicago in 1979 that dumped 20 inches of snow on the city. The blizzard caused a curtailment of transit services, again affecting the poorer parts of the city. “The few available trains coming downtown from the northwest side filled up with middle-class white riders near the far end of the line, leaving no room for poorer people trying to board on inner-city platforms. African Americans and Hispanics blamed this on Mayor Michael Bilandic, and he lost the Democratic primary to Jane Byrne a few weeks later.”
In 1978, snow fell in Massachusetts for 36 hours and dumped 27 inches of snow. Thousands were stranded. According to one account, Governor Michael Dukakis was the only person in state government who went to work during the great blizzard of 1978. During the snowstorm, the governor, clad in sweaters that became a signature afterwards, walked to a local TV studio to reassure residents.
D.C. Mayor Marion Barry, who had his problems with snow of a different sort, was enjoying a vacation and attending the Super Bowl in California when a major snowstorm hit Washington in 1987. As the city struggled to recover, the mayor partied, played tennis, and had a manicure, according to the Washington Post. The fallout from the snow storm led the mayor to declare “We’re not a snow town.” We’ll see.
Image by UpstateNYer; CC-BY-SA-3.0.
Indivisible: Social and Economic Conservatism
February 5, 2010, 5:31 am
The Heritage Foundation recently released a volume, entitled Indivisible, that brings together a number of well-known social and economic conservatives. (I was privileged to serve as the editor for the volume. You can read the whole thing in PDF here.) To make things interesting, those known as social conservatives, like Focus on the Family President Jim Daly, wrote on economic themes, while economic conservatives, like the Wall Street Journal’s Steve Moore, wrote on social issues.
The point of the volume is to show that these two planks of the conservative movement, which have shown signs of estrangement in recent years, are stronger together than apart. Contrary to the popular idea that social and economic conservatism is merely a marriage of convenience, the various essays seek to show that the respective issues are actually interdependent. For instance, in the long run, economic prosperity and limited government depends on moral principles like respect for the property of others and social institutions such as marriage.
Several pieces adapted from the volume have run in papers around the country in recent days. North Carolina’s News and Observer ran articles by Heritage Foundation President Ed Feulner and economist Jennifer Roback Morse; Utah’s Deseret News ran an article by the American Enterprise Institute’s Arthur Brooks and Robin Currie; and the Sacramento Bee ran a piece by Joseph Lehman of Michigan’s Mackinac Center.
Their arguments illustrate, I think, that the intellectual state of conservatism is strong, despite the stereotype—popular in the punditocracy—that conservatism is brain-dead. I’ll discuss these individually in some later posts.
Climate Science: Mend It, Don’t End It
February 5, 2010, 5:30 am
My friend and colleague Michael Barone has the recent climate kerfuffle both right—and wrong —in his Examiner column, “How Climate Change Fanatics Corrupted Science.” What he has right is that all the ugly parts of science, discussed by Thomas S. Kuhn in his landmark book, “The Structure of Scientific Revolutions,” have been demonstrated in the evolution of climate science. Kuhn would not be surprised at what has been exposed in recent months: resistance by climate scientists to outside criticism and review; tribal efforts to suppress publication of contradictory viewpoints; more tribal efforts to give each other flattering reviews; still more tribal agreements (tacit and explicit) to hide mistakes, flawed assumptions, and exaggerations of certainty; and so forth. It has been profoundly ugly. And though it pains me to say it, much of this is “normal science,” which is, as many observers have pointed out, is not a pretty thing when you look behind the curtain.
Still, perhaps Kuhn would be shocked, as he would probably be unable to imagine the extreme, global politicization of climate science, and the enormous monetary flows that follow alarmist claims. This dynamic has produced a sort of “Kuhn on steroids” version of science, in which the normal “revolution” that inevitably overturns the dominant paradigm may face insurmountable political obstacles. Is that a bad thing? Absolutely. Should rigorous investigations and reforms ensue to ensure that such behavior cannot continue? Absolutely. Am I going to write about it in an effort to bring more heat to bear? You betcha.
But should we throw the baby of climate science out with the bathwater? Absolutely not, and this is where I think Michael takes a wrong turn (perhaps inadvertently), by putting legitimate concern over climate change largely into the past tense, and by painting climate science with an overly broad brush:
Some decades hence, I suspect, people will look back and wonder why so many government, corporate, and media elites were taken in by propaganda that was based on such shoddy and dishonest evidence. And taken in to the point that they advocated devoting trillions of dollars to a cause that was based on flagrant dishonesty and dissembling.
There was some basis for concern (emphasis mine).
Michael ends his essay by saying, “People in the grip of such a religious frenzy evidently feel justified in lying, concealing good evidence, and plucking bad evidence from whatever flimsy source may be at hand. The rest of us, and judging from polls that includes most of the American people, are free to follow a more rational path.”
But what is that “more rational path?” Is it to draw the conclusion that the myriad problems of politicized climate science render the entire corpus fraudulent and irrelevant, or is it to re-dedicate ourselves to ensuring that the climate science community cleans house, is properly de-politicized, and is enabled to focus on what is truly important: the genuine, non-trivial risks that human beings face from a climate than can vary sharply over relatively short time periods, whether caused by humanity or by the climate’s inherent natural variability? Let’s face it, it’s all in good fun to joke about mistaken predictions that glaciers are melting, potentially depriving somebody of spring-time melt-water. It’s another thing entirely if the climate were to turn cold, and that glacier started moving rapidly toward your town. You’d really want a heads-up on that one.
I have long been a critic of the Intergovernmental Panel on Climate Change, even as I’ve served as an expert reviewer for two IPCC reports. I have long felt (and written, spoken, and testified) that I believe some climate scientists have egregiously overstated their understanding of the climate system and the utility of their predictive models, and have willingly played into government and media desire for ever more catastrophic scenarios and draconian control schemes while behaving in a viciously uncivil manner bordering on rabid hostility to any criticism of their bad behavior.
But even I have been shocked at the recent revelations of the IPCC: citing materials from the popular press; citing materials from reports by activist, leftist groups like Greenpeace and the World Wildlife Fund; and treating graduate-student dissertations (some of which didn’t even pass!) as if they were equivalent to rigorous studies published in the scientific literature. And yes, some of these people, perhaps dozens of them, deserve to be classed with used car salesmen and trial lawyers. But certainly not all of those involved in climate science and policy, and probably not even a majority.
Just like fighting a war, it’s important to keep up the attack until the enemy surrenders completely, but it’s also important to identify the enemy properly. In that pursuit, I will join others in criticizing the politicized members of the IPCC and the climate science community until it is completely clear that both groups accept the wrong they’ve done; admit where they’ve exaggerated and politicized climate science; and have purged their ranks of people like Michael Mann, Phil Jones, Rajendra Pachauri, and others implicated in science shenanigans both inside and outside of “Climategate.”
But humanity always has, and always will live partly at the mercy of the climate, and I’d hate to go into a future without somebody trying to understand the climate system better, in order to help us avoid, adapt to, geo-engineer away, or otherwise cope with serious climate-related problems. When it comes to climate science and policy, I want to mend it, not end it. Hence, while criticizing, I’ll also accept invitations to improve the process from within as well as without.
That being said, there’s a lot of bad tissue that needs cutting away from the body of climate science, and the sooner the climate science world gets started, the sooner it can get back to serious, objective science, and useful work.
The Vicious Cycle Between the Debt and the Ceiling
February 5, 2010, 5:22 amThe House passed a recent Senate amendment to increase the U.S. debt ceiling. This raises the debt ceiling by $1.9 trillion, moving the total amount that the government can borrow up to $14.3 trillion, the highest level ever allowed. Yet the debt ceiling has never been a limitation on how much the government can borrow, rather is an endorsement by Congress of how much the Department of Treasury has already borrowed.
As the figure below shows, since the Second World War, debt has almost always been equal to the legal limit. The ceiling isn’t a limit; it is the debt. All of this comes from the vicious cycle between the debt and the ceiling. First, Congress sets, and subsequently exceeds, its spending. As long as this spending exceeds revenue, Treasury has to finance this spending by issuing more debt. Treasury quickly hits its limit—think of it like maxing out a credit card. In the meantime, Congress approves more spending, which Treasury now cannot finance. Then Congress raises the ceiling and can approve more spending.
As a result Treasury doesn’t view the ceiling as a bound. In fact, Treasury announces in advance when it’s going to need more debt room. In its debt refunding release last November, the Treasury admitted that, “based on current projections, Treasury expects to reach the debt ceiling in mid- to late December.”
Previously on this blog, Vincent Reinhart wrote that this $75 billion refunding was the largest in history. Just this week Treasury outdid itself by announcing that the next refunding will by for $81 billion in coupon securities. Nor does it show signs of scaling back such purchase. Instead, Treasury’s Borrowing Advisory Committee explained this week that severe cutbacks in Treasury sales could actually damage markets. Like the rest of Treasury, the Borrowing Advisory Committee called raising the ceiling an “anticipated” move.
Delegation of debt to the Treasury and creation of the ceiling have given Congress a nice political cover. Members vote explicitly on the ceiling, not the debt level; too bad it’s congressional spending that creates the need to raise the ceiling in the first place.
America’s Booming Natural Gas Production
February 4, 2010, 3:05 pmFrom Max Schulz’s article “The Quiet Energy Revolution” in today’s American.com:
By marrying and perfecting two processes into a technology called horizontal fracking, engineering has virtually created, from nothing, new natural gas resources, previously regarded as inaccessibly locked in useless shale deposits. Suddenly, the mammoth shale formations in Texas, Pennsylvania, Ohio, New York, North Dakota, and elsewhere have the potential to produce abundant amounts of gas for decades to come.
Human ingenuity has turned theoretical gas reserves—too costly ever to be exploited—into practical resources. And just in time. Less than a decade ago, experts were noting that conventional natural gas production had begun to plateau, despite annual increases in the number of wells drilled.
How ironic that during the ‘drill, baby, drill’ demonstrations as gasoline prices spiked in 2007 and 2008, a silent revolution with natural gas was already underway that will make those concerns largely irrelevant.
The chart below (data here) helps tell the story of America’s booming natural gas production. After a relatively flat period of natural gas production from 1994 to 2006 at about 25 trillion cubic feet per year, the advances in horizontal fracking have boosted domestic production by almost 1 trillion cubic feet on average in each of the last three years, bringing estimated production in 2009 to more than 29 trillion cubic feet. According to a recent Bloomberg report, the United States overtook Russia in 2009 as the world’s largest natural gas producer, largely due to the advances in drilling techniques that have reversed what was once thought to be an irreversible decline in domestic gas production.
Energy experts now estimate that there could be as much as 842 trillion cubic feet of natural gas in shales around the country, which is more energy than all of Saudi Arabia’s oil and represents a 90-year supply of gas at the current usage rate. Thanks to human ingenuity, technological innovation, and the advanced drilling techniques that Max Schulz highlights in his article, America’s energy future is suddenly looking much brighter.
The Gas Pedal Sticks, the Market Works, the Hyperventilation Increases!
February 4, 2010, 10:55 amI’ve been thinking about making an appointment with my old high school pal, Skip Shaffer (he’s an optometrist), but I already know what he’d tell me:
“Ralph, your eyes are glazed over.”
Yeah. Thanks.
It’s from reading all those articles in the press and on the Web about Toyota Motor Corp.’s “pedal problems.”
The auto maker’s “sudden acceleration” woes have been all over the media in reports ranging from mild wonderment that Toyota could have a quality problem to sinister-sounding “What-did-they-know-and-when-did-they-know it?” investigatory forays. The authoritative Automotive News carried things to a new height with its front page this week, featuring a glowering headline in giant type: “TOYOTA’S CRASH AND BURN.”
Toyota’s Crash and Burn? Can “Oh, the humanity!” be far behind?
Well, no. It’s already here, arriving on a cloud of lawyers. In U.S. District Court in Palm Beach County, Florida, where it often appears as if each citizen over age 70 is issued a white Toyota Camry sedan (with its turn signal permanently engaged), a public-spirited attorney filed suit against the automaker on behalf of consumers who, he says, “are scared, they’re frustrated, they want answers.” The answer, of course, is a class action lawsuit and a fat fee for him.
We already have the likes of Henry Waxman (D-NY), Bart Stupak (a Democrat from, oh, who would have guessed? Michigan), and other congressmen “demanding answers” and rushing to warm their hands at the conflagration that supposedly bids to destroy Toyota’s vaunted quality reputation. The Obama administration, no doubt hoping to refurbish its street cred with the United Auto Workers, has put Transportation Secretary Ray LaHood on the scent.
Look, this is a serious recall—a real safety issue that has apparently cost some lives. But the market works. The message has been received and the consequences are unfolding. Toyota has reacted and is obviously trying to fix the problem. There is little evidence that it is being any more recalcitrant than any other corporation or large entity—including the government—whose initial reaction to some charge is a mixture of denial, doubt, and defense. Under ordinary circumstances, this whole affair would have cost the company millions, if not billions. But it is taking a much bigger hit because they are perceived as the New York Yankees of the automobile business. Let’s get the big guy!
Yes, by all means, let’s get to the bottom of the problem. But can’t we dispense with all the end-zone dancing?
Ralph Bennett writes the Automobility column for American.com.
Welcome to Blogland
February 4, 2010, 10:47 amTwo of the smartest analysts of markets—Peter Passell and Bob Hahn—have teamed up to start a new blog, Regulation 2.0. Check it out.
Football Players Take the Political Field
February 4, 2010, 7:51 amFootball fans across the country are gearing up for Super Bowl XLIV. A recent Zogby poll revealed that 59 percent of Americans said they would watch the game, including 24 percent of self-identified “non-fans.” Either the New Orleans Saints or the Indianapolis Colts will emerge victorious this weekend, but could any current players find success in a political career once they hang up their helmets?
Over the years, very few professional athletes have made the jump to politics. The most notable sport figures-turned-politicians are probably former Senator Bill Bradley of New Jersey, a New York Knick in the 1960s and 1970s, and former Congressman Jack Kemp of New York, a quarterback for the Buffalo Bills in the 1960s. The number of professional athletes in Congress reached a peak during the 100th Congress (1987–1988), when five congressmen and one senator had had a sports career prior to their elections. Today, just two members of Congress have backgrounds in professional sports: retiring Senator Jim Bunning of Kentucky was a Hall of Fame pitcher for the Detroit Tigers and the Philadelphia Phillies; and Representative Heath Shuler of North Carolina, a former quarterback for the Washington Redskins, is serving his second term in the House.
But this fall’s midterm elections could bring an influx of new members who had sports careers. In early January, Clint Didier, a Super Bowl–winning tight end with the Redskins, announced that he would challenge Patty Murray for her U.S. Senate seat in Washington State. Jay Riemersma, a tight end for the Bills and the Pittsburgh Steelers, will seek to replace the retiring Pete Hoekstra in Michigan’s Second Congressional District. Additionally, San Diego Chargers offensive tackle Jon Runyan is retiring to run against freshman representative John Adler in New Jersey’s Third Congressional District. Will success on the gridiron lead to success at the polls for these three candidates?
A Frank Discussion of the Pitfalls of Democracy
February 3, 2010, 4:50 pmA detriment to sober thinking about the political future of the United States is a lack of realistic discussion about the nature of democracy, including its problems as well as its strengths. Indeed, Americans tend to prescribe “democracy” to all other nations as a panacea, with little attempt to define the necessary preconditions and the pitfalls.
Thus it is interesting to see that Chinese scholars appear more flexible on the topic, able to voice reservations that would be taboo in the United States, an offense to this particular form of political correctness.
My example is an excellent article in China Daily, “Don’t Rush Into Democracy at Will,” by Zhang Weiying, the director of Guanghua School of Management, Peking University, which takes up such issues as the tyranny of the majority, the relationship between democracy and marketization, the rule of law and political interference with the courts, and the importance of the middle class to freedom and stability:
Since the middle class is sandwiched between the rich and the poor, it acts as the buffer between the two extreme strata of society. If the middle class is not strong enough, the rich could give fairness and justice a silent burial or the poor could rise in revolt. In either case, chaos will descend on society. And only a mature market economy can ensure a middle class that is strong enough to fulfill its social responsibilities. So without a mature market economy neither can China complete its political democratization nor can the middle class perform its role.
He advocates marketization first:
Thus, marketization of the economy is the more urgent task. If a country endeavors to establish political democracy and takes its benefits for granted before marketizing its economy in the real sense, the public will look to governments at different levels to solve problems that they actually could settle themselves.
There is not much sense in immediately reforming governments’ functions and efficiency through radical democratization, because history shows success is hard to come by this way. Almost every surviving democracy that was built before the establishment of market economy has gone through a bumpy and treacherous road. The corollary is: To avoid the treacherous journey before realizing political democracy, a country has to marketize its economy completely.
One can agree or disagree. One should also note that the Communist Party has an institutional interest in postponing democracy, and be wary of treating China Daily as an unbiased source. However, Zhang raises serious points, and China Daily is fascinating if one thinks of it as a window on discussion and argument within China’s ruling circles. (Here is another interesting piece, “Are All Officials Corrupt? No, Says Scholar”—reading between the lines, obviously the Party has an interest in saying “Damn it, we’re trying, and it’s not as bad as you think,” but the acknowledgment of the importance of the issue is itself notable.)
Zhang’s article is taken from a speech at “the Annual Meeting of China’s Reform (2009),” but nothing on this turns up on Google or Bing. The excerpt it well worth reading, to foster understanding of China—and of the United States.
Ch ch ch ch changes… Iran Regime Edition
February 3, 2010, 11:08 amThis looks like a good event (featuring AEI’s Danielle Pletka):
Iran: Prospects for Regime Change
Thursday, February 11, 2010
8:30 AM – 12:00 PM
1777 F Street NW
The ongoing turmoil in Iran almost nine months after 2009’s fraudulent presidential election raises questions about the continued viability of the Iranian regime. With a new round of protests expected in the coming weeks, the Foreign Policy Initiative will host a half-day conference on “Iran: Prospects for Regime Change,” on February 11th, the anniversary of Iran’s Islamic Revolution. Leading Iran experts will examine the state of the opposition and discuss U.S. policy options. With a growing consensus in Washington that the actions of the Iranian regime make a negotiated settlement to the Iranian nuclear crisis unlikely, this timely conference will explore the prospects for change in Iran from within and what the United States should be doing to support Iran’s democrats and resolve the Iranian nuclear question once and for all.
Please RSVP by visiting here.
8:30 – 9:00 Registration and Breakfast
9:00 – 10:15
State of the Green Movement
Panelists:
Reuel Gerecht, Foundation for Defense of Democracies
Mehdi Khalaji, Washington Institute for Near East Policy
Ray Takeyh, Council on Foreign Relations Moderator:
William Kristol, The Weekly Standard and The Foreign Policy Initiative10:15 – 10:30
Break
10:30 – 12:00
U.S. Policy Options
Panelists:
Robert Kagan, Carnegie Endowment for International Peace and
The Foreign Policy Initiative
Danielle Pletka, The American Enterprise Institute
Gen. Chuck Wald (ret.), Bipartisan Policy Center Moderator:
William Kristol, The Weekly Standard and The Foreign Policy Initiative
Religious ‘Moderates’?
February 3, 2010, 9:52 amThe appearance of the word “moderate” is usually a good proxy for media bias. In Newsweek, Lisa Miller reports on religious “centrists” and “moderates” who supported President Obama in 2008 but are now starting to bail on him. Superficially, you might guess that she’s talking about religious voters who are generally conservative on certain social issues but perhaps moderate or liberal on economic issues. They may be strongly pro-life, say, but also be moderately worried about global warming and inclined to think the United Nations ought to do something to stop it. But as “moderates,” they’re bailing on President Obama because he’s moved too far to the left.
Like I said, you might guess that. But only if you thought “moderate” or “centrist” meant, well, moderate or centrist. In reality, she’s referring to voters courted by organizations like Matthew 25, which sought to give theological arguments and cover for left-wing policies.
So she references Sojourners’ Jim Wallis, whose political views are hard to differentiate from the left wing of the Democratic Party except for the theological garnishes. She quotes him complaining, but not because the president has done nothing to discourage abortion or because he has reversed the military’s don’t ask, don’t tell policy, but because Obama hasn’t gone far enough to the left:
“We need a leader,” Wallis told me, “to call not for incremental change but transformational politics. The president could do that. I think he still has it in him, but the American people don’t perceive it.”
Then she mentions Richard Cizik, who, as Miller tells it, is “the erstwhile lobbyist for the National Association of Evangelicals, [who] has just emerged from hiding after being fired for telling NPR’s Terry Gross that he voted for Obama in the primary and supported civil unions.” Long before that, Cizik was actively campaigning for the usual leftish positions on environmental issues. And then there’s the handbook for Christian pastors she mentions, which is published by the “progressive think tank Third Way.”
In short, she provides no evidence for the religious centrists on whom she purports to report. Merely being religious doesn’t make a person politically moderate. These are religious leftists she’s talking about; but alas, that’s not the most marketable label, so they get relabeled as moderates, even when the relabeling contradicts the details of the story.
Survey Says!
February 3, 2010, 9:14 amThe Kauffman Foundation conducted a poll with econo-bloggers, including some from AEI. See the results here.
Despite promising economic growth numbers in the last quarter of 2009, economics bloggers have a grim outlook, according to a new Ewing Marion Kauffman Foundation survey released today. Just last Friday, the U.S. Bureau of Economic Analysis released its advance report of a 5.7 percent growth rate (annualized) of gross domestic product during the fourth quarter of 2009. But even before the fourth-quarter estimate was published, 48 percent of economics bloggers said in the mid-January survey that the economy was “worse than official government statistics show.” Most respondents rate the overall condition of the economy as “mixed,” and 33 percent say it is still “facing recession” or “weak and recessing.”
As Arnold Kling points out that
there are ways in which the survey reflects economists’ points of view that differ from those of others. In particular, I think we understand better than the typical citizen the role that government healthcare programs play in the outlook for the deficit.
My colleague John Makin has a good new paper on deficit myths and realities here.
Reality Check on Taxes
February 2, 2010, 11:53 amThe Drudge Report today played up this article about coming middle-class tax hikes. Although Reuters has pulled the article, many people are still reading it at various websites, so it is important to note and correct its appalling inaccuracies:
– The article asserted that the Obama budget would allow the 10 percent, 25 percent, and 28 percent brackets to expire, boosting those rates to 15, 28, and 31 percent, respectively. In reality, the budget would permanently extend the lower rates.
– The article asserted that the Obama budget would raise the dividend tax rate to 39.6 percent. In reality, the budget would raise the rate only to 20 percent.
– The article asserted that the Obama budget would allow taxpayers’ option to deduct state and local sales taxes to expire. In reality, the budget would extend that option through 2011.
President Obama would permanently extend the Bush tax cuts for households with incomes below $200,000 ($250,000 for couples); statements that the president would allow the Bush tax cuts to expire are true only for households above those income levels. The president has also proposed some additional middle-class tax cuts.
Should this make us happy about President Obama’s budget? Quite the opposite. As Arthur Brooks, Alex Brill, and I have pointed out, the middle-class tax cuts that the president would extend have large revenue losses and do relatively little to promote economic growth. The tax cuts at the top that the president would allow to expire would significantly lower marginal tax rates on saving and investment and promote long-run growth. Letting those tax cuts expire would ultimately harm the middle class by lowering their wages.
Evaluation of the administration’s policies must be based on facts, not fabrications and false rumors. The Obama budget wouldn’t raise income taxes on the middle class. But it would increase marginal tax rates, threatening the long-run growth that sustains the well-being of Americans in all income groups.
Where the Boys Aren’t
February 2, 2010, 10:29 amAccording to a report released last week by the Bureau of Labor Statistics:
At age 22, women were more likely than men to be enrolled in college and were more likely to have received a bachelor’s degree. Twenty-nine percent of women were attending college during the October when they were age 22, compared with 25.2% of men. Moreover, 12.8% of women had earned a bachelor’s degree, compared with 6.9% of men (see chart).
In other words, at age 22, there are 185.5 women holding a bachelor’s degree (or more) for every 100 men who have graduated from college, a ratio approaching two to one. That’s a huge gender disparity in college completion at age 22, but it can be expected that:
1. This huge gender gap will receive almost no media attention, and will be largely ignored by the gender activists.
2. There will be no calls for government studies, or increased government funding to address the “problem,” and nobody will refer to this gender degree gap as a “national crisis,” the way former astronaut Sally Ride described the gender disparity for jobs in engineering, technology, and science (women hold only 25 percent of those jobs).
3. President Obama will not address the gender degree gap by signing an executive order creating the “White House Council on Men and Boys,” like he did last year for women and girls.
4. Neither Obama, Congress, nor the gender activists in academia will address the gender degree gap by invoking Title IX gender-equity law, like they have proposed using for the gender gap in some math and science programs (see here and here).
5. Nobody will blame the gender degree gap on structural barriers from grades K–12 that discourage men from attending or graduating from college, like they do for explaining the gender gap for women in math and science.
In other words, the standard “disparity-proves-discrimination” dogma, followed by calls for government intervention, will not be applied in this case of a huge gender imbalance in college completion by age 22, because the disparity favors women, not men.
As AEI scholar Christina Hoff Sommers wrote last summer in her American.com article “Baseless Bias and the New Second Sex”:
Members of Congress who are concerned about gender equity should take a look at what is happening in the academy as a whole. If there is a crisis in the academy that merits a congressional investigation … it is that men are quickly becoming the second sex in American education.
The new BLS data provide new statistical evidence that men already have become the second sex in higher education.
Liberation Theology and the KGB
February 2, 2010, 10:25 am
The presence of Marxism in liberation theology is well-known, at least to seminarians who are critical readers. Practically every seminarian reads Gustavo Gutierrez’s Theology of Liberation at some point, but most laypeople find it hard to believe that there could have been (and continues to be) a widespread attempt to hybridize Christian theology and Marxism.
Marxist regimes obviously benefitted from the spread of liberation theology in the churches. Still, I was not aware of any connections between liberation theology and communist clandestine organizations until now.
A new article by Robert D. Chapman in the International Journal of Intelligence and Counterintelligence begins to connect some dots. In “The Church in Revolution,” Chapman, “a retired operations officer in the Clandestine Services Division of the Central Intelligence Agency,” argues that the KGB infiltrated the Russian Orthodox Church through Metropolitan Nikodim, the Russian Orthodoxy’s second-ranking prelate. Nikodim was a proponent of liberation theology. Nikodim was active in the otherwise-Protestant World Council of Churches. And the WCC, of course, became an actively left-wing organization during the last half of the 20th century.
Chapman also details the growth of liberation theology in Latin America—and the Vatican’s struggles with it—and the growth of black liberation theology in the United States. Prominent proponents of the latter include James Cone and … Rev. Jeremiah Wright.
The arguments of liberation theologians should be challenged on their merits. The source of an argument, after all, doesn’t establish its truth or falsity. Still, it’s interesting to learn that liberation theology may have been, at least in part, a project of the KGB.
Unfortunately, this isn’t just history. Chapman concludes ominously:
Without doubt, the Theology of Liberation doctrine is one of the most enduring and powerful to emerge from the KGB’s headquarters. The doctrine asks the poor and downtrodden to revolt and form a Communist government, not in the name of Marx or Lenin, but in continuing the work of Jesus Christ, a revolutionary who opposed economic and social discrimination.
A friend of mine, a head of Catholic social services in my area and formerly a priest, is a liberation theologian. He has made a number of humanitarian trips to Central America and told me, ‘‘liberation theology is alive and well.’’ The same can be said of its sibling in the United States.
Breaking News: Administration Finally Realizes Iran Is a Threat
February 1, 2010, 6:26 pm
Everyone is awfully excited about Mahmoud Ahmadinejad’s latest threats to the West. The Iranian regime’s English-language stooge media outlet, Press TV, tells us that “Iran will deliver telling blow to global powers on Feb. 11.” Drudge carried the report in the headline for part of the day. It’s all over the news. I’m not sure why, and maybe I’m missing something. Seriously, Ahmadinejad says this all the time. On July 16 last year, he said, “as soon as the new government is established, with power and authority, ten times more than before, it will enter the global scene and will bring down the global arrogance.” On December 13, 2009, Ahmadinejad predicted that “the fall of the global arrogance and the Zionist regime will be quick and simultaneous.” On May 13, 2008, he said that “global arrogance established the Zionist regime … [which is] … a stinking corpse,” and in January 2007 he promised that “the United States and the Zionist regime of Israel will soon come to the end of their lives.”
A simple Google search will bring up a series of A’jad threats against the “global arrogance” and sundry other American aliases. Here’s the question: The Obama administration has tended to dismiss these sorts of rants as “saber-rattling and bluster,” cries for help, and assorted other psychobabble explanations. Suddenly, however, the administration has started pouring it on from all spigots: sending Patriot batteries to Qatar, the UAE, Bahrain, and Kuwait, lengthening deployments to the Gulf, and otherwise talking up the stakes.
So what’s the deal? Is Iran a major threat to the United States and our allies? Did this suddenly dawn on the administration? And if Iran has suddenly become a major threat, when did they cross the threshold from target for engagement to major threat? Think it through: how do we want to sit down and politely discuss nuclear weapons over coffee one day and need to deploy missile shields the next? Why is Ahmadinejad a nut one day and a dangerous menace the next?
Hint: Something has changed. Second hint: It’s not Mahmoud Ahmadinejad. About time too.