Featured Find: Stabilizing into a Crisis

Joe reads Ezra Klein regularly. I read him sometimes. I find him unusually penetrating and accurate but rather boring and irrelevant most of the time (just my opinion); so while I don't hate reading him, I simply consider reading other writers to be better investments of my time. This time is different. This Ezra Klein piece is passionate, it resonates, and I think, it's accurate - it's perhaps one of the best descriptions of our (economic) time I've come across:

But the Dow Jones industrial average isn’t diving because spending has risen, deficits have grown or stimulus policy has changed. It’s diving because of forces Washington can’t control, and in many cases, doesn’t understand very well. How many members of Congress do you think could give a coherent account of what has happened to oil or steel prices over the past three years? Or what’s happening in the euro zone? Or to the yuan?

A dramatic gap has opened between the economy as Washington sees it — and wants to intervene in it — and the economy that exists. Whatever weak recovery we might have hoped for is being hindered by global commodity prices, consumer deleveraging, fears of flagging demand in emerging markets, earthquakes in Asia and much more. Globally, it’s been an almost uninterrupted run of crises and bad luck. Meanwhile, Washington just spent two months arguing over whether it would pay its bills or spark an unnecessary financial crisis. 

The whole article can be read in three minutes. I highly recommend it.

Why Should I Have to Defend Libertarianism?

This symbol of libertarianism represents an entirely consequentialist morality.Blogging is the rock 'n' roll of the information generation, and Ezra Klein is its Bob Dylan.  In a May 21st post, Three types of arguments over policy, Klein soberly reins in and classifies the noise of a drunken and whirling Washington:

Washington is home to two -- actually, three -- different types of policy debates. The first one, the one that we're used to, asks whether a policy will work. That's the one where I say health-care reform is likely to achieve its goals and cut costs and David Brooks says it won't do either thing and we both try to marshal empirical evidence in service of our points. In theory, whoever's evidence is stronger wins.

Then there's the second one, which is the one that (Rand) Paul is giving voice to, which asks whether a policy is philosophically acceptable. Paul isn't arguing that the Civil Rights Act was ineffective at desegregating Woolworth lunch counters. He's arguing that government shouldn't tell private businesses what to do, and when they do, that's not legitimate even if it achieves its stated policy goals. Or, more prosaically, a Republican argues that we shouldn't have more government involvement in health care because government involvement is bad, and that's true whether or not it's proved efficient in other countries. In theory, whoever's philosophy is more appealing wins.

Click to read more ...

The Bank Tax: Hardly Townsfolk with Torches and Pitchforks

The Obama Administration's proposal for a new tax on bank and insurance debt to repay TARP funds is a stroke of policy genius, albeit only an opening gambit.  The best policy is easy to sell, understand and is beneficial to the country and the government.  This tax accomplishes all of that.  The rough outline is that banks and insurance companies with assets in excess of $50 billion would pay .15% interest on all liabilities apart from insured savings deposits and "Tier 1" capital: stock, disclosed cash reserves and retained earnings.  Making the exceptions, rather the inclusions, explicit ensures that all tricky derivative financing will still count as debt.  With one fell swoop this policy will quiet populist outrage at huge bonuses amidst a painful recession, discourage banks from becoming "too big to fail" and raise needed revenues for the government.  Nevertheless, the Obama administration should improve the proposal by toning down the populist rhetoric, making the link to TARP less explicit and increasing the tax rate and generated revenue.

Click to read more ...

Why they call him Attackerman

In shades of the derisive "Juice-Box Mafia" tag slapped on Jewish writers critical of Israel in the wake of the invasion of Gaza, Michael Gerson criticizes Ezra Klein for taking the dangers of antisemitism lightly:

One part of Klein’s post is particularly illuminating. He finds it amusing to belittle the threat of a hypothetical someone he calls “jewhater429, the 97th entrant in a comment thread” -- just a few months after an Internet-based Jew hater entered the Holocaust Museum with a gun and killed an African-American guard. Some people have the oddest sense of humor.

Spencer Ackerman then rips into Gerson for having the temerity to accuse a Jewish writer of being insufficiently concerned with antisemitism:

I don't know what lack of self-awareness convinces right-wing evangelicals that they're the true guardians of the Jews, but that condescending and parochial nonsense is its own form of antisemitism. We Tribesmen do not need some wire-rimmed enabler of one of the most destructive and inept presidents in American history to protect us from the perfidies of the world. It's us and not him who will pay the price for antisemitism, so if Gerson wants to actually act like a righteous gentile, he can start by not accusing Jews of apathy to their own people's wellbeing for the sin of not sharing his politics.

Um burn.  I agree with Ackerman and Klein in this issue specifically, and more generally I just wish that those bigotry trump cards were played more carefully.  I get that antisemitism and racism are intolerable, but when the left finds hidden racism behind every idiotic Obama criticism or when the right construes any criticism of Israel as antisemitism then the real specter of bigotry is weakened.  Limbaugh and Drudge engaged in real, ugly race baiting, but because of Jimmy Carter, when that legitimate example of racism is pointed out, it just seems like the left is "playing the race card" again.

Diet Healthcare Reform

The big news of the day, at least according to Drudge, is that Team Obama is laying the groundwork for removing the public option from their health care plan. This would be part of a larger strategy shift, which has seen Obama rephrase “health care reform” as “health insurance reform” after his personal popularity and public support for health reform diminished as the debate soured.

Click to read more ...

The Rich get Richer

After Goldman Sachs announced its record setting profits (and bonuses), the reaction was mixed: some people thought Goldman was scum and others thought it was a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Probably the truth lies in the middle: Goldman is a money vampire, but they are also pretty scummy about it.

The list of Goldman’s offenses is astounding: juicing IPO prices that cost average Amercans billons of dollars, selling garbage sub-prime-backed morgage securities while betting they would fail, heavily trading oil futures leading to over $4 a gallon gas and receiving billions of dollars from tax payers (at the behest of former Goldman employees like Hank Paulson) and then only paying 1% in taxes (a total of $14 million) by shifting all of their money abroad. Understand, these things aren’t in dispute.  Goldman settled out of court for millions of dollars for unfair IPO and subprime mortgage practices, though it did so without admitting wrongdoing and all of the other things are in the public record.  This is just how the bank works, they figure out a way to exploit the system and then they pay a token afterward to make any questions go away.

Click to read more ...

Is Cheesecake Factory Gross?

Ezra Klein weighs in on why Cheesecake factory is so popular, ultimately concluding:

Foodies have an unfortunate tendency to alight on a Unified Field Theory of Corporate Food: It’s bad for the environment and bad for workers and bad for animals and bad for waistlines and, above all that, a fraud, because it also tastes bad. This would be convenient, if true. If people weren’t actually enjoying what they were eating, then getting them
to change their eating habits would be pretty easy. But it’s not true, of course. They keep going back to the Cheesecake Factory because, well, they like it.

While it is certainly true that people enjoy Cheesecake factory (and I remember their firecracker salmon appetizer being pretty solid) there are other reasons for its popularity than the food quality.

Click to read more ...

Hova Makes His Move

When one of my favorite bloggers, Marc Lynch, talks one of my great loves, hip-hop, my ears naturally perk up. However, while he is characteristically insightful, I think he misses a few key nuances in his analysis of the hegemonic Jay-Z.

Hova is clearly the most powerful man in hip-hop today, but his power is wasting, like Pentagon assets unsuited for future battles. Even though he is the most famous, wealthy, and, as the former head of Def-Jam, powerful rapper, he has never been regarded as the best or most authentic rapper. Without soft power there is no longevity in the game, which is why Jay had to quickly come out of retirement. He was unable to create a legacy that would last when he was gone. Thus, his power play on Nas was an attempt to shore up his weakest front, his street cred. Unfortunately, Nas murdered him on “Ether,” and Jay’s eventual co-option of Nas into Def-Jam was using strength in one area to make up for weakness in another.

So Jay is a hegemon, but with weak soft power, who must rely on a super abundance of hard power. This analysis ignores that Jay’s success is itself a form of soft power, especially in an industry that constantly name checks girls, cars and chains. Every rapper wants to be in Jay’s position, even if many of them think they are better rappers. Similarly, even when America’s global influence reached a low point with Bush’s disregard for the international community causing a backlash, the proof of its material dominance was attractive enough that its economic model was still spreading.

Click to read more ...