Hey Wendy, look at this!

Now go to 'view' in your browser, and view my source code.

;0)

"It is not contrary to reason to prefer the destruction of the whole world to the scratching of my finger." - David Hume (famous philosopher, economist, and ...crazy person)

 

 

(Note: the following thoughts are not relevant to those who (a) believe exhaustion of natural resources will bring us back to the stone age before we even have to worry about climate change, (b) believe that climate change is not man-made, (c) all God-fearing people will be raptured away before we (or rather, you) need to worry about climate change. If you are in any of these categories, please ignore this blog).

 

Some quick questions on what should be done about climate change. Sorry if some of the formulations are a bit opaque. But here goes:

1. Should developed nations move to reduce greenhouse gases even if developing countries do not do so?

 - The extent of global warming depends on the amount of greenhouse gases in the atmosphere. If developed nations reduce greenhouse gases by X amount compared to the business-as-usual scenario, that would reduce global warming by a proportional degree. So climate change mitigation policies will still be effective to some degree. The moral argument for inaction seems to be one of fairness, not effectiveness. Which brings us to the further question:

 

1.1. What is the relevant metric of 'fairness' in climate change mitigation policy? Is it each nation's total contribution to climate change, or per-capita contribution, or something completely different?

-  On the one hand, the US and China contribute equivalent amounts of carbon emissions. On the other hand, the US per-capita contribution is four times that of China. Also, Americans have fifteen times the average income of Chinese. Should a 'fair' distribution of sacrifice be proportional to 'ability to pay'?  

- Should the relevant metric be 'something completely different', like energy efficiency: the amount of emissions relative to GDP? Or degree of improvement in energy efficiency over time: eg. Increasing energy efficiency by x% each year?

- To what extent should any country worry about fairness as an argument against taking independent action to mitigate climate change?

 

2. Most measures of the impact of climate change focus on the expected reduction in economic output as compared to the business-as-usual scenario. Is this the correct way to measure it? For instance, it ignores the distribution of impact. If it for instance reduces global output by 2%, but that impact is concentrated in certain developing countries - eg. Reducing their output 50% - does that change the case for climate change? Does it reinforce the imperative to do something about climate change? Does it weaken the imperative (from the point of view of less-impacted developed nations)?

 

3. Most of the impact of climate change is expected to occur beyond our (or most of our) life-time. It will primarily affect future generations. So it raises the question: what is our duty to future generations? If climate change mitigation slows the growth of our expected income by x%, in order to increase the expected income of future generations by y%, what are the values for x and y that fulfills our duty towards them?

 

4. Is this framing of the debate - in terms of expected impact (and distribution) of climate change wrong? Should it rather be framed as a question of the value of insuring against catastrophic climate change rendering civilization unviable? If we estimate the chance of catastrophic climate at, say, 5%, what is the price we are willing to pay to insure against extinction?

 

Some links I found useful:

 

Estimates on climate change are getting very scary. (Via Kurtz on the TPM front page.)

 

Climate change mitigation to cost less than 1% of GDP per year.

 

The US market consequences of climate change - Pew Center.

 

Brad Delong on ethics of Climate Change.

 

Matt Yglesias on Climate change and the distribution of impact question.

 

Lord Stern on China and India's role in climate change mitigation.

 

Jim Manzi - 'Climate change mitigation policy is Socialism'. (included in the interests of bi-partisanship)

 

Interesting stats on US greenhouse gas emissions

 

Myth-busting on climate-change negotiations.

 

RAND study of cost of renewable energy measures.

 

CAP on China's efforts to better itself.

 

Please add useful links (and/or questions) in the comments!

"You used to have a rabbit. Beautiful little thing. Do you remember?"
"Flossy."
"That's right. Flossy. Do you remember what happened to Flossy?"
"You shot him."
"That's right. It was the kindest thing to do after he'd been run over by that car."
"Your car, sir."
"Yes, by my car. But even that was an act of mercy when you remember that that dog had been set on him."
"Your dog, sir."
-    General Melchett and George (From Blackadder)


The death panel tidal wave has washed over the media and destroyed the whole structure of a slowly and painstakingly constructed national dialogue on the technical and moral underpinnings of health care reform. It's nauseating that one side of the aisle has demagogued an issue that is or should be deeply important to all families. I just don't understand how a whole major party can take end of life issues and treat them with such a lack of respect. And I don't understand how the whole national media could have jumped on this particularly despicable panic-party wagon with such apparent glee.

One of the toughest decisions anyone will have to make in their lives is literally or metaphorically pulling the plug on their parents. Anything that could make these end of life decisions less heart-wrenching just can't be treated in this way; warped out of recognition, caricatured as a monstrous genocidal scheme, and the perpetrators of this outrage treated with respectful kid-gloves in the media.

I spent the last weeks of my father's life at his bedside, keeping one hand on his shoulder all night because it was the only way to calm him enough so that he could sleep, watching him slowly lose his mind due to the meds and the pain, and then finding myself handed the responsibility of deciding to end the brutal treatment that had no chance of saving his life (or perhaps...  an ever so slight one...?), with my siblings overseas on the phone wondering whether we shouldn't perhaps let it continue....

Nothing will make such decisions easy, but any discussion of measures that could grant those involved some peace of mind just can't become the center of a national clown-show like what has just happened. I will never cease to be surprised by how low the moral lepers can set the limbo-bar of lunacy and how the media can again and again manage to stoop below it.

The media is not completely blind. They are now involved in their nth cycle of self-reflection as they look on the latest wreckage of their own making. And yet, surprise surprise, they see nothing in that mirror other than a thing of pristine innocence sullied by strange forces quite beyond their control.

After all, they did not push the lies and demagoguery. They merely
- reported what the liars were saying ,
- gave the demagogues a bigger soap-box,
- asked the hard questions, such as "is this tough GOP campaign a good strategy?",

- and then after a couple of weeks decided to check whether the rumors swirling around the village like a tornado were actually founded in fact.

After all, they never ever intended for it to end like this, hysterical gun slinging screamers at town halls, the Hill more and more polarized, two halves of the country convinced the other half are Nazis bent on subverting democracy, the President forced on the defensive...

but GAWD does it make for good TV and flashy headlines.

Anarchy sells, what-are-you-gonna-do...?

This would be less maddening if this moment of reflection actually led to thoughts about how to improve the political discourse. But no. The handwringing concerns primarily their fragile place as an elite that moves and shapes this discourse. The worry issues from a sense that they no longer control things. Oh dear. The poor little big-wigs.

We have Joe Klein whining about the difficulty for the Serious Press in maintaining that sacred convention of giving equal credence to both parties, at a time when one party has become so incredibly stupid. You can almost see him WISH the Democrats would turn into equally pathological liars so that the press could once again appear fair and balanced. "Why oh why do the Dems so want to hurt America with their reasonable fact-based arguments?" Of course, now Klein's piece from five days ago is tucked away in Time's historical archive, and on the front page it's replaced (if it ever was there?) by Joel Stein's half-hearted Millbanky tongue-flapping ruminations on how he'd go about setting up the death panel, entitled " Can I Kill You?". Sickening.

For a couple of weeks, the NYT stroked its collective beard 'questioning' whether these rumors were true, and finally decided, with half the country well-entrenched in a panic about the coming genocide, that they were 'false'. But such head-line illumination was reserved for the tech-savvy readers of the interwebs, leaving the unworthy print-readers still in the dark. Why? Maybe clarity on paper is just irresponsible - someone might whack a wingnut over the head with the solid truth. Pixels just don't have the same effect.

Howard Kurtz of WaPo wails about the MSM's impotence in debunking myths. He lists the various instances where CNN, NYT, WaPo, MSNBC and others had flat out called the various crazy rumors baseless. He of course elides the fact that CNN also loudly trumpets the various lies as the Gospel Truth on prime time with Lou Dobbs. WaPo publishes these rumors as fact every other day with the likes of Krauthammer and Kristol. And as for MSNBC, well they've been long been slapped with the discrediting partisan Liberal tag anyway.

These wheezy self-absorbed media 'critics' sound like Glenn Beck summing up his position in one long breath "Obama IS racist, though I'm not saying he's racist, so why do people say I'm saying that...?". What goes on in the brains of the editors at these outfits? Do they really not know what they're doing when they give people the finger with the right hand and pat them lovingly with the left?

The most heartbreaking read in this periodically refreshed media genre is Ezra Klein's sweeping absolution of the media. I used to love reading this guy. But I'm starting to feel that the WaPo virus is going to his brain. In a first shot at this topic of media complicity/impotence in the madness he attributes some responsibility for not doing a better job of knocking the crazy slander down. But then he comes back and offers the following exculpatory thoughts:

The problem isn't in the particulars. It's in the profession. Namely, it's in the competitive pressures to drift toward sensationalism and hot stories. A smear like "death panels" emerges and catches fire because it's fundamentally interesting. You could write a great thriller, or film a poignant drama, about death panels. Not so about health insurance exchanges. That said, the New York Times would probably never mention the lie if given the opportunity. But after it hits talk radio and explodes onto cable news and rips through the blogosphere, it stops being a lie and begins being a story. [...]

They just get caught following a manipulated conversation, and so being part of the manipulation, part of the machine that focuses on cynical lies like the death panels rather than policy specifics like the exchanges. That's not the fault of an individual reporter, though. It's structural, and it requires a structural response.)

WTF? A lie on cable, on the internet, does not stop being a lie.

The story is not that some people are saying this exciting/scary-if-true thing.

The story is that some very powerful people are lying their pants off on the TV.

THAT is an exciting AND scary story. The story is that the GOP are spreading insanely inflammatory lies about their political opposites. Report it. THAT's your job.

When a republican, famous for nothing but her track record of fear-mongering comes out with an Op-ed peddling death panels, a responsible reporter writes gripping pieces like this, laying out her long trail of toxic slime eroding the political fabric of a country.

When a leading respected politician like John McCain feeds the rumors by mumbling skepticism about whether or not half his long-time Senate friends and colleagues are actually genocidal maniacs, the story should not be

'Respected politician has doubts',

 the real story is

'Respected politician has lost his mind'.

The truth in such cases is actually a great story. The problem is that some true, and truly great, stories require a journalist and his editors to have backbone. And perhaps Ezra is right. That is a kind of 'structural problem'. Just not the kind he thinks.

The NYT has a hair-raising piece on the US government's ongoing love-hate story with the sociopathic private military-spying-anti-terrorism outfit formerly known as Blackwater. I'll assume for present purposes I don't need to introduce the reader to the problematic nature of the beast we're dealing with (otherwise see Dickday's introduction). But it is clearly someone to be avoided if possible. And I thought the close ties established during the Bush years had been or were being unwound. Wrong; "I just can't quit you" seems to be the administration line, which would be laughable if it weren't scary.

It is frightening enough to think of these trigger-happy cowboys tasked with protecting civilian government personnel in war zones. But the State Department's relationship with this company and others perhaps marginally more serious is the least worrying part of the story.

The C.I.A. and the State Department are both trying to reduce their dependence on outside contractors, but the administration is also struggling to deal with an overstretched military and spy service.

In the case of the C.I.A., outsiders still help carry out some of its most important jobs, including collecting intelligence in foreign countries, dealing with foreign agents, and taking part in covert programs.

Perhaps I should calm down. Maybe this is just a marginal side of intelligence activity, these agencies every once in a while hiring outside language, technical expertise. Why not? So what tiny percentage of the intelligence budget goes to these unaccountable mercenaries?

Government officials have estimated that about 25 percent of the intelligence workforce consists of contractors, and as much as 70 percent of the entire intelligence budget goes to outside contracts. Yet these are rough estimates, and members of Congressional oversight committees lament that they cannot get reliable figures about the extent of intelligence outsourcing.

So we don't know - due to lack of oversight - how central the real mercenaries are to the more sensitive sides of intelligence activity. And I don't know how much the nutballs at Xe are involved. And I don't know how nutty the other private outfits in this burgeoning 'intelligence industry' are. So I'll just ask the theoretical questions.

1. Should corporations who have a vested interest in creating More War and instability around the world be given the task of providing the information on which a nation assesses whether war is necessary?
2. Should private corporations, whose main appeal is that they make agents less accountable for their actions to government and the justice system, be entrusted with the most sensitive and crucial of all of government activity - national security-related intelligence gathering?
3. Should private military companies, whose very business model is premised on the poaching of the best qualified intelligence and military personnel, thereby reducing 'public sector' (how strange to use this term in this context) capability in these areas, thereby creating a need for private contractors, thereby becoming indispensable to government, even be allowed to exist?
4. Are they even cost-effective?

It seems insane to be in the position of asking these questions in seriousness, frankly.

What's next?! Outsourcing the writing of all federal legislation to the special interest private industries by filling Congressional staff with industry hacks?! Oh, already done.

How about outsourcing vote-counting in national elections to private industry with partisan political allegiance, haha? Oh already done.

Or, hilarious idea, outsourcing the Treasury and the financial policy it administers to private mega-banks' CEOs and board-members? Oh, I see...

Okay, even crazier, how about we outsource health care to private 'insurance' companies whose business model is premised on finding a way to have people die before they can access health care? Oh...   

On a more general note, if you're wondering why so much credence is given in the mainstream debate to insane ideas, it's because insane is the new normal. In the kingdom of the blind, the one-eyed man is not king. He's pegged as a hallucinating lunatic and locked up.

From the inventor of the Public Option, Jacob Hacker.

Now you know what you're fighting for.

Some interesting tid-bits:

What problem would it help solve?

Most observers of health care know that the insurance market has become increasingly consolidated, with one or a small handful of insurers enrolling most of the privately insured in the vast majority of local markets and, in the process, driving up costs. The American Medical Association (which endorsed the reform legislation in the House) estimates that out of 314 metropolitan areas across the nation, 94 percent can be defined as highly concentrated, with two companies or even a single insurer dominating the market. This is a primary reason for a strong national public plan that can compete with private insurers on day one.

Less well known is that provider markets, and especially hospital markets, have also grown increasingly consolidated. The vast majority of major metropolitan areas--some 88 percent of large metropolitan areas, according to 2006 study--now feature hospital markets in which one or two major hospitals dominate the market. Many insurers pay flagship systems and sole providers well above costs to ensure their participation--costs that independent analysts have determined are often themselves excessive because the hospitals in question are inefficient.

These two problems--insurer and provider consolidation--are related. They have driven up premiums for employers and workers, and they have encouraged insurers to control costs by shifting expenses onto patients or weeding out high-cost patients, rather than bargaining for lower provider payments.

What kind of solution does it provide?

The versions of the House bill approved by the House Ways and Means Committee and House Education and Labor Committee contain a Medicare tie-in that has two crucial characteristics:

1. Providers participating in Medicare would automatically be considered participating providers in the new public plan, although they would have the right to opt out.

2. Initial payments to providers would be set at Medicare rates plus 5 percent. After three years, the Secretary of Health and Human Services could adjust rates. But during the crucial start-up period, the public plan would be able to piggyback on Medicare's payment methodology.

In other words, the bills to be considered in conference committee already contain a strong public option with a strong negotiating position and no problem in forming a provider network.

Despite what Paul Starr says here, the Public Option is not a superfluous luxury in the reform package. Without it, how much choice would people in concentrated markets have? If only one insurer has a provider network in your region, are you going to opt for any other plan? Without it, how much incentive would insurers in concentrated provider markets have to negotiate to keep service costs down?

Without it, how is this bill anything other than a corporate giveaway? Remember that Medicare rates on services are 20-30% lower than those of private insurers. And providers choose to opt in on Medicare. In other words, without a Public option the providers are being given a free 20-30% profit margin on services in the absence of a serious negotiator on the other side of the table.

Is this an insignificant 'sliver' of reform? Not if you're an incumbent insurer or service provider. It makes the difference between a big fat profit margin or a smaller market-efficient profit margin.   

So anyone opposing the Public Option is either a big fat liar or a very small small person.


Update: Rasmussen poll showing significant fall in support for health care reform if public option is removed.

Late Update: A Slate piece on how many pundits attacking government-run health insurance actually have government-run health insurance. 

From WaPo

I like Perlstein and always learn something. He pushes the administration's now established line: "it's just not that important".

I at this point still believe the Option-less bill is worse than nothing. Granted, the Option is just a sliver of the overall package, but it provides a guarantee that the insurance exchange(s) are truly competitive, and, if provided with a strong enough negotiating position, seriously pushes down costs on health services. In its absence, the bill looks like a trillion-dollar corporate subsidy. (Seriously, when do we stop racing down this corporatist road to serfdom, and start to consider a new direction?)

Perlstein's arguments seem weak to me. He argues that extremely tight regulation of the insurance exchanges could ensure they are truly competitive, and that other measures - such as tough anti-trust regulation and changes to service-provider incentives - could be just as efficient as a strong public option in reducing health care costs.

The glaring hole in this argument is that

these things are not in the bill.

So there could be a great Option-less bill, but it just happens not to exist.

Okay, that last statement is just bald assertion. I do not know for a fact that these things are not in the bill. But such strong measures, that don't take the easy way of increasing coverage by handing the corporates their ransom, that are equivalent in effect to a public option, are hardly to be expected from the same people that cave so easily in the face of opposition on the Option. Just color me skeptical.

As for the idea that we can give the industry a trillion dollars, leaving out all measures that hurt their bottom line, and then come back with a new bill with nothing in it for them but heartburn - be it the Public Option, regulatory measures, changes in fee-structure - I call such proposals politically naive.
 

Answer one, some, or all of the following four questions, but only insofar as they are morally worthy of answering. (Two points off for answering a bad question)

 

1. Is access to health care a right ?
- And if so, whose duty is it to provide health care to those who cannot afford it? (What about duties towards the poor in third-world countries?)
- If not, is it still a supererogatory (good, but not required), virtuous act to provide it? And in that case, should the government force people to be virtuous by taxing them?

2. Should rich people be allowed to buy health care superior to that provided to those who cannot afford better?

3. Is there such a thing as a morally reprehensible opinion (eg. 'Poor people don't deserve health care they can't afford', 'Obama is a Nazi')?
- Are we morally responsible for our beliefs?
- Or is it only acting on such a belief that would be reprehensible?
- Or is it the consequences of uttering that opinion that make it reprehensible?
- Or is it the character that the opinion expresses that would be reprehensible?
- What is the appropriate reaction to immoral opinions?

4. What is the ethical justification for 'soaking the rich' (eg. having a higher marginal tax rate on incomes 10x the median income)?
- Is it because it makes them only slightly worse off while making others much better off?
- Is it because it does not make them worse off at all, but actually provides social goods they benefit from disproportionately (eg. an educated, healthy work force, better business-friendly infrastructure)?
- Or is it not justified at all? And in that case, is it unjustified because the rich will stop producing, harming the economy? Or because higher (proportional) taxes on some is unfair?

 

Optional: watch this video, and listen to this track as you think through your answers. (Report if you chose the option - N.B. no bonus points for choosing it)

Extra Credit: Ask a better question than those offered in the quiz

(The answers will be corrected by a bi-partisan death panel of respected judges comprised of Sarah Palin, Fred Hiatt, Dick Armey and John Mackey.)

I have always hated this man. Because he's a hack. But having one less hack standing in the way of action on climate change is a good thing. From the FT:

Having questioned aspects of climate change science in the past, Mr Lomborg now says "the basic scientific questions [on climate change] have been answered pretty unequivocally".

Therefore the question moves on from not whether to try to tackle climate change but how to do so most cheaply and effectively.

But he still thinks the consensus focus on curbing carbon emissions is wrong, and that we should look at alternative courses of action:

He is concerned that the United Nations-led consensus that a climate treaty must focus on cuts in greenhouse gas emissions from rich countries is mistaken.

"It's a costly way to achieve very little," he said.

Instead, Mr Lomborg argues, there are cheaper ways of halting temperature rises.

These include tackling sources of climate change other than carbon dioxide, such as methane and soot; investing in new tech­nologies; adapting to the effects of climate change; planting more forests; and weighing up whether emissions cuts are cheaper to do now or later.

Governments hope to thrash out a treaty at the crucial conference in Copenhagen this December.

"Getting a deal will undoubtedly be very hard, but if we get better ideas on the table that are cheaper and more efficient [than emissions cuts for the rich] then there is a greater chance that we will succeed," he said.

So he has gone from obstruction to foot-dragging. A step in the right direction, sort of.

Numbers that have already been circulating, but deserve repeating. Please add your own easy pieces in comments (with links), and/or correct or amend these figures if I'm mistaken somewhere.

1. Rescission: The health care industry claims that rescission only occurs for 0.5% of policy-holders. What they don't say is that this amounts to roughly a 50% risk of rescission if you get seriously ill and incur high health care costs. Even if you have been paying your premium for years.

In short, if you have private, non-group health insurance, you do not have insurance. In one in two cases, your policy will simply be pulled as soon as you send in a claim.

How much is this rescission strategy worth to the insurance industry? If you use the industry's own figures - 0.5% rescission within the private health care market private non-group insurance market (roughly 1/2 1/10th of the population) - and a cost-benefit estimate that rescission makes sense for the insurer only when they expect claims amounting to at least 3 years' premium ($20.000) - in which group the average expected claims will be $ 30.000, on a conservative estimate, then it amounts to 1/2 1/10 x 300 million x 0.005 x 30.000.

That makes a total of at least 22.5 billion 4.5 billion dollars in extra profits for the insurance industry. See Krugman, Felix Salmon, and James Kwak for more.

 

2. The Public Plan: Some voices, such as Ezra Klein are downplaying the importance of the public plan in the reform package. The Health Care Insurance industry would beg to differ. To them it is very important that the public plan fail.

How important? They stand to gain 30 billion dollars in market value if the public plan fails. (To be more accurate, three big insurers - Cigna, United Healthcare Group, Aetna -  stand to gain collectively that amount in value). Decidedly, competition is bad for business. They prefer their regional monopolies. Go figure.

3. Medical Innovation: Many people worry that reform will inhibit the pharmaceutical industry's ability to innovate - creating life-saving drugs in the future. However, for every dollar of money spent by consumers on drugs, 20 cents goes to profits and ultimately only 15 cents goes to research and development, according to Dr. Jerry Avorn (author of Powerful Medicines). Of that 15 cents, a good portion goes to unnecessary development of 'me-too' drugs, refreshing old patents, more expensive drugs with no demonstrable greater efficacy than cheaper existing drugs. So let us say 10 cents goes to productive research. If we assume 20 cents on the dollar in drug prices goes to production and distribution, that leaves 80 cents paid to produce 10 cents of R&D.

That means, opponents of reform must assume that the current system is eight times more efficient in producing medical innovation than all alternative systems whereby those 80 cents are directly funneled into financing research (through the NIH, etc.).

Update: I corrected the rescission-related profite estimate in #1. I originally calculated on the basis of 0.5% of the whole private health-insurance market. It seems that should be 0.5% of non-group policies, otherwise the rescission rate within the non-group section of the market would be truly astronomical. Modifications shown.

Late Update: Link added to #3 on wasteful innovation.

Here's a quick theory of what is going wrong with the health care debate. Standard Rhetorical Theory (SRT) no longer applies.

According to SRT - which I'm lifting from Aristotle's Rhetoric (book II, chapter I), what you do in presenting your case is

(1) try to make the argument of your speech demonstrative and worthy of belief;

(2) make your own character look right, (i.e. that you are someone of good sense, ability, and good will)

(3) put your hearers, who are to decide, into the right frame of mind (in this case, pissed off about corporate give-aways, fearful of losing their jobs and insurance, and pitying of the poor who already have).

I personally think all these three conditions have been met. The arguments are solid, voters trust democrats more than republicans, and are pissed, fearful and compassionate. Meanwhile the Republicans are lying bigger than ever.

Granted, some of their rhetorical tropes may still have some grip on people, and much easier to set up than debunk. There is no easy two-line retort to

"Free markets are more efficient than Government services, so government should stay out of health care".

Sure one could say, "These markets aren't really free, and they cannot be made efficient in the case of health care, because...", but you will lose half your audience at "Because". The same can be said for

"High corporate profits is a sign of a good company, therefore high profits in the health care industry mean the corporations are good at what they do",

and

"These are hard times, so the government must tighten its belt", etc.

But I don't think these tropes are half as convincing as they used to be, especially coming from the enablers of the greatest free-market failure since the Great Depression, and the greatest government bailout of private corporations in history.

The Republicans are mistrusted, their talking points getting stranger and stranger (forced abortion, euthanasia, dieting, nothing can be or should be done for the undeserving hopelessly poor, people need stability not change, this is all a socialist/nazi Kenyan conspiracy), and people are not in a frame of mind to hear them.

But here is a suggestion. They are effective, not despite the fact that they are crazy, but BECAUSE they are crazy. Look at the examples they themselves point to again and again when they argue that government is incompetent: FEMA. The agency that THEY hollowed out and destroyed. Look at their worries about cost-controls and runaway deficits; what comes to mind? The fiscal incompetence of Republicans, the absence of cost-control measures in Medicare Part D. Look at their arguments about government encroachment in people's personal lives; what comes to mind? Gay-bashing, abortion restrictions, religious organizations dictating social policy. Look at their arguments against the complexity of the health care proposal, with their flow-chart grandstanding: WE'RE TOO STUPID TO UNDERSTAND THIS!

What's going on? The Republicans have knocked points (1) and (2) off their Rhetorical checklist. They are no longer trusted, and don't care. And they don't care if you think they are stupid, ignorant, and ill-intentioned. They no longer care if their arguments make no sense. All that matters is putting the audience into a state of fear. And the crazier they seem, the more the audience will feel afraid; Of them. For, when you look at them, you may still believe the best of all possible outcomes may be a Democratic reformed health care service, overseen by Democrats. But the worst of all possible outcomes is a Democratic reformed health care service, overseen by these crazy corrupt idiots. In a nutshell, the Republicans' best argument against health care reform is themselves:

"Look at us, WE could one day be running this program!"

It's the offspring of the old Republican strategy: Run for office arguing that government is incompetent, and when elected prove you're right. Now they have, spectacularly, proven themselves right, and are running hard with that evidence.

So how do you counteract this strategy? Here's my rather Machiavellian suggestion: Argue that Republicans are competent and well-meaning. When arguing with Tommy Thompson, give as an example of well-run government health care his own stellar management of Medicare. When arguing about cost-controls, point to the brain-child of Mitt Romney in Massachusetts, where tweaks to this Republican universal health care plan are fixing the cost-problems that have cropped up.  Point to the amazing Republican creation and management of the VA, the finest government-run health-care system in the world. Praise to the high heavens the Republican-inspired IMAC in the current proposal - an ingenious way to do non-partisan cost-benefit analysis. Republicans can run government spectacularly well. Even the present bunch are brilliant, successful, honest public servants who love America.

I say this strategy is Machiavellian, because I have no idea whether any of these claims are true. AND I DON'T CARE. People will only feel comfortable with greater government involvement in health care if they feel more comfortable with the possibility of Republicans running it.

The usually media-shy Plato, head of the non-partisan Academy think-tank, was back in the spot-light Wednesday with an interview on The Situation Room with Wolf Blitzer. In his remarks he provided a harsh socio-political analysis of the financial crisis and predicted that its poor handling by the administration will inevitably lead to difficult structural adjustments culminating in democracy. He proposed radical financial reforms including limits on leverage and a removal of guarantees on bank liabilities to restrain excessive risk-taking. In response, the White House spokesman Gibbs thanked Plato for his advice, and said the president had extended an invitation discuss the issues over some red wine and olives. Below, the CNN transcript of the interview.

Blitzer: Welcome, Mr. Plato, to The Situation Room - the best political team on television. So, on the occasion of the release of your bestselling book Republic on Kindle, what is its relevance to the present financial crisis?
Plato: Thank you Wolf. Great to be here. Well, if you read my book, I say that the recent decline of our republic into oligarchy was inevitably going to end badly. It was obvious enough, even to a blind man. Oligarchy destroys itself as a result of lack of restraint in the ruling class's pursuit of getting as rich as possible.
Blitzer: Tell me how.
Plato: Because the rulers, owing their power to wealth as they do, are unwilling to curtail by law the extravagance of the young, and prevent them squandering their money and ruining themselves; for it is by loans to such spendthrifts or by buying up their property that they hope to increase their own wealth and influence.
Blitzer: That's just Capitalism, isn'it it?
Plato: What's Capitalism...? Anyway, whatever you call it, it should then be clear that love of money and adequate self-discipline in its citizens are two things that can't co-exist in any society; one or the other must be neglected.
Blitzer: That's pretty clear.
Plato: This neglect and the encouragement of extravagance in an oligarchy often reduces to poverty men destined for better things.
Blitzer: Yes, I guess so.
Plato: Some of them get into debt, some disenfranchised, some both, and they settle down, with hatred in their hearts, to plot against those who have deprived them of their property and against the rest of society, and to long for revolution.
Blitzer: Yes, they do.
Plato: Meanwhile the money-makers [ed. note. - i.e. the financial sector], bent on their business, don't appear to notice them, but continue to inject their poisoned loans wherever they can find a victim, and to demand high rates of interest on the sum lent, with the result that the unemployed and beggars multiply.
Blitzer: A result that's bound to follow.
Plato: Yet even when the evil becomes flagrant they do nothing to quench it, either by preventing people from disposing of their property as they like, or alternatively by other suitable legislation.
Blitzer: What legislation?
Plato: It's only a second best, but it does compel some respect for decent behavior. If contracts for a loan were, in general, made by law at the lender's risk, there would be a good deal less shameless financial shenanigans and a good deal less of the evils I have been describing.
Blitzer: Much less.
Plato: But as it is, the oligarchs reduce their subjects to the state we have described, while as for themselves and their dependants - their young men live in luxury and idleness, physical and mental, and lose their ability to resist pain or pleasure.
Blitzer: Indeed they do.
Plato: And they themselves care for nothing but making money, and have no greater concern for morality than the poor.
Blitzer: True
Plato: Such being the state of rulers and ruled, what will happen when they come up against each other in the streets or in the course of business? [...] Won't the poor conclude that people like this are rich because their subjects are cowards, and won't he say to his fellows, when he meets them in private, "this lot are no good; we've got them where we want them"?
Blitzer: I'm quite sure they will.
Plato: Then democracy originates when the poor win, kill or exile their opponents, and give the rest equal civil rights and opportunities of office.
None of this is surprising. I predicted it twenty-four centuries ago in book eight, chapter six, of Republic. Actually, word for word, just what I said here.
Blitzer: Well, 'kill' is a bit strong [uncomfortable laughter]. But do you think America is ready for democracy? After all, it is a center-oligarchical nation.
Plato: Well, democracy does have flaws. Ideally government should be run by philosopher kings with a good grounding in geometry.
Blitzer: Interesting. With that we have to end this fascinating discussion. Thank you Mr. Plato, and we hope to have you back here soon again.
That was Plato, author of Republic. After the commercial break: Does Bo Obama secretly hate cats? The best political team on television analyses the issue. Don't go away...

Let me just say, I don't usually read McArdle. But I wanted to write something about the moral sentiments and the financial crisis, and I figured she might have something helpfully weird and disconcerting to say to kick things off. And she thankfully obliged with the following nugget in her explanation of the claim that there are no villains in this global tragedy:

 

"When something is common enough, I think it definitionally isn't villanous.  It may be a practice that should be fixed--we should all be more careful when starting our cars, I'm sure.  But most of us have, at some point in our lives, accidentally stepped on the gas instead of the brake.  And in the overwhelming majority of cases, this is not a huge problem, or even a problem at all--we run into the curbstone, or roar out of the driveway a little too fast.  We don't punish people merely because, through a fluke of circumstance, the one time THEY did it happened to be fatal.  Or at least, we shouldn't."

 

She puts the widespread anger and outrage down to self-serving externalizing of blame for the catastrophe: 'There simply isn't warrant for blaming big finance for what has happened'. She bases this exculpatory judgment on a few principles regarding moral responsibility.

1. If enough people are doing it, it isn't blameworthy
2. If it wasn't intentional, you're not responsible for the consequences
3. If it's merely a 'fluke of circumstance' that your actions cause the harm, you are not responsible for the harm
4. There's no evidence the practices that led to the financial meltdown were illegal.

 

Let's take these points one by one. Serfdom, slavery, apartheid used to be 'common enough', but that hardly means there was nothing wrong with them. A closer, perhaps fairer, analogy would be practices dominant in certain industries. Think of the tobacco industry lying about the addictive and carcinogenic properties of cigarettes. Think of the widespread practice of denying reimbursement without justification in the health insurance industry. If enough players in an industry does something, and no law or government agency is there to stop them, does that make it okay? If an industry burns down all the trees in the forest, and all the regulators are too captured to notice the fire behind the smoke, did it even happen? You would think moral blame would attach more to the degree of harm inflicted than to how fashionable something happens to be.

 

The second point about intent is even stranger. Most legal and moral systems incorporate the notion of culpable negligence. If a builder skimps on costs and constructs a rickety school in an earthquake zone, nobody is accusing him of wanting to kill school-children. He merely doesn't care whether they die or not. If big finance doesn't bother to consider the possibility of house prices reverting back to their long-term trend, knowing armageddon or a bail-out would ensue, nobody is accusing them of wanting to destroy the financial system, merely that they do not care if they do (remember how Dick Fuld 'could not imagine' Lehman not getting a bail-out). Three to four years of bubble-level bonuses will suffice for a comfortable retirement in any case.

 

The third point is outright wacky. On the issue of responsibility and the role of chance, it is difficult to know what to say. It doesn't really seem a 'fluke' that fraud on the part of mortgage originators, credit ratings agencies and investment banks (hiding the risks of the assets they were respectively creating, rating or buying) caused the financial meltdown. Could my grandmother just as well have caused the meltdown? Maybe... if she were, say, the CEO of Lehman and had done what Dick Fuld did; i.e. if she were Dick Fuld. But I'm not sure what that has to do with anything

Perhaps McArdle's point is more subtle. Perhaps she is playing that old Jesus card: 'let he who is without sin cast the first stone...'. Well, yes, I once stole some candy from a story as a dare, but I was only eight and impressionable. I also occasionally lied to my mother. But I did not gamble trillions of dollars and lie about the risks to make a short-term profit while putting the world economy in danger. A little introspection is fine. Self-awareness is a good thing. But let's not get carried away.

 

The fourth point has me worried about McArdle's mental health. Yes, evidence of wrong-doing is so hard to come by. We've got e-mails from credit-rating agencies laughing about the cow-manure they're tagging as AAA. We've got Goldman singing the merits of the MBS they were selling while they held a short position on the self-same securities. We've got evidence they had a history of these snake-oil vendor practices during the 90's, and were condemned in a court of law. We've got evidence the SEC is too incompetent and captured to investigate the Wall Street majors. Maybe not enough for suspicion? If only there were some journalists interested in digging beneath the rubble of the financial system to investigate risk-management, accounting, and trading practices. Someone like the business editor of a major magazine like The Atlantic with resources and clout. Golly, if only McArdle could turn to someone like that...

 

There's a kind of moral anosognosia going on here. The human mind has an incredible capacity to misunderstand itself. Sometimes paralysis is accompanied by denial and odd excuses ("I can't move it because that isn't my arm at all, it's my husband's, just attached to me"). It's a phenomenon with a broad application. 'Sure, I am perfectly capable of assigning blame and moral outrage, but there's just no reason to, nor is it my job to find out if there is reason to, nor would anything convince me to do so'. Moral paralysis accompanied by fantastical rationalization.

 

I'm not saying McArdle is a hack, knowingly spouting bullshit for her corporate masters. She's not a socio-path devoid of self-awareness. She doesn't seem like a bad person. She's not in denial out of self-interest. But she's definitely also not making any sense. She's just got a very localized dysfunction in her moral cognitive system. Moral cognition involves among other things 'mental time travel', projecting yourself into hypothetical or real scenarios as you imagine yourself doing the deed or suffering the deed, and see whether you feel respectively guilt (or remorse, or shame) or anger. After you run through enough scenarios you build up a moral theory comprised of principles with more or less general application that justify those sentiments. When you run yourself through the relevant scenarios and feel nothing, but you've got some conspicuous instance of negligence or intent to benefit by harming someone, you can get the strangest explanations attempting to reconcile theory and (absence of) feeling. Enter McArdle, oddly but comfortably numb.

 

P.S. Am I getting repetitive? Do let me know...

Emotions aren't fashionable these days. Cooler heads around here are telling the hotter heads to lower the temperature and play it like the Fonz. Actually, I don't know if they ever were fashionable. Ever since the ancient Mesopotamian gods wiped out humanity in a pique of rage at all the ruckuss the kids were making - and then found that no one was left to feed them with sacrifices and such - people have been blaming their mistakes on emotions. Passions overcome us and make us do all kinds of silly things. Stock markets too high? Just too much irrational exuberance. Stock markets look too low? Too much fear. Steal Achilles slave-girl because she's kind of hot, and then realize you kind of need the guy? Well 'I just wasn't myself, dear friend'. Emotions are a convenient excuse. If we didn't have them, we'd have to invent them. We tend to invoke them only when we (or others) go wrong. And we tend to hold emotions responsible for leading us into error.  

 

The Ancient Greek philosophical schools went so far as to base much of their moral philosophy on the eradication of emotions: they're just disturbances making us all excitable, clouding our thinking; much better off without them. Aristotle thought arousing emotions in political debate was illegitimate - a 'perversion' of the thinking faculties in those one was trying to persuade. The implication is that, if you're in an emotional state, you're not thinking straight.

 

There's something wrong with this whole picture. Emotions don't just drop out of the sky (or the amygdala or the endocrine glands), and somehow occasionally insinuate themselves into our otherwise pristine linear conceptual thinking. In reality there's no clear line between thinking and feeling in general, and the line disappears altogether when it comes to thinking about things that matter - our cares, concerns, and values. There's no real difference between thinking something is dangerous and feeling fear. There's no difference between thinking something is a grievous loss and feeling grief. And there's no difference between thinking something is outrageous and feeling enraged by it. There's no dividing line between making a hard-headed objective judgment about good and bad, right and wrong, and getting hot and bothered about it. They go hand in hand.

 

Of course you can stoke or calm people's feelings. But you do so by giving them reason to think a threat is imminent or remote, grounds to hold that a loss is terrible or just 'stuff' that 'happens', evidence that an outrage deeply egregious or nobody's fault really. The reasons given can be good or bad, accurate or misleading, but they remain reasons. And I'm not denying people can be misled in their evaluative thinking, just as they can with plain descriptive theories (eg. the 'Free Market Economy") or mathematical calculations (if a toss comes up heads four times in a row, what are the chances it will be tails next?). But don't pin the blame on emotions, people are just not always that smart in general. Emotions are perfectly reasonable for the most part.

 

This general 'reason versus emotion' thinking gets up my nose! People blame 'fear' for prolonging the recession; 'consumer confidence just needs to improve', goes the cable TV mantra. All I can say is, how about less 'confidence-promoting' happy talk, and a bit more focus on fixing the enduring risks of an economy teetering on a tight-rope with no safety-net beneath? People blame 'populist anger' at corporate give-aways, fraud, and theft, for being 'unproductive'. It's as though there's more hand-wringing about the anger than about the crimes and injustices which 'the powers that be' would rather paper over and tweak here and there. The moderates in and outside government, serious people dealing with serious issues, would rather avoid any serious action, the assumption being that there really isn't anything seriously wrong with the system...

- Seriously?!

Seventy six years ago a man called Pecora conducted a thorough investigation of the financial crimes and mismanagement that led to the Great Depression, skewering bankers in public hearings, laying out their lies and venality, forcing immediate resignations of executives, and issuing a report that raised public outrage to such a pitch that radical reforms of the system were rammed through despite tough resistance from Wall Street. They lasted almost until the end of the century. Why is such an investigation being so conspicuously avoided this time? Well, the anger it might arouse would be so inconvenient. It might get people thinking...

Frankly, if you're feeling calm, you're not thinking straight!

(The Hamptons, July 16, 2009)

 

Dear Diary,

Just back from the beach. A fine morning ruined by reading the NYT, that liberal rag, again. Now they're celebrating supreme court nominee Sotomayor because she managed not to freak out during the questioning. Talk about a low bar. That is apparently the bar a woman has to pass for the highest judicial position in the land: 'not melt down', as that fine statesman Graham said. He was courteous, naturally, but I think he's right to wonder whether she will pass it. I mean, you can just see her trying to control herself as Sessions and co lay out her blatant racism. Well, you can't really see it, it's not visible on the surface. But she obviously really doesn't like white men. After all, this is a woman who outright told a bunch of impressionable young minority girls that they can grow up to be better at their job than white guys. She's consciously instilling a superiority complex in these kids! If that isn't racism, I don't know what is.

 

So maybe she regrets those remarks, just momentarily got carried away with her emotions. After all, she's a woman. And ever since Aristotle, serious scientists know women are emotional. You can't say that anymore, but if you just look around it's obvious. Women just can't control themselves. Once I was watching that old movie, Straw Dogs, with my (now ex-) wife, where the hot girl has sex with her ex-boyfriend, forcing her weak-ass Dustin Hoffman husband to man up and defend his honor. I mentioned to her as an aside that I thought the girl was a bit screwed up, leading the ex on, letting him do his thing without minding much, and then displacing her guilt by playing the 'victim'. My (ex-) wife wasn't even able to talk rationally about it. She flipped out. There was this weird mix of horror and rage all of a sudden. It's just a movie, I'm just giving my opinion, honey, c'mon! Relax. 

 

There was a similar kind of thing with the girls at the bank. Once over lunch, I just mentioned the obvious fact that girls aren't constitutionally made for investment banking. They really shouldn't be in this business. Nothing personal - it's just scientific fact. Men's testosterone levels make them more aggressive and competitive. Women just aren't able to take the necessary risks - they lack the proverbial balls. Naturally, the girls at the table were fuming. They didn't say anything, though. I'm their manager. But you could see them losing it. No scientific argument, none of the detachment necessary to a fruitful intellectual discussion. As the guys said at the bar after work, women take everything so personally.

 

That's what makes this whole empathy criterion so worrying. You can't base judicial reasoning on emotion. As that TV doctor House once said: emotions are irrational, that's why we call them emotions. You've got to base it on legal principles, and abstract from how much a certain decision can hurt certain feelings. In that Ricci case, you've got a bunch of bright, brave, hard-working white fire-fighters losing a promotion just because the test might have been unfair. You can't deny whites what they ostensibly deserve just because the test might be skewed against minorities. If whites do better at a test, you've got to just accept that whites happen to be smarter. But you can't say that, can you? It's frustrating. Even a centrist like Justice Kennedy recognized in his opinion that you need a really 'strong basis in evidence' before you can claim whites aren't intrinsically smarter. And the evidence isn't there. This isn't racist, it's the Supreme Court moderate talking. Sometimes the facts hurt.

 

Or take partial-birth abortions. Sure, you can feel bad for the woman who is afraid for her health, but just look at the details of the procedure involved - it's really gross. And as Justice Kennedy said, you just can't trust women with such important decisions; studies show they sometimes regret aborting. (As if we didn't already know they are irrational.) Someone's got to help them. Science, legal principle, that is all one should consider in judicial reasoning.

 

Same thing goes for political decisions. The left is basing all its arguments for socialized health care on emotion. They trot out all these sob-stories about people without insurance getting denied care, or people with lousy insurance getting bankrupted. Sure, it's sad. But you've got to think about the economy. You're going to destroy the profits of the insurance industry and the drug industry. It's just economics 101 - you can't get economic growth without healthy profits and the free markets that provide them. And we plain can't afford it. Resolving the financial crisis is already going to cost a couple trillion by the time all the banks' losses are covered. There's just no money left over for health care. So now of course they are going to take our hard-earned money to pay for it, because we're 'rich'! Like 350G is 'rich'. Have you tried paying two jumbo mortgages, private school and college funds for the kids, on 350G? There's not a whole lot left over.

 

Everyone is hurting, not just the poor. I have friends forced to put their kids in public school, sell their boat, sometimes even a house. It's traumatizing. And now we're supposed to pay for other people's health care? We don't even have the previous cushion of decent performance bonuses, because the government won't let us pay back the TARP funds they've chained us to. I've worked really hard for that bonus. I deserve it. Trading is boring, stressful, hard work. We don't do this for fun! Even now, without the old bonus levels, we're working hard to ramp up our risk exposure on the back of Fed loans so that we can make enough to get the government off our back. As long as unemployment doesn't get into double figures, we'll make a killing. So if the economy turns around quickly, it'll be thanks to us and our hard work. And if the economy doesn't turn around, well... I haven't tried to run that through our risk models yet.

 

(*note to self - when back in town, ask Shirley what that downside risk she was bitching about amounted to).

 

I tried to explain all this to the maid the other day when she was harassing me for her pay, but she took off, saying she had to go to her other night-shift job. These people just can't be bothered to understand economics.

 

And now the government is throwing another spanner in the works. They're back pushing us into modifying those bad mortgages. Trying to get us to reward petty criminals; many of these are liar loans in the first place. Liar loans! These people were just irresponsible and deceptive. Of course, we knew they were overstating income at the time, and we did puff up their value on our books so we'd get a bump in our bonuses, but that's just part of the game. People get all upset at bankers because we are paid better than others, but they just don't understand how the system works. Too much emotion again. It's just a matter of principle - you can't reward these liar borrowers, or they'll just come back and do it again. It comes down to moral hazard. And you can't cut back on banker bonuses without us cutting back on all the necessary risk-taking. It's a question of motivation - basic psychology. Luckily the boss has been on the phone explaining it all to Geithner, telling him to lay off.

 

People are getting much too emotional in this time of crisis. They should really do what I do: go to the beach-house, soak up some sun, and talk these hard issues through rationally and coolly with friends over a cock-tail. And then call the girls!

 

So the geniuses at AIG Financial Products are back for more. Remember, these are the people who are responsible, not only for the bulk of AIG's 100 billion in losses in 2008, but arguably also for the meltdown of the world economy as a whole. AIG's assets are now worth less than 100 billion and their debt to the tax-payer around 173 billion, so no one is pretending that this is anything but a direct transfer from the tax-payer to the worst group of traders in the history of mankind.

The pending payout to the AIG FP amounts to $ 235 million. This is apparently not a new deal, it's the same old story coming back to haunt us once again:

 

The pending $235 million in retention bonuses at AIG's financial products unit, whose woes were largely responsible for forcing AIG to the brink of bankruptcy court last year, are part of roughly $450 million in retention bonuses for that unit that AIG has previously disclosed. AIG agreed in early 2008 to make those payments, months before it received a government bailout. The first installment of those payments was made late last year, after the bailout.

The second installment came due in March, and it was the preparations to make those payments that set off the prior controversy. The next installment of payments to the financial products unit employees is not due to be paid for months. AIG has argued that it is obligated to make these payments, and that keeping employees in their jobs is crucial to avoiding additional losses on trades that the unit still has in place and is trying to wind down.

The justification for these retention bonuses is then two-fold: (1) we can't just rip up these contracts, and (2) these particular people are uniquely qualified to wind down the outstanding positions.

Now, this discussion has already been had, but just a couple of points. As regards (1), there is intrinsic value to respecting contracts in most situations, though the general principle of "respect a contract unless one of the parties has destroyed the world economy" seems a workable one without throwing all contractual commitments into doubt. As regards (2), it is a valid point if they are uniquely qualified. And that is not necessarily the case. Most of these trades are being unwound at par or close to par*, which requires no special knowledge or ability. A pug in an armchair could do that for you for, say, 100 bucks an hour...

And even if they are uniquely qualified to unwind this clusterfuck of their own making, have they no shame? Remember, the uniquely qualified Myron Scholes of LTCM fame took $250.000 a year to unwind his mess. He didn't ask for a bonus. These AIG people are true monsters.

* I should source this claim, but I can't find it (perhaps Naked Capitalism or Zero Hedge). If someone has a source or evidence to the contrary, it would be welcome. 

NYT Dealbook on the AIG bonus story.