Hitler on the GOP victory in Massachusetts

Downfall parodies never get old. This is the funniest yet.



BTW, I caught the last hour or so of Downfall on satellite a few years ago. It was quite good. Looks like Bruno Ganz won the German equivalent of a best actor Oscar for his turn as Hitler. Deservedly so.

President Obama Comes to Hackensack

President Obama made an appearance at the cis-Hackensack outpost of Fairleigh Dickinson University¹ to raise campaign funds for our governor, Jon Corzine, the former Goldman Sachs chief. I was going to post about this yesterday, noting that, if memory served, this was the first presidential visit to Hackensack since President Uribe of Colombia made a state visit here a couple of years ago. Then I wasted a half hour trying to find a good photo or article to link to about the Uribe visit, got frustrated, and gave up. Part of the problem with that search is that we've had a Colombian-American mayor here, so articles about him popped up. And we also have an annual Colombian Day celebration here, so that comes up too.

Fortunately, I missed the inevitable traffic snarls yesterday, but Cheryl wasn't as lucky; she got stock in gridlock on Hackensack Ave. on her way back from the Hackensack Financial District. She had to make an Italian illegal U-Turn (all the police were occupied with motorcade security, so she didn't get a ticket for this) and loop around Hackensack via the highways. In any event, thanks to the magic of YouTube, here is some Hackesack residents' brush with the motorcade of the Imperial Presidency²:




¹This school was derided as "Fairly Ridiculous" when I was growing up. Most of its "Metropolitan" campus is on the trans-side of the Hackensack River, which divides the City of Hackensack from the Township of Teaneck.

²By way of contrast, I recall a photo of French President Sarkozy jogging in Central Park last month when he was in New York for the annual UN festivities. Exactly one security guard was visible in the photo.

The FT on the Nobel Peace Prize

Beautiful day here in North Jersey. The sun's out, and the Giants just routed the Raiders. Here's the Financial Times on Obama's Nobel Peace Prize, from yesterday, "Urgency of Now?". Excerpt:

The Norwegian Nobel committee has made odd decisions before. Awarding this year’s peace prize to Barack Obama, however, is not merely bizarre but bad: for Mr Obama, for the prize, and for the cause of peace itself.

[...]

This is the first time the prize is given for what remain, for now, mere aspirations.

[...]

Despite Mr Obama’s undeniable diplomatic ambitions for a more peaceful world, there has simply been no time for him either to realise or betray them. So – to borrow from his own rhetoric – why the fierce urgency of now?

The answer is a Nobel Committee trapped in an adolescent adulation of Mr Obama that, if once shared by many, most have put behind them. Its continuing desire to flatter a particular tendency in US politics – Al Gore and Jimmy Carter are recent laureates – risks painting it as an annex to the left wing of the US Democratic party. Hoping the prize will strengthen Mr Obama domestically is deeply misguided: it will embarrass his allies and egg on his detractors.

Elsewhere, it will come to be seen as awarded for wishful thinking, not hard work. Peace is not served by devaluing the moral force of the prize, whose greatest impact has always been the moral support it can give those who fight oppression with their lives – a von Ossietzky, a King or a Walesa – or leaders who make heavy concessions needed for peace. Mr Obama has done neither. It is, however, in his hands to rescue the prize from itself – by declining it in deference to those more worthy than he.

The Nobel Peace Prize and the Olympics

On his Atlantic blog, former Carter speechwriter James Fallows snarks,

Yes, that Olympic rejection really makes Obama look weak...

Talk about a contemptuous outside world.

Of course, the "outside world" didn't make the decisions in either case, but it's worth considering who did. The Olympic bid was awarded by a diverse group of 106 individuals hailing from many different countries. The Nobel Peace Prize was awarded by these five Norwegians.

In fairness to Fallows, he did write a more compelling post on the subject later, giving a former speech writer's analysis of the President's remarks this morning on hearing he had won the prize.

Van Jones, Green Jobs Czar

Longtime readers may remember this post about Van Jones from last fall ("A Green New Deal?"). At the time, I didn't know he'd be picked by the Obama Administration to be a 'green jobs czar', but I figured his ideas would have some valence with team Obama. Now he has gotten into trouble for some past statements and actions unrelated to his green jobs advocacy (See The New Republic: "Is Obama's Green Jobs Guru In Trouble?". HT: Ta-Nehisi Coates). In a way, this is unfortunate, because it detracts attention from the weakness of his "green collar economy" thesis. How can a robust, job-creating economy be built on winterizing homes and installing more expensive sources of energy?

Six Wasted Syllables (for Paul Price)

On the Atlantic's Business Channel, Chris Good posts about the return of Bobby Jindal, noting that, given his expertise in health care policy, Jindal has taken advantage of the current debate over President Obama's proposed health care reform to tiptoe back into the national spotlight, now that memories of his awful response to the President's speech have faded. Good also links to Jindal's op/ed about health care policy in today's Wall Street Journal, "How to Make Health-Care Reform Bipartisan". One paragraph from Jindal's op/ed prompted the title of this post:

•Refundable tax credits. Low-income working Americans without health insurance should get help in buying private coverage through a refundable tax credit. This is preferable to building a separate, government-run health-care plan.

What would William Strunk, Jr. have called "refundable tax credits", if such a thing existed in his time? I'm guessing he'd call them what they are: "grants". I'm not sure why Jindal and other conservatives persist in wasting an additional six syllables on the longer euphemism. Perhaps it's so they can characterize government spending on such grants as tax relief instead of government spending, but, if so, this bit of obfuscation just plays into liberals' rhetoric on progressive tax policy. Most liberals are happy to characterize transfer payments to low-income Americans as tax relief, and to characterize tax cuts for the wealthy as a form of government spending. There doesn't seem to be much benefit to conservatives in conceding the rhetorical and policy ground on this, particularly since, as some smart centrists (e.g., Clive Crook) and even at least one smart liberal (Matt Yglesias) acknowledge, we are approaching the point of diminishing returns when it comes to increasing the progressivity of our tax system.

As both men have noted, if American liberals want to expand the welfare state raising taxes on the rich, by itself, won't be enough to pay for it; they'll have to raise taxes (by at least a modest amount) on everyone else. Yglesias has noted that countries such as Sweden, which have social safety nets envied by American liberals, also have much more regressive taxes than we do.

Ross Douthat on the Tea Parties

From what appears to be Ross Douthat's penultimate post on his Atlantic blog, before his move to the New York Times op/ed page ("The Tea Parties"):

They resemble nothing so much as the anti-war protests during Bush's first term. The claim that they don't have an organizing premise strikes me as obviously wrong: They're anti-bailout, anti-stimulus, anti-deficit, and anti- the tax increases that will eventually be required to pay for the current spending spree, and complaining that they don't also have a ten-point plan for reforming Medicare and Social Security reflects a misunderstanding of the nature of protest marches, I think. The claim that they're hypocritical and partisan is a bit stronger - where were they when Bush was running up the deficit, etc. - but in fairness, many of the organizing figures were anti-TARP from the beginning, and there's something slightly odd about saying that if you didn't take to the streets to protests a $300 billion deficit you aren't allowed to protest a $1 trillion deficit. The numbers matter, surely ...

But they do have all of the weaknesses of the anti-war marches: Their message is intertwined with a sense of disenfranchisement and all kinds of inchoate cultural resentments, they've brought various wacky extremists out of the woodwork (you know, like Glenn Beck), and just as George W. Bush benefited from having opposition to his policies identified with peacenik marchers in Berkeley and Ann Arbor, so Barack Obama probably benefits from having the opposition (such as it is) associated with a bunch of Fox News fans marching through the streets on Tax Day, parroting talk radio tropes and shouting about socialism.

In those two paragraphs we may have the case for Douthat as a New York Times token conservative columnist distilled. In the first paragraph Douthat makes a gesture of standing athwart the spending tsunami and... noting that it's troubling; in the second paragraph he expresses his disdain for the grassroots conservative rabble that has been protesting this same spending tsunami. For good measure, Douthat finishes with a soupçon of hypocrisy in that last sentence, where he parrots the snark of the Washington Insider's David Weigel (see the caption below the third photo), while mocking protesters for "parroting talk radio tropes".

The handy graphic above comes from Douthat's post.

Son of TARP

The Wall Street Journal explains the Obama Administration's new plan to buy bad assets off of the books of banks ("U.S. Sets Plan for Toxic Assets"). Economist and New York Times columnist Paul Krugman criticizes it ("Despair of Financial Policy"), and criticizes it again ("More on the bank plan"); economist Brad DeLong defends it ("The Geithner Plan FAQ" -- Hat Tip: Matt Yglesias), and Krugman responds to Brad DeLong's defense ("Brad DeLong's Defense of Geithner").

Since this new plan is, essentially, a return to the original, rejected, tack of the TARP plan last fall, it's also worth revisiting John Hussman's objections to the original TARP plan, ("You can't rescue the financial system if you can't read a balance sheet"). I suspect Dr. Hussman will reiterate some of those objections in his market commentary this week.

Buffett's Turn to Face Some Heat

In a recent post ("More Obama Supporters Concerned by the President's Recent Actions") we noted that Warren Buffett and Jim Cramer had made essentially the same criticism of Obama's recent handling of the economy: in an economic emergency, the president's primary focus ought to be dealing with that emergency, not trying to enact other policy priorities. Last week, Jim Cramer and his network, CNBC, became the targets of liberal comedian Jon Stewart. Stewart's criticisms of Cramer, some of which had merit, related mainly to Cramer's actions last year and earlier (e.g., Cramer's comments regarding Bear Stearns prior to that firm's collapse). Why bring that up now? As I speculated elsewhere recently (for example, in a comment on Dr. Mark Perry's Carpe Diem blog), Cramer seemed to be targeted because of his recent criticisms of President Obama -- particularly since he made an easier target than some other Obama supporters who recently criticized the President, e.g., Warren Buffett.

Yesterday, apparently, was Buffett's turn. An article in the business section of Wednesday's New York Times ("Buffett Is Unusually Silent on Rating Agencies") criticized Buffett for not using his influence (since he owns 20% of the company via Berkshire Hathaway) to get Moody's to clean up the way it assigns credit ratings. Now, this is a legitimate criticism of Buffett; in fact, it's one I've made myself¹. But the timing of it seems a little odd, if you don't take into account Buffett's recent criticism of Obama. After all, Berkshire Hathaway has been a major holder of Moody's for years, and the role Moody's and the rest of the ratings oligopoly played in the credit crisis has been common knowledge since at least 2007. Can it be a coincidence that Buffett is getting criticized for this now, a week after he expressed concerns about Obama's handling of the economy on CNBC?

The illustration of Buffett above was credited to Minh Uong, and accompanied the New York Times article.

¹For example, on June 12th last year, on GuruFocus I wrote,

Before we begin the ritualistic praise of Buffett here, let's remember that a company in which he was the largest shareholder through BRK, Moody's, facilitated these excesses by slapping triple-A ratings on so many of those CDOs. When you own ~19% of a company, you have a lot of access to what's going on there, if you want it. It's too bad that Buffett didn't exercise more oversight of Moody's during the credit boom.

Health Care in the U.S. versus Single-Payer Systems in Europe and Canada

Since one of President Obama's three main policy priorities is reforming health care, and since progressive pundits often make invidious comparisons between health care in the U.S. and the single-payer health care systems of Europe and Canada, it's worth revisiting an Investor's Business Daily op/ed on this topic written by former Canadian physician Dr. David Gratzer in 2007. Below is an excerpt:

One often-heard argument, voiced by the New York Times' Paul Krugman and others, is that America lags behind other countries in crude health outcomes. But such outcomes reflect a mosaic of factors, such as diet, lifestyle, drug use and cultural values. It pains me as a doctor to say this, but health care is just one factor in health.

Americans live 75.3 years on average, fewer than Canadians (77.3) or the French (76.6) or the citizens of any Western European nation save Portugal. Health care influences life expectancy, of course. But a life can end because of a murder, a fall or a car accident. Such factors aren't academic — homicide rates in the U.S. are much higher than in other countries.

In The Business of Health, Robert Ohsfeldt and John Schneider factor out intentional and unintentional injuries from life-expectancy statistics and find that Americans who don't die in car crashes or homicides outlive people in any other Western country.

And if we measure a health care system by how well it serves its sick citizens, American medicine excels. Five-year cancer survival rates bear this out. For leukemia, the American survival rate is almost 50%; the European rate is just 35%. Esophageal carcinoma: 12% in the U.S., 6% in Europe. The survival rate for prostate cancer is 81.2% here, yet 61.7% in France and down to 44.3% in England — a striking variation.

Like many critics of American health care, though, Krugman argues that the costs are just too high: health care spending in Canada and Britain, he notes, is a small fraction of what Americans pay. Again, the picture isn't quite as clear as he suggests. Because the U.S. is so much wealthier than other countries, it isn't unreasonable for it to spend more on health care. Take America's high spending on research and development. M.D. Anderson in Texas, a prominent cancer center, spends more on research than Canada does.

Dr. Gratzer doesn't make this point explicitly, but it's also true that patients in other countries benefit from the research and development financed by the American health care system. It's worth reading the rest of his column.

The photo above, of the Proton Therapy Center at M.D. Anderson, comes from M.D. Anderson's website.

More Obama Supporters Concerned by the President's Recent Actions

Last week we noted the concern expressed by two supporters of President Obama, Jim Cramer and Stewart Taylor, about the President's recent statements and actions (see "Buyer's Remorse" and ""More Buyer's Remorse"). This week brings more notes of concern from Obama supporters. On Monday on CNBC, Warren Buffett made a point similar to the one Taylor and Cramer made: in an economic emergency, the president's primary focus ought to be dealing with that emergency, not trying to enact other policy priorities. To underline the point, Taylor used the metaphor of a burning house: you put the fire out first; you don't water the lawn. Buffett used the analogy of World War II, saying that we have been hit with an "economic Pearl Harbor". From the transcript of his CNBC appearance Monday:

[I]f you're in a war, and we really are on an economic war, there's a obligation to the majority to behave in ways that don't go around inflaming the minority. If on December 8th when--maybe it's December 7th, when Roosevelt convened Congress to have a vote on the war, he didn't say, `I'm throwing in about 10 of my pet projects,' and you didn't have congress people putting on 8,000 earmarks onto the declaration of war in 1941.

[...]

[J]ob one is to win the war, job--the economic war, job two is to win the economic war, and job three. And you can't expect people to unite behind you if you're trying to jam a whole bunch of things down their throat. So I would--I would absolutely say for the--for the interim, till we get this one solved, I would not be pushing a lot of things that are--you know are contentious, and I also--I also would do no finger-pointing whatsoever. I would--you know, I would not say, you know, `George'--`the previous administration got us into this.' Forget it. I mean, you know, the Navy made a mistake at Pearl Harbor and had too many ships there. But the idea that we'd spend our time after that, you know, pointing fingers at the Navy, we needed the Navy. So I would--I would--I would--no finger-pointing, no vengeance, none of that stuff. Just look forward.

Warren Buffett may not have much else in common with the "dissident" feminist intellectual Camille Paglia, but she supported Obama as well -- and like Buffett, is concerned by some of what she has seen since he was inaugurated. In the first part¹ of her Salon column Wednesday ("Obama's Clumsy, Smirky Staff is Sinking Him"), Paglia blamed the problems on Obama's staff:

Yes, free the president from his flacks, fixers and goons -- his posse of smirky smart alecks and provincial rubes, who were shrewd enough to beat the slow, pompous Clintons in the mano-a-mano primaries but who seem like dazed lost lambs in the brave new world of federal legislation and global statesmanship.

Heads should be rolling at the White House for the embarrassing series of flubs that have overshadowed President Obama's first seven weeks in office...

[...]

First it was that chaotic pig rut of a stimulus package, which let House Democrats throw a thousand crazy kitchen sinks into what should have been a focused blueprint for economic recovery. Then it was the stunt of unnerving Wall Street by sending out a shrill duo of slick geeks (Timothy Geithner and Peter Orszag) as the administration's weirdly adolescent spokesmen on economics. Who could ever have confidence in that sorry pair?

¹The second part of the column is, inexplicably, about something completely different: Paglia's recent trip to experience Carnival in Bahai, Brazil, as the guest of a popular Brazilian singer.

Atlas Shrugging

Ayn Rand's novel Atlas Shrugged has come up a lot recently in commentary about Obama administration initiatives (e.g., this column by Robert Tracinsky last week, "The Ayn Rand Factor In the Santelli Revolt"). Since one of Daniel Wahl's favorite posts (#5) on his old blog expressed Randian sentiments, I mentioned the Tracinsky column to him and suggested he might want to consider writing a post on the subject at his new blog, Systemically Important. Daniel hasn't written a post there on Atlas Shrugged yet (Today's Systemically Important post is "Mottos: Business Peopleguys"), but several other bloggers have, including Will Wilkinson (Hat Tip: Ross Douthat). For those who haven't read Atlas Shrugged and plan to, be warned that Wilkinson's post ("On Going Galt"), and the parts of it I'm about to excerpt below, include some spoilers.

Wilkinson:

I can’t help but feel that threatening to withdraw from economic production, ala Atlas Shrugged’s John Galt, is a certain kind of libertarian-conservative’s version of progressives threatening to move to Canada.

[...]

But insofar as this is all about taxes on the wealthy (as the link to Malkin suggests) it’s a bit hard to see tax rates somewhat exceeding the Clinton era’s as a move over some inflection point from the tolerable to the completely outrageous. And of course none of these folks designed an engine that would have created basically free energy (and made global warming a non-issue). In the individual case, “going Galt” smacks of a kind self-aggrandizement in the same way that climate smuggery does. Because, really, your marginal contribution doesn’t matter that much.

By the way, Atlas buffs, the point of Atlas Shrugged is not that you are John Galt. The point is that you are not John Galt. The point is that you are, at your best, Eddie Willers. You’re smart, hardworking, productive, and true. But you’re no creative genius and you take innovation — John Galt — for granted. You don’t even know who he is! And this eventually leaves you weeping on abandoned train tracks. 

Wilkinson makes a good point in that last paragraph, one I thought was plain when I read the book years ago, but this misunderstanding seems to be shared by some Atlas Shrugged detractors as well as buffs. Back to Wilkinson:

I think Obama’s policies will be bad for innovation, but not because higher marginal tax rates will lead our best and brightest to retire from the field of endeavor. I’m rather more worried that our best and brightest will follow the incentives and go Robert Stadler. I’m worried that our money, which might otherwise have gone to capitalize real innovation, will be confiscated in order to finance government directed “investment” instead. Our economy can readily absorb a passel of drop-out Willerses (though Eddie never quits!). It’s the misdirected capital embodied by the Stadlers and their Project Xes that really hurts.

Wilkinson is less convincing there. All things equal, additional government spending on scientific research (e.g., National Institutes of Health research grants) would probably increase innovation. The bigger potential threat to innovation isn't increased government spending per se¹, but the prospect of price controls (de facto or de jure) or rationing that might be part of a universal national health insurance program.

¹Increased government spending on transfer payments could indirectly stifle innovation if it increased pressure for price controls or reduced reimbursements in a universal government health insurance program.

I borrowed the image above, of the cover of a paperback edition of Atlas Shrugged, from this blog, which I'm sure borrowed it from Amazon.com or somewhere else.

Update: Daniel Wahl joins the discussion with his latest post: "Going Going Galt".

More Buyer's Remorse

From Stewart Taylor's essay in the National Journal ("Obama's Left Turn"):

Having praised President Obama's job performance in two recent columns, it is with regret that I now worry that he may be deepening what looks more and more like a depression and may engineer so much spending, debt, and government control of the economy as to leave most Americans permanently less prosperous and less free.

Other Obama-admiring centrists have expressed similar concerns. Like them, I would like to be proved wrong.

[...]

But with the nation already plunging deep into probably necessary debt to rescue the crippled financial system and stimulate the economy, Obama's proposals for many hundreds of billions in additional spending on universal health care, universal postsecondary education, a massive overhaul of the energy economy, and other liberal programs seem grandiose and unaffordable.

[...]

The markets have also been deeply shaken by Obama's alarming failure to come up with a clear plan for fixing the crippled financial system -- which has loomed since his election four months ago as by far his most urgent challenge -- or for working with foreign leaders to arrest the meltdown of the world economy.

Perhaps President Obama will come to some agreement with foreign leaders on constructive action during the upcoming G-20 meeting in London.

Buyer's Remorse

From Jim Cramer's open letter to the White House yesterday:

I favored Obama over McCain because I thought Obama to be a middle-of-the-road Democrat, exactly the kind I have supported all my adult life, although I will admit to being far more left-wing during my teenage years and early 20s.

To be totally out of the closet, I actually embrace every part of Obama’s agenda, right down to the increase on personal taxes and the mortgage deduction. I am a fierce environmentalist who has donated multiple acres to the state of New Jersey to keep forever wild. I believe in cap and trade. I favor playing hardball with drug companies that hold up the U.S. government with me-too products.

But these are issues that we have no time for now, on the verge of a second Great Depression. This is an agenda that must be held back for better times. It is an agenda that at this moment is radical vs. what is called for. I am proud to have voted for the Obama who I thought understood the need to get us on the right path, and create jobs and wealth before taxing it and making moves that hurt job creation — certainly ones that will outweigh the meager number of jobs he’s creating.

Most important, I believe his agenda is crushing nest eggs around the nation in loud ways, like the decline in the averages, and in soft but dangerous ways, like in the annuities that can’t be paid and the insurance benefits that will be challenging to deliver on.

So I will fight the fight against that agenda. I will stand up for what I believe and for what I have always believed: Every person has a right to be rich in this country and I want to help them get there. And when they get there, if times are good, we can have them give back or pay higher taxes. Until they get there, I don’t want them shackled or scared or paralyzed. That’s what I see now.

The photo of Jim Cramer accompanied his essay on his Mainstreet.com site.

Intelligence, Education, and Earning Power

In a couple of recent posts (e.g., "Lessons from Brooklyn's New Economy" and "An Atypical Perspective on Health Care in the NY Times") we touched on the politics and economics of education. An article in the business section of Sunday's New York Times, a somewhat fawning profile of Google executive Marissa Mayer (pictured above) included a brief, tangential bit of candor on the subject ("Putting a Bolder Face on Google"). The main responsibility of Ms. Mayer at Google is controlling the "look and feel" of the company's search engine, but the article notes that she also has personnel responsibilities:

At a recent personnel meeting, she homes in on grade-point averages and SAT scores to narrow a list of candidates, many having graduated from Ivy League schools, whom she wanted to meet as part of a program to foster in-house talent. In essence, math is used to solve a human problem: How do you predict whether an employee has the potential for success?

How indeed. Why would Ms. Mayer, who holds a masters degree in computer science from Stanford, be interested in the SAT scores of college graduates? Presumably, because SAT scores are a more objective measure of intelligence than a college degree or grade point average, since the later two can be distorted by admissions preferences and grade inflation. This suggests some problems with President Obama's "college for all" initiative. Some advocates of education as tool for economic advancement seem to confuse the correlation of education and high earning potential with causation. Many high-paying employers (such as Google) demand highly-intelligent knowledge workers. The law since Griggs v. Duke Power restricts the use of broad aptitude tests, so employers often rely on other indicators of intelligence, such as SAT scores, or diplomas from elite schools (that generally require high SAT scores).

What would change if college degrees became as common as high school diplomas? Presumably, the use of college diplomas as a proxy for intelligence would decline, and employers would look more closely at SAT scores, or demand a higher degree to replace the signaling function of a college degree (e.g., jobs that now require bachelors degrees might require masters degrees). That would be a boon for the education industry, but it's unclear how it would help the average American worker increase his earnings potential.

I suspect that the focus among elites in government and punditry on the potential of higher education as a ladder to economic advancement is partly the result of most elites having gone to exclusive private high schools, where virtually all of their classmates were relatively bright and college bound. Had more elites gone to public high schools, where not every student was on a track to college, there might be more skepticism in public policy discussions about the broader utility of higher education.

The photo above accompanied the NY Times article.

Update: for the benefit of new readers of this post, I am now blogging at Steam Catapult and Shadow Stocks.

Lessons from Brooklyn's New Economy

This week, the New York Times published an interesting article on the burgeoning culinary movement in Brooklyn, one similar to the movement led by Alice Waters¹ and others in Berkeley, California, in the 1970s ("Brooklyn's New Culinary Movement"). There are some broader political and economic issues related to this story that the article doesn't touch on, which I try to touch on below.

The article described how a number of Brooklynites were building viable businesses and creating livelihoods for themselves. Conspicuously absent was the role of formal education in most of this. The butcher learned his trade from an apprenticeship of sorts; the ricotta cheese makers learned that craft on a trip to Italy; the chocolate-making brothers were mainly self-taught, etc. Since education is one of President Obama's three main policy foci, it would be good if he or his aides took note of this, but I doubt they will, for a couple of reasons. The first is because of the extent to which the Democratic focus on education is about feeding the educational industry, and the second is because I doubt many of Obama's aids (or outside advisers) have ever done the sort of thing these Brooklynites are doing: building businesses from scratch. That lack of hands-on experience leads to blind spots among our elites, both in the public sector and in the corporate sector.

That's a thought I had considered writing a post on a few months ago, but I'll make the point here instead. There's been speculation in recent months about how some of the catastrophes that combined into the financial crisis could have happened on the watch of some of America's best and brightest, in big business and government. In a recent New York Times column, Ben Stein, drawing on his experience in the Nixon White House, speculated that most of the best and brightest weren't that bright. He wrote that most of the men he worked with in Washington were B+ types, with the exceptions of two he considered to be geniuses, Henry Kissinger and Paul O'Neil. Others in recent months, including Atlantic blogger and Harvard alumnus Ross Douthat, have blamed the arrogance of Harvard-educated elites. I suspect the lack of hands on experience in closer-to-the ground businesses is partly to blame. Relatively few alumni of Harvard or other elite schools go into these sorts of businesses, as they tend to have lower-risk, lucrative job opportunities in big business, consulting, etc.

Attitudes toward debt and leverage are one example. Most small businessmen I've known are inherently cautious about both². The New York Times article doesn't give much detail on how these culinary-related businesses are financed, but what details it does give suggest an aversion to getting over-extended with debt (e.g., the chocolate-makers paying the designer of their packages in chocolate bars and deciding to let their business "evolve" rather than trying to grow it more quickly). The academic perspective on leverage (at least for public companies), up until recently, was different³, and of course there was no shortage of elite university grads at highly-levered Wall Street firms.

The image above, from the article, gives you an idea of the sort of ethnic diversity you can find in many gentrifying New York City neighborhoods.

¹In doing some research before writing this post, I came across this related essay (which I don't entirely buy) by John Schwenkler: Eat Republican: How an organic movement born in Berkeley exemplifies conservative values.

²In lending businesses, some amount of leverage is necessary, but the owner of a local non-traditional lender for whom I've done some work explained to me that his business is usually levered less than 3-to-1: far less than most commercial banks, let alone investment banks. He also takes a more hands-on approach to asset-backed lending than some of his counterparts in big Wall Street firms, e.g., driving out to a retail property backing a note and watching its foot traffic, etc.

³The academic perspective on this always struck me as counter-intuitive. In an NY Institute of Finance class a couple of years ago, for example, the instructor, a veteran CPA and CFA, lectured that it was a bad thing for a company to have a lot of cash on its balance sheet (because that dragged down returns on equity). He said that a company flush with cash it couldn't put to use ought to use it to buy back its stock, and then lever up and buy back some more stock. Of course, companies that followed that sort of advice in the last couple of years haven't been well served by it, while companies holding net cash may now have some attractive opportunities to put it to use in a depressed market.

More on Jindal

In today's Washington Post ("Where's Bobby"), Kathleen Parker writes about the contrast between the Bobby Jindal who gave the dud response to the President's speech last Tuesday and the smart, effective government guy he has shown himself to be on other occasions (Hat tip: Real Clear Politics):

The Jindal who responded to Barack Obama's address to Congress was less the brilliant statesman than a terribly mixed metaphor -- equal parts Mister Rogers, Bobby Brady and Kenneth the Page.

I know Bobby Jindal, and that guy wasn't Bobby Jindal.

[...]

The real Jindal has actually read the stimulus bill and can recite its contents. The real Jindal is the sort of politician who promises ethics and education reform, and actually delivers.

Stories of Jindal's ability to quickly assess a problem and fix it have become the stuff of legend in Louisiana, as when he was assigned the task of reforming the state's Medicaid program and presented a workable plan the following morning. He was in his 20s.

Parker goes on to blame Jindal's performance last Tuesday night on his handlers:

At the moment, Jindal seems to be handicapped by handlers who either don't trust their candidate or have no faith in Americans' intelligence.

[...]

The stage-crafting was amateurish and the speech embarrassing. Jindal is smarter than the guy who criticized "volcano monitoring" as an example of wasteful spending in the stimulus bill, prompting the same cringe reflex that Sarah Palin did when she targeted silly ol' spending -- in France, no less -- on fruit fly research that is, in fact, crucial to medical research.

[...]

Tuesday's speech was a setback, much like Bill Clinton's droning 1988 Democratic convention speech, but hardly a career-ender. When Jindal apparently slipped his collar and resurfaced Wednesday morning on the "Today" show, the Rhodes Scholar Jindal (who was accepted to both Yale and Harvard medical and law schools) was back.

He dropped his "I'm-just-a-regular-guy" shtick and managed to articulate his conservative principles without putting the audience in mind of cookies and milk. Praising Obama's objectives -- while conceding that Republicans have lost fiscal credibility -- he emphasized his preference for policies that help businesses create jobs rather than government programs he fears will require a taxpayer feeding tube in perpetuity.

Below, via YouTube, is the video of the "Today Show" appearance Parker described. I agree that it was a much better showing, but there seemed to be some inconsistency about Jindal's angle of attack on the stimulus bill. At one point he says that a stimulus focused more on infrastructure spending, business tax credits, etc. would have been better¹, and on the other hand he says we can't borrow and tax our way through this. Those are two different, fairly incompatible arguments, and I think you'd find a lot more economists agreeing with the first one than the second one. Watch and decide for yourself.



¹Jindal also mentioned a couple of tax cuts that I doubt would be that stimulative at this point, a capital gains tax cut (who's worrying about capital gains at this point?) and permanently lowering (income?) tax rates on lower earners. President Bush did lower rates on lower earners, and President Obama has said he wants to keep those parts of Bush's tax cuts, but since the bottom 40% of earners pay little net federal income taxes anyway, I doubt there's much stimulative effect in lowering them further (although there probably would be in a temporary payroll tax holiday).

"Jindal's Missed Opportunity"

Smart piece by Nicole Gelinas of the Manhattan Institute in its magazine City Journal: "Jindal's Missed Opportunity" (Hat Tip: Real Clear Politics). Excerpts:

Jindal noted that Republicans have an “honest and fundamental disagreement” with Democrats about “the proper role of government.” Regarding the public sector’s ability to rescue Americans from the economic storm, he said, “those of us who lived through Hurricane Katrina—we have our doubts.” Jindal told how, in the immediate aftermath of the 2005 storm, he went to visit Sheriff Harry Lee (now deceased) and found him yelling into the phones. Lee had learned that volunteers in boats were ready to go out and help, but that “some bureaucrat” had told them they couldn’t do so without insurance and registration. The sheriff told the boaters to “ignore the bureaucrats and go start rescuing people.” From this tale, Jindal concluded, America should realize that “the strength of America is not found in our government” but in the “enterprising spirit” of regular people.

The problem with Jindal’s story—and one reason why Republicans are in so much trouble now—is that reasonable people don’t consider providing critical, life-saving support for starving and dehydrated people after an unprecedented natural disaster to be an example of scarily big government. That’s just minimally competent government, even in a country far less developed than ours. In fact, Jindal’s story illustrates the opposite of what he intended. Lee, a longtime government¹ official, personified the functional, nimble government that we need. He overrode unnamed bureaucrats and told volunteers that he’d be personally responsible if they ran into any more trouble. Lee made a smart decision on the fly and saved lives. Unfortunately, other officials—at all levels, with only a few exceptions—proved shamefully negligent in their responses. Because they failed at their jobs, people died.

[...]

Americans don’t see abject government incompetence as an argument for no government. They see it as an argument for a government that is at least passably competent at fundamental tasks. Republicans do the country a disservice by not recognizing this truth. And since some Democrats seem to confuse Americans’ desire for a competent government with a desire for a government that does everything—a disastrous misstep in the opposite direction—Republicans need to provide a rational counterweight.

The banner image above comes from the City Journal website.

¹To be fair to Jindal, it seemed clear from the context (a response to a POTUS speech) that by "government" he was implicitly referring to the federal government. There are some things only the Federal government can do, but it's not unreasonable for a conservative (or anyone else, for that matter) to prefer to have more responsibility and resources devolved to the state and local levels (e.g., to men like Sheriff Lee).

An Atypical Perspective on Health Care in the NY Times

Last month, the New York Times Magazine published a sprawling cover article by David Leonhardt on how the Obama administration might "remake" the American economy ("The Big Fix"). One of Leonhardt's arguments was that the U.S. spends too much on health care, often without commensurate results, and in his article he suggested spending less on health care and more on education (this view seems to be gaining traction on the left). Despite the length of his article, Leonhardt didn't offer much by way of empirical data in support of his claim about the limited benefits of health care spending or the potential benefits of spending more on education (his argument in support of more emphasis on education included this observation, "The two most affluent immigrant groups in modern America — Asian-Americans and Jews — are also the most educated," without addressing any of the obvious questions that observation raises).

Last Sunday, the New York Times business section offered a different perspective on health care spending, from William Hawkins, the CEO of Medtronic ("The Boss: For Medtronic’s Chief, Success That Hits Home"). Excerpt:

Advances in technology enable us to do things today we weren’t able to do years ago, such as monitoring and managing patients remotely. Twenty years ago when we implanted a defibrillator, it cost $100,000 and wasn’t nearly capable of the performance of today’s devices that are a fraction of the cost.

My family has also been a driving force behind my journey. I have a photo in my office of three of my relatives. My father, 83, has eight coronary stents, some of them ours. My 91-year-old uncle, an injured World War II veteran, suffered from a tremor for years that made his hands shake. When he was 89, doctors implanted one of our deep brain stimulators, which controls movement. When they turned it on, for the first time in 40 or 50 years his hands stopped shaking and he got his life back. My father-in-law, who is 86, has a Medtronic heart valve, stents and a pacemaker.

One of the reasons I’m working is to make sure I can take care of my family so we can enjoy a long life together.

It sounds like Mr. Hawkins's relatives have gotten some positive results from their health care spending. Would we really be better off as a country if that money were thrown into the latest sisyphian federal program to improve public education instead?

The image above, of the deep brain stimulator, is from Wired.

Talking Turki

In an op/ed column in last Friday's Financial Times, Turki al-Faisal (photo above), former Saudi intelligence director and ambassador to the U.S., the U.K., and Ireland, warns of jihad if the Obama Administration doesn't support the Saudi proposed solution to the Mideast conflict:

Mr Obama should strongly promote the Abdullah peace initiative, which calls on Israel to pursue the course laid out in various international resolutions and laws: to withdraw completely from the lands occupied in 1967, including East Jerusalem, returning to the lines of June 4 1967; to accept a mutually agreed just solution to the refugee problem according to UN resolution 194; and to recognise the independent state of Palestine with East Jerusalem as its capital. In return, there would be an end to hostilities between Israel and all Arab countries, and Israel would get full diplomatic and normal relations.

Last week, President Mahmoud Ahmadi-Nejad of Iran wrote a letter to King Abdullah, explicitly recognising Saudi Arabia as the leader of the Arab and Muslim worlds and calling on him to take a more confrontational role over "this obvious atrocity and killing of your own children" in Gaza. The communiqué is significant because the de facto recognition of the kingdom's primacy from one of its most ardent foes reveals the extent that the war has united an entire region, both Shia and Sunni. Further, Mr Ahmadi-Nejad's call for Saudi Arabia to lead a jihad against Israel would, if pursued, create unprecedented chaos and bloodshed.

So far, the kingdom has resisted these calls, but every day this restraint becomes more difficult to maintain. As the world laments once again the suffering of the Palestinians, people of conscience from every corner of the world are clamouring for action. Eventually, the kingdom will not be able to prevent its citizens from joining the worldwide revolt against Israel.

One problem with the Abdullah peace initiative seems to be that Israel already is, de facto, at peace with Saudi Arabia and the other Arab countries. Mr. al-Faisal's threats of jihad notwithstanding, I doubt Israelis lay awake at night worrying about waves of Saudi jihadis infiltrating Israel's borders¹. What the Israelis probably do worry about are rocket attacks from Hamas or Hezbollah, and the prospect of Iran acquiring nuclear weapons. Since the Abdullah initiative doesn't include Hamas, Hezbollah, or Iran, it's not apparent how it would address those Israeli concerns. It's true that there would be other benefits to Israel from a peace treaty with Saudi Arabia and other Arab states, e.g., trade and tourism. But the two Arab countries with which Israel already has peace treaties, Egypt and Jordan, aren't major trade partners of Israel, according to the CIA World Factbook.

It's also not readily apparent how the Arab states would benefit from a peace treaty with Israel, or, for that matter, from peace between Israel and the Palestinians. As an article in yesterday's New York Times Magazine ("Revolution, Facebook Style"):

From Amman to Riyadh, governments have long viewed protests against Israel as a useful safety valve to allow citizens to let off steam without addressing grievances closer to home.

Wouldn't a peace treaty remove that safety valve?

The photo above of Turki al-Faisal comes from BYU's website.

¹Significant numbers of Saudi jihadis have, in fact, infiltrated Iraq's borders in the past few years, but Iraq shares a large land border with Saudi Arabia.