Atlas Shrugged: The Mocking

Thursday, September 30, 2010

Get Off Your Knees

Rich people hate you.

We've said it before but it needs to be said over and over until people start to believe it. They think you are stupid because your job is less important and respected than theirs. You don't get paid as much or travel as much or get as much public praise and attention. People don't pay attention to what you say. They pay attention to what rich people say. Why should rich people listen to people too stupid to get rich?

They tell you that frozen vegetable are okay because they think you can't figure that out for yourself and poor people have bad impulse control anyway--that's why they are poor. They discuss the merits of the Palestinian problem because you need to be told that both sides have a point, otherwise your inability to overcome your knee-jerk pacifism or mindless ideology will lead you astray. They tell you that the budget must be balanced because they know it will work to their benefit and you'll happily do whatever your leaders tell you to do, even if it's against your deepest principles. They sit down and decide that they can make up a reason to go to war becasue they know that most people will never think to question them, and then drill that reason into your heads until it becomes "common knowledge."

They think you are unimportant because you have no power and, in fact, are unimportant. They giggle over your presumption when you criticize them. They insult you in public and private. Your feelings are irrelevant. You don't matter. You're poor--or at least, not as rich as them.

Ian Welsh:

Now that virtually everyone of any importance, up to and including the President has told you that they hate you, that you are a bunch of unrealistic ingrates who need to be drug tested, I trust no one still thinks the White House doesn’t hate the left’s guts, and that it comes from the very top, from the President?

I’m going to write on this at greater length, but the point folks need to get through their heads and burrowed down into their hearts and spleens is that Democratic politicians as a rule, despise you. This isn’t just about the White House, Democrats in the Senate and in the House have done everything short of spit in your face, over and over again, as when Nancy Pelosi snuck an up or down vote on the catfood comission’s findings into the lame duck sessions.

Why are people content with so little? Why do they believe it when they are told that they are nothing, they deserve nothing, they should just crawl away and die? Obama went back on most of his campaign promises and deepened the security state. He is the head of the Assassination Bureau, not the Democratic Party. And the Democrats accept this, make excuses for him, say they'll vote for him! He hates them and everything they stand for. He mocks them for holding their principles.

Now, the second reason I'm telling you this is because Democrats, just congenitally, tend to get -- to see the glass as half empty. (Laughter.) If we get an historic health care bill passed -- oh, well, the public option wasn't there. If you get the financial reform bill passed -- then, well, I don't know about this particularly derivatives rule, I'm not sure that I'm satisfied with that. And gosh, we haven't yet brought about world peace and -- (laughter.) I thought that was going to happen quicker. (Laughter.) You know who you are. (Laughter.)

He ignores Democrats and works against them. He gives Democrats' money away to Big Banks. He kills innocent men and women in foreign countries. He does not respect the laws of the country, the suffering of its people, or his oath of office to defend the constitution. And then he laughs.

And he does all of this because rich people hate you. You are in their way. You must be accommodated and cajoled and persuaded when they want someone to fight their wars or pay for very expensive goods and services that they don't feel like paying for. You pay for the roads that their trucks wear out, the airports that ship their goods, and the utility plants that provide them with electricity, water and gas. Not all of it, of course, and they must pay for those services as well. But it's certainly a lot cheaper than paying for the public works infrastructure they need themselves. In return you want public schools and health care. How dare you? Why won't you just shut up and do what you are told, working for the wage they are willing to offer under the conditions they are willing for you to tolerate?

The only reason people accept the unacceptable is because they are trained from birth to obey, and are willing to trade obedience for membership to the tribe. They are willing to live lives of quiet mediocrity and degenerating morality because they feel they have too much to lose. It's already lost. They just haven't noticed it yet. They are obeying yet getting nothing in return. No feeling of love or belonging, no tangible benefit, no sense of merit or self-respect. Nothing.

We deserve better than neglect, mocking and slow economic strangulation. Authoritarians don't believe that. They believe the rich are better because they are richer, smarter because they are more educated, more moral because they are more respected--and they must be obeyed.

Welsh quote via Avedon Carol.

Wednesday, September 29, 2010

Telephone Tag

Megan McArdle informs us that Matthew Yglesias informs us that it is better to eat frozen vegetables than no vegetables. Being McArdle,she must add that poor people are not suffering for the lack of fresh vegetable because they can always buy frozen.

If one thinks of her job as pay per item, she probably made hundreds of dollars for that post. Ka-ching!

Tuesday, September 28, 2010

The Thinker

(cool image from here)

While we do not want to hurt Megan McArdle's feeling by depriving her of the attention she has earned by her honest toil, it seems that Matthew Yglesias has something to say and attention must be paid.

First came the twittering:

I don't think I hold any middle of the road views whatsoever:
about 7 hours ago via TweetDeck
Retweeted by 1 person

@jaltcoh @ModeledBehavior I am unabashadly pro-reasonable ideas.
about 6 hours ago via TweetDeck
Retweeted by 1 person

Some Yglesias friends commented.

@mattyglesias The problem is not that you are wrong but that you r reasonable. Because if you were wrong & crazy that would fine? #weep4USA
about 4 hours ago via web

@mattyglesias So he doesn't know why we need someone to say lots of reasonable things? I actually think we could use more of that.
about 4 hours ago via mobile web in reply to mattyglesias
John Althouse Cohen

@mattyglesias The problem is not that you are wrong but that you r reasonable. Because if you were wrong & crazy that would fine? #weep4USA
about 20 hours ago via web
Modeled Behavior

The impetus for all the giggling was my post about Yglesias's resemblance to David Brooks. As always, I emphasized the authoritarian nature of his thinking.

I'm not sure why we need someone around at all times to tell us what reasonable people think, or to find middle-of-the-road policies to solve conventionally accepted problems that achieve moderate solutions. But anything that keeps the Masters of the Universe occupied with busy work is probably a good thing.

Yglesias is of the Savvy Tribe (TM Julian Sanchez), which is able through sheer force of intellectual power to analyze every situation and discover that, mirabile dictu, the solution is to be found in the middle ground between two polar opposites. Since politics consists of the struggle between right and left and one must ignore the most extreme from both parties, naturally the solution to any problem is to meet in the middle.

[...]Barro’s personal views aside, it’s a huge error to characterize the dispute in contemporary politics as a big fight about “spending.” There’s a huge gap between where the Obama administration wants to have taxes (somewhat lower than necessary to pay for the spending it favors) and where the GOP leadership wants to have taxes (much lower than necessary to pay for the spending it favors). There are also disputes about spending levels on specific things—Republicans would spend much less on the poor and on salaries for people who staff regulatory agencies. But to balance the budget, at either the Obama or the GOP level of taxation, would require spending cuts that Republicans don’t favor.

No, the huge gap is in between what the very wealthiest Americans own and earn and what nearly everyone else owns and earns. Both the Obama leadership and the Republican leadership will do what they are told to do--pretend that we need to balance the budget so the rich have an excuse to eliminate those arrogant "entitlements." Discussing spending cuts without discussing income inequality, the rich's ridiculously low taxes, and the necessity for tax increases is middle-of-the-roadism at its most typical.

In Knowledge and Privilege, Yglesias reads Jamelle Bouie and is taken by his insight, which seems to be the Yglesias's heh-indeed. Bouie:

To me, it’s no surprise that the highest scorers — after controlling for everything —were religious minorities: atheists, agnostics, Jews and Mormons. As a matter of simple survival, minorities tend to know more about the dominant group than vice versa. To use a familiar example, blacks — and especially those with middle-class lives — tend to know a lot about whites, by virtue of the fact that they couldn’t succeed otherwise; the professional world is dominated by middle-class whites, and to move upward, African Americans must understand their mores and norms. By contrast, whites don’t need to know much about African Americans, and so they don’t.

Likewise, religious minorities — while not under much threat of persecution — are well-served by a working knowledge of religion, for similar reasons; the United States is culturally Christian, and for religious minorities, getting along means understanding those reference points. That those religious minorities can also answer questions about other religious traditions is a sign of broader religious education that isn’t necessary when you’re in the majority. Put another way, there’s a strong chance that religious privilege explains the difference in knowledge between Christians and everyone else.

Why does it not occur to these gentlemen of intellect that people become atheists because they read a lot about religion, and come to realize that their own religion is no different from every other religion? They seem to think that atheist follow their own pattern of indoctrination in a set of beliefs from birth, that atheism is a "religious minority" with its own culture, instead of a choice that people make. Some people raised atheist choose to believe in a Christian god, as do some people raised in some other religion. For others it's not a choice, because the would never choose to leave the groups to which they were born, whether they believe or not. But authoritarians have a difficult time imagining that people can assess, understand and choose to reject what their parents and tribe has deemed true and right. Because of this tendency, Yglesias doesn't notice that you cannot logically say that atheists, who grew up in Christian culture, which is remarkably ignorant of its own history, had to learn Christian history to fit in. They grew up in it, often were Christian themselves, and being the sort to ask why and how (something Yglesias is also unfamiliar with), learned that most of what they thought was true was not, and in time their beliefs lost their hold on them.

Finally, let's look at an Yglesias post on education. It seems that the problem with education is that it is failing poor students. The middle and upper classes seem to do just fine, and therefore their teachers must be fine as well, one assumes.

Among other things, I think this tends to undermine the oft-voiced scale-based critique of different reform initiatives. I’ve watched with frustration as charter school skeptics complain that these measures will never serve everyone while socioeconomic integration skeptics complain that those measures will never serve everyone. Even worse, everyone then turns around and talks about how there’s no “silver bullet” to solve everything. And indeed there isn’t. But what we’ve got is a bit of a niche problem and we also have a lot of promising looking niche solutions. Which is more or less what the situation calls for

No. The problem is that the elite are trying to get rid of their property taxes and get into the lucrative business of for-profit "public" schools. If people were serious about reforming education they would find ways to help poor parents, so the parents could be able to care for their children properly. It's a mug's game to discuss "niche problems" when a full-scale assault on the idea of public education is being conducted.

Yes, Yglesias is reasonable and wants reasonable solutions. He can't seem to find any, but that's not exactly a requirement for the Savvy Tribe anyway.

We are not here to be reasonable. We are here to fight for what is right.

The Center Of The Road

The more I read Matthew Yglesias* the more he resembles a David Brooks with training wheels. Yglesias is usually inoffensive and has a fine grasp of the obvious. Wherever society needs a Harvard graduate to step up to the lectern and pass on conventional wisdom, he is there.

Yglesias tells us that immigrantion can be a good thing, frozen vegetables are better than no vegetables, both Israel and Palestine have valid complaints, some people on the right believe untrue things, dual mandates are confusing, poor minorities do worse in school than middle class kids, and ideological purity is bad.

I'm not sure why we need someone around at all times to tell us what reasonable people think, or to find middle-of-the-road policies to solve conventionally accepted problems that achieve moderate solutions. But anything that keeps the Masters of the Universe occupied with busy work is probably a good thing.

*I've added him to my route.

Monday, September 27, 2010

Ignorance Is Bliss

Megan McArdle takes dishonesty to a new level. She actually seems to think that if she says tea-baggers are grass-roots, we will never discover that they are financed by corporations and led by Dick Armey's Freedomworks. See here, here, here, here, here, and here for a few sources on their relationships.

P. Suderman, husband of Megan McArdle, worked for Freedomworks and still works for a Koch-funded organization.

Mrs. Peter Suderman:

Your memory of how the people in the tea party viewed the bailouts is simply in error; while I supported TARP, there is a very good reason that the House initially voted against it. All of the conservative intellectual figures I know who now oppose TARP also opposed it when it passed; I was subject to a lot of their criticism. You may disagree with them (I do) but the accusation of opportunistic (or racist) hypocrisy is not borne out.

While I'm not particularly a fan of the tea parties, I can't say that I've noticed that the left's grassroots are a shining bastion of rationality. The left has inflated the crazy things that you can find *someone* saying at *any* event and made them the whole of the tea party, which is mostly a bunch of fairly boring middle class people who don't want the federal government taking a bigger share of the economy, and are organizing in a fairly boring way that most people on the left find utterly congenial when it's done in service of opposing wars.

I think the tea parties, like any populist movement, lack a coherent theory of how to govern a large country. But one could equally say that the antiwar protesters lacked a coherent theory of international relations. Did you think they were "unhinged"?

When you say that they didn't care until a black man was president, this is simply false; they cared before. Maybe the tea party would have formed under Hillary or McCain, maybe it wouldn't, but the view that it simply took the tea parties a little while to get their opposition organized is at least as consistent with the evidence. You are treating the most uncharitable possible interpretation as a fact; this is erroneous, and it serves to make any dialogue impossible, just as saying that antiwar protesters "just hate America" is neither accurate nor helpful. When you drag Obama's race into this, you are saying it's opportunistic.

As for the extent to which the tea party is driving the Republican party: care to place odds on actual radical action? (Defunding Obamacare doesn't count; I know YOU consider it radical, but defunding a law which was opposed by the majority of the population is simply not the act of a radical).

You have a persistent tendency to define yourself as part of the "reasonable" sphere, which amazingly skews much farther to the left than the American polity. You are not part of the moderate center; you're firmly on the left, and the majority of the population--even the majority of the educated, intelligent population--firmly disagrees with you.

This seems to be part of a much broader trend in discussing the tea party, where I find the ratio of sheer elitist snobbery to actual content distressingly high. Voters can be wrong without being crazy, unhinged, or otherwise worthy of disgust.

And nary a word about her tea-bagger husband. Oh, she might be forced to add a disclaimer in later. But she will continue to state that the tea-baggers are grass-roots when she knows very well that her husband helped Koch corporations fund, plan and carry out the tea parties.

What a strange time we live in; we are throught the looking glass. The only thing that matters is having enough money and power to get away with all your lies.

Imagination Versus Reality

Via TBogg, we see that Ross Douthat's mother let him play with the computer again. It seems that the little girls who live next door invited him over for a tea party and he thought he was actually going to get real tea and cakes instead of water and Play-Do. So Master Ross takes pen in hand to think over the puzzling dilemma.
The Tea Party is a grass-roots movement — wild, woolly and chaotic — which sometimes makes it hard to figure out exactly what it stands for. But to the extent that the movement boasts a single animating idea, it’s the conviction that the Republicans as much as the Democrats have been an accessory to the growth of spending and deficits, and that the Republican establishment needs to be punished for straying from fiscal rectitude.

Little Master Douthat doesn't understand that a pretend tea-party is not the same thing as a real tea-party. The grown-ups have money to buy real food, and servants to give them real tea and cakes and sandwiches and little lemon tarts. The children are just pretending to have a tea party.
Their eccentric elements notwithstanding, the Tea Parties have something vital to offer the country: a vocal, activist constituency for spending cuts at a time when politicians desperately need to have their spines stiffened on the issue. But it’s all too easy to imagine the movement (which, after all, includes a lot of Social Security and Medicare recipients!) being seduced with rhetorical nods to the Constitution, and general promises of spending discipline that never get specific.

Disappointment has made him bitter.
It wouldn’t be the first time a mass protest movement won a rhetorical victory without achieving a lasting policy shift. The antiwar movement, for instance, seemed to effectively take over the Democratic Party in the middle years of the Bush administration. But here we are, two years into a Democratic presidency, and Gitmo is still open, the U.S. is still in Iraq, and Barack Obama has escalated the war in Afghanistan.

Now, that was just mean.

Can You Tell Me How To Get To Bon Temps?

Heh. Sesame Street did a little parody of True Blood. I couldn't get it to download but here it is. The Sookie Stackhouse Muppet is even wearing a little Merlotte's t-shirt.

Saturday, September 25, 2010

Matthew Yglesias: Man Of The People

I recently had a back-and-forth with a commenter who disagrees with my assessment of Matthew Yglesias: that he is a conventional, authoritarian thinker, and that his changes of mind regarding the Iraq war do not mean he is no longer an authoritarian thinker. In brief, I said that if the commenter wished, I would give Yglesias the same sort of critique that I give McArdle, although I acknowledged that he is not nearly as authoritarian as McArdle nor dishonest like her.

Let the games begin!

In R&D Following Manufacturing to China, Yglesias doesn't understand all the fuss about disappearing manufacturing jobs.

I’ve been urged on any number of occasions to worry more loudly about the decline of manufacturing employment in America, so here’s a link to Ed Luce in the FT:
[M]any of Mr Summers’ very same admirers have also become his detractors. Put simply, they see him as the face of a paradigm that has outlived its usefulness – the view that globalisation is an unmixed blessing for the US economy, and that America’s disappearing manufacturing jobs will be replaced by high-value jobs in the service sector. Things do not appear to be working out that way.

Take Applied Materials, a big US manufacturing company, which earlier this year shifted its chief technology officer and research and development operations to China. The company said it needed its R&D to be close to the source of its manufacturing operations and to its biggest future market. This is the opposite of what is supposed to happen. America was meant to keep the high-end jobs at home, while China would get all the low-value added production.

In addition to my oft-made point that US manufacturing output is not in fact declining, it’s worth noting that the alleged need for R&D to be proximate to manufacturing options (plausible) cuts in both directions.

Yglesias is right; US manufacturing output is not declining. The Sep. 2010 Federal Reserve Statistical Release on industrial production and capitalization utilization states:

Industrial production rose 0.2 percent in August after a downwardly revised increase of 0.6 percent in July. The downward revision in July primarily resulted from newly available data on the output of four industries within manufacturing: iron and steel, construction machinery, paper, and pharmaceuticals. The index for manufacturing output rose 0.2 percent in August after having advanced 0.7 percent in July; the step-down in the rate of increase reflected a fallback in the production of motor vehicles and parts, which had jumped sharply in July. Excluding motor vehicles and parts, manufacturing output increased 0.5 percent in August after having gained 0.2 percent in July. Production at mines moved up 1.2 percent in August, while the output of utilities moved down 1.5 percent. At 93.2 percent of its 2007 average, total industrial production in August was 6.2 percent above its year-earlier level. The capacity utilization rate for total industry rose to 74.7 percent, a rate 4.7 percentage points above the rate from a year earlier and 5.9 percentage points below its average from 1972 to 2009.

We are delighted for the owners of American factories, who seem to be doing just fine. Unfortunately for Yglesias and American workers, however, the job security of wealthy factory owners is not the issue. Why doesn't he look at the number of jobs, not the factory output?

Maybe this is why: From the Congressional Budget Office's Director's Blog:

Decline in U.S. Manufacturing Employment
CBO released an economic and budget issue brief today that discusses the factors underlying the decline in manufacturing employment over the past several years. The manufacturing sector of the U.S. economy has experienced substantial job losses since 2000. During the recession of 2001 and its immediate aftermath, employment in the manufacturing sector fell by about 2.9 million jobs, or 17 percent. Even after overall employment began to improve in 2004, the decline in manufacturing employment persisted. By the end of 2007, with the slowing of economic growth, employment in the sector had edged down further, by half a million jobs. And, as of November 2008, employment in manufacturing had fallen yet again, by slightly more than 600,000 jobs. A significant number of additional losses is likely given the current weakness in the economy.

Although the decline in manufacturing employment in recent years is not a departure from long-standing trends—the sector’s share of total employment has been falling steadily for more than half a century—the recession of 2001 hit manufacturing particularly hard. And, in sharp contrast to the pattern observed during previous expansions, employment in manufacturing (as reflected in the total number of hours worked) did not recover as it usually does following a recession.

The decline in manufacturing employment between 2000 and 2007 stemmed as much from an absence of new hiring as it did from layoffs of individual workers and downsizing. Rates of both job losses and job gains have been lower since the 2001 recession than they were in the 1990s. Workers who lost jobs, however, have typically experienced longer stretches of unemployment than did workers who lost jobs in the previous decade.

The steep decline in manufacturing employment since 2000 is associated with two interrelated developments: rapid gains in productivity (output per hour) in U.S. manufacturing and increased competition from foreign producers. Productivity in manufacturing has risen by about one-third since 2000, and growth in that productivity has consistently exceeded that of the overall nonfarm business sector.

Why didn't Yglesias think of the workers instead of the owners? No idea. Why doesn't Yglesias ever think of the people being affected by his little ideas?

Conventional wisdom is that manufacturing operations will all drift to low-wage countries.

"Will"? Most of it already has.

But if the USA is a better location for R&D than China, and if it’s strongly desirable to co-locate R&D and manufacturing operations, then many firms will want to retain manufacturing operations in the United States of America.

Why would R&D stay in the US? China has smart, educated people also, and that trend will increase in the future. Why would global corporations hire US workers at a higher salary than Chinese workers? Why are the educated class immune from globalization? Why does Yglesias think his class is indispensable?

So if this story is right, then more and better education for America is the key to retaining high-wage manufacturing jobs.

Surely China is saying the same thing?

Alternatively, if the obsolete Summers/Yglesias paradigm is correct then . . . more and better education for America is the key to replacing inevitably-vanishing high-wage manufacturing jobs with high-wage service jobs.

That’s not to say that Luce is wrong. But my read of Luce’s story is less as one about the alleged deindustrialization of the United States dragging down our R&D capacity as it is one in which failure to keep up with high-end technical capacity could drag manufacturing down.

Do we not have enough educated unemployed people to fill these jobs? If corporations are out-sourcing, it's obviously not for lack of people, it's to save money.

The other wrinkle here is that firms shifting R&D capacity to China may be lying to the press about why they’re doing it. I’ve had executives from a number of firms explain to me that they launched an R&D center in China primarily as part of an implicit bargain with PRC officials that doing so would help them win Chinese government contracts. That appears not to be the case with Applied Materials since they’re actually shifting operations rather than creating new ones. But it’s definitely part of the story.

Everybody lies because it's so easy to do. Most people will believe what they want to believe, so all you have to do is figure out what they want--which isn't hard--and give it to them. Yglesias wants to have a wise Exceptionally American ruling class. He should know better, considering he's part of that group himself.

Friday, September 24, 2010

The Megancentric View Of The Universe

Shorter Megan McArdle: Sure, gay kids have it bad, what with the bullying and suicides and everything. But what about me everyone else?

In McArdle's mind, anyone else's gain is her loss. She is a bottomless pit of emotional needs.

This was interesting:

This just goes to show that you have no idea how much hell weird kids, fat kids, and smart kids can get from their parents. For that matter, I know gay kids who had plenty of support at home, and were still miserable, because frankly, at that age, having parents tell you that they love you doesn't really help all that much when your peers insist on telling you you're disgusting.

No one's trying to diminish the importance of doing this for gay kids. But a lot of bullied kids of other descriptions also hurt themselves. Would it somehow diminish what Savage is doing for gay kids to try to help the many other kinds of kids who are tortured by their peers? Why on earth are you angry that I'd dare suggest that hey, this might be nice to do for other kids too? Are you worried that the straight kids will use up the supply of YouTube videos?

This is really dumb, you know? Weird kids, smart kids, new kids - they live in a world where, when they go home, they aren't told by their family that they are going to hell because of who they are. But hey, you know you're "people". If you think it's a worthwhile project to make videos for poor little picked on John and Jane Galts, no one is going to stop you.

Being a gay teenager is fundamentally different from all of these other things[...].

People usually don't end up callous and self-centered for no reason.

Right, I'm not trying to say this isn't a big deal, or "it happens to straight kids too"; I'm saying "it's a great idea, and there are a lot more at-risk kids this could help". Probably I didn't say that right, but such is blogging.

Then shouldn't she stop calling herself a journalist instead of a blogger?

Never Give Up! Never Surrender!

Wow. Megan McArdle is still trying to make claims about drug companies and innovation. Of course she is not still saying that 80-90% of innovation comes from high US drug prices--that didn't work out too well last time--so she changes her tune slightly.

Derek Lowe has something to say to the folks who claim that all the "real" research on pharmaceuticals is done in universities, and drug companies just steal the ideas and monetize them:

[snipped quote]

There is a fundamental misunderstanding of the way that a modern economy drives innovation. People tend to think in terms of a "eureka!" moment--a blockbuster idea or product that springs full blown from the head of Zeus, and then exists forever. But in fact, an enormous amount of productivity improvement is driven by tiny, continuous, incremental change. This is true of treating childhood cancer, it is true of drug discovery, and it is true of Toyotas.

Nobody said all innovation was done by the government. Nobody said that all drugs are discovered in a Eureka! moment. Nobody said drug companies just steal government innovations. There are no links because nobody is making those claims. McArdle is just linking to someone making unsupported accusations so she can pretend the drug companies are victims of vicious lies.

Remember when she found out that her inhaler was now less effective because the manufacturer monkeyed around with it so they could claim it was a new product? Incremental pharmaceutical innovation at work!

Thursday, September 23, 2010

The Rich Are Better Richer

Oh, come on. She's just trying to mess with our heads now.
Megan McArdle: Why Are The Rich So Rich?

Because they have all the money? And once you have all the money you write laws that will ensure you can keep the money and make lots and lots more?
Yesterday, Tyler Cowen noted a paper arguing that the income of financial professionals makes up a large proportion of the top incomes. Since income inequality has been growing at the very top, this has led many to the conclusion that the very wealthy--and particularly those in the finance sector--have arranged things so that most of the rising incomes in society go to them.

You mean people actually do things to become rich? It doesn't just happen for "systemic reasons"? I don't believe it!
It's certainly not a thesis that I find impossible.

Could she please make that a little less "in your face" as the kids say? It's just far too confident and straight-forward a concession. Maybe she could have added a "perhaps" or "in certain circumstances."
Markets are governed by rules, and incumbents will seek to alter those rules to their own benefit.

We will remember that she said that. For the rest of her life.
The thesis seems especially convincing in the light of the university-based meritocratic elite that has emerged over the last four decades.

We suppose McArdle herself is one of those university-based meritocratic elite as well. The fact that her father grew wealthy as a New York construction industry lobbyist and therefore was able to spend $38,000 per year on her prep school tuition (as well as her sister's, no doubt), thereby gaining admission to an Ivy League school that she confessed she was woefully under qualified for, undoubtedly has nothing to do with anything. Her rise was due to merit, not money, and her hard work and the skill sets she developed. Any poor person with a 2.93 GPA could have gotten into the University of Pennsylvania as well, we are sure.
Bankers are very cosy with the elites in other fields, which is why you see so many folks from Goldman and other top banks cycling through the policy apparatus of both Democratic and Republican administrations.

That said, the proponents of this thesis are all a bit vague on how, exactly, this feat is managed. What rules, for example, are enabling such a small fraction of bankers to charge such exorbitant fees for IPOs?

Very cunning. It's the absence of rules that helped caused the problem; the lack of regulation on the shadow banking system.
One could argue that rule changes such as the SEC's 2004 decision to allow broker-dealers to increase their leverage ratios made that business much more profitable, while socializing the risk onto the rest of us. But that doesn't explain something that is pointed out in the excerpt on Tyler's blog: the prevalence of hedge fund managers at the very top. [snipped quote]

Perhaps it was lack of regulation and policies that encouraged a massive run-up of debt.
For the "political capture" story to work, you'd want to explain this in terms of the carried interest tax rule.

Wait--wait--! Let us guess! The lower tax rates under Republicans had nothing to do with the super-rich's accumulation of wealth!
Hedge fund managers take a substantial part of their compensation as a percentage of the returns that the fund earns; these returns are taxed, not as ordinary income, but as capital gains, at the lower rate. I haven't heard many convincing explanations of why this should be the case; the compensation may be contingent, but that is not the same thing as putting capital at risk. (For that matter, I think that we should eliminate the corporate income tax, and tax capital returns as ordinary income. But that is an argument for another day.)

But while I can certainly explain the continued taxation of hedge fund income at capital gains rates as a function of lobbying--the Democrats still haven't managed to change this, even though they've been talking about it for years, which seems a bit mysterious given that we just passed a huge financial services reform bill. But that doesn't explain why they're making so much pre-tax income.

Maybe it's because of the lack of regulation that enabled them to create toxic financial instruments that they leveraged to the hilt while taking gigantic fees and bonuses?
A different story--"skills based technological change"--seems like it might be a better fit.

Oh, this is going to be good. By which we mean idiotic and demonstrably wrong.
Arguably, computers are especially useful in analyzing financial markets, which has vastly increased the ability of those with the best computers, and computer skills, and financial theory, to make money off of small anomalies in the market. These people are making the markets more efficient--Bob Rubin's first job was simply calling London, and trading based on the differences between prices in London and New York. And they're profiting hugely from the anomalies they find. (Also, arguably, from taking on an unwarranted amount of tail risk--but except to the extent that computers allowed them to magnify it, the tail risk was there before. The profits weren't.)

Scene: A small hipster bar in Washington, DC.

McArdle: How about I say that bankers are just smarter than everyone else?

Mr. McArdle: You said that before. We gotta come up with a new way of saying the same thing. I know! Computers! They're hard to understand and the people who write those programs and make those cool games are really smart. We'll just say that they're smart computer-y people who know lots of stuff and that's why they're rich!

McArdle: What was that middle part again?

Mr. McArdle: Let's go home. I want to see if my copies of Bioshock and KillZone 3 came in today.

McArdle: It doesn't matter. Nobody can figure out what I'm talking about anyway.

You can even fit the regulatory story into this, from a different angle: the government doesn't have the best computers or theorists, and so it can't keep up with the constantly multiplying financial complexity. If it did, maybe it would crack down. That doesn't speak to capture so much as our willingness to pour resources into regulation. If we were serious about regulation, the SEC would have the best paid guys on Wall Street, not the worst. But that's politically unthinkable.

Regulation is always politically unthinkable. We are not sure why. It's certainly not because of "capture"! Heh, the very idea of bankers being dishonest! Pish and tush!
Besides, that still leaves athletes, executive compensation, and whole lot of other factors--this paper says "The data demonstrate that executives, managers, supervisors, and financial professionals account for about 60 percent of the top 0.1 percent of income earners in recent years, and can account for 70 percent of the increase in the share of national income going to the top 0.1 percent of the income distribution between 1979 and 2005." It's hard to explain how the wealthy are manipulating the regulatory apparatus to make Apple vastly more profitable than it would have been forty years ago.

Not that Apple is one of those financial firms that are the subject of her post, but they are a good diversion from the main point. Which is the rich are rich because they are smarter and better and entirely merit-based, and if you don't believe her, just ask the multi-millionaire who pays her.

(Worth a thousand words)

Note: To be clear, McArdle said that she got into Penn due to her prep school, and got into Chicago due to Penn. Thanks, Lurking Canadian.

Wednesday, September 22, 2010

Collateral Damage

These people have no heart.

Matthew Yglesias discusses tax versus spending to reduce the deficit and points out that spending cuts would have to be so big that they would inflict great harm on a lot of people. Megan McArdle's response? Raising taxes isn't popular either.

It's not about how people feel, it's about how many people will suffer and die if draconian spending cuts are made. McArdle shrugs and says tough, some programs will just have to be cut to reduce the deficit. And it's not like Social Security really exists anyway!

God save us from these people who really, truly want us dead. We're in the way of infinite profits, both personal and corporate. They'd kill us dead without a second thought, as long as they didn't actually have to do any of the work themselves



Driftglass discusses the manufactured gullibility of the tea-parting right:

The same well-financed masterminds who trained these sock puppets to sit up on their hind legs and howl over the imaginary horrors of Bill Clinton's Democratic Administration...and who taught them to roll over and play dead during the actual, daily horrors of George Bush's Republican Administration...have simply returned the outrage chip in their little heads to its factory default pre-Bush Administration setting.

Of course, their conditioning is such that the Right never notices their own enormous and flagrant hypocrisies, because they are no longer capable of noticing such things. Which is why I don't doubt their sincerity, any more than I doubt the sincerity of a waterhead drunk begging for a bottle.

Any more than I doubt the sincerity of the mob in "1984" howling out its carefully-programmed hatred at imaginary enemies.

Lunatics are very sincere people, and this knowledge -- that on the Right, any connection between passion and logic has been irrevocably severed -- is what permits their leaders and politician to look the camera in the eye and just lie, lie, lie about things that are plain and self-evident and get away with it.

The obvious fact that they are lying -- that shameless and continually lying about big, important stuff has now become nothing more than an everyday tactic among Conservatives -- is certainly a fact, but also completely misses the point.

Paul Krugman also marvels at the willingness of people to believe lies.

But I found myself wondering, as I often do, about the determination with which people believe pundits who please them ideologically, no matter how wrong they have repeatedly been — wrong in ways that, if you believed them, cost you money.

Suppose you had spent the last five years actually believing what you read from the usual suspects — the WSJ opinion pages, National Review, right-wing economists, etc.. Here’s what would have happened:

In 2006 you would have believed that there was no housing bubble.

In 2007 you would have believed that the troubles of subprime couldn’t possibly spread to the financial system as a whole.

In 2008 you would have believed that we weren’t in a recession — and that the failure of Lehman was unlikely to have bad consequences for the real economy.

In 2009 you would have believed that high inflation was just around the corner.

At the beginning of 2010 you would have believed that sky-high interest rates were just around the corner.

Now, we all make mistakes and get things wrong — although it’s striking how often the trolls on this blog feel the need to accuse yours truly of saying things I didn’t. But after this string of errors, wouldn’t you at least begin to suspect that the people you find congenial have a fundamentally wrong-headed view of how the world works?

Guess not.

And when I read an article about the new crop of libertarian pundits, a couple of things jumped out.

Perhaps I’m grasping at straws here but in the weeks leading up to Weigel’s resignation and afterward I’ve noticed a growing cadre of these libertarian journalists in DC who graduated from places like Reason or Cato, write for right-leaning publications that don’t exactly fit their social ideology, or report for traditional DC publications like The Hill or National Journal. The one time I met Weigel personally (only a few days before his emails were leaked, coincidentally) it was through a libertarian journalist friend and many of the public blog posts and private emails I’ve had with other reporters reflect this trend. Without devolving into vast conspiracy theories about libertarian plots to infiltrate our media, I couldn’t help but wonder if there is a rising force of young libertarian journalists in DC, a trend that would be interesting considering recent polls on Americans’ views on the word “libertarian.”

When I spoke to Sanchez, he wasn’t exactly convinced that my idea had any merit. Before I even had a chance to call he wrote that he wasn’t “sure there’s a real there there” in an email. “What you’re actually mapping here is not so much a specifically libertarian thing, it’s that all these people — Ezra [Klein], [Reason editor Matt Welch], me, and Dave — I think it’s almost secondary to the fact that we’re all friends and in that sense ideology is almost irrelevant,” he told me in a phone interview.

For Sanchez, the trend in DC journalism circles is less a story of political ideology and more about the meteoric rise of young reporters who are building their own personal brands. “It used to be you had to put someone through the paces, and you had to cover dog shows and town council meetings,” he said. “You figure out who through this laborious vetting process should be writing for the Post or whatever. And what you’ve got now are a bunch of people who were able to start writing and it turned out they could build a huge audience just writing stuff. You didn’t have to go through this whole rigmarole to figure out who was going to be able to build that audience. They just did it.”

Notably absent from this rumination is money. Corporations who wish to demonize and eradicate regulation poured millions into think tanks and magazines, providing cushy, well-paying jobs to Ivy League graduates. Miss Megan McArdle is not going to cover city council meetings to work her way up to a meaningful job in journalism. For one thing, McArdle is not a journalist. She's a well-paid shill. Furthermore, Ivy League graduates don't build important careers interning in small-town newspapers. That's for people who have no family money or connections to get them good jobs. Finally, McArdle and her friends didn't just go out and build an audience through their talent and hard work. McArdle can't write well and knows far too little about economics to give her opinion on the subject. She and her friends are being supported by the Kochs and Bradley and other multi-millionaires. Otherwise they'd be blogging their personal opinions for free on the internet like everyone else.

The libertarian hordes were created. They didn't spring fully formed out of the internet's brow like Athena from Zeus. The most interesting thing about this whole mess is that Sanchez, McArdle and the rest of their sorry lot refuse to admit that and simply lie--either to themselves or us or both. They rose on merit and they succeed through courage and pluck, they weren't the lucky recipients of wingnut welfare aimed to undermine any attempts at corporate regulation. So they deserve everything they get, but since they know for a fact that they are lying, they are absolutely certain that the poor are even more lazy, greedy and dishonest then they are.

UPDATE: Speak of the devil and the devil appears. McArdle in 2008:

Journalism is a career that is highly, highly dependent on networking and self-promotion, yet in the book [Barbara Ehrenreich] comes across as someone who has never mastered the rudiments of personal contact, like not gratuitously insulting people with whom you are trying to secure employment. It doesn't help that her contempt for the business world seems to have convinced her that it ought to be easy for someone with absolutely no experience to secure a well-paying job in a competitive field. The book mostly serves as a poignant reminder that yes, there really are intellectuals so provincial that they seriously believe the business world is run something along the lines of the presidency in Dave

Tuesday, September 21, 2010

Home Sweet Home

This is the story of girl who cried a river and drowned the whole world.

We could discuss the psychological, moral and philosophical aspects of Megan McArdle's latest attempt to make her way through this cold, cruel world, but time is short and we're going straight for the jugular snark.
More Adventures in Home Buying

So, almost three months after we put in an offer on a house, we are still without a home. Without any home, in fact. We moved out of our rental in late July, because there had been a flood, and since we were scheduled to close on August 15th, it seemed to make sense to simply move out and let the landlord make repairs before re-letting it.

The "flood," which was burst pipes and was not actually an act of nature-gone-wild, took place around the 24th or so. McArdle and P. Suderman evidently decided that nothing could possibly go wrong with buying a house but everything would go wrong with getting the pipes fixed. They could have rented one of those monthly hotel suites--short stays in Washington seem to be a way of life for many government workers--but evidently they didn't want to spend the money. It would be so much cheaper to bunk with sis for a few weeks, even though that meant starting married life in less than ideal conditions.

We moved into my sister's basement for a few weeks.

(::smothered giggles::)

Yeah, like that. Naturally everything went as planned for McArdle et al. in this, the best of all possible worlds.


McArdle is nothing if not predictable. But hey, we know that the market must be free to work and it tends to equilibrium and that people are rational actors who take every consideration into account when making economic decisions and that consumers always have all the knowledge that they need to make those informed decisions, so what could have possibly gone wrong?

The property we are supposed to buy had tenants. Though the tenants initially said they would move out by the first of August, that proved impossible.

McArdle says in the comments that she and Mr. McArdle were told the tenant would be gone, that the seller was working on it by offering the tenant money and there would be no problem with the closing, and "[t]here was no way to know this was going to happen until it did." But there was also no way to know that problems wouldn't arise. They usually do in unknown situations. Why McArdle chose to believe that she did not have to think about any negative consequences is beyond us but it is no surprise to see McArdle assume that everyone will do what she wants. She put off inspecting her car and mailing her wedding invitations until the last minute and complained vociferously when she finally realized that she had waited too late. It was the fault of the clerks or the government or liberal policies, never McArdle herself. The elite write the rules, they don't have to follow them.

We moved the closing to late August. Then to September first, because the tenants still weren't out. It wasn't that big a deal, so we didn't think[---]

McArdle could have stopped right there; the rest is just rationalization anyway.

[---]much of it--it can be hard to find a place, and while we certainly wanted to move in, we weren't in such a heroic rush that we couldn't give the tenants a little extra time to find a place. The tenants are recent college grads who'd been living in the place for four months, not long-term tenants who might have real trouble finding a new permanent abode. We had no reason to expect this to turn into a problem.

In other words, McArdle assumed that the seller, who had an ulterior motive to stretch the truth or lie to her, was telling the truth. We know McArdle had the same attitude in her professional work. We saw her marvel at the idea that bankers would lie to make enormous fees. Did McArdle have the same attitude while dating? "Of course I believe you when you say that the bra in the bed belongs to your sister. Why would you lie to me?"

We moved into my mother's spare bedroom, in order to give my sister and her roommate a break.

I think I saw this movie. It starred Hayley Mills and was a gritty slice of British working class life.

We were assured that the tenants would absolutely, without question, be out by the fifteenth, so we scheduled our closing for this past Friday.

For someone who makes a living by lying to the public she sure is gullible.


She says that a lot, doesn't she?

On Thursday morning, our agent, who had driven by the house, informed us of something strange: the tenant seemed to still be living there. We panicked. At 2:30, the worst was confirmed: the tenant was still there. Furthermore, the tenant, who had seemed happy to find another place, suddenly wasn't happy at all. In DC, tenants are entitled to 90 days notice before moving. They had been given that notice on July 1st. That entitled her to stay until the 30th, and on Wednesday night, she suddenly informed the agent that she intended to avail herself of that right.

Note that the tenant is availing herself of her legal rights. That becomes important later on and might be on the quiz.

I'm not going to take issue with the law itself--tenants should get some notice, and while maybe 90 days makes it too difficult to sell in this market, I'm not prepared to get into an argument about the platonically ideal length of tenant notification. Nor am I going to complain when someone makes a basic exercise of their legal rights.

Isn't the whole point of this post to complain about someone making a basic exercise of their legal rights? Yeah, I thought so.

However, it's a big problem for us. Our mortgage commitment expires the 27th. Had we known that she wanted the full 90 days ahead of time, we could have planned around it--finalizing our mortgage on a date that would give us leeway to close after she moved out. Certainly, we wouldn't have given up our old place, which is costing us a fortune in extra moving and storage fees, and has imposed a heavy burden on our relatives. Exercising her option at literally the very last minute has left us wondering whether we're going to be able to close at all.

None of us can predict the future and few of us can afford to learn only through hindsight, as McArdle seems to prefer. Therefore we consider all angles, even the ones we don't like to think about, make plans, and form contingencies. Hmmm, what could have McArdle done to avoid this problem?

We're not willing to close on the house while a tenant is still in it; we're worried that serving her notice that we intend to take occupancy will restart the clock on the notification, leaving us with nowhere to live. I don't really want to have to evict someone. Moreover, even if I did, eviction in DC, while possible, is extraordinarily difficult, including provisions like these: [snipped quote].

As you can see, if this drags out even a little, we could conceivably be forced to wait until spring to take possession; there aren't a lot of guaranteed warm, sunny days in DC in January. We're not eager to make a mortgage payment on a place we're not living in.

So McArdle didn't want to pay for a hotel and she didn't want to pay for storage fees and extra moving feels and doesn't want to pay for another appraisal. She wouldn't have had to but evidently she didn't want to pay for a lawyer to handle the transaction either. Savvy MBAs don't need to waste money on lawyers, do they? And everyone knows that "DC just doesn't seem to do that kind of stuff." In fact, McArdle's entire dilemma comes down to a question a lawyer can answer: Will McArdle have to wait another 90 days for the tenant to leave if she buys the house? Why did she would write this post instead of spend a couple of hundred to go over the contract with a lawyer and get answers to all her questions?

If we can't close, we'll be in a bit of a pickle. While I haven't compiled scientific data to back me up, my experience in going through the listings is that the housing tax credit grossly distorted the market. Almost anyone who wanted to buy, or sell, in the next twelve months, hastened to put their property on the market before April 30th. The market still clears--the few houses that are priced where the market wants to buy get snapped up immediately. But there are precious few of these. Most of the market, at least in the neighborhoods where we can afford to live, is the stuff that's hard to sell-- beautiful fixer-uppers that require more capital than we have, and overpriced places that won't appraise for where they're listed.

Then move to a cheaper neighborhood.

The rental market seems similarly thin, so we really don't know what we're going to do if we don't buy now. And moving in and out means added expense on top of the money we will have lost on the application process.

Do I regret it? Not really; you have to take some chances in life, and I did love that house. Still love it, and hope to live in it. We'll know in the next few days whether owner and tenant were able to come to some sort of agreement, or whether we have to start the process all over again. Wish us luck.

I do wonder what effect things like this are having on the broader housing market--either here, or in the country as a whole. A lot of people who needed to move and were underwater or close to it, ended up having to rent out their houses to help make the mortgage. At least in DC, however, this makes it harder to sell. Certainly, if we have to go back onto the market again, we'll be extremely leery of looking at any house with a tenant in it. That has to make it harder for the markets to clear.

As Megan McArdle goes, so goes the nation!

That's the end of McArdle's post but not the end of her story. In the comments we pick up a little more information, which the commenters slowly extracted bit-by-bit, like a dentist pulling a shattered tooth. It seems that McArdle's perspective house is owned by someone who "is underwater and lives abroad" and that it's a short sale(corrected). Which makes her aversion to hiring a lawyer even stranger. McArdle would find another house but the houses in the neighborhoods she likes are all "overpriced." Again, McArdle could just move farther out but then she'd be stuck commuting from some suburb on the subway like all the other slobs.

But Megan McArdle has learned several very valuable lessons: everything is someone else's fault, never pay for unnecessary services like legal advice, and the liberal government is trying to ruin a poor little gal's dream of owning a home sweet home.

Monday, September 20, 2010


Today is a very busy work day but I will address Megan McArdle's latest post about her housing difficulties as soon as humanly possible.

I can hardly wait!

Saturday, September 18, 2010

Congratulations, Megan McArdle!

Although we at the Snark are not at all confident that Elizabeth Warren will actually be given the power she needs to be an effective consumer advocate, we are happy to see that she will be able to have some influence. Most of all we wish to congratulate Megan McArdle for doing her part for Elizabeth Warren. You see, it seems that bloggers were instrumental in applying the pressure necessary to get an appointment for Warren.

Susie Madrak at Crooks and Liars says:

I just got off a blogger call with Elizabeth Warren (if you have any doubt that her appointment is seen as by the White House as a concession to the left, note that bloggers are the first people who get to interview her after her appointment was announced) and I got the chance to ask her whether credit reports came under oversight of her Consumer Financial Protection Bureau -- especially when they're used to deny people jobs or to set rates for insurance.

She said yes, it did come under this act -- "credit reporting is an important part of credit", and she said she shared my concerns. She apologized for not being more specific, but said she would be looking into it.

In response to other questions, she said she was looking forward to working on the inside, and would also be a part of the president's economic team with input on larger economic issues.

I think that's the single biggest gain with this appointment: That working people will have a strong, informed ally in the White House. Someone who really does understand our economic pain, and isn't going to be deterred from talking about it.

While I don't doubt she'll have her enemies working against her, she sounds confident and ready to fight on behalf of us all. (And, as she pointed out, a year ago Barney Frank told her the idea for this agency was a "pipe dream" that would never happen.)

"This is about rebuilding America's families, because that's what will give us a stronger economy," she said.[my bold]

We are so very grateful to Megan McArdle, for it seems that by doing her best to destroy Warren in public, she help fan the flames of a bloggy bonfire of support for Warren. Without McArdle's match, the flames might never have caught.

So congratulations again, Megan McArdle! And we wait in eager anticipation for her second attack on Warren, which was announced 57 days ago and (as we have said before) will no doubt will be the absolute most definitive statement on the matter of Elizabeth Warren in the entire history of mankind!

A Terrible Shame

Via Think Progress we see that Megan McArdle is not the only one feeling the jackboot of Katherine Sebelius, Secretary of Health and Human Services, pressing down on his or her face, forever.

[NEWT] GINGRICH: When Secretary Sebelius said the other day she would punish insurance companies that told the truth about the cost of Obamacare, she was behaving exactly in the spirit of the Soviet tyranny. And if she’s going to represent left-wing thought police about Obamacare, she should be forced to resign by the new Congress.

This idea that we the people have to tolerate some bureaucrat being paid with our taxes to dictate free speech to us should end in January by the Republican Congress zeroing out her office and explaining that they would be glad to pay for it when someone is there who recognizes the rights of the American people.

What a shame that McArdle was forced to acknowledge that she had just made everything up about Sebelius. She could have provided support for the right's campaign to hound yet another innocent woman out of public office. Gingrich does so enjoy getting rid of inconvenient women, doesn't he?

McArdle might want to consider working for Gingrich, like Jonah Goldberg's wife did in the past. McArdle could probably make more money working for a right-wing think tank anyway. Sure, she'd lose some of her media gigs and her hanging-on-by-the-skin-of-its-whitened-teeth-reputation as a real journalist. But she'd gain so much more glorious, glorious money in return!

Thursday, September 16, 2010

That's Our Megan!

If I were a shark I'd be smelling blood in the water right now.

(See Updates Below)

Megan McArdle: What Hath Sebelius Wrought At the Health Insurers?

I literally have no idea what this means ("lock down mode"?) but it sure doesn't sound good:

An anonymous (but vetted) reader tells us that HCSC (the holding company for Blue Cross Blue Shield franchises in Illinois, Texas, Oklahoma and New Mexico, and the fifth-largest health insurer by enrollment) is in "lock down mode" following a gag order imposed last Friday (September 10, 2010). If any of our readers have details, we'd appreciate a heads' up as soon as possible.

Any readers have any information on this?

Whatever the facts of this specific case, I'm struggling to come up with a description of the administration's attempt to prevent companies from telling anyone that their legislation cost money, which doesn't start with "creepy" and end in "thuggery". Oh, I'm sure other administrations have done similar things to other industries, and "creepy thugs" is the thought that springs immediately to mind when I contemplate this.

I can see debate over whether corporations ought to be able to donate to campaigns. I cannot see debate over whether politicians ought to be able to silence criticism of their legislation by threatening regulatory retaliation. In what way is the country made better off by giving the administration "soft power" to suppress dissent? And before you answer that, let me be a little more specific: in what way is the country made better off by giving an administration from the other party the power to suppress dissent by groups on your side?

"Whatever the facts...." That's McArdle in a nutshell. The facts are not important. Ginning up a controversy is the important part!

This is the post at her link, in its entirety:

HCSC Info Bleg

An anonymous (but vetted) reader tells us that HCSC (the holding company for Blue Cross Blue Shield franchises in Illinois, Texas, Oklahoma and New Mexico, and the fifth-largest health insurer by enrollment) is in "lock down mode" following a gag order imposed last Friday (September 10, 2010). If any of our readers have details, we'd appreciate a heads' up as soon as possible.

Just drop us a line here, and your information will be treated as confidential.

Some of McArdle's commenters happily jump into the Sebelius-bashing but others point out one itsy-bitsy problem:

Is this a self-imposed gag order? For something that you "literally have no idea" what it means, you've literally implicated Sebelius and the administration.

Oh, I was outraged by the Sebelius letter long before I saw this item.

Ok, what does any letter have to do with the current gag order, which may or my not be imposed by HCSC themselves? I'm not trying to be confrontational, I really don't get it.

Sorry, broke the link. Here:

The link is to Sebelius' letter, which McArdle has not connected to her rumor of a gag order. A few commenters ask for more information.

Completely agree with Megan with respect to Sebelius, thuggery and creepiness.

But I don't see anything in the linked post that connects said gag order to Sebelius's comments. Why does Megan think the two are in any way connected -- just the date of said gag order?


Franklin Delano Bluth
McMegan, I assume you've contacted HCSC and Sebelius for some info but just haven't heard back from them, right?

What info? That they wrote a letter I consider to be an unconscionable abuse of their regulatory power? What "info" do you think I'm missing?

I don't see the problem with the letter. Of course the HHS Secretary doesn't want any insurers to Trojan horse premium increases in the name of the ACA, which I think is equally unsconscionable. She admits premiums will go up 2% at least. She just says any suspected "unreasonable" rate increases will be investigated. If that is the bar for thuggery now...

No, she also quite clearly threatens to punish anyone who ties rate increases to PPACA.

The "unconscionable act" was for Sebelius to write a letter to the national association of health insurers to tell them stop lying about rate increases. But we understand McArdle's confusion. Lying, telling the truth, eh, what's the difference?

Sebelius' letter includes the following:

Dear Ms. Ignagni:

It has come to my attention that several health insurer carriers are sending letters to their enrollees falsely blaming premium increases for 2011 on the patient protections in the Affordable Care Act. I urge you to inform your members that there will be zero tolerance for this type of misinformation and unjustified rate increases.


Given the importance of the new protections and the facts about their impact on costs, I ask for your help in stopping misinformation and scare tactics about the Affordable Care Act. Moreover, I want AHIP’s members to be put on notice: the Administration, in partnership with states, will not tolerate unjustified rate hikes in the name of consumer protections.

Already, my Department has provided 46 states with resources to strengthen the review and transparency of proposed premiums. Later this fall, we will issue a regulation that will require state or federal review of all potentially unreasonable rate increases filed by health insurers, with the justification for increases posted publicly for consumers and employers. We will also keep track of insurers with a record of unjustified rate increases: those plans may be excluded from health insurance Exchanges in 2014. Simply stated, we will not stand idly by as insurers blame their premium hikes and increased profits on the requirement that they provide consumers with basic protections.

Americans want affordable and reliable health insurance, and it is our job to make it happen. We worked hard to change the system to help consumers. It is my hope we can work together to stop misinformation and misleading marketing from the start.

A commenter suggests McArdle do some--what's the word? Oh yeah--reporting, and find out what's going on.

Franklin Delano Bluth
Uh, the "lock down mode" at HCSC that you have no idea what it means? Wouldn't some information directly from HCSC be pertinent to this story? Or even a reaction from Sebelius/Administration about the rumored "lock down"?

I'm not primarily concerned with the lock down. I'm primarily concerned with the secretary of HHS writing letters to insurers threatening regulatory retaliation if they say (truthfully) that PPACA has contributed to rising costs.

I'm sure any minute now McArdle will admit that she jumped the gun and does not, in fact, at this time have any proof of her allegation that Sebelius is punishing health insurance carriers for stating that their rate increases are due to the health insurance reforms.

The administration has quite a bit of power to do quite a lot more than write sternly worded letters, and Sebelius seems to be threatening to deploy their regulatory power against insurers who step out of line.

"Seems to"? If only there were a way to find out the truth!

In conclusion we just wish to say:

I'm outraged by this anonymous readers vague, unsubstantiated claim on a random blog. Outraged by it, I tell you.

Jesus Christ, do you even try anymore? I mean, this is really, really kinda pathetic.

ADDED: McArdle's link, Insureblog, has added updates:

Clarification: I was very hesitant to run with this because so many details are lacking, but my correspondent is very credible, and there does seem to be some urgency involved. I did leave voicemail with both HCSC media contacts (and emailed them, as well). There's nothing about it on the corporate website, but that's not necessarily indicative of anything untoward. There may be nothing to this, but again, this came from a reliable source, and it seems relevant to what we do here at IB. We'll keep you posted.

UPDATE [1:10PM]: Just spoke with HCSC media contact Ross Blackstone, who assured me that there is no "gag order" in place.

It's worthwhile noting that, as Megan McArdle hints, it is disturbing that the actions of the folks behind ObamaCare© make claims of a gag order credible. Thankfully, these fears appear to be unfounded in this case.

By the way, I ran this story early because, if there had been a gag order, there was no way to know if and/or when I would have received corroboration. A vicious circle.

I don't think I would call chasing my own tail "a vicious circle."

SECOND UPDATE: McMeltdown! (TM TBogg and John Cole)

The threat, as I understand it, is to track insurers who jack up rates and lock them out of the exchanges in 2014. I guess I understand why people opposed to HCR and the administration would be uncomfortable with this, but as someone who hopes to be self-employed and purchasing my own plan from an exchange in a few years, I'm glad that regulators are publicly putting them on notice that they're paying attention and won't tolerate bullshit rate hikes. But I guess that probably makes me some kind of socialist or something?

And would you be equally glad if they intervened in your line of business? I imagine you think that isn't likely, but that only tells me that you're happy to have others get their ox gored as long as you're being taken care of. Moreover, the objection is not to the rate hikes, which no one has proven are "bullshit" (as far as I know, Massachusetts, which denied rate hikes to insurers on similar grounds, *still* hasn't found a single actuary willing to sign off on its notion of a "reasonable" hike.) The objection is to hiking rates and telling people that the rate hikes are related to PPACA--even though as Sebelius's own letter concedes, at least a portion of them indisputably are. That's political ass-covering, not reasonable regulation. If you think their claims are fraudulent, that's the province of the FTC, not HHS--but I suspect that Sebelius knows quite well that this would never qualify as banned commercial speech, so instead she's threatening to throw them off the exchanges--and since there's some talk of forbidding companies to sell insurance anywhere else, she seems to literally be threatening to put them out of business if htey dare say anything bad about PPACA.
(Edited by author 39 minutes ago)

I understand the theoretical outrage here, but there have been so few instances in my lifetime in which the the feds have taken on corporate entities that have sophisticated political arms and monopolize a marketplace for products that people depend on to not die, that I am having a hard time imagining an analagous outrageous hypothetical. I'm sure you can think of one?

Let's say the Palin administration sent a letter to deregluated nuclear power plants warning them not to blame any future meltdowns on the "Nuclear Free Markets Act" of 2013. I guess that would piss me off...

Sure. How about a hypothetical Republican administration telling telecoms firms that point out the negative effect of new decency standards or the administration's net neutrality policy to shut the fuck up or they'll do their best to put you out of business? How about a hypothetical Republican administration telling organic farmers or vegetarian food lines who criticize the ludicrous food pyramid that this is going to put them at risk of regulatory retaliation? I can come up with endless quite plausible examples if outrage is not mounted to stop this nonsense.

Important Third Update!: After HCSC corrects her, McArdle admits she was wrong and apologizes.

Wednesday, September 15, 2010

Because I Say So

When is Keynesian policy not Keynesian policy? When Megan McArdle says so. The following conversation in McArdle's comments shows how easy it is for propagandists to claim that black is white and up is down.

From her post:

I also agree with Krugman, the CBPP, and the CFRB that Republicans are hypocritical about tax cuts and Social Security. Not any more hypocritical than those on the left who insist on pretending that there is a trust fund which can somehow, in the context of the unified federal budget, cover the shortfall in Social Security revenues. Nor more hypocritical than those on the left who wish to extend the Bush tax cuts for those making under $250,000, and then blame the Republicans for their lack of fiscal responsibility, when the overwhelming majority of the cost of the tax cuts comes from those which benefit people making under $250,000--as if the budget deficit were offering some sort of discount for social justice.

But still, ludicrously hypocritical.

From the comments:

How can a larger tax cut be "not more hypocritical" than a smaller one?

because the GOP supports both.

No, you wrote that the Republicans, who support a larger tax cut, are no more hypocritical than the Democrats, who support a smaller one. I would think that judging the degree of hypocrisy here would be a simple quantitative exercise.

Sorry, misunderstood you. I think that at some point, the hypocrisy scale maxes out--if you're willing to spend $2 trillion while demagoguing the budget, you're not appreciably less hypocritical than someone who wants to spend $2.6 trillion while doing the same.

Within the Keynesian framework in which they're operating, there's nothing inconsistent about the Democrats focusing tax cuts on those most likely to spend them. You don't have to accept that Keynesian framework, but their policy is consistent within it.

This is non responsive. Within the supply-side framework within which the GOP works, there's no hypocrisy in opposing the highest marginal tax rates. That has precisely nothing to do with the strategic use of the budget deficit to oppose only things which you already opposed anyway . . . while blithely ignoring it when you want to do stuff.

No. Keynesian theory calls for increased spending during downturns, offset by fiscal responsibility during good times. So there's absolutely no hypocrisy involved in advocating tax cuts that are likely to be spent during a recession, while opposing those that are for rich people who are likely to save them and that will have a long-term budgetary impact. On the other hand, for the Republicans, who say that deficits are always bad, to advocate tax cuts for the rich during a period of large deficits, is indeed pure hypocrisy.

But the extensions aren't temporary. That's not Keynesian stimulus, it's just a tax cut.

If they end up being permanent that will indeed be hypocritical.

In McArdle's world, she always wins her arguments because she feels no compunction to argue honestly. She simply claims that tax cuts to increase spending during this recession/depression will never end, therefore they are not Keynesian and Democrats are just as hypocritical as Republicans.

That was easy. And this works for all arguments. If you are paid to help eliminate Social Security you just state that it won't be paid back, therefore it doesn't really exist. Then you change the subject to an irrelevant point you think you can win, forcing your opponent to drop the matter. Since most people know very little about economics you can throw a bunch of numbers and acronyms out and, like Condoleeza Rice, run out the clock by babbling incomprehensibly.

Now I am picturing McArdle and Mr. McArdle giving each other high-fives as they write their devastating responses that lay waste to the arrogant yet laughable pretensions of the lower classes.

After this bit of dishonesty in the support of conservative politics she states, "If I had to claim a political relationship status on facebook, I'd probably choose "It's complicated". There is nothing at all complicated about a political philosophy based on self-indulgence. If she thinks something benefits her, it's good. If it doesn't, it's bad.

Here's a Kathryn Jean Lopez interview with Doug Schoen, who co-wrote Mad As Hell: How the Tea Party Movement Is Fundamentally Remaking Our Two-Party System.

LOPEZ: Who is the tea-party movement? Has that been an evolving thing?

SCHOEN: This is a bottom-up, grassroots movement that has been growing steadily since March of 2009 and it stands for core principles regarding fiscal conservatism and a desire to return to constitutional principles and smaller government.

LOPEZ: Is there a different kind of populism at play here than in the past?

SCHOEN: In 1992, Ross Perot provided leadership and people spontaneously responded to a message that was for its time very similar to the tea-party movement’s. But notwithstanding what the press has said, the tea-party movement is an authentic grassroots movement.

LOPEZ: How is left-wing populism different than right-wing populism? Can they ever meet?

SCHOEN: Both left- and right-wing populism share distrust of the way the political system works and responds. The Left wants more government involvement, the Right wants less government.

LOPEZ: If you had to bet your reputations on it: What is the likelihood this remaking gives birth to a third party?

SCHOEN: I don’t think the tea-party movement will ever become a third party if they continue to demonstrate the kind of success they had tonight and over the past six months or so.

LOPEZ: Do we effectively have a third party when one looks at the Delaware Republican primary results — among others?

SCHOEN: Well, we do have a third force in American politics. It is not organized, and it has many variants and different forms. But it is as powerful as any third party could possibly be at this point in time.

LOPEZ: How much of these primary wins and losses have been about 2010 proxy wars?

SCHOEN: This is not a proxy war. It is an authentic grassroots movement.

LOPEZ: How does Sarah Palin play into all of this?

SCHOEN: Sarah Palin has proven this year without a doubt she is the frontrunner for the 2012 nomination — regardless of what the pundits and polls show.

LOPEZ: Is the GOP the natural home for the tea-party movement?

SCHOEN: Democrats made a profound mistake pushing away the tea-party movement. Bill Clinton won a substantial share of the 1992 Perot vote in 1996. Hence their home by default is the Republican party.

LOPEZ: Despite his win Tuesday night, is there a Mad as Hell message for Charlie Rangel?

SCHOEN: Charlie Rangel is very lucky he has one of the safest Democratic seats in the country.

LOPEZ: Nancy Pelosi Tuesday said she’s confident Democrats will retain control of the House? How in the heck would that happen?

SCHOEN: Nancy Pelosi has no reason to be optimistic. Ask Robert Gibbs!

LOPEZ: Is everyone mad? Are some people simply sad or worried about the future of the country? Are they reached differently?

SCHOEN: Everyone is mad, angry, frustrated, and nervous, regardless of party.

LOPEZ: You both are prolific. Are you simply political animals in need of outlets? What drives you?

SCHOEN: We tell the truth as we know it. Different perspectives sometimes, but absolutely the same perspective about the importance of the tea-party movement.

The tea party is grassroots because the tea party is grassroots. Or as McArdle would say, because the tea party is grassroots.

Tuesday, September 14, 2010

Asking Why

In an article in The Economist on Dinesh D'Souza, the writer says that it's better to address ideas than motivation.

It's not entirely useless to investigate people's backgrounds as a way of understanding their thinking. Mr D'Souza has surely been shaped by the milieu he grew up in and the political ideology that structures it, and Barack Obama was clearly shaped by the experience of growing up partly abroad, with a mixed-race identity that had links to middle-class white America, to black America, and to Africa. I've certainly been shaped by growing up Jewish on the East Coast, Sarah Palin was shaped by growing up Christian in Idaho, and so forth. But I think we do better when we criticise people's ideas and programmes on their own terms, rather than seeking out mysterious causes in their childhoods. There's no need to search for abstruse reasons why an extreme movement conservative like Dinesh D'Souza might oppose raising taxes on the rich or defend privilege in access to education. And it's not surprising that a centrist liberal like Barack Obama thinks people earning more than $250,000 per year ought to be paying more taxes. In fact, that conviction is shared by a majority of the American electorate. If Mr D'Souza finds it bizarre, it's not Mr Obama who's out of touch with America.

We need to do both. I disagree that we should ignore psychological motivation in politics because we need an explanation for irrational acts. Facts and reason are usually ignored during decision-making. We have to understand and explain why so we can address irrational behavior.