October 8, 2012

How Things Work

Aristotle pointed it out oh so many years ago: Humans are moved by emotion more than logic or facts. So using pathos as your primary appeal is an entirely legitimate rhetorical strategy. But pathos does not give one ethical permission to take a Machiavellian route to one’s political ends. For example:

Leading the charge of what were quickly dubbed the “B.L.S. truthers” was none other than Jack Welch, the former chairman of General Electric, who posted an assertion on Twitter that the books had been cooked to help President Obama’s re-election campaign. His claim was quickly picked up by right-wing pundits and media personalities.

It was nonsense, of course. Job numbers are prepared by professional civil servants, at an agency that currently hasno political appointees. But then maybe Mr. Welch — under whose leadership G.E. reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) — doesn’t know how hard it would be to cook the jobs data.

Pointing out that this is nonsense is, of course, a form of nonsense in itself given human nature cited above. But it’s a form of nonsense I’ve engaged in myself and will continue to engage in until the end of civilization — sometime around 2020 I think.

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May 2, 2012

Falling Ever Farther Behind

Productivity is up! Wages are down! Makes perfect sense:

Economic fairness is one of the persistent themes of the 2012 election, and in that spirit the liberal Economic Policy Institute is revisiting the plight of the U.S. worker over the last several decades.

Many of the institute’s findings, which will be presented in greater detail in the forthcoming edition of “The State of Working America,” will be familiar to economists who study income inequality. But they provide a stark illustration of the fact that the vast majority of workers have been closed out of the country’s gains for nearly 40 years.

Particularly striking is the fact that for years leading up to the 1970s, productivity gains were broadly shared, as theory predicts. Then the linkage abruptly broke. What explains the shift?

“The big shift is really in the ’80s, which I would attribute to [Fed Chairman Paul] Volcker’s recession in 1980-82, which killed workers,” said Dean Baker, co-founder of the Center for Economic and Policy Research, who has conducted similar studies. “A high dollar in the mid-80s amplified this effect. You also had the anti-union policies of the Reagan administration.”

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April 2, 2012

Beyond Voodoo

Have we arrived at outright fraud?

To be sure, we’ve had irresponsible and/or deceptive budgets in the past. Ronald Reagan’s budgets relied on voodoo, on the claim that cutting taxes on the rich would somehow lead to an explosion of economic growth. George W. Bush’s budget officials liked to play bait and switch, low-balling the cost of tax cuts by pretending that they were only temporary, then demanding that they be made permanent. But has any major political figure ever premised his entire fiscal platform not just on totally implausible spending projections but on claims that he has a secret plan to raise trillions of dollars in revenue, a plan that he refuses to share with the public?

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March 14, 2012

Making Money the Old-Fashioned Way

Goldman Sachs smackdown shows how low we’ve sunk:

The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

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February 22, 2012

The Coming Storm

Living on sunshine, current and ancient:

Now, in the last hours of the cheap oil economy, the forty year miracle of the Sunbelt boom dwindles and a fear of approaching darkness grips the people there like a rumor of Satan. The long boom that took them from an agricultural backwater of barefoot peasantry to a miracle world of Sonic Drive-ins, perpetual air-conditioning, WalMarts, and creation museums is turning back in the other direction and they fear losing all that comfort, convenience, and spectacle. Since they don’t understand where it came from, they conclude that it was all a God-given endowment conferred upon them for their exceptional specialness as Americans, and so only the forces of evil could conspire to take it all away.

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February 19, 2012

Our National Debate On Energy

Well, our debate really has nothing to do with energy:

A counterattack being planned by the Obama re-election team in Chicago is expected to point out, among other things, Mitt Romney’s actions to raise gas taxes when he was governor of Massachusetts. And Mr. Obama’s Democratic allies on Capitol Hill are eager to renew a nationwide discussion about tax subsidies to oil companies.

“House Republicans are very good at using every argument they can to shield oil companies from paying their fair share,” said Representative Steve Israel of New York, the chairman of the Democratic Congressional Campaign Committee. “They have been relentless and fearless protectors of oil company profits.”

Republicans on Capitol Hill say they are eager to criticize the president as gas prices rise, in part with a flurry of legislation aimed at increasing domestic production.

They also plan to use Mr. Obama’s decision to block the immediate construction ofKeystone XL, a 1,700-mile pipeline that would stretch from Canada to the Gulf Coast. A Republican bill was passed by the House on Thursday to expand offshore drilling and force a permit to be approved for the pipeline.

In an interview, Representative Kevin McCarthy of California, the House whip, mocked Mr. Obama’s claim to want an “all of the above” energy policy.

“He says it in his State of the Union, and then a week later he kills Keystone,” Mr. McCarthy said. “I think energy is going to be one of the major issues in this election, and it’s going to peak in two months.”

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January 29, 2012

The Export From Davos

Fear:

In private conversations here this week, senior officials from the United States, Europe and Asia expressed a mixture of resignation and alarm that Greece may yet default on its government debts, despite several efforts by eurozone members to cobble together a credible rescue. Some warned that such an outcome could spook investors into pulling funds out of larger economies such as Italy and Spain, raising the prospect of defaults in those countries. A few suggested this could eventually trigger the breakup of the eurozone and the end of its shared currency, an event that could produce panic rivaling that seen after the investment banking giant Lehman Brothers collapsed more than three years ago.

In a riveting address here on Saturday, Hong Kong leader Donald Tsang recalled his place at the epicenter of the Asian financial crisis in the late 1990s, and the experience of the 2008 global credit pullback, asserting that the current situation is worse.

“I’ve never been as scared as now about the world, what is happening in Europe,” he said.

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January 29, 2012

Full Of Gas

American politicians are full of gas, but unfortunately there’s less of it left in the earth:

The Energy Information Administration said the sharp downward revisions to its estimates were informed by more data. “Drilling in the Marcellus accelerated rapidly in 2010 and 2011, so that there is far more information available today than a year ago,” its report said. Jonathan Cogan, a spokesman for the agency, added that Pennsylvania had made far more data available than in previous years.

Under the agency’s new estimates, the Marcellus shale, which was previously thought to hold enough gas to meet the entire nation’s demand for 17 years at current consumption rates, contains instead a six-year supply. The report comes just five months after the United States Geological Survey released its own estimate of 84 trillion cubic feet for the Marcellus shale.

The estimates are important because they underpin policy decisions on energy subsidies and exports. Market analysts look to these estimates in making investment decisions. Historically, they have varied widely based on assumptions about the future of technology, coming regulations on drilling and the long-term price of gas.

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January 22, 2012

Suck It Up You American Workers!

Want your manufacturing jobs back? Be willing to work for $17 per day, work 12-hour days six days a week, and live in a company dormitory:

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhonemanufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.

“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

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January 21, 2012

Doomed To Be Dumb

And yet they also want to make the state attractive for business:

If lawmakers adopt Nixon’s proposed funding cuts, Missouri’s public colleges and universities will have seen their state aid cut by about 25 percent during a three-year period. Their financial troubles are compounded by the fact that student enrollment has been growing and — under an agreement with Nixon — schools held tuition flat during the 2009-2010 and 2010-2011 school years.

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