Category Archive for: Media [Return to Main]

Monday, December 31, 2012

Paul Krugman: Brewing Up Confusion

Some well-funded groups are trying to "exploit the fiscal cliff to push a benefit-cutting agenda":

Brewing Up Confusion, by Paul Krugman, Commentary, NY Times: Howard Schultz, the C.E.O. of Starbucks,... posted an open letter urging his employees to promote fiscal bipartisanship by writing “Come together” on coffee cups. ... In the letter, Mr. Schultz warned that elected officials “have been unable to come together and compromise to solve the tremendously important, time-sensitive issue to fix the national debt,” and suggested that readers further inform themselves at the Web site of the organization Fix the Debt. Let’s parse that, shall we?
First of all,... the fiscal cliff ... doesn’t reflect a failure to “fix the debt” by reducing the budget deficit — on the contrary, the danger is that we’ll cut the deficit too fast.
How could someone as well connected as Mr. Schultz get such a basic point wrong? By talking to the wrong people — in particular, the people at Fix the Debt... For example,... Maya MacGuineas, the organization’s public face,... was trying to confuse readers on that point, and she apparently confused Mr. Schultz too. More about Fix the Debt in a moment..., let’s move on to Mr. Schultz’s misdiagnosis of the political problem we face.
Look, it’s true that elected politicians have been unable to “come together and compromise.” But ... implying a symmetry between Republicans and Democrats, isn’t just misleading, it’s actively harmful. The reality is that President Obama has made huge concessions. ... In return, the Republicans have offered essentially nothing. ... Given that reality,... when people like Mr. Schultz respond by blaming both sides equally ... they’re ... rewarding intransigence and extremism...
I’m willing to believe that Mr. Schultz doesn’t know what he’s doing. The same can’t be said, however, about Fix the Debt. You might not know it reading some credulous reporting, but Fix the Debt isn’t some kind of new gathering of concerned citizens..., it’s ... the usual suspects ... backed by an impressive amount of corporate cash.
Like all the Peterson-funded groups, Fix the Debt seems much more concerned with cutting Social Security and Medicare than with fighting deficits in general... What’s happening now is that all the Peterson-funded groups are trying to exploit the fiscal cliff to push a benefit-cutting agenda that has nothing to do with the current crisis, using artfully deceptive language — as in that MacGuineas letter — to hide the bait and switch.
Mr. Schultz apparently fell for the con. But the rest of us shouldn’t.

Saturday, August 06, 2011

"There They Go Again"

I think it would be safe to say that David Glasner is not a big fan of the WSJ's editorial page:

There They Go Again, by David Glasner: ...[T]he Wall Street Journal in its editorial today summed up its approach to economic policy making rather well. ... If Obama is for it, we’re against it. Simple as that. Leave your brain at the door.

He is responding an op-ed by former Reagan administration official David Malpass calling for, among other things, a strong dollar policy.

Wednesday, September 22, 2010

"The Story That Would Have Been Spun"

Arin Dube wonders how an alternative world might have played in the press:

Counterfactual: Or a Story that would have been Spun, by Arindrajit Dube: Six weeks before the midterm elections, the Democratic Party is facing major losses in both the House and the Senate, and is looking increasingly likely to lose control of the House altogether.
What is behind this rapid change in fortunes from only two years ago, when the Democrats swept into power? Based on extensive interviews with sources in both parties, including anonymous sources within the White House, it appears that an over-reach by the Obama administration pursuing a progressive and populist platform may have played an important role. Instead of an incrementalist, business-friendly strategy, the administration went to the hilt with policies focused on a greater role of government in providing jobs and healthcare, and perhaps pre-maturely ended American military involvement in both Iraq and Afghanistan.
Sources both inside and outside the administration agree that the pursuit of a health care policy with a strong role of the federal government (a “public option”) played a large role in solidifying the image of the administration as one that did not spend enough time courting moderate Republicans such as Senator Chuck Grassley. Had the administration not insisted on a strategy that fundamentally ended the control of the health insurance market by a handful of key companies, these sources say that a bipartisan compromise on universal healthcare would most certainly have been reached.
The pursuit of a second stimulus in late 2009 measuring $700 billion dollars was likely the second reason behind the quick turnaround in public opinion. While economists largely credit the second stimulus for lowering the unemployment rate to below 7% through a focus on aid to states and direct hiring initiatives, the political reality remains that there is increasing concern about burgeoning government debt. Although interest rates on treasury bills have not risen – yet – experts we spoke with worry about a sudden increase in such rates at any time. A more measured approach which let the structural problems arising from the bubble sort themselves out though the private market may have not lowered the unemployment rate at the short term. However, politically, our sources say, such an approach would have demonstrated a hard-headed approach that eschews populism, and would have calmed both the markets and an increasingly nervous electorate worried about countercyclical deficit financing.
Finally, while the administration’s economic advisors successfully pushed for a stringent and punishing regulatory policy with respect to the financial sector, some insiders grumble about the early decision by this administration to not recruit more palatable figures such as Timothy Geithner and Lawrence Summers. Lacking the “soft touch” approach championed by Clinoton-era protégé’s of Robert Rubin, the brash economic team under Obama moved quickly to cap bank size, impose draconian capital reserve requirements, re-instate Glass-Steagall, and strong-arm Congress to impose stringent limits on financial sector pay. While possibly creating a less risky financial market, it no doubt led to a flight of talent from the financial sector. Today, the financial sector’s share of employment is back closer to the late 1980s, which some believe is a cause for concern as financial innovations are unnecessarily stymied through regulatory pressure.
As a result of these and other factors, today’s electorate is taking a hard look at the Democratic Party and its brand of economic policies. Looking back with the advantage of hindsight, perhaps the Democratic Party leaders will decide that pursuing a less populist and redistributive strategy would have secured it a lock on both the Congress and the Presidency for generations to come. And that it was the focus on reducing unemployment and providing affordable healthcare – at the cost of securing bipartisan agreements – that lay the foundations for a resurgent Republican party.

There's another possibility. If Obama had fought harder for some of these things, he probably wouldn't have made much more progress than he did -- perhaps a little, but not much. But the battle would have been worth having as a means of signaling to the base that the things they care about are worth standing up for, and for painting the other side as obstructionists standing in the way of moving forward. I think there are alternative histories where the administration is more combative and less devoted to bipartisanship that would have turned out much better than the reality we are seeing today. But the Obama I want isn't the Obama I have.

Tuesday, June 22, 2010

Brief Note

I will be on the Paul Mann Show (KHSU), Arcata, CA from 7:30-8:30 p.m. Tim Duy will be on the show as well.

Saturday, December 05, 2009

"Can Science Fight Media Disinformation?"

Is better science education the answer to our "media disinformation" problem?:

War Is Peace: Can Science Fight Media Disinformation?, by Lawrence M. Krauss, Commentary, Scientific American: ...The rise of a ubiquitous Internet, along with 24-hour news channels has, in some sense, had the opposite effect from what many might have hoped such free and open access to information would have had. It has instead provided free and open access, without the traditional media filters, to a barrage of disinformation. Nonsense claims had more difficulty gaining traction in the days when print journalism held sway and newspaper editors had the final word on what made its way into homes and when television news consisted of a half-hour summary of what a trained producer thought were the most essential stories of the day.
Now fabrications about “death panels” and oxymoronic claims that ”government needs to keep its hands off of Medicare” flow freely on the Internet, driving thousands of zombielike protesters to Washington to argue that access to health care will undermine their fundamental freedom to have their insurance canceled if they get sick. And 24-hour news channels, desperate to provide ”breaking” coverage at all hours, end up serving as public relations vehicles for any celebrity who happens to make an outrageous claim or, worse, decide that the competition for ratings requires them to be anything but ”fair and balanced” in their reporting.
“Fair and balanced,” however, doesn’t mean putting all viewpoints, regardless of their underlying logic or validity, on an equal footing. Discerning the merits of competing claims is where the empirical basis of science should play a role. I cannot stress often enough that what science is all about is not proving things to be true but proving them to be false. What fails the test of empirical reality, as determined by observation and experiment, gets thrown out like yesterday’s newspaper. One doesn’t need to debate about whether the earth is flat or 6,000 years old. These claims can safely be discarded, and have been, by the scientific method.
What makes people so susceptible to nonsense in public discourse? Is it because we do such a miserable job in schools teaching what science is all about—that it is not a collection of facts or stories but a process for weeding out nonsense to get closer to the underlying beautiful reality of nature? Perhaps not. But I worry for the future of our democracy if a combination of a free press and democratically elected leaders cannot together somehow more effectively defend empirical reality against the onslaught of ideology and fanaticism. [full version]

There was plenty of nonsense long before the internet and 24 hour news, but it's probably true that these developments helped to amplify and speed the spread of nonsensical claims, though I'd assert that 24 hour news (plus radio to some extent) is more responsible than the internet.

As for solving the nonsense problem through better science education, I do agree that better critical thinking skills would be helpful, that's true by definition I suppose, but that's not enough. Nobody can be an expert on health care, global warming, and all the other important issues they face. The underlying scientific, economic, political, sociological, etc. issues are too difficult (in some cases even for the experts). To overcome that, we have to rely upon people we can trust, often experts who can help to guide us to the correct decisions, but sometimes it's a trusted intermediary. Critical thinking skills can help us determine who to listen to, but it still comes down to trusting that you are getting the best possible analysis of the problem

For good or bad -- I'm still making up my mind about that -- I think that a trust that was once there is gone, at least to some degree. People believed Walter Cronkite, they trusted scientists, Dr. Spock had all the answers about how to raise your kids, but trust in the media, scientists, politicians, doctors, and so on has eroded (yes, economists too). I'd cite 24 hours news and its ilk as part of the reason, but I'm not sure that's been the fundamental driving force behind the change.

Maybe people are right to be more skeptical of the information they receive -- maybe they trusted too much in the past (and there could be an overreaction during the adjustment, causing trust to fall even further). If so, then the increase in uncertainty brought about by declining trust in experts and other sources of information would be consistent with the appearance of more nonsense in the public discourse attempting to fill the void.

Friday, September 18, 2009

"Regulating for an Independent Media"

This research says that advertising has "seriously interfered with the quality, accuracy, and breadth of content and programming in the media." The proposed solution is to ensure that there is "vigorous competition in media markets," and to provide "public funding of informative media as a public good":

Regulating for an independent media: The problems of political and commercial bias, by Matthew Ellman and Fabrizio Germano, Vox EU: There is a crisis in media and journalism, and policymakers have to tackle both political and commercial influence in the media.

Continue reading ""Regulating for an Independent Media"" »

Tuesday, September 01, 2009

Ideas versus Discipline

"This is just the latest chapter of a long saga":

The Guns of August, and Why the Republican Right Was So Adept at Using Them on Health Care, by Robert Reich: What we learned in August is something we've long known but keep forgetting: The most important difference between America's Democratic left and Republican right is that the left has ideas and the right has discipline. Obama and progressive supporters of health care were outmaneuvered in August -- not because the right had any better idea for solving the health care mess but because the rights' attack on the Democrats' idea was far more disciplined than was the Democrats' ability to sell it.
I say the Democrats' "idea" but in fact there was no single idea. Obama never sent any detailed plan to Congress. Meanwhile, congressional Dems were so creative and undisciplined before the August recess they came up with a kaleidoscope of health-care plans. The resulting incoherence served as an open invitation to the Republican right to focus with great precision on convincing the public of their own demonic version of what the Democrats were up to -- that it would take away their Medicare, require "death panels," raise their taxes, and lead to a government takeover of medicine, and so on. ...
This is just the latest chapter of a long saga. Over the last twenty years, as progressives have gushed new ideas, the right has became ever more organized and mobilized in resistance -- capable of executing increasingly consistent and focused attacks, moving in ever more perfect lockstep, imposing an exact discipline often extending even to the phrases and words used repeatedly by Hate Radio, Fox News, and the oped pages of The Wall Street Journal ("death tax," "weapons of mass destruction," "government takeover of health care.") I saw it in 1993 and 1994 as the Clinton healthcare plan -- as creatively and wildly convoluted as any policy proposal before or since -- was defeated both by a Democratic majority in congress incapable of coming together around any single bill and a Republican right dedicated to Clinton's destruction. ...
You want to know why the left has ideas and the right has discipline? Because people who like ideas and dislike authority tend to identify with the Democratic left, while people who feel threatened by new ideas and more comfortable in a disciplined and ordered world tend to identify with the Republican right. Democrats and progressives let a thousand flowers bloom. Republicans and the right issue directives. This has been the yin and yang of American politics and culture. But it means that the Democratic left's new ideas often fall victim to its own notorious lack of organization and to the right's highly-organized fear mongering. ...
August is coming to a close, and congressional recess is about over. History is not destiny, and Democrats and progressives can yet enact meaningful health care reform... But to do so, we'll need to be far more disciplined about it. All of us, from Obama on down.

[On another issue - people "who like ideas and dislike authority" are the types who tend to end up in universities, so this would also explain how self-selection could lead to a disproportionate number of Democrats in academia.]

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Update: Andrew Samwick says this all sounds familiar:

Robert Reich Is Having Deja Vu, Too, by Andrew Samwick: But he doesn't quite realize it.  In his latest post..., he laments the way Democrat "ideas" couldn't persevere against the onslaught of Republican "discipline."  Change a few details, and he's talking about failed Social Security reform in 2005:

I say the Democrats' "idea" but in fact there was no single idea. Obama never sent any detailed plan to Congress. Meanwhile, congressional Dems were so creative and undisciplined ... they came up with a kaleidoscope of health-care plans. The resulting incoherence served as an open invitation to the Republican right to focus with great precision on convincing the public of their own demonic version of what the Democrats were up to... The Obama White House -- a veritable idea factory brimming with ingenuity -- thereafter proved unable to come up with a single, convincing narrative to counteract this right-wing hokum. Whatever discipline Obama had mustered during the campaign somehow disappeared.

Being "coherent" enough to overcome "hokum" ought to be the minimum standard for legislation on this scale.  Like it or not, if you want to use the tools of a democratic government to reorganize markets for health care, you need more than an idea factory and staged townhall meetings.  You need some discipline yourself.  And we're not talking about Ironman triathlon level discipline.  We're only talking about government level discipline: white papers, Congressional hearings, and, critically, a forum in which the ideas in the bills that are moving through Congress are shown to be better ideas than the alternatives.  We haven't seen that at all.  In particular, show me why the bills moving through Congress, with all of their attendant costs, are better than a simple reform consisting only of:

  1. Community rating
  2. Guaranteed issue
  3. Ex post risk adjustment
  4. An individual mandate, with Medicaid for a fee as the backup option

And spare me the whining about how the Republicans don't have a better plan.  They don't have the White House.  They don't have the Senate.  They don't have the House.  They don't have to have a better argument than the claim that the Democrats' plan isn't better than the status quo.  It's not as if the Democrats shot down Social Security in 2005 and have now done something better.

Wednesday, July 15, 2009

How Should We Interpret Goldman Sach's Unexpectedly Large Earnings?

The NY Times Room for Debate is discussing how we should interpret Goldman Sach's compensation pool, which will be an $11.36 billion set aside for the first half of 2009. Here's the unedited version of my entry (you may like the shorter, edited version better):  

Returning to High-Risk Strategies, Room for Debate, NY Times, by Mark Thoma: What does the size of Goldman's compensation pool tell us? It signals several things. First, it gives some indication that the financial sector is improving, and that is good news. There's no guarantee, however, that the overall economy will follow anytime soon. Even with improvements in the financial sector, the recovery of the broader economy is likely to be a slow process.

One of the reasons I expect the recovery to be slow despite improvements in the financial sector is that the economy cannot go back to where it was before the crisis hit. The financial and housing sectors need to shrink, too many economic resources were used unproductively in support of these activities, and the automobile sector is also in transition.

And it's not just that the financial sector needs to get smaller so that resources can be used productively elsewhere, the financial sector also needs to change its ways so that risk accumulations do not threaten the financial system and the broader economy. As Robert Reich notes today, Goldman's chief financial officer tells Bloomberg News that "Our model really never changed, we’ve said very consistently that our business model remained the same." Thus, a second signal from Goldman's unexpectedly large earnings is that firms such as Goldman Sachs are returning to the same high-risk strategies backed by too big to fail government guarantees that got us into trouble in the first place, and that aspect of Goldman's success is worrisome. It's a signal that the excesses that led to the high incomes of financial executives have not ended.

Why aren't the profits and the bonuses paid to executives justifiable? Don't they signal the superior talents of Goldman employees, and don't those talents deserve to be rewarded by the marketplace? I think we can legitimately question whether this is a reward for superior talent. Goldman was helped by bailout funds -- there's some debate about whether it actually needed a direct infusion of funds -- but it's certainly true that Goldman benefitted when its counterparties such as AIG were bailed out. Goldman is also benefitting from its early escape from government constraints that still inhibit the ability of other firms to compete on equal - though perhaps overly slippery and risky - footing.

 So Goldman's earnings are not simply the product of the superior talent of Goldman's executives, there is more to the story. In addition, the bad incentives that executive compensation structures provide was one of the factors that caused the crisis, and the size of the compensation pool tells us there is work yet to be done to fix this problem.

Other entries from William K. Black, Yves Smith, Charles Geisst, David Merkel, and Jeffrey Miron.

Thursday, July 02, 2009

Tom Keene's "On the Economy"

From earlier today:

Thoma Says Fiscal Policy Needs 6 to 9 Months to Take Effect
July 2 (Bloomberg) -- Mark Thoma, professor of economics at the University of Oregon, talks with Bloomberg's Tom Keene about U.S. employment, consumer confidence and the fiscal stimulus. Listen/Download

[Recent podcasts include: DeLong, Roubini, Eichengreen, Ritholtz, and Blinder.]

Tuesday, May 19, 2009

Notes

This is just for my records:

The Paul Mann Show, Arcata, CA  KHSU May 19, 7:30-8:30 p.m.
The Mark and Dave Show, Portland, OR  KEX May 12, 3:30-3:40 p.m.
The Mark Martinez Show, Bakersfield, CA  KGEO May 9, 3:30-4:00 p.m.

I also, on occasion, do the Mark Thoma show in Springfield, Illinois.

I've been wondering why most of the hosts who call me are named Mark, or even share my name completely, and if that's the main reason they call (it's definitely the reason I was called in one case). So I was glad when Paul Mann called me to do his show again.

Wednesday, April 15, 2009

On the Economy with Tom Keene

Here's an interview I did yesterday for "On the Economy" with Bloomberg's Tom Keene: Listen/Download.[Alternate link: "Thoma Says Politics Limiting U.S. Efforts to Aid Banks. April 14 (Bloomberg)"]

Tuesday, April 14, 2009

Regulating Risk

More Blog Wars:

Don’t Leave the Door Open to Another Financial Crisis: ...perhaps the work on complexity analysis used in analyzing network connections in fields like physics and computer science can be used to analyze  the connectedness of financial firms. The mathematics to do this are already well-developed, and this should be feasible. Both the number and size of the connections would need to be tracked, and a risk index could then be developed.

Then, and this is the regulation part, I would propose developing something like the measures used to assess market or monopoly power discussed here. To determine if a firm is too large and powerful, a measure of its market share is constructed, and if that share crosses a predetermined threshold, further action is pursued by regulators. There’s no reason we can’t do the same with measures of connectedness among financial firms...

Response from Houman Shadab: Why Too Much Regulation Increases Risk.

Sunday, April 12, 2009

Interview

I was on KLCC's Sunday at Noon earlier today (there is also a taped interview of Tim Duy about halfway through). The interview is archived here.