Fiscal Cliff Hanger

I say, again: we have a persistent economic crisis, but right now that crisis is jobs, not deficit. The deficit is a consequence, not a cause of job loss.

The looming 'fiscal cliff" is itself a consequence of a disastrous agreement last year to persuade Republicans not to throw the country into renewed, deep recession by refusing to raise the debt limit - essentially refusing to pay our bills.

No one disputes that, in the long run, we must reduce deficits. Reduce them back to the levels of the last two years of the Clinton administration.

But first we have to put people back to work. But Republican obstructionists don't want the economy to succeed. They will continue to obstruct economic progress.

At the state level, further obstruction will proceed apace in every state whose government is dominated by Republicans. We are about to enter that category here in North Carolina.

I don't make this stuff up, but I do read a lot of what is said by the best economists.

One of the economists I follow is Jared Bernstein. He's a very clear writer and thinker. Today he examines the question of what the last year has taught us about economic beliefs that have not served us well. Here's his summary.

Valentina Lisitsa - Concert Star

Marvelous concert this evening at Oriental's Old Theater. World class pianist Valentina Lisitsa played Rachmaninov, Bach, Beethoven, Chopin, Shubert, Liszt. Absolutely virtuoso playing. Marvelous acoustics in the old movie theater. Attendees treated to Champagne afterward and a DVD viewing of Valentina's recording session with the London Symphony Orchestra.

 A cause to celebrate.

An Economist's Take On Guns

It's hard these days to have a rational conversation about guns. We mostly seem to share views with those who share our views. I have posted a couple of things on my facebook page, and mostly don't hear anything from my gun nut enthusiast friends.

But here are some thoughts by an economist: http://newmonetarism.blogspot.com/2012/12/guns.html

I'm not sure what I think about his ideas, but guns are certainly a good example of economic externalities. A Pigouvian tax? Interesting idea. Maybe liability insurance as a practical way to implement the idea. It works (mostly) with cars.

Former Chief Justice Warren Burger: Second Amendment

Warren E. Burger, Chief Justice of the United States (1969-86) had this to say in an article in Parade Magazine, January 14, 1990, page 4:

"The Constitution of the United States, in its Second Amendment, guarantees a "right of the people to keep and bear arms." However, the meaning of this clause cannot be understood except by looking to the purpose, the setting and the objectives of the draftsmen. The first 10 amendments -- the Bill of Rights -- were not drafted at Philadelphia in 1787; that document came two years later than the Constitution. Most of the states already had bills of rights, but the Constitution might not have been ratified in 1788 if the states had not had assurances that a national Bill of Rights would soon be added.

"People of that day were apprehensive about the new "monster" national government presented to them, and this helps explain the language and purpose of the Second Amendment. A few lines after the First Amendment's guarantees -- against "establishment of religion," "free exercise" of religion, free speech and free press -- came a guarantee that grew out of the deep-seated fear of a "national" or "standing" army. The same First Congress that approved the right to keep and bear arms also limited the national army to 840 men; Congress in the Second Amendment then provided:

"A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed."

"In the 1789 debate in Congress on James Madison's proposed Bill of Rights, Elbridge Gerry argued that a state militia was necessary:

"to prevent the establishment of a standing army, the bane of liberty ... Whenever governments mean to invade the rights and liberties of the people, they always attempt to destroy the militia in order to raise an army upon their ruins."

Plainly the goal of the Second Amendment was to prevent the establishment of a large standing army. That endeavor failed more than a century ago. We now maintain the second largest standing military force in the world. Only China's is larger.

A Way Ahead For Europe - But Europe Won't Like It

Yesterday I posted a speech by professor Galbraith. He was speaking in Berlin.

The Eurozone problem is a German problem. Not a Greek problem or a Spanish problem or an Italian problem.

Professor Galbraith understands this and explains a lot about debt, especially international debt.

Here's a very illuminating interview.

Robert Bork: 1927-2012

Robert Bork was a brilliant professor and one of the most divisive figures in recent American history.

He also has been described as a person with a large brain and a small mind. Conservatives who mourn the fact that Bork was not confirmed as a justice on the Supreme Court don't often point out that six Republican senators voted against his confirmation. And two Democratic senators voted for. That was on the floor vote. In the committee on judiciary, Republican Senator Simpson also voted "no."

Here is a link to a segment of Bork's senate confirmation hearing. The exchange is between Bork and Senator Kennedy. The intellectual level of exchange far exceeds anything we hear these days.

Lawyer, author and legal analyst Jeff Toobin expresses a less-favorable picture of Robert Bork.

Economic Changes - Existing And Prospective - Mostly Europe

Professor James K Galbraith made a really fine presentation December 6th at an IG Metall conference in Berlin. Conference theme: The Good Life. Thanks to Mark Thoma for the link. The title of professor Galbraith's presentation is "Change of Direction."

Professor Galbraith draws attention to the existence of one overarching worldwide crisis. "Yesterday," he says, "Professor Nouriel Roubini give a magisterial and very high speed tour of the world situation making it clear of course that the promised recovery has not occurred. But if Nouriel is Sir Isaiah Berlin’s fox, who knows many things, let me try this morning to be the hedgehog who knows one big thing, and that one big thing is that what we are experiencing is a single, unified, global crisis of the economy and of the financial system. It is not a cluster of distinct and separated events; a subprime crisis in the United States; a public debt crisis in Greece; a bank crisis in Iceland; a real estate bust in Ireland and Spain; nor are there distinct U.S. and European crises, nor can the financial be separated from the real, nor is Germany a country to which crisis has not yet come with the suggestion that there might be some separate way out. There is one crisis, only one crisis, a deeply interconnected crisis of the world system. This crisis has, I think, three deep sources going back not twenty years but forty years to the early 1970s and the end of what we sometimes call the “golden age,” the “glorious thirty” years in the immediate aftermath of the second World War."

This calls to mind Noah Smith's observation that "something big" happened  early in the 1970's. Smith doesn't know what.

Professor Galbraith has some ideas.

"The first of the three deep sources is, I think, the rising real cost of the resources that we use, of energy and of everything that we use energy for. This was a problem that emerged in the 1970s and was then submerged again; it was deferred by new discoveries, by the geopolitical situation, and by the financial power of the western countries, which because of the debt crisis in much of the rest of the world had the effect of suppressing demand for these core resources. But this is a problems that can no longer be avoided or deferred. The cost of energy is roughly twice of what it was a decade ago and the future is far more uncertain. Both of these factors, cost and uncertainty, place a squeeze on the surplus or profitability in regions, continents, and countries that are importers of these resources. And as we confront, as we must, the problem of climate change and as we begin, as we must, to pay the price of climate change this problem is going to become more difficult. That’s just an economic reality that we have to cope with as we face the imperative before us."

"The second great underlying issue ....is technical change, the particular character of which in our time is quite different from ... before. If you take the digital revolution together with globalization, the ease of transnational manufacturing and ... the outsourcing of services, we ... live in an era where technology ... supplants workers. ...[T]he computer and ... associated technologies ... are now doing to the office worker what a century ago the internal combustion engine did to the horse."

"And the third great source of our problem is ideological. It is the neo-liberal idea that has given us deregulation and de-supervision; that has given us the notion that markets can function on their own without breaking down or blowing up. It is this notion as applied especially to finance. This is the great illusion of the last generation, and it fostered a form of economic growth that was intrinsically unstable and unsustainable. Why? ... [I]t was based on declining standards for loans and ... lax accounting standards, it was based upon financial fraud, on the most massive wave of financial fraud that the world has ever seen.... It was known to be such to the lenders at the time. This was true of housing loans in the United States made by the tens of millions that were known to the lenders as “liar’s loans,” as “ninja loans,” no income, no job, no assets; as “neutron loans” destined to explode leaving the building intact but destroying the people. This was known at the time. These were loans that had to be refinanced or they would default.

"It was also true of loans to the public sector, for example Greece....The fact that Greece had a weak public sector and a weak tax system was not a state secret before the crisis...." 

"Rising inequality is often linked to these phenomena. But I think we should be clear about what the linkage is. It is not the case that inequality rose and people compensated for it by borrowing more so they could have a higher standard of consumption. This is not what happened. It certainly did not happen in the United States. What happened was, is that the lenders went out to find new markets often fostering fraudulent loans on low-information borrowers, poor borrowers, inner city home owners, for example, forcing those loans to be refinanced so that the recipient only saw a fraction of the debt with which they were ultimately saddled. And the inequality arose from the booking of fees on those loans. This is how bankers get rich. They make their money in this way. And you can see this in their tax statements and you can see it in the geographical distribution of income gains in the United States."

 Professor Galbraith goes into more detail. You will find it rewarding to read the entire presentation.

You may not find it reassuring.

Are We Totally Helpless?

Where is the outrage? Where is the agony? Where is the will?

December 14, 2012, is a date that should live in infamy. But there have been too many such dates.

We are all heartbroken that such a thing can happen.

Now is the time to grieve for the senseless deaths of 20 young children and six of their teachers and administrators.

Tomorrow is the time for action. And anger, but a focused anger.

Anger at whom? It does no good to be angry at Adam Lanza, a troubled soul not given the healing he needed. In any event, he is now beyond our anger or our healing.

We should seek out and focus some of our anger on those who arm unbalanced people and set them loose on ourselves, our families and our children. Who could do such a thing? Look in the mirror. We have all looked the other way as pusillanimous politicians too frightened to stand up to extremists in an industrial lobby (the NRA) refused to focus on protecting our children.

We have averted our eyes from those who fail to provide adequately for treatment of mental disorders. A glance at Adam Lanza's eyes in the most widely published photo would suggest to any viewer that something is not right. But research, diagnosis and treatment are expensive. So all too often we pass the cost on to the families of those afflicted or to fellow citizens in their vicinity when they lose touch with reality.

What was wrong with Adam Lanza? Some say he suffered from a form of high functioning autism. Others say he could not read body language - another way of saying the same thing. He plainly lacked empathy with his victims - yet another way of saying the same thing.

A word some use to describe such behavior is "Asperger's syndrome."

In general, psychologists don't associate Asperger's with violence, but research seems sparse. Here is a link to one very brief study. Asperger's has only been recognized since about 1994 and is about to be reclassified as part of a larger class: "autism spectrum disorders." This case cries out for a more complete study.

Public safety is at stake.

Guns are too readily available. That is often used as a reason for inaction. We will not be able to achieve perfect success. Too hard.

Let's get the issue out of the "too hard" file.

Perfection need not be the goal. Any improvement will help.

Another group to focus on are those who denigrate our teachers. Remember: six teachers and administrators went into harm's way to protect their children. Why would anyone believe the same teachers were any less dedicated to the education of the children in their charge than to their safety? Who among our self-appointed education "experts" or elected officials know anything about how to educate children but the latest fads among people of their own political persuasion?

 I said focus our anger. What I really mean is focus our determination. In particular, focus on our elected officials who follow aggressive policies of arming everyone with concealed weapons.

Americans are said to own around 270 to 300 million guns. What for?

Gun laws vary from state to state. In California guns can be sold only through licensed dealers. Would-be buyers must wait ten days to get their hands on a gun so they can be checked out.These laws were put in place under Governor Ronald Reagan, largely in reaction to fears of the Black Panthers.

In Arizona adults without a criminal record can go to a dealer with ID and get a firearm on the spot. Who are Arizonans afraid of?

Many states relaxed gun laws in recent years. Virginia and New Mexico now let people take guns into bars. Texas and Utah allow citizens to carry concealed weapons in schools. Wyatt Earp would never have allowed that.

Last Friday — the day Adam Lanza killed 26 students and teachers in an elementary school, Michigan passed a law allowing concealed weapons in schools, churches and hospitals. What, we want to turn our schools into "gunfight at the OK corral?"

On a typical day in America around 100 people are shot. American children are 13 times more likely to be killed with a gun than those in any other country. Do we love our children? Let's control our guns. Not because it is easy, but because it is hard.

Since Obama became president, there have been eleven large scale mass shootings:

November 2009, Army psychiatrist Major Nidal Malik Hasan shot 13 people dead at Fort Hood, Texas.

Congresswoman Gabrielle Giffords was one of 17 victims of a mass shooting in January 2011 in Tucson, Arizona. She survived. Six others, including a nine year old girl, died.

In July James Holmes killed 12 and injured 58 at a cinema in Aurora, Colorado.

And Sandy Hook Elementary School.

But there are others. This year alone, there have been 13 multiple murders, including Sandy Hook.

The killings at Sandy Hook Elementary School last Friday were in a class by themselves. Connecticut’s chief medical examiner said the children he examined had been shot between three and 11 times. He added: “I have been at this more than a third of a century. This is the worst I have seen.” Police found the bodies of 14 children and teacher Lauren Rousseau huddled together in a heap.

Maybe we can't completely end such occurrences, but we have to try.

Here are some things we can do:

1. Reinstate a permanent assault weapons ban; 
2. Create a federal registry for licenses and gun ownership, contingent upon safety training and proper storage education (currently prohibited by the Firearm Ownership Protection Act of 1986);
3. End the “Gun Show Loophole” to the Brady Law, mandating that every gun purchaser be subject to mandatory background checks and wait periods;
4. Oppose concealed carry laws;
5. Mandate permanent gun serial numbers – end gun trafficking;
6. Mandate ballistic fingerprinting– this means being able to trace a bullet back to a specific gun, not just a make;
7. Encourage universal child-safety locks – we child-proof our Tylenol and our cars, why not our guns?
8. Limit purchases to “one gun per month” or “one gun per three months” laws –prevent traffickers from stockpiling guns for the black-market;
9. Most important of all - do away with the fiction (former Chief Justice Warren Burger called it a "fraud") that the Second Amendment protects a personal right to own firearms. "To bear arms" is a term of art that means "to serve in the military." The purpose of the Second Amendment was to prevent establishment of a large standing army.It failed in that purpose long ago.

Regulation of firearms is properly a political issue, not a constitutional issue. There was a time when the NRA understood that. A time before NRA adopted the doctrine of Huey Newton.