Wednesday, November 18, 2009

In Defense of Obama--Again

In a past post I expressed bafflement at the left-wing disillusionment with Obama. These days, I’m not only baffled, I’m getting upset. There is an emerging narrative in left-leaning circles that Obama is spineless, in league with big corporations (particularly Wall St.), and afraid to stand up to the war hawks. This attitude would be forgivable if it had any relation to the truth. But it doesn’t.


False narrative: Obama and Bernanke don’t care enough about jobs and are overly worried about the deficit. We need a second “jobs” stimulus and an explicit policy of higher inflation to get us out of this economic slump. We can’t worry about deficits right now until America gets back to work.

Reality: after the first stimulus successfully stopped the economic meltdown (success for Obama!), now is, in fact, the right time to start worrying about our debt. Sustainable job growth in America depends on the re-balancing of the world economy: Americans need to save more, consume less, and make more stuff that the world wants to buy, while the Chinese needs to buy less of our debt and consume more of our goods. This transition will run smoothly only if the Chinese agree to devalue their currency in relation to the dollar. But the Chinese will do this only if they believe America is serious about cutting back on its debt. That’s the bargain. If the Chinese lose faith in our ability to cut our debt, there are only two possible outcomes: a Chinese-American trade war (instigated by the U.S. because the Chinese will refuse to devalue their currently) or a U.S. dollar currency crisis (instigated by the Chinese who will stop buying our bonds). Both of these would be disastrous for the world economy.

Also, inflation as an explicit policy prescription is totally insane: inflation punishes most the one group of people we should be most eager to help—that is, middle class savers. And it is most kind on those who know how to handle money, who also happen to be the same folks liberals want most to punish--that is, Wall St.


False narrative
: Obama bailed out the banks and now is too chicken to regulate their bonuses. The financial regulatory package making its way through Congress will be watered down so much as to be virtually worthless. Even the Democrats are in bed with Wall St.

Reality: Barney Frank, who is leading the charge against bonuses and fighting very hard for more financial regulation, is a rock star. Watch how Ed Shultz, a proud member of the putting-Obama’s-feet-to-the-fire club, doesn’t listen to a word Frank says about what he and Congress is doing about bonuses. Read this Barney Frank speech, which lays out his plans for financial regulation. He may not get everything he wants in the end, but there is no doubting his determination and the soundness of his thinking. Regulation will happen.


False narrative: Obama failed to step up to the plate when we needed him, he compromised away the public option because of pressure from corporations, and now the bill will only enrich insurance companies and won’t even insure everyone in America. The bill may be so bad, we might be better off with the status quo.

Reality: the public option is decidedly not dead yet, Obama is in favor of said public option, and regardless of whether or not a public option is in the final bill, the reform will be a big step forward when compared with the status quo. At the least there will be no more penalties for pre-existing conditions and many more people will get coverage, with insurance for lower income folks subsidized by increased taxes on upper income folks. It won’t be a dream bill, but getting a dream bill was always pie-in-the-sky.


False narrative
: Obama is escalating the war and is too chicken to stand up to the warmongers.

Reality: despite painting himself into a corner with his hawkish talk on Afghanistan leading up to the election in 2008, Obama, I believe, is trying to wriggle his way out of this growing quagmire. He rejected all of the options for escalation, with explicit instructions to include a clear “end-game” in all future proposals. Obama is increasingly worried about the cost of an open-ended, never-ending war in Afghanistan. The reality in Afghanistan is grim, but Obama is thinking clearly about the issue and should be commended for that.

I admit that on the issues of cap-and-trade and Israel-Palestine Obama does look to have genuinely failed us. That said, it’s clear that on both those issues Obama’s heart is in the right place. If he gets a second term there is hope for the future on these tough issues, too. Patience, my friends, patience.

In a future post I will speculate on why liberals are so pissed at Obama when it seems so obvious (to me, at least) that we should be happy with him.

Thursday, November 12, 2009

An Illustration of why we need an overhaul of national health care policy

Adapted from an email I sent to a friend yesterday:

I’m in a class this semester called “Writing and Reporting on Politics and Policy.” The thrust of the class is that each of us has picked a beat to cover for the semester, and mine is the city government of my hometown: Newton, MA.

Here’s the most interesting thing I’ve found: The city's costs have been increasing and will continue increasing at about 5.5% per year, and its revenues have been increasing at about 3.5% per year. Municipalities in MA are prohibited from having deficits, so they've kept the budget balanced by cutting city staff, deferring needed capital maintenance and investment, and not funding long-term pension liabilities. As a result, the city has a skeleton crew in city hall, a $300 million backlog of capital expenditure (ie roads and schools and fire-stations) and a $400 million unfunded pension liability. If the city were to start making incremental, responsible investment in capital and pension fund, there would be cumulative deficits of $174 million over the next 5 years, on a budget of $262 million for this fiscal year.

Here's the punchline: It’s all health care. The whole structural gap - growth in uses exceeding growth in sources - comes from health care. The city's health care costs have grown at 9.4% per year for the past 10 years. Together with the health care portion of pension benefits, it now makes up 20% of the city budget. If the cost of health care had grown at the same rate as revenues over that 10-year period, the city wouldn't have this structural gap at all. The increasing cost of health care has ripped the city's budget to shreds.

Saturday, November 7, 2009

Sour Grapes

Friend of The Pickle Justin King called my attention to this column, by Joe Posnanski, which is an oldie but goodie: the Yankees buy championships.

One of his main points is that baseball is better at hiding competitive imbalance than are other sports. Whereas in football it’s not uncommon for a great team to win more than 90% of its games, and in basketball a great team can win over 80% of the time, the best baseball teams only win around 65%. The best winning percentages in the last 100 years of pro football, basketball, and baseball are, respectively, 100%, 88%, and 72%.

Which naturally made me wonder why, and I developed a little theory that I think isn’t bad, and perhaps is of some interest: The outcome of a baseball game is determined by fewer events.

Each of the three sports can be thought of as a sequence of zero-sum events, in which each team is doing to try to do something to help it win the game, and that better teams are better at doing. In football, the event is a play from scrimmage. In basketball, it’s an offensive possession, and, ultimately in most cases, a shot. In baseball, it’s a plate-appearance.

When two evenly-matched teams play each other in any sport, what we mean by “evenly-matched” is that, on average, each team will prevail in each of those individual events roughly an even number of times. Perfect example: The 2008 Wimbledon Final, in which Nadal won 209 points, and Federer won 204. The greater the disparity between the two teams, the greater the probability that the better team will prevail in any given trial.

And here’s the rub: For a given probability that the better team will prevail in any given trial, the probability that team will win the whole game is higher the greater the number of trials. And there are fewer trials in baseball than there are in other sports.

In football, each team runs about 70 plays from scrimmage. In basketball, each team has the ball about 100 times. But in baseball, the average game sees each team send about 40 players to the plate.

It’s just a shorter game. There are fewer random trials of an event with probability p. And that means that it’s less unusual for a bad team to beat a good one.

That, and the fact that there are Zach Greinkes on Kansas City Royalses. And I hate the Yankees. And thank you, Peter, for taking me to my first ever world series game.

Wednesday, November 4, 2009

New York makes us stop and think

I would have voted for Bloomberg today if I lived in New York. But let me ask this question: When a gajillionaire spends a brajilion dollars to get re-elected for an election-law-alteration-enabled third term, yet he still only wins by 5 percentage points, does that mean the democratic thing would have been to wave goodbye? Does it mean he shouldn't be there?

I think it probably does. If he didn't have a jagriblion dollars, he wouldn't be the mayor...