From the desk of Mindles H. Dreck:

Reductio ad Elitism

I thought this was worth taking out of the comments, because it touches on two core aspects of my belief system.

• First, I take moral and aesthetic pleasure from the spontaneous exercise of commercial and individual freedom.
  
• Second, most of the world's evil arose from empowered bureacracies trying to squelch the unattractive aspects of that freedom.
  

After taking us to task for hypocrisy, 'Contributor B' returns to an earlier post where I remarked on this:

Often it is a single moment, sometimes quite a small one, that swings the daily prediction this way or that. One of the city's overheated, chaotic traffic jams, with the trucks crawling over the sidewalks? Democracy will never take hold here, ever.

..that "Nobody likes traffic, but only elitists fail to recognize that is often accompanies material progress." "B" asks:

why the word "elitist"? How is that the opinion of an elitist? Perhaps an anti-capitalist, but "elitist"? Why does "elitist" get to function as a code-word for the left, a neat way of saying how rich and out of touch they are?

I don't use "redneck,"because it's just as wrong, simplistic, offensive, inaccurate and culturally misleading as "elitist." Frankly, If I start counting the elitist Republicans I know, I soon run out of digits.

(Wow. Outside the blogosphere, I don't think I know ten Republicans.)

I responded in the comment thread, but I'll amplify here, citing an influence:

Virginia Postrel's book The Future and its Enemies" defines 'dynamists' and 'stasists' to highlight a (admittedly reductive) spectrum along which views about society's present and future seem to fall. This is not the traditional political spectrum of right and left, as she shows with the Nader-Buchanan agreement in the opening:

...she shows how and why unplanned, open-ended trial and error - not conformity to one central vision - is the key to human betterment. Thus, the true enemies of humanity's future are those who insist on prescribing outcomes in advance, circumventing the process of competition and experiment in favor of their own preconceptions and prejudices.

Postrel argues that these conflicting views of progress, rather than the traditional left and right, increasingly define our political and cultural debate. On one side, she identifies a collection of strange bedfellows: Pat Buchanan and Ralph Nader standing shoulder to shoulder against international trade; "right-wing" nativists and "left-wing" environmentalists opposing immigration; traditionalists and technocrats denouncing Wal-Mart, biotechnology, the Internet, and suburban "sprawl." Some prefer a pre-industrial past, while others envision a bureaucratically engineered future, but all share a devotion to what she calls "stasis," a controlled, uniform society that changes only with permission from some central authority.

Virginia's book was liberating for me, because it's alternate taxonomy helped me avoid unwittingly imposing artificial political identities on my own thinking. You shouldn't assume that when I use elitist I'm saying "leftist/liberal (wink-wink), in fact, like Virginia's stasis, I use it to get away from trying to force truly differentiating belief structures into labels that evolved from the political haggling process.

Some people look mass crowding phenomenon as purely negative. Examples other than traffic include suburban sprawl, unconventional housing decorations, street vendors and informal private transportation services. Cass Sunstein has even voiced these thoughts about the internet. . I tend (try even) to view these phenomena positively despite their evident risks and aesthetic challenges. Most of these activities connote much needed economic activity - people consuming their wealth and exercising their freedom, a force that has enriched so many and allowed them to live in dignity.

An elitist condescends to the peaceful commercial and cultural behavior of groups as distasteful, ignorant and inconvenient. To observe people behaving 'chaotically' in a traffic jam and even free associate that they aren't ready for democracy or rights that I believe are inherent in humans seems elitist to me. An elitist is blind to the brilliance of spontaneous order and the seeming disorder that may precede it.

My god, looking at Usenet or blog comment threads - are these people ready for democracy? Or even freedom of expression?

It is human nature to behave ridiculously in groups. I've always said you can make an ass out of anyone by putting them in traffic or a long line. And when you combine them in a structured bureaucracy with power over others - look out. Most of the evil in the world has come from that - even as the individuals themselves go on with the best possible intentions.

For me, the only conventional political axis on which you could place elitism would be statism-libertarianism. Statism/authoritarianism is operationalized elitism - a small group (of..elite) object to how you live your life and set about creating a bureaucracy to use available government power to achieve "a controlled, uniform society that changes only with permission from some central authority."

So elite is the left only if you restrict your definition of 'left' to statism (or 'stasism'). I don't really know what 'left' means today ( I think it was socialist in the past), but I'm sure many on it are as worried about elites staying out of their lives as I am. Certainly, since both parties support a variety of some statist solutions, for libertarian-leaners, the main difference between right and left or Democrat and Republican may be the forecast of which party presents the greater danger to their freedom.

Perhaps, like "Zionist", the term "elitist" needs to be taken back from its abusers.

I don't know whether Dexter Filkins is an elitist, but I caution him for an elitist sentiment voiced in passing. However, at this point I've made entirely too much of it. I liked his article and thought people should read it.

From the desk of Mindles H. Dreck:

More Political Xenophobia

If anyone's interested in fresh blogosphere examples of the syndrome I discussed in my prior post, check out the comments in one post of Kevin Drum's site:

• I'm at a loss to name a Repub who believes in the common good, general welfare, public interest, etc. Only self interest is real.

• The essence of Liberalism:

  Society contributing in order to further the common good.

  The essence of Conservatism:

  "Go f[**]k yourself"

• Well, Hillary is the living incarnation of Satan on earth to most right-leaning folk, she's a woman, she's Bill's woman, she's educated and "uppity," and she dares to say there is such a thing as "wealthy enough." In addition to the whole common good thing. So Sully is not veering too far off message.

• Encapsulated Right wing message to the poor:

  "Screw the poor. What have you ever done for me. I have a gun, so don't you come near me or my family. Quit looking so sad and weepy. You'll make liberals tax my money to help you.

  "I am a religious moralist. Your morals are low class. You have too many babies out of wedlock. You don't speak good English. You eat funny foods. You listen to ugly music. Just because I don't like you doesn't make me a racist. Your religion and culture keep you from getting ahead. Go back where you came from.

• conservatives need to realize that it's better being a little less rich in a world where the poor and middle class aren't so desparately behind. i've never been able to figure out why everyone can't see that. you can go to a mall and have a bunch of people shopping with you, or begging you. but, i suppose, locked up tight in your air-conditioned mcmansions with all your guns and bibles, all those other people just don't matter to you anyway--unless of course your feeling bored and righteous and decide to go fuck with someone's sex life or drug habit... that, is the essence of conservatism.
  

Of course, there are plenty in ours too, even, ironically, in the subject post. I do not hold Kevin responsible.

This all reminds me - I need to add comment links so someone can do this to us. Or does that mean we will become even more 'hostage to our comments section'?

From the desk of Mindles H. Dreck:

ASS-U-ME

Note: some revisions. This was a 'speed-blog' and it shows. Here's more on the same subject.

Regular commenter 'somecallmetim' offers an olive branch (scroll down in the comments) I'd like to stop and appreciate:

More honestly, though, I think the sad fact is that more and more often there is little for people on either side of the Iraq issue to do but be snarky to each other. We seem to be looking at two entirely different worlds. I step outside, point up and say, "It's the sun." You say, "No, of course not, it's the moon."

...I'd almost like to believe that its bad faith on your part, or that you guys are mindles(s) idiots who can be shepherded away from the important decision with promises of pie. But I don't. You and Jane (standing in here for the many on the right like you) are clearly bright and well-educated and decent people. You guys honestly believe Bush has done a great job - and I can't fathom how you could think that. It's as if when I say "Up" you hear "Down." (Or vice-versa).

'Tim' points at a phenomenon that is even worse in person than on the internet (unusually). Living where we do I have the experience, at least once a week, of someone who just assumes that I would never dream of voting for a Republican. Most recently, a friend of my mother's called me and began a lengthy description of an important fund-raiser that would finance campaigners to go out to the swing states and register voters and make the case. No party or candidate is mentioned. Finally, after ten minutes I ask, simply out of amusement - "this is for Kerry, right?".

"Yes, well of course."

"That may be problematic."

"Why? You're not..."

And I experience, yet again, that paralyzing moment when my interrogator acts as if I just dropped in from Gopzork on a winged elephant. I explained that I didn't want to spend the evening discussing politics, but was unlikely to actively campaign for or give money to either candidate, as both parties' platforms are seriously flawed.

It's a critical moment, one where a number of assumptions are made. One is that if I'm not necessarily for Kerry, I must be a card-carrying member of the G.O.P., in favor of everything any Republican ever proposed.

The hysterically funny part of this is that my mother heard about this and asked me to 'please not upset her friends'! (by not being a Democrat when they call to ask me to fund raisers?) I'm a very unusual animal where I come from, sort of like a large reptile or rodent. Just a mild-mannered profession of non-Democratness is very disturbing to the equilibrium. For some reason, it's OK to wax polemic for a half-hour at a time if you are dissing Bush, but non-Democrats must stay in the closet. There's a special exemption for 'Neo-Marxists' who are considered nobly idealistic and kinda cute.

In a similar moment with my cousin recently, I had only told him (after listening to about twenty minutes of Bush-haranguing) that I thought the war was a risky but worthwhile experiment and that establishing democracy in the Middle East was probably the only permanent way to reduce the risk of terrorism for the next generation. He just began screaming at me about every Republican program he'd heard of. For some reason we were off war and on tax cuts in a nanosecond. Actually, he never even let me speak to clarify my views. Seriously. I didn't get a word in edgewise for an hour.

Point being, Tim spins mighty big assumptions about Jane and me from a few comments (in my case, very few in months). "You guys honestly believe Bush has done a great job", he says. Jane and I are far from card-carrying Bush boosters. Neither of us share his views or endorse the GOP platform on abortion, gay marriage, government spending or a variety of personal freedom issues. While we like the idea of a very limited government, we both would prefer a different direction for taxation than the Bush tax cuts. There is plenty of evidence in these pages. Jane has called for Rumsfeld's resignation, and even when I was just starting blogging, I pointed out that Bush was an awful lot like Clinton, lacking firm principles and co-opting the other party's issues.

We have devoted a lot of space to defending the President/administration from over-the-top rhetoric. In some sense we've felt almost forced to. I wonder occasionally whether addressing partisan polemics makes you partisan yourself. That's actually one of the thoughts that's diminished my enthusiasm about posting. I know I'll be backed into some argument where fierce partisans insist that if I don't share their wildly unreasonable demonization of the other side I must be....one of them!.

I know many people were backed up into the same corner defending Clinton. I hope I didn't do it to them. Actually, I'm pretty sure I didn't.

So for the record:

Both parties are chickenshit on gay marriage. I don't think the state should have anything to say about it. On the other hand, it's sad to me that anybody thinks state recognition should be important to their own sense of worth. This is what becomes of subsidies (which the legal status of marriage is). They are inherently discriminatory. It's appalling that people think marriage has to be 'defended' with subsidies or other attempts at social engineering.

Free trade is incredibly important to the growth of the world economy and the distribution of wealth to the far corners of the earth. Steel and agricultural subsidies are inexcusable even if the other guys are doing it. These protections simply slow us down and screw the little guy - in Africa or South America, that is.

The FCC's actions are just chilling to free speech. The new fines are restrictively punitive, and create at least the moral hazard of using them to shape political speech.

Bush never saw a spending bill or entitlement he didn't like, all small government rhetoric aside. Descriptions of his spending policy as some kind of fiscal rope-a-dope defy imagination.

As I mentioned a few posts ago, the decision to transplant Gitmo's prisoner treatment guidelines to Iraq is a textbook example of bureaucratic stupidity. The lack of control of potential WMD sites immediately after the invasion is a major screw-up - one that made the world a MORE dangerous place (remember the 'one vial' argument? Since we really thought they were there, job one should have been lockdown, regardless of the invasion pace).

I'm tired of people who think that businespeople are automatically immoral actors, or that the mere existence of profit or business self-interest signifies a problem. In my experience, the profit motive often protects us from the human instinct to control others when we gather in groups. Without the more objective monetary yardstick, it seems like the unspoken prime directive of groups (read:bureaucracies) is to control others, despite the best intentions of the individuals involved. I sit on a nonprofit board and I've seen it in action.

I endorse the mission in Iraq, which WAS, contrary to much invective, about bringing democracy to the Middle East. Or did I just imagine all the pre-war criticism of the administration being in the thrall of a 'cabal' of Straussian Neo-cons with precisely that mission? You remember, back when everyone thought WMDs were a lock? I understand some people thought Saddam could be deterred. I don't understand people who think it is all about oil or Halliburton. An immense good has been done getting rid of Saddam. It is beyond me why people are so vested in portraying that as entirely venal. Counter-tribalism, I guess.

Given the formidable risks and obstacles undertaken, the situation in Iraq does not appear to be as bad as critics paint it. If we had outlined these conditions as success criteria before the war, many would have been glad to accept them (or bet against them). The desire to make Bush look bad has gotten the better of many folks' judgement, and a high-stakes mission is evaluated in hindsight on distinctly unrealistic terms. Incidentally, I don't think our popularity on the continent is the right indicator for success, they tend to be quite hostile to change. I spent plenty of time in Europe during the Reagan era, and I'm quite pleased he didn't use Continental opinion to keep score.

Given the sea-change in the Republican and Democratic parties over the last 40 years, it's not clear to me how non-politicians can actually harbor such strong us-or-them team allegiances to one party or the other. By definition, if you agreed with one party's platform over the whole time, you've changed your mind on any number of issues. Or you just believe in the intrinsic nobility of one party.

Finally, to return to the subject of the commented post, traffic jams mean people have cars, money and opportunity to buy fuel, places to go, and the freedom to do so when they like. Disparaging traffic in Iraq is like New Yorkers getting upset because it's hard to find an empty taxicab. Commenters didn't even seem to notice I generally approved of the cited article.

I consider it my duty to keep my mind open through the election, especially since I don't fit in either party neatly (does any thinking person?). The rhetoric is annoying, but most of it is backward-looking. What matters now is what the candidate WILL do. This is hard enough to figure given that the last two presidents have governed in a way entirely dissimilar to their campaign positioning, and these two won't say what's next.

Bush needs to be much more articulate about the U.S. role in the Middle East. In my mind he will always suffer from a lack of principles on the domestic front. No second chance there, just a question as to whether the other guy is worse (and Kerry plans to be even more profligate...)

Kerry needs to define the mission from here. He has the clear tactical advantage of using a fresh start with allies, but he hasn't made it clear how that will help. He also needs a domestic platform that isn't all bromides and 'rolling back'.

Both candidates need to be realistic and 'fess up to the fact that we can't protect ourselves from terrorism through domestic policing without giving up civil liberties as we know them. I favor the one who describes this as a long term confrontation where we can use our substantial power and resources to make sure my kids won't have to worry about terrorism. Bush is that guy now, but lord knows there is plenty of room in front of him if the opposition would stop the nonsense and run.

I must admit, it's a weird feeling of power to be able to stun an entire room simply by saying "I was in favor of the war..." then watch the sputtering amazed indignation emerge without a shred of actual argument.

But I just don't think these positions deserve that level of surprise and discomfort.

UPDATE: and for those who don't think I don't stand up for what I believe in - I don't think a guns-blazing preaching-to-the choir rhetoric changes any minds, and I think most of the gaps between the parties here are narrower than they are portrayed. Polemics are fun (and I have indulged), but it may well be MORE loyal to one's beliefs to work at being open-minded - you might actually provoke some re-thinking.

From the desk of Jane Galt:

Beg your pardon?

How's about this para from Slate's In the Papers feature:

The New Yorker, July 5
Katherine Boo heads to the Indian costal city of Chennai to see how outsourcing looks from overseas. She finds Office Tiger, which was founded six years ago by a pair of Princeton grads and has quickly become the back office to dozens of America's largest companies. But while Office Tiger and its competitors have generated tremendous wealth for Chennai and other Indian cities, the country is still plagued by problems the free market won't fix: HIV cases are soaring, cities are running out of water, and the lowest castes still cannot find work. ... Another piece offers a concise portrait of Fallujah in the aftermath of the American withdrawal on May 10. Different groups are struggling for political control, and the Fallujah Brigade, the security force to which American troops ceded control of the city, wields little practical power. —A.B.D.

Cities "running out of water" is exactly what you'd expect from a system that sets the price of a commodity below the market level. As for the others, I'd guess that they're better off relying on the free market to invent their HIV drugs and provide jobs than on their government.

From the desk of Jane Galt:

Sauce for the goose . . .

Democrats who defended the release of Jack Ryan's divorce records are now going to have to explain why the courts shouldn't do the same for John Kerry's.

From the desk of Jane Galt:

Are miscarriages murder?

Andrew Sullivan writes a post about abortion this morning that I may write more about tonight, if I have time. But one tidbit in particular caught my eye:

Sperm is life, but it is not a person; fertilized eggs are routinely aborted naturally (is nature murderous?); miscarriages are a sad but permanent part of our biology; intuitively the abortion of a two week old fetus does not seem to us as equivalent to the abortion of one at six months; and so on.

I've heard a lot of variations on this theme, most of which boil down to either "your body discards an egg every month--is that murder? Do you have an affirmative duty to get pregnant?" or "But half of all pregnancies end in miscarriage!"* The latter, in particular, seems bizarre to me -- are these people really unable to make any moral distinction between, say, dying of cancer and being hacked to death? I'm not arguing that abortion is murder, mind you; only that this argument is a ludicrous refutation of the idea. The fact that people die of natural causes does not make homicide all right.

Similarly, I think it's pretty silly to argue that what takes place at conception is so trivial that there is no difference between an unfertilised egg and an implanted embryo. Nor that there is no moral difference between failing to act to save a life, and taking affirmative action to end one. As long time readers know, I am reluctantly pro-choice. But whenever I hear these arguments brought out, I know my side is flailing wildly.

*A lot of these happen before the women has noticed she's pregnant

From the desk of Mindles H. Dreck:

Damn This Traffic Jam, How I Hate to Be...Authoritarian

I found This NYT article about Iraq to be a neutral and engaging first-person account, in large part because the author acknowledges the misleading vividness of events around him.

In doing so, he makes an odd suggestion:

This is not high science, only pedestrian calculation. Often it is a single moment, sometimes quite a small one, that swings the daily prediction this way or that. One of the city's overheated, chaotic traffic jams, with the trucks crawling over the sidewalks? Democracy will never take hold here, ever. A wave and a smile and a "Hey, Mistah!" from a 12-year-old Iraqi boy? Maybe the Americans will pull this off.

I guess democracy could never take hold near the I-5 in Los Angeles, or Leverett Circle in Boston (especially during the convention). By the look of it, New York in midtown Manhattan and near the L.I.E. and Belt Parkway are doomed as well.

Nobody likes traffic, but only elitists fail to recognize that is often accompanies material progress.

From the desk of Mindles H. Dreck:

Changing Business Models and the Iraq Handover

If you have decided to change your business model, do it quickly. Moving slowly in the name of "keeping everyone happy and working" during the transition is a good way to keep everyone miserable and working at cross-purposes. Business people keep 'learning' this lesson and then repeating the mistake.

There can be little doubt that the brokerage industry has been changing its business model over the last 5 years, and that the new business model is as desireable from a returns point of view as it is mandatory given present regulatory trends. Brokerages are converting to asset managers, earning fees on the assets managed rather than brokerage commissions on transactions. The revenue stream from an asset management model is both less cyclical and more aligned with the customer's interests. Furthermore, the cost of execution has plunged as the benefits of 'straight-through' technology caused vicious price competition (note that the benefits of technology-based competition, as in telecom, inure most permanently to the customer). Finally, both regulators and consumers have come to agree with asset managers that 'sell-side' research (research in exchange for brokerage volume) rarely provided value in the form of better investment ideas, and new regulations have made sell-side research all but impossible to practice in the old model (here's a decent summary).

Furthermore, the old model of broker or portfolio manager as independent stock-picker is dying. Once again, business efficiency and regulatory have joined forces to kill off the old methods. If securities and asset-class research is centralized, account executives can handle many more accounts than if they are performing their own research. In litigation, a client who has suffered from one account executive's ideas will win much more than those who suffered from the supposedly well-researched views of a central research and policy-making group. Regulators inspecting a financial institution expect to see formal account management policy and a record of disciplining those who stray. All documented, all discoverable in litigation.

All of the above is to demonstrate that these changes have an inexorable momentum and have been known for some time. Yet many financial firms have a lot of wood to chop before they will be operating on the new model. Why is that?

To be sure, financial consultants/account executives LIKE being stock-pickers, and don't like delegating that function to a money manager or centralized research. It's not why they entered the business. They long for the good old days when they could B.S. about stocks that only went up and clients didn't measure performance, question added value or want to understand their conflicts of interest. Yet these are well-informed people, they know what is coming.

Managers have been scared to transition rapidly. I've heard professionals from all sort of firms talk about 'gradual transitions' in order to keep all these account executive primadonnas happy. The bosses are afraid the account execs will walk with their clients. In addition, they too have to adapt to a different kind of environment, policing account management and supervising marketing activity instead of pleasing the producers with expensive boondoggles. It's a much more pedestrian job. So month after month they put up with inaction. They are willfully blind to insubordination.

At the houses 'going slow', lawsuits have blossomed out of the bear market and embarassed the firms that don't follow policy. Account executives have slowly left, or behaved so egregiously they've been fired. They survive their scared managers but not their compliance departments, and certainly not regulatory examinations. Most of the people managers feared losing have left slowly as they realized they were engaged in an irrational struggle and needed to start over or find a true portfolio management job.

A few firms have moved quickly. They re-wrote their incentive programs to accelerate the change. One firm simply re-made the bonus scheme to a percentage of centralized money management fees. Account executives quickly figured out the score and stopped picking stocks. By and large, the certainty forced them to confront their unhappiness and decide whether to buy in or opt out.

The organizational truth here is that when something is inevitable, do it now. While account execs mostly didn't desire the change, the ones forced quickly into the new model are happier and more successful. Change creates opposition, but ambivalence incubates opposition, hatching destruction.

For better or worse, this administration's decisions have reflected the organizational truths of management rather than government. The decision to hold fast to the June 30 handover is typical. While all worry that the level of public safety and services can interfere with the acceptance of a new government, the handover is inevitable, and the administration will get on with it. Few Middle Easterners see their own government as having moral legitimacy, but the U.S. has zero chance of gaining that legitimacy as an alien occupying power. The longer the new government is not fully in charge, the lower its chances of gaining that legitimacy. Better to take the risk now, as the reasoning goes, rather than assure the new government's failure by starving it of real authority.

In this sense, the sudden ascendance of Allawi is likely a blessing. Chalabi was perceived as a U.S. stooge even before he spent months as a pretender to power. Allawi will take charge while still in the 'honeymoon' phase, enjoying approval ratings Kerry or Bush can only dream about.

I have been quite unsure throughout the last few months as the administration stuck to its timetable. I see the reasoning now and have become cautiously optimistic, especially after the frenzy of Baathist/Qaeda efforts to destabilize the new regime. Iraqis must understand that we place as high a priority on self-determination and legitimate constitutional democracy as we do on confronting the Jihadis or securing the region's oil supplies. Grinding along in the hopes that we can handover a more conventionally stable country undermines the legitimacy of the new government.

UPDATE: It's done! They moved it up two days.

Then again, if the administration is so management-savvy, why did it take so long to sack Tenet? Demonstrating loyalty to staff in a difficult situation can be good leadership. But is it that important? And what about the bureaucrats who decided Gitmo''s prisoner treatment standards were 'one size fits all' ?

P.S. I apologize, I guess, for not writing much. My top priorities are family and work, with exercise, blogging and sleep in the second tier. There is no end of work, as we have more activity than 2000 and 25% fewer people. Exercise and blogging have lost, and sleep has suffered.

From the desk of Jane Galt:

It's about time

Finally, something worthwhile to do with my old textbooks -- send them to needy universities in Iraq!

I confess I'm a bit confused, though . . . do they really need textbooks written in English? Because if they do, well, I've got a whole bunch of marketing textbooks they can have . . .

From the desk of Jane Galt:

Question of the day

Will violence get better, get worse, or stay the same after June 30th?

There's something to be said for each: it could get better, because the new government will drain legitimacy from the attack; it could stay the same, because the new government is seen as a puppet of the US; or it could get worse, as violent factions struggle for power.

I'm betting, however, that it gets better.

Not, mind you, because I have any insight into the hearts and minds of the Iraqi people, or of the terrorists who are attacking them. The reason I think it will get better is that the terrorists seem so gosh darned determined to derail the handover. This suggests to me that they believe that the handover will significantly curtail their ability to operate in Iraq.

Moreover, the frequency and nature of the attacks, what I believe military people call the operational tempo, has significantly accelerated in the past three months. Now, this could be because the outraged populace is rising up in protest -- but outraged populaces generally do not rise up in protest with car bombs. It seems more likely to me that this is an all out push against the Americans, for strategic, as well as fundraising and recruitment reasons, that cannot be indefinitely sustained.

Of course, there's always the possibility that while one violent group doesn't want the handover to happen, an entirely different violent group is merely biding its time until it does, so that they can begin their bid for control.

So I'm throwing the comments open to my readers. What do y'all think? Up, down or the same?

From the desk of Jane Galt:

Notes from the housing bubble

It breaks your heart:

ANAHEIM, Calif. - For years, Ray and Shahrazad Daneshi sought to buy a home, only to be told that they did not earn enough to qualify for a mortgage. But they recently managed to buy a small house in the shadow of Disneyland for $360,000 - six times their annual income - thanks to a lender who allowed them to borrow the entire value of the home, with no down payment.

"We will not be going to any movies or eating out at restaurants," said Mr. Daneshi, a self-employed wedding photographer who came here from Iran in 1988. "But in two years, the house will be worth a lot more and we will have something to show for it."

The Daneshis' purchase underscores the new, ever-optimistic economics of home buying. A kaleidoscopic array of mortgages for people with little cash or overstretched budgets has enabled families of modest income to take on debt that once would have been beyond their reach. As long as new home buyers could count on rock-bottom interest rates and housing values were going nowhere but up, this seemed to be a virtuous circle.

But now, with the Federal Reserve expected to embark on a series of interest rate increases starting with its meeting on June 30, some experts worry that recent first-time buyers could find easy home ownership a lot harder on their wallets, possibly causing housing prices to wobble in some high-price markets.

With the Daneshis, for example, rising interest rates on the two adjustable-rate mortgages they took out to buy their house would mean that their monthly payment of $2,500 - already more half their monthly income - could go up substantially in two years. Mr. Daneshi realizes that, but is unconcerned.

"Why worry?" he said, adding that he believes rising home prices will help him obtain a better loan deal by then.

Mr Daneshi doesn't seem to realise that when mortgage rates go up, housing prices will go down, because people judge their purchases less by the purchase price than the size of the monthly payment. He will realise this eventually, of course, but probably not until he's in foreclosure.

From the desk of Jane Galt:

Gentleman Jack

More people whose sex lives I don't want to hear about. I mean, why was L'affaire Lewinsky all over the Sunday talk shows? Did anyone have anything new to add? Uh-uh. Can't we just drop it, already?

Now this guy Jack Ryan who's running for the Senate in Illinois has had his divorce records unsealed at the request of ABC News and the Chicago Tribune, revealing that he tried to get his ex-wife to engage in . . . ahem . . . some rather non-traditional behaviour in front of a large group of strangers. The unsealing apparently took place despite the fact that both parties to the divorce requested that the records be kept sealed.

What the hell? What on earth was "the public's right to know" here? His behaviour was legal, if unsavoury, and has, as far as I can tell, absolutely no relevant bearing on his candidacy, unless he's campaigning on a platform of outlawing exhibitionism. What sort of shoddy impasse has the media reached if it's reduced to seeking sensation in the unsealing of court records from the nastiest, most intensely personal records most people ever had -- records which are generally sealed for quite good reason, since there are often, as there were in this case, children who could be badly hurt by the opening of the record of the breakdown of their parents' marriage.

Perhaps I've gotten it wrong. If so, could my readers please enlighten me? What was the reasoning behind unsealing these records, and why was it vital to the public interest that this man's marital difficulties be smeared across the headlines?

From the desk of Jane Galt:

Discouraging foreign students?

Over on Talking Points Memo, guest-blogger John Judis argues that the US is doing itself a disservice by placing restrictions on foreign students:

During the Cold War, American officials discovered that one of the best ways to promote democratic capitalism at the expense of communism was by luring foreign students to American colleges. Some of these foreign graduates returned home to become the leaders of reform movements in their countries. Others stayed in the United States and contributed their skills to the great postwar boom. The same reasoning that prevailed during the Cold War should prevail during the war on terror. The United States should be eager, one would imagine, to expose students from abroad to democracy and religious pluralism, as well as to take advantage of their skills. But not the Bush administration and the Republican Congress. They are oblivious to any foreign policy measures that aren't repressive. Their response to anti-Americanism is to wall off America from its potential critics.

In the wake of September 11, the Bush administration tightened visa rules for foreign students. Prospective students have had to pay a $100 fee to file a visa application. And it has taken up to eight months to process the applications. As a result, foreign applications to American colleges have plummeted. According to the Financial Times, graduate school applications have declined 32 percent this year. "The word seems to be out that you can't get a visa to come and study in the US, so why bother," said Liz Reisburg, who helps recruit foreign MBAs.

Undoubtedly, some aspects of this new visa program were unavoidable in the light of how the September 11 terrorists entered the country. But one would hope that the Bush administration would be trying to streamline the program, and to reduce the delays, so that students would once against be drawn to American universities, as they were during the high-tech boom of the 1990s. Instead, the administration is on the verge of putting still another and greater obstacle in the face of foreign students.

The legislation establishing the Department of Homeland Security included a provision creating "Sevis." a database for keeping track of international students. Each student would have to register with the Sevis. Last October, the Department of Homeland Security proposed that in addition to the $100 visa fee, every prospective student would have to pay another $100 to fund Sevis. The payment would have to be through a credit card or dollars. Universities have not objected to the program itself; but they have objected strenuously to imposing another fee on foreign applicants. "Having yet another thing students have to do to come to the US that they don't have to do in any other part of the world will drive more people away at a time when enrollments are declining," said one official from the Association of International Educators.

I agree with Mr Judis that we should be trying to open our universities to as many students, from as many places, as possible. But the focus on the fee is ludicrous. The reason university administrations love foreign students, particularly graduate students, so much is that they are generally ineligible for financial aid or in-state tuition; they pay full freight, and generally have to provide guarantees up front that they have sufficient assets to pay for their entire course before they are allowed to start. Anyone who can afford university fees can pay a couple hundred bucks to the government for visa processing.

It seems to me, from the limited sample I know, that foreign students are far more worried about the visa difficulties than the money. At my sister's graduation from Duke's public policy school in May, I talked to several students who hadn't seen their families in two years because of visa issues; many of those parents were unable to attend their kid's graduation. Many others spoke of the arduous process of obtaining a visa, in which many people who had gained admission to a programme couldn't attend because they had been unable to get their visa processed in time.

Of course, the reason this is true is that the US is giving much closer scrutiny to student visa applicants, because that's how a number of the 9/11 hijackers entered the country--and the INS notoriously failed to check that they were actually attending school. Fixing this problem will be much more difficult than getting rid of a couple of fees, but if we really want to increase student enrollment, it's the only effective course.

From the desk of Jane Galt:

Air Hysteria

If you haven't been following the financial travails of Air America, the liberal radio station where Al Franken is the big draw, you may not know about the serious irregularities now coming to light. According to the Wall Street Journal, Air America was not pulled off the air in Chicago and LA because of (as some supporters claimed) perfidious backstabbing by a station-owner who was a secret member of the Vast Right Wing Conspiracy. No, it was as the station-owner claimed: Air America was not paying its bills. And the reason it was not paying its bills was that the original owners appear to have . . . er . . . creatively misdescribed the state of their finances when they were raising money and starting operations. To wit, it is alleged that they claimed to have raised $30 million, enough to operate for several years, rather than the $6 million they actually had raised, which they blew threw by the first couple of weeks on the air.

Now the guy with the original idea, Sheldon Drobny, is apparently trying to stage an asset sale to a new entity in order to salvage the operation. This is tricky, because it leaves the new entity vulnerable to charges of setting up a "sham transaction" in order to bilk Air America's creditors. Professor Bainbridge has an excellent discussion of the issues involved.

From the desk of Jane Galt:

Kevin Drum says that the current slow pace of employment recovery is (sigh) the fault of those poor-plundering, labour-looting Republicans.

In the past — shown in the blue bars — everyone benefited when the economy recovered from a recession. Wages went up, total compensation (including things like health insurance) went up, and corporate profits went up. Sure, corporate profits did better than workers' wages, but everybody got a decent slice of the pie.

In the Bush recovery — shown in the red bars — workers have gotten almost nothing while corporate profits have skyrocketed. The Republican establishment must be cackling in its single malt scotch.

But how can anyone defend this? Easy. The free market extremists at the top of the modern Republican party argue that economic growth is caused by the risk-taking executives of Fortune 5000 companies, and therefore they deserve the benefits of that growth. Worker bees don't make any contribution — they just work — so why should they get anything?

Treating labor like a commodity is a morally bankrupt policy, but it's one that's become an epidemic in the Republican party: they don't just want a bigger piece of the pie anymore, they want the whole pie. Surely it's past time for George Bush's beloved "real America" to revolt over this cynical treatment from conservative elitists?

This is not the first time I've heard this from the left. But it's perhaps the weakest of their grievances against the Republicans in government. Presumably they know this, since they rarely posit the mechanism by which the Bush administration has caused this unprecedented phenomenon.

Oh, some of the more dimwitted commenters have suggested that it's because Bush is gutting labour protections. But this is ludicrous. The recovery under the Reagan administration came after some real gutting -- Reagan had just fired the entire Air Traffic Controller's union, signalling unambiguously that there was A New Sheriff In Town. Jobs and wages nonetheless recovered quite nicely.

Under Clinton, on the other hand, who was presumably more to the labour theorists' liking, job growth was much, much slower -- remember the "jobless recovery"? It lasted well into Clinton's first term.

Our recovery has been even more "jobless" -- though the economic contraction ended in November 2001, jobs have only started to outpace workforce growth this year. And a far more plausible explanation for why employment recovery is increasingly lagging economic recovery has been put forth by Erica Groshen and Simon Potter of the Fed. While in past recessions, they argue, most job loss was cyclical--companies laid off workers when demand was slack, and rehired them when business picked up--much more of the change in recent recessions has been structural: companies permanently restructure when times get tough, and workers must find jobs in other companies or industries, which takes longer. For why this is true, one may argue any number of things: the increase in services, which are generally performed by salaried employees, and where productivity is harder to measure, making companies more reluctant to hire; increasing mechanisation, which makes it attractive to replace workers with machinery when times are tough; global competition, which has damaged the bargaining power of previously feather-bedding unions by putting entire industries in jeopardy (for a right-wing version of this, try environmentalists' war on old-line industries); the faster pace of innovation, which reduces the life cycle of industries; financial market speculation, which leads to boom-bust patterns . . .

Really, the candidates are endless. But none of them seem to have much to do with the Bush administration, or the House or the Senate for that matter.

With demand for labour recovering much more slowly than in previous recessions, we would expect to see exactly what we are seeing: with less bargaining power, workers are taking a smaller share of the growing pie.

But this is not a permanent phenomenon. At the end of the Clinton administration, workers were getting a slightly disproportionately large share of the pie (if you define stock options as compensation). Tight labour markets meant that starting fast food workers were getting well above the minimum wage, plus hiring bonuses, in many markets. Members of my previous profession, technology workers, are still struggling to get over the belief that they are naturally entitled to six-figure incomes that increase 10% a year if you stay put and 15-30% a year if you change jobs.

This was not an equilibrium either. Over time, returns to capital and returns to labour are remarkably stable; roughly 1/3 of the income in society goes to capital, while 2/3 is the return to labour. Now that job growth is picking up, wage growth wil almost certainlyl not be far behind. This will be true whether George W. Bush or John F. Kerry is president. And if the former, will those currently accusing him of opressing the worker be looking for conspiracy theories to explain why wages are growing faster than profits?