Sunday, March 25, 2007

Google Earth

Maybe you guys have used google earth before. If you have'nt, go here and download it immediately. If you have, why didn't you tell me about it? This is frakking amazing.

I'll describe it as if you were unaware of its glory. It blends a 3-d globe with satellite images, and google place data to form a seemless explorable planet. Its like having one of those godlike CIA systems from the movies (except you can't keep enhancing any image indefinitely, unfortunately). I will never be lost again. Have you ever been baffled by obscure geographical refences in adventure novels? Not anymore. You'll know exactly what block they're on, and what the roof of the restaurant they're eating at looks like. Joe & Ceci, you live at 38° 2'51.29"N x 78°30'41.49"W and and an altitude of 564 ft (and your apartment is 0.5 arcseconds long from front to back). I could have just searched for your address, but I actually found you by hand, cruising around Charlottesville in my satellite (since I did'nt know your address off hand and this was way more fun anyhow). I'll let you guys explore it for yourselves. If you're not impressed you can go to hell.

The Commanding Heights

I watched The Commanding Heights (TCH) earlier this week and I figured that, per Joe's request, I would post a comment. It was great. I was actually teary eyed more than once while watching it. I don't suspect that anyone would be too surprised by my evaluation. It did support many my preexisting beliefs. I found the perspective on post-communist Russia to be particularly interesting and informative.

I think we could use a lot more of this sort of media. Although TCH portrays a world in which the ideas of liberal economics have triumphed, I feel that that triumph is more practical than political. That is, I believe that many governments were forced into accepting more market oriented policies because command economies had been such a debacle. But I'm not so sure that liberal economics has gained any sort of ascendancy amongst the minds of the ordinary people of the world.

I fear that should the economic winds change, people are as ready as they have ever been to embrace socialistic policies. Not to put too fine a point on it, TCH paints a picture of a grand cycle going from the economically liberal beginning of the twentieth century, through an period of government dominance, and back to the modern era of world markets, and I suspect we might well repeat the same errors in the coming century that we did in the last. This would, of course, be tragic.

Really, as an American on the ground, do you see the weight of public opinion as being in favor of free market policies? In particular, amongst the free market sentiment that you do see, is it there for the right reasons? It seems to me that socialism is still far stronger than liberalism in terms of underlying public support. It is simply a far more intuitive system. Though I may sound like some sort of conservative crank, I think that we have to acknowledge that the overwhelming majority of educators and educational institutions in the U.S. still guide students toward a preference for socialism and planning over markets and individual freedom. We must simply face the fact that organization and government intervention are the products of genuine popular movements, and that laissez faire economics has probably never had widespread support.

Just look at the labor and (largely equivalent) anti-globalization movements portrayed in TCH. Do we, at any time in history see any similar movements in favor of liberalism? No, not really. I guess the American Revolution is about as close as you get. Socialism just makes for way better slogans. People want to hear that their problems are caused by the greed and evil of the rich and powerful, not that scarcity is an inevitable phenomenon and that economic limitations hold with the force of natural law. I have argued before that the drive towards communism is likely maintained by the same forces that first inspired worship of the Gods. As human beings we have a built-in tendency to interpret events in terms of purposeful action. This facility is essential to our functioning as members of complex human societies. But it also causes us to anthropomorphize and personify natural forces. Because the natural forces of scarcity manifest themselves through the market, it makes perfect sense that we blame our problems on the human faces of corporate leaders and government officials. Though such scapegoating is satisfying, it is dangerously counterproductive. We have to recognize that when oil prices, for instance, become unpleasantly high, it is not because oil producers are greedy, it is because the relationship between supply and demand has changed. We can try to deny this fact by imposing government controls, but such a lie hurts no one more than ourselves.

All right, I'll stop jabbering about free markets. If you've watched TCH you probably already have a pretty clear idea of what I'm talking about. But I do still want to comment on instabilities in the modern financial system. This is a very significant aspect of the third part of TCH. These are a very challenging problem. The solution is not at all clear. My opinion is that what we need is, in fact, a greater degree of deregulation. This is totally opposed to what most economists would suggest. But I'll say it nonetheless.

I think that governments go way to far in guaranteeing stability in their banking systems, and that we need to make it much easier for banks to fail. You see, I believe that the operation of central banks brings about a system of risk pooling in which the possibility of failure is aggregated. There is no doubt that it is possible to do away with the risk of individual bank failures by creating a centralized guarantor, but to me it seems equally clear that such a system does not eliminate risk. It merely spreads it. But this spreading means that risk is externalized, so it is entered into far more often. It means that risk goes unrecognized, so it is underpriced. And it means that the realization of risk is quickly contained, so systemic purges of risk are much less frequent. Overall, the result is that the economy ends up containing way more risk than it could have ever supported prior to bank cartelization. In a way this is good. It allows much more lending to take place, and so we have lower interest rates, and hence more development and entrepreneurship. But it is bad in the sense that the economy builds up huge amounts of risk.

Just as the containment of moderately sized forest fires allows the buildup of large amounts of fuel mass, thus increasing the possibility of huge uncontrollable blazes, so the containment of moderately sized failures in the credit system makes much more dangerous failures more likely, if not inevitable. So what I'm saying is that we need to do away with the belief that we can control risk. We need to accept the fact that risk is an inherent result of our inability to foresee the outcomes of economic decisions. Given that recognition, the best solution is to break economies into smaller cells capable of failing individually and thus making failure more common, more recognizable, and more contained.

I think that today there is more unrecognized risk in the world economy than most people could possibly imagine, and that a systemic world economic collapse is more likely than most would like to think. It is in this risk that I see the possibility that the recent trend toward economic liberalization will be undone. If we do see a global economic catastrophe, few will choose to blame it on governments doing too much to safeguard economic stability, and many more will interpret it as a predictable failure of under-regulated markets.

I'm not sure that disaggregation is possible from where we now stand. Risks that have been taken cannot be undone, and disaggregation would almost certainly bring about immediate painful realization of this fact. And even if the central banks of the world were to cast risk back upon subunits of their economies, it would not undo the recent creation of a world derivatives market, which is essentially a privatization of the role of risk aggregation. This market may truly be a market failure: a making of poor decisions that could not be subjected to the strictures of market forces until it had become to big to stop without immeasurable harm being done. But it is too late to do anything about it.

In summary, TCH is very encouraging, and made me feel very warm and fuzzy. But I for one am afraid that the trend that it illustrates might be short lived. I may be wrong. I certainly hope that I am. But if I'm not, the tragedies of the twentieth century could well be revisited in the twenty-first.

Tuesday, March 20, 2007

Obama's Track Record

Thanks to Andrew Sullivan for digging up this slightly dated (October of last year) account of how Barack Obama kept himself busy during his two years in the Senate. Keep it in mind while you're being battered by the talking point about Obama having not done anything. The basic summary:
...I do follow legislation, at least on some issues, and I have been surprised by how often Senator Obama turns up, sponsoring or co-sponsoring really good legislation on some topic that isn't wildly sexy, but does matter. His bills tend to have the following features: they are good and thoughtful bills that try to solve real problems; they are in general not terribly flashy; and they tend to focus on achieving solutions acceptable to all concerned, not by compromising on principle, but by genuinely trying to craft a solution that everyone can get behind.
Also, a follow-up on prosecutorgate, Lincoln Caplan has an informative column on Slate on the proper role for politics in the justice system. He handily rebuts the oft-repeated canard about Clinton replacing the US attorneys when he took over by noting that in the past 25 years the number of US attorneys forced out mid-term for reasons other than misconduct is somewhere between two and five.

Thursday, March 15, 2007

Mistakes Were (Not) Made

I've been holding off posting on prosecutorgate so far mostly because I've been waiting with bated breath for it to explode. This is the big one. After a nearly endless series of blunders, scams, and scandals in the Bush administration, some big, some small, this is the one that I think will go down in the history books as the defining Bush administration scandal. And I've been too intently observing it unfold to say anything. I've finally been moved, however, to respond to the line of defense being offered by Gonzalez and the White House. That line: mistakes have been made. Namely, the DOJ was not fully honest about why the prosecutors were fired. End of story. They hope, by acknowledging and focusing on this particular aspect of the problem, to obscure what lies behind it. On the Newshour last night, the Republican operative (I don't recall who it was) was quite exercised about how awful it was that the DOJ misled the Senate on this count. He was also adamant that nothing else had been done wrong and that there was nothing actually improper about the firings themselves. Bush and Gonzalez have made similar remarks.

Not so fast. The bullshit about firing these prosecutors for performance issues is the least of the problem. Even the firings themselves are not the whole of the problem. This scandal is about the politicization of enforcement of justice in the US. So far Scott Horton at Balkinization has said it best:
What is at stake here? The issue is enormous. It is whether the criminal justice system will be turned into a partisan political tool. Bush's Administration is already widely called a "hackocracy" because of his tendency to fill slots with unqualified and incompetent partisan hacks. But the crisis at DOJ goes far beyond that. Even civil service positions - which have been protected from this sort of partisan corruption since the Hatch Act of 1939 - are being politicized. The Boston Globe, for instance, has closely documented the process of weeding out qualified career attorneys from the Civil Rights Division at DOJ and their replacement with political retainers - and the same process has continued throughout the Department. But at the heart of the DOJ scandal lies political intrusion into the exercise of prosecutorial discretion - one of the areas which a democratic society most needs to shield from partisan intrusion. There is now clear evidence that Gonzales and Bush directed political prosecutions and attempted to deflect prosecutions of Republicans for political purposes. A state that criminalizes political adversaries and that cloaks the criminal conduct of its retainers is by definition a tyranny.
A study by Donald Shields and John Cragan (not yet released) shows that under Bush seven times more Democratic officials have been investigated by the DOJ than Republican officials. Match that up with the Boston Globe findings. Combine it with all of the DOJ/White House emails released by the Senate showing the overtly political nature of the firing decisions, and how they tied into politicized prosecutions. There were no mistakes made. Nothing accidental occurred here. These people knew exactly what they were doing. They created one law for Democrats and another for Republicans. The Bush administration has made a concerted effort to reduce our nation to a banana republic. Gonzalez will have to go, but this scandal ought not end there. This administration and its DOJ is rotten to the core. For the sake of our nation and our system of government the Democratic Congress needs to climb onto this scandal and ride it as far as it can take them. This sort of misconduct needs to be punished to the fullest extent possible.