Detailed Abstractions

Wow… Mr. Harry Reid (note, it’s proper to call him the honorable Mr. Reid, or Senator Reid, but I think both connote an aspect of respect that simply isn’t deserved)… apparently, while serving as Senate Majority leader since the 2006 elections and as a Senator since 1986 (here) has this to say recently (here):

…“I had nothing to do with the massive foreclosures here,” Reid said during an appearance on the ABC News/Washington Post “Top Line” program, adding that he also had no part in contributing to the state’s dismal unemployment figures….

So apparently, one of the most power leaders in the western world has absolutely nothing to do with anything that’s going on…

Meh – With leaders like this…. who needs tyrants?

It the state of MO, like other states with large cities, St. Louis & Kansas City both have local earnings taxes.  Meaning, in St. Louis at least, by merely working inside the city limits of St. Louis, you have an additional 1% income tax.

Enter the voter initiative (whole thing here via ):

…Proposition A wouldn’t repeal the tax, but it would give residents in the two cities a chance to vote every five years starting in 2011 on whether to continue the tax. If voters approved a repeal of the tax, it would be phased out over 10 years, at one-tenth of a percent each year.

The measure also bans any other cities from enacting an earnings tax….

Seems pretty benign, though I’m sure legal challenges will surface if Prop A passes…. assuming of course Missourians are allowed to vote at all.

Enter Kansas City government with union backing:

KANSAS CITY (AP) — Kansas City’s city attorney has filed a lawsuit seeking to block a November ballot measure that would allow residents of Kansas City and St. Louis decide whether to keep their cities’ earnings tax….

A group called Let Voters Decide submitted the ballot measure after the petition drive. The suit was filed on behalf of acting Kansas City city manager Troy Schulte and Pat Dujakovich, president of the Greater Kansas City AFL-CIO, both as private citizens….

What’s their main complaint?

…The lawsuit argues that the required elections would cost both St. Louis and Kansas City about $500,000, and neither city would be compensated for the cost.

According to the suit, Proposition A “becomes a de facto appropriation by voters statewide on Kansas City funds for the purpose of this (local) election.”…

But…

…Let Voters Decide spokesman Marc Ellinger said the measure wouldn’t require either city to pay for a local election if they just wanted to skip the vote and let the tax phase out automatically….

Please don’t get me wrong here, Kansas City might have a good legal basis for their arguments, but I’m unsure we should be living in a government which chooses to sue the state in order to specifically prevent voters from casting their ballots.

Maybe I’m off here, but I always thought for a law to be challenged it had to exist first, then harm would have to exist to give any client standing.

Of course don’t tell that to the President or Arizona either, but I’m digressing.

The point is only that when the government seeks to actively prevent your voice from being heard through ballot initiatives, people should be concerned.

Well, the verdict is in. The Republicans are being cast as the party of no.  The party without ideas.  The party of obstruction.

Please make no mistake about it, this marketing push isn’t really about obstruction, but about the upcoming elections.  Just as President Clinton did brilliantly prior the 1996 elections when he cast all Republicans as following Newt Gingrich and obstructing spending laws, the Obama administration is moving forward in much the same pattern.

This is possible because the White House, regardless of occupant, has historically been able to control the news cycle.  In my opinion, this should be an indictment on journalism as a whole when alternatives which exist aren’t being reported, but simply put:  when the President talks, news happens.  When your normal representative talks, you’re lucky if you even hear about it.

It worked during the Clinton Administration on spending, it worked during the Bush (43) Administration on the Patriot Act, & it certainly might work again this time. Irregardless, the campaign is back and in high gear (here via USA Today):

…”Too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress,” Obama said. “And that has very real consequences.”…

Or here via NY Times blog, here via WaPo, & on and on and on…

From a critical point of view however, obstructionist should not automatically be a pejorative.   Without analyzing what exactly is being obstructed, this is little more than name calling.

As an example, if say in the 1940s Congress was actively trying to “obstruct” the intermittent of thousands of innocent Japanese-Americans, this would not only be a moral good, but any thoughts to compromise solely to be seen as a non-obstructionist would be wrong.  What would be a compromised alternative?  House arrest?

Additionally, we have to be on the lookout for the differences between the marketing of bills and their actual language.  Think of the new health care legislation.  President Obama’s promises of more health care for all at cheaper prices, simply don’t seem to be fulfilled by the 2500 page law passed… or maybe they are being fulfilled, but like the Patriot Act, no one really knows what the new legislation actually means (here via Cato):

…The Patient Protection and Affordable Care Act represents the most significant transformation of the American health care system since Medicare and Medicaid. It will fundamentally change nearly every aspect of health care, from insurance to the final delivery of care.

The length and complexity of the legislation, combined with a debate that often generated more heat than light, has led to massive confusion about the law’s likely impact….

Or on yesterday’s Meet The Press Rep. Van Hollen stated (transcripts here via MSNBC):

…The frustration is there are lots of important bills to push for jobs that are sitting over in the Senate.  But it’s not the fault of the Democratic leadership in the Senate.  I mean, frankly, you know, John Cornyn and his allies have been trying to block a whole lot of very important jobs measures.  We in fact sent a piece of legislation over very recently that would remove these perverse tax incentives to ship American jobs overseas, that give American corporations a bonus if they ship American jobs overseas….

Just like health care, the basic idea that our representatives are working on private job creation incentives is a good one.  But just like the Obama Administration’s promises on health care, Rep. Van Hollen is selling us a job creation bill which has little chance of actually creating jobs.

To translate – what they mean by “removing incentives” is to increase taxes on businesses who outsource.  Now, some may want this to happen for various reasons, but the economics are pretty straight forward.  Tax increases have never increased jobs & forcing a tax such as this could actually result in companies simply moving their head quarters as well.

To be fair, there are bills I don’t believe the Republicans should block, for instance the extension on unemployment benefits (though it seems likely to pass soon: here via The Hill).

Yes, the point isn’t that the Republicans are doing the right thing and the Democrats are failing at every single step, the point is only intended to remind us of the old saying about representative governance:

The people will get the government they deserve.

& so long as we allow marketing campaigns to have more force in elections than critical analysis does, we will likely continue to be disappointed.

More bad news for Obama & the Democrats for 2010 elections.  Via The Atlantic here:

Chris Cillizza’s Morning Fix reports new data from Gallup showing that independents now favor a generic Republican candidate for Congress over a generic Democrat by 12 points….

& as is continually the case with this congress, more bad news for freedom.  Via The Hill here:

The 30-second campaign ad could become a thing of the past for third-party groups if the Democrats’ campaign finance legislation becomes law.

Media strategists argue the new disclosure requirements would eat into the majority of their ad time….

& while we’re talking about lack of freedom…. what might Kagan do about this “disclose” act?  Via Reason.com here:

As solicitor general of the United States, Elena Kagan argued in front of the Supreme Court that the federal government had the constitutional authority to ban certain political pamphlets. She also strongly implied that some political books, if they were partisan enough, could also be censored…..

Does is matter that she’s against free political speech?  Unlikely…. via Yahoo News here:

…Kagan’s performance in the Judiciary Committee drew praise from Democrats and compliments even from some critics, putting her on a path to confirmation by the full Senate sometime in July.

“She will be confirmed. I believe she will be confirmed,” said Republican Orrin Hatch, a member of the Judiciary Committee, predicting there would be at least some Republican support…..

& least we forgot, there’s still an oil spill…. which is being screwed up by the same government that is promising to “fix” healthcare….  Via The Heritage Foundation here, all kinds of people are offering help, but we’re still considering it:

In total, there have been 27 countries and 5 international organizations offering boom, dispersants, skimmers, vessels, bird rehabilitation equipment as well expertise. Along with the other important action items for the administration to undertake, accepting international assistance must be a more urgent priority. The Department of State has a chart that lists the equipment and expertise sitting on the sidelines with most of the status orders “under consideration.” Owners of the equipment have been rapid in their response to government queries but the equipment remains idle. It simply needs to be better….

Not to mention the economic killing impact the asinine moratorium is having:

Meanwhile, the Gulf continues to suffer. It’s not just government incompetence when it comes to the environmental cleanup; the administration’s policy decisions are making the economic harm much worse – especially the offshore drilling moratorium. Although the ban was only meant to affect those rigs operating in water 500 feet or deeper, it has led to a de facto ban on shallow water drilling….

Butler said that only one of his four drill rigs are operating; all four were drilling before the spill. Spartan has six contracts that would put his entire fleet back to work, but he can’t get going until the permits come through, he added. The week before last, Butler said he had to lay off 72 employees. Come Tuesday he’ll have to let another 140 go. “That’s 140 families, is how I look at it,” Butler said….

Not only incompetence in the clean-up, idiocy in quickly implemented, but poorly thought out regulations (DA post here), The Atlantic takes all this and poses an interesting moral question here:

In this video from Climate Desk partner Need to Know, Atlantic correspondent and oil expert Lisa Margonelli talks to Jon Meacham about halting drilling in the Gulf. She explains her view that Americans don’t have a right to drive cars and use gasoline unless we’re willing to drill for it in our own backyard….

For good news – research conducted on parents and children in reference to video games demonstrates that most parents actually don’t need government help.  Via The Technology Liberation Front (here):

• 93% of the time parents are present at the time games are purchased or rented
• 64% of parents believe games are a positive part of their children’s lives
• 86% of the time children receive their parents’ permission before purchasing or renting a game
• 48% of parents play computer and video games with their children at least weekly
• 97% of parents report always or sometimes monitoring the games their children play
• 76% of parents believe that the parental controls available in all new video game consoles are useful

It might be scary to those in government who are continuing to try to push more laws concerning how parents raise their children as it discounts the need for those laws, but for us normal folk – it gives us what we see everyday:

Once again, these findings illustrate that parents are parenting!

One of the more frustrating things I find when engaging others in political discussions, is that some people seemingly have either an unwillingness or inability to contemplate how too much of a good thing can still be bad.

I say frustrating, because it’s intuitive to understand this.  As Paracelsus was quoted saying centuries ago:

“Poison is in everything, and no thing is without poison. The dosage makes it either a poison or a remedy.”

But even without that thought, it seems as if examples are around us daily.  The easiest one to spot is the current tax code.  Looking at individual deductions, it’s easy to see why most exist.  Deductions for raising children or owning a home or small business tax cuts for those hiring or charitable deductions…..etc, etc, etc – They all seem innocuous by themselves.  Even if you disagree with some specifics, the arguments seem valid.

Yet you transition from this basic idea of rewarding people for certain actions through the tax code, to today and you end up with (here):

…the current tax code is 60K pages of government sponsored corruption where the normal citizen or even the IRS agent has little idea exactly what all 60K pages means together, but special interests, nonprofits, businesses, and others all work to make the code a little better for themselves. (Freedomworks – Top Ten Reasons to Scrape the Code here)….

The criminal & regulatory codes are no better.  Their infinite complexity and shear volume, promotes the same corrupt, rent seeking behavior (ever wonder why health care reform is 1600 pages?).

This complexity inherent in all these laws and regulations creates not only rent seeking behavior, but also makes it easier for those in power who wish to abuse others through the system to be able to do so.  You see, once the system has become so complex, then even the average citizen runs the very real risk of unintentionally being on the other side of the law.  When enough people are on the other side of the law, then you get selective enforcement.

But when you’re a Senator and there are potential political points to score…. the trees are just too pretty to worry about that whole forest thingy, so you add more to it by introducing legislation to ban a specific crib because of 32 infant deaths since 2000.

Even on the merits, this law isn’t needed as the 32 deaths weren’t all by the same failure in the drop-down crib (via government’s own report) and no one has yet made any claim that the design itself is the reason for the deaths:

…CPSC has also received reports of 20 other drop side incidents, 12 of which involved the drop side detaching in a corner of the crib. In two of these incidents, a child became entrapped. One child suffered bruising from the entrapment. There are five reports of children falling out of the cribs due to drop side detachment. One child suffered a broken arm as a result of the fall.

In addition, CPSC has received 8 reports of mattress support detachment in these cribs. Due to the space created by the detachment, three children became entrapped between the crib frame and the sagging mattress and four children crawled out of the crib. There was one report of cuts and bruises….

What they found was this was actually the products from one single manufacturer which  is now out of business.  The report goes further to note:

…Due to the fact that Generation 2 went out of business in 2005, CPSC has limited information about the cribs. Although CPSC does not know the total number of units distributed or the years of production, it is believed that there were more than 500,000 of these cribs sold to consumers…..

Which means, that even out of the number of products sold by this one company, the government doesn’t have any real information on such things as failure rates.  32 out of 500K is a small failure rate (assuming all failures can be attributed to product failure versus other causes like improper installation).  Combine that with the knowledge that these numbers are guesses and only include one single company, our Senator should think of herself as being on shaky ground.

The calculus for any potential opponents however is obvious:  lots of potential downside when being labeled as pro-infant death and very little upside as few people seem to care.

So for now, while the trees might know the forest exists and vice versa, until voters are able and willing to contemplate the difference, we will simply continue to lose sight of one in favor of the other.

Being reported @ Politico, there’s once again some new polling data out that is both semi-understandable and interminably frustrating (here):

…The Quinnipiac polls, conducted in three states across the past month, all find likely voters to have complex and contradictory views on these repeal lawsuits as well as health care reform itself.

By a slight majority, likely voters tend to oppose the health care reform law. But they also tend to oppose the repeal lawsuits as a “bad idea” that would, for a sizeable portion of voters, make them “less likely” to support a given candidate….

Which seems roughly equivalent to wanting to win the football game, but not really wanting to deal with scoring points…. or as Politico reports:

…In short, voters simultaneously don’t want to [sic] health care reform but don’t want to challenge it either…

There is a scientific explanation for this called cognitive dissonance (DA posts here).  There’s also some logical evidence that helps explain why we as humans seek to reduce anything seen as contentious by the rest of society.

It’s frustrating because time and time again it seems the majority does understand that government is not some Utopian solution.  For instance, they seem to understand that the current tax code is 60K pages of government sponsored corruption where the normal citizen or even the IRS agent has little idea exactly what all 60K pages means together, but special interests, nonprofits, businesses, and others all work to make the code a little better for themselves. (Freedomworks – Top Ten Reasons to Scrape the Code here).

Yet polls showing voter disgust, such as the dismally low congressional approval ratings, only show feelings.  The reality is even with rates of congressional approval as low as 16%, the rate for the election of incumbents is well over 90%.

There’s a Japanese Proverb that begins with “Vision without action is daydream.”  Well, here we are, proving, that some truths are universal.  Proving that believing in something strongly or knowing something real well is meaningless if never acted upon.

Use a simple analogy to prove this true – what good is the best doctor in the world without patients or students?  What good would have come out of Newton’s genius, or Salk’s genius, if their abilities were followed up by only inaction?

The only good thing that can really be said about genius without action, is that it doesn’t directly harm anyone.  You can make a moral argument that Salk had some level of obligation to help since he could, but inactive genius shouldn’t be the main concern as the real problems will come from people acting without understanding.

& there’s where the second 1/2 of the proverb comes “Action without vision is nightmare. ”

Too bad we’re seemingly in a society today where both are true depending only upon the group in question.

• Proving once again that fascism isn’t just a word, Italy (here via Economist) gave three Google executives six-month suspended sentences for “allowing a clip of an autistic boy being bullied to be viewed on Google Video, which the judge said broke Italy’s privacy laws. “

Just to clarify, I’m not pro-autistic-bullying and would think a civil trial isn’t out of the question, but jail?

• Fannie Mae needs more cash, but just 15 billion… from the taxpayer of course (here via RTTN News).   Seems like people might not agree with this (here via WSJ):

The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday….

Probably why the decision was made over the holidays.

• Crazy fundamentalists blame the Golden Girls for homosexuality (here via ChristWire).

• Democrats & President Obama, all firmly against the Patriot Act after signing it, vote to  prevent all measures from lapsing (here via Wired) for the next full year.

• Harvard intellectual tells us why allowing corporations to spend money on politics is bad (here):

…To understand why, it is important to focus on the individuals who make decisions for companies. When corporations decide which politicians to support, what kind of messages to send, and which political outcomes to seek, their general investors are not consulted. Rather, such decisions are likely to reflect the preferences and objectives of the insiders who manage the companies, ostensibly on shareholders’ behalf….

A little interlude for a thought experiment.  Change which politicians to support and which political outcomes to seek to which charities to support and which cultural outcomes to seek.  Or try reality and change it to, which lobbyists to support and which regulatory outcomes to seek.  But of course, he defines the problem for us:

…And politicians that benefit from corporate spending and access to corporate resources will have an interest in serving the insiders’ preferences and objectives….

Which presupposes politicians already don’t have this interest, presumes it will get much worse, and last, but not least; for spending to have any affect at all, voters have to be swayed to vote against their interests.

It seems the default assumption of every perceived risk these days is simply this:  there can never be too many laws when trying to protect people from themselves.

• CalTech researchers say the brain is wired for equality (here):

…Specifically, the team found that the reward centers in the human brain respond more strongly when a poor person receives a financial reward than when a rich person does. The surprising thing? This activity pattern holds true even if the brain being looked at is in the rich person’s head, rather than the poor person’s….

Oddly enough, the Freakanomics blog posted this with little comment (here) proving environmental factors such as working for the NY Times can affect even innovative economists.  I’ll admit there might be more, but from what they’ve shown, the results do not necessarily say anything about equality at all.  A perfectly reasonable answer is one of need: a rich person doesn’t need a windfall as much as a poor person.

CalTech’s reasoning:

…It’s long been known that we humans don’t like inequality, especially when it comes to money. Tell two people working the same job that their salaries are different, and there’s going to be trouble…

Conflating the thinking that comes with social status and worth when compared to colleagues and equality of results.  It could be in a lot of cases, the person making less might think they work harder and deserve more, not equal.

• & finally, via the Hill.  Did Nanci Pelosi really say that

…”They’ve had plenty of opportunity to make their voices heard,” she said on CNN’s “State of the Union” Sunday morning. “Bipartisanship is a two-way street. A bill can be bipartisan without bipartisan votes. Republicans have left their imprint.”…

Via Buzz.Yahoo.com (because I refuse to send people to the Huffington Post), the Huffington Post reports (here):

President Obama will unveil on Thursday a proposed levy on the nation’s biggest financial firms structured not just to repay taxpayers for the bank bailout, but to recoup some of the public subsidy that “too big to fail” banks have enjoyed on account of their implicit government backstop, a senior administration official tells the Huffington Post….

First, I honestly have a problem with senior administration officials lending their knowledge to such a highly partisan propaganda site as the Huffington Post.   They long ago stop pretending to care about being news or even being accurate and moved straight into MoveOn.org territory.

Now, I’m not saying the President or his staff must chose the outlets I would prefer, but they could definitely send out press statements or use seemingly “real” and more honest news organizations.  It’s not like the NY Times isn’t on the President’s side – why go to Huffington?

Either way – regardless of the merits (or lack thereof0) for this specific  marketing strategy – it seems quite obvious that Mr. Obama and his team lacks a fundamental understanding of economics.  Their continued reliance on government solutions to all economic problems, demonstrates a misunderstanding of the dynamics needed to keep this economic engine and society moving forward.

It seems they have an idea that they can model the economic behavior of institutions they define as “Too big to fail” as if this equilibrium is: A) possible to spot & B) static enough to allow the slow moving government the ability to legislate in a helpful way.

Indeed the current economic crisis itself lends credibility to the idea that the government is in no position to grasp the complexities that exist when dealing with so many interconnected businesses (here):

…”We are here to examine what happened in the public sector, what happened in regulatory agencies, what happened in enforcement agencies,” said Phil Angelides, the chairman of the Financial Crisis Inquiry Commission….

While investigating the public portion of the failure:

…Questions focused on failures around regulatory decisions to loosen bank leverage and capital limits, faulty credit rating agencies, a warning about epidemic of mortgage fraud and a decision by Congress and the FDIC to stop collecting vital insurance fees from ‘well capitalized” banks between 1996 and 2006….

They grilled DOJ:

…Panel members asked Attorney General Eric Holder to conduct an investigation into what, if anything the agency did after the Federal Bureau of Investigation in 2004 warned that mortgage fraud was so rampant that it was a potential “epidemic.”…

& the SEC:

…SEC Chairwoman Mary Schapiro was inundated with questions about the agency’s failure to oversee credit rating agencies, which provided overly rosy debt ratings for problematic mortgage securities….

The FDIC & Congress:

…Meanwhile, the FDIC and Congress were criticized for its decision not to collect deposit insurance premiums from well capitalized banks for roughly a decade between 1996 and 2006….

But it’s ok, because the FDIC agrees with them:

…Both Schapiro and FDIC Chairwoman Sheila Bair agreed that an SEC decision in 2004, under its chairman at the time, William Donaldson, to allow banks to identify how much capital and leverage they must have on hand, based on their own model-based formula, was a mistake that allowed banks to expand their leverage to problematic levels….

Where the lead to the obvious conclusion they were searching for the entire time – government help:

…Bair said. “I think the only place to tackle that on a system-wide basis for both banks and non-banks was through consumer protection rules that gave the Fed the authority to apply rules against abusive lending across the board to both banks and non-banks.”…

Now it might just be me, but thinking federal regulators with new powers over banks and abusive lending standards will get it right next time seems a tad optimistic…. you know, especially considering their massive failure with the current crisis.

Which is of course only a portion of the story.  The government, through various GSE’s, exacerbated the problems with global capital flows, by giving banks incentives to make riskier and riskier loans (here):

…The actual causes of our financial troubles were unusual monetary policy moves and novel federal regulatory interventions. Regulatory distortions intensified in the 1990s. Poorly chosen public policies distorted interest rates and asset prices, diverted loanable funds into the wrong investments, and twisted normally robust financial institutions into unsustainable positions.

We can group most of the unfortunate policies under two main headings: (1) Federal Reserve credit expansion that provided the means for unsustainable mortgage financing, and (2) mandates and subsidies to write riskier mortgages….

Please don’t misunderstand me – just because someone leaves their keys in their car doesn’t mean you should take it – so immoral actions on behalf of lenders, home buyers, and an inaccurate understanding of the true risks were also present in the prelude to this tragedy:

…There is no doubt that private miscalculation and imprudence made matters worse for more than a few lending institutions and individual borrowers….

& therein lies the true rub.  This imprudence is something for which the market should bear the price of their mistakes.  Only through bearing the true cost will their incentives ever line up with true moral behavior.  If you think a local bank or lender wasn’t able to sell every single loan to a GSE, they would’ve continued to allow bad loans to be made which they knew would sink themselves… well, that’s just not very likely and not very rational.

But don’t worry – I’m sure with these new and smarter people, this time they’ll figure out which banks are too big to fail, do it right, and only tax them in the amount they need to insure against the risk.