More on Ruffini

I had some thoughts on a few other points in Mr. Ruffini's post. Mr. Ruffini claims that

Put another way, Republicans thrive as the party of normal Americans -- the people in the middle culturally and economically. This is true of our leadership as well -- we have a history of nominating figures who came first from outside politics. Our base is the common-sense voter in the middle who bought a house she could afford and didn't lavishly overspend in good times and who is now subsidizing the person who didn't.

But this is profoundly wrong. The Republican party would very much like to think of itself as the party of ordinary Americans, but their problem stems from the fact that their outreach to ordinary Americans has for so long been without substance. It has been no more than packaging. When it comes to questions of subsidies the Republican party is ready to throw any ordinary American overboard, no matter how common-sense the voter might be, should she have any degree of difficulty or problem. Yet, when it comes to the executives of major corporations whose business model is completely dependent upon sharing risk via incorporation, or who need copyrights protected, or trade deals with foreign nations or need to have guaranteed sole use of part of the radio spectrum, the Republican party is insistent that those services be provided at as low a charge as possible, preferably for free. This, to anyone of sense, is a subsidy. That they can do, again, however much it puts the burden of supporting these services upon our common-sense voter.

Mr. Ruffini goes on to say:

This sense of frugality, orderliness, and personal responsibility is something everything aspires to in difficult times. This is why Obama's pitch is fundamentally off-key if framed correctly. People's first instincts in a recession are not to overspend, but to tighten their belts.

But this again shows how the Republican party is out of step with the times and why they are no longer in a leadership position. Yes, indeed, it is the first instinct of most people to tighten their belts and this is what people do. That is what makes recessions bad. The nation will be much better off if people took this as a time to start spending. The belt tightening is what causes the pain. What is needed is a leader, a president say, or a political party, that can lead the country better than to follow our first instincts and worst judgment.

Mr. Ruffini goes on to say

Obama's address last night assumed that no one is responsible for anything, except maybe corporate CEOs. The banks as institutions are not ultimately responsible. People who took out risky mortgages are not responsible. The Administration is not responsible for sharing in the pain by postponing longer-term projects like health care. And even if they are, everything in a recession is subsumed to the need to throw money at the problem in an attempt to stabilize the system. The risk for Obama in embracing the bailout mentality is that it catches up to you: this is not how ordinary people act in their daily lives without major consequences down the road.

but this is simply not true. Obama did not say that no one is to blame, rather he spread blame around quite liberally. Rather the distinction is Mr. Ruffini's conservative habit of insisting that those in charge (the corporate CEO) cannot be to blame. Given this attitude (which is ruinous to both responsibility and to a free society) Mr. Ruffini is offended that the CEO is blamed at all and responds as if all the blame were placed on this one individual. That simply was not done.

Republican Gimmicks

In this post Matt Yglesias notes another piece of evidence in the absurdity of the current Republican party. Matt is commenting on this post by Patrick Ruffini who is noting the oddity (and lack of seriousness) in the current Republican Party's current obsession with Joe the Plumber. I agree with Mr. Ruffinin in general, although most of his specific comments are far off the mark, but he doesn't seem to get the problem with the current Republican predicament, nor why they cannot escape Joe the Plumber.

The problem Ruffini is facing in trying to pull the Republican party away from gimmicks is that the Republicans are at this point in a bind. Their ideology is tied two unshakable beliefs 1) the government does nothing of value, does nothing to support business, it just ‘interferes’ in the market 2) government functions like copyright protection, licensing the radio waves, and incorporation are absolutely necessary for business to exist. We on the left are pretty sure one of those must be false, and generally believe that the second is true, therefore it makes sense to charge business money to get these services. The Republican party is still wedded to policies which depend upon both being true. The American people are catching on to the absurdity of the conservative position on this. Given that their position is absurd, they have no choice but gimmicks.

On top of that, as Matt notes, Newt’s 80/20 issues are useless for the Republicans. They are 80/20 precisely because they are peripheral and not central to people’s interests. Yes, they are popular, but the 80 percent who favor them are also not really concerned about them.

Obama's Budget Plans

We can see Obama's budget plans in this article in the Washington Post. His plan is indeed ambitious, but I for one certainly think it sounds very good. Borrowing the WaPo summary of the plan

To get there, Obama proposes to cut spending and raise taxes. The savings would come primarily from "winding down the war" in Iraq, a senior administration official said. The budget assumes continued spending on "overseas military contingency operations" throughout Obama's presidency, the official said, but that number is lower than the nearly $190 billion budgeted for Iraq and Afghanistan last year.

Obama also seeks to increase tax collections, mainly by making good on his promise to eliminate some of the temporary tax cuts enacted in 2001 and 2003. While the budget would keep the breaks that benefit middle-income families, it would eliminate them for wealthy taxpayers, defined as families earning more than $250,000 a year. Those tax breaks would be permitted to expire on schedule in 2011. That means the top tax rate would rise from 35 percent to 39.6 percent, the tax on capital gains would jump to 20 percent from 15 percent for wealthy filers and the tax on estates worth more than $3.5 million would be maintained at the current rate of 45 percent.

Obama also proposes "a fairly aggressive effort on tax enforcement" that would target corporate loopholes, the official said. And Obama's budget seeks to tax the earnings of hedge fund managers as normal income rather than at the lower 15 percent capital gains rate.

All of these are appropriate and helpful steps to take. From my position on the role of government in society and the economy (see here, here and here for example) it is my opinion that the taxes we charge to middle and lower income citizens are way too high and the rates we charge to wealthier citizens, those whose income and wealth are most dependent upon the services provided by the government are way too low. Increasing taxes at the high end and lowering them at the low end of the income range will only serve to boost the economy. There are plenty of folks at the lower end of the income scale who are interested in expanding their economic activity, people who wish to be wealthy but who are not, but have limited access to fresh capital needed to do so.

Look, as a general rule, folks will do more work, and create more new wealth as their expenses rise in comparison to their income. As that difference narrows, people will, whatever their income, do more work and take less leisure. Likewise, as the gap grows (in favor of higher income and lower costs) they will trade further increase in income for leisure time. This is as true of the corporate CEO or fund manager as it is of the hourly wage earner and everyone in between. For people at the lower end of the income range the options when expenses are high compared to income are to take another job or to work more hours or the like. For the manager of a business the options are to also work more hours, but that entails using the resources of the business to create and sell more product. This, in turn, involves hiring more people, paying more wages and stimulating the economy.

So we can see why our economic policies of the past eight years are so foolish. As I have argued in the links above, part of the cost of running a large business in this country are services provided by the Federal Government. Services like copyright protection, incorporation, licensing the electromagnetic spectrum (radio and TV), etc. The Bush era plan to stimulate the economy then has been to consistently cut the costs the businesses have. But this can only serve to increase the gap between income and costs and thus decrease the manager's interest in working to create new and more product. Now in any plan that involves cutting taxes, some additional money will be spent and some stimulus to the economy will be observed. However, the effect will be weak, as it has been for the past eight years. The other effect that I am discussing here, the reduced willingness of the business manager to produce, will also be observed, and it has.

This chart (h/t to Mark Kleiman and Quincy Adams) illustrates what I am discussing. The upper chart shows industrial production, capacity and utilization over time since 1965. The striking thing about the chart is the high level and rapid increase in these value during the Clinton years and the subsequent slowdown and then drop off during the Bush years. With tax rates higher during the Clinton years, people running large businesses needed to produce more and create better products if they were going to enjoy an increase in personal income and wealth. Under the Bush administration, with a nearly guaranteed increase in personal income for the people owning and running the businesses (an increase in their income because the government would certainly reduce their costs, even if they worked and produced less) we see they took more leisure time, produced less and production and utilization slowed down.

Another example of the result of the Bush policies is the quality of our broadband services in this county, discussed by Matt Yglesias, here for example. For a telecom company to improve the boradband services it provides would require a fair amount of efffort to be supplied by the owners and operators of the business. In a capitalist, market based system, the people running a telecom company are motivated to put forth the effort needed to improve broadband service (or any other service for that matter) by a desire to increase their own income and wealth. For the past eight years we have, however, been guaranteeing that they will see an increase in their wealth and income even if the don't do this work, and shock of shocks they have been, by and large, taking the increase income without doing the incrrease effort. The policies of the past eight years have been for the general citizens to do with poorer service and lower value to the products in order to guarantee that the owners of these firms can enjoy great wealth without having to work. This is a foolish policy.

A return to higher taxes for these folks will not raise prices, it will increase the amount of production. To do that will require an increase in employment. All to the good for we citizens who have the responsibility to set the prices that government charges industry for government services. We can also see the effect of these policies in the income and wealth of citizens across the income spectrum in these charts provided by Nate Silver. As indicated, the wealth and income of everybody was higher during the Clinton years, and more equally distributed. This is the expected effect of Obama's plans on taxes and Federal spending. All to the good, again, for the vast majority of citizens.

Fairness Doctrine

Kevin Drum chimes in here on the discussion of the Fairness Doctrine, the FCC rule, abolished in the 1980's, that, in summary, required radio stations to provide rebuttal time if the station was to broadcast controversial commentary.  I pretty much disagree with him here.

Now the doctrine died in the 1980's as part of the Regan revolution.  There has been no serious effort to revive it in liberal political circles, much less in the Congress.  Liberals would not mind seeing it come back, but generally regard it as a dead issue, and don't much care.  I could well be counted among its more ardent supporters and I don't much care.  Nonetheless, since the start of this year, conservatives have been from time to time hyperventilating over the prospect that Democrats will reinstate it.  There has been no serious effort to do so, Obama doesn't support it, none of the leadership is calling for it and the strongest voices on the supper lefty blogs are not calling for it.  See, for example, here and here (the only reference to the doctrine I found on Kos).  And the right is going crazy over the possibility, they are quite fired up about the possibility.

Then Bill Clinton added his voice and expressed his opinion that the doctrine should be restored.  Now while Bill Clinton is a Democrat and as an ex-President he is quite a significant Democrat, that ex- in his title limits his legislative influence.  Still Kevin Drum feels that this is too strong a commentary from a high profile Democrat and Clinton should really shut up about it. 

Kevin is nuts.  Look, on the merits the right wingers are wrong.  The existence of a broadcast network requires the federal government to provide the security that if a given station is transmitting on a frequency, nobody else is.  Someone must insure that there is no interference between broadcasters and the only entity positioned to do that is the feds.  If we the people, through our government, wish to put the restriction that having this protection means that you must also support the fairness doctrine is perfectly reasonable.  Also, the point of the fairness doctrine is that if someone were to defame me before a large audience, common decency says that I should have the opportunity to defend myself before that same audience.  So on both these points the fairness doctrine is a perfectly reasonable rule.  Now, just as I argue above that if we the people wish to have a fairness doctrine attached to broadcast radio, if we don't want it we are free to do without.  That is the decision that was made in the '80's and Democrats are content to live with the decision.

To have the right wing going on about the unfairness to them if they don't get the secure use of frequency provided by the federal government at least 100% of the time, at no charge, their business model cannot survive, only serves to make them look whiny and weak.  Similarly Kevin's fear of giving Rush Limbaugh something to complain about is completely wrong headed.  If we give Rush nothing to complain about but our breathing, be sure that he will be in a towering outrage over that. 

I think there is nothing better for the liberal cause on this issue than to have high profile democrats put forth publicly our arguments in favor of the doctrine, while democrats in positions to affect legislation let the issue lie and conservatives burst veins over the merest possibility that they would have to abide by such a rule.  Let us have the debate.

Stimulus Passed

Well the stimulus did pass the Senate and Obama will sign it into law on Monday. Good job Democrats.

Experience

For the past year or so the value of experience has been a major talking point and serious issue. It was raised by both Clinton and McCain as an issue against Obama. It also seems right now to be part of the concern over how to handle the banking mess. While the popular view may well be to get rid of the damn fools who ran these banks into the ground, folks in positions of leadership seem to be, among other things, worried about losing the expertise held by upper management.

I think, and have been thinking since it was first raised during the campaign, that the concern over experience has been misplaced. Certainly some level of experience is required for any position of leadership and there is a fair amount that one needs to know to be able to be President or run a bank. But it is hardly the case that increasing experience is always a benefit, or that higher levels of experience will always lead to a better outcome. Indeed experience levels somewhat below the highest will often be linked to a fresh or novel outlook that can be quite helpful, whereas the greater experience results in a stilted or ossified outlook that hinders success.

Consider that one could hardly expect the role of commander of a large army to be less in need of experience than head of a bank or even President. But consider also what were America's two largest wars, WWII and the Civil war and who rose to be the commanders in each case. Also, we actually have three cases because in the Civil War, both the Confederacy and the Union needed to put together a General staff. In all three cases most of the leading Generals were not among the most experienced officers at the start of the war. In fact, in most cases the men who would ultimately prove to be our nation's military leaders where not part of the General staff at the commencement of hostilities, or had been promoted to the rank of Brigadier General only a few months before the War started. Consider

WWII

Eisenhower was promoted to brigadier general on October 3, 1941, only a few months before Perl Harbor. Nearly the entire General staff was more 'experienced' than he was, but by all accounts he was far more capable than any others for handling the Supreme Command. Now in WWII there were several highly experienced officers who were more experienced than was Eisenhower (Marshall, of course, and McArthur as well, among others).

Bradley - In February 1941, he was promoted to brigadier general (bypassing the rank of colonel) and sent to command Fort Benning (the first from his class to become a general officer). Again, Bradley only reached the lowest rank of the general staff on the eve of the attack on Perl Harbor

Patton - Colonel Patton was promoted to brigadier general on the second day of October in October of 1940. Even Patton was not high up among Generals at the outbreak of the war. Note too among these WWII Generals that their rank at the end of the war was the inverse of their level of experience at the start. Patton actually had the seniority over Bradley who was senior to Eisenhower.

Civil War - Union

Grant - In June of 1861 he returned to military life after being a civilian and was made a Colonel of Illinois militia before working his way up to the highest possible rank in the US Army. Clearly many who had more experience than he did were far less suited to command.

Sherman - May 14, 1861 after a period as a civilian he is commissioned as a Colonel in the United States Army. Again his lack of experience was more than made up for with ability.

Sheridan - Pill Sheridan was in the army at the outbreak of the war, holding the rank of lieutenant. In May of 1861 he was promoted to captain.

Civil War - Confederate

Lee - Robert E. Lee would be the closest thing to an exception to my point here. However, I'm not claiming that experience is bad, rather that it is not some perfect guide to excellence in performance. Lee held rank of the of Colonel at outbreak of war but was immediately offered position on the General Staff by both sides. He was made one of Virginia's first five full Generals when Virginia joined the Confederacy. While Lee was the most experienced of the people on this list, he was still a relatively inexperienced General officer at the start of the war and his skill demonstrated throughout the war far exceeded his initial 'experience' level.

Jackson - At the start of the War T J Jackson was made a Colonel in the Virginia militia based on his passed military experience. He again was not part of the General staff at the start of the war, but was clearly far more capable on officer that mere measure of experience would indicate.

Forrest - Nathan Bedford Forrest enlisted as a private soldier but was quickly raised to rank of Colonel. Still he did not reach General staff until the war was under way. Whatever else one might think of N. B. Forrest as a military commander he was brilliant, but not, at the start of the war, particularly experienced.

In short, in times of crises it might be just as well to remove the highest levels of 'experience' and replace them with folks at a lower level in the organization. I think that was some of Obama's appeal and that we will need to see that done with Bank organization as well.

A Win

It would seem that Obama is soon to have a chance to sign the stimulus bill, and none too soon I should say.  I am not sure if this is the best bill that could be produced, or if this is exactly what the country needs, but it is pretty good.  I heard some of the Republican House leadership complaining about the final product and going on about the need for small business tax cuts instead.  Are there really that many people who don't understand that a tax cut is of no value to a small business, if the business has no customers with money to buy its products or services?  Sigh.

But what I really wanted to comment on was this at TPM.  A reader there has noted that the bill that is currently being agreed to would appear to be nearly exactly what Obama originally asked for.  This is an impressive comment, as the TPM reader notes, for a new President.  But it also illustrates something that we on the left will have to get used to (and for what its worth I applaud) namely that with Obama we will see little gloating over enemies who are completely vanquished, but we will see many victories.  I believe that with this style we will see more victories, although we shall see less suffering from our opponents.  In all a better way to go.

While I'm on the general subject, I'll also comment on a theme I've seen discussed at various places on the left blogs (sorry I have no link for this).  There is a sort of debate as to whether Obama has demonstrated some brilliant rope-a-dope or jujitsu (insert metaphor of your choice) on his opponents.  The whole laying back at the beginning while the Republicans seemed to have their way was all part of the plan.  Look, I admire the guy, but I doubt this is interpretation is the case.  Rather his skill is different from some super genius chess player, rather he is skilled at adapting to the current situation and will change strategy or tactics appropriately in response.  Such a skill can seem like brilliant planning, and is, in fact, more valuable.  Really, I think it is safe to say that his initial plan did not work as he intended, the Republicans proved more determined to oppose at all costs than he expected.  When that became clear, he adapted.  My opinion at any rate.

Call Now

The right wing is mobilizing well to try and stop the stimulus bill. Now is the time for progressives to call their Senators, of either party, to get this thing through. Not everyone is thrilled with this bill, but for all the and wringing from the left it is a fairly decent stimulus package. The criticisms from the right are rediculous, absurd even. We need to get our message out.

Follow the link to Fact-esq and then call your Senator. Hell, call your representative just on the chance that he or she has influence with the Senator. Call your governor, call everyone.

Here are some links to sites for finding phone numbers and email addresses of Congresspeople.

Congress.org
Contacting the Congress

Call NOW!

Dr. Who

I found this article from Media Matters, referencing an article in the LA Times, to be an amusing example of the current state of the media and the add nature of "liberal" bias.  Apparently the LA Times finds that some people think it a bit pompous of Jill Biden to refer to herself as Doctor based on her having a PhD in education.  The Times seems to feel that Doctor should be reserved for those of the medical profession. 

Now, full disclosure, I have a PhD in physics so I have a bias on this subject.  But the history of the title is kind of significant here.  The title Doctor dates back centuries and has, until very recently, been exclusively a title of general academic accomplishment.  The main character in the story of Faust, Doctor Faustus, for example is based upon a doctor of divinity.  The renowned Samuel Johnson, often known as Dr. Johnson, never studied medicine.  This pattern is repeated for centuries.  Indeed, not too many centuries ago, at a time when scholarly doctors were common, medicine was not a field in which one could get a doctorate.  In the brand new republic of America, however, folks had initially a very low opinion of titles of all sorts (Article I section 9 of the constitution forbids Titles of Nobility, for example) led to a much reduced use of the title Doctor in the new nation.  Later in the nineteenth century the medical profession finally started getting its act together and established itself as a truly professional order and happily embraced the title of Doctor.  At that time the nation's earlier animosity to titles had abated so the the medical profession met little resistance from the general public or from those from academic society.  That coupled with the fact that most people came to know medical doctors as a regular part of life, but were much less familiar with academic doctors.  So now the irony is that academic doctors, in spite of the much longer history for the title come across as the interlopers.  Such are the oddities of history.

So it is perfectly reasonable for Dr. Biden to refer to herself as such.  Actual usage of the title today is, however, far less common than it once was.  It is a generational thing.  In my first place of employment there was nothing odd about the fact that the older gentleman who headed our department was Dr. Pontius.  On the other hand, younger PhDs do not use the title on a daily basis.  But that is part of a general trend in society.  No one today, on a daily basis, calls me Dr. Robinson, but then before I got the PhD no one called me Mr. Robinson either.  Having said all this, it is also true that in more formal, professional settings the title is used.  So at formal, project reviews, I stop being Mike and become Dr. Robinson.

As a final note, as others have pointed out, the pompousness of using the title never seemed to apply to either Dr. Rice or Dr. Kissenger.  I wonder why?

Whose Money

One of the favorite lines from conservatives is that government should let people keep more of their money. Who could argue with that? However, as I've argued elsewhere, there are government services which are used by many folks as a vital part of their income. Whose money is that.

For example, consider the current Governor of California, Mr. Schwartzenegger. Now we have about three thousand years of history for which we know quite a bit about daily life. Maybe more, but at least three thousand. During about twenty-nine hundred of those years acting, performing, composing songs, writing books and poetry were not professions that led to great wealth. Some folks managed to become prominant and attain a comfortable life, but great wealth no. Then over the past hundred years, give or take, government has become involved with defining and securing copyright to the artistic works of such folks and over the same hundred years or so a good number of these performers have become quite wealthy. Wealthy by regional or national standards. People such as Mr. Schwartzenegger. Now, I think that this is not a coincidence. The wealth that passes through these people's hands is still due in substantial measure to their labor, but a great deal of it, in fact by far the larger part, must be due to the agency of Federal copyright protection.

As such it is hardly the case that taxes involve taking Mr. Schwartzenegger's money. The heaviest tax burden proposed by anyone on the mainstream left does not get close to touching Mr. Schwartzenegger's money. The tax burden proposed by the left involves only taking a portion of the money generated by us via copyright.

Further Comments on the Size of Government

Constructive Interference: Size of Government

I'd like to expand a bit on, and clarify, my earlier comments on measuring the size of government by how much its spending contributes to the GDP.

My first point is that governments provide services, security being the foremost, which have value in the market. In today's world, for good or ill, governments also provide a host of other services for which there is some demand in the market. Amongst those are

• Copyright protection
• Incorporation
• Licensing the electromagnetic spectrum
• Negotiating trade deals
• Negotiating a stable international regime
• Health insurance for at least some part of the population
• Old age destitution insurance (Social Security in the US)
• Social Safety net
• Education support
  

and quite a few others. In any meaningful sense the size of government, or at least its significance to the economy, is a measure of how valuable these services are all told, not simply the fraction of all money spent by the government. If the value, to the economy, of all these services is large compared to the value of all goods and services provided by the rest of the economy, then government constitutes a large fraction of the economy. While I agree that it is difficult to find a metric for assessing the value of these services, there are clear problems with percentage of the GDP.

The first problem is that clearly the copyright protection provided by the government to Disney and Microsoft, as those two companies will let you know, is very large. But if the government charges money for this service and spends it on activities that either serve the interests of its constituents or helps it continue to provide those services, we see government's share of the GDP increase. If, however, the government provides this service for free, with no obligations in return from the recipients, then governments share of the GDP is lower. But is hardly the case that government is being less intrusive in the economy in the later case than in the former. For one thing, in the later case, given that the price for this service is lower, we can expect that it will be used more extensively, making governments involvement in the economy, not smaller.

The options we have, therefore are to either have government create these services or not. If it does create these services, giving them away for free will reduce governments share of the GDP, but there is little real value in that. Government is just as intrusive and just as important a part of the economy. Charging money for these services instead, will discourage there use to an excessive extent, making governments share of the GDP larger, but its influence and importance in the economy smaller.

In conclusion, as I say above, government creates services, that are of some value to the economy. Services which, contrary to a frequent conservative talking point, do indeed help to create wealth and jobs. While giving these services away for free does reduce governments share of the GDP, it does not make government and government authority less intrusive. Two approaches are needed to minimize the intrusiveness of government. One is to have government charge for services at a moderate, but not too steep, discount. The other is to have a government which is subject to frequent, thorough and extensive, critical review, oversight and accountability.

Useless Statistics

In my previous post I argued that the fraction of GDP due to government spending is a pretty useless statistic. It does not provide a useful measure for how big or intrusive government is. I'd like to take this opportunity to point out another statistic that has been both amazingly popular and completely meaningless. This would be the conservatives use of the fraction of all income taxes paid by some particularly wealthy fraction of the population.

For a couple of decades now I have heard conservatives trot this statistic out to indicate that the class of people being discussed is over taxed. The top 1% of all taxpayers pay 45% of all taxes (actual number were made up by me now, but he gist is accurate) indicates that those taxpayers are over taxed. There are at least two things wrong with this statistic.

1. The fraction of all taxes payed by an individual or group pretty nearly tracks the fraction of all income earned by that group. If you are paying a large fraction of all taxes that is because you are earning a large fraction of all income. Earning a large fraction of all income is not a hardship.
2. The statistic is comparing the fraction of all revenue taken in by the government. No rational person would asses whether a given expense was too great or too small based on the fraction of all revenue earned by the recipient. This is equivalent to comparing the value of a Honda and a Toyota based on which car comprised the greater fraction of the respective corporation's revenue. No one would care. One might well, and in business will generally, compare the amount of revenue the buyer can get from the purchase to the cost of the purchase. But the fraction of all revenue gained by the provider is irrelevant.

More attention needs to be payed to the underlying assumptions of arguments presented publicly, and much more attention needs to be payed to rebutting those assumptions where false.