The Power and the Money

Failure modes of the United States, part 1a, a counterfactual

  Gah.  Still can’t sleep, but my concentration keeps coming in-and-out.  Here goes a short post on a random topic.

The story of how the Supreme Court tried to hold up much of the New Deal is well known.  Roosevelt tried to appoint six new justices, which thankfully failed, and the Supreme Court reversed itself.  In an earlier post, I argued that it would have made little difference had the Court stuck to its initial rulings.  All that would have happened would have been a constitutional amendment reading something like the following:

Congress shall have the power to legislate in all cases for the general interests of the union, and also in those in which the states are separately incompetent, or in which the harmony of the United States may be interrupted by the exercise of individual legislation.

A less poetic version listed an economic laundry list (wages, health and safety, etcetera) and then said:

The due process of law clauses of the fifth and fourteenth amendment shall be construed to impose no limitations upon legislation by Congress or the several states with respect to any of the subjects referred to in Section 1, except as to the methods or the procedure for the enforcement of such legislation.

Such amendments would have changed pretty much nothing.  The Gun-Free School Zones Act of 1990 would have been upheld, and that’s about it.  So not a very big change.

That said, there was another very different amendment in play at the same time, proposed by Senators Burton Wheeler (D-Montana) and Homer Bone (D-Washington).  It had a lot of support, and since Wheeler was one of the biggest opponents of FDR’s court-packing plans, it was probably the most likely amendment to pass.  (Or so I take away from Bruce Ackerman’s book.)  It read:

In case the Supreme Court renders any judgment holding any act of Congress or any provision of any such act unconstitutional, the question with respect to the constitutionality of such act or provision shall be promptly submitted to the Congress for its action at the earliest practical date that Congress is in session, but no action shall be taken by the Congress upon such question until an election shall have been held at which members of the House of Representatives are regularly by law to be chosen.  If such act or provision is re-enacted by two-thirds of each House of the Congress to which such members are elected at such election, such act or provision shall be deemed to be constitutional and effective from the date of such re-enactment.

That is a bit like Canada’s “notwithstanding” clause.  Congress would have been able to override the Supreme Court with a two-thirds vote.  Unlike Canada’s clause, which requires a notwithstanding declaration to be re-authorized every five years, a Congressional override would have been permanent.  It also would have required a Congressional re-vote, rather than merely authorizing one.  On the other-hand, two-thirds is a rather high bar to jump over. 

Unlike the more concrete economic amendments, which would have changed very little, it is not unreasonable to conclude that the Wheeler-Bone Amendment might have had very significant effects on American history.  The question is how significant, and in what direction.  Could a removal of a veto point create a failure mode?   

The limits of empire

 The world really needs a good game-theoretic model of informal empire.  I suppose Bruce Bueno de Mesquita already has one, but I’d like to see something more specific. 

What’s informal empire?  Well, if “empire” happens whenever one sovereign state exerts its authority over an area previously under a different sovereignty (or none at all) then that empire is “formal” when the imperial state exerts its authority through a bureaucratic chain-of-command that runs from the imperial executive through the local government and down to the person in the street in the new territory.   (Similarly, an empire has formal characteristics if judicial decisions can be appealed upwards to courts in the center, or if the imperial legislature can pass laws for the subordinate territory.) 

Since 1898, the United States has generally eschewed formal empire.  The exceptions are Haiti in 1915-34, the Dominican in 1916-24, Japan in 1945-52, Germany in 1945-55, Okinawa in 1945-72, and Iraq in 2003-04.  (The European Union exercises formal authority over parts of the governments of Bosnia and Kosovo.)  The U.S. has relied on a combination of treaty arrangements, sanction mechanisms, and moral suasion to get its satraps to do what the government of day wants them to do.  The famous SOFAs kinda sorta sometimes formalize quasi-imperial arrangements by giving U.S. troops special privileges inside host countries, including sometimes the right to shoot people, but that is not the same thing as giving the American government the right to give local bureaucrats direct orders under the threat of unemployment or imprisonment.

Sometime informality works and sometimes it doesn’t.  Right now, informal empire has hit its limits in Afghanistan and Honduras.  The U.S. can’t make President Karzai crack down on corruption, form a coalition with Abdullah, or negotiate with the Taliban.  Considering both the number of troops we’ve got running around the country and the number of dollars we pour into its government budget, the lack of influence (let along control) is pretty depressing.  What kind of an empire is that?

In Honduras, the recent agreement between Micheletti and Zelaya appears to have collapsed.  The Honduran legislature has not voted to reinstate Zelaya, and Micheletti is continuing his modus operandi of “what the hell?” by picking a fight over who will lead the interim cabinet until Congress votes.  Washington may be able to pick something up out of this mess, but U.S. leverage is limited.  Aid is suspended and visas were as well until recently; stronger sanctions, meanwhile, will just sock it to a lot of very poor people.  We could give up and run out the clock, which would be the best option if the rest of the hemisphere agreed.  They don’t, so something had to be done, and a few days ago it looked as though the Secretary of State had done it, by brokering a solution.

Only now Micheletti keeps going off the reservation, and there seems to be no quiet easy way to keep him on it.  There is still something a little ridiculous about the lack of American leverage.  What kind of an empire is this?

Not much of one, actually.  To be honest, I suspect that the U.S. will be able to knock some sense into Micheletti.  If pushed, I’d bet on the agreement coming back to life.  But still, the limits of informality are clear.  Even in Afghanistan, let alone Honduras, local political actors are autonomous, and the threats that the U.S. could use to sanction them are not credible. 

Running an informal empire is complicated, and running a formal one is often impossible.  The implications are left as an exercise for the reader. 

27 and a good cigar

  It wasn’t against the Dodgers, so I didn’t spend the bank to get to the Bronx.  Instead, I watched the games at the Thirsty Scholar in Somerville, which appears to have (as I’ve mentioned before) become an unofficial Yankees bar.  I showed up with my high school buddy Carlo Cerruti; other friends drifted in as the night progressed.  Ultimately, there were six of us; but we were there with around fifteen other fans who’d independently discovered that you were unlikely to be assaulted in Yankees regalia at this place.  I speak as someone who has been told by one Boston bartender that his cheering was “inappropriate” and by another “I’m going to have to ask you to tone it down, if you’re going to root for them.”  And those were in yuppie upscale places that I’d scouted in the Harvard Square area because I thought they’d be more Yankees-friendly. Polite yes, friendly no.

The other good thing about the Scholar is that you can smoke outside in full view of several large vidscreens.

No blow-by-blow of the game.  I mean, it was a bar!  Nothing interesting, the way there woulda been at an actual game, that you can’t get from the sports pages.  There were three Phillies fans in the place, all dressed up with Victorino jerseys and all, but they left in the seventh.  What??  The game was by no means over at that point.  If they hadn’t dressed for the occasion, okay, but they had.  Why put in all that prep work and go to a Yankees-friendly place just to give up and leave before the fat lady has sung? 

There was also a bartender from Terry Francona’s favorite bar.  He bites his tongue about his true allegiance when on the job.  You also had the brother-and-sister team from the Big Apple.  I know, the great thing about New York is that nobody looks like they’re from New York.  But to this native New Yorker, this pair just looked like they should be from New York.   (They were.  The Bronx, in fact.) 

Bartender gave us victory shots.  On top of at least four pints of brown ale and three cigars that proved to be a serious mistake. 

 
Anyway, the Series took my mind off the frightening amount of work I have to do and the depressing sight of the U.S. Senate doing whatever it is that the Senate does.  And it brought a ring back to where it belongs.  Now all we need to do is repeat the feat in 2010.

Alexander Hamilton, O.G.

   I'm sure many of you have seen this, but if not, enjoy.  I present to you the early life of the greatest Treasury Secretary in the history of the United States.  Word. 

I still think Madison was right about the soldiers and farmers, though.  Hamilton was too hard sometimes, you feel me?

We have seen the future, and it is California

  I can’t really claim to having said it first, but it looks as though Richard Yeselson, Ezra Klein, and Kevin Drum all agree with me.  Political polarization plus a stupidly-designed legislature have broken the American government.  We have seen the future, and it is California.

I mean, when someone as patently irrational as Joe Lieberman controls a veto point, we have a problem.  Maybe not a failure mode, but a clear problem. 

As they say, “Destruction leads to a very rough road, but it also breeds creation.”  Problem is, it isn’t clear that we're headed towards destruction, per se, just a slow decline as the health system collapses, the fiscal pressures ratchet up, and the climate goes kablooie on us.  Eventually, we hit the end state, or whatever 2030’s version looks like.

Counterarguments?

Failure modes of the United States, part 1d

  I am superwhelmed at the moment, and so the backlog of posts (oil sands, other failure modes) piles up.  But I wanted to point out to readers that Brad Delong has cogently summed up the challenges facing the United States about which we've done nothing over the past two decades.  To paraphrase:

1. Medicare is gonna eat us alive, and we’ve known that for 20 years;
2. Private medical costs are gonna eat us alive, and avoidably kill a lot of people along the way, and we’ve known that for 20 years;
3. Congestion, global warming, and the need to play imperial policeman in the Arabian Gulf are gonna eat us alive, so we should start taxing coal and oil, and we’ve known that for 20 years;
4. As our relative power declines, other countries will eventually eat us alive, unless we do something to build an imperial exit strategy that leaves us secure, and we’ve known that for 20 years;
5. The deregulated financial system almost just ate us alive (and would’ve in fact eaten us alive without a willingness to throw money at the economy), and so needs to be re-regulated in a sensible way, and we’ve known that for about 20 months.

So here’s the question.  How much of the inaction is because the problems are hard to solve, and how much of the inaction is because the U.S. has a veto-filled political system?  Put another way, if the United States circa 1989 had somehow found itself with Canada’s constitution but the same distribution of political ideologies and interests that it actually has, would we have gotten more of a handle on these problems, or would we be punting just as much?

I am opposed to an air raid on Iran, but ...

  ... Matt Yglesias writes, catchingly, that “Give Up Your Nuclear Weapons Program Or Else We’ll Damage Your Nuclear Weapons Program!” sounds pretty ridiculous.  Which it does.  But he then goes on to argue:

Suppose I wanted Herf to give me $10. I figured maybe I could offer him various incentives in exchange for the $10. But it turns out that Herf is irrational or whatever and hell-bent on holding on to his $10. Reaching into his pocket and stealing $7 might have some merit as a response. But threatening to steal $7 in hopes of persuading him to give me $10 would be ridiculous.

The problem is that Herf doesn't have $10.  What Herf has is an uncertain plan to make $10 in the future.  Depending on how far in the future and the risk of failure, threatening to take $7 from him right now could be a powerful deterrent indeed. 

Me, I think that this particular Herf is unlikely to be deterred by taking away his $7.  Besides which, we don't know whether we'll get $7 from him, or just fifty cents.  So I'm not in favor of this particular pre-emptive pickpocketing.  But sadly for us doves, the general principle seems sound.

Failure modes of the United States, part 2

  Today a conservative commentator for Newsmax called for a coup: 

There is a remote, although gaining, possibility America’s military will intervene as a last resort to resolve the “Obama problem.” ... Imagine a bloodless coup to restore and defend the Constitution through an interim administration that would do the serious business of governing and defending the nation. Skilled, military-trained, nation-builders would replace accountability-challenged, radical-left commissars ... Military intervention is what Obama’s exponentially accelerating agenda for “fundamental change” toward a Marxist state is inviting upon America. A coup is not an ideal option, but Obama’s radical ideal is not acceptable or reversible. Unthinkable? Then think up an alternative, non-violent solution to the Obama problem. 

The failure of the military to accept civilian authority was the second of Carlos’s proposed failure modes.  So let’s ask: could it happen here?  We won’t be the first.  Back in 1993, then-Lieutenant Colonel Charles Dunlap published an essay titled “The Origins of the American Military Coup of 2012.” 

In the scenario, the U.S. increasingly turns to the military, first to aid with domestic law enforcement and then, increasingly, to provide other services when the civilians deadlock.  (It’s too bad that the author missed the possibility that a collapsing private health insurance system might cause the government to mobilize domestic Medcaps.)  The military gains the experience to cheaply carry out governmental functions by becoming “the de facto government in many” places abroad where regimes had collapsed or been removed.  Finally, Dunlap postulates that a combination of the end of conscription, the exclusion of ROTC from liberal campuses, long overseas deployments, and attempts to improve on-post service life cause the military to continue to become ever more distinct from American society.  In 2007, Congress unifies the armed forces.  In 2010, the U.S. is soundly defeated in the “Second Gulf War.”  Dunlap doesn’t list the events that finally provoke the coup (a dolchstoßlegende is hinted at) but that wasn’t of course his purpose. 

Another deliberately vague treatment of an American military coup is in Starfarers, by Poul Anderson.  The book implies that the postulated coup occurs long after the elected parts of the United States government have become hollow shells, with a presidential “Advisory Council” calling most of the shots.  Anderson’s coup leader uses the military to oust the current crop of advisors and take their place, leaving intact the titular offices of President and Congress.  (Which is quite similar to what our conservative friend fantasized about today:  “Having bonded with his twin teleprompters, the president would be detailed for ceremonial speech-making.”)

Needless to say, there is no sign of any of this happening in the United States.  Discussion below the fold.

U.S. ♥ Canada, Earth not so much

  Thoughts on cost overruns in the oil sands will be coming up quickly.  Right now, just the (belated) news that the U.S. government has approved the Alberta Clipper, a pipeline that will move crude from Hardisty, Alberta, to Superior, Wisconsin.   

So what is the environmental problem?  Well, aside from the problems with tailings pools and the like within Alberta, the oil sands release a boatload of carbon.  After all, in order to make the stuff you need to inject steam right into the ground.  That takes a lot of energy.  In other words, you need to burn a lot of stuff in order to get stuff you can burn. 

Dealing with that carbon will be Canada's problem.  If Waxman-Markey passes, it is quite possible that the U.S. will tax Canadian oil exports.  Even if that doesn't happen, the adjustment burden will fall north of the border, unless Canada and the U.S. get together on a combined cap-and-trade system.  Unless ... well ... unless both countries decide that it is just more important to have a big and growing share of North American oil consumption produced in North America, with the rents (such as they are) going mostly to the Province of Alberta. 

One reason why oil sands project run overbudget below the fold.  Full explanation still forthcoming, with the preview that the comment thread pretty much nailed the reasons. 

Failure modes of the United States, part 1c

  Many legislatures around the world have veto points.  If a particular party needs to be included in every plausible governing coalition, then that party wields an effective veto over policy.  Those situations, however, are rare.  They are also contingent on voter preferences.  One key election, and the veto player’s influence is gone. 

The U.S. Congress possesses multiple veto points.  One is the committee chairperson, who possesses almost absolute veto control.  Another is the Senate filibuster.  Neither of these are particularly new, but it is plausible to argue that two developments have made them far more problematic.

First, U.S. parties are far more parliamentary than they used to be.  It is now very difficult to peel away opposition legislators than it used to be, particularly among the Republicans.  Second, the Senate filibuster has become routine, creating a de facto 60-vote supermajority.  Thus, the emergence of two new veto points:  the Senate minority party and swing senators.  I wouldn’t bet on swing senators lasting all that long.  Moderate Republicans are down to two women from Maine.  Moderate Democrats are more common, but I suspect that the Democratic leadership will eventually figure out ways to discipline its members that are at least as strong as the Republicans’. 

I suspect, but do not know, that the above development is the half-threat to the American system of government that Carlos thought he might be seeing.

There are multiple ways in which this could cause the Argentinization of the United States.  The current employer-based health care system, for example, is collapsing.  A failure to reform won’t cause any sort of immediate disaster.  But it might (perhaps) cause inequality to increase while saddling those businesses that try to maintain coverage with unsustainable costs.  Over the decades, that could become a slow-motion catastrophe.  Conversely, American public finance is unsustainable over the long-term.  But the definition of “crisis” keeps ratcheting up.  You can punt for a long tine, as debt piles up and public services ratchet down, but unless a miracle occurs you eventually run down the public sector and with it, long-term economic growth.  In that story, we have seen the future, and it is California.  Finally, financial reform already seems to have been quite watered down.  You can’t blame Congress for that, and it might not even be a problem … but there are reasons to believe that we’re setting the stage for another October 2008.  Not to mention Simon Johnson’s suspicion that the U.S. government has been captured by a financial elite.  More veto points, the harder it will be to free the Republic from that capture. 

And then there is global warming.  There is no world government, which means that there is a coordination problem among the big players.  A U.S. incapable of making big decisions probably means that nobody makes the big decisions.  I don’t know, maybe the European Union would decide to impose carbon tariffs, or some farsighted Brazilian leader could bring together a coalition of everybody-but-America, but that seems unlikely. 

To be honest, I’m not convinced that the combination of the filibuster and parliamentary parties necessarily spells paralysis.  Nor does federal paralysis necessarily spell Argentinization:  this country has a lot of things going for it that Argentina never did.  But the legislative provisions of the U.S. constitution are not functioning well right now.  The growing ability of a minority to block Congressional action seems to me to bring a much greater chance of political failure than the presidential veto or judicial review. 

Failure modes of the United States, part 1b

  Judicial veto points seem unlikely to bring down the United States.  The judiciary has neither blocked needed political action, nor imposed great costs upon American business.  Peter argued in comments that it is possible to imagine a world in which lawsuits block everything and make legislation impossible to implement, but that hasn’t happened anywhere else and really shows no sign of happening here. 

What about America’s most famous veto point:  the President?  It is hard to envision a scenario in which this feature, by itself, could bring down the political system.  Congress can override it, and the voters can toss the President out every four years.  One can imagine a disasterous Herbert Hoover type vetoing legislation as the country sank into crisis, but it's hard.  Most of his vetoes were innocuous.  He vetoed the Tariff Act of 1930, a counter-productive piece of legislation if ever there was one.  He also ixnayed the Emergency Relief and Construction Act of 1932, but a compromise measure sailed through.  Congress overturned his other big vetoes.  In short, Hoover wasn’t stopping an activist Congress from fighting the Depression.  I suppose that one could imagine a situation in which a do-nothing President manages to let a crisis burn enough to have an even worse President elected in his or her stead.  Harry Turtledove tried.  But it is a bit far-fetched.

Secuestro express

  Via Matt Yglesias via the National Review, Graeme Wood wonders why secuestros express aren't more common in the United States.

An “express kidnapping” occurs when a criminal gang mugs you and takes you from ATM to ATM until your cards don't work anymore.  In all the first-hand accounts that I've heard the victim was let go within hours.  (I have reliable second hand accounts of ones that ended rather worse:  one lasted a few days; in the other the victim resisted, got shot with a small caliber handgun, and drove himself to a hospital.)  After nothing that this sort of thing doesn't happen in Cairo, Wood wonders why such a “high-reward and not more than medium-risk [crime] does not happen more in America.”  

Sometimes it seems that half my Canadian in-laws are in the Mounties, and my uncle Brent is a cop in Baltimore.  So I asked him why it doesn't happen.  His answer was fairly obvious:  express kidnappings are not medium-risk in the United States.  They are superlatively high-risk, in terms of being caught.  An express kidnapper needs accomplices, needs to travel with a victim in tow, needs to visit public spaces that are often under electronic surveillance, and leaves a very exact trail showing where they went and when.  If they don't want to commit murder, they also usually leave behind an eyewitness who has spent enough time with them for a positive ID.  You'd have to be nuts to try it anywhere in the United States outside New Orleans.  People do, of course, but they get caught, so it doesn't catch on.  The same applies to other countries with efficient police forces, like Chile or Spain.  There was a brief surge of express kidnappings in Spain in 2006, but the criminals were often caught.

Mexico City does not have an efficient police force.  Not only does it lack anything resembling an investigatory capacity, but response times are extremely slow, and the police are often involved in criminality themselves.  The mystery isn't why express kidnappings are rare in the U.S. and Canada.  It's why they don't happen in Cairo.   

Meanwhile, enjoy Method Man:

UPDATES:  Unexpected shout-out from Graeme Wood!  Also, in comments, a link to this book, which illustrates why secuestros express rarely happen in the United States.  It also looks like a good read. 

Failure modes of the United States, part 1a

  So how might the American system fail?  A few weeks ago, Slate ran a somewhat hyperbolic and rather uninformative series about the topic.  My friend Carlos Yu proposed five much more reasonable possibilities.  With classes about to begin, and not a lot of time to write more serious posts, I propose to take them in turn.  His first failure mode was:

There might be too many “veto points” in the Federal system to resolve new problems of government in a timely manner.

A “veto point” is simply a place in the political decision-making process where an individual or collective actor has the ability to call a halt.  In the political science literature that I engage with professionally, the phrase has a positive connotation.  Veto points stop expropriation and predation and civil liberties violation and the like.  But they can also stop needed reforms.  Many a ship of state has run aground because a powerful player prevented a change of course.

One veto point that it is not a problem in the United States is the judiciary.  This was not always true.  See Scott, Dred.  In the early 1930s, it once again looked like the judicial veto might cause a crisis, as the Supreme Court overturned on much of the New Deal.  This could have been a problem ... even if you don't like the New Deal (and parts of it, like the NIRA, were kind of silly), judicial stonewalling might have produced a far worse political backlash.

Only it didn't.  In fact, the judiciary turned out to be a bit of wet firecracker on the crisis-inducing front.  First, FDR tried to pack the court.  That was a bad idea, and died in Congress.  But the President had more ammunition in store:  several constitutional amendments to alter the meaning of the commerce clause were percolating in Congress.  One proposal would have given Congress the power “to legislate in all cases for the general interests of the union, and also in those in which the states are separately incompetent, or in which the harmony of the United States may be interrupted by the exercise of individual legislation.”  Others were less sweeping, but all made the point.  Either the Supreme Court changed its interpretation of the Constitution, or Congress would change the Constitution.

In the face of a credible constitution change, the Court reversed itself in 1937 and permitted most remaining New Deal legislation to sail through.  And if it had stood fast?  Well, we would have gotten a fairly innocuous constitutional amendment.  The Supreme Court didn't use the Commerce Clause to limit Congressional legislation until 1995, and even then it was over a small issue.    

Today the judiciary also exercises a veto power over egregious attempts to roll back civil liberties or use legislation to alter the social changes of the last 40 years.  Many have argued that in that veto has worsened political divisions, by taking abortion policy out of the political arena.  That may be true, but it is also true that almost all the social changes of the last half-century are quite popular, with the partial exception of affirmative action.  The judiciary, by exercising a veto, in fact allows the Republican Party (and, increasingly, pro-life Democrats) to attract socially conservative voters without any fear that they might suffer the national electoral consequences that would follow success in enacting truly socially conservative legislation.

In short, judicial veto points no longer stop constructive economic legislation, although they would be employed to stop Bolivarian-style expropriations.  The judiciary will not veto the federal construction of high speed trains, a national VAT, any conceivable health care bill, or carbon legislation.  Nor does the judiciary's regular overturning of social legislation create frustrations that will end in mass civil disobedience, let alone mass violence.  (Although small-scale violence tragically does occur.) 

Rather, the ironic result of the judiciary's defense of social change is to shore up social conservatism as a political force.  This is interesting, but unlikely to lead to the demise of the United States.  If one really believed in Jack Bauer, then one might argue that the judicial veto on things like torture and summary imprisonment could cause the demise of the nation, but I'm not going to bother with that one.

In short, if vetosclerosis is going to cause the failure of the American experiment, the judiciary is unlikely to be the source of the problem. 

Thoughts?

Is America in decline?

  I don't mean as a world-bestraddling empire and all of that; I mean as a polity with a government capable of responding to the needs of its citizens.  Here you can see a moderately-libertarian fellow worrying that the United States is headed the way of Argentina.  In comments you can read the counterarguments proposed by my friend and colleague, Carlos.  Or you can read this post on the same blog, which summarizes Carlos’s arguments.   

The above picture is of a beautiful woman in the most American part of America, the old stomping grounds of the Chase boys.  Clearly not Buenos Aires.  Could it become Buenos Aires, without the charm?  Could American political institutions cease working?  Read the links, then read the below, and tell me what you think.

A George Will moment

  Some time ago, George Will published an odd screed against blue jeans.  Gancho mentioned the column on this blog here, where he pointed out that I was, in fact, wearing blue jeans while travelling in Greece. 

But I have to say that I have my own George Will moment when it comes to male sartorial style in early 21st century America.  Below is a picture of the street outside the Palacio Nacional in Mexico City, where I met with some officials from the country’s Treasury department to ask some questions about the recent petroleum reforms.  What don’t you see in the photo?

That’s right!  Shorts.  Only one guy is wearing shorts, thankfully long ones, and yes, he turned out to be a European.  What about looking in the other direction?

What about out front?

None!  No shorts.  This is true throughout Latin America.  If you’re over the age of 18, standing on a hard surface, and cannot see the ocean, then you don’t wear shorts.  Not in Panama, not in Venezuela, not in Mexico. 

And I agree with that convention.  The only exception is if you are actively engaged in exercise.  Period.  Adult men in shorts look ridiculous.  I have felt this way since I turned 18; my high school graduation was the penultimate time that I broke this rule.  I ultimate time was while I was travelling in Trinidad, and I looked ridiculous.  It won’t happen again.

As for sandals?  Gimme a break.  At least shorts are comfortable.  Sandals and flip-flops don’t even manage that.  I found flip-flops useful in the Army for the prevention of athlete’s foot, and that’s about it.  They are not comfortable.  They flip, see.  And flop.  Sandals, meanwhile, manage to be shoes without the advantage of keeping your toes safe if you drop something on them.  So, WTF?

Ban ‘em.  End.  None of this.  C’mon Americans.  Get some dignity.  No more shorts.  And no more capri pants on men either, which have started to infiltrate the USA from Europe.  So all you shorts-wearing flip-flopping young people?  Get off my damn lawn. 

El ambiente Azteco

  Gancho asks about the ambience at the U.S.-Mexico qualifier.  Why was I at the U.S.-Mexico qualifer?  Wasn’t I just in the Philippines? 

Well, yes.  But I’ve been a bit busy, and when I haven’t been busy I’ve been jet-lagged, so I haven’t written much.  The proximate reason why I needed to go to Mexico was to research a case on Pemex that I’ll be teaching for the first time on September 15th.  (Agh!  Right before Independence Day, no less.) 

That said, the reason that I picked this week instead of some other week is that this was the week of the big game.  I went to the stadium with mis amigos Gabo y Carlos y prima Silvia. For those of you who’ve never been, Estadio Azteca is impressive.  It feels much larger than similarly-sized stadiums in the United States. We got there on public transit, from which you walk down these concrete elevated walkways filled with hawkers selling Tri-related merchandise, including green-white-and-red Pancho Villa mustaches. 

Everyone wore some version of green-and-white; I’m not sure that I’ve ever been to a game anywhere where so many spectators seemed ready to run onto to the field and substitute just in case Javier Aguirre needed them.  

Of course, I was a ringer, a U.S.-fan wearing El Águila under the leather jacket.  What, you think I was going to drape myself in Old Glory?  Not at this game, sir.  I would have been the only person in America’s colors.  In fact, we couldn’t find the opposition stand.  Carlos was certain there was one, but nothing we could see.

The TV-news later showed scenes of people waving Old Glory in what looked to be a stadium of some sort, but we saw nothing.  I later discovered that there was in fact a U.S. section, but if you go below the fold you’ll be able to see why I don’t have any sympathy for them.

The atmosphere was … raucous.  Not unlike a regular-season professional game in Mexico.  Every time Tim Howard tossed or kicked the ball back towards the Mexican side the stands would come alive in a long shout of “puto!”  It felt like a Molotov concert.  The singing of the traditional “En donde estan en donde estan los pinche gringos que nos iban a ganar” only added to the concert-like atmosphere.  As did the fact that Mexican fans threw paper cups at Davies right after he scored the only U.S. goal. 

In fact, hurtling beer cups was a motif of the game.  Whenever the U.S. tried to set up a corner shot, the fans would pelt the player with cups and bottles.  I have been to many sporting events in the U.S. and Canada and Europe, and I’m not sure I’ve ever fans throw stuff at the players outside of Yankee Stadium, and then only in from the bleachers at the far outfield.   

Now, I have to say, hurtling beer cups is a motif of Mexican soccer matches in general.  But I hadn’t been to one in a while, and so the flying cardboard came as a bit of surprise, as did the fact that most of said flying cardboard still seemed to contain beer.  Every time Mexico scored, we got pelted.  It made for an interesting time in the lower stands.  Below the fold you can see one teenager trying to protect his mother with what appears to be an empty box of Glenfiddich. 

Was conquering the Philippines worth it?

  When you're a recreational blogger (procrastinational is more accurate) every so often an issue that you know a lot about is raised among the Big Dogs of the blogosphere, and for a moment you're annoyed that they didn't bother to check you out.

That's universal, I'm sure.  In my case, though, it's immediately followed by relief.  I don't want this place to be well known.  I mostly use it to establish a public record of my ideas, most of which will go into the book(s) I'm working on.  I've had a few bad experiences with tossing out such ideas sans public record.  Truth is, most of them are between silly and wrong, but every so often there's something good buried in there.

This applies to links to other people's ideas.  The linking makes me think about them, and how they apply to the stuff I work on.  It's why I don't see the point in link dumps, as opposed to specific links.

Which is why I'll link here to Matt Yglesias's question:  “Was conquering the Philippines worth it?”  In it, he suggests the following:

I mean, suppose the Philippines had obtained independence from the United States in the 1890s rather than the 1940s. How would my life be worse? How would any American’s life be worse? What “long-term benefits” actually accrued to us as a result of the counterinsurgency effort?  It seems to me that unless you look at victory and conquest as being their own reward, it’s hard to see any. Anti-American rebels lost, but we didn’t really win anything of note. We spent a lot of money, suffered some casualties, killed a lot of people and in exchange got some military bases that were overrun by the Japanese as soon as it looked like they might be strategically useful.

I have my own opinion, of course.  I might even give it later, although some of my thinking can be found here and here.  And I do think that one should take into account a counterfactual view of the Philippines before issuing judgment.  “Fifty years of Hollywood” might have improved the lot of the Filipinos, and it seems reasonable for a retrospective to seriously examine that possibility rather than reject it out of hand.   

So, before I give my own opinion (which is, as so often, changeable), what are your thoughts?

Happy Moon Landing Day!

  That is all.  Oh, and Brian Kilmeade apologized. 

OK, that isn't all.  The truth is that while I can see absolutely no good reason for there to be a permanent human presence on the Moon, a small irrational part of me finds it both depressing and ridiculous that there isn't one four decades after humanity first set foot on its surface.  Where's my Pan Am ticket?  It's 2009 already, for crying out loud!

So I'd be happy if somebody could figure out a reason to settle the Moon.  Which I kinda doubt they will.  I mean, you'd have to live in a tube or a cave or something unpleasant like that.  And what would you sell to the people back on Earth to get the money to pay off the other people back on Earth who put up the cash to build that tube you're living in? 

But you never know.  Something might turn up.

That is all.

National health care, updated

  Megan McArdle, whom I respect, linked to a piece by Glenn Reynolds that basically says that his wife and father would be dead while his daughter and mother would have a much-impaired quality of life under socialized medicine.

But I have a question.  Two, actually.

(1)  The treatments for Reynolds' mother (hip replacement) and father (radioactive prostate cancer implants) were developed for a patient pool that is mostly subject to Medicare.  Which is socialized medicine by most definitions.  Why doesn't that fact show that the argument is fallacious?

(2)  If other countries generally force healthy young women to die or live impaired lives, why doesn't that show up in any of the comparative quality-of-life studies?

A third, fourth, and fifth might be:  Does Ms. McArdle really believe this argument?  If so, why?  And what does it have to do with any of the actual health care reforms that are on the table?

Meanwhile, Matt Yglesias points out why I have trouble staying friends with doctrinnaire libertarians.  This one's for you, Guy.

UPDATE:  Matt Miller has an interesting column in today's Financial Times.  He points out that save for the public option, the current reform plan essentially extends coverage using a basic template designed by Mitt Romney in Massachusetts.  In addition, one of the financing plans on the table (not my preferred one, I must admit, nor the President's) was basically proposed by John McCain.  Finally, the eye-popping cost is propaganda, caused by people's emotional reaction to the t-word; the right way to think about the cost is that it is 0.5% of GDP or 3% of total healthcare spending.  In short, the way to a compromise that should attract lots of Republican votes is obvious.

But I will add that since we aren't going to get any Republican votes, I will be very annoyed at my party and President should we get a bill that does not include a public option and that is not financed by a surtax on high earners like, uh ... really? ... my wife and me.

Great debate attempt #5

  Childless households making $200,000 a year in expensive Northeastern cities are undertaxed, and the acquaintance mentioned here gets no sympathy from me.  He is getting all bent out of shape about a tax rise of a couple hundred dollars:  4 percent of his income above $200,000.  Maybe.  And I lived in New York, I have friends living in New York, and no, it isn't that much more incomprehensibly expensive than Boston. 

My wife and I are in that category.  We are undertaxed. 

Sometimes the attitudes of my fellow citizens can be very depressing.

Finns marry other Finns? Uh, I guess so.

  Hmm.  I am somewhat ashamed to live in a country where the below is not a firing offense at a major television news network.  No matter how dumb the show may be.  I mean, in a decent country shouldn’t displays like the one below cost you so many viewers that the network simply has to let you go?  For the bottom line, of course.  (Hat tip:  Salon.) 

Apparently not in America.  That said, my wife doesn’t think Brian Kilmeade is being serious.  “He looks like he’s African, Italian, Moroccan, totally mixed up,” she says.  “Clearly a joke.”

Uh, I hope so. 

The great recession

  This weekend, my wife and I made our way up to Fort Lauderdale Executive Airport to grab a helicopter ride above ground zero for the real estate collapse.  It isn't just in marginal neighborhoods, as some observers have suggested.  Spot the foreclosure in this photograph.

In fact, if you look closely, you can spot a second distressed property in the picture. 

Nor is it only individual single-family houses.  South Florida is dotted with what Mexicans used to call “obras negras”:  stopped construction projects left to rot.  And in the South Florida humidity, they will rot:  unsealed foundations will flood and unprotected fixtures will erode.  They are calling them “ghost towers” down here. 

It was a Sunday, but note the lack of construction machinery around the site.

In fact, readers of this blog have already had contact with what became a pair of ghost towers.  Last year, we spotted my brother working on a high-rise located on the border of the Everglades, far out on the urban edge, near nothing but a ginormous shopping mall.  Now it is an infamously distressed complex in which, as far as the local papers can figure, no one lives.

Of course, the recession is also visible at ground level:

I want one!

  Yes, it is an environmental atrocity.  Sure, the purported safety of all the extra power exists only in my imagination.  Indeed, while quite comfortable, the cupholders are in a weird place and the dashboard looks kind of cheap.  And it's noisy as hell.

But it is fun to drive, and that growl makes up for any and all inadequacies you might have.  Would it really be a problem to get a child-safety-seat in and out of the back?  The front seats fold way forward.  Hell, people, I'm under forty, recently married, and we don't drive enough for it to cause an appreciable increase in our gasoline consumption over, say, the Fusion hybrid or a Prius.  And it isn't a convertible.  Plus, my wife loved driving it around Maine last weekend.  So it wouldn't be that pathetic.  Would it?

I really am wondering about those child safety seats in a two-seater.  Hmm.

The importance of form

  The heat is turning up on Honduras’s new government.  Ambassadors are leaving, the borders are closed, World Bank money is gone, as are the U.S. military’s training programs.  Meanwhile, the hemisphere is united against the new government.

There would seem to be three lessons here.  (Note my weasel phrasing!  It isn’t accidental, as all three regular readers know by now.)  First, form matters.  Steven Taylor alluded to this point, and I think he’s correct.  Now, I don’t think that he’s correct about the underlying legality.  The Honduran constitution makes no provision for calling a second constitutional convention.  The Supreme Court, therefore, was completely within reason to tell Zelaya to knock it off with the referendum. 

Nor (given the facts so far) am I sure that Taylor is right as a matter of domestic political strategy.  If it was simply a matter of domestic calculus, a Supreme Court order followed by a quick bundling of the president out of the country might have been the best way to avoid worse conflict.

But Professor Taylor is completely right that hustling the President out of bed at 3am looks terrible. In retrospect, it was certain to produce a bad international reaction, even though I wouldn’t’ve predicted how bad beforehand.  (Hey, I was wrong.  Yes Bernard, I’ll get to Ecuador one of these days.) 

What the Honduran military and Supreme Court and I missed was the reverse Chávez effect.  Once Hugo (inevitably) started tub-thumping and threatening war, the best way for the United States to undercut him was to walk back its initial position and bandwagon on the international opprobrium.  And man, has the United States been successful.  Nobody seems to note that Washington was behind the international curve. 

In short, Honduras has gotten itself into a pickle.  The Supreme Court and military should have thought more about the politics.  The confused messages about resignations and drug-dealing and all the rest did not help; it was propaganda aimed at five-year olds, people who watch Glen Beck, not serious observers.  Now, it would have been damned risky for the Court to issue an order removing and arresting the President, but it would have been much better to have done that (preferably with a concurring Congressional vote ) and hope that Zelaya would be a little slow in mobilizing support, giving you time to bundle him off to Costa Rica after having crossed all the constitutional T’s ... or at least having seemed to. 

Form matters, even when the substance is uncertain and impossible to determine.  Perhaps especially so.  And that goes double in a hemisphere where electoral democracy enjoys the contradictory status of being simultaneously hegemonic and fragile. 

A lack of leverage

  The U.S. really doesn't give a whole lot of aid to Honduras.  Look at the figures, including military aid, from the USAID Greenbook:

That isn't a whole lot of leverage.  Of course, small amounts of aid may make it more likely that they'll be yanked, since such yanking won't wreck the national economy.  But that is the problem with using aid as an instrument of empire.  Contingent bribes — e.g., do good and we will give you more money — are fairly easy to administer.  Contingent threats — do what we want or the cookie jar will be taken away — are a lot harder.  You need to be giving enough money for the recipient to care, but not so much that withdrawing it would cause drastic adjustments that would reverberate back upon the donor. 

To put the above figures in perspective, remittances from the U.S. averaged 16% of GDP over the same period, peaking at 21% in 2006. 

In short, the U.S. didn't have a whole lot of leverage to keep the military-Court combo from ousting President Zelaya, even if the Obama Administration had wanted to.

(Say, should I add a “Honduras” tag to the blog?) 

A dog not barking in Honduras

  The fact that none of my posts about the Honduran coup carry the “Empire” tag is remarkable, considering the history of U.S. involvement in Latin American politics.  Even more remarkable is the idea that should events evolve in such a way as to warrant such a tag (which I consider unlikely), it will probably be either due to either direct meddling by the Alba countries or pressure from Unasur/Río Group/Brazil, not the interference of the United States.  That is quite a shift. 

Of course, the U.S. is still quite hip-joined to Honduras.  There is Soto Cano Air Base.  There is CAFTA.  There is the Millenium Challenge Account.  There are remittances.  Honduras isn’t dollarized, but it is a great case for dollarization, what with remittances above 14% of GDP, a fixed exchange rate and about 24% of all loans denominated in U.S. currency.  And we train its military. 

But Washington isn't leading events.  Sure, maybe it could, but it’s resisting temptation.  (Thank God!)  And that is a very big change. 

More Doug in Senegal, and why you shouldn’t worry about the deficit

  It seems as though I start a lot of posts with the words “it seems.”  I will try to rectify this in the future. 

Ditto, “so,” a verbal tic I blame on my unbridled admiration for Doug Muir, who has, by the way, written a little more about Senegal.  He tells us about the Mourides, a powerful Muslim sect of which I am embarrassed to say I knew nothing.  He bemoans the crappy state of Dakar’s airport, and receives in turn a useful warning from Bernard.  Finally, he wraps his trip with a discussion of W, railroads, France, birds, the CFA franc (e.g., France yet again, although he doesn’t say so), the weather, the expats, and the clothes.  I am pretending not to be annoyed at not getting a shout-out on the France tip, which means that pique is not the reason why I am not explaining the story of the Senegalese railroads under French colonial rule. 

Which brings us to the U.S. federal deficit.  You hear a lot of worring about how interest rates are going to rise from all this wild borrowing.  Where will the money come from?  We are doomed, doomed!!  No links, because I actually like and respect many of the people doing the worrying.  But they need not.

I just had a colleague in my office with the latest BEA numbers, worrying about just that.   Where will the money come from?  So I pulled out a spreadsheet and showed him.  In the first quarter of 2009, annualized personal savings came to $620 billion, or 5.7% of personal income.  Total savings (again, annualized) came to $1,273 billion, or 9.1% of GDP. 

Personal savings is only going up.  If we assume that nominal GDP growth is flat in 2010 (meaning, most likely, that real GDP keeps falling), a rise in the personal savings rate to 10% will produce $468 billion of additional savings.  Retained earning are also likely to rise, say from 4.6% to 5.0% of GDP.  That’s another $47 billion.  Total of $515 billion in new savings ... just as the federal deficit is projected to fall by $393 billion.  Plenty of wiggle room should private investment rise (one can hope) or the current account deficit fall (which seems likely).  A rise in real interest rates does not seem like something we need to worry about.

Rather, what we need to worry about is a continuing shortfall in demand.  What if Americans don’t substitute domestic consumption for imports?  Final demand will fall.  What if domestic investment doesn’t quickly rebound?  (It was $2 trillion in 2008, a full 25% higher than in the beginning of 2009.)  Final demand will fall.  In that situation, we might be wishing for another round of stimulus, rather than worrying about the deficit. 

UPDATE:  The May numbers just came out from the BEA.  Looks like the personal savings rate hit 6.9% that month.  We are on track to exceed 10 percent in 2009, and in my opinion the country will permanently return to 1970s savings levels.  That said, past performance does not always predict future results.  Any counterarguments?

A real anti-imperial triumph

  It seems as though the Argentine ambassador in France will no longer need to pay embassy expenses out of his own pocket.  A French judge lifted the freeze imposed on April 3rd.  More importantly, a German judge released the funds that German companies owed Argentine tax authorities.  Interestingly, Judge Wölber did not base his decision on sovereign immunity.  Rather, he ruled that since the tax payments were owed by the companies’ Argentine operations, German courts had no authority.  It remains to be seen if this precedent will be followed by other European courts, but the Argentine government is optimistic.

Interestingly, U.S. courts have taken the same position.  In 1999, the New York-based Leucadia National Corporation sued Nicaragua over $26 million in defaulted debt that it had purchased for $1.14 million.  A New York court granted the company $87 million.  (No, I don’t know why.)  It tried to collect by attaching Nicaragua’s share of the ticket and landing fees paid by U.S.-based airlines that flew to that country.  U.S. courts, however, refused to uphold the judgment.  But don’t cry for Leucadia.  Eventually the World Bank paid off the debt at 4.5¢ on the dollar, including accrued interest.  By my calculations, Leucadia received about $7.8 million, for a nice return of 584%. 

I am increasingly unsympathetic to Argentina.  But I am also relatively unsympathetic to the vulture funds that try to use the judicial system to impose sanctions on defaulting governments.  I may change that position if we start seeing more ploys like President Correa’s brilliant gamble, but that’s still a hypothetical fear, not a real one. 

P.S.  It seems like I was wrong about Ecuador.  I’ll discuss why, but only if there’s interest.  No reason to admit error if nobody cares ...

Sometimes, libertarians have a point

  The New York Times today published a story on how foreclosures in New England are disproportionately hitting old triple-deckers.  “Triple-deckers” are squat three-story buildings common to the region (pictured below).  Most of them are condominiums these days, but many are owned by the resident of one of the units, who rents out the other two, or by absentee landlords. 

Unfortunately, the author didn't limit herself to simply stating that the foreclosures have disproportionately hit triple-deckers.  Instead, she decided to write a fact-free piece that implies, without any hard evidence, that the housing collapse is threatening to destroy the triple-decker, and with it, tear apart the urban fabric of New England.  What percentage of triple-deckers have are foreclosed?  We don't know.  What percentage of foreclosed triple-deckers are vacant?  We don't know.  We do hear stories about abandoned lots in New Bedford ... but New Bedford has been declining for decades.  Has the recent housing bubble really worsened things?  We have no idea.  It is a remarkably badly-written article. 

But there is one thing mentioned which, if true, is completely insane: 

Modern zoning laws, Ms. Friedman said, would never allow three units on such small lots.  “If we have four three-deckers on 12,000 square feet and could only get two on that amount of land now,” Ms. Friedman said, “we are losing six units. So it’s very important to us to sustain them.”

Can that be serious?  Boston zoning laws require less density than currently exists?  That is flat-out crazy.  I am not opposed to all zoning laws, of course.  I would hate to have somebody block out my ability to see the sun, for example.  But that is just egregious.  Of course, it’s only a problem if there is in fact demand for housing in the parts of Boston where buildings are being abandoned ... so I doubt the premise.  Ms. Friedman is probably worried about the housing for other reasons. 

That said, the general point holds.  Zoning is very costly in this country.  I do not approve. 

Natural gas, energy security, and silly reporting

  Earlier this week, I learned about this report from a Chilean energy executive, which was officially released yesterday.  It seems as though the USA has much much more natural gas than anyone thought.  The increase is due to shale gas. 

Shale gas is found very deep, and it is rather expensive to extract.  Deep wells need to be drilled, the rock fractured, and horizontal wells dug to extract the gas.  A 2007 study found that even the cheapest shale gas deposits aren't viable at a price below $5.40 per million BTU (MMBTU).*

Which makes the market's reaction a little odd.  More accurately, it makes the reporting about the market reaction seem very silly.  Gas prices have been below the level that would make shale gas viable since the beginning of 2009.  So why attribute a tiny little drop to the report's release, especially since (a) the findings have been known to market insiders for some time, and (b) the price is currently below the level that would make shale gas viable. 

That said, the news is important.  U.S. reserves have risen from 79 years of consumption, up from 57.  More importantly, it means that annual production can (in theory) be upped.  That means that none of the LNG terminals approved by various U.S. agencies will be built anytime soon.  American natural gas prices will rise, but not as much as they might, and the U.S. will be one step closer to strong energy security.

Unless it won't be.  Because, well, why did prices spike in the first place?  Gas and oil must be better substitutes at the margin than people think, and that means that gas prices will be subject to pressure from oil shocks for some time to come. 

* Michael Godec, Tyler Van Leeuwen, and Vello A. Kuuskraa, “Rising drilling, stimulation costs pressure economics,” Oil & Gas Journal, 15 Oct. 2007: pp.45-51.  

Brooks on assimilation

  Gah.  I wrote the below two days ago, but stuck it in “drafts” instead of publishing it:

David Brooks published a column today about Sonia Sotomayor.  The first paragraph is interesting.  “Sonia Sotomayor had bad timing. If she’d entered college in the late-1950s or early-1960s, she would have been surrounded by an ethos that encouraged smart young ethnic kids to assimilate. If she’d entered Princeton and Yale in the 1980s, her ethnicity and gender would have been mildly interesting traits among the many she might possibly possess.”

The last sentence is clearly true.  In a striking coincidence, my wife has several dear friends from Yale who like Sotomayor spent their teenage years in Co-op City after humbler origins.  Identity politics wasn't and isn't particularly salient.  And the first sentence has a point.  The 1970s were ground zero for identity politics in the United States.  I view 1970s-style identity politics as a phase both good and inevitable, but it made for an atmosphere that seemed odd at the time (to white guys) and looks a little strange in retrospect (to everyone).  I cannot more strongly recommend Nixonland to get some of the flavor of the time. 

But the middle sentence is wrong.  First, it assumes that Sotomayor were male.  Second, a hypothetical male Sotomayor would not have gotten into those schools at that time.  Third, and perhaps most importantly, “smart young ethnic kids” did not assimilate at those schools.  Of course, you needed to fit in to get in at all, but that's pretty much still true.  And some did let go their heritage, of course, and I don't think there was anything wrong with that.  But more were not allowed to completely assimilate, regardless of their desires, because of how they looked or how their names sounded or how reluctant they were to completely abandon family customs and communal links.  And yet more still chose not to abandon their heritage.  The 1950s were more like today and less like the fantasyland of the great American assimilation machine than Brooks implies, as anybody with smart old “ethnic” relatives can attest, particularly if they are Jewish or Japanese-American. 

The financial meltdown goes nuclear

  I just learned that in 1992 the U.S. Congress decided to help the nuclear industry by making it easier for plant operators to save for the future cost of decommissioning their plants.  How did they do that?  First, they lowered the tax rate on such savings from 34% to 20%.  Second, they removed the requirement to invest decommissioning funds in low-yield government bonds. 

The first didn't go far enough.  Why tax the funds at all?  They're a provision for a future expense. 

The second ... uh oh.  I really hope somebody walked that back between 1992 and today.  I really doubt anybody did.

War and remembrance, American version

  The story of the Finnish Guard has been fascinating.  And it has one excellent modern parallel.  In the South End of Boston, in a formerly Puerto Rican area (now filled with native-born Americans pushing baby carriages) you can find the following monument:

Monument to the memory of the 65th Infantry of Puerto Rico

This monument is dedicated to the heroic Puerto Rican soldiers who made up the glorious 65th Infantry Regiment, whose actions on the battlefield surpassed the standards of bravery and determination. 

They said to us, “We will have peace even though we have to fight for it,” and so we fought in the mountains of Heartbreak Ridge and marched from Inchon.  We froze in the winter and broiled in the summer.  There were moments when we were completely outnumbered but we kept fighting and many of us gave our lives for liberty, justice, and peace.

The 65th Infantry Regiment played a key role in the most heroic episodes ever seen, showing the courage, valiance, and heart of the Puerto Rican soldier in the person of Ángel Luis García Ledesma, the most decorated Puerto Rican soldier in history.  This brave fighter sacrificed his life to cover an enemy grenade with his body, absorbing all its explosive power, thereby saving his compatriots.  For this heroic deed, he was decorated with the Congressional Medal of Honor, the Purple Heart, and monuments have been erected in memory of this transcendental moment of contemporary history.  Today we honor with pride the 65th Infantry Regiment, an example of valor and determination in defense of liberty.

What words aren’t in the monument? 

Bronx, accents, Supreme Court

  And it goes to the woman who saved baseball™!  Excellent.  But I want to discuss accents.  Sonia Sotomayor is from the Bronx, you see, and will bring a third New York accent to the bench, after Antonin Scalia from Queens and Ruth Bader Ginsburg from Brooklyn.

Sotomayor has an accent of the older type, with modern elements, which many people (of all ages) in the New York region still speak.  The fellow who gives the New York speech lessons certainly does, as do I with my relatives.  But it is not a fully modern accent of the sort spoken by my younger in-laws.  See here at minute 1:52 (it is worth it) or here or here. 

What about the other two New York members of the Court?

Not-so-secret prisons at Bagram

  This, if accurate, is un-American and must be stopped.  I was not aware that the U.S. held prisoners at Bagram who were captured outside Afghanistan.  That is wrong.

While I think the decision to keep the torture photos under wraps is a mistake, I am not so sure of my position as to become upset about it.  No laws are being violated, and the administration's propaganda rationale is quite valid.  In addition, I also think that it would be a bad idea to extend habeus corpus to prisoners taken in Afghanistan as long as there is an active rebellion under way.  Denying those rights during a rebellion does not violate American law nor American tradition nor a decent respect of the opinions of mankind.  Finally, I have no problem with American forces swooping down and arresting somebody outside the United States, even in violation of the jurisdiction in which the swooping occurs.  After all, even now, two decades later, and despite all the gray, it still seems to me that Bush the Elder's decision to invade Panama and arrest Manuel Noriega was the right thing to do. 

But I have a serious problem when the swoopee is not transferred to an American federal court but rather transported to an extraterritorial outpost and held with no judicial protections whatsoever.

I understand why the President wants to punt on the Bagram issue.  I am supremely cynical, and unlike many of his early supporters I found the man an attractive candidate early on because I beleived that he was even more supremely cynical in the sort impersonal way that makes for successful presidencies.  But cynicism has its limits.  He does not have my support on the fate of the Bagram detainees captured outside the Af-Pak theater, and they should be tried in American courts or released.   

Trust, but verify

  Every so often you come across something that just makes your day.  The following letter has made my week.   It even made up for running into monuments like the below while driving around Alabama, southwestern Georgia, and the Florida panhandle.

Dayton, Ohio, August 7, 1865

To My Old Master, Colonel P.H. Anderson
Big Spring, Tennessee

Sir: I got your letter and was glad to find you had not forgotten Jourdon, and that you wanted me to come back and live with you again, promising to do better for me than anybody else can. I have often felt uneasy about you. I thought the Yankees would have hung you long before this for harboring Rebs they found at your house. I suppose they never heard about your going to Col. Martin’s to kill the Union soldier that was left by his company in their stable. Although you shot at me twice before I left you, I did not want to hear of your being hurt, and am glad you are still living. It would do me good to go back to the dear old home again and see Miss Mary and Miss Martha and Allen, Esther, Green, and Lee. Give my love to them all, and tell them I hope we will meet in the better world, if not in this. I would have gone back to see you all when I was working in the Nashville hospital, but one of the neighbors told me Henry intended to shoot me if he ever got a chance.

I want to know particularly what the good chance is you propose to give me. I am doing tolerably well here; I get $25 a month, with victuals and clothing; have a comfortable home for Mandy (the folks here call her Mrs. Anderson), and the children, Milly, Jane and Grundy, go to school and are learning well; the teacher says Grundy has a head for a preacher. They go to Sunday School, and Mandy and me attend church regularly. We are kindly treated; sometimes we overhear others saying, “Them colored people were slaves down in Tennessee.” The children feel hurt when they hear such remarks, but I tell them it was no disgrace in Tennessee to belong to Col. Anderson. Many darkies would have been proud, as I used to was, to call you master. Now, if you will write and say what wages you will give me, I will be better able to decide whether it would be to my advantage to move back again.

As to my freedom, which you say I can have, there is nothing to be gained on that score, as I got my free papers in 1864 from the Provost Marshal General of the Department of Nashville. Mandy says she would be afraid to go back without some proof that you are sincerely disposed to treat us justly and kindly—and we have concluded to test your sincerity by asking you to send us our wages for the time we served you. This will make us forget and forgive old scores, and rely on your justice and friendship in the future.

I served you faithfully for thirty-two years and Mandy twenty years. At $25 a month for me, and $2 a week for Mandy, our earnings would amount to $11,680. Add to this the interest for the time our wages has been kept back and deduct what you paid for our clothing and three doctor’s visits to me, and pulling a tooth for Mandy, and the balance will show what we are in justice entitled to. Please send the money by Adams Express, in care of V. Winters, esq, Dayton, Ohio. If you fail to pay us for faithful labors in the past we can have little faith in your promises in the future. We trust the good Maker has opened your eyes to the wrongs which you and your fathers have done to me and my fathers, in making us toil for you for generations without recompense. Here I draw my wages every Saturday night, but in Tennessee there was never any pay day for the Negroes any more than for the horses and cows. Surely there will be a day of reckoning for those who defraud the laborer of his hire.

In answering this letter please state if there would be any safety for my Milly and Jane, who are now grown up and both good-looking girls. You know how it was with Matilda and Catherine. I would rather stay here and starve—and die if it comes to that—than have my girls brought to shame by the violence and wickedness of their young masters. You will also please state if there has been any schools opened for the colored children in your neighborhood. The great desire of my life now is to give my children an education, and have them form virtuous habits.

Say howdy to George Carter, and thank him for taking the pistol from you when you were shooting at me.

From your old servant,

Jourdon Anderson

Churchill, paraphrased, sort of

  American electricity transmission is regulated in an odd way.  You’ve got 50 state regulators.  Then you’ve got three interconnected grids (the Eastern, the Western, and the Texan) and a separate grid in Puerto Rico.  (Alaska and Hawaii don’t have statewide grids.  Hawaii is an archipelago, and Alaska is too thinly populated.)  On top of the three Conus grids you’ve also got ten North American Electric Reliability Council (NERC) regions.  Only Texas, under the Electric Reliability Council Of Texas (ERCOT) coincides with an integrated grid.  Then on top of it all sits the Federal Energy Regulatory Commission (FERC).  The Energy Policy Act of 2005 — as best as I can tell, a not-bad piece of Bush-era legislation — gave it real powers for the first time.

A lot of that act was due to the work of Pat Wood, who ran FERC between 2001 and 2005.  Unlike a lot of political appointees from that era, Wood was supremely competent and very non-dogmatic.  You can get a taste of his approach in this 2001 interview.  He left FERC to go work for Airtricity, and thus in that capacity I’ve had the opportunity to hear him speak on several occasions.

Like a lot of people, he isn’t happy with America’s lack of an intelligent energy policy.  Where’s the carbon tax?  The centralized grid?  The feed-in tariffs?  And, of course, working in the Bush Administration didn’t help.  Admittedly, I last heard him back when “Drill baby drill” still echoed across the land, but as I watch the ugly sausage of cap-and-trade inching its way through the Congressional meat-grinder, with the threat of EPA regulation as a stick in the background, I can understand the disillusionment. 

Even if I wouldn’t take it quite so far as to say, in public, at an HBS conference, “Maybe in a country of 300 million people, democracy, even a republican form of democracy, doesn’t work that well.  But that’s a debate for the law school.”

Supreme court vacancy

  So, Justice Souter is retiring. 

Me, I vote for Sonia Sotomayor.  Why?  C'mon, it's obvious.  First, she's from the Bronx.  Second, she ended the baseball strike back in '95.  Third, I need a third?

I reserve the right to change my opinion should I discover that she does not have a New York accent of the modern type.

But I'd sure love to have a guest post about the Court from somebody who, you know, actually knows something about it.  Hint.

Really unbecoming American sensitivity

 Most of the (few) readers of this blog are certainly aware that in 1978 the United States agreed to transfer full control the Panama Canal back to Panama in 1999.  (I'll discuss the reasons benind that agreement that in another post, if anyone's interested.)  The resulting treaties were controversial.  Most Americans forgot about it right quick, but the Texas Republican party continued to rant about it until 2003.  From their old platform: 

“The Party urges Congress to support HJR 77, the Panama and America Security Act, which declare the Carter-Torrijos Treaty null and void. We support re-establishing United States control over the Canal in order to retain our military bases in Panama, to preserve our right to transit through the Canal, and to prevent the establishment of Chinese missile bases in Panama.”

That's a whole lotta crazy.  But it represented a defensive nationalism that seemed pretty much to be over.  After all, the United States is not a country that harkens back to a grand imperial past.  We are not a country bothered by our military defeats.  We are not a country afraid to recognize past wrongs, we move past ours, we ask others to move past theirs.  Nor does relative decline bother Americans; if we become more prosperous and more secure, there is no worry that others have overtaken us.

Oh, wait!  That's some other country I'm talking about.  Maybe Finland.  We get things like this:

My oh my.  But thank God for Geraldo.  America owes a lot to half-Jewish half-Latin guys from the New York metropolitan area, that's what I always say. 

Unbecoming Canadian sensitivity

  I am an unabashed Canadaphile.  The Canadian constitution is rather better designed than the American one, other than not having a popularly-elected governor-general.  The health care system is not the one I’d design from scratch, but it has ours beat cold.  The federal system makes more sense.  They don’t fetishize local government.  Plus, they play good baseball and make good hip-hop.  And I have in-laws in the Mounties.  How Canadian is that, eh?

 

With that in mind, Canadian defensiveness towards the U.S. perplexes me, and it pops up in the most unexpected places.  Frex, as I didn’t know until I read Randy’s blog, it seems that Janet Napolitano may have accidently confused the Millennium Plot with 9-11 during a press conference.  OK, that’s a little embarrassing.  I’ve been there myself.  But enough to produce this reaction?  Or this one? 

The Globe and Mail column is particularly confusing.  After all, the sensible ripost to any mention of the Millennium Plot is to say, as the column did, that the U.S. blocked the terrorists at the border and the system worked.  Instead it brings up security theater that has nada to do with Canada (shoes in airports) and stuff that’s really aimed at keeping track of Americans, like requiring passports.  And that after a claim that Janet Napolitano is just like Dick Cheney.  Erm?  From whence this excitement?

Now, there are countries where people are understandably worried about perceived slights from the United States.  Like Mexico, where there are umpty-scrump reasons for people to be defensive with respect to their 800-pound neighbor.  Among other things, Mexico lost its war with the United States.  That sensitivity is why the U.S. needs to apply the same border controls to the northern and southern frontier, or at least be publicly seen to be doing that; otherwise key segments of Mexican public opinion would be enflamed, making cooperation unnecessarily harder. 

But similar Canadian sensitivity I don’t get.

Baumol’s disease, perfect competition, and finance

  A colleague points out that Baumol’s model requires perfect competition.  If profits have risen in the financial industry, then it’s probably not the explanation. 

The above graph from Simon Johnson does not at first glance seem consistent with a diagnosis of Baumol’s disease.  The rub is that I don’t know what profits consist of in the financial services sector.  Are we sure that all profits are indeed profits, and not disguised labor payments?

If we are, then we may have to abandon the Baumol hypothesis.  Help?  Anyone? 

Baumol’s disease and the financial industry

  The Baumol effect (or “disease”) suggests that the parts of the economy with the slowest productivity growth are likely to grow the fastest.  Howzat, you ask?  Well, say productivity grows in widget-making but not in article-writing.  The cost of writing articles will rise, because the only way you'll get RA's to write them for you necessary research assistance is to pay higher wages.  Otherwise they'll all go away and make widgets.  So (if you make a bunch of other assumptions that I won’t get into here) the amount of money spent on article-writing will rise.

Simon Johnson recently published a disconcerting chart that showed finance profits rising dramatically as a % of all corporate profits, starting in the 1980s and peaking in 2006 at a rather mind-boggling 41 percent.  I’m honestly not sure how to think about that, so I went to the BEA and downloaded data on the financial industry’s share of value-added and employment.  That produced this chart, of data between 1948 and 2007:

 

Finance’s share of GDP grows monotonically over the last sixty years.  Employment in finance, however, grows about as fast as value-added until the 1980s, when it starts to accelerate, and the 1990s, when it takes off. 

There are three ways to think about this, it seems.  One is that productivity within the financial sector grew dramatically in the 1990s.  “Financial innovation” and the like, whatever that is.

The second is that the financial industry became much less competitive in the 1990s.  The bankers managed to extract rents from the rest of society and increase their share of the pie without producing any equivalent benefit.  Some of those rents went to finance employees, while others went to the firms’ owners and creditors, but is was all about the rents.

The third is that the relative productivity of the financial industry collapsed during the 1990s.  Capital and skilled labor could earn a lot more elsewhere, so the financiers needed to offer them more in order to keep their services.  Some of the higher cost per financial-service went to capital and some to labor, but the growth of the sector was due to Baumol’s disease.

The $64,000 — $64 billion, $6.4 trillion, whatever — question is:  how can you distinguish between these three different hypotheses? 

And the meta-question:  does knowing which of the three best fits the facts change the analysis of the financial collapse?  That is, does the question matter?

Happy tax day!

  So today is tax day in the United States.  I feel like celebrating.  Man, taxes are low in this country.

¡Viva ... uh ... Texaco?

  A while ago, insecure Americans got themselves all worked into a stupid dither about a Mexican vodka ad.  Now, in a sign of great maturity, Mexicans are refusing to get worked up about a European hamburger ad for something called the “Texican” that Burger King has run in the United Kingdom and the madre patria. 

Burger King is going to pull the ad anyway, just like Absolut pulled its.  You be the judge.

Hat tip:  Ganchoblog.

Raisuli my ass

  Who's the biggest pirate-fighter in the last century of American presidents?

From Big Crush, via  Mojo.

Word.

Keep on trucking

  A while ago, I wrote that I was fairly sanguine about the Buy-USA provisions in the stimulus bill.  I prognosticated that they would probably not be applied to our NAFTA partners, and even if they were, the NAFTA dispute-resolution mechanism would limit the damage.  Now along comes another dispute, this time over trucking, that poses a greater threat to trade ... although I am still confident that it will end well.

What's the story?  In 1994, NAFTA passed the U.S. Congress.  It mandated that all three countries open up their long-distance trucking markets to the others.  The U.S., however, punted when it came to Mexico, claiming that Mexican trucks weren't safe.  In 1998, Mexico took the U.S. to NAFTA arbitration.  On February 6, 2001, the U.S. lost ... partially.  The panel ruled that the U.S. couldn't issue a blanket ban on Mexican trucks, but that it could assess their safety on a case-by-case basis.  The Bush administration pushed Congress to issue enabling legislation that would bring the U.S. into compliance with the ruling, and with the political capital gained from 9-11, finally succeeded in November 2001.  (Not everything the Bush Administration did was wrong, although much was botched ... keep reading.)    Congress authorized the FMCSA to inspect Mexican trucks, and the Bush administration issued the required regulations to implement the law. 

Problem solved!  Not quite.  The Bush regulations had some, well, holes big enough to drive a truck through.  More below the fold.

Getting serious about the cartel wars

  Much of Mexico's organized crime problem derives from the United States.  First, obviously but intractably, the U.S. provides most of the demand for illegal narcotics.  Second, and more tractably, the U.S. provides most of the weapons.  This is not to deny that the weakness of Mexican law enforcement and local government is a necessary condition for the current violence.

There are several ways around the problems of Mexican law enforcement.  The simplest one is to use foreign agents.  In fact, that's happened.  In Operación Limpieza, the Mexican government recently busted open a corruption ring inside SIEDO, the agency charged with fighting organized crime.  Except ... the info originally came from an FBI agent operating in Mexico.  (Hat tip:  Patrick Corcoran.)  This will be a diplomatic problem, especially considering how long it took the Americans to pass the information along.

Except it shouldn't be a problem.  In fact, embedding Americans inside the chain-of-command of Mexican law enforcement might be one of the most effective ways of improving its efficacy.  So would spending much more U.S. money on training, or subsidizing Mexican salaries.  This is not to say that Americans are uncorruptible; it is to say that it's much harder to suborn an American agent without discovery.  The incentives are just too different.  The same applies (albeit to a lesser extent) to a better-paid Mexican agent.

A serious American reaction would involve reinstating the assault rifle ban and giving Mexico much more money.  A serious Mexican reaction would involve allowing Americans to bring their investigatory knowledge to Mexico, and use Americans to police Mexican law enforcement. 

Which isn't to say that organized crime is intractable without American help.  It isn't.  It's merely to say that entirely-understandable nationalism on both sides of the border ― “Why should we spend money to help Mexico do things it should be able to do for itself?”  “Why should we allow gringos hipócritas malintencionados to give orders to our own people on our own soil?” ― keeps some of the best tools out of the kit.  And that seems like a shame. 

Accents, Brooklyn

  Over at Randy's place, he's got a neat post on the survival of Dutch in New York City.  Seems like it held on for a couple centuries after the English took it over.  In the post, Randy suggests that the “Brooklyn” accent derives from Dutch.  Peter takes issue, debate ensues. 

Goin' Back To Brooklyn @ Yahoo! Video

Here, I'd like to say three things about New York accents.

1. There are no geographic variations.  None.  Zip.  Say-roe.  All of what seems to be geographic variation is due to race, immigration, or social class.  All of it.  Anyone who tells you otherwise is either confused or f*@king with you.  I have been asked this question every goddamned time I go to Britain.  It ain't true.  Somebody from New York, they say different, they probably be playing games.   
2. The traditional New York accent is dead.  (For a brief period in college, I tried to affect one, for reasons which are beyond me.  My natural speech is bad enough.)  Its more modern variations are also in fact dying, save for ...
3. ... the accent exemplified by Rosie Perez, held by most children of Latino immigrants in the New York metropolitan area, and now spreading throughout the Northeast. It is somewhat different from the previously dominant version of the accent, and it is replacing that version very rapidly.  Even among non-Latinos.

For your edification, click here for Ms. Perez on Letterman, with the new New York accent.  It's worth it.  (For some reason, the damned embedding won't work.)  My older sister isn't quite young enough to talk like this, although I have some very non-Latino in-laws in their twenties who do.  You can see two more examples of the same accent coming from the eyewitnesses in the below BBC report around minute 2:06.

Finally, here is a fellow who gives pretty good lessons in the older version of New York English, the one I speak with my siblings.  He does confuse class and geography, presumably ingenuously, when he describes his accent as a mix of Westchester and Staten Island.  There is no speech difference between a blue-collar dude from Rosebank or one from southeastern Yonkers, or between the child of Ivy League graduates in Todt Hill or in Scarsdale.  He is simply cottoning on to the fact that there are a lot more upper-class types in Westchester County than in Richmond County, and a lot fewer plumbers and police officers. 

Now that you been schooled in the Kings English, what sort of English do you speak? 

Cars of Februaries past

  After World War 2 ended, pent-up consumer demand meant that the auto manufacturers could pretty much sell whatever crap their factories could churn out.  It took, in fact, four years for the carmakers to start selling new products incorporating all the technological advances of the Depression and war years. 

Oldsmobile kicked it off with the restyled Futuramic Rocket 88.  It included the Hydramatic automatic transmission and a brand-new V-8 engine.  Now, neither was new.  Olds introduced the automatic transmission in 1940 and it had been building V-8’s since 1932, but the two things hadn’t been put together in a designed-from-the-chassis up vehicle.  In addition, the Rocket V-8 was the first overhead-valve design, allowing the engine to take up much less space and producing less vibration when accelerating.  It also had an AM radio that could sorta kinda be heard with the top down at cruising speed maybe if you had lots of imagination. 

My father, therefore, wanted one.  But they were hard to find in February of 1949.  Yet the above pic from 1949 shows that he got one.  (Well, actually the Rocket 76 with the Big Six engine.) Only wanting is not having.  How did he make that leap? 

How bad is it?

  We really need a labor economist.  Anyone?  Anyone?  Kaplan?

Calculated risk produced a chart based on a chart published by Barry Ritholtz.   It shows the peak-to-recovery job losses for the recessions back to 1948.  So far, it's been about as bad as 1981-82.  I thought it would be interesting to add 1929 and 1937.  How does the situation look compared to the opening months of the Great Depression and the so-called “Roosevelt recession” of 1937? 

To do that, I had to use the “total employment” series from the BLS Current Population Survey in order to make the post-1939 numbers comparable to the Depression-era data.  What I got looked somewhat different from the charts currently running around the internets. 

The big red line is the current downturn.

Qualitatively, the above picture gives the same picture as the other charts.  The current downturn is more-or-less tracking 1981, 1974, 1957, and 1948, all pretty bad recessions.  And since past performance does not predict future results, we are not promised the same sort of rapid recovery we saw from those four.

But two things surprised me, and are very different from the other data.