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Entries for October 2008

October 31, 2008

Obama's infomercial

I watched the 30-minute program on Wednesday that was produced by the Obama campaign. I watched out of curiosity more than anything else. Since I can't stand even 30-second advertising spots, I was expecting to be bored by what would essentially be a really long commercial. I even feared that it might be Obama giving one long speech. Although he gives good speeches, I am pretty much speeched out at this point.

It was not too bad though, not too cheesy, more along the lines of a PBS documentary, and had good production values. The cutting between the stories of families and his policy prescriptions was a good idea.

The ratings seem to indicate that it was a big success:

An infomercial on behalf of Mr. Obama was a smashing ratings success on Wednesday night, proving to be more popular than even the final game of the World Series — and last season's finale of "American Idol." The audience for Mr. Obama's program far exceeded the expectations of television executives — and many political pundits who questioned whether Mr. Obama was engaging in overkill in buying a half hour on so many networks.

Mr. Obama's 30-minute commercial, which played on seven networks, broadcast and cable, was seen by 33.55 million viewers, according to figures released by Nielsen Media Research.

"I was shocked by the number Obama was able to draw," said Leslie Moonves, the chairman of CBS. "It's just a stunning number."

The early part was bit choppy and lacked continuity. I expected each family's story to be followed up by his solution for the specific problem they faced but the first two stories did not quite do that. For example, the second vignette featured an old couple who thought that had enough money to retire but the husband had to go back to work at Wal-Mart in order to pay his wife's medical bills. But Obama's plans to deal with health care did not immediately follow but came later in the program.

The second half of the program seemed to be much better. The segue at the end to the live rally in Florida was a bit gimmicky but smoothly done and showed that the campaign is capable of tight scripting and scheduling, right down to the very second.

Would the program have changed any voter's minds? I doubt it, and I expect the Obama camp does not expect to either. I suspect that the goal was to reassure those who have already decided to vote for him that they had made the right choice, to show Obama as a calm and thoughtful person, looking presidential. I think they succeeded in doing that.

One noteworthy feature of the program was that Obama did not mention John McCain even once. It was focused entirely on the problems faced by people and what he would do to address them. This quite a contrast with what the McCain-Palin duo has been doing recently. Their message has been highly Obama-focused, almost a non-stop attempt to portray Obama as a dangerous and mysterious and unknown and untested socialist-terrorist-radical, to which their supporters have added other weird things like saying he is a Muslim or even not an American. The complete nutcases have been trying to propagate even more bizarre stories, not worth retelling here.

McCain-Palin have even sunk to the character assassination of a respected Columbia University scholar Rashid Khalidi, using merely the fact that Khalidi is Palestinian to insinuate that he is a neo-Nazi. Josh Marshall and John Judis make the convincing case that the McCain-Palin campaign has to be the sleaziest and most despicable in modern American political history, which is saying a lot considering past campaigns run by the likes of Karl Rove and Lee Atwater.

It is also kind of a bizarre message at this late stage to try and raise such outlandish stories, considering that Obama has been running for president for about twenty months and has been under constant scrutiny. Will this strategy sway voters? I have no idea. I think it will energize the faithful and maybe cause some undecided people to perhaps vote for McCain.

I notice though that when McCain-Palin supporters are interviewed, after saying all these crazy things, they often end up saying that they could never vote for someone who was pro-choice. So ultimately, that is what is driving these people. They do not want a pro-choice president and are willing to say whatever is necessary to achieve their goal, even if it means lying. It is ironic that these people often call themselves 'Christian values voters'.

The infomercial was narrated by Obama himself, and it struck me that he has a very good radio voice, smooth and modulated. When he retires from politics, he could have a successful second career doing voice-over narration for documentaries or as an interviewer on NPR.

POST SCRIPT: The Great Schlep

Sarah Silverman urges young Jewish people to go to Florida and canvass their grandparents to support Obama. (Language advisory)


October 30, 2008

Las Vegas musings

Towards the end of last week I spent three days in Las Vegas for the first time for a conference and stayed at one of the hotels on the infamous strip, the mile or so of road that has all the big hotels and gambling casinos. Since I do not gamble, such locations for conferences do not provide any special attraction for me. A monastery that has internet access would attract me more because I prefer peace and quiet and those two things are in very short supply on the Las Vegas strip.

I did spend an hour or so one evening wandering through the hotel casino watching people gamble. What struck me was how little fun people seemed to be having. They would sit staring intently at their slot machines or at the blackjack tables or at the roulette wheels. The casinos are deliberately designed to have few windows and no clocks so that the gamblers have little sense of the passage of time and can get into an almost trance-like state.

The gamblers I saw did not seem to be particularly well-to-do, just ordinary people, perhaps on their annual vacation from working ordinary jobs. There were some special closed-off rooms where I assume the high rollers gamble, away from the hoi polloi.

I spent the most time watching people play craps, a game I do not understand at all. It has this table that is covered with green baize cloth with patterns and markings and numbers. People would place chips of various colors and patterns at various places on the table, someone would throw a pair of dice, and based on the result the workers would move chips around or take them away or give some to the players. All of this was done solemnly and largely in silence and strongly reminded me of religious rituals, where everyone knows exactly what needs to be done and when, with the croupier as a kind of ersatz priest.

I felt really sorry for the workers in the casinos. They looked bored out of their minds. The constant bright flashing lights, the loud dinging noises from the slot machines, the cigarette smoke were all so aggravating that it drove me out of the room after an hour because I could not stand it any more. I cannot imagine how the workers tolerate it night after night.

It is also physically demanding work. I noticed that the workers at the various gambling tables had to stand all the time though they could easily have been given high stools to sit on and still do their jobs. Presumably the owners and management think that fatiguing their workers this way squeezes out a little more profit. I see this same thing happening with grocery and department store cashiers.

When I was eating at a restaurant in the hotel, a young woman would circle the rooms calling out 'Keno', another gambling game that seems to be some kind of scratch-card gamble that one can play while eating or doing something else. In the forty-five minutes that I was there she must have circled the room about twenty times and was always on the go. At one point, I stopped her and asked whether she had ever used one of those pedometers that would measure how far she walks during work. She said she hadn't but thought it a good idea. She must walk many, miles in the course of each shift and I suspect that she gets paid close to the minimum wage.

I also spent a couple of hours driving around the city with a friend looking at the sights. It is unbelievably tacky, with huge hotels based on various architectural styles, faux classical Roman and Greek and Egyptian being the most popular, all clashing with each other. The parts of the town that were away from the center had some of the traditional charm of the American southwest but the ubiquity of slot machines and other garish gambling venues invariably spoiled it.

It was a relief to leave Las Vegas. I will not be going back if I can help it.

POST SCRIPT: Living in two different worlds

One can understand why John McCain, despite his new-found admiration for Joe the Plumber, might find it hard to appreciate the life of a regular working person. The median household income in the US is $48,000 per year, 'median' meaning half the households make less than that, and half more. But John McCain spends over five times that amount ($273,000) on paying for his household staff alone!

That may explain why he thinks cutting taxes even further for the very wealthy is good policy because then the rich can create more jobs by hiring even more domestic help, in his case maybe someone to keep track of how many cars and homes he owns, so that he is not embarrassed by not knowing. It might also explain why he keeps talking about a capital gains tax cut as being good for the middle class. People like him have little idea of the kinds of concerns that everyday people have.

October 29, 2008

Spreading the wealth-8: On living simply and with dignity

I knew an old couple that lived in Youngstown, Ohio. They had grown up in the Great Depression but later as teachers led comfortable middle class lives. But they never forgot their hard beginnings. I remember being their weekend house guest about thirty years ago and noticed that the bars of soap in the bathroom and kitchen rested on their narrow faces, not the usual broad one. When I asked them about it, they said that this way there was less waste of soap from seepage due to contact with the counter surface.

It was a telling sign that they were frugal people who abhorred waste. You knew that they would squeeze the very last bit of toothpaste out of every tube, that they would dilute the last bit of shampoo in the bottle at the end so that they got all of it out, and that no food would be thrown away uneaten. But while thrifty they were by no means stingy. In fact, while they eschewed ostentatious living, they were very generous people, giving both of their time and money to benefit others, supporters of worthy causes and charities, and you would receive a warm welcome in their home. But they knew how to live on a tight budget, and tried to live simply even when they were not forced to.

When we look back at the times that give us the most sense of pride as a people, it is usually those times when people made it through hardships, like the Great Depression or World War II, when things were hard to obtain and people made do with very little. It gives us the reassuring sense that we can survive tough times again if we had to. While there is no intrinsic virtue to being poor, going through tight financial times at some point in one's life teaches one how to live carefully. One looks back with a sense of pride that one was able to overcome it.

When we came to the US, our first ten years were nomadic, living in small apartments in low-income neighborhoods, with thrift store furniture, an old and cheap used car (when we had a car), and simple food. All our clothes were purchased at sales. We never even bothered to go to the main floors of the department stores where the regular priced items were. In those days, the phrase 'bargain basement sales' was literally true. Department stores had separate entrances from the sidewalk that led straight to the basement where all the clearance items were, so us poor people could go straight there and not clutter up the main store.

Even though I have no wish to relive those days, I don't look back at those times with horror. There is no shame in being hard up. And we were fortunate that we were never hungry or fearful of not being able to pay the rent, at least in the short run. Those experiences have given me the assurance that should things turn out for the worse and I can no longer live the fairly simple way I do now, I can revert to an even simpler lifestyle with a much lower income without much difficulty. The thought of becoming poor again does not frighten me.

During the current financial crisis, I have been reading and listening to stories about how people are trying to deal with suddenly lowered incomes. What often surprises me is the description that some people give of their lives before the crisis hit. Although they seem to be people who have jobs and incomes similar to mine, they live lives that are quite different. They have mortgages that are three to five times my own, eat out at restaurants four or five times per week, and routinely go on vacations to exotic locations. People seem to have the sense that this is what normal life is or should be, rather than an exceptionally extravagant lifestyle. Or maybe it is me who is out of step.

I particularly wonder about retirees who feel that they are entitled to a very good life in their so-called 'golden years', the sense that they are somehow entitled to play golf and go on cruises and travel the world, and who vehemently oppose any tax measures that might lower their lifestyles even slightly in order to provide more public services or benefits to those less well off. Because such people tend to vote in large numbers, politicians pander shamelessly to these well-to-do retirees, especially in states like Florida and Arizona, further encouraging this sense of greedy entitlement.

At the same time I see old people continuing to work at low paying jobs that require considerable physical energy long after they should have retired, obviously because they need the money to just make ends meet. Surely some well-to-do older people can forego a few of their luxuries so that all old people can spend their last years with dignity, and not be forced to push their ageing bodies through difficult workdays.

The only things I feel that anyone is entitled to, that are fundamental human rights, are the basic needs of food, shelter, clothing, and health care. Everything else is a luxury that is nice to have but not an entitlement. Living to a ripe old age with reasonably good health is itself is a gift, a luxury denied to many people. We should be thankful for it.

There is no intrinsic virtue in being poor. But going through such an experience, especially early in life, teaches you how to cut corners and live simply and, hopefully, gives you empathy for those who have not been as fortunate and who may be still living the life that you left behind. This is why I think that it is good for young people to experience at least a few years of living on a low income.

People who are well-to-do should stop complaining about paying higher taxes. We often don't appreciate how much luck went into us being where we are. Those of us who are lucky to be so well off should be glad to spread the wealth around to improve the conditions of those who did not get the breaks we did.

POST SCRIPT: Happy Days are here again

Andy Griffith, Opie, Richie Cunningham, and The Fonz give out some election advice.

See more Ron Howard videos at Funny or Die

October 28, 2008

Spreading the wealth-7: More on the opposition

In the previous post, I said that the arguments in favor of having a more progressive tax system are so obvious that it was an interesting exercise to see why even those who would directly benefit from it still oppose it. I suggested some reasons for this behavior and in this post want to explore some more.

Another group consists of those who are still living in the shadow of the Cold War and have been effectively brainwashed to think that any effort to raise the living standards of the less well-off is 'socialism'. The label socialism has been demonized so much that for such people anything to which that label is attached is automatically a bad thing, even if they do not understand the term and are really poor and would benefit from the proposed plan. Witness how universal, single-payer health insurance is fought by the health insurance-pharmaceutical-physician complex by labeling it as socialism, though the only people who really benefit from not having it are the very wealthy and the health insurance-pharmaceutical-physician complex.

This group of people have completely bought the myth sold to them by the rich that we would all be better off if we let a very few people make and keep as much money as they can by whatever means. It is this group that the McCain-Palin rhetoric is aiming at.

The instinctive siding of such people with the 'plight' of someone who makes $250,000 or more even while they make a small fraction of that and have little or no chance of ever joining those ranks reveals the depth and extent of this brainwashing. They may be finding it hard to pay the rent or the mortgage, they may be fearful of losing their jobs, they may have little or no health care, they may be living in decaying neighborhoods that cannot provide basic services, but somehow they think the very rich and the giant corporations and Wall Street are on the same side as them and deserve to have even more money. Such people are simply not thinking things through.

Another possible reason is that many people share the illusion that some day they too will be rich, and when that happens they want to be able to enjoy the unfettered high life, even though they may be quite vague about how this could come to pass. For some the fantasy may be little more than thinking they will win the lottery. For others, it may be that they have some talent they are proud of and think that they may be 'discovered' by a talent scout and suddenly become a world famous singer or model or comedian or actor or writer or athlete. They do not want to spoil the imagined enjoyment of that future success by supporting policies now that might even slightly reduce the free-spending habits they hope to have when they strike it rich.

The media helps maintain this illusion by feeding this obsession about what rich and famous people are really like. Notice how the interviews with these famous people usually emphasize that they are just like you and me, except for being very wealthy. George Clooney eats corn flakes for breakfast, just like me! Scarlett Johannson likes to lounge around in sweat suits at home, just like me!

At the same time these same media features also indulge in what might be called wealthy-lifstyle-porn, talking about the massive houses, many cars, elaborate parties, and jet-setting lifestyles of the celebrities. The popularity of celebrity-lifestyle TV shows and magazines and the existence of a paparazzi industry to bring us snippets of personal information about these people ("Look! We have photos of Branjelina's babies!") testify to the dream world these audiences are creating for themselves.

All these reinforce the belief that the only thing that separates the very wealthy from you and me is a single stroke of luck. This might well be true. But to base your political decisions on the chance that lightning will strike, that you will hit the jackpot, is foolish. To think that your interests coincide with those few very wealthy people is to live in a dream world.

Tom Tomorrow wrote about this fantasy world that people inhabit and which is encouraged by the celebrity-obsessed media.

A few years back, I was on a road trip with my wife, and somehow, probably from some junk shop along the way, we ended up with the audiobook version of Valley of the Dolls, the classic trashy novel about the lives of the rich and unhappy. After the third or fourth lengthy description of wealthy people enjoying caviar and champagne, I commented that the book was not intended to be about the lives of the wealthy, but rather, about the lives of the wealthy as imagined by the trailer park set: they spend all their time drinking champagne! And eating caviar! (Which brings to mind something I was once told by a prominent contributor to Vanity Fair — that it’s not a magazine aimed at the upper class, it’s a magazine for the middle class to buy believing they are reading a magazine aimed at the upper class. But I digress.)

All these things are designed to give the middle class and the poor the sense of identification with the wealthy. It is quite an amazing thing to see. The reality is that any person with no inherited wealth and who depends on a regular paycheck to meet life's needs has far more in common with the financial situation of a janitor than they have with Paris Hilton.

But as long as they fail to realize who their real allies are, they will continue to be exploited.

POST SCRIPT: Undecided voter=idiot?

The Daily Show tries to understand how people could still be undecided at this stage of the election.


October 27, 2008

Spreading the wealth-6: Understanding the opposition

Recently, Joe Biden said it would be patriotic of rich Americans to pay more taxes and Sarah Palin chided him for it, saying that no one should pay more taxes and that everyone should want to pay less. This is the mantra of the right-wing ideologues. While I disagree with Biden's choice of the word 'patriotic' (a word that has long since ceased to have any operational meaning but instead is just used as a political weapon), I cannot understand the logic of people who think that paying less taxes is always better. Even the ever-conventional New York Times columnist Tom Friedman took issue with Palin on this fetishization of lower taxes for everybody. (Thanks to Norm for the link.)

Recall that what is being proposed is to make the income tax structure more progressive by raising the rates on the highest slabs of income and reducing it for the lower tax slabs. This seems so eminently reasonable, even downright common sense, that we should try to understand the sources of the opposition to it.

One group consists of rich and greedy and callous people. Such people simply do not care about the poor. They have made (or inherited) a lot of money and it gives them a weird sense of entitlement, that this somehow makes them superior to those who have less. They seem to take pleasure in ostentation. Such people enjoy being much richer than others and think that creating a more a more progressive tax scale is somehow unfair to them.

There are also those ideologues that think that the best system is one in which there is no government at all and that all taxation should be abolished and a pure unadulterated free market should reign supreme. Of course these people are nuts. Such a system has never existed except perhaps in small isolated communities back in hunter-gatherer times. Modern societies are far too large and complex to function without significant government involvement and the only meaningful debate is about the proper balance between the private sector and government.

In fact it is the presence of government that has enabled people to be highly productive by specializing in one or two areas of activity and excelling at it, rather than having to take care of all their needs themselves.

Then there are others, who while not rich themselves, subscribe to the economic theory that says that having a few people make enormous amounts of money is good for all of us because this gives them the incentive to work, hard create new inventions, make new discoveries, and use the wealth generated by the fruits of their labors to invest in more businesses that will create more jobs and so we all benefit in the long run. This is the theory of trickle-down economics.

But does this happen? Do people who make enormous amounts of money use the excess after meeting their living needs to invest in new businesses that create well paying jobs? Or do they largely use it for ostentatious living that results in the creation of mainly low-paying service sector jobs (waiters, valet-parkers, maids) to support that lifestyle?

In other words, is trickle-down economics a good theory? That is a question that one should be able to answer empirically and I will leave it to the economists to provide a definitive answer. But there is clear evidence that the rapid rise in income inequality that started around 1980, with huge gains for the very rich has not produced a commensurate rise in the general well being.

Look at figure 2 in this paper that analyzes the rising inequality in incomes from 1980 (which is the year that the stock market started to rise like a rocket) and 2000. Notice that while the lowest four quintiles of family income have stagnated and even decreased slightly over that period, the share of the national income earned by the top 1% rose steeply, doubling its value. So we know who actually benefited from the so-called boom years of Reagan, Bush I, Clinton, and Bush II.

In fact, as we see from the graph below taken from this paper, the share of the total income of the top 1% of households rose from about 8% in 1980 to 20% in 2006.

incomeinequality.jpg

As Table 1 in the same paper shows, from 2002 to 2006, when George Bush and the Republican congress gave massive tax cuts for the rich, the income of the bottom 90% of households rose by only $1,446 (4.6%) while the incomes of the top 0.1% rose by a whopping $1,809,824 (57.6%).

Note that the only time in the past when the wealthy had this large a share of the national income was in 1928, just before the Great Depression. That is not a good indicator of what lies ahead. The idea that allowing a few to amass great wealth is good for all of us is an argument that is hard sustain.

POST SCRIPT: The people in your neighborhood

Stephen Colbert looks at the new middle class loved by McCain and Palin, which consist of those people who are identified solely by their first names and occupations, like the famous Joe the plumber and Tito the builder.


October 24, 2008

Spreading the wealth-5: Class warfare against the poor

Why do so many have a reflexive aversion to paying taxes and think that any adjustments in the tax system to shift the burden away from the poorer and towards the richer is somehow unfair? This is because class warfare has been consistently waged against the poor for so long by both parties that we have come to think of it as the norm. But when attempts are made to redress this balance, the rich are quick to shout 'class warfare!' to distract attention from the fact that they are the masters of it.

One reason is that people have been conditioned to think that there is massive waste in government and that this waste is due to the poor taking advantage of government social programs. Of course there is waste and it should be eliminated. But the level of animosity that is expressed by the well-to-do against the poor seems to be based on something more visceral

I was at a social function recently and was listening to a couple who are very wealthy and live in a large house in a fancy neighborhood and send their children to private schools, and they were railing at how their taxes were going to benefit people whom they clearly thought of as being good-for-nothing. It was quite extraordinary. It never seemed to strike them that only a small fraction of their taxes was going towards any benefit to the poor. They seemed to be driven by a feeling that the poor were poor because they were no good and should therefore be punished and not 'rewarded' for their failures.

People have been taught to hate and despise the poor. They think that such people are shiftless free-loaders and resent their own money being used to seemingly benefit the 'undeserving poor', to use Alfred Doolittle's phrase, and who have done nothing to warrant any consideration. Taxes have become portrayed as a redistributive system to shift money and resources from worthy, hard-working individuals to lazy and less worthy individuals, rather than as a means to shift money from private individuals to the public good that in turn also provides benefits to those same private individuals that they could never obtain otherwise.

The reality is quite different. It is the rich who are the real free-loaders. I wrote before about how the tax system is rigged to siphon money from the poor to the rich and I will quote part of it again to show how this is done.

New legislation was passed in 1977 that reduced benefits and raised the payroll tax to its current value. As a result of the formula that was used, this initially increased revenues by small amounts but eventually the surpluses became large enough that between 1983 and 2003, while the sum of the government deficits for those twenty years (i.e., the excess of expenditure over revenues for those years alone) was $5.4 trillion, the addition to the national debt (i.e., the total accumulated amount of all deficits over all time) was 'only' $3.6 trillion. The $1.8 trillion difference was due to the fact that the Social Security account was running up huge annual surpluses. (David Cay Johnson, Perfectly Legal: The covert system to rig our tax system to benefit the super rich – and cheat everybody else (2003), p. 123)

This Social Security surplus was used to create a false sense of the country being flush with money and this enabled Ronald Reagan in 1981 to push through his tax cuts for the rich. The Social Security surplus was used to hide the true costs of the massive tax giveaway to wealthy people.

In 1983 there was glitch in that Social Security ran a small deficit due to the fact that 10 million people were then out of work and thus payroll tax revenues were down. While most people felt that this was a short-term problem that would go away when the economy revived, others like Wall Street favorite Alan Greenspan (then chairman of the Federal Reserve Board) panicked people into thinking that Social Security was in crisis and Congress again passed new rules reducing benefits and raising the retirement age in the future. This resulted in Social Security starting to run up surpluses again.

The siphoning away of the Social Security surplus to benefit the rich was repeated during the George W. Bush administration. The federal government was running a total budget surplus at the time that he came into office in 2000, and again this was largely due to the Social Security surplus. In fact, between 1999 and 2002, Social Security revenues exceeded expenditures by $640 billion. Bush used this surplus to hide the true cost of the huge 'temporary' tax cuts for the rich pushed through by him in 2001. More than half of the $1.3 trillion that those tax cuts cost the government went to the richest 1% of the population. (Johnson, p. 127)

Remember that the social security payroll tax is a regressive tax whose burden falls disproportionately on the poor and middle class because everyone pays a flat rate on all their earnings up to around $100,000 and nothing on incomes above that limit. Hence the more income you earn above that limit, the lower your tax rate is. But the tax cuts disproportionately benefited the rich.

Why didn't people scream with outrage at this reverse Robin Hood action by the government? Because there is this curious phenomenon of the middle class thinking of themselves as closer somehow to the millionaires than to the poor, although they are often just one paycheck, or worse a pink slip, away from joining the ranks of the poor and the homeless and the destitute, while their chances of becoming one of the rich are almost negligible.

People seem to think that life is like American Idol, that one day through some fortunate combination of luck and effort they will become wildly rich. True, it might happen and does happen to a very small number of people. But to bank on it is as unrealistic as the expectations of a child who abandons his studies in order to practice basketball thinking that he will make it to the NBA just because Le Bron James did. The odds are totally against you. Furthermore, while there is no virtue in being poor, being rich does not necessarily bring with it the psychic rewards and pleasures that make life truly worth living.

As long as this illusion that their interests are closer to those of the very wealth than to the poor is allowed to continue, the middle class (and even segments of the poor) will continue to be suckers exploited by the rich.

POST SCRIPT: The really real America

Jason Jones visits Wasilla to see exactly what the really 'real' America looks like and the extensive executive experience that being the mayor of that town provided Sarah Palin.


October 23, 2008

Spreading the wealth-4: Who is in the middle class?

The problem with discussing the distribution of wealth and income in the US is that politicians of both parties have for years been pandering to the 'middle class' and courting their votes by promising to improve their condition.

The rich have exploited this by giving small income tax benefits to the middle class while giving themselves huge tax benefits, and then claiming that the entire middle class has benefited. David Cay Johnson in his book Perfectly Legal: The covert system to rig our tax system to benefit the super rich – and cheat everybody else (2003) describes how this spreading the wealth in favor of the rich is done. The title of his book says it all. Then the rich (and the middle class dupes who have been taken in by this scam) get outraged and scream 'socialism!' when someone comes along to try and spread the wealth in the opposite direction.

They have been getting away with this because the phrase 'middle class' has been bandied around a lot without being defined by politicians and the media. As a result, we have the curious phenomenon that almost everyone, from the quite poor to the quite rich, thinks of themselves as middle class. Thus someone who is earning $30,000 a year feels they are in the same class as, and feel a sense of class solidarity to, someone earning $250,000 a year. Hence they react with a sense of grievance when someone with much higher income than them doesn't come out ahead because of any change in fiscal policies.

The word class has become perceived as based not only on income but also as a proxy for family background, the nature of one's job, the social circle one moves in, and lifestyle practices. This vagueness has enabled almost everyone to think of themselves as middle class because in at least one area of their life they may overlap with those much better off than them. So someone who has a good formal education but now works at minimum wage job may still consider himself middle class because he reads newspapers and books, listens to classical music, and is involved in arts and community activities.

But if we narrow the definition of class to purely income and leave those other unquantifiable elements out, we can get a better idea what the terms 'poor', middle class' and 'rich' might mean.

To see how income is distributed in the US, take a look at this table published by the Bureau of Labor Statistics and the Bureau of the Census. It gives the range of income in 2005 for each quintile of households. Note that this is for households, not individuals, and thus includes the income of all the wage earners in a household.

20% of households earn less than $19,178
20% of households earn between $19,178 and $36,000
20% of households earn between $36,000 and $57,568
20% of households earn between $57,568 and $91,705
20% of households earn over $91,705

Only 5% of households earn over $166,000.

It is reasonable to think of the middle three quintiles as defining the middle class, so it consists of those households with incomes roughly between $20,000 and $90,000, where I have rounded each figure to the nearest $10,000. If one wants to, one can split those three middle quintiles into lower-middle class, the 'true' middle class, and upper-middle class.

Those earning below $20,000 can be called poor and those earning over $90,000 can technically be described as rich. But there is something jarring about the notion that those earning around $90,000 are actually rich. That level of income does not really allow for the kind of lifestyle that one associates with really rich people. It may be more accurate to label that group as simply 'well-to-do'.

But if we split the well-to-do group into finer-grained slices, we can perhaps get a better understanding of who is really rich. Footnote 1 of this paper provides a link that downloads a spreadsheet that breaks down the income ranges for the highest income groups (excluding realized capital gains) in 2006. (See Worksheet Table 0)

It shows that:

10% of households earn between $100,349 and $138.254
5% of households earn between $138,254 and $329,070
1% of households earn between $329,070 and $482,129
0.5% of households earn between $482,129 and $1,401,635
0.1% of households earn between $1,401,635 and $6,473,710
0.01% of households earn over $6,473,710

Using this table, one can subdivide the top quintile of the well-to-do category into the 'rich' (the roughly 5% of households earning between $140,000 and $330,000), the 'very rich' (the 1% earning between $330,000 and $480,000), and the 'super rich' (the 0.6% earning over $480,000), where again I have rounded each figure to the nearest $10,000. These labels agree more with out intuitive notions.

So Joe the Plumber, who says he hopes to earn over $250,000, rather than being the middle class everyman he has been portrayed to be, belongs to a very tiny and select group, definitely rich and approaching the very rich. He is in the top 2-3% of income earners.

So why is he is whining about his marginal income tax rate for the amount over $250,000 being increased from 35% to 39%, which is hardly going to have any impact on his ability to meet the needs of him or his family? And why do so many people, who will never ever get close to earning that kind of money in their entire lives, identify with him and are sympathetic to his complaint?

More on this later.

POST SCRIPT: McCain supports 'spreading the wealth'

Listen to what John McCain says at the end of this clip at a town hall meeting in 2000:

Transcript of last portion:

Audience member: "Why is it that someone like my father who goes to school for 13 years gets penalized in a huge tax bracket because he's a doctor."

McCain: "I think it's to some degree because we feel obviously that wealthy people can afford more."

Audience member: "Are we getting closer and closer to, like, socialism?"

McCain: "Here's what I really believe: That when you reach a certain level of comfort, there's nothing wrong with paying somewhat more."

Stewart: "That, of course, is the late socialist leader John McCain. I believe he passed away during the Republican primaries. He will be missed."

Looks like McCain was for spreading the wealth before he was against it.

October 22, 2008

Spreading the wealth-3: Meeting a hierarchy of needs

My view is that one should formulate tax policy based on the extent to which one meets a hierarchy of needs.

The first level of needs is to provide food, shelter, clothing, and medical care for oneself and one's family. That undoubtedly takes priority over everything else. People who are struggling financially just to get by even if they live frugally, would tangibly benefit from paying less taxes and should pay less. In fact, there is no reason why such people should pay any taxes at all. Tax cuts or policies that result in higher incomes meet that level of need very well.

But once those needs are met, the next level of needs consist of safe neighborhoods, well-lit and well-maintained streets and sidewalks, parks and recreational areas for children and adults to enjoy, well-stocked libraries, and good schools. Those are very real and tangible needs that I would directly and personally benefit from but it beats me how giving me a tax cut is going to help me attain any of them. This level of needs cannot be met by tax cuts or even higher income, unless the increased income is so large that I can live in a gated communities, send my children to private schools, hire private security services, and otherwise pretty much cut myself off from most of humanity.

Since that is unlikely (and even undesirable from my point of view) am I supposed to take the few hundred extra dollars a month in tax cuts and go around and find other people who share my needs and we then pool our money to build a park? To hire police? To build schools and libraries? That is madness. Only an organized system like government can provide the kind of personal benefit that comes from creating a public good.

Giving people tax cuts when they are already able to meet their first level of needs while this second level of needs is not met makes no sense. It seems to be based on the belief that by using that money to buy consumer goods like iPods, I can compensate for the decay of public services.

Beyond the level of meeting the first level of basic needs, the deeper pleasures and joys of life do not come from private wealth but communal wealth. I would gladly pay more taxes to pay for those needs that can only be met by a collective community effort. What is the point of buying a large flat screen plasma TV instead, unless I am planning to shut myself up in my fortress home, cut off from the pleasures that come with being a social being? Surely this should be obvious? Or do people think that they can be happy in a cocoon while surrounded by poverty and decay?

But I also have a third level of needs, this time on a psychic level. At some level of my subconscious and occasionally of my conscious mind, it bothers me that there are people who go to sleep each night hungry, live in sub-standard and rat and cockroach infested housing in dangerous neighborhoods, whose schools are experiencing physical decay and lack of resources, and who suffer and die from treatable illnesses because they do not have access to affordable health care.

I do not routinely see these people because I am fortunate enough to be able to afford to live and work in neighborhoods where they are largely absent, or at least invisible. But I know they are out there and sometimes as I drive through poorer neighborhoods I can envisage the grim lives such people must be leading. It is depressing. I would gladly pay more taxes to alleviate the hardships those people face.

In order to meet that psychic need, I would gladly pay higher prices for my food if that meant the food service workers were paid better. I would gladly pay more for my groceries if that meant that agricultural workers lived better lives. I would gladly pay more for my clothes if that meant that sweatshops were shut down. And I would gladly pay more taxes to pay for better housing for low-income people and to create a single-payer universal health care system so that no one is denied appropriate care.

All those are also ways to ''spread the wealth around' and they are good things, just as it is a good thing to raise taxes on the well-to-do and use that money to create greater social goods that everyone benefits from.

Even those who do not share my third level of needs must surely recognize the value of the second level, which is why the opposition to spreading the wealth is so surprising.

POST SCRIPT: Fake Americans unite!

Jon Stewart rips into the ridiculous notion put out by McCain and Palin that there is a 'real' America and a fake (?) America.


October 21, 2008

Spreading the wealth-2: Why this benefits all

What is interesting about the flap over Obama telling Joe the plumber about the benefits of spreading the wealth around, is that if you listen to the exchange between Joe and Obama, what Obama is saying not only makes absolute sense, its truth should be blindingly obvious to anyone.

What Obama said was that while he was happy for Joe's success, he also cared about the waitress and the teacher and the store clerk and the policeman and all the others in that community who do not earn anything close to $250,000 per year and were currently struggling and who needed a break. He pointed out that if they were able to do better in life, then they were more likely to be able to afford the services of a plumber like Joe and he would do better too.

That is exactly right. I myself hate plumbing chores. Even though I do not earn anywhere near the $250,000 that Joe is hoping to earn, fortunately I still can afford it so that when something goes wrong in our home I call Nate the handyman and he comes along and promptly takes care of it, while shooting the breeze with me, exchanging information about our families. It is all very pleasant.

As a result, my plumbing problems get solved by an expert professional, Nate gets my business and some income, and this frees up my time and energy to do the things that I enjoy, such as reading and writing. We are both better off.

If I could not afford Nate's services, I would have to learn to do the plumbing work myself and spend a lot of my spare time on it and would probably end up doing a lousy job if not actually flooding the house. And if that fails, I would have to ask friends who know more about plumbing to help me out. A lot of poor people do exactly that. They sacrifice their own time and energy to do such things, bartering their own skills and services for those of others. That is perfectly fine, but it does not help the neighborhood plumber's business.

This example can be multiplied over and over. I pay people to work on my car, to repair the roof, to trim the tress in my yard, to plow my driveway in winter, and so on, because I can afford to. And we all benefit from that in different ways.

But if most people are impoverished and barely making ends meet, and the more concentrated wealth becomes, the less likely it is that small businesses will succeed since fewer people will be able to afford their services. It is far better for a plumber to have a hundred middle class people in his neighborhood than one multimillionaire and a hundred poor people, since a single rich person will not have a hundred times the plumbing needs of a hundred homeowners.

Henry Ford discovered this many years ago when he realized that if he and other employers like him did not pay their employees good wages, there would not be a large enough market of consumers who would be able to afford to buy the cars he made. So while higher wages reduced his profits in the short run, it increased the viability of his business in the long run.

But this basic truth has to be obscured in order that the rich can benefit by impoverishing others, The rich have always depended upon duping the poor to support their lifestyles. As Voltaire said, "The comfort of the rich depends upon the abundance of the poor." But they also have to persuade the less well-off that that this exploitation is good for them. They do this by using their wealth and power to make the political structure serve their needs, then suggest that the resulting structure that redistributes wealth to benefit the rich is 'natural' and that reversing that change to benefit the majority is somehow unfair. What is amazing is that so many poor and middle class people actually believe that argument.

This English nursery rhyme (c. 1764) captures the idea of how the laws have always favored the wealthy. (Thanks to blog reader RCarla.)

They hang the man and flog the woman
That steal the goose from off the common.
But let the greater villain loose
That steals the common from the goose.

The law demands that we atone
When we take things we do not own.
But leaves the lords and ladies fine
Who take things that are yours and mine.

'Spreading the wealth' means taking the commons back from those who have taken it for their private benefit. It has so many benefits for so many people that one has to wonder why there is so much fierce opposition to the idea from the very people who would benefit.

In the next post, this question will be explored further.

POST SCRIPT: The other Palin for president

October 20, 2008

Spreading the wealth-1: Introducing Comrade Bush

By now, practically everyone must be sick of hearing about Joe the Plumber. But bear with me for a minute as he provides me with a peg on which to hang a point I wish to make. I thought his interaction with Obama was quite interesting and was planning to comment on it even before Joe became John McCain's BFF.

What I found most amusing is how the right wing has seized upon Obama's comment to Joe about the need to 'spread the wealth around' and has thrown one of their by now patented manufactured outrage hissy fits, screaming "There, I told you! Obama is a socialist!" and warning that if he is elected president he is immediately going to take all our money and give it to winos and panhandlers and make us wear grey tunics and work on collective farms.

There is a priceless irony at play here in making the charge of socialism against Obama, coming as it does just after the Bush administration has effectively nationalized Fannie Mae, Freddie Mac, and AIG and is planning to use at least part of its $700 billion to obtain part ownership in many banks.

To appreciate the irony we have to realize that it has been almost a permanent feature of US government policy to demand of foreign governments that they privatize their public sector and open their markets to US goods and services by reducing or eliminating tariffs and barriers. The US government routinely uses its power in the World Bank and the International Monetary Fund to force foreign governments to adopt something called Structural Adjustment Programs if they want to receive any aid even to tide over emergencies.

This package of measures, in addition to the privatization and open markets demands, also usually require the reduction or elimination of any subsidies of food, energy, transport, and the like that keep the prices of these commodities low so that regular people could afford them. Governments have been known to fall as a result of the unrest and even riots that resulted from the hardships imposed on their people because of acquiescing to these demands.

It is precisely because Cuba refused to go along with these demands that it has been punished by the US by the blocking of aid, trade embargoes, and the like.

People in the US may not have heard about structural adjustment programs but they are almost household words to any person in developing countries. I heard about them long ago because the newspapers in Sri Lanka would regularly report the parliamentary debates about what the latest demand by the World Bank and the IMF was for any aid, and how the government would deal with it. We all knew that adopting it would lead to financial hardship for ordinary people, at least in the short run.

But now, by adopting policies of acquiring ownership of major institutions to deal with their own financial crisis, the Bush administration has to endure the taunts foreign leaders and analysts who are pointing out all the times that Bush and previous presidents have accused those governments of becoming tyrannical when they did things very similar to what Bush is now doing, and nationalized vital sectors of their own economies.

Many countries are savoring the pleasure of the US now having to eat its own words. As this McClatchy news report says:

They don't call him President Bush in Venezuela anymore.

Now he's known as "Comrade."

With the Bush administration's Treasury Department resorting to government bailout after government bailout to keep the U.S. economy afloat, leftist governments and their political allies in Latin America are having a field day, gloating one day and taunting Bush the next for adopting the types of interventionist government policies that he's long condemned.

"We were just talking about that this morning on the floor," said Congressman Edwin Castro, who heads the leftist Sandinista congressional bloc in Nicaragua. "We think the Bush administration should follow the same policies that they and the International Monetary Fund have always told us to follow when we have economic problems - a structural adjustment that requires cutting government spending and reducing the role of government.

"One of our economists was telling us that Bush has just implemented communism for the rich," Castro said.

No one in Latin America has been making more hay of Bush's turnabout than Venezuela's President Hugo Chavez, a self-proclaimed socialist who is the U.S.'s biggest headache in the region.

"If the Venezuelan government, for example, approves a law to protect consumers, they say, 'Take notice, Chavez is a tyrant!'" Chavez said in one of his recent weekly television shows.

"Or they say, 'Chavez is regulating prices. He is violating the laws of the marketplace.' How many times have they criticized me for nationalizing the phone company? They say, 'The state shouldn't get involved in that.' But now they don't criticize Bush for having nationalize . . . the biggest banks in the world. Comrade Bush, how are you?"

The audience laughed and Chavez continued.

"Comrade Bush is heading toward socialism."
. . .

Mark Weisbrodt, director of the leftist Washington-based Center for Economic and Policy Research, advises numerous Latin American governments.

He called the recent Bush administration policies ironic.

"The biggest nationalization in the world was of Fannie Mae and Freddie Mac. The biggest nationalization of an insurer was AIG. People are saying that Bush is privatizing risk and socializing losses," Weisbrodt said.

John Ross, who has begun providing advice to the Chavez government, along with his boss, former London Mayor "Red" Ken Livingstone, criticized the U.S. president and his conservative political allies.

"They have abandoned every policy that they've advocated that other governments should follow over the past 20 years," Ross said by telephone from London. "And they've adopted the measures that they've condemned other governments for taking.

"This is not the end of capitalism. But it is the end of Reaganism and Thatcherism," he added.

This kind of hypocritical policy making is not completely unprecedented. After all, Richard Nixon, another avowed free-marketeer imposed wage and price controls (another policy strongly frowned upon by the US when done by other countries) for nearly three years when he was president.

Next: Meeting a hierarchy of needs.

POST SCRIPT: Careless McCain staffers

John McCain has a close call.


John McCain Accidentally Left On Campaign Bus Overnight

(Thanks to onegoodmove.)

October 17, 2008

The Barack and Joe Show

I watched the final Obama-McCain debate. As usual, I found it hard to judge a 'winner', despite the fact that I used to debate myself and have judged debates. The problem is that when I was a debating judge, one used evidence, arguments, and coherence as major criteria. Personality traits, quirks, body language, etc, were not really factors to be considered, becoming significant only if they distracted from the major points.

But political debates are not like that. Because they are not an extended discussion focused on a single proposition but jump from topic to topic, the secondary criteria become far more important. It becomes more like a beauty contest, valuing style over substance.

Personally, I thought McCain did a lot better than he had in the past. He seemed more alert and feisty (perhaps a little too feisty at times) but he still gives the appearance of someone barely controlling his anger. Obama as usual seemed unflappable, even though he seemed on the defensive quite often. From what I read yesterday of what the professional pundit class said immediately after the debate, they seemed to roughly share my views.

So what are we to make of the immediate snap polls that show Obama a clear winner? (See here, here, and here.)

In the debates, viewers seem to be largely looking, not so much at issues, but how the candidates comport themselves, which is why the calm and collected Obama is wiping the floor with McCain. I think that what this reveals is not good news for McCain. I think that many people have made up their minds for Obama and their feeling that he had handily 'won' the debate simply reflects their sense that his performance affirmed their choice, that they had no second thoughts or regrets.

There is a good analysis by Joe Klein about how the professional pundit class simply has not caught up with the reality that the public's view of what is important has shifted drastically from what it was in the past, which is why they are caught flat-footed by events like these, not able to gauge the popular reaction.

Like almost everyone, I was startled by the starring role that Joe the plumber played in the debate. For those who haven't seen the video of the exchange between Obama and Joe that was constantly being referred to, here it is:

There have been suggestions that Joe was a McCain plant. His story seemed a little too conveniently suited to McCain's needs. A hard-working man, who after 15 years of putting in 12-hour days is finally able to buy a plumbing business that will provide him an income of $250,000, just the level at which Obama's tax plan raises taxes. He is now aggrieved that just as his hard work is paying off after all these years, he will be paying higher taxes to support poorer people who (by implication) are lazy good-for-nothings unwilling to work as hard as him. It tied in too neatly with what the McCain camp was saying.

DailyKos has done some research on plumber Joe and seems to find that rather than being your regular plumber thinking of starting his own business, three other businesses are owned in the same neighborhood by someone with the same name as him. He also does not have a plumber's license.

Furthermore he shares the same unusual last name as Robert Wurzelbacher, who is Charles Keating's son-in-law and also lives in the Cincinnati area like Joe. If you recall, Keating went to jail for defrauding investors in the savings and loan scandal in the 1980s. John and Cindy McCain were Keating's close friends and McCain was one of the Keating Five senators reprimanded for ethics violations for using his influence to help Keating.

It may be that Joe has no connections at all to Keating, and that Wurzelbacher is a common name in the Cincinnati area. I am sure that further inquiries will bring that information to light.

But while all very intriguing, for the purposes of the point I wish to make, it does not matter if Joe is a McCain plant or not. I had seen the exchange of Obama with Joe earlier this week and had been planning to write about it today. I thought the exchange was interesting and although Joe seemed to start and end the discussion as a McCain supporter, the way that Obama interacted with him was quite revealing about him and his policies.

It supported my view that these 'debates' should not be moderated at all but simply a free exchange between voters and the candidates so that we have more of these kinds of Joe-Obama discussions.

The voters could be selected randomly, like juries are, and they could ask the candidates anything they like and be allowed one follow up question, with the only restriction being a time limit for their questions to avoid speechifying. The only role for the moderator would be to keep tabs on the questioner's time.

I would not bother seeking out only so-called independents either. If people are genuinely uncommitted at this late stage, that means they have not really been paying attention. It should not matter if some of the people selected are rabid partisans out to 'get' the opposing candidate with difficult questions or throw softballs at their own or are even nutcases asking off-the-wall questions. How candidates respond to such people says a lot about them, and we are likely to learn a lot more about them in this format than from the current one that favors regurgitation of talking points and bits of stump speeches.

The trouble with having the present professional-journalist-as-moderator format is that these establishment journalists select questions about the kinds of things that they want to talk about and are drearily predictable. As a result, even the people offering up questions at these 'town hall' sessions tend to pose the kinds of questions that they think the moderators will like and thus select. No wonder these debates tend to be snoozers.

I think seeing more encounters like Obama and Joe (whether he was a McCain plant or not) would be far more interesting.

POST SCRIPT: Palin supporters

Al Jazeera interviews some of the people attending a Sarah Palin rally. Disturbing.


October 16, 2008

Sarah, mean and small

Like most people, I was startled by the choice of Sarah Palin as John McCain's running mate. My first reaction was that it was a bad choice, for reasons that I wrote extensively about earlier. (See list of 'Recent Entries' on the right.)

My misgivings with her were mainly because there are too many potential hazards with thrusting an unknown and unexamined person suddenly into the media spotlight. Although I have never been a fan of Joe Biden, his selection did not set off similar alarm bells because he has been around so long that there were unlikely to be any unpleasant surprises surfacing during the campaign

I also knew when her selection was announced that there was an ongoing ethics investigation ('troopergate') into Palin's attempts to fire her ex-brother-in-law and I did not believe that McCain would choose someone with something so potentially serious hanging over her head right in the middle of a campaign

It was not that I did not think she was competent for the position of vice president and potentially president. There are probably many unpolished gems among the population, who could turn out to be great leaders if given the opportunity. I simply did not know enough about her leadership qualities to make such a judgment.

But now the evidence is in. Subsequent events have made it pretty clear that far from being an uncut diamond, she is pure rhinestone, all flash and no substance. Her two interviews with people like Charles Gibson and Katie Couric, well-known for conducting celebrity-style interviews and hardly noted for their aggressive questioning, revealed someone completely out of her depth even in responding to boilerplate questions. She seems to be lacking in curiosity, and unable to string coherent thoughts together or even speak in understandable sentences. Since then she has retreated to the bosom of sycophantic followers, giving interviews only to people like Sean Hannity, Rush Limbaugh, and Hugh Hewitt.

She has not held a single press conference, an astonishing thing for someone who aspires to the second highest office in the land.

But what has really turned me off is that she has revealed personality traits that are unbecoming in a leader. They show that she is a petty, small-minded, and vindictive person, who has few if any scruples about attacking her perceived opponents, willing to sink to depths that are deplorable even by partisan political standards.

She seems to not care about truth and seems comfortable constructing an alternative reality to shield her from it. One sign was her willingness to repeat over and over again to her adoring fans the lie about her saying 'thanks but no thanks' to the 'bridge to nowhere', even after that assertion had been thoroughly documented to be false.

Another was her recent assertion that the troopergate report released last week completely cleared her of any hint of ethics violations when it explicitly stated: "Finding Number One of the report says: "I find that Governor Sarah Palin abused her power by violating Alaska Statute 39.52.110(a) of the Alaska Executive Branch Ethics Act."

Such things are amazingly brazen and show a disconcerting disconnect either from reality or from truth. Is it any wonder that the Anchorage Daily News describes her response as 'Orwellian' and that it was "an embarrassment to Alaskans and the nation"?

The troopergate report also revealed a degree of startling degree of vindictiveness and abuse of power. The extent that she and her husband went to get her ex-brother-in-law fired, even to the extent of firing his boss for not firing him (which would itself have violated civil service rules), shows a creepy obsessiveness that is disturbing.

The newspaper went on "They had no sense that the power of the governor's office carries a special responsibility not to use it to settle family scores. They had no sense that legal restrictions might prevent the troopers from firing Wooten. They had no sense that persistent queries from the governor's office might be perceived as pressure to bend state personnel laws."

People who abuse their authority over others should never be put in a position of power.

Her casual use of language to suggest that Obama is some kind of dangerous and unknown person who 'palls around with terrorists' suggests a reckless disregard for the basic elements of decency. In watching those clips of her saying such things, one did not get the sense of someone performing a distasteful task because of orders from the campaign. She was acting like she thought it was perfectly acceptable, even enjoying it. She actually seems to revel in the muck.

It should also be remembered that the alleged 'terrorist' William Ayers, whatever his past, is still alive and living in Chicago as a professor of education at a university there. He is not some fugitive in hiding. Repeatedly and publicly calling him a terrorist in these inflamed times is to encourage some crazy person to try and harm him.

The Republican Party has a range of people from old-style establishment conservatives to right wing extremists. The establishment conservatives tend to value knowledge and expertise and know that one has to deal with reality. They clung on to their party even when George W. Bush, Dick Cheney, and Karl Rove systematically set about creating an alternative reality, manufacturing 'facts' to suit their needs, shredding the protections of the constitution, plunging the country into disastrous and immoral wars, crating skyrocketing budget deficits by massive tax giveaways to the rich, and using torture on prisoners.

But Sarah Palin has proved too much even for these loyal establishment conservatives. They see her as beyond the pale and one now sees a steady stream of them announce that they cannot support her and are either calling for her to be dropped from the ticket or saying they are going to vote for Obama, even as the rabid base calls upon her to increase her vicious attacks.

It is too late for McCain to drop her, of course. The two are now joined at the hip, for better or (more likely) for worse.

Sarah Palin has become the bridge to nowhere for the Republican Party.

POST SCRIPT: John Cleese on Sarah Palin

He finds her even funnier than the other Palin.


October 15, 2008

McCain's debate dilemma

It was no secret that the McCain-Palin campaign was in trouble two weeks ago. With the elections looming, they were stagnant in the polls. The Palin boomlet was gone and she was increasingly seen as a liability, firing up the base but alienating pretty much everyone else. McCain's stunt of 'suspending' his campaign to solve the financial crisis was widely viewed as at best erratic and at worst a pathetic attempt to gain attention.

As was predicted by many observers, the campaign tried to turn things around by going nasty, attempting to paint Obama as the 'Dangerous Other', the person who is 'not like us'. There were allegations by McCain and Palin that we don't really know who he is, that Obama has mysterious past that is unexamined, and that he has perhaps secrets that he wants to conceal.

These kinds of vague suspicion dropping are meant to create a canvas onto which people can project their own fears and phantasms. And the crowds at the McCain-Palin rallies and the third-tier pundit fringe in the media dutifully obliged. Obama is secretly a Muslim, Obama is an Arab, Obama is a terrorist (for some of the more deranged and ignorant, all three are equivalent), Obama is a radical, and so on. Of course, the fact that Obama is black was undoubtedly enough fire up the racist elements. .

Palin's comment that Obama 'does not see America like you and me' and has been 'palling around with terrorists' was a particular low point, inciting some people to yell out 'traitor'.

It is true that anybody in a crowd can shout out unpleasant things. It is the climate that the speaker sets up and how he or she responds that is significant. It is an unfortunate fact of life that it really does not take much talent to be a rabble-rouser. People have pent up latent hostilities and insecurities that they normally keep a lid on for fear of societal disapproval. But when a public figure seems to signal approval of such sentiments by silence and even encourages it in crowds, the top comes off and the hate spews out.

This is what we have seen in the last week or so. The response by the crowds at the rallies to this kind of incitement has been downright ugly, shouting epithets, and for many days McCain and Palin did not rebuke them.

But taking this low road does not seem to have worked. The polls have shown increasing levels of public disapproval of both of them, their support has dropped precipitously, and even their supporters in the establishment have voiced concern at the ugliness. Establishment conservatives are finding the campaign increasingly distasteful and counterproductive and are beginning to say so, further enraging the third-tier pundit brigade.

But even on this issue McCain is erratic. After a supporter at a rally last Monday asked McCain when he was 'going to take the gloves off' (i.e., be even more direct about these types of allegations) McCain responded to the delight of the crowd 'How about tomorrow?" It seemed like was signaling that he was going to be on the attack at last Tuesday's debate and no doubt many of his supporters tuned in hoping to see fireworks. Instead they saw a seemingly befuddled McCain whose main attack on Obama was that he supported an earmark request for a new projection system to replace the forty-year old one at the popular Adler planetarium.

This opened the door for the Obama campaign to gently taunt him and raise issues of cowardice. In an interview with ABC's Charles Gibson, Obama expressed surprise that McCain had not said the things he says in rallies to his face. Biden also chimed in that in his neighborhood if you had something bad to say about someone, you said it to his face.

When Gibson later told McCain about Obama's comments, McCain was clearly on the defensive and said that no one could accuse him of being a coward.

More recently, McCain has rebuked some of the people at some rallies who have raised these issues while at other times has repeated those insinuations, the switch sometimes occurring within the space of fifteen minutes. Then yesterday, McCain has again promised to be aggressive at tonight's debate.

It seems like either he is not sure what to do or is trying to keep Obama off balance, not sure what to expect.

So which McCain is going to turn up at tonight's debate? I am told that the format will be like the first, a more free-wheeling format that allows for more digressions and debate and allows the candidates to bring up issues not related to the questions.

His extremist supporters are expecting him to really sock it to Obama and if he doesn't they are going to be disgruntled, to put it mildly. But history indicates that revealing a nasty side with personal attacks in these debates is a losing proposition.

On the other, the fact that the Obama camp is taunting him with insinuations of cowardice must rankle McCain who likes to portray himself as a hero. The fact that McCain has a volatile temper and flies into uncontrollable rages is well known, although not publicly seen on the campaign so far. The possibility that McCain might be goaded into losing control must be causing some concern to his campaign managers. There must also be the fear that the Obama camp is trying to get him to take the bait and personally attack because they have a response ready.

So while there is a global financial crisis, two wars underway, major problems with health care to be addressed, and large numbers of people losing their homes, what we have is a psychodrama, worthy of a TV show, as to who will win the debate mind game.

We can pretty much expect that the Obama we will see tonight is the same one we have seen all along: cool and cerebral. He is not going to fire anyone up but he is not going to make a fool of himself either.

But which McCain will show up? The sometimes confused grandpa figure, constantly talking about earmarks and how he is a maverick? Or the sneering, disdainful, and arrogant figure, the person who earned the nickname McNasty?

Stay tuned.

POST SCRIPT: Obama = Lisa?

And now a Simpsons metaphor for the candidates.

October 14, 2008

Solving the mortgage mess

Now that we have the subprime mortgage mess, solving it is inevitably going to create a sense of injustice in some quarters. During the second Obama-McCain debate, I was startled by McCain's sudden revelation of a new plan to address the mortgage crisis:

"As president of the United States…I would order the secretary of the treasury to immediately buy up the bad home loan mortgages in America and renegotiate at the new value of those homes -- at the diminished value of those homes and let people be able to make those -- be able to make those payments and stay in their homes.

"Is it expensive? Yes. But we all know, my friends, until we stabilize home values in America, we're never going to start turning around and creating jobs and fixing our economy."

He emphasized that this was his very own plan, not Obama's or Bush's. But it turns out that Obama had said something seemingly similar in a speech given on September 23, saying:

"For example, we should consider giving the government the authority to purchase mortgages directly instead of simply purchasing mortgage-backed securities. In the past, such an approach has allowed taxpayers to profit as the housing market recovered."

But while the broad details of the McCain and Obama plans appear similar, apparently the details McCain's plan, released later, are different enough from his own that the of Obama camp is now criticizing the McCain plan as mainly benefiting the financial institutions that caused this mess.

What McCain seems to be suggesting is this. Suppose someone has a $200,000 mortgage on a home that is now worth only $100,000. McCain's plan would purchase the mortgage from the banks at the full value ($200,000), and then renegotiate the mortgage with homeowner for $100,000. This enables the banks to be fully bailed out of the consequences of their reckless lending, and also bails out the homeowners. It is the taxpayers who foot the bill for the remaining $100,000.

Critics have argued that there is no reason that the banks should be bailed out this way by buying the mortgages at face value. Instead they should pay them the 'real' value of the mortgages. But determining the ownership and real value of individual mortgages is not going to be easy since they have been bundled and sliced and diced on their way to being transformed into easily marketable securities.

Clearly the banks want to get as high a price as they can. But they have no real leverage in this situation except for what they have by virtue of their influence with the government partly purchased through their lobbyists' contributions to politicians.

The government should use its leverage to say that they will not bail out the banks but will instead take them over (partially or wholly) by purchasing their stock and thus gaining control. Then they will be able to benefit when home values eventually rise and the banks become more stable and their stock values go up. The government can then sell its stock and get out of the retail banking business. But in the interim, they will have effectively nationalized these institutions, the way they have already nationalized Fannie Mae, Freddie Mac, and AIG.

This is the model being practiced by the European countries led by England and is based on the Swedish solution to their 1992 crisis.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.

That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.

It now seems that the US government is adopting this very solution. Of course, this move smacks of socialism and adopting it will be a tacit concession that capitalism has at least partly failed. It will thus be anathema to those ideologues who do not see problems as requiring pragmatic solutions based on whatever realistic options are available but as requiring actions based on an ideological template. The true free-market believers will say that the government should do absolutely nothing and let the chips fall where they may, irrespective of however many banks go under.

But the people who run the US are neither socialists nor free-market capitalists. What the current crisis reveals only too plainly is that they are 'state capitalists', who think that the government should serve the interests of the big corporations and financial institutions.

But facing a real chance of public revolt over a blatant giveaway to the very financial institutions and people who created this mess, the government seems to be reconciling itself to the fact that it must adopt some variant of the Swedish/English model, and Paulson's revised plan seems to reflect that.

However, the way the US government has been itself lurching from one plan to another does not inspire much confidence. As Josh Marshall points out: "[T]he fact that [Paulson] rammed through his bailout bill as absolutely essential to saving the economy, only to decide a few days later that we need something dramatically different, does not inspire me with great confidence in his grasp of the nature of the crisis."

POST SCRIPT: Tone deafness by the McCain camp

McCain has been getting hammered by Obama for advocating policies that seem to ignore the middle class and cater to the rich. Presumably feeling the need to respond to this charge, the McCain campaign has produced a new tax proposal they say is aimed at the middle class.

What is it? They are proposing a capital gains tax cut!

What are they thinking? It is mostly the rich who worry about capital gains taxes or even know what it is. They are the ones who are constantly asking for cuts in the capital gains tax and even its elimination.

Second, with the current stock market and housing market downturns, people are facing huge capital losses, not gains, so they are unlikely to be paying any such taxes soon.

While this may be just another effort to use the crisis to ram through a policy that will eventually favor the rich when the economy recovers, it is another sign that the McCain has no sensitivity to what concerns ordinary people.

October 13, 2008

Retirement savings losses

Like most people who have retirement accounts, the beginning of October saw the arrival of my quarterly statements and they did not make for pleasant reading. Mine showed a drop of 12% since the beginning of the year.

I have heard many people express dismay over similar losses. It is, of course, not pleasant to see ones savings drop so sharply. But at the same time, we have to realize that what we may be seeing is a drop from an artificially high and inflated value. Over the past few years, those same retirement accounts have grown at a rapid clip due to the galloping stock market prices.

While reading the quarterly statements back in the good old days (i.e., last year) were fun, I never thought of that as 'real' money or wealth, the way I view the money in my bank account. It is like the value of my home. It may go up or down but as long as I am not selling it or trying to borrow against it, it has no effect on my life except psychologically.

Talking of the good old days, wasn't it was just this summer that $150 billion was given away as $600 to each taxpayer and that this 'stimulus package' was supposed to solve all our financial problems by the simple expedient of having people go shopping? Ah, those were the good times.

As I have mentioned before, if we think of the virtual economy of the stock market as being a measure of the real economy, then the Dow Jones Index should only be about 5,500, still below its current value. So, except for people who are forced to convert their stock assets into actual cash, there has been no tangible loss.

What is extraordinary is the effort by some to blame the whole subprime mess on what they claim is the effort by the government to provide loans to poor and minority communities to encourage them to buy homes. They say that this is what encouraged risky lending practices. This is flat-out false.

There were of course many people who did buy homes and made other major purchases based on a false sense of wealth and it is they who are now really feeling the pain. There are those people who bought homes they could not really afford before the real estate market went sour, for which they now owe more money than the house is worth and hence have now defaulted. It is uncertainty both about the scope and extent of this default problem and the worth of the securitized investments made out of bundled mortgages that seems to fueling the loss of confidence in banks and the stock market.

To be sure, many individuals were greedy and took advantage of the chance to buy expensive homes at inflated values based on artificially low introductory rates. Many of them also spent way more than they should have on credit, maxing out their cards. Have we forgotten that people have long been strongly urged to shop, and that it was almost their patriotic duty to do so in order to keep the economy going? Credit card offers were plentiful and so easy to obtain that we were regaled with stories of even cats and dogs obtaining them. Now it seems that credit card debt was also 'securitized' like home mortgages were and those debts are also in danger of default, and suddenly people are being lectured to sternly for their thriftless ways.

People seemed to have had an unrealistic sense of what they could and could not afford. Such people are by no means blameless. But what they are guilty of is greed. They cannot be blamed for the mess because they are not the ones who were in control of the situation.

It should also not be forgotten that not all home mortgage or credit card defaults are due to greed. Some people default because of factors outside their control, like loss of their job or a major illness. In fact, the largest factor in personal bankruptcies is due to the cost of medical care.

It is the banks that we expect to be the grown ups in this situation, who should understand what risks are reasonable. They are the professionals. They are not obliged to give loans to whoever asks for them. It is they who are supposed to check on the value of the homes that are being bought and the ability of the purchaser to pay back the loans before they lend money.

But the banks did not practice the kind of due diligence that was called for. So while they, like the homeowners, are also guilty of greed, they definitely bear the major responsibility for the mess.

POST SCRIPT: Crazy prayers

The idiocy of some religious believers never ceases to amaze me. Take this invocation given by Rev. Arnold Conrad, past pastor of the Grace Evangelical Free Church at a McCain rally in Davenport, Iowa.

"I would also pray, Lord, that your reputation is involved in all that happens between now and November, because there are millions of people around this world praying to their god — whether it's Hindu, Buddha, Allah — that his opponent wins, for a variety of reasons," Conrad said.

"And Lord, I pray that you would guard your own reputation, because they're going to think that their god is bigger than you, if that happens. So I pray that you will step forward and honor your own name with all that happens between now and Election Day," he said.

Apart from the pastor's ignorance (he mixes up the names of gods with the names of the religions) he is warning his Christian god that this election is being seen as a grudge match between him and his competitor gods and that if he doesn't act to make McCain win, he wont be able to show his face in the neighborhood again. Unbelievable.

October 10, 2008

Unbalanced coverage-2: More examples

(I wrote the first post in this two-part series some time ago. I got distracted by the bailout and political coverage.)

There are a few journalists in the US who push the boundaries of the propaganda envelope to the extent that they can to try to get at the facts. What they report is not pretty, which is why the government tries very hard to suppress such efforts.

Seymour Hersh in a speech in 2006 describes how civilian deaths in Iraq get mysteriously transformed into enemy combatants.

[Hersh] described one video in which American soldiers massacre a group of people playing soccer. 


"Three U.S. armed vehicles, eight soldiers in each, are driving through a village, passing candy out to kids," he began. "Suddenly the first vehicle explodes, and there are soldiers screaming. Sixteen soldiers come out of the other vehicles, and they do what they're told to do, which is look for running people." 



"Never mind that the bomb was detonated by remote control," Hersh continued. "[The soldiers] open up fire; [the] cameras show it was a soccer game." 



"About ten minutes later, [the soldiers] begin dragging bodies together, and they drop weapons there. It was reported as 20 or 30 insurgents killed that day," he said. 



If Americans knew the full extent of U.S. criminal conduct, they would receive returning Iraqi veterans as they did Vietnam veterans, Hersh said. 



"In Vietnam, our soldiers came back and they were reviled as baby killers, in shame and humiliation," he said. "It isn't happening now, but I will tell you – there has never been an [American] army as violent and murderous as our army has been in Iraq."

As far as I can tell, this horrific incident did not get much coverage in the major media.

Meanwhile in the other conflict, Russia has recognized the independence of South Ossetia and Abkhazia, a move condemned by the US and western Europe. This has caused predictable outrage from the administration and the media about Russia seeking to forcibly change national boundaries, but don't hold your breath expecting any reporter to ask Bush (or Obama or McCain) how this differs from US recognition of Kosovo as an independent state, which took place in February of this year, following the earlier breakup of Yugoslavia and the forcible separation of Kosovo from Serbia by NATO.

One can multiply such examples over and over. NPR on August 26, 2008 reported that the people of South Ossetia, who want to secede from Georgia and join up with Russia, justified their case by reporting all kinds of atrocities by Georgian troops, such as ripping open the bellies of pregnant Ossetian women, that justified the Russian response. The reporter rightly said that there had been no evidence produced that such things had actually occurred.

But that reporter's skepticism in this case made me recall the similar lurid allegations made about Iraqi troops after they invaded Kuwait in 1990, saying that they were taking incubators away from hospitals and taking them back to Iraq, leaving babies to die.

A young woman named Nayirah appeared in front of a congressional committee. She told the committee, "I saw the Iraqi soldiers come into the hospital with guns, and go into the room where 15 babies were in incubators. They took the babies out of the incubators, took the incubators and left the babies on the cold floor to die.

These reports were uncritically accepted as true by reporters and used to inflame public opinion against Iraq. Human rights groups like Amnesty International reported that 312 babies had died as a result of this atrocity.

Reporters did not seek independent confirmation of this sensational report. They did not even seek to find out who this mysterious young woman was who gave such dramatic testimony. It was only much later that it was revealed that this entire incubator story had been concocted by the public relations firm Hill & Knowlton which was working for the Kuwaiti government and was friendly with then president George H. W. Bush, and that the "eyewitness" Nayirah was actually the daughter of the Kuwaiti Ambassador to the US and had not seen any of the things she claimed she had.

Similar unsubstantiated stories appeared at the UN a few weeks later, where a team of "witnesses," coached by Hill & Knowlton, gave "testimony" (although no oath was ever taken) about atrocities in Iraq. It was later learned that the seven witnesses used false names and even identities in one case. In an unprecedented move, the US was allowed to present a video created by Hill & Knowlton to the entire security council.

(For some other examples of the media uncritically passing on government lies, see here.)

This is why I always suspend judgment and never believe the lurid stories that come out during times of crisis, especially if they reflect badly on 'them'. The media simply cannot be trusted to provide balanced coverage and until I hear of real evidence my presumption is that they are uncritically passing on government propaganda.

POST SCRIPT: Mr. Puddles, where are you?

The Daily Show manages to make the boring debate absolutely hilarious.


October 09, 2008

Reflections on the debates

Here's an old joke:

There was this old man who had a favorite hunting story that he liked to tell over and over. Even though his friends and family had heard it many times, he was always looking for a suitable opportunity in any gathering to repeat it.

At one function, there was no break in the conversation that gave him the chance, so he took his walking stick and, when no one was looking, struck the ground hard with it, making a loud report.

In the startled silence that followed, he said "What's that? A gun shot? Well, talking about guns . . ."

Ok, so it's not a great joke. Not even a good one. I am terrible at telling jokes and don't even remember them shortly after hearing them.

The point is that that old joke suddenly popped into my head during the Obama-McCain debate, when McCain took whatever opportunity he got to go on about earmarks. It seems like it is his favorite topic, something that he works into every speech and interview, delighting in the details.

He went on about the three million dollar earmark that Obama, as part of the Illinois delegation, had requested for an 'overhead projector', implying that this for something you find in any classroom and was a boondoggle. It was actually for a projector for the Adler Planetarium in Chicago, to project the night sky onto the dome. It is the oldest planetarium in the US and whose current projector is forty years old. Those projectors are expensive.

But that was not my point. Sure, earmarks are not good budget practice. But they are not the worst things in the world. In fact, in the grand scheme of things within the US budget, they are rather small potatoes. If you get rid of every earmark, you would still have huge financial problems. McCain's seems overly obsessed with them even as we are talking of trillion dollar bailouts and while he wants to provide hundreds of billions of dollars in tax cuts to wealthy people.

At some point, you begin to wonder whether McCain's focus on earmarks is a way to avoid talking about real budgetary issues. It seems to have become a gimmick, a way to score cheap points.

The debate itself was a rather boring, I thought. The candidates pretty much rehashed the same things they have been saying for a long time. I didn't think there was a clear winner but the snap polls all indicate that Obama won quite handily. (See here, here, and here.)

The format was awful. So far, only the first debate was a real debate. At times, both candidates seemed to want to break free of the rigid constraints and get more free-wheeling but the smug and self-important moderator Tom Brokaw (easily one of the most annoying people on network news, even worse than Gwen Ifill who moderated the vice presidential debate) kept reining them in, reminding them about the rules that had been agreed upon. His selection of questions was mediocre.

But if the candidates themselves wanted to change the rules in mid-debate, why shouldn't they be allowed to? (There was a great episode in The West Wing when at the beginning of a presidential debate, just after the moderator had read all the detailed rules about time limits and no cross-talk and the like, the candidates decided to chuck them and simply talk back and forth. Too bad that only happens in fiction.)

One item that irritated me was McCain's repeated claim that he knows how to get Bin Laden:

He has said this before, and at other times has also said that he knows how to end the war in Iraq. But if he does know how to do all these things, why has he not told President Bush? Surely, if he "puts country first" then he should have told Bush his secret plans a long time ago to get the country out of the current mess, rather than using it as a lure to get people to vote for him. What if he loses? Is he going to take his secret plans and sulk, refusing to share it with anybody, like a spoiled child? Why doesn't someone question him on the ethics of keeping it secret? It reminded me of Nixon's 'secret' plan to end the Vietnam war.

Meanwhile, last week, NBC news anchor Brian Williams and David Letterman had a surprisingly thoughtful analysis of the campaign so far and the vice-presidential debate (except for some nonsense midway about how great Tom Brokaw and Tim Russert are):

Part 1:

Part 2:

Letterman made a good observation about Sarah Palin taking everyone by surprise with her opening "Can I call you Joe" remark to Biden as they were being introduced. I too thought it a little odd but put it down to a mere affectation. Letterman thinks that she did this in order to set up her planned line "Say it ain't so, Joe" later in the debate. Since it has become clear that during the debate she was reading much of her responses from cue cards, that kind of set up for a 'zinger' would not surprise me.

POST SCRIPT: Train metaphor for candidates

One thing that struck me during the debate was that McCain looked and walked and talked like an old man. His allusions were dated. Some older people have an old-world style is graceful and charming and even reassuring. But McCain just comes across as out of touch and cranky.

electiontrains.jpg

(Thanks to a commenter at DailyKos.)

If you liked the train metaphor, then take a look at this one.

October 08, 2008

Obama and the Bradley effect

Will attempts by the McCain camp to paint Obama as some kind of sinister and dangerous figure work?

Analysts seem to feel that such smear campaigns can be effective at times. Recall the absurd situation in 2004 where John Kerry's actual service in Vietnam was ridiculed and called into question by the supporters of Bush and Cheney, both of whom were draft dodgers. Recall also the anti-gay marriage sentiment that seemingly played an important role in that same election.

So far, the normal hot-button issues of sexual orientation and abortion and guns have not played prominent roles in the campaign. This leaves race as the emotional issue that can be exploited. And rest assured it will be, along with all kinds of attempts to impugn the character of Obama using guilt by association.

In trying to run a smear campaign, the McCain campaign is hampered by its own baggage. For every attempt to paint Obama as an elitist, we have the McCains' dozen (?) homes, thirteen cars, and private plane, and the fact that the outfit that Cindy McCain wore at the Republican convention allegedly cost around $300,000.

If they bring up Rev. Jeremiah Wright, they have Sarah Palin's own associations with extreme religious groups, including the weird Rev. Thomas Muthee who blessed her gubernatorial campaign and who prides himself on being able to find witches and run them out of town.

For every Tony Rezko they can dredge up from Obama's past, McCain has his own Charles Keating and his campaign with lobbyists associated with the current financial debacle.

For every allegedly America-hating William Ayers, Palin's flirtation with the secessionist Alaskan Independence Party can be brought up.

Furthermore, Wright and Rezko and Ayers are now old news, their fifteen minutes of fame come and gone, and it is unclear if they will have a serious effect even if they are dusted off and polished to seem like new.

This leaves only race as a major factor to be exploited. And I am afraid it will be. Some months ago Jon Stewart interviewed Barack Obama during the primaries and asked him whether he had a secret plan to enslave white people if he became president. This got a laugh from Obama and the audience but like much of the humor in The Daily Show, it works because it is based on an uneasy reality.

There are undoubtedly some white people who are afraid of giving power to black people. They cannot hide from themselves the fact that black people have been treated atrociously in this country. They fear retribution and wonder if they should take the chance of putting black people in positions of authority. Such people will never vote for 'the black guy'.

We saw some of that sentiment expressed in the primaries, where the Appalachian regions went heavily against Obama and in favor of Hillary Clinton. This Al Jazeera report on racism in Kentucky is striking in the openness of those who think racially.

The question is how far the McCain campaign will be willing to go to grow the size of this group of people by stoking their racial animosities and fears. My sense is that they are willing to go to the very bottom of the sewer and will only desist if it seems to be not working or is backfiring on them.

When Obama's supporters urge him to go for the jugular in response, to take the attack to McCain and Palin, they are ignoring the delicate situation that he is in because of his ethnicity. He cannot take the risk of appearing to be the 'angry black guy'. He has to be passionate but not angry, forceful but not threatening. It is to his credit that he managed to do that so far.

Obama seems to be by nature a cool, cerebral and thoughtful person, and he has reinforced this perception by surrounding himself with solid establishment figures like Warren Buffett, Robert Rubin, and the like. Of course, this also opens him to the charge of being 'elitist', which has become a vague term to suggest that he is smarter than the rest of us and that this is somehow a bad thing.

Then there is the so-called 'Bradley effect' that says that in elections in which a black candidate runs against a white one, opinion polls tend to exaggerate the support for the black candidate because some white people are reluctant to tell posters they are voting for the white candidate for fear of being called racist.

The name comes from the 1982 race for California governor in which the black mayor of Los Angeles Tom Bradley was leading in the polls all the way to election day, and even in exit polls on that day, only to suffer a shocking defeat when the votes were counted. Subsequent studies revealed that white voters had voted for Bradley in smaller numbers than the polls had led one to expect. Some analysts argue that Obama needs a huge lead in the polls to compensate for the inevitable swing away from him on polling day.

Other analysts argue, based on subsequent congressional and gubernatorial elections, that the Bradley effect has largely disappeared over time. Note that they are not saying that race-based voting has disappeared. There are definitely people who will not vote for 'the black guy' because he is black. What these analysts are saying is that there is no evidence from recent elections that people are hiding their voting preferences from pollsters because of fears of being called racist, and so there is no significant, hidden, systematic racial bias in poll responses.

But there has been no presidential election where the Bradley effect has been put to the test. This election may well be the most heavily polled in history. Right now, Obama leads in the national polls by an average of about 6.0 points which, if it holds up, should be enough of a cushion for him, even if there is a residual Bradley effect at play. The results on election day will reveal to what extent the Bradley effect is still a factor.

POST SCRIPT: Evolutionists flock to Darwin stain!

It's a miracle and proof that Darwin's theory of evolution is true.

October 07, 2008

Brace yourself

Breaking news: Barack Obama is black.

It is quite remarkable how little salience that fact has had in the race so far considering that if he wins, the election of the first non-white president of the United States is an event of major historic significance. While his ethnicity is a complex one, he cannot escape (and has in fact wisely embraced) the shorthand description of being black. For his campaign to have insisted on accuracy would have been to draw attention to trivial questions of race and ethnicity that are at best distractions and at worst would make race too important an issue.

When Obama speaks in a debate or gives speeches or is interviewed, the fact that he is black is not the most prominent impression he makes, at least for me. It is just an incidental item that registers in the background, like that he is tall or slim. Obama is on his way to becoming the Tiger Woods of politics. Just as the latter is no longer 'the black golfer', Barack Obama has almost, but not quite, reached the stage of not being 'the black presidential candidate'. That is quite an achievement.

But the next month will see if he has made the complete transition to Tigerness. We are now entering the last stages of the presidential campaign, something I have been long dreading. With the McCain candidacy declining steadily in the polls and on a direct path to losing despite the Hail Marys thrown by them (selecting Sarah Palin and 'suspending' his campaign because of the financial crisis), you can expect them to now do desperate things.

By this I mean going well beyond the standard negative campaigning tactics of distorting your opponent's record, taking their statements out of context, impugning motives, and focusing on style in order to give misleading impressions. Those things have always been part of politics.

No, I expect them to go nuclear, throwing everything at Obama to make him into the stereotype of the dangerous black man, to seek to change his image from that of a Tiger Woods to more of a Dennis Rodman, to transform him in the eyes of white people from someone whom you would welcome into your home to the kind of person you cross the street to avoid.

The McCain camp has already telegraphed their disgusting strategy and Sarah Palin has started the process:

Republican vice presidential candidate Sarah Palin on Saturday accused Democrat Barack Obama of "palling around with terrorists" because of his association with a former 1960s radical, stepping up the campaign's effort to portray Obama as unacceptable to American voters.
. . .
Falling behind Obama in polls, the Republican campaign plans to make attacks on Obama's character a centerpiece of candidate John McCain's message in the final weeks of the presidential race.
. . .
Palin's remark about Obama "palling around with terrorists" comes as e-mails circulate on the Internet with suggestions that the Democratic candidate is secretly a radical, foreign-born Muslim with designs against the U.S. — even though Obama is a native of Hawaii, a Christian and has no connections to Muslim extremists.

McCain's campaign manager Rick Davis (himself now under a cloud because of revelations of his lobbying links to Fannie Mae and Freddie Mac) spelled out how such character assassinations are done.

The premise of any smear campaign rests on a central truth of politics: Most of us will vote for a candidate we like and respect, even if we don't agree with him on every issue. But if you can cripple a voter's basic trust in a candidate, you can probably turn his vote. The idea is to find some piece of personal information that is tawdry enough to raise doubts, repelling a candidate's natural supporters.
. . .
It's not necessary, however, for a smear to be true to be effective. The most effective smears are based on a kernel of truth and applied in a way that exploits a candidate's political weakness.

(Thanks to BarbinMD for the link.)

Ironically, when Davis wrote the above, he was accusing those in favor of George W. Bush of using those very same dirty tactics against McCain in the 2000 Republican primary campaign when Bush was losing to McCain. Bush went on to win. Since McCain has now hired many of those very same Bush operatives to run his 2008 campaign, we should not be surprised to see a reprise of those tactics, now used by McCain against Obama.

One important factor in a successful smear campaign is the ability to create an 'echo chamber' for these slurs, to get it widely circulated in the media. The current financial crisis has been getting banner headlines and has been used to scare people into voting for this huge bailout. Given that financial issues are using up so much media airtime, it may be harder to get traction for this strategy. I suspect that people are more likely to be swayed by extraneous things when there are no major issues gripping their attention.

So will the McCain-Palin attempt at raising so-called character issues at such a time work? Or will it be seen as fiddling while Rome burns?

Frankly, I am not a good judge of whether raising extraneous issues will succeed. I don't have a good feel for the pulse of the people. I really should get out more.

While I am very cynical of the way the government serves mainly the interests of the rich and powerful and influential, I am usually more hopeful about the good nature and good sense of people in general over the long term. Each election time I think that people will not be swayed by trivialities and will vote on the basis of what truly will affect their lives. And while most are like that, unfortunately there do seem to be some people who can be swayed by such appeals to their fears and intolerance.

Whether those numbers will be enough to sway the outcome of this election is something I cannot gauge.

Tomorrow: More on racial politics

POST SCRIPT: And now, live, the vice presidential debate!

Saturday Night Live had its by now obligatory Sarah Palin parody with Tina Fey, with the bonus of Queen Latifah playing moderator Gwen Ifill.


October 06, 2008

Government of the Dow, by the Dow, for the Dow

The recent financial crisis and the frantic (and finally successful) attempt by the government and Wall Street to strong-arm the public to provide immediate relief to the very institutions that caused the crisis is striking evidence, if anyone needed it, of exactly for whose benefit the government is run: Wall Street. You can ignore all the blather about how this bailout was needed to prevent ordinary people from financial ruin. That may or may not be true. What is indubitable is that if Wall Street interests were not at stake, nothing would have been done.

As was clearly evident in the past week, while the government can drag its feet for decades, say it is too expensive, and take no action to solve urgent problems like health care, when it comes to giving away nearly a trillion dollars to the financial industry, it can act with lightning speed. And you can be sure that when this money runs out (as it surely will as Wall Street institutions get their greedy hands on it) and next financial 'crisis' appears, we will be asked to cough up even more, and told that otherwise the sacrifices we have already made will be 'wasted'. This is the same argument given for continuing the war in Iraq.

Although I have written quite a bit in recent days about the crisis and the economy and think I have at least some understanding of how things work, one thing I don't understand is how the stock market works. I understand the mechanics of it, of course, but have long given up trying to understand what makes it go up or down on any given day.

It seems to me that stock prices are only loosely based on the actual health and performance of companies and the general economy, and more on expectations of what will happen in the future. It is not based on current data but on predictions of future data. It is closer to astrology or soothsaying than science.

I can pinpoint the very event that made me give up on the whole business as being hopelessly irrational.

Emperor Hirohito of Japan (1901-1989) was the symbolic head of Japan from 1926 until his death. He was revered by his people and considered by many to be a god-king. He was quite ill during the last decade of his life and close to death on many occasions.

I was intrigued and amused by the fact that the Japanese stock market would go up and down quite dramatically based on rumors about his health, and the news organizations would solemnly report with a straight face things like, "The Japanese stock market dropped sharply today on news that Emperor Hirohito's health had taken a turn for the worse."

This was, of course, absurd. The emperor was very old, had been ill for a long time, and was a purely symbolic head of state and had no say whatsoever on how the government or the economy was run. It would be like the British stock indices fluctuating on rumors about the Queen of England. The reaction of the stock market seemed to me then, and still seems now, to be hopelessly irrational.

Although I do not invest directly in the stock market (although my retirement funds are presumably invested in it), I do an experiment on days when there is some fairly big news event, either political or financial. After I listen to the news, I try to predict what that news will do to the stock market that day. I find that there is little or no correlation. If anything, I am more often wrong than right, that what I see as bad news for the economy sends the stock market up, and vice versa. It is clear that I will never get rich speculating as a day trader.

A couple of years ago, Bob Garfield on the show On the Media had a droll report on how the media and financial analysts try to come up with simple explanations to explain the day-to-day gyrations of the stock market, usually based on nothing more than sheer guesswork or story-telling.

This is why I never take seriously those people who urge policies based on the stock market fluctuations. They are usually self-serving rationalizations for what they want to do.

For example, on Monday, September 29, the House of Representatives surprisingly defeated the Paulson bailout plan on a close vote. As you can see from the graph, the Dow Jones index immediately headed down, plunging 777 points, and that drop was blamed directly on the vote.

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People were issuing dire warnings that it would continue that deep decline and we would all have our retirement funds disappear if Congress did not reverse itself and pass the Paulson plan immediately.

The next day the House was not in session due to a religious holiday and the Dow went up nearly 500 points. Did people conclude that sending Congress on vacation was good for the market? Of course not. They found some other fatuous reason.

Then the Senate passed a revised plan late on Wednesday evening and the market should have been happy on Thursday but it wasn't. (It feels so absurd to ascribe human emotions to the stock market, an institution that deals impersonally with billions of transactions daily but we now take such absurdities for granted.) The stock market declined steeply all through the day, losing about 350 points, for no reason that I could see.

Tension then mounted as the House came back in session on Friday to vote on this new package. The market started the day up and kept rising, gaining about 300 points by 1:00 pm, reaching a peak of 10,766. The House voted at that time and passed the measure quite easily.

Since we were told that the House failing to pass a bailout plan on Monday was the cause of the steep decline that day, you would expect that passing it now would be an occasion for joy. What actually happened was that right after the vote, the market immediately went into a steep decline, losing 450 points to end the day with a net loss.

To me this makes no sense at all. Maybe, to use the phrase coined by MIT professor of business Dan Ariely and which is the title of his book, the market is 'predictably irrational', meaning that there is some method in its seeming madness and I am not expert enough to see it.

As long as the stock market was tethered to the underlying real economy, that may have been true. But I think that the present out-of-control virtual economy, generated by financial institutions that have been allowed to speculate wildly using debt-based securities that were free from regulations and oversight, has resulted in the stock market being connected to the real economy by the slenderest of threads, making rational decision-making impossible.

Maybe it is truly rational and there are people who actually understand it. I know I don't.

POST SCRIPT: Paulson's history

This article points out the little publicized fact that Treasury Secretary Paulson, while head of Goldman Sachs, advocated the very policies that led to the current crisis. And now he has been given a huge check from the taxpayers to 'solve' the very problem he helped create. Nice work if you can get away with it.

Paulson, according to a celebratory 2006 BusinessWeek article entitled "Mr. Risk Goes to Washington," was "one of the key architects of a more daring Wall Street, where securities firms are taking greater and greater chances in their pursuit of profits." Under Paulson's watch, that meant "taking on more debt: $100 billion in long-term debt in 2005, compared with about $20 billion in 1999. It means placing big bets on all sorts of exotic derivatives and other securities."

According to the International Herald Tribune, Paulson "was one of the first Wall Street leaders to recognize how drastically investment banks could enhance their profitability by betting with their own capital instead of acting as mere intermediaries." Paulson "stubbornly assert[ed] Goldman's right to invest in, advise on and finance deals, regardless of potential conflicts."

In testimony in 2000 before the Securities and Exchanges Commission, Paulson as head of Goldman Sachs, argued that Wall Street should be allowed to regulate itself.

Meanwhile, Rep. Brad Sherman of California describes the horror scenarios painted for lawmakers in private sessions before the Monday vote to try and scare them into voting for the bill.


October 03, 2008

Crisis? What crisis? Which crisis? Whose crisis?

In the midst of all this panic about a financial meltdown, it is hard to get a sense of how to actually measure if there is a crisis or not. Clearly there are various measures that can be used: the number of houses foreclosed, the number of personal bankruptcies, the number of banks going under, the amount of credit available, the state of the stock market, and so on. While they are all connected in some way, which ones should we be paying most attention to?

Deciding which measures are being used to say there is a crisis is important because that will drive the efforts to resolve it. Clearly what is concerning the political leadership is the state of the financial market, and the current bailout efforts seemed to be aimed at reassuring the banking, insurance, and other financial sectors and propping up the stock market. People are being scared and told that if the stock market declines their retirement savings will go down the tubes.

It is true that there have been fluctuations in the stock market and some recent declines. But whether this is a problem or not depends on whether we know what the "true" level of the stock market should be. If it is declining from an artificially high value to a more realistic one, then there is no crisis, just a return to normalcy.

To get a rough idea of how to see this, you can look at this graph that shows the Gross Domestic Product (GDP), the Consumer Price Index (CPI), and the S&P 500 stock market index since 1970. The GDP is a rough measure of the size of the 'real' economy, while the CPI is a rough measure of the rate of inflation.

We see that from around 1970 onwards until now, both the GDP and CPI growth rates have fluctuated around an average annual value of roughly 3.5%. But beginning around 1980, the S&P index started taking off like a rocket, meaning that the size of the 'virtual' economy that is measured purely by stock market prices was outstripping the growth of the 'real' economy.

This raises the interesting question of what happened after 1980. That was the year that began the great deregulation era, where the corporations and financial institutions markets were steadily freed of the constraints and regulations imposed on them following the Great Depression of 1929. The drive for deregulation started towards the end of the Carter administration, kicked into high gear with Ronald Reagan, and has been on full throttle ever since.

Government regulation was portrayed as this bureaucratic burden that was stifling innovation, so those regulations were removed. The banking and financial sector was delighted because now they could do more things, borrow and lend more money, and take much greater risks than ever before. This was the beginning of the creation of exotic new financial instruments like derivatives, credit default swaps, collateral debt obligations, and securitized mortgages that led to huge debt-based transactions that enabled trillions of dollars to swirl around in an opaque and unregulated manner. All this freely flowing capital drove up stock prices.

There was increased innovation all right, but not all in a good way. The downside of all the dismantling of oversight was not long coming. The massive federal bailout of the savings and loan industry in the late 1980s and the growth and collapse of companies like Enron and WorldCom can be traced to the removal of those regulations that required at least minimally prudent and honest and transparent business practices.

While all those debacles should have been warning signs of underlying problems, the continued rise in the stock market allowed people to ignore the storm clouds. After all, wasn't the rise in the stock market telling us that we were all getting wealthier, except for those poor saps who lost their jobs in the wake of the collapse of those giant companies?

Below is a graph of the Dow Jones index since its beginning.

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Its value on January 2, 1980 was just 786. Like the S&P index, it too started rising rapidly after 1980, reaching a peak of 11,497 on October 1, 1999. It then dropped to 7,592 on July 1, 2002, rose to an even higher peak of 13,896 on July 2, 2007, and ended at 10,831 on October 1 of this year.

The alarmists are pointing to the 3,000 point drop in the last year as a sign of the financial collapse. But if we think the stock market should reflect the value of the 'real' economy as measured by the GDP, then it is possible to do a very rough calculation and see what the stock index values should be today based on the growth of the GDP.

If we take the average annual GDP growth rate of 3.5% and add to that the average inflation rate of 3.5% as measured by the CPI, then we can calculate what a 7% growth rate in the Dow, starting with its value in 1980, should give us today. That turns out to be about 5,500, about half today's value.

If I am more generous and assign a total growth rate of 8%, I still only get a current index value of about 7,200. I need to postulate an astounding rate of 9.5% over the last three decades to get the current value of the Dow index, and would have to ramp it up to 10.5% to get the July 2007 peak value. Such huge growth rates in the real economy over such a long time are, of course, unrealistic.

So is it the case than rather than us currently having "lost" a lot of money, we never should have taken seriously the idea that we had so much money to begin with? Were we living in a dream world of imaginary wealth and living high on borrowed money? Is this financial crisis just telling us that by pumping another trillion dollars we don't really have into the stock market we are simply postponing the day of reckoning since we are striving to maintain an artificial level of virtual wealth?

Michael Lewitt of Hegemony Capital Management (a hedge fund) gives his perspective. Given his position as a market insider, trading in the very kinds of things that are at the heart of the current mess, his critiques carry particular weight. He concludes that:

There is a point when free enterprise tips over into a degree of economic and social inequality that is politically unacceptable, and the United States has reached that point. HCM is well aware that its views on this topic genuinely anger many of its readers, but this is an issue that must be addressed as an essential component of any program that will return confidence to the financial system. Free market economic policies, in particular tax policies, have led to the creation of an American oligarchy whose wealth and power is excessive. While not as pernicious as the oligarchy that rose from the ruins of the Soviet Union and now lords over Russia and spends its money garishly over the world, an American oligarchy has unduly benefitted from ill-advised tax and economic policies and must be reigned in as a sign to Main Street that the game will no longer be rigged against it. (my italics)

His analysis of the causes of the current situation is similar to what I have been saying:

Financial busts are preceded by financial bubbles. The current bust was preceded by a debt bubble whose unique manifestations were debt securitization and credit derivatives. Underlying these novel debt structures were the human emotions of greed and fear that led to abuses by even the most sophisticated individuals and most highly respected institutions in the market. While these human attributes are the most difficult to legislate, their ability to wreak havoc is clear evidence that they must be regulated in a thoughtful way.
. . .
The profits that Wall Street generated over the past few years were not the result of some new-found genius in the executive suites, but were merely the product of adding unprecedented amounts of leverage to balance sheets.

He points out that all the current panic talk is being driven by short-term thinking.

It is a certainty that America, and then the rest of the world behind it, is going to experience a severe recession the likes of which it hasn't seen for decades. . . One of the problems plaguing America is that we have become so frightened of short-term pain that we are willing to risk incalculable long-term suffering. Any plan that treats the symptom (the loss of confidence) and not the disease (the underlying problems that caused the loss of confidence) will not solve the real problem.
. . .
Despite the cries of pain from the credit markets, HCM has never believed that the world would spin off its axis if a deal is not rushed to completion in the next few days. A bad deal would be worse than no deal at all. (my italics)
. . .
In order to be successful, the Paulson Plan needs to be followed up by comprehensive regulatory reform that accomplishes the goals of convincing the public that the financial system will be fairer in the future than it has been in the past (i.e. that the gains will be spread more equitably and that failure will not be rewarded) and that strong steps will be taken to prevent the oversights that led to the current instability from being repeated.

He also points out that the heads of these financial institutions, while asking for the taxpayers to bail them out, are brazen in their demands, acting like they are doing us a favor by taking our money! And Paulson and Bernanke go along with that.

While trying to help rebuild confidence in American capitalism, Mssrs. Paulson and Bernanke tried to convince Congress that bank executives would prevent their institutions from participating in the bailout if it meant that their compensation would be capped. One would think, as the financial system teeters on the brink of collapse, that the Secretary of the Treasury and the Chairman of the Federal Reserve could make a more persuasive argument than one that poses the likelihood that corporate executives would knowingly violate their fiduciary duty and refuse to participate in a plan to rescue the financial system because it might limit their compensation.

Meanwhile, Pam Martens, who worked on Wall Street for 21 years, reads the fine print in the bailout plan and discovers what Wall Street hopes to win from it. It is an inside job in which the Treasury, the Fed, and Wall Street are using their agents in Congress to pick our pockets.

The more I think about it, the more this bailout plan looks like a swindle. I hope the members of the House of Representatives defeat it in its current form and instead demand a full and careful examination of the problem and what is needed to solve it.

POST SCRIPT: The Vice-Presidential debate

Well, the debate went pretty much as I expected. Sarah Palin was fairly coherent in her answers most of the time though I thought she overdid the folksy, down-home manner. By the way, did you know that she and John McCain are mavericks? And that Palin likes to talk about energy issues whatever the question?

Those who are not political junkies may have been surprised by the solid performance by Joe Biden, who has been pretty much ignored so far in the media coverage, overshadowed by the other three candidates. This may explain why early polls suggest that he 'won' the debate, though declaring winners and losers for such events is a largely meaningless exercise.

What was really surprising was the way Palin was flirting with me.

Sarah, give me a call and let's get together for coffee sometime.

October 02, 2008

Sarah Palin, a river of babble-on*

Tonight the nation finally gets to see Sarah Palin live and unplugged, presumably speaking unscripted.

The last three weeks have been mixed for her. On the one hand, she has drawn large and adoring crowds to rallies and meetings, being a bigger attraction than John McCain or Joe Biden. But despite this, her campaign has gone to extraordinary lengths to shield her from reporters. The two interviews she gave to Charles Gibson of ABC News and Katie Couric of CBS News were excruciatingly painful to watch, as you can judge for yourself from these excerpts from the latter.

Did that make any sense at all? Was there even a sentence in that mish-mash of words?

Ok, maybe that was a bad patch. Anyone can have an occasional brain-freeze. Let's look at an extended clip.

Apart from some flashes of coherence, she again seems to free-associate, gets lost in run-on sentences, degenerates into childish language ("good guys" and "bad guys"?), and throws in a few non-sequiturs for good measure And what was all that about "It's very important when you consider even national security issues with Russia as Putin rears his head and comes into the airspace of the United States of America, where, where do they go? It's Alaska. It's just right over the border. It is from Alaska that we send those out to make sure that an eye is being kept on this very powerful nation, Russia, because they are right there. They are right next to, to our state."

Is she suggesting that Russian planes routinely violate US airspace over Alaska? Does the Pentagon know this? And are we dependent on the good people of Alaska to keep an eye on Russia and be the early-warning system? Jesus's General thinks that Putin may be keeping a similar eye on Palin.

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Here is another extended segment from the Couric interview. It is not reassuring.

What is disturbing is that the kinds of questions Couric asked were ones that could have been predicted, so she should have had reasonable answers ready. There were no questions on obscure matters or that required knowledge of esoteric details. When unable to come up with even an incoherent response, Palin resorts to an exaggerated aw-shucks, I'm-just-a-country-girl shtick that is cringe-inducing.

The inability to be specific and to wander off into mindless generalities is very much on display here, where she is asked to name another Supreme Court decision she disagrees with other than Roe v. Wade.

After not being able to name a single case, she wanders into a thicket of words about the rights of states to decide issues and how she and McCain will change that. Really.

And again here, when she is asked what she reads to get her information.

After saying at one point, incredibly, that she reads 'all of them', she again avoided the question by switching it to an aggrieved implication that people who ask such things must be thinking that Alaskans are ignorant hicks.

She is clearly filibustering, emitting a cloud of words to hide her ignorance.

Palin seems to have been told by her advisors to hit certain talking points and she seems determined to do so whatever the question, come hell or high water. As a result her answers start to wander all over the map as she searches for ways to include each point and she ends up not knowing how to complete the sentence she started. She reminds me of some physics students who, when asked a question to which they do not know the answer, try to bluff their way out by using words like 'energy' and 'entropy', hoping that this will mask their lack of understanding and give their ramblings a veneer of reasonableness. The result is not pretty.

She is undoubtedly articulate and must have some political smarts to be able to reach the level of governor of a state. It is quite possible that she is both smart and ignorant. A lot of politicians are. But what is clear is that she does not know how to use 'political speak' to hide her ignorance the way most seasoned politicians do. She does not how and when to stop talking when she has nothing to say.

It is not that she does not know specific pieces of knowledge that is troubling. It is that she, like George Bush, does not seem interested or curious enough to have even thought about these things. She, like Bush, seems to work off some ideological template that spits out decisions and actions with little deliberation or thoughtfulness.

The reviews of her interview performances have been devastating (see here and here.) The campaign seems so nervous about letting her loose that they would not even let her talk to the press to praise her partner after the Obama-McCain debate (a routine duty for running mates), and instead had her watch the debate in a Philadelphia bar.

But she got into trouble the next day when in, response to a question from a bystander, she seemed to be supporting the position Obama had taken on Pakistan and which McCain had taken pains to criticize just the day before in the debate. Was she not even paying attention to the debate? McCain then had to embarrassingly disavow her comments.

By now everyone must have seen the devastating parody of the Couric interview on Saturday Night Live, made worse by the fact that on many occasions they used her actual words. Though Tina Fey got most of the laughs as Palin, Amy Poehler should get a lot of credit for her dead-on impression of Couric, faced with stream-of-consciousness incoherence, desperately trying to look as if it made some sense.

One of the best things about the first Obama-McCain debate was the more free-wheeling format that encouraged back and forth exchanges, though the candidates took some time to get used to it. It was much more like a true debate although McCain failed to exploit its potential by speaking directly to Obama, for which he has been rightly criticized.

It appears that the McCain camp wants to have a much more structured form for the VP debate, reverting to the 'joint press conference' format, with very little time for back-and-forth, presumably so that Palin will not have to improvise as much and can stick to scripted answers.

In these debates, part of the tactics is lowering the expectations of your own candidate as much as possible since 'victory' is measured (at least by the pundits) by how well you exceed them. The McCain camp has succeeded so well that if Palin just manages to speak in complete sentences, she will have done well, irrespective of what she actually says.

I think she will do a lot more. It is likely that she will come out with both guns blazing, armed with prepared quips and one-liners, trying to resurrect the convention image of the tough, spunky, fast-talking, barb-throwing, woman-of-the-people that so endears her to the party faithful. Whatever the question, she will fill the allotted 90 seconds or whatever by stringing together some tested applause lines.

As a result, she may well succeed in impressing some people.

It should be an interesting evening, though likely to lack much substance.

(* Idea for pun courtesy of that champion of snark Tbogg.)

POST SCRIPT: Bad Disney movie trailer

In an interview, actor Matt Damon said that the selection of Sarah Palin by John McCain was like the plot of a bad Disney movie. Now you can actually see the trailer of that movie.

See more funny videos and funny pictures at CollegeHumor.

Damon was also disturbed by reports that Palin thinks humans co-existed with dinosaurs and hopes she will be questioned about it, saying "I need to know if she really think that dinosaurs were here 4,000 years ago. I want to know that, I really do. Because she's gonna have the nuclear codes."

October 01, 2008

Gambling John McCain

John McCain is known as a lifelong gambler relishing visits to casinos. I have written before that I thought John McCain is also hot-headed and reckless. All these are not signs of the temperament required for a head of state. But his performance last week was extraordinary, even by his own standards.

His week started poorly when the headlines were blaring about a financial crisis and he had to backtrack from his earlier statement that the fundamentals of the economy are strong. He may actually be correct (I am not one who equates the health of Wall Street financial institutions and the stock market with the general economy, although the two are undoubtedly linked) but it was a poor choice of words and timing and he had to immediately retract and explain away, not a good thing to have to do for someone already being portrayed as being out of touch and ignorant on the economy.

Then on Tuesday there was the release of damaging news that his campaign chief Rick Davis's company had received millions of dollars from Fannie Mae and Freddie Mac to provide access to McCain. Davis's company was receiving a hefty retainer as late as August 2008 even though both Davis and McCain had said that Davis had no links to the two companies for over two years. So either Davis was lying to McCain or both were lying to the nation. The previously highly visible and voluble Davis who used to be interviewed all the time suddenly disappeared from sight, not talking to reporters

Then came Wednesday. First there was the release of the Washington Post-ABC News poll showing Obama surging ahead with a whopping 52-43 point lead, suggesting that McCain's campaign was tanking and the Palin bounce was gone. Then there was the taping during the day of the interview that Sarah Palin had with CBS News's Katie Couric. Apparently the Palin entourage who watched the interview realized that it was an unmitigated disaster (more on this tomorrow) and that it would dominate the news that evening.

McCain may have felt the need to make a dramatic move to obliterate all this bad news and put the focus back on himself, playing the role he loves of someone who does not play by the normal conventions. So he declared that he was 'suspending his campaign', flying back to Washington to solve the financial situation, and would even skip the much anticipated debate on Friday until and unless there was agreement on the bailout plan. This headline-grabbing move was reminiscent of his dramatic selection of Sarah Palin when it was becoming clear that Obama would have a rousing finale to the Democratic convention.

In tactical terms, both moves worked. They definitely overshadowed the other news, though the Palin-Couric interview still created waves. But just as the Palin selection rapidly declined in effect over the subsequent few weeks, the campaign 'suspension' move had an even shorter life, blowing up in just a few days.

For one thing it was pointed out that McCain's 'suspension' had little meaningful content. He was still giving numerous interviews, his ads were running all over the country, and his surrogates were out in full force putting out his message.

Second, it proved embarrassing when it was revealed that McCain had not even read the Paulson plan, even though it was only three pages long.

Third, it came out that after all his dramatic statements about wanting to solve the problem, McCain was silent at the White House meeting on the plan. It was Obama who was active in the discussions, asking a lot of questions, some of them directly to McCain and not getting any response. McCain seemed disengaged.

Fourth, many lawmakers in Washington were not pleased with injecting presidential politics into the negotiations and openly said that the candidates' presence was not helpful, since neither of them were members of the committees that were responsible for the matters involved in the negotiations.

Finally, the impression arose that the House Republicans had scuttled a tentative agreement at McCain's request after he arrived in DC, so he was now portrayed as part of the problem, not the solution.

McCain was back in the spotlight but not in a good way. Speculations ran rampant as to the reasons for his erratic behavior. Did McCain scuttle the tentative agreement? If so, why? Some suggested that he wanted to ride to the rescue and solve the crisis single-handedly and was disappointed that an agreement seemed to have been reached before he arrived, so he sabotaged it even though he did not have a ready alternative.

Another suggested reason was that what he and his campaign actually wanted was to postpone or even cancel the Biden-Palin debate because of fears that she would be revealed live on national TV to be out of her depth. His campaign's suggestion that his September 26 debate with Obama be postponed to October 2nd (the original date of the vice-presidential debate) and that the VP debate be vaguely rescheduled for a later date seemed to suggest that they were either trying to run out the clock completely or at least stall for more time to help her prepare.

Whatever the reasons, the tactic did not work. Instead attention became focused on his penchant for stunts and what it said about him and his campaign. Slate even ran a list of his next ten possible stunts to grab attention. (#1: Returns to Vietnam and jails himself.)

Faced with mounting criticism and even ridicule, McCain was forced to go to Mississippi for the debate with his tail between his legs, even though there was no bailout deal. During the debate he even weakly conceded that he would vote for the deal that would be worked out in Washington, even though he did not know at that time what eventual plan would be proposed. It is likely that this will be regarded as his worst week in his campaign, one misstep following another.

Oddly enough, I think McCain could have come out of this as a very big winner. There is huge public opposition to the bailout. It was a foregone conclusion that Obama, a good friend of Wall Street, would support the bailout plan in its essential outlines. If McCain had come out strongly opposing the bailout and openly led the efforts to scuttle it, he may have been able to accurately portray Obama, the Bush administration, and the Congressional leadership of both parties as serving only Wall Street interests, and ride a huge surge of public support as the only true champion of ordinary people, all the way to November.

But the gambler lost his nerve and folded. Wall Street enmeshes the political leadership of both parties in a tight embrace. To defy them now would be to defy all the people who have supported him all these years: his financial contributors, his own party's leadership, George Bush, all his close advisors and confidantes, and those with whom he socializes. He would have been turning his back on his own class and he just could not bring himself to do it.

Although McCain rails against Washington elites and praises his own alleged maverickiness, when an occasion came along that provided an ideal vehicle to show his independence in a concrete way and not just as rhetoric, he capitulated. Such is the power of ruling class allegiance.

In the end, he did what he and Palin repeatedly keep saying you must never do. He blinked.

POST SCRIPT: McCain's stunts

Jon Stewart gives his take on McCain's erratic behavior.