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Supply-Side and Deficit Reduction

July 27, 2010

There’s been a meme going around recently arguing that supply-side economics was an abject failure, to use the popular colloquialism of today’s current affairs pundits.  These claims of failure, however, aren’t based in any suggestions that supply-side economics depressed employment, decreased GDP, or killed our trade-surplus, but rather that it exasperated peacetime deficits by allowing Republicans to basically ignore them.  Martin Wolf has a post up on his FT blog that’s been getting a lot of attention for exposing the political opportunism allegedly inherent in the support of supply-side economics:

To understand modern Republican thinking on fiscal policy, we need to go back to perhaps the most politically brilliant (albeit economically unconvincing) idea in the history of fiscal policy: “supply-side economics”. Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. Supply-side economics said that one could cut taxes and balance budgets, because incentive effects would generate new activity and so higher revenue.

The political genius of this idea is evident. Supply-side economics transformed Republicans from a minority party into a majority party. It allowed them to promise lower taxes, lower deficits and, in effect, unchanged spending. Why should people not like this combination? Who does not like a free lunch?

He then outlines what he believes the step-by-step (political process) was for politically expedient policy-makers:

How did supply-side economics bring these benefits? First, it allowed conservatives to ignore deficits. They could argue that, whatever the impact of the tax cuts in the short run, they would bring the budget back into balance, in the longer run. Second, the theory gave an economic justification – the argument from incentives – for lowering taxes on politically important supporters. Finally, if deficits did not, in fact, disappear, conservatives could fall back on the “starve the beast” theory: deficits would create a fiscal crisis that would force the government to cut spending and even destroy the hated welfare state.

Fair enough, but I have a beef with this line of reasoning.  Just because you lost a bunch of games 10-9 after you adopted sabermetric analysis on the offensive side of your baseball strategy doesn’t mean that sabermetrics is wrong.  It just means you forgot about/were unwilling to do anything about your pitching. Read more…

Picks of the Day

July 27, 2010
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There were only ten games yesterday, so I lay fallow:

  • Yankees (-240) at Indians
  • Cardinals (-144) at Mets
  • Phillies (-235) v. D-backs
  • White Sox (-245) v. M’s

For the froggy:

  • Under 6 ½ (-110) in Natrals v. Braves
  • Under 6 (-110) in Giants v. Marlins

Sunday: 3-3 (0-2)

Week: 21-14 (8-4)

Year: 102-85 (30-28)

What You Should Remember About the WikiLeaks Story

July 27, 2010

Dov Zakheim:

At the end of the day, the WikiLeaks papers will change few opinions. Those who want us out of Afghanistan will cite them ad nauseum; those who recognize the stakes for what they are — the need to preclude that country from once again serving as a breeding ground for al Qaeda and their copycats — will give them short shrift. What matters more is whether General Petraeus can affect the turnaround that made him a war hero in Iraq. If he does, the WikiLeaks papers will make good grist for historians’ footnotes, and nothing more.

This is the reason everybody needs to be sober about this right now.  If we’re to remember anything about this, it ought to be that, as the NYT reporters conclude, “Over all, the documents do not contradict official accounts of the war.”  It’s going to be quite sickening in the coming months to see reporters and pundits cite WikiLeaks as a good reason to get out of Afghanistan — that the spin the White House and the feds are putting on the war effort is somehow affecting public opinion towards AfPak more than daily news reporters detailing the massive obstacles we’re going to have to overcome in order to succeed over there the way we want to do.

And it really boils down to a matter of sloth and repetition: I’m sure that rational commentators as well as pro-war pundits are going to grow quite weary of having to explain over and over again that this particular WikiLeaks gusher (as Peter Fearver aptly re-dubs it) isn’t a bombshell and that it’s not a good reason to pick our toys up and go home.  Unfortunately, 1000-word journalism has a way of incorporating shaky evidence in order to meet a space quota, and doubtless this story will find a way to seep into the public’s conscious as a reason to oppose the use of military force in Afghanistan.  And it will be a mistake.

WWOBLD?

July 25, 2010

Robert Wright has a piece up in the NYT that’s getting a lot of attention for its insights on the Ground Zero Mosque.  Again, I’m going to leave aside the how-far-is-it-from-Ground-Zero thing, because I think that’s beside the point.  Instead, we’re going back to the “what would bin Laden want” argument:

Bin Laden would love to be able to say that in America you can build a church or synagogue anywhere you want, but not a mosque. That fits perfectly with his recruiting pitch — that America has declared war on Islam. And bin Laden would thrill to the claim that a mosque near ground zero dishonors the victims of 9/11, because the unspoken premise is that the attacks really were, as he claims, a valid expression of Islam.

Well, bin Laden had a good recruiting pitch before 9/11, and although there has undoubtedly been a backlash to American involvement in Muslim countries, al Qaeda wasn’t built as a response to an American war.  Not building a mosque at Ground Zero isn’t a validation of bin Laden’s version of Islam any more than not building a church at the Alfred P. Murrah Federal Building is a validation of David Koresh’s version of Christianity, but I don’t see that there are only two options here.  We don’t have to either build a mosque at Ground Zero or roundly denounce the whole thing as an attempt by Islamists to subject the nation to Sharia starting in Manhattan.  We can just build a memorial there!  Besides, we don’t know that bin Laden would prefer the American “war on Islam” narrative.  Like I say, he did have a good recruiting pitch before 9/11.

Unfortunately, there’s a less vacuous side to this argument, because some of the mosque’s opponents are calling on the imam in question to condemn Hamas:

No doubt Osama bin Laden, if apprised of the situation, would hope that Rauf will cave in to these demands and ritually denounce Hamas. Because the Muslims who are most vulnerable to bin Laden’s recruiting pitch are, it’s safe to say, at least somewhat sympathetic to Hamas. And if moderate Muslims like Rauf can be pressured into adopting Israel’s position, and thus be depicted by truly radical Muslims as Zionist tools, that will make them less effective in their tug of war with bin Laden for the hearts and minds of the vulnerable.

Yeah, this is why I prefer to discuss the argument in a vacuum.  There’s no need to force Muslims to make a choice on this issue because, again, there isn’t a clean divide between moderate Muslims and radical ones.  If we wanted to expel from our sights all those Muslims who are even somewhat sympathetic to Hamas — and thus reluctant to “denounce” it — then that’s a lot of people that we’re choosing to make enemies with rather than friends.  As Ackerman points out, that’s “needlessly limiting your pool of allies”.  You can be opposed to the GZM without requiring that its proponents completely rebuke their fellow Muslims.  Is this really the hill on which you’re choosing to make your stand?

Standing Up For Something… Worth Defending?

July 25, 2010

In a political ploy similar to YouCut, Britain’s new coalition government has launched a website which asks people to give their two cents on which laws they think ought to be repealed, preferably the “intrusive and unnecessary” ones left over from Labour’s long managership that “erode civil liberties” and “are not required”.  What’s the most common suggestion?  You’ll never guess:

In fact, the site has been flooded, overwhelmed and filled with folk wanting the smoking ban repealed; this single subject outdoes all others in terms of comments, numbers of votes and the like. But clearly this isn’t the result Cleggy wanted – so the site’s administrators are doing everything they can to disguise the fact. They’ve hidden ‘smoking’ from the big topic sidebar but included ‘business regulations’ in there. They ‘hide’ posts so that no individual smoking post can attract top numbers, and the search engine is utterly farcical. There are dozens of posts complaining about this distorting admin … which have also been well hidden and difficult to find.

As an example of how a risibly biased and corrupt ‘consultation’ can be manipulated as well by the current government as it was by the last, this web page has no equal.

Color me shockeD.  The feds want the public’s opinion except when the public’s opinion favors something the feds don’t want.  Not exactly a twist in the governmental plot.  Still, though, I don’t understand: what’s the line of reasoning behind steadfastly supporting the smoking ban?  Is it because the NHS can’t afford the social cost of people smoking all the time?  Is it because there’s a huge anti-smoking lobby in Britain?  Is it because the public is overwhelmingly well-disposed to it?  That’s not what the response to the site would insinuate, although the Internet has been wrong before.  How’s Nick Clegg responding to this (that’s the British VP, for the ignorant Yanks)?

Of course there are other suggestions which aren’t going to be taken up by this government . . . the introduction of the death penalty or changing the smoking ban; but at least the debate is now really alive.

Uh, okay.  At least now we’re talking about stuff, even if it’s the stuff that the Administration thinks is “of course” not going to happen.  I’m bothered less by the contempt the British leadership seems to have for its constituency than I am by just why in the hell they’re picking that particular policy among a host of others to simply rule out.  I’m actually curious about this: just what is so great about the smoking ban?  Are British people any healthier for it?  Are health-care costs any lower for it?  Is the citizenry more or less free because of it?

(Via Andrew Stuttaford)

Wikileaks Reveals to Us Those Truths Which Most Believe Are Self-Evident

July 25, 2010

Well, Wikileaks appears to have reinforced what the suspicious among us already… suspected.  That is, the notion that Pakistan “isn’t the greatest ally in the world” is just a slight understatement.  Apparently, the latest leak consists of over 90,000 mostly-classified documents, many of which detail “deep ties” between Afghan insurgency and the ISI, Pakistani intelligence.  There is, of course, a certain amount of skepticism that one must exhibit when dealing with leaked material — the Guardian is a bit more unconvinced about the existence of a “smoking gun” implicating the ISI than the NYT is, which follows since the documents all come from the U.S. military rather than the ISI — but it’s unlikely that there are really any earth-shattering developments here.  Blake Hounshell:

Otherwise, I’d say that so far the documents confirm what we already know about the war: It’s going badly; Pakistan is not the world’s greatest ally and is probably playing a double game; coalition forces have been responsible for far too many civilian casualties; and the United States doesn’t have very reliable intelligence in Afghanistan.

I do think that the stories will provoke a fresh round of Pakistan-bashing in Congress, and possibly hearings. But the administration seems inclined to continue with its strategy of nudging Pakistan in the right direction, and is sending the message: Move along, nothing to see here.

Riiiiiiiight.   Seems like the only reason the Administration is steamed about this little guy is that it doesn’t really want anybody to know that Pakistan is as tremendously unreliable as the prophets of doom theorized.  That, and maybe it wants to hide the fact that Administration officials know they missed the last ferry off the island.  It’s always been unclear to me just how much we were counting on Pakistani support for this operation to be completed successfully, but unless it’s anything other than “not that much” — and the selection of David Petraeus suggests that the President hasn’t been reduced to dependence on the Pakistanis’ steadfastness — then undertaking is probably is some pretty hot water.  Not that that wasn’t clear beforehand, but the leak just underscores that fact for large audience, e.g. the American public. Read more…

Picks of the Afternoon

July 25, 2010
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How does a lifelong baseball fan not remember that most Sunday games happen before it gets dark?

  • Red Sox (-142) at M’s
  • Dodgers (-185) v. Mets
  • Cardinal (-127) at Cubs
  • Rangers (-240) v. Angels

Froggy:

  • D-backs (+135) v. Giants
  • Over 9 (-105) in Tigers v. Jew Blaze (Game 2)

Yesterday: 4-2 (1-1)