Definitions versus Namecalling

Jonah Goldberg has a book called Liberal Fascism which is clearly designed to elicit a response from the left. Goldberg is an editor for the National Review.

I am particularly sensitive to the appropriate definition of fascism because of an experience while an undergraduate when a liberal professor attempted to describe Goldwater's 1964 campaign as "fascism." It was nonsense and I debated him for two weeks about his sloppy use of definitions. Afterall, wasn't fascism an outgrowth of the left? Wasn't it called "National Socialism" for a reason? I learned from that class that the left is often prone to define terms in ways that they think will advance their position. They tend to label anything they don't like in pejorative terms. I wanted to read the book to see if Goldberg is guilty of the same sin.

Goldberg is a great researcher. While I have some disagreement with some of his history, including the tendency to place figures out of their context, I think he proves his case. At times he is overly fair to the other side in a way that they have not been. He argues that fascism is defined by four characteristics - 1) the community is valued over the individual, 2) mobilization is an organizing principle (we are getting together to join a crusade), 3) expert knowledge is highly valued and 4) there is an obsession with aesthetics - especially the draw of youth. In a series of chapters he then offers history of Mussolini, Hitler, Wilson, FDR and others and argues that each of the American figures have at least a credible claim for being a fascist. He goes on to argue that the politics of meaning in our time fall into the same definitional scope.

Where I differ with Goldberg is not in his history but in his failure to apply current conditions of the figures he writes about. There is a missing historical context - that could strengthen his argument were it better applied. A credible case can be made that there are disturbing similarities between the European and American figures he covers. One of Goldberg's forebearers is Vincent Ostrom who thirty years ago wrote in The Intellectual Crisis in American Public Administration that many writers in public administration start from the wrong base of theory. He argued that the field of public administration saw as its founding father Woodrow Wilson for his writings including Congressional Government and his book on the state- which rely heavily on theory built by Max Weber and Bismarck rather than on founding fathers like Madison. That discussion and debate continues today and it is no less vibrant. Goldberg's book adds a lot of fuel to the fire, regardless of whether you agree with his use of terminology.

One of the fun parts of Goldberg's book is his scholarship. The quote presented yesterday - which most people would call at least somewhat fitting in the broad scope of fascism was made by Woodrow Wilson in 1915. (I got a winner almost immediately!) His quotes about the appropriate use of state power are equally troubling. But putting the notions in Goldberg's book to practice, several figures in today's environment could be painted into his canvas. Is No Child Left Behind a fascistic law? It is lousy law but I am not sure how much the classification helps in thinking about better political systems.

Who said this?

An American political figure said

"I cannot say too often - any man who carries a hyphen about with him, carries a dagger that he is ready to plunge into the vitals of the Republic whenever he gets ready."

Your task in the comments section is to tell me who said this and when. A prize will be offered.

It may surprise you.

The Guy who Invented the Internet does not understand it

Al Gore is going to speak to the RSA convention in April and seems to not understand how the new medium he claims to have invented actually works. Gore, as a condition of his keynote, has demanded that “"Video recordings, broadcasts and photography are also prohibited."

Like most of what Mr. Gore does this exposes his real understanding of the new digital world. The new world opens possibilities up it does not close them down. Perhaps he still thinks he is in the political realm. But obviously, he is not, and probably he does not understand that that realm is also open to a lot more interventions also.

2 Views of Photography

People who know me understand that one of my passions is photography. I have more than 12,000 shots on my Flickr site. Last night we went out to dinner with some long time friends. He is a budding professional photographer. And he has a series of contests with his son and now his wife to go to a place and then shoot photos pick their X number of favorites and then have people judge them. It sounds like a great game.

I take pictures for two reasons that are ultimately often contradictory. The first is to record an event. When I travel I want to remember where I have been or what I have done. The second is to see something I might not have seen with my naked eye. Sometimes, in very rare settings I can do both in one shot but not often.

The attached were taken by my friend or his wife. The top photo is what was sent to me on his Picasa Site. There are several that a really interesting depending on the picture was taken.

Admittedly, the distinction between recording and recognition is not an original one. But it is important.
A good number of the photographs on my site are of flowers. Something I have tried to do since I first got a digital camera, before my first SLR, was to try to isolate individual images of flowers. There are pictures from Mexico, my own backyard, Palau, Japan and Ireland (and lots of other places).
There are two other principles of digital photography. First, as opposed to film (I did a lot of film in the 1970s) the Kevin Kelly theory of 10 New Rules for the New Economy – digital photography requires a photographer to “embrace the free.” With film you set up a shot for hours. In digital you take hours to and lots of photos. My friends chose the 20 best from their more than 700 that they took on their trip.
The second principle was true in the film era too. But it is more true now. The photo is only half the game. Composition is critical to good photos but great composition does not make great photos. One of the great things about digital photography is post production. The most popular way to do that is with Adobe’s Photoshop. The software allows you to alter reality in wonderful ways. Apple has a better product, called Aperture, which is simpler to use.and has some features which Photoshop misses.

The final point here is that technology both pre-and-post photograph has offered anyone a lot more variety.

Wonks in Politics

Marcos Bretón writes a sympathetic portrait of Sacrmento's mayor in today's Bee. The mayor won't see it that way but it is. Heather Fargo, if she is re-elected, will become a third term mayor. Bretón points out that Fargo's predecessor (who was also a wonk) had one thing which Fargo seems to lack - vision.

Joe Serna, her predecessor, worked for Merv Dymally and then became a professor at Sac State. When he worked for Dymally he was an ideological leftist. When he first ran for city council, from the neighborhood we lived in, he had not given up his ideals but he had developed a great ability to listen. He used those skills to push ideas, often from his ideological perspective, but there was a constant process of working on issues. Fargo has been noticably absent in everything but police protection. (Hers not the city's). You watch her at events and she seems like she could tell you how many white lines are on city streets, but would have no idea about what makes streets a useful part of the city.

We supported Joe in every campaign he ran. Not because we agreed with all the things he wanted but because he had fundamental integrity and consciously wanted to think about what the city could become. Fargo might make a good bureaucrat but that is not what the city needs.

John Hartford

A good friend from Winston Salem sent me a couple of CDs including one from John Hartford (Me Oh My, How the Time Does Fly: A John Hartford Anthology). As I may have mentioned at one point, when I was in high school I actually thought seriously about being a Bluegrass musician. I played with a couple of groups where some of the musicians actually went on to play professionally. Hartford, who we lost in 2001, was one of those unique characters who found his loves early (music and the Mississippi river) and then designed a life around his loves. He was a river boat pilot but also a very creative musician.

The album is a real treat. It includes a pretty wide range of music including some of his original songs. But what struck me was how effortlessly his music wound around his lyrics. There are several songs where he weaves in effortlessly the banjo or fiddle around the lyrics and his toe tapping.

Also in the set that he sent me are some classic CDs of Virginia mountain music and some classic gospel. Those are fun too.

OK so who is responsible for the Subprime mess?

This afternoon I had a lunch with an old friend and the discussion eventually went to the current election. We discussed the problems of the subprime situation. There are a couple of possible culprits. The first might be the people who lied on their applications, inflating their income to get a larger loan. At the same time there were those mortgage brokers who induced people to borrow more than they should have. Clinton and Obama seem to think that the people who took out the mortgages are without blame.

Perhaps more important than any of that was the Community Reinvestment Act. (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) Like many congressional enactments, the intentions were noble. The authors thought that Congress should encourage more loans in low income areas. So they mandated some new statistics which looked at loan volume by area. Supposedly the act would induce more "affordable" housing. Part of the push for affordable housing was a new set of criteria that judged lenders on how well they served communities. Bank regulators began loosening down payment and other credit standards and surprisingly enough as those standards were loosened more and more mortgages were let with mortgagees who had no skin in the game.

So who should society go after? Obviously, the mortgage brokers who created the frauds. No one disagrees with that. But in my opinion, the people who signed the fraudulent applications also have some responsibility. People like Barney Frank seem to think they were innocent of any involvement. That is nonsense. But no one thinks that part of the responsibility for the problem comes from Congress, who changed the law in a way that would get the fast buck players into the game.

The linkage of the CRA to the subprime mess closely parallels the scandals for the S&Ls in the 1970s. Savings and Loans institutions began with a very limited purpose. They had low federal guarantees, but they also had significant restrictions on the investments they could pursue. So Congress simultaneously increased federal guarantees and loosened investment guidelines. Jake Garn and Fernand St. Germain got a bill passed (the Depository Institutions Act) which did all that. One commentator at the time suggested that the Act had successfully "privatized gains while socializing risk." The net cost of the congressional changes was something in excess of $120 billion. The stakes in the subprime mess are a bit higher. But the source is about the same.

Rigid Adherence to Ideology

In an editorial this morning the Bee wrote (about dealing with the issues surrounding Social Security) "This rigid adherence to ideology over pragmatism has resulted in a failure to craft real, bipartisan solutions to social security's problems." That's correct but it is not just the Bush administration (who the Bee criticizes) that is guilty of the sin.

Secretary Paulsen, on the release of the actuarial review of the system commented ""The Social Security program is financially unsustainable and requires reform...[and] the Medicare program poses a far greater financial challenge than Social Security." There sure is not anything rigid or ideological there.

The Bee's beef with the Administration is that it continues to argue for privatization of the system. The Administration has also explored something called progressive indexing as well as other ideas which would reduce the rate of growth for benefits. Both sets of proposals have been tried in other countries. Places as diverse as New Zealand and Chile have adopted privatization, with excellent results. The benefits of the change are manyfold. The country enjoys an increase in saving which contributes to a much more vigorous capital pool. The workers now have some choices among alternatives. And their return on their investments are considerably higher. (The numbers in this case are stunning for all workers.) In those countries where privatization has been adopted there is always a government run option - but most workers understand the truly lousy deal that the current one size fits all actually offers. All those benefits sound like something worth exploring. But the Bee and the democrats in congress refuse to even explore the idea.

Rigid adherence to ideology was a problem with one issue where the Administration got sucked in. That was the Medicare prescription drug benefit, which was adopted because of a rigid ideology of entitlement. The Social Security system will not go into actual insolvency for a while (depends on which actuary you listen to as to when) but Medicare is a looming disaster because of the huge increase that our national "leaders" agreed to just a couple of years ago.

Liberals in Academe

One of the continuing issues for higher education is whether colleges and universities are overly biased toward a liberal perspective. If the faculty is biased toward one point of view many observers would suggest that teaching is replaced by indoctrination.

Two professors (Gordon Hewitt of Hamilton College and Mack Mariani of Xavier University) did a study of changes in a cohort of students in private universities, granting that the faculty is indeed imbalanced to the left. The professors looked at students in these colleges using the UCLA student attitudes survey. They conclude from the review that, even if you grant the notion that college faculties are decidedly more liberal than the population, the changes are small, at least for the group that was studied.

But the professor's data tell another story. During the four years these private college students were undergraduates - the percentage of conservatives declined from 27.3% to 24.5%. At the same time those calling themselves liberals increased from 24.9% to 32.7%. That is a net change in four years of almost 11%. An 11% change in any election would make a big difference.

Ultimately, one wonders whether the indoctrination that seems to happen, based on the professor's data, is sustained. One of the most attributed quotations (variously attributed to Wendell Wilkie, George Bernard Shaw, Woodrow Wilson, Winston Churchill and a few others) suggests that "a man who is not a socialist at 20 has no heart, and a man who at 40 is not a conservative has no brain." Perhaps, the indoctrinated students will follow the maxim.

The Compassionate Conservative

George Bush ran as a compassionate conservative - which was one of those ideas that sounded good to some people, like an oxymoron to others and goofy to still others. As I look at his first seven and a quarter years I am struck by a couple of things. First, if you substitute the word activist for compassionate, I think it is more accurate.

Let me offer one proof of that in an area that I spend a lot of time in. In the K-12 arena Mr. Bush caused a new expanded role for the federal government in No Child Left Behind. He argued that the push for uniform standards was appropriate. The evidence from the first few years of NCLB is that while the fed role increased and while there was a lot of jabbering about how this was going to increase performance - the substantive results are more hype than real.

At the higher education level Mr. Bush's administration spent about five years ignoring any of the key issues. He then asked his Secretary of Education to take on the issue of performance in those institutions. Secretary Spellings did little but talk except in two areas. First, she attempted (and although she was partially unsuccessful the long term trend is going in the wrong direction) to do a federal takeover of the accrediting function. In the end, while the reauthorization did not go as far as the Secretary thought it should, the decentralized model of American higher education is certainly under challenge. In the area of student loans, the administration argued for a dual track (federally provided direct loans and those facilitated through banks). The competition was good but the what looks to be happening, in part because of a partial reconciliation of spending before the actual adoption of the reauthorization, is that the hand of the direct loan supporters (read a program completely run by the federal government) seems more likely. Had Spellings and Bush been more adroit, they would have recognized the problems with the FFEL program and then proposed real alternatives to reduce costs and at the same time offer a better program. Of the three remaining presidential candidates - both democrats are committed to federalizing the loan program and McCain has not yet weighed in on the issue.

For my taste, that might mean the we should be a bit more wary about new juxtapositions of political terms.

Two sides of the same video

A friend who is not a fan of the increased linkages provided by trade and immigration sent me the following video. I am pretty sure he thought this was a comment that would offend me because of the seeming degrading nature of the scene on professionals.

But as I watched I gleaned another meaning. About two years ago Craig Barrett, the former CEO of Intel, told a group of educators that his company no longer needed to hire any more US engineers if they did not meet the international standards that his company required. Employees in the US should understand that they work in a global economy. And as we continue to integrate we will increasingly be working in different teams. One of the odd assumptions about the opponents of free flow of goods and human beings has been that somehow jobs in America are superior. As the video suggests, the hiring of accountants or programmers will work toward the standards of employers around the globe.

Fraudulent Budget Choices

California faces a budget deficit of perhaps $16 billion. A lot of organizations and people are saying how tough it will be to balance the budget. According to the choices offered on one site, it will be impossible. Next 10 which describes itself as an "independent, non-partisan organization that educates, engages and empowers Californians to improve the state's future" has posted its version of the 2008 Budget Challenge - which asks How will You balance the state's budget? - unfortunately. An person who really cares about the budget problems the state faces will find this tool less than useful.

The range of choices offered in the quiz are silly. Take an area I have worked a lot in - higher education, and the section on fees. The budget challenge offers four choices. #1 - Increase fees at about the rate of change in per capita income (5% per year) - labeled the status quo. #2 - Hold tuition constant for the next five year but increase general fund support to cover the difference. #3 - Increase fees by 10% a year and allow the public segments to retain the revenue. #4 - Increase fees by 10% per year and use the additional money to lower the deficit. Are those really the only choices? Would it be a good idea to establish a long term pricing policy not based on changes in the consumer price index? What is the relationship (or what should the relationship be) between fees and financial aid? Those options are not offered. Are those the only options that are available to keep higher education vital and yet to change the dynamics of the budget?

Or look at the range of revenue choices. For income taxes the survey offers #1 - status quo; #2 Raise taxes on upper income taxpayers by $2.4 billion or #3 - reduce taxes by 3.5% for all taxpayers. Unsurprisingly, about 51% of the responses so far have selected the option to raise taxes against higher income taxpayers. The remarkable issue here is that almost every attempt to raise taxes for the highest income taxpayers has yielded well below the projected level of revenue. We know that a) income taxes are a larger portion of state revenues than they were in the past and b) that because of the structure of the system they are more volatile than systems in other states. Yet, the choices don't offer options which try to make corrections in both areas.

Why for example does the set of options include a split roll on property taxes (where commercial property owners are taxed under a different formula than residential) and yet no significant change is offered for Proposition 98 (the school spending formula which has caused a good deal of the complexity in our budget)? The split roll has been offered in a couple of forms to the voters since the passage of Proposition 13 and has been consistently rejected.

One of the most annoying parts of the site is what happens when you make a choice - you are told that X% of the people who have used the site made that choice. Amilcare Puviani, the Italian economist who formulated the idea of the fiscal illusion, would be proud of that device. Among the options for the income tax it is obvious which one will be chosen (stick it to the upper income taxpayers - although upper income is not actually defined).

The range of choices that Californians need to make should be broad not narrow. But Next 10, either because of the way their program works or because of their bias, has limited the options that we should be choosing from. If this is the way state policy makers are actually trying to deal with the budget, we are in deep trouble.

A more helpful document to help us think about the budget problem came from the Legislative Analyst. In her budget analysis this year she proposed a set of changes which make both immediate and longer term sense. The LAO proposals can be found on their main site, where unfortunately you will also find that she has announced her retirement.

One more comment on Obama's Speech

This afternoon I was able to see the speech on YouTube. For some reason I missed a key point when I read the speech. Even if one can buy the religious reconciliation message I was troubled when hearing his discussion of economics.

He describes anxieties facing white americans in these terms "They are anxious about their futures, and feel their dreams slipping away; in an era of stagnant wages and global competition, opportunity comes to be seen as a zero sum game, in which your dreams come at my expense." Part of the reason some Americans think there is a middle class squeeze is because politicians create the impression that there is one. If you look at the data carefully, the claims about the squeeze evaporate. Indeed, wages have been stagnant over the last decade for many americans, but compensation has not.

He goes on to suggest that the source of white resentment should be based on "a corporate culture rife with inside dealing, questionable accounting practices, and short-term greed; a Washington dominated by lobbyists and special interests; economic policies that favor the few over the many." Is our corporate culture really "rife with inside dealing?" Do "economic policies favor the few over the many?" Did he support the economic stimulus package which had a very different set of benefits? Of course he did. I would describe that as not benefitting the few over the many, but the short term over the long term.

Finally his shoddy economic analysis suggest "This time we want to talk about the shuttered mills that once provided a decent life for men and women of every race, and the homes for sale that once belonged to Americans from every religion, every region, every walk of life. This time we want to talk about the fact that the real problem is not that someone who doesn’t look like you might take your job; it’s that the corporation you work for will ship it overseas for nothing more than a profit." Anyone who has that limited an understanding of the benefits of globalization has not looked closely at places like South Carolina. Roger Milliken became a bell weather for trying to hold on to the textile industry in South Carolina. But as a 2006 economic outlook conference suggested at the University of South Carolina - the state would continue to grow with the four t's - "technology, talent, trade, and taxes" The textile mills which left South Carolina more than a decade ago were replaced with firms that manufactured more valuable goods and expanding service industries. Reading those passages suggests that Obama would subscribe to the notion that when we moved from horses to autos that he would have preferred to protect the American jobs making buggy whips. That is nonsense and he should understand that.

Senator Obama's Taxes

I am not a big fan of the trend of releasing a presidential candidate's tax returns. Very rarely does one find anything out that they did not already know. For example, when the Clinton's released the returns that showed they deducted outrageous amounts for donations of used clothing, was anyone surprised? That caveat notwithstanding, I did look at the Obama tax returns which were posted on TaxProfBlog (which by the way is one of the best tax sites on the net - Professor Caron performs a real service to those of us interested in tax issues!)

But after I got over my initial reservations about snooping, I looked at them pretty closely with one question in mind - Do the Obama tax returns tell you anything new about the senator? Here is what I think I found.

First, Mr. Obama's books have been pretty successful and he has treated the creation of those books in a reasonable way, taxwise. Second, from my perspective, he tries to comply with the spirit and letter of the law. He files, with some detail, the expenses of his child care people and pays the employment taxes for his workers. His charitable activity (which some blogs have yammered about because he does not tithe) show me that he understands that making a substantial contribution to a charity can help it. He has made two large gifts to CARE and a couple others to Childhood Literacy projects. His church contributions are not huge until 2006 (and that might be a building fund commitment). Third, like many others in his economic class he has gotten clipped by the Alternative Minimum Tax (AMT) - although because of the percentage of outside income and the amount of self employment tax he seems to have gotten nabbed a bit less than someone who received all of his wages from salary.

So what do we know from the returns? He takes his responsibility as a taxpayer seriously. In this era, that is a pretty good affirmation. As noted at the beginning of this post, I believe that this public disclosure should not be mandatory. In one sense the disclosures would tend to turn me off if a person played the system as a game. On the other hand, if they file scrupulously and have policy positions which I disagree with, the good tax status would not change my vote.

Senator McCain is expected to release his returns in mid-April. To my knowledge the Clinton returns have not had a scheduled release.

Newspapers and the Unseen

Frederic Bastiat, the 19th Century French economist, made a wonderful distinction between the "seen" and the "unseen" in everyday life. His most famous analogy on the subject related to a vandal breaking a window of a homeowner. Bastiat argued that some people would look at that event as a net positive for the community because the guy who fixed the window would be employed to do the repairs and he would be better off and his wages would then go to all of the merchants that he dealt with (the seen). But Bastiat cautioned that the event had unseen consequences also. The homeowner, because he had to repair the window, would have to delay his purchase of new shoes, so the cobbler was less well off (the unseen).

There are numerous examples of the seen and unseen. For example, when hurricane Katrina happened a large percentage of the stories after the storm dealt with the assumed benefits to the region that federal emergency money would have. There was no coverage of the unseen effects of federal money - of the cost to the rest of us taxpayers who subsidize people who live in hurricane regions (not forgetting those who subsidize those of us who live in earthquake regions for those who think I would pick on only the Gulf Coast). There was also precious little coverage of the notion that the people of the Gulf Coast might actually have been better off without the hurricanes.

On the front page of the Bee this morning there is a story - "Tenants fear end to rent control." It goes on to describe the effects of Proposition 98 (which is on the June Ballot) which is one response to the Kelo decision on eminent domain. Among other things, opponents of the measure argue that Proposition 98, because of its requirement to pay owners when the government takes something of value, would ban rent control. The seen of rent control measures is the dandy rates that some lucky devils get in their dwellings. The unseen, which is a major issue, is the decline in the number of rental units available because property owners are less willing to risk their capital in a controlled market. There is absolutely no debate in the economics community about those effects. I am not sure how I will vote on Proposition 98, but the Bee's story, if it is accurate, is a good reason to consider it seriously. I am pretty sure that was not the intent of the front page story.

Moral Equivalencies are neither

In 1906 (in this case a Wikipedia article snip is wrong and suggests he wrote it in 1910) William James penned an essay in which he suggested that we create a conscription for national service. He argued that we should create this so that "our gilded youths be drafted off, according to their choice, to get the childishness knocked out of them, and to come back into society with healthier sympathies and soberer ideas." It was a lousy idea then and just as bad a one today.

In 2001 , soon after 9/11 John McCain,in the Washington Monthly said "What is lacking today is not a need for patriotic service, nor a willingness to serve, but the opportunity. Indeed, one of the curious truths of our era is that while opportunities to serve ourselves have exploded---with ever-expanding choices of what to buy, where to eat, what to read, watch, or listen to---opportunities to spend some time serving our country have narrowed." The idea of a compulsory national service surfaces periodically among political candidates. Both Obama and Clinton also support expansions of national service, albeit a bit less mandatorily.

When I first read the James essay I was struck with how patronizing it is. I am still struck by anyone who suggests that you somehow create a national identity by forcing people to serve. It was a lousy idea in James' time and is still a lousy idea now.

Yeah Right

I do not know who Audrina Partridge is but Truemores posted her comment on the release of some topless photos which came out on the net which struck me as funny. Ms. Partridge commented (on her "celebrity blog site) -

"Regarding the photos that someone released to the public today without my consent, I wanted you to know they were taken when I was just out of high school and beginning to model. I intended them to be artistic and not in any way provocative. The photos were for personal and portfolio use only and not meant to be seen by the public. I was naive, overly trusting of people and inexperienced. I thought that to be a model you had to be comfortable in front of the camera. I'm not ashamed of these photos, but I dont want my young fans to think they have to do what I did. I hope people can learn from my inexperience. It's been almost five years since I posed for that shoot, and during that time I have learned many lessons about this business.
xoxo
Audrina"

Gee, how convincing.

Five truths about the election

As I have watched the last week unfold, I think there are some realities of this election cycle that are beginning to emerge.

#1 - If the election is a referendum on George Bush, any democrat will win.
The story told in an earlier post about the politico in the Red Carpet Room in LAX is one example of that logic. Whether Bush has accomplished something important during his presidency is something for the historians to sort out. (I suspect he will be criticized for a lot of his visions about domestic policy but he might actually get a bit more credit than he gets now for his views of the threats in the Middle East.) McCain has shown an ability to separate himself from the GOP in a lot of ways - on campaign spending (McCain Feingold), on national service - but he has been a strong supporter of the President on Iraq. Many democrats believe that the American people are fed up with Iraq and will accept any plan to extricate us from there. If they act on that belief it could prove fatal to their electoral desires.
#2 - If the voters decide Mr. Obama is a lot like Pastor Wright, regardless of his rhetorical skills, he will lose.
As discussed in an earlier post this week, for me the Obama speech was unsatisfying. What was particularly unsatisfying was his inability to transcend democrat shibboleths that have helped to define racial issues for the last several decades. The more that the race issue is presented in terms of opportunity, the more we will continue to solve it. The more it is presented in terms of victims, as Pastor Wright seems to want to define it, the less chance we will have for resolution. Obama had a chance to make that leap but I think his inexperience showed him unable to do it. In the long term, in spite of the adulatory comments from many in the press, I believe Obama's speech this week will not play well.
#3 - McCain is the unknown at this point.
In the last month McCain has been very successful in defining himself in a way that the American people seem, at this point, to accept. A month ago some pundits were arguing that he would never reconnect with the conservatives. That seems to be wrong. But there is a streak in the Arizona senator that is unpredictable. The last month has looked bad for the democrats. Dennis Miller argues that the flap on Pastor Wright (and possibly Tony Rezko) and Obama's response has put the democrats in a muddle - they cannot reject Obama as their nominee (if they do lots of voters will simply sit on their hands) but if he is the nominee the vast majority of Americans will reject him. Inevitabilities in this election year have proven hard to come by and McCain could still do something silly.
#4 - The VP selection may become important.
The more I look at how things are shaping up the more I believe that the selection of VP on both tickets may actually mean something this time. The job that John Nance Garner called not worth "a warm bucket of spit" has mostly been an appendage. But in this year, it could become important. Don't believe that the dems will be able to construct the dream ticket of Obama and Clinton (or the other way around). But the selection could be a major factor in this race.
#5 Conventional wisdom in politics is not all it is cracked up to be.
This is an odd statement, for someone who writes a lot about politics and often uses conventional wisdom. But I believe that the American people are ready for a different kind of politics. The handlers, including those who handled the current president, are in disfavor. In many ways they should be. We were manipulated by them into an election season which is about twice as long as most Americans can stomach. The more a candidate looks like they are handled, the less likely they will be successful. Does that mean handlers will disappear? Of course not. But it does mean that a candidate who looks less managed will do better.

Chicken Little Krugman

If I had $10 for every time Paul Krugman had called a recession or now a depression, I would be a very rich man. I wonder whether Mr. Krugman believes that instead of aerobic exercise he can keep fit by periodically hyperventilating. In a column published in the Bee today, Mr. Krugman yammered that conditions of today are closely parallel to (shudder) 1929 or more appropriately 1930-31. He goes on to bloviate the banking crisis (which he attributes as the real source of the depression of the 1930s) "showed that unregulated, unsupervised financial markets can all too easily suffer catastrophic failure." Krugman forgets that a good part of the cause of the depression was misdiagnosis of the problem. At a time when most economic historians argue that the money supply was going in one direction, the economic experts of the day reacted in exactly the opposite way they should have, it is odd for him to make this case. A good part of the blame that can be directed for the 1930s depression can be directed to the supervisors. Milton Friedman and more recently Amity Schlaes explain those failures in pretty vivid detail. Krugman should understand that a diagnosis of inflation in a deflationary period might cause some problems in the economy. Arthur Schlesinger described the "technique of the New Deal was improvisation and experiment." In this case, based on the evidence of Friedman and Schlaes, the improvisation and experiment were mostly in the wrong direction.

Indeed, part of the depth of the problem of the 1930s was caused by bank runs. But Krugman, who seems to have never met a government regulation he did not like, goes on to argue that the creation of asset backed securities has allowed banks to upset the balance between savers and borrowers and that somehow more government regulation in this area will stabilize the markets. That is nonsense. His solution, surprise, is to get the financial system back "under control." Remember that the massive new interventions that happened in the 1930s first with Hoover and then with Roosevelt, allowed a significant economic downturn to last for almost a decade. The numbers which Schlaes presents in her book suggest that almost a decade later all of the "controls" helped to extend the problem not abate it.

Krugman is not alone in his view of the financial markets. Several leaders in Congress, on both sides of the aisle, seem to argue that any movement is better than allowing the markets to sort themselves out. But if we learned anything from the New Deal it should be that any movement, is not always positive.

Morons in Public Places

This afternoon I landed at LAX and went to the Red Carpet Club to catch up on Email. I was sitting at one of the desks when I overheard a person speaking in semi-hushed tones about his (self inflated) role in the Obama campaign. He talked to his compatriot about how the contest between Hillary and Obama was causing problems and it "actually made McCain competitive in a year when he should not be." He went on to offer his "services" (presumably this was not Client number 8 or 10) in the upcoming race.

I understand that many in the democratic party believe that 2008 is an entitlement. They think that W. has, beginning with the 2000 election which was stolen, been the worst president since Hoover (the Amity Schlaes interpretation of who did what in the depression not withstanding) or Nixon or whoever their devil of the day is.

I wanted to stop this guy's phone call and remind him that inevitabilities in politics have a habit of not happening. Just ask Rudy Giuliani about inevitabilities. For the first time in several decades there is no heir apparent in the electoral system. I think the American people are enjoying their opportunity to make a decision. And in spite of this moron's yabbering, they will make a decision when they decide they want to and not before. The process between Obama and Clinton, including the Wright episode, has been healthy for American politics. Obama, as I have discussed before, is a bit of an enigma. In many ways he is both a liberal and a unifying figure - in my experience those two qualities do not exist well together.

I also wanted to remind him that the most important phone conversations are like fools faces, they should not appear in public places. If this guy really did have a role in the Obama campaign he would not be laundering his thoughts in such a public manner. If indeed he was a big magilla in the campaign, then Mr. Obama will have a lot of problems in the Fall. The poster is off a website. I am equally appalled by the right's demonization of Clinton and Obama. I think a lot of the electorate remains ready to be convinced who will be the best among the three. It is unlikely that the guy in the Red Carpet room understands that basic fact.

Obama's Speech

To hear the press tell it, Senator Obama's speech was something close to the Sermon on the Mount and the Gettysburg Address. For example, Courtland Milloy, a Washington Post "columnist" gushed "After hearing him deliver what was essentially a treatise on faith, hope and charity, I no longer wanted to risk getting stuck in a racial tar pit with Buchanan or any of the others. I just wanted to hop on that Obama bandwagon and head for a new America. (emphasis added) Mr. Milloy did no similar column after the speech on religious issues by then candidate Mitt Romney, which in many ways was more substantive.

I did not hear the speech. As one who started his career as a speechwriter, I like to read the substance of a person's words rather than he his rhetorical style. Mr. Obama is a gifted orator. But his speech left a lot to be desired.

In my mind there were at least two major issues where his speech fell far short or candor. The first was in moral equivalency. I understand that many in our society may express racially insensitive remarks. But to equate the private expressions of his white grandmother (who expressed fear at being in the presence of an unknown Black person) and Obama's pastor's outrageous remarks (arguing that the US caused the AIDs virus or any one of a number of equally absurd claims) is nonsense. Pastor Wright's statements were not the private expressions of someone with reservations about current conditions but the very public rants of a public figure. Ditto for the reservations that some Americans (including Black Americans) have about racial quotas. Objections to policies of racial quotas may be based on race, but a good many of the objections I have seen raised are based on efficacy of the policies. Can the same be said for Wright's comments justifying the attacks on 9/11?

The second was in moral fiber. It is odd that Senator Obama chose not to make the moral decision to leave his congregation. It is almost credible that he never heard his pastor make the range of claims that video has captured. But the fundamental tenets of Pastor Wright's "theology" which is based on victimhood should be troubling to any figure who claims to be trying to reconcile the American perspective on race. David Davenport, a former president of Pepperdine University and now a fellow in the Hoover Institution wrote an insightful column on the speech, where he described the painful decision that he came to recently to leave his own church over differences about its leadership. One wonders why Obama did not make even consider the same kind of decision.

Davenport compares Obama's campaign strategy to Muhammad Ali's "butterfly" strategy, where Ali would "float like a butterfly" ;ultimately we should demand more of our candidates. They should reveal a bit more about themselves than Obama did in this speech. The president cannot be all things to all people, in this case the Senator's speech tried to do just that.

Grandson Day

This morning Mason and I were supposed to go to a county park and visit with the Easter Bunny. Unfortunately, I misread the name of the park and so we went to Gibson Ranch rather than Gibbons Park. When we got there we could not find any Easter Bunnies. But we did see a lot of ducks; spent a lot of time on the swings; learned the difference between ducks and geese; climbed a lot on the climbing toy; looked at horses and goats; swinged a lot on a tire swing; walked in duck poop; and generally had a great time.

Mason is very verbal so we talked about a lot of stuff. When we finished at the park we went to Subway - his sandwich preference is like his dad's (cheese and meat and mayo) and then went to see Enchanted - he was a bit embarrassed by all the "kissing" but he really liked the movie (so did I - it was the second time I saw it and I thought it was still a very innovative movie).

Then we went back and painted in a coloring book and then played Dinosaur Monopoly (Mason won). All in all a very fun day. The Easter Bunny might have been fun but we found plenty of other things to do. I posted the rest of the pictures on my flickr site (http://www.flickr.com/photos/drtaxsacto/). But the pictures do not capture the fun time we had.

Why Americans Hate E.J Dionne

E.J. Dionne's first book, Why Americans Hate Politics, was a success in its time because it argued that there was a disconnect between what politicians argued and what the people actually wanted their political system to accomplish. One could argue that Dionne has spent the rest of his career proving that his caution about politicians could also be applied to Washington pundits.

Bear Stearns a year ago had a net worth of $11.7 billion, when it was sold to JP Morgan, with a $30 billion line of credit backing the deal, it was sold for the equivalent of $236 million. Put another way, what sold for $160 a year ago sold for $2 (per share price) over the weekend. By either calculation that's a pretty hefty drop. Most financial analysts suggest that JP got a montster deal. But in a column which was reprinted in this morning's Bee one of the Washington Post's lead defenders of more government sees the transaction as a verification that Wall Street is made up of welfare queens. He makes that comparison because most on Wall Street want a differential rate for capital gains and many oppose inheritance taxes. The way he sees it all government policies are subsidies and capital gains are welfare payments for the rich. Even for Dionne, who can be a hyperbolic at times in his rants, this column was a bit over the top.

He quotes former Maine Senator Bill Cohen as saying that free markets are great until you need the government. It is an odd justification for his brand of interventionism on at least two counts. Dionne seems inordinately ready to charicature supporters of markets in the starkest terms. One wonders how he would have described the savings and loan debacles of a couple of decades ago, which were brought on not by unbridled capitalism but by changes in government policy (noticeably the increase in the limits of deposit insurance limits and the broadening of investment guidelines for S&Ls). At the same time he seems to believe that ALL government interventions are neutral in terms of market effects.

Ultimately, the fall of Bear (like the fall of Goodbody, Bache, L.F. Rothschild, Barings, etc.) is a sign of change in the market. Markets are not predictable. Nor should they be. And, despite Dionne's protestations, government interventions do not reduce the uncertainties of markets.

Would Dionne have us go back before mortgage obligations were not bundled and collateralized? Would he go back to an era when mortgages were only for five year periods? Would he argue that only Fannie Mae and Freddie Mac (certainly not paragons of financial strength) should be the only arbiters of liquidity in the housing market? Of course not. Welfare queens indeed.

Adam Smith warned that capitalists tend to collude when given the chance. But remember, Smith's book was about Mercantilism, the ultimate governmental policy for markets.

Caution lights on Obama

It is unlikely that any politician can spring upon the national scene without a plan. One of the myths of Senator Obama has been that he just came upon us. But as one who experienced at least three examples of seeming newcomers who were not that new (Carter, Clinton and Huckabee are three southerners who come to mind immediately) I think it is important to not buy the story but to look beyond the hype. In the case of Obama, there are some disturbing signs. But it is unclear whether the issues that have surrounded Mr. Obama for the last week are substantial or quibbles.

Obama denounced Pastor Wright but in a way that any lawyer would love in a statement so qualified as if to be almost meaningless. "The statements that Rev. Wright made that are the cause of this controversy were not statements I personally heard him preach while I sat in the pews of Trinity or heard him utter in private conversation. When these statements first came to my attention, it was at the beginning of my presidential campaign. I made it clear at the time that I strongly condemned his comments. But because Rev. Wright was on the verge of retirement, and because of my strong links to the Trinity faith community, where I married my wife and where my daughters were baptized, I did not think it appropriate to leave the church." Indeed the candidate forced Wright to leave the campaign. But the extreme nature of the rhetoric of Pastor Wright and the depth and breadth of his comments suggest that Obama could not have been naive about the nature of his Pastor's beliefs.

I am also bothered by reports of the Senator's wife's comments such as "for the first time in my adult lifetime, I am really proud of my country — and not just because Barack has done well, but because I think people are hungry for change." This is a person who has been admitted to some of the most prestigious universities in the nation and who is pursuing a career in the law.

The Rezko affair is also something we should watch warily. Obama claims that the relationship of Mr. Rezko to his house purchase was not known to him (Obama). In the Wright and Rezko issues claiming ignorance is odd and disappointing. A politician playing at the national level should not be able to be led into something simply because of naiveté.

Obama has been extraordinarily adroit at masking his intentions in this campaign running on a campaign of change. But change for change's sake should not be a guide to how to select a leader. Obama's voting record is decidedly to the left. If that becomes his platform, American voters will reject him.

Shakespeare and the Mac Air

On March 6, Michael Nygard posted a note to his blog that "Steve Jobs" made him miss his flight. I do not know whether I fly more or less than Nygard. But I have had the same computer (a MacAIr) since about the time he got his. I've never had a problem with the erstwhile representatives of TSA (Thousands Standing Around). So I am not sure whether this rant is much ado about nothing or real. With the instant on feature it is easy to boot up. So while I am not skeptical about TSA personnel being bureaucratic, I am about whether the Air was the cause of him missing his flight.

Lord Acton (Redux)

What is it about politicians and sexual scandal? The coverage of this latest scandal has been interesting. ABC posted a gallery of politicians with sexual scandals for the past years, going back to Wilbur Mills. I am sure they missed a few. A good number of Mr. Spitzer's former buddies in the media, who were all for his savaging of people like Hank Greenberg and Dick Grasso, seem to have turned on him with considerable zeal.

Most of this story would not be of interest to me except for the two things. First, Spitzer built his professional and political reputation on being a tenacious prosecutor whose understanding of the appropriate limits of power were never in view. In several of the Wall Street prosecutions that he pursued there was never any real evidence that the people under suspicion had credibly violated law - but Spitzer used the powers of his office to extort results. The prosecutorial function, among all government activities, needs to be in the hands of someone who has perspective. Second, it seems clear that the liberties Mr. Spitzer exercised in his professional role extended to his personal life - the best politicians are able to separate their personal and professional lives. Here part of his downfall was the appearance of invulnerability. Spitzer never learned the simple lesson of holding things in their proper perspective or even in simply admitting to a mistake.

Everyone can quote Acton's famous phrase about power corrupting - but I think his better one says "It is easier to find people fit to govern themselves than people to govern others. Every man is the best, the most responsible, judge of his own advantage." The role of prosecutor is one of the most sensitive in society. Elliot Spitzer betrayed that role well before he got caught with those expensive hookers.

Sacramento's Pathetic Mayor

Yesterday, at the start of the race for Mayor of the city, the current incumbent attempted to smear what looks like her most important opponent.

Heather Fargo has been lackluster at best. Her "vision", if you can call it that, for the downtown has been limited to put it charitably. Under her tenure problems seem to get deferred and perquisites for the mayor seem to increase.

Her major opponent, former NBA star Kevin Johnson, could be very credible opponent. So Fargo rushed out a series of charges about Johnson's supposed back tax bills. Unfortunately, like many of Fargo's efforts this one was not well thought out and it turns out all of the charges were false.

The contrast between the kind of energy that Joe Serna produced for the city and Fargo's is stark. Serna had, like Fargo, a commitment to left wing causes, but he also had a vision for the city. While not all of his ideas were successful, the city did some amazing things during his tenure. But as you look downtown today, it has stagnated under Fargo. She deserves to be defeated in her attempt to be re-elected.

Hugh Flournoy's Celebration

Last night we had a celebration of former California Controller, Hugh Flournoy's life. It was a grand event. There were some good remembrances from Hugh's colleagues and friends. There was a lot of talk about Hugh's practical side and his commitment to policy.

For me there were a couple of highlights of the evening. First, to see a group of formerly young politicos expressing respect for one of their departed colleagues was inspirational. Second, it was to hear from a couple of people, especially one of his advance persons and a former Reagan deputy director of the Department of Finance, who told stories about Hugh's willingness to speak truth to power. Others spoke about his absolute commitment to following through; if he made a promise it was done.

But the best part of the evening came from something that was pointed to be a lot of participants but never actually pinned down. Hugh had a clear philosophy of government. I think he was perhaps more Hamiltonian than I, believing more in the possibility of the positive effects of government. But what came from all of his friends and colleagues was that his philosophy was not marred by rigid ideological orthodoxy. That offered him a chance to accomplish two things which today's politicians are woefully inadequate at. He was able to work toward solutions in his elected roles based on consistent principles. But he had enough respect for the process so that he could work with politicians who started from a very different base.

Smoot Hawley and A. Mitchell Palmer

It is disappointing to hear the pandering in this presidential campaign as I have listened I am reminded of two terrible examples from early in the 20th Century. A Mitchell Palmer was an AG in the early 1920s who led a series of anti-immigrant raids. A lot of the GOP candidates are Palmeresque in their comments about immigrants. The data here is pretty clear - from respected researchers as diverse as Julian Simon and Dowell Myers. This generation of immigrants has provided, like all previous generations net benefits to society. And, according to Myers research they are assimilating more quickly than any previous generation. But some in the GOP see an easy target.

On the other side Clinton and Obama sound a lot like W.C. Hawley and Reed Smoot. Those two created a disastrous tariff regime in 1930 which helped to extend the depression. Clinton and Obama are pandering to the unions who claim that NAFTA has not produced positive results for us. That is nonsense. The easing of trade restrictions since WWII has improved American life in all sorts of ways. There have been some transition problems but many of those were not created exclusively by increasingly free trade but by changes in what Americans do best. Our future growth does not depend on many of the smokestack industries whose former workers Obama and Clinton seem to be Smoot-Hawleying to.

Leaders should lead not try to pander to groups of voter fears. Our candidates should be smarter. But, so far, they are not.

Cartesian Humor

My daughter called me yesterday with a joke.

René Descarte goes into a Starbucks and orders a coffee. The barista asks him if he wants room for cream.

He replies "I think not."

When she was growing up there were some frequent comments about both Descarte and his successor (I think therefore I am, I think). An obscure academic would have recast the joke -

Descarte goes into a Starbucks and orders a coffee. The barista asks him if he wants room for cream and he replies "Cogito no" (Descarte's original formulation was "Cogito ergo sum" - because that was the way scientists of his era talked to each other).

But my daughter's version was better.