All religions, arts and sciences are branches of the same tree.
Albert Einstein
Sunday Talk Soup
On Meet the Press: two points:
- the Jamie Dimon interview: The JP Morgan Chase CEO was probably the most highly-regarded banking veteran until the recent revelation of a $2B trading loss. There are a number of things Dimon said which bothered me, where he played the role of a properly chastened Crony Capitalist partner, acknowledging the necessity of the nature and extent of regulation of the banking industry, even feeling the necessity at one point to point out that he, too, favored progressive taxation. David Gregory, as usual, seemed more interested in making the case for the financial reform law to deal with these sorts of events, with the private sector risk-taking behavior where gains are private but losses are socialized; the far Left in particular has focused on the role of complex financial instruments like derivatives. Dimon does make a number of points which David Gregory fails to follow-up to my satisfaction: for instance, Dimon says that he agrees with about 70% of Dodd-Frank (what about the other 30%?); he points out that the loss in question, whereas certainly significant, was manageable, offset by other profitable business operations and unrealized capital gains; he thought the class warfare rhetoric was unnecessary and unproductive. Gregory tries to get him behind the Buffet Rule and finally points out that Dimon is a Democrat. Dimon seemed unfamiliar with the President's plan to tax higher income people at a minimum 30% (including investment income) and doesn't make the obvious points about double taxation, taxation of nominal vs. real gains, and the counterproductive aspects of economic policy resulting in tax avoidance, etc. He does make subtle criticisms of the Obama White House, which seem to go by Gregory: at one point, he talks about an anti-business mentality, he thinks the White House made a mistake by not following up with Simpson-Bowles, he refers to himself as "barely Democratic", and he implicitly faults the White House for fostering economic uncertainty. He hints that the wealthy would be willing to do their part, meaning that sacrifice needs to be shared across classes (the obvious point being there aren't enough rich people to close the Obama deficits), although predictably both Dimon and Gregory, as progressives, completely ignore the fact that Obama has failed to make any material attempts to reduce spending. He also makes a subtle point that goes over Gregory's head that whatever the nature of government regulation, that one can never design away mistakes in business (or any other human endeavor). Overall, I was disgusted, but not surprised, that a crony capitalist would welcome the Bush/Obama interventions in the economy; I think he failed to adequately address government (versus market) failure, and he didn't adequately point out that many, if not most banks did not play a role in the economic tsunami--and to this day fail to point out the real beneficiaries of TARP were the GSE's, AIG and the car companies, none of which were addressed in Dodd-Frank.
- Obama's recent pro-gay marriage stance: Whereas well-known bloggers like gay-"married" Andrew Sullivan found it cathartic to hear the President "come out" in support of gay "marriage", this blog always knew that Obama was in favor of the same. He had opposed the relevant federal legislation (the Defense of Marriage Act) when he started his political career back in 1996, and he had opposed California's Proposition 8. I always realized that he framed his position to avoid alienating culturally conservative Democrats and independents whom felt strongly about the issue. I thought that he might wait until after his reelection to reveal his hand, but my guess is that the campaign thought that the polls had shown greater acceptance of "gay marriage" and that he could contain any defections on the issue. For instance, African Americans are strongly in favor of traditional marriage, but are they willing to vote out the first black American President, whom enjoys up to 90% of their support over one issue? Ironically few people are talking about the practical significance of the President's support. A number of states over the past 4 years have passed gay marriage laws without Barack Obama's support, and there's very little that he can do as President: any attempt to repeal DOMA is dead on arrival--and would probably seal the doom of embattled Senate Democrat incumbents (e.g., McCaskill, Tester, etc.) Barack Obama would likely do little more than leave the matter to the states--a position ironically identical to that of many conservative Republicans (including Ron Paul). Will it make any difference in this fall's election? No doubt it will be yet another reason for culturally conservative voters to vote against Obama, already upset over the birth control kerfuffle and other reasons. I note with amusement how Gregory tries to turn the table on Romney, talking about constitutional amendments (supermajorities are hard to come by in the current Congress) or against civil unions. I'll simply point out even without civil unions, there are legal remedies to guarantee things like hospital visit access.
Is Obama "Too Intelligent" To Be President?
There is a Vanity Fair article out, promoting an upcoming biography of Barack Obama, among other things referencing insights from undergraduate year (and/or subsequent) girlfriends. I'm not really interested in Obama's salad days. (It does seem the Washington Post has an obsession for the high school antics of Mitt Romney, whereas Obama's college-age dalliances with recreational drugs scarcely garner attention.)
I came across a recent LA Times op-ed from Meghan Daum; it's funny to hear someone mourning how Obama's prepared speech on race relations (yes, the one where he threw his white grandmother under the bus) has been trumped by the media-savvy President talking about how Trayvon looked like the son he and Michelle have never had. We hear about how Obama references works by T.S. Eliot and does things like Sunday crossword puzzles. OH, PLEASE! I was writing original poetry in high school and college; to the best of my knowledge, Obama never published a single scholarly article during his stay at Harvard and the University of Chicago. His first two books were autobiographies.
If you read his speeches, they are meandering, indulgent and replete with trite observations. This guy played hardball with an outnumbered GOP in the 111th Congress, never realizing that payback is a bitch. He spends weeks of dithering on an Afghanistan surge only to come up with an incoherent decision of sending and withdrawing troops. He dropped the ball on Bowles-Simpson when he had committed GOP senators in a compromise. He plays golf and goes on vacation to Hawaii and Martha's Vineyard during the BP oil spill crisis and with the lowest labor force participation rate and almost unprecedented long-term unemployment levels. He ignores warnings from Biden and Panetta over the birth control funding mandate for religious-affiliated organizations. He goes around telling European countries with staggering national debt that they should follow his lead and go on a government spending binge. Even the late Steve Jobs called a lunch for Silicon Valley principals "too fancy", but the White House cooking staff ignored him, saying that the President liked his creamy desserts.
Yeah, this is some rocket scientist. I don't like to attack politicians on personal grounds; I prefer to discuss bad policies, but it's time to debunk the myth of the arugula-eating intellectual Barack Obama.
One final note: apparently his Columbia University era girlfriend described an incident where she confessed to the future President that she loved him, and the smooth-talking sarong-wearing Barack responded with a classy "Thank you!" That romantic exchange seemed oddly familiar when I suddenly realized where I had heard it before: Fox-TV's "New Girl" Jess similarly said "Thank you" when her very needy, emotionally vulnerable boyfriend confessed his love for her.... Come to think of it, "New Girl" may be the only show Barack Obama hasn't been on this television season...
Classical Liberalism: Dr. Ashford's Series #3
Public choice theory attempts to explain how we move from a basic system of limited government on which most people can agree to the convoluted state we are dealing with today.
Consider one of my favorite targets, sugar. Gookeekus et al. wrote a paper Sweetening the Pot; the abstract starts with: "Sugar growers have been capturing substantial rents from the U.S. sugar program. Despite well-documented huge welfare losses of this program, legislators have always voted against phasing it out." The paper then starts off with the following introductory passage:
The U.S. sugar program is a case in point to show that indeed trade policies redistribute domestic wealth, in particular what happens when the beneficiary of a protectionist policy is a small and concentrated group and the losers are large and widely disbursed all over the country. Sugar growers have been capturing rents from tariffs and quotas since the 1790s. Taussig (1931) described sugar protection in his Tariff History of the United States. The U.S. General Accounting Office (2002) estimated that the sugar program cost consumers about $1.5 billion in 1996 and about $1.9 billion in 1998. As Groombridge (2001, p. 1) has written: “nowhere is there a larger gap between the U.S. government’s free trade rhetoric and its protectionist practices than in the sugar program.”The basic point is, for most of American consumers of sugar (or domestic producers of related products, like chocolate, baked goods, etc.) we would be better off with the market price, which is less than what we currently pay. The confectioner could offer his sweets at a lower price, selling more; consumers could apply the savings to other purchases. So why haven't we been able to stop this giveaway to sugar growers, given a nation of maybe 3% farmers and 97% consumers? Obviously the same goes beyond sugar: there are (or have been) subsidies on domestic production of corn-based ethanol (and tariffs on imports of Brazilian ethanol), which is conventionally mixed up to 15% with gasoline.
How does this happen? I remember when I first dreamed of becoming a professor while at OLL. I had this fantasy that even if other intelligent people and I got into a disagreement, we would address it like Leibniz:
The only way to rectify our reasonings is to make them as tangible as those of the Mathematicians, so that we can find our error at a glance, and when there are disputes among persons, we can simply say: Let us calculate [calculemus], without further ado, to see who is right.(Readers, you didn't think a math and philosophy geek would quote Leibniz?) I later discovered how politically naive I was. I probably mentioned in an earlier post that literally in my first semester in a tenure-track position at UWM, I was threatened by the informal MIS chair (at that time the business school at UWM did not have formal department structures); my ride to a dog-and-pony show at Wisconsin Bell was in a different tour group of the facilities and was already gone by the time my tour ended. The chair, who had a consulting relationship with Wisconsin Bell, was coincidentally still there and volunteered to drop me off at my apartment. A few blocks away from the apartment, he mentioned that his doctoral student had discussed a private conversation I had with the latter.
I had befriended the student but for some reason he refused to let me look at his soon-to-be-defended proposal which I later learned was under the direction of his chair. Dissertation proposals are generally frozen a couple of weeks before the defense, and all faculty can sign out a copy. I saw a proposal that was frankly not even fleshed out. His chair was trying to get Wisconsin Bell to agree to a field test (almost zero probability that would happen), and his second choice was using student subjects. His theory was not well-specified with trite hypotheses (of the type "people will make better decisions with better information available to them"), he had no discussion of the study task, measures, number of human subjects, statistical analyses, etc. I advised him to withdraw the proposal, because I felt that he would be ripped apart at the defense. He mentioned that he was entering the job market (at the time the MIS recruiting conferences were in November (DSI) and December (ICIS)); he and the chairman felt that he wouldn't be a credible candidate if he wasn't ABD (i.e., all but dissertation, after a successful proposal defense). (He was probably right about that.)
So when the chairman spoke about the details of a confidential conversation I had with the student, I was surprised, to say the least. The chairman paid lip service to the technical issues I had raised and then got down to business. He first told me (this is verbatim as I recall), "I'm sure that you realize that you have no vote in your tenure process." He then followed that up by mentioning that he had recruited a well-known organizational behavior professor on faculty to be on the student's committee, and that professor would be at the proposal defense. The basic threat was if I opened my mouth at the defense, this scholar would run interference and turn the tables on me.
I knew at that moment that I would never get tenure at UWM and my days there were numbered. Later that academic year I achieved PhD program faculty status based on my scholarly output, but the four MIS senior faculty had their students work around me (i.e., I wasn't asked onto any committees).
Even in the professional ranks, things could be petty. I was basically an interim Apps DBA contractor in Santa Clara. I had inherited the recently resigned perm DBA's cubicle near a building window. One morning I'm literally in the middle of doing a number of patches, when my boss shows up at the cubicle and announced that he had recruited one of his crony former Tyco subordinates as a perm network administrator, only perm employees deserve window cubicles, and I had to leave immediately for a middle cubicle in another row. I asked him for some flexibility because I was in the middle of patching, but my boss flatly refused. Do it NOW.
The point I'm trying to get across in the two examples is that they should never have happened Other factors entered the picture (say, a senior manager's power or authority). Similar things happen in the public sector as well. Public choice theory looks at politicians as a special case of self-interested individuals operating in an economy, only with different motivating factors, e.g., fame, power, and/or post-political career interests (e.g., university chair or president, lobbyist, corporate executive or director, etc.)
Clearly no legislator would want to support keep an unnecessary military installation open in a different district and/or state or various other earmark projects on intrinsic merit--but he might engage in favor swapping for goodies in his own district or state. Why? For purposes of reelection, of course. A month ago I nominated Bill DeWeeze, a convicted former Pennsylvania house speaker, as one of my Jackass of the Year candidates. What I recall was this one constituent's reaction: she saw the state legislator not so much in terms of policy positions but in the fact he had brought two state prisons and the jobs to staff them to his district.
One of the points that Dr. Ashford gets across here is that the few can sometimes prevail over the many. For one thing, the sugar subsidy issue may not be material for most people, but very important to the farmer. We can see a similar phenomenon if you compare a more pragmatic candidate like Mitt Romney and a more ideologically consistent libertarian-conservative Ron Paul. When you vote for a pragmatist, you are voting more for a person's judgment than his ideas; people get more excited about ideas. So, for instance, whereas at the primary level, Ron Paul might get 10-12% of the vote, the percentage could double in a caucus situation, and the candidate could win. We often see a similar situation for various special-interest circumstances where a relatively small up-front investment in a lobbyist can yield in a much larger payoff in the long run.
Musical Interlude: My Favorite Groups
The Rolling Stones, "Heartbreaker"
