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Economy

CNBC Responds To Jobs Report By Advocating Stimulus Cancellation

By Pat Garofalo on Dec 5, 2009 at 12:00 pm

Yesterday, the Department of Labor reported that the unemployment rate dropped to 10 percent in November, and the U.S. economy lost a much lower than expected 11,000 jobs last month, which is the fewest since the recession began in December 2007. The wider measure of underemployment also fell to 17.2 percent, from 17.5 percent.

Everyone (aside from the Republican National Committee, which still used the new numbers to bash the Obama administration) seems to be looking at the report with cautious optimism. But CNBC’s Trish Regan concluded that the report means the government should cancel the rest of the American Recovery and Reinvestment Act (i.e. the stimulus package) because we are now on “the road to recovery”:

The first thing that went through my head was, number one, wow! I mean, it was a tremendous surprise to, I think, everyone, certainly here at the New York Stock Exchange, one of the reasons the market’s doing so well this morning. But the second thing was, do we really need more stimulus given that we seem to be very much now on the road to recovery?…Why spend any more money? We haven’t spent all the stimulus money thus far, why not maybe hang onto that?

Watch it:

While the jobs report is certainly encouraging, I wouldn’t be celebrating a recovery just yet. 7 million jobs have still been lost in this recession, while “the typical unemployed worker has been searching for work for 20.1 weeks, and the share of the unemployed who have been out of work and searching for a job for at least six months rose to a record high of 38.3 percent.” Its particularly foolhardy to suggest canceling the stimulus on the same week that the Congressional Budget Office found that it has created or saved 600,000 to 1.6 million jobs, with plenty of punch still to come.

We’re definitely not out of the woods, which is why it’s encouraging that Democrats in Congress are working to craft a new jobs package. “I think we’re at a moment now where we’re beginning to see the positive benefits of the stimulus, but if we take our foot off the accelerator, we could relapse into a very, very slow recovery,” said Sen. Jack Reed (D-RI) yesterday.

The Wall Street Journal reported that Democrats are looking at a $170 billion effort — funded at least in part by TARP money that has been repaid to Treasury by banks — inclusive of $100 billion in safety net provisions and $70 billion in infrastructure investments and aid to states.

President Barack Obama, meanwhile, will lay out his own vision for a jobs bill on Tuesday, and Congress isn’t expected to unveil its final legislation until after Obama’s speech. According to White House Press Secretary Robert Gibbs, Obama is likely to endorse using TARP funds for the jobs bill. Republicans, meanwhile, are opposed, with House Minority Leader John Boehner (R-OH) calling it “the worst idea I’ve ever heard of.”

Yglesias

The Persistence of Poverty

By Matthew Yglesias on Dec 5, 2009 at 11:28 am

220px-The_Scream

Mike Konczal has an excellent summary of the main ideas in Charles Karelis’ book The Persistence of Poverty: Why the Economics of the Well-Off Can’t Help the Poor. We normally think of goods in terms of “declining marginal utility.” One slice of cake (or car, or laptop, whatever) might be worth quite a bit to you, but the second one is going to be worth less, and a fifth will be worth even less. But not every situation works like this. You might be in an increasing marginal utility situation. Consider the Screaming Room:

Now picture you are in a room with 10 people screaming. You hate it when people scream, and you can pay a person to get them to stop screaming. Would you pay in a similar way to the cake example? Would you pay a $1 to get the first person to stop screaming, and a penny for the 10th person to stop screaming?

No. Getting one person to stop screaming would make very little difference in how much you dislike being in the room. Modern psychology tells us you might not even notice it. You’d probably only pay a penny to get that first guy to stop screaming. However getting the second guy to stop screaming might be worth 10 cents. And the last guy, the difference between some screaming and no screaming, might be worth the full dollar to you. The more quiet it got, the more a marginal difference in how quiet it is would be worth to you. There’s increasing returns to this good; the 10th guy not screaming is worth more than the first guy not screaming, which is the exact opposite dynamic of the 10th cake being less delicious than the first.

Most of our conventional thinking about what constitutes prudent behavior—hard work, saving money, “consumption smoothing,” etc.—is grounded in a view where the most important goods are declining marginal utility goods. Karelis’ thesis is that poor people face a world where situations analogous to The Screaming Room are actually quite common. Thus it’s both rational for the poor to often eschew bourgeois norms of prudence, and also the case that clever schemes to incentivize good behavior and lead people out of poverty wind up not having their desired result. You really need big pushes that get people over the hump and make prudence worthwhile; then people will act prudently and get on a self-sustaining path to prosperity.

It’s an important idea and an important book. Still, I do always worry about the dangers of overthinking poverty relative to obvious ideas. Like to state the obvious, a poor person in 1999 looking to work hard and get ahead could probably find a job whereas a poor person in 2009 looking to work hard and get ahead is probably out of luck. Poor macroeconomic performance, in other words, creates a lot of poverty. Similarly, if you read Katherine Boo’s classic article “The Marriage Cure” about trying to fight poverty through marriage-promotion, it’s hard not to be struck by how frequently the main subject of the article finds her employment prospects harmed by Oklahoma City’s bad bus service. Lead paint does serious harm to the intellectual and emotional development of (primarily poor) children and cleaning it up has a huge positive impact on their life prospects.

Alyssa

Maybe this time, he’s learnt his lesson…

By Alyssa Rosenberg on Dec 5, 2009 at 10:49 am

Dollhouse, a show which should be preserved as a poster-child for all sorts of frustrating ‘what might have beens’ is ending in a few weeks, and creator Joss Whedon gave a pretty wide ranging interview with The Chicago Tribune. Whedon is honest about the compromises that he made in order to continue with the show – how difficult he found it to balance his vision with the demands of a network who became skittish about some of the areas that Whedon was interested in exploring and what that meant for the creative process.

I make no bones about the fact that, of anybody working in mainstream culture, Whedon’s vision speaks directly to me in a way that nobody else does. Questions of identity have always been central to his shows – both for individual characters (Buffy trying to figure out where the Slayer ends and she begins) and for groups (the ‘created’ families of Firefly and Angel). I find this endlessly fascinating and am always amazed by how Whedon and his partners find fresh ways to examine these themes within such diverse genre trappings.

From the interview, it seemed that in its original conception, Dollhouse, was Whedon’s attempt to drill further into these obsessions;

…it was more about the idea of our identities and what we consider to be ourselves and how relating to other people affects that, how we incorporate other people in ourselves and how we project ourselves onto people and how everybody relates to everyone in their lives through the filter of their own beliefs, experiences and memories. That to me is kind of fascinating. What we think we want from each other when we say “I love you” or any of those other things is, I think, very complex and sometimes very depressing and sometimes kind of weirdly beautiful.

Now that’s a show I would have killed to see. But the quote also shows Whedon’s shortsightedness if he thought that a network would be the right place to explore it. Leaving aside the content restrictions concerning sex (the hypocrisy of which Whedon is right to call out), the sheer brutal creative drain of churning out 22 episodes a year is inevitably going to dilute a concept like this. It’s why networks are so eager to commission procedurals. The elements of each set-up are basic and easy to grasp, no matter what extra kink is thrown in to differentiate it (She speaks to ghosts! He’s a human lie detector!).

Dollhouse was doomed because Whedon chose the wrong venue and its not necessarily Fox’s fault if they tried to steer the show to what they saw as a more commercial direction. Whedon should have learned his lesson with Firefly.

That’s why I am excited about the thought of Whedon going to a cable channel – not necessarily because he can suddenly be a bit more graphic with what he shows, but because of the wider degree of flexibility it affords strong producers to shape their series around the demands on the concept. The great renaissance in American television in the last 10 years (and that certainly seems to be the case from here in the UK) was driven by this flexibility. Six Feet Under, The Sopranos, Mad Men, The Wire and Battlestar Galactica could only exist once many of the structural restrictions of network television were removed.

I don’t think that cable channels are a panacea for Whedon’s difficulties, merely that they represent the best opportunity for him to be able to tell the stories he wants with the fewest compromises to economic reality. He will still ultimately have to create a show that people will want to see.

Climate Progress

Watergate Redux: Break-ins Reported at Another Top Climate Research Center

By Climate Guest Blogger on Dec 5, 2009 at 9:41 am

Hmm.  Maybe the “gate” part of the ClimateGate moniker is more apt than we thought, as guest blogger Brad Johnson reports in this WR repost.

WatergateTwo weeks ago, thousands of illegally hacked emails from a British climate research center were dumped on a Russian webserver, timed to influence the politics of of the international climate negotiations commencing next week in Copenhagen, Denmark. Beginning Thanksgiving week, conservative media and Republican politicians have compared the climate scientists whose private emails were hacked to Hitler, Stalin, and eugenicists, saying they are involved in a global conspiracy to defraud and possibly take over the world. The Climategate “scandal” “” a swiftboating intimidation and smear campaign against science “” is the right-wing rage from Stephen Dubner to Sarah Palin, Glenn Beck to Lou Dobbs. Like the original Watergate scandal involving right-wing operatives who burglarized the offices of their political opponents, the real crime is the original break-in.

It has now been reported that the University of East Anglia Climatic Research Center is not the only victim of such a criminal invasion: burglars and hackers have also attacked the Canadian Centre for Climate Modelling and Analysis at the University of Victoria in British Columbia:

Read more

Security

EU Report: Israel ‘Working Deliberately To Alter Jerusalem’s Demographic Balance’

By Matt Duss on Dec 5, 2009 at 9:30 am

east jerusalem demolitionIsrael’s Haaretz reports on a confidential European Union report which “accused both the Israeli government and the Jerusalem municipality of working deliberately to alter the city’s demographic balance and sever East Jerusalem from the West Bank.”

[The EU report] said that both bodies assist right-wing organizations, such as Ateret Cohanim and Elad, in their efforts to implement this “strategic vision,” especially around the Holy Basin area. These organizations buy houses in Arab neighborhoods, and make “attempts to implant further Jewish settlements into the heart of the Muslim Quarter.”

The municipality, the report continued, discriminates against the city’s Arab residents with regard to building permits, health services, education, sanitation and more. [...]

On another issue, it stated: “The expansion of Israeli settlements has sparked a trend of settler violence against the Palestinian population in East Jerusalem. Such criminal actions have been witnessed by Israeli police but are not met with adequate intervention.”

The EU report also criticized Israel’s closure of Palestine Liberation Organization and Palestinian Authority institutions in east Jerusalem, stating: “The general sense of neglect felt by many East Jerusalemites and the absence of Palestinian state-sponsored institutions and secular organizations are paving the way for Islamic religious organizations to expand their influence.”

This is a pattern we’ve seen repeatedly in the Israeli-Palestinian conflict, in which attempts Israeli attempts to handicap expressions of secular Palestinian nationalism benefited extremist Islamist groups like Hamas. It also echoes a phenomenon found throughout the Middle East, in which government suppression of legitimate political activity has resulted in greater support for religious alternatives.

All of this has been reported on for years by Israeli human rights organizations like B’Tselem and Ir Amim, as well as international human rights organizations like Amnesty international and Human Rights Watch, but unfortunately this hasn’t resulted either in Israel changing the policy, or in the country with the most leverage over Israel — the United States — taking serious steps to get Israel to change the policy, which creates understandable resentment and anger which in turn powers extremism and violence. The Obama administration clearly seems to understand that Israel’s cutting off access to the parts of Jerusalem that the Palestinians claim as their capital is a hugely provocative display of bad faith that undermines moderate Palestinian leaders and discredits the path of peaceful negotiation, but at this point the administration doesn’t seem interested in taking on the pro-eviction lobby in Congress and suspending aid to Israel, which is the only thing likely to change Israeli behavior.

Economy

Comcast: The Chamber Of Commerce Is Wrong On Health Care

By Amanda Terkel on Dec 5, 2009 at 9:15 am

U.S. Chamber of Commerce In recent weeks, the U.S. Chamber of Commerce has been stepping up its campaign against health care reform, running ads in seven states fear-mongering that the public option will increase individual costs and threaten the system of employer-sponsored coverage. It has even been “collecting money to finance an economic study that could be used to portray the legislation as a job killer and threat to the nation’s economy.”

But on Thursday, Comcast, the nation’s largest cable provider, came out and endorsed the Senate health care legislation. CEO Brian Roberts sent a letter to President Obama saying that the “enactment of comprehensive health care reform legislation is, in my judgment, critical to putting this country on a path of sustained growth and prosperity.”

Later that day, a small group of bloggers met with Comcast Executive Vice President David Cohen, who discussed how important the company believes health care reform is to reinvigorating the economy. A Comcast spokesperson confirmed to ThinkProgress that the company is an annual contributor to the Chamber, but not a member of the board of directors. It is also active on a number of working groups, such as Technology and Regulatory Affairs, and a supporter of a recent broadband study commissioned by the Chamber. At the meeting, Cohen made a specific point of noting that Comcast is not involved in the Chamber’s controversial anti-climate change legislation lobbying.

However, when we asked Cohen about what the Chamber is doing on health care, he said that Comcast clearly disagrees. But Cohen gave no indication that the company was thinking of discontinuing its dues, stating that the members and national organization are bound to have disagreements:

We’re entitled to have our own opinion, and I think it’s impossible for the U.S. Chamber of Commerce to only take positions that 100 percent of its members agree with 100 percent of the time. … But we clearly don’t agree on health care. There may be other things we agree on, but on health care, we clearly don’t agree. [...]

You just can’t let the perfect be the enemy of the very good. Nobody wrote that you have to solve this problem in one piece of legislation at one time.

The Chamber of Commerce did not respond to ThinkProgress’ requests for comment.

Yglesias

Baucus Sought US Attorney Job for Girlfriend

By Matthew Yglesias on Dec 5, 2009 at 8:41 am

This seems like Max Baucus shot himself in the foot and then dodged the bullet:

Senate Finance Chairman Max Baucus’ office confirmed late Friday night that the Montana Democrat was carrying on an affair with his state office director, Melodee Hanes, when he nominated her to be U.S. attorney in Montana. [...] Hanes, who is divorced and now lives with Baucus in the Eastern Market neighborhood of Washington, D.C., ultimately withdrew her name from consideration for the U.S. attorney position in order to move to Washington, and she now works in the Justice Department’s Office of Juvenile Justice and Delinquency Prevention as a counselor to the administrator.

That’s a nice use of the Friday news dump. And while the behavior certainly seems unethical, since Hanes didn’t get the US Attorney job, there’s not much to be done.

A larger point here is that the tradition of senatorial control over US Attorney appointments is fairly problematic. Appointing your mistress is generally frowned upon, but appointing your political allies is par for the course. And yet, the US Attorney’s office is supposed to oversee public integrity investigations. One thing the Blago investigation has certainly made me think of is how bad would other politicians’ fundraising activities sound if they were being bugged by the FBI? Which isn’t to say we should go around bugging politicians’ phones at random, but it is smart to see these corruption issues thoroughly investigated. And that’s undermined by so closely linking the key prosecutors to local political bigwigs.

Yglesias

Why a Housing Bubble?

By Matthew Yglesias on Dec 5, 2009 at 8:31 am

(cc photo by Chris Corwin)

(cc photo by Chris Corwin)

Kevin Drum wonders why we got a housing bubble:

But why did capital fail to flow to productive investments? Saying that housing was the “path of least resistance” doesn’t explain anything. In some sense, housing (or property in general) has always been the path of least resistance for investment dollars.

The real difference seems to lie not in housing becoming a better target for investment, but in real goods and services becoming less attractive ones. Why? Surely this is something that deserves considerably greater scrutiny than it’s gotten.

I’m not sure the distinction between “real estate got more attractive as an investment” and “other investments got less attractive as an investment” is all that conceptually rigorous. But I think there is, in fact, reason to believe that the causation involves real estate starting to look more attractive. In particular, we had a lot of “innovation” in mortgage finance that both expanded the number of people who could (apparently) afford to own a home and expanded the number of people who could viably engage in real estate speculation. I don’t think it’s all that surprising that this entrance of new market participants could have started a bubble scenario or that once the bubble was underway it kept attracting more and more money. We’re herd animals and there’s always a preference for getting in on the latest investment fad than for whatever else is on the table.

The odd thing is that even where policymakers seemed to recognize the problem, they didn’t do anything about it. On May 20, 2005 Alan Greenspan said “Without calling the overall national issue a bubble, it’s pretty clear that it’s an unsustainable underlying pattern.” That would have been a good time for major bank regulators like Alan Greenspan to say “given the unsustainable trend, we should force banks to apply lending standards that are higher than usual, rather than laxer than usual.” But he didn’t. And nobody from the Bush administration was urging anyone to do this. And you didn’t hear Nancy Pelosi and Harry Reid urging them to do it either.

All that said, it’s worth emphasizing that the mere existence of an asset-price bubble and its subsequent collapse doesn’t necessarily lead to a years-long recession. A worse policy response than the one we got could have saddled us with Depression conditions, but a better one could have avoided a ton of the human suffering we’re seeing right now.

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