Alito and Empathy

Alito made waves in his Ricci opinion with an overt critique of empathetic judging:

“sympathy” is not what petitioners have a right to demand. What they have a right to demand is evenhanded enforcement of the law... what, until today’s decision, has been denied them.

The core of opinion itself however, is a much more subtle, and damning critique of the President's nominee, in line with my prior analysis.

As discussed in that post, the President's view is:

I will seek someone who understands that justice isn’t about some abstract legal theory or footnote in a casebook; it is also about how our laws affect the daily realities of people’s lives.

Alito's opinion exemplifies this sort of understanding. While it doesn't lack for cogent legal analysis, its heart is dedicated to plainly describing how the legal theory in question -- what Roberts more artfully elsewhere labeled "a sordid business" -- affects the daily realities of ordinary people's lives. However justified, the sort of race-conscious judging Obama and Sotomayor favor, gives life, or at least terra-firma, to characters such as this Reverend Kimber, and the ugly and corrupt role they play in our political (and economic) lives.

Given that the President is no fan of Alito or his manner of judging, one is led to suspect that the President's judicial philosophy is less about a general framework for making wise judgements and more about reliably supporting a particular political agenda.

Ginsberg's Dissent

A few observations regarding the dissent in Ricci.

Ginsberg argues that while the petitioners "attract" "sympathy", "they had no vested right to promotion." It takes a particularly empty flavor of sympathy to miss that what was at stake here was more than simply a "right to promotion". This is, whatever else, a case of breached trust. Their employer, the city government, initially, established a process by which promotions would be allocated. They sacrificed to succeed within that process only to have the rug pulled out from underneath. On a very broad -- and admittedly non-legalistic -- level, we have a right to trust, if not our employer, then our Government.

On a more legalistic level: In 1964, Congress passed the Civil Rights Act, Title VII of which prohibits intentional discrimination in employment ("disparate treatment"). In 1971, the Supreme Court discovered an additional prohibition basically against policies which cannot be justified by business necessity that, in-practice, produce discriminatary outcomes ("disparate impact"). Tangentially, its worth noting the bright line between this sort of actual "legislating from the bench" that was then popular, and the sort nowadays attributed to conservative justices. In 1991, Congress blessed this discovery by enacting a Civil Rights act explicitly codifying disparate impact.

Conservatives on the court, perhaps with this history in mind, see a tension between the two prohibitions. To them, the former, generally speaking, mandates race-neutral decision making where as the latter, in practice, can encourage race-conscious decision making.

The liberal dissenters argue that this law -- as laws in general -- should be interpreted as a cohesive whole. Understood as such, the manifest intent is to remedy historical discrimination. One should not, in keeping this spirit of the law, actively acting to remedy historical discrimination, be overly taxed with concern for reverse discrimination.

In other words, to the Court, disparate treatment should be evaluated in a race-neutral manner. A city surely cannot throw out tests for promoting too many blacks, ergo it can't throw out test for promoting too many whites. To the dissenters, "context matters" (which is to say "race matters"), and there is expanded wiggle room for reverse-discrimination if it is in the service of remedying historical discrimination.

The above said, the dissenters appear to go on to apparently agree with the rest of the Court that not only outright, but even de-facto, quotas are a no-no. The dissent appears to agree with the Court that the test results could not have lawfully been discarded entirely on the basis of disparate impact, that some legitimate basis for questioning the exam itself is required. In the end, they merely quibble with the Court's "Strong Basis in Evidence" standard as unnecessarily high.

The alternative standard they propose is, to my mind, low to the point of meaningless. In reality, if it governed, no exam producing statistical disparity would likely be protected.

What is most interesting to me in this is the contrast with the district court decision approved by Sotomayor. The dissent, in theory, prohibited de-facto quotas even if, in practice, it would support their establishment. The district court, as summarized in the dissent, and by implication the likely future Justice, were not troubled at all by de-facto quotas.

Realism

It is almost too easy to find blatant hypocrisy in contrasting the President's policy towards Iran with that towards Latin America.

Towards Iran the President, initially, staked a position that "it's not productive, given the history of U.S.-Iranian relations, to be seen as meddling". Toward Latin America (e.g.: Columbia and Honduras ), in which, far more than Iran, the United States has historically meddled -- -- the President has not felt similarly constrained.

In the Administration's defense there are two justifying arguments: The argument that US condemnation of the stolen election in Iran would result in a more brutal suppression of protesters and the argument that sooner or later we will have to negotiate with the mullahs so best minimize antagonizing them.

Neither argument is particularly strong. By its own measure, the Administration's calibrated approach failed miserable -- protesters are being quite brutally suppressed. It was liked doomed, in part, by its (all things considered, ironic) unilateralism: Our European allies (including Britain with its own peculiar history in Iran), were not as tepid in their response as we were. Further, it is hard to see how the effort to pursue "tough negotiations" with "no illusions" is hindered, rather than furthered, by speaking our minds plainly.

In the end, the reason why Obama found it easier to condemn the Honduran courts and congress than he did the Iranian Mullahs, is that he understood that the former are not like the latter. While the Honduras "coup" may stir up ghosts of Pinochets past in the hearts of deep leftists, Obama knows that we are not likely to see blood on the streets of Tegucigalpa the way it is running in Tehran. In other words, he is pursuing the Carter-esque policy of holding to pristine standard and, inevitably, condemning, those who fundementally share our values whilst coddling tyrants.

It is most certainly true that Carter's weakness, invited aggression. (e.g.: The revolution in Iran and the Soviet invasion of Afghanistan). In the case of Afghanistan, aggression led to over-reach, which was fortunate for us.

I think it is reasonable to wonder, given Obama's relative weakness -- his love letters to Khamenei and "hot dog" dimplomacy -- if the Iranian regime would have acted as blatantly as they did to steal the election were W still in office and there was a more realistic expectation of averse consequences.

Repost: Daye-Light

In December, I posted:

Austin Daye is a revelation. He is a 6'11 sophomore with bonifide small foward skills. Plus he has a name made for sportscenter puns.

Daye was taken 15th in the NBA Draft last night.

The real story of the draft is Brandon Jennings. He bailed on the mandated year of being-exploited-by-a-college and instead went to Europe where he got paid some $3 million (including endorsements) to play mediocre-ly and ride the bench without really hurting his draft position (Of his high school class: Evans and DeRozan who had impressive freshman years went 4 & 9, Jennings went 10, Holiday who was mediocre at UCLA went 15). To my mind, this is the smart thing for any of the top tier H.S. talent to do. It will be interesting to see what the N.C.A.A. does when confronted by the choice of losing the most exciting players or relaxing exploitative controls.

I have to imagine that if UConn had won the NCAA championship, AJ Price would have gone earlier than late second round and Jeff Adrien would have been drafted. I would like to believe that Adrien will yet play in the NBA.

And, for the record, I don't see how Ricky Rubio turns out better than Jonny Flynn.

Too Cute By Half

An op-ed piece in the times makes a variant on the cutesy argument that conservatives are the real empathetic judicial activists.

The author makes a few arguments, none particularly cogent. A sample:

...when it comes to the race cases before the Supreme Court, too many conservatives abandon both originalism and judicial restraint.

The Voting Rights Act decision was a case in point. Eight justices avoided weighing in on the constitutionality of the law... But Justice Clarence Thomas went further, declaring the provision unconstitutional. Congress, he argued, was justified in the 1960s in responding to the denial of the voting rights guaranteed by the 15th Amendment, but things have changed and the provision is no longer needed... is that really for him to say? Congress is the proper body to make that judgment. none of the justices... discussed any historical evidence about what the ratifiers of the 15th Amendment intended. It is hard to believe that, back in 1870, they wished to empower courts to determine which voting rights laws were necessary. The occasion for the amendment was, after all, the end of a civil war brought about in significant part by judicial overreaching in the Dred Scott case.

The actual facts are these: Under the constitution, State governments have fundamental rights protected from intrusion by the Federal government. A majority of justices likely believe, for good "originalist" reasons, that section 5 of the VRA would have been an unconstitutional intrusion of the Federal Government in state affairs prior to the adoption of the 15th Amendment. The plain text of the 15th Amendment gives Congress the power to protect voting rights, but not to otherwise arbitrarily intrude into sensitive areas of state and local policymaking. Historically, the Supreme Court, not Congress, has the responsibility of Judicial Review, which, in this case, involves determining whether this legislation is a constitutional protection of voting rights or an unconstitutional intrusion on State autonomy. The suggestion that somehow because of Dred Scott the 15th Amendment is governed by an original intent to assign Judicial Review to Congress is, to my mind, rather fanciful.

In stretching to make a less tenable point, the Author actually missed a more accurate, if limited, one. The politics of this case are such that a court finding Section 5 of the VRA unconstitutional would be almost as political valuable for Democrats as Roe v Wade has been for Republicans. It is easy to believe that the Conservative Justices in the majority, had the politics in mind, as they, best I can tell, found a creative way to gut the law -- by discovering an expanded “bailout” provision -- without, technically, overturning it.

In the end, however, there is all the difference in the world between Justices, perhaps like Roberts, who may, on occasion, creatively, or expansively, interpret in an effort to avoid making political waves, and those who do so -- as conservatives fear (perhaps unjustly) of Sotomayor -- without similar concern.

Socialism?

Obama is often accused of having a European-socialist agenda, but it is possible that his inspiration is closer to home: Hamiltonianism

Roughly, Hamilton had a vision of a powerful central government operating hand in hand with, and through, large, dependent, private concerns dominating the economy. He would feel quite at home, I think, in the age of Government Motors and Government Sachs.

Stacked Deck

The rules of The Superstars competition on ABC were clearly announced. There are two main events, the scores are added up after the events with the bottom four teams going to the "Obstacle Course", the Obstacle Course loser goes home.

This is how things stood through the 2 Main Events:

Event	1	2	Total
Kristi/Maks	80	100	180
Brandi/Julio	100	50	150
Bode/Page	60	80	140
TO/Joanna	40	70	110
Lisa/Dan	70	20	90
Jeff/Ali	30	60	90
Robert/Estella	50	30	80
Jennifer/David	20	40	60

Per the announced rules, TO&Joanna should have been safe. Instead they announced that Jennifer&David, Robert&Estella, and Lisa&Dan were definitely going to the Obstacle Course and they invented a "Rubber Match" in which Jeff&Ali -- who had the same total score as Lisa&Dan -- would get to compete with TO&Joanna for who was safe and who was going to the Obstacle course.

To no-one-who-saw-the-promo's surprise, TO&Joanna lost the Rubber Match and the Obstacle Course and were sent home, but not before Joanna, likely prompted by the producers of this sham show, tore into TO.

I am a big TO fan and tend to believe he gets a raw deal from NFL fans, the media and his team. Its sad to see he even gets a raw deal from super-f***ing-stars and probably a safe bet that the producers are bitter Cowboy (or 49er or Eagle) fans.

Analogy

Laura Walsh being interviewed on The O'Reilly Factor, in the process of making O'Reilly look like a sputtering moron made the following argument:

I told him that he was within his rights to think late-term abortion should be illegal, and that he should work to make it so. But right now it's legal. I compared his position to that of gun opponents. We can legally, under various circumstances, own guns. But some gun opponents would like most guns, especially handguns, to be illegal. What if those folks started a crusade against gun dealers, maybe picking out one in particular, saying he had "blood on his hands," "he should be stopped," all the O'Reilly Tiller quotes?

Sadly, Bill cut me off and derided that comparison as stupid...

While O'Reilly perhaps could have better articulated, he is right on the substance.

Late term abortion is, more or less, legal despite some people viewing it as, simply, murder. Gun dealing is, more or less, legal despite some people viewing it as contributing to an increase in the number of murders. As few, if any, view gun dealing as itself, simply, murder, most would find crusading, in a disruptive and inflammatory way, against arbitrary gun dealers inappropriate.

On the other hand, if there was a particular gun dealer who, for example, had a known track record of selling guns to criminals, or of selling guns later used in murders -- activity that more people might view as akin to, or at least in the ballpark of, murder -- more people would by sympathetic to that sort of crusade.

Under any analysis, Walsh's argument holds no water. To give a slightly better (if still imperfect) analogy: Were it legal in America for trained and licensed professionals to kill homosexuals, the argument that people should simply "work" through the political system to change the law would fall monstrously flat. Crusades would be called for.

Now my faith does not teach that abortion is, simply, murder and, in this age of unlimited government, I am sympathetic to any restraint on its power (which is to say, I would prefer to see the right to privacy expanded not diminished) but it does seem to me that Walsh's argument to people who believe that abortion is, simply, murder falls similarly flat.

Of Fictions

In a nytimes op-ed piece, Tony Judt says that settlements are bad.

His (jumbled) argument amounts to something along the lines of: He spent some time on a kibbutz. Israelis self-identify as a settler-nation. Some settlements are large demographically and geographically. All settlements, authorized by the Israeli government or not, are illegal under international law which "prohibits the annexation of land consequent to the use of force." Settlers amount to ~10% of Israeli Jews. American aid subsidizes the price of Israeli settlements, which are much cheaper than homes in Israel. No Israeli government will dismantle settlements under any peace deal. Netanyahu, and Israel, is playing Obama "for a fool" and America "for a patsy". From this he concludes that it is not enough to stop Settlement expansion and that Obama should "remind Israelis that all their settlements are hostage to American goodwill" and that they "have nothing to do with Israel’s defense, much less its founding ideals of agrarian self-sufficiency and Jewish autonomy." If he does not, "the United States would be humiliated in the eyes" of the world.

In claiming that American aid subsidizes settlement activity, he is correct to the degree that different Israeli governments have subsidized settlement activity to varying degrees. However, without any subsidy, homes in settlements would naturally be much cheaper then homes in Israel proper both because of the cramped-ness of Israeli cities and because of the risks inherent to settlement living.

He creates a false dichotomy out of settlement dismantling. It is not an all or nothing question. While no Israeli government will likely agree to dismantle all settlements, Israeli government have twice now -- in Sinai and Gaza -- dismantled settlements, and twice now -- in 2000 and 2007 -- agreed, in the context of a final status offer, to dismantled some West Bank settlements.

His core premise is that all settlements are illegal as annexations of land consequent to the use of force. Putting aside arguments along the lines of wondering why Israel's borders need be amongst the few in the world not such, there is still room to question. If the prohibition is, as Judt, describes it "annexation", then Israel is in the clear so long as it does not annex settlements without an agreement. If the original "use of force" is some sort of original sin that can not be cleansed via agreement, then it is not simply the post-67 settlements at stake. After all, the '67 borders were themselves established through force in 47-49. Which would argue that only the UN partition plan borders are "permitted". In the end, of course, even the UN partition plan was not peace-ably accepted: without the "use of force" there is no Israel.

I find it easy to agree with the longstanding American position that settlement activity is an obstacle to peace. Peace requires space between Israelis and Palestinians, settlement activity creates an unhelpful proximity. I also have no quibble with the argument that American tax payer dollars ought not be going to subsidize settlement activity. But I see no reason, as some do, to take for granted that the '67 borders are this bright unassailable green line, behind which Israel is safe and secure. It is not clear to me that this International Law which we are told states explicitly that no Jew may live in Hebron does not apply equally to Jerusalem or Tel-Aviv.

In other words -- and this should go without saying -- that it is not at all unreasonable, if it is is debatable, to believe that settlements have a great deal to do with Israel’s defense and Jewish autonomy. And, so, Judt's inflammatory rheteric (eg: patsy, fool, humiliated) wildly off-base. It continues to amaze me that otherwise sensible people -- on all sides of the issue -- start to froth at the mouth when discussing Israel.

Of Scalping

The ethicist@nytimes (here and here) argues that concert tickets ought not be resell-able:

Markets function best when supply can adjust to demand... Given her popularity, her shows will necessarily be in short supply. The question of how to allocate that supply is thus inescapable... I’m not persuaded that virtue requires the most popular singers to perform for only the people with the most money...

Scalper markets exist because performers consistently set their ticket prices below market value. This is generally explained as because setting ticket prices at the, often obscene, market value would generate bad press, in particular the claim that the performer cares little for average fans. I think that explanation is questionable. Specifically: It argues for ensuring that some tickets are priced afford-ably, but not for pricing the best tickets at a discount.

I more suspect that tickets are priced to sell out accounting for the depth of the market. A performer wants sell more tickets because an empty arena diminishes the show. If there are, for example, 5,000 tickets to sell in a section, the price should be around what the 5,000th person (ranked by amount willing to pay) is reliably willing to fork over. It is similar, to some degree, in this regard, to Stock IPOs. As with stock IPOs, selling into (secondary) markets will be profitable because the person who did not partake in the initial allocation willing to pay the highest price for a ticket, will likely be willing to offer a substantive premium on top of that "5000th" price.

The smaller the percentage of tickets resold out of total tickets is, the more likely that this explains pricing. Further, if this is the dynamic, face prices should go down if the resale option is taken away.

In any case, it is clear that none of the Ethicist, Miley Cyrus and, the Champion Contra-Ticketmaster, Bruce Springsteen have ever been faced with buying tickets they could only marginally afford. Otherwise, they would understand how secondary markets actually serve to make tickets more affordable to average fans in two ways. First, the option to sell the tickets if for some reason they are unable to attend is more valuable to average fans, for whom the face price is meaningful. Second, many fans are able to afford the face price on their own tickets only by profiting on the sale of extra tickets.

One final note in regards to Springsteen. The secondary market for his tickets is unusually pricey. This is, in part, due to the affluence of his fans, but also because Springsteen fans, far more, I suspect, than other fans, are likely to attend multiple shows in a given tour, dramatically increasing demand). Springsteen encourages this by giving fans something new/different each and every show. In other words, if Springsteen was truly concerned about secondary market prices, he would adopt a clear policy of playing identical shows night to night.

Great Minds

I am not saying Taranto reads my blog, but...

It is very well to choose one's words carefully, but Obama's timidity is shameful. One of the central arguments for electing him president was that he would restore America's "moral authority," supposedly squandered by George W. Bush. But of what use is moral authority to a nation led by a man who is either too indifferent or too frightened to say a word on behalf of what is right?

Early this morning, I posted:

On of the key promises of Obama's candidacy was that he would "restore America's standing in the world"... Most Americans, I think, have difficulty seeing how remaining silent, or neutral, in the face of a stolen election is a recipe for restoring, rather than undermining, our global standing.

The Argument for Nationalized Health Care

The standard argument for nationalized health care -- our system is too expensive and ineffective, and nationalized health care works well elsewhere -- seems to me, to be very weak. Too expect our government to create a Health Care System as well conceived and run as, say, Austria's supposedly is is like expecting our Government to handle a bailout of our financial sector with the thoughtfulness and discipline with which the Swedish government bailed out its.

On the other hand, I think there may be a more reasonable argument:

Most of those who support a free market health care system believe that some amount should be subsidized for those who cannot afford it. It is similar, in this aspect to food.

In theory, the amount of food purchased, or subsidized, by the government is very small in relation to the total amount of food purchased. The government action, then, does not serve to distort the price of food.

With health-care this may not be the case. It may be that the minimum amount of health-care that should be available to everyone is beyond the ordinary means of enough people that the government will inevitably be a price-maker. We currently spend about $7,000 per person a year on health care. Even discounting that number a bit, it is an awful burden on a family making $50,000 (even inflating that number a bit to account for employer provided health-care).

If that is the case, the choice is between something resembling the current hybrid system or a more uniform nationalized system.

It is not hard to argue from there that the hybrid system -- where incentives are so misaligned and acountability and transparency so minimal -- is such a disaster that a nationalized system is preferable.

On the other hand, the per person spending may be reducible to something more affordable.

For example, there is the argument that our current system drives medical innovation. This may be true, but I do not see why the American patient is obliged to fund innovation for the rest of the world. In theory, I like the idea of price protection laws along the lines of: To receive patent protection for a medication or medical device, you cannot sell it in the US for more then some baseline derived from the price you sell it in other developed countries.

More fundementally, to get at the natural price of health-care, you'd have to figure out what it would cost without, for example, the (market) distortions of medicare/medicaid, often heavy handed state regulations and with a more sensible system to handle malpractice. Which is all rather hard to do.

Restoring America's Moral Standing

On of the key promises of Obama's candidacy was that he would "restore America's standing in the world"

The divergence between what that means to the hard left and what that means to main street America is illustrated by the Administration's in-action towards the Iranian election.

Most Americans, I think, have difficulty seeing how remaining silent, or neutral, in the face of a stolen election is a recipe for restoring, rather than undermining, our global standing.

Should Ahmadinejad steal this election with our implicit acquiescence, we can add Iran to the list of Muslim nations whose populations resent us for talking about freedom and democracy while supporting their own oppressive governments.

On the other hand, should the election turn out to have been legitimate, Obama's inaction will prove to have been wise.

On a related note, one can't but be amused by the observation that while only a few years ago, to the hard left Kissenger equaled Satan, right now, our President, who was their candidate, is pursuing "realist" policy that would make Kissenger proud.

Babies with Candy

Krugman argued that ending the current "unconventional" economic measures would be a mistake since history shows that the two times they were previously tried in response to a "liquidity trap" they were ended "too soon".

Occam's razor might argue: The current "unconventional" measures are a mistake since they have been tried twice under similar circumstances and did not work.

The President, of course, expressed His understanding, contra- conservative critics (and it turns out Krugman), that it was pretty well settled that these sort of unconventional measures worked in the past.

Iranian Government

One interesting pattern in reporting on Iran is that the liberal media generally asserts that Ahmadinejad and Khamenei are a duo and that the former is sub-ordinated to the latter, whereas more conservative media reports a power struggle between the two.

The most likely motivation behind this is that it is quite difficult to argue for engagement with a Government substantively controlled by Ahmadinejad. It is easier to argue for engagement with a Government in which he is a mere figurehead.

I suppose time will tell which side is reporting the straight facts and which is subsuming "journalism" to a political agenda.

Counter-Speech

I have never really embraced Bibi, always feeling his personal indiscretions, "american style" campaigning, political gamesplaying and apparent lack of broad vision ill-fit the demands -- given what is at stake -- of the highest levels of the Israeli political arena. That said, having now read the transcript, it appears to me he gave a very close to perfect speech.

The speech had two audiences, the Israeli public and the President.

To the fractured, often combative, Israeli public he made clear that -- in contrast to his first go round -- he was going to be a uniter, not divider, governing from an inclusive consensus and not a narrow base. To left he argued: "Unity among us ... will help us achieve reconciliation with our neighbors." To the hard right he argued: they must recognize the reality of international situation even while standing firm on essential principles, such as the security of the Jewish State.

I demonstrated in my comments on Obama's speech in Cairo, that the audience for his defense of Israel was Jewish Americans rather than Muslims. The President, in his outreach to Muslims, is evidently concerned that Jewish Americans, who voted 75+% for him, perceive him as being fair to Israel. Netanyahu drew, for Obama, bright lines which can only be crossed at the real risk of undoing that perception. Even left-of-center Jewish Americans believe strongly that Palestinian partners in peace ought recognize the Jewish state and that the international community ought take seriously legitimate Israeli security concern. If Netanyahu demonstrates seriousness in avoiding any geographic expansion of settlements (and the if is big), the President will have a hard time convincing many Jewish Americans that kitchen-remodeling in Gush Etsyon is illegitimate and an obstacle to peace.

Above all, how without grace or goodness appear those who have no sympathy for a speech that concluded:

I call on the leaders of the Arab world and on the Palestinian leadership, let us continue together on the path of Menahem Begin and Anwar Sadat, Yitzhak Rabin and King Hussein. Let us realize the vision of the prophet Isaiah, who in Jerusalem 2700 years ago said: “nations shall not lift up sword against nation, and they shall learn war no more.”

With God’s help, we will know no more war. We will know peace

Great Minds

I'm not saying that Bibi reads my blog, but...

A week after President Barack Obama's address to the Muslim world, Netanyahu said the Palestinian state would also have to recognize Israel as the Jewish state - essentially saying Palestinian refugees must give up the goal of returning to Israel.

Three weeks ago, I posted:

Israeli leaders do have savvier options available. For example: Netanyahu could agree to accept Abbas' demand he commit to a two state solution, if Abbas does the same, which is to say, he commits to there being no right of return to Tel Aviv.

Payback

Drudge is following the Letterman/Palin fued. Its worth noting that this is a continuation from the Presidential Campaign when Letterman had a strong hand in sinking McCain.

Economics of Soccer

Drudge let us know that Manchester United accept £80m bid for Cristiano Ronaldo from Real Madrid

I don't pretend to understand the economics of soccer, but superficially it would seem that Mr Ronaldo is grossly underpaid. Was Mr Ronaldo paid his market worth, I would think, his "sale" value would be zero. If that is the case, the £80m here is coming out of Mr Ronaldo's pocket.

Efficiency

Poking Holes in a Theory on Markets

...the efficient market hypothesis is ... a theory that ... the stock market can’t be beaten on any consistent basis because all available information is already built into stock prices. The stock market, in other words, is rational.

In the last decade, the efficient market hypothesis, which had been near dogma since the early 1970s, has taken some serious body blows. First came the rise of the behavioral economists ... who convincingly showed that mass psychology, herd behavior and the like can have an enormous effect on stock prices... Then came a bit more tangible proof: the dot-com bubble, quickly followed by the housing bubble...

These days, you would be hard-pressed to find anybody, even on the University of Chicago campus, who would claim that the market is perfectly efficient.

The financial services industry, of course, has a great interest in undermining the efficient market thesis. To the degree it holds true, active fund managers (which is to say all of them) are snake oil salesmen, plain and simple.

Markets should be mostly rational, by the simple syllogism that markets are made up of people, and people, when it comes to their money, are mostly rational. Certainly, as the behavioralists show, people are never entirely rational and so markets are, perhaps, never entirely rational.

That said, the focus on broad behaviorism obscures, I think, a more fundamental irrationality embedded in markets, which is: People, acting rationally within in their individual constraints, do not always produce a rational outcome in aggregate.

More directly: In the current regime, what an investment manager thinks about a company is only a part (perhaps even a small part) of an investing decision. There are all sorts of additional concerns that factor in. For example, a manager has to be concerned about the optics of the investment her own, often under-informed, investors. A manager has to consider the changing regulatory and political environment in which the company operates (its fair to say that the investors the past nine months have been betting more about "what the government will do" than "what a company will do"). There are all sorts of constraints that operate in the name of "Risk Management" that seem to do far more to distort prices then reduce risk. Above all, a manager has to consider the regulatory environment in which she operates. All these considerations alter investment decisions.

In other words, the market is composed of people who are making decisions that only partially reflect economic information and expectations and so market prices only partially reflect that information and expectation. The more these external factors dominate investment decision making, the less rational markets are. And the more irrational markets appear the more likely these external factors are dominating.

Yet ... In Mr. Grantham’s view, the efficient market hypothesis is more or less directly responsible for the financial crisis.

“In their desire for mathematical order and elegant models,” he wrote in his firm’s quarterly letter to clients earlier this year, “the economic establishment played down the role of bad behavior” — not to mention “flat-out bursts of irrationality.”

He continued: “The incredibly inaccurate efficient market theory was believed in totality by many of our financial leaders, and believed in part by almost all. It left our economic and government establishment sitting by confidently, even as a lethally dangerous combination of asset bubbles, lax controls, pernicious incentives and wickedly complicated instruments led to our current plight. ‘Surely, none of this could be happening in a rational, efficient world,’ they seemed to be thinking. And the absolutely worst part of this belief set was that it led to a chronic underestimation of the dangers of asset bubbles breaking.”
...
Justin Fox’s ... thesis, essentially, is that the efficient marketeers were originally on to a good idea. But sealed off in their academic cocoons — and writing papers in their mathematical jargon — they developed an internal logic quite divorced from market realities. It took a new group of young economists, the behavioralists, to nudge the profession back toward reality.
...
As Mr. Fox describes it, much of the early academic work that led to the efficient market theory was aimed at simply showing that most predictive stock charts were glorified voodoo... Dissertations were written showing how 20 randomly chosen stocks outperformed actively managed mutual funds...

In time, this insight led to the rise of passive index funds that simply matched the market instead of trying to beat it. Unless you’re Warren Buffett, an index fund is where you should put your money. Even people who don’t follow that advice know they should...

As Mr. Grantham sees it, if professional investors had been willing to acknowledge these aberrations — and trade on the fact that the market was out of whack — they should have been able to beat the market. But thanks to the efficient market hypothesis, no one was willing to call a bubble a bubble — because, after all, stock prices were rational...

The notion that no one was willing to call a bubble a bubble is silly. I don't think it would be difficult to find mountains of published quotes from the peak of the respective "booms" calling them "bubbles".

The job of an investment manager is not to avoid bubbles, on the contrary. Bubbles -- which make it very easy to buy low and sell high -- are an investment managers best friend. The job of an investment manager is to time her trades properly.

Finally, again, the notion that "professional investors" were captive to efficient market theory defies reason. If one is captive to efficient market theory, one does not actively trade.

Meanwhile, government officials, starting with Alan Greenspan, were unwilling to burst the bubble precisely because they were unwilling to even judge that it was a bubble...

There is a stronger argument in regards to government officials. For example, regulators have long operated under the "theory" -- one that perhaps ought be revisited -- that introducing externalities into investment making decisions does not reduce the efficiency of markets.

On the other hand, Alan Greenspan -- given his famous "irrational exuberance" speech -- is an ill-fitting posterboy for "government officials unwilling to even judge that it was a bubble". The decision, on the part of government officials, of if, when and how to burst a bubble is a tremendously complicated one. There are many reasons (good and bad) why a government official might recognize a bubble but be unwilling to burst it.

Mr. Fox sees it somewhat differently. On the one hand, he says, the efficient market theoreticians always assumed that smart market participants would force stock prices to become rational. How? By doing exactly what they don’t do in real life: take the other side of trades if prices get out of whack. Their ivory tower view reflected an idealized market that simply doesn’t exist.

The crucial question, to my mind, is why that market does not exist. I don't believe the evidence supports the (behavioralist) assumption that smart market participants were entirely oblivious to the bubble around them. To understand why the efficient market theory failed, one has to understand the many reasons why a smart market participant who recognized the bubble around her might not force stock prices to become rational.

The Public Option

Obama Pushes Public Health Care Option At Town Hall

President Obama on Thursday told a town hall audience in Green Bay, Wisc. he continues to support a government-sponsored health insurance option, or a "public plan," as a means to improve health care in the United States.

"One of the options... should be a public insurance option," the president said, addressing one of the most contentious issues in the current health care debate. "The reason is not because we want a government takeover of health care."

He said a public option would keep private companies honest and would keep prices down.

The notion that government-sponsored health insurance is simply another option useful for keeping private companies honest is, of course, beyond dishonest. It is not altogether dis-similar from, for example, Microsoft arguments that bundling its browser expanded consumer choice. It is, likely, however, quite effective politically. It takes to many words to explain how a government option will inevitably crowd out private options eliminating choice, or how this outcome is more then likely what democrats intend.

Instead of opposing choice, Republicans would be better suited embracing+extending. They would be wise to accept, in principle, the creation of a public option, but insist on rigorous oversight to ensure that it is a genuine, self-sufficiently funded, insurance program where prices and coverage are determined by actuaries, not special interests. They could then argue that the Democratic alternative was to put the taxpayers on the line for yet another under-the-table unaffordable welfare program (see: Mae, Fannie et al).

Put simply: If the political story is "Democrats offering more choices, Republicans beholden to entrenched interests," Republicans lose. If the political story is "Both offer additional choice, Republicans demand greater oversight/accountability," Republicans win.

"We've got to admit the free market has not worked perfectly when it comes to health care," Mr. Obama said...

He emphasized that the next eight weeks of debate in Washington will be critical.

"If we don't get it done this year, we're probably not going to get it done," he said.

We, of course, have got to admit no such thing. Or at least, can withhold such agreement until a free market system is, actually, tried. The current system could not be farther from free market. The government, in one form or another, controls virtually every medical decision the private sector nominally makes.

Consider: Beyond even the obvious heavy handed impact of Medicare/Medicaid, State regulations and malpractice law, the government controls how many medical students go into what specialties by funding residencies and fellowships, and through the NIH and NSF has a strong influence on medical research priorities.

Given how tightly the decisions private insurers make are controlled (or, more, precisely, how narrowly their degree of freedom), it is only slight exaggeration to claim that, within our health system, insurers are paid, mostly, to take blame.

The politics, then, become interesting. If Democrats remove the easy scapegoats from the system they become the most natural replacement. Every patient who feels needed treatment was denied or unnecessarily delayed will henceforth be a potential Republican. Some Democrats likely understand that and may feel compelled to publicly advocate for "reform", but would privately prefer it fail.

The president, however, acknowledged that his plan "comes at a time where we don’t have extra to spend. Tax revenues are down, more people are seeking help from the state, so we've got a lot of pressure on our budget."
...

Republicans ought be publicly wondering why, if his plan is just new insurance option amongst other options, it bears such a heavy price. Privately run insurance companies do not tax to fund their business, why would a public option?

He also repeated his proposal for limiting tax deductions for the rich back to rates in place during the Reagan administration...

It strangely took the administration a little long to figure out that tax deductions for charity are popular. Invoking Reagan's name is a smart counter-strategy.

That said, the backbone of a free society, or liberal democracy, is a vibrant civil society. Tax deductions for charity are a Government policy that serves, intentionally, to strengthen civil society. It is fair to suspect that seeking to narrow that policy carries the opposite intent.

Causation

Five Ways to Fix America’s Schools

AMERICAN education was once the best in the world. But today, our private and public universities are losing their competitive edge to foreign institutions, they are losing the advertising wars to for-profit colleges and they are losing control over their own admissions because of an ill-conceived ranking system. With the recession causing big state budget cuts, the situation in higher education has turned critical. Here are a few radical ideas to improve matters:

Raise the age of compulsory education. Twenty-six states require children to attend school until age 16, the rest until 17 or 18, but we should ensure that all children stay in school until age 19. Simply completing high school no longer provides students with an education sufficient for them to compete in the 21st-century economy. So every child should receive a year of post-secondary education.

The benefits of an extra year of schooling are beyond question: high school graduates can earn more than dropouts, have better health, more stable lives and a longer life expectancy. College graduates do even better. Just as we are moving toward a longer school day (where is it written that learning should end at 3 p.m.?) and a longer school year (does anyone really believe pupils need a three-month summer vacation?), so we should move to a longer school career...

One measure of the degradation of our public conversation is the manner in which statistics are mangled by advocates of education. The benefits of an extra year of schooling are extra-ordinarily questionable. "better health, more stable lives and a longer life" may be correlated with incrementally more education but correlation does not imply causation.

Further, perhaps the author had a miserable childhood, but recalling my own, I find it easy to imagine a three-month summer vacation comes with measurable benefit.

Heard Here First

In my comments on the President's Cairo speech, I noted he carefully avoided mention of the long history arab/islamic anti-semitism. An op-ed contributer in the times noticed the same thing: The Exodus Obama Forgot to Mention

Embrace and Extend

Drudge posted Obama Tells American Businesses to Drop Dead: Kevin Hassett, which articulates something increasingly on the mind:

I’ve finally figured out the Obama economic strategy. President Barack Obama and his team have been having so much fun wielding dictatorial power while rescuing “failed” firms, that they have developed a scheme to gain the same power over every business. The plan is to enact policies that are so anticompetitive that every firm needs a bailout...

Microsoft Chief Executive Officer Steve Ballmer came to Washington to announce what Microsoft would do if Obama’s multinational tax policy is enacted.

“It makes U.S. jobs more expensive,” Ballmer said, “We’re better off taking lots of people and moving them out of the U.S.” If Microsoft, perhaps our most competitive company, has to abandon the U.S. in order to continue to thrive, who exactly is going to stay?

At issue is Obama’s policy to end the deferral of multinational taxation.

The U.S. now has about the highest combined corporate tax rate, second only to Japan among industrialized countries. That rate is so high that U.S. firms have an enormous disadvantage versus competitors. The average corporate tax rate for the major developed countries in the Organization for Economic Cooperation and Development in 2008 was about 27 percent, more than 10 percentage points lower than the U.S. rate.

U.S. firms have nonetheless prospered because our tax code allows a business to set up a subsidiary in a low-tax country. When that subsidiary earns profits, they are taxed at the rate of that country, and don’t face U.S. tax until the money is mailed home.

The economically illiterate partisan Democratic view is that this practice is unpatriotic and bleeds jobs from the U.S. The economic reality is that American companies use this approach to acquire market share overseas. The alternative is losing the business to foreign competitors...

In general, it seems increasingly apparent that improving the competitiveness, and even viability, of American companies is a much lower priority for this administration than harnessing them in the pursuit of a political agenda.

In this specific case, if I am understanding this properly (and I may not be), the administration position can be fairly characterized as "economically illiterate partisan". The current law allows American companies competing in countries with a far lower than US tax rate, to compete with local companies on an even playing field. The administration would like them to compete with a metaphorical arm tied behind a metaphorical back.

Bigness Redux

Drudge posted the following bit of news which recalls this early post of mine:

State firms cry foul over stimulus projects -- Federal approach to contracting tilts toward bigger players

KALISPELL - Across the nation, local firms can expect to lose billions of economic stimulus dollars to large multinational corporations, thanks to a government contracting scheme that puts paperwork speed ahead of community recovery.

In Montana, that means qualified building firms are out of the loop, while many millions in federal construction funding will go to a California company that recently earned a stern rebuke for its failures in Iraq - a war-profits scandal that cost taxpayers hundreds of millions of dollars.

"It's a farce," said Dewey Swank of Kalispell's Swank Enterprises. "It stinks of politics and big special interests."

Over the past several years, Swank has teamed with Montana-based CTA Architects to successfully design and build four federal border stations. Several more ports now are being built along the Montana-Canada line, thanks to the massive stimulus bill, but this time Swank and CTA didn't have a chance to bid.

That's because the government is using a controversial contracting method that speeds bidding but also tilts the playing field in favor of mega-companies. It's called IDIQ contracting, which is shorthand for "indefinite delivery/indefinite quantity," and it's essentially an all-you-can-eat money buffet for big corporations.

An IDIQ is a broad and open-ended agreement, in which the government essentially creates a sort of long-term, all-purpose contract under which specific tasks can later be defined. The scheme moves projects quickly, which is a priority for economic stimulus jobs, but critics argue it's anticompetitive, because only a handful of large firms can afford to engage on such undefined and unrestricted terms.

In Montana, where about $78 million is earmarked for border-station construction, that means Swank and CTA are out, while Parsons Corp., from Pasadena, Calif., is in...

The company entered Iraq in 2003, with just eight government contracts for reconstruction. But those few vague umbrella agreements eventually came to cover about 1,000 projects in 500 locations. Oversight was spread as thin as the contracts and, when projects stalled, taxpayer money hemorrhaged.

By 2007, the man in charge of overseeing Iraq's reconstruction issued a scathing report to Congress, charging that Parsons had failed to deliver. Hundreds of millions had been spent, Inspector General Stuart W. Bowen said, but 150 health centers did not get built and some work that got done was "substandard."
...
Swank, for one, wonders why someone with Parsons' recent history is still winning government contracts, and then he answers his own question: "Someone's palm is getting greased."

In fact, Parsons ranked third among the nation's construction-services firms in terms of federal campaign contributions during the 2008 election cycle, donating about $600,000 split almost evenly between Republicans and Democrats. The company also spent more than $1.5 million lobbying federal lawmakers between 2004 and 2008, with $305,000 shelled out during the 2008 presidential election year.

"That," Swank said, "tells me a lot about how things get done."
...
Federal data show that job orders made through pre-existing IDIQ contracts (as opposed to individually bidding jobs) grew from 14 percent of total dollars spent in 1990 to 52 percent in 2005, and it's growing faster than ever now that the stimulus puts priority on speed...


Goes without saying that this IDIQ does not at all further the cause of Government transparency and accountability.

Re-Capitalization

Drudge posted: U.S. war funding bill brims with unrelated extras

A $100 billion bill to fund U.S. wars in Iraq and Afghanistan is rapidly accumulating extra items such as money for military aircraft the Pentagon doesn't want and possibly a scheme to jump-start sagging auto sales.

The cars and planes are not directly linked to the U.S. war effort. But they are typical of Congress' penchant for loading bills with unrelated spending in hopes the funds will sail through on the strength of the main legislation.

President Barack Obama ... too sought more -- $4 billion extra to combat H1N1 swine flu and $5 billion to back credit lines to the International Monetary Fund, which is trying to help developing countries weather the global economic downturn.

The unrelated provisions have slowed the bill down, especially for the IMF because Republicans have argued the extra items should be vetted through the normal congressional process rather than jammed into an emergency spending bill...

While Republicans do not have the votes to block the bill, they have said they will oppose it and that forces Democrats to ensure most of their members back it...

"This supplemental was supposed to be about providing funding for our troops," one House Republican aide said. Instead, it has become a mish-mashed, taxpayer funded 'Christmas tree' bill that will propagate bad policies and unnecessary spending."

Some 51 anti-war House Democrats had opposed the bill but now are under pressure to switch to give Obama a victory. But a House Democratic leadership aide said Republicans will have to answer to constituents for opposing a war funding bill.
...
And lawmakers are also considering adding money for a plan to spur domestic car sales by offering up to $4,500 in vouchers for buyers to trade in their less fuel-efficient vehicles for ones that get better mileage, known as "cash for clunkers".
...
Democratic Representative John Murtha, who heads the House Defense Appropriations Subcommittee, managed to get $3.1 billion for eight C-17 and 11 C-130 military transport planes included...

The Pentagon did not request the aircraft but lawmakers want them to preserve jobs in their home states and Murtha disputes the military's contention that they are not needed...

"This is a dangerous game Republicans are playing by jeopardizing the well-being of our soldiers to score political points," the aide said. "The supplemental will be passed, but they will have to answer for their actions if they oppose it."

There is some irony in Democrats requiring GOP support for a "war" bill they want to pass without co-ercing support from "anti-war" Democrats.

The politics here likely favor the GOP. Voters, today, are likely more concerned about out-of-control Government spending then insufficient support for troops.

More generally, it seems to me that the best strategy for Republicans trying to rebuild their "brand" would be to avoid offering a positive platform on policy issues. The Democrats, of course, retook Washington by rigorously critiquing Bush administration policies at every turn without offering much of a positive agenda of their own.

A more positive version of the strategy the Democrats used would be for the GOP to focus on process and transparency issues. Make clear that they understand that the American people, in their wisdom, have given virtually unchecked power to the Democrats and assert that they are not looking to obstruct the Governing Party's agenda. That their only concern -- one that the Democrats surely share -- is that the Government should be run in an transparent and accountable fashion.

To that end, the GOP should be offering legislation banning these sort of 'Christmas Tree' bills. They should also be demanding more transparency out of the recovery.gov site and from political donations on the internet. They could also demand that the government abide by the same sort of accounting and disclosure rules required of public companies. Increasing corporate, and similar, income taxes can be opposed in the name of transparency as Americans have a right to know their contribution, but while these taxes are, in the end, paid by ordinary Americans -- in the form of higher prices, lower wages, and reduced investment income -- its nearly impossible to attribute individually. Similarly, the GOP ought demand that voters be informed of the true costs of proposed, and existing, regulations. And, my favorite pipe dream: a truth-in-campaigning bill which held campaigning politicians to the same sort of truth-in-advertising expectations businesses are -- or Martha Stewart was -- held to.

Kristof

Rising Above I.Q.

In the mosaic of America, three groups that have been unusually successful are Asian-Americans, Jews and West Indian blacks — and in that there may be some lessons for the rest of us...

West Indian blacks, those like Colin Powell whose roots are in the Caribbean, are one-third more likely to graduate from college than African-Americans as a whole, and their median household income is almost one-third higher...

A common thread among these three groups may be an emphasis on diligence or education, perhaps linked in part to an immigrant drive...

Among West Indians, the crucial factors for success seem twofold: the classic diligence and hard work associated with immigrants, and intact families. The upshot is higher family incomes and fathers more involved in child-rearing.

What’s the policy lesson from these three success stories?

It’s that the most decisive weapons in the war on poverty aren’t transfer payments but education, education, education. For at-risk households, that starts with social workers making visits to encourage such basic practices as talking to children...

The next step is intensive early childhood programs, followed by improved elementary and high schools, and programs to defray college costs.

Perhaps the larger lesson is a very empowering one: success depends less on intellectual endowment than on perseverance and drive. As Professor Nisbett puts it, “Intelligence and academic achievement are very much under people’s control.”

This approaches the sort of stuff that conservatives have been shouting into vacuums for 40 years and called racist for their efforts.

The success of West Indians calls into question the notion that it is white racism that accounts for racial economic disparities.

Dramatic economic disparities between immigrant groups undermine Kristof's simplistic notion of "immigrant" drive.

In the end, Kristof comes close, but is unable to get his head around the meaning of this data. As he describes it, perseverance and drive come, above all, from the family and community. It is hard to see how the programs he advocates for address that. In the end, the most evident conclusion to draw, is that the best way to help people is to strengthen families and communities and support cultures of achievement rather than dependence.

The Speech

The text, with comments:

...We meet at a time of tension between the United States and Muslims around the world - tension rooted in historical forces that go beyond any current policy debate. The relationship between Islam and the West includes centuries of co-existence and cooperation, but also conflict and religious wars. More recently, tension has been fed by colonialism that denied rights and opportunities to many Muslims, and a Cold War in which Muslim-majority countries were too often treated as proxies without regard to their own aspirations. Moreover, the sweeping change brought by modernity and globalization led many Muslims to view the West as hostile to the traditions of Islam.

Violent extremists have exploited these tensions in a small but potent minority of Muslims. The attacks of September 11th, 2001 and the continued efforts of these extremists to engage in violence against civilians has led some in my country to view Islam as inevitably hostile not only to America and Western countries, but also to human rights. This has bred more fear and mistrust.

So long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace, and who promote conflict rather than the cooperation that can help all of our people achieve justice and prosperity. This cycle of suspicion and discord must end...

This is our President at his best. He thoughtfully describes the contours of a complicated issue in a way that most observers would recognize as mostly fair and comprehensive.

The "mostly" modifier is due to the claim of centuries of co-existence. The claim is no doubt simply true (bloody co-existence is still co-existence). However, "co-existence" may be meant to bring to mind "peaceful co-existence", which, so far as I can tell, is historical fiction.

I do so recognizing that change cannot happen overnight. No single speech can eradicate years of mistrust, nor can I answer in the time that I have all the complex questions that brought us to this point...

This is our President at his not-so best. As if, if only given more time and speeches, he could eradicate years of mistrust and answer all the relevant complex questions.

Part of this conviction is rooted in my own experience. I am a Christian, but my father came from a Kenyan family that includes generations of Muslims. As a boy, I spent several years in Indonesia and heard the call of the azaan at the break of dawn and the fall of dusk. As a young man, I worked in Chicago communities where many found dignity and peace in their Muslim faith.

Pettily: It is easy to suspect that the "I am a Christian", was a late, political, addition.

As a student of history, I also know civilization's debt to Islam. It was Islam - at places like Al-Azhar University - that carried the light of learning through so many centuries, paving the way for Europe's Renaissance and Enlightenment. It was innovation in Muslim communities that developed the order of algebra; our magnetic compass and tools of navigation; our mastery of pens and printing; our understanding of how disease spreads and how it can be healed. Islamic culture has given us majestic arches and soaring spires; timeless poetry and cherished music; elegant calligraphy and places of peaceful contemplation. And throughout history, Islam has demonstrated through words and deeds the possibilities of religious tolerance and racial equality...

It is a simple fact of political life, that a speaker cannot mention Islam without acknowledging the great achievements of Muslims (mostly) centuries ago. What makes this not entirely harmless is that most such lists -- including this -- are composed of the achievements produced via the interaction of many cultures -- including Ancient Mediterranean, Chinese and Indian.

So I have known Islam on three continents before coming to the region where it was first revealed. That experience guides my conviction that partnership between America and Islam must be based on what Islam is, not what it isn't. And I consider it part of my responsibility as President of the United States to fight against negative stereotypes of Islam wherever they appear

But that same principle must apply to Muslim perceptions of America. Just as Muslims do not fit a crude stereotype, America is not the crude stereotype of a self-interested empire. The United States has been one of the greatest sources of progress that the world has ever known. We were born out of revolution against an empire. We were founded upon the ideal that all are created equal, and we have shed blood and struggled for centuries to give meaning to those words - within our borders, and around the world. We are shaped by every culture, drawn from every end of the Earth, and dedicated to a simple concept: E pluribus unum: "Out of many, one."

Much has been made of the fact that an African-American with the name Barack Hussein Obama could be elected President. But my personal story is not so unique. The dream of opportunity for all people has not come true for everyone in America, but its promise exists for all who come to our shores - that includes nearly seven million American Muslims in our country today who enjoy incomes and education that are higher than average...

It is easy to quibble with the silly claim that part of the responsibility of the PotUS is to fight against negative stereotypes of Islam, but he what he asks for in return is more valuable then what he offers.

The situation in Afghanistan demonstrates America's goals, and our need to work together. Over seven years ago, the United States pursued al Qaeda and the Taliban with broad international support. We did not go by choice, we went because of necessity. I am aware that some question or justify the events of 9/11. But let us be clear: al Qaeda killed nearly 3,000 people on that day. The victims were innocent men, women and children from America and many other nations who had done nothing to harm anybody. And yet Al Qaeda chose to ruthlessly murder these people, claimed credit for the attack, and even now states their determination to kill on a massive scale. They have affiliates in many countries and are trying to expand their reach. These are not opinions to be debated; these are facts to be dealt with...

Volumes are spoken, I think, by the fact that the President, and his advisors, felt it necessary to acknowledge those who question or justify the attacks of 9/11 and to defend the proposition that they were not right.

We also know that military power alone is not going to solve the problems in Afghanistan and Pakistan. That is why we plan to invest $1.5 billion each year over the next five years to partner with Pakistanis to build schools and hospitals, roads and businesses, and hundreds of millions to help those who have been displaced. And that is why we are providing more than $2.8 billion to help Afghans develop their economy and deliver services that people depend upon...

One fact to be dealt with that the President ought to have recognized from the financial bailouts: When you start handing out money, people start lining up to get their cut. There are people in Egypt who are, no doubt, wondering who they have to kill to get their share of the "not-by-military-power-alone" fund.

The sooner the extremists are isolated and unwelcome in Muslim communities, the sooner we will all be safer...

Perhaps the most interesting sub-texts of the speech, to me, is the "or else" always hanging overhead, every now and then poking its nose. In this case (implicitly): Muslims will not be safer until extremists are unwelcome in Muslim communities.

Those who judge the new President as soft on terror ought consider: Obama has sort of painted himself in a corner -- by undoing policies the previous administration considered necessary to keep us safe and by groveling before those who generally wish us no good -- where he will have little choice but to over-react if there is another 9/11 style terrorist attack, with many of those who hamstrung the previous administration's aggression, likely cheer-leading.

The second major source of tension that we need to discuss is the situation between Israelis, Palestinians and the Arab world.

America's strong bonds with Israel are well known. This bond is unbreakable. It is based upon cultural and historical ties, and the recognition that the aspiration for a Jewish homeland is rooted in a tragic history that cannot be denied.

Around the world, the Jewish people were persecuted for centuries, and anti-Semitism in Europe culminated in an unprecedented Holocaust. Tomorrow, I will visit Buchenwald, which was part of a network of camps where Jews were enslaved, tortured, shot and gassed to death by the Third Reich. Six million Jews were killed - more than the entire Jewish population of Israel today. Denying that fact is baseless, ignorant, and hateful. Threatening Israel with destruction - or repeating vile stereotypes about Jews - is deeply wrong, and only serves to evoke in the minds of Israelis this most painful of memories while preventing the peace that the people of this region deserve...

This sort of narrative is for the benefit of American Jewish voters, not Muslims. Muslims, as I think the President well knows, readily dismiss the narrative with the on-the-surface-sensible argument "why should Palestinians suffer for the crimes of Europe?"

If the President wanted to argue for the Jewish Homeland to Muslims, he would have both identified Israel as the ancestral and spiritual homeland of the Jewish people and, gently, reminded them that anti-semitism was not a purely European phenomena. The Spanish Jewish/Muslim "Golden Age" ended, violently, a long/long time ago (Jews, for example Maimonadies' family, were forced from Muslim Spain centuries before they were forced from Christian Spain). In the almost thousand years since then the treatment of Jews (and other minorities) in Muslim lands is not characterized by tolerance (a point he does make later in the speech to further a different argument). Since "what we share is more important then what divides us" is a great theme of this speech, it would have been appropriate to note that a history of violent anti-semitism is something Christians and Muslims share.

More Directly to the point: Israel is more a product of Muslim, than Christian, anti-semitism. A majority of Israeli Jews are the descendants of refugees from Muslim, not European, countries. Historically, early Zionism was divided between "cultural" -- who wanted only to build Jewish communities, but not a Jewish state, in our ancestral homeland -- and "political" -- who wanted to build a Jewish state -- branches. After the recurring Arab massacres of Jews in the early years of peaceful Jewish settlement, it became clear that growing Jewish communities in the Holy Land was not possible without a state to protect them. Even today, in the end, the ultimate necessity for the preservation of Jewish State (as opposed to an "Israelstine"), for the many Israelis who no longer identify themselves much as Zionists, is simply that, for good reason, nobody believes that Jews would be treated justly in a majority Arab state.

At the same time, Israelis must acknowledge that just as Israel's right to exist cannot be denied, neither can Palestine's. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop.

I have already discussed the red herring that the settlement "issue" is. The only things I have to add are that (a) I am not sure if/when any Israeli leader agreed to halt "natural growth" (if that is what Obama is referring to) and (b) [WARNING: CHEAP SHOT AHEAD] that given his personal background, perhaps Obama's choice of phrase, questioning the legitimacy of the settlements was intended as a statement of solidarity!

Israel must also live up to its obligations to ensure that Palestinians can live, and work, and develop their society. And just as it devastates Palestinian families, the continuing humanitarian crisis in Gaza does not serve Israel's security; neither does the continuing lack of opportunity in the West Bank. Progress in the daily lives of the Palestinian people must be part of a road to peace, and Israel must take concrete steps to enable such progress...

The implication here is that the Israelis do not recognize the need to improve the economic situation in the Palestinian territories. The reality, of course, is that Bibi has, since his election, prioritized that need above all else. This misrepresentation by Obama is an odd strategy if bringing Israelis and Palestinians together in peace is his goal.

The Talmud, describes Aaron, the paradigmatic Peace-Maker, as "tricking" opposing parties into believing that their rival's intentions were less malign then they, in truth, were. Obama, if peace is his goal, apparently believes the opposite move is the play.

America will align our policies with those who pursue peace, and say in public what we say in private to Israelis and Palestinians and Arabs. We cannot impose peace. But privately, many Muslims recognize that Israel will not go away. Likewise, many Israelis recognize the need for a Palestinian state. It is time for us to act on what everyone knows to be true...

Obama here continues his anti-Aaron strategy. The reality is, of course, more than "many Israelis recognize the need for a Palestinian state": The democratically elected government of Israel led, then, by Ehud Barack, accepted one. Further, an important point conscience-ly obscured by Obama's language: While some Israelis who "recognize the need for a Palestinian state" do so on pragmatic grounds, many recognize the moral need. The same language implicitly acknowledges that Muslims, even privately, generally refuse to recognize any moral need for the Jewish Homeland. At best, "many" "recognize" that Israel will not go away. Many others, of course -- the Government of Iran, for example -- have no such recognition.

It worth noting, by contrast, the "Aaron Strategy" is employed vis-a-vis the Israelis. On the basis of scanty, at best, evidence, and in the face of substantive evidence to the contrary, it is repeatedly asserted from near every quarter that Palestinians generally wish to live in peace with the Jewish State. I have a hard time understanding, then, why the President, and his advisors, thought it wise to describe Israeli intentions to Muslims as being more malign than they, in truth, are.

This mis-reflection may simply be the product of a President without clear understanding of the terrain himself, who is surrounded, on the ground, by an army of "progressive" staffers with deep abiding hostility towards the Jewish State. At the very least, it serves to strengthen the fear that the Administrations aim is not so much to bring true peace, as to win Muslim favor by "selling out" Israelis.

For many years, Iran has defined itself in part by its opposition to my country, and there is indeed a tumultuous history between us. In the middle of the Cold War, the United States played a role in the overthrow of a democratically-elected Iranian government...

The implicit characterization of Mosadeqq as a democrat is revolting on so many levels, but is, perhaps, a necessary part of the approach/argument the President is taking/making.

This last point is important because there are some who advocate for democracy only when they are out of power; once in power, they are ruthless in suppressing the rights of others. No matter where it takes hold, government of the people and by the people sets a single standard for all who hold power: you must maintain your power through consent, not coercion; you must respect the rights of minorities, and participate with a spirit of tolerance and compromise; you must place the interests of your people and the legitimate workings of the political process above your party. Without these ingredients, elections alone do not make true democracy...

This is a particularly well-crafted argument by the President. The danger of Muslim-Democracy has always been that the Muslim Brotherhoods or Hamases always threaten to win elections. The President well-used his bully pulpit here.

All these things must be done in partnership. Americans are ready to join with citizens and governments; community organizations, religious leaders, and businesses in Muslim communities around the world to help our people pursue a better life.

The issues that I have described will not be easy to address. But we have a responsibility to join together on behalf of the world we seek - a world where extremists no longer threaten our people, and American troops have come home; a world where Israelis and Palestinians are each secure in a state of their own, and nuclear energy is used for peaceful purposes; a world where governments serve their citizens, and the rights of all God's children are respected. Those are mutual interests. That is the world we seek. But we can only achieve it together.

I know there are many - Muslim and non-Muslim - who question whether we can forge this new beginning. Some are eager to stoke the flames of division, and to stand in the way of progress. Some suggest that it isn't worth the effort - that we are fated to disagree, and civilizations are doomed to clash. Many more are simply skeptical that real change can occur. There is so much fear, so much mistrust. But if we choose to be bound by the past, we will never move forward. And I want to particularly say this to young people of every faith, in every country - you, more than anyone, have the ability to remake this world.

All of us share this world for but a brief moment in time. The question is whether we spend that time focused on what pushes us apart, or whether we commit ourselves to an effort - a sustained effort - to find common ground, to focus on the future we seek for our children, and to respect the dignity of all human beings.

It is easier to start wars than to end them. It is easier to blame others than to look inward; to see what is different about someone than to find the things we share. But we should choose the right path, not just the easy path. There is also one rule that lies at the heart of every religion - that we do unto others as we would have them do unto us. This truth transcends nations and peoples - a belief that isn't new; that isn't black or white or brown; that isn't Christian, or Muslim or Jew. It's a belief that pulsed in the cradle of civilization, and that still beats in the heart of billions. It's a faith in other people, and it's what brought me here today.

We have the power to make the world we seek, but only if we have the courage to make a new beginning, keeping in mind what has been written.

The Holy Koran tells us, "O mankind! We have created you male and a female; and we have made you into nations and tribes so that you may know one another."

The Talmud tells us: "The whole of the Torah is for the purpose of promoting peace."

The Holy Bible tells us, "Blessed are the peacemakers, for they shall be called sons of God."

The people of the world can live together in peace. We know that is God's vision. Now, that must be our work here on Earth. Thank you. And may God's peace be upon you.

This final flourish is, simply, spectacular.

There is a certain danger in all this, however. Hypocrisy is, in Islam, a big deal. Muslims will likely be very sensitive -- in a way that Americans have thus far not been -- to the perception that Obama's actions do not match his words.

Government Motors

U.S. role at GM to be passive, Obama vows

President Obama said Monday that the U.S. government had no interest in taking an ownership stake in General Motors Corp. But faced with two other bad options -- letting the legendary automaker fail or simply extending more government loans that would add to the company's strangling debt burden -- he had no choice...

But Obama's decision to take the unprecedented step of assuming ownership of a major manufacturing company opened him up to sharp criticism that he was nationalizing the automaker. The Republican National Committee quickly dubbed the company "Government Motors."

"No matter how much the president spins GM's bankruptcy as good for the economy, it is nothing more than another government grab of a private company and another handout to the union cronies who helped bankroll his presidential campaign," Republican National Committee Chairman Michael Steele said...

Obama directly rejected criticism from some small bondholders that the United Auto Workers union received a more generous deal in exchange for giving up some of the debt GM owes to a retiree healthcare trust.

But Mark Modica, 48, business manager at a Saturn dealership in Doylestown, Pa., said he thought the UAW did better than small bondholders like him...

"We have retirees on our side who are losing their retirement, but it seems like the retirement of the people in the union is being protected," he said. "I don't think there's a doubt there was preferential treatment."

Despite Obama's vow to be a hands-off investor, the government's majority interest in GM opens up the White House to political pressures on key company decisions. The auto task force has already been lobbied by some members of Congress who want to keep GM plants in their districts open.

Other legislators are pushing back against the plans by GM and Chrysler, which the administration also forced into bankruptcy, to ax hundreds of dealers...

But the Obama administration said its ownership of GM won't extend to operational decisions. Those will be left to the company's board, a majority of which the administration will choose from seasoned business executives...

The notion that the government is merely a passive investor is, of course, a fiction. Management may have nominal freedom to make decisions, but nobody needs to be explicitly told where the bread is buttered.

The charge that Obama rewarded UAW retirees -- who many Americans blame for the collapse of GM -- at the expense of less politically savvy retirees, will, I think be very effective politically as faces are put on the dis-favored class.

The more interesting, to my mind, political exposure for Obama is his call for smaller, greener cars. Most Americans, in particular those in sub-, or ex-, urbia with families need bigger cars. The Prius is a car for urban singles. If three years from now family-sized cars are more expensive, or harder to come by, it will be easy to blame the President. This sort of attack stands to be particular effective given its easy relation to many existing lines of attack: Democrats being over-eagerness to intervene+politicize the free market/make choices for people, Democrats lacking understanding of family values, etc.

Republicans would be wise to be careful to avoid statements predicting the GM's failure. GM's failure is in no one's interest, and rooting for it is dangerous politically. Further, should GM succeed it ought not become an excuse, or template, for further, more expansive, politicization of the economy. It is, of course, far from clear at the moment, that "republican" and "wise" are two words that can be safely joined in a sentence.

Dinner and a Movie

The cost of a NYC weekend

In another odd twist left unexamined by the media, the White House on Monday said it simply would not release the cost of President Obama's weekend jaunt to New York City, where the First Couple had dinner and caught a Broadway show.

Spokesman Robert Gibbs, keeping the White House press corps in stiches, as he always does, said the Obamas would have preferred using a commercial airline shuttle to New York and back, but the Secret Service would not allow such unprotected travel (ba da bing)...

There was, of course, an ironic element of the trip. In February, Obama scolded corporate executives (while also costing Las Vegas some $130 million) when he said: "You can't get corporate jets. You can't go take a trip to Las Vegas, or go down to the Super Bowl on the taxpayers' dime."
...
One early estimate (from the New York Post) put the cost at $24,000. Absurdly low. The Daily Mail in London threw out another number — $75,000. Sure, three times as much as the first estimate, but still probably spectacularly low. Remember, joyriding Air Force One around for a few hours over Manhattan a couple months ago cost $250,000, so the cost of the weekend trip was likely not likely that low.

It was some feat by the White House press handlers to get the $25,000 number out there first if the true number was more then a factor of 10 times that.

It is unreasonable to condemn this date night and demand that the President never engage in personal activity. It is quite reasonable to demand that such expenditures are made transparently. Voters are surely owed that much.