Wednesday, January 27, 2010

Signs of change

Update: Oregonian writer/associate editor David Sarasohn had an interesting column in Sunday's paper observing that the voting on the two tax-increase measures did not follow the usual demographic of solidly opposed throughout the state and solidly in favor in Multnomah County (the Portland area). In this case the non-Multnomah County votes were opposed by a slim margin on one measure, and I think actually in favor on the other.
Something very surprising happened yesterday: voters in Oregon passed two tax increases, upholding action by the State Legislature, raising 750 million dollars in order to balance the state budget without further cuts.

The two ballot measures passed by solid margins, along the lines of 55% to 45%. I have lived in Oregon for 30 years and I expected both measures to fail. The normal way it works around here is:

slightly progressive bill has early support

corporate money runs scare-add campaign

bill narrowly or solidly defeated

This time the same script was followed but with different results. I should say that these tax increases were in my opinion quite modest and no great hardship, and that significant cuts to state spending were made to complement the added tax. To me this seemed fair, and I view it as a reasonable adjustment of financial burden. I should also disclose that I work for the state and that I do not have to pay either of the taxes. I have a friend with a small business who is affected, and he still voted for them.

So what was different this time? As I said, based on past experience I had little hope that these would go through. My answer: I think the electorate is willing to hear some new ideas, and with high unemployment in Oregon, a little more desperate than in the past. They don't want state services further slashed because many more of them now depend on those services.

Let me also point out that what happened in Oregon is pretty much the opposite of what happened in Massachusetts when Scott Brown defeated the Democratic candidate for Ted Kennedy's Senate Seat.

Thursday, January 21, 2010

The real issue: we need to value truth

I have mentioned before that our political system is non-functional, that we are not able to have productive, intelligent debate about the issues, and that something needs to change if we ever expect to deal with the many problems our country is facing. You could put this another way: why is it that a country with all the advantages of America - an open society, great wealth, the most powerful nation in the world, the only remaining superpower - has a social structure significantly poorer than the other developed countries, an infrastructure unprepared for higher energy prices, and is bogged down in two wars with no end in sight?

I have been reading George Soros' "The Age of Fallibility"; he has given this question a great deal of thought. Soros pins the blame on a lack of regard for truth. This resonates with me because it explains so much: how come the media and politicians are allowed to steer the public debate into meaningless side-tracks and frequently present a picture that is an outright lie? Why do we fall for it again and again? Now I understand why pundits like Paul Krugman and Glenn Greenwald are so frustrated. I understand now that we cannot expect logical outcomes and behavior until we deal with the root problem.

George Soros is quite an interesting character. He has a deeply philosophical approach to life, it might not be what you would expect from a hedge fund manager. Indeed, his philosophy and life experience have formed the basis for his approach to financial speculation. He lived under Hitler's Nazi government as well as the Soviet Communist government, so he has seen the result of totalitarianism and of ideology dogmatically and relentlessly pursued. The key to his philosophy is what he calls "reflexivity", which is the idea that reality can never be perfectly understood because your own actions and thoughts and the actions and thoughts of others alter reality. This should lead you to realize that you may be wrong, i.e. you see your own fallibility. His ideal of an open society is based on the realization that we are all fallible, no one has the absolute understanding of the truth, and so we should not suppress ideas. He also talks about "far-from-equilibrium" situations, where the normal rules don't work anymore. He has had great success recognizing these times and capitalizing on them.

Why then with a philosophy based on being unable to perfectly know reality, does he value the search for truth? Because the further your actions stray from reality the more likely that reality will at last intrude and you will pay the price.

The philosophy acknowledges that we can manipulate reality to a certain extent. We have seen this in the various financial bubbles, and as someone in the George W. Bush administration said, "we make our own reality". This can be true to a point, but eventually the Iraq war looked unsuccessful even to those who championed it.

The American public, says Soros, is too easily manipulated. We value success too much in this country, and tend to have an end-justifies-the-means attitude. We are not as concerned as we should be about the truth and reality. This should be our focus if we hope to change our country.

Monday, January 4, 2010

Where we stand at the end of 2009

UpdateII: President Obama should also get credit for engagement with Iran and the Muslim world, something that is politically risky at home but does great good for the U.S. image in the world and steers us away from yet another ill-chosen confrontation. Also, under his administration the EPA has begun taking on climate change, a very significant development.

4/17/2009: "The Environmental Protection Agency on Friday formally declared carbon dioxide and five other heat-trapping gases to be pollutants that endanger public health and welfare, setting in motion a process that will lead to the regulation of the gases for the first time in the United States."

In summary he is doing some significant good. I'm not sure if this outweighs the bad of the decision to escalate in Afghanistan. And the economic situation is a whole other level of problem, something which demands much more than we usually expect from a President or from our political system. But here it is - it must be dealt with.
Update: Forgot to also give Obama credit for the stimulus which although too small, kept us from immediate bad times. Also should have mentioned that the health care bill would be a huge accomplishment in normal times, but right now it is not as significant because of the economic threat. Should have also pointed out that the bold economic and structural action required, which Obama has not taken, would not have been taken by anyone who could get elected President. Remember that FDR had 3 years of inaction and its consequences before he came into office. This greatly discredited the argument for inaction and gave a strong argument for large-scale intervention.
What a year it has been. The scary financial events of the fall of 2008 were not matched in 2009, but U.S. government spending and intervention this year seem unprecedented in modern times. Barack Obama begin his presidency with promise but after a year of what I would call Washington business-as-usual I am convinced that he will not be an agent of change. He and his administration have behaved as politicians always behave, trying to insure future power for their party and collaborating with big business in exchange for financial support. That is not to say that it doesn't matter that Obama was elected president instead of John McCain. It appears that we are going to get health care coverage for many more people thanks to the flawed health care bill now in the works. This is definitely good, although much more work is needed here to control costs. The health care bill is the only difference so far between an Obama presidency and a potential McCain presidency; the troop increase in Afghanistan seems like McCain's policy, and on most other fronts Obama has continued the policies of the second half of the George W. Bush administration, with some exceptions for things like the Bush tactics of using Justice Department appointments as a partisan instrument or actively suppressing scientific findings. John McCain would also have ended these abuses.

At the end of 2009 we remain waiting for the full effects of the 2008 financial meltdown. These have not been put on the books yet, so we may have the false sense that things are turning around. While the workout seems to proceed very slowly, it must happen eventually. I think we will start to see some of it this year. There is no way you can lose a trillion dollars of real wealth without some change in standard of living. Some people have already experienced this change, but we are ultimately headed for a national leveling.

The saving grace about having Barack Obama as President is that he does seek input from a lot of people, including Paul Krugman. Krugman was quite impressed with Obama's ability to understand an analysis. If things get bad enough he may change his approach. So far he has listened to people like Larry Summers and has not understood how bad our situation really is (if he did understand he would have taken bolder action).

Unfortunately our country has forgotten the scare of 2008 and has lost the sense of desperation that helped us be willing to listen to new ideas. Instead we have polarized along out-dated lines of conflict based on economic schools of thought, of all things. This must be contrived, I think the real conflict is more of a cultural one: conservative-religious vs. non-religious (or even mainline protestant or socially liberal catholic), or intellectual elites vs. working class average Joe.

Because of this polarization and the intensity of hatred that it generates, President Obama is reviled as a would-be-communist for very moderate increases in the power of government (like the health care bill), and is given no slack for the big government intervention that was necessary and done only because of the severity of the economic calamity. Instead this is also held against him, although it is clear that he never would have done this in normal economic times.

In this climate, the bold action that is needed is politically impossible. That is, unless things get bad enough; then I think it becomes possible again - remember the fall of 2008.