Francis Fukuyama on Plutocracy

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Left Out by Francis Fukuyama  The answer to the question “Is America a plutocracy?” might seem either trivial or obvious depending on how one defines the term. Plutocracy, says the dictionary, simply means “rule by the rich.” If the query is taken literally to mean that the non-rich­the vast majority of American citizens­have no influence in American democracy, or that the country is self-consciously ruled by some hidden collusive elite, the answer is obviously “no.” On the other hand, if the question is taken to mean, “Do the wealthy have disproportionate political influence in the United States?” then the answer is obviously “yes”, and that answer would qualify as one of the most unsurprising imaginable. Wealthy people have had disproportionate influence in most polities at most times in history.  Of course, one can argue endlessly over who qualifies as being rich, whether the rich constitute a social class capable of collective action, how open or closed that class is, what constitutes real political power in today’s America, and so on. But if the question remains as simple as those articulated above, the basic answer will not change or be of much interest.

Books After Amazon

Boston Review Link

The Big Bank Theory - Jon Stewart

Jon Stewart's take on the Federal Reserve & Quantitative Easing.

Jon Stewart - Big Bank Theory

Quanitative Easing for Dummies

Try this out for an entertaining video with economic wisdom!
Short video on YouTube (6:48)

Quantitative Easing for Dummies

Dave's 10 Reasons Why the Fed's Quantitative Easing Won't Work

http://blog.atimes.net/?p=1607

November 4th, 2010 

By David Goldman

10. No-one to whom banks want to lend wants to borrow.

9.  The kind of businesses that create jobs, namely start-ups, need equity rather than debt in any case.

8.  The Fed will flatten the yield curve out to five years, competing against the banks, reducing their profitability and their capacity to lend.

7.  The deflationary tendency in the US, such as it is, is mainly demographic: as the Boomers retire, they sell real assets (the US may have a 40% oversupply of large-lot family homes by 2020), and buy financial assets, just like the Japanese during their great retirement wave of 1990-2000 (which coincided with the lost decade). It has nothing to do with monetary policy which has been extremely lax throughout.

6. If you keep interest rate slow in the advent of an enormous retirement wave, then people will save more and spend less, because they expect to earn less income on their savings.

5. If you increase the inflation rate, prospective retirees will save more and spend less, because they expect to have less future purchasing power. That is the opposite of what the Keynesian short-term model predicts, namely that inflation prompts people to spend money (why keep it in the bank if its value is falling)? That’s the trouble with the Keynesian approach: it’s a blindered, short-term view of things. But some times the long-term, for example demographics and the retirement cycle, affects the short term.

Missed Opportunities: Critique of Obama Presidency

http://www.ritholtz.com/blog/   

On election night six years ago, I wrote:  The Tragedy of the Bush Administration. In it, I despaired that...

 
Colleagues:  Cousin Brucie will blog on this article and topic shortly.  I am not sure I agree with this line of attack, a left assault on Rubin, Summers, Gaithner, etc. and the banking industry.

“Once in a generation, the stars align for a political leader. There is this perfect moment – too often based on some enormous danger of long-lasting consequences for generations to come.

Once every half century, the perfect combination of leadership and threat, of challenge and response meet. The leader – imperfect, fallible, yet ready to rise to the occasion – grabs the brass ring.

Think Winston Churchill fighting the global threat of the Nazis, Thomas Jefferson writing the Declaration of Independence, JFK’s dare to send a man to the Moon . . .”

The rest of that piece went on to lament how George W. Bush was granted that rare opportunity to grab the brass ring, to rise to the occasion ­ and failed miserably.

Here we sit, not half a century later as originally surmised, but a mere six years later. I once again find myself lamenting the opportunities wasted by a US President in response to a great cataclysm. In the case of President Obama, it was his response to the financial crisis. The opportunity for greatness presented itself, and was . . . ignored.

The President was swept into office on a wave of Anti-Bush sentiment. The stock market was in free fall, credit was frozen, the recession already 13 months old. As Rahm Emanuel said, “Never waste a good crisis.” A strong leader would have taken advantage of the moment, of the opportunity.

Why Obama is No Roosevelt by Dorothy Rabinowitz

This oped from the Wll Street Journal by Dorothy Rabinowitz is a thoughtful analysis of our current ills, making a key point about political experience as a crucial ingredient in our leaders.  I knew Dorothy when I lived in New York and taught at Columbia.  She was invariably tough-minded and shrewd, with a gift for trenchant analysis and utterly no illusitons.  She also was (and I assume still is) very funny.  I haven't seen her in years, but I follow her editorials in the Journal with great interest.  Give 'em hell, Dorothy!

Here is the link:

http://online.wsj.com/article/SB10001424052748704141104575588211544818170.html

 Thanks to Barbara Littell for sending me along the link.

My Take on the NPR Firing of Juan Williams

Having a blog tempts one to spout off on subjects where you really shouldn’t. I have known Juan Williams and admired him, for a long time. I was incensed by the NPR action, but I thought I would hold my tongue since there was no dearth of negative reactions from all over the country and the political spectrum. With the dust having settled somewhat, and the event receding into last week’s news, I thought that if I had anything to say I would say it with my usual sober (?) style. Alas, I find that my temper has not cooled. I find the unpleasantness of the episode  more upsetling upon further reflection. Some people do a slow burn, and perhaps that is what is happening with me.  But I don't think sot.

Let’s look at the situation: what was the transgression that was supposed to have occurred? Juan, in answer to a question, observed that he had a fearful reaction on an airplane when he saw Muslims onboard but then went on to say that one should resist such feelings. Wasn’t this like the lady in the Ag Department who said she thought of not helping white farmers, but then overcame this feeling and knew that she was there to help all poor farmers? It would seem so,  but apparently did  not to the  NPR leadership.  Juan had committed an intolerable act of political incorrectness by having had the thought in the first place. The CEO had the bad judgment to deem Juan’s comment a firing offense. She then compounded the error by clumsily handling the act of firing (by her own later admission). She did not have a face-to-face meeting, a discussion with Juan (was she afraid she might change her mind?)  She fired him on a telephone call, and refused to discuss or talk about the matter.

The State of Conservatism by Christopher Caldwell

NY Times Link - Caldwell Article

This an an excellent commentary on the state of conservatives, and conservative party politics, in America today. Sees the large picture -- in particular, the appeal of Sarah Palin and of the Tea Party. Yet recognizes the need for Republicans to make sense of complex problems like the budget deficit. I recommend it to my readers.

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In Digital Age, Students Still Cling to Paper Textbooks

Dear Colleagues,

I want to announce that I am considering publishing my new book (tentatively titled America's Scientific State) myself and distributing it through Amazon or Barnes and Noble.  This amounts to "publishing on demand" -- by which is meant that you order and receive the book within days, and at a low price.  Probably around or under $10.

The new book is intended as a follow-up to my earlier American Science Policy Since World War II (Brookings, 1990) which sold 10,000 copies, mostly in the college textbook market.  I urge any faculty members who teach courses in American Politics or Science and Public Policy to contact me at brucelrsmith@aol.com or at my GMail address.  I will through Skype offer free ten minute mini-lectures at no additional cost through pre-arrangement between the instructor and me (can't do it for every individual student!).  This is an unusual opportunity, teachers, to enrich your classroom offering.  Let's take advantage of the new technological age!

*****

In a Digital Age, Students Still Cling to Paper Textbooks

By LISA W. FODERARO

CLINTON, N.Y. ­ They text their friends all day long. At night, they do research for their term papers on laptops and commune with their parents on Skype. But as they walk the paths of Hamilton College, a poster-perfect liberal arts school in this upstate village, students are still hauling around bulky, old-fashioned textbooks ­ and loving it.

“The screen won’t go blank,” said Faton Begolli, a sophomore from Boston. “There can’t be a virus. It wouldn’t be the same without books. They’ve defined ‘academia’ for a thousand years.”

Though the world of print is receding before a tide of digital books, blogs and other Web sites, a generation of college students weaned on technology appears to be holding fast to traditional textbooks. That loyalty comes at a price. Textbooks are expensive ­ a year’s worth can cost $700 to $900 ­ and students’ frustrations with the expense, as well as the emergence of new technology, have produced a confounding array of options for obtaining them.

Internet retailers like Amazon and Textbooks.com are selling new and used books. They have been joined by several Web services that rent textbooks to students by the semester. Some 1,500 college bookstores are also offering rentals this fall, up from 300 last year. Here at Hamilton, students this year have a new way to avoid the middleman: a nonprofit Web site, created by the college’s Entrepreneur Club, that lets them sell used books directly to one another.

MODERN US PREZ! -- Gilbert and Sullivan on President Obama

Delightfully entertaining video on President Obama, as rendered in modern Gilbert and Sullivan fashion!

Click HERE for Link

Sorting Out Responsibilities in Higher Education Policy

Colleagues -- this is an important new analysis of the role confusion in higher education policy by two thoughtful observers of the scene.  I recommend it highly.


Views from Inside Higher Education

Re-sorting Responsibilities

October 15, 2010

By Arthur M. Hauptman and A. Lee Fritschler

The current student financial aid system and the existing process for assuring quality in higher education share a common problem: key stakeholders in both are either being asked or are seeking to do things they are not capable of doing well. Many of the changes suggested in recent higher education debates would worsen this mismatch of function and responsibility. American higher education does need to be reformed in key ways -- but these changes should focus instead on making sure each group of stakeholders is capable of doing what it is being asked to do.


What is wrong with the current structure? In short, federal and state governments, accrediting agencies, and institutions are being asked to do important tasks without having the requisite skills, resources, and -- often -- legal authority to do them. By the same token, the traditional role of faculty in judging quality is being largely ignored. Parents and students are also required to provide a set of information that often requires estimates and guesses that are not easily made, all at risk of federal penalty if not done correctly.

When Insults Had Class

For this post I am indebted to James Reichley, friend, colleague, and astute observer of human character.  These insults reflect a world and time when language mattered, and when vulgarity was recognized for what it was.

When Insults had Class

These glorious insults are from an era before the English language got boiled down to 4-letter words.

  *****************

The exchange between Churchill & Lady Astor:

She said, "If you were my husband I'd give you poison."

He said, "If you were my wife, I'd drink it."

A member of Parliament to Disraeli: "Sir, you will either die on the gallows or of some unspeakable disease."    "That depends, Sir," said Disraeli, "whether I embrace your policies or your mistress."

"He had delusions of adequacy."

Walter Kerr

"He has all the virtues I dislike and none of the vices I admire." - Winston Churchill

"I have never killed a man, but I have read many obituaries with great pleasure." - Clarence Darrow

Thanks to Robert Lapeyrouse for this post.

Neolithic Immigration

How Middle Eastern Milk Drinkers Conquered Europe

By Matthias Schulz

New research has revealed that agriculture came to Europe amid a wave of immigration from the Middle East during the Neolithic period. The newcomers won out over the locals because of their sophisticated culture, mastery of agriculture -- and their miracle food, milk.

Wedged in between dump trucks and excavators, archeologist Birgit Srock is drawing the outline of a 7,200-year-old posthole. A concrete mixing plant is visible on the horizon. She is here because, during the construction of a high-speed rail line between the German cities of Nuremberg and Berlin, workers happened upon a large Neolithic settlement in the Upper Franconia region of northern Bavaria.

The remains of more than 40 houses were unearthed, as well as skeletons, a spinning wheel, bulbous clay vessels, cows' teeth and broken sieves for cheese production -- a typical settlement of the so-called Linear Pottery culture (named after the patterns on their pottery).

This ancient culture provided us with the blessing of bread baking. At around 5300 BC, everyone in Central Europe was suddenly farming and raising livestock. The members of the Linear Pottery culture kept cows in wooden pens, used rubbing stones and harvested grain. Within less than 300 years, the sedentary lifestyle had spread to the Paris basin.

The Barack Obama Sr. I knew - Washington Post - Oct 15, 2010

This post was published in the Washington Post Op-Ed Section on Oct 15, 2010. 


Washington Post Link

The Barack Obama Sr. I knew

Barack Obama Sr., with his son Barack in an undated photograph. (Via Bloomberg News)   Enlarge Photo

By Bruce L.R. Smith

Friday, October 15, 2010

I suspect I am one of the few Americans still alive and modestly in possession of his faculties who knew President Obama's father, and I see nothing of the man I knew in Dinesh D'Souza's Oct. 8 Washington Forum commentary, "The dreams from his father." 


Barack Obama Sr. was a graduate student in the economics department at Harvard while I was in the government department as a PhD student. He was in several of my wife's classes (she was studying in the econ department), and we both got to know him. I can't claim to have been close to Obama, but we became sufficiently familiar socially to invite him to our wedding in New York City in June 1964. We gave him the phone number of my wife's parents in Manhattan to call in case he had trouble finding a place to stay.

Why School Reformers Are a Menace -- the Short Version

Dear Reader, I’m sorry that my posts have been so long.  I promise to make them shorter.  Herewith is the short version of the longer post on this topic of October 5, 2010:

     Reformers are buzzing around like mosquitoes on a hot summer night.  The most peskiest of the whole lot are the school reformers.  They are the most self-righteous, cocksure, and determinedly wrong-headed.

The Sounds of Science

Here, Dear readers, are my views on evolution summed up in a beautiful short recording, a take-off on The Sound of Silence (by the Beatles or Simon-Garfunkel?).  Check it out!  I think Christopher Hitchens would like it.  Thanks to Robert Lapeyrouse for the post.

http://www.youtube.com/watch?v=0TZkKylFHDo

Why School Reformers Are a Menace

Reformers are buzzing about like swarms of mosquitoes on a hot summer night.  The school reformers are the worst of the whole pesky lot.  They are the most cocksure, self-righteous, and determinedly wrong-headed.  There are so many things wrong with their diagnoses and their remedies that I scarcely know where to start.  Let’s start with their general approach toward change, namely, with their general conception that things are so bad that everything must be transformed, yanked up by the roots so to speak.  This is of course what revolutionaries believe.  Now revolutions can succeed or fail.  Most, in fact, fail.  The old count in de Lampedusa’s The Leopard remarks to his radical nephew he is glad that the nephew wants to change everything because the count will then feel reasonably confident that nothing will change.  Even when revolutions succeed in overturning a regime a new tyranny is often substituted for the old.  We don’t need to dwell on the numerous examples of this happening in the twentieth century.  Nor need we pause to trace the intellectual biographies of the many twentieth century writers who moved from utopian beliefs on the left to more modest, and conservative, notions of what can and should be reformed.

          No, we must concede to the current reformers that their revolutionary language is metaphorical; they want reform but what they have in mind is less than overturning the whole order of society.  You never know with some of the reformers though, and that is one of the problems with them.  Some of them do want to use school reform as a wedge to enact a broader left agenda.   However, the school reforms forces currently gather under a banner that includes elements from both the political left and the right.   The reformers agree that the educational system must be changed dramatically since small changes will be fruitless in the face of such vast and deeply-rooted failure.  Never mind for the moment what is meant by the whole system.  Do we mean how teachers are trained, recruited, rewarded, and evaluated, how schools are financed, what students are taught – the curriculum, that is, whether students come from stable homes that encourage studying and learning, whether students actually learn something according to one or another metric, or what exactly?  Would you reform all of these aspects of the system, or only deal with some of them, and if only with some, which ones are the most important?  

The Impact of the Foreclosures -- Thanks to Robert Lapeyrouse

     The intricacies of mortgage finance is an area somewhat out of my usual expertise (though for various strange reasons I have bought and sold 17 times and refinanced numerous more times!)  But since this blog is devoted togetting behind the headlines, and exploring issues in a deeper way than one normally encounters in the "smart set" I take the liberty to venture into the area and post the following analysis y Robert Lapeyrouse based on informative articles in the Wall Street Journal.  For further reading, I urge my readers to consult Michael Lewis, The Big Short, and his earlier Liar's Poker, both superb and engrossing reads.  The post starts now:


The WSJ has an article that does a great job of qualifying the impact of what the foreclosure halt will do to the traditional cash waterfall priority schedule inherent in every MBS deal. To wit: junior bondholders will rejoice as they will receive payments for the duration of the halt/moratorium (these would and should cease upon an act of foreclosure), while senior bondholders will suffer, as the deficiency money will come out of the total "reserve" in the pooling and servicing agreement set up by the servicers. As for the servicers themselves, they should be "reimbursed by funds in the trust for all costs related to litigation and extra processing of foreclosures, provided they follow standard industry practices." In other words, it will now become "every man, sorry, banker for themselves" as each party attempts to preserve as much capital as possible given the new development: juniors will push for an indefinite foreclosure halt, seniors will seek an immediate resumption of the status quo, while the servicers stand to get stuck with billion dollar legal and deficiency fees if it is found that "standard industry practices" were not followed. Alas, it would appears that the servicers have by far the weakest case, and the impact to the banks, whose sloppy standards brought this whole situation on, will be in the tens if not billions of dollars. Oh, and suddenly both junior and senior classes will be embroiled in very vicious, painful, and extended litigation with the servicers. Lots of litigation. 

More from the WSJ on the conflict between juniors and seniors:

Obama's Flawed Mideast Peace Process

Shlomo Ben-Ami

See the attached file

MADRID – Since its inception in Oslo almost two decades ago, the Israeli-Palestinian peace process has been stymied by the dysfunctional political systems of both sides. Hostage of an impossible coalition and of a settlement movement of free-lance fanatics, Israeli Prime Minister Binyamin Netanyahu’s leadership is seriously compromised. His Palestinian counterparts are hardly in a better position.

Today, the clique that surrounds Palestinian President Mahmoud Abbas embodies the bitter deception which the peace process that began with the Oslo agreement has meant for the Palestinians. Moreover, the Palestinian Authority has come neither to represent the majority of Palestinians nor to rule by democratic means.