goodbye big zero. hello happy new decade!

Nobel Prize economist Paul Krugman is calling this last decade "The Big Zero." I tend to agree with him (and thus excerpt at length):

[F]rom an economic point of view, I’d suggest that we call the decade past the Big Zero. It was a decade in which nothing good happened, and none of the optimistic things we were supposed to believe turned out to be true.

It was a decade with basically zero job creation. O.K., the headline employment number for December 2009 will be slightly higher than that for December 1999, but only slightly. And private-sector employment has actually declined — the first decade on record in which that happened.

It was a decade with zero economic gains for the typical family. Actually, even at the height of the alleged “Bush boom,” in 2007, median household income adjusted for inflation was lower than it had been in 1999. And you know what happened next.

It was a decade of zero gains for homeowners, even if they bought early: right now housing prices, adjusted for inflation, are roughly back to where they were at the beginning of the decade. And for those who bought in the decade’s middle years — when all the serious people ridiculed warnings that housing prices made no sense, that we were in the middle of a gigantic bubble — well, I feel your pain. Almost a quarter of all mortgages in America, and 45 percent of mortgages in Florida, are underwater, with owners owing more than their houses are worth.

Last and least for most Americans — but a big deal for retirement accounts, not to mention the talking heads on financial TV — it was a decade of zero gains for stocks, even without taking inflation into account. Remember the excitement when the Dow first topped 10,000, and best-selling books like “Dow 36,000” predicted that the good times would just keep rolling? Well, that was back in 1999. Last week the market closed at 10,520.

So there was a whole lot of nothing going on in measures of economic progress or success. Funny how that happened.

[...]

What was truly impressive about the decade past, however, was our unwillingness, as a nation, to learn from our mistakes.

Even as the dot-com bubble deflated, credulous bankers and investors began inflating a new bubble in housing. Even after famous, admired companies like Enron and WorldCom were revealed to have been Potemkin corporations with facades built out of creative accounting, analysts and investors believed banks’ claims about their own financial strength and bought into the hype about investments they didn’t understand. Even after triggering a global economic collapse, and having to be rescued at taxpayers’ expense, bankers wasted no time going right back to the culture of giant bonuses and excessive leverage.

Then there are the politicians. Even now, it’s hard to get Democrats, President Obama included, to deliver a full-throated critique of the practices that got us into the mess we’re in. And as for the Republicans: now that their policies of tax cuts and deregulation have led us into an economic quagmire, their prescription for recovery is — tax cuts and deregulation.

Of course, one of the great things about the United States is that we believe in second chances. So while the first decade of the new millenium was a big dud, here's to substance, to progress, and to new hope for the Tens.

the more interesting story is where the stimulus money was allocated

The Sacramento Bee reports on California state agencies that inflated the number of jobs they created or preserved through use of American Recovery & Reinvestment Act (a.k.a., stimulus) funds. But I think the more illuminating part may be how the money was distributed in the first place. Consider these numbers:

In October, Caltrans told the federal government that it created or preserved 1,590 jobs with $26.7 million the department received earlier this year under the American Recovery and Reinvestment Act.

[...]

The Department of Corrections and Rehabilitation claimed that it saved 18,229 jobs with $1.08 billion in stimulus money, even though the department had issued layoff notices for just 6,962 corrections employees.

The California State University system said it saved 26,156 jobs – half its entire work force – with $268.5 million in federal stimulus money.

To recap: Caltrans got $26.7 million, the Cal State system got $268.5 milion, and prisons got $1.08 billion.

So basically, when designing how to "recover and reinvest" in America and in California, it was decided that the best solution was to spend about 40 times more on prisons than, you know, actual infrastructure like transit, and 4 times as much on keeping people locked up than on, you know, training our labor force to be highly educated and competitive in today's economy.

Just great.

crs finds acorn broke no laws in last five years

via OpenLeft, the NYT reports on a Congressional Research Service Report that shows that the much-maligned ACORN, a stalwart of community organizing and voter registration, has broken no laws in the last five years, despite facing the scrutiny of "46 inquiries by federal, state, and local agencies, including the FBI and the Treasury Department, and five by Congress as of October 2009."

This witch hunt is purely political.

ca food banks make fresh produce a priority

From yesterday's LAT, a piece on the efforts of California's food banks to make fresh fruits and vegetables a key component of food assistance:

"Ten years ago, food banks were much more passive," said Michael Flood, who runs the Los Angeles Regional Food Bank, one of the largest food banks in the country. They took what they could get -- packaged food that might have been supermarket rejects or new products that failed.

Today, 20% of the L.A. bank's food is produce -- by far the largest single category, Flood said.

Farmers have long donated food to their local food banks or have allowed people to glean leftovers from their fields. But in 2005, the California Assn. of Food Banks got involved, hiring one solicitor who procured 10 million pounds of food. In 2008, three solicitors got 64 million pounds of produce. A fourth solicitor begins work in January.

[Solicitor Steve] Sharp, whose family has long farmed in the Imperial Valley, is a deal maker in a Dodge pickup and a straw cowboy hat, seeking farmers in the Imperial and Coachella valleys who are willing to harvest or pack crops they can't otherwise sell. They get paid just enough to get the cabbage or garlic or melons into bins.

"Two weeks ago I had a grower call me and say he had a truckload of cantaloupes and one of honeydew. So I have to go look at it and make sure the quality is there," Sharp said. "They were just real small, and nobody wanted it. There was no market for that size of melon."

He hopes to get [grower Rudy] Schaffner's off-size corn come spring. Schaffner has agreed to work on adapting his conveyor belt system to handle what Sharp needs. They think of it as finding a solution "farmer style."

"The cool thing is, we've got a problem and we're taking care of it directly," Schaffner said one sunny December afternoon in his kitchen, a large poinsettia on the table.

Farmers often have crops that don't meet customers' size or appearance requirements. Or they may have a bumper crop they can't afford to store. A storm in the Northeast can back up produce orders across the country, leaving a farmer with a truckload of unsold food.

"You cut their losses. You are fixing a problem they may have," Sharp said.

Very cool.

sen. al franken's anti-rape amendment signed into law

Good news today, as President Obama signed the Defense Appropriations Act that included an amendment from Sen. Al Franken (D-MN) that prohibits defense contractors from limiting the ability of their employees to seek justice against their employers in court for offenses including rape, sexual assault, harassment and false imprisonment. Although the law does not apply retroactively, any company signing a contract with the government may not enforce arbitration clauses preventing bringing these types of charges to court; thus, once a company such as, oh say former-Halliburton subsidiary KBR signs a new contract with the government, they can no longer invoke any such arbitration clause, such as the one that is preventing former KBR employee Jamie Leigh Jones from suing the company for being drugged and gang-raped by co-workers, and then locked in a storage container by other co-workers to cover up the crimes and destroy forensic evidence. More horrifying details here. Thanks to the new law, Jones and others who have suffered from similar violence and crimes may soon be able to pursue justice in the courts.

Score one for the good guys.

health care bill: good policy killed by bad politics?

Two of the most prominent progressive leaders in Democratic politics have just said that we should kill the health care bill the Senate is recommended, which has been freshly stripped of the Medicare buy-in for those 55-64 years of age as well as the public option trigger. It will likely also be stripped of the 90% "medical loss ratio" provision, which would have required insurance companies to pay-out 90% of their premium revenue in health care benefits. Given all these losses on big ticket and hotly debated issues, it is not surprising that Howard Dean and Darcy Burner are calling for abandonment of the abomination that they see a once promising reform effort having turned into. To quickly get the cost-savings that real health insurance reform requires, reconciliation may be a better idea.

One expert, however, disagrees. Health care cost guru Atul Gawande argues in his latest New Yorker piece that perhaps Frankenstein's Monster is exactly what the U.S. health care system needs right now: a poorly sewn together package of every innovation and policy proposal ever to cross a health policy expert's desk, all thrown out into the marketplace of ideas as pilot projects, may the strong survive. As Dr. Gawande argues, "if we’re willing to accept an arduous, messy, and continuous process we can come to grips with a problem even of this immensity."

The real question, then, seems to me to be not whether American ingenuity fueled by small-scale government-backed successes, gradually scaled up, can work--it seems very plausible that it can--but whether such a process can flourish in the political turmoil likely to follow from such a "weak" health care bill. Because the truth remains that even if there is a lot of "good stuff" in this bill, it will not reduce health care costs quickly enough, it will not create competition in the market where health insurers operate as an oligopoly, and Americans will see little short-term improvement in their access to or cost and quality of health care. There simply isn't enough big ticket stuff in the current health care bill that Democrats will be able to point to come 2010 and 2012, and too much risky stuff (individual mandates to buy insurance comes to mind) that may prove political liabilities. The possibility of a loss of Democratic control of government means that even the good policy ideas scattered throughout the bill may not have a chance to take root; a Republican government would undoubtedly lead to uprooting of pilot projects before they can demonstrate their success, and scaling up would be near impossible.

I have little faith that a Sen. Reid-led Senate will use reconciliation, as they should have from the beginning, to push through the most essential, cost-saving reforms. The final hope lies in conference committee and the possibility that the Medicare buy-in compromise with the public option trigger can be restored, and that this will provide enough short term relief for enough Americans that Democrats can hold on for the next 4 years at least.

does rahm want democrats to lose congress?

From Chris Bowers:

The best way for Democrats to keep improving is to focus on jobs. This is probably why, in a speech before a bunch of CEOs, Rahm Emanuel has declared reducing the deficit is the top economic priority for next year:

Deficit reduction over the long term will be the White House's primary focus next year, and Chief of Staff Rahm Emanuel said at the Wall Street Journal's CEO Council conference last month it will be a "key component" of the president's State of the Union address.

"It is foremost on his mind and the mind of the economic team," Emanuel said.

Good idea. The budget deficit is also the top priority of, like, 2% of the nation:

CBS News Poll. Dec. 4-8, 2009. N=1,031 adults nationwide. MoE ? 3.

"What do you think is the most important problem facing this country today?" Open-ended

Economy/Jobs: 47
Health care: 12
War/Peace (general): 4
Poverty/Homelessness: 3
Moral values/Family values: 3
War in Afghanistan: 2
War in Iraq: 2
Budget deficit: 2
Other: 20
Unsure: 5

This poll makes a mockery of the notion that the country is mainly concerned about the deficit right now. When people are not promoted with any choices, only 2% of the country independently lists the deficit as a top priority.

on mammograms and science

The science behind the mammogram brouhaha in the NYT:

if screening catches the breast cancers of some asymptomatic women in their 40s, then it would also catch those of some asymptomatic women in their 30s. But why stop there? Why not monthly mammograms beginning at age 15?

The answer, of course, is that they would cause more harm than good. Alas, it’s not easy to weigh the dangers of breast cancer against the cumulative effects of radiation from dozens of mammograms, the invasiveness of biopsies (some of them minor operations) and the aggressive and debilitating treatment of slow-growing tumors that would never prove fatal.

The exact weight the panel gave to these considerations is unclear, but one factor that was clearly relevant was the problem of frequent false positives when testing for a relatively rare condition. A little vignette with made-up numbers may shed some light. Assume there is a screening test for a certain cancer that is 95 percent accurate; that is, if someone has the cancer, the test will be positive 95 percent of the time. Let’s also assume that if someone doesn’t have the cancer, the test will be positive just 1 percent of the time. Assume further that 0.5 percent — one out of 200 people — actually have this type of cancer. Now imagine that you’ve taken the test and that your doctor somberly intones that you’ve tested positive. Does this mean you’re likely to have the cancer? Surprisingly, the answer is no.

To see why, let’s suppose 100,000 screenings for this cancer are conducted. Of these, how many are positive? On average, 500 of these 100,000 people (0.5 percent of 100,000) will have cancer, and so, since 95 percent of these 500 people will test positive, we will have, on average, 475 positive tests (.95 x 500). Of the 99,500 people without cancer, 1 percent will test positive for a total of 995 false-positive tests (.01 x 99,500 = 995). Thus of the total of 1,470 positive tests (995 + 475 = 1,470), most of them (995) will be false positives, and so the probability of having this cancer given that you tested positive for it is only 475/1,470, or about 32 percent! This is to be contrasted with the probability that you will test positive given that you have the cancer, which by assumption is 95 percent.

[...] Whatever the probabilities associated with a medical test, the fact remains that there will commonly be a high percentage of false positives when screening for rare conditions. Moreover, these false positives will receive further treatments, a good percentage of which will have harmful consequences. This is especially likely with repeated testing over decades.

In short, tests are not perfect, and when testing for a rare disease, too much testing may actually do more harm across a large population than good.

turnout wins elections = the base wins elections

"The Base"--that is, hardcore ideological supporters--are insufficient in the United States to win national elections or swing districts. Candidates and incumbents need to woo the oft-cited "swing voters," moderate/centrists and/or indifferent voters who are as likely to stay home and watch the newest Grey's Anatomy as they are to go and cast a vote. However, winning a majority of swing voters does very little good if your base stays at home. In fact, pissing off your base will lose you an election, since the base is much more valuable than just the sure-thing votes they represent. They represent volunteers for get-out-the-vote and voter registration efforts, they represent your most likely donors, and they represent the people who are trying to convince their social networks that going out and voting for you is actually more important than catching up on TV dramas.

President Obama should be worried about his base, because they are shifting from excited optimism to depressed cynicism, and cynicism does not a volunteer/donor make.

DaveJ at OpenLeft makes some suggestions on ways that the President and Administration could signal that they actually do care about their base:

I want to see some Democratic Senators publicly held accountable for going against Obama's agenda.

I want to see the government very publicly slap down a large company for illegally firing union organizers, polluting,

I want to see the government publicly prosecute a few companies for discriminating against (firing, pay differentials, etc.) people over 50 or because they are women or minorities. I'd like to see very public sting operations that catch these companies doing what we all know they are doing.

I'd like to see some Bush cronies held accountable for the corruption and lawbreaking that occurred. (And how about doing something for Gov. Siegelman and apologizing to him on behalf of the government?)

Actually I just want to see some damn laws enforced. A signal that we are returning to rule of law would tell the public that government is back on the side of the people. How many Bushies have been prosecuted for corruption? How many cronies have been asked to give the money back?

A robust Jobs Bill and climate change legislation would help, too. So would immigration reform. But one way or another, President Obama needs to do something. As Mike Lux notes, "the last 4 presidents who didn't have a good relationship with their base were George HW Bush, Jimmy Carter, Jerry Ford, and LBJ. What those four very different presidents had in common was that they didn't get re-elected."

a healthy gdp does not mean a healthy nation

After four consecutive quarters of decline, positive GDP growth is an encouraging sign that the U.S. economy is moving in the right direction.

- White House Council of Economic Advisers, Nov. 24, 2009

One of the most insulting approaches current American politicians can take in addressing the ongoing Great Recession is to express great joy about the fact that Wall Street seems to be recovering, and the GDP seems to be reversing its downward trend. It is insulting because it essentially is telling Americans that the economy is actually much better than the one that they are living with every day. As the pre-Recession bubble showed us, a healthy total GDP doesn't mean that everyone in the country is benefiting equally. This has been especially far from the truth in recent years, as economic growth largely benefited the wealthy. The top 1% of income earners in the U.S. take home 23.5% of Americans' income, the largest share to be concentrated in the top percentile since 1928, during the pre-Great Depression "Gilded Age." According to the United Nations Development Program, the United States is ranked 3rd in the world for largest gap between rich and poor.

There are better ways to measure countries' success in bettering their lives than simply looking at GDP rates. One standout is the idea of a Human Development Index, as Paul Rosenberg discussed over the summer. The UN Development Program bases the index on actual outcomes in the areas of health and education, rather than just how much money the country is making overall:



Similarly, the Social Science Research Council's American Human Development Project (cool site to play around with if you have some time) looks at standard of living in addition to health and education indicators. This allows them to (literally) draw a vivid picture of the well-being of various parts of the country:



Policymakers who genuinely care about the well-being of their constituents need to abandon the GDP rhetoric when talking about economic trends. Perhaps more fundamentally, though, efforts to change the way that American leaders understand and value economic progress requires not just better government policies, but better ways of measuring the success or failures of such policy.

what is unclear is what type of president obama chooses to be

Progress, far from consisting in change, depends on retentiveness. When change is absolute there remains no being to improve and no direction is set for possible improvement: and when experience is not retained [...] infancy is perpetual. Those who cannot remember the past are condemned to repeat it.

- George Santayana, 1905

From Alan Jenkins today:

Most Americans carry around at least two stories of government in their heads. One is the story of government as problem solver, as fair referee, and as investor in shared prosperity. It is the government of first responders, of Iwo Jima, of gifted teachers, Head Start and Social Security. The other story is of government as bloated bureaucracy, as tax-and-spender, as bungler, and as rights violator. It is the government of the DMV, of Vietnam, of lazy teachers, of FEMA and Hurricane Katrina. More important than ideology for these Americans is how facts on the ground seem to reaffirm one story or the other.

[...]

The public’s willingness to wait for progress [...] will depend in large part on their belief in the competence of this administration to make the trains run on time. Mistakes will no doubt occur. But the political success of this president may be determined in the coming months by whether his government is characterized by the popular and high-profile “cash for clunkers” program, or is just seen as a clunker.

The lessons of history are clear: it is clear what type of government programs have long-lasting positive effects on American society and help build the legacy of a great Administration (Social Security/Head Start), and it is clear what types of failures tarnish even otherwise laudable presidencies (Vietnam/Hurricane Katrina).

What is unclear is what archetype of president President Obama chooses to be.

FDR good, Hoover bad.