The New York Times
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December 10, 2008
Op-Ed Columnist
While Detroit Slept By THOMAS L. FRIEDMAN
As I think about our bailing out Detroit, I can’t help but reflect on what, in my view, is the most important rule of business in today’s integrated and digitized global market, where knowledge and innovation tools are so widely distributed. It’s this: Whatever can be done, will be done. The only question is will it be done by you or to you. Just don’t think it won’t be done. If you have an idea in Detroit or Tennessee, promise me that you’ll pursue it, because someone in Denmark or Tel Aviv will do so a second later.
Why do I bring this up? Because someone in the mobility business in Denmark and Tel Aviv is already developing a real-world alternative to Detroit’s business model. I don’t know if this alternative to gasoline-powered cars will work, but I do know that it can be done — and Detroit isn’t doing it. And therefore it will be done, and eventually, I bet, it will be done profitably.
And when it is, our bailout of Detroit will be remembered as the equivalent of pouring billions of dollars of taxpayer money into the mail-order-catalogue business on the eve of the birth of eBay. It will be remembered as pouring billions of dollars into the CD music business on the eve of the birth of the iPod and iTunes. It will be remembered as pouring billions of dollars into a book-store chain on the eve of the birth of Amazon.com and the Kindle. It will be remembered as pouring billions of dollars into improving typewriters on the eve of the birth of the PC and the Internet.
What business model am I talking about? It is Shai Agassi’s electric car network company, called Better Place. Just last week, the company, based in Palo Alto, Calif., announced a partnership with the state of Hawaii to road test its business plan there after already inking similar deals with Israel, Australia, the San Francisco Bay area and, yes, Denmark.
The Better Place electric car charging system involves generating electrons from as much renewable energy — such as wind and solar — as possible and then feeding those clean electrons into a national electric car charging infrastructure. This consists of electricity charging spots with plug-in outlets — the first pilots were opened in Israel this week — plus battery-exchange stations all over the respective country. The whole system is then coordinated by a service control center that integrates and does the billing.
Under the Better Place model, consumers can either buy or lease an electric car from the French automaker Renault or Japanese companies like Nissan (General Motors snubbed Agassi) and then buy miles on their electric car batteries from Better Place the way you now buy an Apple cellphone and the minutes from AT&T. That way Better Place, or any car company that partners with it, benefits from each mile you drive. G.M. sells cars. Better Place is selling mobility miles.
The first Renault and Nissan electric cars are scheduled to hit Denmark and Israel in 2011, when the whole system should be up and running. On Tuesday, Japan’s Ministry of Environment invited Better Place to join the first government-led electric car project along with Honda, Mitsubishi and Subaru. Better Place was the only foreign company invited to participate, working with Japan’s leading auto companies, to build a battery swap station for electric cars in Yokohama, the Detroit of Japan.
What I find exciting about Better Place is that it is building a car company off the new industrial platform of the 21st century, not the one from the 20th — the exact same way that Steve Jobs did to overturn the music business. What did Apple understand first? One, that today’s technology platform would allow anyone with a computer to record music. Two, that the Internet and MP3 players would allow anyone to transfer music in digital form to anyone else. You wouldn’t need CDs or record companies anymore. Apple simply took all those innovations and integrated them into a single music-generating, purchasing and listening system that completely disrupted the music business.
What Agassi, the founder of Better Place, is saying is that there is a new way to generate mobility, not just music, using the same platform. It just takes the right kind of auto battery — the iPod in this story — and the right kind of national plug-in network — the iTunes store — to make the business model work for electric cars at six cents a mile. The average American is paying today around 12 cents a mile for gasoline transportation, which also adds to global warming and strengthens petro-dictators.
Do not expect this innovation to come out of Detroit. Remember, in 1908, the Ford Model-T got better mileage — 25 miles per gallon — than many Ford, G.M. and Chrysler models made in 2008. But don’t be surprised when it comes out of somewhere else. It can be done. It will be done. If we miss the chance to win the race for Car 2.0 because we keep mindlessly bailing out Car 1.0, there will be no one to blame more than Detroit’s new shareholders: we the taxpayers.
Showing posts with label Opinion. Show all posts
Showing posts with label Opinion. Show all posts
Wednesday, December 10, 2008
Monday, December 08, 2008
They Hate Us — and India Is Us By PATRICK FRENCH
The New York Times
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December 8, 2008
Op-Ed Contributor
They Hate Us — and India Is Us By PATRICK FRENCH
London
AS an open, diverse and at times chaotic democracy, India has long been a target for terrorism. From the assassination of Mohandas Gandhi in 1948 to the recent attacks in Mumbai, it has faced attempts to change its national character by force. None has yet succeeded. Despite its manifest social failings, India remains the developing world’s most successful experiment in free, plural, large-scale political collaboration.
The Mumbai attacks were transformative, because in them, unlike previous outrages in India, the rich were caught: not only Western visitors in the nation’s magnificent financial capital but also Indian bankers, business owners and socialites. This had symbolic power, as the terrorists knew it would.
However, I recently saw a televised forum in which members of the public vented their fury against India’s politicians for their failure to act, and it soon became apparent the victims were poor as well as rich. One survivor, Shameem Khan — instantly identifiable by his name and his embroidered cap as a Muslim — told how six members of his extended family had been shot dead. Still in shock, he said: “A calamity has fallen on my house. What shall I do?” His neighbors had helped pay for the funeral. Like most of India’s 150 million Muslims, Mr. Khan is staunchly patriotic. The city’s Muslim Council refused to let the terrorists be buried in its graveyards.
When these well-planned attacks unfolded, it was clear to anyone with experience of India that they were not homegrown, and almost certainly originated from Pakistan. Yet the reaction of the world’s news media was to rely on the outmoded idea of Pakistan-India hyphenation — as if a thriving and prosperous democracy of over a billion people must be compared only to an imploded state that is having to be bailed out by the I.M.F. Was Pakistan to blame, asked many pundits, or was India at fault because of its treatment of minority groups?
The terrorists themselves offered little explanation, and made no clear demands. Yet even as the siege continued, commentators were making chilling deductions on their behalf: their actions were because of American foreign policy, or Afghanistan, or the harassment of Indian Muslims. Personal moral responsibility was removed from the players in the atrocity. When officials said that the killers came from the Pakistani terrorist group Lashkar-e-Taiba, it was taken as proof that India’s misdeeds in the Kashmir Valley were the cause.
These misdeeds are real, as are India’s other social and political failings (I recently met a Kashmiri man whose father and sister had died at the hands of the Indian security forces). But there is no sane reason to think Lashkar-e-Taiba would shut down if the situation in Kashmir improved. Its literature is much concerned with establishing a caliphate in Central Asia, and murdering those who insult the Prophet. Its leader, Hafiz Saeed, who lives on a large estate outside Lahore bought with Saudi Money, goes about his business with minimal interference from the Pakistani government.
Lashkar-e-Taiba is part of the International Islamic Front for Jihad Against Jews and Crusaders (the Qaeda franchise). Mr. Saeed’s hatreds are catholic — his bugbears include Hindus, Shiites and women who wear bikinis. He regards democracy as “a Jewish and Christian import from Europe,” and considers suicide attacks to be in accordance with Islam. He has a wider strategy: “At this time our contest is Kashmir. Let’s see when the time comes. Our struggle with the Jews is always there.” As he told his followers in Karachi at a rally in 2000: “There can’t be any peace while India remains intact. Cut them, cut them — cut them so much that they kneel before you and ask for mercy.” In short, he has an explicit political desire to create a state of war between the religious communities in India and beyond, and bring on the endgame.
Like other exponents of Islamist extremism, he has a view of the world that does not tolerate doubt or ambiguity: his opponents are guilty, and must be killed. I have met other radicals like Mr. Saeed, men who live in a dimension of absolute certainty and have contempt for the moral relativism of those who seek to excuse them. To achieve their ends, it is necessary to indoctrinate boys in the hatred of Hindus, Americans and Jews, and dispatch them on suicide missions. It is unlikely that any of the militants who were sent from Karachi to Mumbai — young men from poor rural backgrounds whose families were paid for their sacrifice — had ever met a Jew before they tortured and killed Rabbi Gavriel Holtzberg and his wife, Rivka, who was several months pregnant, at the Mumbai Jewish center.
America’s so-called war on terror has been, in many respects, a catastrophe. In Pakistan, it has been chronically mishandled, leading to the radicalization of areas in the north that were previously peaceful. Yet links between the military, the intelligence services and the jihadis have remained intact: Lashkar-e-Taiba is merely one of a number of extremist organizations that continues to function.
The prime solution to the present crisis is to force the closing of terrorist training outfits in Pakistan, and apply the law to those who organize and finance operations like the Mumbai massacres. Hafiz Saeed and other suspects should be sent to India to stand trial. The remark by Pakistan’s president, Asif Ali Zardari (a man whose history of shady business dealing makes him demonstrably unfit for high, or even low, office), that he did not think the terrorists came from Pakistan would be funny if it were not tragic.
The United States gives around $1 billion a year in military aid to Islamabad; that is leverage. It does the people of Pakistan no favors for Washington to allow their leaders to continue with the strategy of perpetual diversion, asking India to be patient while denying the true nature of the immediate terrorist threat. I received this e-mail message recently from a friend in Karachi: “Nowhere can get more depressing than Pakistan these days — barring some African failed states and Afghanistan.”
Patrick French is the author, most recently, of “The World Is What It Is: The Authorized Biography of V. S. Naipaul.”
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December 8, 2008
Op-Ed Contributor
They Hate Us — and India Is Us By PATRICK FRENCH
London
AS an open, diverse and at times chaotic democracy, India has long been a target for terrorism. From the assassination of Mohandas Gandhi in 1948 to the recent attacks in Mumbai, it has faced attempts to change its national character by force. None has yet succeeded. Despite its manifest social failings, India remains the developing world’s most successful experiment in free, plural, large-scale political collaboration.
The Mumbai attacks were transformative, because in them, unlike previous outrages in India, the rich were caught: not only Western visitors in the nation’s magnificent financial capital but also Indian bankers, business owners and socialites. This had symbolic power, as the terrorists knew it would.
However, I recently saw a televised forum in which members of the public vented their fury against India’s politicians for their failure to act, and it soon became apparent the victims were poor as well as rich. One survivor, Shameem Khan — instantly identifiable by his name and his embroidered cap as a Muslim — told how six members of his extended family had been shot dead. Still in shock, he said: “A calamity has fallen on my house. What shall I do?” His neighbors had helped pay for the funeral. Like most of India’s 150 million Muslims, Mr. Khan is staunchly patriotic. The city’s Muslim Council refused to let the terrorists be buried in its graveyards.
When these well-planned attacks unfolded, it was clear to anyone with experience of India that they were not homegrown, and almost certainly originated from Pakistan. Yet the reaction of the world’s news media was to rely on the outmoded idea of Pakistan-India hyphenation — as if a thriving and prosperous democracy of over a billion people must be compared only to an imploded state that is having to be bailed out by the I.M.F. Was Pakistan to blame, asked many pundits, or was India at fault because of its treatment of minority groups?
The terrorists themselves offered little explanation, and made no clear demands. Yet even as the siege continued, commentators were making chilling deductions on their behalf: their actions were because of American foreign policy, or Afghanistan, or the harassment of Indian Muslims. Personal moral responsibility was removed from the players in the atrocity. When officials said that the killers came from the Pakistani terrorist group Lashkar-e-Taiba, it was taken as proof that India’s misdeeds in the Kashmir Valley were the cause.
These misdeeds are real, as are India’s other social and political failings (I recently met a Kashmiri man whose father and sister had died at the hands of the Indian security forces). But there is no sane reason to think Lashkar-e-Taiba would shut down if the situation in Kashmir improved. Its literature is much concerned with establishing a caliphate in Central Asia, and murdering those who insult the Prophet. Its leader, Hafiz Saeed, who lives on a large estate outside Lahore bought with Saudi Money, goes about his business with minimal interference from the Pakistani government.
Lashkar-e-Taiba is part of the International Islamic Front for Jihad Against Jews and Crusaders (the Qaeda franchise). Mr. Saeed’s hatreds are catholic — his bugbears include Hindus, Shiites and women who wear bikinis. He regards democracy as “a Jewish and Christian import from Europe,” and considers suicide attacks to be in accordance with Islam. He has a wider strategy: “At this time our contest is Kashmir. Let’s see when the time comes. Our struggle with the Jews is always there.” As he told his followers in Karachi at a rally in 2000: “There can’t be any peace while India remains intact. Cut them, cut them — cut them so much that they kneel before you and ask for mercy.” In short, he has an explicit political desire to create a state of war between the religious communities in India and beyond, and bring on the endgame.
Like other exponents of Islamist extremism, he has a view of the world that does not tolerate doubt or ambiguity: his opponents are guilty, and must be killed. I have met other radicals like Mr. Saeed, men who live in a dimension of absolute certainty and have contempt for the moral relativism of those who seek to excuse them. To achieve their ends, it is necessary to indoctrinate boys in the hatred of Hindus, Americans and Jews, and dispatch them on suicide missions. It is unlikely that any of the militants who were sent from Karachi to Mumbai — young men from poor rural backgrounds whose families were paid for their sacrifice — had ever met a Jew before they tortured and killed Rabbi Gavriel Holtzberg and his wife, Rivka, who was several months pregnant, at the Mumbai Jewish center.
America’s so-called war on terror has been, in many respects, a catastrophe. In Pakistan, it has been chronically mishandled, leading to the radicalization of areas in the north that were previously peaceful. Yet links between the military, the intelligence services and the jihadis have remained intact: Lashkar-e-Taiba is merely one of a number of extremist organizations that continues to function.
The prime solution to the present crisis is to force the closing of terrorist training outfits in Pakistan, and apply the law to those who organize and finance operations like the Mumbai massacres. Hafiz Saeed and other suspects should be sent to India to stand trial. The remark by Pakistan’s president, Asif Ali Zardari (a man whose history of shady business dealing makes him demonstrably unfit for high, or even low, office), that he did not think the terrorists came from Pakistan would be funny if it were not tragic.
The United States gives around $1 billion a year in military aid to Islamabad; that is leverage. It does the people of Pakistan no favors for Washington to allow their leaders to continue with the strategy of perpetual diversion, asking India to be patient while denying the true nature of the immediate terrorist threat. I received this e-mail message recently from a friend in Karachi: “Nowhere can get more depressing than Pakistan these days — barring some African failed states and Afghanistan.”
Patrick French is the author, most recently, of “The World Is What It Is: The Authorized Biography of V. S. Naipaul.”
Trouble in the Other Middle East By ROBERT D. KAPLAN
The New York Times
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December 8, 2008
Op-Ed Contributor
Trouble in the Other Middle East By ROBERT D. KAPLAN
Washington
THE divisions we split the world into during the cold war have at long last crumbled thanks to the Mumbai terrorist attacks. No longer will we view South Asia as a region distinct from the Middle East. Now there is only one long continuum stretching from the Mediterranean to the jungles of Burma, with every crisis from the Israeli-Palestinian dispute in the west to the Hindu-Muslim dispute in the east interlocked with the one next door.
Yet this elongated Greater Near East does not signify something new but something old.
For significant parts of medieval and early modern history, Delhi was under the same sovereignty as Kabul, yet under a different one from Bangalore. From the 16th to the 18th centuries, the Mughal dynasty, created by Muslims from Central Asia, governed a sprawling empire encompassing northern and central India, almost all of Pakistan and much of Afghanistan — even as Hindu Maratha warriors in India’s south held out against Mughal armies. India’s whole history — what has created its rich syncretic civilization of Turko-Persian gems like the Taj Mahal and the elaborate Hindu temples of Orissa — is a story of waves of Muslim invaders in turn killing, interacting with and ultimately being influenced by indigenous Hindus. There is even a name for the kind of enchanting architecture that punctuates India and blends Islamic and Hindu styles: Indo-Saracenic, a reference to the Saracens, the term by which Arabs were known to Europeans of the Middle Ages.
Hindu-Muslim relations have historically been tense. Remember that the 1947 partition of the subcontinent uprooted at least 15 million people and led to the violent deaths of around half a million. Given this record, the relatively peaceful relations between the majority Hindus and India’s 150 million Muslims has been testimony to India’s successful experiment in democracy. Democracy has so far kept the lid on an ethnic and religious divide that, while its roots run centuries back, has in recent years essentially become a reinvented modern hostility.
The culprit has been globalization. The secular Indian nationalism of Jawaharlal Nehru’s Congress Party, built around a rejection of Western colonialism, is more and more a thing of the past. As the dynamic Indian economy merges with that of the wider world, Hindus and Muslims have begun separate searches for roots to anchor them inside a bland global civilization. Mass communications have produced a uniform and severe Hinduism from a host of local variants, even as the country’s economically disenfranchised Muslims are increasingly part of an Islamic world community.
The Muslim reaction to this Hindu nationalism has been less anger and violence than simple psychological withdrawal: into beards, skull caps and burkas in some cases; self-segregating into Muslim ghettos in others. The terrorist attacks in Mumbai had a number of aims, one of which was to set a fuse to this tense intercommunal standoff. The jihadists not only want to destroy Pakistan, they want to destroy India as well. India in their eyes is everything they hate: Hindu, vibrantly free and democratic, implicitly and increasingly pro-American, and militarily cozy with Israel. For Washington, this is no simple matter of defending Pakistan against chaos by moving troops from Iraq to Afghanistan. It is a whole region we are dealing with. Thus for the jihadists, the concept of a 9/11-scale attack on India was brilliant.
Just as the chaos in Iraq through early 2007 threatened the post-Ottoman state system from Lebanon to Iran, creeping anarchy in Pakistan undermines not only Afghanistan but also the whole Indian subcontinent. The existence of terrorist outfits like Lashkar-e-Taiba that have links with the Pakistani security apparatus but are outside the control of Pakistan’s own civilian authorities is the very definition of chaos.
A collapsing Pakistan, and with it the loss of any real border separating India from Afghanistan, is India’s worst nightmare. It brings us back toward the borders of the Mughal world, but not in a peaceful way. Indeed, the route that intelligence agencies feel was taken by the fishing boat hijacked by the terrorists — from Porbandar in India’s Gujarat State, then north to Karachi in Pakistan, and then south to Mumbai — follows centuries-old Indian Ocean trade routes.
The jihadist attack on India’s financial center not only damages Indian-Pakistani relations, but makes Pakistan’s new civilian government — which has genuinely tried to improve ties with India — look utterly pathetic. Thus, the attack weakens both countries. Any understanding over Kashmir, the disputed Muslim-majority territory claimed by Pakistan, is now further than ever from materializing, with mass violence there a distinct possibility.
This, in turn, reduces the chance of an Indian-Pakistani rapprochement on Afghanistan, whose government Pakistan seeks to undermine and India sends millions of dollars in aid to help prop up. The Pakistani security services want a radical Islamized Afghanistan as a strategic rear base against India, while India wants a moderate, secular Afghanistan as a weapon against Pakistan.
Pakistan is not only chaotic but dangerously lonely. Islam has not proved effective in bringing together its regionally based ethnic groups, and thus a resort to a fierce ideology as a unifying device among fundamentalist Muslims has been the country’s signal tragedy. Meanwhile, Pakistan’s military suspects that Washington will desert their nation the moment the leadership of Al Qaeda is, by any chance, killed or captured.
Making matters worse, every time the United States launches an air attack into Pakistan from Afghanistan, it further destabilizes the Pakistani state. That is why the Mumbai attacks bring true joy to the most dangerous elements of the Pakistani security establishment: the tragedy has caused the world to focus on India’s weaknesses — its lax security, its vulnerability to age-old maritime infiltration and, most of all, the constant threat of caste and tribal violence — that have been obscured by its economic success. See, many Pakistanis are saying, your beloved India is not so stable either.
This is nonsense, of course. India, with all its troubles, is far more stable than Pakistan. In the meantime, every day that goes by without riots in India is a defeat for the Mumbai terrorists. Indeed, India’s own Muslims have demonstrated against the attacks.
But India, not just Pakistan, desperately needs help. Just as solving or at least neutralizing the Israeli-Palestinian dispute is a requirement for reducing radicalism and Iranian influence throughout the Levant, the same is true of the Indian-Pakistani dispute at the other end of the Greater Middle East. Our notion of the “peace process” is antiquated and needs expanding. We need a second special negotiator for the Middle East, a skilled diplomat shuttling regularly among New Delhi, Islamabad and Kabul. (There has been some speculation, in fact, that Barack Obama is considering Richard Holbrooke, the former United Nations ambassador, for just such a job.)
The Middle East is back to where it was centuries ago, not because of ancient hatreds but because of globalization. Instead of bold lines on a map we have a child’s messy finger painting, as the circumvention of borders and the ease of communications allow the brisk movement of ideas and people and terrorists from one place to another. Our best strategy is, as difficult and trite as it sounds, to be at all places at once, Not with troops, necessarily, but with every bit of energy and constant attention that our entire national security apparatus — and those of our allies — can bring to bear.
Robert D. Kaplan is a national correspondent for The Atlantic and a senior fellow at the Center for a New American Security.
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December 8, 2008
Op-Ed Contributor
Trouble in the Other Middle East By ROBERT D. KAPLAN
Washington
THE divisions we split the world into during the cold war have at long last crumbled thanks to the Mumbai terrorist attacks. No longer will we view South Asia as a region distinct from the Middle East. Now there is only one long continuum stretching from the Mediterranean to the jungles of Burma, with every crisis from the Israeli-Palestinian dispute in the west to the Hindu-Muslim dispute in the east interlocked with the one next door.
Yet this elongated Greater Near East does not signify something new but something old.
For significant parts of medieval and early modern history, Delhi was under the same sovereignty as Kabul, yet under a different one from Bangalore. From the 16th to the 18th centuries, the Mughal dynasty, created by Muslims from Central Asia, governed a sprawling empire encompassing northern and central India, almost all of Pakistan and much of Afghanistan — even as Hindu Maratha warriors in India’s south held out against Mughal armies. India’s whole history — what has created its rich syncretic civilization of Turko-Persian gems like the Taj Mahal and the elaborate Hindu temples of Orissa — is a story of waves of Muslim invaders in turn killing, interacting with and ultimately being influenced by indigenous Hindus. There is even a name for the kind of enchanting architecture that punctuates India and blends Islamic and Hindu styles: Indo-Saracenic, a reference to the Saracens, the term by which Arabs were known to Europeans of the Middle Ages.
Hindu-Muslim relations have historically been tense. Remember that the 1947 partition of the subcontinent uprooted at least 15 million people and led to the violent deaths of around half a million. Given this record, the relatively peaceful relations between the majority Hindus and India’s 150 million Muslims has been testimony to India’s successful experiment in democracy. Democracy has so far kept the lid on an ethnic and religious divide that, while its roots run centuries back, has in recent years essentially become a reinvented modern hostility.
The culprit has been globalization. The secular Indian nationalism of Jawaharlal Nehru’s Congress Party, built around a rejection of Western colonialism, is more and more a thing of the past. As the dynamic Indian economy merges with that of the wider world, Hindus and Muslims have begun separate searches for roots to anchor them inside a bland global civilization. Mass communications have produced a uniform and severe Hinduism from a host of local variants, even as the country’s economically disenfranchised Muslims are increasingly part of an Islamic world community.
The Muslim reaction to this Hindu nationalism has been less anger and violence than simple psychological withdrawal: into beards, skull caps and burkas in some cases; self-segregating into Muslim ghettos in others. The terrorist attacks in Mumbai had a number of aims, one of which was to set a fuse to this tense intercommunal standoff. The jihadists not only want to destroy Pakistan, they want to destroy India as well. India in their eyes is everything they hate: Hindu, vibrantly free and democratic, implicitly and increasingly pro-American, and militarily cozy with Israel. For Washington, this is no simple matter of defending Pakistan against chaos by moving troops from Iraq to Afghanistan. It is a whole region we are dealing with. Thus for the jihadists, the concept of a 9/11-scale attack on India was brilliant.
Just as the chaos in Iraq through early 2007 threatened the post-Ottoman state system from Lebanon to Iran, creeping anarchy in Pakistan undermines not only Afghanistan but also the whole Indian subcontinent. The existence of terrorist outfits like Lashkar-e-Taiba that have links with the Pakistani security apparatus but are outside the control of Pakistan’s own civilian authorities is the very definition of chaos.
A collapsing Pakistan, and with it the loss of any real border separating India from Afghanistan, is India’s worst nightmare. It brings us back toward the borders of the Mughal world, but not in a peaceful way. Indeed, the route that intelligence agencies feel was taken by the fishing boat hijacked by the terrorists — from Porbandar in India’s Gujarat State, then north to Karachi in Pakistan, and then south to Mumbai — follows centuries-old Indian Ocean trade routes.
The jihadist attack on India’s financial center not only damages Indian-Pakistani relations, but makes Pakistan’s new civilian government — which has genuinely tried to improve ties with India — look utterly pathetic. Thus, the attack weakens both countries. Any understanding over Kashmir, the disputed Muslim-majority territory claimed by Pakistan, is now further than ever from materializing, with mass violence there a distinct possibility.
This, in turn, reduces the chance of an Indian-Pakistani rapprochement on Afghanistan, whose government Pakistan seeks to undermine and India sends millions of dollars in aid to help prop up. The Pakistani security services want a radical Islamized Afghanistan as a strategic rear base against India, while India wants a moderate, secular Afghanistan as a weapon against Pakistan.
Pakistan is not only chaotic but dangerously lonely. Islam has not proved effective in bringing together its regionally based ethnic groups, and thus a resort to a fierce ideology as a unifying device among fundamentalist Muslims has been the country’s signal tragedy. Meanwhile, Pakistan’s military suspects that Washington will desert their nation the moment the leadership of Al Qaeda is, by any chance, killed or captured.
Making matters worse, every time the United States launches an air attack into Pakistan from Afghanistan, it further destabilizes the Pakistani state. That is why the Mumbai attacks bring true joy to the most dangerous elements of the Pakistani security establishment: the tragedy has caused the world to focus on India’s weaknesses — its lax security, its vulnerability to age-old maritime infiltration and, most of all, the constant threat of caste and tribal violence — that have been obscured by its economic success. See, many Pakistanis are saying, your beloved India is not so stable either.
This is nonsense, of course. India, with all its troubles, is far more stable than Pakistan. In the meantime, every day that goes by without riots in India is a defeat for the Mumbai terrorists. Indeed, India’s own Muslims have demonstrated against the attacks.
But India, not just Pakistan, desperately needs help. Just as solving or at least neutralizing the Israeli-Palestinian dispute is a requirement for reducing radicalism and Iranian influence throughout the Levant, the same is true of the Indian-Pakistani dispute at the other end of the Greater Middle East. Our notion of the “peace process” is antiquated and needs expanding. We need a second special negotiator for the Middle East, a skilled diplomat shuttling regularly among New Delhi, Islamabad and Kabul. (There has been some speculation, in fact, that Barack Obama is considering Richard Holbrooke, the former United Nations ambassador, for just such a job.)
The Middle East is back to where it was centuries ago, not because of ancient hatreds but because of globalization. Instead of bold lines on a map we have a child’s messy finger painting, as the circumvention of borders and the ease of communications allow the brisk movement of ideas and people and terrorists from one place to another. Our best strategy is, as difficult and trite as it sounds, to be at all places at once, Not with troops, necessarily, but with every bit of energy and constant attention that our entire national security apparatus — and those of our allies — can bring to bear.
Robert D. Kaplan is a national correspondent for The Atlantic and a senior fellow at the Center for a New American Security.
Wednesday, December 03, 2008
Budgets Behaving Badly By DAVID LEONHARDT
The New York Times
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December 3, 2008
Economic Scene
Budgets Behaving Badly By DAVID LEONHARDT
WASHINGTON
Last week, on the same day the Treasury Department announced a brand new $800 billion program to stem the financial crisis, Barack Obama held a news conference to say that he was serious about getting the budget deficit under control.
To which a properly skeptical citizen might respond: Good luck with that.
The deficit in the current fiscal year could end up approaching $1 trillion, which is roughly equal to the combined budgets of the military and Medicare. Given the depth of the crisis, running a big deficit makes perfect sense. But the government also needs to have long-term plans to reduce it. And the sort of deficit we’re now facing will require some pretty creative plans.
Fortunately, there is a group of economists who are almost ideally suited to help Mr. Obama with this task — to come up with budget cuts that can reduce government spending without harming the quality of government services. They’re called behavioral economists.
Behavioral economics sprang up about three decades ago as a radical critique of the standard assumption that human beings behaved in economically rational ways. The behaviorialists, as they’re known, pointed out that this assumption was ridiculous.
Would-be weight losers pay $100 a month to belong to a gym they rarely visit. Borrowers get fooled into taking out a loan with an appealing teaser rate. Patients fail to follow even a basic regimen of prescribed drugs — a failure that can leave them with serious medical complications and Medicare with big hospital bills.
Thanks to insights like these, behavioral economics has entered the mainstream. In this year’s campaign, Mr. Obama signaled an interest in the field by surrounding himself with advisers who were quite sympathetic to it. Of course, this was before the financial crisis became so serious that it overwhelmed everything else. Today, it’s reasonable to ask whether the Obama administration will still have time for behavioral economics.
That’s why some economists are now talking about whether Mr. Obama should add a new kind of adviser to his team, one specifically charged with translating the lessons of the behavioral revolution into real-world policies. This person would work with Medicare officials to improve drug compliance. He or she would think about how mortgage regulations should be rewritten, how health insurance choices should be presented and how carbon emissions might be cut.
“The issues we struggle with today are inherently behavioral as never before,” Sendhil Mullainathan, a behavioral economist at Harvard, told me. “It’s impossible to think of the current mortgage crisis without thinking seriously about underlying consumer psychology. And it’s impossible to think of future regulatory fixes without thinking seriously about that issue.”
Behavioral economics may sound like an ivory tower subject, but it’s really the opposite. It’s the study of everyday life as it actually happens, not as some textbook says it should. It offers economic policy makers a new set of tools — a more subtle, psychological set — beyond tax rates, interest rates and other traditional tools.
And it can already claim one big policy success. In 2006, Congress passed a pension bill with a clause that came straight out of research on savings by Richard Thaler, a behavioral pioneer, and others. (Mr. Thaler and Cass Sunstein recently wrote “Nudge,” a book advocating behavioral policies, and both were informal advisers to the Obama campaign.)
The savings research had found that many more people saved money in a 401(k) retirement plan if they didn’t have to take active steps to join the plan. In one study, only 45 percent of a company’s new employees participated in the 401(k) when doing so required them to take some kind of action, like filling out a form. Eighty-six percent participated when doing so was the default option.
The new pension law gave companies a small incentive to make employees opt out of a 401(k), rather than opt in. The law doesn’t restrict employees’ choices in any way. It simply encourages a more sensible default. Peter Orszag, Mr. Obama’s nominee for budget director, has called the law “a tangible example of how economic research can be rapidly translated into concrete policy changes that should improve people’s lives.”
Mr. Orszag’s interest in behavioral work, together with the reach of the budget office, makes it the obvious place for a behavioral maven to be based. An outside committee of experts — a smaller-scale version of the financial crisis board that will be headed by Paul Volcker, the former Federal Reserve chairman — may also make sense. Mr. Obama’s aides have learned that they have a better chance of persuading him of an argument when they tell him that they’ve spoken with the top experts in a given field.
The group would have plenty of work. Take the current policies toward prescription drugs. Right now, Medicare separates hospital insurance and drug insurance into different programs. The insurers running the drug plans, Dana Goldman of the RAND Corporation points out, make more money when they have to cover fewer prescriptions.
The government, on the other hand, often loses money when people don’t take medications for chronic conditions like diabetes and hypertension. Later on, these people show up at the hospital, and Medicare foots the bill.
A more sensible policy would get rid of these perverse incentives and also take into account the reasons that patients fail to take their pills. Mr. Goldman suggests charging an annual fee for a drug, rather than the current system of charging people separately for each prescription refill, which gives them a reason not to get the refill.
To take another example, many laid-off workers remain unemployed for months at a time, out of a mistaken belief that they will be able to find a new job that pays as much as their old one. In the process, they often do permanent damage to their finances. Jeffrey Kling of the Brookings Institution says that the unemployment insurance system could help people get over this psychological barrier by temporarily subsidizing a new, lower-paying job.
A behaviorally savvy Social Security Administration, meanwhile, could help people make better choices about when to start receiving checks. (Many now do so at age 62, the earliest possible date, which is generally a mistake.) The Environmental Protection Agency could redesign fuel economy stickers so that they emphasized the long-term gasoline costs of driving the vehicle. Banking regulators could devise a standard, default mortgage that didn’t involve a teaser rate or other gimmicks.
During the campaign, some liberals criticized the Obama team’s interest in behavioral economics, saying that the field wasn’t ambitious enough to solve today’s biggest economic problems. And it certainly can’t solve the current crisis — or the deficit — by itself. But no one is arguing that the Obama administration bury itself in behavioral research instead of working on the crisis.
The promise of behavioral economics is that it can help create a better government, one that wastes less money and does more to improve people’s lives. That’s hardly a modest goal.
“Everybody is preoccupied, as they should be, with preventing the next Great Depression,” as Mr. Thaler, an economist at the University of Chicago, says. “But it will be important for the administration to have people tasked with thinking long term — like, once it’s not O.K. to spend $100 billion on a whim, how do you get our budget under control?”
E-mail: Leonhardt@nytimes.com
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December 3, 2008
Economic Scene
Budgets Behaving Badly By DAVID LEONHARDT
WASHINGTON
Last week, on the same day the Treasury Department announced a brand new $800 billion program to stem the financial crisis, Barack Obama held a news conference to say that he was serious about getting the budget deficit under control.
To which a properly skeptical citizen might respond: Good luck with that.
The deficit in the current fiscal year could end up approaching $1 trillion, which is roughly equal to the combined budgets of the military and Medicare. Given the depth of the crisis, running a big deficit makes perfect sense. But the government also needs to have long-term plans to reduce it. And the sort of deficit we’re now facing will require some pretty creative plans.
Fortunately, there is a group of economists who are almost ideally suited to help Mr. Obama with this task — to come up with budget cuts that can reduce government spending without harming the quality of government services. They’re called behavioral economists.
Behavioral economics sprang up about three decades ago as a radical critique of the standard assumption that human beings behaved in economically rational ways. The behaviorialists, as they’re known, pointed out that this assumption was ridiculous.
Would-be weight losers pay $100 a month to belong to a gym they rarely visit. Borrowers get fooled into taking out a loan with an appealing teaser rate. Patients fail to follow even a basic regimen of prescribed drugs — a failure that can leave them with serious medical complications and Medicare with big hospital bills.
Thanks to insights like these, behavioral economics has entered the mainstream. In this year’s campaign, Mr. Obama signaled an interest in the field by surrounding himself with advisers who were quite sympathetic to it. Of course, this was before the financial crisis became so serious that it overwhelmed everything else. Today, it’s reasonable to ask whether the Obama administration will still have time for behavioral economics.
That’s why some economists are now talking about whether Mr. Obama should add a new kind of adviser to his team, one specifically charged with translating the lessons of the behavioral revolution into real-world policies. This person would work with Medicare officials to improve drug compliance. He or she would think about how mortgage regulations should be rewritten, how health insurance choices should be presented and how carbon emissions might be cut.
“The issues we struggle with today are inherently behavioral as never before,” Sendhil Mullainathan, a behavioral economist at Harvard, told me. “It’s impossible to think of the current mortgage crisis without thinking seriously about underlying consumer psychology. And it’s impossible to think of future regulatory fixes without thinking seriously about that issue.”
Behavioral economics may sound like an ivory tower subject, but it’s really the opposite. It’s the study of everyday life as it actually happens, not as some textbook says it should. It offers economic policy makers a new set of tools — a more subtle, psychological set — beyond tax rates, interest rates and other traditional tools.
And it can already claim one big policy success. In 2006, Congress passed a pension bill with a clause that came straight out of research on savings by Richard Thaler, a behavioral pioneer, and others. (Mr. Thaler and Cass Sunstein recently wrote “Nudge,” a book advocating behavioral policies, and both were informal advisers to the Obama campaign.)
The savings research had found that many more people saved money in a 401(k) retirement plan if they didn’t have to take active steps to join the plan. In one study, only 45 percent of a company’s new employees participated in the 401(k) when doing so required them to take some kind of action, like filling out a form. Eighty-six percent participated when doing so was the default option.
The new pension law gave companies a small incentive to make employees opt out of a 401(k), rather than opt in. The law doesn’t restrict employees’ choices in any way. It simply encourages a more sensible default. Peter Orszag, Mr. Obama’s nominee for budget director, has called the law “a tangible example of how economic research can be rapidly translated into concrete policy changes that should improve people’s lives.”
Mr. Orszag’s interest in behavioral work, together with the reach of the budget office, makes it the obvious place for a behavioral maven to be based. An outside committee of experts — a smaller-scale version of the financial crisis board that will be headed by Paul Volcker, the former Federal Reserve chairman — may also make sense. Mr. Obama’s aides have learned that they have a better chance of persuading him of an argument when they tell him that they’ve spoken with the top experts in a given field.
The group would have plenty of work. Take the current policies toward prescription drugs. Right now, Medicare separates hospital insurance and drug insurance into different programs. The insurers running the drug plans, Dana Goldman of the RAND Corporation points out, make more money when they have to cover fewer prescriptions.
The government, on the other hand, often loses money when people don’t take medications for chronic conditions like diabetes and hypertension. Later on, these people show up at the hospital, and Medicare foots the bill.
A more sensible policy would get rid of these perverse incentives and also take into account the reasons that patients fail to take their pills. Mr. Goldman suggests charging an annual fee for a drug, rather than the current system of charging people separately for each prescription refill, which gives them a reason not to get the refill.
To take another example, many laid-off workers remain unemployed for months at a time, out of a mistaken belief that they will be able to find a new job that pays as much as their old one. In the process, they often do permanent damage to their finances. Jeffrey Kling of the Brookings Institution says that the unemployment insurance system could help people get over this psychological barrier by temporarily subsidizing a new, lower-paying job.
A behaviorally savvy Social Security Administration, meanwhile, could help people make better choices about when to start receiving checks. (Many now do so at age 62, the earliest possible date, which is generally a mistake.) The Environmental Protection Agency could redesign fuel economy stickers so that they emphasized the long-term gasoline costs of driving the vehicle. Banking regulators could devise a standard, default mortgage that didn’t involve a teaser rate or other gimmicks.
During the campaign, some liberals criticized the Obama team’s interest in behavioral economics, saying that the field wasn’t ambitious enough to solve today’s biggest economic problems. And it certainly can’t solve the current crisis — or the deficit — by itself. But no one is arguing that the Obama administration bury itself in behavioral research instead of working on the crisis.
The promise of behavioral economics is that it can help create a better government, one that wastes less money and does more to improve people’s lives. That’s hardly a modest goal.
“Everybody is preoccupied, as they should be, with preventing the next Great Depression,” as Mr. Thaler, an economist at the University of Chicago, says. “But it will be important for the administration to have people tasked with thinking long term — like, once it’s not O.K. to spend $100 billion on a whim, how do you get our budget under control?”
E-mail: Leonhardt@nytimes.com
Sunday, November 09, 2008
Just What This Downturn Demands: A Consumption Tax By ROBERT FRANK
The New York Times
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November 9, 2008
Just What This Downturn Demands: A Consumption Tax By ROBERT FRANK
THE country is now in the midst of the deepest economic crisis since the Great Depression. But as a new administration prepares to enter the White House, the crisis could end up being a potent ally for change. Without it, political resistance to the steps needed to address our most acute and longstanding economic problems would be almost insurmountable.
Despite broad agreement that the nation needs to increase spending in many domains — including infrastructure, health care, scientific research and clean energy development — no one has forged a legislative coalition capable of raising the necessary tax revenue. But with the country sliding into what promises to be a sharp and protracted economic downturn, it is imperative to increase spending over the short run, regardless of how we pay for it.
Even stalwart conservatives concede the point. For example, Martin Feldstein, the Harvard economist who was an adviser to the campaign of Senator John McCain, recently wrote in The Washington Post, “The only way to prevent a deepening recession will be a temporary program of increased government spending.” Mr. Feldstein suggested that government might need to offset a shortfall of some $300 billion in household spending.
In the long run, though, it will be necessary to raise enough tax revenue to balance the budget. One of the most effective ways to do that is by changing what we tax. Most federal revenue now comes from the income tax. Because a family’s annual income equals the amount it spends each year plus the amount it saves, we are effectively taxing savings. And savings rates have fallen precipitously, often dipping into negative territory as families have used home equity loans and credit card debt to spend more than they earned. Because the country needs to save more, taxing savings makes no sense.
The first reform that Barack Obama should consider is replacing the progressive income tax with a progressive tax on consumption. A family would report its income to the Internal Revenue Service as it does now, and also its savings, as it now reports contributions to retirement accounts. Annual consumption would then be calculated as the family’s income minus its savings. Its taxable consumption would be that amount minus a large standard deduction — say, $30,000 for a family of four.
A family that earned $60,000 and saved $10,000, for example, would have taxable consumption of $20,000. Initial tax rates on consumption would be low, and would then rise steadily with consumption, topping out at higher levels than the current top rates on income.
Such a tax could raise more revenue than the current system, yet would be far less burdensome for families at nearly all income levels. Because of the large standard deduction, middle-income families would pay less than they did before, and high-income consumers could limit their tax increases by saving more.
How painful would that be? Some wealthy families now spend millions of dollars on coming-of-age parties for their children. A steeply progressive consumption tax would encourage them to spend less, which would not be much of a sacrifice, since the main effect would be to lower the bar that defines an acceptable coming-of-age party for people in their tax bracket.
Other changes in what we tax could further reduce the revenue shortfall while producing positive side effects. Energy and climate specialists, for example, have long advocated taxes on carbon. The burden of these levies would be lessened by the resulting reductions in pollution and congestion.
Imposing new taxes is never easy. But recent research suggests innovative ways of making it more palatable. Behavioral economists have shown that the pain caused by a loss is far greater than the pleasure caused by a gain of the same magnitude. This asymmetry, called loss aversion, helps explain why it is so hard to pay higher taxes. Doing so means reducing consumption now — a loss that is immediately painful.
To overcome this hurdle, Congress could vote to increase future taxes — a strategy that happily coincides with current fiscal imperatives. Tax increases are never a good idea when the economy is in the doldrums, but the current downturn will not be permanent. Higher taxes could be phased in gradually, after income growth resumes. As long as each year’s tax increase is smaller than the corresponding growth in income, painful reductions in consumption will not be necessary.
Evidence supporting this strategy comes from “Save More Tomorrow,” a payroll savings program designed by the economists Richard H. Thaler and Shlomo Benartzi. Under this program, workers can allocate a portion of future salary increases to retirement savings accounts. Hundreds of corporations report that their employees began saving at sharply higher rates after the introduction of this program.
It would be quixotic to imagine that losses from the current economic meltdown won’t be painful. But the crisis also opens new doors to policymakers — providing them with options that would have seemed unthinkable just a few months ago.
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November 9, 2008
Just What This Downturn Demands: A Consumption Tax By ROBERT FRANK
THE country is now in the midst of the deepest economic crisis since the Great Depression. But as a new administration prepares to enter the White House, the crisis could end up being a potent ally for change. Without it, political resistance to the steps needed to address our most acute and longstanding economic problems would be almost insurmountable.
Despite broad agreement that the nation needs to increase spending in many domains — including infrastructure, health care, scientific research and clean energy development — no one has forged a legislative coalition capable of raising the necessary tax revenue. But with the country sliding into what promises to be a sharp and protracted economic downturn, it is imperative to increase spending over the short run, regardless of how we pay for it.
Even stalwart conservatives concede the point. For example, Martin Feldstein, the Harvard economist who was an adviser to the campaign of Senator John McCain, recently wrote in The Washington Post, “The only way to prevent a deepening recession will be a temporary program of increased government spending.” Mr. Feldstein suggested that government might need to offset a shortfall of some $300 billion in household spending.
In the long run, though, it will be necessary to raise enough tax revenue to balance the budget. One of the most effective ways to do that is by changing what we tax. Most federal revenue now comes from the income tax. Because a family’s annual income equals the amount it spends each year plus the amount it saves, we are effectively taxing savings. And savings rates have fallen precipitously, often dipping into negative territory as families have used home equity loans and credit card debt to spend more than they earned. Because the country needs to save more, taxing savings makes no sense.
The first reform that Barack Obama should consider is replacing the progressive income tax with a progressive tax on consumption. A family would report its income to the Internal Revenue Service as it does now, and also its savings, as it now reports contributions to retirement accounts. Annual consumption would then be calculated as the family’s income minus its savings. Its taxable consumption would be that amount minus a large standard deduction — say, $30,000 for a family of four.
A family that earned $60,000 and saved $10,000, for example, would have taxable consumption of $20,000. Initial tax rates on consumption would be low, and would then rise steadily with consumption, topping out at higher levels than the current top rates on income.
Such a tax could raise more revenue than the current system, yet would be far less burdensome for families at nearly all income levels. Because of the large standard deduction, middle-income families would pay less than they did before, and high-income consumers could limit their tax increases by saving more.
How painful would that be? Some wealthy families now spend millions of dollars on coming-of-age parties for their children. A steeply progressive consumption tax would encourage them to spend less, which would not be much of a sacrifice, since the main effect would be to lower the bar that defines an acceptable coming-of-age party for people in their tax bracket.
Other changes in what we tax could further reduce the revenue shortfall while producing positive side effects. Energy and climate specialists, for example, have long advocated taxes on carbon. The burden of these levies would be lessened by the resulting reductions in pollution and congestion.
Imposing new taxes is never easy. But recent research suggests innovative ways of making it more palatable. Behavioral economists have shown that the pain caused by a loss is far greater than the pleasure caused by a gain of the same magnitude. This asymmetry, called loss aversion, helps explain why it is so hard to pay higher taxes. Doing so means reducing consumption now — a loss that is immediately painful.
To overcome this hurdle, Congress could vote to increase future taxes — a strategy that happily coincides with current fiscal imperatives. Tax increases are never a good idea when the economy is in the doldrums, but the current downturn will not be permanent. Higher taxes could be phased in gradually, after income growth resumes. As long as each year’s tax increase is smaller than the corresponding growth in income, painful reductions in consumption will not be necessary.
Evidence supporting this strategy comes from “Save More Tomorrow,” a payroll savings program designed by the economists Richard H. Thaler and Shlomo Benartzi. Under this program, workers can allocate a portion of future salary increases to retirement savings accounts. Hundreds of corporations report that their employees began saving at sharply higher rates after the introduction of this program.
It would be quixotic to imagine that losses from the current economic meltdown won’t be painful. But the crisis also opens new doors to policymakers — providing them with options that would have seemed unthinkable just a few months ago.
Sure, It All Sounds Grand, but Don’t Forget the Gravitas By BEN STEIN
The New York Times
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November 9, 2008
Sure, It All Sounds Grand, but Don’t Forget the Gravitas By BEN STEIN
WE will soon have a new leader of the United States. He will have considerable power, yet obviously not nearly enough to deliver on everything that has been promised. With these limitations in mind, herewith are a few suggestions regarding some of the pitfalls ahead in handling economic policy:
HAVE REALISTIC EXPECTATIONS Plan what must be done to effect the minimum amount of change you’ll be happy with. All politicians basically promise the moon and the stars to their supporters. For any new president, it’s crucial to try to decide what can be reasonably changed — like naming a new Treasury secretary and having higher taxes for the wealthy. Then the president must set to work on those while his prestige and mandate are still fresh and strong.
CHAMPION ONLY THE SERIOUS IDEAS Don’t sign on to any economic policy proposals without some statistical or theoretical heft to them.
The Republicans lost this election partly because of the heritages of pie-in-the-sky supply-side economics and excess deregulation. I doubt very much that a Democratic president is going to become a supply-sider, but in the campaign there were some other ideas that sound good but have no rigor to them.
Alternative energy sounds nice. But here in California, we have poured plenty of money — in the form of tax credits — into solar power and wind power. The contribution of these sources to our statewide energy product has been very modest. This doesn’t mean that the effort should not be made. But there is a limit to taxpayer resources, and it may be that tax subsidies are not the way to go here.
Likewise, job retraining for workers in industries affected by foreign competition makes anecdotal sense. But the statistical results about this are highly mixed. Maybe some form of relocation assistance would be better.
I am endlessly amazed that I have to pay about $60 an hour to hang a mirror in Rancho Mirage, Calif., and that there is a shortage of reliable handymen there. This has implications for hard-working machinists being laid off in Detroit. Maybe there is some merit to a fund that would take workers where they want to go and are needed.
Another campaign idea was a reconsideration of free trade. But trying to roll back free trade is like putting toothpaste back in the tube. It rarely works, and it makes a tremendous mess while you are trying. The retaliation involved in erecting trade barriers is almost never worthwhile.
Basic hint: If an idea lacks any convincing theory or data to support it, maybe it’s best to avoid it.
BAIL OUT DETROIT Yes, an America without a large automobile and truck industry is not America. This country cannot possibly be a first-class power without maintaining a large motor industry.
The national security considerations make saving General Motors, Ford and Chrysler a life-or-death matter. And the good men and women who make our fine cars have at least as much claim to government help as farmers and bankers do. We’ll want a G.M. or a Chrysler when it’s time to make tanks and Humvees and need their workers’ skills.
HAVE GOOD PEOPLE AROUND And that especially means men and women without axes to grind. The president-elect has some of the best brains on earth around him, especially Warren E. Buffett and Paul A. Volcker. It’s important to make full use of them.
STAY HUMBLE No matter how many electoral votes a president receives, he is mortal. He will make mistakes. Events will pile up that are too much for anyone to handle, so he should be ready to pray over them. A president will be beaten down more than he can expect, and if he is ready with humility, he will be far ahead of the game.
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November 9, 2008
Sure, It All Sounds Grand, but Don’t Forget the Gravitas By BEN STEIN
WE will soon have a new leader of the United States. He will have considerable power, yet obviously not nearly enough to deliver on everything that has been promised. With these limitations in mind, herewith are a few suggestions regarding some of the pitfalls ahead in handling economic policy:
HAVE REALISTIC EXPECTATIONS Plan what must be done to effect the minimum amount of change you’ll be happy with. All politicians basically promise the moon and the stars to their supporters. For any new president, it’s crucial to try to decide what can be reasonably changed — like naming a new Treasury secretary and having higher taxes for the wealthy. Then the president must set to work on those while his prestige and mandate are still fresh and strong.
CHAMPION ONLY THE SERIOUS IDEAS Don’t sign on to any economic policy proposals without some statistical or theoretical heft to them.
The Republicans lost this election partly because of the heritages of pie-in-the-sky supply-side economics and excess deregulation. I doubt very much that a Democratic president is going to become a supply-sider, but in the campaign there were some other ideas that sound good but have no rigor to them.
Alternative energy sounds nice. But here in California, we have poured plenty of money — in the form of tax credits — into solar power and wind power. The contribution of these sources to our statewide energy product has been very modest. This doesn’t mean that the effort should not be made. But there is a limit to taxpayer resources, and it may be that tax subsidies are not the way to go here.
Likewise, job retraining for workers in industries affected by foreign competition makes anecdotal sense. But the statistical results about this are highly mixed. Maybe some form of relocation assistance would be better.
I am endlessly amazed that I have to pay about $60 an hour to hang a mirror in Rancho Mirage, Calif., and that there is a shortage of reliable handymen there. This has implications for hard-working machinists being laid off in Detroit. Maybe there is some merit to a fund that would take workers where they want to go and are needed.
Another campaign idea was a reconsideration of free trade. But trying to roll back free trade is like putting toothpaste back in the tube. It rarely works, and it makes a tremendous mess while you are trying. The retaliation involved in erecting trade barriers is almost never worthwhile.
Basic hint: If an idea lacks any convincing theory or data to support it, maybe it’s best to avoid it.
BAIL OUT DETROIT Yes, an America without a large automobile and truck industry is not America. This country cannot possibly be a first-class power without maintaining a large motor industry.
The national security considerations make saving General Motors, Ford and Chrysler a life-or-death matter. And the good men and women who make our fine cars have at least as much claim to government help as farmers and bankers do. We’ll want a G.M. or a Chrysler when it’s time to make tanks and Humvees and need their workers’ skills.
HAVE GOOD PEOPLE AROUND And that especially means men and women without axes to grind. The president-elect has some of the best brains on earth around him, especially Warren E. Buffett and Paul A. Volcker. It’s important to make full use of them.
STAY HUMBLE No matter how many electoral votes a president receives, he is mortal. He will make mistakes. Events will pile up that are too much for anyone to handle, so he should be ready to pray over them. A president will be beaten down more than he can expect, and if he is ready with humility, he will be far ahead of the game.
Remember That Capitalism Is More Than a Spectator Sport By ALAN S. BLINDER
The New York Times
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November 9, 2008
Remember That Capitalism Is More Than a Spectator Sport By ALAN S. BLINDER
AMONG the daunting set of tasks ahead for the president-elect, perhaps the most basic is to restore a sense of fairness to and faith in our economic system — much as Franklin D. Roosevelt did in the 1930s.
For too many years, too many Americans watched helplessly as the economic world passed them by, the top dogs prospered, and their national government either sat by passively or intervened to help the “haves.” No wonder trust in the system plummeted. It was hanging by a thread when the financial crisis erupted. Now, it has been destroyed.
An economy isn’t supposed to work that way. Our celebrated capitalist democracy is designed to be a participation sport — not a spectator sport — and one in which the average American can still win. So the new president’s most fundamental job is to restore the people’s confidence that the economy will perform — for them.
While any new president would prefer a loftier starting point, Barack Obama will have to begin with the troubled Troubled Asset Relief Program. The way the Bush administration started it has left the $700 billion bank bailout in danger of becoming the most unpopular use of public money in the history of the republic — unless something is done fast.
If it’s not already too late, the new president must convince Americans that the bailout is being managed for their benefit, not for Wall Street’s. Because the first $250 billion or so is being doled out to banks without asking anything in return, this will be no easy task. Quick changes in the bailout program — and I mean changes that ordinary people can understand — are necessary.
I’d start by sending a large dollop of that bailout money to Main Street — literally. That means devoting substantial sums to refinancing home mortgages that might otherwise go into foreclosure, which is what the head of the Federal Deposit Insurance Corporation, Sheila Bair (bless her heart!), has been urging for months. The president-elect can be a powerful ally for Ms. Bair.
There are a number of ways to mitigate the impending wave of foreclosures. To those who object that refinancing mortgages one at a time is too slow, Mr. Obama should have two replies. First, let’s end the delays and get started. Second, the Home Owners’ Loan Corporation took on a much larger task — relative to the economy’s size — in the New Deal, and succeeded admirably. Can’t we match the speed of the 1930s? Yes, we can.
Next up, after reforming the bailout plan, is the Economic Recovery Act of 2009. Given the likely severity of the economic slide, a large dose of fiscal stimulus — amounting to perhaps 2 percent of G.D.P., or roughly $280 billion — is needed either in the lame-duck Congressional session this month or soon after Inauguration Day. The new president must guide Congress away from passing an unprincipled hodgepodge of members’ favorite projects that would just remind the public of what’s wrong with Washington. Instead, we need a bill that has clear objectives, is well designed to achieve them, does not do long-term harm in the name of short-run help — and can be explained to the body politic.
Regarding objectives, I’d suggest sticking to two: creating jobs by creating new spending, and alleviating the misery that accompanies deep recessions.
The first criterion points toward such items as more generous unemployment insurance and food-stamp benefits, because that money will be spent quickly. It also points toward grants and loans to hard-pressed state and local governments, so they don’t cut their spending or raise taxes. Because this recession will likely be lengthy, not fleeting, a large-scale public infrastructure program — with vigorous anti-pork provisions — also makes sense.
Again, the New Deal offers examples. Temporary institutions like the Civilian Conservation Corps and the Works Progress Administration provided much-needed jobs but also left a legacy of new public infrastructure — the people’s capital, if you will.
The second criterion again points toward more generous unemployment insurance and food-stamp benefits, but also toward policies like these: expanded trade adjustment assistance for displaced workers, more home heating assistance for low-income households, broader health insurance coverage — a step toward universal coverage — and a plan that gets serious about job retraining. (Here, tiny Denmark may be a good model.)
These and related programs are often referred to as the “social safety net,” and America’s is in tatters. But we need both repairs and a new metaphor. Lyndon B. Johnson had it right when he called upon the government to provide a “hand up, not a handout.” The Obama administration should seek to create a new “social trampoline” that not only catches people when they fall, but also propels them back into productive employment. If properly designed, such a social trampoline would both ease the short-run pain of recession and facilitate the long-run adjustment to globalization.
And at every step along the way, Mr. Obama should make abundant use of the presidential bully pulpit to explain, to cajole and to bring along not just the Congress, but also the people — just as Roosevelt did. Americans need to feel, once again, that it’s their economy, and that the government is working on their behalf. Here, a little eloquence can go a long way. Fortunately, we just elected a man who has a lot.
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November 9, 2008
Remember That Capitalism Is More Than a Spectator Sport By ALAN S. BLINDER
AMONG the daunting set of tasks ahead for the president-elect, perhaps the most basic is to restore a sense of fairness to and faith in our economic system — much as Franklin D. Roosevelt did in the 1930s.
For too many years, too many Americans watched helplessly as the economic world passed them by, the top dogs prospered, and their national government either sat by passively or intervened to help the “haves.” No wonder trust in the system plummeted. It was hanging by a thread when the financial crisis erupted. Now, it has been destroyed.
An economy isn’t supposed to work that way. Our celebrated capitalist democracy is designed to be a participation sport — not a spectator sport — and one in which the average American can still win. So the new president’s most fundamental job is to restore the people’s confidence that the economy will perform — for them.
While any new president would prefer a loftier starting point, Barack Obama will have to begin with the troubled Troubled Asset Relief Program. The way the Bush administration started it has left the $700 billion bank bailout in danger of becoming the most unpopular use of public money in the history of the republic — unless something is done fast.
If it’s not already too late, the new president must convince Americans that the bailout is being managed for their benefit, not for Wall Street’s. Because the first $250 billion or so is being doled out to banks without asking anything in return, this will be no easy task. Quick changes in the bailout program — and I mean changes that ordinary people can understand — are necessary.
I’d start by sending a large dollop of that bailout money to Main Street — literally. That means devoting substantial sums to refinancing home mortgages that might otherwise go into foreclosure, which is what the head of the Federal Deposit Insurance Corporation, Sheila Bair (bless her heart!), has been urging for months. The president-elect can be a powerful ally for Ms. Bair.
There are a number of ways to mitigate the impending wave of foreclosures. To those who object that refinancing mortgages one at a time is too slow, Mr. Obama should have two replies. First, let’s end the delays and get started. Second, the Home Owners’ Loan Corporation took on a much larger task — relative to the economy’s size — in the New Deal, and succeeded admirably. Can’t we match the speed of the 1930s? Yes, we can.
Next up, after reforming the bailout plan, is the Economic Recovery Act of 2009. Given the likely severity of the economic slide, a large dose of fiscal stimulus — amounting to perhaps 2 percent of G.D.P., or roughly $280 billion — is needed either in the lame-duck Congressional session this month or soon after Inauguration Day. The new president must guide Congress away from passing an unprincipled hodgepodge of members’ favorite projects that would just remind the public of what’s wrong with Washington. Instead, we need a bill that has clear objectives, is well designed to achieve them, does not do long-term harm in the name of short-run help — and can be explained to the body politic.
Regarding objectives, I’d suggest sticking to two: creating jobs by creating new spending, and alleviating the misery that accompanies deep recessions.
The first criterion points toward such items as more generous unemployment insurance and food-stamp benefits, because that money will be spent quickly. It also points toward grants and loans to hard-pressed state and local governments, so they don’t cut their spending or raise taxes. Because this recession will likely be lengthy, not fleeting, a large-scale public infrastructure program — with vigorous anti-pork provisions — also makes sense.
Again, the New Deal offers examples. Temporary institutions like the Civilian Conservation Corps and the Works Progress Administration provided much-needed jobs but also left a legacy of new public infrastructure — the people’s capital, if you will.
The second criterion again points toward more generous unemployment insurance and food-stamp benefits, but also toward policies like these: expanded trade adjustment assistance for displaced workers, more home heating assistance for low-income households, broader health insurance coverage — a step toward universal coverage — and a plan that gets serious about job retraining. (Here, tiny Denmark may be a good model.)
These and related programs are often referred to as the “social safety net,” and America’s is in tatters. But we need both repairs and a new metaphor. Lyndon B. Johnson had it right when he called upon the government to provide a “hand up, not a handout.” The Obama administration should seek to create a new “social trampoline” that not only catches people when they fall, but also propels them back into productive employment. If properly designed, such a social trampoline would both ease the short-run pain of recession and facilitate the long-run adjustment to globalization.
And at every step along the way, Mr. Obama should make abundant use of the presidential bully pulpit to explain, to cajole and to bring along not just the Congress, but also the people — just as Roosevelt did. Americans need to feel, once again, that it’s their economy, and that the government is working on their behalf. Here, a little eloquence can go a long way. Fortunately, we just elected a man who has a lot.
The Real Mandate Is to Bridge the Wealth Gap By ROBERT J. SHILLER
The New York Times
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November 9, 2008
The Real Mandate Is to Bridge the Wealth Gap By ROBERT J. SHILLER
THE new president will have a clear mandate to redress economic inequality. During the campaign, John McCain made sure that voters clearly heard Barack Obama say “spread the wealth around,” and they elected him anyway.
Indeed, there has been a significant, decades-long trend toward greater inequality that needs to be corrected. The president-elect needs to seize the opportunity and to do something really effective to prevent inequality from getting much worse.
The financial crisis that afflicts the country is largely a result of speculative bubbles, built on false hopes, in the housing and stock markets. Many Americans thought that they would rise in the economic hierarchy from one or another of these investments, and their disappointment is profound. As dreams have been lost, the gap between the wealthiest and those struggling to provide basic items for their families will become more evident and more painful.
The best way to battle gratuitous inequality is to make our financial institutions better embody the true principles of risk management. Financial theory is all about incentives for people to work effectively, and diversifying against random shocks by sharing them among many investors. At its essence, finance is really more about helping and sharing than “beating the market.”
Traditional mutual funds and retirement saving plans, as well as insurance plans for loss of one’s home due to fire or flood, or of one’s income due to disability, are actually risk management vehicles that help reduce inequality. The new president’s important mission should be to broaden these plans.
It may seem paradoxical to try to lessen inequality by relying on the institutions that are most blamed today, but it is only through these institutions that inequality reduction can really work well in a capitalist economy. Enhanced financial institutions could serve the real purpose that financial theory proposes: serving the people.
This would mean transforming the kind of ad hoc measures now used to help economically stressed people in the current crisis into permanent measures that are grounded in solid financial theory and augmented with an understanding of human nature.
In my book “The Subprime Solution: How Today’s Global Financial Crisis Happened and What to Do About It,” I outlined three areas of action that would democratize finance — make it work better for the people — and help prevent future crises. We must improve the information infrastructure, encourage broader and more robust risk markets, and develop better retail financial products. Each of these goals would require work by both the government and the private sector, and all would generalize and privatize the emergency measures already taken, so they become systematic.
To improve the information infrastructure, we need to subsidize financial advice for the common man. The crisis we are in is largely due to investor ignorance. Some emergency measures, like the Hope Now Alliance, have been set up essentially to offer such help, but these will presumably be dismantled after the crisis, and they are not well designed for serving investors’ broad needs. We need some permanent subsidies to get the full scope of financial advice out to the people.
Second, we need to broaden financial markets to improve risk management. We need sophisticated systems that will act as insurance plans against unexpected risks. The government could lead the way to a historic development of financial infrastructure.
Third, we need to change retail financial institutions, notably those that grant and service mortgages. Recent government policy has encouraged workouts for defaulting mortgages — again an impromptu, after-the-fact measure. These workouts should have been spelled out in the original of what I have called a “continuous workout mortgage.” Then workouts could be systematic, automatic and free-market, with costs priced into the original mortgage rate.
A fourth and more radical step would be to index the tax system to income inequality. The system would automatically become more progressive if inequality became more acute. Changes in tax rates would be made in the future, not now, easing the transition’s shock to the public. Leonard Burman, a former Treasury official for President Bill Clinton and now head of the Tax Policy Center in Washington, has been working with me to transform this idea into a sketch of a program we call the Rising Tide Tax System. We found that if such a program had been instituted 30 years ago, even in a partial form, we could have lessened economic inequality.
In short, the best thing that President-elect Obama can do is to set up permanent new structures to harness the innovations of finance to improve people’s lives on Main Street. Americans will support a president who works hard both to maintain incentives central to our capitalistic economy, and to ensure fundamental fairness. If Mr. Obama does both, he will leave a lasting legacy.
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November 9, 2008
The Real Mandate Is to Bridge the Wealth Gap By ROBERT J. SHILLER
THE new president will have a clear mandate to redress economic inequality. During the campaign, John McCain made sure that voters clearly heard Barack Obama say “spread the wealth around,” and they elected him anyway.
Indeed, there has been a significant, decades-long trend toward greater inequality that needs to be corrected. The president-elect needs to seize the opportunity and to do something really effective to prevent inequality from getting much worse.
The financial crisis that afflicts the country is largely a result of speculative bubbles, built on false hopes, in the housing and stock markets. Many Americans thought that they would rise in the economic hierarchy from one or another of these investments, and their disappointment is profound. As dreams have been lost, the gap between the wealthiest and those struggling to provide basic items for their families will become more evident and more painful.
The best way to battle gratuitous inequality is to make our financial institutions better embody the true principles of risk management. Financial theory is all about incentives for people to work effectively, and diversifying against random shocks by sharing them among many investors. At its essence, finance is really more about helping and sharing than “beating the market.”
Traditional mutual funds and retirement saving plans, as well as insurance plans for loss of one’s home due to fire or flood, or of one’s income due to disability, are actually risk management vehicles that help reduce inequality. The new president’s important mission should be to broaden these plans.
It may seem paradoxical to try to lessen inequality by relying on the institutions that are most blamed today, but it is only through these institutions that inequality reduction can really work well in a capitalist economy. Enhanced financial institutions could serve the real purpose that financial theory proposes: serving the people.
This would mean transforming the kind of ad hoc measures now used to help economically stressed people in the current crisis into permanent measures that are grounded in solid financial theory and augmented with an understanding of human nature.
In my book “The Subprime Solution: How Today’s Global Financial Crisis Happened and What to Do About It,” I outlined three areas of action that would democratize finance — make it work better for the people — and help prevent future crises. We must improve the information infrastructure, encourage broader and more robust risk markets, and develop better retail financial products. Each of these goals would require work by both the government and the private sector, and all would generalize and privatize the emergency measures already taken, so they become systematic.
To improve the information infrastructure, we need to subsidize financial advice for the common man. The crisis we are in is largely due to investor ignorance. Some emergency measures, like the Hope Now Alliance, have been set up essentially to offer such help, but these will presumably be dismantled after the crisis, and they are not well designed for serving investors’ broad needs. We need some permanent subsidies to get the full scope of financial advice out to the people.
Second, we need to broaden financial markets to improve risk management. We need sophisticated systems that will act as insurance plans against unexpected risks. The government could lead the way to a historic development of financial infrastructure.
Third, we need to change retail financial institutions, notably those that grant and service mortgages. Recent government policy has encouraged workouts for defaulting mortgages — again an impromptu, after-the-fact measure. These workouts should have been spelled out in the original of what I have called a “continuous workout mortgage.” Then workouts could be systematic, automatic and free-market, with costs priced into the original mortgage rate.
A fourth and more radical step would be to index the tax system to income inequality. The system would automatically become more progressive if inequality became more acute. Changes in tax rates would be made in the future, not now, easing the transition’s shock to the public. Leonard Burman, a former Treasury official for President Bill Clinton and now head of the Tax Policy Center in Washington, has been working with me to transform this idea into a sketch of a program we call the Rising Tide Tax System. We found that if such a program had been instituted 30 years ago, even in a partial form, we could have lessened economic inequality.
In short, the best thing that President-elect Obama can do is to set up permanent new structures to harness the innovations of finance to improve people’s lives on Main Street. Americans will support a president who works hard both to maintain incentives central to our capitalistic economy, and to ensure fundamental fairness. If Mr. Obama does both, he will leave a lasting legacy.
Home
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* U.S.
* N.Y. / Region
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* Automobiles
* Back to Top
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The Mood Always Matters, So Restore Confidence First By TYLER COWEN
The New York Times
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November 9, 2008
The Mood Always Matters, So Restore Confidence First By TYLER COWEN
HIGH deficits and a declining economy will limit the hand of the new president in many matters of economic policy. Health care reform usually proves more expensive than promised, and voters are in no mood for higher gasoline or energy taxes. Still, President-elect Barack Obama faces the very important task of restoring confidence in our nation’s economy.
He will need to appear calm and purposive, and to articulate to the American people the underlying economic strengths. Even if some of this is wishful thinking, there is a chance that positive attitudes will improve the reality on the ground.
Over the last several months, the Bush administration has mishandled this issue.
Most of all, the “Paulson plan” to bail out the economy was not executed gracefully. The Treasury secretary, Henry M. Paulson Jr., warned the nation that something terrible would happen if the plan were not passed; that terrified both Wall Street and Main Street.
The early version of the plan would have given the Treasury secretary almost unlimited powers, without checks and balances on his decisions. The market took that extreme proposal as a sign that the situation was truly dire.
After the scare came indecisiveness. Whether or not the Paulson plan was a good idea, no one articulated how it would work or why it was needed. The initial plan was then dumped for a successor plan — laden with Congressional pork, by the way — and then this second plan turned out to be less important, after it was passed, than the need for an immediate recapitalization of the banking system.
Along the way it was never clear what Congress favored or why, and the regulators appeared to be stumbling from one crisis to the next, scaring the American public along the way. Political uncertainty hardly caused the crisis, but politics made it much worse.
EVEN if you believe the dubious proposition that an initial scare was needed to pass legislation, the time has come to patch up confidence. The federal government lacked a commanding presence during the early stages of the financial crisis.
Rebuilding confidence might seem a small matter, but it is not. The truth is this: America is a wonderful and magnanimous nation when it is a winner, but Americans are not used to losing and Americans are not used to panic.
Often we respond to negative events badly, so we need to be especially careful when we are in a losing or risky position.
Very bad events can cause a panic among the citizenry or its leaders, which translates into subsequent bad decisions. For a classic example of a negative policy dynamic, look at 9/11. The United States lost 3,000 lives and a great deal of wealth and confidence. The government then took actions, most of all the Iraq war, which led to even greater losses.
We are in danger of getting stuck in another negative dynamic, but this time in the realm of economics. We might follow up the financial crisis with some worse responses and policies.
It’s not just the country’s future that is on the line. Despite the commonality of anti-American rhetoric, the United States sets the tone for much of the world.
If America is seen as turning the corner and stabilizing its economy, that will be a positive cue for many other countries.
The notion of a downward spiral of ideas and events is not unprecedented. Starting in the early part of the 20th century, the West experienced one awful event after another, including a world war, a flu pandemic and a major depression. The response was a global spread of totalitarian ideas, a loss of confidence in democracy and capitalism and, eventually, another war.
While today’s world is far from this point, there is a small chance that we will move in an unstable and worsening direction. Steering away from it should be a priority for the next president.
Rebuilding confidence won’t be easy. If our next president seems flip or overconfident, observers will be skeptical above all else. Denying our basic economic problems will erode credibility, but those problems — most of all our debt and a collapsed financial sector — need to be acknowledged in a way that shows a path forward.
We need to avoid overreaction at the same time we need to return to feeling in control.
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November 9, 2008
The Mood Always Matters, So Restore Confidence First By TYLER COWEN
HIGH deficits and a declining economy will limit the hand of the new president in many matters of economic policy. Health care reform usually proves more expensive than promised, and voters are in no mood for higher gasoline or energy taxes. Still, President-elect Barack Obama faces the very important task of restoring confidence in our nation’s economy.
He will need to appear calm and purposive, and to articulate to the American people the underlying economic strengths. Even if some of this is wishful thinking, there is a chance that positive attitudes will improve the reality on the ground.
Over the last several months, the Bush administration has mishandled this issue.
Most of all, the “Paulson plan” to bail out the economy was not executed gracefully. The Treasury secretary, Henry M. Paulson Jr., warned the nation that something terrible would happen if the plan were not passed; that terrified both Wall Street and Main Street.
The early version of the plan would have given the Treasury secretary almost unlimited powers, without checks and balances on his decisions. The market took that extreme proposal as a sign that the situation was truly dire.
After the scare came indecisiveness. Whether or not the Paulson plan was a good idea, no one articulated how it would work or why it was needed. The initial plan was then dumped for a successor plan — laden with Congressional pork, by the way — and then this second plan turned out to be less important, after it was passed, than the need for an immediate recapitalization of the banking system.
Along the way it was never clear what Congress favored or why, and the regulators appeared to be stumbling from one crisis to the next, scaring the American public along the way. Political uncertainty hardly caused the crisis, but politics made it much worse.
EVEN if you believe the dubious proposition that an initial scare was needed to pass legislation, the time has come to patch up confidence. The federal government lacked a commanding presence during the early stages of the financial crisis.
Rebuilding confidence might seem a small matter, but it is not. The truth is this: America is a wonderful and magnanimous nation when it is a winner, but Americans are not used to losing and Americans are not used to panic.
Often we respond to negative events badly, so we need to be especially careful when we are in a losing or risky position.
Very bad events can cause a panic among the citizenry or its leaders, which translates into subsequent bad decisions. For a classic example of a negative policy dynamic, look at 9/11. The United States lost 3,000 lives and a great deal of wealth and confidence. The government then took actions, most of all the Iraq war, which led to even greater losses.
We are in danger of getting stuck in another negative dynamic, but this time in the realm of economics. We might follow up the financial crisis with some worse responses and policies.
It’s not just the country’s future that is on the line. Despite the commonality of anti-American rhetoric, the United States sets the tone for much of the world.
If America is seen as turning the corner and stabilizing its economy, that will be a positive cue for many other countries.
The notion of a downward spiral of ideas and events is not unprecedented. Starting in the early part of the 20th century, the West experienced one awful event after another, including a world war, a flu pandemic and a major depression. The response was a global spread of totalitarian ideas, a loss of confidence in democracy and capitalism and, eventually, another war.
While today’s world is far from this point, there is a small chance that we will move in an unstable and worsening direction. Steering away from it should be a priority for the next president.
Rebuilding confidence won’t be easy. If our next president seems flip or overconfident, observers will be skeptical above all else. Denying our basic economic problems will erode credibility, but those problems — most of all our debt and a collapsed financial sector — need to be acknowledged in a way that shows a path forward.
We need to avoid overreaction at the same time we need to return to feeling in control.
Put Away the Wish List, and Help Households Bounce Back By PETER BERNSTEIN
The New York Times
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November 9, 2008
Put Away the Wish List, and Help Households Bounce Back By PETER BERNSTEIN
CAMPAIGN talk was all very well, but the new president will have to start his administration with serious business. He should begin his Inaugural Address by saying that most campaign promises must be put on a wait list while he gives his full attention to the critical condition of the economy. There is no time for lengthy deliberation and debate.
The restoration of some kind of liquidity and order to the financial sector is the first step to recovery. The departing administration has properly made the financial sector its priority, and its efforts appear to be bearing fruit. But these efforts have not been enough.
The president’s most important priority should be to support the household sector. Households and their mortgages were the key to the onset of crisis. Now, with unemployment rising and home prices still falling, the new administration must help households first if we are to have any hope of reversing the devastating course of a recession. Households are the primary customers of American business.
To begin, the president should ask Congress to immediately extend unemployment insurance benefits by six months. But that step, while welcome, is only a balm, not a cure. The cure will develop from a plan to bring stability to home prices. There are two reasons for this emphasis.
First, we can trace the origins of the crisis to the growing pace of defaults on subprime mortgages in the summer of 2007. Until we can contain the defaults on these mortgages and the resulting impact of foreclosure on home prices, the downward pressure on prices will persist. Without such action, these vicious problems will continue to feed on themselves, with further defaults, further fire sales of good homes, further declines in home prices, further threats to the solvency of financial institutions and, most important, further shredding of the morale and the hopes of millions of Americans.
The second reason for focusing on the household sector is the special situation of the current national economy. In earlier recessions, the household sector responded to the pressures of recession but was not the driving force behind those pressures. Now, because of a mortgage crisis induced by falling home prices, millions of people — including those who acted prudently — are in deep trouble with no clear path back to good jobs and steady incomes.
The risk here is not just humanitarian. Indeed, the risk is also to the preservation of the social structure of democracy and to the future progress of America.
There is a limit to how far government guarantees can go, because of the variety of complications in dealing with the mortgage mess. In particular, many mortgages were packaged as collateral for newly created fixed-income paper now owned by investors and institutions all around the world.
Treasury Secretary Henry M. Paulson Jr. proposed a federal government purchase of this so-called toxic paper from financial institutions, which had the attraction of setting a price on these obligations and rendering some liquidity to them. But the mortgages would still be outstanding, and the names of the homeowners who took out those mortgages would still be there. Hence, the ownership of the mortgages might change, but the debtor would still be the same family or individual owing the same amount of money. The main concern now is to help the lender and the homeowner simultaneously.
A solution to these dilemmas would greatly improve the chances of reaching the primary goal: stabilization of home prices. To achieve it, we must alter the terms of these mortgages to contain the foreclosure process and, in time, bring it to an end. Only then can we shrink the number of houses under forced sale conditions and stop the downward pressure on prices.
A compulsory change in mortgage terms would initially appear to damage the lender in order to protect the borrower. But lenders are in as much trouble as borrowers because they cannot collect the money owed them and have little chance of selling a home at a price that would enable them to come out whole. Lenders and borrowers are in this crisis together.
The best solution proposed so far has been from Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation. Under this proposal, servicers of mortgages would rewrite outstanding mortgages to a more affordable level for the homeowner by lowering the principal amount owed, by reducing the interest rate, by extending the maturity — which would reduce monthly payments — or by combining these steps. In addition, the government would share a portion of the losses in these mortgages if they went into default.
WHILE this arrangement would mean a lower return than the lender originally expected, the ultimate results would be better and less risky than the losses now being incurred.
Others will come up with improvements to this plan or offer different models, but the main point is to intervene promptly, directly and powerfully to counter the home price debacle.
Only then can we begin to restore hope and optimism to Americans and to the outlook for our economy.
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November 9, 2008
Put Away the Wish List, and Help Households Bounce Back By PETER BERNSTEIN
CAMPAIGN talk was all very well, but the new president will have to start his administration with serious business. He should begin his Inaugural Address by saying that most campaign promises must be put on a wait list while he gives his full attention to the critical condition of the economy. There is no time for lengthy deliberation and debate.
The restoration of some kind of liquidity and order to the financial sector is the first step to recovery. The departing administration has properly made the financial sector its priority, and its efforts appear to be bearing fruit. But these efforts have not been enough.
The president’s most important priority should be to support the household sector. Households and their mortgages were the key to the onset of crisis. Now, with unemployment rising and home prices still falling, the new administration must help households first if we are to have any hope of reversing the devastating course of a recession. Households are the primary customers of American business.
To begin, the president should ask Congress to immediately extend unemployment insurance benefits by six months. But that step, while welcome, is only a balm, not a cure. The cure will develop from a plan to bring stability to home prices. There are two reasons for this emphasis.
First, we can trace the origins of the crisis to the growing pace of defaults on subprime mortgages in the summer of 2007. Until we can contain the defaults on these mortgages and the resulting impact of foreclosure on home prices, the downward pressure on prices will persist. Without such action, these vicious problems will continue to feed on themselves, with further defaults, further fire sales of good homes, further declines in home prices, further threats to the solvency of financial institutions and, most important, further shredding of the morale and the hopes of millions of Americans.
The second reason for focusing on the household sector is the special situation of the current national economy. In earlier recessions, the household sector responded to the pressures of recession but was not the driving force behind those pressures. Now, because of a mortgage crisis induced by falling home prices, millions of people — including those who acted prudently — are in deep trouble with no clear path back to good jobs and steady incomes.
The risk here is not just humanitarian. Indeed, the risk is also to the preservation of the social structure of democracy and to the future progress of America.
There is a limit to how far government guarantees can go, because of the variety of complications in dealing with the mortgage mess. In particular, many mortgages were packaged as collateral for newly created fixed-income paper now owned by investors and institutions all around the world.
Treasury Secretary Henry M. Paulson Jr. proposed a federal government purchase of this so-called toxic paper from financial institutions, which had the attraction of setting a price on these obligations and rendering some liquidity to them. But the mortgages would still be outstanding, and the names of the homeowners who took out those mortgages would still be there. Hence, the ownership of the mortgages might change, but the debtor would still be the same family or individual owing the same amount of money. The main concern now is to help the lender and the homeowner simultaneously.
A solution to these dilemmas would greatly improve the chances of reaching the primary goal: stabilization of home prices. To achieve it, we must alter the terms of these mortgages to contain the foreclosure process and, in time, bring it to an end. Only then can we shrink the number of houses under forced sale conditions and stop the downward pressure on prices.
A compulsory change in mortgage terms would initially appear to damage the lender in order to protect the borrower. But lenders are in as much trouble as borrowers because they cannot collect the money owed them and have little chance of selling a home at a price that would enable them to come out whole. Lenders and borrowers are in this crisis together.
The best solution proposed so far has been from Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation. Under this proposal, servicers of mortgages would rewrite outstanding mortgages to a more affordable level for the homeowner by lowering the principal amount owed, by reducing the interest rate, by extending the maturity — which would reduce monthly payments — or by combining these steps. In addition, the government would share a portion of the losses in these mortgages if they went into default.
WHILE this arrangement would mean a lower return than the lender originally expected, the ultimate results would be better and less risky than the losses now being incurred.
Others will come up with improvements to this plan or offer different models, but the main point is to intervene promptly, directly and powerfully to counter the home price debacle.
Only then can we begin to restore hope and optimism to Americans and to the outlook for our economy.
It’s a Time to Listen, and to Obey the Laws of Arithmetic By N. GREGORY MANKIW
The New York Times
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November 9, 2008
It’s a Time to Listen, and to Obey the Laws of Arithmetic By N. GREGORY MANKIW
IT was a good campaign, and a historic victory. As the president-elect gets ready for new responsibilities, here are four ways to become a reliable steward of the economy:
LISTEN TO THE ECONOMISTS During the campaign, Senator Barack Obama assembled an impressive team of economic advisers from the nation’s top universities, including Austan D. Goolsbee of the University of Chicago and David Cutler and Jeffrey Liebman of Harvard. The campaign’s director of economic policy, Jason Furman, is a smart, sensible and well-trained policy economist. I know: he is a former student of mine.
It would be a good idea to pay close attention to what they have to say. They will often give advice quite different from what will be coming from the Congressional leaders Nancy Pelosi and Harry Reid. To make sure the views of economic advisers are heard, they should have offices close to the Oval Office. The chief of staff should invite them to all the relevant meetings.
EMBRACE SOME REPUBLICAN IDEAS No party has a monopoly on truth. It would be wise to adopt the best Republican policy proposals, as Bill Clinton did with welfare reform in 1996.
Health policy is a case in point.
Over the past several months, Senator Obama lambasted Senator John McCain’s proposal to reform the tax code to include a refundable health insurance tax credit. But long before Mr. McCain ever proposed this idea, it was advanced by Mr. Furman, the Obama campaign’s policy director. He can explain why the Furman-McCain plan makes a lot of sense.
Now the new president may decide that this plan does not go far enough. He may want a more generously funded social safety net to help the less fortunate get health care. Fair enough, but in pursuing that goal, he will run into the next issue.
PAY ATTENTION TO BUDGET CONSTRAINTS The nation faces a long-term imbalance between government spending and tax revenue. The fundamental problem is that the federal government has promised the elderly more benefits than the tax system can support. This fiscal imbalance will become acute as more baby boomers retire and start collecting Social Security and Medicare benefits.
Yet during the campaign, Mr. Obama promised to cut taxes for 95 percent of Americans, to vastly expand health insurance coverage and never to cut Social Security benefits or raise the retirement age. The new administration will almost surely have to renege on some of these promises. As the economic team will often say, even if the laws of arithmetic are ignored during campaigns, they become a real constraint when making actual policy.
RECOGNIZE PAST MISTAKES As a new senator, Mr. Obama voted along predictable left-wing lines. As president, he will need a more eclectic, nuanced approach.
Consider trade policy. In the Senate, he voted against the Dominican Republic-Central America Free Trade Agreement. He opposed free-trade agreements with Colombia and South Korea. He supported Senators Charles E. Schumer and Lindsey Graham in their quest to put tariffs on Chinese goods if China failed to revalue its exchange rate. He supported the Byrd Amendment, which encouraged domestic companies to file antidumping suits against foreign competitors. He supported subsidies for domestic producers of corn-based ethanol and tariffs on imports of more efficient sugar-based ethanol.
The team of economists can explain why these positions were wrong-headed. Economic isolationism is not in the national interest. A high point of the Clinton presidency was the enactment of the North American Free Trade Agreement, which passed both the House and Senate with a majority of Republicans and a minority of Democrats.
Last Tuesday, many people voted for Mr. Obama hoping that he would achieve the kind of economic success that Mr. Clinton enjoyed in the 1990s. The best chance of delivering what they want requires abandoning some positions and pursuing a more moderate, bipartisan course.
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November 9, 2008
It’s a Time to Listen, and to Obey the Laws of Arithmetic By N. GREGORY MANKIW
IT was a good campaign, and a historic victory. As the president-elect gets ready for new responsibilities, here are four ways to become a reliable steward of the economy:
LISTEN TO THE ECONOMISTS During the campaign, Senator Barack Obama assembled an impressive team of economic advisers from the nation’s top universities, including Austan D. Goolsbee of the University of Chicago and David Cutler and Jeffrey Liebman of Harvard. The campaign’s director of economic policy, Jason Furman, is a smart, sensible and well-trained policy economist. I know: he is a former student of mine.
It would be a good idea to pay close attention to what they have to say. They will often give advice quite different from what will be coming from the Congressional leaders Nancy Pelosi and Harry Reid. To make sure the views of economic advisers are heard, they should have offices close to the Oval Office. The chief of staff should invite them to all the relevant meetings.
EMBRACE SOME REPUBLICAN IDEAS No party has a monopoly on truth. It would be wise to adopt the best Republican policy proposals, as Bill Clinton did with welfare reform in 1996.
Health policy is a case in point.
Over the past several months, Senator Obama lambasted Senator John McCain’s proposal to reform the tax code to include a refundable health insurance tax credit. But long before Mr. McCain ever proposed this idea, it was advanced by Mr. Furman, the Obama campaign’s policy director. He can explain why the Furman-McCain plan makes a lot of sense.
Now the new president may decide that this plan does not go far enough. He may want a more generously funded social safety net to help the less fortunate get health care. Fair enough, but in pursuing that goal, he will run into the next issue.
PAY ATTENTION TO BUDGET CONSTRAINTS The nation faces a long-term imbalance between government spending and tax revenue. The fundamental problem is that the federal government has promised the elderly more benefits than the tax system can support. This fiscal imbalance will become acute as more baby boomers retire and start collecting Social Security and Medicare benefits.
Yet during the campaign, Mr. Obama promised to cut taxes for 95 percent of Americans, to vastly expand health insurance coverage and never to cut Social Security benefits or raise the retirement age. The new administration will almost surely have to renege on some of these promises. As the economic team will often say, even if the laws of arithmetic are ignored during campaigns, they become a real constraint when making actual policy.
RECOGNIZE PAST MISTAKES As a new senator, Mr. Obama voted along predictable left-wing lines. As president, he will need a more eclectic, nuanced approach.
Consider trade policy. In the Senate, he voted against the Dominican Republic-Central America Free Trade Agreement. He opposed free-trade agreements with Colombia and South Korea. He supported Senators Charles E. Schumer and Lindsey Graham in their quest to put tariffs on Chinese goods if China failed to revalue its exchange rate. He supported the Byrd Amendment, which encouraged domestic companies to file antidumping suits against foreign competitors. He supported subsidies for domestic producers of corn-based ethanol and tariffs on imports of more efficient sugar-based ethanol.
The team of economists can explain why these positions were wrong-headed. Economic isolationism is not in the national interest. A high point of the Clinton presidency was the enactment of the North American Free Trade Agreement, which passed both the House and Senate with a majority of Republicans and a minority of Democrats.
Last Tuesday, many people voted for Mr. Obama hoping that he would achieve the kind of economic success that Mr. Clinton enjoyed in the 1990s. The best chance of delivering what they want requires abandoning some positions and pursuing a more moderate, bipartisan course.
Tuesday, November 04, 2008
Turning Points, 2008 Edition By ANA MARIE COX, BOB KERREY, MICHAEL KINSLEY, KEVIN MADDEN, PAUL MASLIN, and HOWARD WOLFSON
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November 4, 2008
Turning Points, 2008 Edition By ANA MARIE COX, BOB KERREY, MICHAEL KINSLEY, KEVIN MADDEN, PAUL MASLIN, and HOWARD WOLFSON
Barring something really, really unforeseen, the presidential campaign ends today. Really. Op-Ed editors asked a group of experts to write about some of the undernoticed moments from the past 18 months.
What did Celine Dion do to Hillary Clinton?
Fleetwood Mac's "Don't Stop" set the modern standard for campaign songs when Bill Clinton adopted it as his own in 1992. Its admonition, "Don't stop thinking about tomorrow," dovetailed perfectly with the premise of Mr. Clinton's run.
Sixteen years later, Hillary Clinton's campaign spent a considerable amount of time deciding on its song. Those of us who worked for her knew from experience that music could define a campaign — for good and for bad.
Mrs. Clinton's Senate campaign kickoff in 1999 was initially judged a huge success until her opponent, Rudolph Giuliani, began to zero in on one of the warm-up songs played before Mrs. Clinton hit the stage: Billy Joel's "Captain Jack."
"Captain Jack," unfortunately, contains references to masturbation and drug use. Mr. Giuliani said we were sending a clear signal to America's youth: "Let's say yes to drugs. I think it's a very, very dangerous message." The story dominated the local news for days.
For the rest of her Senate campaign and for her presidential race, we instituted strict controls to ensure that every song at a Clinton event had been vetted, both lyrically and rhythmically. Fail-safe devices were put in place. Committees of jurisdiction and oversight formed. It got so that it would have been easier to start a nuclear war than to play an offensive song at a Hillary Clinton rally.
The selection of a presidential campaign song was deemed especially critical. A group was chosen, some for our musical tastes, others to act as censors.
Brainstorming sessions ensued. The Iowa caucuses could wait — this was serious business.
Ideas were put forward: Motown, disco, ballads. I pushed K T Tunstall's "Suddenly I See" because it seemed empowering and upbeat. It was immediately criticized. What about the singer's use of the word "hell"?
Everyone had favorites, and every favorite had its detractors. We studied lyrics and performer biographies. We downloaded possibilities and listened. Some of us danced, while others sat and frowned.
"Get Ready" by the Four Tops? Too sexual. "Rhythm Nation" by Janet Jackson? What about that unfortunate wardrobe malfunction?
To break the stalemate, we sponsored an online contest for supporters and gave them options to choose from. The votes and commentaries rolled in. Celine Dion's "You and I" was selected, a decision I jokingly predicted would signal the end of the campaign.
Sadly, my prediction proved correct.
— HOWARD WOLFSON, a strategist for Hillary Clinton's presidential campaign, blogs about music at GothamAcme.com
Was John McCain's fate within his control?
A professional colleague of mine told me at the beginning of this presidential campaign season that these contests are often shaped by "moments" — still frames from a whirring picture show.
He may have been right about the past, but not about this year. The 2008 race was defined by ocean-size events like the conflict in Iraq and the global credit crisis, phenomena beyond the control of the candidates. Campaigns and fortunes either crested upon these events, or were washed away by them.
John McCain emerged the victor from a crowded Republican primary field because of his vocal and principled alliance with the troop surge in Iraq, a position he arrived at with a practical realization that his political prospects were tied to a policy whose execution he ultimately would not control. Out of this decision, Mr. McCain earned his political salvation.
Then in the fall, Mr. McCain was engulfed by market forces in the economy and in politics; he was yoked to an administration and a party on the target end of a thundering volley of blame.
More than we like to admit, candidates are confronted, and often defeated, by the elusive element of fate.
— KEVIN MADDEN, the press secretary for Mitt Romney's presidential campaign
What medicine brought the Straight Talk Express to an end?
For months, Steve Schmidt, John McCain's chief strategist, tried to bring discipline to the campaign.
Though Mr. Schmidt shared Mr. McCain's affection for individual journalists, he also believed that the senator's rolling press conferences obscured the campaign's "message of the day." And he thought that some journalists — he referred to them as "the bloggers," even if they weren't — promoted the gaffe contests that played out on cable news and were amplified online.
But Mr. McCain had faith in his instincts and his charm, and so the "straight talk" continued against Mr. Schmidt's wishes.
Until the Viagra question. After a female McCain adviser complained about health insurance companies that covered pills for male impotence but not for birth control, a reporter asked Mr. McCain what he thought.
Mr. McCain made a face, expressing silent befuddlement. In the pool report, a TV reporter included the number of seconds that passed between the question and Mr. McCain's first tentative reply. Planned Parenthood put out a commercial. And Mr. McCain realized his love affair with the press was already over.
— ANA MARIE COX, the founding editor of Wonkette and a contributor to Time magazine
What political candidate delivered the finishing blow to the public financing system for presidential campaigns?
On June 19, Barack Obama announced he would opt out of the public financing system for presidential campaigns. He might still be the favorite to win today if he had said yes to $85 million of public money, but I doubt it. Obviously he doubted it, too, or he would have accepted the spending cap.
His charisma, talent, message and management skills enabled him to raise and spend an amount several times greater than the public money John McCain had available for television advertisements and paid staff in important states. (To be clear, if Senator McCain thought he could have matched Senator Obama's fund-raising efforts he would have opted out, too.)
For Senator Obama, the principle of doing what is essential to win trumped the principle of support for public financing. He made the right choice. I believe 2008 was the year that federal financing of presidential elections died. It was on life support coming into this election. The ability to raise millions of dollars from small donors over the Internet made the law unnecessary, and it also contributed to one of the most exciting, most watched and best understood campaigns in our nation's history.
— BOB KERREY, a former Democratic senator from Nebraska and the president of New School University
How did John Edwards frame the campaign?
In the John Edwards campaign, we viewed the Netroots Nation candidate forum, attended by many liberal bloggers, as a huge opportunity.
Starting with his first election, Mr. Edwards had refused to accept any contributions from Washington lobbyists or political action committees. At the forum in August 2007, he challenged his opponents to do the same. The moderator followed up by saying, "Senator Edwards has really a very straightforward question here, which is, will you continue to take money from lobbyists?"
"Yes I will," Hillary Clinton said. "A lot of those lobbyists, whether you like it or not, represent real Americans."
That moment was the beginning of the end of her candidacy. Without it, she might have become the nominee and now be on her way to the White House.
— JOE TRIPPI, the author of "The Revolution Will Not Be Televised" and an adviser to John Edwards's presidential campaign
What primary or caucus clinched the Democratic nomination for Barack Obama?
Barack Obama's most decisive victory was his first, on Jan. 3 in Iowa. That win made him the presidential front-runner — a position he has never lost in the succeeding 10 months.
After Iowa, John Edwards was finished as a serious contender for the Democratic nomination. Hillary Clinton was badly wounded, too. A majority of black voters was convinced after the caucuses that Mr. Obama could win among white voters, and a crucial segment of Mrs. Clinton's base disappeared.
Iowa provided another intimation of change. Des Moines was where, almost exactly one year ago, two key advisers to Mrs. Clinton mocked the young Obama supporters. "Our people look like caucus-goers, and his people look like they are 18," one adviser told a reporter. The adviser added that they "look like Facebook."
Mr. Obama's voters didn't look like caucus-goers, but America in 2008 didn't look much like its past in lots of ways.
— PAUL MASLIN, the pollster for Bill Richardson's presidential campaign
When was the last American election with four white guys on the two major-party tickets?
We are surrounded by images of white men in suits. There might be 20 of them photographed sitting around a conference table (the board of directors in 1955) or just three (the founder of this auto dealership, his son-in-law who now runs it and his son who is supervisor of the parts department) or 500 (the class of 1940 at its 25th reunion). Oil paintings of forgotten committee chairmen line the corridors of power in Washington. Cigar boxes still feature illustrations of the Dutch Masters.
These images look quaint, even the ones from the 1950s and 1960s. The haircuts are bad, the smiles are too solemn, the lapels and the ties are too wide, or too narrow. But mainly, the men are all men, and all white. It strikes you immediately. These images don't "look like America," as Bill Clinton used to say.
If the annual portraits of a hospital's trustees are lined up along a hallway, you can see the changes as if through a flip book. Around 1970, a light-skinned, oldish African-American appears in the second row. Then a second black guy, darker and younger. Then a very young white woman, and a black woman, or a white guy in a wheelchair. In 2005, the first Asian-American appears. That guy who shows up the next year in the front row, far left, might or might not be Latino, or perhaps an Indian (of either variety). It's hard to tell. By last year the annual group shot still doesn't exactly look like America, but it looks more like America today than it did in 1955.
Meanwhile (yes, O.K., except for Geraldine Ferraro, chosen in 1984 to help Walter Mondale, a good and extremely white man, lose to Ronald Reagan) the world's most important group shot remained four white men in suits until Aug. 29, when John McCain picked Sarah Palin as his running mate. Since then, there have been hundreds of images of Mr. McCain and Ms. Palin, Barack Obama and Joe Biden, Mr. Obama and Mr. McCain, Ms. Palin and Mr. Biden, or collected shots of all four of them. As of that moment, it became hard to imagine that these pictures would ever again be of four white men. Fine for a cigar box, maybe, but America has moved on.
Thanks for this healthy development go to John McCain, for choosing Sarah Palin, and to Barack Obama, for choosing himself. Also for being himself — a one-man ethnic stew. If America looks like anyone, it looks like him. Sarah Palin deserves, if not credit, then a bit of sympathy. She wants America to keep looking like a small town in western Pennsylvania around 1966. She was the last, victorious shot in a revolution she doesn't support.
— MICHAEL KINSLEY, the founding editor of Slate and a columnist for Time magazine
http://www.nytimes.com/2008/11/04/opinion/04points.html?pagewanted=print
http://snipurl.com/7shqh
November 4, 2008
Turning Points, 2008 Edition By ANA MARIE COX, BOB KERREY, MICHAEL KINSLEY, KEVIN MADDEN, PAUL MASLIN, and HOWARD WOLFSON
Barring something really, really unforeseen, the presidential campaign ends today. Really. Op-Ed editors asked a group of experts to write about some of the undernoticed moments from the past 18 months.
What did Celine Dion do to Hillary Clinton?
Fleetwood Mac's "Don't Stop" set the modern standard for campaign songs when Bill Clinton adopted it as his own in 1992. Its admonition, "Don't stop thinking about tomorrow," dovetailed perfectly with the premise of Mr. Clinton's run.
Sixteen years later, Hillary Clinton's campaign spent a considerable amount of time deciding on its song. Those of us who worked for her knew from experience that music could define a campaign — for good and for bad.
Mrs. Clinton's Senate campaign kickoff in 1999 was initially judged a huge success until her opponent, Rudolph Giuliani, began to zero in on one of the warm-up songs played before Mrs. Clinton hit the stage: Billy Joel's "Captain Jack."
"Captain Jack," unfortunately, contains references to masturbation and drug use. Mr. Giuliani said we were sending a clear signal to America's youth: "Let's say yes to drugs. I think it's a very, very dangerous message." The story dominated the local news for days.
For the rest of her Senate campaign and for her presidential race, we instituted strict controls to ensure that every song at a Clinton event had been vetted, both lyrically and rhythmically. Fail-safe devices were put in place. Committees of jurisdiction and oversight formed. It got so that it would have been easier to start a nuclear war than to play an offensive song at a Hillary Clinton rally.
The selection of a presidential campaign song was deemed especially critical. A group was chosen, some for our musical tastes, others to act as censors.
Brainstorming sessions ensued. The Iowa caucuses could wait — this was serious business.
Ideas were put forward: Motown, disco, ballads. I pushed K T Tunstall's "Suddenly I See" because it seemed empowering and upbeat. It was immediately criticized. What about the singer's use of the word "hell"?
Everyone had favorites, and every favorite had its detractors. We studied lyrics and performer biographies. We downloaded possibilities and listened. Some of us danced, while others sat and frowned.
"Get Ready" by the Four Tops? Too sexual. "Rhythm Nation" by Janet Jackson? What about that unfortunate wardrobe malfunction?
To break the stalemate, we sponsored an online contest for supporters and gave them options to choose from. The votes and commentaries rolled in. Celine Dion's "You and I" was selected, a decision I jokingly predicted would signal the end of the campaign.
Sadly, my prediction proved correct.
— HOWARD WOLFSON, a strategist for Hillary Clinton's presidential campaign, blogs about music at GothamAcme.com
Was John McCain's fate within his control?
A professional colleague of mine told me at the beginning of this presidential campaign season that these contests are often shaped by "moments" — still frames from a whirring picture show.
He may have been right about the past, but not about this year. The 2008 race was defined by ocean-size events like the conflict in Iraq and the global credit crisis, phenomena beyond the control of the candidates. Campaigns and fortunes either crested upon these events, or were washed away by them.
John McCain emerged the victor from a crowded Republican primary field because of his vocal and principled alliance with the troop surge in Iraq, a position he arrived at with a practical realization that his political prospects were tied to a policy whose execution he ultimately would not control. Out of this decision, Mr. McCain earned his political salvation.
Then in the fall, Mr. McCain was engulfed by market forces in the economy and in politics; he was yoked to an administration and a party on the target end of a thundering volley of blame.
More than we like to admit, candidates are confronted, and often defeated, by the elusive element of fate.
— KEVIN MADDEN, the press secretary for Mitt Romney's presidential campaign
What medicine brought the Straight Talk Express to an end?
For months, Steve Schmidt, John McCain's chief strategist, tried to bring discipline to the campaign.
Though Mr. Schmidt shared Mr. McCain's affection for individual journalists, he also believed that the senator's rolling press conferences obscured the campaign's "message of the day." And he thought that some journalists — he referred to them as "the bloggers," even if they weren't — promoted the gaffe contests that played out on cable news and were amplified online.
But Mr. McCain had faith in his instincts and his charm, and so the "straight talk" continued against Mr. Schmidt's wishes.
Until the Viagra question. After a female McCain adviser complained about health insurance companies that covered pills for male impotence but not for birth control, a reporter asked Mr. McCain what he thought.
Mr. McCain made a face, expressing silent befuddlement. In the pool report, a TV reporter included the number of seconds that passed between the question and Mr. McCain's first tentative reply. Planned Parenthood put out a commercial. And Mr. McCain realized his love affair with the press was already over.
— ANA MARIE COX, the founding editor of Wonkette and a contributor to Time magazine
What political candidate delivered the finishing blow to the public financing system for presidential campaigns?
On June 19, Barack Obama announced he would opt out of the public financing system for presidential campaigns. He might still be the favorite to win today if he had said yes to $85 million of public money, but I doubt it. Obviously he doubted it, too, or he would have accepted the spending cap.
His charisma, talent, message and management skills enabled him to raise and spend an amount several times greater than the public money John McCain had available for television advertisements and paid staff in important states. (To be clear, if Senator McCain thought he could have matched Senator Obama's fund-raising efforts he would have opted out, too.)
For Senator Obama, the principle of doing what is essential to win trumped the principle of support for public financing. He made the right choice. I believe 2008 was the year that federal financing of presidential elections died. It was on life support coming into this election. The ability to raise millions of dollars from small donors over the Internet made the law unnecessary, and it also contributed to one of the most exciting, most watched and best understood campaigns in our nation's history.
— BOB KERREY, a former Democratic senator from Nebraska and the president of New School University
How did John Edwards frame the campaign?
In the John Edwards campaign, we viewed the Netroots Nation candidate forum, attended by many liberal bloggers, as a huge opportunity.
Starting with his first election, Mr. Edwards had refused to accept any contributions from Washington lobbyists or political action committees. At the forum in August 2007, he challenged his opponents to do the same. The moderator followed up by saying, "Senator Edwards has really a very straightforward question here, which is, will you continue to take money from lobbyists?"
"Yes I will," Hillary Clinton said. "A lot of those lobbyists, whether you like it or not, represent real Americans."
That moment was the beginning of the end of her candidacy. Without it, she might have become the nominee and now be on her way to the White House.
— JOE TRIPPI, the author of "The Revolution Will Not Be Televised" and an adviser to John Edwards's presidential campaign
What primary or caucus clinched the Democratic nomination for Barack Obama?
Barack Obama's most decisive victory was his first, on Jan. 3 in Iowa. That win made him the presidential front-runner — a position he has never lost in the succeeding 10 months.
After Iowa, John Edwards was finished as a serious contender for the Democratic nomination. Hillary Clinton was badly wounded, too. A majority of black voters was convinced after the caucuses that Mr. Obama could win among white voters, and a crucial segment of Mrs. Clinton's base disappeared.
Iowa provided another intimation of change. Des Moines was where, almost exactly one year ago, two key advisers to Mrs. Clinton mocked the young Obama supporters. "Our people look like caucus-goers, and his people look like they are 18," one adviser told a reporter. The adviser added that they "look like Facebook."
Mr. Obama's voters didn't look like caucus-goers, but America in 2008 didn't look much like its past in lots of ways.
— PAUL MASLIN, the pollster for Bill Richardson's presidential campaign
When was the last American election with four white guys on the two major-party tickets?
We are surrounded by images of white men in suits. There might be 20 of them photographed sitting around a conference table (the board of directors in 1955) or just three (the founder of this auto dealership, his son-in-law who now runs it and his son who is supervisor of the parts department) or 500 (the class of 1940 at its 25th reunion). Oil paintings of forgotten committee chairmen line the corridors of power in Washington. Cigar boxes still feature illustrations of the Dutch Masters.
These images look quaint, even the ones from the 1950s and 1960s. The haircuts are bad, the smiles are too solemn, the lapels and the ties are too wide, or too narrow. But mainly, the men are all men, and all white. It strikes you immediately. These images don't "look like America," as Bill Clinton used to say.
If the annual portraits of a hospital's trustees are lined up along a hallway, you can see the changes as if through a flip book. Around 1970, a light-skinned, oldish African-American appears in the second row. Then a second black guy, darker and younger. Then a very young white woman, and a black woman, or a white guy in a wheelchair. In 2005, the first Asian-American appears. That guy who shows up the next year in the front row, far left, might or might not be Latino, or perhaps an Indian (of either variety). It's hard to tell. By last year the annual group shot still doesn't exactly look like America, but it looks more like America today than it did in 1955.
Meanwhile (yes, O.K., except for Geraldine Ferraro, chosen in 1984 to help Walter Mondale, a good and extremely white man, lose to Ronald Reagan) the world's most important group shot remained four white men in suits until Aug. 29, when John McCain picked Sarah Palin as his running mate. Since then, there have been hundreds of images of Mr. McCain and Ms. Palin, Barack Obama and Joe Biden, Mr. Obama and Mr. McCain, Ms. Palin and Mr. Biden, or collected shots of all four of them. As of that moment, it became hard to imagine that these pictures would ever again be of four white men. Fine for a cigar box, maybe, but America has moved on.
Thanks for this healthy development go to John McCain, for choosing Sarah Palin, and to Barack Obama, for choosing himself. Also for being himself — a one-man ethnic stew. If America looks like anyone, it looks like him. Sarah Palin deserves, if not credit, then a bit of sympathy. She wants America to keep looking like a small town in western Pennsylvania around 1966. She was the last, victorious shot in a revolution she doesn't support.
— MICHAEL KINSLEY, the founding editor of Slate and a columnist for Time magazine
http://www.nytimes.com/2008/11/04/opinion/04points.html?pagewanted=print
http://snipurl.com/7shqh
A Date With Scarcity By DAVID BROOKS
The New York Times
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November 4, 2008
Op-Ed Columnist
A Date With Scarcity By DAVID BROOKS
Nov. 4, 2008, is a historic day because it marks the end of an economic era, a political era and a generational era all at once.
Economically, it marks the end of the Long Boom, which began in 1983. Politically, it probably marks the end of conservative dominance, which began in 1980. Generationally, it marks the end of baby boomer supremacy, which began in 1968. For the past 16 years, baby boomers, who were formed by the tumult of the 1960s, occupied the White House. By Tuesday night, if the polls are to be believed, a member of a new generation will become president-elect.
So today is not only a pivot, but a confluence of pivots.
When historians look back at the era that is now closing, they will see a time of private achievement and public disappointment. In the past two decades, the United States has become a much more interesting place. Companies like Starbucks, Apple, Crate & Barrel, Microsoft and many others enlivened daily life. Private citizens, especially young people, repaired the social fabric, dedicated themselves to community service and lowered drug addiction and teenage pregnancy.
Yet, at the same time, the public sphere has not flourished. Despite decades of affluence, longstanding issues like health care, education, energy and entitlement debt have not been adequately addressed. The baby boomers, who entered adulthood promising a lifetime of activism, have been a politically undistinguished generation. They produced two presidents, neither of whom lived up to his potential. They remained consumed by the culture war that divided their generation. They pass their political supremacy today having squandered the fat years and the golden opportunities.
Month by month, frustration has mounted. Americans are anxious about their private lives but absolutely disgusted by public leaders. So change is demanded.
Republicans nominated an old warrior with a record of making hard decisions and absorbing the blows that ensue. Many of us regard him — and always will — as one of the heroes of our time. But the public demand for change was total, and if the polls are right, voters will elect the man who breaks from the recent past in almost every way.
Barack Obama is a child of a child of the 1960s. His mother was born only five years earlier than Hillary Clinton. For people in Obama’s generation, the great disruption had already occurred by the time they hit adulthood. Theirs is a generation of consolidation and neo-traditionalism — a generation of sunscreen and bicycle helmets, more anxious about parenthood than anything else.
Obama is not only a member of this temperate generation, but of its most educated segment. He has lived nearly his entire adult life within a few miles of one or another of the country’s top 10 universities.
His upscale, post-boomer cohort has rallied behind him with unalloyed fervor. Major college newspapers have endorsed him at a rate of 63 to 1. The upscale educated class — from the universities, the media, the law and the financial centers — has financed his $600 million campaign (which relied on big-dollar donations even more heavily than George W. Bush’s 2004 effort). This cohort will soon become the ruling class.
And the irony is that they will be confronted by the problem for which they have the least experience and for which they are the least prepared: the problem of scarcity.
Raised in prosperity, favored by genetics, these young meritocrats will have to govern in a period when the demands on the nation’s wealth outstrip the supply. They will grapple with the growing burdens of an aging society, rising health care costs and high energy prices. They will have to make up for the trillion-plus dollars the government will spend to avoid a deep recession. They will have to struggle to keep their promises to cut taxes, create an energy revolution, pass an expensive health care plan and all the rest.
As Robert J. Samuelson writes in his forthcoming book, “The Great Inflation and Its Aftermath,” “Already, Americans face far more claims on their incomes than can be easily met.”
In the next few years, the nation’s wealth will either stagnate or shrink. The fiscal squeeze will grow severe. There will be fiercer struggles over scarce resources, starker divisions along factional lines. The challenge for the next president will be to cushion the pain of the current recession while at the same time trying to build a solid fiscal foundation so the country can thrive at some point in the future.
We’re probably entering a period, in other words, in which smart young liberals meet a stone-cold scarcity that they do not seem to recognize or have a plan for.
In an age of transition, the children are left to grapple with the burdens of their elders.
Printer Friendly Format Sponsored By
November 4, 2008
Op-Ed Columnist
A Date With Scarcity By DAVID BROOKS
Nov. 4, 2008, is a historic day because it marks the end of an economic era, a political era and a generational era all at once.
Economically, it marks the end of the Long Boom, which began in 1983. Politically, it probably marks the end of conservative dominance, which began in 1980. Generationally, it marks the end of baby boomer supremacy, which began in 1968. For the past 16 years, baby boomers, who were formed by the tumult of the 1960s, occupied the White House. By Tuesday night, if the polls are to be believed, a member of a new generation will become president-elect.
So today is not only a pivot, but a confluence of pivots.
When historians look back at the era that is now closing, they will see a time of private achievement and public disappointment. In the past two decades, the United States has become a much more interesting place. Companies like Starbucks, Apple, Crate & Barrel, Microsoft and many others enlivened daily life. Private citizens, especially young people, repaired the social fabric, dedicated themselves to community service and lowered drug addiction and teenage pregnancy.
Yet, at the same time, the public sphere has not flourished. Despite decades of affluence, longstanding issues like health care, education, energy and entitlement debt have not been adequately addressed. The baby boomers, who entered adulthood promising a lifetime of activism, have been a politically undistinguished generation. They produced two presidents, neither of whom lived up to his potential. They remained consumed by the culture war that divided their generation. They pass their political supremacy today having squandered the fat years and the golden opportunities.
Month by month, frustration has mounted. Americans are anxious about their private lives but absolutely disgusted by public leaders. So change is demanded.
Republicans nominated an old warrior with a record of making hard decisions and absorbing the blows that ensue. Many of us regard him — and always will — as one of the heroes of our time. But the public demand for change was total, and if the polls are right, voters will elect the man who breaks from the recent past in almost every way.
Barack Obama is a child of a child of the 1960s. His mother was born only five years earlier than Hillary Clinton. For people in Obama’s generation, the great disruption had already occurred by the time they hit adulthood. Theirs is a generation of consolidation and neo-traditionalism — a generation of sunscreen and bicycle helmets, more anxious about parenthood than anything else.
Obama is not only a member of this temperate generation, but of its most educated segment. He has lived nearly his entire adult life within a few miles of one or another of the country’s top 10 universities.
His upscale, post-boomer cohort has rallied behind him with unalloyed fervor. Major college newspapers have endorsed him at a rate of 63 to 1. The upscale educated class — from the universities, the media, the law and the financial centers — has financed his $600 million campaign (which relied on big-dollar donations even more heavily than George W. Bush’s 2004 effort). This cohort will soon become the ruling class.
And the irony is that they will be confronted by the problem for which they have the least experience and for which they are the least prepared: the problem of scarcity.
Raised in prosperity, favored by genetics, these young meritocrats will have to govern in a period when the demands on the nation’s wealth outstrip the supply. They will grapple with the growing burdens of an aging society, rising health care costs and high energy prices. They will have to make up for the trillion-plus dollars the government will spend to avoid a deep recession. They will have to struggle to keep their promises to cut taxes, create an energy revolution, pass an expensive health care plan and all the rest.
As Robert J. Samuelson writes in his forthcoming book, “The Great Inflation and Its Aftermath,” “Already, Americans face far more claims on their incomes than can be easily met.”
In the next few years, the nation’s wealth will either stagnate or shrink. The fiscal squeeze will grow severe. There will be fiercer struggles over scarce resources, starker divisions along factional lines. The challenge for the next president will be to cushion the pain of the current recession while at the same time trying to build a solid fiscal foundation so the country can thrive at some point in the future.
We’re probably entering a period, in other words, in which smart young liberals meet a stone-cold scarcity that they do not seem to recognize or have a plan for.
In an age of transition, the children are left to grapple with the burdens of their elders.
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