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.

Renovated Town Hall

The renovated Town Hall is looking good. I think Bob Maxbauer has done a good job. We will enjoy the improved facilities for many years.

I'm really anxious to attend the first Town Board meeting in the new facilities.

Europe Is In Trouble

It looks like Europe is going into recession again. Not only is Greece suffering from 25% unemployment, so is Spain. The austerity measures forced on those countries aren't working. Prime Minister Mario Monti of Italy, the technocrat appointed to that office at the behest of Eurocrats in Brussels, largely responding to Germany.

Last year, things were really looking bad, but Mario Draghi, the new president of the European Central Bank, has managed to slow the deterioration. But there is a growing perception that in the long run, in the absence of greater European political integration, prospects for the Euro and the Eurozone are not good.

A book by Harvard professor Dani Rodrik, published last year, explains the problem:

"The Globalization Paradox: Democracy and the Future of the World Economy, W.W. Norton, New York and London, 2011, forthcoming.
Surveying three centuries of economic history, a Harvard professor argues for a leaner global system that puts national democracies front and center.
From the mercantile monopolies of seventeenth-century empires to the modern-day authority of the WTO, IMF, and World Bank, the nations of the world have struggled to effectively harness globalization's promise. The economic narratives that underpinned these eras—the gold standard, the Bretton Woods regime, the "Washington Consensus"—brought great success and great failure. In this eloquent challenge to the reigning wisdom on globalization, Dani Rodrik offers a new narrative, one that embraces an ineluctable tension: we cannot simultaneously pursue democracy, national self-determination, and economic globalization. When the social arrangements of democracies inevitably clash with the international demands of globalization, national priorities should take precedence. Combining history with insight, humor with good-natured critique, Rodrik's case for a customizable globalization supported by a light frame of international rules shows the way to a balanced prosperity as we confront today's global challenges in trade, finance, and labor markets."

In summary, by creating a common currency before political integration, Europe has put the cart before the horse. Probably because the horse simply wasn't going to happen.

In a recent interview with the Swedish journal Respons, Rodrik explains his views in detail. This is the best and clearest explanation of the European dilemma I have read. For anyone interested in European affairs, I recommend reading it.

After reading the article, I conclude that the best solution is to do away with the Euro. There plainly is no risk-free approach to a viable future for the Euro. Better to do away with it sooner than later.

Why does this matter to Americans? We export a lot of goods and services to Europe. Another European recession is not good news for the US economy.

Laura Tyson's Advice

Today's Laura Tyson article in New York Times' Economix blog spells out in much more detail than my earlier post just why we don't have more jobs and what to do about it.

What's wrong?

Insufficient aggregate demand. In other words, not enough people have enough disposable income to buy stuff.

What to do about it?

Hire more people. Build more roads and bridges. Government spend more money.

What not to do about it right now?

Reduce spending.

What else not to do?

Don't raise taxes on poor and working people.

Can we raise taxes on anybody without crashing the economy?

Yes. Raise them on our richest people.

Why? They'll never notice. Won't reduce their spending at all.

Why else? The economy will work better.

Top Priority: Jobs, Not Deficit

It's a mystery to me how, during the greatest sustained employment crisis since the Great Depression, our national political class remains focused on the deficit instead of putting people back to work. Robert Reich, former Secretary of Labor in the Clinton administration, takes a stab at explaining why the obsession should be with jobs.

Read Reich's article. Here's my take on it.

The deficit is caused by unemployment. When people are unemployed, all manner of safety net expenses go up. Unemployment insurance payments increase. Medicaid takes over more of the cost of medical care. Food stamp use increases. Revenue goes down as fewer people earn income. At the state level, people buy less and pay less sales tax.

All of these add to the deficit. With respect to the safety net, the deficit isn't a bug - it's a feature.

The safety net isn't just to help individual citizens. It helps businesses, by making it possible for the citizens to keep buying food, shelter and clothing. Wal-Mart thrives on the safety net.

The safety net also helps regions. Concealed by the fact that safety net programs are paid to individuals is the reality that these are enormous transfers from the more prosperous to less prosperous regions of the country. Without these transfers, Mississippi would be like Greece.

To get out of this fix, the federal government needs to spend more, not less.

Right now, the focus needs to be on putting people back to work.

The safety net is not a form of charity to individuals, though it does help keep people alive. More importantly, in a cold-hearted way, it keeps the economy alive. It keeps businesses going in bad times by sending customers through the door.

Without safety net programs, a major downturn would feed on itself and the economy would have no natural bottom to it.

Right now, only the federal government has the power to put people back to work. And there is clearly work that needs to be done. Fix our crumbling roads and bridges, for one. Bury our electrical distribution system, for another (to at least mitigate damage from future Sandys). Put teachers, firemen and policemen back to work. All of these measures would put money back in people's pockets and put people back in stores, increase orders to factories, reduce safety net expenditures, increase tax revenue and reduce the deficit.

Jobs first. The deficit will follow.

Right To Work For Less

Those of us who have studied 20th Century history, especially the history of authoritarian or fascist dictatorships have observed a pattern. Dictators seek to control the media, control the schools and control or destroy the labor unions.

I was reminded of this during the past week as the Republican government in Michigan pressed during a lame duck session to destroy unions in Michigan. Michigan is not alone. They are now one of twenty-four states with so-called "right to work" laws.

"Right to work" as many observers have noted, really means "right to work for less." The term itself is an example of Orwellian language which means the opposite of what it seems to mean. Harold Meyerson of the Washington Post does a very good job explaining the historical background. Meyerson shows the similarity in the aim of "right to work" and efforts by the Communist leadership in China to control and benefit from the profits of improved productivity.

In our country, it isn't the government, but those who control the finance system, who have stolen the lion's share of increased productivity for themselves.