Wednesday, October 26, 2011

Important graphs for understanding our unemployment

Why hasn't our unemployment rate improved? You hear different answers to that question, but here's the number of jobs over Obama's presidency in the private and public sectors:

The private sector bottomed out almost 2 years ago and has been steadily recovering. Government jobs have been steadily declining (minus the spike for the census).

Republicans always explain that unemployment is high because Obama has led an unprecedented expansion of "big government" that is preventing businesses from creating jobs, and what we need is "smaller government". But if that were true, the graphs above should be reversed. Businesses are creating jobs, but those are being offset by lost government jobs due to... smaller government.

Many people assume that all disagreements between Democrats and Republicans just boil down to opinions that can't be proven one way or the other. But sometimes you can be just plain wrong.

Saturday, October 8, 2011

Book plug: Willpower

I just finished reading, and highly recommend, Willpower: Rediscovering the Greatest Human Strength by Baumeister and Tierney. It's about scientific studies into our willpower/self-control: how to measure it, how it works, how we can improve it. Some of it is really surprising, but convincing, and part of what makes all of it interesting to me is that the whole concept of a "will" is one of the most mysterious things about existence - the fact that our impulses and instincts can pull us in one direction, but we have the ability to choose to do something else.

I'm not going to go through all the studies demonstrating this, but the basic idea in the book is that our willpower is a lot like a muscle. It gets tired when we overuse it. We can also build its strength over the long-term, or let it weaken. The most interesting thing to me was that our brain consumes glucose to use self-control. This is why dieting can be especially hard; you need glucose to resist temptations, but dieting reduces your supply of glucose.

The book also spends some time explaining how our culture has made a big mistake in prioritizing self-esteem over self-control for children. A lot of the studies about the problems with an over-emphasis on self-esteem were funny. In one, they tested a bunch of kids on a new subject, then spent some time with only half the kids telling them how great they were at it. After more teaching and a test on the same subject, the kids who received the self-esteem boosts were more confident in their work than the others but actually performed worse.

It does give advice on proven ways to help improve your willpower, but the authors seem to admit that this is an area where we still have a lot to learn. They explained some studies showing that religion can be a large source of willpower but didn't go much into trying to dissect that. In my opinion, monasteries would be a good source of ideas to test. Monks of many religions have spent thousands of years trying to figure out how to control each and every thought, and it'd be interesting to test their various techniques from a scientific standpoint.

Anyway, a quote from the book:

We think that research into willpower and self-control is psychology's best hope for contributing to human welfare. Willpower lets us change ourselves and our society in small and large ways. As Charles Darwin wrote in The Descent of Man, "The highest possible stage in moral culture is when we recognize that we ought to control our thoughts."

Thursday, September 22, 2011

Oh Santorum

Another GOP debate tonight. I think Rick Santorum won the award for saying the dumbest things, mostly his military-related comments.

Someone from the military who just came out of the closet due to the repeal of Don't Ask Don't Tell asked if Santorum would reinstate DADT if elected President. (By the way, the audience booed when the guy said he was gay). Of course, Santorum said yes. Here were his reasons:

1. Repealing DADT gives gays "special status". What??
2. He said repealing DADT is bad because we shouldn't be allowing sexual activity within the military. How is that related?
3. He said "sex should not be an issue"... as a reason we should reinstate the policy that openly gay people can't serve in the military.

The other really great stupid thing he said is that we should put more money and people in both Iraq and Afghanistan because we do whatever it takes to "succeed" and we should do whatever the Generals say. I have no idea how he can reconcile that with his completely opposite approach towards everything else the federal government does. How is it "conservative" to support giving a blank check to a government bureaucracy? Imagine if he had said "we should give as much money to the EPA as the EPA says it needs to completely succeed at environment protection". I'll never understand how someone can say we need to cut spending in every program to help our unemployed, poor, children, elderly, etc., but be willing to spend as much money and kill (indirectly) as many of our citizens as needed to "win" (whatever that means) in Iraq and Afghanistan.

Another face-palm moment of the night was Herman Cain saying he wouldn't have beaten cancer if Obamacare had been in place because "government bureaucrats" would take too long to approve his treatments. Um, what government bureaucrats? Why are people still pretending Obamacare is a single-payer system? Cain would have had private insurance either way. It sounds like the system he doesn't like is Medicare, but none of them will ever suggest we should do away with that.

Wednesday, September 21, 2011

Obama's new debt deal

It's annoying to see the coverage of how Obama's proposed debt deal is "so liberal" and "clearly just for campaigning". Then we continue to hear more about how all the politicians in Washington can never compromise on anything. But is that really true?

As I've previously said, if you want to take a very basic ideological divide of how to close a budget deficit, the purely conservative approach would be all spending cuts, and the purely liberal side would be all tax increases. The compromise would be somewhere in the middle, which happened in all previous deficit deals under Clinton, Bush I, Reagan, etc.

Here's Obama's plan:

Most of it (2/3) is spending cuts. And this is just what he's going into negotiations with; he's not threatening to veto any plan that tilts even more towards cuts over revenues.

Meanwhile the Republicans claim they're the party most concerned about the deficit, yet they will filibuster any new revenues. In fact, their proposed "debt" plan from Paul Ryan actually *cuts* taxes.

I do believe Obama's plan has no chance of passing Congress. But that's not because it's some unreasonable and extreme left-wing plan. And it's not because all politicians in Washington are unwilling to ever compromise. It's only because the *Republicans* in Washington are unwilling to compromise. I don't know how you could see it any other way; you can support their rigidity, but you can't deny it. And if they're unwilling to accept a single penny of new taxes to fix the deficit, you have to wonder if they really think the deficit is much of a problem. They're treating it more like an excuse to just do things they'd want to do anyway.

Tuesday, September 13, 2011

Republican Presidential Debate

I watched most of the Republican Presidential debate tonight. I think there's very little useful information to gain from these debates, but there's a strange mix of frustration and entertainment that mysteriously keeps drawing me in. And sometimes it's just uncomfortable... like hearing the crowd cheer at the mention of the death penalty in the last debate and shouting enthusiastically that we should just let people without health insurance die in this one.

The basic problem with these debates is this... you have 1 minute to answer extremely complicated questions that most viewers know very little about. If the best answer is complicated and beyond the understanding of someone with no knowledge of the topic, trying to explain it in 1 minute isn't going to be very popular. If you want to get elected, your only real choice most of the time is to throw out catch phrases, play it safe, and try to start a controversy around one of your opponents. So you hear really stupid things in these debates, but you never know for sure if that was the candidate's belief for real, or if that's just what they thought is best for their campaign.

Best examples from tonight:

1. Perry defending HPV vaccination mandates because he's "always on the side of life". It should be obvious how much this contradicts his opposition to universal health care.

2. Question: What should happen if someone without health insurance gets into an accident and needs a treatment they can't afford in order to survive? Bachmann: I don't like Obamacare.

3. The crowd booing when Romney suggested there would be benefits to moving to a federal sales tax. Of course, they were just booing because "tax=bad". But really, shifting our taxation away from income and more into consumption is exactly in line with conservative politics. Earlier in the debate when they were praising Texas for not having an income tax, that's exactly what it meant: we have a sales tax instead. A suggestion for Romney: if you want to get elected, stop assuming people know anything. Don't try to explain something complicated; you should have just answered "no new taxes", and you would have gotten tons of applause.

4. Every candidate keeps saying we should lower taxes. Then Perry was asked if he agrees with Obama's tax cuts. He answered no because we can't afford to, so we'll have to raise taxes in the future to pay for it. I guess that only happens when Obama is the one proposing the tax cut?

5. When Bush became President, we had a budget surplus. By the time he left, we had a really bad deficit. The biggest policy contribution to that deficit was huge tax cuts (this is math, not opinion). So tonight the simple question was asked: were those tax cuts bad since they weren't paid for with matching spending cuts? Bachmann just said no because "we have a spending problem not a taxing problem". Ugh.

6. Ron Paul getting booed for suggesting terrorists hate us because of ways we've screwed them over in our foreign policy. There's such a strange contradiction in the Republican base in their views of the government and the military. "The government screws everything up, we need to shrink government" is guaranteed to get cheers on almost every topic, but you can't hint at that idea with regards to our military interventions around the world. "We need to cut government spending" is a reason to cut every program that helps our poor, but you must hate America if you make that suggestion for our military.

Friday, September 9, 2011

The End of Loser Liberalism

I woke up at 3:30 feeling wide awake... eventually I gave up on falling back to sleep, so now I'm on my 2nd cup of coffee and just finished reading Dean Baker's "The End of Loser Liberalism: Making Markets Progressive". I highly recommend it; yes it's interesting but mainly because it's free, so why not?

The basic idea of the book is that Democrats should change their strategies to be more about having a different foundation for the free market rather than having the government directly alter the outcomes of it. He agrees with the goal of a progressive society where more money is distributed downward, but he thinks focusing just on government programs funded by taxing the rich is an ineffective way to accomplish that and a political disadvantage. For one thing, whenever you let debates be summarized as small versus big government, people intuitively gravitate towards supporting the side of "smaller government". He sees much what we currently refer to as "the free market" as a system rigged by the government to benefit the wealthy and corporations at the expense of average workers and smaller businesses, where there are many opportunities for progressives to become more "free-market" than conservatives. In that sense I think some of his ideas could get some support from some libertarian-ish conservatives.

A couple of examples...

We typically think of patents as part of the free market, but in many ways, it's a government intrusion in the free market that creates monopolies and inefficiencies. For example, when a drug company has a patent on a certain medicine, their government-enforced exclusive right to develop/distribute it allows them to sell for far above the market value. And that effectively moves money from average Americans to the wealthy. There's clearly a good goal behind the concept of patents... it covers the cost of new inventions and provides additional incentive for innovation. But the book suggests we look for other ways of doing that which wouldn't create the same inefficiencies in the market and would cost the economy far less as a whole. Baker's suggestion is having a public pool of money that is used as an immediate payment to reward things like new medical inventions. Yes, that would be a new government program with a cost, but it could cost far less than creating a bunch of monopolies. It keeps the incentive of new inventions while letting the market immediately do its magic to find the cheapest and most efficient way to develop and distribute the new medicine.

Another example is our policies in free trade. He agrees that free trade is a net benefit to the economy and is part of having a "free market". But right now most of our free trade agreements are set up only to expose poorer Americans to international competition while preventing the same for higher-income, higher-skilled workers. This, in effect, is the government tampering with the market to distribute money from the poor, who are forced to compete with cheaper foreign labor, to the rich, who can now buy cheaper products without the same international competition. For example, factory workers in America have been completely exposed to competition from foreign labor, but drug companies and doctors have been protected from this by our laws. If I can save a lot of money buying something made in a foreign factory, I can do so. But what about health care? Operations and medicine are usually far cheaper in other countries. In America, the average heart valve replacement costs $160,000. In India it costs $9,000. That's a $110,000 difference that would easily cover the costs of either traveling there or paying an Indian doctor to travel here, but you can't do that through our health insurance system. If Medicare or your private insurance company were allowed to "outsource" health care just like our cars and clothes can be, that could save you and our government tons of money. If progressives pushed for simply opening up health care to free trade, that would go a very long way to expanding access to health care using power of the free market.

I'm not saying I agree with everything in the book. I'm just saying it's all interesting, and I'd like to see some of the ideas experimented with.

Saturday, September 3, 2011

Would higher inflation fix our economy?

Should the Fed purposely cause higher inflation for a while as a way to reduce unemployment? This is an idea I've seen from various economists lately, which I originally read from Greg Mankiw, who is now Mitt Romney's economic adviser.

We typically have a knee-jerk reaction that higher inflation is bad. But what effects would it have if money started losing its value more quickly? Because of the uncertainties of our bad economy, people are saving more of their money instead of spending or investing it in ways that would produce growth. But higher inflation would give more incentive to spend/invest that money, because otherwise it will just sit there losing its value. This would also benefit those who are in debt (at the expense of lenders) because it effectively reduces how much they really owe.

Obviously, you shouldn't make inflation too high because of the clear downsides. But if you assume the view of our economic problems that I recently posted, where high household debt and low spending are keeping us from a recovery, then it does seem that a move towards somewhat higher inflation would have an overall positive effect for the reasons above. It's effectively similar to fiscal stimulus but with 2 advantages: it wouldn't add to our national debt, and it wouldn't require passing a bill through the children in Congress. However, the Fed has shown no intention of using this strategy, even though Bernanke supported the idea in the past as a way for Japan to pull out of its slump in the 90's.

Monday, August 29, 2011

Bachmann the Prophet

"I don't know how much God has to do to get the attention of the politicians. We've had an earthquake; we've had a hurricane. He said, 'Are you going to start listening to me here?' Listen to the American people because the American people are roaring right now. They know government is on a morbid obesity diet and we've got to rein in the spending." -- Michelle Bachmann

Yes. Hurricane Irene, which killed several people and will cause more government spending to repair some of the damages, was God trying to tell Washington to reduce spending.

Because this is how it works: the all-powerful, all-knowing, all-good creator of all things has a message he wants to tell our politicians. But He has severe communication issues. Instead of literally telling the politicians to stop spending, the best He can do to deliver that message is use naturally occurring events to kill random people on the same coast as Washington DC, then tell Michelle Bachmann to explain the secret message to us.

Another possibility: God is using Michelle Bachmann's words as a message to warn us not to vote for her.

Friday, August 26, 2011

Why the economy sucks

I don't know or understand much about macroeconomics. But I have spent a lot of time the past couple of years reading stuff from people who do, and whereas I had no idea what was going on when the Lesser Depression started, I do feel like I understand the basic problem now.

The main reason unemployment is so bad right now is a lack of demand in our economy - there are less people buying things. Businesses will hire more people when they have more customers. There will not be more customers until people spend more money. But a big reason why people are spending less money is because they're unemployed. So it's hard to pull out of a deep recession because you get stuck in this catch-22. How can we increase total spending enough to start upward momentum in a case like this?

In milder recessions, we can get pulled out of that trap by the Fed lowering interest rates. Basically that makes it cheaper to borrow money, and people respond to that incentive by borrowing (and therefore spending) more. But there's a limit to how much you can lower interest rates because you can't make them lower than zero. With a big enough blow to our economy, that extra incentive to borrow isn't enough to counter-act the recession, which is the case we're in now where the Fed has held them as low as possible with no real recovery.

Why is it so hard right now to bring back consumer spending to start a full recovery? The big difference is that people are more in debt now compared to milder recessions we've gone through. Even if interest rates are lower or people get some extra money, they can't spend much until their debts are more manageable. But this isn't because of increased use of credit cards; the increase over time has been in mortgages:

When I was looking into buying a house before the recession, most of the "expert" advice was to buy the most expensive house you could afford. Basically, population is increasing, but the earth is not, so real estate "should" always increase in value. And your mortgage will continually get easier to pay, because you will eventually make more money, and inflation will effectively lower your mortgage payments. And if it worst comes to worst, you can always sell your house for a net profit. Both the people buying houses and the banks financing them were doing what seemed to be the smart long-term decision. But thanks to the housing bubble, up to 28% of homeowners now owe more on their mortgage than the actual value of their homes. With the recession's job losses and pay decreases, people have a harder time paying their mortgage, and because their house now has a lower value, they can't even sell it to get rid of the mortgage that they can no longer afford.

The issue of household debt will resolve itself eventually, but that would take a very long time. We can't start a meaningful recovery any time soon without reducing household debt and increasing consumer spending. The real question is: what are the realistic options for doing so, and what are their downsides?

Monday, August 15, 2011

The Texas Miracle

With Rick Perry now officially running for President, the "Texas Miracle" has been all over the news. The Texas Miracle refers to the supposedly wonderful economy in Texas that doesn't have the unemployment issues found in the rest of the country, all thanks to Rick Perry and conservative politics. The statistic going around is that in the past 2 years, 38% of all new jobs created in the U.S. were in Texas.

So let's look at the unemployment rates per state and see how awesome we are! Link. Holy crap... Texas is #26 at 8.2%... half of the states are doing better than us. And we're losing to some of the most liberal ones like New York, Massachusetts, and Vermont. Vermont even has single-payer health care and Ben & Jerry, but their unemployment rate is 5.5%! Why is nobody talking about the Vermont Miracle? We're just in the middle of the pack. And especially when you consider that we have the highest percentage of minimum wage jobs in the nation, it looks like Texas isn't such a great state for employment after all.

So how can it be true that 38% of all new American jobs in the past 2 years were in Texas?. It is true, but it's clearly not because our employment rate is better. So it must reflect a larger population and faster rate in its growth. The statistic is meant to make you think it represents something it doesn't. But I'm sure it's going to win Perry a lot of votes anyway.

Friday, August 12, 2011

Romney owns hecklers, Dems declare him corporationy

It's crazy to me that this is being referred to as a gaffe, and the DNC is using it for anti-Romney ads. Of course, "corporations are people" by itself sounds bad. But all he seems to be doing here is owning ignorant hecklers. If anything, this should be used in pro-Romney ads. A heckler literally answered that money earned by corporations doesn't go to people because it instead goes to... "their pockets".

Just as there are many conservatives who like to imagine that all government spending is "waste" that can be cut with no negative consequences, there are also many annoying liberals who seem to think corporations are limitless sources of corrupt money we can keep taxing with no negative effects on real people.

Puppet Tim Robbins says it best:

Wednesday, August 10, 2011

Debt Downgrade, Treasuries, & Stocks

Example of the news sucking: On Monday, after S&P downgraded our debt and the stock market took a dive, I saw stories online with headlines like "stocks plunge after S&P debt downgrade" and other wording implying that one led to the other. Why? Is it just because those are 2 big things everyone knows about, and people would like the simplicity of imagining that the causation worked that way?

This week stocks have plunged, but U.S. debt has sold better than ever. Today we broke the record for lowest interest rate on 10-year treasury notes. If the events of this week were due to investors' concerns over U.S. debt, the interest on our debt would have gone up, much less down to record lows. If investors are selling tons of stocks and buying up tons of U.S. debt, that means that 1) our debt is still considered the safest investment in the world and 2) the economy sucks and will continue to suck.

So on the one hand, our economy is terrible and showing no signs of meaningful improvement under current circumstances. On the other, investors and foreign governments want to lend our government money more cheaply than ever before - well below inflation... they are basically paying us to hold on to their money. Doesn't that suggest that right now is the best time to borrow a bunch of money to pump into our economy and the wrong time to try to balance our budget? Borrowed money for stimulus would only need to have a slightly positive effect in order to pay for itself. We could just hand out tax rebate checks to everyone the way Bush did.

So why is Washington - Republicans and Democrats - currently spending all their time on our long-run budget issues and doing nothing about our economy?

Monday, August 8, 2011

Moral Dilemmas

I'm currently reading Justice: What's The Right Thing To Do?, and it starts with a couple of hypothetical situations that has really bothered me because it demonstrates a big inconsistency in our conscience.

Scenario #1: You are on a trolley heading down a track, and you notice that there are 5 people tied to the rails ahead. The brakes are out, but you can turn onto a different track where there is only 1 person tied down. So your only choices are to do nothing and let the trolley kill 5 people, or change course and kill 1 person that would have otherwise lived. What's the right thing to do? For most people (including myself), your conscience tells you that the best thing is to change course and save the greatest number of lives.

Scenario #2: Same case, but there's nobody in the trolley. You and a very heavy person are on a bridge overlooking the track. If you do nothing, the 5 people on the track will die. But you happen to know that if you push the heavy person off the bridge and onto the track, he will die when the train hits him, but it will cause the train to stop. It would do no good for you to jump down. What is the right thing to do? For most people (including myself), your conscience tells you that you should not push the innocent bystander off the bridge.

The problem is that these 2 scenarios are effectively the same moral dilemma. In both cases you can do nothing and let 5 people die, or make a choice where the trolley hits and kills only 1 person that would have lived otherwise. So what really is the right thing to do, and why does our conscience contradict itself? I don't know. But I assume our different gut reactions have a lot to do with how directly responsible we'd feel for the 1 person that died in each case. Pushing someone off a bridge feels like you're directly killing someone whereas you feel more removed from the situation if you just turn a train. Like how people can be complete jerks when driving but you know they'd be nice to your face.

Sunday, August 7, 2011

Debt Deals

Starting over this blog... seems like a good idea to keep my political rants in its own separate thing instead of just facebook (/google+) posts.

Anyway, this recent debt ceiling/deal/downgrade is a perfect example of how depressing politics can be. The Tea Party largely gained political power in the '10 midterms by campaigning about how bad our national debt is. Yet if it weren't for the far-right wing of the Republican party, our debt situation would now be in much better shape and the S&P downgrade wouldn't have happened. The S&P downgrade in and of itself doesn't really matter, but based on new polls, this seems to have the effect of a much higher disapproval rating of Obama, which can lead to a further rise in power for the Tea Party, which will in turn hurt our debt prospects even more.

First of all, only the far right movement within the Republican party thought it would have been ok to not raise the debt ceiling. S&P said if we would have just done a clean raise of the debt limit, they would not have lowered our rating.

Then, when it turned out that the debt ceiling vote was going to be a point of negotiation for getting our debt situation under better control, Obama and Boehner came to a tentative $4 trillion deal. About $3 trillion was going to come from spending cuts including big changes in Medicare and Social Security (programs Democrats are usually very resistant to changing). The other $1 trillion would be new revenues only by closing tax breaks, not by raising rates. A purely liberal deal would be all revenues, and a purely conservative deal would be all spending cuts. And for market-oriented conservatives, new revenues by closing tax breaks and subsidies should be great because those distort the free market anyway. This deal was *VERY* heavily tilted in favor on conservatives and would have been a huge victory for the Republican party, especially considering Democrats hold the Senate and the White House. The Democrats would have lost the support of a lot of their base if this deal had passed, especially from raising the Medicare eligibility age by a few years, but they were willing to make huge concessions for the sake of accomplishing something big.

Some Republicans (like Boehner) were on board too, but the new wave of more Tea Party-style Republicans wouldn't accept the $4 trillion deal because they won't vote for anything with a single dollar in revenues. Because they are completely uninterested in any sort of compromise, we almost defaulted on our debt, weren't able to come to nearly as big of a deal for reducing the deficit, and now we're down to a AA+ rating. There's no reason to blame this on Obama or Congress in general; it's clear who specifically should get most of the blame.

There are 2 big policy levers for getting our debt under control over time: tax hikes and entitlement cuts (Medicare/Medicaid mostly). Republicans really don't want to raise taxes; Democrats really don't want to cut entitlements. But if they want to actually get something done, just like in all deficit deals of the past, they'll have to do some of both. Obama and the Democrats involved in making a debt deal were willing to give a hell of lot to make a big deal happen. Some of the Republicans were willing to take that deal. But as long as we have a sizable portion of Congress that believes in absolute ideological purity instead of actual results, we're not going to be able to make meaningful progress on our long term debt problems. Based on the facts of what actually happened, I'd like to know how this is, as my mom some people put it, "all Obama's fault".