Mad Social Scientist

Daniel Gross is easily the best regular columnist on Slate.com, and he outdoes himself with this history of Republican frustration with the wild success of New Deal policies.

Gross's thesis is that Republicans have never gotten over the fact that FDR was right: that regulation, taxation, and government programs could save capitalism from itself, give it a conscience, and simultaneously usher in a new age of growth, prosperity, opportunity, and equality, and save the world from Communism and fascism. Instead, Republicans blindly assume things must be worse than they would be under unfettered capitalism---and refuse to even listen to contrary evidence. Gross says Republicans are scheming to demolish Social Security not because of any of the official reasons they give, but because they want to stick it to FDR. If they have to end our long national nightmare of peace and prosperity in the process, so be it.

I wouldn't be surprised if this sort of self-schadenfraude motivated the Grover Norquists of the world. But I think the muscle is coming from politicos, not intellectuals, who see the chance to carry out the greatest heist in history...

I love one point Gross makes: who saved the country from Depression and the world from fascism? Who led when the Greatest Generation was soldiering through America's darkest hours? Not the Republicans---they just helped create the catastrophe. No, it was the Democrats who were in charge when it really mattered. Thank God. And let's never let the Republicans forget it.

Apropos my earlier post, here is how my friend Rob heard the Bush inaugural speech.

How else could it be heard?

An old protest slogan, meant to be chanted by assembled crowds speaking to the powers that be, goes "This is what democracy looks like."

Mr. Bush, if your policies look like "freedom" to you, I can only conclude you are dangerously sociopathic.

It's time to point out a dangerous delusion. One of my favorite economists, and favorite bloggers, Brad DeLong, has one annoying intellectual habit. Like many economists, he occasionally speculates on the optimal policy, assuming politics is no barrier to that policy (e.g., the assumption that a benevolent dictator exists, who always implements the optimal known policy, so the only policy problem consists of finding it). This is a useful exercise, within limits. But it is not an adequate route to policy prescription, because public policy is a political economic equilibrium, depending not only on what is feasible and rational for strategic actors in the economy, but also what is feasible and rational for strategic actors in the government. Moreover, it is an institutional equilibrium: institutions, as, for instance, Douglass North often argues, shape the resources of actors; hence control of institutions contributes to the long-run equilibrium in policy.*

Upshot: a policy that might be optimal under a benevolent dictator (who may be governing a pack of wily, selfish economic actors) may not---in fact, usually is not---optimal or sustainable when the government itself is run by and contested by wily, selfish political actors (who may, of course, overlap with the economic actors). It may sound good in "theory" (that is, a naive theory), but in practice, may be quickly subverted, exploited, or trashed.

Example: Brad notes a possible compromise on Social Security involving granting the Social Security Administration some latitude to govern a tentative private accounts scheme, and also giving the SSA the power to expand that scheme at a later date. The virtue of the plan is putting that date off, so that current arguments about the course of privatization that seem false can be proven so before irrevocable changes are made.

But supposing this plan were implemented, how would the governing party react? The same way they always do---they'd try to staff SSA with sycophants, profiteers, and liars; they'd build a long term campaign convince the public that the Democrats had in fact conceded that SS is collapsing; they'd try to manipulate the calendar for further privatization; and in general use the new institutional power of the SSA to achieve their own (nefarious) ends. I'd like to say the Democrats would fight tooth and nail, and develop strategies to undermine the Republicans', but they haven't done that over the last 20 years, and they show little sign of strategic thinking even now. Instead, they are struggling even to unite in short-term opposition to the destruction of their party's grand achievement.

If the world were run by powerful, smart technocrats, who cared equally about the fate of all citizens, then Brad's idea might be the way to go. But *nothing* is run that way. In a shameless plug of my dissertation, I should note that not even central banks, the supposed paragons of modern economic technocracy, are free of subjectivity, disagreement, and indirect government manipulation. To the extent DeLong's proposal to give the SSA independence is a conscious or unconscious imitation of the granting of legal independence to central banks, it would be wise to note that laws alone do not create autonomy.

Instead of offering compromises that might, under a wise government, offer marginal improvements over status quo, we should recognize that we can do no better than to "buy insurance" against truly catastrophic policy choices made by the morons, monsters, and madmen in charge of our government. That means fighting like hell to preserve the good-but-imperfect system we have. On every major policy initiative---tax cuts, Medicare, Iraq, Social Security---the Bush administration has lied about the effects of that policy to Congress. Lied, as in "told Congress things it knew to be untrue", like the size of the tax cut, the cost of prescription drug benefits, the cost and necessity of war, the current fiscal state of Social Security... There can be no relationship of trust with political actors who have repeatedly shown a willingness to lie for short-run gain. We can never compromise or work with them; we can only defend what is good about the status quo, and hold out until they are at last sent home to Texas.

Lesson: We can't expect a rescue by wise men or those missing Republican "adults" Brad and other keep hoping will ride to the rescue. Throughout history, many political economies have found themselves under the power of fools with grand schemes, or under the thrall of petty thieves bent on extracting rents at the expense of national wellbeing. We in the US have largely escaped that fate, through wisdom and luck. We've pressed our luck by (re?-)electing a snake-oil salesman. Without wisdom, even our luck will eventually run out.

*I call this a habit, because I am sure DeLong is as aware as anyone of the need to consider the politics of equilibrium policies, and the role of institutions. I have my own lazy intellectual habits; a good friend often complains about my tendency to confidently assume "the grass is greener" in Western Europe on many issues. Perhaps you've noticed others...

A very disturbing study finds that a large fraction of the current crop of American high school students---the 9/11 generation---no longer believe in the 1st Amendment.

Only half, for example, think there should be a free press.

My friends teaching freshmen and sophomores in college tell me there has been a sudden, generational shift towards authoritarianism. Hobbes is in; Locke is out. Fear of terror, and the imperative of maintaining security, have triumphed over the love of liberty.

Did al Qaeda attack America because it "hated our freedom", as so many Republicans have said? Of course not; only someone totally ignorant of al Qaeda's goals, and willing to treat a serious enemy as a gaggle of idiots, would assert such nonsense. They wanted to engage us in a global struggle over the future of the Islamic world. They don't care what we do in the privacy of our own borders.

The real enemy of American freedom has used to the 9/11 attacks to tear up the constitution, introduce fear and torture to the daily political lexicon of America, and, most insidiously of all, shift political discourse so far towards security policy that children growing up in today's America think the struggle against terrorism trumps all other concerns, including civil rights. Is the constitution of American liberty so weak that a mere 3000 civilian deaths, in a country of 300 million, could persuade us to abandon the Bill of Rights? Horrible as 9/11 was, it would not test the Founders' faith in liberty, and it should not test ours. Thomas Paine would be shocked at how little we suffered before abandoning our birthright.

My words may strike some readers as strange, because the very terms "freedom", "liberty", and "democracy" are being redefined under own noses. Bush claims he is on a worldwide crusade for freedom---which naturally consists of war, threats, and occupation abroad, the secret construction of an international gulag archipelago, and the smearing of domestic opponents as traitors. All part of freedom, you know.

All modern authoritarians must confront the concepts of liberty and democracy. Most choose to redefined these words so that their regimes can be seen as paragons of democracy and freedom. We're not just living such a redefinition, we're exporting it.

Yesterday, the brave people of Iraq ignored guerilla attacks to participate in... what exactly? An election with more than a hundred parties, secret candidates afraid for their lives, a puppet government expected to do well (how can they not in the circs), an occupier regulating their press and freedom of movement---this sounds like a plebiscitory carnival to me, not a democracy. I'm hesitant to even admit the mere possibility this could lead to democracy or a democratic culture.

But the press and pundits of the US called it "democracy", and, more disturbingly, "freedom". In Bush's America, political freedom is no more than the right to participate in periodic majoritarian elections, no matter how twisted, and subsequent submission to the supposed embodiment of that majority. I don't know how anyone can connect the two concepts, but essay after essay says the Iraqis, by participating in this grisly joke, are showing their love of "freedom". (Soon, we'll probably find that this exercise of freedom consisted of granting a patina of legitimacy to the occupiers' puppet while generally voting on ethnic lines. Woo-hoo!)

Freedom, for those who have forgotten, is not the same as democracy. Often, freedom must be protected from democracy. That, high school students, is the purpose of the First Amendment and Bill of Rights. Our most cherished political documents; the very Holy of Holies of the American civil religion, is a bulwark against the tyranny of democratic majorities.

But these precious civil liberties have been traded in for a cheap knock-off: personal autonomy, which many Americans incompletely construe as liberty from government taxation and regulation.

Plebiscites and empire. Napoleonic democracy, anyone?

Bush will (someday) espouse a particular plan for Social Security. That plan will almost surely involve borrowing lots of money (selling government bonds) to invest in the stock market, because "the stock market pays better returns than bonds". As has been noted, this is a bizarre plan: who are the chumps buying our bonds instead of buying stocks, if stocks are such a no brainer? So the first problem is that our plan says the market offers better returns, but is full of fools willing to hand that return to the government, for free, over a period of decades.

Imagine your son, fresh out of college, came to you and said: "Dad, you've always told me to save for retirement, and I've always wanted to live it up while I'm young. My new plan is to spend 100% of my income, but simultaneously take out loans, and invest the proceeds in the stock market, which on average will return 8%. So I just need to find someone who will give a loan for less than 8%, and I'm probably set." Asks the father: "What will you do if the market crashes?" The son: "Oh, I'll default, and live off what I can find in dumpsters after I retire." The bank: "Like hell you're getting a loan for less than 8%! We could invest the money directly in the stock market. Why should we take on the risk of a shiftless, insolvent middle man?"

The reason bonds and stocks coexist, despite bonds having a lower average return or premium, is that the former are lower risk, given the government's *historical* behavior. As the risk associated with bonds increases, say, because the currency is sinking, or because the government is hinting at a future default, especially by piling up unsustainable red ink, the premium associated with bonds will increase. Likewise, the more bonds we issue, the more expensive the next bond is to sell, as we tap out demand for low risk assets and increasingly crowd out private investment. In expectation, there is no benefit to the borrow and invest scheme, unless you think your creditors are a pack of fools.

So does Bush really believe there is a free lunch that can be eaten over a period of decades, on the tab of the world's investors? Well, Bush's economic sophistication pales compared to the average housecat's, so what does his "team" think?

I suspect they think they can make out like bandits in the short run by handing over a large borrowed sum to Wall Street. They know they can't fool all the market indefinitely---they just want to fool some voters for a short time.

Re: Social Security, you need to know only a few other things.

1. Though estimates differ abit, non-partisan experts in the Social Security Administration believe the system will pay out 100% of benefits through 2042, and at least 70% thereafter. Those benefits are indexed to inflation, so 70% is still pretty good---and a lot better than zero. Small tweaks---raising the retirment age gradually, eliminating the cap on payroll income that means an executive and his secretary pay the same SS taxes, and perhaps raising taxes a bit or cutting benefits a bit---could ensure the long-run solvency of the system for many generations.

2. Privatization plans that have been examined by SSA don't provide as much expected benefit as the status quo that's supposedly in crisis.

3. Thanks to Bush's insane fiscal policies---unaffordable tax cuts on the very rich, a massive military build up and endless war in Iraq, increased pork barrel spending---and the weak recovery they have produced, the rest of the Federal Government is in far worse fiscal shape than Social Security. Anyone serious about fiscal responsibilty would tackle the budget deficit first, and be willing to consider tax increases to do it.

4. The Social Security Trust Fund is real, and full of real assets---treasury bonds. The goverment must honor those bonds in the future---both as a matter of constitutional law, and to avoid a massive financial panic. The system is not, nor will it be, "bankrupt". Even in 2042, payroll taxes as currently structured will pay 70% of benefits.

5. If you are 28, like me, you can not only expect to receive Social Security, you should be ready to take to the streets to defend it against theft.

A fascinating argument on whether people deserve their pre-tax incomes is making the rounds. (The answer, of course, is "no", but the argument seems novel.)

In essence, Elizabeth Anderson is pointing out that if you believe prices aggregate information about present demand, they cannot simultaneously reward responsible past behavior, unless present demand was known with certainty when people made the decisions that ultimately determined their wages. If, as Hayek argued, the prices in a capitalist system are the unique source of this information; ie, future demand is uncertain at the time people are making the investments that lead to their income (in combination with relative prices), then incomes do not reflect desert only, but also chance. The component of incomes reflecting chance is not deserved, and can be taxed and redistributed justly.

If, to get out of this argument, one claims that people can know with arbitrary certainty future prices, then the information exists to create a socialist planned economy as efficient as a free market.* But of course, people don't know future prices. And therefore future prices, and the incomes that depend on them, are not precise measures of just desert.

I'm curious how Hayekians and other conservatives would respond. I imagine many would make efficiency arguments against redistribution, while implicitly conceding capitalism is unjust; in essence saying that the degree of redistribution describes an efficient-incentives/justice-in-income frontier, and arguing for a corner solution at the free market.

Others may try to salvage a Nozick rebuttal to Anderson's essentially Rawlsian twist on Hayek, but I'm likely to find that unpersuasive.

Some may employ a public choice argument against redistribution, by defending the market as the most just available system, even if they are not terribly just (e.g., intervention on balance lowers justice, as the politically powerful collect rents/divert redistribution to the undeserving).

What other responses am I missing?

*I hasten to note that such a system may not be in any political economic equilibrium, even if this information is available. Why should any planners do the efficient thing, when they can exploit their institutional power to collect rents?

For years, Halliburton has maintained operations in Iran, despite investigations and criticism. Now, they're pulling out. Dismissing the possibility that Halliburton has developed a corporate conscience or delusions of respectability, should we wonder whether Halliburton knows something we don't?

I just read a fun book about Pirates (arrhh), called The Pirates! In an Adventure with Scientists, by Gideon Defoe. I've seen it described as a cross between Douglas Adams, Monty Python, and, well, pirates. But me beauties, that's not the half of it. Aye, tis more than a nip of Douglas Adams in this brew, but there's another spice in there, laddies. The humor and style is unmistakable. Is Gideon Defoe the author of Fafblog? Or just an avid reader? Only the Medium Lobster knows for certain, and he's not telling the likes of us scurvy dogs.

In lighter news, I was picking up wrapping paper at the drugstore when I found a great gag gift. Many years ago, one of my uncles got one of my other uncles an... unconventional birthday gift.

Naturally, this meant war. The Mr. T Sprinkler got passed around for a couple of years, then disappeared. My cousin found one on ebay and gave it to his father this Christmas, no doubt igniting a new gag gift war.

I cannot risk a gag gap!

And today, I found my new first strike weap---er, doomsday deterrent. The fools at the drugstore had slashed the price from $20 to $5, and placed it hopefully by the register. The sales clerk thought my plan to purchase it a gift from God. It talks, you see, and that must get very annoying. Very annoying indeed...

Mu-hm-hm-ha-ha-ha!

The fortune cookie I received at a Chinese restaurant, an hour after defending my doctoral dissertation:

"You have had a good start. Work harder!"

Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.

I think it's time. Alas, the VP is as mad as a hatter himself, and the Cabinet is full of undistinguished sycophants, but file this provision in the back of your mind. Bush's mental incapacity could have a silver lining.

The government is calling off the weapons hunt in Iraq. At least O.J. is still looking for the real killers.

And the GOP continues to try to drown the federal budget in the bathtub, claiming as justification the limp it picked up the last time it was beaten up by the Republicans.

Despite everyone else's opinion that elections cannot be held in Iraq on Jan 30, President Tell-Me-No-Evil insists they can. Goodie. Anything to bring forward the day Iraq enjoys the fruits of democracy. Like ethnic civil war. And a government that secretly pays the press to feed the unsuspecting public propaganda.

here

Spc. Graner's attorney isn't exactly Clarence Darrow. In fact, I don't think he's even Lionel Hutz.

The prosecution showed some of the photos taken at Abu Ghraib in their opening argument, including several of naked Iraqi men piled on each other and another of England holding a crawling naked Iraqi man on a leash.

In his opening arguments, Womack said using a tether was a valid method of controlling detainees, especially those who might be soiled with feces.

“You’re keeping control of them. A tether is a valid control to be used in corrections,” he said. “In Texas we’d lasso them and drag them out of there.” He compared the leash to parents who place tethers on their toddlers while walking in shopping malls.

Referring to stacking the prisoners, Womack said: "Don't cheerleaders all over America form pyramids six to eight times a year? Is that torture?"

Womack also said that Graner was "doing his job, following orders and being praised for it."

Yeah, those cheerleaders who are forced to form pyramids naked by people who just finished beating them. I'm sure I saw that in a half-time show somewhere...

Bonus points for appealing to the civility of Texas prison procedures.

An important point most people seem to have forgotten is that a large percentage of Abu Ghraib prisoners were innocent bystanders picked up on weak evidence or swept up to meet quotas. They weren't being "corrected", and they hadn't been tried as criminals.

Today's two op-eds at the NYT are a perfect illustration of the present divide in American politics. The two sides used to be called liberal and conservative, but those monikers no longer capture the real division, which is between the sane and the mad.

Paul Krugman writes a standard Social Security piece, which, like so many I've read in the last month, points out that improving Social Security's fiscal position has nothing to do with private accounts, and everything to do with net national saving. He points out that the deficits Bush's current fiscal policies and proposals will likely create could bring about an Argentina-style crisis. I get the feeling that while Krugman would prefer that Bush preserve the nation's commitment to its retirees, he above all wants Bush to have a sane fiscal policy. If you're going to rob us blind by pillaging the trust fund and/or giving Wall Street a cut of the Social Security pie, at least do it without bankrupting the country. (Let's put it another way, Mr. Bush. How much would it cost to get you and your crew to leave us alone. $500 billion? An even trillion, cold hard cash? It'd be a bargain for the country.)

David Brooks writes a truly bizarre article that as much as admits that Iraq is beyond hope and doomed to a bloody civil war, then does an about face to assert that because most Iraqis want security (he goes so far as to say democracy; I find it dubious that most Iraqis know what it is), therefore they will find a way to control the small percentage who want chaos. Wow. Now that they have all the power, they don't even put the slightest effort into convincing us things will be okay.

First, if "majority for peace brings peace" were an empirically supported principle, world history would look very different. I think most people in pretty much every society are decent folks who would like to live peaceful, secure lives. Yet history is full of civil wars, genocides, and other conflagrations. Clearly, a minority can create violence and instability in some cases, and the peace-loving majority can be persuaded that violence is the only way. Paging Dr. Pangloss---you've just been one-upped.

Second, WTF---aren't conservatives endlessly bleating on about the age of terror, and the power of small, fanatical groups to threaten superpowers? Isn't that why the Bush administration insists on being allowed to invade countries at the first hint of a future threat? And now we're to believe that any small group dedicated to violence and terror is doomed because it lacks a majority? I guess 9/11 doesn't change anything after all.

I haven't posted in a month, but I've been reading, and Jebus is it depressing. I've seen three main news stories: Bush-engineered economic decline; Bush-engineered chaos and death in Iraq, and natural disaster around the Indian Ocean. Nature trumps Bush for destructive power, but give him another year in Iraq, and he'll catch up. I've also seen three main propaganda themes in the conservative press: 2+2=5 level falsehoods, especially regarding Social Security; increasingly fantastical hopes of a turn-around in Iraq; and ominous mutterings that it is time to really "get tough" on the insurgents by training death squads to foment terror in the Sunni triangle (no doubt the new Torturer General can help out).

In the Bush era, the formerly-conservative Republicans have a single media goal: keep their image positive and their enemies under fire while they grab everything that isn't bolted down. Formerly-liberal Democrats have given up on seeing progressive aims realized, and increasingly just want sane policies. Sane conservative policies would be fine. But please, don't burn down the country while you're pilfering the Treasury; don't bleed the army white to make your opponents look like cowards; don't turn us into a nation of torturers, terrorists, and thugs because you lack the creativity to solve the problems you've created; and don't throw out two centuries of democracy just to hold on to power through our national descent into poverty and despair.

We former-liberals in the Sanity Party know you are morons, monsters, and madmen. We tried to stop you; we tried to tell the people, but you've won every round. Now just take what you want and go. We won't press charges, and you can pardon yourselves on the way out. Just leave something standing.

A man is trying to organize a general boycott on Jan 20, to mark Bush's Inauguration as a black day.

I think this is a good start, though to be sure, boycotts are seldom successful.

I have something a little larger in mind. Bush is threatening to privatize Social Security, and in the process, steal enormous sums from the trust fund---a trust held by the government on behalf of the people---and from working Americans. Democrats will be hard pressed to stop him in Congress, if Bush is willing to push through a bill to kill Social Security on a party line vote. Before we let that happen, we should consider a general strike. A large fraction of the electorate clearly hates the Bush administration, and we are concentrated in the economically vital Blue States. If we refused to go to work until Social Security was guaranteed, we could wreak havoc.

I should note this is a nuclear option and would be a Herculean task to organize, given the usual free rider problems and inevitable selective efforts at punishment by Republican employers. So I've marked this entry as Mad Social Science. But it's worth filing away---someday, it might not seem so mad...