The Consumer Reports of Boycotts

One of the outcomes of the Superbowl was a controversy about an Israeli company called SodaStream.   SodaStream sells a device which injects CO2 into water and with syrups they sell so that you can produce home made soda.   I am not much of a soda drinker so I have never used the product - but it seems like a good idea.    

Oxfam produced a silly ad suggesting that this company, which offers employment to Palestinians, is exploiting the workers.  That is  nonsense.   In an area of the world where poverty is high - this little company is offering good jobs.   Despite the overblown rhetoric of Palestinian spokesmen - that is the reality.  The company's spokesperson quit her role with Oxfam.  In recent months the Palestinians have used terms like "apartheid" to describe Israeli policies in what they believe to be Palestinian territory.   That is so off the mark it is laughable - but some in the world have begun to believe the claim.

But the real story comes from a fringe group  I found  called Global Exchange - whose mantra is that they are   "an international human rights organization dedicated to promoting social, economic and environmental justice around the world"  (Please note I have not put in their URL as I usually would because I find their campaign despicable.)

On their website they sneer - The simplest alternative to buying a SodaStream machine is to drink plain water or other non-carbonated beverages - no one actually needs to drink bubbly water. And even if you like to do so on occasion, remember that you’ll have to consume quite a bit before you’ll realize any economic or environmental benefits from owning your own machine, compared to simply buying bottles at the grocery store. (Yes, plastic bottles are wasteful, but plenty of plastic, plus metal and other resources used for manufacturing and shipping, goes into each home machine, too.)  Can you imagine the internal fights with these nutballs.   "If we can't get people to not buy products from this company that is operating in what we believe to be Palestinian territory then should we actually ask them to use (shudder!!!!) plastic bottles?"   Which orthodoxy prevailed is a matter of some interest - evidently environmental and nanny state principles get thrown out when you have a chance to rail against a for profit company.

But then the site goes on to offer consumer recommendations on competitors to the SodaStream.    Their first alternative has the following advice "XXX (the first company recommended)  isn’t selling its own syrups or powder to flavor your soda, but its customer service department says a full line will be available soon. In the meantime, both Cuisinart customer service and at least some Bed Bath & Beyond retail staffers are recommending SodaStream’s flavorings, but you don’t have to you follow their advice - you can just add fruit juice, brew your own flavorings (start with these recipes), or try the flavor packs offered by two other recent entrants in the make-your-own-soda market."  (Note on the original site the words "these recipes" were hot linked to nothing - evidently the nanny state faction in this group prevailed and prevented GE from being a full fledged consumer advocate.)

It seems odd that a group which claims to support human rights and "economic" justice would spend so much time trying to assail a small company that is offering good jobs in a place where people really need them.  But then again when you live by orthodoxy, even the cross conflicted notions of this group, what you say and what you actually do may be quite different.

A slight redefinition for Economics

When I walk our dog Indy, I often listen to books on tape or podcasts.  Econtalk is a favorite of mine - last year the host interviewed Ronald Coase.   Coase is one of those seminal figures in Economics and the interview was wonderful.   The current book I am listening to is Basic Economics by Thomas Sowell.

Sowell begins the book with a common flaw.   He argues that Economics is the study of scarcity.  That is not an uncommon opinion.  Check out 100 textbooks and I will bet you will find all of them starting in the same manner.

But here is where I think the starting point is wrong.   Many commodities in society are approaching the status of limitlessness.   And yet even if we were to achieve that for all the necessities of life we would still need to think about economics.   Stefan Linder, a Swedish economist, in a book that is sadly out of print, argued that as commodities become more ubiquitous we still have to make choices - time becomes the issue to solve not products.

So for me, rather than beginning with the idea of scarcity and going through a series of supply and demand curves we should begin the discussion of the subject about choices.  This offers a lot of improvements in results.   First, we begin to understand that life is about making the right choices among alternatives, many of which are easy to obtain.   Second, as we think about those choices we might be less inclined to substitute feelings for judgment.   Many of our political choices are based on feelings - "everyone should get healthcare" (without any explicit understanding about what healthcare is or what it will cost) or we have a "right" to this or that.    A third benefit, and perhaps the most important, is that one does not naturally devolve many decisions to a governmental solution.   Many in society ask us to believe that by producing something on the government side of the ledger that we inherently defeat the problem of scarcity.   But as the deficits in public pensions and entitlement programs suggest - that is pure nonsense.

As James Buchanan pointed out many years ago - if you begin with the benefits of trade (people establish relationships for mutual benefit) rather than the concept of scarcity - you ultimately have a sounder basis to discuss economics.  The same could be said for starting with the idea of choices and their consequences.

Joe Biden Public Policy Wonk

Sometimes you do not need to say much - for example -

#1 - Nearly 32 million riders prove what I’ve known my whole career – passenger rail is one of the best bargains available to the American people. We need to continue investing in our nation’s infrastructure, including passenger rail service, to keep our economy moving.  - Joe Biden is Vice President of the United States of America.

#2 -  A graph produced by the Vice President to prove his point.  (Ridership is UP)

#3 - A graph from the Chair of Amtrak's Board to the Congress for more subsidy.

#4 - 

	RIDERSHIP	2013 APPROPRIATION	WISHED FOR APPROPRIATION
	31,600,000	1,378,000,000	2,650,000,000
SUBSIDY PER RIDER		$43.61	$83.86

So Biden argues that something which requires an almost $44 per ride subsidy is one of the "best bargains to the American people" - if that is true I would hate to see some of the lesser bargains.

The Absurd Dynamics of Obamacare

Ezra Klein of the Washington Post's Wonk blog has been furiously trying to find a pony in the load of errors that is Obamacare at this point.   He did a post yesterday which argued that the ACA's policy was actually pretty good - despite the news of the computer screw ups.   He presented a diagram and called it the Obama Trilemma - which argues that the ACA is trying to balance three different issues in health insurance.

When you think about the diagram at the right it which comes from his article, it looks simple - but the simplicity makes all three legs inaccurate.  That is true in part because it oversimplifies the problems associated with trying to advance health care coverage.

Take each of the three legs of the triangle.   Affordability is a concept that is, in this instance, in the eyes of the beholder.   What is the right percentage of income that a person should bear to be covered?   That answer is different for the poor and the rest of us.  Accessibility is a bit clearer - although in this case because of the mandate - accessibility is not voluntary.   Is a comprehensive policy one which meets the current needs of a policy holder or one which covers all eventualities?   If you decide to define it as the latter, then the costs for many consumers will be significantly in excess of what they would pay under a less regulated market.

There are actually four markets that the ACA is trying to cover - the group policy (where individuals are covered for health costs by a policy issued by an employer), the individual (where individuals buy coverage on their own), Medicare and Medicaid.   Medicare is relatively straight forward - individuals are covered for a basic policy and have the option to purchase at additional expense a broader set of coverages.  Although it is financially unsound, we at least understand how it works.   The case that was made to expand Medicaid was that it was not accessible to a broad enough range of individuals (that depends a lot on how flexible the individual and group markets are) and on your definition of equity - in this case the Congress chose to define the standard quite liberally (400% of the poverty rate calculated by the Federal Government).

The real problem comes on accessibility for the individual and group markets.   If comprehensiveness is too broad then insurance companies are likely to reduce their spread of risk or raise their prices to cover those new costs.   Remember that the President repeatedly told us that "If you like your current policy, nothing will change."   That turns out not to have been true.  Comprehensiveness for the supporters of the ACA is defined by someone else - In 1993 Hillary Clinton commented "We just think people will be too focused on saving money and they won't get the care for their children and themselves that they need"   So much for consumer choice.   Here is the situation for one such policy holder who had her choices reduced by the ACA -

I'm one of those 7 to 12 "millions" who has had an individual "policy"- in Texas, no less- for 10+ years. Premiums with my current Ins.Co.- BCBS- are going up 25% for an individual "Silver level" policy. What am I gaining/losing ? Mental health coverage (thankfully, don't need); better Rx coverage (I think- but maybe not); no lifetime policy maximum ( mine was $1MM); maternity care (Umm, at 60, don't need it); had 80% major med/ co-insurance-BUT- no maximum out of pocket. With a Silver plan, I'm down to 70% "co-insurance" but a "cap" on out of pocket at $6250. Is it a "good deal" for me, assuming no catastrophic health crisis ? No. But neither was/has been my private, individual policy of 10+ years- Over $7,000 a year before co-pays & deductibles for "benefits" that have averaged out to less than $500 a year. 
I "get" shared sacrifice; I get getting the under served/poor into a system that treats before a crisis (and out of the ER- which as a Taxpayer, I am paying for directly- via my property taxes here in Dallas); I get convincing the young invincibles that nothing is free forever. 

Evidence is coming in fast and furious that a lot of people covered in the individual market are being dropped or are facing huge increases in costs.   The numbers at this point are in the millions.  Sara Kliff - who writes on healthcare for the WP, commented that between half and three quarters of the buyers in the individual market are going to be dropped.  She says that is because the plans do not meet the standards of the ACA.   In reality the numbers look to be a lot larger, in part because some of the group market is also being affected and many group policy holders are facing significant cost increases.  One administration person called the 5% (probably a low number) insignificant.

There is one other twist in the program which has long term implications.   There was an implicit tradeoff in the ACA  - we could afford to expand the coverage in the Medicaid part of the system IF we got people who were currently uncovered to buy coverage.   Evidence from the successful sites like Oregon is that the vast majority of "purchasers" are signing up for Medicaid.   That makes the economics of the program even less favorable.

The ACA, at least in California Covered, which I investigated for a friend, has lots of choices - from bronze, to silver, to gold plans - offered by a number of providers.  That seeming choice is not realized when you add in all of the mandated services.   Costs even for a minimum policy may not be reasonable except for a person who is getting a government subsidy.

If we can ever get to trying to fix this mess (after the incompetent computer code is adjusted) we might begin to think about a system which offers a shopping basket rather than a package for consumers.

Two Ways to Look At Christmas

I have a friend who is an ardent Emailer.  She often sends out inspiring and interesting posts.   But this morning she left me flat with a suggestion that instead of buying something made in China that we buy American.   In this globalized world the sentiment is nice but actually not helpful to our own interests in the US.

Her post, suggested that you do things like going to a local restaurant and leaving a big tip (nice sentiment for the server); getting a gift certificate for your barber; a health club membership - or other things which seemingly buy local.

But the curmudgeon in me could not resist responding.  The premise of the argument suggests that we should buy American and close out all those foreign products.  But I go back to David Ricardo who had a much more Christmasy idea called comparative advantage that suggests that it is often better to allow a country or firm to produce a good or service if they can do it with either lower cost or lower opportunity cost.

Let's look at the purchase of a cellular phone compared to a health club membership.   If a cell phone costs about $200 very little of the value is produced by the manufacturing process.   By allowing your Christmas gift list to get that Chinese made phone you do a couple of things.  First, you encourage the creation of higher end jobs in the American economy - think of the difference between the wages of a health club employee or a designer or engineer who figures out how to make all those new features.  Second, you are helping to build another economy in the world where (as their economy develops) they will have a whole lot more buyers who want things like American designed cellular phones.

Now consider some of the consequences of buying that health club membership.   If cellular phones are manufactured in China could it be possible that all those workout machines are also made outside the US - the US has (until recently - more on that later) been losing manufacturing jobs.   Think of how overjoyed you 15 year old - or even your spouse would be with a mundane Christmas gift like a certificate to a barber - almost as good as a pair of socks.

Finally, there is that stubborn thing about changes in comparative advantage.  In the last couple of years, comparative advantage on manufacturing many things has come back to the US.  It seems that our stronger productivity has helped us to bring back jobs on shore - and those jobs pay pretty well.  So the best strategy for Christmas giving seems almost the opposite of what my good friend forwarded to me.   But then that is often how economics thinking works out.

Reflections on Gridlock

I've been struck in this current (or continuing) political fight how unable the political class seems to be able to look for a solution on both the budget and the debt ceiling.   There are many causes but no one seems to be working toward a solution.   But the discussions in the media have been less than helpful.

Here are some thoughts - 
#1 - Each side seems intent on talking to itself - Here is how a left of center friend described the stalemate in a Facebook post - "This is a fight they have lost nearly 50 times in Congress, in a national election, and in the Supreme Court. Democrats have compromised by offering a measure that included $72 billion in annualized across-the-board spending cuts to keep the government open. The Senate passed this legislation multiple times before the government closed. " This friend is normally a very reasoned person but the post strikes me as ignoring some major issues.    Let me parse the statements a bit.  This is a fight they have lost nearly 50 times in Congress, in a national election, and in the Supreme Court.  I am not sure where the number 50 comes from but my friend ignores the fact that the ACA (if that indeed is the base of the problem) was adopted by an extraordinary set of procedures without a single vote from the GOP; the immediate election after the bill was adopted saw massive losses for the democrats mostly attributed to the one bill; the Supreme Court's decision on the constitutionality of the measure was actually a 4:4:1 decision. It is one which is not likely to be in the replay roll of SCOTUS.   All of this suggests that the ACA could use some adjustments to build a broader political base.  Democrats have compromised by offering a measure that included $72 billion in annualized across-the-board spending cuts to keep the government open.   That assumes that the supposed $72 billion actually solved the deficit - but it (which even with the reductions from the top) continues to be among the largest in our history.  More needs to be done on both the level of government spending and reducing the debt.   The Senate passed this legislation multiple times before the government closed.   So far the leader of the Senate has been the most strident in opposing any substantive discussion about changes in the ACA.  When you listen to the pundits of the right - they echo tired phrases - as tired as the ones of my friend on the left.

#2 - The Political Class seems to think this is a silly game not serious business - Wonkblog actually created a Daily Default Dashboard (See illustration above) which is based on a series of questionable financial indicators.   Even that seems to indicate that the level of projected tension in Washington is not high at this point.   They figure they can screw around for a couple of more days and then get credited with the save.   Joel Kotkin points out in a recent column "This has been a golden era for the nation's capital, perhaps the one place that never really felt the recession. Of the nation's 10 richest counties, seven are in the Washington area. In 1969, notes liberal journalist Dylan Matthews, wages in the D.C. region were 12 percent higher than the national average; today, they are 36 percent higher. Matthews ascribes this differential not so much to government per se, but on the huge increase in lobbying, which has nearly doubled over the past decade."  Kotkin argues that all this has lead to a divide in the country that is not just left/right but between the Washington elites and the rest of us.   The GOP may be leading the way but everyone's reputation is taking a hit - at some point we will rise up and say enough shenanigans.

#3 - So what about the debt ceiling and the CR? - Yesterday the President said he will begin to negotiate when the House passes a clean CR and debt limit increase.   He seemed also to say that it is unusual to negotiate on something like the debt limit - (one of his favorite lines - the debt limit increase is merely confirming what Congress has already authorized).   But those premises are false on a number of points.   First, since 1962 the debt limit has been raised 74 times (according to the Center for American Progress - hardly a conservative mouthpiece).   Our debt held by the public amounts to about two thirds of our national product which is the highest it has been in almost sixty years.   In prior periods things like Gramm-Rudman-Hollings and PayGo have been included in debt limit adjustment agreements.  Debt limit votes have proven a good time to elicit spending reductions and controls.  Doing what the President proposes would expose about half the country to more unbridled spending.

Interest on the debt is about 6% of the total federal expenditures.   So the claim that if the debt ceiling is not increased we will default are nonsense.  Organizations like Moody's have pointed out the absurdity of the claim - in a CNBC interview the CEO of Moody's said  “It is extremely unlikely that the Treasury is not going to continue to pay on those securities, hopefully it is unlikely that we go past October 17 and fail to raise the debt ceiling, but even if that does happen, then we think that the U.S. Treasury is still going to pay on those Treasury securities,” he added.   The best estimate of the effects of the lack of a CR (continuing resolution - which is a short term fix necessary because the Congress cannot actually pass a real budget) has on governmental programs is about 17% (thus 83% of the government is still operating).  The President has a lot of discretion in deciding which things stay open. So if we default it will be done by the President much in the same way that the Administration has chosen which things to call non-essential.  So far the President has chosen a standard policy of making the pain visible.   But as we saw at the WWII memorial - many people are beginning to understand the politics of closures.

#4 - So what is the fight actually about? -.   Note that in the last five years, partially as a result of the recession but not entirely, the percentage of the economy dedicated to federal spending is significantly above what it was prior to this president.   Revenues have begun to trend back to their normal levels (at under 20% of GDP) but the deficit is still large because the expenditure side of the budget is still considerably larger than it has been at any time in our history.  Note the projected "drop" brings the budget back to 4-6% over where it has been and that is in a time when war expenditures are going down.  As mentioned above, that is also true for that our total national debt (both what is represented in internal transfers and what is owned by the public) is the highest it has ever been.

Ultimately, I believe the American people want something less from government.  They've shown a reluctance to raise taxes to the levels necessary to fund all the things the Administration wants to do.  They've also shown a great deal of well deserved grumpiness about the implementation of the ACA.    One other issue - unlike prior fights on this issue - while the right is taking a beating - so is the President.   An NBC/WSJ poll in September found that a small majority of Americans disapprove of Obama's handling of the economy (52%).   By a 2:1 margin Americans do not want to raise the debt ceiling.   At the time the respondents supported the GOP notions on working on the deficit by a 12 point margin.  Another major poll about the same time said by a 20% margin that they disapproved of the President's handling of the economy.   And more importantly 40% thought the economy would be worse off a year from now.  52% of the respondents believe that the economy is in bad (bad, very bad or terrible) shape.

#5 - How will it all come out? - see The Paul Masson Theory of Legislating - I've taught a course on legislative practice over the last couple of decades in which I lay out about a half dozen rules that I came to understand in the four decades that I worked in Washington and Sacramento.  The Paul Masson Rule is simple - legislators will make no decision until they have to (riffing off the old commercial - we will sell no wine before its time).   My suspicion is that they will begin to talk in the next couple of days and come to a resolution within a day or two of the supposed deadline when the debt ceiling will begin to pinch - that might be as late as the 20th but certainly before Halloween.

The Hardly Strictly Bluegrass through the lens of Garrett Hardin

One of the rights of passage for young economists is to read a mostly dystopic essay by Garrett Hardin called the "Tragedy of the Commons."   Hardin argued that if things were not properly gated (or priced) they would be used inappropriately.  Allow people to use an open field to graze sheep (the commons) and they will mostly wreck it.  There is some truth to what Hardin had to say but like most writers of his type there is also something very wrong about his basic idea.   Wired writer Chris Anderson raised the more logical part of the "commons" problem in his book called "Free" - but there is a darker side of the "commons" problem which lead Hardin to project all kinds of environmental disasters.  There I think he was mostly wrong.   If you did not go - or even if you did and missed acts there is a great Webcast Archive of some of the Performances.

Yesterday we went to the 13th edition of Hardly Strictly Bluegrass - which is a music festival originally funded by Warren Hellman and held in Golden Gate Park.   The music is a bit eclectic - although many of my generation would understand the reference - performers ranged from Boz Scaggs to Louden Wainwright III to Allison Krause.   HSB venues are nestled into a half dozen niches in the park.   It is organized pretty well, for what it is.   So what you get is hardly, strictly bluegrass.

 This was the first time I had been to one and I was stuck with several impressions.

#1 - There are two choices for this - follow the performers or follow the venue.   We chose a venue and stayed the day to hear the groups as they moved through.   We chose something called the Rooster Stage - which is in a small area bounded by two hills.   We did not want to sit in the sun and thus sat up in one of the high areas.   The benefit of staying on one venue is you do not have to deal with the crowds much.   The cost is there are a lot of good acts in each of the venues.   As we were walking out to go to dinner Allison Krause showed up on the Banjo Stage and did a nice short set.  And we got to hear her as we walked along. The simple answer seems to have been the venue choice is the better, just for the reduction in hassle; but choose the right venue.

#2 - At least where we were, the crowd was not really there to listen to the music.   Almost immediately we recognized that the crowd, which was overwhelmingly young and white, was there to hang out.   The music was a precipitator but not a motivator.  That was unfortunate, but it seemed to prevail in the venue for the entire afternoon.   There was constant chatter which was loud enough so if you wanted to listen to the musicians you could not.

#3 - There were a set of inconsistent ethics - This may be an odd comment but I think it is correct.   For the most part, unlike many events like this, the crowd was pretty good at picking stuff up.   Fans that either brought or bought food, carried out the wrappers and cans.   That was not true for some beer cans (Coors cans seemed to be the ones most neglected) but most people actually cleaned up after themselves.  But the crowd did not respect space very well.   As we were coming back on Bart an HSB visitor complained that she had staked out a space in one venue very early in the morning to be able to see a particular set of performers but as the day wore on  people came and stood in front of her.  So she was not rewarded for her effort.  The clods seemed to be oblivious to her space.  So in one sense, part of the commons problem (trash removal) was disproven.   At the same time, another part - the chatter and the inability to respect reasonable boundaries - was true.  Hardin, like his original paper, was about half right.


#4 - Impressions of San Francisco -  The HSB has a normal melange of people you expect to see in San Francisco including lots of tattoos (I wonder how those people will ever get hired), piercings (ditto), and Doc Martins with fancy dresses.   Those do not bother me - although they are different.   I think that many of those choices, made in the name of individual expression, when you see such a large group together, are evidence that many are just another form of conformity.

And as you would expect at any large street event there were the usual band of eccentrics.   The picture to the right is of a guy who between acts would sell poetry readings.   He had a patois which was funny (at least the first two times you heard it.)

Riding back on the Muni - there was a good and happy crowd.  (We had to go on the Freeway, to BART, to Muni and then a lot of walking.)  It was, for the most part, a pretty mellow crowd.

#5 - Entrepreneurial spirit lives - In the middle of the afternoon a guy with dread knots came by with a cooler.  The guy had purchased coconuts with the husk off and was carrying a large bottle of rum and a machete.  He was lop the top off (with a bit of panache)  the coconuts and allow the buyer to sip out some of the coconut milk and then he would refill it with rum.  The deal was $10 - which based on other prices was certainly reasonable.   In the space of about an hour working the crowd he sold about 20 of these concoctions.   I was impressed by his enterprise.   He had a mix of showmanship and entrepreneurial talent that was pretty nifty.

More on the Phone Market

There is some more data, this time from Kantar Worldpanel, which supports the notion that the cellular market is maturing.   Presented to the left is an estimate of market share for various operating systems in various countries.

Dominic Sunnebo, strategic insight director at Kantar Worldpanel ComTech, comments: “After years of increasing market share, Android has now reached a point where significant growth in developed markets is becoming harder to find. Android’s growth has been spearheaded by Samsung, but the manufacturer is now seeing its share of sales across the major European economies dip year on year as a sustained comeback from Sony, Nokia and LG begins to broaden the competitive landscape.”

But there is a second story which is more complex and ultimately more interesting.   With the 5S Apple began a refresh of their mobile devices to a 64 bit architecture.   It is likely that over the next couple of months the next versions of iPads will be moved to the 64 bit structure.   New iPads will come out in one or more cycles before the end of the year.  While some experts have yammered that the move to the new chip is not a big deal, I think it might be.  The key asset of a 64 bit chip is that it grabs data more effectively.    If Apple is moving to cover all of these devices in a short refresh cycle the integrated ecosystem of Apple will begin to pay off in big steps.  All of a sudden the look and feel of all that stuff that you use for your mobile devices will be faster - with things like fingerprint id but also with the less snazzy stuff like doing things like multitasking.  If the device is quicker and more useful (both of which the 64 bit structure can assist - then the stickiness of the device in a mature market will increase.

The America's Cup Win

At one point in my life I was an avid sailor.  (Certainly not at the level of the America's Cup racers.)   We sailed something called J-Boats which were about 24 feet (about a third the length of the cup boats).   J-Boats were middling in what is called the PHRF standard (which is somewhat analogous to a handicap in golf).  I have no idea what the equivalent rating for this new and radical design but to give you an idea these boats can actually go a lot faster than the wind under the right conditions.

A few weeks ago, in a post about Larry Ellison, I expressed concern about the new design.   I even suggested that it would not have bothered me to see the American team lose.   In the end, after starting out 4 races behind (because of a penalty) and then having a couple of miserable performances - they ran eight races almost perfectly and won the series 9-8.   It was a truly impressive win - after a tactical adjustment in one of the early races- where they declined to do a second race of the day (for which they were widely criticized).

The technology (which you can see something of in the video below) is amazing,  The sails are actually airfoils not traditional sails.   And the design of the boat is to get as much of the multi-hull out of the water so the boat can ride on a foil.   But I wish that they might go back to a more traditional design or have a non-tech version of the America's cup.   Somehow a boat shooting along the water at close to 50 MPH does not seem right.   And yet the Oracle team published the rules on how to design the boat, and after the initial hiccup was able to come back and win the series.  

The cost of each of these new designs excludes all but the most wealthy.  Another criticism of the current rules is that only one of the team members was actually an American citizen.   And yet both of these objections should be overcome.  When Commodore Vanderbilt was racing the cup - it was limited to very wealthy people.  So not much has changed.  What the Cup has done over time is to improve sailing for lots of less capable sailors.   While the air foil is not likely to replace standard sails on smaller boats, it is likely that a lot of the innovations will find their way into more consumer oriented boats.   As to the gripe about the lack of Americans on the team - what was there was American technology.  So it is a great metaphor for larger economic issues.

I ended up watching a couple of days racing on the ESPN channels but did not go down to a race.  Friends that did go down to the Bay to view the races live said, compared to earlier Cups - these were over so fast it was hardly worth the drive.  What I was left with at the end of this series is what big changes are likely in the next series four years hence?

A so what chart from the WP.

The WP published the following graph this morning which compares the power consumption in six African countries with the consumption of an energy efficient refrigerator in the US.

The point the Post was trying to make was look how greedy (or fill in other negatives) Americans are.   But my response is so what.   Americans do a lot of things that the rest of the world does not, including working aggressively on making the things they use even more efficient.   The Post's logic is that Americans are piggy.  But why not try to bring standards of consumption in those six nations up to something closer to what the US can afford?  

Consider another chart.   This time compare what a fridge cost to operate and how much it consumed in electricity over time.

Over the last 40 years the average refrigerator in the US has reduced the number of kilowatts consumed by three quarters.  All the while the cost of consuming those KWs has also been reduced.  We've got products that do a better job for cheaper.   Taken from another view, we have actually reduced the disparity between consumption in those six countries because in the 1970s undoubtedly there was most likely less electricity consumed in the African countries and more in the US refrigerators.    Numbers and charts always benefit from looking at a wider range of numbers.

Larry Summers drops out

NEWS COVERAGE WITH ANNOTATIONS (Note the picture was specially chosen to show Summers at his best) - Larry Summers, the former Harvard President and current somewhat Washington insider withdrew his name from consideration as Fed Chair today.  In his note to the President he said he had "reluctantly concluded" that the confirmation process would be "acrimonious and not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation's ongoing economic recovery." (Read he counted the votes or the President's staff did.)  He also is quoted as saying  “This is a complex moment in our national life. I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.” (Read again he did not have the votes and the President has lots of other nasty fights to deal with.  Read also that the President's approval rating (on the RCP average) on handling of the economy is just a bit over 40%)  The President responded with "Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today," the president said in a statement.  (Note the President reads polls too)

"I will always be grateful to Larry for his tireless work and service on behalf of his country, and I look forward to continuing to seek his guidance and counsel in the future," the president added.  The President did not express an opinion about Summers' tireless quest for the Fed job.

Summers was a key figure in the early stages of the Clinton Administration and also served a key role with the current one.   He has a well deserved reputation as arrogant. (see an earlier post)  Yellin has more direct bank experience and although she is likely to be more accommodative than ideal - I expressed an opinion earlier that she is a better choice.

The speculation is that the liberals got him in favor of Janet Yellin.  From my perspective that is a bit too simple.   Some polling on the Summers nomination got negative reviews from bankers and others on Wall Street.   A USA Today survey found that 56% of the economists polled preferred Yellin. There may be a third candidate Donald Kohn (who was a Bernanke deputy)- but I would put my money on Yellin (which is indeed what you do when a new Fed Chair is named) 

Knowledge and Power

I've always been fascinated by George Gilder.  At at least three times in my life he has written a book which caused me to rethink basic principles.   The first two were Wealth and Poverty and Microcosm.  The first was the substantive bible of the Supply Side revolution in economics.  It did not make outlandish claims about how tax rate reductions would be always neutral (as Jude Wanniski seemed to do) but it did present a clear case (later affirmed by the results of the 1981 and 1986 tax acts) for reducing and simplifying the tax code.   The second gave a compelling roadmap for much of the technological revolution we have lived with in the last three decades.

I need to admit that I served on a national board with Gilder in the 1970s.   One funny story should explain - this was well before the publication of W&P.   We had a Ripon Society board meeting in New York and on Friday night George called and said he would have to miss dinner because he had gotten on the plane wherever he was and got so absorbed in his work that he failed to get off when the plane landed in NYC.  He promised he would be there on Saturday.   Mid-day Saturday he called from another location and said it had happened again and so he was in yet another city but not NYC.  He never did get to that board meeting.

Several of Gilder's books start with a hero.  So in Microcosm he spent a lot of time on Carter Mead.   Mead was at Caltech and Gilder did a superb job of explaining Mead's thoughts on how things would keep getting smaller and faster.   In his latest book, Knowledge and Power, he latches on to Claude Shannon - the Bell and MIT engineer who built a framework for information theory.

The book is divided into three sections - the first on information theory where he establishes that communications systems, including economic systems, can be divided into content (knowledge and information) and power (the conduit).   Content is messy and unpredictable; the conduit is opaque but predictable.  For conduit to be successful in economic transactions one needs to have things like property rights, stable exchange rates, etc.   In economics it is an old argument advanced by many of the Austrian economists.   You do not need to know why a dollar can be exchanged for something but you do need to have some certainty that the value of the dollar is not subject to constant negotiation.   Hayek raised similar points in his writing on knowledge.  I found this section dense, but worth the slog. The key part of the content layer is that it is infused with surprise(s).  One other idea is that content and conduit are linked.

The second section of the book then applies the theory to real world examples.  Mess up the conduit with inordinate regulation or other distortions and the knowledge benefits soon become less robust.   The second section is almost a practical implications discussion of the theory section.  It is quick and simple and I think mostly on target.

The third section has a series of responses those that might be in opposition to Gilder's thoughts on the relationships between knowledge and power.  Four are presented below as examples.

He begins by taking on a group of economists that do not understand the power of entrepreneurial spirits.   He chooses David Stockman and Paul Samuelson for special consideration.   Ultimately, economics is not just about transactions but about the ability to be what Smith called the "bull headed brewer" going forward with an idea despite what others think.   But this kind of thing cannot be planned.  After WWII Paul Samuelson and others in his camp argued that the demobilization would present us with a pretty severe downturn.   In the 1946 elections, Congress switched hands.   In a very short period of time the percentage of GDP devoted to the federal sector went from 46% to 14%.   But growth happened.   He seems a lot less concerned about debt to GDP ratios and even deficits, if those things allow the entrepreneur to thrive.   As Hayek argued in the Fatal Conceit, planners can never get it right because they cannot understand the "knowledge of time and place" that each of us carries on our own.   He does a good brief review of the tenuous position of American tax policy pointing out that ours is the highest corporate tax structure in the world.  He pokes fun at California and its tax follies.   Neither is productive for encouraging explorations into entrepreneurial growth.   You could add in Robert Reich or Paul Krugman - all seem to think that there is no cost to moving more and more into government.   

A somewhat opposite point of view was first presented in two books by Nicholas Taleb (Fooled by Randomness and The Black Swan).  Gilder argues that Taleb is interesting but ultimately wrong in his conclusion that unexpected and serious events will come in increasing frequency.  Included in Gilder's critique are the "random walk" theorists that argue it is impossible to beat the market.  Inherent in markets is the ability of a person who understands a detail that others do not - to exploit that knowledge - it is certainly present in the process of innovation and likely as present in the financial markets.

The third group might be called the apostles of the machine.   He reviews  the writings of George Dyson and Ray Kurzweil (and a couple of others like Kevin Kelly).   Several years ago Kurzweil wrote a long book called the Singularity which argues that computers will somehow become human or that humans will become anthro-robotic.   He suggests that computer intelligence will soon dwarf human intelligence.   Gilder rejects the notion in part because one cannot separate intelligence and creativity.  One of my favorite lines in the book is his dismissal of much of modern science which he suggests has devolved into "politics, panics and cartels."

Arnold Kling and Peter Theil are the next targets.   Kling wrote a book called the Great Stagnation which was written about in this blog about the time it came out.   It is a pessimistic tract that posits that we've taken all the low hanging innovation fruit off the table and will be stuck with low economic growth in the future.   Theil takes a slightly different tack to the argument by positing that big things (like teleportation) are not going to happen.   Gilder, ever the optimist, says neither idea is correct.   We do not know where the next good idea will come from - but he asserts unless the conduit level gets too oppressive (from regulation or unsound tax policy) that things will happen.  He points out that the risk of stagnation is always present - witness that the US in 2010 began to export talent back to countries like Israel - where the entrepreneurial spirit is in better shape.

I originally got the book as an Audible presentation.  But I was so intrigued with it that I also got  the electronic version from Amazon.   Forbes has a review of it that calls it his best work, and I think that is probably true.   The Forbes review quotes one of Gilder's conclusions - “The ultimate strength and crucial weakness of both capitalism and democracy are their reliance on individual creation.  But there is no alternative except mediocrity and stagnation.  Demand-based systems can never flourish in a world where events are shaped by millions of human beings, acting unknowably, in fathomless interplay and complexity, in the darkness of time.”

Ronald Coase

On Monday, Ronald Coase, a 1991 Nobel Laureate in Economics died four months short of his 102d birthday.   There are a lot of intriguing things about Coase.    Coase was most celebrated for discussions of social cost and a theory of the firm.   The WP did a summary of five of the branches of theory for which he should be remembered.   That is both a pretty good list and a short summary of some pretty elegant work.  

I want to note two things about Professor Coase.    First, comes from the last paper cited in the Post article - the Lighthouse in Economics.  As the theory of public goods developed, especially in books like Paul Samuelson's Economics - lighthouses were often cited as good examples of public goods.   The traditional definition of public goods are those things in society which are non rival and non exclusionary.   Writers like Samuelson argued that the consumption of what a lighthouse produces does not diminish the ability of more than one ship to consume and at the same time because they helped ships at sea - it was impossible to exclude ships that did not pay.   In the article Coase said he was bothered by the logic and thus went back and did the empirical research and found that for British shipping there was indeed a way to get ships passing a point to pay for the service.  

The second issue came about as a result of an Econtalk podcast in May 2012.  Russ Roberts interviewed Coase a bit more than a year ago.  At the time Professor Coase was frail in body but not in thought.   The hour is well worth listening to - to hear him describe his thoughts on all sorts of issues as well as to explain that at 102 he had just finished a book on the Chinese economy.   He was an active scholar throughout his life.   Throughout his life Coase emphasized two important concepts for any scholar - he was rarely content to sit idly by.   At the same time he was remarkably willing to listen and discuss theory (even his own) and to be informed of other points of view.

The Problem with Income Statistics

There's been some recent data on which both the left and the right seem to be concentrating.   It seems that this economic recovery has not been as robust as anyone thought it would be.   In some stats wages have actually declined.   The numbers have been very harsh on workers without a high school diploma but even not very friendly to college graduates.   In January, for example, total income (according to the Feds who keep those numbers) income declined month to month by 3.6%.  Real wages for many income groups have declined.

Some part of the left (like former Enron advisor Paul Krugman for example or Robert Reich) believe that incomes have declined because there is not enough government.   They continue to subscribe to the "public squalor" argument first advanced by John Kenneth Galbraith (if we only had more government we would be better off).   Some of the right (for example, John Taylor and Paul Ryan) sees the slow income growth as a function of too much government.   If we could just reduce the government's hand in the economy and reduce the level of debt, incomes and economic growth would be kick started.

The chart at the left is one from Catherine Mulbrandon's wonderful resource on income statistics.  It shows job growth by sector by income between 2000 and 2011.  So, for example,  during the period the number of government jobs in the economy grew and their average income was a bit over $60,000.  Health care and social assistance grew significantly but their median income was a bit lower.

Mulbrandon's chart, which was published widely this week in places like Wonkblog got me to think about the issue.   And while I generally subscribe to the arguments from people like Taylor and Ryan - there is a bit more going on.     As Mitra Toosi (of the Bureau of Labor Statistics) has suggested the workforce is composed of three groups (at least as it applies to this question) entrants (those starting to work), stayers (those continuing) and leavers (those retiring or leaving the workforce for some other reason).    The mix of those could have a profound effect on aggregate income statistics.   The chart above is from a paper by Toosi which projects workforce participation to 2050 by age.   Note that even then there will be some remnants of the boomers still in the workforce.  But the dynamics of the three groups may influence the aggregates.

Let's try an example to illustrate this.   I retired from my CEO position at the end of 2011.    My successor was hired with an income that was about a third lower than the final level of compensation I received.  Over time her compensation will grow to match or exceed what I achieved (assuming she does well - and I make that assumption).  At the same time, while I retired comfortably, my income has declined from when I was working full time.   If we had a two person economy, aggregate income would have declined.   But neither of us is worse off.

All this is not to denigrate the arguments for reducing deficits and for putting the economy on a sounder path to economic growth.   But it is to say that when you hear some politician or pundit making a point about income statistics, take the words with a lot of caution.

Steve Balmer, Steve Case and Tim Cook - the varying fortunes of Tech CEOs.

Saturday's WSJ had an homage of sorts to Steve Ballmer who announced last week that he would retire (young) as CEO of Microsoft.  I've written frequently about this inflated ego but as they say on ESPN let's go to the video tape.  The Journal, succinctly and elegantly summed up his 13 year tenure.   The chart at the right (red is 2000/yellow 2013) compares the valuations of seven tech giants during the period that Mr. Ballmer was CEO of Microsoft.  He took a $600 billion company and made it into a $290 billion company.  More importantly he let the company's most important franchise struggle while missing the boat on a wide range of other products in the tech space.  In the article (which was another demonstration of the WSJ mastery of this new age of journalism) they presented the financial data but they also presented a timeline - which looks a lot like a continuous set of missed opportunities - he did not scratch the Surface nor did he have an Zune of an idea.  (Puns intended)   He often looked during his tenure as a petulant child; he whined,derided,and chided his opponents while failing to guide his company.

But there is another story in the chart.  Notice that at the beginning of the period AOL was a $100 billion company and now is less that $3 billion.  At the turn of the century a lot of people talked about the innovative genius of Steve Case (the AOL CEO who pulled of one of the most significant disasters of modern corporate history - the merger of Time Warner and AOL).     What also caught my eye was the valuation of Apple.  In the middle of September Apple will launch the new iteration of the iPhone (the one Ballmer said would not sell).   In the last year or so, Apple has ceded market share of both the smart phone and tablet market.  That may have been inevitable.  (They still sell a hell of a lot of units in a much larger market for both products.)   Critics have argued that Apple without Jobs is not Apple.

I am one of those Apple fans that is waiting to see what they will unveil for the rest of the year.   A cheaper iPhone; new versions of the iPad(s), an iWatch, an iTV - or as Monty Python frequently said - something completely different.   Under Ballmer's leadership the arrogance of Bill Gates turned sorry - a malignant manifestation of the gang that could not shoot straight.   From my view Tim Cook, the current CEO of Apple has a lot more going for him than Ballmer ever did.   But beginning on September 10, we will see whether the press lives up to the reality.   In Ballmer's time, it never did.

The Third Metric

Ariana Huffington is not just a ruthless self promoter.   I first came to know about her when a friend was applying to be the campaign manager for her then husband, Michael Huffington.   Michael Huffington was a one term congressman who won a contested primary against a somewhat out of touch incumbent and then promptly expressed interest in running for the US Senate.   He again spent a boatload of money in the primary and made a respectable showing against Diane Feinstein.   My friend described the couple as bizarre and has said subsequently that he was very happy he did not get the job.

Ms. Huffington went on to be a right of center talk show host and then gradually moved to the left.   Her conversion seems to have been somewhat related to the incursion into Serbia but she actually came out (to the left) when she endorsed John Kerry in 2004.   When Gray Davis was being recalled she was all over the map - first a candidate (in a classic dust up between the eventual winner - who in many ways is very much like her) and then an opponent of the recall.   I offer that history because Californians have known about her for at least two decades.   I have never been convinced that she is an especially deep thinker.    She has been very successful in developing and promoting a left wing news alternative called the Huffington Post which has lots of substance but also lots of tabloid elements.  I confess that I read the Huffpost on a daily basis, in part for the substance.

There is one other background on this post - George Easterlin was an economist who came up with something called the Easterlin Paradox in the 1970s which argued that happiness does not increase with increased wealth and therefore pursuing GDP for its own sake is not a good goal.   His original argument (and its offshoots) have been used by many to justify alternative ways to think about the relationship of economic growth to happiness.   The Paradox is troubling on a number of levels - measures of both GDP and happiness are noticeably squishy.   That is true within a country and even more so across countries.   And any first year economics student should understand the math of the utility function which postulates that as utility increases the marginal benefit for each increment decreases.

Two researchers from the University of Michigan have looked again at Easterlin and have found that if you look carefully at his data, the conclusions do not come from his data.   They find a very high correlation between level of GDP and levels of national happiness.  

So along comes Ariana - with this idea called the "Third Metric" which is a jumble of ideas about all those generalized concepts that much of the left uses to redefine "money can't buy happiness" or "there is more to life than money" or the current buzzword "sustainability" as if markets, without this new concept, have no interest in continuing.  Ultimate any market is sustainable or it loses its market function. From my perspective, even thought Huffington has pushed the concept hard this "Third Metric" when you think carefully about it is a bunch of bollix.  It is a classic "vochongo" a word which everyone uses but no one clearly understands.  (See earlier posts on the term here.)

Perhaps beginning with Adam Smith (in the Theory of Moral Sentiments) there has been a lot of writing on the multiple paths to happiness.   Smith consistently does not argue that more material success is a guarantee of happiness.   Yet, in his other book (that everybody quotes and no one actually has read - note I've read both) he discusses the "bull headed brewer" - the mainstay of markets.  

From my perspective much of the "Third Metric" is an imperfect restatement of Galbraith's Affluent Society which many of us had to suffer through in undergraduate work in the 1960s.    Her argument is that if we do not concentrate on economic growth that we will live in a better world.   Anyone with a brain can understand that there is more to life than the almighty dollar - but taking your eyes of GDP growth as an important metric will diminish happiness in society, simply by making all of us a bit less well off.   I am sure Huffington would agree with some of the President's speech today arguing that income inequality has increased in terrible ways in this country for the last several decades.   And yet even with that data, when you include things like transfer payments, the perceived inequalities are reduced.   One economist (James Galbraith - who is the son of JK and has written a lot on income statistics) argues that if you take out just fifteen counties in the US, the reality of a change in income equality has moved almost not at all for the past forty years.

The Third Metric is a diversion which will not help improve the lives of Americans.

The New Fed Chair

In an ideal world we might think about abolishing the role of the Federal Reserve.   Since they were founded their assistance in reducing the fluctuations in the business cycle have been uneven at best.  That belief comes in part from Hayek who argued that the economy is so complex that individuals are unable to reconcile the innate complexities of the sum of human behavior.   Simple here is better.

From my perspective the policies adopted by the current Fed have been less than effective.   I am not a fan of creating fiat money and then paying the banks to hold that dough in their reserves, which is fundamentally what has happened over the last couple of years.

That being said the current Fed Chair Ben Bernanke will step down and a new chair will be chosen.   In the last few days there seems to have developed a fight between supporters of Larry Summers and Janet Yellen.

Yellen is generally a greater supporter of using fed policy to reduce unemployment rather than holding inflation down (called by some a dove).   But she is a first rate economist.   She is married to George Akerloff, the former UC Berkeley professor who wrote among other influential papers the market for lemons - where he argued that the price of used cars is discounted from optimal levels because of the sleaze in the ranks of used car lots.   Nancy Pelosi said it would be "nice" to have a woman.   Yellen can stand on her scholarly record, her gender should be irrelevant.

Summers is one of those Washington cockroaches that seems to resurface in every administration of a democrat.  He is arrogant, and quite willing to twist positions as winds change.   In some ways he has been much better on at least talking about reducing the levels of deficits (although his role as Fed Chair would have a minimal role in that).  Wonkblog described the potential choice of Summers in very clear terms -he "has a track record of being supremely confident in his own intellect, to the point of being dismissive of those with whom he clashes."  Churchill once described Chamberlain as a very modest man with a great deal to be modest about.   Unfortunately the former Harvard president does not fit the first half of the statement - any fed chair should fit the second half.

Summers, in a statement to Senator Murray's budget committee said in June of this year

"I am increasingly optimistic about our economic recovery. Indeed, I believe our economic prospects now look as sound as at any time in the last 15 years. The late 1990s saw the emergence of a major stock market bubble which was followed by recession in 2001 and slow recovery giving rise to fears of deflation. Soon enough bubbles recurred, this time credit and housing markets, leading me to observe in 2006 and 2007 that again, “The main thing we have to fear is lack of fear itself.” In August of 2007, the financial crisis began with profound distress overtaking the economy in late 2008. Recovery since that time has been real if inadequately paced.

I think it is now reasonable to expect the pace of recovery to accelerate if sound policies are pursued. "  The statement mixes hubris with odd policy judgements - exactly what we do not need in the position.

About a third of the democratic caucus in the US Senate sent a letter to the President this week urging Yellen - which was a clear slap at Summers.   Some commentators are arguing that the discussion going on between both sides will doom both candidacies.

I began to grow tired of the Greenspan years where he would go to Congress and spin words to the enthrallment of members of congress who wanted to look like they understood economics.  Bernanke, at least on that point has been better.   The illusion that the fed has a set of levers that will make the economy sing is quite silly.   Whoever is the next chair should take a hippocratic-like oath, to first do no harm.

My ideal candidate would be someone who could implement something like the Taylor rule - which would stabilize fed policy.  But in this administration that is not likely to happen.   Thus, while I am not a fan of Summers, I am not sure that this choice actually makes a lot of difference in long term economic policy.

Rhetorical Economics

Yesterday the President offered his thoughts (the first we are told of five or six) on how to fix the economy in a speech at Knox College in Illinois.   Evidently, his prescription is to blame the members of the House GOP and to whip up a new batch of rhetoric.  Much of what he said was a restatement of what he has said before.

Here's how he said we got to where we are economically - "Technology made some jobs obsolete. Global competition sent a lot of jobs overseas. It became harder for unions to fight for the middle class. Washington doled out bigger tax cuts to the very wealthy and smaller minimum wage increases for the working poor."   Even in that short paragraph there are some interesting assumptions.   Employees quite joining unions (except public sector unions) well before technology and global competition started changing the workforce.    One might quibble with whether the minimum wage actually helps or hurts the working poor - most economists argue that the minimum wage makes it a lot harder for low skilled workers to get any job.  Indeed all of those things have changed the economy - one cannot make the assumption as he does that all have been destructive of the middle class.


He went on to say "And towards the end of those three decades, a housing bubble, credit cards, a churning financial sector was keeping the economy artificially juiced up, so sometimes it papered over some of these long-term trends. "   The bubble he speaks about and all that "juice" came mostly from federal policies well described in books like Reckless Endangerment which describe the absolute thievery perpetuated by people inside and outside of the government.   Yet, compared to the S&L crisis - almost no one has actually been prosecuted for their misdeeds.

He makes the claim that the economy has recovered (although he does not add that it is the weakest recovery ever) because of health care and "investments" in new technologies (like Solyndra) and the two mega enactments of his Presidency that even he has admitted are too complicated to administer. (Dodd Frank and Obamacare) He seems to claim that his policies (although he has dragged his feet on approving shale leases and things like the Keystone pipeline) have allowed us to reduce our dependency on foreign oil to historic levels.

He then commented "When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther and farther apart, it undermines the very essence of America — that idea that if you work hard you can make it here.  And that’s why reversing these trends has to be Washington’s highest priority."   Ok, so even if you do not agree with the lead up rhetoric America should be an opportunity society.   So what are his key solutions?  

One of his constant refrains is that middle class incomes have stagnated for four decades but the data (from the Washington Post no less) suggests that is not correct.   The Post Numbers show a growth in both family and household income that is significant in constant (inflation adjusted) dollars.  If the WP can find this trend it is a wonder that the President cannot.

He mentions a couple.   Immigration reform - a very important public policy but not likely to move the needle on growing the economy.  He also lists "America has to make the investments necessary to promote long-term growth and shared prosperity — rebuilding our manufacturing base, educating our workforce, upgrading our transportation systems, upgrading our information networks."   Some of those things could be aided by sound government policies, others less so.

The speech laces in criticisms of the House GOP as engaging in an "endless parade of distractions and political posturing and phony scandals" (I guess the direct involvement of the General Counsel of the IRS - one of two presidentially appointed people in the IRS in trying to suppress political opponents is one of those phony scandals).   As a conservative (and not a member of the GOP) I am tired of the rhetoric on both sides - that accuses the president of every misdeed.  At the same time there are some real problems with this administration that should be examined - that is the oversight function of Congress which it did not do in the build up of the credit bubble.

Ultimately the best way for the president to engage on the issues he cares about is to genuinely engage with his opponents.   But one of the most significant failures of his presidency has been his unwillingness to get off his rhetorical stump and engage the other side.