Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

29 November 2012

“Fiscal Cliff” or Briar Patch?

[For an update on global economic recovery, click here. For a recent post on Egypt’s trials, click here.]

It’s a shame that no one watches “Uncle Remus” cartoons any more. Some consider them racist. Some think them outmoded. For whatever reason, they’ve fallen way out of style.

But youngsters today ought to familiarize themselves with these cultural icons of a bygone age, for they have predictive power in politics today. And they’ll continue to have it as long as a half-“black” man is president.

Uncle Remus was an avuncular African-American screen character dressed in a sharecropper’s suit. He told droll stories about a cartoon character named “Bre’r Rabbit” (Brother Rabbit).

The rabbit was much like Disney’s later Bugs Bunny—a clever creature who escaped many scrapes by being smarter than his persecutors. When the mean ol’ farmer or his dogs got Mr. Rabbit in their clutches, Mr. Rabbit would plead, “Puh’lease don’t throw me in that briar patch!”

Of course, being thrown in the briar patch was precisely what the clever rabbit wanted. The farmer and his dogs were too big to follow him there, and Mr. Rabbit could get away. So the Uncle Remus’ stories became metaphors for African-Americans’ mental ju-jitsu—how they often exploited their tormentors’ dumb and blind hatred to come out on top.

As we approach the so-called “fiscal cliff,” our national tale is beginning to resemble an Uncle Remus story. The essential ingredients are two: (1) a course of action driven by religious-level ideological faith and blind rage, and (2) an outcome that seems terrible to some but may actually be beneficial, at least to Democrats.

It’s now becoming clear that John Boehner’s “happy talk” about closing loopholes will come to nothing. Why? Revising the tax code takes months or years, and we have exactly 32 days.

Every change in the code hurts someone, and usually that someone has lobbyists. All Boehner’s proposal will do is produce a flurry of lobbying, much heat, no light, and certainly no resolution. As usual, the GOP hasn’t thought its plan through; it’s just temporizing.

No less a budget authority than Peter Orszag recently explained how the currently proposed $50,000 limit on tax deductions would tank charitable giving, especially by high earners who account for a huge share of it. Not only that: a $50,000 limit on deductions would hit the million-dollar income class much harder than the rest of us. People like Mitt Romney would pay a larger share of their income than they do now; they might even have to pay the same effective tax rates as their secretaries, nannies and gardeners. Horrors!

Unfortunately for the Boehner plan, these high-income folks are the GOP’s only rational backers. Apart from the usual pack of extremists, they are the only GOP supporters whose interests are actually aligned with GOP policy. The rest of the folks who so vehemently sought (and still seek!) to dis-elect the President are doing so out of racial animus or blind faith in a form of political religion, not rational pursuit of their own interests. This truth applies especially to the duped and deluded, tired old middle class white men.

The money men (they are virtually all men) who now back the stumbling Republican juggernaut would have their personal oxen gored deeply under the Boehner plan. They’re just now beginning to understand that point and react. That’s why the plan is going nowhere.

Even if rich folks’ self-interest didn’t kill the Boehner plan, other things would. As I’ve written before, the current Obama plan—dropping Dubya’s gratuitous and fiscally disastrous tax cuts—has four eminently visible virtues: simplicity, soundness, substance and sense.

The Obama plan is simple to understand and implement. Everyone knows what it means to raise marginal tax rates a little bit (only a few percent). You don’t have to be an economist, or even an accountant, to see cause and effect.

Our tax code may be the greatest monument to unnecessary complexity ever conceived by the Mind of Man. But if you raise marginal rates, you don’t have to undertake the gargantuan task of revising it to raise revenue. That task would take at least a year, even if we had a well-functioning Congress, which we don’t.

The Obama plan is sound because it reverses a foolish frolic. Dubya cut taxes when he shouldn’t have, after starting two gratuitous wars. In so doing, he created a huge share of our current deficit, long before the President ever set foot in the White House.

We can’t reverse the wars or bring back the lives and treasure wasted in them. But we can drop the gratuitous cuts and get back to the tax scheme that let Bill Clinton create 22 million jobs and a huge federal surplus. We didn’t do so badly then.

The Obama plan has substance in two important respects. If his plan to raise taxes only on high earners prevails, it will help restore fairness to a system in which those same lucky earners have grabbed the lion’s share of the goodies for over a generation. If we fall over the “fiscal cliff,” all tax rates will go up to where they were under Bill Clinton. Either way, we come closer to a truly progressive tax system, in which people like Mitt don’t pay taxes at lower rates than their vastly poorer hired hands.

Finally, the Obama plan (or the “fiscal cliff”) has sense. As I’ve explained in another post, personal income-tax rates and capital-gains rates are two entirely different animals. Cutting capital-gains rates (really, so-called long-term capital gains rates) encourages investment in business. Cutting personal tax rates encourages excessive personal consumption, especially by the rich.

That’s why FDR and his immediate successors maintained top marginal rates in the ninety-percent range but much lower capital-gains rates. Oddly enough, that period of extremely high personal tax rates marked our nation’s best economic days—the so-called postwar “boom.”

The high taxes were not “job-killing” as Boehner and his Fox zombies claim. They were job-creating because they gave the rich the easy choice of putting their money into industry or giving it to Uncle Sam.

So if sense and substance are any guide, the Republicans are going to have to bend. If they don’t, we’re going to ride gently over over the “fiscal cliff.” Would that be so bad?

I think not. It would be like Bre’r Rabbit being thrown into the briar patch.

Falling over the fiscal cliff would give the Dems, at long last, exactly what they want and deserve. Tax rates would go up for everyone, but the rich would pay more because they make more and because their marginal rates are already higher. We would take a small step back toward truly progressive taxation.

Our bloated military-industrial complex would have to digest enormous budget cuts. For the first time ever, it would have to get serious about declaring the “peace dividend” that the Cold War’s end promised but never delivered. That’s been a Democratic goal since 1991, when the Soviet Union collapsed. Now it will come to pass.

So if the GOP throws us into that briar patch, all will go the Dems’ way.

Equally important, the GOP will get the blame. It will be left trying to claim that its impossibly complicated loophole-closing scheme, which no one really believes, wants or understands, is better than the obvious ploy of raising revenue by raising tax rates. It will also have to explain why rates lower than those that prevailed during our best economic days are now suddenly bad. Good luck.

“What about the economy??!!!” you scream. Well, what about it?

We have been told, again and again, that going over the fiscal cliff will cause a recession. That prediction has become conventional wisdom, but how often has conventional economic wisdom been right? Certainly not in the Crash of 2008, when financial gurus told us mortgage-backed securities were good risks and housing prices would never fall.

Before you bet on conventional economic wisdom, you might want to spend a half-hour reading Chapter 6 of Nate Silver’s superb recent electronic book on modern oracles, The Signal and the Noise—Why So Many Predictions Fail, but Some Don’t.

Silver, you may recall, accurately predicted all fifty states’ results in the recent presidential election, plus all but one of the Senate races. After probing quantitative analysis, he gives economists failing grades for prediction, especially of GDP. In fact, Silver rates them far lower than weathermen, who can only predict things seven days out.

Here’s Silver’s final verdict on conventional GDP forecasts, based on quantitative comparison of actual predictions with how things actually turned out:
”In reality, when a group of economists give your their GDP forecast, the true 90 percent prediction interval—based on how these forecasts have actually performed and not on how accurate economists claim them to be—spans about 6.4 points of GDP (equivalent to a margin of error of plus or minus 3.2 percent).”
If these historical numbers are right, economists’ prediction of an 0.5% GDP contraction after we fall over the fiscal cliff is utterly meaningless. In reality, it could mean anything from a contraction of 3.7% to growth of 2.7%, almost a percent higher than we enjoy now.

Economists’ predictions are lousy for many good reasons. They include optimistic bias, overconfidence, bad data, correlations based on noise, not signal, and constant official revisions to fundamental parameters like jobs, productivity, sales, etc. But the most important reason is simple and devastating: economists have no valid general theory of how our whole economy works. They have nothing like the quantitative theories of chemistry, physics, fluid dynamics, and atmospheric physics that undergird our weather predictions.

Our economy is just too complicated and ever-changing. We haven’t a clue how it works, or how all its many parts fit together. So “prediction” becomes a futile exercise of looking backward to make correlations with shaky data, without knowing what is signal and what is noise.

The only valid quantitative studies that we have are retrospective. One of the best is Rogoff’s and Reinhart’s comprehensive study of economic declines after financial panics and crashes. It goes back hundreds of years and analyzes many events. Its conclusion is simple: recessions after financial panics take, on the average, a half-dozen years or more to cure.

So recessions caused by financial panics are sort of like the common cold. You can eat well and stay warm. Or you can starve yourself and work or play out in the rain. As long as you don’t smoke or get a secondary infection, your cold will last the same time. As the old saying goes, “An untreated cold lasts fourteen days; a treated cold lasts two weeks.”

It’s now been over five years since the economists (retroactively) declared the start of our current recession. So according to Rogoff’s and Reinhart’s massive data, on average we should have a year or less to go.

Current data bear out that forecast. Already we see definite signs of recovery, including increasing employment and consumer confidence and a rapidly rebounding housing market. (The latter is especially important in this recession because housing was the epicenter of the 2008 Crash.) In addition, we have the lowest interest rates since World War II, the result of impressive efforts by the Fed, which may actually have been curative.

So recovery is coming inexorably. Europe is getting its act together. Those events are far more significant than the paltry hit of falling over the fiscal cliff, which (for the first year) is measured in the low hundreds of billions, a pittance by Crash standards.

All this puts the Dems are in a “tails I win, heads you lose” position. Whatever happens, they will get credit and the GOP the blame. If the fiscal cliff is not as steep or dangerous as predicted, we will recover in a year or so over the GOP’s figurative dead bodies. If the depressing predictions come true, the Republicans will get the blame for proposing a “solution” that no one, not even they, understands, and that John Boehner can’t get his wing nuts to deliver.

Not only that. The repeal of all the Bush Tax Cuts, plus the huge budget cuts, will solve the deficit problem.

As you may recall, the deficit is the only one of our long-festering national problems for which the GOP has any plan at all, let alone a workable one. Once it’s solved, what will the GOP do? Can it convince the rest of America that banning abortion and gay marriage, making church attendance mandatory, stringing up peaceful Muslims, and encouraging everyone to wear assault weapons as personal ornaments will bring us to Paradise?

I think not. Once the deficit issue dies, the GOP will be nothing but a bizarre collection of single-issue extremists. It will have no central theme to unite them.

Youth, who don’t see what all the “social-issue” fuss is about, just went for Obama by a 23% margin, despite Mitt’s virtuoso salesmanship and the Fox propaganda machine. With the debt issue behind us, that’s the GOP’s future. Can we all say “Whigs”?

So puhlease, Mr. Farmah, puhlease don’t throw us in that briar patch!

Update (12/4/12):

Evidence is mounting that the global economy is recovering nicely and normally. Not only is the US housing market recovering and US unemployment slowly but steadily eroding. Not only will improvident investors in Greek bonds take yet another severe “haircut” (this time two-thirds), thereby restoring a semblance of real capitalism, aka market discipline, to international financial markets.

That’s just the beginning. US annualized GDP growth is now estimated at 2.7%, one-half higher than just a month ago. International trade imbalances are falling under the dual impact of conscious trade-policy adjustments, especially in China, and changing foreign-exchange rates. Hedge funds are betting on commodities again—a sign of more recovery to come. And, perhaps most important, China, which is now the global economy’s high-growth engine, is growing again and widely expected to grow more rapidly under its new leadership.

The bottom line is quite simple. The so-called “fiscal cliff” represents an economic hit—to the US alone—of a mere $600 billion, and it only begins next year. That’s a tiny fraction of the $15 trillion US economy, not to mention the global economy. The natural process of healing from the Crash of 2008, which is now five years behind us, is well apace.

That healing process is signal, and the so-called “fiscal cliff” is noise. Falling off the “fiscal cliff” will actually improve the global economy by: (1) reducing the US deficit, (2) improving our Yankee credit rating, and (3) making it easier for the Fed to maintain the lowest interest rates here since World War II.

Errata: An earlier version version of this post called today’s projected GDP growth of 2.7% one-third higher than that projected a month ago. The month-ago GDP-growth figure was 1.8%, so the increase is 50%, as stated above. Also, an earlier version of the update was erroneously dated 12/8/12—a date in the future at the time. I regret the errors.


28 November 2012

Hard Bargaining in Egypt

Less than two years ago, ordinary Egyptians began their Tahrir Square Revolution. With steadfastness and very little bloodshed, they brought rudimentary democracy to a country that had never known it.

Now, with President Mohamed Mursi purporting to grant himself extraordinary powers, they face a burning question. How can they preserve what they have wrought?

Maybe they should ask Abdul.

No, Abdul is not my name for the hypothetical average man on the Arab street. He’s a real person. He has a little shop in a tiny bazaar near a modern rest stop on the way from the Red-Sea port of Safaga to Luxor (the modern name for the ancient city of Thebes).

Abdul is unusual in several respects. Unlike many of his colleagues, who have all the subtlety of piranha, he’s got a light touch. He has a winning smile and a way of saying “my friend” that makes you forget his salesman’s guile.

After buying a few small trinkets from Abdul on our way to Luxor, my wife and I had gotten away from him by promising to stop on our way back. Sure enough, on our return he spotted us coming out of the rest rooms and approached us. My wife was ready to buy a scarf and left the bargaining to me.

Abdul started with a price of 200 Egyptian pounds, or about $32. He showed us several scarves. He tried a few tricks with the exchange rate, but he stopped abruptly when he saw that I can do math in my head. After several minutes, we agreed on a price of $14, less than half his starting price.

I was happy. Abdul seemed happy.

Later our guide told us the fair price for the scarf was eleven or twelve dollars. So Abdul had made himself an extra profit of 18% to 27%, while making us feel happy with both the purchase and the price. He is good at what he does.

So why can’t Egyptians who want to strengthen their democracy be more like Abdul?

Bargaining seems to come naturally in Egypt. It’s part of the culture. But as far as I can tell from news reports, the most important bargaining in Egypt’s history has only just begun. After ending a futile strike, the leaders of Egypt’s judiciary have begun to bargain for limits to Mursi’s sweeping decree. Maybe they need some reinforcement from political leaders who are democratically inclined.

Bargaining is exactly the right approach. The small-d democrats in Egypt have a lot of leverage. They have a huge following in the urban areas, which seems ready to take to the streets at a moment’s notice. They have the judiciary and scores of well-respected, well-known educated people on their side. One of their partisans is Mohamed El Baradei, the former Director General of the International Atomic Energy Agency.

And although the democrats fear and despise it, they also have the Supreme Council of the Armed Forces, which so far has seemed far more interested in stopping violence than starting it. Egypt’s professional army has proved to be a conservative institution in the old, good sense of that word. It conserves people’s lives, rather than wasting them as in Syria.

Yet serious bargaining has only just begun. Worse yet, its goals seem puny compared to the reportedly sweeping scope of Mursi’s decree. Recent reports suggest that democrats are trying to restrict his self-granted kingship by subject matter, limiting his unreviewable power to “sovereign” matters, whatever that means.

There are many ways of bargaining. Our Yankee style is to start with a reasonable proposal that you think the other side would accept and then proceed to resolve the few remaining issues. That method is efficient, but it’s not how Middle Easterners haggle. There, you start with extreme positions and expect both yourself and the other side to give up a lot, as Abdul did with me.

Is that what Mursi did? It sure looks that way. I’ve not yet seen a literal translation of his decree. But the various reactions to it suggest that it had no limits in time, scope or subject matter. Mursi was, in effect, declaring himself the last Pharaoh. The judiciary reacted as if Mursi were reading it entirely out of the governmental equation.

That seems unlikely, as least in the long term. Mursi is an American-educated engineer. He could hardly have gotten through college in America without hearing of the three branches of government and the importance of their vitality and independence.

Like everyone else, Egyptians ought to respect the training of a man educated to design and build things that work, not just to argue or proclaim. But engineers, too, have their weak spots. One of them may be a tendency to underestimate how much turmoil rapid change in a time of uncertainty and discord can cause.

In other words, Mursi may have too mechanistic a view of how society works. He may need to learn how to bargain better.

(I leave aside for the moment the possibility that Mursi has abandoned his early training and become a religious ideologue. His reported refusal even to mention Israel by name raises that fear. You do not govern well by ignoring reality, however unpleasant it may seem to you. If Mursi walks down that road, Egypt may well have to suffer real cataclysms, not just street demonstrations. But until I have more evidence otherwise, I proceed on the assumption that Mursi’s model for leadership is Turkey’s Erdogan, not Iran’s Ahmadinejad.)

So rather than stand on the sidelines wringing our hands, we Yanks should advise or help in the bargaining process, as much as Egyptians will allow.

One way we can help is by suggesting reasonable limitations on Mursi’s (or any president’s) power toward which Egyptian democrats can bargain. Limiting rule by decree to extreme or emergency conditions—the Egyptian judiciary’s apparent first gambit—is only the most obvious such limit. Other possible and desirable limitations include time limits on extraordinary powers generally and requirements (including possibly delayed requirements) for legislative or judicial approval.

Like financial markets, political forces often tend to overreact, especially in the short term. Mursi is the first duly elected leader in Egypt’s six-millennial history. So it’s appropriate to give the man a chance and see what he can build. But that doesn’t mean giving him unlimited power indefinitely. Let him do what he can, but let the parliament and judiciary correct his mistakes if he can’t or won’t do so himself.

So, for example, his decrees relating to domestic policy—especially the vital economic sector—might retain force for a specified, short term (say, six months to a year). Then they would expire unless ratified by parliament. In addition (or alternatively) they would become subject to judicial review for consistency with Egypt’s constitution. Delayed parliamentary approval might require a super-majority, so at least a small fraction of parties other than Mursi’s own would have to approve extraordinary (non-legislated) measures.

Another possibility would be for economic measures to require the public and well-publicized approval of a panel of neutral, economic technocrats appointed by the president but with supermajority approval in parliament. The supermajority requirement would insure appointments based on ideological neutrality and technocratic merit, rather than party fealty, religion, short-term thinking, or corruption. They would also give the technocratic experts a patina of legitimacy and at least a smidgeon of opposition support.

It took us Yanks thirteen years after our own Revolution to forge and ratify our Constitution. Even so, as we now know it’s rife with flaws when compared, say, to a simple parliamentary government like Britian’s or India’s. Our Senate “holds” and filibusters allow small minds from very small states to delay and even thwart executive appointments and legislative achievements desired by the vast majority. And we have no way of getting rid of a bad president short of medical incapacity or criminal misconduct.

So we Yanks should be patient with Egypt. It is now less than two years from the very beginning of the Tahrir Square Revolution that, for the first time in six millennia, overturned Pharaonic government and promised something better.

That something need not—and probably should not—look like anything like our Constitution. Our way is not the only way to democracy. It’s probably no longer even the best way.

All Egypt need do to stay on the road to freedom is keep the three branches of government, plus the army, separate and working together, provide some checks and balances, and insure some basic human rights, including minority rights. Then Egyptians will enter the mainstream of modern global society as free and respected partners.

How they do so is up to them. So far, they and the SCAF have shown every tendency to change peacefully, with a minimum of bloodshed. Egypt is not Syria. But the process of change will no doubt involve many twists and turns, lots of hard bargaining, many street demonstrations, and some more regrettable low-level violence. Let the haggling begin!


22 November 2012

Thanksgiving Message 2012: A Baker’s Dozen Reasons to be Thankful

[For a recent post on the South’s future, click here. For a post on support for Obama as a function of state GDP and net tax receipts/payments, click here.]

A Thanksgiving message is a five-year tradition on this blog. It’s especially meaningful for me this year, when I’m abroad. (I will spend the day passing through the Suez Canal.)

Thanksgiving I love above all holidays. It’s uniquely American. It has no nationalist, religious, political or military flavor. It celebrates the peaceful co-existence of two cultures: innocent Native Americans and refugees from religious persecution in England.

Most of all, it celebrates the help that Natives gave the presumably more “advanced” immigrants. Without that help, many of our forbears would not have survived. So Thanksgiving celebrates the mutual self-help that is our species’ chief evolutionary advantage.

Thanksgiving’s main purpose is giving thanks. This year, we have lots to be thankful for.

Many of our blessings are mixed. But that, too, is a form of blessing. As the writer Heinlein observed, “At cusp, choice is. With choice, spirit grows.” The choices we have just made in our election, together with other choices yet to be made, will nurture our spirits and fix our fate.

That, too, is a blessing. We can still chart our own destiny. We just have to do so wisely.

So here, in November 2012, is a list of some of our many blessings, in rough order of importance:

1. We are still a free people. The greatest massing of money and power ever assembled in any capitalist society sought to buy us and failed. We can make up our own minds and still control our own destiny.

2. As the old song says, “We are the world.” Every racial, ethnic, national, cultural and religious group lives among us. Most have equal or nearly equal opportunity to succeed, and all make the most of what chances they have. Immigration and diversity enrich us beyond measure, and far beyond the comprehension of nations that don’t celebrate them.

3. We are beginning to understand what builds true success and happiness. We have rejected a path of lower taxes, less regulation and more power to those who already have too much. The class war is not over; it never will be. But a decisive battle has been won. And our youth, as always, understand that money is not everything. Although its walls may be tarnished, we still live in the shining city on the hill—all of us.

4. We still have capable entrepreneurs. Aging oil buccaneer T. Boone Pickens is still investing in wind power and natural gas. Elon Musk is pushing solar power, commercial space travel, and electric cars. Entrenched industrial barons scoff, but they scoffed at Carnegie, Edison and Jobs, too.

5. We are learning to live within limits and discovering the preciousness of peace. Both lessons are hard for us, as settlers of a sparsely populated continent and the world’s sole remaining superpower. But recent experiences have taught us the cost and unintended consequences of environmental heedlessness and war. As long as nuclear weapons remain only a deterrent, the absence of wars on the territory of major powers that has so far characterized the postwar period is likely to continue.

6. The Internet has made communication and knowledge universal. Only sixteen years have passed since the Internet’s release for general commercial development. The global changes in those few years have been breathtaking.

Among many other things, the Arab Spring and the change in attitudes toward minorities, including gay marriage, could not have occurred without it. We are just on the threshold of a new age in which good ideas prevail and bad ideas die quicker than at any time in human history. We Yanks can be proud of providing the infrastructure for that age.

7. We are learning to cooperate. The urge to circle the wagons and beat our chests like victorious apes is still strong. But the better angels of our nature have prevailed. Russia, which is too far away to have any serious quarrel with us, is no longer our enemy. Our disputes with China are economic and will remain so. The world’s big hot spots today—in the Middle East, still-split Korea, and the pesky Daioyu/Senkaku Islands—are far from our shores, albeit indirectly dangerous. And our youth have many qualities, good and bad, but one of their foremost is teamwork.

8. We still have free speech. Freedom of propaganda disgusts us and nearly overwhelmed us. But common sense prevailed. Our near-absolute freedom of speech still gives us a greater chance to discover truth—in science, politics and daily life—than ever in history.

9. We still help each other. Our big disputes are largely abstract and future-directed. When it came to extending unemployment insurance to 99 weeks and passing the first stimulus bill (which economists of both parties told us we needed to avoid a second Great Depression) we acted, together. There are far too many homeless and far too many poor in America today for comfort. But we are all far better off than less than a century ago, during the Great Depression. Economic recovery is too slow, but it is coming.

10. Except in the few hot spots, the world’s big conflicts today are economic. They take place in meeting rooms, not on battlefields. They involve much the same old pride, nationalism, greed and stupidity as always, but far less blood and far fewer deaths. And, by and large, the people who “wage” these conflicts, bargaining in closed rooms, are smarter and better educated than the emperors and generals of bygone ages. So our future is brighter, even if our present is cloudy and often filled with meaningless words and seemingly endless delay.

11. We Yanks are free to define ourselves again. For three generations, we defined ourselves in reaction to Communism abroad. (Despite our panic attacks and Vile Joe McCarthy, there never was any real threat of it at home.)

Often our reaction was extreme. Abysmal author but successful polemicist Ayn Rand was our first apostle of extremism. Barry Goldwater pushed us into its nearest approach to national influence.

But every serious Communist threat expired a generation ago, with the Soviet Union’s collapse and China’s earlier transformation into single-party authoritarian capitalism. The two generations of Cuban refugees who defined themselves by raw hatred for Fidel Castro are passing from the scene. In their wake they are leaving a part of the Old South—Florida—transformed by an influx of retired Northerners and a much mellower range of Hispanic immigrants.

Florida is now uniquely cosmopolitan and international and likely to be Democratic from here on out. At a minimum, it will never return to traditional Southern isolationism.

Like anti-Communism, Islamophobia is on the wane. In a nation founded on religious tolerance, it never really had much hold outside the usual pockets of ignorance. Now the global failure of international terrorism, coupled with the inherent moderation of the Arab Spring, have taken the wind out of its sails.

So we Yanks need no longer define ourselves by what we hate. Like Florida, we are all free to define ourselves by our aspirations and multiple cultures.

12. We are still the principal heirs to three glorious global traditions. In the last half-millennium, our species has learned: (1) individual responsibility and freedom of conscience, (2) personal accountability of leaders, especially at the very top, and (3) real economics, including the value of free markets and competition and the evils of monopoly in any form.

These are seminal human achievements. We Yanks have been at the forefront of the last two and key modern exponents of the first.

Recently, we have fallen behind a bit on (2) by failing to subscribe to the International Criminal Court. But Europe has taken up the slack. If our species can continue realizing these three principles in practice, and if we can avoid killing ourselves with nuclear fire or climate change, our common human future has no limits.

13. Our own Yankee future is still largely in our own hands. We still have the world’s most powerful economy. We still have the world’s best military. We still have a degree of market isolation and independence, even in energy, if we choose to preserve it. Despite our recent madness, the rest of the world still looks to us first for leadership, as we refine and perfect these three great principles of the Second Millennium in the Third.

Our future is, as always, precarious, but not nearly as much as during the Cold War. The values of co-existence and cooperation that we Yanks honored so long ago with our very first Thanksgiving are increasingly universal. We are no longer alone in a world of monarchs, emperors, butchers and despots.

These are no mean blessings. They are good reasons to give thanks, right here, right now, in November 2012. Happy Thanksgiving!


20 November 2012

GDP for Obama II, and Who’s Really a “Taker”

[For comment on the future of the South, click here.]

After the 2008 presidential election, I ran a spreadsheet on the fractions of national GDP of states that preferred President Obama and John McCain, both by any margin and by a margin of 20% or more. The results, shown in this 2008 post, were instructive.

Nearly three-quarters of the nation’s productive capacity preferred Obama to McCain, and over a third preferred him by 20% or more. A little over one-quarter of the nation’s productive capacity preferred McCain, and only 5% preferred him by a margin of 20% or more.

The following table shows the same numerical analysis for this year’s election and compares it to the results for 2008:

Fraction of National GDP Preferring Obama and his Opponents
Year and OpponentStates Preferring Obama by 20% or MoreStates Preferring ObamaStates Preferring OpponentStates Preferring Opponent by 20% or More

The results in 2012 were not quite as overwhelming a productive rout as those in 2008. But still, two-thirds of our state-by-state productivity preferred Obama, and over one quarter preferred him by a margin of 20% or more. Less than one-tenth of our productivity preferred Mitt by a similar margin.

Another instructive numerical exercise is analyzing which candidate’s supporters are net “takers” of federal taxes. The latest easily available data of state-by-state federal tax payments is for 2006. I took these data and made a spreadsheet for the same categories of states (from the 2012 election) in the preceding table. In order to make the numbers meaningful, I took population-weighted averages of the state-by-state tax receipt/payment ratios in each category. The results are as follows:

Ratios of 2006 Federal Taxes Received to Taxes Paid
(Population-Weighted Averages)
YearStates Preferring Obama by 20% or MoreStates Preferring ObamaStates Preferring MittStates Preferring Mitt by 20% or More

What does this table mean? On a per-capita average, states that voted for Obama received only 91 cents for every federal tax dollar they paid, while states that voted for Mitt received $1.22. The more lopsided the margin, the more lopsided the receipts: states that preferred Obama by 20% or more received only 85 cents for every dollar of federal tax they paid, while states that preferred Mitt by the same margin received $1.36.

This analysis puts Mitt’s “takers” rant in perspective, doesn’t it? State by state, the folks who voted for him are “takers,” and the more they preferred him, the more they took.

Sources: State-by-state GDP fractions for 2011 came from this BEA interactive table. The 2006 state-by-state ratios of federal taxes received to paid came from this table (scroll down). The state population figures for population-weighted averaging were 2010 figures from this table. The state-by-state voting figures came from the tables in the Washington Post, for 2012 here.

Joe Klein, Watching Fox, and the Civil War’s Final End

Of all the so-called “mainstream” pundits, Joe Klein of Time Magazine is the most clear-eyed, and the best writer. His column in the venerable weekly—all by itself—justifies paying the price of a subscription.

Klein has another virtue. Unlike many print pundits, he does not seek visual celebrity or extra income by appearing incessantly on TV. At least I’ve never seen him on anyTV news show.

In resisting the temptations of video celebrity, Klein recognizes an essential truth of modern media. Whether on line or on dead trees, “print” is a medium cooler, more reflective, and ultimately more accurate than video.

Print recognizes a basic evolutionary truth. Our species requires processing—what we call “thought”—to reorganize the impressions of our five senses into anything like fidelity to objective reality, let alone perspective. Sleep, it turns out, assists in that processing, which is why we go mad without it.

Writing both reflects and requires mental processing. Impromptu speaking and herky-jerky camera tracking do not. It is doubtful whether civilization as we know it could have emerged without writing.

As evidence of these points, you need look no further than Klein’s column on our recent election, which I just read belatedly (Time Magazine, Commemmorative Election Special, November 19, 2012, page 39, 41).

The column’s title, “Obama’s Mandate for Moderation,” gives away its principal point. Both the President’s re-election and Mitt’s last, desperate, pirouetting “pivot” signaled our electorate’s innate distaste for extremism.

Unlike so many conventional wise men, Klein also noted that circumstances now make moderation more, not less, likely. Those circumstances include the very real possibility of the GOP becoming a permanent minority party, except on a limited regional basis.

Klein’s insight went even further. In his lead paragraph, he wrote:
”The South, though a more complex region than ever before, won’t rise again until it resolves the issues that have marked its difference from the rest of the country since the land was colonized.”
In other words, after 147 years the South has finally lost the Civil War. It has done so despite a century-long counter-revolutionary ideological movement. It has lost despite driving the nation ever rightward since the end of World War II. And it has done so despite numerous guerrilla ideological victories, including causing the word “Southern” to predominate in the names of businesses (over the word “American”) far north of the Mason-Dixon Line.

The South’s final loss came not with a bang, but a whimper. Its governing culture of bossism, racism and European-style aristocracy (once based on land, now on wealth generally) may continue in some places, such as Alabama, Mississippi and South Carolina, for another generation or two.

But the South has lost the ability to command ideological allegiance, even attention, from the vast center of America, let alone its more productive parts. The paternal authoritarianism of John Boehner and Mitch McConnell’s barely suppressed smug smirk have morphed into a cautious realism now that their best days are over.

It will take some time for this truth to sink in, especially in the South. The South’s beating heart (in Viginia) went decisively for a “black” man. The seat of its modern industrial renaissance (in North Carolina) did so in 2008 and almost (but not quite) did again this year. Not only that, the President is a “black” man whose policies the South’s propaganda machines—and one of the best salesmen ever to run for president—characterized relentlessly (if inaccurately) as “liberal,” “socialist” and extreme. Yet he won a clear, nationwide victory.

But what struck me most about Klein’s incisive piece was not these observations, accurate and unconventional as they were. I have made them myself on this blog.

What struck me most was his confession that “I watched Fox . . . for much of election night.”

I wish I could do that. For me watching Fox is like drinking spoiled milk mixed with horse shit while listening to fingernails screeching on a blackboard. I can’t stand the bullying tone, the over-the-top smugness, the utter ignorance, and the endlessly repeated conventional lies. I can’t stand to think that my countrymen actually support, for profit, an institution whose nearest counterpart is the Soviet organ Pravda in the USSR’s heyday.

Fox’ “fair and balanced” slogan even mimics Pravda’s name, which means “truth” in Russian. What real journalists tout the alleged verity of their product in their journal’s name or slogan? The good ones do the best they can to reflect reality and let readers judge.

But I digress. Klein, of course, is right in watching Fox. Reality includes not just the logical and sublime, but also the bad, the ugly and the vile.

Like it or not, the American right-wing propaganda machine, of which Fox is the linchpin, is part of our society. And so it bears watching. Klein took favorable note of Fox’ early capitulation to the reality of the election results, despite Karl Roves’ protests.

In terms of dead and wounded, Gettysburg was one of the bloodiest battles in which Americans have ever fought. But as Lincoln recognized in his famous short speech, it was also the turning point of our Civil War.

And so it is today. The ugly, hard-fought 2012 election was the decisive ideological battle against the South’s century-long attempt to retake the nation peacefully.

Sometimes it may not seem so. The zombie still walks and talks behind Mitch McConnell’s smug smile.

But the zombie is now lifeless. The living inhabit a multi-racial, multipolar, modern world. The old plantation life of soft summer evenings with oppressed people singing soulfully in the deep background is truly gone with the wind.

From our new world, democratic people of all colors, races and cultures will take our noisy civilization to the stars—if we don’t kill ourselves with nuclear fire or climate change first. The South’s traditional culture will take no part in that advance; higher forms of human civilization will replace it, slowly and inexorably, as Cro-Magnons did the Neanderthals.

P.S. Secession. And if the South really wants to secede, this time we should let it, including Texas and any other fellow travelers. Just let them leave their nukes at the door, which they had no hand in developing. And let them pay their fair share of our national debt, plus all arrears for net federal receipts over taxes paid.


12 November 2012

Denying Reality, or Why the GOP’s Internal Reform Will Take Some Time

My father was a Hollywood screenwriter. He used to tell a droll story about the arrogance that comes from manipulating “reality.”

A half a century or so ago, the New York Times used to pick the books on its best-seller list by tallying sales at a handful of New York City bookstores. Those stores’ identities were supposed to be secret, but a few New York literary agents found out.

Some of these agents offered their author clients a special service. For a small fee, they would surreptitiously buy enough books from the right stores to make any book a best seller.

One well-known author wrote a dog of a book. It didn’t sell well, so he hired an agent to perform this ploy. After the book became a “best seller,” he tried to hawk it to movie producers in Hollywood. No one bought.

In frustration, the disappointed author made a personal visit to one of the legendary Hollywood producers of the era, someone like Louis B. Mayer. The producer was patient. He listened to all the author’s arguments about how good his book was. Then, after the producer finally rejected the dog yet again, the author screamed, “But it’s a best seller!”

That story came to mind as I read various accounts of the GOP’s desultory and cursory “reviews” of its recent electoral loss. Intransigent GOP operatives keep pointing to their party’s continued control of the House as reason to avoid serious party reform. It’s not our message, they insist; we just need a better messenger than Romney. But like the dog-book’s “best-seller” status, that “win” came from manipulating the system, not honest competition.

Today everyone knows the vast majority of House seats are uncompetitive. The fraction of “safe” seats for one party or the other varies between 90% and 95%, depending upon what report you read and when.

The reason is simple: rampant gerrymandering of House districts. Over the last two decades, one or the other party, upon gaining electoral power in a particular state, has carved out “safe” districts for its partisans. Often both parties conspired to construct safe districts for their respective partisans, leaving only a handful of “swing” districts in which candidates from either party might win. The result has been a vast winnowing of our population—House district by House district—into red and blue. (Senatorial districts are generally too large to permit the same manipulation.)

The GOP has been by far the most successful of the two parties in gerrymandering. Why? Because operatives like Karl Rove have understood for years that policies favoring angry old white men were not America’s future. Lacking attractive policies, they turned to manipulating the system with gerrymandering and vote suppression. Meanwhile, the Democrats naïvely sought to win by making districts fairer and expanding voter participation, because they are the right things to do.

So now, after voters have decisively rejected GOP candidates in two presidential election cycles, so-called “mainstream” GOP “thinkers” point to their durable majority in the House as evidence of the attractiveness of their program. Isn’t that like the author of the dog-book screaming, “But it’s a best seller”?

I haven’t made a complete analysis of the GOP’s gerrymandering efforts over the last two decades. But I have looked at John Boehner’s district in southwest Ohio. It’s a decidedly odd shape, self-evidently designed to pick up various conservative far suburbs of Cincinnati. It also has a grotesque pseudopod that envelops Wright-Patterson Air Force Base and its housing communities. This gerrymandering has enabled Boehner to survive a challenge by a superbly attractive young Democrat.

Another prime example of denying reality is climate change. The massive devastation wrought by Sandy came so soon after Irene, which came so soon after Katrina. Then there was the rare Colorado-like powder snow that partially buried New York City’s urban canyons last winter. All these weirdly devastating weather events, coming in such historically quick succession, are starting to convince many people that there is something to this theory of global warming after all.

But Fox and its shouting bullies continue to deny it. They spout odd, irrelevant and often erroneous “facts” from a complex science about which they know nothing. Mainstream American thought is eroding the ground out from under them, if only because our nation’s media, which are largely headquartered in Manhattan, don’t want to see their home battered yet again.

I could do on and on, but you get the idea. Rupert Murdoch’s vast media empire, with willing complicity from much of our own native media, has converted our television into a vast fictional forum filled with gossip, distortions and lies. (This, among other things, is why Mitt took so long to concede the election; his GOP handlers believed their own lies.)

As a result, vast segments of the US public, especially those that rely on Fox for information, have no clue what is actually transpiring in their own country, let alone the world.

But our youth—the so-called “Millennials”—increasingly don’t watch TV much at all. They text and get their “news” from the Internet, social media, and each other. As a result, Fox’ Empire of Lies is contracting, and with it the GOP’s capacity to delude itself and voters fruitfully.

The past and present state of affairs has allowed Republicans to win a number of House elections with a cartoon ideology. They’ve done so, in large part, by relentlessly bashing government, while ignoring the very real incompetence and oppression that big business inflicts on helpless customers. The result is people—and districts!—that vote Republican reliably, but whose “thinking” involves such gems as “Get your government hands off my Medicare!”

True believers are always hard to dissuade. And so it is with the true believers that Fox has brainwashed and the GOP has exploited. Fox and the GOP have spent decades propagandizing people to believe in simplistic abstract ideology, bashing government, exploiting waning racism in the South and irrelevant “social” issues everywhere, and manipulating the system for their own benefit with gerrymandering and vote suppression. And now, after two successive losses to a super-competent “black” man have thrown their whole direction into question, they shout “But it’s a best-seller in the House!”

Intransigence, hubris, vanity, and refusal to introspect are hardly attractive human qualities. But they have one “advantage”: they are durable. When they infect a whole political party, they produce something like the Communists in the Soviets’ heyday or our GOP today.

It might take a long, long time for the GOP’s so-called “thinkers” to come around, let alone its brainwashed rank and file. It took the Soviet Communists some 74 years, from 1917 to 1991. Many Russians are still Communists at heart, long after their system morphed into an authoritarian form of state capitalism.


08 November 2012

Keystone: An Engineering and Economic Atrocity

[For an 11/14 update to this post, click here. For my final thoughts on Mitt, click here. For a brief comment on Huntsman at State, click here. For my recent post on why our two parties might now work together for the common good, click here.]

One of the first things re-elected President Obama must do is decide whether to give the proposed new Keystone Pipeline a “go.” Most of the opposition so far has come from environmentalists. They have concluded that building the pipeline will damage fragile wilderness and that operating it—with all the risks of spills—will endanger wilderness, wildlife and maybe even farming and human settlements.

But there are much more persuasive than environmental reasons to reject Keysone. The whole project would be an engineering and economic atrocity. Here’s why.

Take a look at a map. Together with a much shorter stretch of existing pipeline, the proposed new Keystone would take heavy, tar-sands crude from northern Alberta, halfway across Canada and all the way across the US (from north to south), to our Gulf Coast refineries.

Once refined, what markets would the resulting gasoline and diesel serve? Dallas-Forth Worth and Houston are big cities and are relatively close. But no one is about to build a transcontinental pipeline just to serve them. The big markets for fuel are on the East and West Coasts and in the Midwest. It would be hard to find a place (inside the US) farther from them than our Gulf Coast.

What does that long distance mean? It means that Keystone’s construction costs, the entire transcontinental pipeline’s maintenance costs, its risks of spills, and the costs to transport the refined fuel are larger than for almost any conceivable alternative. So is the risk of pipeline terrorism: the longer the pipeline, the greater the risk of mischief.

No engineer in his right mind would plan such a Rube Goldberg scheme without considering every possible alternative first. The driving distance from Houston to Chicago is 1,086 miles, to Los Angeles 1,546 miles, and to New York City 1,627 miles. Why take crude from northern Alberta to our Gulf Coast for refining there, and then transport the refined fuel over a thousand miles to East Coast, West Coast and Midwest markets? The answer involves a little bit of engineering and a lot of economics.

One key motivation for the plan is export. The Gulf Coast has not just the highest-capacity refinery complex in our nation. It also has biggest crude-oil import-export complex.

That’s where the vast majority of oil shipments from the Middle East come in. If you have pipes and piers that let you offload crude oil from a Saudi supertanker into an onshore tank, you can reverse the flow and export oil anywhere in the world. We’ll discuss Big Oil’s motivation for doing so in a moment.

A second key motivation for using Gulf-Coast refineries is capacity. The Midwest has a chronic shortage of refinery capacity, which is why Midwest gasoline prices are chronically high. At the same time, the Gulf Coast refineries have excess capacity, due to cars’ increasing fuel efficiency and the effect of higher fuel prices in getting drivers to avoid unnecessary trips.

The “solution”? Refine gasoline and diesel in the Gulf Coast and transport the resulting gasoline and diesel to the Midwest. That and export are precisely why Big Oil reversed the flow of an obscure pipeline spur called “Seaway” last summer.

Here the alert reader might ask a simple question. Wouldn’t it be cheaper to build a couple of new refineries in the Midwest than build a trans-Canadian and transcontinental pipeline to the Gulf Coast, operate that pipeline continuously, and transport every gallon of gasoline or diesel a thousand miles to the Midwest? And wouldn’t it be quicker and cheaper to supply those refineries with light, sweet crude from our very own Bakken shale “gusher” in North Dakota and Montana? (Bismarck is only 834 miles from Chicago.)

Big Oil is greedy, but not stupid. There must be sound economic reasons for it to propose what, from a geographic and engineering standpoint, looks like a Rube Goldberg scheme.

There are two economic reasons for this engineering atrocity. First, the Gulf Coast refineries not only have excess capacity. They are also old and mostly fully depreciated, i.e., fully paid for. By using them at closer to full capacity, Big Oil avoids the need to pay for building any new refineries at all.

But examined more closely, this reason makes no sense. Building a pipeline like Keystone is much more expensive than building a new refinery complex. The pipeline is also much harder to permit: the refinery is localized, while the pipeline must go through numerous localities, some of which are populated or environmentally sensitive areas. Every state and local jurisdiction has its own environmental review and permitting processes. And if Big Oil used light, sweet “fracked” crude from the Bakken (which is easier to refine) to supply the Midwest, the refineries would be even cheaper.

Petroleum engineering and science also have marched onward since the fully depreciated Gulf-Coast complex was built. Building a much smaller complex in the Midwest (to serve it, not the whole nation) would be much cheaper now than then. And the result, being more modern, would produce more fuel per barrel of crude and less toxic effluent per gallon of fuel.

It doesn’t matter whether you compare new refinery expense to the enormous expense and risk of building Keystone, or whether you consider the engineering and transportation advantages of local refineries. Refining fuel for the Midwest in the Gulf Coast makes no engineering or economic sense. Supplying the Midwest by bringing heavy crude from Alberta to the Gulf Coast makes even less sense. Yet there still must be a good economic reason for this otherwise senseless proposal. What is it?

The answer has to be export. No other answer makes sense. As our domestic appetite for oil and its derivatives levels off and declines, Big Oil looks wistfully at foreign markets, where prices for crude are 18% higher. It looks even more wistfully at gasoline and diesel prices, which are more than double ours, even before taxes.

That’s the real driver of Keystone: the economic isolation of our US oil-and-gasoline markets. Our market isolation makes our gasoline and diesel fuel much cheaper than their European and Asian counterparts. Big Oil wants to change all that.

If Big Oil could globalize domestic markets for crude oil, gasoline, and diesel, two things would happen. First, the longstanding spread between the West Texas Intermediate (American crude) benchmark and the European “Brent” crude benchmark would disappear. At a minimum, WTI would come much closer to Brent, with the difference probably not exceeding the (much lower) transatlantic shipping costs of crude. If that happened, Big Oil’s revenue for selling crude would increase by close to 18%, without any additional exploration or extraction on its part.

Globalizing markets for refined fuels would have a much bigger prize. It would more than double Big Oil’s revenue from a gallon of gasoline or diesel. Because costs would not increase at all, profits would much more than double. For example, if a gallon of gasoline cost $3 to produce and distribute and sold at retail for $3.50, doubling its retail price to $7 would increase profit from 17% to 133%.

Big Oil is in business to make a profit, the bigger the better. So it’s not surprising that it would propose a massive infrastructure change that makes no sense from an engineering perspective. Profit is the driver here.

But what do we, the people, get from this proposal? Mostly negative things.

We’ll inevitably get higher prices for domestic crude. We’ll get much higher prices for gasoline and diesel. We’ll get all the greater environmental danger and risk of terrorism that a transcontinental pipeline entails.

But even that’s not all. We’ll reduce our energy independence to the extent that our own domestic fossil fuels end up abroad. We’ll reduce our domestic reserves of crude oil to the same extent, thereby reducing our long-term national security. (We’ll reduce them either by sending imported Canadian crude abroad and using up our domestic supplies or—as Big Oil has proposed—using the Canadian crude to supply domestic needs but selling our cleaner fracked Bakken oil abroad.)

What will we, the people, get in exchange? Those who own stock or long options on Big Oil (like me, I confess), will get richer. The rest of us will get poorer and more insecure. That seems like a terrible bargain.

It’s not as if Big Oil has a dim future otherwise. In the long run it might, as inertia-ridden human civilization looks to other sources of energy. But that won’t happen in a big way for at least another decade or two. In the meantime, the developing world is engaged in an orgy of road and car building, which will insure increasing global demand for oil-based fuels for the foreseeable future. Coupled with flat or decreasing supply, that means ever-rising prices.

As global economic development accelerates, the prices for Big Oil’s products will steadily increase without any additional effort on its part. The result will be like getting money from Heaven. That’s why I’ve invested in Exxon Mobil.

But Big Oil is not content with waiting for steady and inexorable price rises as the global economy recovers and spurts ahead. It wants to make even more by exporting and exhausting prematurely the priceless geological heritage that nature gave us and our Canadian neighbors. In so doing, it wants to kill the market isolation that has given us cheap energy for over a century.

Once we have exportable oil, gasoline and diesel, our WTO agreements probably obligate us to sell them abroad to all comers without discrimination. But nothing in the WTO obligates us to massively change our energy infrastructure to make that possible.

If we’re going to stop this process of selling our precious fossil-fuel reserves out to foreign buyers, and losing our market isolation and our cheap energy, we have to do so now, with Keystone.

Big Oil wants to increase its profit massively, in the shorter term, by serving the rest of the globe with our and Canada’s precious fossil-fuel reserves. We should decline to let it do so and reject the engineering and economic atrocity that Keystone would be.

Update: Motives and Consequences

It’s hard to see human motives without a mind reader. So for a moment, let’s forget about profit motives and think about consequences.

Suppose the US government rejects Keystone. What happens then?

Well, the big “horrible” that Big Oil wants to scare us with is a Canadian pipeline from the Albertan tar-sands fields to an export terminal somewhere in British Columbia. So suppose the Canadians build one, or (more likely) Canadian subsidiaries of US Big Oil do. What then?

Well, Canada is member of the WTO, too. Just like us, it has to sell its wares to any other WTO member without discrimination in price or quotas. Those wares include crude. So we can buy the Canadian crude in, say, Vancouver, for the same globalized price that Japanese, Europeans or South Americans pay.

What difference would that make in our domestic prices of gasoline and diesel fuel as compared to Keystone? Not much. It might even reduce them.

If we wanted to bring the crude to the Gulf Coast for refining there, as with Keystone, we could do so in tankers, just as we now bring crude from Venezuela or Saudi Arabia. Against the cost of tanker transport, we would have to weigh the cost of building and maintaining Keystone. That cost is enormous, quite apart from the possible environmental damage, which Canadians would have to bear if the pipeline was theirs. (That pipeline would also be much shorter than Keystone, so the Canadian risk would be less.)

Probably the transport-cost balance would be a wash. It might even cut in favor of tankers, at least until the capital investment in Keystone were fully amortized and the financing expenses paid off. Either of those events would probably lie at least a couple of decades away, if we approved Keystone.

But suppose we had sufficient refining capacity in local major markets. That is, suppose we decided to send the Canadian tar-sands oil from the hypothetical Vancouver terminal, directly to major US fuel markets for refining there. Then Los Angeles would be lot closer to the Vancouver source, and the Gulf Coast no farther away.

Only East Coast and Midwest markets might suffer, and then only from the minor cost of tanker transport, which we know is far less than the present differential between Brent and WTI pricing. (This analysis assumes that our current Bakken-shale “gusher” of light, sweet, “fracked” crude from North Dakota wouldn’t be available to East Coast and Midwest markets, which are a lot closer to that source than Vancouver is.)

So would much be missing insofar as concerns our domestic supply from Albertan sources? No. The only thing that would be missing, as compared to Keystone, would be the ability to refine Canadian crude into gasoline and diesel in the Gulf Coast and export the refined products, therefore destroying our market isolation for them. (Actually, we could do that, too, by bringing the Canadian crude to our Gulf Coast in tankers, but doing so would be a lot more transparent than pipelining it in.)

Also missing would be the ability to export the crude from our North Dakota Bakken gusher. Keystone, whose path is not too far from that gusher, would permit us to export that new bonanza, further destroying our market isolation and globalizing oil and oil-derived-fuel prices, this time from our own domestic reserves, not Canada’s.

Perhaps it’s unkind to impute unconfessed profit motives to Big Oil. But when the only alternative—and the one Big Oil most wants us to fear—produces almost identical effects on domestic supply, and when the only conceivable difference is export, you have to accept basic logic. Big Oil may be greedy, but it’s not stupid.

Huntsman at State?

According to Yahoo News, the Obama Administration is considering Republican John Huntsman, Jr. to replace Hillary Clinton as Secretary of State. Unfortunately, Huntsman is still runner up to Senator John Kerry.

There are at least six reasons to prefer Huntsman to Kerry, all of them good.

First and most important, Huntsman has by far the most relevant expertise. He speaks fluent Mandarin and served almost four years as our ambassador to China, sheparding our (and the globe’s!) most important bilateral relationship, by far. With trade issues still rankling both countries, and with the chance of a trade or real war between Japan and China, it is vital for us to have the most expert possible Secretary of State, whose command of China’s official language inspires respect and trust.

Second, Huntsman has six years of solid experience in national administrative positions in international trade and commerce. Kerry has no similar experience.

Third, one of our most important tasks during the next four years will be turning the GOP back into a real political party. Right now, it is a collection of extremists led by people whose goal is to bend the rules to the breaking point in order to win at all costs.

We can’t long survive without a rational and credible opposition party. By giving a well-qualified Republican a prominent position in his second administration, the President could jump-start the GOP’s internal reform process from outside.

Fourth, everyone knows we need more bipartisanship, but no one seems to have any real plan to get there. Huntsman was not only the only qualified GOP presidential candidate. He is now self-evidently the one best qualified for State. By giving Huntsman a prominent position in his second administration, the President could signal that Republicans have a role to play in government, but only if they are well qualified by education and experience, rational and fact-centered, and willing to play nice with others.

Fifth, virtually all of the just-ended two-year campaign was a distraction from our real national problems, which have festered for an average of 17.5 years. Most of them are domestic, but some—like climate change, economic inequality, and our boated and inefficient military-industrial complex—are strongly influenced by foreign affairs. Now that the disastrous campaign is over, the President needs to recover his Lincolnesque quality and appoint the ablest person to each job, regardless of party.

Sixth and finally, John Kerry is not nearly as well qualified as Huntsman. It would be a gross mistake to award such an important job based on party loyalty or gratitude for past service. Kerry is a fine man, and he gave more to Obama’s campaign just ended than he gave to his own eight years ago. He deserves something. So give him Veterans or Labor, but not State. Please.

Why Mitt Lost

The following post is, I hope, my last ever on Mitt. We dodged a bullet in keeping him out of the White House, the speed, size, power and aim of which we’ll never know. But the consequences of his election would have ranged from mildly bad to disastrous.

Fortunately for us and our species, his political career is over. But before he falls into the obscurity he so richly deserves, it’s useful to ask a single question: why he lost.

Let me count the reasons. They are many and sundry. But here are a dozen, in roughly declining order of importance:

1. The job of president is a political one. Mitt is unqualified by political experience, political achievement, temperament and judgment to be President of the United States. The only reason he got so far was that all the other Republican candidates, except for Huntsman, were even worse.

2. Despite his consummate salesmanship, Mitt was and is an unelectable, undiplomatic, egotistical, insensitive jerk (1, 2 and 3). His “47%” gaffe, like all the others, was not just a slip. It was who he is.

3. Mitt was, and remains, an investment banker, of the private-equity subspecies. Weren’t they the folks that, barely four years ago, destroyed the global economy, throwing so many out of homes and jobs?

4. Despite Mitt’s salesmanship, the GOP’s program, after the debates, was almost precisely the same as Dubya’s. A pig with lipstick is still a pig.

5. Our Founders and the people who won the West and built this nation were neither entrepreneurs nor lone gunslingers. They were deliberate social engineers and community organizers. They traveled West together, in large groups. They helped each other raise barns, bringing European civilization to a wilderness. People know in their history and their hearts that the myth of extreme individual self-reliance only goes—and went—so far.

6. The GOP’s “coalition” has become a bizarre collection of single-issue extremists. To the rest of us they look and sound like a mob. Tuesday’s electoral rout didn’t reach Goldwater landslide proportions only because of Mitt’s superb salesmanship and Fox’ effective propaganda. But they weren’t enough.

7. People got tired of lies. As the lies went more and more over the top, people got disgusted. Anybody care to bet when Chrysler will move Jeep to China?

8. Americans are still a compassionate people. At least most of us are. Dubya made “compassion” just a slogan. Mitt ignored it entirely, preferring theory and ideology. His half-hearted “change” in the debates was too little, too late.

9. The strategy of keeping the country in gridlock and blaming the President didn’t work, and rightly so. [1 and 2]

10. Our country has changed. It’s less white, younger, hipper, savvier, less TV-reliant, and far more tolerant. Bigoted American Taliban are not the source of our nation’s vitality or long-term growth, whether in population or in productivity. Immigration is.

11. Those who care about climate change and foreign policy (and worry about war) know that the rest of the world wants an America that acts on facts, evidence and reality. Fox’ alternative reality is just not good enough. Real reality intruded on Mitt’s and the GOP’s narcissistic optimism only before his concession speech. That was why it was late.

12. Hatred, intolerance, bigotry and disdain for real people’s suffering are not the American way. If they ever become so, we will lose whatever is left of our “exceptionalism.”

Only points 1-3 and 7—four points out of a dozen—are messenger or messenging issues. The majority are issues of substance. If the GOP persists in trying to take the country backwards, and in believing it only needs to “communicate” better, it will become a permanent minority party far quicker than anyone suspects.

The GOP needs a better message, not just a better messenger. It will never find a better salesman than Mitt [1 and 2], or a better marketing department than Fox. The problem is the product, not the selling.

There is room in America for intelligent, moderate conservatism. There is no room for a conservatism that ignores reality (take heed, Fox!) and seeks to turn the clock back to an imaginary, golden past. Americans can believe a lot, but they don’t believe in time machines, and they don’t want to go backward. Thank God for that!


07 November 2012

Working Together

The President’s win last night was more relief than a triumph. The triumph came in the victories of Elizabeth Warren, Claire McCaskill, and up to twenty other women in the Senate.

Pardon my reverse sexism, but I’m a firm believer in women as compromisers and deal-makers. When grown men start squabbling like two-year-olds, they need a mother. Women are also healthy cynics on financial gambling, which seems to come from the Y chromosome. In any event, it’s about time.

My eyes misted a bit when the networks declared Obama the winner, and again when he won nearly all the swing states. But there were no tears like four years ago.

After all the hoopla was over and I turned off the TV, one of conservative commentator David Brooks’ best columns came to mind. It was about the aftermath of World War II. In it, Brooks described the sobriety and humility that touched our nation after winning the worst war in history.

There was no triumphalism. No one in any position of power wanted to crush our enemies, who had already surrendered unconditionally. No one wanted vengeance, as European leaders had demanded after World War I.

We were all too exhausted and relieved that it was over even to think of that. Instead, we adopted the Marshall Plan, rebuilt our enemies and turned them into model democracies. We did what Jesus would have done. The results today are the world’s first, third and fourth most successful economies.

The campaign just ended was a lot like war. It was all attack and very little uplift, on both sides.

I don’t mean to imply a false equivalence. I will go to my grave believing that the GOP started it all, very early, by adopting Rush’s plan of making the President fail, and doing so in his first days in office.

And the GOP was by far the worst attacker. When the President didn’t fail, it did the next best thing: it set out to make believe he had failed. As the President’s first term devolved into a two year-campaign, it accused him of doing all he nasty things it had done to run him down.

In his own way, Romney ran a campaign that was every bit as dirty and dishonest and John McCain’s four years ago. The recent hail-Mary lie that Chrysler was about to move its Jeep plants to China was merely emblematic. And while Mitt’s concession speech was gracious, it wasn’t nearly as gracious and apologetic as McCain’s.

So our electoral war was nasty, brutish and long. But it’s over now. It’s time to think about healing the hurt and running a country that’s been nearly dead in the water for close to two years.

As Lincoln said after our greatest division, “a house divided cannot stand.” We’ve been divided for too long. We’re starting to lose not only our focus and edge, but our international prestige and the world’s patience.

Unfortunately, we still have the main ingredients of gridlock: a Democratic Senate and Republican House, fueled by Tea-Party fervor. So how can things be different?

Of course they won’t be different unless both parties try hard. But there are three good, practical reasons to try much harder this time.

First, for four more years we will have a centrist President who has compromise and cooperation in his soul. It’s not just his 2004 “no red or blue America” speech, or his book on bipartisanship, “The Audacity of Hope.” It’s not just his attempts to make deals on health-insurance reform, the debt deal that ultimately led to our Fiscal Cliff, and the American Jobs Act. It’s also his bending over backwards so far, especially on tax cuts for the wealthy, that progressives like me started to complain.

Notwithstanding the caricature the GOP painted of him in order to win this election, the President is a dealmaker and compromiser. If the GOP strides to meet him, he will go more than half way. All he needs is a willing “partner for peace.” He made yet another overture of that kind in his acceptance speech last night.

The second reason why there should be compromise is a practical one: time is not on the GOP’s side. From the day of the President’s inauguration, the plan was to make him fail so that voters would blame their misery on him and dis-elect him. That ploy almost worked, in part because Mitt is so good a salesman.

But a miss is as good as a mile. The ploy always depended on the laws of economics. As all competent economists knew and have told us repeatedly, recessions caused by financial crises last at least several years. The GOP gambled on recovery coming too slowly to re-elect the President.

That almost happened, but the GOP lost. Next time it will lose much bigger. After four more years, the economy will be much improved, if not fully recovered. (Not much of this will have anything to do with politics, but that’s how economies work.)

So there will be no blame to allot, only credit. The GOP won’t get much credit if it blocks every presidential initiative and lets us fall over the Fiscal Cliff.

The final reason for the GOP to compromise is demographics. If you looked carefully at the TV screens last night, you would have noticed two things. The folks at the GOP campaign were old and white. The Dems were younger and rainbow colored.

If you knew nothing else about the election, you could have told who won just by looking at those two rooms. The Dems’ room looked like America’s present and future. The GOP’s room looked like America’s past.

Demographics and attitudes changed enough in four years to re-elect an African-American president in a still-racist country with a still-ailing economy. They also changed enough to pass several state initiatives approving gay marriage.

Just think of what will happen in another four years. The GOP will have to meet the needs of all the good-looking, multicolored youth in that roomful of Obama supporters, not just for good jobs, but for real deficit reduction, sustainable energy independence, affordable education and health care, and a climate that doesn’t continually pound our South and East coasts with storms like Katrina and Sandy.

If the GOP won’t or can’t do that, it will go the way of the Whigs.

The writing is on the wall. The keep-the-nation-dead-in-the-water-and-blame-the-President-strategy failed. It will fail worse next time. Continuing the same strategy with a much-improved economy and a younger, more savvy, more diverse and angrier electorate would nicely fit Einstein’s definition of insanity.

It’s possible that GOP leadership is insane in that sense. Many Tea Partiers seem that way. But it’s also possible that the GOP played the blame game because its last president’s record was so dismal and it had nothing else to offer.

The next few weeks and months will tell. Was the strategy of blame a symptom of insanity? Or was it the product of a very cynical and nasty—but quite rational—GOP leadership believing that winning is not just the most important thing, but everything? If the GOP maintains the same scorched-earth obstructionism with an improving global economy and an electorate growing younger, more diverse, more demanding and better informed, not even Fox’ alternative reality—to which the GOP screens were tuned all last evening—can save it.


04 November 2012


[For a detailed comparison of Obama’s and Romney’s achievements, click here. For comment on the kerfluffle re Libya, click here.]

Dear Voters,

With all the lies flowing around us, it may be hard to know what to do. It may even be hard to drag yourself to your polling place. But it ought to be easy to know what not to do. As you mull your votes and your responsibilities as citizens, please:

1. Don’t vote for blame.

One campaign is founded on blame. It blames the President for the deficits and wars that Dubya started, and for the lingering effects of the Crash of 2008, which economists say should take many years to dissipate. It blames him for the gridlock in Congress, which dates back to Bill Clinton’s presidency. It would blame him for Original Sin if it could get away with doing so. Don’t base your vote on blame.

2. Don’t reward gridlock.

You all know what happened. Just days after the President’s inauguration, Rush Limbaugh declared making him fail and dis-electing him the GOP’s primary goals. The President hadn’t even done anything before Rush threw down the gauntlet.

Speaker Boehner and Senate Minority Leader McConnell were embarrassed at first, but they soon signed onto this treasonous effort. Why? They had nothing else to offer you [1 and 2]. Their last president’s acts and policies had laid us low, and nothing in their views had changed.

Some Republicans voted for the 2009 stimulus package because their own economists told them we’d have another Great Depression without it, and they’d get the blame. But since then, the President has never gotten more than a handful of GOP votes for any legislative initiative, no matter how many GOP ideas it contained. And when they didn’t have a majority, the GOP used the filibuster, 142 times more frequently than it was used from World War I to the Vietnam War.

In poll after poll, you say you don’t like gridlock in Washington. Then don’t vote to reward it.

3. Don’t approve lies.

Mitt Romney had a character transplant—or at least a whole-body policy transplant—in the presidential debates. He still wants to reduce taxes, to fulfill his pledge to unelected right-wing extremist Grover Norquist. But on everything else he’s changed. He softened his emphasis or changed his entire view on abortion, “self-deportation,” privatizing Medicare, privatizing Social Security, cutting Medicaid, cutting welfare, making trade war with China, and bombing Iran.

You know that only one of his two faces is the real one, but which is it? Vote for honesty and reliability, not lies and flip-flops.

4. Don’t pick a pig in a poke.

Not only don’t you know which face Romney will show as president. You also can’t tell how competent he’ll be.

He made a lot of money in private equity, but that’s nothing like being president. If elected, with four years of experience in public office, he would be the least experienced president in American history, if you count our generals-presidents’ military commands.

In the White House, Mitt would be doing politics, not business. When put beside the President’s, his track record in that field is pathetic.

Mitt’s told us—many times—that he knows “what it takes” to do better. Yet we have nothing but his unreliable word for that. Don’t vote for bragging and bluster. Vote for experience and proven achievement.

5. Don’t buy used policy, even from a master salesman.

You know what values lie behind Mitt’s vague policies and incomplete plans. They’re the same ones the GOP has pushed since Reagan: lower taxes (especially on the rich), less regulation, more pollution, a weaker safety net, a bigger and more expensive military, and a more arrogant and unilateral foreign policy, which means more war.

You know that Mitt, despite all his flip-flops and late-campaign character transplant, endorses every one of these goals. He can hide Dubya and try to make us forget that Dubya ever existed. But he can’t hide himself.

Don’t let a master salesman sell you used policy. Kick the tires. Then vote to continue the change that you started in 2008. It’s not done yet. It’s just beginning.

6. Don’t reward distraction.

We have at least ten grave national problems. On average, they’ve festered for 17.5 years, since long before Barack Obama emerged on the national stage, let alone became president.

For at least a decade, the GOP has tried to distract you from these very real problems, with “social issues” like abortion, gay marriage, and religion. Today it has no solution for any of them except the national debt. And even there, its numbers don’t add up.

If you know anything about government, you know that a president has little influence, let alone control, over social issues. They are matters for Congress, the fifty states or individual consciences. So why make them big issues in presidential elections? Maybe the reason is a total lack of useful ideas on what government really can do.

Even in things a president can control, like foreign policy, the GOP has distracted us. For example, it has demagogued the recent tragedy in Libya, making us forget the President’s winning policy in Libya, Gaddafi’s demise, our steady crushing of terrorism, and our reliable support for legitimate Arab liberation.

If you vote for distraction, you’ll only get more of it. Vote for the guy with his eye on the ball.

7. Don’t approve division.

The GOP has a new lie. It’s born of sheer desperation. As the polls in key states turn toward the President, the GOP is now trying to blame our national divisiveness on him.

You know that’s a lie. You know how the President rose to national prominence: with his 2004 speech about one America, not a red or blue America. You know he wrote a whole book about centrism and bipartisanship, called “The Audacity of Hope.” You know how Democrats, liberals and progressives have complained of his willingness to bend over backward to make a deal, as in continuing the Bush Tax Cuts for the rich. You know how many have called him “spineless” for his eagernness to compromise.

So you know, in your hearts, who’s responsible for the division. Don’t reward it, or it will just continue as far as the eye can see.

8. Don’t endorse hate.

From the primary campaign of 2008 to the present day, the President has faced the strongest avalanche of hate directed at any leader in my lifetime. They call him a “socialist,” distorting the very meaning of the word, although he’s a centrist. They call him an alien, although he was born in Hawaii. They call him a Muslim because of his middle name, but he’s a Christian.

They call him a racist, although he never mentioned race but once, in a masterful speech that challenged us to deal with race as adults. They call him a terrorist and Kenyan agent—code words for being half black.

You can feel the raw hate in the endless name-calling in public comments in any online medium. You know in your heart where it comes from.

In the debate on foreign policy, Mitt backed off from his extreme positions. He agreed with the President on most things. He just claimed he would do things better.

You know that foreign policy is where any president’s power is strongest. You know it’s the only field in which he can act without Congress. So when two men say they would do much the same thing where they have the most power, there’s no reason to hate one.

You know in your heart the source of it all: a rehash of our Civil War. Don’t succumb to it, and for God’s sake don’t add to it. Let’s put that ugly chapter behind us once and for all.

9. Don’t support tribalism.

If you are white, like me, you have a special responsibility. You are in a waning “majority,” which has ruled this country since its founding.

We whites fought ourselves in our Civil War. That war is still the bloodiest in our history, despite its relatively primitive weaponry. The good side of us won.

Don’t backslide. Go forward. You know in your heart its’s the only right path.

10. Don’t lose heart.

If you are black, brown, yellow or red, don’t give up.

In just a few short years, there will be no majority. Every racial group will be a minority, and we will all have to get along. Dr. King’s (and Rodney’s) dreams will come closer to fruition because there will be no alternative.

You don’t have to wait passively. You can bring those dreams closer right now, in this election. And you know that tens of millions of whites like me are with you.

Don’t let the hate, fear or disappointment discourage you. Go and vote, even if you have to crawl to the polls on crutches.

Help us all build a future based on competence, honesty, love, equality, justice, faith, and hope. Keep your eyes on the prize, not the lies.

Respectfully and prayerfully,