Relevant and even prescient commentary on news, politics and the economy.

At CATO, knowing how to diagram–or read–a sentence is an impediment

Via djw at LG&M and Echidne, the original sentence:

Since 1920, the vast increase in welfare beneficiaries and the extension of the franchise to women — two constituencies that are notoriously tough for libertarians — have rendered the notion of ‘capitalist democracy’ into an oxymoron.

The it’s-not-the-stupidity-it’s-the-coverup “explanation” from the editor:

[Thiel] writes only that women have tended to favor policies and candidates he opposes, and which he thinks are bad for the country. This seems — to my mind at least — regrettable, but also generally true.

We can leave the question of whether Jason Kuznicki actually uses his mind as an open one. For now, I just plan to assume he never wants any woman with half a brain to work at CATO. He continues:

Thiel might have chosen his words more carefully, but it’s still quite a logical leap from what he actually wrote to demanding the end of women’s suffrage. Of course women should be able to vote. It’s ridiculous to suggest otherwise. We libertarians just need to do a better job of convincing them that voting in favor of individual liberty and free markets are the best choices they can make. [emphasis mine]

All right, let’s assume—contra the evidence—that Thiel is not demanding an end to women’s suffrage. Since he has equated giving women the vote with the death of the “notion of ‘capitalist democracy,'” we are left with three choices

  1. Take Thiel at his word that giving women the vote destroyed the glorious CATOist “capitalist democracy,”
  2. Take Kuznicki at his word that women are just too dumb to understand the glories of “individual liberty” and “free markets,” but that Institutes like CATO are around to help them overcome their inferiority in that respect, or
  3. Conclude that Kuznicki believes that people who read CATO Unbound are illiterate, or at least stupid enough to believe that Thiel’s decision to make an attack on women’s suffrage part of the subject of his sentence referred to a subordinate clause, not the predicate.

I used to expect better from CATO. It’s sad to see them resort to “Who are you going to believe, me or the text I published?”

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Specter, Blue Dogs and Filibusters: the Dynamics

by Bruce Webb

I just went on a web cruise through the bigger venues of the left blogosphere and I don’t think even some of the big guys get it. The prevailing sentiment seems to be that 60 is not a particularly important number because it only takes one Blue Dog to defect to sustain a filibuster. But this I think is to miss the actual dynamics that were in play and how Specter’s move changed the game.

(This ran long so I stuck most of it under the fold.)

First Republicans rarely had to sustain a filibuster through an actual cloture vote, and when they did had the numbers to do it on their own. When Bush was in office they used the filibuster as a stand-in for the veto threat, on the reasonable enough argument that if Democrats couldn’t muster 60 votes for cloture, they sure as hell wouldn’t get 67 to override a veto. So if the ultimate result was going to be a veto then a compromise why not save everyone time and grief and compromise now. In doing so they were able to present themselves as the voice of reason while asserting that everything the Democrats did was simply political posturing in the face of the inevitable. And once compromise was agreed to the Blue Dogs could spring to action without every being openly disloyal to the party. Given that at least some of their votes would be needed to pass any legislation they held a key gatekeeping role.

But the key is that the Republicans took all of what heat there was in this scenario, which is okay for them, there was realistically not much the Democrats could do to them beyond trying to punish them at the ballot box, something they would be doing anyway. Meanwhile the Blue Dogs could but on the White Hat of Compromise.

Things tightened up after the election of Obama, the implicit veto threat now being off the table and so removing the Republican defense that they were only facilitating the ultimate compromise. Now they truly had to be the Party of No in order to be effective, but as long as they could keep a united front they could still prevail. And just as importantly their Blue Dog allies could keep their hands clean.

Well that dynamic changed yesterday. Specter’s move in party may not have much effect on his vote on final legislation but though he denies that this means he will be a reliable 60th vote on cloture in practice that will be impossible. He simply can’t afford to be the constant last vote to block the Leadership agenda, their promise to clean the primary field as much as possible will become null and void if he constantly sides with the Republicans on filibuster threats. And the same goes for the current Blue Dogs. Up to now they have been able to keep their hands clean and while they could hint that they were not certain votes for cloture in practice they had to go along. Which is why Democrats had no defectors on the Obama budget, the Dogs had too much to lose.

Why is why some of the projections on the Left that Bayh or Nelson will jump over to the Republicans are more than overstated. Thinking back over the history of Senatorial defections I can’t think of one since Strom Thrumond went from Dep to Rep in 1964 where someone consciously chose to move into the minority on principle alone.

There may be some key votes where a Blue Dog will simply decide he can spit in the faces of Obama and the Leadership and get away with lining up with Republicans to sustain a filibuster but there will be a price to pay, (as Specter found out when his leadership tacitly endorsed him being primaried by Toomey). So while we can expect them to do their best to block the progressive agenda I don’t think the filibuster will be a viable option, and certainly not if with Bayh you have Presidential ambitions.

So yesterday was a big day. The ideology of the Senate may not have shifted an iota, but the dynamics shifted a lot. Rather than being passive enablers of Republican obstruction the Blue Dogs would have to move into open opposition to Obama. This might work in relation to something like EFCA but if they try to get too blatantly in the way of Health Care reform they will be steamrolled. Something I suspect they know full well.

(In Googling I see that Ben Nelson serves on four powerhouse committees: Appropriations, Armed Services, Agriculture, and Rules and is up for election in 2010. I don’t think he would like to be shifted from one or all of those over to the Indian Affairs or Aging Committees or the Special Committee on Printing in 2008.)

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Swine flu

By Spencer,

Is there any truth to the reports that Rush Limbaugh and Newt Gingrich are proposing that we need to cut tax rates on dividends and capital gains to deal with the swine flu?

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What’s the Scam?

by cactus

What’s the Scam?

Over the years my wife has known her, a friend of hers has developed a, shall we say, checkered past. That includes a felony (for drunk driving), at least one bankruptcy, as well as a number of questionable deals in which she was engaged in partnership with her husband. (She recently began divorce proceedings against him.) For example, my understanding is that the couple sold a vehicle about a year ago, and, ahem, activities related to the sale resulted in grand larceny charges plus against her husband and a no contest plea from him. I recall hearing about a number of other interesting misadventures the couple had had over the years.

I’m swamped, so I’m going to cut to the chase. My wife’s friend was in a bar one night, and met another felon who hired her to sell health insurance to small companies. (There was a small matter of obtaining a license, but that was achieved in short order.) I hear things third hand, mind you, but my understanding is that the ratio of felons to non-felons in the office is surprisingly high considering that social security numbers and financial information are provided to the agent by clients. I understand the concept of rehabilitation, but like I said, that ratio is high enough that it isn’t happening by accident.

And then there’s another thing. My understanding is that my wife’s friend is now making upwards of $4,000 a week. That is a not-insubstantial amount of money, especially considering that a) she has only been at this three months, b) she had zero experience or knowledge of health insurance before this point, and c) she doesn’t have any particular skillsets that relate to health insurance or health insurance sales. Another factoid: it seems she gets a 28% commission. That’s her take-home, not the office or her boss or any of the other fixed costs. Also, I looked up the insurance company which has most of the policies she sells, and that company, at least, is definitely legitimate.

So I’m wondering what’s going on here. Any ideas?
by cactus

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Stocks at the President’s 100 Days

By Spencer,

Given all the attention the press is giving the 100 days results I though people might find this chart of interest.

There is a wide spread convention to use the election day as a base for the stock market because of the belief that the market is a way of discounting future results.

Of course I will not point out that the policies Larry Kudlow wants to repeat produced the second worse stock market results of any US President.

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Just an opportunity to libel, never a previous concern


A regular reader claimed the torture debate at Angry Bear was simply an opportunity to libel. Let that not ever be repeated. These are only some posts on the issue here, from different points of view. Such an important issue deserves careful thought, and no invective. If all you have is swearing, either side, you have lost the argument.

Stay away from fox news on torture says army 2004

Joe Lieberman 2004

Cheney and torture 2005

On the geneva conventions 2006

waterboarding 2007

McCain and Giuliani 2007

Torture legalities 2007

Battlefield ethics 2007

Ticking time bombs 2007

Canada and human rights

David Rose 2008

McCain and torture 2008

Andrew Sullivan and McCain on torture

There are more if you have a real interest and not a passing political excitement.

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The disconnect of my economy with the money economy

by Divorced one like Bush

The Yahoo Financial page has had this headline from the AP up for a while today:
Top Stories
Investors are cautious as swine flu cases increase- AP
This is the first line:

The swine flu gave Wall Street a reason to turn cautious. The Dow Jones industrial average gave up a midday recovery and retreated about 0.6 percent Monday as the swine flu’s death count in Mexico grew to about 150 people from 100.

Really? Swine flu is the reason one should be getting out of the market. Not any of these:
Whirlpool 1Q profit drops on weakening demand – 1 hour, 4 minutes ago
– AP

Whirlpool Corp., the world’s largest maker of stoves, refrigerators and other major home appliances, said Monday its first-quarter profit fell 28 percent on slumping sales, softening consumer demand and the stronger dollar.

Boeing CEO calls slump ‘once-in-a-lifetime’ event – AP – 1 hour, 5 minutes ago

Boeing Co. Chairman and Chief Executive Jim McNerney assured shareholders Monday that the company is in strong shape to ride out the “once-in-a-lifetime” downturn that has walloped its profits, jetliner orders and stock price.

GM to cut 21,000 US factory jobs, shed Pontiac – AP – 2 hours, 39 minutes ago

General Motors Corp. could be majority owned by the federal government under a massive restructuring plan laid out Monday that will cut 21,000 U.S. factory jobs by next year and phase out the storied Pontiac brand.

Or this from a few days ago:
Retail import volume at U.S. container ports to decline at least through summer, report says

Import cargo volume at major U.S. retail container ports fell again in March after dropping below the 1 million twenty-foot-equivalent (TEU) mark in February, the first time in seven years the total had fallen that low. And the volume declines should continue for at least a few more months, according to an IHS Global Insight-National Retail Federation (NRF) report issued Wednesday.

U.S. ports will handle an estimated 987,371 TEUs in April, which would represent a 22 percent drop compared with the same 2008 period, after handling an estimated 930,142 TEUs in March, a 19.7 percent decline compared with March 2008’s total, according to the IHS Global Insight-NRF monthly Port Tracker report.

Swine flue is what’s doing it for you hey? Not that workers are being shed, profits are down, container traffic is down. I mean come-on, what could a company not making a profit or selling less stuff while shedding jobs in a down economy that was 70% consumer driven have to do with you making money off of their stock. Nothing I guess.

Nothing has changed. There are still two economies and only one of them is a concern.

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Leona Helmsley Omnibus Tax Reform Act of 2009

by Bruce Webb

Well there is no such bill, but it would be a good title for what we would see if we put the entire economic right tax agenda together. Because what seem to be totally different arguments end up delivering the same outcome.

We can start with the corporate income tax. The argument here is that it represents ‘double taxation’ and/or that it just gets passed through in prices. Okay we can debate that in comments if you like.

Then we can move on to the estate tax. Along with emotional appeals to the ‘death tax’ you get an argument about it being unfair to small business and family farms. Another topic for debate.

Moving along we have tax on dividends and tax on capital gains. Once again we have our old friend ‘double taxation’ along with arguments that taxes on these simply reduce motivation for re-investment.

Well then we can step down the road to marginal tax rates. Obviously higher rates similarly reduce reinvestment.

Which brings us to the Flat Tax. Here the argument is that you can save billions in compliance costs and so have everyone paying less. This argument is a hoot, but I’ll leave it for others.

What would happen if you passed all of this as a package? And all with arguments stemming from economic equity and efficiency in order to get majority support?

Billionaires would never have to pay a dime in federal taxes. There are I believe five Walton’s heirs. If you eliminated corporate income tax there would be that much more to distribute as dividends, which should also serve to drive the stock price up. If you eliminate the tax on dividends than each would have just that much more money to spend or reinvest. If you further eliminate taxes on capital gains (all in the interest of the larger economy of course), any stock sales for the purposes of diversification or otherwise would not be subject to tax. And if as a final step you eliminated the estate tax the entire capital accumulation would pass tax free to the next generation.

If we choose we can have a spirited debate on all of these separately or in combination, have at it (I am going out for lunch). But if we yielded individually on each issue to these economic right proposals and all of it was wrapped up into one bill the post title becomes perfectly appropriate. Because when it comes down to their total agenda the economic right fully agrees with the famous dictum of heiress Leona Helmsley:

“We don’t pay taxes. Only the little people pay taxes …”

Why does the Queen of England have multiple palaces and huge collections of jewels and gilded carriages? Because until recent times Royals paid no taxes at all and certainly no taxes on capital. Did the British Monarchy actually deliver value in exchange for that status? Well the American Colonists certainly didn’t think George III was worth it, but that is a decision for the British People. The question is whether we want to transform holders of great family wealth into our own heriditary tax-free aristocracy? Do we want to transform ‘hedge fund king’ from a metaphor to a reality?

If so lets get busy on the Helmsley Act.

If not always remember that the first question you should ask about such proposals is ‘cui bono’ and not just at the margins. Who gets how much?

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Cronyism, the Fed, the Treasury, and the Banks

By Stormy

What can I say? Bank bonuses are climbing again. All is hunky dory. Casandra-Krugman again sounds the alarm. And Geithner, boy wonder, child of the New York Fed, protégé of Rubin, is the unabashed advocate of his dining chums: Citibank mucky-mucks, Goldman and Sacks execs…on and on the list goes. Why, just as Citibank was going into a tailspin, Sanford Weill, its CEO, asked Geithner take over as Citibank’s chief exec.

Joe Stiglitz puts the problem kindly when he says:

“I don’t think that Tim Geithner was motivated by anything other than concern to get the financial system working again,” Mr. Stiglitz said. “But I think that mindsets can be shaped by people you associate with, and you come to think that what’s good for Wall Street is good for America.”

There is a cancerous club mentality that reaches from the Fed to the banks, to the lobbyists, to the government, supported by a cadre of adoring economists singing praises of Summer, hoping to be called to Washington. And who fills the seats on the New York Fed? Execs from Citigroup, JPMorgan, Chase…. They are the foxes; we are the chickens.

There are those who have long decryed the Federal Reserve System as a scam with its fractional banking. You hear them occasionally railing against the system. Mainstream economists generally ignore them, treating them as wackos. Clearly, these folks will never be members of the club.

What bothers me are the incestuous relationships that pervade the Fed, the Treasury, and the banks. It is a revolving door: Exit a bank; enter the Treasury or the Fed. Exit the Treasury; enter a bank. The argument for this chummy arrangement is: A major bank CEO would be a good Fed or Treasury man. Who else has such marvelous insight into the financial workings of the U.S.?

And what about academia? Well, if you have used your skills to make money off the system, if you have entered the financial pit and made money for the big guys, then you can join the club…if you have a good sponsor. So it is with Summer. You can share a good cigar, a barbecue or two. Have the kids and wives get to know each other. Talk shop occasionally as you sip a fine martini. As your resume builds, so too do your connections…and your wealth. You get the key to the revolving door. When Geithner or Summers finally step down, you know where they will land.

Frankly, I am tired of all this. As Krugman says:

…there’s no longer any reason to believe that the wizards of Wall Street actually contribute anything positive to society, let alone enough to justify those humongous paychecks.

So why did some bankers suddenly begin making vast fortunes? It was, we were told, a reward for their creativity — for financial innovation. At this point, however, it’s hard to think of any major recent financial innovations that actually aided society, as opposed to being new, improved ways to blow bubbles, evade regulations and implement de facto Ponzi schemes.

Consider a recent speech by Ben Bernanke, the Federal Reserve chairman, in which he tried to defend financial innovation. His examples of “good” financial innovations were (1) credit cards — not exactly a new idea; (2) overdraft protection; and (3) subprime mortgages. (I am not making this up.) These were the things for which bankers got paid the big bucks.

I am not suggesting that they act as a collective conspiracy, although I sometimes wonder. Nonetheless, this a group of people who are always looking for more power and more wealth. Over time, they have built a system that skims more and more wealth into their pockets. Financial innovation? You got it. More bank charges and trickier credit cards? You got it.

We nibble at the edges, trying to fight back. Maybe all students should not get credit cards. Maybe they should be screened to see if they can handle the credit. Is this the best we can do?

How do you stop the revolving door? With great difficulty. Those who advise the President on Fed or Treasury appointments are those very folks who have the most to gain, the members of the club. I wish we could change the ethos of greed; I wish there were someway of stopping the revolving door. Maybe enforced retirement when you get to the Fed or Treasury level? You cannot be a CEO or financial officer of any major bank? (We have the same problem with ex-Presidents, ex-senators, and ex-congressmen–they all crowd into revolving lobby door.)

What to do. I do have a couple of suggestions, one of which has already been made elsewhere: Break up the largest banks and private institutions. Simon Johnson has made just such a suggestion. In his testimony before Congress, he states the problem:

Jobs in finance became more prestigious, people in finance became more prestigious, and the cult of finance seeped into the culture at large, through works like Liar’s Poker, Barbarians at the Gate, Wall Street, and Bonfire of the Vanities. Even the convicted criminals, like Michael Milken and Ivan Boesky, became larger than life. In a country that celebrates the idea of making money, it was easy to infer that the interests of the financial sector were the same as the interests of the country as a whole – and that the winners in the financial sector knew better what was good for American than career civil servants in Washington.

His solution?

the advice from those with experience in severe banking crises would be just as simple: break the oligarchy.

In the U.S., this means breaking up the oversized institutions that have a disproportionate influence on public policy. And it means splitting a single interest group into competing sub-groups with different interests.

Another additional way is to draw a real line between government and those entities it oversees.

In this case, draw the line between the financial sector and the Treasury and the Fed. Treasury and Fed cannot comprise individuals from the very sector they oversee. Nor can Treasury or Fed officials take a job in any institution that the Fed or Treasury oversee.

Create two distinct job lines, two professional castes, each with its own ethos and responsibility.

The line between government and private enterprise has become too blurred, too easily subject to abuse. Entering one should mean being forever disbarred from the other. When your life’s work in either is done, you retire–permanently. Bill Clinton should be on the golf course, not lobbying for foreign powers or private companies…or joining this or that corporation as many of the high officials in his and other administrations have done. Retire. Or do philanthropic work.

The disease that has brought the financial sector to its knees now protects it. That very disease has destroyed our health care system…and threatens other sectors of the economy as well.

Breaking up those institutions that have grown too large to fail is certainly one step forward. But we need to do major surgery on the real cancer: Cronyism gone amuck.

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