Matt Yglesias

Good News

Well here’s a story that certainly brought a smile to my face:

Yet all three of his choices — Senator Hillary Rodham Clinton as the rival turned secretary of state; Gen. James L. Jones, the former NATO commander, as national security adviser, and Robert M. Gates, the current and future defense secretary — were selected in large part because they have embraced a sweeping shift of resources in the national security arena.

The shift, which would come partly out of the military’s huge budget, would create a greatly expanded corps of diplomats and aid workers that, in the vision of the incoming Obama administration, would be engaged in projects around the world aimed at preventing conflicts and rebuilding failed states.

Whether they can make the change — one that Mr. Obama started talking about in the summer of 2007, when his candidacy was a long shot at best — “will be the great foreign policy experiment of the Obama presidency,” one of his senior advisers said recently.

But the adviser, who spoke on the condition of anonymity because he was not authorized to speak publicly, said the three have all embraced “a rebalancing of America’s national security portfolio” after a huge investment in new combat capabilities during the Bush years.

This is a really good idea! We do spend way too much on the military, and we do severely under-resource other elements of our foreign policy strategy. If Clinton and Gates and Jones are all on board for a big push to turn this around, and that’s why Obama wants them all on his team, then that strikes me as a very good reason.

Holbrooke on Bundy

Richard Holbrooke reviews a book on McGeorge Bundy and puts a liberal foot forward:

Bundy never believed in negotiations with the Vietcong or the North Vietnamese. This, coupled with his enduring faith in the value of military force in almost any terrain or circumstance, were his greatest errors. They contributed to a tragic failure. With the nation now about to inaugurate a new president committed to withdraw combat troops from Iraq and succeed in Afghanistan, the lessons of Vietnam are still relevant. McGeorge Bundy’s story, of early brilliance and a late-in-life search for the truth about himself and the war, is an extraordinary cautionary tale for all Americans.

Seems sensible to me.

Demand Is High — Let’s Drop the Price

There’s a curious tendency for the portion of peoples’ brains that deals with supply, demand, and price issues to stop functioning when the subject turns to parking. Andrew Samwick has a great example:

Second, my otherwise delightfully governed town has this practice of putting bags over the parking meters around the holiday shopping season. I associate it with the downtown merchants, since the meters north of downtown (say, near my office) remain operational. I can’t figure this one out.

1. If you believe that the meters are there to regulate access to the town’s scarce resource of parking spaces, then you need that regulation even more, not less, during the busy holiday season.

2. If you believe that the meters are there to raise money for the town, then your best opportunity to get that money is when you know demand will be high, like during the busy holiday season.

Presumably, the reason the town does this is to accommodate a request from the downtown merchants. But why do they perceive this to be in their self-interest? Why does “free (but scarce) parking” attract people to drive to town? Wouldn’t the better marketing approach be “still cheap but available parking,” given that the cost of the parking (about $1 an hour) is still small relative to the cost of whatever the visitors are going to buy?

If it were me, I’d raise the fees during the holiday season (and lower some other local tax). Yet anoSether reason why I will never be town manager.

But the world could really use more town managers like Samwick! Virtually ever town or city in the United States of America could adopt smarter parking pricing policies and suddenly find itself with parking spaces more available, taxes lower, higher retail sales, etc. See also the problems with too cheap parking at Harvard Square.

The Downturn in China

Things are looking down in the far east, just like everywhere else:

China’s growth rate has been forecast to be about 9 percent in 2008, down from 11.9 percent the year before and close to the 8 percent that economists say China must maintain in order to keep the labor market stable.

“China is under growing tension from its large population, limited resources and environment problems, and needs faster reform of its economic growth pattern to achieve sustainable development,” Hu said, according to the People’s Daily newspaper, the official Communist Party newspaper. He did not provide specifics.

This hardly counts as an economic model, but for my part I just don’t see how China could possibly maintain 8 percent growth if we have simultaneous recessions in Japan, the US, and the Eurozone. And all indications are that we’ll have simultaneous recessions in those countries. Keep in mind that six percent growth would be, for a country that’s not China, an impressive figure — especially under bad conditions. But if China is unable “to keep the labor market stable” then I think you have to wonder about what the consequences of that would be for their political stability.

Stadium Deals

Here’s a little local news while I’m still in NYC from the always-appalling universe of stadium dealmaking:

The Bloomberg administration was so intent on obtaining a free luxury suite for its own use at the new Yankee Stadium, newly released e-mail messages show, that the mayor’s aides pushed for a larger suite and free food, and eventually gave the Yankees 250 additional parking spaces in exchange.

The parking spaces were given to the team for the private use of Yankees officials, players and others; the spaces were originally planned for public parking. The city also turned over the rights to three new billboards along the Major Deegan Expressway, and whatever revenue they generate, as part of the deal.

Bad stadium policy meets bad parking policy and a good time is had by all.

Kristol’s Next War

In addition to being a booster of the two actual wars in Afghanistan and Iraq, Bill Kristol and/or his publication has, at one time or another, also called for the United States to go to war with North Korea, Syria, Iran, and Sudan. And now he’s got another war he’s like to start:

And while [Bush is] at it, perhaps he could tell various admirals to stop moaning about how difficult it would be to deal with the pirates off the coast of Somalia (isn’t keeping the shipping lanes open a core mission of the Navy?) and order the Navy to clobber them. If need be, the Marines would no doubt be glad to recapitulate their origins and join in by going ashore in Africa to destroy the pirates’ safe havens.

I’m not one to say that we should blindly defer to the preferences of the military brass, but surely they’re due some deference. Is the Navy really “moaning” about how difficult it would be to stop the pirates, or are they perhaps accurately describing difficulties? Where does Kristol get off adopting a condescending tone on this subject? The Marines “would no doubt be glad” to spearhead an amphibious assault on land-based Somali targets? Has he asked anyone about that? I think a lot of Marines feel that the Corps has a lot on its plate in Iraq and Afghanistan. And certainly I’ve never heard someone with legitimate knowledge of the regional situation indicate that a simple “destroy the pirates’ safe havens” operation would work. You’d need to address the fact that the whole country is in a persistent state of anarchy.

One might further note that the whole situation is a big unintended consequence of the Christmas 2006 Ethiopian invasion of Somalia. Something that was done with full US support and loudly cheered by The Weekly Standard. But thought he consequence was unintended, it was widely predicted by people who knew what they were talking about. I harp on this because it’s a subject I was prescient on, but I wasn’t prescient due to any incredible leaps of genius — I just listened to the International Crisis Group rather than, you know, The Weekly Standard. But now Kristol wants to go off on yet another half-baked invasion scheme. Or, rather, he wants to posture as favoring such. Because the best wars to monger for are the ones that don’t actually happen.

Clueless Chambliss

Senator Saxby still not sure if the economy’s in a recession.

Done Deal

Bill Clinton is doing the right thing and preparing to do donor disclosure related to his foundation in order to clear the path for Hillary’s nomination as Secretary of State. I was shocked by how far her presidential campaign was able to go without Bill taking this step. Good for Obama for insisting on it, and good for the Clintons for complying.

Now, perhaps, we can refocus some attention on the scandal of George W. Bush’s library fundraising. All throughout the second term of his administration he’s been raising undisclosed, unlimited funds from foreign governments, businessmen, and God knows whoever else. The whole system is in need of reform, but there’s been basically no attention or reporting on Bush’s activities.

Basketball-Like Activities

Last night I went with my brother to see the Knicks-Warriors game and boy-oh-boy was it something. It just wasn’t much like “professional basketball” as that’s normally understood. The Knicks gave up 125 points. And won. Easily. Chris Duhon now holds the Knicks franchise record with 22 assists. It’s a little sad. For a longtime franchise like the Knicks, that record should be held by a great point guard. And Duhon, no offense, is not a great point guard. David Lee put up absurd numbers — 21 rebounds and 37 points.

But of course if you look at them, plenty of Warriors had good state lines, too. After all, they did score 125 points. They just didn’t even remotely play defense. It was pretty sad.

War Machine

Back in April, The New York Times‘s David Barstow published a blockbuster story about the corrupt relationship between Pentagon officials, defense contractors, cable networks, and retired generals. It’s a long piece that deserves to be read in full and, indeed, probably deserves to be reread in full. But the gist of it was that the generals who you’d see on TV acting as nominally independent “analysts” were not, in fact, independent at all. They were getting their talking points straight from the Pentagon. And the coordination was motivated, in part, by the fact that they were also on the payrolls of various firms profiting from lucrative contracts with the Pentagon.

Today he has a followup story focusing in tightly on one particular ex-general, Barry McCaffrey. The headline: “One Man’s Military-Industrial Complex”. Spencer Ackerman remarks that if the piece is false “McCaffrey really ought to sue, because if it isn’t, he has no reputation for integrity left.” This is true. And Barstow certainly seems to have the goods. The piece is long to the point where excerpting from specific examples has no real point, but here’s a bird’s eye view of the issue:

The consulting company he started after leaving the government in 2001, BR McCaffrey Associates, promises to “build linkages” between government officials and contractors like Defense Solutions for up to $10,000 a month. He has also earned at least $500,000 from his work for Veritas Capital, a private equity firm in New York that has grown into a defense industry powerhouse by buying contractors whose profits soared from the wars in Afghanistan and Iraq. In addition, he is the chairman of HNTB Federal Services, an engineering and construction management company that often competes for national security contracts.

Many retired officers hold a perch in the world of military contracting, but General McCaffrey is among a select few who also command platforms in the news media and as government advisers on military matters. These overlapping roles offer them an array of opportunities to advance policy goals as well as business objectives. But with their business ties left undisclosed, it can be difficult for policy makers and the public to fully understand their interests.

On NBC and in other public forums, General McCaffrey has consistently advocated wartime policies and spending priorities that are in line with his corporate interests. But those interests are not described to NBC’s viewers. He is held out as a dispassionate expert, not someone who helps companies win contracts related to the wars he discusses on television.

But rather than focusing on McCaffrey and his issues, it’s worth contemplating the breathtaking lack of integrity on display from the television networks here. As I said, Barstow published a piece on this back in April. None of the TV networks addressed the issue he raised in anything resembling a serious manner. And, again, we now have NBC News caught flat-out in the midst of corruption, deceiving their viewers. And NBC News isn’t sorry. They’re not apologizing. They’re not ashamed. Because they’re beyond shame. They never had a reputation for honor, so they don’t even see this sort of thing as damaging.

Metaphorical Foot, Literal Thigh

This business with Plaxico Burress accidentally shooting himself in the leg really belongs in the “too good to make up” file. Go Redskins!

I, Outlier

I should say the reason I picked up Outliers in the first place was that a friend mentioned that he thought it explained something I’d been curious about. Specifically, The Economist proclaimed that Will Wilkinson, Ezra Klein, Megan McArdle, and myself were the public intellectuals of the future. To which I remarked:

I think it would be strange if the main qualification for becoming a high-profile public intellectual in the future is that you had to start a personal blog in 2002 or 2003.

Gladwell’s book is all about why this sort of thing happens. Rob Pitingolo spells out the argument in detail and observes that it’s analogous to Gladwell’s argument about super-rich software entrepreneurs. Except that even successful bloggers don’t really get to be super-rich, and certainly not Bill Gates rich. But it’s a very similar thing where, yes, you need to work hard but also you need to have been the beneficiary of some pretty lucky breaks to even be in a position where you have the possibility of working hard.

Searching for Cassandra

On the Cassandra-hunt issue my sense is that a large number of economists and macroeconomic observers were well aware of the probability that serious problems related to the collapse of a housing bubble might arise. But that most of them assumed that other key actors were also aware of the situation and therefore nothing extraordinarily bad would happen. People would see the value of their assets decline and there would perhaps be a recession but nothing earth-shattering

By contrast, some people who had something more like a ground-level view of the actual practices of financial service understood what was going on and weren’t shy about saying so. It was all on Calculated Risk. And of course others who had a ground-level view knew what was going on and weren’t interested in telling anyone about it.

Countercyclical

One silver lining in the dark clouds of the economy is that it looks set to alleviate the military’s recruiting woes as declining labor market prospects in the civilian economy leave more people looking kindly on joining up. As the story notes, the decreasing casualty levels in Iraq and the prospect of a new, popular, non-horrible commander in chief also seem to be playing a role.

The Inauguration Housing Bubble

It’s certainly true that talk of repeating a windfall by renting out your place for Inauguration Week is all the buzz in DC. But I haven’t seen any real verification of big money being found in this domain. An awful lot of people genuinely want to be out of town for the inauguration. And that, combined with the buzz about high prices, seems to me to have lifted the supply of housing sky-high reducing the margins available to most people. I clicked on the article because I saw a photo of someone I know, and the caption says “Katherine Mangu-Ward, one of many in Washington willing to rent their homes for the inauguration, has offered her one-bedroom apartment online for $1,000 a night.” But of course Katherine offering her apartment for $1,000 a night isn’t at all the same as someone offering to pay her $1,000 a night.

But if anyone feels like it, I’d gladly entertain an offer in that range.

The Real Shaq

Word to the wise. If you’re not following Shaq’s Twitter feed you’re not really living in the contemporary world. He’s moved us all the way to Web 4.0.

Outliers Early Returns

I’ll reserve final judgment until I’ve finished the book, but based on having read about two thirds of Malcolm Gladwell’s new book, Outliers, yesterday I can tell you that The New York Times‘s negative review is extremely wrongheaded. He’s tackling a much more important subject than in The Tipping Point or Blink, and I’d say he’s delivering. This slim, highly readable volume almost certainly isn’t the definitive last word on the question of what makes people succeed, but it’s a really brilliant summary of most of the currently available research. I really only wish it were longer so that it could explore certain points in more detail, but leaving you with the feeling that you haven’t read enough is far from the worst problem a book can have.

What About the Policy?

The story of reconciliation between Barack Obama and Hillary Clinton is a nice one, but as I point out in an article for The National, the fact remains that they had some significant differences on the campaign trail. And though we’ve heard a lot about their rapprochement, we haven’t heard a great deal from either of them about the policy direction the administration needs to take. I’m hoping that as the new team is unveiled we’ll hear more statements on policy, and those statements will harken back to the bold approach Obama promised during the campaign.

Cato and the Financial Crisis

A libertarian friend recommended as “great” this missive from Cato President Ed Crane making the case that if only we’d listened to the libertarians none of this financial crisis business would have happened. The analysis is pretty damn weak if you ask me. Crane writes:

As for the subprime crisis, it was not just Peter Wallison sounding the alarm. In 1997 Cato published a Policy Analysis by Vern McKinley entitled “The Mounting Case for Privatizing Fannie Mae and Freddie Mac.” Vern wrote: “Because of their quasi-government status, there is a market perception that Fannie Mae and Freddie Mac mortgage-backed securities and debt carry and implicit federal guarantee against default. Hence, the GSEs expose the federal taxpayer to an ever-increasing potential contingent liability that could ultimately cost tens of billions of dollars to rectify.”

I think that analysis is perfectly correct, but the fact of the matter remains that it has almost nothing to do with our present situation. The implicit government guarantee to Fannie and Freddie was a bad idea in my view, but it had nothing in particular to do with the creation of the financial crisis, and the upshot of the crisis ultimately was that even institutions that hadn’t been given such guarantees wound up getting bailed out.

But more to the point, when the best your organization can claim in terms of prescience is that you published something in 1997 then you know you have a problem. Clearly, the McKinley pieces doesn’t have much of anything to say that’s relevant to the specifics of the problems that have unfolded in 2007 and 2008. That’s not McKinley’s fault, it’s a reflection of the fact that he was writing in 1997, before the stock market crash and the subsequent growth of the housing bubble. 1997 was too early to be prescient. Meanwhile, Cato does have a section on its website dedicated to papers on the subject of “Financial Crises and the Global Financial System.” They published no papers whatsoever between September 2004 and May 2008. And the September 2004 paper was about Iraq. 2004 also saw a paper about the Dominican Republic. 2003 witnessed another paper about Iraq and an Anna Schwarz paper on “The IMF’s Dubious Proposal for a Universal Bankruptcy Law for Sovereign Debtors”. But as the stage was being set for the current crisis, absolutely nothing.

Similarly, on housing markets they published absolutely nothing between 2004 and 2008 — precisely the years during which the bubble was growing and changes in policy might have made a difference.

In January of 2005, though, Cato’s Alan Reynolds did publish some sneering nonsense deriding those who believed there was a housing bubble:

The start of each year is prime time for economic pessimists, who try to persuade us terrible things are about to happen. A perennial favorite is the “housing bubble” about to burst, with a supposedly devastating impact on household wealth. [...] A July 2, 2002, Wall Street Journal editorial on this topic worried that “homebuyers are resorting to greater levels of mortgage debt.” Contrary to such anxieties about homeowners being over-leveraged, their equity exceeds 56 percent of the value of homes and that ratio has not declined. Mortgage payments often replaced rental payments as homeownership increased, but that was not an added burden. [...] House prices did not just “bubble” for no reason.

I don’t know what conclusions about “libertarians” should really be drawn from any of this, but it’s clear enough that Crane’s institution was mostly indifferent to the problem as it mounted, and occasionally intervened to try to shout down people who were calling attention to the issues.

Remembrance of Presidents Past

George W. Bush on himself:

In an interview conducted earlier this month by his sister, Doro Bush Koch, Mr. Bush said he wanted to be remembered “as a person who, first and foremost, did not sell his soul in order to accommodate the political process.”

“I came to Washington with a set of values, and I’m leaving with the same set of values,” Mr. Bush said. “And I darn sure wasn’t going to sacrifice those values; that I was a President that had to make tough choices and was willing to make them. I surrounded myself with good people. I carefully considered the advice of smart, capable people and made tough decisions.”

Unlike many things that come out of his mouth, this is basically true. Bush considered the advice of smart, capable people such as Colin Powell, Richard Clarke, Rand Beers, Paul O’Neal, Christie Todd Whitman, etc. and he chose to regret it. These were tough choices. The destinies of billions of people around the world were in one way or another effected. Hundreds of thousands of lives lay directly in the balance. And rather taking the advice of smart, capable people Bush decided to take the advice of dumb, inept people. And he did it, as he says, because he was following his values — immoral values that he he shared with the people on whose counsel he preferred to rely. The results have been disastrous and are plain to see.