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The Wisdom of Silence

August 24, 2010 12 comments

Better to remain silent and be thought a fool than to speak out and remove all doubt. 

      Mark Twain 

When Twain made this remark he probably didn’t have American presidents in mind, but it captures an important lesson in an unintended way. Of course, Twain meant that if you’re a fool and you speak, your intellect will be more obvious to others than if you kept your mouth shut. Presidents often aren’t fools (yes, I did just write that) but speaking out even with wise words may be a foolish move. 

Over at The Economist’s “Democracy in America” blog, the writer, while staking out an odd position on gay marriage (one I happen to disagree with), observes that “for presidents, words are political actions.”

What would have been the actual political consequences of a decision by Barack Obama to come out in favour of gay marriage in the past year and a half? I don’t think there can be any doubt that such a move would have re-politicised an issue that, remarkably, has become steadily less partisan in recent years. Presidents can’t simply speak their minds. For presidents, words are political actions. A president who voices an opinion without considering the political consequences is acting irresponsibly. Presidents’ voiced opinions about social justice are very sharply constrained by whether voicing those opinions is likely to advance their visions of social justice at that political moment. And that means that presidents’ spoken views on such questions may lag far behind the pace of progressive opinion, and may become much less progressive when they are in power than they were before they were elected.

I happen to believe that Obama speaking out in favor of gay marriage would be beneficial to the cause (and would certainly put him on the right side of history), but it’s not preposterous to think that the opposite effect would result. There is no question that it would further politicize the issue just when a majority of Americans now believe in full marriage rights for gays and lesbians. 

On August 11th Matthew Yglesias wrote a post arguing that often presidential leadership can be counterproductive. He was talking about immigration, but this clearly applies to all issues. He was piggybacking off of Ezra Klein’s post on Francis Lee’s book Beyond Ideology which argues that “presidential positions” increase the partisanship on issues.

[The] American people — and the media — expect a lot of bully pulpit leadership. But that bully pulpit leadership polarizes the other party against the initiative, even when the messaging is effective.

Grasping this dynamic is key to understanding the wisdom of President Obama in not offering his full opinion of the Islamic center near Ground Zero. If anyone has any doubts of the effect, notice how the issue became more polarized when he just commented on the constitutionality of it. This isn’t to say that presidents shouldn’t ever speak out on controversial issues; it is to only notice that “A president who voices an opinion without considering the political consequences is acting irresponsibly.”

Given that, I think it’s unfair for writers on the left, right, and center to blast President Obama for being cowardly for not commenting on the wisdom of the choice or to give his personal opinion. Clive Crook’s latest FT column is a perfect illustration of this. This expands on his previous blog post on what Crook thinks Obama should have said. Of course, all this presumes Obama is, in fact, in favor of the mosque and thinks it is wise. If he thinks it is unwise and insensitive, does Crook still think it’d be unifying? Lee’s research suggests that had Obama spoken out by praising the wisdom of the mosque it would have made the polarization of the issue even worse. If he strongly argued that equating this mosque and Sufi Islam with the Islamic fanatics that attacked the US is completely irrational he would have been skewered for being insensitive to the 9/11 families. 

Presidents’ words also have effects diplomatically. Had Obama given too much sympathy for the sentiments of the 9/11 families by saying that it isn’t completely irrational to feel disgust at putting a mosque so close to the site of a horrendous attack by Islamic terrorists, how would that have played with our Muslim allies? To not consider the unintended consequences would be ill-advised. 

None of this is to argue that presidents shouldn’t take politically unpopular or politically dangerous stands if strong principles are at stake. Commentators just need to recognize the possible effects of a president’s words; after all, a president speaking out may be counterproductive to justice or diplomatic goals and these effects aren’t necessarily going to run in the same direction. Crook or Krauthammer or whoever can plausibly argue that the president should take a stand that they agree with because it is the right thing to do, but to argue that it is cowardly not to or that it would be “unifying” if he did is disingenuous or foolish – on this they’d be better off remaining silent. 



(image: abc news)

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How Modern Conservatives Aren’t Like Hoover, ctd

Martin Wolf explains the politically brilliant but economically preposterous idea that changed Republicans from minority to majority party and from conservative to “extreme radicals.”

Supply-side economics liberated conservatives from any need to insist on fiscal rectitude and balanced budgets. Supply-side economics said that one could cut taxes and balance budgets, because incentive effects would generate new activity and so higher revenue.

[…]

[T]he Republicans were transformed from a balanced-budget party to a tax-cutting party. This innovative stance proved highly politically effective, consistently putting the Democrats at a political disadvantage. 

[…]

Since the fiscal theory of supply-side economics did not work, the tax-cutting eras of Ronald Reagan and George H. Bush and again of George W. Bush saw very substantial rises in ratios of federal debt to gross domestic product. Under Reagan and the first Bush, the ratio of public debt to GDP went from 33 per cent to 64 per cent. It fell to 57 per cent under Bill Clinton. It then rose to 69 per cent under the second George Bush. Equally, tax cuts in the era of George W. Bush, wars and the economic crisis account for almost all the dire fiscal outlook for the next ten years (see the Center on Budget and Policy Priorities).

[…] 

This is extraordinarily dangerous. The danger does not arise from the fiscal deficits of today, but the attitudes to fiscal policy, over the long run, of one of the two main parties. Those radical conservatives (a small minority, I hope) who want to destroy the credit of the US federal government may succeed. If so, that would be the end of the US era of global dominance. The destruction of fiscal credibility could be the outcome of the policies of the party that considers itself the most patriotic.

 (emphasis is mine)

I couldn’t agree more on the danger of having a 1 of the 2 major political parties being completely untethered to economic reality. We don’t have a mainstream conservative opposition in America today – we’re poorer for it. 

(part 1)

"Walking And Chewing Gum"

June 19, 2010 2 comments

Martin Wolf explains to deficit hawks that tightening fiscal policy too early could cause more problems in global markets.

Despite the most aggressive monetary policy ever, private sectors moved into huge surpluses. Monetary policy was “pushing on a string”. The fiscal offsets – overwhelmingly due to built-in fiscal stabilisers, not the discretionary stimulus – helped sustain demand in the crisis. But they were insufficient, even with monetary support, to prevent deep recessions. The argument that stimulus was unnecessary is hard to accept. It is easier to believe it was too small, albeit also ill-targeted.

So how quickly should deficits be eliminated? We must recognise the danger here: cutting public spending will not automatically raise private spending. The attempted reduction in the structural deficit might lead, instead, to a rise in cyclical fiscal deficits, which would be running to stand still, or to a reduction in the private surpluses only because income fell even faster than spending. Either outcome would be grim. Yet neither can be ruled out.

As long as output remains depressed, the fiscal support is most unlikely to be inflationary. Nor will it crowd out the private sector: it is more likely to crowd it in. The big question, then, is whether deficits can be financed. My answer is: yes. Remember that so long as the private sector runs financial surpluses it must buy claims on the public sector, unless the developed world as a whole is about to move into huge external surpluses.

Deficits are a real problem, just not now. It’s clear that we should reassure private investors and financial markets by setting up long-term policies for controlling the deficit that don’t depress demand in the short-term. A VAT would be one obvious revenue side solution. Controlling health care costs is the biggest on the spending side. The good news is that the best way to curb the deficit is to enact policies that promote economic growth now. Fiscal restraint now isn’t one of those policies.

Crude Offender

FlowingData makes it clear that compared to even the low standards of other oil companies, BP is in a class of its own for negligence and disregard for the safety of its workers and of its wells. 



In The Sunday Times, Andrew Sullivan lets off some steam. (Whole column worth reading)

At first blush, the onslaught against BP does seem a little much. But once you examine its recent record, the cornercutting and recklessness that precipitated this calamity, and the company’s enmeshment with the regulators who are supposed to be keeping watch … well, you tend to get more angry, not less. Take a simple comparison with other multinational oil companies. Over the past three years, the US government department that monitors compliance with health and safety regulations has cited several companies for negligence or corner-cutting. Sunoco and ConocoPhillips have had eight “egregious, wilful” safety violations apiece. Citgo had two. Exxon had one. BP had … 760.

[…]

Alas, what won’t change is the oil addiction that has forced the US to drill deeper and deeper in more and more treacherous waters, where techniques carry more risks precisely because the terrain is brand new. If you want to assign real, structural blame, it belongs in the end to the American people, who simply refuse to wean themselves off carbon and want to continue having the cheapest petrol in the West. This habit bolsters America’s enemies, empowers oil-rich Islamic states and is slowly cooking the planet. 

Sullivan again endorses my favorite solution to our oil addition: a carbon tax


There is plenty to be upset about in this whole fiasco, but certainly one of those things isn’t Obama’s tone or emotion. Here’s Clive Crook in the Financial Times.

The criticism of Mr Obama’s handling of the oil spill has been especially and flamboyantly unreasonable. So far as capping the leak is concerned, the relevant expertise resides with BP and the other oil companies. The notion that they should be “pushed aside” is risible. In any case, of course, the administration is in charge – overseeing the operation, as opposed to directing it in detail, which is as it should be. A deepwater drilling moratorium is in place and a thoroughgoing review of the regulatory regime is under way. The White House has been active in mobilising resources to contain damage to the coastline.

[…]

The view seems to be that staying calm in a crisis is all very well, except in a crisis. Then, the president must radiate rage and fear, pretend to direct operations, race about uselessly, weeping and hugging as he goes, doing stuff that will not help and might make things worse. 

Crook has been very reasonable about this issue from early on. I’m sure he’d appreciate this video.


(video via Ta-Nehisi Coates)

"Even The Fiercest Free Marketeer Should Accept This"

April 23, 2010 Leave a comment

Martin Wolf argues for the need to regulate our financial institutions and prepare for future problems.  

Does today’s engorged financial system produce gains that justify these costs? In a recent speech, Adair Turner, chairman of the UK’s Financial Services Authority, argues it does not.* Financial systems are important servants of the economy, but poor masters. A large part of the activity of the financial sector seems to be a machine to transfer income and wealth from outsiders to insiders, while increasing the fragility of the economy as a whole. Given the extent of the government-induced distortions in the system, even the fiercest free marketeer should accept this. It is hard to see any substantial benefit from the massive leveraging up of the economy and, above all, the real estate sector, that we saw recently. This just created illusory gains on the way up and real pain on the way down.

Just as Keynes saw the need for government intervention into the economy to save capitalism rather than replace it, we need to reform our financial system so any failure by a bank doesn’t lead to a disruption of the entire economy.  Capitalism depends on creative destruction – we need a system that can deal with 2nd half so we can have the 1st.    

Clive Crook on Frum and Moderates

April 14, 2010 2 comments

Crook finds Frum’s thinking sound on the need for more moderate Republicans but fuzzy on healthcare:

He is simply inconsistent. On the one hand, Obamacare is a “vast new social welfare program.” On the other, “the gap between this plan and traditional Republican ideas is not very big…It builds on ideas developed at the Heritage Foundation in the early 1990s that formed the basis for Republican counter-proposals to Clintoncare in 1993-1994.” So was this a terrible plan that needed to be stopped? If so, the Republicans gave it all they had. Or was it a basically good plan that could stand some further improvement? If Frum thinks that–as I do–why would he have voted in the end to kill the reform?

I agree with Crook here that passing the bill could then be a platform for improvements to be added later. Frum is probably right that the Republicans could have achieved a more market friendly bill if they sought that during the fight. Does Frum think that the possibility of improving the bill after it passes in its current form is negligible or impossible? I suppose that would explain the inconsistency, but it wouldn’t be very persuasive. 


In the Financial Times, Crook also makes some further important points about the need to moderate the GOP

Meetings such as this are not campaign events aimed at voters at large. They are gatherings of activists, intent on maximum fervour. Even so, to call the Obama administration “socialist” is risible. If anything, “secular” makes even less sense. Do Republicans regard universal health insurance as a godless undertaking? And since when, even in the US, was “secular” an allowable term of abuse? 

A moderate and intelligent opposition to the Democrats’ policies is badly needed. Apparently, nobody in the Republican party aims to provide it. Republican leaders seem intent on presenting the party’s angriest, most stupid and least tolerant face. Some leading Republicans who are moderate by temperament and conviction – John McCain, for instance – are being pushed to the right in primary election contests with more conservative opponents. Others, such as Mitt Romney and Tim Pawlenty, are disowning their previously expressed views or just keeping their heads down.

Clive, it became “allowable” when the Republican Party became the party of the religious right instead of a party of conservatives. But, thank you, the question keeps needing to be asked. 

Larry Summers in the Financial Times

My lucky stars: Martin Wolf (!) interviews Larry Summers (!!). 

LS I think there’s a great deal in past policy that will continue to have an impact. One of the things that people most consistently forget is that two generations of studies show that the lag between monetary policy and impact is six to 18 months. So the financial policies that will be affecting the economy over the next nine months are not the contemporaneous ones, but the ones from some time ago. Only about half the resources from the Recovery Act have yet been disbursed. So there is substantial fiscal policy in train.

We are seeing some of the benefits of the financial policies that forced so much capital into major financial institutions in increased levels of lending that are showing up in statistics. We took steps last week to enhance the programmes in support of the housing sector, by enhancing the ability to refinance underwater homes on more favourable terms which should make it significantly easier . . . should reduce pressures in the housing market and should also make it easier for home owners to engage in improvements in their homes of various kinds, all which contribute to aggregate demand.

 I hope rumors of Summers leaving the Obama administration are untrue. 

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