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Existential Crisis OF the Agora III: Fixing Things Around Home

The last two posts were, in some senses, wrap-ups on the economic and international situations; they were couched in terms of the Agora - the public square and how it functions. A major purpose of the Agora is free exchange, that is trade and the economy, and the public square exists within the context of the relationships among states, hence the international part. Now we want to shift our attention to the third major aspect of the Agora - the behavior and rest of the lives of the citizens. In other words what goes on in the Agora besides "just" being a marketplace, or what is going on with Domestic Policy. Now that's a topic we've covered, in some depth before for it's own sake, as well as in the context of the role of key policies for the health of the economy (changing the game with regard to Education, Healthcare and Energy are sine qua nons of reaching a new plateau of healthy economic growth that's sustainable for example). But we have serious problems with these policies that will take serious people to solve them.

Why You Care: Long-running Structural Problems

Necessarily we all focus on our own day to day concerns and affairs, hopefully with a weather eye to how the winds and currents are blowing. Letting today's emergencies swamp all concern for the weather leaves us extremely vulnerable to boiled frog syndrome. Ignoring them entirely and taking a comfortable state of affairs for granted (that's not a lukewarm bath it the soup water warming up slowly) guarantees it. As we've hopefully made clear in the prior two posts we are crossing major cusp points in the economy and in the world that will shape the next decades as much as anything that's happened in the last six. One way or another they cannot be ignored - our only choice is cope or drift. Let's descend into wonkishness for a minute and consider another of the major structural trends, and remember this is just one of several major structural challenges we face. The top part shows the cumulative growth in the economy, consumption, investment and saving since 1948. The key thing to note is that when credit-driven consumption led to the relative demise of savings; in other words when immediate gratification became the dominant driver of our socionomic health. At the end of the day growth is jobs, income, prosperity and the well-being of our descendants. You can see the debt vs consumption link more clearly in the second sub-chart while the third comes full-circle back to growth, investment and savings. Growth has been gradually slowing down for many years until it went cliff-diving recently (NB: as badly as it's done in those six decades !). If we want to create a prosperous new future we need to return to being a nation of ants, not of grasshoppers.

Domestic Policy and Future Prosperities

Our first post on the health of the Agora took a fairly deep dive on long-term economic prospects, what it'll take from an economic policy point of view and what it'll take for those policies to work in terms of re-factoring crucial domestic policies in Education, Energy and Healthcare. In other words our future prosperity is utterly dependent on getting them right and making them work. There's a giant meme that's set into our politico-cultural DNA that government should keep hands off on everything, which is something of a natural reaction to the failed social engineering policies of the '60s. It also is neither realistic nor reflects the vital roles that are mandatory for government to play if we are to have a healthy society; it's also appallingly ignorant of history. Each of these topics require not just a post but books to properly dissect and, unfortunately we're still feeling our way thru on some key ones. Nonetheless government has a traditional role to play in defense and public safety as well as the creation and maintenance of civil society - which we've known about since the First Cities and continue to work on. A lot of folks think free markets came down from on high thru the immaculate conception but in fact they are a recent invention in human history and require their own institutional infrastructure. Government has also played a role in public investment that's vital to the health of any society from roads and bridges to China's Great Canal. For example modern capital markets were created by the Dutch and adopted and grown by the English. The entire notion of reliable financial markets (ahem) and public finance owes a great deal to England, Issac Newton, David Hume and others. The US government has played a vital historical role in jump-shifting US economic growth in investing in all our modes of transportation. And did you know that the entirety of our post-WW2 prosperity, over which we're now haggling, was based on federal investment in pre-war inventions that turned then into major new products, industries and jobs ? Markets don't work well for these sorts of good and are also prone to other systemic (that is self-caused) breakdowns as well as market failures. The classic example is pollution where no one company can afford to clean itself up if everyone doesn't. On a macro-scale modern economies are vulnerable to Black Swan breakdowns where the entire system implodes. We experienced one during the Great Depression and are in the middle of another, who's worst potential consequences appear to have been avoided. Another example is the role of publicly funded education - without the widespread adoption of free public high-schools the industrialization of our economy wouldn't have worked very well. And without extensive public health programs the urbanization that drove it was also infeasible. At the end of the day government is indeed vital - the question is finding the proper balances between public, private and civic policies and the mechanisms to implement them.

Getting It Right: Policy Mechanism

Many of the public initiatives listed in our shopping list are things that we've been working away at for centuries, even millenia and we've gotten to the point where we understand what needs to be done and how to do it pretty well. The area where we thought government could do everything led to a rather hubristic set of social engineering policies in the sixties that didn't go at all well however. And led to the Reagan Backlash as the limits of government intervention were reached and tested beyond workability. Now we've gone to far in the other direction, with obvious penalties. Friedrich Hayek arrived at the telling criticism of socialism and communism - if you attempted to determine policy across a large and complex society the efforts at data collection, decision-making, implementation, monitoring, control and enforcement quickly swamp your coordination capabilities and led to a rigid and ossified public policy. That's also what, IOHO at least, made the social engineering projects of the '60s unworkable. Yet the painful burns we've acquired by refusing to do what we've known needs to be done in Education, Healthcare and Energy, where we've literally been talking about fixes for three decades or more, makes clear that the ARE NOT SELF-CORRECTING problems. Which gets us to the fundamental challenge of implementation. In other words we need to set national policy congruent with our long-term goals and find the appropriate mechanisms to get people moving in the right direction voluntarily. Creating such incentives for individual decision-making is how markets work, when they work. Here we know they do not. What may be required - remember we're still feeling our way thru these new challenges - is national standards and funding combined with localized implementation and customization. If you look at the Big Three programs rolling out in D.C. you'll find that this is indeed the path they are taking. We'll be picking up on that thesis in the future with detailed dives into each. In the meantime we suggest you put to bed the "socialism" meme that partisan politics attempted to exploit to win points.

It's Time For Every Person

Horatio Lord Nelson's final general signal to his fleet at Trafalgar, which saved England and the modern world as we know it by their victory, was that "England expects every man to do his duty". Since we started with an Aaron Sorkin allusion we'll end with one as well. Here Ainsley Hayes, newly appointed to the White House Office of the Counsel is challenged on her motives.

"Is it so hard to believe in this day and age that some one would roll up their sleeves, set aside partisanship and ask, what can I do ?

What's your answer ? Whatever it might be let's hope the people in D.C., or at least the White House, agree with Miss Ainsley. Clearly many do not and put partisan victory ahead of duty to country. And duty to country is NOT blind - it doesn't require blind acquisence. It requires coming up with the best answers of which one is capable and makng one's best efforts to shape public policy. It then requires doing one's best to make the decisions reached  effective and successful - not continuing a constant search for advantage at the expense of the country.

Domestic Policy and Politics

Scoring Obama's First 100 Days   Obama's much-maligned $787 billion stimulus, which passed, is actually several bills in one: the biggest tax cut in American history, the biggest infrastructure investment since the interstate highway in the 1950s, the biggest investment in education in a generation and lots more. His budget, which was approved with no Republican votes, shifts a whole range of priorities in a progressive direction and sets in motion a process that will likely lead to major health-care reform this year. Add the other bills and executive orders that seem to get signed practically every week, and the One is moving into Roosevelt's range. Because no one ever marches for stimulus or a budget, maybe it's easier to assess Obama's achievements by thinking of the people on the receiving end. If you're a woman seeking pay equity, a child in need of health insurance, a nurse trying to avoid a layoff, a $25,000-a-year worker hoping for a tax credit, a passenger who would rather take the train, a group of parents trying to start a charter school, a homeowner facing foreclosure, a cancer researcher strapped for funding, a hiker looking for more wilderness, a small business tired of exorbitant federal loan fees, a historian trying to see some long-secret documents, a young person eager to take part in national service, a prisoner praying to avoid torture, then you got something tangible out of the president's debut. For all the hoopla, Obama came to the job with unfavorable odds for success. He had no major management experience except his nearly flawless campaign, the success of which has in the past been an unreliable predictor (see Jimmy Carter). But despite a nightmarish effort to get his subcabinet vetted and confirmed, Obama quickly mastered the art of picking the right senior management team and selling successfully to his customers in Congress, the media and the public. His ease with himself and his audiences makes it all go down easier, even when he makes mistakes. Crisis leadership is, above all, about restoring confidence. Just as FDR got the country believing again in capitalism and democracy, Obama is so far making good on his pledge to navigate in a new direction. The people are responding. From January to April, the percentage of Americans saying the country is on the "right track" went up 23 points under Obama. The figure was flat or down for the previous three presidents. Polls are ephemeral. Stuff happens, especially abroad, to cripple presidents. Remember LBJ and Vietnam? And at home I'm still worried he'll compromise too much on health care or other priorities. But the president heads into the middle of a rough year with something substantial to build on.

The Slippery Side of 60 Since Election Day, Democrats have dreamed of reaching the sunny uplands of a filibuster-proof Senate majority. Now that Sen. Arlen Specter has switched parties, and Al Franken seems likely to win his vote-count court case, they are approaching the commanding heights. But they ought to be careful what they wish for. The history of fat congressional majorities is mixed. They can stoke unrealistic expectations among interest groups and magnify the role of outliers and egos. There is a risk of philosophical overkill, internal civil war and the kind of political myopia that eventually empowers the opposition party (yes, even one as lost as this GOP). The country's philosophical fault lines don't disappear when one party is in power; they just appear as internecine battles. If and when the Democrats get to 60, the party's core liberal-progressive interests are likely to demand prompt action on a host of topics. But if every action requires 60—and that's becoming the norm in the Senate—the ironic result will be to empower the party's centrist wing. "We're going to spend all of our time dealing with those guys, I'm afraid," said a Senate leadership aide, who declined to be identified because he didn't want to antagonize them.

After the Great Recession FINANCE: Well, first of all, I think that we should distinguish between finance as the lifeblood of our economy and finance as a significant industry where we have a comparative advantage — right? So in terms of just growing our economy, we’ve got to have enough credit out there to fund businesses, large and small, to allow consumers the flexibility to make long-term purchases like cars or homes. So that’s not going to change. And I would be concerned if our credit market shrunk in ways that did not allow for the financing of long-term growth. What that means is not only do we have to have a healthy banking sector, but we’re going to have to figure out what we do with the nonbanking sector that was providing almost half of our credit out there. What I think will change, what I think was an aberration, was a situation where corporate profits in the financial sector were such a heavy part of our overall profitability over the last decade. That I think will change. And so part of that has to do with the effects of regulation that will inhibit some of the massive leveraging and the massive risk-taking that had become so common. EDUCATION: We set out a goal in my speech to the joint session that said everybody should have at least one year of post-high-school training. And I think it would be too rigid to say everybody needs a four-year-college degree. I think everybody needs enough post-high-school training that they are competent in fields that require technical expertise, because it’s very hard to imagine getting a job that pays a living wage without that — or it’s very hard at least to envision a steady job in the absence of that. And so to the extent that we can upgrade not only our high schools but also our community colleges to provide a sound technical basis for being able to perform complicated tasks in a 21st-century economy, then I think that not only is that good for the individuals, but that’s going to be critical for the economy as a whole. CHANGE: Do you think this recession is a big-enough event to make us as a country willing to make some of the sorts of hard choices that we need to make on health care, on taxes in the long term — which will not cover the cost of government — on energy? Traditionally those choices get made in times of depression or war, and I’m not sure whether this rises to that level. THE PRESIDENT: Well, part of it will depend on leadership. So I’ve got to make some good arguments out there. And that’s what I’ve been trying to do since I came in, is to say now is the time for us to make some tough, big decisions. The critics have said, you’re doing too much, you can’t do all this at once, Congress can’t digest everything. I just reject that. There’s nothing inherent in our political process that should prevent us from making these difficult decisions now, as opposed to 10 years from now or 20 years from now. It is true that as tough an economic time as it is right now, we haven’t had 42 months of 20, 30 percent unemployment. And so the degree of desperation and the shock to the system may not be as great. And that means that there’s going to be more resistance to any of these steps: reforming the financial system or reforming our health care system or doing something about energy. On each of these things — you know, things aren’t so bad in the eyes of a lot of Americans that they say, We’re willing to completely try something new. But part of my job I think is to bridge that gap between the status quo and what we know we have to do for our future.

SoundsGreat, But What Does He Really Mean?' After all, everything Obama does is pragmatic. His adviser David Axelrod let it be known just after the election that Obama was a "pragmatist and a problem solver," which was a good thing, because, as Axelrod had said shortly before the election, "people are in a pragmatic mood, not an ideological mood." When Obama introduced his national security team, he declared that "they share my pragmatism about the use of power." And as he recently told the New York Times, the same goes for his economic policy, where "what I've been constantly searching for is a ruthless pragmatism."  Ruthless pragmatism! It sends shivers up the spine. But what does it mean, really, to have a "pragmatic" president? Pragmatism has distinguished roots. William James and John Dewey promoted it as a philosophy that elevated knowledge gained through action over theory and concepts. Obama has been pragmatic in this sense when it comes to, say, the financial crisis, embracing trial and error and resisting the more systemic solution of nationalizing banks. But pragmatism fails as a political definition, says Robert Reich, who served as President Clinton's labor secretary, because it describes how a politician moves toward a goal, not the goal itself. "It's possible to be ruthlessly pragmatic in terms of how you get to an objective," Reich said, "but the phrase is nonsensical in terms of picking an objective." That leaves us searching for the intent and belief beneath each "pragmatic" approach so far.

At a Glitzy Washington Gala, Hailing the Stand-Up in Chief  The annual dinner of the White House Correspondents' Association took on an edgier quality last night: it could have been held on the edge of the Hollywood Hills. A once-cachet Washington tradition, the annual dinner may have completed its final transformation this year into a crushing gathering of several thousand, increasingly less a celebration of journalism than a parade of Hollywood and television celebrity. The President, who by tradition attends and delivers comical remarks at the dinner each year, won the crowd over early. "Most of you covered me." After a beat, he added, "All of you voted for me." Noting that Sunday is Mother's Day, Obama reported that it was a tough holiday for his sometimes profane chief of Staff, Rahm Emanuel. "He's not used to saying the word 'day' after 'mother.'" Obama also made fun of RNC chairman Michael Steele for seeking a bailout for the GOP and noted that former vice president Dick Cheney was not in attendance, busying writing his memoirs which Obama said would be titled, "How to Shoot Friends and Interrogate People." He mocked the reporters' recent obsession with his first 100 days by announcing that he was immediately building a presidential library in honor his first 100 days. "My next 100 days will be so successful, I will complete them in 72 days. And on the 73rd day, I will rest." Obama said that in his next 100 days he will learn to give a speech without a teleprompter — something he has been criticized by some for relying too heavily on — while his vice president Joe Biden, who has made a string of ill-advised comments lately — will learn to use one.

Obama is Spock: It's quite logical Spock has been on many minds lately, and not entirely because of the new film. Big thinkers in both print media and the blogosphere -- from New York Times columnist Maureen Dowd  to MIT media moguls -- have referenced the Enterprise's science officer in recent months, drawing parallels between the dependably logical half-Vulcan and another mixed-race icon: Barack Obama. They're not just talking about the ears. For those of us who watched the show in the 1960s (or during the countless reruns since), Nimoy's alter ego was the harbinger of a future in which logic would reign over emotion, and rational thought triumph over blind faith. He was a digital being in an analog world; the Pied Piper who led our generation into the Silicon Age. Anyone who followed the early "Star Trek" with regularity knows how charismatic Spock was. If there were two characters I wanted to be as a young man, they were Spock -- and James Bond. Both displayed total self-confidence, and amazing problem-solving skills. Both traveled to exotic destinations, and were irresistible to women. And both shared a quality that my generation lacked completely: composure. While Bond had his weaknesses (anything in a bikini), Spock was virtually unflappable. During the months that I researched "Future Perfect," people all over the world admitted a longing for the zeitgeist of "Star Trek." "The Enterprise crew was a professional team of people solving problems together," agreed Nimoy. "It was always a very humanistic show, one that celebrated the potential strengths of mankind, of our civilization, with great respect for all kinds of life, and a great hope that there be communication between civilizations and cultures." The problem with smart, thoughtful people is that you have to pay attention. Even with "Star Trek," some viewers complained that the stories were too complicated, requiring too much focus for the average TV viewer. Nimoy sympathized. "'Star Trek,'" he reflected, "was a language show. A lot of the ideas were expressed verbally. It has been said -- and I think it's true -- that if you didn't listen to 'Star Trek,' you couldn't follow the stories." The same could be said of today's White House: It's a language show. "Issues are never simple," Obama has said. "Very rarely will you hear me simplify the issues." The stakes are high, the narrative is complex, and no one's talking down to us. Obama, like Spock, rewards close listening. His cool logic is a real departure from what we've grown used to. Often presidential speechmaking is an emotive art, where oratory trumps reason.

http://www.newsweek.com/id/195414

Playing 'D' Against Obama The Republican Party's navel is a pretty unattractive thing. So maybe Republicans should stop obsessively gazing at it. Instead, the GOP might focus on taking on the Obama administration, whose policies are surprisingly vulnerable to political and substantive attack. Battling Barack Obama is an enterprise that offers better grounds for Republican hope than indulging in spasms of introspection or bouts of petty recrimination. No, the payoff from a policy confrontation with Obama won't be immediate. The economy appears to be set for a short-term uptick. Obama remains popular. Many of his proposals look superficially attractive. But we haven't yet had a thorough airing of their implications, to say nothing of their real-world consequences if they are enacted. So one should assume Obama will stay strong through the summer and perhaps even the fall. But 2009-10 could be the winter of Obama's discontent. Republicans should be making the case against Obama's policies now so that citizens know whom to blame next year. To make things simple for busy and easily distracted GOP pols, I'll organize the Republican anti-Obama agenda into five categories, all beginning with the letter "D" (as in Democrat). Bill Bennett likes to quote the adage that no one ever became a saint through someone else's sins. But Republicans don't need to qualify for sainthood. They need to get back in the game. If Republicans begin to highlight the problems in Obama's five-D agenda now, they should be ready to compete, with a real shot at success, in 2010.

The GOP's Shameless New Attack How desperate are Republicans? If their political anxiety correlates with their shamelessness, very. Last week, the House GOP released a web video that flashed images of President Obama associating with the King of Saudi Arabia and, yes, members of the Congressional Hispanic Caucus -- spliced between scenes of angry-looking foreigners burning American flags and a balaclava-clad insurgent firing a rocket propelled grenade. Yesterday, the Senate’s Republicans took their turn at alarmist political aspersioneering, releasing this web video on Obama’s plan to close the prison facility at Guantanamo Bay. After showing the names and scary looking pictures of some of Gitmo’s most unsavory prisoners, the video cuts to a CNN anchor asking, “where are they going to go?” -- and then it flashes shots of detention facilities in military bases in the Lower 48. On screen, road signs tell us who’s really going to get creamed: Colorado, Pennsylvania, Virginia -- even Kansas! (What, did Lamar Alexander, who produced the ad, run out of swing states to scare?) “Terrorists,” the video warns in bold letters, “Coming Soon to a Neighborhood Near You.”

Obama hails efforts on clean energy, health care President Barack Obama says agreement on an energy bill and a promise by interest groups to squeeze trillions of dollars in savings from the health care system show that change has come to Washington. Some of those most opposed to past attempts at health care overhaul pledged this week to reduce the annual rate of growth in such spending by 1.5 percentage points, for a promised savings of $2 trillion in the next decade.Weeks of negotiations have led to the introduction in the House of an energy proposal that, for the first time, would mandate reductions in the heat-trapping gases blamed for global warming and shift the country toward cleaner sources of energy.Obama campaigned for president on a promise to change the way Washington works.He said Saturday in his weekly radio and Internet address that he was heartened by the "willingness of those with different points of view and disparate interests to come together around common goals, to embrace a shared sense of responsibility and make historic progress."Obama singled out utility companies and health insurers, doctors and hospitals for coming to the table.

Do you get the Millennial Generation?  MTV premièred in August 1981, seven months after Ronald Reagan was inaugurated as America's 40th president. It revolutionized TV and the music industry as much as Reagan changed the country's politics.And now, just as the election of Barack Obama to the presidency signaled the end of that political era and the beginning of another, MTV is belatedly shifting gears as well.The network, long known for cynical and vapid content, has suddenly understood the importance of being earnest. Booze and bikinis are out. Do-good singers and hard-working art students are in. MTV's mistake was to assume that the members of particular demographic groups, in this instance young people in their mid-teens through their mid-20s, behave the same and hold the same attitudes at all times. If only MTV's executives had gone to the movies more often, they might have recognized these generational changes much sooner. Everyone in politics and pop culture should learn the lesson MTV belatedly has. To really understand the preferences of young people, take a look at their generation and not simply their age. That will tell you everything you need to know.

'A Failure of Capitalism' The current crisis, Posner maintains, is a depression. True, it is not (we hope) a great depression. But the typical postwar recession is a partly self-correcting disinflationary contraction that soon subsides, often leaving the economy healthier. The present downturn is a self-sustaining deflationary contraction whose costly aftereffects will linger for years. The Great Depression led to World War II. Today’s depression presumably won’t be that bad, but it may cause a huge loss of output, an immense increase in the national debt, a swing to excessive regulation, a nasty bout of inflation, a decline in America’s economic and geopolitical power, and increased political instability abroad.A typical recession is a market correction, usually of inflation or other economic imbalances; a depression is a market failure. And it is a failure (here is grenade No. 2) that the market is powerless to prevent. “An interrelated system of financial intermediaries” — a banking system, broadly defined — “is inherently unstable,” Posner writes. Think of it as “a kind of epileptic, subject to unpredictable, strange seizures.”And so — here is the part libertarians will hate — markets, entirely of their own accord, will sometimes capsize and be unable to right themselves completely for years at a stretch. (See: Japan, “lost decade” of.) Nor can monetary policy be counted on to counteract markets’ tippy tendencies, as so many economists had come to believe.Alas, economists and policy makers got cocksure. They thought they had consigned depressions to history. As a result, they missed warning signs and failed to prepare for the worst. “We are learning,” Posner writes, “that we need a more active and intelligent government to keep our model of a capitalist economy from running off the rails.”

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