Matthew Yglesias's Blog, page 2379

The Prospects For Martian Socialism

Hugo Chavez notes the possibility that avaricious capitalism is responsible for the collapse of Martian civilization:

"I have always said, heard, that it would not be strange that there had been civilization on Mars, but maybe capitalism arrived there, imperialism arrived and finished off the planet," Chavez said in speech to mark World Water Day. Chavez, who also holds capitalism responsible for many of the world's problems, warned that water supplies on Earth were drying up.

It's worth noting that the prospects for a socialist revolution on Mars are explored in both Alexei Tolstoy's novel Aelita and its 1924 silent film adaptation Aelita: The Queen of Mars. The book's not very good, but the movie's a great example of the constructivist style that was popular in early Soviet days. The suggestion is that socialist revolution on Mars is likely to fail, and for this reason the film fell into ideological disfavor.

Meanwhile, though I've seen a lot of people mocking the Mars bit, Chavez is clearly correct that actually existing capitalism is putting the world on a path to catastrophe. If scarce natural resources like water and the atmosphere's capacity to absorb carbon emissions were actually being priced correctly, there's no reason hypothetical capitalism would be unsustainable. But that's not how the contemporary global economic system works, and unless we change it we're going to face big problems. Unfortunately, the conservative movement in America is rabidly opposed to even modest efforts to conserve fish stocks through a system of property rights, being committed instead to an ideological vision of relentless exploitation of the commons.

How The Mission Creeps

Donald Rumsfeld, chatting with Greta Van Susteren last night, illustrates exactly why I fear that a no fly zone policy in Libya may not be politically sustainable. A few years ago, Gaddafi was back in the "good guy" box and John McCain wanted to supply him with American military equipment so that he, like his colleagues in Yemen, Bahrain, and Saudi Arabia could repress politically dissidents with a Made In The USA spirit. But now that he's back in the "bad guy" box, his continued existence in power is some kind of grave physical threat to the American people:

VAN SUSTEREN: In terms of Qaddafi and Libya, he doesn't have the nuclear weapons. He supposedly dismantled that. How do we know that he doesn't have biological weapons?

RUMSFELD: Well, that is — to go back to the title of my book, that's an unknown unknown. We — we — he may. In fact, it's a known unknown. I don't know he does. We do know that he's had an interest in chemical weapons over a period of time, but I don't recall hearing anything about biological weapons.

VAN SUSTEREN: I guess the reason why I have some element of concern because he's obviously threatened us. I mean, we've got our — we've got our flyovers. We've got our military action. And he says that, you know, he's going to fight back. And I never know if it's just sort of an empty threat of someone who's pathetic or someone who truly does have nuclear or biological or chemical weapons that we simply don't know about and that he could fight back.

RUMSFELD: I just don't know the answer, but there's no question he's a person who's engaged in terrorist acts. He's sponsored them, dealt with terrorist organizations. And he is — he obviously didn't stay in power for 40 years by being stupid. He's intelligent and clever and opportunistic. He would not think of trying to compete against our armies or navies or air forces. He would deal — whatever he did would be asymmetric and it would be something that would be unconventional and very likely — and possibly not even something in Libya, something conceivably elsewhere in the world.

You could easily imagine the Libya situation ending up like the first Gulf War—a decent military outcome that doesn't quite achieve the political result that was hoped for and that leads, over time, to growing US political demand for an additional war to "finish the job." After all, as American pretensions to global military hegemony become increasingly impossible to sustain in reality, there seems to be a need to conjure up increasingly shambolic big bads for us to fight. Libya could fit the bill nicely.

In Defense of Half Measures

Between war skeptics darkly warning of "mission creep" in Libya and hawks urging a more expansive mission, I do worry that we're missing out on the fact that the administration does have the option of sticking with a very modest military campaign. Many observers claim to find it contradictory for the Obama administration to have said that "Gaddafi must go" while also maintaining that regime change is not the goal of the ongoing military operation there. The tension here is real, but the administration's stated policy is both coherent and (unlike a military campaign aimed at regime change) is consistent with international law.

In essence, there's a two-track policy process here. On one track, the US government has a declaratory policy of regime change. We are also using a number of policy levers—financial, economic, and diplomatic—in pursuit of that policy. But "we've decided we don't like the incumbent dictator" is not a legally valid reason to stage an unprovoked military attack on another country. "We have a Security Council resolution authorizing the use of force," by contrast, is a valid reason. And what the UNSC was prepared to authorize is a mission aimed at prevent Gaddafi from overrunning rebel positions and slaughtering people, not a regime change mission. Threading this needle on an operational level is obviously a dicey proposition. But helping the rebels secure control over Ajdabiya and points east while declining to support offensive military operations further west is a perfectly coherent military objective that NATO could sustain at low cost.

Rory Stewart in the London Review of Books makes the case on the merits for precisely such a mission:

But the basic positions remain black and white. Do it or don't do it, but no halfway houses. And therein lies the danger. On the World Service this afternoon, I was accused of falling between two stools. 'On the one hand, you say the no-fly zone is humanitarian and not about regime change. On the other hand, you say that we are taking measures against the Gaddafi regime to force him to step down.' And when I tried to make a distinction between military measures with a humanitarian purpose and civilian measures with a political purpose, the interviewer countered: 'Surely this is the worst of all worlds.' On the contrary, it seems to me the lesser evil. The no-fly zone is preferable to seeming to countenance and endorse Gaddafi's actions; and better than putting troops on the ground to force regime change. But such measures are difficult to explain and sell.

That seems fine to me, albeit a possibly questionable use of resources in a cost-benefit sense. My fear, however, is that it won't be politically sustainable and Obama/Sarkozy/Cameron will get baited into a scenario where anything less than total rebel victory counts as "defeat" and therefore we end up pouring more resources into a regime change mission.

Why Do Teacher's Unions Care About Interchange Regulation?

Mike Konczal and Kevin Drum both examine the question of the National Education Association siding with the banks on the debit card interchange issue and find that their minds are unchanged. They both attribute the NEA's opposition to the new regulations to the fact that there are some teacher-run credit unions whose interests may be imperiled by regulation:

So this argument should be viewed in light of the credit union argument. Firms with less than $10 billion in assets will not be covered by the interchange amendment, though credit unions don't believe this will be the case in practice. Felix Salmon took a look at the arguments for credit unions last June and found them wanting, Adam Levitin did an overview of interchange and Credit Unions and the Durbin amendment in December 2010 and found that while it is complicated, competition from the market is likely to follow-through on two-tier pricing, benefitting credit unions.

So the argument here is that the unions are acting on behalf of their own interests as credit union operators, and being disingenuous when they talk about harm to consumers. But on top of that, they're also mistaken about their interests as credit union operators! Maybe that's right…

Monopoly Power Matters

Having issued a skeptical word or two in defense of the AT&T/T-Mobile merger, let me offer a skeptical word of opposition against this Heartland Institute cheerleading:

Those harping over this merger operate from a bizarre anti-business mind set. They have convinced themselves that it is the goal of every business to gobble up as much market share as possible – just so it finally has the power to abuse its customers. But no merger – not even one as large as this between T-Mobile and AT&T – repeals the corrective influence of free markets in the digital economy. In other words, no company is eager to ruin its brand no matter how big it gets.

That's true. No company is eager to ruin its brand, but no company is eager to have low profits either. Companies balance the value of their brand against the value of high prices against the value of various kinds of costs. If there were only one cell phone operator, it would still need to worry that rapacious maltreatment of its customers would result in people simply refusing to use cell phones or else that it would tempt a new firm to enter the market. But starting up a competing cell phone operator would be difficult, risky, and expensive. You could get away with a lot of abuse before tempting someone new into the market. What's more, as soon as the new firm was getting close to getting off the ground you could start cutting prices to pre-empt the new entrant. And the hypothetical new entrant is going to know that this might happen, which is a further deterrent to entering. The concern that a market with only two operators will be a version of that scenario is perfectly sensible and neither "bizarre" nor "anti-business." And in general, any market with such high barriers to entry is going to feature very imperfect competition so it's reasonable for people to scrutinize it unusually closely.

Endgame

Plastic forks and paper cups:

— Should the US intervene in the Somali civil war to protect civilian life?

— Or should the US intervene in the Cote D'Ivoir civil war to protect civilian life?

— If this article is write, supplying clean water to the population of Congo would cost about 100 Tomahawk missiles.

— Libya and the bounds of the possible.

— GOOD is hiring a ton of people and wants you to know that it's a "dog-friendly work environment" which sounds gross to me.

— Light rail in Jerusalem.

— Wrestling and civil rights.

Matt & Kim, "Red Paint".

Conservatives Must Lead on the Deficit

On the radio today with David Gergen and Reihan Salam, I took the view that it makes no sense to criticize the president for lack of leadership on the long-term fiscal crunch. Whatever you think of its merits, White House has laid out a budget proposal. Congressional Republicans say that it makes taxes too high and the deficit too large, but they've yet to produce a lower-tax/lower-deficit alternative for us to compare it to. Until they do, I don't really see what there is to talk about.

What's more, I made the point that the main sticking point is that Republicans simply refuse to acknowledge that revenue as a share of GDP needs to go higher than it was at the end of the Bush years. The White House concedes in principle at least that Social Security and Medicare spending need to go lower than they're currently projected to. What needs to happen next is for the GOP to concede in principle that revenue needs to go higher. Reihan said Republicans would certainly oppose any increase in tax rates but might agree to close some tax loopholes. That's an interesting idea, but it seems to be off the table:

Republican leaders in the Senate and House will not agree to tax increases in the guise of reform measures, according to a prominent conservative advocate for lower taxes. Conservatives have grown increasingly worried that Republicans in Congress may accept a tax hike as part of a broader deal to reduce discretionary and entitlement spending. But Senate Republican Leader Mitch McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio) have pledged to Americans for Tax Reform (ATR) president Grover Norquist they will not support any deficit reduction package that increases taxes.

Under these circumstances, there's nothing to negotiate about and nothing presidential leadership can achieve. If Republican leaders don't want to agree to any revenue increases, that's their prerogative, but willingness to compromise on revenue is the sine qua non of a bipartisan deal. Absent that willingness, there neither can nor will be a bipartisan deal so there's nothing for the president to say or do.

The real question then becomes: When will the Republicans produce a budget proposal? We've seen the White House proposal. Do Republicans have an alternative proposal that makes the deficit lower consistent with their position on taxes? If they do, I'd like to see them write it down on paper so we can talk about it.

Where Does Katie Roiphe Live?

Katie Roiphe's critique of NYC private school anxiety is excellent, with just one problem:

The most sought-after school in my neighbourhood, a famously open-minded and progressive and arty yet very exclusive private school, is conferring a kind of creativity on the parents, so that even if they are bankers or hedge-fund guys, as many of them frankly are, they can tell themselves in the dark of night that they are creative people, because their children attend this impeccably creative school. And if they are creative people – that is, people who have somehow made enough money to send their children to this school, but work in film or music or advertising – they can congratulate themselves on their creativity, even if they are not, although in a creative profession, exactly creating anything themselves. The secret suspicion that you might be a hack, a glorified hack, making a rather nice living doing something fun (but not truly living out your fantasy of creating art the way you honestly thought you would be in college), well, the cheque you make out to that fancy, creative, open place you are sending your child to is proving otherwise. They are putting on operas when they are three years old, after all. They are illustrating Wallace Stevens poems by the time they are six. How could anyone accuse you of just being a banker, or a music executive, or an internet guy with good glasses? I have a friend whose five-year-old attends this school. She and her husband were pleased that when their daughter had an assignment to write down what she wanted to be when she grew up she wrote "artist". But when they arrived at the class presentation the next day they saw that all 22 children had put down "artist": there were no "veterinarians", no "circus acrobats", no "doctors", no "hair cutters". Twenty two artists, and one kindergarten class: the school, you see, does not play around.

Right on. But which neighborhood? And which school? St Anne's? Dalton? Little Red Schoolhouse? Someplace else? Or would naming names jeopardize her own kids' admissions chances? The critique of NYC private school anxiety is simultaneously a performance of the same thing.

Households and States

In response to my claim that public understanding of fiscal policy is dominated by fallacious analogies between a national government and a household, MF asks for an explanation "Why is that analogy deceptive or misleading?"

Glad you asked. There are a number of reasons, but the main one concerns money. A household typically measures its wealth in terms of money. So many assets and so many liabilities. And it doesn't just do this as an accounting convention. An influx of extra dollars into your bank account is a real increase in your wealth. Mo money mo purchasing power.

The United States of America also uses dollars as a unit of account for tallying up assets and liabilities, but the wealth of the United States is properly measured not by how many dollars there are but by what real production we're engaged in and what real stock of assets we possess. We have the I-95 and the aircraft carrier Ronald Reagan and the Hollywood movie studios and Yale University and the casinos of the Las Vegas strip and the Mayo Clinic and fertile farmland and many detached single-family homes. Unlike a household, if we as a country want more dollars, we can just print more dollars. But also unlike a household, if we as a country want more stuff we actually have to make more stuff not just obtain more currency. This means that to say we're "broke" or "running out of money" is nonsense. The relevant issue is are we running out of productive capacity? If we try to boost demand faster than we can produce, we'll end up with inflation. But if our level of demand is well below our potential for production, then we'll get richer (have more stuff, more production) merely by increasing our demand to something closer to our potential.

I think people get an intuitive understanding of this if they try to think about a total war situation. In World War II, the Nazi-Soviet tank balance is determined by the quantity of tank factories, the quality of tank designs, the availability of steel and rubber and trained workers, etc. If you somehow "run out of money" but have plenty of aircraft and trained pilots, you'll find a way to get the pilots into the planes. When people look at the balance of power between North and South in the Civil War they primarily look at available manpower, railroads, industrial capacity, trained officers, etc. The American budget needs to add up in an accounting sense, but the quantity of currency available should never really be the issue.

The NFL's Ownership Rules

Stephen Squibb's N+1 piece on the NFL lockout sheds light on something I've wondered about from time to time. How come you don't see more teams organized as co-ops the way the Green Bay Packers are? Conversely, how come you don't see teams organized as regular firms with shares listed on the stock exchange? Apparently it's against the rules in both cases:

It is this kind of public—a universally available and voluntary association—that the league outlawed in 1961, when it stipulated that "No corporation, association, partnership or other entity not operated for profit nor any charitable organization or entity not presently a member of the league shall be eligible for membership." The new rules demanded that each team be owned by at least one person with a minimum controlling interest of 30 percent. As the value of each team has risen, so has the height of this barrier to entry, which has recently become so high as to trigger a kind of succession crisis in Pittsburgh. There the problem was that no individual Rooney child had enough millions to buy out any of the others in order to create the necessary 30 percent share. Acting quickly to preserve one of its prized aristocracies, the league declared some owners more equal than others, allowing the combined 32 percent stake of the two Rooney boys to count as that of one individual.

This kind of weird protectionism all occurring in a league that benefits from an anti-trust exemption and billions in taxpayer subsidies for stadiums. That leads to a good line:

It has frequently been said that in this country we have socialism for the rich and capitalism for the poor. What the case of the NFL demonstrates so clearly is that what we have, in fact, is whatever the rich want whenever they want it. And whatever they want always gets the same name, free market capitalism, regardless.

This, indeed, is what you see over and over again. "I can't dump water on David Koch's lawn" is property rights, and "David Koch can pollute the air as much as he wants" is also property rights; opposing progressive taxation is freedom and pharmaceutical monopolies are also freedom.