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September 23, 2010

Latest Posts from Economist's View

Latest Posts from Economist's View

"The GOP's Bad Idea"

Posted: 23 Sep 2010 12:50 AM PDT

Ezra Klein reacts to the GOP's 'Pledge to America':

The GOP's bad idea, by Ezra Klein: ...Their policy agenda is detailed and specific -- a decision they will almost certainly come to regret. Because when you get past the adjectives and soaring language, the talk of inalienable rights and constitutional guarantees, you're left with a set of hard promises that will increase the deficit by trillions of dollars, take health-care insurance away from tens of millions of people, create a level of policy uncertainty businesses have never previously known, and suck demand out of an economy that's already got too little of it.
You're also left with a difficult question: What, exactly, does the Republican Party believe? The document speaks constantly and eloquently of the dangers of debt -- but offers a raft of proposals that would sharply increase it. ... It says that "small business must have certainty that the rules won't change every few months" and then promises to change all the rules that the Obama administration has passed in recent months. It is a document with a clear theory of what has gone wrong -- debt, policy uncertainty, and too much government -- and a solid promise to make most of it worse. ...

I reacted to Republican plans a few days ago:

There don't seem to be any new ideas here, just a promise to undo what's been done since the Republicans lost power. Why would we want to return to the policies that brought us a stagnant middle class even in the best of times, widening inequality, out of control financial markets, the biggest recession in recent memory, declining rates of health care coverage, threats to Social Security and to social insurance more generally, tax policies that reinforce trends in inequality and create big holes in the budget (amid false claims that tax cuts more than pay for themselves), and two wars whose total costs to the nation go far beyond the large budgetary costs that have brought programs such as Social Security and Medicare -- programs vital to middle and low income households -- under increasing financial pressure?


Posted: 23 Sep 2010 12:50 AM PDT

This looks like a mess:

'Robo-signer' played quiet role in huge number of foreclosures, by Brady Dennis, Washington Post: The robo-signer lives on a quiet street in this small town an hour's drive northwest of Philadelphia. ... Many large mortgage lenders have come to rely on a relative handful of so-called robo-signers ... to attest to the accuracy of thousands of home foreclosure documents across the country. ...
Stephan - who declined to talk to a reporter -... works as the leader of the document execution team for GMAC Mortgage. He has signed off on as many as 10,000 foreclosures in a month, according to court documents. That's barely a minute per case, assuming he works a normal eight-hour day.
His signature indicated that the information in the cases was accurate to the best of his knowledge, and that he had signed in the presence of a notary. The problem was, that didn't always happen, according to depositions that Stephan gave in December and June...
He stated that he would glance at ... a few other numbers, but simply assumed most of the information in the files was correct. Stephan, who has more than a dozen people working under him, told attorneys that he had three days of training for the position and that he didn't know how the "summary judgment" affidavits he signed were used in judicial foreclosure cases.
Stephan's admission has cast into doubt thousands of mortgage foreclosure filings. ...

Maybe that's how this happens.

"Against Homework"

Posted: 23 Sep 2010 12:50 AM PDT

This is from an 1860 edition of Scientific American:

Against Homework, Scientific American: A child who has been boxed up six hours in school might spend the next four hours in study, but it is impossible to develop the child's intellect in this way. The laws of nature are inexorable. By dint of great and painful labor, the child may succeed in repeating a lot of words, like a parrot, but, with the power of its brain all exhausted, it is out of the question for it to really master and comprehend its lessons. The effect of the system is to enfeeble the intellect even more than the body. We never see a little girl staggering home under a load of books, or knitting her brow over them at eight o'clock in the evening, without wondering that our citizens do not arm themselves at once with carving knives, pokers, clubs, paving stones or any weapons at hand, and chase out the managers of our common schools, as they would wild beasts that were devouring their children.

Debate on Tax Cuts May Be Delayed

Posted: 23 Sep 2010 12:31 AM PDT

What are Democrats thinking? Will they really decide to run away rather than standing their ground and daring Republicans to vote no?:

Debate on Tax Cuts May Be Delayed, by David Herszenhorn, NY Times: Floor debate over the highly contentious issue of what to do about the expiring Bush-era tax cuts may be delayed until after the November elections, senior Democratic aides said on Wednesday.

Senate Democrats will meet over lunch on Thursday to discuss the issue, but appeared close to a decision to postpone a debate that was shaping up to be a fierce clash with Republicans. ...

Democrats nominally control 59 seats in the Senate, but would need 60 votes to overcome a likely filibuster... And no Republican has come forward willing to support legislation that does not extend the lower rates at all income levels.

Still, some Democrats have lobbied in favor of forcing a vote that they say would show that Republicans are obstructing tax relief for 97 percent of Americans while fighting to maintain the lower rates for millionaires.

links for 2010-09-22

Posted: 22 Sep 2010 11:02 PM PDT

"The Awesome Stupidity of Replacing Larry Summers with a CEO"

Posted: 22 Sep 2010 03:42 PM PDT

The other day, Andrew Leonard of Salon's How the World Works said in response to a post that appeared here on, as he put it, Republican plans to "Erase the last two years and return to the good old days of George W. Bush":

I was struggling to find words to express my Monday morning dismay at this breathtakingly ambitious agenda for making America great again by repeating exactly the same mistakes that screwed the country up, but Mark Thoma, a professor of economics at the University of Oregon, beat me to it (posting shortly after midnight!).

My turn. I was trying to figure out how to say that appointing a CEO as head of the CEA plays into Republican charges that Obama is anti-business, but Andrew Leonard beat me to it:

The awesome stupidity of replacing Larry Summers with a CEO, by Andrew Leonard: If the Obama administration appoints a corporate executive to replace Larry Summers as National Economic Council director then the White House fully deserves the thumping it will get in November.
The ostensible reason for this colossal misunderstanding of the current political situation, sourced to anonymous administration officials, is that the White House wants "to allay the business community's doubts about administration policies."
This is nonsense. The only way for Obama to "allay" the so-called business community's "doubts" would be to join with Republicans in seeking a repeal of bank and healthcare reform, abandon his efforts to raise taxes on the wealthy, and fire Elizabeth Warren. By the definition currently employed on the opinion pages of the Wall Street Journal, anything to the left of Ayn Rand or Jim DeMint is "anti-business." The bleating from Wall Street executives who feel bullied and demonized only proves one thing: Anything less than their total freedom to pursue profit free of all government restraint is utterly unacceptable -- no matter what the consequences for the country at large.
The very notion that Obama is "anti-business" is an absolute charade, cooked up by conservative pundits and fed by financial industry lobbying muscle. It has no connection to on-the-ground reality, and if administration officials think it is one of Obama's problems then they are the worst kind of spineless idiots.
Obama's dilemma is that his middle-of-the-road approach to solving problems has outraged the base of both parties. ... But appointing former Time-Warner CEO Richard Parsons to Summers' job will not make an iota of difference...

Obama needs to reject the idea that Wall Street must be placated any further than it already has been. It's going to be tough enough over the next two years defending the ground that has already been won. He doesn't need to concede any more. What he really needs to do is fire whoever is floating to the press the idea that the administration is concerned about being perceived as "anti-business."

Paul Krugman agrees.

"Who Can Replace Larry Summers?"

Posted: 22 Sep 2010 10:41 AM PDT

Brad DeLong says "nobody":

Who Can Replace Larry Summers?, by Brad DeLong: My view: nobody. The Obama administration is going to be weaker as a result of his forthcoming departure.

The job of Assistant to the President for Economic Policy has two components:

  1. Making sure that the President hears and considers the arguments, and makes an informed decision.

  2. Making sure that everybody thinks that the president has heard and considered their arguments, and made an informed decision, and that they are valued and respected members of the team who are being given due influence and deference.--and also to make sure that the president hears everybody's arguments and makes an informed decision.

Larry is superb at figuring out how to present complicated arguments to make them comprehensible to non-experts, and at setting up frameworks for discussion and debate that kept policy discussions on track and organized. That is most of the job. That is (1). And at that Larry is the best in the world.

The other part, part (2)--making sure that everybody thinks that their point of view has been given a fair shake, and that they are valued and respected measures of the team? Well, given who Larry is, he far, far exceeded expectations. Only one public shouting fight in the halls of the West Wing in two years is... quite good, really.

If I were Obama, I would (a) move Tim Geithner over to the West Wing job, for that is the job that matches his skill set where I think he would indeed by best in the world, and (b) bring Laura Tyson in to be Treasury Secretary...

Failing that, were I Obama, I would probably try to grab Alan Blinder from Princeton to fill the West Wing job...

And were I really devious, I would bring Ben Bernanke over to the West Wing and put Larry in the Fed Chair job...

That he wasn't as bad as expected at half his job "given who Larry is" doesn't say that he did it well, and it doesn't say he did it better than anyone else would have. I don't see how that translates to "irreplaceable." The public perception is that he captured the White House conversation and directed it in a particular way, and at times prevented dissenting views from being fully expressed. True or not, public perception matters and the idea that Summers was the one standing in the way of more populist policy was commonly held and hurt the president's standing with the base.

Maybe he's so good at the first part of the job that it more than compensates for failures at the second, but that depends upon the weights you attach to each part of the job, and it also depends upon the assumption that nobody else would be better at the first part. I guess I place more emphasis on the second part of the job than Brad, and I very much doubt that Summers is the only one in the world who can effectively "present complicated arguments to make them comprehensible to non-experts, and at setting up frameworks for discussion and debate that kept policy discussions on track and organized." There are others who can do this well, I think just as well. But even if they aren't quite as good at the first part of the job the difference wouldn't be that large, and their ability to do better at the second part of the job would more than compensate. Summers is not irreplaceable.

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