There's a very succinct description of how private equity works in Matt Taibbi's Greed and Debt: The True Story of Mitt Romney and Bain Capital:

In a typical private-equity fragging, Bain put up a mere $18 million to acquire KB Toys and got big banks to finance the remaining $302 million it needed. Less than a year and a half after the purchase, Bain decided to give itself a gift known as a "divident recapitalization." The firm induced KB Toys to redeem $121 million in stock and take out more than $66 million in bank loans -- $83 million of which went directly into the pockets of Bain's owners and investors, including Romney. "The dividend recap is like borrowing someone else's credit card to take out a cash advance, and then leaving them to pay it off," says Heather Slavkin Corzo, who monitors private equity takeovers as the senior legal policy adviser for the AFL-CIO.

Under the debt load, with new management planted by Bain who knew nothing about the toy business but knew enough to rubber stamp Bain's dividend, KB went bankrupt. That may have been disappointing to Bain -- the longer KB survived, the more its owners could bleed it -- but Bain's investors and owners had already made a handsome return on the deal. And deals are what private equity is all about, one deal after another, each one a windfall. Back during the S&L crisis someone pointed out that the best way to rob a bank was to own one. Turns out that's true for any business.

But it used to happen less frequently. Several reasons come to mind, the most obvious being that business owners have fewer scruples now than they used to. The most corrosive idea behind this shift is the notion that the sole responsibility of business owners is to maximize profits, especially given that we can only truly measure profits in the short-term. This has always been a latent idea among business owners and (especially) financiers, but for most of our history has been limited both by law and by custom.

For instance, family-owned companies have good reason to take a longer-term view of a business that will be handed down through the generations. Even the case of a broadly held corporation is likely to have a mix of short- and long-term-oriented investors, and need to balance those interests off. On the other hand, when a company is taken over through a LBO, the ownership is narrowed drastically, and the debt overhang all but forces the owners to focus on the short-term.

Other trends add in. When owners live in the same locale as the plant, they are less likely to harm the community. Replace them with outside owners and those scruples go away. When owners are expert in their industry, they are more likely to strike a balance between short- and long-term needs, because they see their whole careers developing within a single industry which has few options should they blow up. Replace them with finance people and those considerations vanish: to a financier, all companies look the same, and there are always more companies around the corner. (Financiers, after all, don't build companies; they buy them -- and usually with other people's money.)

A unionized work force also limits the management's options, so the loss of union protection has made it easier for companies to be looted and plundered. Then there is the law: most of us still believe that business owners are still subject to law, that they are prohibited from criminal activity (significantly including fraud), but the overall trend had been toward less regulation, toward less effective enforcement, and toward less exposure to torts: the result is that business owners need have fewer scruples about their compliance with the law. (Possibly the best example of this was the Citibank-Travelers merger, at the time blatantly illegal, but rather than prosecuting the Clinton administration arranged to change the law, making the merger retrospectively legal.)

The result of all these trends is that we are now plagued by a new breed of businessman: one that's only in it for the money, and willing to take the money from anywhere it's available, using any methods he can get away with. The particular scheme that Romney practiced at Bain is especially odious because even in cases where the extra debt and looting don't kill the business, everyone related to the business (workers, customers, neighbors) except for the owners is much poorer as a result, while only a handful of already rich investors get richer. But they're just the worst of the worst. The whole financial sector has more than doubled in the last thirty years as the business of business has shifted from making products and providing services to making deals with huge payouts to the dealmakers, those profits to be squeezed out of everyone else.

Boeing announced that they're closing what's left of their Wichita plant. That means laying off 2,160 workers, and not fulfilling any of the promises they've made to Kansas politicos over the last decade while pursuing the great $35 billion tanker scam. The Boeing plant dates back to 1927 when it was Stearman Aviation. The plant greatly expanded during World War II, mostly at government expense, when employment swelled to over 50,000 and Wichita built the B-29s that won the war against Japan, and into the 1950s the B-47s and B-52s that pounded Korea and Vietnam (and still occasionally fly over Afghanistan).

My father worked at Boeing for 38 years, and my brother worked there for 23 years. In my father's day Boeing had several large plants in Washington plus the one in Wichita: all were unionized and the IAMAW negotiated nationwide, so Boeing's workers caught a break in Wichita. Nowadays it seems like they have hundreds of plants. The company isn't much good at building aircraft any more, but they do big business in auctioning off plants to cities and states eager to pay to have their citizens exploited. In 2005, Boeing spun several properties, including most of their Wichita plant, off in a private equity deal to create Spirit Aerosystems, reducing their Kansas employment from 15,000 to 4,500, and they cut more than half of that in the six years since.

It's not that Wichita and Kansas haven't been willing to cut Boeing hundreds of millions of dollars in loans and abatements and other favors, nor that the local politicians ever hesitated to ply their influence for Boeing's benefit -- the tanker scam is only the grossest example. It may be the unions: before Boeing carved up their plant in 2005 SPEEA had organized the office workers, giving the Wichita plant (in right-to-work KS) the highest percentage union representation of any Boeing plant. That's no longer true, but Boeing still claims it costs 70% more to do work in Wichita than in San Antonio, where they have a non-union workforce in a fresh government-built plant. Wichita workers aren't used to thinking of themselves as overpaid, but Boeing has no scruples when it comes to screwing over their workers.

Some links:

• Roxanna Hegeman: Boeing to close Wichita plant with 2,160 jobs
• Roxanna Hegeman: Boeing to close Kan. defense plant by end of 2013
• Boeing decision stings
• Beccy Tanner: Boeing's Wichita history dates to 1927

I skipped over the ones searching for reaction from Kansas politicians. About all they had to say was that they were sad or sorry. In the 1940s the government built McConnell Air Force Base across Oliver Street from the plant they built for Boeing. The two have always had a symbiotic relationship. The reason the Air Force still flies 1950s-vintage aircraft like B-52s and KC-135s is that they've been periodically flown into McConnell and rebuilt by Boeing -- in fact, the KC-135 tankers are based here, even though they're mostly used to support fighters in Asia. Take Boeing away and there's no need for McConnell.

For some reason no one noticed how vulnerable McConnell would be once the KC-135s were replaced. Now if those same politicians are finally moved to salvage some jobs here, they'll do whatever they can to kill the new tankers. They never were a good idea, but now for Kansas at least the jobs excuse works against them.

I sent the following squib to the Eagle's Opinion Line:

Mark these words: McConnell AFB will be closed within five years of the first new tanker delivery. If you care about those jobs, kill the tanker contract. We don't need new ones. The ones we already have get us in too much trouble as it is.

The Eagle is asking for stories telling them "what impact has Boeing had on you and your family over the decades?" They provided a living for my father, although it's also likely that the leukemia that killed him was rooted in the chemical he was exposed to there. They turned into a nightmare for my brother, firing him for being too pro-union and for being a medical insurance liability. By then they liked to brag that "this isn't your father's Boeing." Indeed, they're not. They haven't just tracked the moral rot of the nation; they've repeatedly been the cutting edge.

UPDATE: One more Boeing article: Boeing misses deliveries target; Airbus beats goal. This just reinforces my argument above that in redirecting its business to maximizing its political clout and using that to extort income and financing from government and profits from workers, Boeing has lost its fundamental competency at building airplanes. It used to be that Boeing would build entire planes in one factory, with a great deal of vertical integration. If the advantages of doing so aren't obvious, look at the accompanying picture, which shows a 787 fuselage being loaded into an even larger airplane to be flown to the final assembly plant. As Boeing added more properties (to gain more political angles), and started to do more subcontracting (mostly to screw their workers, although wide supplier networks also helped build political clout), the manufacturing process became vastly more complex, while Boeing's quality control has declined. You see all this in the 787 program, which is about five years (and counting) behind schedule.

The contrast to Airbus should be instructive. You'd think that Airbus, with its government bureaucratic control forcing work to be spread over multiple countries, and its unions not only pushing labor costs up but effectively co-managing the company, should be much less efficient than Boeing, but at least Airbus can concentrate on actually building planes. And while Boeing is constantly whining about how urgently they have to cut labor costs to remain competitive, Airbus not only pays higher wages, they do so in Euros which are much more expensive than dollars. But in the end the ability to deliver planes makes all the difference.

Tony Capaccio: Overrun Forecast in Boeing Tanker Work: Well, that didn't take long. The overrun is $500 million over the first $4.8 billion chunk of $7.1 billion in "development funds" -- the first actual aircraft, based on Boeing's now-obsolete 767 airframe, aren't scheduled for delivery until 2015. Moreover, the widely touted $35 billion program is now described as "planned as a 179-aircraft, $51.7 billion program that includes research, production, and aircraft support." Unlike the golden age of cost-plus-10% Air Force contracts, Boeing's on the hook for the overruns -- which is good news, unless you work there, in which case it just becomes more fuel for Boeing's psychotic efforts to squeeze its workforce, and to scam all of the political jurisdictions that think Boeing is doing them a favor by exploiting their labor. We've already seen the first of that with Boeing's threat to close its Wichita facility -- i.e., the one plant Boeing has that has almost all of the company's experience maintaining the Air Force's KC-135 tanker fleet. Still, despite all its attention to cost, delays and overruns have plagued Boeing's management for decades now. They've become so adept as scamming the system they've forgotten what got them into the game in the first place: the skills to build airplanes.

In another sense, the cost overruns are Boeing's fault: it was widely felt that they deliberately underbid the tanker contract to counter EADS. They had lost the previous competitive bid in large part because their numbers were way out of line, and only got the contract rebid through their lobbying clout. I wouldn't be surprised to find they found the right numbers through their revolving door contacts: they've had one VP go to jail for trying to fix the deal, and it would be surprising if the graft ended with her.

I keep returning to the Boeing tanker story because it seems so central to what is sick with America today. The tankers themselves are the platform upon which the American military empire is built: you can't project power to the far corners of the globe unless you can find a gas station when you get there. Any time some fool calls for a "no flight" zone, they're not only calling for the fighters and bombers to shoot down contraband flights, they're calling for the tankers to keep those fighters and bombers in the air over their targets. Making a $51.7 billion investment in new tankers shows us that the imperial command has no plans to back down from America's commitment to bully the world. On the other hand, if you do accept the need for the US to roll back its armed forces, the first place to cut funding is this $51.7 billion -- plus the untold billions it will cost to maintain and fly those planes if and when they ever get built.

On the other hand, stopping the new tanker program leaves the old one in place, and that KC-135 fleet has gotten the US to where it is today. Indeed, there's no reason why those planes can't stay in service for many more decades. They've been repeatedly rebuilt, periodically refitted with new wings and/or engines. They fly in spaces where they don't need to worry about being shot down. The main people who have emerged as opponents of Boeing's tanker scam have either been anti-graft imperialists like Sen. John McCain, or pro-graft ones like Sen. Richard Shelby who want more of the booty for themselves. So while opposing new tankers is one step, opposing the old ones is another. The main reason to shut down the old ones is to make it harder for the US to get involved in foreign wars -- most obviously the air-focused ones like Kosovo and Libya, although the ability to maintain the "no fly" zones in Iraq was what kept war with Iraq on the burner, making the 2003-11 war virtually inevitable.

But then there are a whole other set of reasons for opposing the new tanker program: those rooted in the management culture of Boeing, their vast political lobbying network, their revolving doors in and out of the Pentagon. For a while Boeing could market itself as a national treasure as America's number one manufacturing exporter. They may still be, but they've turned into a national disgrace. They've become poster boys for the collapse of business ethics that plagues the entire country. It used to make sense for the public to support corporations that in turn made useful things that built up the public's standard of living. That they made a profit in the process was tolerated, in large part because it was taxed -- another way corporations gave back to the society, and to the nationhood, that supported them. Now, however, they've become rackets, predators, out to suck as much profit as possible any way they can get away with it. Nor are they merely part of a bad trend: Boeing is an innovator here, a model for other companies to follow. This isn't so much because anyone at Boeing was all that clever. It's more because ever since WWII Boeing has been nursed by the Defense Department, a training that they wound up taking as their entitlement. Moreover, they built their commercial business the same way, through one crooked, cross-financed deal after another. Most notoriously, to sell planes in China, they agreed to build some of them there, and they went further and lent out their lobbying subsidiary to promote China's "most favored nation" trading status. (If you factor in the subsequent trade loss to China, Boeing no longer looks like much of an exporter.)

Some of this may be inevitable in the airframe business. Europe wound up nationalizing its various aircraft companies, consolidating them into Airbus. Airbus has two advantages over Boeing. One is that they can draw on public funds for development expenses -- actually, not that big of an advantage given how Boeing has been able to scam the US military and so many states and cities across the country for just that purpose. The other is that while Airbus has to break even to stay in business, it does so for the sake of the industry, its workers, and the nations that own it. It isn't compelled to strip and scavenge the way Boeing does. Those actually seem like good reasons to nationalize Boeing: run it as a unionized non-profit, allow it to borrow cheap through the Fed (even to finance sales, given sane regulation), cap the executive salaries and get rid of the crooks.

If I had much more time and patience than I do, I'd start a website dedicated to squashing the tanker program and smashing Boeing; maybe nomoretankers.org. It would be one way to start a reevaluation of what companies are good for in America, and a realization of what they are no good for. And armed forces, too. The tanker deal is a "teachable moment" -- and Boeing is an object lesson.

Crowson's editorial cartoon in the Wichita Eagle today, on Boeing's tanker scam bait-and-switch. In their big PR push to dislodge EADS's winning bid and rejigger the $35 billion contract in their favor, the PR flacks at Boeing had upped their usual 1,000 job promise to 7,500 -- counting all sorts of multiplier effects, something Republicans never believe in unless they hear it from a defense contractor. Now that the deal is done Boeing's decided maybe they don't need Wichita after all -- although there's always the suspicion that they may just be angling for yet another bribe, something they've repeatedly done in the past.

Molly McMillin has another article on Boeing in the paper today: Analysts: Loss of Boeing Would Hurt City, Region. Not much new there. One thing the analysts didn't factor in was the extent to which Boeing's presence corrupts local politics, but that was the subject of an anonymous Opinion Line comment:

If Boeing leaves, I hope it will take our bought-and-paid-for congressional delegation with it, along with "aviation consultant" Todd Tiahrt.

Probably no Weekend Roundup today, but I do hope to get something else up this evening. One Kansas-themed story likely to lose out in the shuffle is Brownback Complaint About Student Tweet Lands Kansas Teenager in Principal's Office. As someone who's been there for doing something like that -- admittedly, long before Twitter made it easy to do and easy to get caught -- I can only applaud Emma Sullivan. Also, quote another Opinion Line commenter:

How many people does our "less-government" governor have employed to check through social media networks to see who is saying what about him? And how much does he pay them? And will he report these naughty people to Santa Claus?

By the way, driving around Wichita a couple nights ago, I came upon several small roadside signs proclaiming "Christmas Doesn't Suck!" If Brownback's concerned about language, well, that horse has left the barn.

Michael Lind kicked off an argument on energy and climate policy. Andrew Leonard was taken aback, and Lind tried to regroup. The three pieces:

• Lind: Everything You've Heard About Fossil Fuels May Be Wrong
• Leonard: A New Golden Age for Fossil Fuels? Huh?
• Lind: I Am Not a "Global Warming Denialist"

Lind's basic point is that fracking will save our energy-intensive way of life:

If gas hydrates as well as shale gas, tight oil, oil sands and other unconventional sources can be tapped at reasonable cost, then the global energy picture looks radically different than it did only a few years ago. Suddenly it appears that there may be enough accessible hydrocarbons to power industrial civilization for centuries, if not millennia, to come.

So much for the specter of depletion, as a reason to adopt renewable energy technologies like solar power and wind power. Whatever may be the case with Peak Oil in particular, the date of Peak Fossil Fuels has been pushed indefinitely into the future.

Lind skips over the two basic problems with nonconvential hydrocarbon extraction: the cost, especially as measured in energy, and the side effects, which include pollution and climate-altering carbon dioxide created when those hydrocarbons are burned. Lind doesn't deal with cost factors at all. Lind handwaves evidence that fracking pollutes, attacks Greens for promoting uncompetitive renewables, and dismisses climate change as "low probability" -- if it were probable that would be all the more reason for going nuclear, but since nobody wants nuclear the climate change risks must be negligible.

He goes further to blast conservation:

The renewable energy movement is not the only campaign that will be marginalized in the future by the global abundance of fossil fuels produced by advancing technology. Champions of small-scale organic farming can no longer claim that shortages of fossil fuel feedstocks will force a return to pre-industrial agriculture.

Another casualty of energy abundance is the new urbanism. Because cars and trucks and buses can run on natural gas as well as gasoline and diesel fuel, the proposition that peak oil will soon force people around the world to abandon automobile-centered suburbs and office parks for dense downtowns connected by light rail and inter-city trains can no longer be taken seriously. Deprived of the arguments from depletion, national security and global warming, the campaign to increase urban density and mass transit rests on nothing but a personal taste for expensive downtown living, a taste which the suburban working-class majorities in most developed nations manifestly do not share.

Eventually civilization may well run out of natural gas and other fossil fuels that are recoverable at a reasonable cost, and may be forced to switch permanently to other sources of energy. These are more likely to be nuclear fission or nuclear fusion than solar or wind power, which will be as weak, diffuse and intermittent a thousand years from now as they are today. But that is a problem for the inhabitants of the world of 2500 or 3000 A.D.

Leonard doesn't get into costs either, which I suspect is the real limit on how much nonconventional hydrocarbons we actually extract, but he does note the pollution externalities -- a word which attempts to translate oft-ignored intangibles like pollution into costs. And while he concedes that it would be nice to have more cheap energy to fall back on, he sees this as buying time, not carte blanche to act like the world's problems aren't our own.

The thrust of Lind's piece is that we have nothing to worry about. But that's the wrong moral to take from the surprising surge of accessible natural gas. If the environmental problems associated with fracking can be managed, then the fact that natural gas is cheap and relatively clean should definitely be celebrated. But not because it signals some illusory new golden age of fossil fuels, but rather because it gives us more breathing room than we thought we had to get our act together and find ways to limit the vast -- and increasing -- amounts of fossil-fuel derived greenhouse gas emissions that are currently getting pumped into the atmosphere.

Lind at least tried to put some distance between himself and the industry propagandists:

I am not a "global warming denialist." Although science is always provisional and subject to revision, I have no reason to doubt the scientific consensus that greenhouse gases almost certainly are warming the atmosphere. Nor do I have any reason to doubt that as a result of human greenhouse gas emissions the earth's temperature will rise in the next few centuries. This being the case, efforts wasted on lobbying for unrealistic mitigation schemes that are doomed for political reasons would be better devoted to plans for minimizing any damage that global warming, already underway, might cause to particular areas of the world.

As I wrote in my essay, if the threat of global warming is really as bad as James Lovelock and James Hansen says it is, then we should listen to those eminent scientists, who argue for a rapid transition from fossil fuels to nuclear power. [ . . . ]

If there were really a clear and present danger of catastrophic overheating, we could not afford to rely on feeble, indirect, "market-friendly" measures like cap and trade and renewable energy mandates on utilities, to say nothing of trivial, symbolic gestures like LEED certification of "green" houses. The only rational course of action would be for the federal government to declare martial law, nationalize the energy sector, conscript American industry and engage in an emergency nuclear power build-out at taxpayer expense. There would need to be Marshall Plan subsidies to help poor coal-burning countries shift to nuclear energy. Most people would consider an occasional Fukushima or Chernobyl a price worth paying, if the apocalyptic alternative were a runaway global greenhouse effect and the end of civilization or humanity on an earth as dead as Venus.

At least Lind didn't reiterate the relatively underdeveloped smears against conservation and renewables from the original article. I'm one of the first to admit that windmills have a downside -- the cemetery where many of my ancestors are buried is towered over by the things, creaking eerily in the sky, destroying an atmosphere that should be serene. But even if the upper limits of wind and solar power fall short of current, let alone future, fossil fuel demands, every kilowatt they shift extends the available reserves. Same for local food, for public transit, for tighter cities. It makes no sense to dismiss an alternative because it doesn't solve everything.

As for nuclear, Lind is either attempting to scare us, or he naively believes in utopia. There is a lot of uranium scattered about the crust of the earth, and quite a bit of thorium too. But it's not clear how much can really be mined and refined efficiently enough to produce more power than is consumed along the way -- a way that necessarily includes whatever you wind up having to do to safely dispose of the waste. Plus we don't have an especially good record of understanding the risks and accounting for their costs. Lind may be happy to suffer "an occasional Fukushima or Chernobyl" but most of us are more cautious, especially near our own backyards. I'm not hardcore anti-nuclear, but I don't see how this works.

I'm also not a global warming crank, but I can see a lot of real bad things happening short of turning Earth into Venus. Again, even if the little things that are doable prove inadequate, I don't see the logic of ridiculing them: can't hurt, and maybe they buy you a little time and flexibility to grapple with the big problems. Lind, however, rejects any moderating effort until we snap, at which point all he can offer us are horrors: martial law, conscripted business, an accident-prone nuclear power industry, God knows what else. He immediately rejects the first principle of progressivism, which is, hey, let's stop a minute and think about this, so we can plot out a course that does what we want to do.

But let's go back to the beginning here: fracking. I saw the movie Gasland recently. It's hard to tell from one personal take whether gas fracking is always destructive to the environment, but the movie does make the case that sometimes it is, and that there needs to be more trustworthy oversight so we can understand when things go wrong and what can be done about it. One thing that is clear is that the fracking fluid is deadly poisonous. Another is that industry standard practices of drilling gas wells and hooking up pipelines and infrastructure are not as safe and reliable as they should be. Another is that the profit-seeking gas companies have powerful incentives to hide rather than to face up to problems. It also isn't clear how economical it is to tap into shale gas: the deposits are thin and often poorly sealed; the horizontal drilling and fracturing are expensive and difficult. This raises questions: how densely do you have to drill? how quickly do the fields loose pressure? how much gas is actually recoverable? Unless all of this can be done by spending much less energy than is returned it will prove uneconomical.

The same basic questions apply to any tight oil or gas source. Until fracking was developed gas shale was uneconomical. Now, how far have we move that equation. We've known for a long time that there is a lot of oil shale in Canada, but it's always been real expensive to extract it. For now, all we can do is to strip off the shale closest to the surface, heat the rocks up to extract the oil, and dump almost everything as waste. Every step along the way uses up a significant fraction of the extracted oil, so you don't wind up with much profit. Tar sands are even tougher. When oil was $20/barrel people speculated that tar sands would be profitable at $40/barrel, but we've still never hit a price that works: it just takes too much energy. And everything else in the industry works that way. The biggest conventional oil finds in recent times have been deepwater offshore fields, and the real costs of drilling them just took a sudden leap in 2010.

And now Lind just waves his hand and we'll be able to process massive amounts of gas hydrates. All we have to do there is sink robots to the bottom of the ocean, have them dig off the sediment, then pick up little clumps of ice and methane and shuttle them back to the surface. Good news is that once you got them, the chemistry is pretty simple, but getting them is something else.

I don't doubt that eventually we'll pump every recoverable barrel of oil out of the ground, that we'll suck up all the gas we can afford, and that we'll mine all the coal we can get to. Nor do I doubt that we'll convert almost all of that carbon into carbon dioxide because we'll want to use all of the energy packed into those molecules. And we'll dump most of that carbon dioxide into the atmosphere, where it will trap solar energy and make the planet hotter and hotter. We've spent the last century doing just that as unthinkingly as possible, and if Lind has his way we'll just keep on doing just that, assuming that any problems that do crop up will miraculously solve themselves.

What bothers me about all this is its unthinking nonchalance. I don't doubt that if we really did think about it we would wind up burning all that fossil fuel. But we would recognize the benefits of slowing down the pace, both of the burning and of everything else that depends on that energy. Slow down the pace and you'll postpone the reckoning. Slow down the pace and you'll reduce the concentration of carbon dioxide and lessen its warming effect. Slow down the pace and you'll have more time to think about what you really want to do. In particular, you might think about how much consumption is enough for human happiness, and narrowing the band between not enough and too much to develop a more equitable society that leans more to cooperation than to competition, and therefore reduces conflict, allowing us to slow down further, and stretch out the time before we face the end of our fossil fuel endowment.

On the other hand, Lind doesn't want to slow down. He wants to keep racing on until we hit a wall, then start a big fight over whatever's left. Reminds you he never was a real progressive. He just got a lot of credit for turning on his fellow neocons and opposing the War on Terror. But here he is, dumb again.

Bonus link: Bill McKibben: Obama Strikes Out on Global Warming: Tom Engelhardt's intro reviews the latest climate news, before McKibben gets to what's bugging him:

The Obama administration is making its biggest decisions yet on our energy future and those decisions are intimately tied to this continent's geography. Remember those old maps from your high-school textbooks that showed each state and province's prime economic activities? A sheaf of wheat for farm country? A little steel mill for manufacturing? These days in North America what you want to look for are the pickaxes that mean mining, and the derricks that stand for oil.

There's a pickaxe in the Powder River Basin of Montana and Wyoming, one of the world's richest deposits of coal. If we're going to have any hope of slowing climate change, that coal -- and so all that future carbon dioxide -- needs to stay in the ground. In precisely the way we hope Brazil guards the Amazon rainforest, that massive sponge for carbon dioxide absorption, we need to stand sentinel over all that coal.

Doing so, however, would cost someone some money. At current prices the value of that coal may be in the trillions, and that kind of money creates immense pressure. Earlier this year, President Obama signed off on the project, opening a huge chunk of federal land to coal mining. It holds an estimated 750 million tons worth of burnable coal. That's the equivalent of opening 300 new coal-fired power plants. In other words, we're talking about staggering amounts of new CO2 heading into the atmosphere to further heat the planet. [ . . . ]

Strike two against the Obama administration was the permission it granted early in the president's term to build a pipeline into Minnesota and Wisconsin to handle oil pouring out of the tar sands of Alberta. (It came on the heels of a Bush administration decision to permit an earlier pipeline from those tar sands deposits through North Dakota to Oklahoma). The vast region of boreal Canada where the tar sands are found is an even bigger carbon bomb than the Powder River coal. [ . . . ]

Fortunately, that sludge is stuck so far in the northern wilds of Canada that getting it to a refinery is no easy task. It's not even easy to get the equipment needed to do the mining to the extraction zone, a fact that noble activists in the northern Rockies are exploiting with a campaign to block the trucks hauling the giant gear north. (Exxon has been cutting trees along wild and scenic corridors just to widen the roads in the region, that's how big their "megaloads" are.)

Unfortunately, the administration's decision to permit that Minnesota pipeline has made the job of sending the tar sand sludge south considerably easier. And now the administration is getting ready to double down, with a strike three that would ensure forever Obama's legacy as a full-on Carbon President.

The huge oil interests that control the tar sands aren't content with a landlocked pipeline to the Midwest. They want another, dubbed Keystone XL, that stretches from Canada straight to Texas and the Gulf of Mexico.

Needless to say, this is just a small subset of Obama's handling of energy and environmental issues since taking office. You might recall that he had just unveiled a huge giveaway program to open up deep water oil drilling in the Gulf of Mexico and up and down the Atlantic coast when BP's well blew up. And he had just announced another round of incentives and subsidies for the nuclear power industry when Fukushima melted down. Time and again he's tried so hard to follow in GW Bush's footsteps, championing the crony capitalism his predecessor(s) worked so hard to advance. And time and again he's tripped himself up. That's not change you can believe in. That's the same old story you voted against.

Henry Farrell: Count Me In With the Unsophisticated Six Year Olds: Starts by quoting a Kindred Winecoff attack on Krugman, arguing that things like the Bush tax cuts, the Medicare D program, and the housing bubble were actually cases of popular will at work in a democracy, not (as Krugman argues) the results of intense lobbying by self-interested elites. Farrell writes:

However, actual work on how policy gets made suggests that this doesn't work. On many important policy issues, the public has no preferences whatsoever. On others, it has preferences that largely maps onto partisan identifications rather than actual interests, and that reflect claims made by political elites (e.g. global warming). On others yet, the public has a set of contradictory preferences that politicians can pick and choose from. In some broad sense, public opinion does provide a brake on elite policy making -- but the boundaries are both relatively loose and weakly defined. Policy elites can get away with a hell of a lot if they want to.

The Medicare D example is worth exploring a bit.[1] Adding some sort of drug perscription coverage to Medicare was a very popular proposition. Most health insurance plans provide some sort of coverage. Originally it was a relatively cheap benefit, but under its cover pharmaceutical companies were able to push prices way up, which made the omission all the more glaring in Medicare. It was one issue that Democrats seemed to have some traction with, which is basically why Karl Rove felt the need to sweep the issue away. Once Rove and the Republicans decided to do something, the actual legislation was pure giveaway to the industry. So popular demand wanted the benefit, but not the law as written. In particular, the prohibition against the government negotiating drug prices had no popular benefit -- it greatly increased costs, some of which were passed to seniors in forms like the "donut hole" and the rest fobbed onto taxpayers. The law was clearly an inside deal, but it is true that if the benefit hadn't had such broad popular support it wouldn't have been pushed or passed. So in that sense Medicare D wasn't purely the work of ensconsed elites. On the other hand, the Iraq War was.

No one denies that popular opinion limits what elites can do, nor that it can provide a wedge for one set of elites to campaign against another. However, the latter happens very infrequently, in large part because there are rarely serious splits between elite opinion. One finds, for instance, that both parties hire Treasury officials from the same sets of Citibank and Goldman-Sachs executives. The defense and foreign policy establishments are nearly as integrated. For some 30 years now the US relationship with Israel has been hamstrung by the Dennis Ross-Elliot Abrams tag team, who are nothing more than foreign agents, yet they've managed to pin down what we like to think of as a popular democracy.

When popular opinion demands health care reform, Obama consults with the usual industry lobbyists and comes up with a right-wing think tank plan. The Democrats response to global warming, which quite a few people are seriously worried about, is yet another right-wing think tank scheme. The right then abandons both plans to move the debate even further right, even further away from the issues people actually care about. Working through these charades you wind up with a disaffected populace that doesn't even bother to vote -- it's not like there are any candidates anyway.

[1]: Later on I see Henry quoting Krugman on this:

In fact, the only budget-busting measure undertaken in recent memory that was driven by popular demand as opposed to the agenda of a small number of powerful people was Medicare Part D. And even there, the plan was needlessly expensive, not because that's the way the public wanted it -- it could easily have been simply an addition to traditional Medicare -- but to please the drug lobby and the anti-government ideologues.

Emphasis added. The other budget-busters were sold to the public, and you can cite some polls showing that the selling was successful, but not ones that show that the people who were sold to understood what they were buying.

Winecoff later argues that most Americans don't want a healthcare system run by the government, then tries to broaden "anti-government ideologues" to include those masses. In fact, very few Americans have any major problems with the healthcare systems that are actually run by the US government -- Medicare, Medicaid, the Veterans Adminstration. It's only imaginary ones they object to, which makes you wonder if they really know what they are opining about.

This, in turn, is followed by 262 comments. Some are worth quoting.

Bloix [1]:

Is this an example of "an extremely weak understanding" or is it an example of lying? I cannot imagine how honest person could say that the tax cuts and the Iraq war took place because they were "supported by majorities." The Bush administration was the passive conduit for the will of the people, is that the idea? [ . . . ]

Sometimes people say things that reveal that they are genuinely not worth debating. They are simply lying sacks of shit and they need to be opposed, not reasoned with.

Straightwood [6]:

An examination of the character of Karl Rove is all that is required to support Krugman's thesis of irresponsible and incompetent elites. This "Mayberry Machiavelli" could in no way be described as a public servant. He was a cynical manipulator of public opinion relentlessly pursuing the the political agendas of his patron(s). To suppose that a creature like Rove was simply responding to the wishes of the public is lunacy.

politicalfootball [7]:

"If there is a housing bubble, maybe it's because public policy was skewed in ways that home ownership attractive, because that's what people want." [Kindred Winecoff]

It's amazing to me that alleged scholars will say unbelievably stupid shit like this. You can knock Krugman for being rude if you like, but what are you supposed to say about this? I promise you that very few people actually supported -- or even understood -- the predatory lending, unregulated derivatives, etc. that caused the housing bubble.

MPAVictoria [9]:

"There is not even any doubt that neither the tax cuts, nor the Iraq war, would have happened if they weren't pushed by political, business, and media elites." [christian_h]

Exactly right. All of these policies were pushed relentlessly by the media at every opportunity. It also should be noted that both the tax cuts and the Iraq war were pushed with lies. The Bush administration repeatedly claimed that the majority of the tax cuts were aimed at the middle class and the poor, which we all know was false, and they also claimed that Iraq had WMDs, which we now also know was false.

Kindred Winecoff [13]:

Hitting too hard, Henry. I was protesting Krugman's moralism, and suggesting that even the most simplistic view of politics suggests an interest-based explanation works better. I disagree with little that you wrote (I'd go further on some points), but I have no idea why you're sticking up for Krugman here.

I pretty much gave up on Winecoff's frequent comments after here. At one point he argues that elite opinion is divided then gives Krugman as an example of an elite who disagrees with various Bush policies. In fact, I wound up stopping near the point where Winecoff wrote, "The consensus here seems to be that I should shut up."

Sebastian [15]:

Oh no Kindred, that won't fly. You persistently read Krugman in the most uncharitable way possible and now ask for a charitable reading of your own posts?

Let me summarize:

• Brooks: It's the stupid electorate that's gotten us into this mess, we really need smart elites to get us out.
• Krugman: Are you kidding me? Those policies were elite driven and not due to some stupid electorate.
• Winecoff: But public opinion favored those policies! It was the public after all!
• Farrell: Dude, that's not how policy is made.
• Winecoff: Yeah, I agree, but that doesn't matter and I hate Krugman.
• Readers: ????

Straightwood [19]:

The rich got their tax cuts in America because they paid for them with political donations and retainers to lying thugs like Karl Rove. There are "malefactors of great wealth" and Krugman is right to denounce their cynical political flunkies on moral grounds.

christian_h [22]:

Kindred makes three fundamental theoretical mistakes: One, he mistakes the result of an opinion poll for the complex reality that is the opinion of the masses; two, he mistakes correlation for causality; and three, he ignores completely the way ruling class ideology as transmitted by media, entertainment, the organization of daily life, impacts on and shapes public opinion. Maybe this is a feature of IPE rather than Winecoff, but I always find it fascinating when liberal social scientists write as if 150 years of Marxist thought did not exist; although of course in the case of the Bush tax cuts or the Iraq war one doesn't have to be a Marxist to recognize that whatever public support they may have had was obviously the product of massive propaganda unleashed by elites intent on forming the very public support needed as an excuse to implement these policies.

Josh [26]:

What about the invasion of Grenada? Did that happen because the people wanted it? 'Cause polls taken after it'd begun showed a lot of public support.

b9n10t [28]:

The public opinion poll is, for Winecoff, like the provocative dress that implicitly sanctions the violators designs.

Area Man [30]:

"If there is a housing bubble, maybe it's because public policy was skewed in ways that home ownership attractive, because that's what people want." [Kindred Winecoff]

You can't be serious.

Having public policy skewed in favor of home ownership cannot cause a housing bubble. The whole idea of a bubble is that constantly rising valuations are unsustainable; in other words, buying becomes irrational, but it keeps paying as long as other people keep buying. If public policy makes home ownership more attractive, this by itself will not cause an irrational buying spree, it will at most cause a one-time increase in home values, after which they level off. This is assuming you believe there were massive changes in public policy starting in the late 90s that encouraged people to buy houses that weren't in place before, which as far as I can tell, there weren't.

Another way to think about this is to ask precisely how public policy changed in 2007-2009 to make home ownership massively less attractive, since this is why you seem to think that people overbought homes to begin with. I am not aware of any such changes, and many to the contrary.

Martin Bento [31]:

Occasionally, you can have a policy that is popularly-driven. Legalization of medical marijuana is probably the best recent example. Most states that have passed it have done so by ballot initiative, usually over the opposition of most of the elected representatives. There was little elite agitation for it beforehand. There was some -- from libertarians, including people like Milton Friedman -- but it was scattered and limited to the occasional Op Ed. Milty like to talk this way to seem consistent, but he didn't actually do much to push for it. There was also support on the Left, but not from people credibly regarded as part of the political elite. The Iraq War and tax cuts were nothing at all like this.

hopkin [41]:

I don't see what is so difficult about this. Why on earth would donors pour millions and millions of dollars into candidates' war chests if all they were going to do once elected was reflect public opinion (whatever that means)?

Loviatar [49]:

You are giving Winecoff too much credit. I've read his original post and his responses here and all I've gotten from his writing is that he is a disingenuous, dissembling mouthpiece for the anti-Krugman portion of the political elite.

He is doing exactly what a modern day trench soldier for the conservative movement does; he puts out a poorly researched political hit job and when challenged on facts, he dissembles, when taken to task with his own words, he builds strawmen. He is not naive, he didn't read Krugman incorrectly, he is just playing by the modern conservative playbook.

Conservative Playbook -- 7 easy steps

1. support crappy policy (e.g. Paul Ryan's budget plan)
2. when challenged -- dissemble (we're not killing Medicaid)
3. scream liberal media (standard)
4. when challenged again -- build strawman (budget mess was created by housing and medical aid for poor people)
5. scream liberal media (standard)
6. when challenged again -- lie (the public wanted tax cuts for the rich and the Iraq war/the public wants us to cut medical care for the poor and elderly)
7. scream liberal media (standard)

Straightwood [62]:

Mr. Winecoff seems intent on diffusing responsibility for bad policy outcomes by laying down a smokescreen of generalities regarding explicit and implicit voter "approval" of bad policy. But there are sharp distinctions of motives and methods between powerful individuals energetically pursuing an agenda and a vast aggregation of poorly informed voters tolerating faits accompli. This asymmetry does not seem to interest him, because he wants to spread blame so evenly that nobody can be blamed.

Straightwood [77]:

Brooks is possibly the worst of the VSP pundits because of his indefatigable chutzpah abetted by junk sociology. Every few days he emits an unsubstantiated "insight" that consistently supports aggrandizement of the rich and the pauperization of everyone else. Ever since Brooks saw that the Buckleys ate off silver plates, he has been a loyal servant of the fortunate, and there is no slimy sophistry that he will not stoop to to please his patrons.

That Brooks, a shameless sophist, occupies equal column space across the page from a rigorously honest Nobel Prize winning economist is a sad commentary on the swamp of "balanced" commentary that the NYT has become under the dysfunctional Bill Keller.

Jim Harrison [84]:

Winecoff is perfectly correct that our system has some democratic features, which is the reason that our conservative elites have to lie so much. [ . . . ]

Much shorter version: Of course Krugman is accusing elites of immorality. "Why do I call you a pig fucker? Because, first of all, you fuck pigs."

Henry [96]:

If Krugman is saying, as plainly as plainly can be, that Medicare Part D was driven by public demand, then why do you [Winecoff] keep on reiterating that he is saying quite the opposite of what he does in fact say? Let me repeat that again. He says -- as unequivocally, plainly and simply as someone could possibly say it -- that the initial impetus for Medicare Part D was driven by popular demand. This presents broad problems for your general claim that Krugman has a one dimensional account of politics in which the public plays no role whatsoever.

Robert [102]:

For several decades, I've noticed that the elites that the 10 or 20 companies owing the U.S. media put on regularly spout lies and bullshit. Has it become so bad that they now believe their nonsense and are now, like Winecoff, at best, extremely stupid? [ . . . ] I'm not sure if I'd like to think that for a society to continue, its ruling class must have some idea of how things work.

Straightwood [118]:

Regarding the presence of evil in political leadership, there is a simple test. Knowingly making false representations to achieve goals that are harmful to the general electorate, but beneficial to one's patrons, is evil. People who regularly do this to advance their political careers are evil. [ . . . ]

Many Republicans (and Tea Party partisans) are bluntly claiming that further concentration of wealth in America is good for the nation, despite abundant evidence that this is false. If they do not know that this is a false proposition, then they are simply stupid. If they do know it, they are evil. To the degree that Democratic politicians exhibit the same behavior, the same conclusions must be drawn.

christian_h [129]:

There is a valid criticism of Krugman to be made in particular as regards the financial crash -- while it was of course made possible by deregulation, that deregulation was a necessary component of the financialisation of modern capitalism that in turn is a response to the problems of the tendency of the rate of profit to fall and the surplus absorption problem. Seen this way, it IS indeed simplistic to blame the actions of elites, as in, individual members of the elite, for it.

This is one that could use some unpacking, but even if you regard financialization as an inexorable law of capitalism -- David Harvey wrote a Marxist take on this, and Kevin Phillips wrote a non-Marxist one -- it still comes down to actual, well-moneyed elites to grease the wheels and make it happen. If it was just surplus absorption, one could find plenty of poor workers to distribute that to -- but the bankers had other ideas.

Straightwood [140]:

Maybe the influence of elites has grown [Kindred Winecoff]

Maybe?

Have you heard of the Citizens United decision? Are you aware of the demise of the Fairness Doctrine in broadcasting? Do you understand that five corporations dominate news media in the USA? Have you heard of the Koch brothers? Do you know that 44% of US congressional representatives are millionaires?

Phil [167]:

"Krugman concedes the point on Part D." [Kindred Winecoff]

This is through the looking glass. The entire point of this thread is that Krugman didn't make the argument you ascribed to him in the first place. You can't belatedly recognise that fact and then score it in favour of your position.

There are two substantive points here. One is that Krugman quite demonstrably never said -- and there are no good reasons to read him as implying -- that public opinion has no influence over policies such as health care reform, Iraq, tax cuts usw. (You could start by conceding that one, it would clear the air.) The other is that, for a whole host of reasons, some of which go back to the Founding Fathers (try talking to them about 'democracy'), anyone who talks about public opinion in the US as an independent force which drives government policy is going to have to do an awful lot of work to make this view stand up. Either that or engage in a lot of bait-and-switchery with words like 'approve'.

You know, that's enough for today. Only got to the 193rd comment, one from Henry, which sent me off on a tangent. This comment was mostly a quote from Banjamin Wallace-Wells' New York profile What's Left of the Left: Paul Krugman's Lonely Crusade. We can close on this quote, which says something about Krugman's contention that his politics is driven by his understanding of the data:

A few years ago, Krugman, having decided that he was going to be writing about politics and so he should know more about it, did a very Krugman thing. He didn't talk to people who worked in Washington. Instead, he started to read the political-science literature. Krugman had never understood the press coverage of politics, which seemed to emphasize its most irrelevant aspects. Why dwell on a presidential candidate's psychology when the trends in unemployment would tell you who would win an election? But viewed through the prism of political science, politics began to seem much more familiar to him. There was a mathematics to it -- you could assemble data, draw correlations, understand what was essential and what was noise. The underlying shape of politics came sweeping into view: If you arranged members of Congress from left to right based on how they voted on welfare-state issues -- Social Security, Medicare, unemployment insurance -- it turned out that this left-to-right axis could predict every other vote: On Iraq expenditures, on abortion, whatever. "When you realize the fundamental divide in U.S. politics is just this one-dimensional thing, and that is how you feel about the welfare state," Krugman says, "that changes things."

You could see something else in the data, too. From 1979 to 2004, the income of the richest one percent of Americans grew by 176 percent, that of the richest one fifth of the country by 69 percent, and that of everyone else by less than 25 percent. Working through the numbers, Krugman came to believe that "only a fraction" of the change was compelled by global forces, which had been the standard explanation. The rest, he concluded, was political.

It was Krugman's Princeton colleague Larry Bartels who made the critical connection, in research Krugman devoured and still cites. Perhaps the most important influence on income inequality, Bartels argued, was something economists had not emphasized: whether a Democrat or a Republican was in the White House. Since World War II, Bartels found, wealthy families in the 95th percentile in income had seen identical income growth under both parties. But for families in the 20th percentile, the difference was astonishing: Under Democratic presidents, their income grew at six times the rate it did under Republican ones. There was, for Krugman, a kind of radicalization implied in this.

A lot of things fall out of this observation. One, for instance, is why Krugman regards Ron Paul as an ultra-rightist instead of as someone who has some very favorable traits, especially his steadfast opposition to using American military force abroad. It also shows why Krugman is always able to find a rationale to favor a Democrat over a Republican, even if he can say nothing else nice about the Democrat. Also helps explain why he consistently views Clinton as better than Obama -- there's even a bizarre section where he imagines the Democratic Party revolting to nominate Clinton in 2012 (he gives that the same odds as Michele Bachmann winning the election).

Not as good a profile as one might hope for. Still worth quoting the best line, in a back-and-forth section on Larry Summers:

Krugman's sense of humor is built upon self-deprecation, and sometimes Summers's sense of humor is built upon deprecating Krugman, too.

One more, an insightful lesson from Argentina that many others missed:

[Domingo] Cavallo liberalized the [Argentine] economy and drew overseas capital to Buenos Aires -- "lionized by the financial press, the maestro of the Argentine miracle," as Krugman recalls. But when the Argentine economy slowed, international investors withdrew, unemployment grew to 25 percent, and by 2003 an estimated 30,000 people in Greater Buenos Aires were surviving by scrounging for cardboard to sell to recycling plants. [ . . . ] If Domingo Cavallo, one of the elect, could preside over this collapse, then perhaps there but for the grace of God went Alan Greenspan. What Krugman took from Argentina -- and what he thinks even liberals in Washington missed -- was "a certain level of understanding," he says, "that important people have no idea what they're doing."

Somehow I got way behind on Paul Krugman's twice-weekly New York Times columns. Rather than clutter up the Weekend Roundup with them, I thought I'd kick out the salient points here. Actually, although the columns are always well thought out and tightly crafted, most of my many Krugman quotes come from his blog, where he strays wider from his basic themes and strikes things at more interesting angles. In the columns he tends more to harp on the same points, not that they don't deserve some harping.

• The Intimidated Fed [April 28]:

  Given this dismal picture, you might have expected unemployment, and what to do about it, to have been a major focus of Wednesday's press conference with Ben Bernanke, the chairman of the Federal Reserve. And it should have been. But it wasn't.

  After the conference, Reuters put together a "word cloud" of Mr. Bernanke's remarks, a visual representation of the frequency with which he used various words. The cloud is dominated by the word "inflation." "Unemployment," in much smaller type, is tucked in the background.

  Really, no surprise. When Bush nominated Bernanke, the only thing anyone had to say about him was to praise how vigilant he would be on fighting inflation. The Fed has a legal responsibility to further full employment, but in practice it's in thrall to the bankers. Obama could have done something about this when Bernanke's term expired, but Mr. Change-You-Can-Believe-In renominated Bernanke, giving him three more years to sacrifice employment on the holy grail of inflation-fighting. The fact is that no president since Carter nominated his own guy for Fed Chairman during his first term. (Carter nominated Paul Volcker, the all-time champ of the inflation fighters, who raised interest rates to all-time highs to induce a recession and get Carter thrown out of office.) Krugman is kind of soft on Bernanke (who chaired Krugman's economics department at Princeton), and Bernanke is less awful than Greenspan, but the actions he was praised for during the crisis were things that ran against his grain. It wouldn't have taken much effort on Obama's part to come up with who at least could have conceived of employment mattering. Hell, Larry Summers would have been a better choice.

  Lately the inflationistas have seized on rising oil prices as evidence in their favor, even though -- as Mr. Bernanke himself pointed out -- these prices have nothing to do with Fed policy. The way oil prices are coloring the discussion led the economist Tim Duy to suggest, sarcastically, that basic Fed policy is now to do nothing about unemployment "because some people in the Middle East are seeking democracy."

  But I'd put it differently. I'd say that the Fed's policy is to do nothing about unemployment because Ron Paul is now the chairman of the House subcommittee on monetary policy.

  So much for the Fed's independence. And so much for the future of America's increasingly desperate jobless.

  I'm not sure that the snipe at Ron Paul is necessary or helpful. The Fed has always favored bankers over workers. Bankers have always hated inflation, and ever since economists came up with a formula to link inflation to wage gains they've had one more reason to undercut workers.

• Springtime for Bankers [May 1]: Usually when deregulation turns sour politicians of all stripes feel obliged to crack down on the miscreants who took advantage of the deregulator's good faith. As I recall, back during the S&L crisis Congress passed a law that defrauding a thrift a capital crime. This time the one one the Republicans could find to blame was the government for bailing the bankers out, and even there they were hardly serious -- it was, after all, a Republican administration that did most of the bailing. And they fought back on everything that implied that the bankers owed something to the public: against nationalizing banks (which is how the S&L crisis was fixed), against any sort of limit on executive bonuses, and especially against any reform or regulation (not that the Democrats were pushing for much either).

  What does it take to limit future bailouts? Declaring that we'll never do it again is no answer: when financial turmoil strikes, standing aside while banks fall like dominoes isn't an option. After all, that's what policy makers did in 1931, and the resulting banking crisis turned a mere recession into the Great Depression.

  And let's not forget that markets went into free fall when the Bush administration let Lehman Brothers go into liquidation. Only quick action -- including passage of the much-hated bailout -- prevented a full replay of 1931.

  So what's the solution? The answer is regulation that limits the frequency and size of financial crises, combined with rules that let the government strike a good deal when bailouts become necessary.

  Remember, from the 1930s until the 1980s the United States managed to avoid large bailouts of financial institutions. The modern era of bailouts only began in the Reagan years, when politicians started dismantling 1930s-vintage regulation. [ . . . ]

  To see what's really going on, follow the money. Wall Street used to favor Democrats, perhaps because financiers tend to be liberal on social issues. But greed trumps gay rights, and financial industry contributions swung sharply toward the Republicans in the 2010 elections. Apparently Wall Street, unlike the voters, had no trouble divining the party's real intentions.

  And one more thing: by standing in the way of regulations that would limit future financial crises, Republicans are giving further evidence that they don't really care about budget deficits.

  By the way, the real reform that nobody talks about is getting the money out of politics. The Democrats, who had a piece in every one of these disastrous banking deregulation laws, have been desperately chasing the Republicans for business donors, grasping for whatever they could find, which increasingly included Wall Street. Indeed, one can argue that Clinton made Wall Street more money than Reagan and all the Bushes, even after taxes. The thing that bothered me more about Obama than Larry Summers was how he crowed about what smart and savvy businessmen Jamie Dimon and Lloyd Blankfein are, and how tight he was with both personally.

• Fears and Failure [May 5]:

  Nothing here that Krugman hasn't said dozens of times before, or won't say dozens of times in the near future. That we're stuck on these themes just shows that political interests have shoved us into a dark age of idiocy.

  It's not as if our political class is feeling complacent. On the contrary, D.C. economic discourse is saturated with fear: fear of a debt crisis, of runaway inflation, of a disastrous plunge in the dollar. Scare stories are very much on politicians' minds.

  Yet none of these scare stories reflect anything that is actually happening, or is likely to happen. And while the threats are imaginary, fear of these imaginary threats has real consequences: an absence of any action to deal with the real crisis, the suffering now being experienced by millions of jobless Americans and their families.

  What does Washington currently fear? Topping the list is fear that budget deficits will cause a fiscal crisis any day now. In fact, a number of people -- like Erskine Bowles and Alan Simpson, the co-chairmen of President Obama's debt commission -- have settled on a specific time frame: terrible things will happen within two years unless we make drastic spending cuts. [ . . . ]

  Which brings me back to the destructive effect of focusing on invisible monsters. For the clear and present danger to the American economy isn't what some people imagine might happen one of these days, it's what is actually happening now.

  Unemployment isn't just blighting the lives of millions, it's undermining America's future. The longer this goes on, the more workers will find it impossible ever to return to employment, the more young people will find their prospects destroyed because they can't find a decent starting job. It may not create excited chatter on cable TV, but the unemployment crisis is real, and it's eating away at our society.

  Yet any action to help the unemployed is vetoed by the fear-mongers. Should we spend modest sums on job creation? No way, say the deficit hawks, who threaten us with the purely hypothetical wrath of financial markets, and, in fact, demand that we slash spending now now now -- which might well send us back into recession. Should the Federal Reserve do more to promote expansion? No, say the inflation and dollar hawks, who have been wrong again and again but insist that this time their dire warnings about runaway prices and a plunging dollar really will be vindicated.

  So we're paying a heavy price for Washington's obsession with phantom menaces. By looking for trouble in all the wrong places, our political class is preventing us from dealing with the real crisis: the millions of American men and women who can't find work.

  One more thing that could be said: in a growing economy, it's possible for everyone to come out better, but in a stagnant or shrinking economy, the only way anyone gets better is at the expense of others. The measure of wealth isn't how rich the richest are, but how much productive work is done, and the simplest way to get more done is to employ more people. Moreover, high employment not only increases overall wealth, it helps to distribute it more evenly, resulting in a more equitable society where more people participate and fewer feel like victims.

• The Unwisdom of Elites [May 8]: The previous column all over again.

  The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe's single currency is coming apart at the seams. How did it all go so wrong?

  Well, what I've been hearing with growing frequency from members of the policy elite -- self-appointed wise men, officials, and pundits in good standing -- is the claim that it's mostly the public's fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate's foolishness.

  So this seems like a good time to point out that this blame-the-public view isn't just self-serving, it's dead wrong.

  The fact is that what we're experiencing right now is a top-down disaster. The policies that got us into this mess weren't responses to public demand. They were, with few exceptions, policies championed by small groups of influential people -- in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes. [ . . . ]

  President George W. Bush cut taxes in the service of his party's ideology, not in response to a groundswell of popular demand -- and the bulk of the cuts went to a small, affluent minority.

  Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America's political and pundit elite.

  Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that's who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts -- and who is now, of course, among those hectoring us about the deficit. [ . . . ]

  Why should we be concerned about the effort to shift the blame for bad policies onto the general public?

  One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn't be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn't be giving lectures on responsible government.

  But the larger answer, I'd argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they'll do even more damage in the years ahead.

• Inflation and Economic Hooliganism [May 11]: This one ran in the Sunday Magazine, so it's a little more expansive (but not much).

  Emerging economies never had the luxury of complacency. The decades before the storm were a time of relative economic calm in America and Europe, but it was an era of repeated crises in the developing world: the Mexican crisis of 1994-95, the Asian crisis of 1997-98, the Argentine crisis of 2001-2 and more. And this history of crisis fed a mood of caution, both on the part of governments -- which paid down their debts and accumulated huge reserves -- and on the part of the private sector, where debt-equity ratios and other measures of financial fragility fell sharply from 1998 onward.

  As a result, by the time the big crisis in wealthy nations struck, emerging economies were far less vulnerable to disruption than they were in the 1990s -- and, as it turns out, far less vulnerable than many advanced economies. In the panicky months after the fall of Lehman, past prudence wasn't enough to insulate countries from the global recession. But once the free fall ended, the emerging world staged a strong recovery, even as advanced economies struggled.

  In fact, once the acute phase of the crisis was over, the difficulties of advanced economies actually had the effect of promoting growth in the emerging world, as investors -- finding few good opportunities in debt-burdened wealthy nations -- began funneling money into up-and-coming economies, turning those economies' recoveries into runaway booms.

  These booms are, in turn, causing inflation to rise in the emerging world. China and India grew more than 10 percent last year, Brazil more than 7 percent. These economies are overheating, and inflation is the natural result.

  By contrast, in the United States and Europe, the only serious inflation is taking place in prices of raw materials. And what's pushing up raw material prices? Mainly, it's rapidly growing demand from the emerging world, with its voracious appetite for steel, copper, cotton and, above all, oil. [ . . . ]

  For while some countries have a problem with homegrown inflation, we don't. Our problem is unemployment. And to deal with our job shortage, we need low interest rates and, yes, continuing budget deficits to keep our economy growing.

  What about complaints from other countries that they're suffering inflation because we're printing too much money? (Vladimir Putin has gone so far as to accuse America of "hooliganism.") The flip answer is, Not our problem, fellas. The more serious answer is that Russia, Brazil and China don't have to have inflation if they don't want it, since they always have the option of letting their currencies rise against the dollar. True, that would hurt their export interests -- but economics is about hard choices, and America is under no obligation to strangle its own fragile recovery to help other nations avoid making such choices.

• Seniors, Guns and Money [May 12]: This is the sort of thing that makes people like me think the Republicans aren't just stupid and greedy but flat out evil: they not only have no interest in helping people get quality medical care; more than anything else they seek to protect the opportunities for health care businesses to rip us off. One way they do this is to divide the population into two camps, one of which foolishly thinks it's protected from the predators because they're not like the other camp who never get a chance. Ryan's scheme to divide medicare eligibility into two groups -- one that can keep their coverage while the companies rip off the government and the other that has nothing to look forward to but empty promises -- is just one example.

  Nor is demography the whole story. Over the long term, health care spending has consistently grown faster than the economy, raising the costs of Medicare and Medicaid as a share of G.D.P. Cost-control measures -- the very kind of measures Republicans demonized last year, with their cries of death panels -- can help slow the rise, but few experts believe that we can avoid some "excess cost growth" over the next decade.

  Between an aging population and rising health costs, then, preserving anything like the programs for seniors we now have will require a significant increase in spending on these programs as a percentage of G.D.P. And unless we offset that rise with drastic cuts in defense spending -- which Republicans, needless to say, oppose -- this means a substantial rise in overall spending, which we can afford only if taxes rise.

  So when people like Mr. Boehner reject out of hand any increase in taxes, they are, in effect, declaring that they won't preserve programs benefiting older Americans in anything like their current form. It's just a matter of arithmetic.

• America Held Hostage [May 16]: Every time since the founding of the republic that the government has found itself approaching the statutory debt limit, Congress has passed a new and higher limit. The need to do so was already established by the budget that Congress passed, the costs of doing so are zero, and the risks of not doing so are catastrophic. So why are the Republicans who control the House dragging their feet and threatening doom? Mostly because they get a kick out of extorting favors from spineless Democrats, especially the one in the White House.

  Six months ago President Obama faced a hostage situation. Republicans threatened to block an extension of middle-class tax cuts unless Mr. Obama gave in and extended tax cuts for the rich too. And the president essentially folded, giving the G.O.P. everything it wanted.

  Now, predictably, the hostage-takers are back: blackmail worked well last December, so why not try it again? This time House Republicans say they will refuse to raise the debt ceiling -- a step that could inflict major economic damage -- unless Mr. Obama agrees to large spending cuts, even as they rule out any tax increase whatsoever. And the question becomes what, if anything, will get the president to say no. [ . . . ]

  What has changed? The answer is the radicalization of the Republican Party. Normally, a party controlling neither the White House nor the Senate would acknowledge that it isn't in a position to impose its agenda on the nation. But the modern G.O.P. doesn't believe in following normal rules. [ . . . ]

  So hitting the debt ceiling would be a very bad thing. Unfortunately, it may be unavoidable.

  Why? Because this is a hostage situation. If the president and his allies operate on the principle that failure to raise the debt ceiling is an unthinkable outcome, to be avoided at all cost, then they have ceded all power to those willing to bring that outcome about. In effect, they will have ripped up the Constitution and given control over America's government to a party that only controls one house of Congress, but claims to be willing to bring down the economy unless it gets what it wants.

  The piece has more details on what would happen if there is no agreement, except the critical question of who the voters will wind up blaming.

People read this stuff and get the silly idea that Krugman is some kind of radical, but he's nothing of the sort. He qualifies as being on the left because he thinks that a more equitable society is a good thing; that people should be able to feel more secure, and that we are all better off when people have more opportunities and freedom, but he's no utopian: he's pretty happy within the bounds not just of most modern social democracies but within the exceptionally modest one we enjoyed from the New Deal through the Great Society. He's really moved very little since he worked for Reagan 30 years ago. What's scary is how far the right has slid past him, how dogmatic and intractable they've become. Even so basic an idea as that the government should provide deficit-financed countercyclical spending to lessen the damage caused by recessions is now fought tooth and nail by a party whose own presidents (as late as G.W. Bush) were first in line to open the tap.

Thought I might do a post about Krugman as a bonus, but it's taking me too long to sift through the comments (which are worth sifting), so maybe tomorrow.

Just got a piece of email from Craig Aaron at freepress.net. I get a lot of mail like this but this is the first time I've just copied it verbatim:

FCC Commissioner Meredith Attwell Baker is leaving the FCC to become a lobbyist for Comcast -- just four months after she voted to approve the Comcast-NBC merger.

This is just the latest -- but perhaps most blatant -- example of so-called "public servants" cashing in on companies they are supposed to be regulating. But Baker's jump to Comcast is particularly egregious. As recently as March, the commissioner was giving speeches complaining that the Comcast-NBC deal "took too long."

Baker's new position is actually Senior Vice President of Government Affairs, working directly for Comcast. Baker was appointed to the FCC by Obama, assuming office July 31, 2009, and has been an opponent of "net neutrality" ever since she landed. She's listed as a Republican, married to the son of Reagan-Bush consigliere James Baker. I have no idea how she got appointed, but this is a question that anyone who thought that Obama might actually change anything important needs to contemplate.

Whether this is the most blatant corruption ever is something we can debate. When Boeing paid Pentagon procurer Darleen Druyun off with a Vice President job, she (but not the Boeing execs who hired her) wound up in jail. When Billy Tauzin pushed the Medicare D bill through the House -- the one that prohibited the government from negotiating prices with pharmaceutical companies -- he didn't even bother to finish his term before cashing in as President and CEO of PhRMA, the pharmaceutical industry lobbying conglomerate. Those are two of the more blatant cases I can think of, but there are many more. On Obama's watch, the biggest one thus far has been Peter Orszag, who served as CBO Director before landing the job as Citigroup's Vice Chairman of Global Banking: you can say that was less blatant, but Orszag was an important peripheral figure in the bank bailouts and the new job is worth millions.

I'm sure we'll be hearing much more about this over the next few weeks, including numerous campaign quotes from Obama about how he was going to clean up the stench of corruption that smells just like this.

Don't have any new links, but the NLRB ruling against Boeing for building a new aircraft assembly plant in South Carolina is heating up. Boeing is acting dumbfounded, as well you might expect given how little flack they've gotten for their anti-union activities in the recent past. (Among other things, when the office workers in Wichita unionized, Boeing sold off the plant in a private equity deal, then managed to decertify the union from the tiny rump group they kept for military work.) What I find even more disturbing than the anti-union aspects of the South Carolina move is that they got the state to fork over $900 million in bribes to build the plant. Even there, only the size of the booty is surprising: for quite a while now Boeing has made a practice of selling jobs to state and local politicians, both in the US and abroad. Their whole business swims in an ocean of corruption: that they can't deliver new aircraft like the 787 and that they aircraft they do sell like the 737 have been turning up to be defective is a side effect. Like all good US corporations, their real business is making money for investors (and upper management), and their products hardly matter.

I'm pretty broken up about this: To all Maxine Udall Girl Economist readers. I keep one browser window with a set of tabs opened to a handful of websites I follow pretty closely: of late, I trimmed this list down to mine, TPM, War in Context, Krugman, and Udall. (I cut back on Salon and Yglesias due to browser performance issues -- maybe just a suspicion but I wish I had more Javascript profiling and management tools -- and my interest in other sites waxes and wanes.) Anyhow, the news is that Udall -- a pseudonym, it turns out, for Alison Snow Jones -- has died, "suddenly" we're told. I've linked to a number of her pieces over the last few months (my posts listed first, for what little I add, then hers):

• The Company Store (2011-01-07): Company Store Redux.
• Weekend Roundup (2011-01-02): Another Conversation about Health Care Costs
• Weekend Roundup (2010-11-07): Freedom Is Not Just Another Word for Nothing Left to Lose, and The Death of Capitalism
• Weekend Roundup (2010-10-03): Structural Misalignment and a Counterfactual Economy
• Weekend Roundup (2010-09-19): The Road to Serfdom Isn't Paved, Intergenerational Win-Win: Health Insurance, Education, Environment, Infrastructure, Pharmaceutical Lemons, and Dr. Frances Kelsey and Another Pharma "Lemon"
• Weekend Roundup (2010-09-05): Some Thoughts on Pharmaceutical Prices
• Link Week (2010-08-29): Capitalist Myopia

That's as far as my links go back -- about the point when I first noticed her. Her pieces tackle real world problems, but always with the methodological logic that makes economics the dismal science it aspires to be. This logic has its own inner beauty, and its ability to trivialize human concerns turns out to be part of its utility. Still, Udall never lost track of those concerns; she somehow managed to bring the logic back to real issues and problems, and she often brought back some new insight into them that I previously didn't have. That actually doesn't happen all that often -- we are all much more comfortable reading things that confirm what we already think we know -- and that's what landed her on my short list. As far as economists are concerned, I feel now almost exactly the way I felt when George P. Brockway died. I've read more than a hundred books on economics, but most of what I actually learned came from Brockway. I don't have enough perspective to measure Udall, but hardly anyone I've read in the last year has been more rewarding.

I should spend some time digging back through the many pieces I missed. I'd like to quote one at some length here, partly because it's more personal than I suggested above was her norm: 'Tis the Season . . .:

I started blogging a little over a year ago. Last night over dinner, a friend asked me why I do it. The answers I gave him were: I love to write and I want to be part of the really exciting conversation about economics and economic thought that has been a byproduct of the financial sector's mismanagement of risk.

I didn't say it last night, but I think I also started blogging because I grew up in a family business and have become increasingly appalled over the last 10 years or so by what seems to me to be a very limited view of the duties, obligations, and responsibilities of business.

I remember the sense of incompleteness and confusion I felt when first exposed to the theory of the firm. You see, in our business we were not profit maximizers. We were business men and women, embedded in a community, our fate intertwined with that of the community. We had to make enough money to stay in business for the long-haul. That meant that our customers had to keep coming back, we had to provide value, and we had to work, to sell. No one who walked into our business was greeted with "Let me know if I can help you." The customer was like a sacred guest. Our job was to find out what she needed, to tell him as much as we could about the merits of our merchandise, to help them identify and purchase the best match for their preferences and their pocketbook, or to send them to a competitor, with directions on how to get there, if we didn't have and couldn't get what they were looking for. [ . . . ]

Now, after a year of blogging, I'm discouraged and puzzled.

I can understand that someone who has managed to capture a privileged economic and political position, one where they are backed by US taxpayers as they gamble for personal gain in financial casinos, will do whatever they must to maintain it. And I expect that over time, if unchecked and unchastized, they will take on increasing amounts of risk, underwritten by the rest of us. What I didn't expect was the magnitude of the moral failure: that financiers would help to create securities designed to fail, sell them to clients, and then bet against them.

What I can't understand is the willingness of the citizenry to protect and reward someone who has harmed or is continung to harm them. I do not understand voting for politicians who support tax cuts for and neutered regulation of these same destructive speculators. Nor do I understand voters' apparent willingness to eviscerate all of the social programs and safety nets that are all that stand between them and what can only be regarded as neo-feudalism. I conjecture that the reason for this counterintuitive behavior is that the moral narrative that accompanies a technocratic tax cut for the wealthy is more compelling that the moral narrative that accompanies a technocratic stimulus of aggregate demand or support for families harmed by the financial sector's market and moral failures.

If you had told me 10 years ago that I would become a critic of investment bankers and an advocate for labor, I would have said that you were crazy. I was weaned on horror stories about the New Deal, the WPA and CCC, wage and price controls, and the horror of unions. [ . . . ]

Now I find myself wondering if the price is becoming too high, paid by those who can least afford it, and collected disproportionately by those who no longer generate the jobs or the universal opulence that used to be justification for that disproportionate allocation. I'm also increasingly concerned about how that price is set and the one-sided and self-serving (for those at the top) discourse that surrounds it.

I got into this conversation because I felt I might be able to contribute clarity for those not trained in economics and a different perspective. It has been an exciting and stimulating conversation. I've thought and read more about macroeconomics than I ever did in grad school. I have developed a real fondness and respect for my readers and their very thoughtful comments and for my fellow economics, anthropology, sociology, and biology bloggers, especially Mark Thoma, without whom only five people would ever have read this blog.

Now I find myself in need a a break, partly because I feel so discouraged by recent political events and the apparent triumph of zombie economics; partly because I have a paper and a grant proposal that need my attention. Barring some major new development, I'm going to take some time between now and New Years to reflect on what I've learned this past year and on the conversation we have had. I'll be back online around the New Year.

She did come back, and wrote several brilliant pieces, the last, What Price Microfinance?, posted on Jan. 17, the day she died.

Looking around her blog, before I close I can't help but share the two quotes Udall picked out from the original girl economist, Joan Robinson (incidentally, one of the first economists I read at any length):

The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.

And:

A sure sign of a crisis is the prevalence of cranks. It is characteristic of a crisis in theory that cranks get a hearing from the public which orthodoxy is failing to satisfy. . . . The cranks are to be preferred because they see that there is a problem.

I spend some time looking for further information about Udall. Came up with many tearful links to the announcement, but not much else, other than this:

• Interfludity: this post goes back and pulls a bunch of quotes from Udall's blog, starting with pretty much the same 'Tis the Season extract above.

I've been meaning to write about Maxine Udall's Company Store Redux post. It's based on a paper by Michael Kumhof and Romain Ranciere called "Inequality, Leverage, and Crises." As economists like to do, this builds its understanding around a simplified model, dividing the world into two income groups: workers and investors:

The impacts of the two groups' preferences and behaviors play out differently depending which group is favored in terms of bargaining power within an economy. In the United States, where rising income inequality has been accompanied by erosion of labor union membership and political power and a rise in the political influence of financial and commercial interests, it's no surprise that bargaining power has favored so-called "investors." I say so-called, because usually when one "invests," one produces something, often of value to the rest of us: more productive physical capital; more jobs; innovation; or better and cheaper products. Something that doesn't require a taxpayer bailout and result in a near-10% unemployment rate. But I digress.

Kumhof and Ranciere note that as income inequality has grown in the US, it has fueled a recirculating flow of borrowing by working and middle class families and lending by the "investor" class, borrowing that has been necessary to maintain working and middle class consumption as real working and middle class incomes have stagnated or fallen: [ . . . ] Our current situation in which 5% of the population captures and owns a disproportionate share of national output, which it then lends to the teeming masses whose share of output has been stagnant or dwindling, is really just a new variant of the company store.

Udall goes on to describe mining company stores in terms that will be familiar to anyone who recalls Tennessee Ernie Ford's "Sixteen Tons" (actually a Merle Travis song, and worth seeking out in the original, although Ford's version is the one permanently etched in my mind, probably the most-played record I owned in the late 1950s). The key point is that when corporate control is so complete, wages just recycle back to the company in a closed loop -- kind of like the old joke about the bar that only rents you beer. The result:

Over time and as wage-earner bargaining power weakens, the investor class is able to capture greater proportions of workers' declining or stagnant real wages. The effect is that an increasing portion of middle-class wages circulate back to the financial sector as interest and fees instead of into the larger economy (except, of course, as it occasionally "trickles down" from the investor class to what over time is likely to become the equivalent of a servant class).

That's a pretty bad situation, at least if you're a worker or a servant, but it also turns out to be unsustainable:

In Kumhof and Ranciere's model, an eventual crisis causes a collapse of asset values, including those that wage earners have been borrowing to finance. The authors show through a series of simulations that only a restoration of wage-earner bargaining power (and therefore an increase in workers' relative incomes) produces the sustained reduction in worker leverage that is necessary to reduce the probability of another crisis.

My emphasis there, because that's the point I want to make sure you all get. The so-called investor class has pretty much had free reign to run the world company store since the early 1980s. They've become ever more dominant, ever more powerful, and ever more exposed to the absurdity of their political chokehold on the economy. The crisis occurred because they extended debt to people who couldn't afford it and justified it by pointing to asset values inflated by their own excesses. This basic critique has been made now and then -- David Harvey's The Enigma of Capital and the Crises of Capitalism (2010, Oxford University Press) is pretty dry but gets it right. The important thing about this piece is that it's one of the very few pieces that zeroes in on the only viable solution. As Kumhof and Ranciere put it:

By contrast, restoration of poor and middle-income households' bargaining power can be very effective, leading to the prospect of a sustained reduction in leverage that should reduce the probability of a further crisis.

Udall added the emphasis in her quote. Nice to have some theory here, but this should also be clear from practical examples. The US economy grew much faster from 1945-70 when real working class incomes were on the rise than it has from 1980-2010 when real incomes have been stagnant at best, even while asset prices inflated even faster. Even today, when you look at economies that are actually growing at significant rates -- China, India, Brazil -- one thing they have in common is that they are places where workers' real incomes and standards of living are growing (regardless of how pitiful they may seem relative to US and Europe). Moreover, real investments -- that is, investments that actually bother to increase productive capability -- are most often made in economies where real wages are growing (as opposed to the US, a capitalist nation with an ever-dwindling capital resource base, because we don't have the political will to halt its erosion). As Udall concludes:

If the model is right (it does seem a rather good fit with reality), all of these measures require that a government constituted to be of, by, and for the people enact policies that support wage earners, that its elected representatives start serving 95% of the people rather than the top 5% that has so effectively commandeered it. It also requires that we the people find ways to become less dependent on a financial sector that no longer serves our best interests. Unfortunately, the last will likely contract an already fragile economy, at least in the short run.

For the last 30 years, the government has been part of the problem in this trend to increasing income inequality. It's time for government to become part of the solution in reining in financial sector excesses and restoring workers to something that approximates a fair share of national output. Otherwise, most of us will eventually find out what its like to "owe our soul to the company store."

I've been trying to make this point all along, so let me reiterate: the only way to get the American economy going again -- seriously, the only way to save capitalism -- is to increase demand from the bottom of the economy up, and that can't be done without a redistribution of wealth and won't be done without a redistribution of political power. There are lots of ways to do this, and it doesn't have to result in perfect equality or anything close to it (although that would be nice), but it can't be faked (as it has through the extension of debt over the last twenty years). Still, we are a long ways from recognizing this truth, and will suffer mightily until we do.

Peter Diamond is one of the winners of the Nobel Prize for Economics this year. He was also one of Obama's appointees to the Federal Reserve Board of Governors that's being held up by Republican obstructions in the Senate. The Federal Reserve, you may recall, has a legal mandate to promote full employment. Diamond is one of the world's foremost scholars in researching why unemployment remains a persistent problem, lagging as it does well into so-called recoveries, so you might think that he'd be a useful person to have working on the problem -- actually, under current circumstances, what may be the biggest, most immediate problem we face right now. But a lot of people in business don't see any real problem with persistent longterm unemployment, and not just because bankers dread inflation. Unemployed workers drag the whole labor market down, which tilts the balance of power to capitalists, and capitalists have found, at least since the 1970s, that there is more profit to be made at the expense of labor than through growth that they would have had to share with labor. (You may also recall how helpful economists were back in the 1970s with their NAIRU theories: Non-Accelerating Inflation Rate of Unemployment, the idea that the only way to limit inflation -- which is to say, to protect the value of money -- is to throw people out of work.) I don't know that Diamond would go as far as I'm suggesting -- Paul Krugman, for instance, still seems to think that NAIRU is solid economics and not just class war -- but he clearly makes Republicans like Sen. Richard Shelby nervous.

Some relevant links:

• Jonathan Cohn: Peter Diamond, Still Blocked from Fed, Wins Nobel: Among other things, notes that Diamond was "a staunch defender of social insurance," and with Peter Orszag wrote up a proposal to "maintain the program's solvency without privatization."

• Tyler Cowen: Peter A. Diamond: Good reference compilation on Diamond's work.

• Tim Fernholz: The Nobel Prize Has a Well-Known Liberal Bias: I can think of plenty of exceptions to that title, starting with Milton Friedman, but nonetheless:

  Maybe Republicans are simply prone to the same kind of weird mental block that makes famous economists and anyone on the Fed forget that the institution has a purpose other than maintaining price stability (full employment, ahem), but if you needed any more indication at how broken the Senate is, I'm not sure you can find a better one than this: The United States, purportedly the world's most advanced economy, cannot put a Nobel-prize winning economist on the board of its central bank because of obstruction from a minority of one House of Congress.

• Ezra Klein: Peter Diamond wins the Nobel Prize, continues being blocked by the Senate: something suspicious about behavioral economics.

• Paul Krugman: What We Learn From Search Models: wonkish notes on search theory.

• Paul Krugman: Peter Diamond, Macro Maven: pre-Nobel prize:

  This is disgusting: Senate Republicans holding up Peter Diamond's nomination to the Federal Reserve Board on the grounds that he may not be qualified to make monetary policy. Aside from the fact that the same Senators cheerfully confirmed Bush nominees who didn't know much about economics of any kind, this is especially stupid right now. [ . . . ]

  Diamond is exactly the man we need -- which, given the way things have been going lately, probably means he won't get confirmed.

• Andrew Leonard: A Nobel prize-sized challenge to Senate Republicans

• Steven D Levitt: Congratuations to Peter Diamond on Winning the Nobel Prize in Economics: More of a memoir:

  The single most memorable moments with Peter Diamond always occurred in seminars. Diamond often would fall asleep in seminars, often for large chunks of time. What was amazing, however, is that he would open his eyes and then make by far the most insightful comment of the entire seminar! He also did something in seminars that almost no other economist does: he both posed tough questions that would undermine the entire thesis of the speaker, and he would provide the speaker the answer to the very question. Academic economists are far more adept at poking holes in other people's arguments than in constructing solutions, at least on the fly. But somehow Diamond was able to work out in his head complex models that would take others days or weeks and reams of paper to solve.

• Ian Millhiser: Fed Nominee Whom Sen. Shelby Deemed Too Unqualified to Confirm Wins Nobel Prize: more on Shelby than on Diamond.

• Chris Weigant: Nobel Prize Obstructionism:

  Over the past two years, Democrats have not made Republican obstructionism the political issue it should rightly be by now. They should have been screaming loudly about the abuse of the cloture (or "filibuster") by the current Senate -- abuse which is simply unprecedented in our history. Few know this, because Democrats have essentially given Republicans a free pass on the issue. The media has even begun to regularly say things like "you need 60 votes in the Senate to pass a law" which is not only false, but also reinforces the notion that what Republicans have been doing for the past two years is somehow normal, instead of unprecedented in all of American history.

• Matthew Yglesias: Peter Diamond Wins the Nobel Prize: Doesn't have much to say, but commenter FGS has it right:

  Richard Shelby neither knows nor cares a whiff about the actual qualifications of Diamond or any other appointee. He's stalling for the sake of stalling because he wants the country to be ungovernable.

Andrew Leonard: "I was wrong again!" What Ben Bernanke meant to say: A pretty apt translation of the Fed Chairman's speech to the choir in Jackson Hole. Most memorable line: "The working class is unbelievably screwed." Followed by the gratuitous, "This is kind of bumming me out." It's not like Obama had no choice but to renominate Bush's top pick for the Federal Reserve chairmanship. The chatter campaign behind giving him a second term was based on his supposed success but any way you slice it we're worse off now than when Bush nominated Bernanke in the first place. It's bad enough when Obama recycles Clinton advisers; it's downright indecent when he keeps Bush cronies in office.

Andrew Leonard: Paul Krugman: "I told you so, again": This was written over a week ago, so it doesn't include Krugman's latest Predictions I Wish Had Been Wrong:

Looking for some other stuff, I found this post from October 2008 in which I predicted a level of right-wing craziness about Obama similar to that facing Bill Clinton, but worse.

But Leonard is right that that "Reading Paul Krugman's blog these days is like looking into a hall of mirrors, infinitely refracting the same message: I told you so." I'm not sure that Krugman's prescription for the stimulus was big enough but he was sure right that Obama's figure was way too small. I see today that Laura Tyson has a New York Times op-ed on Why We Need a Second Stimulus, so maybe that's something that Obama will finally run on even though passing it has no chance in the current Congress. She doesn't note that at least since Nixon Republicans have a perfect record of supporting stimulus spending when in office and only opposing it when they think the Democrats will get blamed for the economic downturn. One thing that Krugman points out is that austerity-minded Germany has actually done more stimulus spending than the US given how Obama's efforts have been eroded by cuts in state and local spending. You'd think they could have thought that through, and moreover that they could have explained the analysis, but they don't seem to have even tried. In fact, Christina Romer's analysis was in Krugman's range, about double what Obama asked for, so you can't even say they didn't have the analysis. They just didn't have the guts to level with the American people, and that at a time when they had virtually nothing to lose.

The old saw is that hindsight's 20/20, but that's clearly wrong here. Even Obama's hindsight isn't that good. On the other hand, people like Krugman and Leonard keep seeing these things as they're happening.

Matthew Yglesias: Progressive Consumption Taxes. I meant to write something about this a few weeks ago, but it slipped out of my consciousness, until Yglesias brought it up again. What he calls a "progressive consumption tax" is actually an opt-out income tax: it lets rich people opt out of paying income tax on any money they choose to save rather than spend. I can think of several things wrong with this.

For starters, consumption taxes should be point-of-sale, since that's precisely when one has the money to pay them -- if the tax pushes the price above what you are willing to pay, then you walk away from the purchase. (Sales taxes depress economic activity a bit, but more often than not you need what you're buying so you pay the tax. Sales taxes also depress profits a bit, since every now and then a seller will settle for a bit less profit rather than losing the sale.) The problem is that point-of-sale taxes can't be progressive unless you can distinguish how much buyers have bought in the past, something that would take a lot of nosey bureaucracy and would still be almost laughably easy to subvert. (You could, of course, tax more expensive items or certain kinds of items at higher rates, which would make a sales tax somewhat progressive, but that gets real complicated real fast.) Robert Frank's scheme gets around this problem by taxing income minus savings, so the rap on consumption is false advertising.

The bigger question is why exempt savings, especially since savings is simply what people who have too much money have left over after they've bought everything they needed. For years and years economists lecture us on the virtue of savings, arguing that the economy depends on investors, that government policy should do everything possible to increase savings. We already bend over backwards to encourage savings, deferring taxes on retirement accounts, deducting taxes on home borrowing, barely taxing dividends and capital gains. One paradox is that with all of this policy favoring savings the nationwide savings rate keeps dropping -- which of course is cited as evidence that we need even more favorable treatment of savings. Also curious is that the rare occasion where savings goes up is precisely when the economy as a whole tanks. So why on earth should we think that savings drives the economy?

Well, the reason some people say that is because pretty much by definition savings is the exclusive defining trait of the rich: people who have more money than they need to satisfy their consumption desires have savings, and people who don't don't. Sure, there are marginal cases where poor people scrimp to save something away, and there are rich people who come up with ever more fanciful ways to squander their money, and you're no doubt right to find the former virtuous and the latter foolish, to expect that the former will improve their lot and the latter will throw it away. But what's good for individuals is often irrelevant to the whole economy or society. (Drug use is often tragic for individuals but is big business coming and going for the economy as a whole.) So whenever you hear someone talking on about how we need more savings, what he's saying is that rich people should be able to dig deeper into your pockets. Encouraging savings is one of the main ways we allow our country to become more and more inequal.

Another big way we make wealth more inequal is by flattening the tax rate. That's what repeated movements to cut "marginal" tax rates have done. Shifting to sales taxes, which are necessarily flat, also favors inequality. And capped payroll taxes and special treatment for unearned income is even more regressive than flat tax rates. The only real way to keep inequality from getting way out of hand -- as it's pretty much done in America, and done even worse in the crony capitalist havens of the developing world -- is to progressively tax excess income, which is to say: what we need to do is to tax savings. Frank and Yglesias imagine they can make up for the inherent shortcomings of their scheme by jacking up the tax rates on extravagant spenders. That might help a little, but the opt-out nature of their scheme is a big and dangerous loophole.

I've written a lot about taxes in the past so let me reiterate a few points:

• Taxes are necessary to support government spending while keeping the currency reasonably stable. How much spending we need depends on how many services we prefer to be provided equitably through public spending rather than through profit-seeking private enterprise -- we now have many examples of this like education, roads, sanitation, parks, justice, and defense, and one can easily add to this list. We need to raise approximately as much in taxes as we plan to spend for all of these reasons.
• A government is too big only if it crowds out and doesn't satisfy private economic activity that we actually need. (I doubt that such conditions are actually possible, at least in a responsive democracy.) As long as government spends what it takes in, its effect on the economy should be neutral, except in times when private sector lags, in which case government spending stimulates the economy.
• Because tax policy distorts economic activities, you generally want to make taxes as invisible and unobtrusive as possible. (This is the exact opposite of most US practice, which is to make taxes appear as ugly as possible.)
• Sales taxes, like VATs, are a good way to provide the bulk of tax revenues, because they are always available -- their funding is a necessary part of the transaction -- and they can be efficiently collected through businesses. They can be varied by product, which is useful for adjusting prices to reflect externalities. A VAT can be structured to exempt labor costs, thus minimizing its depressive effect on jobs. They can even be seasonally adjusted, and as such can be autotuned to reflect revenue needs.
• Income taxes should be retained and should be significantly progressive to counterblance the extraordinary advantages that our economic system allows some individuals. Progressivity helps to maintain a fair and equitable society, and expresses a general desire to limit greed even short of confiscatory rates. (We have in the past had marginal income tax rates as high as 90% without damaging the economy. In fact, growth rates during that period were much higher than they have been since the rates were cut.)
• I would make a distinction between earned and unearned income. Both would be taxed progressively: earned income (wages, small business profits) would be taxed same as now; unearned income (interest, dividends, capital gains, gifts, inheritance) would be taxed at a rate that progresses as your total unearnings accumulate over your lifetime. This has the merit of encouraging poorer people to save to supplement their future income without unduly favoring the rich (who save because they have too much money, and whose money multiples with very little effort on their own).
• Stiffly progressive estate taxes are necessary to prevent the undemocratic accretion of a hereditary aristocracy. There are countless examples of the harm such people do -- the fact that the new right has been largely funded by heirs is just a particularly odious one. Whatever inheritance that does slip through the tax net would be treated as unearned income as above.
• Corporate profits should continue to be taxed, but using a progressive rate structure which would encourage competition by undercutting the advantages of scale that large corporations enjoy.
• Since so many government services are borne at the state and local level, we need a system for uniform tax collection and systematic tax sharing. This would also work to counter political lobbying for local tax preferences which too often these days guides plant location and corrupts local politics. This system should provide automatic countercyclical measures so that state and local government can adjust appropriately to economic cycles. State and local governments which receive a larger tax share than they wish to spend should be able to rebate the excess to their constituents on an equal basis.
• I would get rid of the current system of property taxes, mostly because it requires a tax to be paid from savings as opposed to sales and income taxes which are paid from available funds -- i.e., if you cannot afford the tax on a purchase, you have the option of foregoing the purchase, but if you cannot afford the tax on a property, you can be forced to liquidate the property. (Estate taxes are like property taxes, but since the owner is no longer with us, he or she isn't distressed by the judgment.)

Most people on the left instinctively reject non-progressive or even regressive taxes, probably because they are tired of losing battles over progressive income and estate taxes. You can have a progressive tax system with a lot of regressive or flat taxes if the progressive component is truly effective. Similarly, people on the left rarely care to cut or eliminate property taxes because taxing property is a straightforward way to soak the rich, but the need to save for property taxes introduces a lot of distortions in the system.

This all seems to self-evident to me that sometimes I think someone should set up a soapbox and campaign on these ideas -- I'm tempted to call them Smart Taxes. (Can't use Fair Tax, which has already been debased to sheer stupidity. How can anyone think that eliminating a one-page rate table simplifies the tax code, as compared to the thousands of pages of FASB rules that try to figure out what is income and deductible expense, a problem that will persist no matter what the rate.) But this sort of jiggering of the tax system is just a nice way to make the system a bit more efficient and sensible. The real question is whether we want to live in a more equitable society, whether we appreciate the core values of mutual respect, openness, fair treatment, equal opportunity, honesty. There is much research, as well as common sense, that shows that more equitable societies are happier, less stressful, more productive societies. If you want that, then devising a tax system to represent those values is straightforward. Meanwhile, the people who don't want that will be screaming bloody murder over any scheme that hints at progressivism, even one like Yglesias and Frank proposed with an opt-out for the superrich.

Something I meant to add to yesterday's "The Raw and the Cooked" post but ran out of time and/or patience. One point there is that I recognize that where one stands on global warming is more often than not consistent with one's political stance. Leftists of most stripes not only see the need for aggressive state intervention to mitigate (or even better to reverse) the global warming trend, they tend to insist that the dire threat of global warming commands us to adopt their policy directions. One reason I'm especially cognizant of this is that I've recently read two books that do just that.

One is Bill McKibben: Eaarth: Making a Life on a Tough New Planet; the other is Juliet B. Schor: Plenitude: The New Economics of True Wealth. Neither book has much to say about global warming, other than to assert that the global warming crisis makes their economic schemes all that more urgent.

McKibben, whose first book, The End of Nature was one of the first books on the subject back in 1989, does have an introductory chapter which reads like a catalog of horrors, but he's more interested in reprising his 2007 book Deep Economy: The Wealth of Communities and the Durable Future -- you wouldn't be wrong to think of the new book as a mash-up of the two previous books -- which is to say he's primarily concerned with promoting the ideal of small scale local economies. McKibben builds on a lot of recent work, especially regarding food, but his basic ideas have been kicking around for decades now, developed by people like Murray Bookchin and Paul Goodman who developed them without the slightest concern for global warming.

Schor is a sociologist who at least as far back as the early 1990s decided that the rat race isn't all it's cracked up to be. She's expressed that in at least two previous books: The Overworked American: The Unexpected Decline of Leisure (1992) and The Overspent American: Why We Want Want We Don't Need (1998). The new book goes further toward sketching out a more satisfying economy based on less overwork and overspending. And while global warming and peak oil play into her rationales, there's no reason to think she'd think differently if they weren't factors at all. Again, her ideas aren't terribly original -- Goodman and Bookchin have been there, as well as Marxists like Paul Sweezy and Andre Gorz, and for that matter the notion even shows up in John Maynard Keynes, who -- see John Skidelsky: Keynes: The Return of the Master -- saw capitalism as a path to "the good life" rather than an end in itself.

You can click on the links, including the cover images, to pick up a fair sampling of quotes from each book.

The economic visions of McKibben and Schor are only two of many possible programs that can be hitched to global warming, but all but the most dystopian involve taking deliberate and systematic direction to mitigate (or better still to reverse) the consequences. The proposals of someone like Al Gore or the various thinkers in the Obama administration hardly seem to me to be leftist, but conservatives are stuck in such a rut of denial they can't even warm up to market-oriented approaches like cap-and-trade or tax credits to stimulate investment in non-carbon-based energy sources -- ideas that used to come out of conservative think tanks when thinking was still permitted.

There is, of course, something disingenuous about hoisting one's pet ideas (or nonsense) up whatever flag pole seems to be getting attention, but that doesn't invalidate them -- best to try to sort out each problem and each proposal on its own terms. McKibben and Schor (and for that matter Skidelsky/Keynes) offer attractive notions of how to re-engineer the economy to make is more satisfying, and that seems like something worth thinking about -- at least on the left, where we believe that how we run the world is at least largely a matter of choice.

PS: It finally occurs to me that one defense of Schor and McKibben is that if one adopted their economic ideas, there would be an immediate and substantial reduction in the forces driving global warming. Again, if you choose an economy meant to satisfy the needs and desires of its inhabitants, you'd come up with something that doesn't just drown us in destabilizing pollutants, like we have gotten from laissez faire approaches.

One might also add that the cap-and-trade people are the real conservatives, since they're basically trying to stabilize the existing system using levers that are consistent with its current operation. Again, the right fails to conserve anything; they're happy to let the economy flail itself to death in contradictions they're too ignorant and/or uncaring to even recognize.

Matthew Yglesias: Taxophobia: I read the referenced posts by Greg Mankiw and Brad DeLong, and don't think they're really saying what Yglesias thinks they're saying, but Yglesias does sum up one political view that seems to be well entrenched if not necessarily spreading wide:

What I take Mankiw et al to be saying is that taxes are really, really, really bad. And taxes on high-income people are really, really, really, really, really, really, really bad. They think that the electorate is joined by leftwing economists in massively underestimating the scale of the badness. And they look at population aging and growing health care costs and see that it's likely that taxes will go up in the future. And they think this is an incredibly bad outcome, with massive negative long-term consequences. Consequences that are far more dire than any transient, years-long period of unemployment. Ergo, it's really important to do the best one can to weather the 111th Congress -- the most leftwing congress in decades, and the most leftwing congress we're likely to see in quite some time -- while minimizing increases in the spending level. Really, really, really important.

Mankiw's nonsense can be highlighted in three lines:

1. "Higher future taxes reduce demand today for at least a couple of reasons. First, there are Ricardian effects to the extent that consumers take future taxes into account when calculating their permanent income."
2. "That is, businesses may be reluctant to invest in an economy that they expect to be distorted by historically unprecedented levels of taxation in the future."
3. "But many other economists (and I suspect many stimulus-skeptics like the tea-partiers) believe that taxes have significant incentive effects and can prevent the economy from reaching its full potential."

Let's start in the middle: nobody is arguing for "historically unprecedented levels of taxation" -- I'd be inclined to kick up the estate tax a notch, but I don't see a need for 90% marginal tax rates. (I'd cap top bracket income taxes around 50%, where they might be aggravating but wouldn't be a real disincentive -- which is not to say that higher, truly disincentivizing tax rates wouldn't have social value in capping greed.) Nor do any currently projectable federal debt levels require unprecedented levels of taxation. So a key part of Mankiw's argument -- my second quote above is an elaboration of the second point alluded to in the first quote -- is sheer demagoguery. Moreover, refuting it lets us invoke historical cases. In particular, the period when the US had its highest tax rates was exactly the period when the nation's economy grew the fastest, which at the very least lends no credence to the claim that raising tax levels depresses the economy.

The first point about Ricardian effects strains credulity. Is anyone ever so smart that they can correctly anticipate how future events will eventually prefer investment decisions today? It's easy to pile on counterexamples: when did the inevitability of a bubble of real estate or high-tech stocks or Dutch tulips bursting ever inhibit that bubble from developing? If there is any one thing you can count on it's that business only thinks in the short term. There may be good reasons to worry about the long term, but the current behaviour of business isn't one of them.

The third quote raises two problems. While it is true that current tax policy allowances and deductions affects business behaviour inasmuch as it adjusts (or distorts) prices, it isn't at all clear that overall tax levels have much effect except on distribution -- low tax rates let profits accumulate much faster (making the rich much richer and increasing inequality) while high tax rates slow down that accumulation, but there is little evidence of whole industries boarding up due to higher tax rates. More generally, investors -- i.e., people with more money than they can consume -- will seek out higher returns but will settle for the best returns they can get, folding only when there are no profits to be had at all. As long as tax levels allow for some profits, and the taxes are then recirculated as spending, it's hard to see how higher tax levels depress the economy -- at most they depress the upper classes, which isn't necessarily a bad thing.

The other canard is the bit about the economy "reaching its full potential." I have no idea what Mankiw thinks this means, especially since he implies that it relates to low taxes. A more plausible definition would tie "full potential" to full employment. We tend to think ass backwards on this issue: that a booming economy causes fuller employment, rather than that fuller employment is what makes the economy bloom; much as we are led to believe that business investment creates jobs, as opposed to realizing that labor is what creates all that we value in the economy. For various reasons, capitalists left to their own devices never produce full employment. The only way to get there is for government to fill the gap, both by spending to prop up the private sector and by creating jobs directly. And to pay for those jobs you have to raise taxes, and the most productive way to do that -- with inequality approaching historically unprecedented levels, and especially with the the rich sitting on cash they can't find productive investments for -- is to target the rich.

And that's the deeper context for Mankiw's argument. It's not just that he dislikes taxes. Just as important is that he isn't bothered by unemployment. In fact, I think you'll find that he rather likes unemployment: more unemployment means cheaper labor, less pressure to share profits, tilting the balance of power toward capital. Friendly economists may pollute the air with Ricardian mumbo jumbo, but the prime reason capitalists don't like taxes, labor rights, and any sort of government action to create jobs or lessen the pain of unemployment is that they don't want to share. In fact, their power viz. labor matters so much that they'd rather suffer through a sluggish economy than lose any of their relative advantages.

One problem here is that in polite political discourse, Mankiw et al. can't just come out and say, "hey! we like this 10% unemployment, we like that the safety net is unraveling, we're looking forward to squeezing labor even harder." Rather, they talk about how we can't afford the deficit (sooner or later, at least in some crackpot theories), about how taxes only hurt the economy (and therefore how we can't fix the deficit problem). They have to pretend that only the richer rich create jobs (even though most of their gains have come from bidding up each other's assets), and that the economy they build somehow benefits us all.

One thing Yglesias is right about is that Krugman, DeLong, et al. are "a bit too literal in their disagreements with the center-of-center economists [whoever that is] of the world." I have three or four recent books on why Ricardo was full of shit, but that's not what this is really about. It's really about power: who pays and who benefits. And that reflects a fundamental difference in worldviews: do we share the world, or do we compete for its spoils? The Great Depression and WWII shocked people into a sense that we're all in this together, and out of that we forged a more equitable society, based on labor rights, a safety net, and steep progressive taxation to pay for it. It wasn't perfect, and flaws going back to the beginning would eventually undermine it. But in the 1970s the rich revolted, exploiting their substantial advantages for political and economic gain, and they have gradually tore the social compact apart while compounding problems. The eight disastrous years of George Bush led to a change of leadership, but sadly, pathetically not to a change in thinking. We are in the midst of a one-sided class war, where the putative defenders of the non-rich don't even recognize they're being fired on, and don't make more than the most paltry efforts to defend the people who voted them in.

On the other hand, I don't blame Krugman and DeLong for focusing on the economic nonsense. They've worked hard to keep the economists from pulling the wool over our eyes. I blame the Democratic Party politicos, starting with the guy in the White House, for not finding principled political issues to run on and drive home, such as the need for full employment to lift working wages, and more progressive taxes to level the playing field; the need to get out of the global war business -- one which only serves to fund the right and keep the left on the defensive -- and the need to reverse the great risk shift -- the real security threat that most Americans face these days.