And who is this guy Obama?

A splendid op-ed in this morning’s New York Times. Mr. Coates writes:

Obama has been much praised for the magnanimity he shows his opposition. But such empathy, unburdened by actual expectations, comes easy. More challenging is the work of coping with those who have the disagreeable habit of taking the president, and his talk of “fundamentally transforming the United States of America” seriously. In that business, Obama would do well to understand that while democracy depends on intelligent compromise, it also depends on the ill-tempered gripers and groaners out in the street.

The Party of Lincoln, whatever its present designs, has not forgotten this.

 

Krugman on the new cult

Sure, the Right is crazy. But the new cult, in Krugman’s eyes, is all about centrism. As in, we need a centrist party and centrist leaders and a centrist president—to, somehow, meld the conservatives and the liberals into a working majority that gets things done.

Krugman suggests that this is wrong-headed thinking. For one, we already have a centrist president. No, the problem is that far too many Democrats are bending over backwards to accommodate the loony Right. He writes:

The reality, of course, is that we already have a centrist president — actually a moderate conservative president. Once again, health reform — his only major change to government — was modeled on Republican plans, indeed plans coming from the Heritage Foundation. And everything else — including the wrongheaded emphasis on austerity in the face of high unemployment — is according to the conservative playbook.

Krugman then goes on to fault the media for its obsession with “balance,” tainting both sides in equal measure.

You have to ask, what would it take for these news organizations and pundits to actually break with the convention that both sides are equally at fault? This is the clearest, starkest situation one can imagine short of civil war. If this won’t do it, nothing will.

His final words:

It’s a terrible thing to watch, and our nation will pay the price.

I find all of this terribly frustrating, because it doesn’t seem to matter that Krugman et al. point out the problems and even provide some path out of the mess. The people who should know better just continue their errant ways.

Going for the new record

The M’s are at 17 and still diligently pursuing both the American League and Major League records for most consecutive losses in a season. The former is held by the 1988 Baltimore Orioles (21); the latter by the really hapless 1961 Philadelphia Phillies (23). Only four to go to match the Orioles. Tying the Phillies is a long shot, but I have faith in the M’s.

A primer on the debt ceiling

A nice Q & A in the New York Times about the debt ceiling fiasco. Also, take note of this excerpt:

But over the last 30 years, the debt has increased under every president — with the biggest increase under President George W. Bush, who cut taxes, added a drug benefit to Medicare and fought two wars.

James Fallows provides an appropriate chart in a recent The Atlantic post, via the New York Times:

The new “era of austerity”

It appears that even Nancy Pelosi has embraced belt tightening. She states that the US “must enter an era of austerity” [my emphasis]. Since both Harry Reid and Barack Obama propose huge cuts in federal spending there is no reason to expect an outcome that puts people to work and restores the already draconian cuts to public services, including education.

Unfortunately, the arguments against austerity in recessionary times necessarily involve economic theory and a little bit of history, which are both alien territory for selfish Republicans and, to our collective regret, far too many Democrats who should know better. That said, we can understand how the austerity advocates have prevailed.

There is a simple notion that has gained far too much traction: a government should be run like a financially responsible household. Washington, D.C. should not spend more money than it takes in. Indeed, a responsible government would sock money aside for rainy days; in other words, build and maintain a budget surplus.

I’m all in favor of this proposition, especially the surplus part—if we were living under more normal conditions. But we’re not, and this is where matters leave the satchel of shibboleths and enter the more arcane territory of economic theory.

The departure is complicated by two challenges: (1) denial that we’re mired in abnormal circumstances; and (2) a refusal to admit that the problems we face demand extraordinary, deliberate actions rather than merely sitting back to await the magic of the market.

Economic thinking amongst academics can be generally divided into two broad camps: Keynesians and, well, non-Keynesians. The latter take their cues from University of Chicago professors, notably Robert Lucas, Jr., who is alleged to have uttered something to the effect that mentioning the name of Keynes invited derision among serious economists.

There is still much debate on what Keynes meant in his writings. However, his book General Theory reveals his essential thinking on macroeconomics. His Chapter 12 on long-run expectations provides a workable précis of recessions and how to recover from them.

Basically, during periods of low aggregate demand (i.e., not enough people buying enough things), both the producer and the consumer are locked in a stalemate, with neither willing or able to extricate. The producer (or investor) declines to hire people because he has no need to crank out more widgets, since people aren’t buying. Consumers, on the other hand, have experienced either stagnant or deflated wages, and with almost 15 million people out of work, lack the means to purchase goods and services. Keynes believed that both actors during recessionary times suffer from significant “uncertainty,” or lack of confidence. In response they retreat, retrench, or otherwise stop spending. Who can break the logjam? Keynes said only the federal government—by stimulating the economy (fiscal measures).

Here is where we encounter severe obstacles. The Republican Party as a whole refuses to increase taxes, even on the wealthiest, so as to increase government revenues and thereby reduce the deficit. Indeed, the Republicans want to lower taxes even more. (And recall that US tax rates are the lowest amongst the OECD countries.) Their plan is to slash government spending, which is precisely the opposite of Keynes’s prescription. Moreover, this new austerity won’t work, as even the Economist magazine pointed out.

A second obstacle: Republicans and non-Keynesians believe that government stimulus leads to higher inflation. Well, if anything, the economy suffers from too little inflation. Let’s look at the numbers from the Bureau of Labor Statistics:

The fainter gray line represents “core” inflation, all items less volatile food and energy prices. The darker line shows all items. It should be clear that the $700 billion+ stimulus package did not usher in a period of high inflation.

Nor should there have been any suspicion that it would. The collapse of the housing bubble wiped out about $8 trillion in asset value. Also, between 2008 and 2009, the Gross Domestic Product actually fell—by $1.6 trillion.

Yet, the stimulus package, itself a result of compromise with the selfish Republicans, was less than half the amount needed—and most of that was in the form of more tax cuts. When push came to shove Obama sided with the pragmatists in his advisory ranks, ignoring the recommendations of Christine Romer et al. who pushed for a real stimulus (fewer tax cuts) of at least $1.5 trillion, enough to close the gap in GDP.

Krugman, who has written a forward to a new edition of Keynes’s magnum opus, offered these words in March:

Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks.

There. Austerity only exacerbates the problems. Mr. Reid? Ms. Pelosi? Are you paying attention?

Torture vs. masochism

I grew up with the S.F. Giants. I remember vividly sitting on the couch, playing hooky from school, watching the seventh game of the 1962 World Series. There were two outs in the bottom of the ninth against the Yankees, with runners in scoring position and Willie McCovey at the plate. Then the famous line drive and the Peanuts cartoon. If only the ball had been a foot higher. But Bobby Richardson snared the searing spheroid, ending the longest series in history (rain delays and postponements in both cities).

After moving to Washington state in 1973, I continued to follow both the Giants and the Oakland A’s. Despite a quirky, outlandish owner, the A’s managed to string together three consecutive World Series titles. But the Giants, not so well. The Bay Bridge series in 1989 was marred by the major earthquake, and the Giants were soundly defeated–swept, actually—by their counterparts from “there’s no there there.”

Then last year, the glorious. The Giants finally won the World Series, after 56 years of wandering in the baseball wilderness. But it was torture. Close, nail-biting games during the final stretch of the season then throughout the playoffs. Opponents, however, learned to fear the beard. So, no matter how perilous the journey, San Francisco fans gladly endured the torture for the end result.

But what can we say about Mariners’ fans? There is no endurable torture, since the outcome is almost always the same: a loss. No, if you follow the home team, as do I, you must engage in a perverse form of masochism, knowing that futility-squared produces the same miserable result. During this record-breaking losing skein, the M’s have discovered that it’s become nearly impossible to combine good pitching and good hitting; indeed, on this recent devastating road trip they’ve had neither.

What to do?

Managers come and managers go, yet nothing changes. Players come and players go, yet nothing changes. General managers come and general managers go, yet nothing changes. The only constant in the organization is the absentee ownership and the CEO.

Let’s speculate. I’ll assume that the owners keep the team, although I don’t know why anyone would want it. The general manager is in charge of acquiring and jettisoning the manager and is mostly responsible for the roster of players. Jack Z. has performed poorly, by almost any measure. Nail-chewing Eric Wedge, as feisty as they come, has all but exhausted his rhetorical arrows. Continually chiding the players to “get tougher” doesn’t seem to work. Now he’s shaved off his Fu Manchu in a feeble attempt to relieve the clubhouse pressure. The tune has shifted from tough to what-the-heck. But sticking with this bunch of players and coaches would only guarantee misery.

Jack Z., believe it or not, says he’s not actively shopping for deals. His major problem: none of the players, with perhaps three or four exceptions, will command value in the market. What’s a Figgins worth? Same for Jack Wilson. Yet, they’re doing no one, including themselves, any good playing for the hapless M’s. There may be young players with “potential,” that elusive quality that may never be realized. Trade the future?

I’ll go out on a limb. I bet that there will be movement, since the season is hopelessly lost. I also bet that whoever leaves Seattle will feel as if they’d escaped purgatory—and they will prosper in different environs. That’s what former Mariners do.

The next few days before the July 31 deadline should be interesting. The masochism is a given.

The president’s lawyers

I found a note of irony regarding President Obama’s use of legal counsel. It seems that with respect to engaging US troops and military apparatus in Libya, Obama rejected his lawyers’ advice. Yet, when on the verge of a possible economic meltdown as a result of government default, Obama takes cover behind his lawyers’ skirts and trousers. After all, former president Clinton urged Obama to invoke the 14th Amendment to unilaterally raise the debt ceiling, but Obama claimed that his lawyers wouldn’t let him.

So, the scorecard reads: off to another war, yes; avert a government default, no. Who’s playing politics here?

In his blog this morning, Paul Krugman writes:

I hope and pray that Obama’s lawyers discover that the 14th amendment solution is valid after all. Because otherwise we’ll be looking at very dire things, even if the markets stay calm.

Valid, smalid. If it’s convenient, take the lawyers’ counsel—or not.