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

Some or All?

Today, Clark announced his tax plans:

Clark vowed to repeal or modify the Bush tax cuts for families making at least $200,000 annually, repeating a promise he made a few weeks ago, and the scheduled reductions for those families making less than $200,000 would be protected under his plan. Clark is taking a similar position as Democratic presidential candidates Sens. John F. Kerry (Mass.) and John Edwards (N.C.) and breaking with former Vermont governor Howard Dean and Rep. Richard A. Gephardt (Mo.), both of whom want to repeal all of the Bush tax cuts.

I’m assuming that all the candidates are including the estate tax among the to-be-repealed cuts


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Baseball and Efficient Markets

CBS Marketwatch reports on a recently circulated research paper by Ronald Kahn at Barclay’s Capital that makes a very good analogy between investing and baseball:

The New York Yankees and Florida Marlins may match swings on the field, but given what they spent on player salaries to get to the World Series, the two rivals couldn’t be more different in their investment styles.

The miserly Marlins, with the fifth-lowest payroll among 30 major league franchises, are typical of price-conscious value-stock buyers. The team’s $48 million salary budget averages $1.7 million a year for each player.

The freewheeling Yankees, in contrast, are the big league’s big spenders. The club’s $150 million payroll comes to more than $5 million on average for each player. The Yankees’ investing behavior is more akin to a growth-stock buyer who looks to capture a stock’s momentum regardless of price.

“The way investors succeed is not through emotion and gut instinct,” Kahn explains. “It’s through a very logical, rational, scientific approach.” Trouble is, most investors don’t embrace this strategy, creating opportunities in the marketplace for those who do, Kahn says.

That’s the secret to the Oakland A’s success, and why the one of the poorest teams in baseball — with a $50 million payroll — has consistently outperformed wealthier teams, Kahn says. The [A’s have] reached the American League playoffs in each of the past four seasons, even though its thin wallet would suggest otherwise. Only the Yankees can also make that claim.

“[The owner of the A’s] didn’t have the money to go out and pay any amount for the players he wanted,” Kahn says. “The way he was going to build a team is similar to what value investors do — to try to identify stocks that are mispriced.”

Just as a keen value buyer scours the market for mispricings and unrealistic assumptions, Beane discovered that professionals in his business frequently failed to properly value a player’s true worth — what a value investor would call a stock’s intrinsic value.

I like this example. Unfortunately for many economists, however, it provides evidence against the efficient markets assumption that economists typically make.

The efficient markets notion can be summed up by the following joke: An economist and his daughter are walking down the street one day, when the girl sees a $100 bill lying on the sidewalk. “Dad, look, a hundred dollars!” the daughter says. “Nonsense,” the economist replies, continuing with his daughter past the bill. “There can’t be $100 lying there, or someone would have already picked it up.”

The A’s – and now the Marlins – are apparently finding $100 bills all over their sidewalks.


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Snow Learns His Lesson… Sort Of

US Treasury Secretary John Snow, when asked today about future interest rates, gave the right answer this time. Contradicting evidence from earlier this week (described in my earlier post), Snow replied “I don’t really comment on interest rates. Interest rates are a matter for the Fed.” Well done. He has apparently realized that his answer to the same question three days ago was a mistake.

Of course, then he went on to say that higher rates next year wouldn’t hurt the US economy, suggesting that he won’t mind if they go higher. While that might be true, this qualification injected a bit of confusion into his clear initial statement, and has lead to at least one major financial news source to report the headline “Snow: Higher Rates Okay; Official says rate hike won’t hurt.” That’s probably not the headline he was hoping for. Perhaps he’ll get it completely right on his next attempt.


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A Telling Slip of the Tongue?

Something that Bush said during a press conference with the President of Indonesia today struck me as a bit odd. I just went and checked the transcript, and discovered what it was about Bush’s phrasing that seemed slightly unsavory to me:

Bush: Americans hold a deep respect for the Islamic faith, which is professed by a growing number of my own citizens.

Americans are now George Bush’s citizens? Shouldn’t it be “my fellow citizens,” or “my own country’s citizens,” or at least “our own citizens?” I know it’s nitpicky, but to me such phrasing makes it sound like we belong to him. Either that, or it’s a case of “L’etat, c’est moi.” Regardless, I don’t like what such slips — inadvertent though they may be — reveal about Bush’s mindset.


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Politicians Making Ethics Decisions

Can someone explain to me why some politicians feel that it’s their place to make the decision in cases like this?

TALLAHASSEE, Fla., Oct. 21 — Six days after the feeding tube of a brain-damaged woman was removed in a case that pitted her husband against her parents, Gov. Jeb Bush ordered it reinserted on Tuesday after the Legislature empowered him to do so. The extraordinary step overrides years of court rulings… [Her husband,] Mr. Schiavo has sought the removal of his wife’s feeding tube since 1998, testifying that she told him she would never want to be kept alive artificially.

I honestly don’t understand why this decision is anyone’s business but the family’s. Or why politicians feel that they understand ethics better than other people. Anyone care to explain it to me?


p.s. You can add this to the Libertarians for Dean list.

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Reproductive Freedom

A “partial-birth” abortion ban, without exceptions for the health (there’s an exception for the “life” of the mother, but an amendment to add “health” failed to pass), passed 64-34. I put “partial-birth” in quotes because what was really banned was a specific dilation and evacuation procedure that is similar to one used in midterm abortions. That is, expect Republicans — either in court or with further legislation — to quickly move to extend this first restriction into months 4-6, and continue from there (In Tom DeLay’s words, “This is not the end of the abortion debate”).

Green voters, Libertarians, and non-voters: Happy yet?

TBogg has the list of Yeas and nays, with Democrats who voted for the ban bold-faced (an ironic turn of phrase, but I guess there’s no such thing as ‘craven-faced’ text). Given the overwhelming margin, there was little Democrats could have done to stop it, so I understand but don’t particularly respect Democrats in conservative states who voted for it (Blanche Lincoln, Evan Bayh, Daschle, Landrieu, and a few others).

On the other hand, kudos to Republicans Susan Collins and Olympia Snowe. Now, someone remind me why are these two are still Republicans? On which major policy issue do they agree with their party?


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Is the Democratic Party in Decline?

Here’s what Fred Barnes has to say about the subject in this week’s Weekly Standard:

AFTER THE 1972 AND 1980 ELECTIONS, Republicans said political realignment across the country would soon make them the dominant party. It didn’t happen. Now, despite highly favorable signs in the 2002 midterm elections and the California recall, Republicans fear a jinx. Karl Rove recently told a Republican group that the realignment question won’t be decided until 2004.

There’s really no reason to wait. Realignment is already here, and well advanced. In 1964, Barry Goldwater cracked the Democratic lock on the South. In 1968 and 1972, Republicans established a permanent advantage in presidential races. In the big bang of realignment, 1994, Republicans took the House and Senate and wiped out Democratic leads in governorships and state legislatures. Now, realignment has reached its entrenchment phase. Republicans are tightening their grip on Washington and erasing their weakness among women and Latinos. The gender gap now exposes Democratic weakness among men. Sure, an economic collapse or political shock could reverse these gains. But that’s not likely.

I could point out how several of the pieces of evidence he mentions are pretty flimsy. On the other hand, one fairly persuasive item he mentions is simply the increasing percentage of the American public that identifies themselves as Republican. But let’s hold off on trying to figure out if Barnes is right for a moment, and suppose that he is.

David Brooks picks up on this theme in his column in today’s NYTimes. Brooks argues that the crux of the problem for the Democrats is that the average voter no longer feels that Democrats share their value system. As he put it, “they didn’t trust Al Gore because they thought he looked down on them. They felt Bush could come to their barbershop and fit right in.”

But even if Brooks is onto something (and as I said, I’m not sure that the premise of realignment is right in the first place), what he’s describing is not a function of differing values between Democrats and Republicans. He’s describing a difference in marketing. Al Gore would have had the best interest of the people in the neighborhood barbershop at heart much more than Bush has. And that’s precisely why I would argue that any perception that Republicans share middle American values is a fictional creation of a tremendous, decades-long marketing campaign. A very successful one.


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White Collar Flight… to India

Today’s Guardian contains a provocative commentary by George Monbiot on a theme that we’ve touched on before here. The piece begins:

If you live in a rich nation in the English-speaking world, and most of your work involves a computer or a telephone, don’t expect to have a job in five years’ time. Almost every large company which relies upon remote transactions is starting to dump its workers and hire a cheaper labour force overseas. All those concerned about economic justice and the distribution of wealth at home should despair. All those concerned about global justice and the distribution of wealth around the world should rejoice. As we are, by and large, the same people, we have a problem.

I like this piece because it raises several very interesting issues, which I’m going to mention here but not answer in this post. First, is it really likely that millions of service jobs will move to India? In August, Forrester Research released a report that said yes. Their prediction?

Over the next 15 years, 3.3 million US services industry jobs and $136 billion in wages will move offshore to countries like India, Russia, China, and the Philippines. The IT industry will lead the initial overseas exodus.

Sounds like a significant number of jobs… though I’d be curious to know how they arrived at their number.

Second: suppose predictions like Forrester’s come true? Would that mean serious trouble for white collar workers in the US? Would it have a noticeable negative impact on our economy?

Third: I like Monbiot’s honesty in the last sentence quoted above. So many of the people who oppose international economic integration do so on the grounds of helping domestic (i.e. US) workers, and also on the grounds of helping workers in developing countries. Monboit correctly points out that those two are often mutually inconsistent goals. So what’s the resolution? If you want to help both groups, where should you stand on this issue?

More food for thought, and comments. I’ll pursue these issues in detail in later posts.


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In Fairness to the TSA

…I probably would let this guy through with minimal screening, too.

A bit of advice to Tucker Carlson: you may want to start arriving at the airport a bit earlier.


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Food for Thought

And lot’s of it, from Matt Stoller over at the ClarkSphere. It starts as a jeremiad, as Matt recounts his interactions with political consultants and the experiences that took him from Kerry to Dean and then to Clark, but he ends upbeat and very pro-Clark.

Also noteworthy are the numerous positive things Matt says about Dean. Reading between the lines, Matt’s saying that Dean is great, but he thinks Clark is even better.


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