On, Wisconsin!

Paul Krugman's column Sunday, Wisconsin Power Play, detailed the parallels between Cairo and Madison; he concludes that as with Mubarak the real storyline is about power. As the economy continues to struggle with the effects Wall Street deregulation induced on Main Street, the crisis of confidence in Wisconsin Governor Scott Walker's leadership is because his proposal would further accelerate the disturbing trend: redistribution of wealth away from the middle and lower classes.

Of course, logically the proposal flies in the face of the evidence about his spending and budget decisions, but he evidently thought he could slip that by in the current political climate. After all, as Pew research from earlier this month points out, while lots of people favor "cutting spending" when you get down to brass tacks it turns out that the vast majority like what the government is spending the money on:

So that leaves a real problem for those who campaigned on cutting the size of government: just what are people really willing to give up?

Walker's call to remove collective bargaining rights amounts to opening a new front in class warfare, and he's at the pointy end of the stick.

"...it has nothing to do with helping Wisconsin deal with its current fiscal crisis. Nor is it likely to help the state’s budget prospects even in the long run: contrary to what you may have heard, public-sector workers in Wisconsin and elsewhere are paid somewhat less than private-sector workers with comparable qualifications, so there’s not much room for further pay squeezes."

Paul Krugman, 20 Feb 2011

I feel for Governor Walker; new bosses that flex their muscles don't always understand the limits. Less than two months into his term he's learning that ascending to the executive branch doesn't come with absolute power. Voters who liked the sound of lower taxes in November apparently don't expect vague promises of "fiscal discipline" to reduce what's invested in our children's education or the support we guaranteed military veterans. Meanwhile certain of Walker's own spending increases smell of corporate welfare and backroom deals.

The Governor is losing the battle of public opinion. People in Egypt are ordering pizza for demonstrators in Madison, for crying out loud. If moderate Wisconsin Republicans can't mediate his position and broker a deal quickly, irate people in Wisconsin recalling that government bailed out banks and learning more about the Koch's support for their new Governor may just get beyond rumors they're talking about organizing a recall and actually do so -- which will make Walker's current concerns about losing face for reversing a strongly-stated position pale in comparison.

Thomas Hayes is an entrepreneur, former Congressional Campaign Manager, strategist, journalist, and photographer who contributes regularly to a host of web sites on topics ranging from economics and politics to culture and community, who incidentally stands in solidarity with the citizens and workers in Wisconsin refusing to let their Governor's self-created budget "crisis" and new spending priorities be re-cast as a reason to undermine contractual obligations and collective bargaining agreements.

You can follow him as @kabiu on twitter. Tweet

Blue DOUBLE Cross - you call that a plan?

That didn’t take long. Less than two weeks have passed since much of the medical-industrial complex made a big show of working with President Obama on health care reform — and the double-crossing is already well under way. Krugman's May 21 OpEd points out just how two-faced big insurance is. They will fight reform. PERIOD.

The insurance company plan turns out to be "protect the status quo."

Their "plan" is to let costs go on rising! Their plan is corporate bureaucrats and HMOs getting between you and your doctor to protect their profits - accountants deciding your doctor doesn't know what should be prescribed. If we address two things, 1) people who lose or can't get insurance, and 2) the totally out-of-control cost spiral, while we sensibly challenge insurance companies by creating a new public health insurance option to let the free market work its magic, everybody will be able to afford good health care.

Their plan is to keep cherry-picking the healthy and the wealthy and dumping you if you commit the sin of getting sick or injured - that's the insurance companies self-interested idea of cost control. You can't blame them, really, they're just trying to keep the CEOs and lobbyists well-paid, and it's been working for 30 years or more, and they've got many of our elected officials bought and paid for already.

There's no incentive for big insurance companies to control health care costs - they haven't been competing. The first hint they might have to do so got them to the table. They're scared stiff at the prospect of a public option, because they surveyed people and the truth is folks love the idea. I'm not talking about single-payer, mind you - the President isn't trying to turn us into England despite what you hear about socialized medicine. This first step that insurance companies oppose is giving Americans a real choice.

But the big insurance CEOs only paid lip-service to the President for fear of bad PR. Now they're doing an about face. Krugman skewers them, including the fact that they've had TV ads in the works since well before their meeting in D.C.

Health care isn't the problem, the high cost of getting coverage is the problem. Insurance companies and their champions on Capitol Hill oppose real reform; reform threatens their profits.

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Paul Krugman is WRONG about The Obama TARP Plan - Once Again

On March 24th, I wrote a short post on Economist and NY Times Columnist Paul Krugman and created this video below.




Today, in the wake of Newsweeks' rather unfortunate April Fools Day article on the Princeton Professor (which presented him as a kind of edgy intellectual but lacked real substance in the discussion of why Krugman is wrong about Obama), I decided to offer this expanded blog post. The problem is that Krugman is really angry that the Obama administration is and has ignored him and this emotion has driven a sloppy intellectual approach, paced by the fact that he's not presented a plan for our troubled banks, all the while taking an aim at the President's plan that has the effectiveness of a drunken sailor at an arcade shooting gallery.

Who is Paul Krugman?

Professor Krugman is a decorated International Economist, who recently - in 2008 - won the Nobel Prize in Economics for his solid theory on two-country trade. Here Krugman attacked the standard idea of two-country trade by explaining with some heft that a country like the United States that makes a Cadillac sports sedan will see that car purchased to some degree in Germany, which just happens to produce the competitor BMW 5-series. In other words, rich countries trade like goods more often than poor country to rich country or vie versa. This idea was path-breaking in that the economies of scale were not included in traditional models of trade, so pretty much any country could trade with another one in this immmaginary World. Krugman's theory explained the real World.

Now, why do I have an interest in this? Because my background is in urban economics and I focused on it at both Texas-Arlingron and Cal-Berkeley, but fell in love with a kind of way of modeling relationships called System Dynamics which causes one to see the World as a set of feedback and control connections. And that's where I break with Krugman. As a traditional economist, he does not see beyond a set "straw-person example" and into the more complex World around him -- the political aspect of economics (the political economy as its called) is lost on him, which is why the Obama Administration does not embrace him.

The Obama plan for bank troubled assets, using Troubled Asset Relief Program money to finance non-recourse loans to encourage investors to buy the "junk" is one example (called the "Public-Private Investment Program for Legacy Assets"). Krugman attacks this plan around the idea that we're giving taxpayer money away to create this market, then sets the idea that it will not work without emprically showing why it will not do so in detail or offering an alternative plan.

What Krugman missed is a read of the political landscape such that Obama's TARP plan is not only one the market asked for, and for months, but was needed to take the bad debts off the banks books. And that's what Krugman misses. He rants on about the plan's possible failure from within its own system, but says nothing -- zip -- about getting the assets off the banks books, which is the real success. Then Paul makes a real intellectual error by writing that the Obama administration sees the bank financial system as sound, which it does not, otherwise this plan would not exist.

He then writes as if the plan uses all of the TARP money, rather than the truth, which is that it uses a small portion of it, thus leaving enough left over for other plans.

As I have stated again and again, the plan lacks a payment to American taxpayers under $100,000 of $3,500 each -- or about $380 Billion -- to essentially help banks and to a degree stimulate spending. Why? The vast majority of Americans don't have massive debt problems asmany don't carry credit card debt and for those who do the average level of credit card debt is about $10,000, so this plan helps reduce that by one-third. But people aren't going to leave the money under a matress, they will put it in banks, thus helping both Wall Street and Main Street. Remember the unemployment program, designed for those who were laid off from large companies in the past, does not help the apprentice plumber who has a decade-long resume of customers that suddenly dried up.

See, my idea is a supplement that I introduced a while back in a talk with CNN's Ali Velshi, who agreed it could help. But it fits within the economic and political reality of what we need to do to fix America's economy in a way that Krugman's plan does not do.

Oh. I forgot. He doesn't have a plan.

In closing, I do not embrace crits of this post that are based on the "You're not an economist" view or juvenile name-calling, which is common online but not allowed here in my space, but I do like a good debate on rigor and detail. Bring it.

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Never underestimate the power of a woman.

The U.S. economy continues to reverberate from the policies (or perhaps lack of policies) that the Bush-Cheney administration championed since taking office 8 years ago, and by most accounts we've now lost over 3.5 million jobs during the recession that they bestowed upon the tax-payers and future tax-payers. 600,000 Americans have been laid off in January alone. The mortgage foreclosures continue unabated, the unemployment rate is soaring, yet now that Bush is out of office certain members of the U.S. Senate and House of Representatives continue to support the trickle-down theories that brought us to this economic precipice. But it's not their fault.

The bloc that blocked

I don't mean the state of the economy - that's the fault of everybody who ever championed, or simply ignored, deregulation of the banking and financial industries. No, it's not their fault that they're engaged in partisan posturing at a time when the country has delivered a broad mandate for new approaches, because House Speaker Nancy Pelosi tricked them. The Speaker got the minority to circle their wagons, to vote as a block against the first version of the new Stimulus bill even though they had been supportive of Bush's hurried spending bills to bail out banks as the previous administration was winding down, and now the Republican Senators are largely following suit.

Pelosi ran a bill through quickly for a vote, and now they're posturing desperately while the tax payers and voters watch more closely than the politicos are accustomed to - they're being downright obstructionist, and that leaves the Democrats in a stronger position.

Some strategists might suggest that at such a juncture the wise thing would be to give the newly elected President what he asks for, hoping that by the time the mid-term election rolls around they'd have something to point their fingers at if it fails while saying, "we did what he asked." But the voters are seeing the Republicans suggest we try "cutting taxes" again. Cutting taxes sounds pretty good to the people we've bailed out on Wall Street, I suppose, but when you're worried about losing your job and keeping food on the table your concern is not for the Capital Gains tax which is already considerably lower than the Income Tax, your concern is over staunching the flow of jobs before unemployment spirals to the levels of the Great Depression. President Obama's right to insist on timely action, the same sort of need the prior administration finally woke up to in the waning lame-duck days of their power.

Theatrics are alive and well in the U.S. Senate

What are the Republicans opposed to? Not so much, it turns out: something under 1% of the spending, yet rather than come with proposals for the voters to contemplate their doing what worked in the past, made-for-Fox drama and histrionics, name calling. While the President is visibly reaching out to find common ground, some of the most influential Republicans in the capitol are playing for sound-bites of their outrage and opposition, "...you have to start from scratch" - they failed to realize that Nancy Pelosi invited them back into their old, discredited "we-they" postures for the national audience, and failed to understand the urgency and pain of their constituents as the layoffs and foreclosures continue.

The reality is the situation is urgent; we can't allow the economy of the nation to falter and stall, we can't afford it. The decisions have to be made and plans launched by people who can't remotely follow the calculus that economists such as Paul Krugman or Mark Anson employ. Americans want to get back to work - and we want our elected leaders to do their work swiftly so we can stop laying off teachers and assembly line workers and losing their productive participation in our economy.

Maybe if we enforced layoffs, or even pay cuts, in Congress in proportion to the rest of the country, or the budget, they'd get off their rhetoric and get the bill passed.

Paul Krugman wins Nobel prize

Paul Krugman, economist and NY Times columnist, has won a Nobel prize. From Bloomberg:

President George W. Bush, whose approval ratings are at historic lows as the U.S. veers toward a recession or worse, got yet another thumb in the eye when one of his most vociferous critics was awarded the Nobel Prize in economics.

While Princeton University Professor Paul Krugman was honored ``for his analysis of trade patterns of and locations of economic activity,'' he's more widely known for twice-weekly columns in the New York Times and appearances on television, in which he regularly attacks the president on the war in Iraq, his tax cuts and other issues.

Krugman, 55, doesn't mince words. He has accused Bush of leading the country into ``strategic disaster and moral squalor,'' and his columns and Times blog entries carry headlines with such blunt entreaties as ``Please Go Away.''

Even though Krugman's award was for his economic theories and not his criticism of Bush, the prize elevates the profile of an already-prominent Bush critic, said Jim Davis, a political science professor at Washington University in St. Louis.

``People will just see that a well-informed economist who has been critical of the Bush administration got the Nobel Prize, that's the take-away here,'' Davis said.

Of the more than 800 Krugman pieces listed on the Times Web site since he
became a columnist in 1999, almost 600 of them mention ``Bush,'' a search of the
site shows.

`Takes the Food'
On Feb. 11, 2005, he referred to Bush as someone who takes food from the mouth of babes and gives the proceeds to his millionaire friends.'' On Jan. 22, 2007, Bush, with his plan to use tax credits to buy health insurance, is ``not even trying to hide his fundamental indifference to the plight of the less- fortunate,'' Krugman wrote.

Krugman is a fierce critic of Bush's foreign policy and was an early opponent of the war in Iraq. Of the president's case for removing Saddam Hussein, Krugman
wrote on Feb. 11, 2003, ``Mr. Bush's America does not look like a regime whose
promises you can trust.''

``People claim to be shocked by the Bush administration's general incompetence,'' Krugman wrote on Oct. 8 last year. ``But disinterest in good government has long been a principle of modern conservatism.''

Krugman is not the first Bush critic to win a Nobel Prize. Former President Jimmy Carter's Nobel Peace Prize in 2002 ``was more of a slap in the face,'' said Stephen Hess, a political scientist at the Brookings Institution in Washington.

Krugman's award could bring Bush face-to-face with his antagonist. The president typically invites Nobel Prize winners to the White House in November or December.

White House spokeswoman Dana Perino declined to comment on the award.