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Welfare Reform

Robert Waldmann is back

I didn’t mean to stop blogging for so long. I apologize. I also apologize for this post which is one of my occasional screeds against welfare reform. Oddly there seems to be almost a consensus that welfare reform was a good policy. I think this is based entirely on the fact that, by pure coincidence, it was implemented during the late 90s boom.

Matt Zetlin wrote

One thing that hasn’t happened yet — but should — is that liberals who are noting that Republican obstructionism and the 60 vote Senate are the primary causes of a frustrating first year for Obama should become much more sympathetic to Bill Clinton.
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Now, there is room to complain about his priorities in office and whether NAFTA and welfare reform were really key components of any type of progressive or liberal agenda, but it seems impossible to say that the only reason that the Clinton administration didn’t produce the progressive results one might have wanted had much to do with Clinton himself.

I comment.

Good points and congratulations on the link from Yglesias. I object very strongly to two words in your post “welfare reform.” You write that it was arguably not a “key component[] of any type of progressive or liberal agenda,” For the sake of debate, I’ll scotch the “arguably” and interpret “one can complain” as meaning “it is true that.” Your praising welfare reform with faint damnation is still, to put it as politely as I can, batshit insane.

You do know that there are over 6,000,000 food stamps recipients in the USA with 0 cash income (nothing to live on but food stamps) don’t you ? I’d say that situation has a whole whole whole hell of a lot less than nothing to do with ” any type of progressive or liberal agenda,” It is also true that TANF enrollment has barely increased during the first 16 months of the current recession (warning out of date pdf from an advocacy organization or try the official verrrry slowwwww opening link don’t blame me blame HHS gluttons for boredom can go to the index for maybe more data) and is about one third of peak AFDC enrollment. Welfare reform caused and is causing immense human suffering. There are desperately desperately poor people in the USA (I define that as income less than half the poverty line) because the social safety net was destroyed by a bill signed into law by Clinton.

The perception that welfare reform was good policy or OK policy or not terrible policy is based entirely on the fact that, when it was enacted, the economy was booming. The poor did OK in the late 90s in spite of welfare reform. The non poor did very well. You can’t judge a policy looking only at events during an extraordinary boom. Look the US poor did very well indeed during the war in Vietnam, but it was terrible policy. I assert that your reasoning is absolutely along the lines of admitting that the war in Vietnam was not a “key component[] of any type of progressive or liberal agenda.” I really mean that. Each consists of evaluating a policy only by looking at what happened at the same time. We can’t blame welfare reform on the filibuster. We can’t even blame it on the Republicans in congress. They did not have the votes to over ride a veto. Clinton decided not to veto a welfare reform bill. He condemned millions of people to horrible horrible poverty (as opposed to merely horrible poverty without welfare reform).

I also find it odd that you classify NAFTA along with welfare reform. I strongly support NAFTA and I don’t like hearing it associated with welfare reform. What was wrong with NAFTA ? I’d consider free trade to be a key component of any progressive or liberal agenda. That is because protection condemns third world workers to horrible horrible horrible poverty. The only case for protection is that it is needed to defend hereditary privilege (the advantage of being born a citizen of a first world country). No decent progressive or liberal can support any such thing. Instead people who want to unite the forces of egalitarians and selfish racists who want to keep the third world poor convince themselves that trade is bad for the third world.

Now, in general, I absolutely agree with your excellent post. It is simply insane to act as if Clinton ran the country when he was President. It is especially insane to act as if he ran the country when the only power he had was the veto. However, he did not use the veto when any decent person would have done so. That’s a fact and the only excuse would have been that there were 67 senators willing to over ride a veto (there weren’t 60 senators willing to vote for cloture it passed under reconciliation).

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Who Voted for Brown in Massachusetts — and Why?

by Maggie Mahar
crossposted with Health Beat

Who Voted for Brown in Massachusetts — and Why?

The media continues to report that the Massachusetts vote was a referendum on health care reform — and that this has the White House worried. If so, the White House is wrong. Take a look at polling conducted by Hart Research Associates for the AFL-CIO on the evening of the election, revealing who voted for Brown –and what those voters said. Then consider separate polling done by the Washington Post together with the Kaiser Family Foundation and Harvard University. Read both reports, and you’ll have a very hard time believing that Scott Brown’s election represents a mandate on healthcare legislation.

Finally, factor in the eye-opening Kaiser Family Foundation January tracking poll, and what it reveals about what voters do and don’t understand about health reform legislation. If most voters have only a hazy idea of what is in the legislation, you really can’t say that they voted against the Senate bill.

Who Voted for Brown ?

Democrats who are disillusioned that Obama has not pushed further on health care reform? Upper-middle-class voters who believe that Obama doing too much, going too far, and may well hike their taxes? No, the surprise is that Brown was elected by Massachusetts’ working class, and they were not focused on health care legislation.

Non-college men voted for Brown by a 27-point margin (59% to 32%), and non-college women also voted for Brown by 13 points (while college women went for Coakley by 13 points).
 
If you look at all college graduates, Coakley won this election by five points among college graduates, but lost the non-college vote by a 20-point margin. This represents a huge swing among non-college voters since 2008, when Obama won by 21 points, for a net swing of 41 points.
 
What happened? How did Democrats lose so many working class voters? Many of the non-college voters who chose Obama a year ago were Latinos and African Americans. This time, they stayed at home, according to election eve and election night polling done jointly by the Republican firm American Viewpoint and the Democratic group, Lake Research Partners on behalf of the nonpartisan group Women’s Voices. WomenVote. (Unmarried women and younger voters also came out in fewer numbers. )
 
Keep in mind that a minority of white voters pulled the lever for Obama in 2008—he needed non-white voters to carry him over the top. Apparently this time Democratic organizers in Massachusetts didn’t work very hard to bring out their vote, or to explain to minority communities that, even if they didn’t particularly warm up either candidate  (which I can well imagine), this vote could be important for health care reform.
 
The Hart poll was done on the evening of January 19, when pollsters conducted a telephone survey among 810 voters in the special election for U.S. Senate in Massachusetts. The survey has a margin of error of ±3.8 percentage points. (The pollsters note that “the survey data were weighted to be consistent with the actual election results, yielding a five-point margin for Brown –50% Brown, 45% Coakley, 1% other candidates, 4% refused).
 
In the end, the pollsters observe that the results of this election “were not a call to abandon national health care reform.” 82% of voters were aware of Scott Brown’s opposition to health care legislation supported by President Obama and congressional Democrats, but “it had virtually no net impact on the Senate election.” Here is the money line:
 
“Those who knew Brown’s position [on reform] were as likely to say it made them less likely (39%) to support him as to say it made them more likely to support him (41%).”
 
A few HealthBeat readers have suggested that Massachusetts elected Brown because they have seen health care reform in their own state, and do not like it. But the poll reveals that two-thirds (67%) favor the Massachusetts health insurance law that ensures nearly universal coverage, including 53% of Brown voters 
 
Moreover, the poll confirms HealthBeat reader Pat S’s argument that the vote had more to do with personality than issues: “Considerable evidence exists that this election was largely about the individual candidates, Coakley and Brown, more than a referendum on President Obama or the Democratic agenda.”
 
By 61% to 33%, Massachusetts voters said they were picking the best candidate to be their U.S. senator, rather than “sending a message to Washington.” Drill down, and look only at Brown’s voters, and you’ll find that they, too, say they were selecting the best candidate, not sending a message to Washington about the direction of the country (52% to 42%). People simply liked Scott Brown better. His personal rating from voters was 51% positive to 32% negative (net +19 points), while Coakley had much weaker personal ratings at 40% positive and 37% negative.
 
Voters were not expressing dislike for the president: Massachusetts’ electorate give Obama much better ratings than Coakley (52% positive, 33% negative), and approval of the job he is doing (52% approve, 38% disapprove).
 
Insofar as they were voting on issues, those polled reported that they were most concerned about the economy and jobs. Electing a candidate “who will strengthen the economy and create more good jobs” was the single most /very important factor according to 79% of those polled.

Health care reform placed a distant second: “Electing a candidate who is committed to controlling health care costs and covering the uninsured” (single most/very important factor) among only 54% of all voters. The working class voters who elected Brown have been hit hard by the economy. That is their immediate concern. As Hart notes:

“Economic dissatisfaction played a large role in Brown’s victory. The majority of voters who said the Massachusetts economy is not so good or poor (52%) voted for Brown by 56% to 39%. However, voters who said the economy was excellent, good, or fair supported Coakley by 52% to 43%.”

A Second Poll
 
Over at the Washington Post, Ezra Klein reports on the Post/ Kaiser/ Harvard poll srv/politics/polls/WaPoKaiserHarvard_MassPoll_Jan22.pdf , a second survey that tried to determine why voters chose Brown.

This Washington Post-Kaiser-Harvard poll was conducted by conventional and cellular telephone Jan. 20-21, among a random sample of 880 voters in the Massachusetts special election. The margin of sampling error for the sample of voters is plus or minus four percentage points.
 
After reviewing the results, Klein observes:

“The results make it untenable to argue that the election had nothing to do with national issues in general or health-care reform in particular. But it makes it similarly hard to argue that the state is firmly opposed to health-care reform, or that Scott Brown’s election is a mandate against the bill.” .
 
I agree, but I would go further. When I took a close look at the questions and the results in the Post/Kaiser/Harvard poll, I discovered that it tended to confirm much of the Hart research.
 
First, 91% of Brown’s voters considered the economy and jobs “extremely important or very important” compared to 84% of Coakley’s voters.

More importantly, 88% of Brown’s voters thought “leadership and personal qualities” were “extremely important or very important” compared to just 69% of Coakley’s voters. (This supports the notion that, to a large degree the folks who picked Brown were selecting someone they liked, without worrying as much about the issues. )
 
Granted, 93% of Brown’s voters said that health care reform is “extremely important or very important,” but as Ezra notes,
“48 percent of Brown’s voters think that Brown should work with Democrats on the health-care reform bill rather than partner with Republicans to sink the effort altogether. Which suggests that though Brown’s election was far from an affirmation of President Obama’s agenda, nor was it a call for relentless obstruction.”
 
There are many contradictions in the way Brown voters responded to the Washington Post/Kaiser/Harvard poll’s questions. (This is not unusual. Human beings are, well, peculiar creatures. We often disagree with ourselves.  And Brown’s voters do not all agree with each other.) On the one hand the vast majority of Brown voters who were polled say they are opposed to the health reform legislation—but their reasons for disliking it vary widely. Many in the media have suggested that those who voted for Brown were disgusted by all of the deal-making and the way Democrats cave to special interests.

But when Brown voters who said that healthcare was “extremely” or “very important” were asked to be more specific, only 13% of Brown voters said they “Didn’t like the way it was being handled; politics; deal-making; closed doors lack of transparency.”
 
What is striking is just how varied the responses were:

– Nine percent of Brown voters said healthcare is important because they “generally support reform or the current bill. Just 22 percent said they put healthcare reform near or at the top of their list because they are generally opposed to reform or the current bill.
 
– Fourteen percent said healthcare is important because they’re concerned about the cost of the bill—increased taxes, government spending and the deficit.
 
– Twelve percent of Brown voters said health care reform mattered to them because they are opposed to government involvement in health care.
 
What may be most telling is that among Brown voters who think health care and health care reform is “extremely or very important” only 2% agreed that “everyone should have health care; healthcare is a right.”
 
When explaining why healthcare is important to them, none named the “need for more/better coverage for the uninsured.” This suggests that many of Brown’s voters may be opposed to the legislation because they are opposed to the basic idea of universal coverage—whatever form the legislation takes.
 
By contrast, when explaining why they are focused on healthcare 21 percent of Coakley’s voters said “everyone should have healthcare; it is a right;” and 8 percent mentioned the need for better coverage for the poor.
 
This suggests that many of Brown’s voters are conservatives or libertarians who don’t believe that a civilized country has a responsibility to make healthcare available to everyone. They believe in “personal responsibility.” Everyone should take care of themselves and their own families.
 
The fact that so many African-Americans, Latinos, didn’t turn out helped skew the results; the majority in these communities do believe that healthcare is a right.

How Can People Oppose Legislation They Don’t Understand?
 
But the strongest argument suggesting that the Massachusetts vote was not a vote against reform can be found in a Kaiser Family Foundation study that polled households shortly before the Massachusetts election. http://www.kff.org/kaiserpolls/8042.cfm The survey showed voters sharply divided on the legislation along Democratic and Republican party lines, with Independents evenly divided (41 percent support the legislation; 43 percent don’t)
 
But most importantly, the polling showed that most voters have only a dime idea of what is in the bill. According to Kaiser, “The poll finds that even after a year of substantial media coverage of the health reform debate, many Americans remain unfamiliar with key elements of the major bills passed by the House and Senate.”
 
– Nearly 40 percent did not know that the bill would prohibit insurers from denying coverage because of pre-existing conditions.
 
– The majority of seniors had no idea that the Senate bill would help close the Medicare “doughnut hole” so that seniors would no longer face a period of having to pay the full cost of their medications.
 
– Forty-eight percent of all Americans had not heard that the legislation would offer tax credits to small businesses to help them buy insurance for their employees.
 
– Forty-one percent are not aware that if they have employer-based insurance, the reform legislation will not change existing arrangements.
 
– More than one quarter of all Americans had no idea that reform legislation would provide subsidies to help low-income families buy insurance.
 
– Thirty-seven percent did not realize that insurers would be forced to provide a basic benefit package, defined by the government—no more “Swiss Cheese policies” filled with holes.
 
– Sixty-three percent were unaware that insurers will no longer be allowed to charge women more.
 
In each case, those polled responded more favorably to the legislation as they heard about these provisions. For instance, when they were told about the tax credits for small businesses 73 percent said they would be more likely to support the bill.
 
In general, the more respondents learned about the bill, the more positive they were. “It’s one thing to talk about the public’s perception of health care reform legislation, which right now is in some ways negative, but it’s another to tell people what’s actually in the bill and when you do that people are more positive,” said Kaiser President and CEO Drew Altman.
 
Why do so few Americans know what is actually in the legislation? A blizzard of misinformation has created much confusion. In newspapers and on television, you regularly hear that ordinary Americans will be forced to buy insurance they cannot afford (no mention of subsidies or caps on out-of-pocket payments which should virtually eliminate medical bankruptcies.) You read that small businesses won’t be able to afford a mandate (no mention of tax credits.)
 
Americans have been told that the Democrats are making no effort to rein in spending (no mention of the pages and pages of proposals that would cut Medicare costs, paving the way for lower health care bills throughout the system.) They are warned  that Medicare beneficiaries will be hurt (no explanation that Medicare cuts are targeting unnecessary care that puts patients at risk without benefits; no mention that the bill will help close the donut hole that now forces Medicare patients to pay for their drugs out-of-pocket.)
 
We have been told that insurers will continue business as usual (no mention of the provision that prevents them from putting a lifetime cap on benefits, or the plank in the legislation which says that insurers must spend a certain percentage of the premiums they receive on healthcare. If they don’t spend it, they are required to  give their customers a partial refund.)
 
The other reason most people aren’t aware of what the Senate bill would do is because they are busy. They are working. They are raising children. They don’t have time to pay attention to the devilish details. In some cases, they don’t have the education or the powers of concentration needed to absorb and analyze this legislation. That’s not what they do for a living.
 
Why can’t some of the analysts boil the bill down to a few pages, and six power-points? Because the benefits are all in the details, and often those details are interlocking. You cannot understand one without understanding another. (I’ve written a three-part post that tries to cover all of the important points—both the pros and the cons. See Glass Half-Empty, Glass Half-Full, parts 1, 2 and 3)
 
But the truth is that re-forming a $2.6 trillion industry that serves (or at least should serve) millions of very different people—young and old, sick and healthy, poor, working-class, middle-class, upper-middle-class and wealthy requires thousands and thousands of adjustments. Just spelling out what will be covered requires many pages, and many amendments.
 
For instance, did you know that the legislation would require that insurers cover vision and dental care for children? That’s just one of those adjustments that will make all of the difference for some families.
 
– Finally, it is true that some Americans are strongly opposed to both the Senate bill and any reform legislation.
 
As Kaiser’s January tracking poll observes: “Views on the proposed legislation seem indelibly partisan: A solid majority of Democrats (64 percent) support the proposals being discussed, while an even larger majority of Republicans (76 percent) oppose it. When it comes to the enthusiasm gap, strong feelings are significantly more predominant on the right, with twice as many Republicans saying they ‘strongly oppose’ the proposed legislation as Democrats saying they ‘strongly support’ it.” 
 
“Political independents, that critical swing group, are divided down the middle: with 41 percent supportive and 43 percent opposed.”
 
The bottom line is this: the Massachusetts special election does not serve as a referendum on health care legislation. The voters who chose Brown chose him for myriad reasons. They say that they knew he opposed the legislation; about half of his voters counted this in his favor, while half counted it against him. Go figure.
 
The White House should ignore the Massachusetts election.
 
Nationwide, most voters have only a sketchy idea of what is in the bill. . So it’s impossible to talk about whether they favor or oppose current legislation. People can’t reject something they don’t understand – unless they are simply against reform on first principles, i.e. they don’t believe in universal coverage.

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Job creation–tax cuts are not the right tool

by Linda Beale


Job creation–tax cuts are not the right tool

Not unexpectedly, the “think tanks” that claim to be nonpartisan but that conduct research sponsored by corporate interests and support “capital market” solutions to economic problems are at it again pushing more tax breaks for the huge corporations that just gained more legislative clout with the Supreme Court’s foolish decision in Citizens United. See, for instance, the Milken Institute’s, Jobs for America: Investments and policies for economic growth and competitiveness (Jan. 2010) (sponsored by one of the biggest of the “bad guys” pushing corporate tax cuts all the time, the National Association of Manufacturers).

The Milken report wants the government to do the following:

reduce the corporate tax rate (The section 199 manufacturing credit–which amounts to a significant rate reduction for most US companies–has already been passed by Congress under the same argument that reducing taxes will result in job creation. but there not much in the way of new jobs to show for the tax reduction; this report claims that reducing the rate to 22% versus the current statutory rate of 35% would cause a .3 percentage point growth in GDP from 2011 to 2013, with an increase in employment of 2.13 million. These sorts of claims are made for all kinds of tax cuts, but seldom pan out in practice.)
increase the R&D credit (we’ve already done that–the R&D deduction was made a credit and it didn’t have a significant impact on job creation. It’s a stretch to think it would, since the research is either going to be done anyway or just tweaking around the edges in ways that doesn’t require significant expansion of research facilities. Most of the basic research done at universities is much more important to the core of job development and innovation expansion.

Let companies export technology products to produce products abroad (that will help overseas job production, but will essentially increase the flow of jobs to low-labor-cost countries and do nothing to create jobs here)
invest in infrastructure projects (now, that one has real potential, butprobably NOT the projects recommended here, which include an expansion of offshore drilling and onshore exploration and coal usage–projects that do nothing to move us towards better use of energy and prevention of global warming).

The Milken report, in other words, espouses many of the same policies applied by the Bush II administration. They didn’t create jobs under Bush and there’s no reason to think they would be more successful now–in fact, we’ve tried tax cuts as job stimulus for years without success. A recent Congressional Research Service (CRS) report notes that business tax incentives don’t do much to stimulate the economy. See Hungerford & Gravelle, Business Investment and Employment Tax Incentives to Stimulate the Economy (Jan. 22, 2010) (available on BNA). The report notes that the February 09 economic stimulus package included $286 billion in tax cuts, many directed towards business, and that the administration has advocated futher business incentives. However, it reports that “the evidence … suggests that a business tax subsidy may not necessarily be the best choice for fiscal stimulus.” It considers, for example, the idea of tax credits–the two most common of which are investment tax credits and accelerated deductions for depreciation. While studies suggest that such credits have some potential for increasing employment, they have not proven to be effective in practice. Reasons for ineffectiveness include the complexity of credits, the uncertainty of credits prior to tax filing time, the lack of awareness about the credit til tax filing time, and the fact that “product demand appears to be the primary determinant of hiring.” Firms may not invest even with investment tax credits, if they are already at excess capacity. In fact, the report notes empirical evidence from recent studies that suggest that the induced spending is less than the cost of the tax subsidy.

Let’s face it. Businesses will always demand tax subsidies, because the managers and owners benefit when they pay less in taxes. But tax subsidies may do little or nothing to stimulate the economy or provide jobs. This CRS report suggests that tax subsidies don’t act as a stimulus for hiring, but rather as just another windfall for businesses. The report notes that to the extent an investment subsidy isn’t used to stimulate investment it may well simply be used to pay down debt or pay out dividends to shareholders.

Programs that create jobs are the ones that directly create jobs–not the ones that just put more money in the hands of already wealthy CEOs and shareholders who will likely sock the money away in some investment overseas. We need to be creating jobs programs like those in the New Deal era–real jobs that can make the country better by building infrastructure and make the lives of the people directly affected better. And we need to be very selective about the infrastructure projects that we fund. Providing additional subsidies to Big Oil and other extractive industries is a 19th century solution to a 21st century problem.

Will Congress be able to do anything other than the bidding of the big corporate interests and their managers and owners–especially after the right-wing Court in Citizens United overturned multiple precedents to find that corporations can spend whatever they want to buy elections, in the guise of claiming that such ill-founded judge activism furthers free speech rights? Will Congress be able to show any concern for ordinary Americans? It seems increasingly doubtful, unless Americans become better informed and able to vote in large blocks to disempower the corporatist agenda. We must remove politicians that simply put in place the policies that the big multinationals want. Those policies almost always will serve the managerial/owner class and not ordinary Americans.
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crossposted with ataxingmatter

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Obama’s State of the Union Tax Proposals

by Linda Beale

Obama’s State of the Union Tax Proposals

President Obama delivered his first State of the Union speech tonight, assuring us that we could jump-start job creation through tax cuts for businesses and gain needed relief for families through tax cuts for middle-class households.

What Obama offers is, as usual, a mixed bag–too much of the same old tax cuts favored by the right for decades , which have not been proven to do much to create new jobs, but some good programs that merit passage.

I’ve got strong doubts that an accelerated depreciation provision amounting to a 10% tax cut for businesses and costing $38 billion can be considered an effective jobs bill, even when it is generously offered to small businesses. Similarly, more preferences for capital gains (exempting them from taxes when the money is invested in small businesses) goes the wrong way–without much assurance of real job creation.

The proposal for a tax credit for new workers is more promising–although I’d prefer to see stimulus and not tax cuts, this credit is at least directly related to new employment, unlike the other provisions that simply reduce the tax costs for existing businesses without any guarantee of new jobs.

Adjusting the way the federal government supports loans for college students is a long-needed reform. The current program represents a subsidy for banks that has grown through the years to provide fees to banks even though universities do most of the same administration work that they did under the direct loan programs. Banks have finangled the subsidy (as they have credit card fees, the TARP-related guarantees) into more money for themselves and less for students. It’s time to eliminate the giveaway and provide the money to students instead of to the banks. Obama is pushing the right policy here.

Ending tax breaks for Big Oil, ending the carried interest preferential taxation of compensation for investment fund managers, and not extending the lower rates for the super-rich are all good ideas. Obama finally made the needed argument that the solutions offered from the right–to extend tax cuts for the wealthiest Americans, deregulate, and maintain the status quo on health care–are just what we’ve been doing that led us to crisis and huge deficits. We shouldn’t repeat the failed experiment.

Similarly, Obama made his proposal for taxing financial institutions to pay for the costs of the federal guarantee that has been necessary to move them out of crisis through use of the TARP funding. That’s a reasonable plan, based on the degree of leverage other than ordinary deposits.
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crossposted with ataxingmatter

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AIG, Logic, Insanity, and Tim "I Saw Nothing" Geithner

Go read:

  1. If you’re only reading one post, see FT Alphaville, which incorporates and expands upon…
  2. Tom Adams and Yves Smith’s posting at Naked Capitalism discussing the document and the reality of the situtation.
  3. the document itself is available from either The Long Room or the Huffington Post.

If the FRB of NY really believed that their only option was payment in full and not telling anyone about it, then Tim Geithner’s leadership abilities make Ben Bernanke look like Dwight Eisenhower.

BarryO is, apparently, finally trying to make clear the distinctions between TARP, TLGF, TALF, CPLF, Maiden Lane, Maiden Lane II, Maiden Lane III, etc. and the actual Stimulus Package. A good place to start: One was a huge giveaway that has led to overreported profits and high taxpayer expenses. The other was passed by Congress.

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The iPad is NOT a Computer, its a Briefcase w/Gizmos

by Bruce Webb

Geekery below the fold.

Steve Jobs was a little hyperbolic in his language yesterday which led some people to laugh. Well there are reasons he is a self-made billionaire and you are not.

The key to understanding why the iPad and similar devices can change the world it to understand that it is not a computer without a physical keyboard, or a multi-media player, or a portable display, sure all of those are built in but they don’t add up to what the iPad really is, which is a magic briefcase full of Gizmos.

What’s a Gizmo. Well the online dictionaries have boring definitions but for my purpose a Gizmo is something that does something for you. A Gizmo generally isn’t big and it mostly isn’t multifunctional, it just does what it does in a fun and efficient way. The iPad is designed to be a repository for Gizmos along with Games and Books and Music and allows you to use all of them anywhere you go. Now it sounds silly to put it this way but it doesn’t have to be, if you were a Building Inspector it might be nice to have one Gizmo to record your findings and another that allowed you to look up the International Building and Fire Codes on the fly, and maybe another to allow you to record your time on the job. And on a dirty, dusty or muddy job site it might be nice to have one in the same form factor as the clipboard you had been carrying rather than some clamshell lap top vulnerable to the environment.

A salesman needs a different set of Gizmos. Maybe a Travel Schedule and Ticket Booking Gizmo, maybe one that displays the companies entire product line with accompanying video and specs. And maybe some things to kill time while traveling, say maybe a Travel Chess Set or a book of Crosswords. But whatever you are and whatever you do it would be neat and at times necessary to always have with you your own collection of Gizmos. Me, I am a simple guy on a typical day all I would need is my Bus Schedule Gizmo, and a Gizmo that would display a full web page while allowing me to touch type posts and comments. But in an immediate past job as a Real Estate/Land Development Researcher it would have been nice to have a Road Map Gizmo for my area, another that had copies of County and City Land Development Codes and another with access to Interactive Permit and Zoning Maps for the various jurisdictions we dealt with. Oh and an aerial photo viewer. Now I had all that capability in my office and sort of via my laptop in my car, but there was very little magical about it.

We could go on. A tourist in a foreign country has a whole new set of needed Gizmos. Currency calculators, Maps, Guidebooks, Brochures, Travel Clock, and a Translation Gizmo and probably no desire to whip out a laptop at the souvenir stand in some street in Montmartre. A college student in turn has all kinds of different Gizmo desires, say movie and club schedules, maybe a University Library Catalog Gizmo, or for an athlete the playbook and training and practice schedule.

And that is the beauty of the iPad, it is not based on a model of the tablet computer, instead it is modeled on the iTouch a handheld Gizmo that delivers dozens of other Gizmo products that the user selects from literally tens of thousands of offerings. If you like, and a lot of people do, you could simply have your iTouch loaded to capacity with games, or songs, or videos, plus maybe a Facebook Gizmo. Or you could load it up with every Reference and Trivia resource in the land and bore all your friends for ever. Or just load it up with books and use it as a pretty-good e-readers, or use it as a repository of maps or photos or any combination of that. Of course along with that you can use it as an acceptable web browser and in a pinch as an input device to any cloud computing applications you have going, but in the end what keeps the iTouch a Gizmo Toy and not a Gizmo Tool is the screen size. I mean you could easily load the entire Snohomish County Development Code on an iTouch but absent a very specialized Gizmo indeed looking something up for a client and then sharing it would be a nightmare.

An iPad is built from the ground up to be a full screen screaming Gizmo Machine. Instead of storing a sub-set of your professional books and tools in your briefcase you simply load them on top of a machine. It is said that the magic of the dancing bear is not how well it dances but that it dances at all. And you can say the same about the traditional lap top computer, they have taught it to dance quite a few steps. The iPad instead IS a dance machine.

Okay I have an iPad in my hand. What do I want it to do for me?

1. I want it to be a full page web browser.
2. I want it to be an acceptable blog posting tool.
3. I want a full page version of the Transit Schedule for my area
4. I want it to play my music.
5. I want it to play my movies.
6. I want to be able to update and share my Facebook Wall with someone in the room.
7. I want a functional replacement for my Thomas Guide Map Book
8. I want a useable Guide Book to Western Birds
9. I want a useable Tide Table and opening and closing date/time for fishing runs and shellfish seasons.
10. I want a photo album of all my nieces and nephews
11. I want one click access to my Investment Portfolio’s current prices
12. I want one click access to Professional Books and Codes relevant to my job
13. I want a repair manual for my car.
14. I want a traveling chess board with interactive capability
15. I want the Oxford English Dictionary
16. I want the complete run of Astounding Magazine from 1935-1942

Actually I would be happy with items 1-3, I am kind of a simple guy, but this is a reasonable set of Gizmos for a simple guy, other people would layer on any number of items. But note one thing. With the exception of the web browser none of this is built around the standard Office Suite. And none of it around Graphic Design. Or Application Development. Or building websites. If I was looking to add some functionality to the above it would probably start with the iLife Suite (which would give me some web tools) and then some sort of Writing Program. And probably add some interactive Language modules to allow me to brush up on my neglected French, Latin and Welsh and maybe add back in Italian. But in any event the iPad is already optimized to deliver all of these Gizmos and more, you just need to possibly pay for some of the actual content

When you buy a laptop there is kind of a sense of ‘Well there it is’, it has whatever software package you ordered, and maybe you go online and order and install some more or try to find the disks so as to reload things. The iPad is not like that. Instead it asks you what you want to do with it and you start by visiting the App Store and browsing among the free and trial Apps. And there are literally tens of thousands of them. Then you simply start adding and rearranging Gizmos that do the kinds of things you want them to do.

At $499 and no need for a contract the price point is excellent or anyone who has reliable access to WiFI, which these days often means the Library or Starbucks and there are certainly enough free Apps and free document sources out there to justify getting one. Plus there are a good number of Gizmos built in to the unit. But I think the question will come to this. Pick up a piece of 8 x 11 paper, fold it down an inch at top and side and ask yourself this: “What are the top 25 things I would like a magic piece of paper to deliver to me anywhere any time?” and then follow up with: “How much of that potential functionality do I lose by trying to access that through the 3″ screen on my phone?” and “How much functionality do I really lose if I left my laptop at home and relied on this on a typical day?”

Finally a little note about sociality. Laptops aren’t social. You are not going to whip one out at a party or at the bar or while hiking with friends, nor are they something you would generally just hand to a friend. They aren’t particularly cool even when you are out on your own, sitting on a bench in front of an exhibit at the art museum with an open lap top just screams dork. On the other hand the iPad with out without its case more or less looks like a small portfolio. If you turned it on and did a quick web search on the artist, it would look as natural as could be. As it would be navigating some narrow aisles looking for treasure in an old book store or antique store, who looks at a guy with something the size of a clipboard in his hand? When people I know are talking around me I like to do a quick look up on my iPhone pull up a picture and then show it, but it is a little awkward sometimes I am walking up to them and giving them a phone which since we are all over 50 means them dragging out a pair of glasses. With the iPad instead I can do the equivalent of laying out an 8 x 10 glossy photo by their elbow. “Look know that’s a (whatever they are trying to describe)”. I think this ability to share, to be able to on the spot pull something up and then physically hand the display to another person or to hold it up for sharing is going to open new horizons in personal computing.

This BTW may make this product the must-have for teenagers. It is right at the same price level of buying them a smartphone and a dedicated MP-3 player and I can see the girls passing their Facebook Walls back and forth as they walk down the hall or sit in the lunch room, its a natural. I don’t know how many High Schools provide Wi-Fi but it has to be a lot, this thing just flat out works in the teen, twenty-something social environment.

So the iPad is big. Not because it is in a category of its own, it was proceeded there by both the iTouch and the iPhone, but because it takes that category to a level of real world functionality that transforms a pretty cool toy into what can be developed by each individual into a lifestyle tool. It simply makes the handbook, the guidebook, the catalog, the manual, the route schedule potentially obsolete, People who bitch about its maybe lack of markup tools ignore the fact that we interact with text and information in all kinds of ways in daily life plus we use all kinds of information Gizmos in the process. I guess we will see how his one goes.

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Japan rescinds war on deflation

by Rebecca Wilder

At least that is the way I read today’s monetary policy release. According to the statement released today: “The Bank of Japan will encourage the uncollateralized overnight call rate to remain at around 0.1 percent.” However, the statement curiously omits the following from item 6. of the previous release:

The Policy Board has concluded that it is appropriate to further disseminate the Bank’s thinking on price stability, by stating more clearly that the Policy Board does not tolerate a year-on-year rate of change in the CPI equal to or below 0 percent and that the midpoints of most Policy Board members’ “understanding” are around 1 percent.

I don’t know why the Bank of Japan would rescind their commitment to 0 percent, when the median inflation projection is negative through 2011, although improved from its latest forecast in June 2009 (at the end of the January 2010 policy statement). That’s bad – rising real debt, further hits to consumer spending, the works. Admittedly, there’s debate over the actual benefit of quantitative easing and zero-interest rate policy (see this paper at the FRSB).

But another policy-relevant bit of news hit the wire today: S&P put Japan’s credit rating on negative watch. From the NY Times:

“The outlook change reflects our view that the Japanese government’s diminishing economic policy flexibility may lead to a downgrade unless measures can be taken to stem fiscal and deflationary pressures,” S.&P. said. “The policies of the new Democratic Party of Japan government point to a slower pace of fiscal consolidation than we had previously expected.” Prime Minister Yukio Hatoyama has some lofty spending plans in its budget, funded by an expected 44.3 tn yen bond issuance.

Diminishing policy flexibility? Given the central bank’s propensity to move away from the ZIRP, and the government debt running stock at 183% of GDP (and rising), I’d say that diminishing policy flexibility is a euphemism.

japan_leverage

Notice how Japan’s government debt rose while the nonfinancial sector’s obligations fell – that’s the deleveraging story.

Japan is not “insolvent”, at least that is what the external debt metrics say. But the only real policy flexibility is held by the central bank. And the Bank of Japan, ostensibly at least, doesn’t seem to be providing adequate liquidity.

If left unchecked, this could happen to the U.S.: policy mistakes. Raising taxes and hiking rates too early can turn into persistent economic problems.

Rebecca Wilder

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I Got your REAL State of the Union right here

by Daniel J Becker (DOLB for the rest of you)

UPDATED BELOW.
Well, I thought being tonight is the big night for the President I would give my version of the SOU. This is an update on the flower shop. For any new readers, these are real numbers from an honest to goodness small business.

As you can see from the chart below, or maybe not, I don’t need a loan. I don’t need a tax break. I could use a real national health plan as the medical for this year again, including premiums hit $15K (16.5 and 17.7 prior 2 years). I have a high deductible plan that increased from $6471 in ’06 to $7195 in 2009, 11% up.

No, even if you did the cash for clunkers again, I don’t have the extra cash flow to take a loan. Though the delivery van has 235K miles on it. It’s a 2002 Caravan.

All my loans are fixed, so I’m not worried about deficit fueled inflation as it relates to my monthly payments. My property, even with the 15% loss in the last 2 years based on tax evals is still 1.69 times more than my mortgages and I only have 15 or less years to go.

We’re working with less people at the shop and have layed off our manager/worker (he’s fast, a good designer and can carry the load when we’re not there) to 1/2 time. We’re watching every penny as to inventory, utilities, insurances (I’m getting money back on the WC because payroll is down).

What I’m worried about is this:
Keep in mind, that we were considered a larger than normal shop. If we’re doing this bad, imagine how the wholesalers and everyone else down line are doing. That’s the real trickle down folks!

There is only one thing that will fix it: CUSTOMERS!

It’s not that people are not trying to spend, it’s that they really have run out of money. Note that the credit card sales continued to rise for a year after the account and cash sales started to decline.
The people tried to spend. Now they can’t.

So, let me be clear to the Congress and the President: I NEED CUSTOMERS…WITH MONEY!

Update:  A commentor asked for some more data. 
Ins, Maintenance, Rent, Utilities, and Property/inventory taxes are 13% of gross. Payroll is 25% Payroll is down 14%, but gross is down 16%. We can cut payroll more, but the issue becomes my sweety having some down time. (please no lectures). Payroll was 25% of gross last year. 

Supplies (what we sell) were 48% of last years gross, this year 47%.

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Buy on the Rumor, Sell on the Fact

UPDATE: datacharmer at Bluematter thinks visually.

Bruce, yesterday:

Unless you have had the experience of using an advanced smartphone it is hard to explain how transforming it is to have the Internet in your pocket, if I have a question about anything it is mostly as close as my left pocket. But like the iPhone the Tablet is a lot more than a combined phone/usable web browser, it is a host for Apps, millions of them. And it is the Apps that are the game changer. Because the possibilities are quite literally endless.

Sarah, today:

iPad?! Really?! REALLY? Gosh, I’m sorry I no longer have a Nook now. They would have been great partners.

The iPad, now available in Light, Maxi, and Super (8Gb, 16Gb 64Gb)? As Tessa Dare said, are there NO women at Apple who could have given them the heads up (HA) that this is a BAD NAME?…

This isn’t “standing on the shoulders of Kindle.” It’s giving the Kindle half a nod from across a ballroom full of other people you’d rather talk to….

What about onboard social networks, email functionality, or notation from inside iBooks? Wouldn’t that be a key feature to intregrate with the endless onward wanking about Pages? For example: writing a report… and easily with a single gesture including both the source material and the citation using iBooks and Pages?

I realize that reading isn’t the utmost important thing for everyone else, but come on now! Productivity in all forms includes printed material. The lack of interaction demonstrated in iBook makes me hope for other reading alternatives on the iPad (DEAR GOD THE NAME). Color me underwhelmed in a big, big way.

UPDATE II: Brad piles on:

But ffs, it can’t handle flash, and it doesn’t have any way to access media not on its own HD, no disc drive, no usb port in. That’s fine for a phone but not for a potential media player. Apple has finally made something I have no interest in owning.

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