by Dave Schuler on February 8, 2010
Essential reading from Edward Luce at the Financial Times:
Pundits, Democratic lawmakers and opinion pollsters offer a smorgasbord of reasons – from Mr Obama’s decision to devote his first year in office to healthcare reform, to the president’s inability to convince voters he can “feel their [economic] pain”, to the apparent ungovernability of today’s Washington. All may indeed have contributed to the quandary in which Mr Obama finds himself. But those around him have a more specific diagnosis – and one that is striking in its uniformity. The Obama White House is geared for campaigning rather than governing, they say.
Hat tip: Steve Clemons who adds:
But one thing essential to understand is that the kind of policy that smart strategists — including by people like National Security Adviser Jim Jones, Defense Secretary Robert Gates and other advisers like Denis McDonough, Tom Donilon, James Steinberg, William Burns, (previously Gregory Craig) — would be putting forward is getting twisted either in the rough-and-tumble of a a team of rivals operation that is not working, or is being distorted by the Chicago political gang’s tactical advice that is seducing Obama towards a course that has not only violated deals he made with those who voted him into office but which is failing to hit any of the major strategic targets by which the administration will be historically measured.
The ability to manage an election campaign is not indicative of an ability to manage, generally.
One danger is that the Obama Administration is becoming embroiled in the same sort of crony capitalism of which the Bush Administration was accused, viz. the Ticketmaster-Live Nation merger:
For followers of politics as practiced in Chicago, it is hard not to suspect some successful influence peddling. In addition to employing the most high-powered Democratic lobbyists in Washington, Live Nation’s board members include Hollywood super agent Ari Emanuel, brother of Rahm Emanuel, President Obama’s chief of staff and former North Side congressman, while Ticketmaster’s board of directors included the president’s Harvard classmate and transition team leader Julius Genachowski, until he resigned to become chairman of the FCC.
by Dave Schuler on February 8, 2010
To expand a little on the point I was making the other day about mathematical models, consider Newton’s laws of motion. Newton’s first law, which you probably learned back in high school as “an object in motion tends to stay in motion, an object at rest tends to stay at rest”, while a pretty good first approximation, doesn’t really work. Why?
Because the actual statement is “Every body perseveres in its state of rest, or of uniform motion in a right line, unless it is compelled to change that state by forces impressed thereon”. In normal terrestrial environments we’re never without a net force. In particular, friction and gravity need to be taken into account.
When it comes to actual measurable results, two bodies in a vacuum behave differently than two bodies in air. Or water. And there are environments in which viscosity is the most important determinant of motion, say, a vat of molasses.
That’s why I insist on actual measurements in evaluating how successful a model is. However elegant, models that don’t take into account all of the forces involved can be disastrously wrong and, while I’m prepared to believe that deficit spending applied with perfect timing to optimal objectives can have the predicted multiplier effect, I’m not as prepared to believe that real governments operating in real political environments aren’t counter-productive.
Using your model to compare the unemployment that would have taken place without your spending measures to the unemployment that will take place with your spending measures proves exactly nothing if the model itself is wrong. And the same is true if the numbers being produced by your model are less exact than the data that’s being used to evaluate the model.
by Dave Schuler on February 8, 2010
Has anybody else noticed that the Wall Street Journal is tucking an increasing proportion of its opinion section behind the pay wall lately? While I think that the WSJ’s strategy is prudent for its news content, I think it’s foolish for its editorial and opinion content. If an op-ed is unread, does it have influence?
by Dave Schuler on February 8, 2010
Shorter Paul Krugman: “The Senate won’t do what I want them to so America is on the road to ruin.”
It might be a nicety lost on progressives who never get west of the Alleghenies but your views are held by about 10% of the American people. And telling people how stupid, unruly, and unappreciative they are probably isn’t a good strategy for convincing them.
Also, a brief note for those who look forward to the time when the United States isn’t the sole superpower: nobody else wants the job. Come what may we’re going to be stuck with it for a long, long time. If the EU wanted the job, they would actually have to start taking steps to do it. They aren’t. Standing on the sidelines bitching is ever so much more comfortable.
China has problems of its own which it will take all of its ingenuity and energy to handle.
Who is this candidate for “top nation” of whom you speak?
by Dave Schuler on February 5, 2010
Menzie Chinn points out that President Obama’s goal of doubling exports can be achieved by devaluing the dollar if what is being talked about are nominal rather than real exports. I hope that’s not what he has in mind.
Dr. Chinn goes on to point out that, if that’s not what he’s talking about, then doubling exports is pretty unlikely.
by Dave Schuler on February 5, 2010
The Bureau of Labor Statistics has released its monthly estimate of the employment situation:
The unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was essentially unchanged (-20,000), the U.S. Bureau of Labor Statistics reported today. Employment fell in construction and in transportation and warehousing, while temporary help services and retail trade added jobs.
That sounds like good news. It would be even better if we were seeing job growth. We aren’t:
In January, the civilian labor force participation rate was little changed at 64.7 percent. The employment-population ratio rose from 58.2 to 58.4 percent.
and the number of discouraged workers continues to grow:
About 2.5 million persons were marginally attached to the labor force in January, an increase of 409,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-16.)
Among the marginally attached, there were 1.1 million discouraged workers in January, up from 734,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million people marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.
This is very bad news. It means that the decline in the unemployment rate, as in past months, is almost entirely because potential workers have become so discouraged they’ve stopped looking and, due to the way the unemployment rate is calculated, no longer count.
However, in real human terms and in terms of economic well-being they count very much indeed and, if this pattern continues, I expect we’ll see anxiety increasing rather than diminishing.
Update
I think I may have misread the results. This table shows a sharp decrease in U-6. If that’s the case it’s very good news indeed.
Update 2
Curiouser and curiouser. The non-seasonally-adjusted figure shows a sharp increase in U-6. I guess it depends on how much confidence you have in the fudging. And it looks like that’s the way the markets are taking it, too.
by Dave Schuler on February 5, 2010
This morning I want to make a brief comment about Paul Krugman’s column for today, not because I necessarily disagree with it but in order to reflect on the use and misuse of mathematical models in economics or anything else for that matter. Dr. Krugman observes:
These days it’s hard to pick up a newspaper or turn on a news program without encountering stern warnings about the federal budget deficit. The deficit threatens economic recovery, we’re told; it puts American economic stability at risk; it will undermine our influence in the world. These claims generally aren’t stated as opinions, as views held by some analysts but disputed by others. Instead, they’re reported as if they were facts, plain and simple.
Yet they aren’t facts.
That’s quite right. They aren’t facts. They’re conclusions drawn from some combination of mathematical models of the economy, observed facts, and, probably, intuition into people’s behavior. And when Dr. Krugman continues:
Let’s talk for a moment about budget reality. Contrary to what you often hear, the large deficit the federal government is running right now isn’t the result of runaway spending growth. Instead, well more than half of the deficit was caused by the ongoing economic crisis, which has led to a plunge in tax receipts, required federal bailouts of financial institutions, and been met — appropriately — with temporary measures to stimulate growth and support employment.
The point is that running big deficits in the face of the worst economic slump since the 1930s is actually the right thing to do.
that isn’t a fact, either. It’s another conclusion derived from mathematical models, observed facts, and different intuitions into human behavior.
You may have seen the graphs, produced by President Obama’s economic team, showing what unemployment would have been in 2009 and 2010 without the spending package they supported and with the spending package they supported. Their predictions were wrong both in amplitude (how high unemployment would get) and frequency (the period over which unemployment would continue to rise). The most obvious conclusion from that is that their models were wrong.
However, continuing to refer to these models as if they were facts is even more wrong. Taking a single set of incorrect assumptions and deriving two sets of incorrect numbers from them, varying one parameter, tells you exactly nothing about the underlying reality.
I don’t know if deficit spending is an effective means of stimulating economic growth or not. It’s certainly what I was taught when I took economics. It’s not the model that determines whether it’s right or wrong but the underlying facts. It may be possible that the optimal deficit spending package implemented with perfect timing could have the predicted effect, real deficit spending packages implemented in real timeframes don’t. It’s the facts that determine that not the models.
In a few minutes the Bureau of Labor Statistics will be presenting us with more facts or something approximating facts: last month’s unemployment figures. Ignore the models and consider the facts, whatever they may be.
by Dave Schuler on February 4, 2010
You’ve got to hand it to us: there’s never a dull moment in Illinois politics these days. No sooner does Dan Hynes concede the election to sitting Gov. Pat Quinn:
Dan Hynes ended his Democratic governor campaign today, calling Gov. Pat Quinn and pledging his support in the fall campaign.
“Well, the people have spoken, and the votes have been counted. And I’m here to report that we rose up but fell just a little short,” Hynes said at a news conference at his River North campaign headquarters. “And if democracy means anything, it means that the campaign with more votes wins.”
“We did the right thing. Made sure all the votes are counted and now we know for sure that it wasn’t us,” Hynes said. “And rather than contest or demand anything further, let’s do the right thing again.”
“There is nothing I think I could have done more. I have no regrets,” he said.
than the nominee realizes that Scott Lee Cohen, the guy who came from nowhere to snag the Democratic nomination for lieutenant governor, has a felony arrest record:
Cohen, a pawnbroker who was the surprise winner in the little-publicized contest among half a dozen candidates, had previously disclosed his 2005 arrest. He described it Wednesday as an argument with his drunken girlfriend and said he didn’t lay a hand on her, though she called the police and had him taken into custody.
But the official police and court records show that the woman alleged Cohen put a knife to her throat and pushed her head against the wall.
In their October 14 arrest report detailing the complaint from the 24-year-old woman, Chicago police noted they observed “mild abrasions from knife wound” on her neck. They also noted “minor scars on her hand from her trying to defend herself against the arrestee swinging the knife at her.” The report notes the woman was seen by ambulance personnel but not taken to a hospital.
Quinn has mused publicly about the advisability of Cohen’s withdrawing his name from the ticket for the good of the party but has stopped short of asking him to withdraw.
The girlfriend is apparently no stranger to the justice system. According to John Kass, court records show that she’s a prostitute.
Illinois’s lieutenant governor race doesn’t generally get a lot of attention. It’s a job with few responsibilities and little opportunity to do real harm. That’s why the powers-that-be weren’t totally verklempt at Pat Quinn’s getting the job. That is, at least, until Rod Blagojevich got impeached and Quinn took the governor’s mansion.
All of this might provide openings for the Republicans except that they’re embroiled in their own battle to see who’ll be their gubernatorial candidate in November. At this point less than 500 votes separate the leader, Bill Brady from Kirk Dillard, the guy in second place. Unless party heavyweights can convince one or the other of them to step aside, I expect we’ll see challenges, recounts, and the full panoply of remedies for months to come. The Illinois Republican Party has shown a rare ability to shoot itself in the foot in recent years.
Update
The Sun-Times has more details on the arrest:
Cohen, now 44, placed “a knife up to complainant’s neck causing minor scars,” according to the police report from his arrest. There also were “minor scars on her hand from her trying to defend herself against the arrestee swinging the knife at her.” Cohen also allegedly “pushed complainant’s head against [a] wall, causing a bump on the back of her head.”
Paramedics treated the now 29-year-old woman at Cohen’s Near North Side home. Police photographed her injuries, which they described as “mild abrasions from knife wound.”
“She never came to court and the charges were dismissed,” Cohen said. “I realized this relationship was not healthy for me. I ended it, and we parted amicably.”
The day before the ex-girlfriend failed to come to court for Cohen’s case, she was sentenced to court supervision in her misdemeanor prostitution case, which Cohen campaign strategist Phil Molfese said did not involve Cohen. The woman could not be reached for comment.
Molfese also said that Cohen sees his children regularly and has paid off any tax debt he’d incurred through the sale of a downtown building. “He’s been honest and up front from the beginning,” Molfese said of Cohen’s arrest. “It’s just that nobody cared.”
Until now, that is.
