So much to do. So little will.

A recurring theme of these pages is the miserable state of both the economy and our political system, however defined. There are problems out there that demand urgent attention, but the folks who can make this happen are engaged in a hissy fit, spewing vitriol and untruths rather than taking a moment to reflect on why they’re even in office. First clue, it’s not to simply reward those who bought your ticket to the congressional dance. You really have a duty to “the people.”

Let’s take our nation’s infrastructure, for example. I think it’s a good one, because (a) it’s been so long neglected and (b) were our putative representatives to start paying attention the economy might actually recover. Quickly on the latter point.

This is a demand-constrained recession, which means that too many people lack sufficient income to spend on goods and services. They need jobs that pay “family wages.” If the government were to spend money fixing the things that are broken and building things that we’ll continue to need, people would be working once again. And when they work, they make money, which they use to feed, house, clothe their families, and pay taxes—just what the Economy Doctor ordered.

Each year for the last five the Urban Land Institute and the firm Ernst & Young produce a report detailing infrastructure needs. They’ve just issued their fifth. Here’s an excerpt:

In contrast with its global competition, the United states is lurching along a problematic course—potentially losing additional ground. After more than 30 years of conspicuously underfunding infrastructure and faced with large budget deficits, increasing numbers of national and local leaders have come to recognize and discuss how to deal with evident problems. But a politically fractured government has mustered little appetite to confront the daunting challenges, which include finding an estimated $2 trillion just to rebuild deteriorating networks. operating beyond their planned life cycles, these systems include roads, bridges, water lines, sewage treatment plants, and dams serving the nation’s primary economic centers.

Although President Obama ranks infrastructure as one of his administration’s top three “win the future” initiatives (together with education and innovation), the chances for setting and executing national priorities appear to be foundering in partisan debate over tax burdens and how to cut exploding government debt. Plans for transformational networks—regional high-speed passenger rail, a new electric grid tied to energy-saving technologies, and state-of-the-art satellite air traffic control systems to replace obsolete radar stations—will probably get delayed, pared back, or shelved.

Despite the nation’s unemployment woes, the vast job-creation potential of infrastructure projects is being sidetracked by concerns about government spending appetites and potential cost overruns. related benefits from reducing carbon footprints—energy efficiencies and greater independence from problematic foreign energy sources—are also failing to gain much traction. The overriding stumbling block to generating support for rebuilding the country’s infrastructure remains simple public resistance to paying more for these systems—either through higher taxes or user fees. Although informed voters have passed bond issues and even some sales tax increases for new projects, Congress perennially refuses to raise the federal gasoline tax or allow states to put new tolls on interstate highways, which could help ramp up funding for mass transit alternatives and repair existing highways and bridges. [added emphasis]

Oh, and this is a very good time for governments to be borrowing, since interest rates are so low. Thus saith The Economist. However, the magazine continues, there is a lingering belief that would-be bondholders fear that the government won’t pass along the costs of borrowing. The Economist says this is nonsense:

America is the world’s largest economy. Its citizens are among the richest and least-taxed in the developed world. American citizens will not move to other countries en masse if taxes go up (the equivalent of “losing market share”), and citizens can’t simply refuse to pay their taxes (the equivalent of “elastic demand”). Setting politics aside, there should be no question that the American government can “pass on its costs to consumers” if necessary. This ought to mean that debtholders will continue to trust the credit of the government, which should mean interest rates on its debt will stay low until growth picks up, which should mean that no extra tax increase to pay off debt will be necessary. [my emphasis]

That this magazine would offer these suggestions strikes me as almost amazing. After all, The Economist is proudly conservative. But what passes for conservative in the U.S. is closer to a weird hybrid of fascism and libertarianism, both inchoately practiced by amateurs residing under the loony umbrella of the new GOP.

It’s no wonder we’re in such a mess.

Who is this guy Obama?

I found this piece in the New York Review of Books affirming my attitudes toward Barack Obama. Author David Bromwich writes:

The anti-Washington tactic, and the extensive travel it licenses, have not worked well for Obama. He retains the wish to be seen as a man above party; and a more general distaste for politics is also involved. But what is Barack Obama if not a politician? By his tones of voice and selection of venues he has implied several possibilities: organizer, pastor, school principal, counselor on duties and values. Most prominently, over the past six months he seems to have improvised the role (from materials left behind by Reagan) of a kind of national host or “moderator” of the concerns of Americans. From mid-2009 through most of 2010, Obama embarked on solo missions to shape public opinion at town hall meetings and talk show bookings, but the preferred format now appears to be the craftily timed and planned and much-heralded ecumenical address. Obama’s televised speech on January 12 at the memorial service after the Tucson shooting was his first major venture on those lines. His speech on May 19 at the State Department was the second; and its announced subject was even more ambitious: the entire domain of US policy in the Middle East.

I have called Obama ‘the Great Capitulator’ for his repeated failures to lead. He manifests two conceits: that he is above it all; and that he has an especially high opinion of his negotiating abilities.

During the 2008 campaign many could not get enough of Obama’s rhetorical talents. Perhaps much of this approbation was no more than his not being Bush, the mush mouth wont to utter phrases of a playground bully. But Bush II is long removed from the scene, so the contrasts subside. After two and a half years in office Obama should be properly judged on his present words and deeds. I’m not inclined to be generous with my grades.

One detail Bromwich covers is Obama’s time away from the Oval Office.

For that matter, he has been away from Washington for a large part of his two and a half years as president. This fact may be dwelt on excessively by his detractors, especially at Fox News, but its importance is scarcely acknowledged by his allies. (According to figures compiled at the end of 2010 by the CBS reporter Mark Knoller, Obama’s first twenty-three months in office saw seventy days on foreign trips and fifty-eight days on vacation trips.) He has gambled that it pays to present himself as a statesman above the scramble of something disagreeable called Washington.

It was said of Ronald Reagan that we’d all be better off if he took more and longer naps. That would leave less time for mischief, of which he was plenty capable. Would Obama be more useful if he worked harder? I’m beginning to doubt it. His distaste for mixing it up with his detractors and his abject willingness to quickly concede the opposition’s points does not bode well for the rest of us.

So much apparent potential tossed so readily for pedestrian political gains. What a shame. At least he seems to be having a good time of it. Another round of golf, Mr. Boehner?

You don’t suppose it could happen here?

An estimated 750,000 public sector workers, including teachers, walked off their jobs in the UK. They are protesting planned changes to their benefits packages, including pensions. The Cameron government claims that the current situation is “unsustainable.” The Times:

The strike is the latest development in an increasingly bitter dispute between the affected unions — including the National Union of Teachers, the Public and Commercial Services Union, and the University and College Union — and the Conservative-led coalition government.

The government, whose austerity budget is beginning to take affect around the country, says that the current pension system is unsustainable and unaffordable. It has raised the working age and is now proposing that workers pay a larger proportion of their salaries into their pension plans each month. The government has also proposed recalculating pensions so that they will be based not on a worker’s final salary, but on a “career average” salary, taking into account the worker’s entire working life.

We can only imagine American public sector workers aping their British counterparts. Why are we so evidently docile and the Europeans so resistant? After all, we’re the ones borne of revolution.

Some, like Noam Chomsky, argue that the consent of masses has been successfully manufactured. I’ll take it a bit further. The propaganda has been so effective that we, the people, essentially do the bidding of the privileged.

We’re the ones who get upset if someone proposes that the rich be taxed more heavily. We’re the ones who stand for Boeing after it built a new plant on the East Coast to escape the union’s influence. We’re the ones who scream for more war, and damn the costs. We’re the ones who support increased surveillance by the state. We’re the ones who gainsay “Obamacare.” We’re the ones who wish to make it more difficult for workers to organize. We’re the ones who want more roads for our emissions-spewing cars. We’re the ones who deny the science of climate change. We’re the ones who push our teachers to be “more accountable.” We’re the ones who worship “the rich and the famous.”

It was, simply put, a piece of cake.

For the GOP: bad news is good news

Paul Krugman:

Think about it. There’s a significant chance that failing to raise the debt limit could provoke a renewed financial crisis — and Republicans would rather take that chance than allow a reduction in tax breaks on corporate jets.

What this says to me is that Obama cannot, must not, concede here. If he does, he’s signaling that the GOP can extract even the most outrageous demands; he’s setting himself up for endless blackmail. A line has to be drawn somewhere; it should have been drawn last fall; but to concede now would effectively mean the end of the presidency.

Given the previous actions of the Great Capitulator I don’t see much hope of line drawing. The Republicans demonstrate a particular brand of idiocy; they are perfectly willing to place everything at risk to gain electoral victories. The worse things get, they reckon, the more the voters will blame the incumbents.

But surely we’re not so stupid as to elect a Michelle Bachman or a Rick Santorum or a Tim Pawlenty or a Sarah Palin…?


The repeating pattern

We’re witnessing yet another instance of a familiar pattern. Candidates for the Oval Office may speak of peace and prosperity, but after they win the presidential race and move in to the White House the soaring rhetoric evaporates, replaced by talk of strength and protecting “our national interests.”

Thus, Barack Obama raised hope on the left during his campaign, reprising statements uttered as a senator and Illinois legislator. Yet, upon assuming the title of Commander in Chief he has demonstrated that war is truly a bipartisan issue. Send in the troops. Bulk up the Pentagon. Let’s go kill people.

Here’s one writer’s take on what’s going on in Afghanistan:

The escalation in the war not only caused casualties on both sides, but it also resulted in the further militarisation of communities, either through the government’s initiative of arming local militias or via criminal gangs and anti-government forces. This is undoubtedly affecting provision of very basic services such as health, education, agricultural and various socioeconomic development programs.

Furthermore, the military surge certainly resulted in an increase in recruitment to anti-government forces. This was partly due to civilian casualties, but also to the reaction of those forces loyal to the Taliban to the increased military presence.

Time to come home, America.

Now’s the time

In an ailing economy should public agencies commence capital projects? I say yes.

I’ll mention a couple of guiding principles in support of my opinion. First, insofar as a public agency (e.g., school districts, public utilities) is expected to be around for decades it helps to take a long-term view of capital projects. Second, there is a silver lining in depressed economic times—both capital and labor are cheap.

The Snohomish County PUD, of which I am one of three elected commissioners, decided to accelerate capital projects, those that were on the list to be completed sooner or later. The board judged that land, labor, and money were as inexpensive as they might be in the foreseeable future. Under the two guiding principles, the commissioners gave its approval to advance the utility’s capital plan. In the long run, the PUD will save money—in the millions of dollars.

The Everett school board is wrestling with a couple of capital projects, including a new and much-needed administration building. The other is a resurfacing of two high school tracks.

The Everett School Board appears to be one step away from approving a new $23.3 million administration building, a project that has been talked about off and on for years.

The proposed 62,000-square-foot building is by far the biggest of three construction projects expected to be voted on at the school board’s next meeting on July 5.

I say now’s the time.

Keynes alive and well—as a Swede

In the United States we have a problem. Well, more than one, to be sure. The biggest problem, in my judgment, is that we just can’t seem to do anything positive, despite being faced with an array of challenges. There are multiple reasons for the constipation; I’ve covered a few in these posts.

I’ll reprise two: (1) we can’t seem to agree that there’s a problem in the first place; and (2) we’re so ideologically, culturally, and socioeconomically divided that even if there should be that rare moment of agreement on what ails us, there is virtually zero possibility of achieving consensus on solutions.

We are a big, vast country. Indeed, by most measures, we’re several smaller countries badly coexisting within political boundaries to the north and south and huge oceans to the west and east.

I, for one, would be quite comfortable being a resident of that mystical region some call ‘Cascadia’—essentially, the area west of the Cascade Mountains beginning with British Columbia and ending in San Francisco. Such a place could genuinely be dubbed “Left Coast.” Nor would we residents of Cascadia have to put up with southern yahoos or midwestern Puritans. Cascadia would be like—Sweden.

The Swedes seem special to me. Perhaps because I have the luxury of never having set foot on its soil. There are some salient features of that country’s culture and politics that stand out. I’ll list three:

  1. low poverty
  2. the lowest Gini index (more wealth equality)
  3. a will and ability to let reason guide decision-making

Case in point: How to solve the financial crisis?

Here is where Keynes comes in. While both economists and politicians in the US debate the wisdom of Keynes, the Swedes learned their lessons from past financial difficulties, judging in their aftermath that Keynes offered a path to recovery. The Washington Post lists five Keynesian lessons:

  1. Keep your fiscal house in order when times are good, so you will have more room to maneuver when things are bad.
  2. Fiscal stimulus can be more effective when it is automatic.
  3. Use monetary policy aggressively.
  4. Keep the value of your currency flexible.
  5. Bankers will always make blunders; just make sure they don’t doom the economy.

Keynes believed that austerity should be practiced during times of plenty and expansionary policies implemented during times of recession. But one entire political party in the US has it backwards: tighten your belts when things are bad; fuel the expansionary fires when all seems well. So, instead of financial stability we get wild, dramatic swings, euphemistically called ‘business cycles.’

The Republicans say that government action creates uncertainty, eroding business “confidence.” Well, the Swedes, according to the Post article, established automaticity in fiscal stimuli, depending on specific conditions or triggers. In the US, we tried to throw a bunch of money at the problem—all at once. It was neither sufficiently large nor repetitive. Indeed, there is just no political way for this Congress to accede to more stimulus.

Milton Friedman, who became an economic hero to Reaganites, chided the Federal Reserve for not having done more during the Great Depression. The Swedes took his criticism to heart, adopting monetary policies that make Ben Bernanke seem like a Scrooge.

We hear a lot from conservatives about the specter of a weak dollar. As in all things, the US dollar must be strong! Even when now would be a good time for its value to fall. The Swedes had the good sense to say no to the Euro, unlike the Greeks. They also demonstrated wisdom by allowing their currency, the krona, to fluctuate against others. A krona that is weak before the Euro and dollar makes Swedish exports less expensive and therefore more attractive—and that’s good for its economy by keeping factories humming and workers busy.

Ah, the bankers. The folks in Congress and the White House bent over with exposed bare asses and let Wall Street ream them again and again. As a result, our financial sector has become the epitome of moral hazard: heads they win, tails we lose. The fat cats bet big and lost. No problem. Here come the taxpayers to the rescue. Now when a few in Congress dare to curb Wall Street’s wanton ways, the fat cats remind them of who gets people elected or tossed out of office. No matter how loud and frequent the exposés against the financial barons, they are immune from consequences. So, they will blunder some more, and each time we’ll be the ones feeling the pain.

And just look at what “those socialists” over there did with respect to government debt. (Graphic from Washington Post)

Gosh, where’s our next war? We’ve got to keep up this “exceptional” stuff going.