Obsidian Wings

Karl's Web

by Eric Martin

Paul Krugman comments on a recent Karl Rove op-ed that addressed the Iraq war and related political implications:

Karl Rove now tells us that his “biggest mistake” was not fighting back against the perception that the Bush administration deliberately misled us into the Iraq war. His main evidence that nothing like that happened is the fact that a 2005 commission found no wrongdoing.

Here is what Rove actually wrote:

Several bipartisan commissions would later catalogue the serious errors in the intelligence on which Mr. Bush and Democrats relied. But these commissions, particularly the Silberman-Robb report of March 31, 2005, found that the "Bush lied" charge was false.

Not that it should surprise anyone, but Rove is, er, lying about not lying.  That is, the Silberman-Robb commission was specifically NOT tasked with investigating whether or not the Bush administration distorted intelligence.  So it's kind of rich to cite that commission's report as exonerating evidence.

From the report's mission statement (pdf):

Finally, we emphasize two points about the scope of this Commission’s charter, particularly with respect to the Iraq question. First, we were not asked to determine whether Saddam Hussein had weapons of mass destruction. That was the mandate of the Iraq Survey Group; our mission is to investigate the reasons why the Intelligence Community’s pre-war assessments were so different from what the Iraq Survey Group found after the war. Second, we were not authorized to investigate how policymakers used the intelligence assessments they received from the Intelligence Community. Accordingly, while we interviewed a host of current and former policymakers during the course of our investigation, the purpose of those interviews was to learn about how the Intelligence Community reached and communicated its judgments about Iraq’s weapons programs—not to review how policymakers subsequently used that information. [emphasis added]

Vintage Rove.

This Still Makes Sense

by Eric Martin

Note to politicians in Washington: If you want to reduce the budget, vote for the public option. From the CBO (via Matt):

CBO estimates that the public plan’s premiums would be 5 percent to 7 percent lower, on average, than the premiums of private plans offered in the exchanges. The differences between the premiums of the public plan and the average premiums of private plans would vary across the country because of geographic differences in the plans’ relative costs. Those differences in premiums would reflect the net impact of differences in the factors that affect all health insurance premiums, including the rates paid to providers, administrative costs, the degree of benefit management applied to control spending, and the characteristics of the enrollees. [...]

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the proposal would reduce federal budget deficits through 2019 by about $53 billion. That estimate includes a $37 billion reduction in exchange subsidies and a $27 billion increase in tax revenues that would result because a greater share of employees’ compensation would take the form of taxable wages and salaries (rather than nontaxable health benefits). Those changes would be partly offset by an $11 billion increase in costs for providing tax credits to small employers. (The proposal would have minimal effects on other outlays and revenues related to the insurance coverage provisions of PPACA.)

Tastes great.  Less filling.

Jaundiced Eye of Newt

by Eric Martin

Isn't Newt Gingrich supposed to be the intellectual, the "ideas man," the not-as-loony-as-Sarah Palin option in the GOP?  Apparently not:

There should be no mosque near Ground Zero in New York so long as there are no churches or synagogues in Saudi Arabia. The time for double standards that allow Islamists to behave aggressively toward us while they demand our weakness and submission is over.

Matt Yglesias is spot on:

Why on earth would we adopt this standard? There are no synagogues in the Vatican City, and yet we have Catholic churches all over the place. That’s because the United States of America isn’t a small city-state run by a religious leader. In Denmark, they have a state-sponsored church, but we don’t have a state-sponsored church because in the United States we have a strong belief in a brand of religious pluralism that’s served both the country and religion well. Saudi Arabia is notorious for its lack of freedom of religion, but we don’t improve anything by mimicking Saudi Arabia’s flaws.

Seriously.  What political philosophy does Gingrich's recommendations represent?  That our freedoms should be gauged by the lowest common denominator anywhere on the globe, and calibrated accordingly on a case-by-case basis?  What the worst of the worst regimes do, so too shall we to groups that share some cultural similarities to the regimes in question?

Brilliant.  

I mean, if Israel won't let Arabs buy land in 80% of Jerusalem, does that mean we shouldn't let Jews buy real estate in 80% of New York City?  Obviously not, but by Gingrich's standard, presumably, yes?

The rest of Gingrich's piece is a mish-mash of demagoguery, misinformation, ingornace and dog whistle bigotry.  He even claims to know what "every Islamist in the world" thinks (that "Cordoba" is a "a symbol of Islamic conquest") and conflates the Cordoba House sponsors with Islamists (they are most definitely not, as they do not espouse that particular doctrine - not that, even if they were, we should persecute them). 

UPDATE: Adam Serwer adds:

My first observation here is that Gingrich so admires the intolerance of his declared enemies that he wants to imitate it. The second is that Gingrich's attempt to hold Muslims collectively accountable for the actions of a relative handful of extremists doesn't simply reinforce al-Qaeda's narrative that America is at war with Islam as a whole; it skirts dangerously close to accepting the terrorist-friendly premise that "innocents" as we generally understand the term don't actually exist.

Yup.

Boom Goes the Dyn-O-Mite!

by Eric Martin

Barry Ritholtz tackles a question via email regarding a topic that has been discussed on this Site with some regularity (via):

“Can you support your position, in a fast, easy way, why the US housing boom was NOT caused by Fannie and Freddie, or the CRA? I understand all the factors you laid out in the book — but I would like to see more evidence to support your view.”

Well, its difficult to prove a negative — supporters of the “FNM/FRE/CRA caused it” should have to prove their case, as I did in Bailout Nation.

However, I have always found this chart to be quite compelling:

>

Chart via BIS by way of NewObservations.net

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Pray tell what caused the same boom and bust in these other nations?

And how could Fannie/Freddie or the CRA be responsible — that only applies to the US — when you have the same, global, coordinated rise in prices?  (And you can add Korea and New Zealand to the chart above).

For those of you who still believe the political talking point that it was FNM/FRE/CRA’s fault, the question remains: What caused these other nations to boom the same time the USA did?

Poor minorities the world over?  Snark aside, Ritholtz posits a theory:

The US Federal Reserve’s monetary policy, on the other hand, did have a global impact. The US has the world’s reserve currency, the biggest economy and the most important central bank.  When the Fed took rates down to 1%, it had an ginormous impact on everything priced in debt, dollars or leverage. That includes housing, around the world.

But that doesn't really fit into a neat and tidy talking point with the racial overtones that the GOP is playing up via a number of dubious non-scandals these days.

Grand Old Party at Ground Zero

by Eric Martin

The increasingly vocal campaign to prevent a mosque from being built near the Ground Zero site in New York City is an unseemly mixture of ignorance, irrational fear, naked bigotry and opportunistic political demagoguery.  It also represents a blunder in terms of counterterrorism policy.

Unsurprisingly, Sarah Palin has thrust herself to the forefront of this effort, with her characteristic mangling of the English language somewhat obscuring the ugliness of the message underlying her now infamous "refudiate" tweet.  Neddy Merrill captured the crux well:

As if you didn’t know, Palin tweeted as follows:

Ground Zero Mosque supporters: doesn’t it stab you in the heart, as it does ours throughout the heartland? Peaceful Muslims, pls refudiate…Peaceful New Yorkers, pls refute the Ground Zero mosque plan if you believe catastrophic pain caused @ Twin Towers site is too raw, too real….Peace-seeking Muslims pls understand. Ground Zero mosque is UNNECESSARY provocation; it stabs hearts. Pls reject it in interest of healing

There’s something obscene about Palin reminding “peaceful” New Yorkers that the pain of 9/11 is “too raw.” But what really set me off is the idea that “peaceful Muslims” should oppose the masjid because of its associations with 9/11. Here’s the tension: we’re always hearing calls for “moderate muslims” to repudiate extremism, denounce terrorism, etc., but the guy heading the Cordoba Institute is pretty much the paradigm case of the moderate muslim who rejects al Qaeda, Sharia-for-all, global caliphate, all that. The Cordoba Initiative is all about being the moderate Muslim voice. One problem, therefore, is that he’s being opposed by the people ostensibly calling for…more of what he wants to do.

The second problem: the CI masjid will be “unnecessary provocation” only if people see the pain of 9/11 as caused by [M]uslims rather than, say, extremist [M]uslims in al Qaeda. (If I were more enthused about this post I’d make up a story about “how dare you build a synagogue near where that Jewish guy did that terrible thing” etc. etc.) Complaining about the symbolism or psychological effects just helps to cement the idea that the relevant reference class is [M]uslim rather than something else. The point of amplifying the “moderate voice” is to show what is true, viz., the [M]uslim community is a diverse one with a very small minority who likes to blow stuff up. The collective responsibility view implicit in Palin’s opposition is diametrically opposed to that. And you wonder why Step ibn-Fetchit doesn’t come running when you call.

That's it in essence.  The building of this mosque by the Cordoba Institute would only be problematic if al-Qaeda is treated as representing all Muslims, even those that view al-Qaeda as a fringe group that espouses heretitcal ideas.  No doubt al-Qaeda craves that mantle, but we have very good reasons to try to deny al-Qaeda that prize. 

And, remarkably or not, many of the same pundits that claim to want "moderate" Muslims to take a more prominent role in marginalizing the extremists fringes are also the ones arguing that such moderate Muslim groups should not be part of the tapestry of the financial district in Manhattan.

This is common sense.  Alienation and marginalization of moderate elements is not conducive to the empowerment of those same elements.  That, aside from the malevolance of the bigotry itself.

An American Utopia

by Jacob Davies

Chicago, in 1948:

(Via the Ebert Club; no link.)

This video reminds me of driving through St Louis on the way back from Milwaukee. Unexpectedly, knowing nothing of what to expect, downtown St Louis was a spectacular metropolis rising out of an endless plain; the civic buildings rival the Parthenon, as if they were built for a 1,000 year civilization; the arch is pure industrial exuberance, a 600 foot tall sign that says "We built it because we could".

The video of Chicago is like an early-20th-century city dreamcape, or a pre-war science-fiction magazine cover, filled with buildings grander than anything before built by human hands, wealth and optimism and confidence expressed in stone and steel and glass.

America is a Utopian society. It aspires to an achievable perfection, a middle-class egalitarian meritocratic democracy with no kings, no pharoahs, no rulers by inheritance or divine right. In this it is different to Britain, where I grew up, which has class differences that in many ways no side really wants to erase, rather only to throw the other down, or keep them down.

All this was apparent in the first few weeks I spent in the US, and it took years to really appreciate the ways in which the aspiration to that Utopian ideal has been made futile for a large section of the population. "We can't afford it" is the litany heard in the wealthiest country that has ever existed. If I think that is sad, it's not because I want America to be like Europe, or Britain. It's because I want America to be like America. When I say I think progressive taxes should be higher, it's not because of a miserly desire to live a smaller and more cramped life, out of disapproval for consumption. It's because I think that building an exuberant, wealthy America that leaves nobody out requires it.

America is a Utopian society. It would be sad if, in our lifetimes, we didn't try to take a few more steps towards that goal.

'Till the Stream of Your Blood Is As Black As the Coal

by Eric Martin

Yet another reminder of why stronger regulation of industry, and stiffer penalties for infractions, are required, and why industry self-regulation/de-regulation as championed by the GOP is such a spectacularly bad idea:

Directed by supervisors, miners at Massey Energy’s Upper Big Branch Mine commonly disabled monitors that could detect methane gas before the explosion that killed 29 in April. An investigation by NPR has “documented an incident in February 2010 in which an Upper Big Branch electrician was ordered to circumvent the automatic shutoff mechanism on a methane detector installed on a continuous mining machine.” Ricky Lee Campbell, a 24-year-old coal shuttle driver and roof bolter who witnessed the incident, told NPR they circumvented the safety device so that they could “continue to run coal”:

Everybody was getting mad because the continuous miner kept shutting off because there was methane. So, they shut the section down and the electrician got into the methane detector box and rewired it so we could continue to run coal.

There were dozens of such incidents, NPR reports. Maintenance foreman Clay Mullins told NPR he “believed miners could run mining machines temporarily with disabled monitors because that’s what the mine’s foreman and superintendent told him.”

Don Blankenship, the CEO of Massey Energy, was caught with a 2006 memo that told workers faced with safety rules, “you need to ignore them and run coal” because “coal pays the bills.”

Even with regulations in place, industries will continue to put profits ahead of the safety of workers and the public in general - relying on industry-friendly regulators to look the other way, or the gentle sting of paltry fines should enforcement actions proceed.  Given this, the belief that if we left corporations, who are required by fiduciary duty to maximize profits for their shareholders, to their own devices without any regulation, they would put a premium on worker/public safety is irrational at best.  In fact, it shouldn't pass the laugh test. 

But observing that probably makes me an effete, elitist liberal with no empathy for everyday Americans, like coal miners.

If You Kill My Dog, I'ma Slay Your Cat

by Eric Martin

Glenn Greenwald links to Britain's former chief intelligence official observing what was, really, the logical result of the wars in Iraq and Afghanistan:

Britain's support for the wars in Iraq and Afghanistan radicalized many Muslims and triggered a big rise in terrorism plots that nearly overwhelmed the British security services, the former head of the domestic intelligence agency said on Tuesday.

Giving evidence to an official inquiry into the Iraq war, Eliza Manningham-Buller, former MI5 director general, said the U.S.-led invasions had substantially raised the number of plots against Britain.

"It undoubtedly increased the threat and by 2004 we were pretty well swamped," she said. "We were very overburdened by intelligence on a broad scale that was pretty well more than we could cope with.

Greenwald then observes:

So if I understand this deeply esoteric and surprising concept correctly, what causes many Muslims to become radicalized and want to mount violent attacks on a particular country is when that country brings war, bombings, and other forms of destruction and interference to the Muslim world.  Who knew?  British Muslims became "radicalized" and "swamped" that country with Terrorist plots only after watching the Government attack two separate Muslim nations.  Add to that things like lawless detentions, Guantanamo, a torture regime, attacks in places like Somalia, Pakistan, Yemen and others -- all on top of two occupations in the Muslim world that will extend for a full decade at least -- and only the densest among us (or those who actively desire high levels of Terrorism threats for their own interests) will fail to see how the very policies justified in the name of fighting Terrorism are the ones most exacerbating that problem. 

Greenwald then preemptively addresses the familiar rebuttal to the argument that our foreign policy can fuel radicalization, a rebuttal that I previously described as the "Absolution Dodge."  According to the Absolution Dodge, terrorist attacks, radicalization and anti-Americanism pre-dated the invasions of Iraq and Afghanistan, and will outlive the end of each occupation, therefore, it is pointless to view these events as causal factors in increasing radicalization.  Rather, such attitudes are formed out of jealousy and animosity toward freedom. Thus, we do not need to adjust our foreign policy in order to mitigate these negative effects.  Greenwald:

And, as always, those who have been told that American interference and violence in the Muslim world began only after 9/11 should read about Mohammad Mossadegh; Joy Gordon's new book on the devastation brought by American air attacks on Iraq in the Persian Gulf War and especially the decade-long sanctions regime that followed; our endless support for continuous Israeli wars and occupation in that part of the world; and our decades-long support for tyrants from Egypt to Indonesia].  The issue is causation, not justification, and it's as crystal clear now as it was in 2003 when the U.S. Government itself recognized it.

That list isn't even exhaustive.  Some additional thoughts from me on the Absolution Dodge:

The pundits that use this simplistic formulation are usually doing so in order to shield unwise and flawed foreign policy choices from criticism. The recognition of the durability of some level of anti-Americanism/extremism/terrorism quickly morphs into a fatalistic call to inaction. "Why change our foreign policy when nothing is going to completely extinguish anti-Americanism, extremism or terrorism everywhere?" As if complete eradication is the only viable goal, and as if the intensity of the anti-Americanism that exists in the world - and whether or not it leads to radicalization or cooperation with radicals - is irrelevant.

Many purveyors of this faux-wisdom go even further than bemoaning the lack of total solutions by attempting to altogether de-link the anti-Americanism/extremism/terrorism from any past, present or future actions on our part. Instead, these the source of these phenomena is attributed to some vague combination of jealousy, envy and the inevitable hostility directed at the lone superpower.

While there undoubtedly is, and always will be, some of this baseless animosity toward America, attributing the lion's share of anti-Americanism to these caprices is wrongheaded - though it has its uses when seeking to dismiss legitimate concerns of blowback from present or future foreign policy endeavors (such as, say, military confrontation with Iran). If they hate us for our freedoms, what does it matter if we bomb another Muslim country? [...]

At the risk of stating my own tautology, this "all or nothing/blameless" view is not conducive to crafting good policy. While some level of anti-Americanism/extremism/terrorism will exist no matter what policies US Presidents (past, present and future) adopt, that does not mean that our policies cannot have a positive impact on the degrees of each and that we should not consider this outcome in our decision making process. Even small adjustments in the intensity and pervasiveness of anti-Americanism/extremism can be meaningful.

And certainly, not invading or attacking yet more Muslim nations is an adjustment that would have considerable benefits.  Speaking of which, the neocon war drums are nearing one of their periodic crescendos, this time with Iran in the crosshairs.

The Only Game in Town

by Jacob Davies

(We just moved over the weekend and we're still buried in boxes, so I haven't had a chance to post here the last few days, but this is a quick* post on some issues related to taxation.)

* Quick, and therefore not short. Pithiness is hard. (Pissiness, on the other hand...)

In many discussions of the effects of increased progressive taxes it seems to be assumed that business owners or high-income salaried workers or wealthy investors face a choice between deploying their resources - work effort and funds - or not doing so, and that the change in the quantity of expected returns from resource deployment will change the amount of those resources deployed.

I see little evidence that this choice exists at all. Rather, there is only one game in town, and you can't even take your ball and go home.

For investment funds, in order to choose not to invest them at all, you would have to withdraw the money in cash and stuff it under your mattress. Short of that option, you are investing whether or not you want to - at the very least providing reserves to your bank to loan out. The only question is which investments you are making. However, taxation affects the returns from different investments of different risk levels to a proportionate degree, so the choice is not between a risky investment that might be reduced from 10% return to 8% return by taxes, or a safer one at 5%, but between putting it into a risky investment now at 8% return or a safer one reduced by taxes to 4%. The ranking of investment choices remains the same, and those who look for the highest return will still put money into risky ventures.

There is no real option to "hoard" in the world of modern banking; leaving the money in the bank just means that professionals, and not you, are the ones making the decisions about which investments will pay the highest returns, and bankers for obvious reasons make those decisions based on the real returns from the investment and not the post-income-tax returns that an investor will receive.

For individual work effort, the choice is supposedly between work and leisure. However, only in a very extreme situation does this really apply - for instance, where marginal rates are (say) 90% and the person is in a position to adjust work effort in small units in response - i.e. to stop working part-way through the year or to cut back on hours. The Beatles complained about confiscatory tax rates (per the song, rates of 95%) but they were not in a position to reduce work effort in a way that applied only to the marginal part. Short of not working at all, in which case they would have no income at all, they could not control how much money was returned in a fine-grained way. And of course, in general they would rather have 5% of a million pounds than nothing at all.

With marginal rates of, say, 50% and the type of working conditions that apply to most people, the case is far weaker. The theory runs like this: let's assume that someone is working a 60 hour week so they can bring home $300,000 a year, returns are exactly proportionate to work effort, and they have perfect flexibility about how much they work. So, they rate the value of that last hour of leisure a week that they could acquire at about $3,333 a year ($5,000 * .66 after income taxes); otherwise they would have already cut back on work effort. Now a new bracket is introduced that increases the marginal rate to 50%. The return from that marginal hour is now $2,500, and so the consequence might be that they push down working hours until the marginal value of that extra hour of leisure is equal to the $2,500 earned from it.

That's one story. Here's a second story: the worker works until they have earned (after taxes) say $200,000, and that happens to require them to work 60 hours a week. When tax rates go up, they will only earn $180,000 for 60 hours a week, and to compensate they will increase their working hours until they earn $200,000 again.

To me both stories are equally implausible. People actually work the hours they work based on social norms (the 40 hour week) and/or a rough estimate of income maximization (i.e. not a work/leisure tradeoff). High-income jobs do not resemble low-tech piecework labor; it is rare that even extending work hours beyond 40-60 hours a week can actually increase output at all. A lawyer in independent practice, for instance, working 60 hours may be able to bill more hours if he extends to working 80 hours a week, but the work quality will fall off. And if workers work for income maximization and not because of a hypothetical work/leisure tradeoff, taxes will have no effect at all on work effort - more work means more money, whatever the tax rate.

That's my take; have at it.

Once Again, I'm In Trouble with My Only Friend

by Eric Martin

Liel Leibovitz views and transcribes a rather telling video shot of Israeli Prime Minister Benjamin Netanyahu who, presumably, thought the cameras were off:

In it, Netanyahu dismisses American foreign policy as easy to maneuver, boasts of having derailed the Oslo accords with political trickery, and suggests that the only way to deal with the Palestinians is to “beat them up, not once but repeatedly, beat them up so it hurts so badly, until it’s unbearable” (all translations are mine).

According to Haaretz’s Gideon Levy, the video should be “Banned for viewing by children so as not to corrupt them, and distributed around the country and the world so that everyone will know who leads the government of Israel.”

...After claiming that the only way to deal with the Palestinian Authority was a large-scale attack, Netanyahu was asked by one of the participants whether or not the United States would let such an attack come to fruition.

“I know what America is,” Netanyahu replied. “America is a thing you can move very easily, move it in the right direction. They won’t get in their way.” He then called former president Bill Clinton “radically pro-Palestinian,” and went on to belittle the Oslo peace accords as vulnerable to manipulation. Since the accords state that Israel would be allowed to hang on to pre-defined military zones in the West Bank, Netanyahu told his hosts that he could torpedo the accords by defining vast swaths of land as just that.

“They asked me before the election if I’d honor [the Oslo accords],” Netanyahu said. “I said I would, but … I’m going to interpret the accords in such a way that would allow me to put an end to this galloping forward to the ’67 borders. How did we do it? Nobody said what defined military zones were. Defined military zones are security zones; as far as I’m concerned, the entire Jordan Valley is a defined military zone. Go argue.”

Smiling, Netanyahu then recalled how he forced former U.S. Secretary of State Warren Christopher to agree to let Israel alone determine which parts of the West Bank were to be defined as military zones. “They didn’t want to give me that letter,” Netanyahu said, “so I didn’t give them the Hebron agreement [the agreement giving Hebron back to the Palestinians]. I cut the cabinet meeting short and said, ‘I’m not signing.’ Only when the letter came, during that meeting, to me and to Arafat, did I ratify the Hebron agreement. Why is this important? Because from that moment on, I de facto put an end to the Oslo accords.”

Such open contempt from our supposed "strongest ally" and the recipient of more US aid than any nation in the World.  Also note Netanyahu's confession about bringing down the Oslo accords - which flies in the face of the preferred narrative regarding Arafat's recalcitrance.

In a somewhat related sense, Joel Schalit wrote an interesting piece on the resentment and underlying current of anti-Americanism prevalent in Israeli politics:

Despite the fact that both right and left equally indulge American involvement in domestic affairs when it suits their purposes, Israeli conservatives tend to complain the most about the United States when circumstances require. Part of this is due to the opportunity such criticism provides to remind Israelis that the right is the sole bearer of national values, of Jewish cultural pride and political power. Part of it has to do with the discomfort that the right carries over Israel’s intense reliance on a country with strong traditions of liberalism and multiculturalism, despite America’s historic support for Israel’s policies towards the Palestinians and US sponsorship of the settlement project.

There is always a fear that an increasingly multiethnic America will lean too far to the left, and that such a transformation, while logical to anyone familiar with the country’s changing demographics, will inevitably portend negative consequences for Israel. This is where the Israeli discomfort at having to rely for 10% of their budget upon a mixed-race president with an Arabic middle name, who makes a point of reaching out to Muslims, unfortunately comes in. Encouraged by rightist Jewish forces in the United States, Israeli conservatives become intransigent as a means of demonstrating their support for their Diaspora counterparts, even if this means risking larger crises for Israel, such as a split with the United States.

While this fear no doubt exists in some form or another, the stronger case can be made that Israeli leaders such as Netanyahu can and do, in fact, lead America around by the nose, regardless of which party or politician inhabits the White House.  In short, history validates Netanyahu's arrogance.

History also supports the conclusion that the Likud Party's only interest in the peace process is in determining how best to sabotage it, not as a good faith negotiator. 

Imagine if the United States foreign policy establishment acted rationally given this evidence, and the fact that our current policies vis-a-vis Israel are bad for both the United States and Israel?  Radical.