Jobless milestone

The economic recovery just passed a significant threshold. Bloomberg reports

Claims for jobless benefits dropped last week to the lowest level in two years, showing the U.S. labor market is taking a turn for the better as the economy accelerates into 2011.

Applications for unemployment assistance decreased by 34,000 to 388,000 in the week ended Dec. 25, breaking the 400,000 level for the first time since July 2008, according to Labor Department figures today in Washington.

The weekly jobless figure is notoriously volatile; the week leading up to Christmas is far from typical, and the figure could subsequently be revised upward.

Nevertheless, a number below 400,000 is significant because it is generally seen as indicating an expanding labor market. The figure is also consistent with a general downward trend over the last few months.

The UI claims figures were also accompanied by other positive news. Bloomberg is also reporting

Businesses in the U.S. expanded in December at the fastest pace in two decades, adding to evidence the world’s largest economy is accelerating heading into 2011.

The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 68.6 this month, exceeding the most optimistic forecast of economists surveyed by Bloomberg News and the highest level since July 1988. Figures greater than 50 signal expansion.

While these are positive developments for most of us, the good news isn't shared by all, especially the 27 percent of "patriotic" Americans (61 percent of Republicans) who hope President Obama's policies will fail.

Financial and moral bankruptcy

In the New York Times Economix blog, Simon Johnson glummly assesses Europe's financial prospects over the next few months as countries reach deadlines to roll over their debts.

He outlines some painful steps for the European Union, including greater fiscal integration, more intervention by the European Central Bank in core countries, but a casting off of some weaker countries. Although the steps are painful, Johnson concludes that

At the end of the day, the Europeans will save themselves, with the measures outlined above, only because there will be no other way to avoid wasting 60 years of political unification.

Although the U.S. faces some similar pressures, Johnson is less sanguine about our ability to solve our problems.

Our leading bankers looted the state, plunged the world into deep recession and cost the United States eight million jobs. Now many of them stand by with sharpened knives and enhanced bonuses – willing to suggest how the salaries and jobs of others can be further cut. Consider the morality of that.

Will no one think hard about what this means for our budget and our political system until it is too late?

Alfred Kahn, 1917-2010

Occasionally, the economics profession contributes a hero to society. Alfred Kahn, who led the effort to deregulate the airline industry in the late 1970s and who had a long, productive and admirable career at Cornell University, was one of those heroes.

Bloomberg reports the sad news of his passing.

Kahn's principal legacy was a much more (though not perfectly) competitive airline industry and the lower fares, greater choice, and yes, greater uncertainty that brought.

Party of No Senators say "Yes" to Medicare Fraud

Bipartisan legislation that would have strengthened the protections against Medicare fraud was quietly shot down this week by Republican senators who placed an anonymous hold on the legislation.

The Hill reports

The bill makes it harder for executives at companies that have defrauded Medicare to continue doing so. It also seeks to prevent companies from setting up shell companies to insulate themselves from liability.

The bill passed the House by voice vote but died in the Senate this week after anonymous Republicans placed a hold on the legislation.

Or as the bill's sponsor, Rep. Pete Stark, told The Hill, "Fraudsters and crooks who bilk millions out of Medicare just received a Christmas present courtesy of anonymous Republican Senators."

The Republicans' cowardly, under-the-table actions show that their primary goal is to serve business interests, even if those interests defraud the rest of us.

Early holiday vacation for Rep. Coble

Our local man, not-in-Washington, Rep. Howard Coble decided to treat himself to an early holiday vacation and to skip several votes over the last few days. Rep. Coble stayed around just long enough on Friday to vote against help for people facing foreclosure and has subsequently been AWOL for votes on

• The Reduction of Lead in Drinking Water Act (vote 656, Dec. 17),
• The Defense Level Playing Field Act (vote 658, Dec. 21),
• The FDA Food Safety Modernization Act (vote 661, Dec. 21),
• A military appropriations bill (vote 662, Dec. 21),
• The Protecting Students from Sexual and Violent Predators Act (vote 663, Dec. 21), and
• the other three votes taken on Dec. 21.

Perhaps Rep. Coble is changing his affiliation from the Party of No to the Party of Not Present.

Update (12/23/2010): Rep. Coble also skipped out on yesterday's vote to compensate and fund health care for 9/11 responders.

FCIC Republicans: the only villian is the government

Republicans on the "bipartisan" Financial Crisis Inquiry Commission (FCIC), which was established by Congress and the President to "examine the causes, domestic and global, of the current financial and economic crisis in the United States," have distributed a pre-buttal to the commission's anticipated report.

The pre-buttal lays the blame for the crisis squarely at the feet of the government, which (p. 2) "was following a social policy in addition to an investment policy" and "pushed investors toward investing in mortgage debt." Or as the report states on page 3

Through the GSEs, FHA loans, VA loans, the Federal Home Loan Banks, and the Community Reinvestment Act, among other programs, the government subsidized and, in some cases, mandated the extension of credit to high-risk borrowers, propagating risks for financial firms, the mortgage market, taxpayers, and ultimately the financial system.

The crisis was also spurred by a loss of confidence, which "exploded into a generalized market panic." The panic was precipitated by, but distinct from "mortgage losses." This is a reprise of John McCain's famous assertion in the midst of the market meltdown that "the fundamentals of our economy are strong" (the parallels shouldn't be too surprising given the McCain's principal economic advisor, Douglas Holtz-Eakin, was one of the pre-buttal's authors).

What was the role of the housing bubble? It was merely an "interrelated event" and not "a sufficient condition for the financial crisis."

Maybe the big banks come in for some blame? Nope, their "primary role ... was that of financial intermediary, providing a link between those who wished to invest in mortgages and those who wanted to take out a mortgage to buy a home."

How about the ratings agencies? They made "mistakes" and did not "appreciate" the risks of declining home prices. The report does allow that "their ratings on MBS (mortgage-backed securities" proved to be severely inflated," but notice the passive voice. The report gives an example of a security with a marginal rating but never mentions the AAA ratings that the agencies bestowed on many securities or how those agencies allowed issuers to make minor modifications to otherwise unsuitable securities to obtain a AAA rating (sort of like a health inspector allowing a restaurant to clean up just enough filth to stay open).

The report also doesn't mention the critical, knife-edge role that AAA-rated securities played.

Fraud and shoddy underwriting in originating the mortgages? The words "fraud" and "underwriting" do not appear in the body of the report ("fraud" is on the front page but only in the title of the enabling legislation), and the word "originators" only appears three times and then only in the context of a "system (that) had worked this way for decades, and worked well."

While underwriting goes unmentioned, the report does include the term "lending standards." But who, exactly, lowered lending standards? The government.

Farther removed from the mortgages, how about the synthetic derivatives (essentially, side bets that referenced but did not include an actual stake in the mortgage-backed securities)--surely, these had some role in over-leveraging the market? Not according to the report, which omits any mention of these.

A report on the financial crisis that omits the words, "Wall Street," "fraud," "underwriting," "collusion," and "derivatives" and that overlooks Wall Street's view of most clients as "suckers" isn't worth the paper it's written on.

FIFA's advice to the LGBT fans -- "refrain from sexual activites"

Members of the LGBT community will have to think twice before attending the 2022 World Cup in Qatar. As the U.S. State Department travel page on Qatar warns

Homosexual activity is considered to be a criminal offense, and those convicted may be sentenced to lashings, a prison sentence, and/or deportation.

Regrettably, Sepp Blatter, the president of FIFA, thinks this is a laughing matter.

FIFA president Sepp Blatter was unable to keep a straight face when asked at a press conference in South Africa what to advise gay people who hope to go to the Arab emirate.

The mainly Muslim country, which will host the tournament for the first time, forbids same-sex relationships by law.

"I would say that they should refrain from sexual activities," Blatter answered on Monday, after a long pause.

Hey, at least Blatter refrained from telling LGBT fans to go f### themselves--perhaps because that activity is illegal in Qatar.

FIFA's Code of Ethics has no prohibition against discrimination on the basis of sexual orientation. There's a similar blind spot in its choice of World Cup hosts.

Big bank collusion in the derivatives market

People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public.

Adam Smith, The Wealth of Nations, 1776

Adam Smith warned the world about collusion more than two centuries ago. More recently, shady, inside, nontransparent dealing in derivatives contributed to a financial meltdown and the deepest recession since the 1930s. And yet, we continue to allow the too-big-to-fail banks to collude in the derivatives market.

The New York Times reports

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.

To be clear, the issue isn't derivatives themselves. When traded fairly, derivatives serve an important function in financial markets, allowing firms and investors to diversify and hedge risks. Rather, the problem is how the market is operated.

At a minimum, the lack of transparency and lack of competition lead fees to be higher than they need to be. In essence, it's hard to get a good deal because buyers can't see the other deals that are out there. As the article explains

It would be like a real estate agent selling a house, but the buyer knowing only what he paid and the seller knowing only what he received. The agent would pocket the difference as his fee, rather than disclose it. Moreover, only the real estate agent — and neither buyer nor seller — would have easy access to the prices paid recently for other homes on the same block.

The profits of the colluding banksters soar but at the expense of firms and investors who buy the products.

The clearing house also gives the participating banks a tremendous and unfair information advantage. Banks start with an information advantage from assembling the derivatives. The same way that a used-car salesman has inside information about a lemon he may be trying to offload; the banks often have inside information about the securities that make up the derivative (Goldman Sachs' scandalous participation in the ABACUS CDO is but one example).

And there are other information advantages. The clearinghouse allows participating banks to see how the overall market is trending, while investors are left largely in the dark.

If banks were always neutral market makers, these information asymmetries might matter less, but the investment banks are also often parties to these transactions, trading from their own accounts or using derivatives to offload their own risks.

The clearinghouses should, in principle, be advantageous by increasing the information in the market. However, these advantages only obtain if the clearinghouses are open to all qualified institutions and if the resulting information is shared with all market participants.

Tea Party goes K Street

The Party of No, Obstruct and Delay has adopted a new Delaying tactic--Tom Delay's tactic of climbing in bed with Washington's K Street.

During his campaign to represent Wisconsin in the U.S. Senate, GOP nominee Ron Johnson accused Democratic incumbent Russell Feingold (D) of being "on the side of special interests and lobbyists."

...But after defeating Feingold, Johnson himself has turned to K Street for help - hiring homeland security lobbyist Donald H. Kent Jr. as his chief of staff.

Johnson is not alone: Many incoming GOP lawmakers have hired registered lobbyists as senior aides. Several of the candidates won with strong support from the anti-establishment tea party movement.

...In addition to Johnson, Sen.-elect Mike Lee (Utah) has announced that energy lobbyist Spencer Stokes will be his chief of staff. Tea party favorite Rand Paul (Ky.) has hired anti-union lobbyist Douglas Stafford as his top senatorial aide.

In the House, Rep.-elect Charlie Bass (N.H.) has named food industry lobbyist John W. Billings as his chief of staff. Billings was a senior aide to Bass during an earlier stint on Capitol Hill.

Sen.-elect Chip Cravaack (Minn.) has hired former U.S. senator and former lobbyist Rod Grams as his interim chief of staff, though aides have said the posting is probably not permanent. Grams's lobbying clients from 2002 to 2006 included 3M, Norfolk Southern and the Financial Services Roundtable, records show.

Other incoming GOP lawmakers who have recruited staff from K Street include Robert Dold (Ill.), Steve Pearce (N.M.) and Jeff Denham (Calif.). John Goodwin of the National Rifle Association, one of Washington's most powerful lobbying groups, has signed on as chief of staff for Rep.-elect Raul Labrador (Idaho).

The staff choices are as fitting as they are discomforting. Many of the Tea Party candidates owe their electoral victories to corporate and special interest money.

Now the paymasters are claiming their seats at the table.

Meet the new boss, same as the old boss

Think things are going to be different in Washington now that the Tea Partiers have come to town. Think again.

After Francisco "Quico" Canseco beat Rep. Ciro Rodriguez (D-Tex.) as part of the Republican wave on Nov. 2, the tea party favorite declared: "It's going to be a new day in Washington."

Two weeks later, Canseco was in the heart of Washington for a $1,000-a-head fundraiser at the Capitol Hill Club. The event--hosted by Reps. Pete Sessions (R-Tex.) and Jeb Hensarling (R-Tex.)--was aimed at paying off more than $1.1 million in campaign debts racked up by Canseco, much of it from his own pocket.

After winning election with an anti-Washington battle cry, Canseco and other incoming Republican freshmen have rapidly embraced the capital's culture of big-money fundraisers, according to new campaign-finance reports and other records.

Especially poignant is a Republican fundraising consultant who explains

"These guys ran against Washington, but they ran against the bad parts of Washington--the bloated bureaucracy and Nancy Pelosi's agenda," he said. "That's not a contradiction to take money from a trade group or corporation that represents free-enterprise principles."

Actually, it sounds like the bad parts of Washington are doing what they've always done.

Fable of the bad gifts

This semester brought a refreshing change in teaching assignments. Instead of the usual technique-heavy graduate fare, I had the opportunity to teach a freshman seminar on "Markets and Morality" (I'll pause a moment while Bubba, Joe Guarino, Pino, and Tony Wilkins clean up the coffee they just snorted onto their computers).

...

Okay, are we all back?

Anyway, one of the more challenging assignments from the class was an analysis and discussion of Bernard Mandeville's poem, the "The Grumbling Hive," from his book The Fable of the Bees or Private Vices, Publick Benefits.

In "The Grumbling Hive," Mandeville, an early 18th century essayist and provocateur, describes a colony of bees whose many vices actually contributed to the overall prosperity of the hive.

Thus every Part was full of Vice,
Yet the whole Mass a Paradise;
Flatter’d in Peace, and fear’d in Wars,
They were th’ Esteem of Foreigners,
And lavish of their Wealth and Lives,
The Balance of all other Hives.
Such were the Blessings of that State;
Their Crimes conspir’d to make them Great:
And Virtue, who from Politicks
Had learn’d a Thousand Cunning Tricks,
Was, by their happy Influence,
Made Friends with Vice: And ever since,
The worst of all the Multitude
Did something for the Common Good.

The bees, recognizing only the vices and none of the public benefits, pray for and are granted virtue. However, many jobs and incomes depended on the bees' wasteful and dishonest activities. When vice disappears, the demand for goods shrinks, and soon after, the hive collapses, leading Mandeville to conclude

Then leave Complaints: Fools only strive
To make a Great an Honest Hive
T’ enjoy the World’s Conveniencies,
Be fam’d in War, yet live in Ease,
Without great Vices, is a vain
Eutopia seated in the Brain.
Fraud, Luxury and Pride must live,
While we the Benefits receive:
Hunger’s a dreadful Plague, no doubt,
Yet who digests or thrives without?
Do we not owe the Growth of Wine
To the dry shabby crooked Vine?
Which, while its Shoots neglected stood,
Chok’d other Plants, and ran to Wood;
But blest us with its noble Fruit,
As soon as it was ty’d and cut:
So Vice is beneficial found,
When it’s by Justice lopt and bound;
Nay, where the People would be great,
As necessary to the State,
As Hunger is to make ’em eat.
Bare Virtue can’t make Nations live
In Splendor; they, that would revive
A Golden Age, must be as free,
For Acorns, as for Honesty.

Mandeville's insight was that in a decentralized society, vice could be a source of demand. When coupled with possibilities for trade, this demand (despite its corrupt underpinnings) motivated supply, which then led to prosperity. Some years later, Adam Smith formalized this lesson when he described in The Wealth of Nations how the "invisible hand" of the decentralized marketplace transformed individual greed and self-interest into social well-being.

For the class, students were asked whether Mandeville's thesis had any relevance for today. The students were pretty sharp, and most recognized how the parable related to a market economy and thus to modern society (I tried not to get too discouraged over the remaining few who wrote that Mandeville's analysis was irrelevant because we hadn't become bees).

This morning, however, Slate's Timothy Noah provides a more direct application of Mandeville in our times as he extols wasteful gift-giving.

Economists never tire of pointing out that gift-giving is economically wasteful. The ur-text is O. Henry's famous short story "The Gift of the Magi." Della cuts off her silky tresses to buy husband Jim a platinum fob for his gold watch. Jim sells his gold watch to buy wife Della tortoise-shell combs to groom her silky tresses. Merry Christmas! Even if Della hadn't cut off her hair, economic theory would demand to know why, if Della really wanted the combs, she wouldn't already have bought them. Or why, if Jim really wanted to replace his worn leather watch strap, he wouldn't already have done so.

But let's consider an alternative interpretation. Yes, Christmas gift-giving will visit upon Della and Jim heartbreak and economic waste. But upon the altar of their sacrifice they create economic stimulus. Jim and Della suffer that the rest of us may prosper. Long live inefficiency!

...In a weak economy, Americans don't have the luxury of worrying whether their spending patterns are efficient; they just want to see somebody spending money, period. Nor (despite the sudden vogue for deficit reduction) do they really want to spend much time worrying about debt. Efficiency and debt are both important considerations, but not while unemployment remains close to 10 percent.

Noah criticizes economists for their obsession with efficiency, most notably Joel Waldfogel's yule-tide chestnut about the deadweight loss of gift-giving. However, Noah also reaches back further, writing

Many, many years ago, economists used to worry that people's economic wants far exceeded their economic needs. These wants were judged the creation of evil advertising executives on Madison Avenue. Advertisers, John Kenneth Galbraith famously observed in his Mad Men-era book The Affluent Society, "bring into being wants that previously did not exist."

If Noah had reached back another 200 or so years (or sat in on the seminar), he would have found that economic thinkers once held a much more accommodating view of people's wants and of inefficiency.

No, no, no

Like a broken record (or an old Ringo Starr song), the Republicans continue with no, no, no.

This is leading some of them to go to great lengths to distinguish their no's from others.

However, every once in a while, you'll hear a yes.

Phony frugality

Extended unemployment insurance benefits have once again expired due to Republicans' phony concerns regarding the deficit. Bloomberg reports

Thousands of Americans are set to begin losing unemployment benefits after Congress failed to agree on extending aid to the long-term unemployed.

In a replay of a dispute earlier this year, lawmakers are deadlocked over how to finance an extension even as the aid starts to lapse. Democrats yesterday offered to extend benefits for a year, with the $56 billion cost financed with borrowed money.

Republicans balked, demanding the extension be offset with savings elsewhere in the government’s budget.

Republicans express no such concerns regarding the budget-busting $700 billion tax cut for America's richest 1/20th of households. There's no cry that those revenue losses be plugged. They're even willing to hold all other legislation, including tax cuts for the other 19/20ths of households and ratification of the revised START treaty hostage.

It wasn't that long ago that extended assistance to the jobless was routinely granted in recessions and that helping luckless people who had histories of work had bipartisan support. Not so much anymore.

With the unemployment rate still near 10 percent, with just over 40 percent of unemployment spells lasting more than six months, and with state unemployment funds being tapped out because of the length and depth of the recession, an extension is more than warranted. However, what's a little more immiseration when tax cuts for the rich are at stake.

Your TARP's got a little Wessonality

How is the Troubled Asset Relief Program (TARP) like Wesson oil? It's all coming back except for one tablespoon.

In its latest report on the TARP, the Congressional Budget Office (CBO) estimates that the eventual cost will only be $25 billion.

So far, the program has disbursed $389 billion, and when all is said and done, that total will rise to $433 billion. Both of these figures are far less than the original $700 billion authorization.

To date, the program has been repaid $216 billion. Much of the remaining expenditures were used to purchase assets that will eventually be resold to make up nearly all of the remaining amount.

The CBO analysis only accounts for the direct, anticipated financial costs of the program and does not include government revenues that were saved when the economy was kept from imploding. Similarly, it omits the wider benefits to the economy from those same actions.

For instance, the Center for Automotive Research estimate that the $80 billion in TARP expenditures that went to GM and Chrystler saved the economy approximately $100 billion in further income losses.

The record is all the more remarkable given the rocky start of the program. Recall that the Bush administration requested the original $700 billion authorization and got Congressional approval late in its term (Oct. 2008) but then almost immediately decided not to use the funds for their original purpose--buying troubled assets. A substantial portion of the program was handed off to the Obama administration during its transition, and the new administration, in turn, had to contend with the sideshow over executive pay at the banks that had been assisted.

The TARP continues to fry up the Party of No and their Tea Party crybabies. Ultimately, though, the program is turning out to be better than it was cooked up to be--except perhaps for one $25 billion tablespoon.

That didn't take long

The Washington Post reports

Only three days after GOP senators and senators-elect renounced earmarks, Arizona Sen. Jon Kyl, the No. 2 Senate Republican, got himself a whopping $200 million to settle an Arizona Indian tribe's water rights claim against the government.

The quick bankruptcy of the automakers saved more than a million jobs

As the Federal government recovered nearly half of its emergency investment in General Motors yesterday, the Center for Automotive Research reported that the Obama administration's actions saved more than one million jobs in 2009 and just over 300,000 jobs in 2010.

Government assistance to General Motors and Chrysler enabled orderly bankruptcy proceedings and led to the saving of more than 1.14 million jobs in 2009 alone, according to a recently released Research Memorandum published by the Center for Automotive Research, (CAR), an Ann Arbor-based nonprofit research organization. The memorandum examines the magnitude of the economic impact of the U.S. policy to provide aid to the auto industry in 2008 and 2009 and weighs the public and private benefits against the public cost.

In addition, the administration's actions helped to avoid about $29 billion in other revenue losses that would have occured, lowering the net cost to the treasury.

The two unattractive choices at the time were quick government-financed and negotiated bankruptcies for GM and Chrystler or longer, drawn-out private bankruptcies. The CAR analysis compares these scenarios.

President Bush (the "great decider") punted the choice to the Obama administration. The Bush administration provided a temporary bail-out but did not make any of the wrenching choices regarding longer term support or restructuring.

Despite the assistance from the government, the restructuring was painful. Jobs and dealerships were lost. GM and Chrystler stockholders were wiped out. The analysis shows, however, that the outcome could have been more than a million jobs and nearly $100 billion dollars worse.

The Obama administration's tough decision was the right one, helping to avoid enormous additional job and income losses, while setting the stage for the automakers' eventual recovery.

What will be the Party of No's objection now?

A substantial majority of Americans--70 percent according to a May Gallup poll--reject continued discrimination against openly gay and lesbian service members. The President, his Republican Secretary of Defense, and Democrats in Congress similarly reject this discrimination.

And now the long-awaited survey of active military members reveals that a similar substantial majority of servicepeople don't see harms from ending discrimination.

From the Washington Post,

A Pentagon study group has concluded that the military can lift the ban on gays serving openly in uniform with only minimal and isolated incidents of risk to the current war efforts, according to two people familiar with a draft of the report, which is due to President Obama on Dec. 1.

More than 70 percent of respondents to a survey sent to active-duty and reserve troops over the summer said the effect of repealing the "don't ask, don't tell" policy would be positive, mixed or nonexistent, said two sources familiar with the document. The survey results led the report's authors to conclude that objections to openly gay colleagues would drop once troops were able to live and serve alongside them.

Just before the election, the Republican minority in the Senate blocked legislation that would have repealed the military's policy of discharging openly gay and lesbian service-members.

Don't look for this new evidence to change many Republican minds or to end Republican obstructionism.

A token of their extreme

Not yet convinced that this year's crop of Republican candidates are reactionary extremists? A New York Times editorial observes

Former Vice President Dick Cheney has to be smiling. With one exception, none of the Republicans running for the Senate — including the 20 or so with a serious chance of winning — accept the scientific consensus that humans are largely responsible for global warming.

The candidates are not simply rejecting solutions, like putting a price on carbon, though these, too, are demonized. They are re-running the strategy of denial perfected by Mr. Cheney a decade ago, repudiating years of peer-reviewed findings about global warming and creating an alternative reality in which climate change is a hoax or conspiracy.

Regretably, this list includes our own Sen. Richard Burr., who would be in line to chair the Senate Energy and Natural Resources Committee if North Carolina is short-sighted enough to re-elect him.

I would encourage Sen. Burr and the other deniers to read the reports by the National Academy of Sciences

Most scientists agree that the warming in recent decades has been caused primarily by human activities that have increased the amount of greenhouse gases in the atmosphere (see Figure 1). Greenhouse gases, such as carbon dioxide, have increased significantly since the Industrial Revolution, mostly from the burning of fossil fuels for energy, industrial processes, and transportation. Carbon dioxide levels are at their highest in at least 650,000 years and continue to rise.

There is no doubt that climate will continue to change throughout the 21st century and beyond, but there are still important questions regarding how large and how fast these changes will be, and what effects they will have in different regions. In some parts of the world, global warming could bring positive effects such as longer growing seasons and milder winters. Unfortunately, it is likely to bring harmful effects to a much higher percentage of the world’s people. For example, people in coastal communities will likely experience increased flooding due to rising sea levels.

The scientific understanding of climate change is now sufficiently clear to begin taking steps to prepare for climate change and to slow it. Human actions over the next few decades will have a major influence on the magnitude and rate of future warming. Large, disruptive changes are much more likely if greenhouse gases are allowed to continue building up in the atmosphere at their present rate. However, reducing greenhouse gas emissions will require strong national and international commitments, technological innovation, and human willpower.

Instead, look for denial and investigations to discredit scientists if the Republicans gain control.

Happy 30th -- PVHS Class of '80

I'm headed tomorrow to my 30th high school reunion in the garden city of Sterling, VA. I expect to see more than a touch of grey.



So long as I feel better than Jerry on Sunday morning, I should be okay.

Democrats as equal-opportunity verbal offenders

Republicans aren't the only ones who make disparaging comments when they think the public isn't listening. California Attorney General and gubernatorial candidate Jerry Brown's were recorded in the following exchange

...the attorney general and his aides discussed resisting pressure to cut public-safety pensions or face losing police endorsements to Whitman.

"Do we want to put an ad out? ... That I have been warned if I crack down on pensions, I will be ... that they'll go to Whitman, and that's where they'll go, because they know Whitman will give 'em, will cut them a deal, but I won't," Brown said.

Someone else said: "What about saying she's a whore?"

"Well, I'm going to use that," Brown replied. "It proves you've cut a secret deal to protect the pensions."

There are some modest distinctions here. AG Brown did not make the comment, though it sure looks like he agreed with it. Also, his campaign issued an apology, albeit for the wormy reason that it might have caused offense rather than it was flat-out wrong. The bottom line, however, is the comment was offensive.

AG Brown and his campaign worker each owe Meg Whitman a more direct and forceful apology.

'Queers' and 'fruitloops'

How do Republican legislators in North Carolina talk among themselves?

State Rep. Larry Brown sent his fellow House Republicans an e-mail last week where he referred to gays as "queers" and "fruitloops."

Brown was responding to an e-mail House Minority Leader Paul Stam of Apex sent to members of his caucus about House Speaker Joe Hackney getting an award from the Equality NC Foundation, a gay-rights group.

Brown sent his reply to nearly 60 e-mail addresses.

"I hope all the queers are thrilled to see him," said the message dated Sept. 27. "I am sure there will be a couple legislative fruitloops there in the audience."

Rep. Brown owes his constituents an apology for his bigoted comments.

House Minority Leader Paul Stam, however, doesn't see it that way. Under the Dome quotes him as saying, "It was not sent to a public group ... There's a lot of language that is used by public officials in public and private that should not be used."

Rather than enabling his bigoted colleague, Rep. Stam should be condemning Rep. Brown's remarks. An e-mail list of "nearly 60" people is hardly private. And the remarks are no less deplorable for being expressed to a few people.

A different kind of structural deficit

With Republicans and the Tea Party clamoring to cut discretionary government spending, it's important to remember that the country has many grossly underfunded needs, the transportation infrastructure being only one.

The United States is saddled with a rapidly decaying and woefully underfunded transportation system that will undermine its status in the global economy unless Congress and the public embrace innovative reforms, a bipartisan panel of experts concludes in a report released Monday.

...Co-chaired by two former secretaries of transportation - Norman Y. Mineta and Samuel Skinner - the group estimated that an additional $134 billion to $262 billion must be spent per year through 2035 to rebuild and improve roads, rail systems and air transportation.

Investing more money is a critical part of the solution, but it's only one part. The bipartisan panel recommends the following:

1. Stop the bleeding: Congress must address the immediate crisis in transportation funding.
   
2. Beyond the gas tax: Innovative thinking is needed to develop the next generation of user fees. Specifically, future funding mechanisms should not depend primarily on fossil-fuel consumption—which the government is actively seeking to discourage through a number of other policies—to keep up with transportation investment needs.
   
3. Jobs for the future, not just today: Future stimulus spending should be directed to those transportation projects that will deliver the greatest returns in terms of future U.S. competitiveness, economic growth, and jobs. Building a foundation for sustained prosperity and long-term job creation is more important than boosting short-term employment in road construction.
   
4. Pass the power, please: Clarify decision-making power and enhance the effectiveness of states, localities, and metropolitan planning organizations.
   
5. Adopt a capital budget: The federal government should adopt accounting methods that (A) recognize expenditures on transportation infrastructure as investments (rather than consumption) and (B) take into account future returns on those investments.
   
6. Connect the dots: Adopt an integrated approach to transportation planning that includes freight and goods movement and stresses intermodal connectivity.
   
7. Getting Americans home in time for dinner: Find more effective ways of reducing urban congestion.
   
8. It’s all about leverage: Encourage public-private partnerships while also improving oversight of such partnerships.
   
9. Deliver transportation investments on time: Reform project planning, review, and permitting processes to speed actual implementation.
   
10. Build a foundation for informed policy: Better and more timely data are essential to measure progress toward defined goals and objectives and to improve the performance of the nation’s transportation systems.

A return to fiscal sanity requires that the country realistically assess and prioritize its needs and then come up with ways to fund those needs. Republicans' and Tea Partiers' denial of these problems doesn't mean that that they go away.

What's wrong with Emily Bazelon

Has Emily Bazelon gone completely off the deep end?

She has engaged in a crusade on behalf of the tormenters of Phoebe Prince (the student in Massachusetts who hung herself after being cyber-bullied). Bazelon took this to the point of arguing that Prince herself was a bully.

She is now arguing that judgement must be withheld in the case of Tyler Clementi, the freshman from Rutgers who jumped from the George Washington Bridge after being video-taped and you-tubed in a same-sex encounter by his despicable roommate, Dharun Ravi, and another dormmate, Molly Wei.

Bazelon muses

But can we stop for a moment before we blame Dharun and Molly Wei, the other student who allegedly participated in the taping, for Tyler's suicide?

Right, video-taping and you-tubing a sexual encounter could not have possibly contributed to Clementi's suicide.

Why blame the tormenters when it's easier to blame the parents as Bazelon did in this earlier post on the suicide of a Wesleyan freshman? Bazelon finds it hard to even name tormenters.

To be clear, I get Bazelon's argument, which is that suicide is complex. However, that does not lead to Bazelon's conclusion that we should

hesitate to think we have any but the shallowest understanding of what happened here.

Dharun and Wei committed a heinous act. It's impossible to imagine how this couldn't have contributed to Clementi's suicide.

Payment follies at the NC Employment Security Commission

The North Carolina Employment Security Commission (ESC) has made payment mistakes to unemployment insurance (UI) claimants totalling some $28 million and is now compounding its errors with confusing letters to those claimants.

The News & Observer reports

Thousands of long-term unemployed North Carolinians could soon owe the state money because the Employment Security Commission improperly made about $28 million in payments over the last two years.

Last week, the ESC began sending out letters to about 38,000 people who it has determined were either overpaid or underpaid through no fault of their own.

Recipients, all of whom received unemployment benefits for a year or longer, are getting anywhere from one to six letters depending on the number of times their benefits have been extended.

The final letter has the correct amount due, but the letters often aren't arriving in the right order. The letters also tell people they can apply for a waiver to have the overpayment forgiven. But the ESC can provide no details on how each wavier will be evaluated.

Despite sending out the letters, the ESC was unable on Monday to provide an estimate of how many people will owe the state money.

"We are hoping a majority of these [final letters] will say zero," said Larry Parker, an ESC spokesman.

The most basic function of the ESC is to administer the UI program, which means collecting the correct UI taxes and paying the correct benefits. The ESC has fallen down in this essential function.

Worse, instead coming up with a correction, the agency appears to have issued conflicting instructions to claimants. The ESC should have figured out a way to correct the problem before sending the first letter.

Instructions at the ESC web-site are far from helpful. Buried in small type on the agency's home page is a note

Some claimants may have received multiple monetary and adjustment letters in the mail. If you are one of these individuals and want to know more about what you have received click here.

Clicking leads to a message in pure bureaucratese

The primary goal of the Unemployment Insurance program is to pay benefits as timely and as accurately as possible. We have paid a record amount of claims over the past year and have discovered the possibility of some improperly paid claims. As a result, we have made corrections to our records. You may have received several monetary determinations and one or more letters relative to your payment history.

Some individuals received improper regular UI payments. Improper payments are being corrected with little impact on individuals in most cases. If you received improper regular UI payments, we have replaced those improper payments with proper EUC payments and with EB payments.

The letters contain instructions for you to follow. If you want to have further discussions about any letter that you have recently received, contact us by email at esc.ui.customerservice@ncesc.gov.

What could be clearer or more helpful? And you can bet that the e-mail responses from the ESC will be every bit as clear and helpful as the posted message and the original letters.

The state's unemployed have other things to worry about than wading through confusing and contradictory "monetary determinations" or pondering the propriety of regular UI, EUC, and EB payments.

To borrow from Jimmy Breslin, NC is fast becoming the state that couldn't shoot straight.

18 = most economists?

CNNMoney.com authoritatively reports this morning on the results from a survey it conducted

With income tax rates set to go up on Dec. 31, Congress is hotly debating what to do next. But most economists agree: Keep them where they are.

No ambiguity whatsoever--most economists agree!

With such an authoritative conclusion, this must be some survey. Surely, CNNMoney.com started with a wide roster of economists, perhaps the 17,000 or so members of the American Economic Association? Hmm, not exactly.

Okay, then they must have surveyed a large number of economists so that they can precisely infer the policy views of the profession. Only if you think that 31 economists constitutes a large sample.

Okay, the sample is small, but it's representative with overwhelming percentages favoring the tax cuts. Hardly. About two-thirds of the surveyed economists work for large banks, brokerages, or business associations. And of those surveyed, only 18 of 31 supported the tax cuts (and several of those did so with qualified support).

CNNMoney.com later explains that its survey is limited to "leading" economists, though its list of economists includes no Nobel laureates or John Bates Clark medal winners. There are at least a few of those who oppose the tax cuts. The story describes the views of another well-known (but not-leading-enough-to-be-included-in-the-survey) economist, Alan Greenspan, who opposes the tax cuts.

At the end of the story, we really don't know what most economists think about the tax cuts. A comfortable prediction, however, is that most would agree that CNNMoney.com has conducted a crap survey.

Cashing in on 9/11

Where most people see the anniversary of a tragedy, Glenn Beck and Sarah Palin see a fanatastic money-making opportunity.

The Anchorage Daily News reports

Crowd magnets Sarah Palin and Glenn Beck are teaming up again, this time on the ninth anniversary of the 9/11 attacks.

"We can count on Glenn to make the night interesting and inspiring, and I can think of no better way to commemorate 9/11 than to gather with patriots who will 'never forget,' " Palin wrote of the conservative commentator on her Facebook page. "Hope to see you there!"

But unlike their free August rally at the National Mall, Saturday's event in Anchorage will come with a hefty price.

Tickets range from $73.75 to a high of $225. The priciest tickets cover seats up front and a "meet and greet" at the Dena'ina Civic and Convention Center, where the event is being held.

Yep, separating "patriots who will 'never forget'" from their hard-earned $73.75 to $225, that's the way Beck and Palin plan to "restore honor" to the country.

Shameless.

It's not easy being green -- part IV

The New York Times posts about an Economist article that predicts that more efficient light bulbs could increase the amount of electricity demanded.

...history suggests that better technology 'will serve merely to increase the demand for light.'

The logic is that people demand what the bulbs produce--light. More efficient bulbs reduce the price of that good, causing demand to rise. In this case, demand appears to be very responsive (elastic), leading not only to more light consumption but more energy consumption.

More relativism Guarino-style

Joe Guarino's crusade against the relativists, nihilists, and purveyors of porn in the Greensboro library continues. However, his latest post only helps to expose more relativism on his part.

One of the great services that Joe performs for the citizens of Greensboro is to field questionnaires for city council candidates and to post the responses. I may disagree with Joe's slant on a lot of things, including some of the loaded questions on the questionnaire, but I have to salute him for giving voters a wealth of candidate information that wouldn't come out otherwise.

Why bring up the questionnaire? Well, in today's post, Joe expresses disappointment with a city council candidate who flip-flopped on a question about filtering (she responded that she supported computer filtering on the questionnaire and then didn't support Danny Thompson's ill-conceived motions regarding filtering).

It appears, however, that filtering wasn't exactly the be-all and end-all issue when Joe was making endorsemens. For example, in the District 2 race last year, he endorsed Dan Fischer whose response to the filtering question was “No. I want our children to be able to look for what they need to for research purposes. And there are plenty of people who use the library computers other than our children. If we had a section just for children then yes, I would want some kind of filters on the computers.”

He favored Fischer over Nettie Coads, whose response to the filtering question was "Yes, some should be filtered for exclusive use by young people."

In another race, Joe endorsed George Hartzman, whose very adamant response to the filtering question was, "First Amendment. It is up to parents to raise their children, not the state. Next thing you know somebody is burning books. Who gets to decide what’s filtered?" In that race, Joe passed over a candidate who gave a more positive response.

In another race, he initially endorsed Nancy Vaughan, whose response to the filtering question was "(No) I do not think that the libraries’ should filter computer content. Parents should take responsibility for their children’s computer use. " There were other candidates in the race unambiguously supported filtering.

In another race, Joe endorsed Mary Rakestraw, who did not complete a questionnaire, over Joel Landau whose short but sweet answer to the filtering question was "yes."

Joe continues to cast people who oppose filtering as "amoral" and castigates them as "relativists."

These parties have collectively decided that the false god of "library information" accessed through the internet is at a higher level of priority than the moral imperative of protecting minors. They have constructed an idol in their minds-- and that idol is unobstructed access to the internet.

But in several instances Joe's actions show that he had higher priorities than "the moral imperative of protecting minors." Maybe I missed it, but I didn't see a single case where Joe even mentioned filtering in his endorsement posts.

Joe had an opportunity to make moral choices related to filtering--it was either an all-important issue with him or it wasn't. Joe chose to elevate other concerns.

More slime in the Congressional swamp

"Draining the swamp" is a challenge when the swamp keeps refilling so quickly.

The Dallas News reports

Longtime Dallas congresswoman Eddie Bernice Johnson has awarded thousands of dollars in college scholarships to four relatives and a top aide's two children since 2005, using foundation funds set aside for black lawmakers' causes.

The recipients were ineligible under anti-nepotism rules of the Congressional Black Caucus Foundation, which provided the money. And all of the awards violated a foundation requirement that scholarship winners live or study in a caucus member's district.

Applying the Rangel defense, Rep. Johnson concedes that she violated the rules but did so unintentionally.

Now that she's been called out, she has promised to "rectify the financial situation." Now if only she could rectify the trust-in-your-Congressperson situation.

Time to lift the partial moratorium on off-shore drilling?

The Bipartisan Policy Center, a non-profit organization that was founded by four former Senate majority leaders, has just released a report that concludes that an appropriate regulatory regime has been established to take the place of the partial moratorium on deepwater oil drilling that was imposed after the BP disaster.

Specifically, the report concludes

The Department of Interior’s drilling moratorium has served the productive purpose of allowing time for both industry and government to prepare for a safer, more vigilant, and dependable future for U.S. offshore drilling. We believe DOI and the industry have used this time effectively to develop a new regulatory regime for drilling in the Gulf of Mexico. At the same time, we readily agree with the oft-made point that drilling risks cannot be reduced to zero. But we are satisfied that compliance with the Interior Department’s NTLs 5 and 6 and other actions by the Department will achieve a significant and beneficial reduction of risk. If industry is diligent in incorporating these requirements and DOI is vigilant in oversight and enforcement, we believe this new regime will provide an adequate margin of safety to responsibly allow the resumption of deep water drilling in the Gulf of Mexico.

Lifting the moratorium and replacing it with a new regulatory regime is not a magic bullet--oil drilling would not resume immediately and the drilling that eventually would occur wouldn't be riskless.

With respect to the first point, affected drilling would continue to be halted for some time while companies bring themselves into compliance with the regulations. Thus, the lifting of the moratorium doesn't translate into an immediate resumption of drilling.

Moreover, the new regulations will increase the costs of deepwater drilling and are likely to discourage some activity. So there would be a reduction in future drilling activity. The recommendations are far from "drill, baby, drill."

With respect to the second point, the report makes clear that many risks would remain and that more steps need to be taken to prepare for possible disasters. The report also makes clear that the changes in the regulatory regime are just starting and that more work and research will be needed.

The administration's drilling ban was an appropriate but controversial (and as the report indicates "blunt") response to the BP disaster. While some criticized the economic impacts, imagine the response if another rig disaster had occurred. Given the problems and uncertainties that existed at that time, the ban was the right policy call.

The administration, however, has backed itself into a corner with the ban. The legality of the ban is in question (the initial moratorium was struck down by a federal court, and it's not at all clear whether the follow-on moratorium will survive judicial review). Moreover, the moratorium is idling work at a time when the economy is barely limping along. The administration is surely looking for a way to move forward.

Hopefully, this report will give it the political cover to do so and provide a blueprint for a more responsible energy policy.

Guarino's relativism

For the three of you from Greensboro who may have missed the latest goings on, a fierce debate has been raging over whether the public library should install filters on its computers to reduce the amount of porn that's allegedly being downloaded.

The debate was ignited a few weeks ago when a poorly informed and ill-prepared councilman, Danny Thompson, waved a thick stack of papers implying that the majority contained examples of porn-viewing and other indecent behaviors in the libraries. The councilman then introduced a motion to install filters on the computers. A subsequent examination of the papers revealed that only a few indecent incidents had occurred and that such incidents had actually been substantially reduced over the last year. Nevertheless, the intrepid councilman pressed on.

The matter was revisited at a subsequent city council meeting, which voted the councilman's filtering motion down but asked library staff to provide more data.

The ever-excitable Joe Guarino immediately hyperventilated that council members had voted "to permit porn surfing" (nevermind that the available evidence showed that existing library policies were reducing these incidents, not increasing them). Brother Joe has since been on a tear accusing library staff and those who oppose the filters of "moral relativism."

Sayeth Joe,

We are worshipping the idol of unrestricted access to 'library information,' and placing that at a greater level of importance than protecting minors.

He goes on to accuse the library of "peddling" porn.

Of course, nothing could be further from the truth. The library actually has a comprehensive approach that includes registering users, having them agree to usage terms, running throttling software, and having staff and security personnel present. In fact, the councilman's papers are evidence that restrictions are present and result in sanctions. Yet Joe equates these layered restrictions to peddling porn and suggests that the library staff be arrested for distributing child pornography.

Another local blogger, Tony Wilkins, now reports that "two anonymous sources" have told him that 21,000 visits to porn sites occurred last month in the local public library. Multiply by 12, and the number rises to 252,000 annually. Naturally, this has inflamed Joe who now says that "the burden is now on the relativists and the nihilists to demonstrate why filters are not appropriate."

Let's put aside the obvious question of why Tony's sources might have requested anonymity and go with his figures. It appears that Joe is the true relativist here. The most optimistic estimates for the filters indicate that they might screen 97 percent of objectionable material (albeit at the cost of lots of non-objectionable material also being blocked). Apply that likely inflated screening rate to 252,000 page visits, and Greensboro still ends up with over 7,500 porn views.

Joe and the councilman got their knickers in a bunch over a few dozen incidents, yet they would have us adopt a technology that would permit thousands of porn views each year. You tell me who's a relativist.

The only "correct" absolutist position is to immediately remove the execrable internet from the public library. While we're at it, the internet should also be removed from public schools and any public place where children might see someone else surfing--that includes all public wi-fi in non-adult venues (don't want those kids who wandering through Caribou Coffee to accidentally view "Debbie Does a Double Latte" or some such).

Until Joe is willing to remove all possibilities for inappropriate browsing in public places he is the moral relativist.

Our schools are great; yours stink

Gallup has released results from its annual poll of Americans' perceptions of their public schools. In the poll, respondents are asked to assign a grade--A, B, C, D or F--to the schools. Overall, the vast majority of respondents give the nation's public schools a grade of C (53 percent) or worse (26 percent). The results are consistent with a trend of increasingly negative views regarding schools.

An interesting result, however, appears when people are asked about their local schools--the ones that they fund and that their children attend.

Only 27 percent of respondents give their local schools grades of C or worse; 71 percent give them A's or B's. Views regarding local schools also trend in the opposite direction from views regarding schools as a whole. According to respondents, their local schools have become better over time.

The disparity is even more pronounced when parents are asked about the schools their children attend. For this group, 77 percent rate their children's schools as good or better, again with a generally increasing trend.

Results like these are fairly common. People despise Congress but love their own representatives. Other drivers are awful, but few people rate themselves that way.

Objective results indicate that the local view is closer to being accurate. Long-term trends in reading and math scores from the National Assessment of Educational Progress have shown improvements for most age groups and especially for the youngest groups. Gains have been particularly pronounced for students from minority groups and students with less-educated parents.

Maybe it's time to cut the public schools a little bit of a break and stop villianizing educators. According to the people who seem to know best (local citizens and parents) and according to objective standards, "our" schools are both good and improving.

Sextortion

One more reason (as if one were needed) not to post or transmit something on-line that you wouldn't want everyone in the world to see now, or later.

The News-Observer reports

Federal prosecutors and child safety advocates say ... teens who text nude cell phone photos of themselves or show off their bodies on the Internet are being contacted by pornographers who threaten to expose their behavior to friends and family unless they pose for more explicit porn, creating a vicious cycle of exploitation.

One federal affidavit includes a special term for the crime: "sextortion."

The article goes on to warn

Privacy is nonexistent on the Internet, and once indiscretions appear online, they are virtually impossible to take back. A nude photo sent to a boyfriend's cell phone can easily be circulated through cell phone contacts and wind up on websites that post sexting photos. Once there, it's available for anyone who wants to trace it back to the person who made it.

Kids, you'll avoid a lot of heartache if you simply don't send this stuff.

Will the Greensboro library filter Quayle?

Ben Quayle, a Republican candidate for the 3rd district congressional seat in Arizona touts himself as, "a lifelong fiscal and social conservative," "a fighter for conservative values," and someone who will "protect life and traditional marriage."

Apparently, those "lifelong" conservative social values include writing for a smutty web-site under the pseudonym, Brock Landers (the name of a character from the movie Boogie Nights), and then lying about his activities when confronted.

The web-site links to some of Quayle's work, which might have a tough time getting through some of the library filters that local conservatives are proposing.

Quayle has already run into some truthiness issues in this campaign, sending out campaign mailers in which he posed with two young girls that weren't his (he is childless) to give the impression that he is a family man.

As the saying goes, watch what they do, not what they say.

Fiscal day of reckoning

An outcome that once seemed unimaginable for the U.S. is now receiving some serious discussion--a fiscal crisis and a sudden loss of investor confidence. The CBO has written a policy brief, "Federal Debt and the Risk of a Fiscal Crisis," that describes some dire possible consequences if the U.S. does not get its public budget under control.

The CBO writes about initial manageable consequences, such as rising interest payments that would add to the pressures on public budgets, debt servicing that would also crowd out of other productive activities, and a debt level that reduces our ability to respond to subsequent economic shocks or other emergencies.

However, the CBO goes on to warn

Beyond those gradual consequences, a growing level of federal debt would also increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget, and the government would thereby lose its ability to borrow at affordable rates. It is possible that interest rates would rise gradually as investors’ confidence declined, giving legislators advance warning of the worsening situation and sufficient time to make policy choices that could avert a crisis. But as other countries’ experiences show, it is also possible that investors would lose confidence abruptly and interest rates on government debt would rise sharply.

Without some changes in policy, the outlook isn't good. The CBO describes how under existing laws the public debt burden in the U.S. is forecast to remain high but manageable (debt will grow but so will the economy, leaving the effective debt burden to increase relatively slowly). However, many of those existing laws, such as caps on physician reimbursements under Medicare and the expiration of all of the Bush-era tax cuts, are likely to change. Under an alternative scenario, debt could grow much faster and possibly to unsustainable levels, triggering a crisis.

Sadly, neither Democrats nor Republicans are seriously addressing the issue. Democrats continue to add short-term budget boosts, like the current $26 billion aid package for states and local governments, that claim to be debt-neutral in the long run but which rely on budgetary gimmicks (for example, the aid package relies on a future change in food stamp benefits that Democrats will try to undo). Republicans don't even make this pretense, advocating unapologetically for a continuation of the unaffordable tax giveaways to the wealthy.

The policy changes needed to address the growing debt won't be easy or painless. However, relatively modest fixes can be implemented if we act sooner rather than later.

Russia bans wheat exports

Think that weather changes don't have consequences?

Russia banned all exports of grain on Thursday after millions of acres of wheat withered in a severe drought, a portentous decision at a time when crop failures caused by heat and flooding span the northern hemisphere.

...The decision caused an immediate and sharp rise in the already high global price of wheat. It rose more than 8 percent in early trading on the Chicago Board of Trade on Thursday, after having increased about 90 percent since June because of the drought in Russia, Ukraine, Kazakhstan and parts of the European Union, and floods in Canada.

The National Oceanic and Atmospheric Administration summarizes the dire situation in Russia.

High temperatures and sparse rainfall dominated the climate of the world's largest country during June and July. With temperatures hovering 8–12°F (4–8°C) above average across a large swath of Russia, daily record high temperatures of 91°F (33°C) and 95°F (35°C) were recorded in Moscow on July 16th and 17th, breaking records that dated back to 1951 and 1938, respectively. On July 26th, the city recorded its highest temperature ever—98.9°F (37.2°C)—breaking the previous record of 98.2°F (36.8°C) set 90 years ago. The hot weather has had deadly consequences. More than 1,200 drowning deaths were reported as people tried to escape the heat across Russia. The worst drought conditions since 1972 destroyed 22 million acres (nine million hectares), an estimated 20 percent of the nation's crops, including grain, vegetable, and fodder. Additionally, a state of emergency was declared as 948 forest fires covering 64,000 acres (26,000 hectares) were burning in 18 provinces. Twenty-six forest fires and 34 peat fires were burning in the Moscow region on the 26th, leading to dangerous air pollution levels. Mosekomonitoring, the Moscow governement agency in charge of monitoring air pollution, said that smog levels were five to eight times greater than normal. According to Rianovosti, Russian meteorologists stated that the summer of 2010 was the hottest on record for the country.

A single season or year of bad weather does not equate to climate change. However, a warming climate would contribute to more heat waves and to localized droughts.

Critics of climate change policies are quick to point out the costs of those policies. The situation in Russia reminds us that unabated climate change has costs as well.

Senators Coburn & McCain are suddenly computer scientists

Senators Coburn and McCain have criticized our sister institution, the University of North Carolina at Charlotte (UNCC) for being awarded a research grant from the National Science Foundation's Computer & Information Science and Engineering directorate.

The research grant was awarded to a faculty member in UNCC's Software and Information Systems Department to study how to digitize information on human movement, support visualization of those data, and facilitate interactive communication. Coburn and McCain sneer at the project because the movement being studied comes from dancers and the interactions involve choreographers and potential audience members.

Coburn and McCain don't tell you that the project was competitively awarded after undergoing extensive scientific peer-review that involved computer scientists and NSF scientific panels.

Coburn and McCain also criticize the administrative costs of the project, writing "administrative expenses are unusually high for this project... The project’s lead researcher noted that the university is taking a 44 percent cut to cover 'overhead expenses.'"

However, the Senators have mistated the administrative costs. UNCC charges an overhead (facilities and administrative) rate of 44 percent against the applicable direct costs of on campus research projects. If all of the direct costs were applicable (they aren't), UNCC's administrative "cut" would be just under 31 percent of the total costs. Also, NSF grants often involve contributions of resources from the applicant institution (institutional cost-sharing), making the effective cut smaller still.

Also, the 44 percent cost rate, which is set through an agreement between UNCC and the U.S. government, is hardly "unusual." For example, the comparable overhead rates for on-campus research at the University of Oklahoma at Norman and the University of Arizona are each higher at 50 percent and 51.5 percent, respectively. I couldn't find similar criticism from the senators of their home-state institutions' indirect rates.

Coburn and McCain can't get many of the basic facts of this project correct, yet they would have us substitute their judgement for the expert assessments of NSFs scientific staff and reviewers.

Perhaps the senators could tell us how much taxpayer-funded staff time they allocated to digging this stuff up.

One day like this

Happy Birthday Cathy! There really is only one day like this. Please remind me, though, why do you want me to cut my hair shorter and put on biker shorts?

Secesh breeds secesh

BTW, Texas Gov. Perry and Tenn. Rep. Wamp aren't the only Republican secessionists.

Other examples:

• Republicans in Minnesota passed a secessionist resolution at a district nominating convention.


• Polls taken last year showed that sizeable fractions of Republicans in Georgia and Texas favored secession for their states.


• Rep. Ron Paul, "Secession is very much of an American principle... Secession is a good principle... We need to reconsider this."

If at first you don't secede

Yet another Republican "patriot" is raising the spectre of secession if the reactionary minority doesn't get its way.

Rep. Zach Wamp (R-03) suggested TN and other states may have to consider seceding from the union if the federal government does not change its ways regarding mandates.

"I hope that the American people will go to the ballot box in 2010 and 2012 so that states are not forced to consider separation from this government," said Wamp during an interview with Hotline OnCall.

He lauded Gov. Rick Perry (R-TX), who first floated the idea of secession in April '09, for leading the push-back against health care reform, adding that he hopes the American people "will send people to Washington that will, in 2010 and 2012, strictly adhere" to the constitution's defined role for the federal government.

"Patriots like Rick Perry have talked about these issues because the federal government is putting us in an untenable position at the state level," said Wamp...

Perhaps Rep. Wamp has forgotten the oath that he swore before the Almighty promising to bear allegiance to the United States (italics added):

I do solemnly swear that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; that I take this obligation freely, without any mental reservation or purpose of evasion; and that I will well and faithfully discharge the duties of the office on which I am about to enter: So help me God.

Apparently, allegiance is a sometime thing.

As is Rep. Wamp's concern regarding unfunded mandates on the states. Rep. Wamp was singing a different tune when he voted for (and still boasts about) the Higher Education Opportunity Act of 2008 which imposed numerous requirements on state systems of higher education and threatened states with a loss of federal education funding if they cut their own financing of higher education (see section 116, pp. 36-37).

Efficiency

Economists emphasize efficiency -- these guys show how four chords go a long, long way.

Sweet tea for toddlers?

Rep. Maggie Jeffus has come in for some criticism over at Joe Guarino's blog. Joe criticizes her for H1726, a bill that would require modest standards for the types of foods that licensed day care centers could provide children and that would lead to the development of physical activity standards for day care centers.

Among the specific requirements, the bill would require the NC Child Care Commission to

...adopt rules for child care facilities to ensure that all children receive nutritious food and beverages according to their developmental needs. The Commission shall consult with the Division of Child Development of the Department of Health and Human Services to develop nutrition standards to provide for requirements appropriate for children of different ages. In developing nutrition standards, the Commission shall consider the following recommendations:

1. Limiting or prohibiting the serving of sweetened beverages, other than 100% fruit juice, to children of any age.
2. Limiting or prohibiting the serving of whole milk to children two years of age or older or flavored milk to children of any age.
3. Limiting or prohibiting the serving of more than six ounces of juice per day to children of any age.
4. Limiting or prohibiting the serving of juice from a bottle.
5. Creating an exception from the rules for parents of children who have medical needs, special diets, or food allergies.

Joe criticizes the bill as "ridiculous."

The language in the bill closely follows a recommendation that was made by the the "ridiculous" NC General Assembly Task Force on Childhood Obesity. The Task Force, in turn, relied on "ridiculous" model regulations that were proposed by researchers at UNC and other experts.

The Task Force was responding to high and growing rates of obesity in North Carolina. Indeed, the Robert Wood Johnson Foundation has just released a study that shows that North Carolina ranks 10th in rates of adult obesity and 11th in rates of childhood obesity. However, these figures must also be "ridiculous."

There is also evidence that North Carolina day care centers do a poor job of feeding their charges. A research team from UNC examined the foods and beverages that preschoolers in NC day care centers were served and consumed (Ball et al., J. Am. Dietetic Assoc., 2008). The team found that, on average, preschoolers consumed less than 13% of the recommended amounts of whole grain foods and around 7% of the recommended amounts of dark vegetables. Preschoolers did get adequate amounts of milk, but most of that milk was whole milk--only 11% was low- or non-fat.

They concluded

Our data suggest that children are not consuming recommended amounts of whole grains, fruits, or vegetables while attending full-time child care. Instead, children are consuming excessive amounts of added sugars from sweet snacks and condiments, and saturated fat from whole milk and high-fat or fried meats.

It would be nice if we could rely on market pressures to contribute to better nutrition standards at day care centers. The laissez faire argument goes something as follows:

• parents know what's best for their children and will value care providers who meet their children's nutritional needs;
• day care providers, in turn, will be forced to compete for the hard-earned dollars of those parents; the day care centers will have to provide good meals or risk going out of business.

However, the trends in obesity and the evidence that child care centers do a poor job of feeding children undercut this argument.

While parents may know what's best for their children in a general sense, they may not know everything that goes on in a day care center. There is asymmetric information in the sense that day care centers know more about the quality of care provided than the parents. Day care centers are especially problematic because their clients--infants, toddlers, and preschoolers--have limited or no ability to report what happens to them.

A related problem is that the consequences of poor nutritional practices are not immediately apparent. A single serving of soda or whole milk typically doesn't lead to noticeable, immediate problems (unless the child is diabetic or lactose intolerant). People have considerable trouble appropriately accounting for consequences that are uncertain or that occur far off in the future.

Even if parents and care providers take these direct consequences into account, they are unlikely to take other externality effects into account, such as the amounts that society is likely to contribute to mitigating health problems or that obesity may have on society.

The costs of complying with this legislation are minimal. Sugar-free drinks, including water, can be substituted for sugary drinks. Low-fat milk can be substituted for whole milk. There's virtually no cost difference.

At the same time, there's scope for some real benefits from reduced obesity and its co-morbidities.

Rep. Jeffus and the 66 other representatives who supported this legislation (including 5 Republicans) are offering a modest, common-sense, and well-considered approach to improve children's nutrition and reduce obesity.

Clint Webb for Senate

A fantastic campaign ad satire.

Rep. Kanjorski's offensive statement

Democratic Congressman Paul Kanjorski (D-PA) recently spoke in favor of a program that would help for "average, good American people" who were facing foreclosures and the loss of their homes--a fine sentiment.

However, he defined those "average, good American people" as those who were "not minorities" and "not defective." His quote in full,

We're giving relief to people that I deal with in my office every day now unfortunately. But because of the longevity of this recession, these are people -- and they're not minorities and they're not defective and they're not all the things you'd like to insinuate that these programs are about -- these are average, good American people."

The implications, of course are that minorities and "defective(s)" are somehow distinct from "good American(s)" and that these groups are less deserving of assistance with their housing hardships. The implications may have been unintended, but even so, it's not clear what positive implications might have possibly been intended.

Rep. Kanjorski should apologize for his offensive statement. So far, he's refusing.

NC Lege wants to incentivize big-business tax cheats

The NC legislature is considering a change in the state's tax system that is projected to cost the state $100 million in business tax payments that are legitimately owed.

The state Senate and the business lobby want to take away a big stick that the state's tax collector says it needs to punish big businesses that dodge their taxes.

The issue is up for debate in budget negotiations under way between the state House and Senate. The Senate's version includes a provision that would prevent the N.C. Department of Revenue from assessing a penalty on businesses it thinks are hiding income. The provision is not included in the House's version.

N.C. Department of Revenue Secretary Ken Lay, who is under pressure to maximize the state's collections in the aftermath of a deep recession, says he needs the ability to assess penalties to force companies to be honest. Without the penalties, the revenue department thinks it would miss $100 million in taxes it would otherwise collect. The state faces an $800 million revenue shortfall.

The current policy penalizes substantial under-reporting of business income--it only applies to businesses that under-report their income by 25 percent or more. The policy provides an incentive, albeit an incomplete one, for multi-state businesses to report their NC income. If a company is found to under-report, it must pay the tax that is legitimately owed and a penalty.

The new policy would remove that penalty. In so doing, multi-state companies would have strong incentives to hide their NC income in sham out-of-state operations. If the NC tax authorities fail to detect these maneuvers, the companies escape their tax obligations. If the authorities do uncover the shenanigans, the companies would only be on the hook for the amount that was originally owed plus interest.

The results are easily predicted. More companies will attempt to hide income, and enforcement will become both more costly and less effective. Tax cheats get a tremendous break, leaving the rest of us to either pay more or make due with fewer state services.

The NewsObserver article states that

Supporters of the idea say the revenue department is overstepping its authority and unfairly punishing business. The penalties punish a well-intentioned company that had no way of knowing the department would disagree with its tax return years later, they say.

Howzat?

The revenue department is hardly "overstepping its authority" by investigating tax returns and following state policies in assessing penalties.

It also seems unlikely that "a well-intentioned company" would be punished, as the current penalty doesn't apply unless there is substantial under-reporting.

As for not knowing, the companies have the same responsibility that the rest of us do to follow the law and compute their taxes correctly.

North Carolina faces enough problems with its antiquated tax system and with anticipated budget shortfalls over the next few years. The legislature shouldn't compound that problems by encouraging multi-state businesses to hide their incomes.

Vast mineral wealth in Afghanistan?

Afghanistan, in part because of 30-odd years of war and political instability, is one of the world's poorest and least-developed countries. All of that could change, however, with the discovery of vast, untapped, and previously unknown mineral wealth.

The New York Times reports

The United States has discovered nearly $1 trillion in untapped mineral deposits in Afghanistan, far beyond any previously known reserves and enough to fundamentally alter the Afghan economy and perhaps the Afghan war itself, according to senior American government officials.

The previously unknown deposits — including huge veins of iron, copper, cobalt, gold and critical industrial metals like lithium — are so big and include so many minerals that are essential to modern industry that Afghanistan could eventually be transformed into one of the most important mining centers in the world, the United States officials believe.

The minerals represent a tremendous development opportunity for the Afghan people and a route out of poverty.

In 2009, total GDP in Afghanistan was estimated to be $23 billion, or $800 per person. Only 8 countries had lower levels of per capita GDP. And it's important to remember that the $23 billion figure is inflated by large inflows of development assistance. Afghanistan's own economic performance is much worse.

One trillion in potential resources represents an off-the-charts jump in wealth. Tapping just one percent of the deposits per year would raise the country's pre-transfer income by more than 50 percent. Building the mines and infrastructure necessary to extract and export would further add to the economy.

The changes for Afghanistan could be profound. As Benjamin Friedman has argued in The Moral Consequences of Economic Growth, sustained economic development tends bring positive social changes, including more social cohesion, more personal freedom, and more openness. If handled properly, the wealth could form the glue that finally brings this shattered country back together. The wealth could also set the stage for more sustained development.

However, that's a big "if." Exploitation of mineral wealth is hardly a surefire development strategy, especially in a country that is as weak, divided, corrupt, and poorly governed as Afghanistan. One need only consider the Democratic Republic of the Congo, which has vastly more mineral wealth but also fought a civil war and remains even poorer than Afghanistan, to see the risks. Iraq, too, has tremendous oil wealth, but that wealth has served as much as a touchpoint of conflict as a catalyst for progress. Both the benefits and costs from the extraction of natural resources tend to be divided unequally, which also is destabilizing.

Nevertheless, an opportunity has appeared that wasn't known before. With any luck, this opportunity will bring good things to Afghanistan.