Thursday, June 28, 2012

Judge Robert's brilliance

I just read an explanation of Robert's move, and I am even more impressed.  My first thought is that it is very good news that he did not legislate from the bench.  But, even better is how he did it.

Those arguing for the constitutionality of Obamacare argued that it was allowed under the Commerce Clause.  But, if Congress can force people to buy something, that is not a good thing.  That is too much power for Congress to have.  So, the argument against Obamacare, when looking at it from the point of view of the commerce clause, was very persuasive. As argued by Randy Barnett, a strong voice against the law:

"The Framers knew the difference between doing something and doing nothing. They gave Congress the power to regulate commerce, not to compel it. Ignoring that distinction would undermine the principle that the Federal Government is a government of limited and enumerated powers"

But Roberts changed the argument.  He allowed the constitutionality of Obamacare and, at the same time, limited the reach of the commerce clause. He said, in effect: "Mandate? What mandate to buy insurance? There's no mandate, anyone can refuse to buy insurance, they will just have to pay a fine, which is nothing more than a tax.  Same as a tax on cigarettes to discourage smoking, this is a tax to fund Obamacare, not a mandate to purchase insurance."  

So, the law stands -which makes liberals happy, but the commerce clause is restricted and cannot include a mandate from Congress to buy something - which should make conservatives happy, if they pause long enough to think about it. In other words, Congress is not allowed to force us to buy broccoli.

The best lawyer in the room changed the basis of the argument and achieved two results: he limited the power of Congress in their use of the Commerce Clause to force people to engage in economic activity, and he restrained the power of the Supreme Court keeping it from legislating from the bench.  


Chief Justice Roberts decides not to legislate from the bench

On March 27 of this year I had written on this blogsite that I hoped that the Supreme Court would not legislate from the bench and overturn one of the biggest and most consequential laws passed by the legislature in decades.  My hope was realized today as the Supreme Court Chief Justice, John Roberts, sided with the four "liberal justices" and upheld Obamacare (Affordable Care Act).  

As I understand it, Chief Roberts' main argument is that the charge that it was unconstitutional to have the "individual mandate" force people to buy health insurance is a false one because there actually is no mandate, only a penalty for those who refuse to buy insurance, which is nothing more than a tax, which Congress has the constitutional right to impose.

If the country doesn't like Obamacare, the proper remedy is at the ballot box. If the Republicans want to base their November campaigns on overturning the health care law, that is up to them.  But to my mind, there are much more important issues confronting the country:  the economy, the deficit, the still too reckless financial system, the Eurozone crisis, and the Arab Awakening and the changes it is causing in the middle east, for example.  

I thought that Obama wasted a precious year and a half at the start of his presidency focusing on health care rather than concentrating on the terrible Great Recession.  I hope that the Republicans don't make the same mistake now.  There are more important issues to deal with than this ideological obsessions of the right wing.  

Wednesday, June 27, 2012

Can Morsi govern over a legitimate democracy in Egypt?

By all accounts, Egypt is the leader of the Arab world.  So, when the Arab awakening happened in Egypt, there was much reason for celebration.  They had overthrown a brutal dictator, Mubarak.  Other Arab nations were likely to follow.  Certainly Libya did follow, and Syria is trying, but it is more complicated there.

Next, Egypt held elections and have elected a new president.  The West had certainly hoped that the results would be a secular, pluralistic government.  But, the Arab world is very much Islamic.  So, I suppose it is not all that big a surprise that the Muslim Brotherhood won the election.  And it can be no surprise that Egypt and the Arab world will become more Islamic in the future.  

The question that Thomas Friedman wonders about is whether the new president, Morsi, will rule as a leader of the half of the country which is Islamic, or will he create safety and outreach to the other half of the country - secular, liberal, Salafist, and Christian.  

There was a reason to hope for the latter today, because Morsi appointed a woman and a Christian as his Vice Presidents, and these are apparently positions of actual power rather than just ceremonial.  He has declared that women have the same rights as men, even though he had earlier declared that women should be banned from the presidency, and had also said during the campaign that the Quran would be the Egyptian constitution.

So, if Egypt is creating a mold, perhaps this is the direction the Arab world is going, more Islamic (but not Islamist) and also sincere in its efforts to create a society that is inclusive of the large minorities that are not Muslim.

One can certainly hope.

Thursday, June 21, 2012

Moody's cuts the ratings of big banks

After the financial crisis of 2008, it became apparent that pretty much everyone involved in the financial industry had seriously screwed up - from the  financial institutions themselves, to the regulators, to Fannie Mae and Freddie Mac, to almost everyone in Congress, to a series of presidents, and to the ratings agencies. 

Today, Moody's is trying to do its job in a more responsible way, and they have downgraded 15 large financial institutions. According to the New York Times:

"Two United States banks that were hit hard in the financial crisis emerged with the lowest ratings. Citigroup and Bank of America are now rated only two notches above junk. While Morgan Stanley avoided a worst-case scenario of a three-notch downgrade, its rating slipped by two levels."

I am encouraged that Moody's seems to be more on the job.  Their reasoning seems pretty straightforward to me:  

"All of the banks affected by today's actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities," Moody's global banking managing director Greg Bauer, said in a statement."

It has seemed to me that the financial giants have done everything they could to keep their basic business model of taking huge risks on the assumption that if they win they make personal fortunes, and if they lose, tax dollars would be used to bail them out and keep them from failing.  This downgrade could be a wake-up call for the financial industry to actually make some real, substantive changes to the way they do business.  

I would like to see banks become boring places to work once again, where their business is to lend money to actual businesses creating actual jobs and building the economy.  I would like to see M.I.T. and Harvard graduates go on to get jobs in their fields of study rather than go to Wall Street to strike it rich - by taking risks with taxpayer's money by placing gambling bets in zero sum game markets that don't do anything to grow the economy.

Tuesday, June 19, 2012

The Greek elections settled nothing

As best as I can make out, the elections in Greece settled nothing.  The Greek electorate are divided, but at least voted against leaving the Eurozone, however the divided results could likely result in the "winning" New Democratic Party not being able to form a coalition government.  

The voters are divided: some agree that austerity is needed, some think less austerity and more government stimulus is needed.  Either way, they want the Germans to pay, and how long the German voters will go along with that notion is anybody's guess.

The primary symbol of the division, I think, is the division between Germany and France's new socialist president, Hollande.  Germany wants austerity and accountability as a condition of loans, whereas Hollande wants Keynesian government stimulus, but, of course, the source of the stimulus funds will ultimately be Germany.

The financial industry seems to hold to the belief that clever tinkering will keep it all afloat.  It gets so tangled, but I don't see how one of the two endpoints doesn't eventually happen: the Eurozone breaks up so that sovereign nations can have their own currency as well as their own fiscal policies and keep their sovereignty, or they all cede their sovereignty to an appointed aristocratic entity that dictates the fiscal policies of them all.  Both seem impossible, but the forces of ever continuing financial crises may eventually push them into one of those end games.  

I think there may be a deep, centuries old acceptance within the European mind that looks to and accepts rule by aristocracy.  A faceless, unelected bureaucracy in Brussels setting fiscal policy for all of the Eurozone may be how it ends up.

Saturday, June 16, 2012

Republicans don't have an illness, they have a viewpoint

My favorite editorialist is the center-right David Brooks of the New York Times.  He writes an illuminating editorial in Friday's paper.  Many Democrats explain the Republicans' positions as being extremist and the result of some kind of mental illness.  David Brooks tries to explain Republicans to Democrats by saying:

"I guess I'd say that Republicans don't have an illness; they have a viewpoint...many Republicans have now come to the conclusion that the welfare-state model is in its death throes".

Democrats see Republicans trying to dismantle the gigantic entitlement state that liberals have spent many decades building and can see it only as insensitive and cruel lack of caring about and for people.  They explain it as insensitivity for people, as dancing to the tunes of the super-wealthy (who are  seen as essentially greedy and uncaring), as greedily keeping money for themselves and disregarding the needs of the people, or as psychological imbalances resulting from bad parenting or fear of change.

But, Republicans see it quite differently. To them it is obvious that the money has run out.  To them, Margaret Thatcher summed up the fatal flaw of the welfare-state:

"The problem with Socialism is that you eventually run out of other people's money."

It may not be totally fair to call Democrats socialists, but the Republican view of the vast welfare state in Europe (and to a slightly lesser degree in America) is that it has run out of money and cannot be saved, and it's best to abandon it before it sinks and takes the entire country down in its whirlpool of destruction.

Greece is the first massive collapse of that governing philosophy, and it looks like Spain, Italy, Portugal, and maybe others are all teetering on the brink.  

And to Republicans, how far behind is the U.S.?  When 40% of every government dollar spent is borrowed, how viable is the U.S. welfare-state?  And the Obama and Democrat claim that this can be solved by taxing the "rich" is silly, it seems to them, as the revenue raised by that would be nice, but wouldn't come close to ending the deficit.

I can certainly understand that Republican view.  And I share it, as far as it goes.  

But, I would add that it is not only the entitlement welfare-state that is unsustainable, but the military-industrial state that is unsustainable as well.  It was all nice and good that America emerged from WWII as the dominant economic and military power.  But, to be reminded of Eisenhower, we need to curb the growing military industrial complex, which drains huge amounts of tax dollars to support it.  It was developed to fight a potential WWIII with the Russian and Chinese communists.  And, indeed, those totalitarian regimes were intent on world domination and needed to be stopped.  

But, we won.  And even though a revival of fundamentalist Islamism resulted in the terrible attack against us on 9/11, I think that much of our military and defense budgets can be reduced.  We have just run out of money.  We no longer have the money to be the military hegemon that we once did.

We can't afford the welfare-state, nor the military-state of the past.  There is a new America being born, as well as a new Europe and a new Middle East.  And I think living within our means as a nation is just as necessary as it is necessary to live within our means as individuals.

Reduce government spending (with reasonable entitlement reforms as well as cutting the military), reform the tax system (that includes raising taxes overall while lowering marginal rates so as to encourage innovation) and a new world can be born.

It is going to happen anyway, because, you know, we're runnning out of money.

Sunday, June 10, 2012

Europe, United they fall?

I am not sure that the Euro will survive, nor the Eurozone itself. 

Economists Simon Johnson and Peter Boone write that it is nearly inevitable that the Eurozone is over, and it is just a matter of time for people to admit to it.  Greece, of course, will be the first to go.  Their point seems to be that the European Central Bank, the International Monetary Fund, and the European Commission keep finding ways to loan money to Greece and the other weak periphery European countries, but all that is happening is that the eventual need for the breakup gets pushed down the road with the consequences of that breakup becoming bigger as time passes.  They foresee capital flight from the sovereign banks and governments of the periphery Euro countries.  

I'm not a financial guy, and I think people in the financial industries continue to believe that the European Project can be rescued by more and more clever ways to get loans to the failing financial institutions and the failing sovereign nations.  

But I wonder.

It looks to me like the eventual outcome is going to have to be one of two things:  either the Eurozone breaks up and an idealistic notion - that was unrealistic - reluctantly fails, or the Eurozone unites into some form of a European United States.  Both outcomes seem impossible now, but I think the forces pushing Europe into one of those outcomes are too strong to be changed with clever ways to transfer more and more money from Germany to the failing nations and banks.

One currency without one fiscal policy is proving to be disastrous.

If the Eurozone is to unite fiscally, it might be able to do so by having a central fiscal authority govern all of the Eurozone nations without needing to have all of Europe unite under one government, but how nations with centuries of sovereignty with their own cultures, histories, and languages voluntarily turn over their sovereignty to a central power is very hard to imagine.  Necessity, however, may force the issue in the end.  

If you look at the United States, we faced many of the same issues after the Revolutionary War.  The cultures of each sovereign state was very different from the rest, but we managed to make it work.  Indeed, the cultures across the various parts of the U.S. are still radically different - compare Texas and South Carolina to Massachusetts and New York.  But we manage to make it work.  

Or at least we have up until now.  Time for some prayers for harmony, hope, understanding, negotiation, and compromise, on both sides of the Atlantic.

Friday, June 8, 2012

Walker wins and FDR is vindicated

Wisconsin governor Scott Walker won handily in the recall election on Tuesday.  The unions tried to have him thrown out of office because he dared defy their powers.  

As I understand it, he cut government workers benefits, and when the unions tried to demonize him for it they discovered that the public wasn't too enamored with the extraordinary benefits of the union workers, and had at least some sympathy for Walker's claim that the benefits were bankrupting the state.  As a matter of fact, since the new rules on the government unions went into effect the state went from a massive deficit to a surplus.  

So, the unions decided to change the issue to Walker's denying the unions the right to collective bargaining, which Walker was hindering.  But, at the heart of the unions' complaint was that Walker was changing the rules on the unions' ability to collect union dues.  That is, the dues would no longer be automatically collected, and union membership would become voluntary.  As I understand it, once these new rules were enacted, union membership dropped by about half.  The result?  Loss of union power, which is what the recall effort was all about, union power.

The unions tried to wield their power, but lost power instead.  That is what happens in power plays - either you win or you lose, and the governmental unions lost.

The most interesting thing, to my mind, is to revisit the grandfather of modern liberalism's views on the role of collective bargaining of governmental unions - that of Franklin D Roosevelt himself.  In a letter to the National Federation of Federal Employees, written August 16, 1937, FDR made it very clear that collective bargaining had no place in public service of governmental employees. 

A couple of excerpts from this short letter:

"All government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.... Particularly, I want to emphasize my conviction that militant tactics have no place in the function of any organization of Government employees... a strike of public employees manifests nothing less than an intent on their part to prevent or obstruct the operations of Government until their demands are satisfied.  Such action, looking toward the paralysis of Government by those who have sworn to support it, is unthinkable an intolerable."

Pretty clear - "unthinkable and intolerable."  

I'm not sure that the public employee unions have done much in the way of threatening strikes in Wisconsin or elsewhere, but they have been negotiating with politicians, Democrats especially, who have an incentive to give them what they want.  This is because the Government unions are the biggest supporters of pro-union politicians, i.e. Democrat politicians.  They give them both money and lots and lots of free labor to man phones and help them campaign in many ways.  

So, it is no wonder that the unions got so much of their demands on pensions.  Had they demanded large wage increases, those kinds of numbers could be publicized and used effectively as a tool to deny the government unions' demands.  But, pension improvements were just too arcane to be able to be turned into headlines or bumper stickers, so the unions got what they wanted. 

The problem is that the big pensions, granted to younger and younger retirees, are eating up the other government services in a time of recession like today.  Voters are seeing that libraries, parks, education, and public safety are suffering while the pensions sail along keeping middle class, middle aged people on the public dole for decades to come, at nearly the same wages as when they worked.

So, Wisconsin said no to the recall.  How did government unions stray so far away from FDR's vision? I don't see this so much as a victory for Republicans against Democrats or Republicans against unions.  I see this more as a needed balancing of something that was out of balance.

Tuesday, June 5, 2012

Activating our imaginations to understand our political opposites

I have been focusing on trying to understand the political tribes in America - what they believe and why.  More to the point, I am trying to see the goodness and morality that each tribe represents.  I think that one of the biggest toxins in America today is the inability of those in each tribe to be able to use their imaginations and see the goodness in the people of the other tribe. 

I just finished a very insightful book on this issue:  "The Righteous Mind:  Why Good People are Divided by Politics and Religion" by Dr. Jonathan Haidt, moral psychologist at the University of Virginia. 

His basic presentation is that liberals, conservatives, and libertarians each view the world in the light of six moral yardsticks:
  1. Care/harm - the ability to empathize with the pain of others, to care, and react to react against those who do harm to others;
  2. Fairness/cheating - wanting things to be fair, and react against those who cheat;
  3. Liberty/oppression - wanting liberty, and react against oppression;
  4. Loyalty/betrayal - wanting loyalty to your own "tribe", and reacting against those who betray it;
  5. Authority/subversion - wanting to honor authority, and reacting against those who subvert it;
  6. Sanctity/degradation - wanting to live in a world that is sanctified and pure in a spiritual sense, and reacting against the degradation of life and the spirituality of the world.
An interesting side note is that to liberals, the fairness/cheating yardstick is about equality, whereas to conservatives it is about proportionality - i.e. people should be rewarded in proportion to their contribution, even if it produces unequal outcomes.

One of his basic points is that our sense of right and wrong is not based upon our rational, explaining mind, but rather is based upon our subconscious, unconscious, intuitive mind.  We can consciously make changes, but our psychologies that infuence our morals are deep and usually unexamined.  And, more to the point, our judgments of others' morality is instinctive, intuitional, and not based upon our rationality.  It is a gut reaction to those who disagree with us as being immoral.  This is the toxin in today's political climate, in my opinion.

Another point that he makes is that the tribes cannot change each other's points of view by combatting them.  It takes empathy and human connection to be able to get past the rational part of the mind which functions as a rationalizer of our moral commitments.  Once we can see each other as real people that we can identify with on basic human terms, we can start to see the goodness in the moral values that they hold, even though they are different than our own. 

He cautions against "confirmatory thought" which just confirms and justifies our own moral view of the world, and encourages "exploratory thought" which explores other points of view.  When we want to confirm a belief, we ask ourselves if we "can" believe it, and the answer is almost always yes.  When we want to discredit someone else's belief, we ask if we "must" believe it, and the answer is almost always no.  So, we just live inside the bubble of our own tribes, judging others as evil who must be destroyed.  Such is the nature of our political world today.

As to how this works in our political thinking, he demonstrates, through experimentation, that Liberals focus almost exclusively on the Caring and Fairness (equality fairness) values; Libertarians focus almost exclusively on the Liberty value; and conservatives focus fairly evenly on all six of the moral values.  Dr. Haidt started his journey into the study of moral psychology as a liberal trying to find ways for liberals to persuade conservatives.  He ended up having a much greater respect for conservatives, much to his surprise apparently, and became more conservative himself as he recognized the value of the yardsticks other than just caring and fairness/equality.

Haidt concludes by chosing positive contributions to society by both liberals and conservatives that he thinks can be a starting point to help understanding. 

He sees two indisputable contributions from liberals:
  1. Governments can and should restrain corporate superorganisms, who would otherwise operate only in the interest of profit and have no incentive to care about their impacts on people or society;
  2. Some problems really can be solved by regulation, for example the defiling of the environment or harming the health of people.
He sees an indisputable contributions from libertarians:
  1. Markets are miraculous, and they set prices, establish efficiencies, and foster creativity and innovation that a controlled, planned economy never can.
He sees an indisputable contribution from conservatives:
  1. You can't help the bees by destroying the hive, i.e. by weakening cohesive groups you destroy the moral capital that binds them and the people withing them are diminished.
By respecting each other's moral values, by respecting each other's human value, we can differ with each other without demonizing each other, and we can create  political climate that is not kill or be killed, but rather is one that allows and encourages disagreement that can lead to negotiation, compromise, and a functional political system that is not stuck in the gridlock of extremist ideologies bent on the destruction of The Other, who is Evil

List the Calories, don't ban the drinks

One final thought about Bloomberg's New York law banning huge sodas.  I think the most persuasive thing he can do would be to list the calories of the drinks, on the cups or on the menu boards in the establishments, prominently and easily seen.  Banning them is government coercion, which I don't like.  But showing the calories is education, and will have an effect, probably more of an effect than the other.

Sunday, June 3, 2012

The Puritanical heart of liberalism

New York Mayor Bloomberg's outlawing the selling of sodas over 12 ounces does  one major thing, in my mind, it reveals the Puritanical core of liberalism.  

The wonderful book that I have written about previously, "American Nations: a history of the Eleven Rival Regional Cultures of North America" by Colin Woodard, made the very interesting observation that modern liberalism was descended from the Puritan Massachusetts founders, and that although the content of the Puritanism has changed a bit, the basic energy is still there, to improve society for its own good, and to do so with dictatorial certainty and righteousness.

There is no doubt about the fact that people harm themselves dramatically by drinking over-sized sugar drinks, but it is a belief in government coercion for the benefit of humankind that lies at the heart of liberalism.  And many find it oppressive and dictatorial.  

The knee-jerk reaction of conservatives is to tell an overly powerful government to take their good intentions, and their belief in the right of government to control every aspect of people's lives -- and shove it.

I think I agree.  

(And I hope people start addressing the terrible health habits that are causing the obesity epidemic in America, on their own, as a result of persuasion rather than force)