Category Archives: Social policy

Obama’s Work for Almost Free, Maybe You Get Hired Program

I so often criticize the New York Times for doing stenography for officialdom that I feel compelled to point out a case of good reporting on an Obama initiative I’ve seen criticized in other venues and failed to shred on NC.

The Times piece focuses on a Georgia “tryout” program in which workers still on unemployment get to work for free for prospective employers for a maximum of 24 weeks. The employer is under no obligation to hire anyone. Needless to say, this program is more than a tad skewed in favor of companies. But it costs no money and creates the impression the government is Doing Something. So since no one in DC wants the government to spend more money, particularly on little people, this gimmick is perfect fit with the “let them eat cake” zeitgeist.

Key sections of the Times piece:

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The False Dichotomy of Greed

By Sell on News, a macro equities analyst. Cross posted from MacroBusiness

The Euro crisis appears to be developing into something similar to the 1980s Latin American debt crisis when the idea that, to quote Walter Wriston, who ran First National City/ Citibank from the 1960s into the 1980s it was assumed that: “countries don’t go out of business.” The Latin American leadership demonstrated that they, in effect, could, by defaulting. As a number of bloggers at MacroBusiness have pointed out, government finances are not like household finances, although they are often seen that way. That much is well understood in the financial community, although perhaps not as well in the wider public.

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Richard Kline: Progressively Losing

By Richard Kline, a Seattle-based polymath and poet

Those anywhere to the liberal side of the Anglo-American political spectrum have been on a long losing streak. As of this summer of 2011, they are wholly in disarray. In my considered view, ‘progressives’ lose because they do not have it as a goal to win. Their principal concern is to criticize the moral failings of others in society, particularly the moral failings of those in power.

At best, progressives seek to convert. In the main, they name and shame—ineffectively. American ‘progressives’ distrust political power, period, are queasy about anyone having it, and suspicious toward anyone who actively seeks it, including other putative progressives. The contest as progressives conceive it is fundamentally a moral one: they believe they are right, and want their opposition to see the light and reform/conform. Thus, they don’t frame what they engage in as a fight but rather as a debate.

There has been another and more radical trend on the left-liberal end of the spectrum previously. That trend derived from radicalized, Continental European, immigrants, it sourced much of labor activism, and is largely extinct in America as of this date. It is the atrophy of this latter muscle in particular which has rendered progressive finger-wagging impotent.

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The Decline of Manufacturing in America: The Role of Government Neglect

As I mentioned in a Labor Day post, I grew up in an America where manufacturing was still the backbone of the economy. I may be more aware of that than most in my age group by virtue of spending much of my childhood in small towns where the local paper mill was the biggest employer. Similarly, when I went to business school, many of my classmates had worked for major manufacturing firms, and the ones who had been in finance (for the most part, two year credit officer programs at major banks) weren’t seen as having better backgrounds than their classmates.

While as other economies developed, the US share of global production was bound to decline, I’m disturbed by the assumption that labor costs are the sole determinant of success. My contacts is that it is an article of faith in Washington is that the US can be competitive only in finance (and presumably in commodities businesses like agriculture). This story line is terribly convenient, since it gives diseased, greedy, and incompetent American managers and policymakers a free pass.

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Mike Wallace 1959 Interview of Ayn Rand

I found this interview intriguing for two reasons. First, I must confess to not realizing that Rand’s philosophy was rooted in the counterfactual belief that people are rational. Every social science (ironically, save mainstream economics) puts human irrationality and inconsistency front and center. Nobel prize winner Herbert Simon studied how woefully limited human cognitive capacities. More Nobels have been awarded for behavioral economics, which (among other things) has catalogued numerous cognitive biases.

Second, the questions that Wallace raises with Rand illustrate how much social values have changed in 50 years.

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Quelle Surprise! New York Fed Director Shills for Bank of New York, Argues Against Rule of Law

Given the Federal Reserve’s abysmal regulatory record in the runup to the crisis (even the uber bank friendly Office of the Comptroller of the Currency was more aggressive in going after subprime abuses, for instance), it should be no surprise that some of its directors are utterly lacking in propriety and common sense when it comes to defending the rights of banks to profit at the expense of customers and society at large.

The only good news about the latest example is that it was so ineptly done that it appears to be backfiring.

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Kucinich on Creating Jobs in America

I normally steer away from political posts, but this two part interview with Dennis Kucinich on Keith Olbermann’s Countdown focuses on economic issues. The interviewer was admittedly throwing softballs, but the critique of Obama was blunt. Is a primary challenge in the offing?

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James Galbraith on How Fraud and Bad Economic Thinking Got Us in This Mess

Yves here. Our resident mortgage maven Tom Adams pointed me to a speech by James Galbraith via selise at FireDogLake, which discusses, among other things, how certain key lines of thinking are effectively absent from economics, as well as a lengthy discussion of the failure to consider the role of fraud. Galbraith is not exaggerating. The landmark 1994 paper on looting, or bankruptcy for profit, by George Akerlof and Paul Romer, was completely ignored from a policy standpoint even though it explained why the US had a savings and loan crisis.

Similarly, Galbraith refers to an incident at the most recent Institute for New Economic Thinking conference, in which he stood up and said, more or less, that he couldn’t believe he has just heard a panel discussion on the financial crisis and no one mentioned fraud. The stunning part was how utterly unreceptive the panel and the audience were to his observation. You’d think he’d had the bad taste to say the host had syphilis.

I strongly urge you to read the entire piece; non-economists may want to skim the first third and focus on the crisis material and what follows. This is the key paragraph:

This is the diagnosis of an irreversible disease. The corruption and collapse of the rule of law, in the financial sphere, is basically irreparable. It’s not just that restoring trust takes a long time. It’s that under the new technological order in this field, it can not be done. The technologies are designed to sow and foster distrust and that is the consequence of using them. The recent experience proves this, it seems to me. And therefore there can be no return to the way things were before. In other words, we are at the end of the illusion of a market place in the financial sphere.

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Warren Reportedly Ready to Drink From Poisoned Chalice of a Senate Bid

I’m disappointed to have learned from a credible source that despite her public “I”m taking some time off to think about it” stance, Elizabeth Warren has formed a committee to run for Senate in Massachusetts. I’m told she could repurpose it for a Presidential campaign but my sense is the odds are against it.

My mole, who has done granular work on Massachusetts elections, is pretty confident her bid will fail despite the fact that Scott Brown does not have terribly deep support by the center and left. He says (as we and others have) that out of state money corporate money would pour into Scott’s coffers, making it even harder to overcome the advantages he enjoys as an incumbent. In addition, Harvard professors are not a demographic that plays well in much of the state. And this reading comes from someone who is ideologically sympathetic and would support her campaign.

Whatever reasons Warren may have for launching a Senate campaign, they will pale in comparison to the perceptions that will mount whether she fails or succeeds.

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Quelle Surprise! Greedy Rentiers Are the Same the World Over!

Tolstoy said that happy families are all alike, and it may be true of businesses as well. But while Tolstoy no doubt had an an image of settled domesticity in mind, the 21st century corporate version of happiness is much less appealing.

I thought US-based readers would find this extract from a recent post in the Australian blog MacroBusiness terribly familiar. While America’s extortionate class par none is the too big to fail financial firms, in Australia they have enough of a tradition of regulation that the banks are merely coddled as opposed to completely spoiled (they also never had the opportunity to engage in the wreck-the-economy-for-fun-and-profit exercise we had here that put them firmly in control).

Down under, the cohort that is now at the top of the economic pecking order is the miners. Notice the similarities to behavior we’ve seen over and over again here

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Randy Wray: The Budget Compromise – Congress Creates a Rube Goldberg Doomsday Machine

By Randy Wray, Professor of Economics at the University of Missouri-Kansas City and Senior Scholar at the Levy Economics Institute of Bard College. Cross posted from EconoMonitor

Don’t you feel relieved? After weeks of threats, hostage-taking, and other forms of deficit terrorism, our two political parties have finally “compromised” on what was always a foregone conclusion. (As I write, we still await the Senate vote—but it looks like a done deal.)

Washington got what it wanted—a down payment on destruction of the last remnants of progressive policy. Soon, it will be 1929 all over again. We can make believe that the New Deal and Great Society programs never existed, and go back to the good old days when it was every “man” for himself.

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Propagandized US Reporting on Recent Developments in Egypt?

As an old wag put it, “Just because you are paranoid does not mean they are not out to get you.”

Tonight, the Wall Street Journal and the Los Angeles Times both ran stories charging that the revolution in Egypt had lost a great deal of public support. The reason they triggered by BS detector was that they both appeared the same evening. If this had been a domestic story, it would be not unreasonable to assume that a seeming coincidence of that sort was the result of a PR push, particularly in the absence of a major news event as a trigger. And as we will see, when I checked the UK media and Aljazeera, the gap in reporting was noteworthy.

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Matt Stoller: What Presidency?

By Matt Stoller, who worked on the Dodd-Frank financial reform law and Federal Reserve transparency issues as a staffer for Rep. Alan Grayson (on Twitter at @matthewstoller)

If you have only one rule in politics, I suggest the following – get your head of out your television set, and start paying attention to government. The narrow intense focus of TV can constrain us so powerfully that we are blinded by technicolor.

To explain – there’s an endless stream of musings on our current political problems, with an attempt to apportion “blame” for what’s going on.

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