Monday, December 19, 2011

Tax Cut Extensions

The House GOP is right (and both Senate parties wrong) on the economics of the payroll tax cut. Whether one believes that tax cuts help spur economic activity by increasing Aggregate Demand or by increasing incentives to productivity, a two-month measure is basically worthless. People, especially business owners in this case, don't make long-term employment decisions based on a few dollars difference for 2 months.

Of course, one can qualify the statement on rightness here: temporary tax cuts are a dumb idea in general. Do we want people hired for short stints or for the long term?

Friday, December 16, 2011

8 and a half years ago

Officially, the conflict in Iraq has ended for the United States. This is a good moment to reflect, and I'll repost one of my proudest pieces of writing. I published this on my old blog, Instant Replay on March 10, 2003, ten days before the invasion.
Instant Replay Invades the Iraqi Question

IR has come under tremendous pressure from U.N. inspectors to take a position on the United States' buildup in the Persian Gulf and the possibility of going to war against Saddam Hussein's corrupt regime in Baghdad.

Having taken a month and a half off from blogging has given me the clarity to address this firmly. I will attempt a linear argument, but I'm a bit pressed for time, so don't hold it against me that I can't make a comprehensive 12,000 page declaration.

Instant Replay believes that Saddam's regime is as corrupt, ungodly, and "evil" as government can be. The Iraqi people I know have no love of Saddam, and most Arabs think he's a little nuts. Saddam Hussein has earned his ouster, and he deserves anything anyone can throw at him. It's not a question of whether Saddam deserves to be keelhauled; it's a question of whether the United States - or anyone - should do it.

There are three arguments for disarming Iraq by force. One is humanitarian: war now will save lives in the long run. One is political: Iraq may be linked to al-Qaeda and is undoubtedly linked to Palestinian insurgents, on whom the U.S. and Israel are waging a war. The last is legal: Saddam has disregarded a long series of UN resolutions and has developed WMDs.

So Saddam deserves to be ousted, and there exist a few good reasons to oust him. IR believes that if the UN Security Council can agree to a course of action, that course should be followed. That may involve another six months of inspections, during the heat of the Iraqi summer. It also may involve another six years of circus, like the last six years. Either way, Saddam has put himself on the international agenda, and the world community has a responsibility to deal with him.

IR believes that the United States has tenuous legal grounds at best for entering the war. The U.S. does have moral footing of some sort, though. However, most importantly, the U.S. should not preempt the UN for political reasons.

The disastrous consequences of unilateral action will include a sharp split from our important allies - Europe, Russia, China, others - in the war on terror, increased terror against the U.S., and a loss of flexibility in dealing with the very real threat of North Korea.

By disregarding not only the UNSC but - more importantly - our allies, we are sacrificing post 9/11 favor for worldwide resentment. It's not that the Russians will become suicide bombers, it's that they won't tell us before some Uzbek does. In the post-Cold War world, we need allies more than we need victories. I don't know that Bush's people - all of whom are Cold Warriors who cut their teeth on Nixon and Reagan battles - understand that. Bush needs to listen to his Daddy, who was the #2 architect of the New World Order (Gorby was #1, imho), and ignore Samuel Huntington, author of "Clash of Civilizations."

The gains from conquering Iraq would be modest and mainly deterrent. However, I believe that the costs could be much higher. The U.S. will give ammunition to every Islamist pedagogue, their versions of Samuel Huntington, and the "Clash of Civilizations" will be a self-fulfilling prophecy. Some of Bush's strongest hawks point to Israel as a country who really knows how to deal with terror: by cracking down hard. Has anyone noticed that Israel is the most fear-ridden, terror-stricken country in the developed world?? Following longstanding Israeli tactics of preemption and punitive aggression will only lead to an Israelization of America.

This argument brings us back to the starting point: the war on terror. While IR won't commit to this position, it would like to raise the question of the wisdom of waging such a war. Since one successful terrorist can win the entire "war" by slipping through and blowing something really important up, isn't this a war we can't win? Seizing assets and arresting militants by cooperating with other countries is great. But intervening militarily and punishing those who host terrorists - the same way we punished villages hiding Viet Cong guerrillas - may be "right", but it doesn't augur success.
The last paragraph in particular proved hauntingly correct over the next eight years. After getting comments from a few friends, I posted follow-up posts that strengthened my not-now position on the war.
While I respect (some of) those who support war on Iraq, I only respect those who can give a reasonable political answer for their convictions. In response to David's comments, saying that being against a preemptive invasion of Iraq is "an avoid war at all costs mentality" is building a straw man. I supported the war in Afghanistan, and I argue vigorously with pacifists, since sometimes options are really exhausted.

DJN's naivetee is unsettling. He writes, "A new Iraq will be great news for missionaries." That couldn't be farther from the truth. If Iraq conquered the U.S. and changed our regime, would anyone (even Democrats) be more likely to embrace Islam? With the American evangelical community as hawkish as ever, Christians in Iraq face the prospect of persecution from neighbors, and Christianity could be set back by decades in an already anti-Christian country. Christianity was first crushed in that part of the world when the predominantly Christian Roman Empire went to war against the Persian Empire. Persian Christians were persecuted and Christianity was looked at as an enemy religion. If Christians want to spread Christ's love, war should not be their tool of choice.

Ali Baba misunderstands the purpose of the United Nations. His domestic policy background seems to taint his view of diplomatic relations. Other countries are not in danger of dictating American foreign policy. The U.S., on the other hand, habitually dictates foreign policy to many states beholden to us for aid and support. As well we should. The world of international affairs is anything but equal, and the parity of states in the UN General Assembly is an important instrument of free speech, but not of global decision-making.

I have never argued that the U.S. should bow to the UN in all its policies. That said, the UN is an excellent forum for gauging world support. In Gulf War I, we were helped by most of the world, and Secretary of State James Baker did a tremendous job at rallying support. He didn't have to do that so that we could act, he did it so that we could act with the best possible results.

Instant Replay's position is that Iraq deserves to be disarmed, but that it is not America's problem only. If Saddam has WMD's, Iran, Saudi Arabia, Israel, Turkey, and perhaps Europe are the ones who should be scared. As long as the U.S. has the possibility of war hanging over Saddam's head, we're safe. Once we start a war, we've got a target painted on our backs. Instant Replay's position is not about morality, it's about politics, and as I told David recently, Republicans need to give up being "right" for once and act in their own - and the country's - best interest.
The prescience above shows the value of having 3/4 of an undergraduate degree. If only someone in the Bush White House had been so ill-educated!

Monday, December 12, 2011

The Grinch that Gouged Christmas

Butter in Norway is selling for something like $500 a pound. You read that correctly: five hundred dollars a pound. This is the result of the perfect butter storm: weather led to less milk production and lower fat content in milk. A bizarre high-fat-diet health care fad led to an increase in demand for butter. Now, with dark December upon them, Norwegians are heating up their ovens for the de rigueur Christmas butter cookies.

In a free market, this would lead to a big increase in butter imports from Europe's many dairies, and a very small increase in the world price of butter (how many butter cookies can 5 million Vikings eat?). But Norway doesn't have a free market for butter. It's byzantine centrally-planned dairy czars were cracking their knuckles and licking their buttery fingers as prices rose and butter-smugglers were seized. But the shortages went too far - and now TINE is the Grinch that gouged Christmas!

What went wrong here? First, the Norwegian government allowed a single monopoly to control virtually the entire dairy industry. Then, it gave the monopoly control of its tariffs and quotas on dairy imports! This paragraph is astounding:
TINE, the largest Norwegian diary coop who is also responsible for managing the Norwegian diary market has been under significant criticism fo insert linkr its management of the dairy. As a result, it was forced to ask the Ministry of Agriculture to temporarily reduce its import tariff rates from NOK 25.19/kg (€3.24/kg) to NOK 4/kg (€0.51/kg) to overcome the predicted weekly market shortage of 50 tonnes during December. This exceptional measure will only remain for the month of December and allows any trader to import butter at this rate.
In case you hadn't figured this out, quotas (like Norway's) are worse for consumers than tariffs. A tariff raises the price of imports, but it does so by a certain level. A quota, by contrast, limits import supply, and in the event of big shifts in supply and demand, it can do massive damage to consumer's pocketbooks - while the profits all flow to foreign companies! But this is the system chosen by a government that will only act when it is ordered to do so by an evil monopolist bent on robbing its fellow citizens.

So celebrate your freedom from public-private partnerships by cooking some Norwegian butter cookies this Christmas season. After all, the Norwegian consumers are helping keep the price of butter artificially low for those of us who emigrated!

Newsflash: Mitt Romney Is Rich!

Mitt Romney inadvertently revealed that he is rich enough to lay $10,000 on a wager. This was evidently news to many reporters.

We know he's rich. Get over it. More importantly, he was right.

Monday, December 5, 2011

Richard Cohen models sophistication and nuance for country bumpkin Repubs

In a WaPo column about how "lucky" President Obama is (really! I guess Cohen reads different news sites then I do), Richard Cohen characterizes the GOP with this uplifting chestnut:
It is simply amazing that in a country of 313 million people, many of them literate, the political opposition consists of ignoramuses, dimwits, contrarians, Christian jihadists and, now, two men so thoroughly hollow that a moral principle would make a rattling sound inside them. I am talking of course of Newt Gingrich and Mitt Romney.
It's a good thing Republicans can't read, or they might feel insulted!

Saturday, December 3, 2011

Herman Cain: the Movie

Herman Cain's meteoric, mercurial presidential campaign was brief and fascinating. It's a story that was made for Hollywood.

Of course, the Hollywood version is a little different:

Herman Cain: The Movie: a down-on-his-luck, divorced motivational speaker with two unhappy teenage children is having a hard time feeding his family, and needs to boost his popularity, so he decides to run for president. The campaign starts slow, but gets more and more fun as Cain realizes he's spending other people's money to run his personal marketing campaign. Polling around 5 or 10%, he considers the gambit a success, and gets ready to ride the "successful" campaign out to a 4th-place Iowa finish and a lucrative post-race career.

But then disaster strikes: the frontrunner freezes in a debate ("Oops!"). Cain manages to say something brilliant, and immediately becomes the front-runner. This was unexpected! And unpleasant. All of a sudden, the media pay attention, voters expect him to campaign in early states (he'd run in opposite areas, to guarantee that he made the news with each appearance), donors call for accountability, and he and his family find themselves in the maw of a real, nasty campaign.

Cain needs an escape, but one that will generate even more publicity and not let on that he didn't actually want to be president. His sole confidante comes up with a plan: they pay off a woman who used to work in the next office to claim that she was sexually harassed by Cain. But she's not a convincing storyteller, and the media find out that she just got a big payment (but can't trace it to Cain). With the attack discredited and obviously political, Cain is now a victim-hero, and rises even further in the polls.

Desperate times call for desperate measures. Cain is depressed, hiding from his campaign, and goes out into a rainy night in Portsmouth, and ends up hitting on women in a sketchy bar. This is hilarious, but he finally finds someone who will take him home. The story leaks, and as his campaign goes down in flame and fireworks behind him, he falls in love with the woman from the bar. Naturally, he ditches his motivational speaking career and moves to some grimy section of Portsmouth with his true love. (I told you it was Hollywood).

Friday, December 2, 2011

The Gingrich Bubble

Donald Trump
Michele Bachmann
Rick Perry
Herman Cain
Newt Gingrich

So it looks like a two-man race between Mitt Romney and Newt Gingrich. But remember, just a month ago, nobody but Romney and Cain could break 20%. And three months ago, it was nobody but Romney and Perry, with Perry the presumed front-runner. So don't get too excited. That being said, the voting starts in a month, and there isn't much time for Gingrich to fade and be replaced by Rick Santorum, Ron Paul, or whoever else is left.

Why should we expect Gingrich to fade? Because he's damaged goods. He's only polling well because he performed well in the debates, where he was better-informed, more forthright, and less catty than anybody else on the set. Those are not, unfortunately, Gingrich's most universally described character traits.

Conservative Jennifer Rubin wields the knife, with quotes from Ramesh Ponnuru:
very serious flaw... perils of Gingrich... innovative-sounding... wholly absurd... incendiary... grandiose... abrasive... opportunist... serial infidelity... multiple ex-wives... lobbying... lobbying... lobbying... ultimate Washington insider... self-indulgent... obtuse... dishonest... megalomania... recklessness... disorganization.
Her argument is a lot more nuanced than what I've presented. But this particular list of flaws seems a lot more damning, especially in the current political environment, than Romney's wishy-washyness or over-produced image. More to Rubin's point, conservative opinion leaders have already turned on Gingrich, and conservative voters will follow.