Re: Paul Ryan – the election is over

Ok, I know I’m not supposed to be cocky. And I am overall a rather pessimistic person, so I don’t even feel comfortable saying this, anyway. Plus, like everyone else, my political predictions frequently turn out to be wrong.

But, with Romney’s selection of Paul Ryan for VP, this election is now over. Obama will win, and fairly easily.

You may recall that in the past few weeks, there has been some uproar over Harry Reid’s claim that Romney paid zero taxes over the course of a decade.  It’s a claim that could be easily disproved by Romney releasing his taxes, but of course he seems loath to do that.

But now the conversation has changed. Forget the past, let’s look at the future. Paul Ryan’s budget plan, which now becomes the Romney/Ryan budget plan, has some specific ideas for cutting taxes. In particular, it would slash corporate taxes to zero. For the one year of tax returns Romney has released, in 2010, Romney paid about 14% in taxes on his income. Under his new Romney/Ryan budget plan, that number would be… 0.82%. The reason? Nearly all of Romney’s income in that year comes from capital gains/dividends and the like.

This is unimaginably toxic. The political ads write themselves. Romney always had to fight against his image as a rich guy who just wants to cut taxes so that he becomes richer, while the middle class foots the bill. Now he picks a guy who has proposed to do exactly that.

Podcast #(??): Our thoughts on the horserace

We typically try to refrain from over-analyzing the horse race, but sometimes, we allow ourselves some horse-race bullshit. After all, it does matter who wins a presidential election.

Thus, the podcast follows. Topics include:

• Romney and Bain: Is Romney being Swift-boated (i.e., attacked with misleading reports that undermine his core strength)? Is it working?
• Is it fair to attack Romney for being an out-of-touch rich guy, even if he is?
• Do narratives matter?
• How much to economic indicators matter?
• What are our best guesses on the presidential race so far?
• Will the Supreme Court Obamacare decision matter?

[audio http://dl.dropbox.com/u/14175885/Podcast8.mp3]

MCBAIN!!!!

When have capitalists ever been moral?

With each financial scam/hoax/fraud, we hear people decry capitalists not acting as they once did — with honor and so forth. David Rhode has a new short piece for the Atlantic about this topic regarding the Libor scandal. In summary, bankers are behaving unethically and their lack of ethics hurts all of us. And I basically agree with that.

I do take issue, however, with the idea that somehow the past was better. Remember that time when Jay Gould tried to corner the gold market? Remember that time when rampant speculation and poorly regulated credit markets led to the Great Depression? (Oh yeah, did I mention that a bunch of financial wizards tried to overthrow the government?) The amorality of the S&L is on par with the amorality of today.

Capitalists have always pursued profit above all. That’s the point. It would be folly to expect them to do otherwise. That’s exactly why blunt, dumb regulations, rather than public scoldings, are needed to hold the line.

 

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David Rohde – David Rohde is a columnist for Reuters, two-time winner of the Pulitzer Prize, and a former reporter for The New York Times. His forthcoming book, Beyond War: Technology, Economic Growth and American Influence in the New Middle East will be published in March 2013. More

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The Libor Scandal and Capitalism’s Moral Decay

By David Rohde

Jul 13 2012, 2:45 PM ET 181

The scandal engulfing the financial industry is yet another sign that our business leaders no longer respect the rule of law. 

Reuters

Maybe the acronym at the heart of the scandal is too confusing. Or Americans are simply tired of hearing about greedy bankers. By any measure, though, the Libor bank scandal is an extraordinary example of the 1 percent stealing from the 99 percent – and our crumbling ethics.

If an organized crime group was accused of breaking into the Nassau County Treasurer’s Office on New York’s Long Island and stealing $13 million, outrage would be widespread. And if the same group was accused of stealing millions from the City of Baltimore and other struggling municipalities, they would emerge as an issue in the presidential campaign.

Instead, the Libor scandal is emerging in dribs and drabs and drawing little public attention. The middle class is being victimized, and there is little protest.

Last month, the British bank Barclays agreed to pay $453 million to American and British authorities to settle allegations that it manipulated key interest rates for profit between 2005 and 2009, specifically the London Interbank Offered Rate, or Libor. American and British investigators are now examining whether traders at a dozen other banks — including the “too-big-to-fail” U.S. banks JPMorgan, Citibank and Bank of America — also manipulated rates.

It is hard to overstate the impact of the Libor benchmark, which is used to value some $360 trillion in loans and financial contracts worldwide. It affects lending to governments, businesses and consumers, and even student loan and credit card rates.

So Barclays’ victims weren’t just other banks and traders. They included taxpayers in dozens of communities who are believed to have paid millions more in interest than they should have at the height of the financial crisis. Teachers and other public servants may have been laid off because of bankers’ pursuit of ever-higher profits.

Lawsuits filed by the City of Baltimore and dozens of other parties against Barclays, JP Morgan, Bank of America, Citibank and Deutsche Bank have been consolidated into a single case in a New York federal court. Banks are denying any wrongdoing, and the true scope of the losses — and the role of American banks — is expected to emerge in the complex legal battles ahead.

I do not believe all bankers are evil. I admire business owners who innovate, create jobs and strengthen communities. But theft — whether the perpetrator is clad in a business suit or blue jeans — is theft.

And let’s not kid ourselves. Our ethical decay stretches beyond Wall Street. It spans industries, political parties and groups. In April, systematic bribery by executives of the U.S.’s second-largest company – Walmart – was reported across Mexico. In June, American sports officials accused cyclist Lance Armstrong of engaging in a massive doping conspiracy. And Jesse Jackson Jr. appears to be the fifth member of Congress to be embroiled in an ethics scandal in two years.

Around the world, a globalized economy is creating planetary-sized profits — and relentless pressure. A May survey by Ernst & Young of 400 chief financial officers around the world found that a growing number of them were willing to pay bribes and falsify their firm’s financial performance to survive the financial downturn.

The number of chief financial officers who said they would engage in bribery to stay in business grew from 9 percent in 2011 to 15 percent in 2012. And the number who said they would misstate their company’s financial health to get though a downturn rose from 3 percent in 2011 to 5 percent in 2012.

“One of the most troubling findings of the survey is the widespread acceptance of unethical business practices,” Ernst & Young said in a statement. “It is particularly alarming that respondents are increasingly willing to make cash payments.”

Corporate boards and other overseers, meanwhile, appear to be looking the other way. Eighty-one percent of those surveyed worldwide by Ernst & Young said anti-bribery and anti-corruption codes of conduct were in place in their companies. But nearly half said they did not believe employees had been punished for violating those polices.

Even the strongest passwords get stolen

When I read stories about the “most common passwords” or whatever, I always wonder how they got this information in the first place. Usually the pieces are laughers or a warning to people to have more “secure” passwords. The latest Yahoo! Mail breach suggests that the commonest password “base words” are things like “password” and “qwerty.”

But fancier passwords are actually not much better than non-fancy passwords. “checkmymail” is as safe as “Ch3cK!Mym41L” if they’re going to be stolen anyways. The most likely threat of breach isn’t from someone guessing your password — it’s from you writing it down, saving it in your browser, forgetting to logout on a public computer, or having someone steal your password wholesale from the company itself. If banks, email companies, and the federal government can’t keep information from outing, what’s the point in having a super-secure password?

When we think about risk, it usually turns out that the biggest risks are hidden or impossible to assess. You can take a lot of precautions to protect your password (Slate’s Farhad Manjoo has tips here), but in the long run, that risk is tiny compared to the risk of just having your password stolen one day. It’s like the weird-but-true factoid that you have a higher chance of dying by asteroid than by lightning. We can take precautions to protect us from the small risks, but the big risks are often out of our control; you can’t get Yahoo!Mail (for which you pay nothing) to be more secure with your data.

Re: the new Obama ad, “Firms”

Here it is:

This ad impressed me. Not because it hits Romney hard (though it does), but because of the sound editing. Listen to it again, and make sure to note the images that appear as the sound changes. The editing manages to evoke empty warehouses, open spaces, an office intercom, and a voice from very far away. An interesting discussion of how this is done, including reverberation and high-pass filtering, can be found here.

Why not twelve-parent households?

One thing bugs the shit out of me is the conventional wisdom that two-person opposite-sex biological parents represent the best environment for raising children. David Brooks raised the old chestnut again in his wacky piece about the decline in opportunities for the lower classes:

A long series of cultural, economic and social trends have merged to create this sad state of affairs. Traditional social norms were abandoned, meaning more children are born out of wedlock. Their single parents simply have less time and resources to prepare them for a more competitive world.

First, this may be true and it may not be. Research has been inconclusive, and difficult to extricate from simple socioeconomic trends. Additionally, some research has shown that high-conflict marriages are as bad if not worse than single-parent households, and that stability may be a better indicator than number of parents.

Second, even assuming the argument is correct and two parents are better than one, why wouldn’t three parents or four parents be better than two? As California prepares to address this with possible legislation to open the door to more greater-than-two-parent households, it’s not surprising that the usual suspects have crawled out to voice their opposition:

“This bill is a Trojan horse for the same-sex-marriage agenda,” Peter Sprigg, a senior fellow at the Family Research Council, said.

“Advocates for same-sex marriage are very interested in separating parentage and marriage from biological parentage, because that’s the one thing same-sex couples can never achieve,” he added.

I mean, sure, but part of the core conservative argument against same-sex marriage is that two-biological-parent households are better than two-nonbiological-parent households. Why wouldn’t the introduction of more adults, including the biological parents not be better? In fact, we have been doing this for some time, with villages, tribes, and relatives often taking on the responsibility of childcare. Like, oh, I don’t know, this family.

If stability is the goal, why not include as many stable adults as we can find?

Health care predictions

Like the saying goes, “It’s hard to make predictions, especially about the future.”

I am in the minority view here, but I think the Court still upholds the whole law in a quite narrow opinion in a 6-3 decision authored by Chief Justice Roberts. Maybe I am naive in my belief that laws matter, but I just don’t believe that the Court is willing to limit the Commerce Clause on some made-up wacky distinction like “action” vs. “inaction.”

I’d also give about 20% odds that the Court punts entirely, either by ruling on the Anti-Injunction Act provision (rendering all the lawsuits invalid) or by delaying the decision entirely by another year.

Predicting the Supreme Court is tough, but the ones who would know think it’s looking rough for the individual mandate. I’m hoping that the judges remember that law matters.

We’ll find out Thursday, along with everyone else.

Politifact – “BOOM! ROASTED!”

Politifact reminds me of Michael Scott when he’s trying to roast; they are so eager to roast and find “lies” that they don’t do any deeper introspection on the substance of the statements they are evaluating.

Consider, for instance, their recent 4-Pinocchio rating for the old chestnut that “women make 77 cents for the same job as men.” Take this, exaggerating Obama:

The Obama campaign took a legitimate statistic and described it in a way that makes it sound much more dramatic than it actually is. The 77-cent figure is real, but it does not factor in occupations held, hours worked or length of tenure.

BOOM! ROASTED!

Well, except look at those caveats–(1) occupations held; (2) hours worked; or (3) length of tenure. If we look at BLS occupation figures, (warning: PDF!) we see that women are still pulling down less than men in a variety of categories, so how might those three factors play into this equation?

• Occupations held: Well, this is a problem, except even in the most specific BLS figures the disparity exists. Female chief executives make 69% what male chief executives make. Unless there is some massive difference in the types of “first-line supervisors of retail sales workers,” women are still making 79% of what their male counterparts make. That’s a pretty specific job type, and yet, the disparity still exists. Now, there’s no way of knowing exactly which job they hold; (PDF) research suggests that within the same establishment, wage gaps are smaller, but the overall pattern still holds that women are paid less than men for similar occupations regardless of establishment. So is Politifact right that the 77-cent figure for “the same work” is false? I mean, maybe, but the real figure might be something like 80-cents. How much better is that?
• Hours worked: Well, it’s hard to say for hours worked; those pesky women are always taking so much more time off! Or not. BLS figures show that there’s a small difference in aggregate hours worked, but the difference between 8.2 hours and 7.8 hours, even considering overtime, doesn’t make up for the 23-cent gap, and as part-time employees, women actually work more than men. Plus, in “white-collar” occupations where hourly wages don’t matter (managers, supervisors, chief executives, elementary school teachers, accountants, social workers), women still earn less than men. Maybe they’re also working fewer hours there, which is why their companies reward them less. Or maybe something else. But they definitely earn less for similar work, if not the same.
• Length of tenure: This one pisses me off the most. Maybe those lower-paid women have not worked there as long. True! But is that “not the same job”? A seventh-year teacher and a third-year teacher/cashier/clerk/nurse are doing the “same work.” They do, however, have different levels of seniority. And it turns out that men get promoted at a much higher rate than women (10.6% of men get promoted, as opposed to 7.6% of women), even though their wage growth at each level of promotion is similar. Again, this could be because men are just much better, hard-working, committed, etc. to their jobs than women. Or, perhaps, it could be that there continue to be discriminatory hiring, firing, and promotion practices at these establishments.

The point of this whole exercise is to illustrate that Politifact’s urge to get Obama in a hits-generating BOOM! ROASTED! moment has actually obscured the truth behind the statement. Just because it is difficult to get an exact comparison of apples-to-apples, doesn’t mean that women aren’t working for less pay doing essentially the same job. The bottom line is: women are promoted less often than men, earn less money than men in similar occupations (or “the same work”), and are subject to discriminatory hiring, promotion, and pay. Even if the 77-cent figure did take into account those three missing factors, it would still hit pretty close to the mark.

Provocation: The Olympics are terrible

The Summer Olympics are almost upon us, which means Olympic fever the world over. Soon, people will be glued to their TV sets to watch feats of human athleticism. I’ll admit that I enjoy watching many of the events, particularly track and field, gymnastics, swimming, and judo.

Unfortunately, the Olympics represent much that is wrong with the modern sports and entertainment apparatus, and a troubling blend of nationalist jingoism, shortened attention span, and corporate exploitation. Rather than a celebration of human achievement, they are increasingly a competition of sponsors, heavily subsidized national training programs, and unpaid labor.

Why do the Olympics suck so much?

1. The athletes get hosed: Today, the Olympics no longer cares about only admitting amateur, non-professional athletes, which is fine, I guess. Unlike professional meets, the Olympic-organized events do not offer a purse for winners (some countries, like the U.S. do), which means that unless you’re Michael Phelps, you’re not getting steady income. Meanwhile, corporate sponsors for the Olympics (not to mention the highly corrupt IOC… which is such a foregone conclusion that it doesn’t even warrant its own bullet point) make tons of money off of the Olympics ($4B for the 2001-04 quadrennium), along with the various ancillary businesses that surround the Olympics. The only people not making money on the billions in revenue are the people competing. “OK,” you say, “but isn’t it great that the athletes are motivated by more than money?” I do, indeed! But that is all the more reason to making it easier to do what they love, rather than forcing them to beg for sponsorships to continue competing for our benefit.
2. No one cares about these sports outside of the Olympics: Outside of, say, basketball, tennis, and maybe boxing, no one cares about these sports. They are amazing feats of stretching human achievement to the limit, but we pretend to enjoy them once every four years anyways. And why? Because they are “our” team, or because we like the way they look, or because they have a great narrative. But once the lights dim, our attention flits elsewhere. It’s a great international corporate lovefest, but it’s all a short-term fling, one that vanishes as quickly as it appeared.
3. It professes apolitical ideals, yet encourages jingoism: Yeah, so I’m a big party pooper. Yelling “USA!” at the screen is half the fun! But I’m bothered by the fact that politics is carefully managed at the Olympics in a way that encourages only a certain kind of nationalism. These days we just gleefully cheer for our colors–the ones we had no part in supporting in a game we don’t care that much about. The narrative of triumphalism in athletics as triumphalism in foreign policy leads to all sorts of unfortunate ties between athletes and the countries they represent, as if someone’s most important identity were the flag over their head rather than their personal achievements. Meanwhile, when the “wrong” type of politics makes an appearance at the Olympics, there is always hell to pay. It’s a white-washed version of the world that not only ignores, but denigrates those who dare to speak out. Making an statement of protest = bad; kow-towing to nation-states and stereotypes = good.

Watch this (somewhat melodramatic) documentary on the 1968 Olympics’ black power salute to get an idea:

And if you think this kind of thing is over, Peter Norman, the silver medalist Australian who shared the podium with John Carlos and Tommie Smith, was not even invited to the 2000 Sydney Olympics. Last year, these clowns still won a silver medal.

In short, the Olympics exploit athletes, have only fleeting connection to its “fans,” and obsessively censor any sign of political unrest or turmoil. No wonder totalitarians everywhere have always loved them.

Big whoop, wanna fight about it?

William Saletan atSlate always has these big pseudo-scientific questions that he thinks are deeply thought-provoking but are actually pretty schmeh.

For example, he has a long-standing (and probably wrong) hypothesis about race-linked intelligence. (I have previously noted the goofiness of this “scientific” discovery here.)

Now Slate has two stories about a study finding that children of gay parents at a time when being gay and having children was/is maligned can be stressful and difficult. That’s pretty understandable. Saletan’s take is probably more line with mine in that he thinks it still proves gay marriage is a good outcome (two parents, loving household, financial support, etc.). Still, he takes the study as methodologically sound (some criticisms here).

That said, let’s presume, for the sake of argument, that the study is right and two same-sex parents are actually in fact worse for the child than two opposite-parent biological parents. So what? Lots of children are raised in households without two opposite-sex biological parents; couldn’t a two-parent same-sex household still be better than, say, single parents? Couldn’t some alternate arrangement (let’s say, oh I don’t know, three parents in a household, or a two-parent biological household with grandparents in the home to provide childcare) provide even better results than the two-parent biological household? Should the government or society encourage such behaviors? Maybe, but maybe not. Attacking the “worst” child-rearing environments probably yields the most returns for society; certainly two-parent same-sex households are better than, say, institutional housing or constantly shifting foster care. Since there is high demand for same-sex households to have children, maybe we should be encouraging lots of adoption by any combination of two-parent households.

My point is that much like any presumed difference in intelligence between races (which, as I’ve noted, is probably wrong on its face anyways), the difference between a two-parent same-sex financially-supported household and a two-parent opposite-sex financially-supported household is probably so marginal that the policy implications are nil compared to the differences between a two-parent household and a no-parent household, or a two-parent household and an institutional care facility, or the difference between a poor family and a rich family.