Can You Say 'Tone Deaf' In Japanese?
Very useful in explaining why, e.g., John Thain initially asked for a $10 million bonus even as he decorated his office lavishly with taxpayer funds. As the letter writer puts it, "he was astoundingly KY."
Matt Miller's Blog
Eclectic thinking on politics, policy and more
Can You Say 'Tone Deaf' In Japanese?
Another fun factoid from a letter to the FT this week: "The hot new word in Japan is KY. An abbreviation for kuuki-yomenai, it literally means 'unable to read the air.'"
Very useful in explaining why, e.g., John Thain initially asked for a $10 million bonus even as he decorated his office lavishly with taxpayer funds. As the letter writer puts it, "he was astoundingly KY."
Banking line of the week
"If you want to end up with the economy of Pakistan, the politics of Ukraine and the inflation rate of Zimbabwe, bank nationalization is the way to go."
-- Peter Boone and Simon Johnson in the FT
Have been a bit on run with book tour commitments and so slower to post in recent days. Hope to get back in flow next week with the econ debates heating up, and also reporting on reactions to Dead Ideas from my travels.
Can Conservatives Face Up To Their Dead Ideas?
Essential piece in Politico today by Bruce Bartlett, the former Bush I and Reagan aide who makes a cameo appearance in my new book, "The Tyranny of Dead Ideas," as the last honest Republican when it comes to taxes. Bartlett, who comes from the libertarian wing of the party, but who is an intellectually honest analyst, was basically banished from the GOP a few years back when he started writing that taxes would need to rise to fund the boomers' retirement, and that therefore the GOP's tax cutting mantra was doomed. Instead, he said, Republicans should be figuring out how to finance the revenue we'll need in ways that are smartest for the economy. Today's piece updates some of these points:
Conservatives would better spend their diminished political capital figuring out how to finance the welfare state at the least cost to the economy and individual liberty, rather than fighting a losing battle to slash popular spending programs. But this will require them to accept the necessity of higher revenues...It is simply unrealistic to think that tax cuts will continue to be a viable political strategy when the budget deficit exceeds $1 trillion, as it will this year. Nor is it realistic to think that taxes can be kept at 19 percent of GDP when spending is projected to grow by about 50 percent of GDP over the next generation, according to both the Congressional Budget Office and the Government Accountability Office. And that’s without any new spending programs being enacted.These truths are obvious to anyone who bothers to look at the fiscal facts. It's a measure of the GOP's intellectual bankruptcy that none of its leaders are willing to acknowledge this publicly (and that they exiled an honest fellow like Bartlett for daring to utter the unpleasant truth). But one thing is certain: until the party sheds this Dead Idea, it has no chance of developing a new and coherent governing philosophy that bears any relation to the real world. Yes, I'm sure it's painful for Republicans to let go of the tax cutting mantra that has been so powerful for the party since 1980. But, as Ronald Reagan loved to say, "facts are stubborn things."
Do conservatives have the guts (and honesty) to face up to the Dead Ideas in their midst, and update their thinking for a new era? My guess is that Rush Limbaugh, Sean Hannity and Bill O'Reilly can't handle the truth on taxes. This much intellectual honesty would be devastating to their "brand." But if the entire GOP community can't handle reality either, it'll be a long few decades in exile...
The Ross Plan
Private equity king Wilbur Ross floats intriguing mortgage reform fix in the NY Post. As a way to use $100 billion to get 12 million underwater homeowners back in the black, with lenders and government sharing in any upside if prices recover in years ahead, it looks interesting.
CDS anxiety continued
Gretchen Morgenson floats some potential fixes for the credit default swap hangover - worth reading.
The Empathetic Pundit
Eliot Cohen, fresh from his stint as a counselor in the Bush State Department, notes in WSJ the essential quality of a good pundit:
Invariably, a pundit will prescribe solutions. In doing so, he should follow the advice of the late Raymond Aron, the wisest French policy intellectual of modern times: Never criticize a policy unless you can convincingly depict a better course of action. Aron, like many of the greatest commentators on policy, had virtually no experience in government, but great empathy for those in a position to decide. Empathy -- the capacity for imagining what it is like to be the other -- is an essential quality for the thoughtful pundit.Couldn't agree more. I've always felt this way, probably because of the lucky experience I had of serving in the Clinton White House and before that at the FCC. It's always surprised me since how few commentators think this way.
Overheard on CNBC
Reporter on the floor of the stock market saying that while everyone agrees government has to do something big to stimulate the economy, "investors just don't trust the government to get it right." That's as opposed to the private sector -- especially discredited/graced leaders and firms like John Thain and Ken Lewis and AIG and Citigroup etc -- who can be trusted to get it right?
Barro Says No Free Lunch
Robert Barro in the WSJ argues that there's no multiplier effect from increased federal spending in terms of its impact on GDP -- if he's right the Obama folks would be overstating the potential impact from a spending side stimulus. I'd like to see the rebuttal from the Democratic economists.
UPDATE: Krugman responds to Barro here.
More outrageous bank factoids
The FT had a piece yesterday I almost missed with more maddening facts. After injecting $45 billion in capital into the idiotic Bank of America, the US government apparently owns just 6% of the bank. Yet the entire market cap of B of A is less than the $50 billion it offered to pay for Merrill Lynch last September. How on earth does this happen? Whatever your fears may be of temporary bank nationalization, shouldn't taxpayers at least get the banks they've bought and paid for? When we don't, we're simply lavishing windfalls on shareholders who are supposed to bear the brunt of awful managerial decisions in the market. Astonishing. You don't need to resort to demagoguery at this point to be calling for many bankers' heads....
On January 20, 1993 I reported to OMB to work as Alice Rivlin's top aide. I remember when we came in, shortly after noon, and seeing Richard Darman's boxes packed up in the hallway of the Old Executive Office Building, ready to go. The evil GOP budget genius (poor Darman died a few years ago, at too young an age) was meeting with Leon Panetta and Alice. I was filled with great hope then for the progressive goals we in the Clinton Administration might accomplish -- hopes that were largely dashed when you look back at what was actually done over eight years (I served for the first two). In the end, Clinton had two years on "offense" and six years on "defense" -- the affirmative phase of his presidency ended after the 1994 midterm blowout.
Now I'm filled with even more hope as Obama enters the White House. And I feel sure that Obama has a real chance to get things done on health care, education and other public investments that eluded us years ago. Here's hoping...audaciously!
Let the Republican Rethinking Begin!
David Frum, my former radio sparring partner on "Left, Right & Center," has launched a new group blog today called NewMajority.com that aims to be a Republican version of the Democratic Leadership Council circa 1989. Worth keeping an eye on if you want to track GOP rethinking in the age of Obama
Close to normal
My wife has always said something that rang true for me today watching Obama - part of his appeal is that he's so close to normal, only a few years away from having the concerns and behaviors that regular people have. He and his wife still had student loans until his books became real income generators. His meteoric rise means that unlike most who become president, he hasn't been in the rarified, cosseted world of political leadership for years (as governors or senators, for example). Obama is new to the bubble. That means there's still a freshness and connection with the real world that seems precious to have in a president. Here's hoping he finds a way to keep that quality.
America the diverse
If you're celebrating America's remarkable diversity today, a few of the articles in the current Atlantic Monthly are really worth reading. In particular, try The End Of White America? (on the post-white culture already taking hold), and Race Over? (on the persistence of race's relevance in politics as seen through the eyes of the folks who helped get Obama elected).
Roberts Blows It!
Can you believe Chief Justice Roberts got the oath of office wrong, and almost made Obama look bad because Obama was trying to say it correctly? You could see Obama making the split second decision to go with Roberts' incorrect phrasing because the justice was obviously flailing. A very generous moment by Obama, when in a nanosecond he had to be thinking, 'I can't believe this guy is muffing it, but I forgive him and let's go on." So much for brilliance (in Roberts) being a reflection of any ability to perform simple tasks under pressure! Would be fun to know what Obama and Michelle have to say about that moment when they debrief the day privately tonight....
UPDATE: Roberts mouthed to Obama at the luncheon that "It was my fault."
Where is the taxpayer equity in all these bank bailouts? NYT details how little is being lent from the new capital infusions, and how the banks are treating it as a "windfall." But it can't be a windfall so long as Uncle Sam -- i.e. all of us --gets equity stakes in these banks commensurate with the taxpayer money we've poured in. That way, at least, once the economy recovers and the banking system is on a sounder footing, we'll get some return for these extraordinary moves. But if government has given these firms sweetheart deals it's intolerable. Yet that's what it looks like Paulson & Company have been doing. Citigroup looks like exhibit A -- we've put $45 billion in capital into the reeling bank, and guaranteed $300 billion in toxic assets, yet so far as I can tell the government owns only 8% or so of the company. How can this be when the capital we put in exceeds the market value of the firm? Once we get the fine print on the Bank of America bailout this week the same is likely to be true. How can it be that Warren Buffet drives a harder bargain than the US government? Obama has to alter all this somehow or the devastation wreaked by these reckless banks and their greedy leaders will be compounded by government incompetence in assuring that the unavoidable rescues only deepened the ripoffs.
The Geitner tax thing has me worried. What the press will eventually turn to is that $34,000 or thereabouts for a guy who has been in public service his whole career, and thus isn't rich, is a lot of money, which will raise questions about how "accidental" his "oversights" may have been. I hope I'm wrong but I fear this is where the story may be headed. If it was a Paul O'Neill type -- already wealthy from a dozen years as Alcoa CEO - you'd say $30-40,000 in missed tax payments wasn't about the money. If any Republicans force further delays, the press will dig deeper on this, so here's hoping Geithner has explanations that can withstand a few more rounds of scrutiny.
Those NYT front page ads
Each new one seems like a cultural marker to me. Today's from Citigroup -- there's no link to it because its an ad, thouht maybe they'll soon add links -- was filled with marketing jibberish to the effect that their point of view is that we should know their point of view. Presumably that means they'll be running haiku style op-eds in future installments of the little two inch space they have at the bottom of page 1. They closed by saying that in troubled times its good that "Citi never sleeps." At a time when the bank is tottering and being split up, has devoured zillions of taxpayer cash without apparent effect, and lost tens of billions on bum investments, the perky upbeat marketing slogan feels really off-key. It's a marketing/reality disconnect. There are things that marketing can't fix. Though at least we know where some of the TARP money is going -- to boost NYT ad revenue.
Press coverage update
Not So Fast
If you're convinced TARP is a disaster because bank lending is still stalled, and think Congress needs to thus require banks to push the money out the door, think again. Martin Baily and Charlie Schultz, both former chairs of the Council of Economic Advisors to Democratic presidents, offer a needed corrective in the Post. This makes the satisfying urge to assail the failed efforts of Paulson more ambiguous, but them's the facts.
Casey At The Bat -- Bernanke Edition
Bernanke gave an important speech in London yesterday on the economic situation and the road ahead (NYT on it here, the speech itself here). He said the emerging stimulus plan, while important, won't be enough to right the ship without doing more to fix the financial system. But there's another way to look at where we may be heading on Bernanke's watch this year, which I thought I'd lay out in a fun little poem - a form that is often underestimated as a mode of economic analysis. If you know the great American baseball ditty, "Casey At The Bat," you'll recognize the meter. Enjoy!
Bernanke at The Fed!
Things were looking down for GDP that fateful year
Retail sales had sunk, with the consumer crouched in fear
The S&P had cratered, while the banks their cash did hoard
But still there’s hope, they said, with Ben Bernanke at the Board
George Bush had all but washed his hands – Obama hadn’t started
Though Larry Summers thought big thoughts, the waters hadn’t parted
Hank Paulson, who had tried his best, could not get out of bed
But don’t despair, they told us, Ben Bernanke’s at the Fed
Now Ben, from back in Princeton days, had studied doom and gloom
Though soft of voice his brain was oft the biggest in the room
Unlike the vanquished Greenspan he was no Rand devotee
And when he went to bed, Ben didn’t sleep with NBC
To fight the dip Bernanke had hurled thunderbolts galore
He lowered rates and bought up debt from here to Bangalore
He rallied global central banks who feared his vengeful sting
Though shove had come to push, big Ben still pushed his mighty string
But now Ben had to face grim facts - with interest rates at zero
The standard cures had failed and Ben Bernanke was no hero
Jobless claims were soaring and the TARP had all run dry
From sea to wailing sea came forth a deep collective sigh
And so Bernanke pulled the final arrow from his quiver
A tool so blunt and fearsome that it made his colleagues shiver
“The lesser of two evils!” cried Bernanke to his board
And then Ben flipped the switch – and then the printing presses roared....
O somewhere in this fruited plain the Chinese plan to poach
Obama’s talking fireside; Nardelli’s flying coach
AIG is RIP – and Britney’s a sensation
But there is no joy on Wall Street – thanks to Big Ben’s Big Inflation
Press coverage update
Newsweek.com's interview with Matt; plus LA City Council President Eric Garcetti interviews Matt on KCRW"S "Politics of Culture."
The Return of Gene Sperling
Gene Sperling is back, working for Tim Geithner in a new post advising the new Treasury secretary on fiscal policy and more. I predicted he'd end up at State working with Hillary, but wherever he is, Sperling is a tireless force. See my earlier post on this back on December 3 here, and the unpublished, "too favorable" version of my New Republic profile of Gene from a decade ago here.
This Depression May Be Good For Your Health
One virtue of the pickle we’re in is that it's going to provide cover for the infusion of federal cash we need to finally get health care IT going. Everyone’s who’s looked at this knows that doctors in particular typically won’t invest in electronic medical records and seamless connections with others in the system because most practices are small shops that won’t see a payback for what can be a costly investment; the benefits are really for the system as a whole. Because of this dynamic (fueled as well by the fact that many docs who were early movers on IT felt they got burned and wasted their money), Newt Gingrich told me a few years ago we might need $50 billion from the feds to prime the pump on health care IT. He figured we’d have to find some national security rationale to make this politically viable, just as Eisenhower did with the interstate highway system. At the time, Newt thought the threat of bioterrorism in the wake of 9/11 might be one potent argument for why we needed to get docs and providers on a sophisticated, integrated IT grid.
Flash forward to today, though, and the economic emergency has done the trick. Health care IT can make for good stimulus, and helps get in place the things we’ll need to boost the value we get from the health sector over time. My hunch is that folks on all sides will share the Obama team’s view that this is the moment to make it happen. If done right the long term benefits should be huge.
Indispensable Health Wonkery
One of the central fights in any health care reform Obama pursues will be over having a new public health plan for non-seniors offered to compete against the private health plan options offered to people who lack secure workplace coverage. If you want to think intelligently about this, the place to start is Jacob Hacker’s 20 page paper making the case for the public plan option. Hacker, who recently moved to Berkeley from Yale (proving once again that all the interesting people eventually settle in California...:)), is the thinker behind this reform – his work on it from several years back was picked up by John Edwards, Hillary Clinton, and of course Obama, and he’ll be a critical behind-the-scenes voice in the evolving debate. Unless the health insurers can mount a convincing rebuttal to Hacker’s arguments and analysis, it’s hard to see how they can win this battle – at least on the merits.
High anxiety these days as to whether China will continue to buy up our Treasury debt now that the deficits could close in on a stunning $2 trillion a year for a couple of years. But I have an idea. Instead of worrying about whether they’ll show up at our public Treasury auctions, why don’t we reach out to cut a deal with China directly via a private debt placement, as often happens with private companies who need cash from lenders? We’d ask the Chinese to pick up, say, another trillion or so in Treasury debt over the next few years, and let them lock in an interest rate that feels attractive to both sides.
Yes, the optics of this private placement would be unprecedented (I think) and stunning, but so what? These are extraordinary times, Chian still has big savings surpluses that need to be invested, and we need to borrow bigtime for a few years. Why worry month-to-month about who will show up to buy our debt demanding what interest rate? This would let China feel Warren Buffet-like to boot – an heroic investor at a time of crisis. Maybe as part of the deal we’d give China, for free, a big chunk of the green energy technology we want them using instead of all those dirty coal plants that could lock in emissions woes for decades. Readers who are much smarter on finance (and green tech) than I am should feel free to tear this idea apart – or improve upon it.
The Unreal Economy
How detached from reality did we become as the world of derivatives grew ever larger and profitable for those who peddle them? Here’s a story one Fortune 500 CEO told me when I shared my fears that credit default swaps could be the next big shoe to drop:
I have no unique perspective on CDSes, but I have to admit that when I first learned of them, some years ago, and got an explanation of how one worked on our own company, it went like this: “Say you own company X’s bond but don’t want to take company X’s credit risk. Then you sell a CDS, pocket the difference, and you’ve eliminated your risk of default by X. You basically then own a government bond.” My reply was: “I used to work on Wall Street. In those days, if you owned an XYZ bond and didn’t like the credit risk, you would sell the XYZ bond and buy a government bond. Then you didn’t 'basically' own a government bond. You actually owned a government bond.” The banker I was talking with had no reply to that.
Backstage with Colbert
A number of you have asked what it’s like to do Colbert, does he ever talk to you as his real self offstage, etc. The answer is it was unbelievably fun (I’ve said to a few people it was the most fun I can imagine having in 5 minutes, which invariably leads people to offer other options they think would be better...). The man is a comic genius, and the “real” Stephen also seems like a very decent person.
Colbert did come back to the green room before the show to say a brief hello and offer two cents of advice. “I play a character,” he said. “That character is an idiot. You need to disabuse him of his ignorance. Just approach it like that and have fun.” Talent producer Emily Lazar offered similar counsel. Whatever he throws at you, she said, just come back and explain to “Stephen” why he’s not seeing things right, and make your case.
One of the funniest parts of the experience was off-air . A few minutes before the taping started, a staffer came by to give a sense of what the writers had brainstormed as potential lines of “questioning” Colbert might take. He might not use these at all, she said (and Colbert didn’t that night – it was all basically improvisational riffs). The idea is to have you not be totally blindsided by the wackiness that might be coming.
Here are the things I recall from what they said he might ask about The Tyranny of Dead Ideas. These totally cracked us up in the green room.
-Why should we get rid of the old ideas, when the new ones suck?
-Even if the old ideas don’t work anymore, shouldn’t we continue them out of respect for tradition?
-You say the economy is creating too many of the “undeserving rich.” But isn’t that the American Dream – to be rich and useless?
-What about undead ideas?
When they put me at the interview desk on the set just before my segment started, I glanced over at Stephen at his anchor desk to have a look. Just before the camera went on he looked over at me and snapped deadpan, “The free ride is over, Miller.” He’s just really funny.
I took some improv classes while in law school in the mid 1980s and recall what they stressed (at Chicago City Limits in New York) about the importance of listening and then making a choice and committing to it. Colbert does this with such intensity and at such a peerless comic level that it was really exciting to watch him work up close – even if that meant watching him reckon instantaneously how to create some very funny moments at my expense!
Economists in Trouble
Yes, they’re the only economists we have, but the profession really is in a dismal state. Very few were ahead of the curve in warning us about the looming credit and housing bubbles. Now they have little authoritative to offer about the precise nature of a stimulus package that would be most effective. And when it comes to the trade debate, as I argue in The Tyranny Of Dead Ideas, they’ve let down the country (and jeopardized their own ideals) by treating the need to provide health and pension security for average Americans as an afterthought in the case for trade, rather than as a crusade the profession itself needs to lead if we're going to avoid a protectionist backlash.
Some respected economists need to lead their academic colleagues in a rethinking of the profession’s priorities. We need economics to make a bigger social contribution. As a glance at the agenda of the American Economic Association’s recent annual meeting suggests, too many of these folks spend their careers drilling down into highly quantitative trivia instead of developing fresh ideas on the broader challenges of political economy. It’s not just Wall Street that’s diverted too much of the nation’s economic talent into unproductive channels – it’s the narrow, tenure-producing but irrelevant work in too many economics departments, too.
I can understand how people who feel ashamed for having done something irretrievably wrong in the current economic mess might kill themselves – like a Bernie Madoff (though his smirking pictures make you think he’s not close to contemplating that). But it’s harder to understand why someone like that German multi-billionaire killed himself the other day. Unless there’s more that will come out, it seems like he was losing control of much of the empire he’d spent decades creating – but thanks to bad bets and mismanagement, not because of improprieties or fraud. If that’s the case, he killed himself basically because he had lost most of his money.
Maybe I’m not thinking about this right, and obviously someone else’s emotional state is a mystery to outsiders, but to kill yourself because you don’t have as much money as you once did seems an awful reason to want to die. Of course this stuff happens (indeed, I just heard about a Palm beach wife who’s leaving her husband because he just lost everything, and she doesn’t want to support him with her trust fund. Nice.) Maybe it was because the German guy felt he let down employees and investors? I don’t know. Wonder what others think.
Web site updates - Washington Post column
Kathleen Parker's nationally syndicated column says Dead Ideas belong at the center of the national debate...check it out in the press section here.
Web site updates - press coverage
Book tour feeds
Some of you who subscribe to the blog feed have asked us to post links to various book interviews and appearances so you can easily know of things you might want to check out. My wonderful web designer and site maintenance guru Madeira James will be posting that information going forward. Thanks for your interest.
What About Stimulus Vouchers?
Here's a creative idea sent from Will Lewis, a management consultant at KCRW-FM in Santa Monica, where "Left, Right & Center" originates. He writes:
Individual grants of cash may not work because of fear. People will save the dollars or pay down debt. But if you made the grant in the form of script or coupons, you could force the money to be spent for goods and services. The value of the script could be limited to say 90-days. It could not be used to pay down debt. It could not be saved. Redemption by merchants of the script for dollars could be handled by commercial coupon redemption centers. Now, of course, it's possible that this idea has already been floated. But you never know.In my experience it's never safe to assume that everything has been considered. I haven't seen this idea anywhere. What about it, folks?
UPDATE 1/11 - Len Burman of the Tax Policy Institute wrote that he offered a proposal in this spirit in mid December on the NYT economics blog:
Stimulus musings continued
1. As Krugman points out, the new CBO economic forecast shows why the stimulus being discussed is still too timid, despite its eye-popping size. It's a 3% of GDP stimulus to address what CBO believes is an 8% gap we face between actual and potential GDP. This is the ball people need to keep their eye on.
2. Republicans like John Boehner continued their deeply confused and almost certainly disingenuous critique, saying that the new dismal budget projections -- a $1.2 trillion deficit next year before the stimulus is added -- proves "we can't borrow and spend our way to prosperity." Wrong, wrong, wrong. We have no choice in the next two years but to borrow and spend our way to recovery. Yes, of course, we have to get back to fiscal sanity afterwards, but that is then and this is now. As I argued recently in Fortune and Politico, the answer is to committ to deficits of no greater than 2-3% of GDP (vs. what could be an epic 10% next year) once unemployment goes back under 5-6%. Make this the stated goal. Require a supermajority vote of Congress to run deficits any bigger. Then empanel a bipartisan commission or some such now to show the way as part of the stimulus bill, to signal to markets that we know the madness must be temporary.
3. Martin Feldstein deserves profound credit for stepping up to support a big stimulus (even though he's not quite to the size we need yet either). If a Republican economist of his stature had not been supporting extraordinary measures from the beginning, the debate today might be totally different.
4. More on this down the road, but one way to get back to fiscal sanity on the spending side after the economy recovers won't only be long-term entitlement reform. From my OMB days under Clinton I was always impressed by the incredible potential power of a one year freeze on large classes of spending. When the moment is right a few years from now, I think Obama could sell such a move politically as part of a shared sacrifice to get our fiscal house in order. The interest groups scream, but the impact is huge -- it lets revenues "catch up" for a year, and in a strongly growing economy this shaves huge amounts off the deficit. I'll come back to this at some point more concretely as the debate unfolds, but wanted to put the marker down as food for thought early.
5. Of course taxes will also have to rise as a share of GDP -- which means we'll need to explode one of the Dead Ideas featured in my book, that "Taxes Hurt The Economy (And They're Always Too High)." Obama should charge any long term "fiscal fixes" commission to hit the road explaining the tax facts to the public over the next few years as well.
Was anyone else struck by the fact that that first-ever page one ad in the NYT this past Monday was placed by CBS? A TV outlet desperate for ad revenue bought the newfangled ad in a print outlet desperate for ad revenue. Something meta-ironic about that, if that's a concept.
If You Believe This One....
This was how Neale Donald Walsch, best-selling author of the "Conversations with God" books, explained how he happened to lift a story verbatim from another author.
Mr. Walsch now says he made a mistake in believing the story was something that had actually come from his personal experience...So much for the Responsibility Era. My mind made me do it.
Your Dead Ideas Here!
To mark the official launch date of my new book, "The Tyranny of Dead Ideas," we're kicking off a contest here for the top Dead Ideas you think need to be exploded in American society. After all, while I focus on six big Dead Ideas in the book, there are surely dozens more in our public life, and probably hundreds if not thousands in our business and personal lives. Let your creative juices (and angst) flow -- tell us why your Dead Idea nominee needs to be blown up, the damage it's currently doing, and anything else that helps people understand the urgency of rethinking. Submit your nominees in the comments here, or email me at the site. I'll showcase the best Dead Ideas from readers in the period ahead. Winners will get signed copies of the book, as well as other forms of everlasting recognition tbd....
Stimulus shortfall - back of the envelope
I'm still worried the Obama stimulus won't be big enough. Today's NYT had Harry Reid saying economists had told him we need to look at $800 billion to $1.2 trillion over two years, but that Obama's team is so far talking about $775 billion as a two year max. Apparently GDP declined at 5% annualized rate in the fourth quarter. If we therefore need at least 5% of GDP government stimulus to keep things from tanking, in a $14 trillion economy that's $700 billion per year. And who knows if GDP will be contracting at a deeper rate as early '09 figures come in? My business friends and colleagus think the first quarter could be a holocaust. We need more radical stimulus numbers fast from credible sources that make any Obama call for $700-plus billion a year the "sane, reasonable alternative." Over to you, Paul Krugman....
Still True Today!
I've added to the top of blog a new feature called Still True Today, an idea for the media I proposed in my first book, The Two Percent Solution, as a way the top media outlets could regularize attention to the things that remain important every day even though there isn't news on them. Here's how I described it in the book, when I presented then-Washington Post editor Len Downie with a mock up of the idea:
Still, I’d always thought, wasn’t there some way that the most important daily bulletin boards in our public life – page one of the Post and the Times -- could institutionalize regular attention for things that are important even though there’s not “news” on them? Some device that would be consistent with these editors’ sense that they should not be directing an agenda, but which would nonetheless perform a public service by mitigating the gap left when officials prefer not to address important issues.
“Can I throw out a crazy idea?” I said, laying on the table a mockup of the front page of the Post I had prepared. “Why not have a feature called ‘Still True Today’?” I explained that this would be a small but visible line or two across the bottom of the front page; a kind of tickertape, nothing that would interfere with 98 percent of the usual front page, where the big news of the day would always appear. But, in addition, in this small daily feature, you’d highlight facts that were, well, still true today. My own list would include things like "42 million Americans uninsured – 80% in family with full time worker,” “2 million teachers need to be recruited in the next decade, while average teacher salary is $40,000,” and so on, in the Two Percent spirit. You might go with a different subject each day, I suggested – say, health on Monday, education on Tuesday, the working poor on Wednesdays -- but repeat the same facts each time. Obviously there are countless permutations. The exercise would require our top papers to put forward what they think are the most important things citizens need to remain aware of even as the news changes each day. It might help set the agenda for the papers’ in-depth reporting projects. The art department could make sure this recurring feature was fun and lively. Who knows? If the Times or the Post started such a feature, the ripple effect might be huge.
I still like the idea so I've added it to the top of the blog. I've started it with some of my own "favorite" troubling things that are Still True Today. Feel free to nominate your own ideas in the comments here, and I'll work the best ones into the rotation. And feel free to prosyletize the Still True Today idea to your favorite media outlets.
A Guide to the Good Life
Over the holiday I read a truly wonderful new book called A Guide to The Good Life: The Ancient Art of Stoic Joy, by William B. Irvine. Irvine is a professor of philosophy at Wright State in Dayton, Ohio, and, unlike virtually every other modern academic philosopher, he's decided to devote his energies to the question of how one ought to live (instead of writing arcane papers for other academics that have little to do with what philosophy should really be about). Irvine shows how the Stoic approach to attaining virtue and tranquility -- and the day to day techniques they developed more than 2000 years ago to pursue these ends -- has deep relevance to modern life. The book really resonated with me (from what little I knew of the Stoics before, I was already convinced I was tempermentally kind of a Stoic myself - especially re their counsel that while one can't control what happens in life, one can control how one reacts to what happens). I can't do justice to the book's many pleasures in a brief squib here. Suffice to say I find myself referring to the book almost every day now in ways that are driving my wife and daughter a little crazy (Jody is definitely not a Stoic, but I am working on her...and since she gave me the book for Hanukah she has only herself to blame!) Irvine also includes suggested further readings, which has me heading next for Seneca's essays. You can find more at Irvine's website here.
Climate clash in White House
Piece in the Times details the likely showdown between the cap-and-traders on Obama's team - -Carol Browner, and of course, Obama himself, at least for now -- and carbon tax advocates Larry Summers and Peter Orszag. It talks about Obama being against a carbon tax because he doesn't want any hit of higher energy prices at a time when average folks are already reeling in the recession. Fair enough. But the missing piece in these discussions is that cap-and-trade only works by creating a de facto tax anyway via higher energy prices as the cost of emissions permits gets built into prices. It just doesn't look like an explicit tax, which supposedly helps the pols. I'm dubious. Especially when cap and trade also looks like it means a big bureaucracy to administer and allocate it all, a system that is sure to be gamed. The best idea I've heard is "carbon-tax and dividend" (see one version here), which would would simply be a re-jiggering of the tax system. You'd add stiff new carbon taxes, but then rebate, say, 90% of the proceeds via, say, payroll tax reductions. Maybe you'd keep 10% to invest at the federal level to jumpstart new alternative energies, in hopes of hitting on a DARPA-like win (the Pentagon program 25 years ago that helped bring us the Internet). Carbon tax and dividend means there would be no impact on the average consumer -- indeed, with a little creativity you could design it so that lower income folks got back more in lower taxes than they paid in higher energy prices. And if you have strict reporting requirements on emissions you can track progress against what the cap and traders say needs to be achieved in overall emission cuts, and dial the tax (and rebates) up if need be. Conservatives could support it, too. Something like this needs to get on the agenda.
UPDATE 1/4: Charles Krauthammer makes passionate conservative case for carbon tax and dividend in the Weekly Standard.