John Cassidy's Blog, page 52

A Reluctant Realist at West Point

A day after announcing that he will withdraw virtually all U.S. troops from Afghanistan by the end of 2016, President Obama went to West Point and tried, for the umpteenth time, to lay out an “Obama doctrine” for American foreign policy.

Arguably, this was largely unnecessary. Most Americans already know about and support Obama’s approach, which involves repudiating the Bush Administration’s military adventurism, but, nonetheless, remaining committed to prosecuting the war on terror by more covert methods; paying lip service, but not much more than that, to humanitarian interventionism; and, above all else, avoiding getting entangled in another Iraq or Afghanistan.

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Parsing Piketty: Is Wealth Inequality Rising in the U.S.?

As you may have seen over the weekend, Thomas Piketty’s “Capital in the Twenty-First Century” has been subjected to another attack—a detailed and critical examination of some of the data it presents, by Chris Giles, the economics editor of the Financial Times.

Since its emergence as a surprise best-seller, Piketty’s book has been challenged on theoretical grounds from the left and the right. (I’ll get into that academic debate in a future post.) But what has given Piketty’s critique of modern capitalism heft is the trove of data on which it relies. Now comes Giles, who accuses him of cherry-picking among the various sources he used for his charts, altering some figures, and making others up “out of thin air.” After parsing and redoing some of Piketty’s numbers, Giles says, “there is little evidence in Prof Piketty’s original sources to bear out the thesis that an increasing share of total wealth is held by the few.” In the case of the United Kingdom, Giles claims, the corrected data indicate that the concentration of wealth has actually fallen over the past few decades. In the United States, he suggests, inequality of wealth has stayed more or less constant.

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The Progressive Challenge to Andrew Cuomo

In some ways, Governor Andrew Cuomo, who launched his reëlection campaign on Thursday, has been an effective and laudable leader for New York. He’s got the machinery of government working in Albany, no mean feat, cajoling and, when necessary, browbeating the legislature, bringing budgets in on time, and balancing them. too. On social issues, particularly gay marriage and gun control, he has led not just the state but also the country.

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Coming Soon: Gridlock on Top of Gridlock

If you think that Washington is messed up, and the political system is failing to address many of America’s biggest challenges, stick around. Things look to be getting even worse. That’s the message of the primaries held on mini-Super Tuesday, and the latest opinion polls, which show the Republicans leading the Democrats in many of the states key to the November midterms.

Now that the Republicans have decided not to hand elections to the Democrats by nominating right-wing looney tunes in races for winnable seats, they stand prepared to exploit the three big factors that are running in their favor: an unusually friendly electoral map, an unpopular President, and a widespread feeling that the country is on the wrong track. As I pointed out a couple of weeks ago in a bluffer’s guide to the midterms, the situation has turned around dramatically since last fall, when, for a brief moment in the wake of the government shutdown, Democrats were dreaming about recapturing the House of Representatives. Today, that seems virtually impossible. Unless something changes over the summer, the G.O.P. is likely to gain the six seats it needs to capture the Senate, which could well usher in a two-year standoff with the White House that would make the current gridlock look like a model of benign administration.

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Why Karl Rove Is Smiling Today

Karl Rove, fresh from outraging Democrats with his remarks about Hillary Clinton’s health, was on Fox News last night, and, once again, he was looking pretty happy with himself. As it became clear that establishment Republicans—i.e., those supported by Rove and his big Super PAC—had bested their Tea Party-affiliated rivals in a number of key G.O.P. primaries, Rove flashed his gnashers and told Megyn Kelly: “The reason Republican candidates are winning is because they are uniting the party.”

Presumably, Rove wasn’t talking about Mitch McConnell, the lugubrious Senate minority leader, who does a good job of uniting the Democratic Party but is about as popular among G.O.P. activists as an outbreak of measles. Still, McConnell was one of last night’s big winners. Having been challenged by a strident businessman, Matt Bevin, who attacked him as a “pretend conservative” and attracted a lot of Tea Party support, McConnell won the primary handily. With almost all of the vote counted, he was was leading Bevin by sixty per cent to thirty-six per cent.

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Credit Suisse Got Off Lightly

Twenty-four hours on, I still can’t quite get my head around the deal Credit Suisse made with the United States government, in which the bank pleaded guilty to helping wealthy Americans evade their taxes by parking money in undeclared Swiss bank accounts. Fortunately, Brady Dougan, the bank’s American chief executive, is way ahead of me.

Speaking in London on Tuesday, Dougan said that the guilty plea—the first by a big bank in over a decade—was having little or no impact on Credit Suisse’s business. “We have found no instances where clients cannot do business with us,” Dougan said. “Our discussions with clients have been very reassuring and we haven’t seen very many issues at all.”

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Modi’s Role Model: Margaret Thatcher or Lee Kuan Yew?

As several commentators have noted in recent days, Narendra Modi, India’s Prime Minister-elect, shares several characteristics with Margaret Thatcher, the late British Prime Minister.

Like Mrs. T., Modi is a product of the provincial petite bourgeoisie. Thatcher’s father ran a corner store in Grantham, Lincolnshire. Modi, too, came from a family of grocers: his father ran a number of tea stalls in the Gujarat city of Vadnagar. Thatcher was a strong believer in enterprise and the self-help ethos that often goes with it, and she disdained the metropolitan élites, whom she accused of bringing Britain to its knees. In seeking to put the “Great” back into “Great Britain”—that was how she saw her mission—she surrounded herself with right-wing oddballs and entrepreneurs, ignored the advice of her colleagues, and frequently acted dictatorially.

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What Does Modi’s Victory Mean for the World?

The world’s biggest democracy and second-biggest country has a new leader, and he’s a controversial one: Narendra Modi, the head of the Hindu-nationalist Bharatiya Janata Party, and the longtime chief minister of Gujarat, a state in the northwest of India. In a post here today, the Indian journalist Samanth Subramanian describes what the lengthy election campaign felt like, noting how Modi, who will forever be associated with the 2002 riots in Gujarat that left more than a thousand people dead, most of them Muslims, tacked to the center, emphasizing economic growth and anti-corruption measures rather than Hindu chauvinism.

From an international perspective, Modi’s ascension to the Prime Minister’s office raises two questions. Will India adopt a more strident and bellicose foreign policy than it did under Manmohan Singh, an Oxbridge-educated economist, and his Congress party? And will the new government succeed in rebooting India’s “economic miracle,” which has sputtered in recent years?

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How Do Hedge Funds Get Away With It? Eight Theories

The other day, I asked how hedge funds manage to bestow such great riches on their managers despite the fact that, in many cases, their performance seems pretty ordinary. That got quite a reaction. The responses ranged from claims that hedgies are remunerated perfectly appropriately to charges that they are outright crooks who prey on gullible and greedy investors. Because the industry has grown enormously in recent years—according to one industry source, hedge funds now manage about $2.1 trillion of capital, a good deal of which comes from pension funds and charitable endowments—it’s not a trivial matter which of these explanations is the most accurate.

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Rebellious Economics Students Have a Point

In case you missed it—and you probably did—there’s a revolt afoot in the universities. It’s not exactly Paris, 1968, but there is a significant, if small, movement, extending from New York and London to Rome and Tel Aviv, that’s determined to change the way economics is taught.

Echoing complaints that have been mounting in the economics world for at least twenty years, and which became louder after the financial crisis of 2008, the student rebellion is calling for a more pluralistic and diverse approach, rejecting the textbook methodology that all too often reduces economics to a set of mathematical exercises. “The real world should be brought back into the classroom, as well as debate and a pluralism of theories and methods,” a group called the International Student Initiative for Pluralism in Economics said, in an open letter that was posted online last week. “This will help renew the discipline and ultimately create a space in which solutions to society’s problems can be generated. United across borders, we call for a change of course.”

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