Monetary Metaphors

By Matthew Yglesias on Nov 17, 2011 at 5:30 pm

Metaphors are important to how people think about the world, so I think it’s worth discussing them explicitly. Many people, I think, view the relationship between a central bank and a parliament as like a canoe. You’re both paddling the thing in tandem. And if the boat’s not getting to where you want it to go, the sensible question is to ask who’s not paddling hard enough. If you have more inflation than real output, then you need parliament to paddle more. But if prices are dipping into scary deflation territory, then maybe the central bank has to step up.

A different way of thinking about it would be a sailboat. The central bank is blowing the wind, and the parliament has its hand on the steering wheel. The wind strength determines, in nominal terms, how far the ship goes. The steering determines whether that nominal distance gets you closer to where you’re trying to go in terms of living standards. As long as some wind is blowing, it’s true that better steering will shorten your trip. And it’s certainly true that harder wind isn’t going to compensate for the ship pointing in the wrong direction. But at the same time, even a really well-steered ship isn’t going to go anywhere without wind in its sails. If you’re becalmed, you’re becalmed and getting lectures about how your previous navigation was less than ideal doesn’t change anything. It’s true that you can always hope the ocean currents push you in a favorable direction, and that it would be advisable to have the rudder in the right position to take advantage of good luck, but fundamentally you need wind. By the same token, if the ship’s going in the wrong direction what you really need is to turn the ship around, not less wind. At the same time, if the wind goes too strong, you could dangerously overburden your navigators.

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NEWS FLASH

Nevada Attorney General Announces Indictments Related To ‘Robo-Signing’ | Today, Nevada Attorney General Catherine Cortez Masto announced indictments in a huge robo-signing scandal in Clark County, Nevada. The indictment is against “two title officers, Gary Trafford and Gerri Sheppard, who directed and supervised a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder’s Office between 2005 and 2008.”

Alyssa

The Right Not To Be Dignified

By Alyssa Rosenberg on Nov 17, 2011 at 5:23 pm

Up at The Loop 21 today, I consider the right not to be dignified in entertainment:

It’s natural to react to allegations that you are less than the normal, and to prove that you’re not just trying to be equal but better than the normal: more serious, more composed, more sophisticated, and yes, more dignified than the people who are degrading you. Condoleezza Rice told People magazine that when she was in college, she told a professor, “I speak French, I play Bach, I’m better in your culture than you are,” in response to the professor’s citation of a racist scientist who said that black people were biologically less intelligent than other races. It’s the need for that sort of refutation that animates a great deal of Sidney Poitier’s career—he could tame classrooms full of London students, outclass white newspaper publishers and gallery owners, and solve murders that white detectives couldn’t, even under constant threat.

Similarly, Tom Hanks’ performance as Andrew Beckett, a gay man suffering from AIDS and fired from his law firm in the movie “Philadelphia” is a sharp rebuke to the idea that it’s his bigoted heterosexual coworkers who are the true grownups. Members of the firm try to embarrass Beckett, setting him up as incompetent, suggesting he’s responsible for his own illness. But his resilience proves that having sex in a movie theater is less a cause for shame than being an ignorant bigot.

Equality means that not every role has to contribute to a single overwhelming message, that folks get to be individual, rather than collective. There’s nothing wrong with playing dignified roles. There’s nothing wrong with playing gooftastic, or criminal, or insecure roles. It’s when you can only do one that we have a problem.

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Security

Ignoring Administration Warnings, GOP Senator Offers Amendment To Sanction Iranian Central Bank

By Ali Gharib on Nov 17, 2011 at 5:15 pm

Iran's Central Bank building

Senate Minority Leader Mitch McConnell (R-KY) introduced an amendment today to the National Defense Authorization act, or the defense budget, that would sanction Iran’s central bank. The amendment was designed by Sen. Mark Kirk (R-IL) to collapse Iran’s currency and, therefore, economy. Asked about the sanctions last month, he said in an interview that he thought it was “okay to take food from the mouths” of ordinary Iranians because of the actions of their government.

The Obama administration flirted with the idea of sanctioning the Iranian Central Bank, with Treasury Undersecretary David Cohen saying that they were “looking very actively” at imposing such measures. But officials have since warned against the broad sanctions.

Director of the Treasury’s Office of Foreign Assets Control Adam Szubin said this week at a House of Representatives hearing that the Central Bank sanctions could actually benefit Iran and hurt the U.S. and global economies by causing oil prices to spike:

There are very real scenarios in which an oil spike might hit. [...]
If there is a hike in the price of oil, Iran gains. If there is a spike in the price of oil…there could be profound harm to the global economic recovery and a windfall to Iran.

The amendment also constricts the administration’s ability to conduct its foreign policy. In most matters, the president is afforded a foreign policy waiver to free his hand to make policy and maintain relations with other countries. But the Kirk amendment “require(s) the President to impose sanctions on foreign financial institutions that conduct transactions with the Central Bank of Iran.” The waiver, in this case, lasts only 60 days and must be renewed and certified to Congress, and only in the case that allowing the financial transactions is “necessary to the national security interest of the United States.”

The sanctions, however, could be difficult to implement. “[F]oreign financial institutions that conduct transactions with the Central Bank of Iran” might include entities such as European central banks that are conducting what, according to their own and international laws, are completely legal business in and with Iran that is routed through the central bank.

This summer, more than 90 senators signed onto a letter to Obama, led by Kirk and Sen. Chuck Schumer (D-NY) supporting the notion of sanctioning Iran’s central bank.

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NEWS FLASH

Iowa’s Senate Majority Leader Pledges To Block Anti-Gay Marriage Amendment | Iowa Senate Majority Leader Michael Gronstal (D) intends to block a proposed constitutional amendment to ban same-sex marriage, which has been legal in the state since April 2009. Minority Leader Jerry Behn (R) insists voters deserve the opportunity to enshrine discrimination in the constitution and eliminate a right that currently exists. The National Organization for Marriage tried to rally voters around the amendment by supporting Republican Cindy Golding in the recent special Senate election. After $40,000 of NOM’s anti-gay propaganda, 55 percent of voters still supported Democrat Liz Mathis, who opposes the amendment.

Justice

Alabama Legislators Weighing Changes To State’s Draconian Immigration Law

By Amanda Peterson Beadle on Nov 17, 2011 at 5:00 pm

State Sen. Gerald Dial (R-AL) says it's "common sense" to change Alabama's immigration law.

The realities of how drastically HB 56, Alabama’s extremely harmful immigration law, harms the state economy and daily lives of state residents has become abundantly clear, with farmers watching crops rot because they do not have enough workers, children being bullied in school, and proof of citizenship being required for everything down to getting a library card.

Now, Republicans legislators are beginning to talk about ways to change the law, and they even have removed the bill’s sponsor, state Sen. Scott Beason (R), as chairman of the Senate Rules Committee because of racist comments he made. Many say they want to fix the “unintended consequences” of the law. Specifically, state Sen. Gerald Dial (R), who is helping to write a series of amendments for the law, told the Birmingham News that requiring proof of legal residence or citizenship for every transaction with a state or local government is too burdensome. “It’s just common sense. Let’s step up and say we’ve made some mistakes,” Dial said.

But echoing other legislators, Dial also insisted that the changes will not take away from the law’s purpose: to prevent undocumented immigrants from working in the state. The New York Times reports that the law is still popular even as industries suffer from the loss of immigrant workers who were scared away by the law:

“Eighty percent of the population of the state thinks it’s a good bill, so politically you’re kind of careful to say anything negative about it,” said Judge James V. Perdue, president of the Alabama Probate Judges Association. “Those that passed it don’t want to admit that there’s anything wrong with it.”

But as lawmakers hear complaints from business leaders and constituents, several have become more willing to discuss changing, clarifying or in some cases scrapping sections of the law governing schools, government transactions and several of the law’s stiff penalty provisions.

Outside of farmers and poultry plant operators, who have complained of severe labor shortages, the most pointed criticisms concern a legally vague provision that requires proof of immigration status for “any transaction between a person and the state or a political subdivision of the state.”

The law lists three examples of such transactions: renewing driver’s licenses, business licenses and car tags. In a court filing in August, the state argued that the United States Justice Department, which is challenging the law, was exaggerating the law’s reach.

“Its fear that Section 30 would prohibit such aliens from having running water or sewer services, for example, has little basis,” the filing said.

But lawyers across the state are concluding that this section could be interpreted, in the words of Birmingham’s city attorney, Thomas Bentley, to apply to “almost everything that we do.”

As good as it sounds to hear Dial openly discuss changes to the immigration law, the damage from the extremely anti-immigrant law has already been done. The state’s economy will lose $40 million as an effect of the law, hampering its ability to recover from the recession. Even doctors in the state could have trouble this year renewing their professional licenses before the Alabama legislature takes up any amendments to the law in its 2012 session.

Alabama Gov. Robert Bentley (R) admits that the law is confusing for people. “I do believe we need to simplify this bill,” he said. But between the amendments being discussed by legislators and the governor’s admission that the law needs to be changed, it begs the question why they approved such an extreme measure without weighing the consequences in the first place.

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Climate Progress

Solar For the 99%? Two Thirds of California Solar Installs Are in Median-Income Zip Codes

By Stephen Lacey on Nov 17, 2011 at 4:53 pm

Think solar is only for the 1%? Not so fast.

New data from California shows that two thirds of solar PV installations from 2009 to 2011 were in zip codes with median household incomes between $40,000 and $84,000, according to analysis from PV Solar Report and SunRun.

Solar PV is often criticized as an “eco-chic” technology only available for the richest, most fashionable greenies. Of course, if you’ve followed the solar industry (or invested in a system of your own), you know that is not true.

Yes, the upfront costs of investing in a system can still be prohibitive, particularly in states without good incentive programs. But the falling cost of equipment combined with innovative “solar services” and group purchasing programs can actually make solar energy cheaper than grid-based electricity in some states.

The installation trends in the industry — the emergence of point-of-sale financing, growth in plug-and-play systems, dramatic improvements in hardware and electronics, and better installation techniques — are making the technology accessible to a wide range of consumers.

We should be careful not to make sweeping conclusions about this California-specific data. But let’s remember, this is a solar market that just passed the 1-GW installation mark, a feat only accomplished by a few other countries.

And as it’s often said: “So goes California, so goes the nation.”

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Yglesias

The Studying Gap

By Matthew Yglesias on Nov 17, 2011 at 4:45 pm

The recession and the endlessly escalating cost of college have, rightly, put a bit more emphasis on the fact that higher education is heterogeneous and students should probably try to study something worthwhile. Unfortunately, I think people sometimes misunderstand what is and isn’t a worthwhile program of study. This chart from Kay Steiger is probably a good place to start:

People, I believe, intuit that the STEM fields are good majors. But I think that’s not just, or even primarily, because of their intrinsic merits. The fact that these programs are hard and the people in them tend to spend a lot of time studying is an important part of the story. By contrast, majoring in “business” sounds very practical-minded to a lot of people. After all, how could a business degree not be more valuable than some nonsense like philosophy? That’s one of the reasons why it’s become the most popular major by far. But business majors aren’t actually doing anything! Not surprisingly, in exchange for doing less work than people in other majors, business majors also learn less.

None of that’s to say that there’s anything wrong with business (or education) as a subject to study. But a good starting point for colleges across the country would be to say that if they have degree-granting programs that don’t seem to require the students to do any work, they’re probably doing something wrong. Meanwhile, I worry that in some respects we’re probably undershooting arts/humanities education as a country. For people who are good at it, the ability to create objects of aesthetic merit is incredibly valuable and this is a domain where we show no little sign of making progress with automation.

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Economy

Sen. Gillibrand Introduces Bill Allowing SEC To Prosecute Members Of Congress For Insider Trading: ‘It Has To Be Illegal’

By Tanya Somanader on Nov 17, 2011 at 4:45 pm

With his ear to the ground in Massachusetts, Sen. Scott Brown (R-MA) is bolstering his Wall Street reform cred with a new bill to stop members of Congress from participating in insider trading. Responding to a 60 Minutes report citing lawmakers who earned thousands from trading on information learned in private briefings, Brown’s Stop Trading On Congressional Knowledge (STOCK) Act of 2011 requires lawmakers to report transactions of at least $1,000 in bonds, commodities or stocks within 90 days. Today, Sen. Kristin Gillibrand (D-NY) took it one step further with a bill that will not only ban insider trading for congressional members but will “empower the Securities and Exchange Commission to prosecute lawmakers for insider-trading cases as well as make insider trading against the rules of the House and the Senate.”

Noting that “the American people don’t have a lot of trust in Congress,” Gillibrand told CBS’ Early Show host Chris Wagge that “it’s incumbent upon us to make the kinds of changes that the American people would expect we would make so that we live by the exact same exact rules that everyone else does.” While there is disclosure now, she said, “it has to be illegal, just like it’s illegal for everyone else.” Watch it:

House Speaker John Boehner (R), however, thinks that such laws are unnecessary as “there are already guidelines for congressional investments,” adding, “I have not made any decisions on day-to-day trading activities in my account and haven’t for years.”

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Climate Progress

Announcement Of Alternate Tar Sands Pipeline Sends Midwest Oil Prices Surging

By Brad Johnson on Nov 17, 2011 at 4:35 pm

After the spiking of the Keystone XL pipeline by the Obama administration, the tar sands industry moved quickly to open an alternate route from Canada to Gulf Coast refineries. With the announcement of the pipeline deal, U.S. oil prices spiked, on the expectation that Canadian tar sands crude would no longer be locked in the Midwest market. ConocoPhillips sold its stake in the Seaway Pipeline, which connects Texas to Oklahoma, to Enbridge Inc. Enbridge plans to alter the 200,000 barrel-per-day pipeline so that it can take Candian crude from Oklahoma to Texas:

The sale of an oil pipeline running from Oklahoma to Texas upended U.S. energy markets Wednesday, sending the price of crude surging above $100 a barrel as America copes with the promise and pitfalls of its new energy boom. Enbridge Inc.—which bought a 50% stake in the Seaway Pipeline—announced it would reverse the direction of the flow, allowing more crude to move south from oil storage in Cushing, Okla., into the world’s largest refinery complex along the Gulf Coast.

Every analysis has been that giving Canada access to Gulf Coast refineries would increase prices for Americans. TransCanada estimated its 700,000 bpd Keystone XL pipeline would increase oil prices by about $6.55 a barrel in the United States.

Despite the facts, the fiction that building the Keystone XL pipeline would benefit American oil consumers has been popular among proponents.

Sen. Grassley (R-IA) claimed the Keystone XL project would “reduce prices at the pump for consumers.” House Speaker John Boehner (R-OH) said the pipeline would “lower gas prices.” Energy chair Fred Upton (R-MI) claimed expediting the pipeline would “lower energy prices.” Natural Resource Committee chair Doc Hastings (R-TX) claimed Keystone XL would “lower gasoline prices.” Rep. Lee Terry (R-NE) said it would “help reduce energy prices.” Rep. Ed Royce (R-CA) said his vote to approve the pipeline “reduces the cost of gas and boosts the economy.” Rep. Gus Bilirakis (R-FL) complained that “delaying the pipeline will hurt American energy prices.” Rep. Ed Whitfield (R-KY) said the pipeline would mean “lower prices.” Rep. Mike Rogers (R-MI) said the pipeline would help “stabilize prices at the pump for Michigan families.” Rep. Renee Ellmers (R-NC) claimed it would “lower gas prices.” Rep. Mary Bono Mack (R-CA) said the pipeline would help “hold down future price increases.” It would “help reduce the burden of high gas prices on American families,” claimed Rep. Gary Miller (R-CA). Rep. Mike Ross (D-AR) said it would “lower the price of fuel for all Americans.”

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