Friday, October 30, 2009

Economics 1A and Washington BS

The Obama administration today claimed that they had either created or helped to forestall the loss of 650,000 jobs with the stimulus money. They had the Vice President trot out this nonsense, with a joke that Reagan used to tell (although Biden claimed it was from his grandfather). When you push on the number it becomes all those jobs that were created as a result of a) more money to local and state government (an assumption that without the dough the jobs would have been lost) or to contractors who are using stimulus money to do projects. One other Administration official claimed that the actual number of jobs created or saved was 1 million.

Here are some questions that anyone should expect to be answered by the Administration - don't hold your breath.

1) Take them at their word for the higher number - is it reasonable to pay almost $80,000 per job? Have they done any estimates of how long these supposed jobs will last? Do they have any idea about the potential hiccup that happens when the stimulus dries up? One estimate by John Taylor at Stanford, suggests that the effects of the stimulus on GDP growth has been almost impossible to see.
2) Did they miss the session on opportunity costs? What might have happened in job creation both in the short term and long term if the government had not borrowed massive amounts to fund jobs that may or may not have been lost? Have they bothered to look at the short term costs versus the long term costs of less deficit financed funding. Considered another way the stimulus package added a bit more than $2500 per capita to the debt that faces every American.
3) The unemployment rate in the country (which is a trailing indicator) is approaching 10% - does that mean the Administration argues that the number of unemployed would have increased by 1,000,000 if the stimulus had not been in place? The most recent BLS numbers suggest that we have about 15 million unemployed - so the million more would add another 6% to the figure.

Wednesday, October 28, 2009

Poor old Ken Feinberg

The US now has more czars than Russia ever did. One of them is Ken Feinberg who is the Administration's pay czar. Feinberg does not have the best PR sense - he recently commented " "The private marketplace should be able to have the flexibility to adopt these programs on their own." - when responding to a question about whether it is appropriate to yank some perks for the execs in the bailout companies who received government money (and ultimately whether it is appropriate to extend his inane rules to companies operating in the private sector). I believe there are two issues here. Should Mr. Feinberg or any other government official have anything to say about private sector pay? The answer is NO. At the same time, we should ask should Mr. Feinberg have anything to say about compensation for executives who agreed to take the public money to help bail them out? There the answer is a resounding YES.

The WSJ says he is destroying the capitalist system. I say baloney. I am a strong believer in the market system and furthermore believe that compensation will help to attract the best people to run firms. But that is not the question raised by Mr. Feinberg's new limitations on executive compensation. The seven companies who have received TARP money did so because they said they needed it. OK, so when you use other people's money, even the people's money, you might get some new rules. Some of the other firms that took this dough had the brains to pay it back before Mr. Feinberg could slap his new requirements on them. Were the administration to try to extend their new rules to private sector firms we should all be up in arms. But since these "leaders" have tasted at the government teat, they should get to live by the new rules.

Too much time on their hands

Governor Schwarzenegger vetoed a bill by a San Francisco assembly member and some loons in the city by the bay are trying to suggest that the veto message has a hidden message in it. If you read the phrase created by the initial letters on the left hand column it is possible to come up with a vulgar phrase.

I am sure anyone with time on their hands could come up with other phrases by looking at the letter through a prism or by counting the fifth letter of every third word. But the point being made by the governor is one he has made repeatedly. The cryptographers should a) get a life and b) get to work on issues that really matter for the state.

Tuesday, October 27, 2009

Honesty and Inevitability

The healthcare reform debate has been marked by a very high level of interest by the American people. The most recent Survey USA poll suggests that 73% of those polled are following the issue with "a lot of attention." For any issue that is a remarkable statement. Another indicator is that of those who favor the President's plan (or some variety of the public option) 79% of those strongly favor the option. Of those who oppose the public option 86% strongly oppose it. In spite of the levels of interest the political class seems intent on trying to manipulate opinion rather than trying to discern what is moving the American people.

A really interesting article in the New England Journal of Medicine found that "public support for change is shaped by the interaction of three factors: people's perception of problems that affect the country, their assessment of their own current life situation and their worries about the future." Those highly critical of the current system favor the system should face major change. There seems to be pretty widespread support for an expanded federal role in health care - including a mandate for coverage.

Rasmussen suggests that 57% say a health care plan will increase costs while 53% say it will reduce quality. Remember that of the people with health insurance the vast majority are satisfied with their plan. A large majority argue that they would oppose a plan for government health care if it would mean that employers would drop their current programs.

Gallup's most recent poll found that an increasing margin of voters (now 49%) think a federal plan will result in worse health care. 70% think quality of care would diminish and 75% think costs would climb. 50% think a final bill should include a public option while 46% think it should not. That is hardly the mandate that Senator Reid claimed in offering his opt out public option.

But then we find that the Christian Science Monitor claims that "the public generally supports the public option." From my review of the polling I think the CSM is blowing smoke. According to the experts that have looked at the polling more closely than I "You can move the public opinion needle significantly with changes in wording or emphasis." (Karlyn Bowman, a polling expert at the American Enterprise Institute)

I have a pretty strong belief in the intelligence of the American voter. But I believe politicians still want to try to manipulate opinion to fit their narrow beliefs. Were the politicians intent on understanding the will of the people they might be able to craft a pretty good bill. If they continue headlong in their pursuit of their own agendas one of two results will happen. First, we could end up with no change. As an alternative we could end up a lot worse than we are today. Neither is a very good option but when you begin with an ego problem like Reid and others seem to have, the possibility for a positive result seems limited.

Monday, October 26, 2009

Balance for the President

The President found time to go to Copenhagen to argue for Chicago getting the Olympics. Yet, according to some sources he can't find the time on November 9 to go to Berlin to celebrate the 20th Anniversary of the Fall of the Berlin Wall. While I can understand the notion of civic pride as the reason for going to Copenhagen, I cannot understand why a more important event with a more important set of allies cannot be similarly noted.

Two questions for supporters of the public option

The public option on health care seems to have reared its head again. The option is supported for overt and covert reasons. Some supporters argue that private insurance does not permit for enough competition. Therefore, instituting the public option will enhance such competition. Is there any example where increased public provision has increased the competitiveness in the private sector?

At the same time, supporters of the public option argue that health insurance companies have grown too large and are therefore unresponsive. Evidently, their argument would suggest that growing smaller and therefore more competitive would improve the market. Uwe Reinhardt, perhaps the foremost health economist in the country, argues that the market is a bit more complex. He suggests that when the hospital sector began to consolidate that their bargaining power with insurance companies began to increase and that smaller insurers cannot negotiate effective pricing. He argues for a government intervention which would mimic the Maryland system - where rates are negotiated jointly and then available to all insurers. Why haven't the supporters of the public option picked up on that idea?

Friday, October 23, 2009

Soupy Sales

Soupy Sales died this week at age 83. He was a mainstay of part of my childhood. He was funny, a bit off color and did slapstick as well as anyone. Reprise - (X2)

There's a soupy called turkey soup
made from a gobbler who never flew the coop
and there's a soupy called chicken soup
but I'm a soupy called sales.

You can't eat me with a spoon
But I'm still soupy just the same
No I'm not crazy as a loon
It's just that Soupy is my name.


I love to get a pie in the face
Because it makes the people laugh.
It makes them smile, instead of frown
It picks them way up
When they are feeling way down.

I makes the world a happier place
When they smash me with the pie.
That's why I love to get a pie in the face
Cause I'm a love to get 'em
Laughing guy

...Would someone get me a towel?

For those of you who enjoyed Soupy - you know what I am talking about - for those of you who don't too bad.

Thursday, October 22, 2009

Musing on Discontinuity in the Political System

For the last couple of years I have worked with a presentation on how to have success in the legislative process which has four simple rules. Those rules are - The Otto von Bismark Rule - Politics is the art of the possible; The Lord Palmerston Rule - No permanent friends, no permanent enemies,only permanent interests;The Scarlett O'Hara Rule - Tomorrow is another day (with the Unruh Corollary - If I'd killed all my friends yesterday, I'd have no friends today); and the The Clint Eastwood Rule - Proximity matters. There is a fifth tentative rule also (The Ernest and Julio Rule - which states that no legislation comes before its time) but I have not yet added that to the full presentation.

If you want to see the whole presentation is is on my Personal Website

Senator Lamar Alexander got me to thinking today when he commented that he thought the current administration was a lot like the Nixon Administration - with evidence of an enemies list. There is a lot of evidence that the Obama people have a list of people they would not like to engage with - two come to mind (the insurance industry and Fox news). If one follows the Scarlett O'Hara rule (with the Unruh Corollary) then the Palmerston rule should almost be self enforcing. If you think of the legislative process as something continuing than as a series of contests you disregard enemies when starting on a new project. If you don't you are likely to have a continuing set of combatants - to be in the bubble that Pitts discussed in yesterday's post.

As I thought about that today I came to the realization that the Palmerston rule might be re-written a bit. Those interests might be redesigned to be called values or principles. Nixon was nothing if flexible in his beliefs. When he first ran for congress he ran a narrow and bitter campaign. In the 1972 campaign he got into trouble because he had a list of enemies that he wanted to quash. On the other side, Ronald Reagan had a set of established principles on which he was unwilling to bend. But he was also able to work with the likes of Tip O'Neill (who had many of the same qualities although the principles were different). Ultimately without those principles, the politician begins to solve for power and not interests. A good deal of the nonsense that has turned off Americans to the political system has been the preponderance of politicians who are too flexible in their principles. At this point it is unclear whether the Obama people understand that simple idea.

Wednesday, October 21, 2009

Cached in the Act

Jerry Brown, our former governor who is seeking to be our governor again got stung this morning by technology. I say it is about time. For more than 30 years Brown has tried to portray himself as an intellectual, a guru. What most people on the inside have seen him as is an opportunist. Many of the problems of California began during the eight years Brown was governor.

In between his runs for office, he was on a radio show on KPFA, the flagship of the Pacifica Foundation's radio network. The show was on between one run for President and his run for Oakland mayor. During that show he said some pretty outrageous things. Until a few days ago some of those quotes were up on his website. But for some reason the former Governor Moonbeam's minions discovered that his comments would not play well in this decade so they were pulled. But thanks to services like the Wayback Machine Brown's ravings cannot disappear like he hopes the memories of his eight year reign as governor will.

Brown's response was typical " "In understanding the relevance of brief excerpts from my 1990s talk show, keep in mind that the goal was to provoke debate and lively discussion, not craft legislation." In the caches there is something for everyone. Did you like Bill Clinton? Brown said "I don't believe Clinton is different from Richard Nixon." Do you think that capital punishment is ok - Moonbeam says it is "state murder." Brown is quieter now - not willing to campaign on substance and hoping Californians will forget the eight years of malfeasance that he presided over.

Gary South, longtime political consultant who is working for Gavin Newsome, seems to have gotten the feed. He might well use it when the AG actually announces for Governor (is it re-election when he has been out of office for more than twenty years or just political regurgitation). It would be just desert for this politician who tries to reinvent himself almost on well to be forced to live with his statements made when he thought almost no one was listening.

Leonard Pitts, half correct

Leonard Pitts is a syndicated columnist for the Miami Herald. He likes the President. He has written a lot about how unfair he thinks the criticisms of the President are. In a recent column he made a point about the supposed cocoon that conservatives live in. He thought it a bit silly that the son of Phyllis Schlafly (a voice from the past who wrote "A Choice Not and Echo" in the 1964 Goldwater campaign) who is trying to start Conservapedia as a conservative option to Wickipedia. He thought that was a silly idea. So do I. One of the powers of Wickipedia is that for the most part it corrects itself. So when some loon from the left puts in that some conservative once fed on infant children, someone pretty soon corrects it. He then goes on to make a point which I think is not correct. He states that Schlafly

" is part of an ongoing crusade to delegitimize any institution, any information source, any inconvenient fact that contradicts conservative beliefs. Rather than trust those beliefs to stand or fall in the free market of ideas, some conservatives now apply a kind of intellectual protectionism. So now you have your conservative newspaper, your conservative radio station, your conservative university, your conservative ``facts'' and, apparently, your conservative God, and you may build yourself a conservative life in a conservative bubble where you need never contend with ideas that challenge, contradict -- or refine -- your own."

His point being that conservatives are especially susceptible to being part of a protected environment which protects their beliefs from almost any outside alternative. I think his point is valid but does not go far enough. Our political system is based on the exchange of ideas. But we have lapsed into two trends I believe are particularly disturbing. First, we simply don't engage in seeking out those other sources or alternative views. I do not particularly care what the son of Phyllis Schlafly or even the son of Ron Dellums thinks. But I have tried diligently to understand what all the hub-bub is about on the health care debates. I think the general direction of the President's proposals are in the wrong direction, just as I did for the last President's direction on K-12 education. But I don't believe that either is the devil or not as much an American as I.

And that is the second issue, which I think Pitts seems to do often. Just because I disagree with someone does not mean that I think they are immoral or criminal or related to some other kind of evil plot that will end Western Civilization as we know it. The discussion in the public sector should stick to ideas and leave the food fights to the WWE. Where I think Pitts is especially wrong is in the fact that I think we have too many bubbles and many on the left - who only see NPR or CNN, read the Times (of whichever city), and live in a liberal enclave are any the less bubbled up than the right. Indeed, I think there is a far greater chance that bubbles happen more to those on the left than on the right. Is politically correct speech a recognition of the power of the right?

Monday, October 19, 2009

Ranking the BCS

The Bowl Championship Series system came out with their college football rankings on Sunday. Personally, I think most of these things should be unimportant until nearer the end of the season. But USC, after defeating Notre Dame and more importantly stopping a supposed Heisman contender three times well inside the red zone went down in the rankings. That does not make sense.

The BCS is made up of three components - the AP coaches poll, the Harris interactive poll and computer rankings. They are supposed to be ranked equally. According to the BCS "The computer rankings percentage is calculated by dropping the highest and lowest ranking for each team and then dividing the remaining total by 100, the maximum possible points. (Example: the 6 rankers have Team A ranked 2, 3, 3, 3, 3, and 4. Take away the 2 and 4 which leaves an average of 3rd place. The BCS quotient of this component would be 0.92. (23 / 25 = 0.92)." Both the Harris and the AP ranked USC fourth but the BCS ranks them seventh. Harris and AP ranked Alabama and Florida differently - and that is understandable. Both coaches polls rank USC above the unbeaten Boise State and Cincinnati, presumably based on schedule.

Boise State continues to claim they play a real schedule. They did beat Oregon at the beginning of the season. But then they play such powerhouses as San Jose State, UC Davis and Tulsa. Oh, they also beat Miami (of Ohio) which so far has a perfect season.

Ultimately for USC the season comes down to the Halloween game in Oregon. The Ducks have had a good season and their matchup against SC is at home. Like playing in South Bend, there is a home field advantage of some points. There are two conclusions on rankings. First, the BCS should be scrapped and replaced with a playoff system. Second, the Pac 10, as they demonstrated during last year's bowl season, are a very competitive conference.

Wednesday, October 14, 2009

Defending the Nobel Peace Decision

The decision to name the President as the 2009 recipient of the Nobel Peace Prize has created a lot of discussion. Some commentators on the right have suggested that the award is completely unjustified. Some on the left have argued that the President's selection was a natural. A lot of fun has been made of it. In many of the previous awards, the prize was offered as work completed, clearly this award was aspirational. Jokes circulated on the Internet that the President would be considered for the Heisman trophy because last weekend he thought about watching a college football game. The Colbert Report did a very funny segment about the award poking fun at the selection.

Thorbjorn Jagland the chair of the committee tried to defend the decision by saying "He got the prize for what he has done." In an even more odd defense of the choice one other committee member said "I looked at his face when he was on TV and confirmed that he would receive the prize and would come to Norway, and he didn't look particularly happy," (Gee, it must have been a good idea because the President was not particularly happy about getting it.) Ultimately at least one of the committee members came up with the most candid response by suggesting that at least part of the reason why Obama got the award was because he was not George Bush.

Regardless of the decision and whether the award was a good idea, it presents some interesting problems for the President. This award is clearly an aspirational one much as the one to Al Gore was (although Gore arguably had achieved some movement on his quest on global warming). But if the President is unsuccessful in the things he is trying to do, he may be judged more harshly - not by the Nobel Committee - which has consistently in the last several years been a relatively reliable indicator of European elite opinion on international issues - but by the real guide of opinion. It raises the bar somewhat for someone where expectations are already very high.

Tuesday, October 13, 2009

Miracles in Technology

A couple of months ago I bought a new MacPro with lots of Ram and a huge hard disk (two even of a terabyte apiece). Never mind that when I started to work with computers Stanford's entire network was about two terabytes.) I decided to put all of the CDs that I have collected over the years on to iPhoto. My Flickr account has about 20,000 photos (I like photography). But between my prior collections and the CDs I have almost 35,000 photos going back to the mid-1990s. (Those are after culling my really bad shots.)

I began to load the photos on to the hard disk - backed up with a 500 GIG Iomega portable drive. But I soon realized that some of the photos on the CDs had been backed up already. No problem - IPhoto does a great job at searching out duplicates and asking if you want to add them again. I have recovered some photos I thought I had lost without having to go through all those duplicates. What's more the new IPhoto does both place and face recognition so I have been able to catalogue all of them. It actually recognizes the difference between Vicente Fox - who I met in Mexico and Desmond Tutu - who I met at the University of the Pacific.

That may seem common place to some but to me all those things are still a WOW!

Monday, October 12, 2009

The Nobel Selection

This morning it was announced that Ellinor Ostrom was a co-recipient for the Nobel in Economics. I thought her selection is an exceptional one. Last year's Paul Krugman, certainly deserved the award for his work on trade. His political polemics detract from the award a bit. But Ostrom is a wonderful choice. I am not as familiar with the work of her co-recipient, Oliver Williamson. Williamson was a student of Ronald Coase and has spent his career on transaction costs in firms.

Ostrom's work has focussed on how people deal with the "commons." In 1968 Garrett Hardin published a paper that is a standard in the field of economics (even though Hardin was microbiologist) called the "Tragedy of the Commons." The paper discusses what could happen to common areas where property rights are not well established. His other writings went on to argue that human beings were naturally selfish.

Ostrom has spent her career thinking more carefully about how human beings organize their activities. Her research has suggested a variety of organizing principles which can help us to use resources more effectively. Ostrom's research has pointed the way for solutions to resource allocation principles that fit the needs. Hardin was dogmatic; Ostrom has been creative.

There are two other distinctions relating to Ostrom's award. First, she is the first female to be so honored. But second she is, in the narrow sense of disciplines, not an economist. Her doctoral work was in political science. Obviously, she has not been limited by her discipline. She used skills and knowledge from a variety of disciplines. Since her work has focussed on resource allocation it is more than appropriate that she be recognized for her contributions to economics.

When disciplines began to evolve in American colleges and universities, there was something called political economy - which recognized that the fields of politics and economics were deeply bound together. Ostrom's work and her award are a recital of those linkages.

Funny Line

I am still not sure about how I feel about the state's Chief Justice, Ron George. Some of the decisions where he signed as lead were poorly reasoned. But in a speech last week, that discussed the problems the state has with the initiative process, he came up with a great one liner. The Chief Justice quipped "In the last election voters gave rights to chickens and took them away from gays." (linking our vote to regulate the size of chicken coops and enshrining in the Constitution a limitation on the definition of marriage)

Wednesday, October 07, 2009

Is it time to stop supporting health charities

This morning on NPR there was a report about an innovative program that Safeway sponsors for its employees which provides incentives for employees who do the right thing in losing weight, quitting smoking and exercising. In essence the CEO of the company argued that these incentives made more productive workers and improved their health. For those employees who do not choose to take care of themselves they pay normal rates for their health insurance.

But the NPR people also interviewed some idiot from the American Cancer Society who yammered that contrary to common sense that this program (which is actually contained in the Senate Finance bill as an amendment by Senator Ensign) is somehow discriminatory. What twaddle!

If we are to "reform" health care part of the solution will come from making intelligent choices and as importantly in increasing the propensity of all of us to be wiser consumers. From a rational viewpoint that means thinking about how we use our health care and also in taking better care of ourselves. If we do that we will cost the system less. But the nimrod from the ACS seems to think that what we should be doing is creating more of an entitlement mentality. That is a sure way to guarantee that the "reforms" bankrupt us all.

When ACS and the Heart Association and others began to get into public policy issues a couple of decades ago - they stood for sound health policy. I worked with them on a couple of bills in Sacramento where they helped explain complex issues, especially about bio-medical research. But even then they began to become advocates for a more expansive government. I understand that at least some of the work of these entities is to support research but the externalities created by the kind of public policy advocacy advanced by the ACS spokesperson is just too high a price to pay.

Monday, October 05, 2009

Timing in Academics - the Intellectual Origins of Rexford Tugwell and his influence on the New Deal

This afternoon as I returned from a meeting in the Bay Area, I was listening to a podcast on Econtalk that featured John Nye from the Mercatus Center at George Mason. I've written about Econtalk before - Russ Roberts is an excellent interviewer. John Nye recently published a paper which argues that the common assumptions about the Great Depression are wrong. He makes a convincing case, similar to the one made by Amity Shlaes (also written about in this blog) in The Forgotten Man. Shlaes made the point that the common perception that a) Hoover fiddled in responding to the depression and b) FDR's stimulus actions brought us out of the depression are both wrong.

Nye points out in the podcast that there was a short and significant downturn in 1920-21 where no fiscal stimulus was tried but where monetary policy tried to be stimulative and that we came out of that downturn, caused in part by the post WWI transition, much more smoothly. The Federal Reserve, which was then about 7 years old, flexed its muscles and that helped.

Part of Nye's argument rests on the work and thoughts of Rexford Tugwell. Tugwell was one of a group of left leaning intellectuals that went to the Soviet Union in 1927. They met with Stalin although Tugwell seems to have missed the meeting.
He was also perhaps the key member of the FDR brain trust. His original role with FDR was in Agriculture but his influence in the administration was far wider.

Tugwell studied at Wharton and during his doctoral work seems to have come under Scott Nearing and SImon Patten (who was an economist with an institutional focus). Nearing was dismissed from Penn for his radical ideas. Patten was a transitional figure to at least speculate on the effects of advancing technology on the traditional notions of scarcity in economics. Both of his mentors raised questions about classical economics (including Smith and Ricardo). At the time when Tugwell was doing his doctoral work there was also a lot of academic ferment on the merits of planning. Remember that he came of age in a time when muckrakers were decrying excesses of capitalism and a number of seemingly promising ideas about the capacity of the human intellect to control things were advancing.

A lot of the ideas championed by Tugwell were based on a model of centralized planning. He once said: “Make no small plans, for they have not the power to move men’s souls”, which sounds a lot to me like the quote that Rahm Emmanuel said about crises early in the Obama administration. Tugwell championed a controlled market system where big producers would be heavily regulated by the government. A lot of those ideas were prevalent in the early years of FDR. The efforts in trying to control supply in factories and agriculture come from these bounds. According to Nye, those activities may have actually slowed down the recovery in the 1930s. FDR's one successful plan was to get us off the gold standard and to de-value the dollar - both of which could be seen as monetary policies to loosen monetary policy. Thus, in many ways Tugwell's ideas were no different than the economic policies of the National Socialists in Germany.

In a speech after he left government he referred to planning as "The Fourth Power of Government." After he retired from government service he spent the latter years of his life in Santa Barbara and at one point proposed a massive revision of the US Constitution. Among those proposals (drafted in the 1970s) was one to establish a planning and regulatory branch of government.

Tugwell may have come to his doctoral work with notions already imbedded. Or he could have developed his philosophies in reaction to the prevailing teaching of the day about economics. Or he could have been influenced by the generation of academics of his day. Most likely he came to these "quaint" notions from a combination of influences. What is most interesting to me is to speculate about how he came to a set of ideas which before this administration were so thoroughly discredited.

As Nye points out, the academic consensus thirty years ago was that FDRs policies helped to pull us out of the Great Depression. The current orthodoxy suggests that a) most of FDRs policies did nothing to help get us out of the problem and b) some that Tugwell championed most fiercely actually extended the crisis for more years. Indeed, academic ideas go in and out of fashion. But it is interesting to speculate what might have happened had Tugwell's commitment to big government and big industry been absent. Nye suggests that we seem to have come out of the 1920 crisis, where no such programs were suggested, a lot more quickly.

Sunday, October 04, 2009

The Commission on the 21st Century Economy

One of the perils of the California situation at this point is the absolute volatility of its revenue system. We've had swings of 60% on capital gains receipts in several of the last few years. Admittedly our politicians seem to want to spend everything we get in in the fat years (and then some). But that is normal behavior for the political class.

The media have not missed our problem. In three recent articles (Who Killed California?,How California Can Get Its Groove Back,California Failing), National Affairs, the Wall Street Journal and the Guardian wrote articles about our problems.

This spring the political leadership did something right. The established a commission to look at our tax system and come up with proposals to take some of the bounce out of the tax system - which is so obviously encouraging high wealth individuals and firms to flee the state.

The Commission released its report this week and it has some pretty good ideas, at least as a starting point for a discussion. An odd group of individuals including Willie Brown, George Shulz, and Diane Feinstein endorsed at least the necessity to go forward. Unfortunately, parts of the state's business leadership did not. The head of the State Chamber of Commerce, who no doubt has been losing members to other states in recent years, babbled ""We must not rush into replacing our 70-year-old tax system with an unproven experiment." The head of the California Business Roundtable, as a member of the Commission, refused to endorse the report. (When even the liberal dean of UC's law school, who also served on the commission did.)

In 1984 President Reagan pushed for reforming the US income tax. He got a commission together which produced a long and academically thoughtful report which was lousy on the politics. Rather than giving up - he stuck to his guns and with the help of some prominent politicians on both sides of the aisle (O'Neill, Rostenkowski, Packwood, Bradley) got a tax bill which simplified our system and improved efficiency. (The best summary of that process was done in a book by Jeff Birnbaum who was then with the Wall Street Journal - Showdown at Gucci Gulch)

It will be a test of our current governor and the legislative leadership that created the commission whether they will have the internal fortitude to continue forward to try to get some substantive change which will help to bring the state back. In the next couple of posts I want to analyze the report of the commission and its proposals. This may be the single most important public policy issue of this decade.

Thursday, October 01, 2009

Bill Safire

The former Nixon speechwriter died at 79 this week. I knew him slightly. Bill was in love with language. He was the guy who gave Spiro Agnew the phrase “Nattering Nabobs of Negativism.” A one dinner my wife and I had with him he gave a long discussion of the origin of the “I have a dream” speech given by Martin Luther King. Just as his phrase was derivative of something originally uttered by Teddy Roosevelt. Bill went through both the history of speeches like Dr. King’s not to denigrate his speech, but to show that the work was a grand part of American rhetorical tradition.
After he left politics he became a Pulitzer winning columnist and wrote a couple of novels and a couple of books on use of the language that are fun and useful. Bill wrote a biography of the Nixon Administration called , Before the Fall which is still the most readable and fair-minded coverage of Nixon.