Category: Political Science
Simon Johnson analyzes the Dublin gambit
There is little doubt that Ireland, as a one-off situation, is handled easily, albeit at greater expense than anyone would like. But how does the game tree run?
…the Irish leadership has every incentive to delay until other countries can be dragged into turmoil. The crisis will become euro-zone wide, at which point all eyes will turn to some combination of the European Central Bank, the German taxpayer, and the IMF. But the ECB can’t pay and the German taxpayer won’t pay. Does the IMF have the resources to tackle Spain, let alone a bigger country like, say Italy or even France?
The U.S. could add sufficient funding to the mix — this is what it means to be a reserve currency — but the mood in Washington has shifted against bailouts.
As an alternative, Europe could place a call to Beijing to find out if China would like to commit some of its $2.6 trillion in reserves to keep European creditors whole. This would be an enormous opportunity for China to vault to a leading global role. Perhaps it was a good idea to place Min Zhu, a top Bank of China official, in a senior position at the IMF.
Sentences to ponder
Well, “Mom”, if flying is a “privilege, not a right,” it’s because over the last century we have gradually accepted the proposition that anything the government tells us it can regulate, it can regulate.
Here is much more, courtesy of The Browser. And this:
Throughout my career – both as a prosecutor and as a defense attorney – I’ve observed a consistent inverse relationship: the more petty a government officer’s authority, the more that officer will feel a need to swagger and demand that you RESPECT HIS AUTHORITAH. Your average FBI agent might search your house based on a crappy perjured warrant, invade your attorney-client emails, and flush your life down the toilet by lying on the stand at your mail fraud trial. But he doesn’t feel a need to vogue and posture to prove anything in the process. He’s the FBI. But God above help you when you run into the guy with a badge from some obscure and puny government agency with a narrow fiefdom. He and his Napoleon syndrome have got something to prove. And he’s terrified that you’ll not take him very, very seriously. When I call FBI agents on behalf of my clients, they’re cool but professional and nonchalant. When I call a small agency – say, state Fish & Game, or one of the minor agency Inspector Generals – they’re hostile, belligerent, and so comically suspicious that you’d think I was asking for their permission to let my client smuggle heroin into the country in the anuses of handicapped Christian missionary orphans. They are infuriated, OUTRAGED, when a client asserts rights, when a client fails to genuflect and display unquestioning obedience. They are, in short, the TSA.
Megan says she is (partially) boycotting flying, but I am surprised by this decision. In relative terms it is the driving experience which has deteriorated, largely because of traffic congestion. Imagine what flying would be like if they were not allowed to charge you a proper price for the experience.
When it comes to airports, some high MU of money users will be better off as a result of TSA abuse; it will lower the price of flights. Personally, I'm happy to put up with the practices if it means less congestion in the airport security line.
Who wants to cut government spending?
Via Kevin Drum, here is the report:
Rep. Michele Bachmann (R-Minn.) was asked to be an appropriator and said thanks, but no thanks. Rep. Steve King (R-Iowa), a tea party favorite, turned down a shot at Appropriations, which controls all discretionary spending. So did conservatives like Lynn Westmoreland (R-Ga.) and Jim Jordan (R-Ohio), an ambitious newcomer who will lead the influential Republican Study Committee.
….”Anybody who’s a Republican right now, come June, is going to be accused of hating seniors, hating education, hating children, hating clean air and probably hating the military and farmers, too,” said Jack Kingston (R-Ga.), a fiscal conservative who is lobbying to become chairman of the House Appropriations Committee. “So much of the work is going to be appropriations related. There’s going to be a lot of tough votes. So some people may want to shy away from the committee. I understand it.”
Kingston said he’s approached Bachmann, King and Westmoreland about the committee, and they all told him they weren’t interested.
In equilibrium, is this a sign that spending cuts are likely or unlikely?
One problem with charter cities
In Haiti there are riots against the UN, for fear that the aid mission brought cholera to the country:
…clashes between rioters and troops left two dead, dozens injured, foreigners in hiding and an awful question hanging in the tear-gassed air: did the UN mission, known as Minustah, bring cholera to Haiti?
The boys and men hurling rocks and bottles and shooting at foreign soldiers in the northern towns of Cap-Haitien and Hinche had no doubt. Nor did the residents of Port-au-Prince, who greeted UN convoys with sullen stares and insults.
The circumstantial evidence, which is not considered to be definitive, is this:
There had been no cholera here in living memory. The strain appears to be from south Asia. Soldiers from Nepal, which has cholera, moved into a base beside the Artibonite river in early October. The base has sanitation problems. A week later the river was contaminated and people in the area started vomiting and getting diarrhoea.
Why Ireland fears a bailout
Ireland fears the punitive terms of a bailout as it would have to give up partial sovereignty over its finances and could be forced to raise corporation tax.
The story is here. Note that casting your financial lot with the EU is especially problematic if you don't expect the EU to be so influential five or ten years down the road. Obviously the Irish are betting against the idea of a major step toward EU fiscal union and correctly so.
Addendum: Finland weighs in.
How does the President order flowers?
I don't post much about the President, so this puzzle caught my eye:
Asked if he has a hard time ordering flowers – as the Michael Douglas character did in "The American President" – Obama said, "The truth is, actually, I get to keep my credit cards, and if I want to go to the florist, I could order some flowers and pay for it." (He did add that if he tried to order the flowers by phone, "they might not believe me.")
What could you say to prove, over the phone, that you are the President of the United States? If you assume the florist is at a working computer terminal and can access Google, you could promise to answer questions about your life, and to answer them so quickly the florist would not think you are googling to those answers. Plus you are dialing from a 202 area code and you sound like President Obama (because you are President Obama), whose voice is well-known and distinct. I would think he would have an especially easy time establishing his identity over the phone. Furthermore the audience, wondering that maybe you are the President of the United States, would fall into the deference mode, even if some residual doubt remained.
Impersonating the President of the United States might draw interest from the law, or at least an inquiry, and that would discourage potential pranksters and make your claim more credible.
Who would have a tougher time establishing a credible identity over the telephone? How about Lady Gaga? Her speaking voice is not well known, fans will know the details of her life on the web and thus pass the Google test, she does not command deference from many florists, and if you impersonate her the Secret Service won't come knocking on your door.
Somewhere in here is a lesson for evolutionary biology…
Haiti claim of the day
Court the income:
“If you can gain the support of one person in Boston, it can translate to 10 people in Haiti,” said Mark P. Jones, a professor of political science at Rice University who has studied Haiti.
Haitian candidates are spending a lot of time campaigning in the United States, even though Haitians who are U.S. citizens are ineligible to vote in the election. It is also a venue for raising money. The full story is here.
Words of wisdom
I think that where a lot of progressive political junkies go wrong is that they think “blame Republicans for failing to pass plan to fix the economy” is a close substitute for “fix the economy.” In reality, the evidence that fixing the economy would help Democrats politically is overwhelming, while the evidence that the plan/block/blame strategy would work is non-existent. People like me and Atrios would feel better about President Obama and his team if they made public statements that indicated that he roughly agrees with our take on what ideally should be done, but people like me and Atrios are neither swing voters nor marginally attached voters. Our emotional state has very little political relevance.
What’s more, there’s unfortunately a real tension here. The things you would do to outline a bold progressive approach to fixing the economy are very different from the things you would do to try to get the GOP votes you need to pass economy-fixing legislation. In particular, the reaction red state (or district) Democratic members of congress to those things would be very different. The fact of the matter is that the mistakes of 2009 in terms of the stimulus and the Fed can’t be easily undone.
That is from Matt Yglesias.
Why don’t we nudge people toward more risk?
Most paternalistic nudges encourage more safety (or at least the appearance of safety), such as when government steers people away from trans fats with a warning label or when the transportation authority structures the contours of a road to induce drivers to slow down. I can think of a few nudges in the direction of greater risk-taking:
1. QEII and activist monetary policy more generally. Investment tax credits and upbeat Presidential speeches.
2. Military recruitment campaigns and ads.
3. Social norms that people should pursue the love of their life, propose marriage, have children, and so on.
What else?
The Hansonian question is why the bias toward safety is neglected for risk-taking in these areas. Is it a simple utilitarian standard? Is it that these forms of risk-taking are affiliated with larger social purposes, namely ones whose relative status we are trying to boost? Are nudges toward risk just as common as nudges toward safety, but we are less willing to describe them as such?
Risk-taking by eating dangerous food has a relatively low social status, perhaps because the gain is mostly private. Sushi or sampling street food in exotic locales have minority or cult followings, perhaps because they are (sometimes) associated with higher class values. Many people eat and enjoy trans fats but few people defend or elevate them.
The deficit commission report
I've read only the summaries (and here), not the report. Mankiw is happy, Krugman and DeLong are upset. The home mortgage interest deduction goes and income tax rates are 8, 14, and 23 percent. No one thinks this is the final deal. I would say evaluate this as you would a movie trailer: will it get people to take the next step of thinking about a ticket purchase? The top 23 percent tax rate is like the quickly cut scene with the rolling boulder, the skimpily clad girl, the grinning enemy, and the face of the star. "The Bowles-Simpson plan has a ratio of roughly $3 in spending reductions for every $1 in revenue increases…" It won't happen in real life. As a movie preview I judge this as "good enough." It basically declares that some major deductions have to be on the table and it gets us to the next step.
Ezra Klein comments.
Brad DeLong’s fiscal plan
You'll find it here and I agree with much of it. I would phrase the rhetoric differently, but let's put that aside. And also let's assume — as is likely the case — that Obamacare is here to stay and thus that is taken off the table. The most important development is simply that Republicans (and Democrats) support the potential for Obamacare to reduce the rate of growth of Medicare expenditures. That is the #1 issue in fiscal policy today. And it saddens me how infrequently it comes up, except to be attacked.
I get nervous when I read Brad's phrase "commit immediately," which appears repeatedly in the post and it appears in critical moments. I favor the specified commitments but I also think they are highly unlikely. The phrase "commit immediately" is almost an oxymoron, as the call for immediacy highlights that no one to date has made such a commitment or wants to or, in all likelihood, will, until of course an emergency comes, as with the passage of TARP.
This "don't commit, rather do it now" reasoning is easy to understand when the Democrats pushed for a rapid passage of Obamacare, or when we look at the frustration with the stalled repeal of DADT. Few on the left thought that "precommitment to do" was a viable option in those cases, so the push was "do it now," even if that was not convenient in terms of the election or, in the case of DADT, relations with the Pentagon. Yet when we return to fiscal policy, the talk is once again of "commitment." I fear it is a placeholder for the idea of "no commitment."
What's the best fiscal policy when there is no commitment? I say let the Bush tax cuts expire fairly soon, so that spending feels to the public like it has a cost. (It's become increasingly clear to me that when it is possible for taxes to fall again that they will do so; I am less worried about high tax rate lock-in than I was fifteen years ago.) Have prominent Republicans endorse the better parts of Obamacare. Continue QEII but no second fiscal stimulus and no extension of any Obama tax cuts, which were a mistake in the first place. Carbon tax if possible but it's not. Reindex Social Security ASAP. Cut discretionary spending where you can.
That's my fiscal recipe, for this lovely Wednesday morning, sans commitment. Like Brad's proposals, it won't happen, but it feels "merely impossible," as opposed to impossible at a more fundamental metaphysical level. Should that distinction matter?
Oh, and get rid of DADT during the lame duck session of Congress. Ha.
Addendum: Interfluidity has brilliant, and related, remarks. The best post I've read in some time.
The more things change…
Via Veronique deRugy, here is the recently elected Rand Paul on earmarks:
In a bigger shift from his campaign pledge to end earmarks, he tells me that they are a bad “symbol” of easy spending but that he will fight for Kentucky’s share of earmarks and federal pork, as long as it’s doled out transparently at the committee level and not parachuted in in the dead of night. “I will advocate for Kentucky’s interests,” he says.
Ireland facts of the day
The increase in spending, which is part of Ireland’s present problem, is quite recent. From 2000 to 2006, the number of people employed in the Irish health sector increased 20 percent, in education by 27 percent, in the justice sector by 22 percent, and in the civil service by 27 percent.
In the past decade, Irish health spending has doubled, in real terms. In 2000, about 22 million items were prescribed; 10 years later, 52 million items were. People aren’t twice as healthy as a result.
As far as taxes on income are concerned, Irish people now pay about half as much as an equivalent family does on the same income in Germany. There is currently no recurring tax on property, no charge for water supplies, and modest fees for a college education. Welfare payments compare favorably with those in Northern Ireland.
Here is more. Currently there is talk of a "buyer's strike" in the market for Irish bonds. When the Irish accept the full extent of the standard of living "reset" implied in all of this, how big a step back will be required? Ten years? More? If you take away pre-war, war, and post-war examples, is there any precedent for such a large reset in the history of wealthy countries? Apart from contemporary Iceland, that is.
Will Ron Paul oversee the Fed?
Politico reports:
Here's a little irony in the House GOP sweep: The next chairman of the monetary policy subcommittee — overseeing the Federal Reserve?
None other than Ron Paul (R-Texas), who'd just as soon abolish the Fed.
Paul is the ranking member of the Subcommittee on Domestic Monetary Policy and Technology on the Financial Services , which oversees the Federal Reserve, the U.S. Mint and American involvement with international development groups like the World Bank. Unless someone bumps him, he's next in line for the subcommittee gavel.
The Republican Conference has to vote on the matter, however. Paul has long called for the abolition of the Fed and restoration of a gold standard.
My impression of the election results, from a great distance
There is an anti-gay backlash in Iowa and I don't see marijuana climbing the legalization hill, if it can't make it through current-day California. We're seeing the high water mark for pot, as aging demographics do not favor the idea. Just 32% of the Tea Party candidates won; admittedly that figure should be adjusted by the rate of incumbency (a lot of Tea Party candidates were challengers). In any case, there was not a Tea Party tidal wave. Sarah Palin as nominee is up a few points on InTrade.com, although I do not see why. Haley Barbour is also up and Chris Christie is down considerably (why?). Given that the Democrats did better than expected in the Senate, Obama's reelection chances look better now than they did a week ago. The Republican strategy is not dominating in broad constituency, MSM-reported, "lots of scrutiny" races, even with an abysmal economy and a not so popular health care bill. My mental model of Obama is that he will cut deals with the Republicans, even on (mostly) their terms, if indeed any deal is on the table. I would be pleased if critics of the Obama presidency would indicate their managerial background and expertise, yet few do. How many of them could manage a team of ten people with any success?