October 31, 2006
You Can't Make This Stuff Up
James Glassman, the prescient author of Dow 36,000, is standing by his argument:
Glassman, 59, defends ``Dow 36,000's'' original premise as well. The prediction -- that the Dow would triple by 2005 -- is still valid, he says, although he's pushed the deadline out to 2021.
Investors who bought the Dow's 30 stocks in October 1999, when the book was published, waited more than four years to pull even. From the bull market peak reached four months after it came out to the bear market low of Oct. 9, 2002, the average lost 38 percent.
I think Galbraith had it right:
If all else fails, immortality can always be assured by spectacular error.
Gore To China?
The Economist has a good rundown of the new study showing unchecked global warming will consume 5%-20% of worldwide GDP -- a catastrophic amount that makes preemptive measures a downright bargain. Relatedly, I was at an event yesterday uniting all manner of (small "e") economist types, many of whom spoke dreamily of the need for some national investment in innovative industries, most of whom thought renewable energy offered both the most promise and the most possible gain. That's certainly backed up by this graph, which sort of scares the hell out of me:
Kelly Sims Gallagher, one of the savviest early analysts of climate policy, has devoted the last few years to understanding the Chinese energy transition. Now the director of the Energy Technology Innovation Project at Harvard's Kennedy School, she has just published a fascinating account of the rise of the Chinese auto industry. Her research makes it clear that neither American industry nor the American government did much of anything to point the Chinese away from our addiction to gas-guzzling technology; indeed, Detroit (and the Europeans and Japanese to a lesser extent) was happy to use decades-old designs and processes.
"Even though cleaner alternatives existed in the United States, relatively dirty automotive technologies were transferred to China," she writes. One result is the smog that is choking Chinese cities; another is the invisible but growing cloud of greenhouse gases, which come from tailpipes but even more from the coal-fired utilities springing up across China. In retrospect, historians are likely to conclude that the biggest environmental failure of the Bush administration was not that it did nothing to reduce the use of fossil fuels in America, but that it did nothing to help or pressure China to transform its own economy at a time when such intervention might have been decisive.
It's not that the decisions were incomprehensible at the time. Why would Detroit want to share advanced anti-pollution technologies given China's penchant for lax intellectua property regulation? But comprehensible though they were, they'll prove destructive shortly. The policy choices are dispiriting, here. While elites like the muse about gas taxes, I'd guess there's precisely no chance of one being passed into law. If we had a bipartisan accord where both parties unanimously endorsed such a program and thus dispersed blame and retribution, maybe. We don't. Investment in some sort of Apollo Alliance project would be a good move, both from a jobs and environmental perspective, but it's unclear how rapid the advances will be. So I trend towards the pessimistic side on all this, but who knows? Maybe 2008 will see the inagauration of President Gore, and everything will be different.
I Feel So Free
I'm happy to say it: Fuck the founding fathers. See? It's liberating and alliterative.
Damn You Spy!
There's a new history of Spy magazine out that's getting good reviews. The publication was before my time, but it's really impossible to overstate how enduring -- and annoying -- its influence is. I've yet to work or intern at a single publication that didn't advise me to go look at old Spys, or didn't huddle around the editorial table trying to recapture the snarkathon's magic in a one-shot graphic. The management of dull and serious political magazines is populated mainly by folks who wish they were at Spy, or editing it, or writing for it, and so they demand funny charts. Now!
Calm Before The Storm
It's just over a week till the midterm elections, which could change everything, nothing (which would, in its way, change everything), or something in between. We've all been focused on these for months, and the polling suggests real hope and potential. And yet, and yet, things feel oddly calm, no? I mean, not at The Corner, where they're freaking out and publishing every GOP press release and piece of Casey oppo they can find, but everywhere else. It's as if no one has anything left to say.
GalbraithIt's not the biggest deal in the world, but I'm a little disturbed that neither Robert Rubin, Peter Orszag, or Jon Chait appeared to know where John Kenneth Galbraith's concept of Countervailing Powers comes from. Rubin appears to think it's from a book called "Countervailing Powers," which doesn't exist. No one else even heralds a guess. The actual book is American Capitalism, one of Galbraith's three most influential economic works (the other two were The Affluent Society and The New Industrial State.) As I said, not the biggest deal in the world, but here you have two top Democratic economists and a top liberal policy wonk, and none of them seem particularly familiar with (arguably) the greatest Democratic economic thinker of the past century*.
On the bright side, the three do seem to understand -- and this is a particularly wrenching realization for Rubin -- that Galbraith's ideas are absolutely critical in the current moment. I'm often stung by how much everything I write is simply vintage Galbraith, defrosted and mad-libbed for the current era ("Name of president here"). Take countervailing powers: Galbraith argued that capitalism's natural tendency is towards aggregation. The neoclassical concept of many different competitors all battling it out was, he thought, naive. The realities of mergers, acquisitions, and predatory practices would leave industries with a small number of very large players, most of whom would be tacitly cooperating for reasons of profit or survival.
The only way to restore balance, Galbraith argued, was other behemoths. So massive retailers would compete with massive producers (there's evidence of this happening, as Gillette joins Procter & Gamble, in part to better bargain with Wal-Mart), and both had to handle massive unions and activist government. The tension between producers and retailers would safeguard a good economy, and the power of government and unions would ensure a good society.
The extrapolations aren't hard. Unions are basically dead, the government is currently gripped by a corporatist ideology that leads them not to stay out of the economy, but to use their influence to augment corporate power, and no one who reads me will miss the resonance with Wal-Mart's virtual monopsony. I'm not one who goes in much for the conservative adoration of their philosophers and intellectual forebears, but I think the left is deeply impoverished by its essential abandonment of Galbraith's insights. For those who want to do better, you can get a rich and broad overview by reading Richard Parker's recent biography of Galbraith, this compilation of Galbraith's best writings, American Capitalism, or The Affluent Society. And that's just where you should start.
*Indeed, there's little I'm prouder of than that Galbraith was one of The American Prospect's founding sponsors.
Update: Here are some great Galbraith quotes, in including this one, which I find particularly relevant:
Liberalism is, I think, resurgent. One reason is that more and more people are so painfully aware of the alternative.
Who Ya Gonna Hate?
It is the almost insane hatred one sees in our enemies that has most horrified me since September 11, 2001. I have written elsewhere that militant Islam is suicide terrorism as social contract – they are willing to destroy their entire societies in order to strike their enemy. But Orwell's column makes me realize that the Islamist movement is also a spiritual and moral suicide blah blah blah....
You know what's horrified me the most since 2001? The almost insane hatred exhibited in my countrymen. We'll beat the "Islamofascists," or bin Laden, or Hussein, or whoever we're worried about this week. But the blithe pundits suggesting that "[e]very ten years or so, the United States needs to pick up some small crappy little country and throw it against the wall, just to show the world we mean business?" The Hitchens, Sullivans, and Mario Loyolas of the world resurrecting George Orwell in order to recast their enemies as existential, ideological threats and themselves from writers to warriors? The vast swath of the country willing to embrace torture and domestic surveillance? I don't know how we beat that lust for war, for bloodshed, for danger, for enemies abroad and at home. Nor the domestic mindset that emerges from it.
October 30, 2006
Conceptions of Government
Do try and wrap your mind around this. Republicans believe the federal government is a bureaucratic, moribund, and ineffective institution. They deride Democrats for thinking it can achieve not only the seemingly impossible, but the moderately difficult. They also believe it can stop 20-29 year olds from having sex. I didn't think armed guards bristling with tranquilizer guns could do that.
Taxing The Rich
At a New America event today, James Glassman (author of the hilariously wrong Dow 36,000) turned his characteristic insightfulness to inequality. "We've done all the redistributing we can do," he helpfully informed the audience. The poorest 50% only pay 3% in federal income taxes!
I was reminded of Glassman's by Mike's excellent comment on the inequality post from earlier today:
The cost of government should be funded in accord with the percentage of assets owned and earned. Here are increases in national debt for the past few years. Note, increasing national debt shows the full extent of deficit spending.
Here are the taxes paid by quintile.
Here is a pie chart of wealth distribution.
As you can see from this chart, the bottom 50% owns 2.6% of the wealth; they are therefore overtaxed because their tax burden is 3.4%. The top 10% own 69.9% and the remainder, the 40% between the top 10 and the bottom 50% own 27.4%. That totals 99.9% of American wealth. Note, the chart is dated 2001. Since then, the upper groups have gained wealth, the lower have lost.
There is a correlation between wealth owned and income earned, but note; there are families with great wealth and low income because the wealth is considered unearned: from stocks, bonds, and other sources aside from the weekly paypacket.
It is clear that the Federal taxes are too low by 575,000,000 in order to meet federal expenses and that the people owning America are drastically undertaxed because they are in no way paying their fair share, which is under 65% when it should be over 70%.
Therefore, all talk of the rich being overtaxed is bunk.
There's also, of course, payroll taxes, sales taxes, user fees, taxes on goods, and all the other regressive charges laid on by the government and helpfully forgotten whenever wingers want to make the point Glassman is. But as to his direct argument, Mike gets it right: We're not even taxing the rich in proportion to the share of the economy they control. Forget taxing them beyond it.
Dead Tree Lives
Ryan Sager posts up the list of the 25 highest circulation newspapers in the country with the last year's change noted on the right. I knew USA Today was the top paper in the country, but I didn't realize it had more than double the readers of the New York Times. And the New York Post has no surpassed The Washington Post, further signaling the death of civilization. One caveat: These are the print numbers, and it'd be interesting to see how they change if web visits are recorded. Such readers may not do much for the bottom line, but they're readers nonetheless. I got the Times traffic numbers from their site, and depending on which metric you go by (Nielsen or internals), they got either 11 million or 21 million unique visitors in April, which certainly changes how the following circulation numbers look. In any case, for those interested in the dead tree data, the numbers are below the fold.
1. USA Today: 2,269509, (-1.3%)
2. The Wall Street Journal: 2,043235, (-1.9%)
3. The New York Times: 1,086,798, (-3.5%)
4. Los Angeles Times: 775,766, (-8.0%)
5. The New York Post: 704,011, 5.3%
6. Daily News: 693,382, 1.0%
7. The Washington Post: 656,297, (-3.3%)
8. Chicago Tribune: 576,132, (-1.7%)
9. Houston Chronicle: 508,097, (-3.6%)
10. Newsday: 413,579, (-4.9%)
11. The Arizona Republic, Phoenix: 397,294, (-2.5%)
12. The Boston Globe: 386,415, (-6.7%)
13. The Star-Ledger, Newark, N.J.: 378,100, (-5.5%)
14. San Francisco Chronicle: 373,805, (-5.3%)
15. The Star Tribune, Minneapolis: 358,887, (-4.1%)
16. The Atlanta Journal-Constitution: 350,157, (-3.4%)
17. The Plain Dealer, Cleveland: 336,939, (-0.6%)
18. The Philadelphia Inquirer: 330,622, (-7.5%)
19. Detroit Free Press: 328,628, (-3.6%)
20. The Oregonian, Portland: 310,803, (-6.8%)
21. The San Diego Union-Tribune: 304,334, (-3.1%)
22. St. Petersburg (Fla.) Times: 288,676, (-3.2%)
23. The Orange County (Calif.) Register: 287,204, (-3.7%)
24. The St. Louis Post-Dispatch: 276,588, 0.6%
25. The Sacramento (Calif.) Bee: 273,609, (-5.4%)