Saturday, November 21, 2009

Friedman and Kristoff get it

In a column published in the NY Times on November 7 of this year

Thomas Friedman basically gave up on the prospects of peace between Israel and the Palestinians in the short term, and came out against any further US involvement in trying to restart negotiations between the parties. I (sadly) agree strongly with this column, the thesis of which is that the US should stop bothering to try and broker a peace agreement that neither side wants! If they decide they want it, they know where to find us. As he put it, borrowing a line from the State Department, the Israelis want negotiations without a deal (so they can be seen and see themselves as trying for peace while always expanding their precious settlements which, given the dramatic downturn in violence from the Palestinians, is Israel's primary short term goal these days), while the Palestinians want a deal without negotiations. Oh sure, the Palestinians want a peace treaty, but even those that will negotiate with Israel, such as Abbas, don't want to actually give up anything, such as a never-will-exist right to return to Israel proper, or a total giveback of all lands captured in 1967. (I favor such an Israeli giveback, except for the old City of Jerusalem, as in Israel's selfish interests, but never mind...) And why won't Abbas and his ilk negotiate about now? Because even so-called moderates in their midst might well put a bullet in their heads. Oh, and Hamas runs the West Bank, and their official position is that Israel has no right to exist, and of course no formal negotiations. Lovely. Even if Israel WANTED a workable peace deal, which in my opinion it basically doesn't, it has literally no one to negotiate with!

So neither side really wants to talk turkey. I said a while back that I'm opposed to Israel resuming peace talks because Abbas has no base and can't deliver anyone. While that was and remains true, Frideman's argument is vastly better than mine. No more negotiations because neither side really wants to reach an agreement. So taking Friedman's insights and formulation into account, my plan is: (1) leave both sides mostly to their devices; (2) prevent the Israelis from further self-destructive settlement expansion; (3) let the Gazans stew in their rocket launching juices; (4) ignore the West Bank; and (5) be done with the whole damn thing. Friedman's right, if they want to talk, they know where to find us. I wish I could support peace negotiations, but right now I don't, for the reasons so very well stated in Friedman's column. Excellent job, Tommy!

As for Kristoff, in his column in the Times Thursday November 19th,

he said that the GOP health care naysayers of today are saying many of the same things, sometimes literally the same things, that (mostly) GOP opponents of the creation of Social Security in 1935 and Medicare in 1965, said. Back in the day, the naysayers said Medicare would ruin health care, it was a step to socialized medicine, the government would get between you and your doctor. Nonsense. In 1964, way too many elderly in America HAD NO REGULAR DOCTOR because they couldn't afford it. After 1965, they could. Medicare was the reason. Sure, its mighty expensive, and has to be radically altered or it will, literally ruin the country, but America without Medicare is literally unthinkable. Elderly people having to chase down free/reduced cost care. Monster unmet health needs. Gigantic numbers of elderly dying for want of readily available care. Appalling. Kind of like what happens to thousands of uninsured annually today, you understand, but radically worse, because the elderly need health care far more than younger folk, and are in a worse position to find information, reduced cost or free care, etc. In short, it would be a nightmare for the nation and a living hell for way too many of the elderly. As for the politics, if the GOP ever put to a vote a full repeal of Medicare it would probably be the end of them as a party, literally. I could imagine the democrats winning a 50 state landslide by 25 points, and holding 80-85 seats in the Senate and a similar proportion in the House after the GOP tried it. Medicare is wildly popular among the elderly, for all of its flaws, and both parties know it. It is also popular among the non elderly population.

As for social security, the "end of the progress of a great country," was the quote from one speaker. That's right, ensuring that no elderly person in America lives in truly abject poverty will finish us off as a great nation! Think we're richer and better off than in 1935? Or 1945? By a wide, wide, wide margin, in every measure. Longer life expectancy, lower infant mortality, better health, more/better cars, vastly more/better consumer goods, and far more. Social Security was down a path to the dreaded "socialism." Without getting into silly labels, would it be better if millions upon millions of elderly were in dire poverty? I think NOT.

Now both programs have huge downsides, cost and otherwise, don't get me wrong. But their upsides are absolutely massive; in my humble opinion, they radically changed the country for the better!

Kristoff is 100% right! The democrats should bring up these long-ago objections from GOP naysayers, demonstrate that they proved wildly off the mark, remind the public that the GOP (and some democrats, to be sure) have been against the great progress represented by the two huge social entitlements, medicare and social security, and the same arguments that are wrong then are wrong now in today's health care debate. Bravo, Mr. Kristoff! I couldn't have said it better myself!

Saturday, November 07, 2009

Jobs created by Presidency.

While I was listening to the un-illuminating debate about health care on the house floor, I decided to show you all just how bad George Bush's economic record was.

In the 4 years of Jimmy Carter's presidency, the economy gained 10.5 million jobs. That's actually a huge number, but I'm not surprised. This is when women were entering the labor force in huge numbers, and we were a lot younger as a nation than we are today, so more workers were entering the workforce every year. Its not nearly as impressive as it sounds, but not godawful either.

In Reagan's 8 years, the economy created 16 million jobs. What's interesting is that only 5 million and change were created in his first 4 years, as a result of the bad recession of the early 1980s, whereas 11 million were created in the last 4 years in the 1980s boom.

George Bush senior took over when the economy was strong, so his 1-term presidency should not have created many jobs. And it didn't, only 2.6 million in the 4 years. Not as bad as it sounds, but not good.

During Clinton's 8 years the economy created a whopping 22.5 million!!! Now the economy was weak but recovering when Clinton took over, so his first term should have had a bunch of new jobs created. And, with a larger labor force, you would expect a larger number of jobs to be created than in past presidencies. Still, this is a HUGE, HUGE number.

During Bush 43's 8 year disaster of a presidency, the economy created 2 million jobs!!!! Yes, 2 million net jobs in 8 years!!! Now the 2001 recession wasn't his fault AT ALL, and he took over right at the end of a boom, so the fact that literally zero jobs were created in his first term is somewhat forgivable. But only 1.8 million in his second term? Beyond pathetic!!!

Review of 8-year presidencies:

Reagan: 16 million.

Clinton: 22.5 million.

Bush 43: 2 million.

16, 22.5, 2. Yes, there are mitigating factors, but not ANYWHERE near enough to account for this huge, HUGE difference in economic outcomes. Amazing. Hey, who out there still likes Bush?
Have my economic projections changed?

I was recently asked whether, given the still awful employment reports coming out every month, whether I'd care to revise my economic projections. The answer is basically no. I was precisely correct regarding when the recession would end and the growth in the economy in the last quarter, but I was perhaps too optimistic in terms of the recovery of the job market. Job losses have slowed dramatically. The economy lost 645,000 jobs/month from November 2008-April 2009, 357,000 from May-July 2009, and 188,000/month from August-October. So the job market is clearly deteriorating at a much slower rate than late last year and early this year.

But less bad being the new good isn't really very good. I actually thought the job market would be closer to zero jobs lost by now. That less unhappy day is probably still a few months away. But it won't be long before we're gaining jobs, and after a few sluggish months of job growth I still think that by the middle of next year job growth will be quite strong.

So nothing has changed my prediction for a strong economic recovery, which will be clearly felt by the middle of next year. I may have been off on timing, but everything else stands.

A window into my thinking can be seen by the striking Third Quarter 2009 Productivity Report, released Thursday.

The money sentence is, "Nonfarm business sector labor productivity increased at a 9.5 percent annual rate during the third quarter of 2009." This is the best quarterly result since the third quarter of 2003, and is a huge number. Since that third quarter of 2003, the next highest number was the 6.9% of the 2nd quarter of 2009, and the next highest 5.5 percent in the third quarter of 2007 (just before the recession began). No quarter since 1999 has been over 10%, so 9.5% is a big number. Output increased 4% (not bad at all, but not quite a boom), and hours worked DECREASED 5%. Business cannot keep that up for long at all. Fewer hours worked and more production. Very soon, if more production is desired by business, more worker hours will be needed. This will first be accomplished by asking current workers to work longer hours. There is, sadly, plenty of scope for this, which is why I may have been too optimistic about how fast the labor market would recover. However, you can only produce so many more widgets (or cars, or refrigerators, or legal briefs) with your current staff before you have to hire more people. That point will be reached soon, probably during the Winter or very early Spring. From there, I expect demand to be so robust, as a result of government stimulus, very low interest rates, a lot of money sloshing around, and pent up demand for consumer goods, including, incredibly, cars, that businesses will have to hire a lot of workers, quickly, and continue doing so for a long long time.
Health Care reform passed the House. 220-215, only 2 votes to spare! Nancy must have done yeoman's work arm twisting "moderate" dems. One Republican voted for it, which is one more than I expected. Although the House did pass it, the margin was SO narrow that it gives a lot of cover to wavering moderate dems in the Senate.

Just a short time ago, the House passed one of the 2 or 3 most important pieces of legislation in the last 50 years. Yet another step in the never-ending journey towards a just and more sensible country was passed. The Senate is taking its sweet time, and then there will be a conference committee, and the House passage was a nearly foregone conclusion for months, but it is still one of the most dramatic bills ever to pass the House. This is a truly historic day, a key step on the road to a more sane health care system. That less-than ringing endorsement STILL means that this is a Monster Important Bill. Health care is THAT important.

This post is going to be on the rambling side, because I have a few different threads going through my head, and don't want to do two separate posts, so please bear with me. Health care is crucial and I have some interesting things to say, I think, so bear with me.

In general, I'm of two minds on health care reform. The health care reform I REALLY prefer is frightfully simple. The House bill is 2,000 pages long. My health care bill is literally a paragraph: "All Americans shall have the right, and be required, to purchase access to Medicare at prices to be set by a Panel of 5 members appointed by the President and Confirmed by the Senate. This Committee, called the Medicare Committee, shall have the power to promulgate rules and regulations it deems appropriate, with Congress having the right to veto said regulations within 30 days of their promulgation; otherwise they have the force of law."

That's it. Basically, Medicare access for all. The idea is for private insurance to whither on the vine and end up with a single payer system. But Obama and many others deemed that FAR too radical, and they are surely correct. The democrats just wouldn't go for it.

So we end up with reform designed to make the current system work less dysfunctionally, less badly, rather than, as I much prefer, ripping it up, stomping all over it, burning it to a crisp and forcefully throwing it in a landfill, to die a well-deserved death.

But if you're going to make the health care system work less badly, the House Bill seems to me to be a very good start. I haven't followed the health care debate closely, for some reason, but this bill does restrict the more odious health insurance company practices. We appear to be stuck with the private system, but it will be less awful. The success or failure of this great reform effort, assuming it passes, will be in whether health care costs stop soaring far beyond inflation, and instead go up at around the rate of inflation. That change may not sound like much, but over a 10-20 year period, its HUGELY HUGELY important. We spend circa 2.2 TRILLION dollars a year on health care. Call it 2 trillion for simplicity. A difference of 5% in the rate of growth of health care spending is $100 BILLION a year in growth in spending avoided. That's well over a trillion ANNUALLY in avoided growth in health care costs in 10 years time, and far more than double that in 20 years time. I know I sound a bit hysterical when I say this, but slowing the growth in health care costs is, literally, crucial for the survival of this nation. Without exaggerating one iota. Every other problem America faces absolutely pales in comparison to the inexorable growth in health care costs, and the hugely dysfunctional health care system. And even though the lack of insurance by 50 million people is HUGELY significant, costing by most estimates more than 30,000 lives per year (that's nearly a 9-11 EVERY MONTH) self inflicted by our insane health care system, even that enormous problem pales in comparison to the ridiculous costs in our system. If we spent per person what France (a rich complex economy and a healthy country) spends each year, we would spend about $800 BILLION less each and every year on health care. $800 billion!!! That amount of money just dwarfs everything else in our national discussion. That's the total cost of the Iraq war-- EVERY YEAR, above and beyond what France spends, if only we spent what France spends per person! This is, beyond a shadow of a doubt, the most significant domestic issue facing America. Its fiscally critical, its the civil rights issue of our times, its so very important!

Civil Rights? Huh? Has Flyingpinkunicorns flown into a brick wall and suffered a concussion? Not at all. I think that health care should be a right, like the right to equal justice, the right to a free to the student public education through high school, the right to freedom of speech. If we don't provide AS A RIGHT health care to every single American (and not merely access to an emergency room) I think we should e-mail Gordon Brown, the PM of Britain, CC the Queen, and tell them we screwed up in 1776 and we want back into the British Empire! I really do-- I don't think we are a worthy nation right now because health care is not a right. It should be. That's a civil rights issue if ever I saw one; we discriminate on health care access based on ability to pay. If anyone proposed instituting charges for public schools such that poor parents couldn't afford to send their kids to school, in an attempt to secure a better life, there's be million person marches and riots! If we had previously enshrined health care as a right, and tried to take it away, the same would result. We should move towards making access to health care a right. Now you don't have a right to the very best private schools, and I'm actually 100% ok with having more expensive and less expensive plans. But access to a basic "Ford" plan should be, must be, a right. The democratic health care reform bills do NOT do this, but they do move several steps in that direction, which is why I support the effort on civil rights grounds.

I watched a lot of the house speeches today. They were not illuminating. There are a great many things I could say about the STUPID things the Republican members said, but I want to focus on just one. The GOP fancies itself the party of freedom. And at least 5-7 members mentioned the loss of FREEDOM in the House bill. You know, those who would sacrifice liberty for security deserve neither, blah blah blah. That's one of many sayings that if you think about it for a nanosecond you'll realize just how silly it is. Now government can EASILY go too far, and restrict liberty without increasing security correspondingly. See airport security. But having regulations decreases freedom? Want the freedom to drive without the restriction of traffic lights? Let the market decide? How about preventing insurance companies from discriminating based on pre-existing conditions. This decreases freedom for insurance companies, but as for individuals, not so much. Oh, the horror of government bureaucrats getting between you and your doctor. What do you think the private insurance sector does, every hour of every day in every state? This is just silly. Think most seniors think they've lost freedom by being on Medicare? Go ask them, Medicare is hugely popular. Veterans care, despite some problems, also works fairly well. The idea that millions of uninsured, myself included, who will soon enjoy vastly cheaper access to the health care system somehow are losing freedom is, of course, insane. Even those who have insurance will, if this bill works, pay less/their employers will pay less in coming years. Not much of a loss of freedom! The only persons losing "freedom" are health insurance companies, which have had far too much freedom and have done a huge degree of harm with it.

Anyway, there are some anti "freedom" provisions, to be sure. But overall, I'm with FDR who spoke of freedom from want and freedom from fear. Its easy to take that way too far, but this legislation doesn't even come close. By and large, this bill rationalizes to an extent a partially irrational health care system. It puts sensible regulations on insurance companies, protects individuals from arbitrary practices, and so on.

Now don't mistake for a second what I've said to indicate that I buy what the democrats are saying. What the democrats are saying is in many cases nearly as silly as what the GOP says, which is impressively silly indeed! Here's my favorite: several female legislators said that they rise to support this bill because it prohibits insurance companies from charging women more than men. Now let's assume that they insurance companies do so not out of animus, but because women's health care costs more. I don't know this to be the case, but I'm assuming it, as its overwhelmingly likely to be true.

So why on earth shouldn't insurance companies be allowed to charge more to those who cost more to service? GEICO charges more for bad drivers than good drivers, because paying out claims for bad drivers cost more. This makes all the sense in the world. Now if government thinks for social policy reasons that women shouldn't be charged more for health care (a somewhat reasonable position) then it should be government that pays for this preference somehow, either for a credit to the private sector or, better yet, by being the insurer (I support a single-payer system, strongly, for all of its flaws). But why on earth should this preference be imposed on the private sector? Similarly, why should an insurance company be forced to cover a pre-existing condition, presumably without being allowed to charge an appropriate rate? If someone has diabetes or the like, and is likely to cost a lot, and is getting new insurance, why should the insurance company be forced to insure at less than a market rate? This forces a private, for profit business to subsidize someone it does not have a business relationship with. That's INSANE! INSANE! It really is. Should American Airlines pay if I get cancer next week? No? Then why should a new insurance company? Because its in the insurance business? But I thought the private sector should be allowed (in the bounds of other laws) to act as it pleases. You are taking away what the private sector can do usefully; set prices. Using the private sector in this way is crazy; you get all of the downsides of the private sector (incentives to deny care, huge marketing costs, incentives to delay payment, etc) with few or none of the upsides (a market based pricing mechanism). The design of the democrats' health care reform is so far from optimal it isn't even funny. Of course, its still far, far better than our crazy, insane health care system, but it sure as heck isn't the way I would design it.

If you want to see a democrat saying what I'd like to say about the GOP and health care, look up on the speech by George Miller on Saturday night the 7th at 8:40 p.m. eastern. HOO BOY! Tell em what you really think George! And he's 100% right. The GOP has no answers for the huge problems in our health care system. Zippo. Well, they have a few good ideas. We do need to reform the medical malpractice system. Its not nearly as big a deal as you've heard, but it is a problem, a meaningful one, and it should be addressed. The government should be the primary watchdog over bad doctors, either state or federal. But that doesn't really happen overmuch now; so the tort system takes on this role. And it does so hugely inefficiently. So reform is needed.

And the GOP is going on and on and on about allowing insurance companies to sell across state lines. Now this creates huge new marketing costs, so I'm not wild about it. Still, if we're stuck with this insane system, we may as well have the competition that selling across state lines will bring. Would you prefer that only 2 or 3 car companies be allowed to sell in your state? I didn't think so.

But these "ideas" do literally nothing to deal with the uninsured, and little to nothing to deal with runaway health care costs. The GOP is out of ideas. Completely out. If you're in any way surprised by this, you haven't been reading my blog! Or paying close attention. Well, that's what we have bloggers for!
Obama won the Nobel Peace Prize. Huh? I'm a bit tardy, but better late than never.

This announcement had me scratching my head from the instant I heard about it.

According to the Nobel web page, "Since World War II, the Peace Prize has principally been awarded to honour efforts in four main areas: arms control and disarmament, peace negotiation, democracy and human rights, and work aimed at creating a better organized and more peaceful world."

Well, although it does say "efforts" rather than "results," what special efforts has Obama made? Talks with North Korea and Iran? Whoopee. A return to American engagement after the Cowboy diplomacy of the Bush years, particularly the first term? Worthy of a pat on the back, but a Nobel Peace Prize?

At least for me, one should have tangible ACHIEVEMENTS in areas involving peace and human rights before receiving probably the most prestigious award in the world. Starting the peace process between the Israelis and Palestinians in the early 1990s DID qualify in my view, even though it didn't work out. At least there was a tangible accomplishment, substantive talks where there were none before with a clear possible path towards the resolution of one of the world's more intractable conflicts. But talks with Iran having just begun, following years of talks with the Europeans? Worthy of note, perhaps, but a Nobel? In short, whatever ones views of Obama, he has only been in office 9 months, and on the international front has nothing tangible whatsoever to show for it. Now that's not a damning indictment or anything, but we're talking about the NOBEL PEACE PRIZE here.

Oh, and while we're on the subject of PEACE, he's only very slowly winding down our 100,000 troop commitment in Iraq. What are we accomplishing there for regional, or even local peace? Don't know. And he's considering a troop buildup in Afghanistan, which will more likely than not lead to years of inconclusive war, civilian casualties, and all without Afghanistan being a viable nation state under a stable government at the end of this process. Now perhaps this can be defended, but we're talking about a NOBEL PEACE PRIZE here.

Look, I've predicted that the economy will boom, health care reform will pass and Obama will wind down our wars. Despite a VERY VERY slow start, I'm still at least lukewarm on him, if not a little better. But this award was just silly.

What really happened is that the elites of Europe were just horrified by Team Bush, and are so thrilled to have them replaced by a team that actually wants to talk to Europe and values its opinion, that they threw a wholly undeserved Nobel at him. Its their award to cheapen, I suppose, and they have indeed cheapened it, and not just a little. Nice going peoples.

The Obama boom has begun, Part II, the Politics

As I said in a post a few weeks back, the Obama boom has begun. The economy will do spectacularly well over the next several years, far better than nearly everyone is predicting. In addition to the significant economic ramifications, as discussed in the companion post, the coming boom will have big political ramifications.

As of this moment, the democratic part of the US electorate is dissillusioned with Obama. Nothing seems to have changed, and all we hear is TALK about health care, not action. Well, this too shall pass. It is overwhelmingly likely that a bill will be signed into law, and no one will care down the road that it took ridiculously long; instead, the voters will ask; what's in it for me.

Similarly, people are frustrated and pissed that the economy still sucks. If my Obama Boom does come to pass, and I'm even surer than before that it will, all will be forgiven. Unemployment was still over 7% when Reagan won 49 states in 1984, he won such a roaring landslide because everyone could see that things were getting much better. The same will be happening before 2012, and Obama will be similarly headed to a rocking reelection landslide.

Obama will likely win a 40-45 state reelection landslide. If my predictions about the economy are right, and nothing else ala war or watergate goes disastrously wrong, Obama will win reelection by 15 points.

Second, the boom will come in time to avert what could otherwise be bad losses for the democrats in the 2010 midterm elections, and instead leave the dems with only modest losses.

Third, and much more important than the short term political ramifications, the coming Boom will likely serve to remind Americans that government can and often does things right. The reaction to the disastrous meltdown of 2008 was spectacularly effective, and, I predict, the reaction to the coming Boom, with the fed slowly raising interest rates and taking money out of the economy, money it created in order to stimulate the economy and prevent a depression, will be almost as successful. I predict that the number of Americans who think government can actually do a lot of good, and get a lot right, will soar, from the very low numbers of today to numbers more in line with historical norms. I realize that this prediction is out there, even wacko. But when you try and predict the future sometimes there ARE sharp breaks with the present. Of course when you're wrong you look super foolish. I'm not saying that faith in the government will truly soar, but it will rise. And since the GOP is the party of government can't do anything right, it will be electorally disasterous for them. Not only will Obama win big, but he'll have big coattails. The dems could gain 15-25 house seats and 5-8 Senate seats in 2012 if what I forsee comes to pass.

Put another way, the above will make GOP attacks on government fall on far less receptive ears than they have since the late 1970s, which will have the extremely positive side effect of forcing the GOP to come up with a new message. Say, the government spends too much, and doesn't do what it does well. THAT's the message that the GOP used to send, and its a vital message! They've gotten away from that, to "Government isn't the solution, government is the problem," Reagan's famous line. Well, mostly not. If you're old, young, sick, or in any other way not fully able to take care of your needs as well as a healthy middle class adult, government IS the solution. Oh, and even if you are middle class, prosperous and well, you need government to regulate the financial markets, the health care system, and so on. Ask Lehman. Ask millions of foreclosed homeowners. Yes, Middle America, I'm talking to you! Not to mention getting the basics right. Americans understand that Bush ran two wars badly, failed during Katrina (with plenty of Louisiana (democratic party) failure thrown in, left the economy teetering on the edge of depression, and allowed America's problems to fester. Even people who don't follow politics overmuch get that. Ask President McCain.

Now, if after a few years of Obama the economy is booming, health care is being partially reshaped, the war in Iraq is winding down and the war in Afghanistan is being won, all of which I predict, faith in him, the democrats, and the federal government in general, will go way up! This will have profound ramifications, some of which I have outlined, some of which I can't even begin to guess. But this is the near term political future. Democrats up, Republicans down further, and, after a weak showing in 2010, democrats should be able to make gains all around in 2012 on the coattails of Obama's landslide reelection.