Archive for the ‘Brooks’ Category

Brooks and Krugman

October 24, 2014

In “The Working Nation” Bobo gurgles that there is a clear agenda for job growth that can materially and spiritually reinvigorate America. We just need to be willing to pursue it.  In the comments “Karen Garcia” from New Paltz, NY had this to say:  “Thatcher and Reagan leapt from the stagnant pond of their own self-absorption and left the rest of us to slowly drown in whole oceans full of plutocratic effluent.  That Brooks gives credence to Michael Strain’s cynical “all you need is a bus ticket and a dream” advice to the unemployed actually strains credulity. But what would reading a Brooks column be without the voluntary suspension of disbelief and a sense of humor?”  In “Plutocrats Against Democracy” Prof. Krugman says that the desire to suppress the vote in Hong Kong isn’t really so different from the agenda of the political right in the United States.  Here’s Bobo:

During the Cold War era, Western economies delivered broad and growing prosperity for the middle class. This nurtured a general faith in political institutions and culminated in the democratic triumphalism of the 1990s.

In a new essay called “The New Challenge to Market Democracies,” William Galston of the Brookings Institution argues that this era is over. In Europe, growth has stagnated and unemployment is at catastrophic levels, especially for the young. Japan is afflicted with economic stagnation and demographic decline. In the United States, the middle class is hollowing out. The median annual earnings of workers with bachelor’s degrees have not increased in three decades.

A tree known by its fruit, democratic capitalism, Galston observes, has not produced the expected crop. This has led to a loss of confidence in the regime. Galston’s essay is about how economic problems degrade the national spirit and lead to a loss of faith in the whole enterprise.

I think the malaise can be pinned down more precisely. In our meritocratic culture, satisfying and stretching work has become a psychological necessity. More than ever before, we are defined by what we do. If you are of prime age and you are not in the labor force, or engaged in some deeply stretching activity like parenting, then you will begin to feel drained inside. If you are in a dysfunctional workplace with bad personal relationships and no clear purpose, a core piece of you will begin to degrade. If you are not earning enough money so you can feel respected, and live without desperate stress, you will begin to lose confidence and élan.

And that is what’s happening today. The labor force participation rate is at its lowest in decades. Millions are in part-time or low-wage jobs that don’t come close to fulfilling their capacities. Millions more are in dysfunctional or unhealthy workplaces, but they don’t feel they can leave because they don’t think there are other jobs out there that pay the same amount.

The country is palpably in the middle of some sort of emotional recession. Yet over the past five years, the political class has done essentially nothing. That will fill future generations with astonishment and should fill the current generation with rage.

It is precisely at this moment that leaders are called upon leap past the current moment and to point the way to the sun-drenched path ahead. You may disagree with every policy they ever uttered, but Ronald Reagan and Margaret Thatcher leapt beyond the stagnant mood of the late 1970s.

If you get outside the partisan boxes, there’s a completely obvious agenda to create more middle-class, satisfying jobs. The federal government should borrow money at current interest rates to build infrastructure, including better bus networks so workers can get to distant jobs. The fact that the federal government has not passed major infrastructure legislation is mind-boggling, considering how much support there is from both parties.

Other shifts are more fundamental, but should be the signature themes of the next political era. First, the government should reduce its generosity to people who are not working but increase its support for people who are. That means reducing health benefits for the affluent elderly. But it means, as Michael Strain of the American Enterprise Institute recommends, increasing wage subsidies when employers hire the long-term unemployed and issuing relocation subsidies so people in high unemployment areas can move.

Second, the tax code could do a lot more to encourage work and investment. Ideally, we’d move to a progressive consumption tax. But at least we could have the sort of tax reform that Senators Marco Rubio and Mike Lee have suggested, which would simplify the code while subsidizing middle-class families. The fact that Washington hasn’t even made a run at serious tax reform is another sign of utter political malpractice.

Third, the immigration system should turn into a talent recruiting system, a relentless effort to get the world’s most gifted and driven people to move to our shores.

Fourth, there has to be a doubling-down on human capital, from early-education programs to community colleges and beyond. Today, too many people are focused on the top 1 percent. But, as economist David Autor has shown, if you took all the wealth gains the top 1 percent made between 1979 and 2012 and spread it to the bottom 99 percent, each household would get a payment of only $7,000. But if you take a two-earner, high-school-educated couple and get them college degrees, their income goes up by $58,000 per year. Inequality is mostly a human capital problem.

This isn’t rocket science. Vast majorities support every idea I’ve mentioned here. It just takes a relentless focus on job creation, bold political leadership and a country willing to be shaken out of its fear.

I love the way he says “only $7,000.”  Just because it’s chump change to you, Bobo, doesn’t mean that it couldn’t save people from bankruptcy.  Cripes, but he’s a jerk.  Here’s Prof. Krugman:

It’s always good when leaders tell the truth, especially if that wasn’t their intention. So we should be grateful to Leung Chun-ying, the Beijing-backed leader of Hong Kong, for blurting out the real reason pro-democracy demonstrators can’t get what they want: With open voting, “You would be talking to half of the people in Hong Kong who earn less than $1,800 a month. Then you would end up with that kind of politics and policies” — policies, presumably, that would make the rich less rich and provide more aid to those with lower incomes.

So Mr. Leung is worried about the 50 percent of Hong Kong’s population that, he believes, would vote for bad policies because they don’t make enough money. This may sound like the 47 percent of Americans who Mitt Romney said would vote against him because they don’t pay income taxes and, therefore, don’t take responsibility for themselves, or the 60 percent that Representative Paul Ryan argued pose a danger because they are “takers,” getting more from the government than they pay in. Indeed, these are all basically the same thing.

For the political right has always been uncomfortable with democracy. No matter how well conservatives do in elections, no matter how thoroughly free-market ideology dominates discourse, there is always an undercurrent of fear that the great unwashed will vote in left-wingers who will tax the rich, hand out largess to the poor, and destroy the economy.

In fact, the very success of the conservative agenda only intensifies this fear. Many on the right — and I’m not just talking about people listening to Rush Limbaugh; I’m talking about members of the political elite — live, at least part of the time, in an alternative universe in which America has spent the past few decades marching rapidly down the road to serfdom. Never mind the new Gilded Age that tax cuts and financial deregulation have created; they’re reading books with titles like “A Nation of Takers: America’s Entitlement Epidemic,” asserting that the big problem we have is runaway redistribution.

This is a fantasy. Still, is there anything to fears that economic populism will lead to economic disaster? Not really. Lower-income voters are much more supportive than the wealthy toward policies that benefit people like them, and they generally support higher taxes at the top. But if you worry that low-income voters will run wild, that they’ll greedily grab everything and tax job creators into oblivion, history says that you’re wrong. All advanced nations have had substantial welfare states since the 1940s — welfare states that, inevitably, have stronger support among their poorer citizens. But you don’t, in fact, see countries descending into tax-and-spend death spirals — and no, that’s not what ails Europe.

Still, while the “kind of politics and policies” that responds to the bottom half of the income distribution won’t destroy the economy, it does tend to crimp the incomes and wealth of the 1 percent, at least a bit; the top 0.1 percent is paying quite a lot more in taxes right now than it would have if Mr. Romney had won. So what’s a plutocrat to do?

One answer is propaganda: tell voters, often and loudly, that taxing the rich and helping the poor will cause economic disaster, while cutting taxes on “job creators” will create prosperity for all. There’s a reason conservative faith in the magic of tax cuts persists no matter how many times such prophecies fail (as is happening right now in Kansas): There’s a lavishly funded industry of think tanks and media organizations dedicated to promoting and preserving that faith.

Another answer, with a long tradition in the United States, is to make the most of racial and ethnic divisions — government aid just goes to Those People, don’t you know. And besides, liberals are snooty elitists who hate America.

A third answer is to make sure government programs fail, or never come into existence, so that voters never learn that things could be different.

But these strategies for protecting plutocrats from the mob are indirect and imperfect. The obvious answer is Mr. Leung’s: Don’t let the bottom half, or maybe even the bottom 90 percent, vote.

And now you understand why there’s so much furor on the right over the alleged but actually almost nonexistent problem of voter fraud, and so much support for voter ID laws that make it hard for the poor and even the working class to cast ballots. American politicians don’t dare say outright that only the wealthy should have political rights — at least not yet. But if you follow the currents of thought now prevalent on the political right to their logical conclusion, that’s where you end up.

The truth is that a lot of what’s going on in American politics is, at root, a fight between democracy and plutocracy. And it’s by no means clear which side will win.

Brooks, Cohen and Nocera

October 21, 2014

Bobo thinks he’s going to tell us all about “The Quality of Fear.”  He babbles that the reaction nationally to Ebola is rooted in weaknesses in our cultural fabric.  I’m sure that the ginning up of pants-pissing terror by the media has nothing to do with anything…  Mr. Cohen, in “China Versus America,” ‘splains how Chinese “harmony” and American “freedom” produce the dangerous clash of two exceptionalisms.  Mr. Nocera, in “A World Without OPEC?”, thinks he knows how the shale revolution has weakened the power of the oil cartel.  In the comments “sdavidc9″ from Cornwall had this to say:  “To write an article on the future of oil without mentioning global warming is oh so Republican. We are fighting over seating arrangements on the Titanic.”  Here’s Bobo:

There’s been a lot of tut-tutting about the people who are overreacting to the Ebola virus. There was the lady who showed up at the airport in a homemade hazmat suit. There were the hundreds of parents in Mississippi who pulled their kids from school because the principal had traveled to Zambia, a country in southern Africa untouched by the Ebola outbreak in the western region of the continent. There was the school district in Ohio that closed a middle school and an elementary school because an employee might have flown on the same plane (not even the same flight) as an Ebola-infected health care worker.

The critics point out that these people are behaving hysterically, all out of proportion to the scientific risks, which, of course, is true. But the critics misunderstand what’s going on here. Fear isn’t only a function of risk; it’s a function of isolation. We live in a society almost perfectly suited for contagions of hysteria and overreaction.

In the first place, we’re living in a segmented society. Over the past few decades we’ve seen a pervasive increase in the gaps between different social classes. People are much less likely to marry across social class, or to join a club and befriend people across social class.

That means there are many more people who feel completely alienated from the leadership class of this country, whether it’s the political, cultural or scientific leadership. They don’t know people in authority. They perceive a vast status gap between themselves and people in authority. They may harbor feelings of intellectual inferiority toward people in authority. It becomes easy to wave away the whole lot of them, and that distrust isolates them further. “What loneliness is more lonely than distrust,” George Eliot writes in “Middlemarch.”

So you get the rise of the anti-vaccine parents, who simply distrust the cloud of experts telling them that vaccines are safe for their children. You get the rise of the anti-science folks, who distrust the realm of far-off studies and prefer anecdotes from friends to data about populations. You get more and more people who simply do not believe what the establishment is telling them about the Ebola virus, especially since the establishment doesn’t seem particularly competent anyway.

Second, you’ve got a large group of people who are bone-deep suspicious of globalization, what it does to their jobs and their communities. Along comes Ebola, which is the perfect biological embodiment of what many fear about globalization. It is a dark insidious force from a mysterious place far away that seems to be able to spread uncontrollably and get into the intimate spheres of life back home.

Third, you’ve got the culture of instant news. It’s a weird phenomenon of the media age that, except in extreme circumstances, it is a lot scarier to follow an event on TV than it is to actually be there covering it. When you’re watching on TV, you only see the death and mayhem. But when you’re actually there, you see the broader context of everyday life going on alongside. Studies of the Boston Marathon bombing found that people who consumed a lot of news media during the first week suffered more stress than people who were actually there.

Fourth, you’ve got our culture’s tendency to distance itself from death. Philip Roth once wrote: “In every calm and reasonable person there is a hidden second person scared witless about death.” In cultures where death is more present, or at least dealt with more commonly, people are more familiar with that second person, and people can think a bit more clearly about risks of death in any given moment.

In cultures where people deal with death by simply getting it out of their minds, the prospect of sudden savage death, even if extremely unlikely, can arouse a mental fog of fear, and an unmoored and utopian desire to want to reduce the risk of early death to zero, all other considerations be damned.

Given all these conditions, you wind up with an emotional spiral that develops its own momentum.

The Ebola crisis has aroused its own flavor of fear. It’s not the heart-pounding fear you might feel if you were running away from a bear or some distinct threat. It’s a sour, existential fear. It’s a fear you feel when the whole environment seems hostile, when the things that are supposed to keep you safe, like national borders and national authorities, seem porous and ineffective, when some menace is hard to understand.

In these circumstances, skepticism about authority turns into corrosive cynicism. People seek to build walls, to pull in the circle of trust. They become afraid. Fear, of course, breeds fear. Fear is a fog that alters perception and clouds thought. Fear is, in the novelist Yann Martel’s words, “a wordless darkness.”

Ebola is a treacherous adversary. It’s found a weakness in our bodies. Worse, it exploits the weakness in the fabric of our culture.

Go change your underwear, Bobo…  Here’s Mr. Cohen, writing from Singapore:

Let us take it as a given that the post-1945 world order with the United States as dominant nation has begun to unravel, that China is rising to inherit the earth, that the unease of our times has much to do with that difficult transition, and that violent conflict is a normal accompaniment to the passing of the baton from one great power to the next. America stood tall at the end of World War II. It also stood on a vast field of corpses.

Let us further posit the far-fetched hypothesis that humankind has learned from history. It must then be determined to avoid another conflagration. Happy talk of hyper-connectivity is not enough. The dream of the victory of enlightened self-interest in the name of the collective good on a shrinking planet was an ephemeral late 20th-century illusion. What will matter above all is the capacity of the United States and China to avoid fatal misunderstanding. In a state of mutual incomprehension, clashing interests will escalate.

How far China and America are from understanding each other became clear to me the other day as I listened to George Yeo, the former Singaporean foreign minister. He set out his view of the United States as a “missionary” power filled with the righteous conviction that it must usher the earth to liberty and democracy, and of China as an anti-missionary power convinced by its own bitter experience of foreign domination that nonintervention in the affairs of other states is a necessary form of respect. Far from cynical exploitation, Yeo argued, China’s non-judgmental approach to other powers was above all a reflection of its own history, a form of moral rectitude. The West’s perception of Chinese bullying and ruthless mercantilism was just plain wrong.

Yeo is a highly intelligent and thoughtful man with a deep knowledge of China and considerable experience of life in America. I can’t help seeing cynicism in China’s readiness to extract resources from the realms of dictators or democrats and its unreadiness to do as much as America in stopping Ebola or the killers who call themselves Islamic State. I am sure that, for President Xi Jinping of China, the sight of America getting enmeshed in another Middle Eastern skirmish has its satisfactions. But Yeo made me wonder. Can the missionary mindset begin to comprehend the non-missionary worldview, or even accept such categorization?

The core problem is two forms of exceptionalism, the American and the Chinese. The United States is an idea as well as a nation. Americans, even in a battle-scarred inward-looking moment such as the present, are hard-wired to the notion of their country as a beacon to humanity. President Obama’s foreign policy is unpopular in part because he has interpreted a popular desire to regroup as license to be satisfied with hitting singles and avoiding strike-outs. That is the attitude of an unexceptional nation, which can never be America’s self-image.

But Chinese exceptionalism is no less powerful. It holds up China as a uniquely non-expansionist power over millennia of history, bringing harmony in a Confucian expression of its benevolence — a China standing in contrast to the predatory West. The Communist Party, with its mantra of “peaceful rise,” has fashioned an effective pillar of its ideology through the integration of Middle Kingdom thought. As Joe Studwell, the author of “How Asia Works,” put it to me in an e-mail, the party with “not much socialism to cling to, has reached into Middle Kingdom exceptionalism by resurrecting Confucius, starting Confucius Institutes all over the world.” The result, as Yuan-kang Wang, an associate professor at Western Michigan University, has written in Foreign Policy, is a widespread belief in “historical China as a shining civilization in the center of All-under-Heaven, radiating a splendid and peace-loving culture.”

Exceptionalism, in all its forms, is tenacious. Tell Tibetans about China’s peace-loving culture. Tell Iraqis about America’s dedication to liberty. The contradictions, and failings, within the beliefs do not diminish them. I believe, still, in the overall beneficence of American power, the fundamental yearning of the human spirit for freedom, and the unique American identification with that desire. Xi’s clampdown on the Internet, his attempt to clean up corruption when corruption must be endemic to any one-party state, his expansionism in the South China Sea, and his difficulties with a stubborn pro-democracy movement in Hong Kong all strike me as demonstrating the internal contradictions of “harmony” and “peace” within a Chinese system that has generated prosperity but increasingly stifles the open debate more prosperous people want.

Europeans, with their experience of 20th-century devastation, would argue that all forms of exceptionalism are dangerous, the missionary and non-missionary equally so. They have settled for less in the interests of quiet. America and China will not do that in the foreseeable future, and so their relationship must be viewed with guarded pessimism. In war’s aftermath there are no exceptions to human suffering.

And now we get to Gunga Din:

Forty-one years ago this month, the Arab oil embargo began. The countries that were part of it belonged, of course, to the Organization of Petroleum Exporting Countries — OPEC — which had banded together 13 years earlier to strengthen their ability to negotiate with international oil companies. The embargo led to widespread shortages in the United States, higher prices at the gas pump and long lines at gas stations. By the time it ended, the price of oil had risen to $12 a barrel from $3.

Perhaps more important than the price increases themselves was the new world order the embargo signaled. The embargo “set in motion geopolitical circumstances that eventually allowed [OPEC] to wrest control over global oil production and pricing from the giant international oil companies — ushering in an era of significantly higher oil prices,” as Amy Myers Jaffe and Ed Morse noted in an article in Foreign Policy magazine that was published last year at the 40th anniversary. Twice a year, OPEC’s oil ministers would meet in Vienna, where they would set oil policy — deciding to either hold back or increase oil production. There was always cheating among members, but there was usually enough discipline in the ranks to keep prices more or less where OPEC wanted them.

As it happens, the title of that Foreign Policy article was “The End of OPEC.” Jaffe and Morse are both global energy experts — she is the executive director of Energy and Sustainability at the University of California, Davis, and he is the global head of commodities research at Citigroup — who say that if America plays its cards right, OPEC’s dominance over the oil market could be over. I think that day may have already arrived.

“OPEC is not going to survive another 50 years,” Morse told me. “It probably won’t even survive another 10. It has become extremely difficult for them to forge an agreement.”

When Morse and Jaffe wrote their article last year, the price of oil was more than $100 a barrel. Today, the per-barrel price is in the low- to mid-$80s. It has dropped more than 25 percent since June. There was a time when $80 a barrel would have been more than satisfactory for OPEC members, but those days are long gone. Venezuela’s budgetary needs requires that it sell its oil at well above $100 a barrel. The Arab Spring prompted a number of important OPEC members — including Saudi Arabia and the United Arab Emirates — to increase budgetary spending to keep their own populations quiescent. According to the International Monetary Fund, the United Arab Emirates needs a price of more than $80 to meet its budgetary obligations. That’s up from less than $25 a barrel in 2008.

Not long ago, Venezuela asked for an emergency OPEC meeting to discuss decreasing production. Iran has said that such a meeting is unnecessary. Meanwhile, Saudi Arabia has made it clear that it is primarily concerned with not losing market share, so it will continue to pump out oil regardless of the needs of other OPEC members. This is not exactly cartel-like behavior. The next OPEC meeting is scheduled for late November, but there is little likelihood of an agreement.

And why does OPEC suddenly find itself in such disarray? Simply put, the supply of oil is greater than the demand, and OPEC has lost its ability to control the supply. Part of the reason is a slowdown in global demand. China’s economy has slowed, and so has its voracious appetite for oil. Japan, meanwhile, is increasingly turning to natural gas and nuclear power.

But an even bigger part of the reason is that the shale revolution in North America is utterly changing the supply-demand dynamic. Since 2008, says Bernard Weinstein, an energy expert at Southern Methodist University, oil production in the United States is up 60 percent. That’s an additional three million barrels a day. Within a few years, predicts Morse, America will overtake Russia and Saudi Arabia and become the world’s largest oil producer.

What’s more, according to another article Morse wrote, this one for Foreign Affairs magazine, “the costs of finding and producing oil and gas in shale and tight rock formations are steadily going down and will drop even more in the years to come.” In other words, the American energy industry might well be able to withstand further price drops easier than OPEC members.

When I got Jaffe on the phone, I asked her if she thought OPEC was a spent force. “You can never say never,” she replied, and then laid out a few dire scenarios — mostly revolving around oil fields being bombed or attacked — that might make supply scarce again. But barring that, this is a moment we’ve long been waiting for. Thanks to the shale revolution, OPEC has become a paper tiger.

Brooks and Krugman

October 17, 2014

In “The Case for Low Ideals” Bobo gurgles that the idealism of President Obama’s 2008 campaign seems foolish now, but idealism, a different kind, still has a place in American politics.  In the comments “Diana Moses” of Arlington, Mass. had this to say:  “I found myself trying to put my finger on why this column comes across to me as self-serving. I guess it sounds to me as though the writer is basically saying, “The system works for me, too bad if it doesn’t for you.” ”  Exactly.  It’s FYIGM.  Prof. Krugman, in “What Markets Will,” says the financial turmoil of the past few days, especially in Europe, has policy crusaders again sure that they know what the markets are asking for.  Here’s Bobo:

Let’s say you came of political age during Barack Obama’s 2008 campaign. Maybe you were swept up in the idealism. But now you’ve seen an election driven by hope give way to an election driven by fear. Partisans are afraid the other side might win. Candidates are pawns of the consultants because they’re afraid of themselves. Everybody’s afraid of the Ebola virus, ISIS and the fragile economy.

The politics of the last few years have made you disappointed, disillusioned and cynical. You look back at your earlier idealism as cotton candy.

Well, I’m here to make the case for political idealism.

I’m not making the case for the high idealism that surrounded that 2008 campaign. It was based on the idea that people are basically innocent and differences can be quickly transcended. It was based on the idea that society is easily malleable and it’s possible to have quick transformational change. It was based in the idea of a heroic savior (remember those “Hope” posters).

I’m here to make the case for low idealism. The low idealist rejects the politics of innocence. The low idealist recoils from any movement that promises “new beginnings,” tries to offer transcendent “bliss to be alive” moments or tries to fill people’s spiritual voids.

Low idealism begins with a sturdy and accurate view of human nature. We’re all a bit self-centered, self-interested and inclined to think we are nobler than we are. Montaigne wrote, “If others examined themselves attentively, as I do, they would find themselves, as I do, full of inanity and nonsense. Get rid of it I cannot without getting rid of myself.”

Low idealism continues with a realistic view of politics. Politics is slow drilling through hard boards. It is a series of messy compromises. The core functions of government are negative — putting out fires, arresting criminals, settling disputes — and much of what government does is the unromantic work of preventing bad situations from getting worse.

Politicians operate in a recalcitrant medium with incomplete information, bad options and no sleep. Government in good times is merely dull; when it is enthralling, times are usually bad.

So low idealism starts with a tone of sympathy. Anybody who works in this realm deserves compassion and gentle regard. The low idealist knows that rallies with anthems and roaring are just make-believe, but has warm affection for any politician who exhibits neighborliness, courtesy and the ability to listen. The low idealist understands that those who try to rise above the messy business of deal-making often turn into zealots and wind up sinking below it. On the other hand, this kind of idealist has a full heart for those who serve the practical work of legislating: James Baker and Ted Kennedy in the old days; Bob Corker and Ron Wyden today. Believing experience is the best mode of education, he favors the competent old hand to the naïve outsider.

The low idealist is more romantic about the past than about the future. Though governing is hard, there are some miracles of human creation that have been handed down to us. These include, first and foremost, the American Constitution, but also the institutions that function pretty well, like the Congressional Budget Office and the Federal Reserve. Her first job is to work with existing materials, magnify what’s best and incrementally reform what is worst.

The businessman might be enamored of disruptive change, but the low idealist abhors it in politics. The low idealist liked Obama’s vow to hit foreign policy singles and doubles day by day, so long as there is a large vision to give long-term direction.

The low idealist admires a different kind of leader; not the martyr or the passionate crusader or the righteous populist. He likes the resilient one, who maybe has been tainted by scandals and has learned from his self-inflicted wounds that his own worst enemy is himself.

He likes the person who speaks only after paying minute attention to the way things really are, and whose proposals are grounded in the low stability of the truth.

The low idealist lives most of her life at a deeper dimension than the realm of the political. She believes, as Samuel Johnson put it, that “The happiness of society depends on virtue” — not primarily material conditions. But, and this is what makes her an idealist, she believes that better laws can nurture virtue. Statecraft is soulcraft. Good tax policies can arouse energy and enterprise. Good social programs can encourage compassion and community service.

Low idealism starts with a warts-and-all mentality, but holds that people can be improved by their political relationships, so it ends up with something loftier and more inspiring that those faux idealists who think human beings are not a problem and politics is a mostly a matter of moving money around.

Of course Bobo’s crowd only wants it to move in one direction.  Welcome to the new Gilded Age.  Here’s Prof. Krugman:

In the Middle Ages, the call for a crusade to conquer the Holy Land was met with cries of “Deus vult!” — God wills it. But did the crusaders really know what God wanted? Given how the venture turned out, apparently not.

Now, that was a long time ago, and, in the areas I write about, invocations of God’s presumed will are rare. You do, however, see a lot of policy crusades, and these are often justified with implicit cries of “Mercatus vult!” — the market wills it. But do those invoking the will of the market really know what markets want? Again, apparently not.

And the financial turmoil of the past few days has widened the gap between what we’re told must be done to appease the market and what markets actually seem to be asking for.

To get more specific: We have been told repeatedly that governments must cease and desist from their efforts to mitigate economic pain, lest their excessive compassion be punished by the financial gods, but the markets themselves have never seemed to agree that these human sacrifices are actually necessary. Investors were supposed to be terrified by budget deficits, fearing that we were about to turn into Greece — Greece I tell you — but year after year, interest rates stayed low. The Fed’s efforts to boost the economy were supposed to backfire as markets reacted to the prospect of runaway inflation, but market measures of expected inflation similarly stayed low.

How have policy crusaders responded to the failure of their dire predictions? Mainly with denial, occasionally with exasperation. For example, Alan Greenspan once declared the failure of interest rates and inflation to spike “regrettable, because it is fostering a false sense of complacency.” But that was more than four years ago; maybe the sense of complacency wasn’t all that false?

All in all, it’s hard to escape the conclusion that people like Mr. Greenspan knew as much about what the market wanted as medieval crusaders knew about God’s plan — that is, nothing.

In fact, if you look closely, the real message from the market seems to be that we should be running bigger deficits and printing more money. And that message has gotten a lot stronger in the past few days.

I’m not mainly talking about plunging stock prices, although that’s surely telling us something (but as the late Paul Samuelson famously pointed out, stocks are not a reliable indicator of economic prospects: “Wall Street indexes predicted nine out of the last five recessions!”) Instead, I’m talking about interest rates, which are flashing warnings, not of fiscal crisis and inflation, but of depression and deflation.

Most obviously, interest rates on long-term U.S. government debt — the rates that the usual suspects keep telling us will shoot up any day now unless we slash spending — have fallen sharply. This tells us that markets aren’t worried about default, but that they are worried about persistent economic weakness, which will keep the Fed from raising the short-term interest rates it controls.

Interest rates on much European debt are even lower, because Europe’s economic outlook is so bad, and we’re not just talking about Germany. France is currently in conflict with the European Commission, which says that the projected French deficit is too big, but investors — who are still buying French bonds despite a 10-year interest rate of only 1.26 percent — are evidently much more worried about European stagnation than French default.

It’s also instructive to look at interest rates on “inflation-protected” or “index” bonds, which are telling us two things. First, markets are practically begging governments to borrow and spend, say on infrastructure; interest rates on index bonds are barely above zero, so that financing for roads, bridges, and sewers would be almost free. Second, the difference between interest rates on index and ordinary bonds tells us how much inflation the market expects, and it turns out that expected inflation has fallen sharply over the past few months, so that it’s now far below the Fed’s target. In effect, the market is saying that the Fed isn’t printing nearly enough money.

One question you might ask is why the market’s pro-spending, print-more-money message has suddenly gotten louder. My guess is that it’s mainly driven by events in Europe, where the slide into deflation and the growing public backlash against austerity have reached a tipping point. And it’s very reasonable to worry that Europe’s problems may spill over to the rest of us.

In any case, the next time you hear some talking head opining on what we must do to satisfy the markets, ask yourself, “How does he know?” For the truth is that when people talk about what markets demand, what they’re really doing is trying to bully us into doing what they themselves want.

Brooks, Cohen and Nocera

October 14, 2014

In “The Sorting Election” Bobo gurgles that American society is self-segregating, and it’s showing up everywhere — including in next month’s midterm elections.  In “The Instruction of Pestilence” Mr. Cohen says plague can remain dormant for years but its bacillus never dies or vanishes entirely.  Mr. Nocera says “Amazon Plays Rough.  So What?” and has a question:  While the debate rages on over monopoly status, is anyone really going to stop shopping at the website?  Here’s Bobo:

Everybody knows that Silicon Valley has become an economic powerhouse over the past quarter-century, but Houston’s boom is less appreciated. Joel Kotkin of Chapman University points out that over the past decade, Houston has outperformed every major metropolitan area in income growth, population growth and migration. Since 2000, the city’s employment figures have risen by 32 percent, ranking it No. 1 in percentage job growth. In August, Houston issued more single-family housing permits than all of California.

The Bay Area and Houston share a strategic asset: engineers. The two regions rank first and second in the country in engineers per capita. Beyond that, they are thriving on the basis of very different growth models.

Obviously, the Bay Area is driven by technology. Houston’s growth is driven by energy. More than 5,000 energy-related companies are located there. The Bay Area is a tightly regulated city. Houston has no formal zoning code, though, as the city gets more affluent, more rules are being written. The Bay Area is beautiful in the way urbanists like, while Houston is mostly ugly, in the way fast-food chains like. The Bay Area is densely populated and great for walking, while Houston is sprawling, though much of the development over the past few years has been high-density hipster infill.

The Bay Area is the hands-down winner when it comes to creativity and charm. But it’s a luxury region, unaffordable and wildly unequal. Houston wins when it comes to livability, especially for people who want to have children.

Kotkin, who has become an evangelist for the Houston model, points out that Houston is possibly the most ethnically diverse city in America. It’s more egalitarian than San Francisco. African-Americans and Hispanics there have high home ownership rates. Houstonians also enjoy a pretty high standard of living. If you take annual earnings per job and adjust it for the local cost of living, then Houston ranks top among major cities.

Over the past few years, liberals and conservatives have been arguing over which growth model is best. But, of course, there’s no need to choose. Both models are more or less working.

What we’re seeing, it seems to me, is a profusion of economic growth models in different parts of the country — a net increase in economic pluralism and diversity. Perhaps even more than in the past, cities are specializing, turning into global hubs for a specific economic sector.

This diversity is an enormous economic advantage for the country, and an enormous social and political challenge. As the country diversifies economically, it segments socially and politically. Each economic sector attracts different kinds of people and nurtures different kinds of values. The specialization of output means that every place becomes more like itself.

In addition, as society gets more educated, it segments further. Educated people are more polarized politically than less educated people. Educated people are also more likely to move around and tend to move in with people like themselves. Over the past few decades, we’ve seen increases in residential segregation along political, income and cultural lines.

As the years go by, politics more and more resembles these underlying divisions. I used to think that this was basically a centrist country and that political polarization was an elite phenomenon. But most of the recent evidence suggests that polarization is deeply rooted in the economic conditions and personal values of the country. Washington is not the cause of polarization; America is. The irony is that something good about America (economic pluralism) is contributing to something bad (segmentation and political trench warfare).

Which more or less explains the midterm elections. The 2014 campaign has been the most boring and uncreative campaign I can remember. Democrats cry, “My Republican opponent is an extremist loon!” Republicans cry, “My Democratic opponent once shook hands with President Obama!” There’s not even a Contract With America, nor many policy suggestions of any sort. Most campaigns just remind preconvinced voters how bad the other party is.

One result of the election is already clear. Political representation will more closely resemble the underlying social segmentation. Right now there are a lot of red states with Democratic senators. After this election, there will be fewer — probably between four and nine fewer. The election is about sorting people more tightly into their pre-existing boxes.

People often compare this era to the progressive era — a time of economic transition with wide inequality and political rot. But that was an era of centralizing economic forces. This is an era of economic pluralism and political segmentation.

People in San Francisco and Houston are achieving success while pursuing different economic models. It probably doesn’t make much sense to govern them intrusively from Washington as if they were engaged in the same project.

Of course gerrymandering has NOTHING to do with ANYTHING.  Nothing to see here, move along…  Here’s Mr. Cohen:

Webster’s Dictionary defines plague as “anything that afflicts or troubles; calamity; scourge.” Further definitions include “any contagious epidemic disease that is deadly; esp., bubonic plague” and, from the Bible, “any of various calamities sent down as divine punishment.” The verb form means “to vex; harass; trouble; torment.”

In Albert Camus’ novel, “The Plague,” written soon after the Nazi occupation of France, the first sign of the epidemic is rats dying in numbers: “They came up from basements and cubby-holes, cellars and drains, in long swaying lines; they staggered in the light, collapsed and died, right next to people. At night, in corridors and side-streets, one could clearly hear the tiny squeaks as they expired. In the morning, on the outskirts of town, you would find them stretched out in the gutter with a little floret of blood on their pointed muzzles, some blown up and rotting, other stiff, with their whiskers still standing up.”

The rats are messengers, but — human nature being what it is — their message is not immediately heeded. Life must go on. There are errands to run, money to be made. The novel is set in Oran, an Algerian coastal town of commerce and lassitude, where the heat rises steadily to the point that the sea changes color, deep blue turning to a “sheen of silver or iron, making it painful to look at.” Even when people start to die — their lymph nodes swollen, blackish patches spreading on their skin, vomiting bile, gasping for breath — the authorities’ response is hesitant. The word “plague” is almost unsayable. In exasperation, the doctor-protagonist tells a hastily convened health commission: “I don’t mind the form of words. Let’s just say that we should not act as though half the town were not threatened with death, because then it would be.”

The sequence of emotions feels familiar. Denial is followed by faint anxiety, which is followed by concern, which is followed by fear, which is followed by panic. The phobia is stoked by the sudden realization that there are uncontrollable dark forces, lurking in the drains and the sewers, just beneath life’s placid surface. The disease is a leveler, suddenly everyone is vulnerable, and the moral strength of each individual is tested. The plague is on everyone’s minds, when it’s not in their bodies. Questions multiply: What is the chain of transmission? How to isolate the victims?

Plague and epidemics are a thing of the past, of course they are. Physical contact has been cut to a minimum in developed societies. Devices and their digital messages direct our lives. It is not necessary to look into someone’s eyes let alone touch their skin in order to become, somehow, intimate. Food is hermetically sealed. Blood, secretions, saliva, pus, bodily fluids — these are things with which hospitals deal, not matters of daily concern.

A virus contracted in West Africa, perhaps by a man hunting fruit bats in a tropical forest to feed his family, and cutting the bat open, cannot affect a nurse in Dallas, Texas, who has been wearing protective clothing as she tended a patient who died. Except that it does. “Pestilence is in fact very common,” Camus observes, “but we find it hard to believe in a pestilence when it descends upon us.”

The scary thing is that the bat that carries the virus is not sick. It is simply capable of transmitting the virus in the right circumstances. In other words, the virus is always lurking even if invisible. It is easily ignored until it is too late.

Pestilence, of course, is a metaphor as well as a physical fact. It is not just blood oozing from gums and eyes, diarrhea and vomiting. A plague had descended on Europe as Camus wrote. The calamity and slaughter were spreading through the North Africa where he had passed his childhood. This virus hopping today from Africa to Europe to the United States has come in a time of beheadings and unease. People put the phenomena together as denial turns to anxiety and panic. They sense the stirring of uncontrollable forces. They want to be wrong but they are not sure they are.

At the end of the novel, the doctor contemplates a relieved throng that has survived: “He knew that this happy crowd was unaware of something that one can read in books, which is that the plague bacillus never dies or vanishes entirely, that it can remain dormant for dozens of years in furniture or clothing, that it waits patiently in bedrooms, cellars, trunks, handkerchiefs and old papers, and that perhaps the day will come when, for the instruction or misfortune of mankind, the plague will rouse its rats and send them to die in some well-contented city.”

The most surprising word there is the most important: The epidemic may also serve for the “instruction” of a blithe humanity.

And now we get to Mr. Nocera:

Is Amazon a monopoly?

That certainly is what Franklin Foer, the editor of The New Republic, thinks. In the magazine’s current issue, he has written a lengthy polemic denouncing the company for all manner of sins. The headline reads: “Amazon Must Be Stopped.”

“Shopping on Amazon,” he writes, “has so ingrained itself in modern American life that it has become something close to our unthinking habit, and the company has achieved a level of dominance that merits the application of a very old label: monopoly.”

Foer’s brief is that Amazon undercuts competitors so ruthlessly and squeezes suppliers so brutally — “in its pursuit of bigness” — that it has become “highly worrisome.” Its founder and chief executive, Jeff Bezos, “borrowed his personal style from the parsimonious Sam Walton,” the founder of (shudder) Walmart, and Foer notes that pushing suppliers has always been the key to Walmart’s low prices, just as it is for Amazon’s.

But, he says, when Amazon does it, the effect is somehow “darker.” Why? Because “without the constraints of brick and mortar, it considers nothing too remote from its core business, so it has grown to sell server space to the C.I.A., produce original television shows about bumbling congressmen, and engineer its own line of mobile phones.” What, precisely, is darker about making TV shows about bumbling congressmen is left unsaid.

And then, of course, there is the book business, which Amazon most certainly dominates, with 67 percent of the e-book market and 41 percent of the overall book market, by some estimates. Foer devotes a big chunk of his essay to Amazon’s ongoing efforts to “disintermediate” the book business, most vividly on display in its current battle over e-book pricing with Hachette, in which it is punishing Hachette by putting its books at a disadvantage on its website compared with other publishers’ books. Foer worries about what Amazon’s tactics will ultimately mean for book advances. And he fears that books will become commoditized — “deflating Salman Rushdie and Jennifer Egan novels to the price of a Diet Coke.”

What he doesn’t say — because he can’t — is that Amazon is in clear violation of the country’s antitrust laws. As Annie Lowrey and Matthew Yglesias both pointed out in blog posts (at New York magazine and Vox respectively), there is no possible way Amazon can legitimately be called a monopoly. Lowrey notes that Amazon’s sales amount to only “about 15 percent of total e-commerce sales.” Walmart’s e-commerce sales are growing at least as fast as Amazon’s. Meanwhile, as Yglesias points out, Amazon has to compete with far larger rivals, including not just Walmart, but Target and Home Depot in the brick-and-mortar world, and Google and Apple in the digital universe.

The truth is that American antitrust law is simply not very concerned with the fate of competitors. What it cares about is whether harm is being done to consumers. Walmart has squashed many more small competitors than Amazon ever will, with nary a peep from the antitrust police. Even in the one business Amazon does dominate — books — it earned its market share fair and square, by, among other things, inventing the first truly commercially successful e-reader. Even now, most people turn to Amazon for e-books not because there are no alternatives but because its service is superior.

“In confronting what to do about Amazon,” Foer writes as his essay nears its conclusion, “first we have to realize our own complicity. We’ve all been seduced by the deep discounts, the monthly automatic diaper delivery, the free Prime movies, the gift wrapping, the free two-day shipping, the ability to buy shoes or books or pinto beans or a toilet all from the same place.”

Our complicity? In fact, in its two decades of life, Amazon has redefined customer service in a way that has delighted people and caused them to return to the site again and again. Does Amazon have a dark side? Yes, it does — primarily in the way it has historically treated its warehouse workers. But to say that Amazon has to be stopped because it is giving people what they want is to misunderstand the nature of capitalism.

Let’s be honest here: The intelligentsia is focused on Amazon not because it sells pinto beans or toilets, but because it sells books. That’s their business. Amazon is changing the book industry in ways that threaten to diminish the role of publishers and traditional ways of publishing. Its battle with Hachette is a battle over control. It’s not terribly different from the forces that ultimately disintermediated the music business.

As an author, I’m rooting for Hachette. The old system — in which the writer gets an advance, and the publisher markets the final product — works for me, as it does for most writers of serious nonfiction.

But, am I going to stop using Amazon? No way. I’m betting you won’t either.

Brooks and Krugman

October 10, 2014

Bobo is trying to convince us that “Money Matters Less.”  He has a question:  Remember all the talk about how Citizens United would give Republicans a spending advantage forevermore? He tells us that hasn’t happened.  Prof. Krugman, in “Secret Deficit Lovers,” says debt scolds hate good fiscal news so much that most Americans haven’t heard that the deficit plunge of the past several years continues.  Here’s Bobo:

I happened to be in the U.S. Capitol when the Citizens United decision came down four years ago. Democratic lawmakers greeted the decision with a mutually reinforcing mixture of fury and fear. The decision, everyone agreed, would unleash a tsunami of corporate and plutocratic money into politics, giving Republicans a huge spending advantage. “This is the end of our party,” wailed one Democrat, aware he was going a tad over the top.

Things haven’t worked out as expected. In 2012, Mitt Romney did not have a spending advantage over Barack Obama. According to the Center for Responsive Politics, very few publicly traded corporations made political donations.

During the 2012 campaign cycle, news articles began appearing in local papers reporting that it was sometimes Democratic groups who were making the most of the post-Citizens United landscape. The Center for Public Integrity looked at campaigns in 38 states in 2012. Democratic-leaning groups outspent Republicans by more than $8 million.

This year, the same sorts of articles are appearing. A Politico analysis in September found that the 15 top Democratic-aligned committees outraised the 15 top Republican ones by $164 million. Based on data from the Center for Responsive Politics, Democrats have more money than Republicans in most of the tightest Senate races: Colorado, Alaska, Arkansas, Georgia, Iowa, Louisiana, Minnesota, North Carolina, New Hampshire and Virginia.

Karl Rove has been shaking the Republican donor base, arguing that his groups are being outspent. A September study by his “super PAC,” American Crossroads, found that Democratic candidates have reserved $109 million in television advertising time before Election Day, while Republicans have reserved $85 million.

So was the furor about Citizens United misplaced? Will Democrats end up winning the political spending wars, thanks to their own plutocratic donor base?

Well, the situation is complicated. The first thing we know about the post-Citizens United era is that it has accelerated a pre-existing trend: Each year more money flows into campaigns. Spending this cycle is more than double what it was at this point in 2010 and four times higher than it was in early October 2006.

Second, the decision has not scared away small donors, as many feared. A study by Douglas M. Spencer and Abby K. Wood suggested that smaller donors were just as likely to be active after the decision as before.

Third, many of Democrats’ apparent advantages in spending this year are temporary. A major wave of Republican money is expected over the next few weeks. Democrats do have an advantage in the donations made to super PACs, which have to report their donors. But Republicans have an advantage in donations made to 501(c)(4) groups, which can keep the names of donors secret.

The final and most important effect of Citizens United is that it will reduce the influence of money on electoral outcomes. Yes, that’s right. Reduce.

Remember, money is quite important in local races, with unknown candidates.

But money is not that important in high-attention federal races. Every year we get more evidence suggesting that campaign spending does not lead to victory. In 2012 the Koch brothers spent huge amounts of money to pathetic effect. Rove’s American Crossroads dumped $117 million into the 2012 election. More than 90 percent of it was spent on candidates who ended up losing.

And money is really not important when both candidates are well-financed. After both candidates have hit a certain spending threshold, the additional TV commercials they might buy are just making the rubble bounce. The economist Steve Levitt has found that if you cut a campaign’s spending in half, and held everything else constant, then the candidate would only lose 1 percent of the popular vote. If you doubled a candidate’s spending, the candidate would only gain 1 percentage point. In other words, big swings in spending produce only small changes in the vote totals.

We’re now at a moment when a fire hose of money is trying to fill the same glasses of voters. That means every plausible Senate candidate and almost every plausible House candidate has more than enough money to get his or her message out. What matters more is the quality of that message and the national mood. If Democrats exceed expectations this year it will because of the reasons Ashley Parker and Nicholas Confessore identified in a recent Times article: because their message is better defined.

The upshot is that we should all relax about campaign spending. We should worry more about America’s rich. Some people who are really smart at making money are apparently really stupid at spending it. This year, the big spender is a hedge fund manager named Tom Steyer. He could have spent $42.7 million paying for kids to go to college. Instead he has spent that much money this year further enriching the people who own TV stations. What a waste.

And what a waste of oxygen and pixels Bobo is…  Here’s Prof. Krugman:

What if they balanced the budget and nobody knew or cared?

O.K., the federal budget hasn’t actually been balanced. But the Congressional Budget Office has tallied up the totals for fiscal 2014, which ran through the end of September, and reports that the deficit plunge of the past several years continues. You still hear politicians ranting about “trillion dollar deficits,” but last year’s deficit was less than half-a-trillion dollars — or, a more meaningful number, just 2.8 percent of G.D.P. — and it’s still falling.

So where are the ticker-tape parades? For that matter, where are the front-page news reports? After all, talk about the evils of deficits and the grave fiscal danger facing America dominated Washington for years. Shouldn’t we be making a big deal of the fact that the alleged crisis is over?

Well, we aren’t, and once you understand why, you also understand what fiscal hysteria was really about.

First, ordinary Americans aren’t celebrating the deficit’s decline because they don’t know about it.

That’s not mere speculation on my part. Earlier this year, YouGov polled Americans on fiscal issues, asking among other things whether the deficit had increased or declined since President Obama took office. (In case you’re wondering, the pollsters carefully explained the difference between annual deficits and the level of accumulated debt.) More than half of those polled said it had gone up, while only 19 percent correctly said that it had gone down.

Why doesn’t the public know better? Probably because of the way much of the news media report this and other issues, with bad news played up and good news downplayed if it’s reported at all.

This has been glaringly obvious in the case of health reform, where every problem with the Affordable Care Act has been the subject of headlines, while in right-wing media — and to some extent in mainstream news sources — favorable developments go unremarked. As a result, many people — even, in my experience, liberals — have the impression that the rollout of Obamacare has been a disaster, and have no idea that enrollment is above expectations, costs are lower than expected, and the number of Americans without insurance has dropped sharply. Surely something similar has happened on the budget deficit.

But what about people who pay a lot of attention to the budget, the self-proclaimed deficit hawks? (Some of us prefer to call them deficit scolds.) They’ve spent the past few years telling us that budget shortfalls are the most important issue facing the nation, that terrible things will happen unless we act to stem the flow of red ink. Are they expressing satisfaction over the fading of that threat?

Not a chance. Far from celebrating the deficit’s decline, the usual suspects — fiscal-scold think tanks, inside-the-Beltway pundits — seem annoyed by the news. It’s a “false victory,” they declare. “Trillion dollar deficits are coming back,” they warn. And they’re furious with President Obama for saying that it’s time to get past “mindless austerity” and “manufactured crises.” He’s declaring mission accomplished, they say, when he should be making another push for entitlement reform.

All of which demonstrates a truth that has been apparent for a while, if you have been paying close attention: Deficit scolds actually love big budget deficits, and hate it when those deficits get smaller. Why? Because fears of a fiscal crisis — fears that they feed assiduously — are their best hope of getting what they really want: big cuts in social programs. A few years ago they almost managed to bully the nation into cutting Social Security and/or raising the Medicare eligibility age; they even had hopes of turning Medicare into an underfinanced voucher program. Now that window of opportunity is closing fast.

But isn’t the falling deficit just a short-term blip, with the long-run outlook as dire as ever? Actually, no. Falling deficits right now have a lot to do with a strengthening economy plus some of that “mindless austerity” the president condemned. But there has also been a dramatic slowdown in the growth of health spending — and if that continues, the long-run fiscal outlook is much better than anyone thought possible not long ago. Yes, current projections still show a rising ratio of debt to G.D.P. starting some years from now, and uncomfortable levels of debt a generation from now. But given all the clear and present dangers we face, it’s hard to see why dealing with that distant and uncertain prospect should be any kind of policy priority.

So let’s say goodbye to fiscal hysteria. I know that the deficit scolds are having a hard time letting go; they’re still trying to bring back the days when Bowles and Simpson bestrode the Beltway like colossi. But those days aren’t coming back, and we should be glad.

Brooks, Cohen and Krugman

October 3, 2014

Bobo has outdone himself.  In “The Problem With Pragmatism” he gurgles that our dominant political mind-set (pragmatism) tends dangerously toward rationalism uninformed by moral emotion.  In the comments “Stu Freeman” from Brooklyn, NY has this to say: “Gosh, when David Brooks goes for a “think piece” as opposed to an obvious screed on the virtues of conservative politics he comes across as even more inane than usual.”  Mr. Cohen, in “Iran, the Thinkable Ally,” says Obama’s war against ISIS makes war with Iran even more unthinkable, and that a nuclear deal is imperative.  Prof. Krugman considers “Depression Denial Syndrome” and says the fall of Bill Gross at Pimco is an example of how decision-makers refuse to acknowledge that the rules are different in a persistently depressed economy.  Here’s Bobo:

During the 20th century, political thinkers were defined less by their attachment to political parties and more by their attachment to magazines. Arthur Schlesinger was associated with The New Republic. Lionel Trilling was associated with the Partisan Review. Each magazine had its own personality, its own community of writers and readers and defined its own spot on the intellectual landscape.

Today, the Internet has made magazine communities less cohesive. Most of those magazines still exist, but people surf through them fluidly and click on individual articles. Writers are identified more as individuals and less as members of a circle.

Something important has been lost in this transition. For example, The New Republic, which turns 100 this year, made a series of superficially contradictory demands on its readers. To be a well-rounded person, the magazine implied, it is necessary to be both practical and philosophical, both politically engaged and artistically cultivated. The magazine offered, and still offers, short practical articles on politics and policy in the front of the book and long literary essays on philosophy and culture in the back.

In 1940, the magazine published a stunning critique of those who refuse to embrace both kinds of knowledge. The essay, called “The Corruption of Liberalism,” was written by the unjustly forgotten writer Lewis Mumford. It’s been revived by the magazine’s current editor, Franklin Foer, in “Insurrections of the Mind,” a collection of essays from the magazine’s first century.

Mumford’s nominal subject was his fellow liberals’ tendency, in 1940, to hang back in the central conflict of the age, the fight against totalitarianism. “Liberalism has been on the side of passivism in the face of danger,” he wrote. “Liberalism has been on the side of ‘isolation’ when confronted with the imminent threat of a worldwide upsurge in barbarism.” Liberals, he continued, “no longer dare to act.”

But, as Mumford goes along, he penetrates deeper into the pragmatist mind-set itself, the mind-set of people who try to govern without philosophic or literary depth. And, in this way, his essay is perceptive about the mind-set that is dominant in political circles today. Washington is now awash in big data analysts, policy wonks and social scientists. Today’s foreign policy debate is conducted along realist lines, by both liberals and conservatives.

A core problem with pragmatists, Mumford argues, is that they attach themselves so closely to science and social science that they have forgotten the modes of insight offered by theology and literature. This leads to a shallow, amputated worldview.

“This pragmatic liberalism,” Mumford writes, “was vastly preoccupied with the machinery of life. It was characteristic of this creed to overemphasize the part played by political and mechanical invention, by abstract thought and practical contrivance. And, accordingly, it minimized the role of instinct, tradition, history; it was unaware of the dark forces of the unconscious; it was suspicious of either the capricious or the incalculable, for the only universe it could rule was a measured one, and the only type of human character it could understand was the utilitarian one.”

Because of these blinders, pragmatists can’t understand nonpragmatists: “It is not unfair to say that the pragmatic liberal has taken the world of personality, the world of values, feelings, emotions, wishes, purposes, for granted. He assumed either that this world did not exist or that it was relatively unimportant; at all events if it did exist it could be safely left to itself, without cultivation. For him men were essentially good and only the faulty economic and political institutions — defects purely in the mechanism of society — kept them from becoming better.”

Pragmatists often fail because they try to apply economic remedies to noneconomic actors. Those who threaten civilization — Stalin then, Putin and ISIS now — are driven by moral zealotry and animal imperatives. Economic sanctions won’t work. “One might as well offer the carcass of a dead deer in a butcher store to a hunter who seeks the animal as prey. …”

Pragmatists also have trouble rousing themselves to action. They try to get rid of emotions when making decisions because emotions might lead them astray. But, in making themselves passionless, they always make themselves tepid and anesthetized. That leads to passivity. Everything is too little too late.

Mumford concludes that only people with an aroused moral sense will be properly mobilized to stand up for humanity. “Life is not worth fighting for: bare life is worthless. Justice is worth fighting for, order is worth fighting for, culture … .is worth fighting for: These universal principles and values give purpose and direction to human life.”

Today, lofty political idealism is out of favor. Even a president initially elected as an idealist has been reduced into a more technocratic role. But Mumford makes the case for leaders who understand evil down to its depths, who have literary sensibilities and who react with a heart brimming with moral emotion.

Next up we have Mr. Cohen:

Breakfast last week in New York with President Hassan Rouhani of Iran was a cordial affair, bereft of the fireworks of his predecessor, whose antics made headlines and not much more. Rouhani, flanked by his twinkly-eyed foreign minister, Mohammad Javad Zarif, was composed, lucid and, on the whole, conciliatory. He said a nuclear accord was doable by the deadline of Nov. 24 “if there is good will and seriousness.” He revealed that he had spoken last year with President Obama about “a number” of possible areas of collaboration in the event of an accord. He did not underplay the difficulties, or the implacability of a deal’s opponents in Iran and the United States, but suggested the “short-lived dustbowl” thrown up by any resolution would dissipate as win-win awareness grew. He even alluded to the aroma of roses. It was a polished performance full of the subtleties intrinsic to the Iranian mind. The question, as always with Iran, is what precisely it meant.

The interim agreement with Iran, reached in November 2013, has had many merits. Iran has respected its commitments, including a reduction of its stockpiles of enriched uranium and a curbing of production. The deal has brought a thaw in relations between the United States and Tehran; once impossible meetings between senior officials are now near routine.

The rapid spread over the past year of the Sunni jihadist movement that calls itself Islamic State has underscored the importance of these nascent bilateral relations: ISIS is a barbarous, shared enemy whose rollback becomes immeasurably more challenging in the absence of American-Iranian understanding. Allies need not be friends, as the Soviet role in defeating Hitler demonstrated. President Obama’s war against ISIS makes war with Iran more unthinkable than ever. Absent a “comprehensive solution that would ensure Iran’s nuclear program will be exclusively peaceful,” in the words of last year’s accord, the drumbeat for such a war would almost certainly resume. From Jerusalem to Washington countless drummers are ready.

It is critical that this doable deal get done, the naysayers be frustrated, and a rancorous American-Iranian bust-up not be added to the ambient mayhem in the Middle East. The Islamic Republic, 35 years after the revolution, is — like it or not — a serious and stable power in an unstable region. Its highly educated population is pro-Western. Its actions and interests are often opposed to the United States and America’s allies, and its human rights record is appalling, but then that is true of several countries with which Washington does business.

An important recent report from The Iran Project — whose distinguished signatories include Brent Scowcroft, Zbigniew Brzezinski, Thomas Pickering, Ryan Crocker, John Limbert (the former U.S. hostage in Tehran), Joseph Nye and William Luers — put the U.S. strategic interest in a deal well: “There is a strong link between settling the nuclear standoff and America’s ability to play a role in a rapidly changing Middle East.” A nuclear agreement, the report said, “will help unlock the door to new options.” From Syria to Afghanistan by way of Iraq, those options are urgently needed.

For them to be opened up, a workable narrative has to be found, one that satisfies Congress that Iran’s road to a bomb has been sealed off through curtailment and rigorous inspection of the nuclear program, and satisfies Iran’s hard-liners that the country’s ability to develop nuclear power for peaceful use has not been permanently infringed or its rights as a signatory of the Treaty on the Non-Proliferation of Nuclear Weapons irrevocably curtailed. That is a tall order. But subtlety and ingenuity are no strangers at this table. Both sides have an enormous amount to lose if talks fail.

Obama has put his personal prestige behind this effort. Collapse would amount to another Middle Eastern failure for him. He knows that the sanctions drive against Iran would likely unravel in the event of failure, as cooperation with Europe, Russia and China frays. He would be pushed once again toward military action against Iran. (Of course, he would also prefer to concentrate visible progress in the talks between Nov. 4 and Nov. 24, so that Republicans cannot brandish “softness” on Iran against the Democrats in the midterm elections.)

The difficulties are considerable. Karim Sadjadpour of the Carnegie Endowment for International Peace told me, “Those we talk to can’t deliver and those who can deliver can’t talk to us.” Ali Khamenei, Iran’s supreme leader, who does not do New York breakfasts, is a hard-liner. On issues from the number of centrifuges Iran is permitted to the duration of any deal, the two sides differ. Sadjadpour believes “managed irresolution” is the best that can be hoped for, a failure that preserves some gains. I think failure would be unmitigated: Renewed estrangement, war drift. A deal can and must be done for the simple reason it is far better — for Iran, the United States, Europe and Israel — than any of the alternatives.

And now we come to Prof. Krugman:

Last week, Bill Gross, the so-called bond king, abruptly left Pimco, the investment firm he had managed for decades. People who follow the financial industry were shocked but not exactly surprised; tales of internal troubles at Pimco had been all over the papers. But why should you care?

The answer is that Mr. Gross’s fall is a symptom of a malady that continues to afflict major decision-makers, public and private. Call it depression denial syndrome: the refusal to acknowledge that the rules are different in a persistently depressed economy.

Mr. Gross is, by all accounts, a man with a towering ego and very difficult to work with. That description, however, fits a lot of financial players, and even the most lurid personality conflicts wouldn’t have mattered if Pimco had continued to do well. But it didn’t, largely thanks to a spectacularly bad call Mr. Gross made in 2011, which continues to haunt the firm. And here’s the thing: Lots of other influential people made the same bad call — and are still making it, over and over again.

The story here really starts years earlier, when an immense housing bubble popped. Spending on new houses collapsed, and broader consumer spending also took a hit, as families that had borrowed heavily to buy houses saw the value of those homes plunge. Businesses cut back, too. Why add capacity in the face of weak consumer demand?

The result was an economy in which everyone wanted to save more and invest less. Since everyone can’t do that at the same time, something else had to give — and, in fact, two things gave. First, the economy went into a slump, from which it has not yet fully emerged. Second, the government began running a deficit, as the economic downturn caused a sharp fall in revenue and a surge in some kinds of spending, like food stamps and unemployment benefits.

Now, we normally think of deficits as a bad thing — government borrowing competes with private borrowing, driving up interest rates, hurting investment, and possibly setting the stage for higher inflation. But, since 2008, we have, to use the economics jargon, been stuck in a liquidity trap, which is basically a situation in which the economy is awash in desired saving with no place to go. In this situation, government borrowing doesn’t compete with private demand because the private sector doesn’t want to spend. And because they aren’t competing with the private sector, deficits needn’t cause interest rates to rise.

All this may sound strange and counterintuitive, but it’s what basic macroeconomic analysis tells you. And that’s not 20/20 hindsight either. In 2008-9, a number of economists — yes, myself included — tried to explain the special circumstances of a depressed economy, in which deficits wouldn’t cause soaring rates and the Federal Reserve’s policy of “printing money” (not really what it was doing, but never mind) wouldn’t cause inflation. It wasn’t just theory, either; we had the experience of the 1930s and Japan since the 1990s to draw on. But many, perhaps most, influential people in the alleged real world refused to believe us.

Which brings me back to Mr. Gross.

For a time, Pimco — where Paul McCulley, a managing director at the time, was one of the leading voices explaining the logic of the liquidity trap — seemed admirably calm about deficits, and did very well as a result. In late 2009, many Wall Street analysts warned of a looming surge in U.S. borrowing costs; Morgan Stanley predicted that the interest rate on 10-year bonds would soar to 5.5 percent in 2010. But Pimco bet, correctly, that rates would stay low.

Then something changed. Mr. McCulley left Pimco at the end of 2010 (he recently returned as chief economist), and Mr. Gross joined the deficit hysterics, declaring that low interest rates were “robbing” investors and selling off all his holdings of U.S. debt. In particular, he predicted a spike in interest rates when the Fed ended a program of debt purchases in June 2011. He was completely wrong, and neither he nor Pimco ever recovered.

So is this an edifying tale in which bad ideas were proved wrong by experience, people’s eyes were opened, and truth prevailed? Sorry, no. In fact, it’s very hard to find any examples of people who have changed their minds. People who were predicting soaring inflation and interest rates five years ago are still predicting soaring inflation and interest rates today, vigorously rejecting any suggestion that they should reconsider their views in light of experience.

And that’s what makes the Bill Gross story interesting. He’s pretty much the only major deficit hysteric to pay a price for getting it wrong (even though he remains, of course, immensely rich). Pimco has taken a hit, but everywhere else the reign of error continues undisturbed.

Brooks and Krugman

September 26, 2014

In “The Good Order” Bobo gurgles that the arduous work of imposing order is critical to success in any realm, from the international state system to one’s own mind.  “MetroJournalist” from the metropolitan NY area wins the internets today with this comment:  “Mr. Brooks, you forgot to mention that every morning, TPTB at The New York Times, wake up, have coffee, go to their desks and fail to understand that there are some columnists who need to be replaced by people who have something worthier to write about.”  I do so hope that Bobo reads the comments…  Prof. Krugman has questions about “The Show-Off Society:”  Has there been an explosion of elite ostentation? If so, does it reflect moral decline, or a change in circumstances?  Here’s Bobo:

When she was writing, Maya Angelou would get up every morning at 5:30 and have coffee at 6. At 6:30, she would go off to a hotel room she kept — a small modest room with nothing but a bed, desk, Bible, dictionary, deck of cards and bottle of sherry. She would arrive at the room at 7 a.m. and write until 12:30 p.m. or 2 o’clock.

John Cheever would get up, put on his only suit, ride the elevator in his apartment building down to a storage room in the basement. Then he’d take off his suit and sit in his boxers and write until noon. Then he’d put the suit back on and ride upstairs to lunch.

Anthony Trollope would arrive at his writing table at 5:30 each morning. His servant would bring him the same cup of coffee at the same time. He would write 250 words every 15 minutes for two and a half hours every day. If he finished a novel without writing his daily 2,500 words, he would immediately start a new novel to complete his word allotment.

I was reminded of these routines by a book called “Daily Rituals: How Artists Work,” compiled by Mason Currey.

The vignettes remind you how hard creative people work. Most dedicate their whole life to work. “I cannot imagine life without work as really comfortable,” Sigmund Freud wrote.

But you’re primarily struck by the fact that creative people organize their lives according to repetitive, disciplined routines. They think like artists but work like accountants. “I know that to sustain these true moments of insight, one has to be highly disciplined, lead a disciplined life,” Henry Miller declared.

“Routine, in an intelligent man, is a sign of ambition,” W.H. Auden observed.

Auden checked his watch constantly, making sure each task filled no more than its allotted moment. “A modern stoic,” he argued, “knows that the surest way to discipline passion is to discipline time; decide what you want or ought to do during the day, then always do it at exactly the same moment every day, and passion will give you no trouble.”

People who lead routine, anal-retentive lives have a bad reputation in our culture. But life is paradoxical. In situation after situation, this pattern recurs: order and discipline are the prerequisites for creativity and daring.

This is true on so many levels. Children need emotional and physical order so they can go off and explore. A parent’s main job is to provide daily predictability and emotional security.

Communities need order to thrive and cooperate since where there is chaos and disorder there is distrust and withdrawal. The main job of local leaders is to provide the basic infrastructure of security: roads, police, honest judges and orderly schools.

The world needs order, too, a set of assumed norms and routines that all nations adhere to. You can’t have freedom, trust, democracy and self-determination when thugs like Vladimir Putin of Russia are rampaging across borders and monsters like the Islamic State are killing innocents.

The world’s superpower has a hard and unpleasant duty. The United States is obligated to organize coalitions to impose rule of law — to beat back the wolves and maintain that order.

Building and maintaining order — whether artistic, political or global — seems elementary, but it’s surprisingly hard. Writers have to go to amazing lengths to impose order on their own unruly minds — going off to basement storage rooms. W. Somerset Maugham refused to work in a room with a view. He liked facing a bare wall. It requires toughness of mind and rigid discipline to properly serve your own work.

Preserving world order is even harder. President Obama showed that kind of toughness in his United Nations address this week (you knew I was going to make this leap). It was one of the finest speeches of his presidency.

During his public life, Obama has hit the high notes of poetic romance — his 2008 campaign. He has also hit some prosaic notes of caution, realism and inaction. But this speech blended the two tones. It put tough-minded realism at the service of a high calling.

The speech was about defending the world order against enemies like ISIS and Putin. Breaking with past emphasis, he acknowledged that sometimes you have to use military might to fight off a military threat. He acknowledged that power-hungry thugs aren’t appeased if you try to show them how nonthreatening and reasonable you are. Obama cast off his cloak of reluctance and more aggressively championed democracy than he has recently. He was direct and forthright.

We’ll see what action comes behind the words. But the larger point is that the order of global civilization, like the order in a poet’s mind, is something that has to be fought and imposed every day. The best life is a series of daring excursions from a secure and orderly base.

I wonder if Bobo reads books on creativity in hopes of learning how to be less of a hack…  Here’s Prof. Krugman:

Liberals talk about circumstances; conservatives talk about character.

This intellectual divide is most obvious when the subject is the persistence of poverty in a wealthy nation. Liberals focus on the stagnation of real wages and the disappearance of jobs offering middle-class incomes, as well as the constant insecurity that comes with not having reliable jobs or assets. For conservatives, however, it’s all about not trying hard enough. The House speaker, John Boehner, says that people have gotten the idea that they “really don’t have to work.” Mitt Romney chides lower-income Americans as being unwilling to “take personal responsibility.” Even as he declares that he really does care about the poor, Representative Paul Ryan attributes persistent poverty to lack of “productive habits.”

Let us, however, be fair: some conservatives are willing to censure the rich, too. Running through much recent conservative writing is the theme that America’s elite has also fallen down on the job, that it has lost the seriousness and restraint of an earlier era. Peggy Noonan writes about our “decadent elites,” who make jokes about how they are profiting at the expense of the little people. Charles Murray, whose book “Coming Apart” is mainly about the alleged decay of values among the white working class, also denounces the “unseemliness” of the very rich, with their lavish lifestyles and gigantic houses.

But has there really been an explosion of elite ostentation? And, if there has, does it reflect moral decline, or a change in circumstances?

I’ve just reread a remarkable article titled “How top executives live,” originally published in Fortune in 1955 and reprinted a couple of years ago. It’s a portrait of America’s business elite two generations ago, and it turns out that the lives of an earlier generation’s elite were, indeed, far more restrained, more seemly if you like, than those of today’s Masters of the Universe.

“The executive’s home today,” the article tells us, “is likely to be unpretentious and relatively small — perhaps seven rooms and two and a half baths.” The top executive owns two cars and “gets along with one or two servants.” Life is restrained in other ways, too: “Extramarital relations in the top American business world are not important enough to discuss.” Actually, I’m sure there was plenty of hanky-panky, but people didn’t flaunt it. The elite of 1955 at least pretended to set a good example of responsible behavior.

But before you lament the decline in standards, there’s something you should know: In celebrating America’s sober, modest business elite, Fortune described this sobriety and modesty as something new. It contrasted the modest houses and motorboats of 1955 with the mansions and yachts of an earlier generation. And why had the elite moved away from the ostentation of the past? Because it could no longer afford to live that way. The large yacht, Fortune tells us, “has foundered in the sea of progressive taxation.”

But that sea has since receded. Giant yachts and enormous houses have made a comeback. In fact, in places like Greenwich, Conn., some of the “outsize mansions” Fortune described as relics of the past have been replaced with even bigger mansions.

And there’s no mystery about what happened to the good-old days of elite restraint. Just follow the money. Extreme income inequality and low taxes at the top are back. For example, in 1955 the 400 highest-earning Americans paid more than half their incomes in federal taxes, but these days that figure is less than a fifth. And the return of lightly taxed great wealth has, inevitably, brought a return to Gilded Age ostentation.

Is there any chance that moral exhortations, appeals to set a better example, might induce the wealthy to stop showing off so much? No.

It’s not just that people who can afford to live large tend to do just that. As Thorstein Veblen told us long ago, in a highly unequal society the wealthy feel obliged to engage in “conspicuous consumption,” spending in highly visible ways to demonstrate their wealth. And modern social science confirms his insight. For example, researchers at the Federal Reserve have shown that people living in highly unequal neighborhoods are more likely to buy luxury cars than those living in more homogeneous settings. Pretty clearly, high inequality brings a perceived need to spend money in ways that signal status.

The point is that while chiding the rich for their vulgarity may not be as offensive as lecturing the poor on their moral failings, it’s just as futile. Human nature being what it is, it’s silly to expect humility from a highly privileged elite. So if you think our society needs more humility, you should support policies that would reduce the elite’s privileges.

Brooks, Cohen and Nocera

September 23, 2014

Bobo is annoyed.  Bobo is pissed.  In “Snap Out of It” he barks that it’s been a bad summer, but it’s important to keep things in perspective.  In the comments “Michael” from LA had this to say:  “Mr. Brooks, please send a copy of your recommendations to your fellow Republicans in government and in the media. Then, for your own good, stand aside so you won’t be singed by the blowback.”  Mr. Cohen, in “Truths of a French Village,” says talks with a real estate agent illustrate why globalization does not alter the reality of cultural differences.  Mr. Nocera looks “Behind the Chevron Case” and says this lawyer may have movie-star good looks, but he has a lot to answer for, too.  Ah — attack the attorney who went after Chevron, but say nothing about what Chevron was responsible for.  Typical.  Here’s Bobo:

I’ve been living in and visiting New York for almost a half-century now. One thought occurs as I walk around these days: The city has never been better.

There has never been a time when there were so many interesting places to visit, shop and eat, when the rivers and the parks were so beautiful, when there were so many vibrant neighborhoods across all boroughs, with immigrants and hipsters and new businesses and experimental schools. I suppose New York isn’t as artistically or intellectually rich as it was in the 1940s and 1950s, but daily life is immeasurably better.

And when I think about the 15 or 20 largest American cities, the same thought applies. Compared with all past periods, American cities and suburbs are sweeter and more interesting places. Of course there are the problems of inequality and poverty that we all know about, but there hasn’t been a time in American history when so many global cultures percolated in the mainstream, when there was so much tolerance for diverse ethnicities, lifestyles and the complex directions of the heart, when there was so little tolerance for disorder, domestic violence and prejudice.

Widening the lens, we’re living in an era with the greatest reduction in global poverty ever — across Asia and Africa. We’re seeing a decline in civil wars and warfare generally.

The scope of the problems we face are way below historic averages. We face nothing like the slavery fights of the 1860s, the brutality of child labor and industrialization of the 1880s, or a civilization-threatening crisis like World War I, the Great Depression, World War II or the Cold War. Even next to the 1970s — which witnessed Watergate, stagflation, social decay and rising crime — we are living in a golden age.

Our global enemies are not exactly impressive. We have the Islamic State, a bunch of barbarians riding around in pickup trucks, and President Vladimir Putin of Russia, a lone thug sitting atop a failing regime. These folks thrive only because of the failed states and vacuums around them.

I mention all of this because of the despondency and passivity and talk of unraveling that floated around this summer. Now there is a mood of pessimism and fatalism evident in the polls and in conversations — a lack of faith in ourselves.

It’s important in times like these to step back and get clarity. The truest thing to say is this: We are living in an amazingly fortunate time. But we also happen to be living during a leadership crisis, and a time when few people have faith in elites to govern from the top. We live in a vibrant society that is not being led.

We don’t suffer from an abuse of power as much as a nonuse of power. It’s been years since a major piece of legislation was passed, and there’s little prospect that one will get passed in the next two.

This leadership crisis is eminently solvable. First, we need to get over the childish notion that we don’t need a responsible leadership class, that power can be wielded directly by the people. America was governed best when it was governed by a porous, self-conscious and responsible elite — during the American revolution, for example, or during and after World War II. Karl Marx and Ted Cruz may believe that power can be wielded directly by the masses, but this has almost never happened historically.

Second, the elite we do have has to acknowledge that privilege imposes duties. Wealthy people have an obligation to try to follow a code of seemliness. No luxury cars for college-age kids. No private jet/ski weekends. Live a lifestyle that is more integrated into middle-class America than the one you can actually afford. Strike a blow for social cohesion.

Powerful people might follow a code of public spiritedness. That means restraining your partisan passions and parochial interests for the sake of domestic tranquility. Re-establish the lines between public service and private enrichment.

Third, discredit political bigotry. In 1960, 5 percent of Republicans and 4 percent of Democrats said they would be displeased if their children married someone of the opposite party. By 2010, Cass Sunstein observes, those numbers had jumped to 49 percent and 33 percent. How small-minded can you get?

Fourth, put congressional reform atop the national agenda. More states could have open primaries. Nonpartisan commissions could draw district lines. Presidential nominees should get an up-or-down vote within 90 days. Representative Jim Cooper of Tennessee suggests that if Congress doesn’t pass a budget or annual spending bills on time, then members don’t get paid.

Politics is generally the same old tasks. Rejuvenating ailing institutions. Fighting barbarians to preserve world order. Today is nothing new. Instead of sliding into fatalism, it might be a good idea to address our problems without exaggerating our plight.

We can address our problems by getting rid of all the Republicans in Congress for starters.  Here’s Mr. Cohen:

A few weeks ago I was in France, where I’ve owned a village house for almost 20 years that I am now planning to sell. A real estate agent had taken a look at the property and we had made an appointment to discuss how to proceed. She swept into the kitchen, a bundle of energy and conviction, with an impassioned appeal:

“Monsieur Cohen, whatever you do, you must on no account sell this house!”

I gazed at her, a little incredulous.

“You cannot sell it. This is a family home. You know it the moment you step in. You sense it in the walls. You breathe it in every room. You feel it in your bones. This is a house you must keep for your children. I will help you sell it if you insist, but my advice is not to sell. You would be making a mistake.”

This was, shall we say, a cultural moment, one of those times when a door opens and you gaze, if not into the soul of a country, at least into territory that is distinct and deep and almost certainly has greater meaning than the headlines and statistics that are supposed to capture the state of a nation, in this case one called France, whose malaise has become an object of fascination. I tried to imagine an American or British real estate agent, presented with a potentially lucrative opportunity, deciding to begin the pitch with a heartfelt call not to sell the property because it was the repository of something important or irreplaceable. I came up blank. I could not picture it. There were no circumstances in which self-interest, or at least professional obligation, would not prevail. Price would be pre-eminent, along with market conditions and terms. Yet in this French village, across a wooden kitchen table set on a stone floor, the setting of economic interest below emotional intuition seemed a natural outcrop of soil and place.

I thought of this exchange the other day as Prime Minister Manuel Valls, a modernizing socialist, faced a confidence vote in the National Assembly over yet another plan to cut public spending, make the job market more flexible, and break the French logjam of high unemployment, a bloated state sector and handouts that can have the perverse effect of making work in the official economy an unattractive proposition. “What matters today is effectiveness and not ideology,” Valls said.

He prevailed even though 32 members of his own party abstained in protest at a perceived attack on socialist principles. More than any other party of the center-left in Europe, the French socialists have had trouble jettisoning ideological baggage ill-adapted to 21st-century global competition. More than any other Western country, France has resisted modernity, at least in the way it thinks of itself. So my feeling listening to Valls talk about “effectiveness” could be summed up in two words: Good luck!

The prime minister is up against something deeper than the resistance of labor unions or his own party: a culture that views the prizing of efficiency as almost vulgar. Effectiveness had no place in my chat with the real estate agent. Effectiveness does not seem to enter into it as I contemplate French butchers bard a chicken or prepare a cut of beef with deft incisions. Effectiveness is not the rule in French shopping habits. It lies at a far remove from the long conversations between shopkeepers and clients. Efficiency for the French is a poor measure of the good life, just as making a buck from the sale of a house pales before the expression of feeling about what a house may represent. Whether this is good or bad hardly matters. It is often bad for the French economy. It is also a fact of life.

These distinctive cultural components of nations are probably underestimated as globalization and homogenization create the impression that the same standards or systems can be pursued everywhere. I used to be impatient with such thinking. The Russians need a czar! The Egyptians need a pharaoh! The French need to strike! No, I would think, the Russians and the Egyptians and the French are like everyone else, they want to be free, they want governance with the consent of the governed, they do not want their lives subjected to arbitrary rules, or to live less well than they could without czars and pharaohs and strikes. Now I feel I was wrong about that. Globalization equals adaptation to insurmountable differences as much as it equals change. Some things do not change, being the work of centuries.

A couple of days after my meeting I was having a beer with my sons in a French cafe. The bill was 14 euros. The waitress was going to take a credit card, then saw I had a €10 note. “Just give me that,” she said. “Don’t worry about the rest.”

It must be nice to live in London and have a home in France too…  Here’s Mr. Nocera:

“I am the target of what is probably the most well-funded corporate retaliation campaign in U.S. history,” Steven Donziger emailed me early Monday afternoon.

Donziger, 53, is the sort of attorney they make movies about. Tall, handsome, and charismatic, he has spent the bulk of his legal career on one case: trying to get Chevron to clean up an environmental mess that he says its predecessor left behind in the Ecuadorian rain forest. His clients are poor Ecuadorians who have allegedly been living with the land’s degradation ever since Texaco pulled out of the country in the early 1990s. (Chevron bought Texaco — and acquired its legal liabilities — in 2001). He has worked tirelessly on the case for more than two decades, finally gaining a $19 billion judgment against the company in an Ecuadorian court in 2011. Though a higher court later cut the damages in half, it would still seem to be a fantastic victory by David over Goliath.

But there is another, darker narrative about Donziger, told most recently by Paul Barrett, a Bloomberg Businessweek writer whose book about the Chevron-Ecuador case, “Law of the Jungle,” is being published this week. According to Barrett, Donziger may have begun his quest with the best of intentions, but somewhere along the way, he lost his bearings. To get the judgment he wanted from the Ecuadorian courts, Donziger allegedly committed multiple acts of fraud, including having members of his team ghostwrite a crucial report for the court that was supposed to be authored by an independent expert. Donziger has responded by accusing Barrett of working hand-in-glove with Chevron, in effect being part of the “retaliation campaign.”

I know Donziger slightly. I’ve always liked him. But I have to say that I find Barrett’s account far more persuasive than Donziger’s. Without question, Chevron has gone after him. But Donziger is the one who supplied the ammunition.

One reason Barrett’s account is credible is that he began his reporting with a Bloomberg Businessweek cover story in 2011 that was decidedly pro-Donziger. But once he got the book contract and began digging deeper into the case, he started to have his doubts about Donziger and the plaintiffs’ team. How could the plaintiffs know for sure that Chevron was at fault when the Ecuadorian government’s oil company had continued to extract oil from the rain forest for years after Texaco left? Where was the epidemiology that connected the oil waste to disease? What about the ghostwritten expert’s report? And the ex parte communications with judges? And even an alleged attempt to bribe the judge to rule in the plaintiffs’ favor?

Barrett isn’t the only one to come to view Donziger as a rogue lawyer willing to do virtually anything to win. So has Roger Parloff, Fortune magazine’s legal writer, who has covered the case for years. And so has the highly respected human right lawyer — and Notre Dame law professor — Doug Cassel.

With every critic, Donziger and his allies have replied the same way: The critics have been corrupted by the evil Chevron. But there is one critic who is not so easy to brush aside: the federal judge Lewis Kaplan of the Southern District of New York. Chevron brought a civil RICO case against Donziger, claiming that his actions had so tainted any Ecuadorian verdict that it should be unenforceable in the United States. (Because Chevron has no assets in Ecuador, the judgment would have to be enforced in countries like the U.S. where it did have assets.)

After a six-week trial, Kaplan essentially agreed, writing an astonishing 485-page decision in which he concluded that Donziger and his team had “corrupted” the trial. (Donziger described Kaplan’s decision as “deeply flawed.”) Donziger had once thought his case against Chevron would show public interest lawyers how to bring big, complex foreign cases against multinational corporations. Instead, it is more likely to show corporations that there is more merit in fighting back than settling.

What’s worse is that the Ecuadorians who live in the affected areas have still not seen any help, 20 years later. A lawyer with a more realistic view of the case might have been able to get a reasonable settlement early on. A lawyer who had played by the rules might have even won a judgment that would now be enforceable in an American court. “Donziger disserved his clients and his cause” by the way he conducted himself during the trial, Cassel now says.

When I spoke to Donziger on Monday, he conceded that he may have made some mistakes, but nothing as egregious as Chevron’s “horrendous actions in Ecuador.” He told me that he was proud of the way he had acted, and that he still stands by the ghostwritten expert’s report.

“I am a big boy,” Donziger said. “I can take responsibility for what I did or did not do.” But that’s just the problem. He can’t. And he hasn’t.

Brooks and Krugman

September 19, 2014

Oh, gawd…  Bobo has a question in “Startling Adult Friendships:”  How would you spend $500 million? He’s got a few ideas.  In the comments “Claus Gehner” from Seattle and Munich had this to say:  “Mr. Brooks’ editorials of late have been a bit – how shall I put it – weird. This one ascends to new heights of weirdness.”  Bobo’s obviously going through some prolonged midlife crisis.  I just wish he’d keep it to himself.  Prof. Krugman, in “Errors and Emissions,” says fighting climate change could be cheaper and easier than almost anyone imagines if we wouldn’t give in to the despair.  Here, dear sweet Baby Jesus help us, is Bobo:

Somebody recently asked me what I would do if I had $500 million to give away. My first thought was that I’d become a moderate version of the Koch brothers. I’d pay for independent candidates to run against Democratic or Republican members of Congress who veered too far into their party’s fever swamps.

But then I realized that if I really had that money, I’d want to affect a smaller number of people in a more personal and profound way. The big, established charities are already fighting disease and poverty as best they can, so in search of new directions I thought, oddly, of friendship.

Ancient writers from Aristotle to Cicero to Montaigne described friendship as the pre-eminent human institution. You can go without marriage, or justice, or honor, but friendship is indispensable to life. Each friendship, they continued, has positive social effects. Lovers face each other, but friends stand side-by-side, facing the world — often working on its behalf. Aristotle suggested that friendship is the cornerstone of society. Montaigne thought that it spreads universal warmth.

These writers probably romanticized friendship. One senses that they didn’t know how to have real conversations with the women in their lives, so they poured their whole emotional lives into male friendships. But I do think they were right in pointing out that friendship is a personal relationship that has radiating social and political benefits.

In the first place, friendship helps people make better judgments. So much of deep friendship is thinking through problems together: what job to take; whom to marry. Friendship allows you to see your own life but with a second sympathetic self.

Second, friends usually bring out better versions of each other. People feel unguarded and fluid with their close friends. If you’re hanging around with a friend, smarter and funnier thoughts tend to come burbling out.

Finally, people behave better if they know their friends are observing. Friendship is based, in part, on common tastes and interests, but it is also based on mutual admiration and reciprocity. People tend to want to live up to their friends’ high regard. People don’t have close friendships in any hope of selfish gain, but simply for the pleasure itself of feeling known and respected.

It’s also true that friendship is not in great shape in America today. In 1985, people tended to have about three really close friends, according to the General Social Survey. By 2004, according to research done at Duke University and the University of Arizona, they were reporting they had only two close confidants. The number of people who say they have no close confidants at all has tripled over that time.

People seem to have a harder time building friendships across class lines. As society becomes more unequal and segmented, invitations come to people on the basis of their job status. Middle-aged people have particular problems nurturing friendships and building new ones. They are so busy with work and kids that friendship gets squeezed out.

So, in the fantasy world in which I have $500 million, I’d try to set up places that would cultivate friendships. I know a lot of people who have been involved in fellowship programs. They made friends that ended up utterly transforming their lives. I’d try to take those sorts of networking programs and make them less career oriented and more profound.

To do that, you have to get people out of their normal hunting grounds where their guard is up. You also probably want to give them challenging activities to do together. Nothing inspires friendship like selflessness and cooperation in moments of difficulty. You also want to give them moments when they can share confidences, about big ideas and small worries.

So I envision a string of adult camps or retreat centers (my oldest friendships were formed at summer camp, so I think in those terms). Groups of 20 or 30 would be brought together from all social and demographic groups, and secluded for two weeks. They’d prepare and clean up all their meals together, and eating the meals would go on for a while. In the morning, they would read about and discuss big topics. In the afternoons, they’d play sports, take hikes and build something complicated together. At night, there’d be a bar and music.

You couldn’t build a close friendship in that time, but you could plant the seeds for one. As with good fellowship programs, alumni networks would grow spontaneously over time.

People these days are flocking to conferences, ideas festivals and cruises that are really about building friendships, even if they don’t admit it explicitly. The goal of these intensity retreats would be to spark bonds between disparate individuals who, in the outside world, would be completely unlikely to know each other. The benefits of that social bridging, while unplannable, would ripple out in ways long and far-reaching.

It’s sad to think that Bobo can’t think of another way to form friendships other than what sounds very much like a reeducation camp for people like him…  Here’s Prof. Krugman:

This just in: Saving the planet would be cheap; it might even be free. But will anyone believe the good news?

I’ve just been reading two new reports on the economics of fighting climate change: a big study by a blue-ribbon international group, the New Climate Economy Project, and a working paper from the International Monetary Fund. Both claim that strong measures to limit carbon emissions would have hardly any negative effect on economic growth, and might actually lead to faster growth. This may sound too good to be true, but it isn’t. These are serious, careful analyses.

But you know that such assessments will be met with claims that it’s impossible to break the link between economic growth and ever-rising emissions of greenhouse gases, a position I think of as “climate despair.” The most dangerous proponents of climate despair are on the anti-environmentalist right. But they receive aid and comfort from other groups, including some on the left, who have their own reasons for getting it wrong.

Where is the new optimism about climate change and growth coming from? It has long been clear that a well-thought-out strategy of emissions control, in particular one that puts a price on carbon via either an emissions tax or a cap-and-trade scheme, would cost much less than the usual suspects want you to think. But the economics of climate protection look even better now than they did a few years ago.

On one side, there has been dramatic progress in renewable energy technology, with the costs of solar power, in particular, plunging, down by half just since 2010. Renewables have their limitations — basically, the sun doesn’t always shine, and the wind doesn’t always blow — but if you think that an economy getting a lot of its power from wind farms and solar panels is a hippie fantasy, you’re the one out of touch with reality.

On the other side, it turns out that putting a price on carbon would have large “co-benefits” — positive effects over and above the reduction in climate risks — and that these benefits would come fairly quickly. The most important of these co-benefits, according to the I.M.F. paper, would involve public health: burning coal causes many respiratory ailments, which drive up medical costs and reduce productivity.

And thanks to these co-benefits, the paper argues, one argument often made against carbon pricing — that it’s not worth doing unless we can get a global agreement — is wrong. Even without an international agreement, there are ample reasons to take action against the climate threat.

But back to the main point: It’s easier to slash emissions than seemed possible even a few years ago, and reduced emissions would produce large benefits in the short-to-medium run. So saving the planet would be cheap and maybe even come free.

Enter the prophets of climate despair, who wave away all this analysis and declare that the only way to limit carbon emissions is to bring an end to economic growth.

You mostly hear this from people on the right, who normally say that free-market economies are endlessly flexible and creative. But when you propose putting a price on carbon, suddenly they insist that industry will be completely incapable of adapting to changed incentives. Why, it’s almost as if they’re looking for excuses to avoid confronting climate change, and, in particular, to avoid anything that hurts fossil-fuel interests, no matter how beneficial to everyone else.

But climate despair produces some odd bedfellows: Koch-fueled insistence that emission limits would kill economic growth is echoed by some who see this as an argument not against climate action, but against growth. You can find this attitude in the mostly European “degrowth” movement, or in American groups like the Post Carbon Institute; I’ve encountered claims that saving the planet requires an end to growth at left-leaning meetings on “rethinking economics.” To be fair, anti-growth environmentalism is a marginal position even on the left, but it’s widespread enough to call out nonetheless.

And you sometimes see hard scientists making arguments along the same lines, largely (I think) because they don’t understand what economic growth means. They think of it as a crude, physical thing, a matter simply of producing more stuff, and don’t take into account the many choices — about what to consume, about which technologies to use — that go into producing a dollar’s worth of G.D.P.

So here’s what you need to know: Climate despair is all wrong. The idea that economic growth and climate action are incompatible may sound hardheaded and realistic, but it’s actually a fuzzy-minded misconception. If we ever get past the special interests and ideology that have blocked action to save the planet, we’ll find that it’s cheaper and easier than almost anyone imagines.

Brooks, Cohen and Nocera

September 16, 2014

In “Goodbye, Organization Man” Bobo actually whines that the global failure to address the Ebola epidemic stems from a much broader crisis in our culture of government.  In the comments “gemli” from Boston points out the following:  “Suddenly Mr. Brooks is outraged that the government he has helped submerge in the bathtub is incapable of mounting an effective, expensive, internationally coordinated effort to respond to disease outbreaks. You can’t rail against big government one day and complain that it’s not there when it’s needed the next.  Brooks has repeatedly advocated for big government to be replaced by grassroots volunteerism, or by a distributed gaggle of local government agencies. But when a virus is knocking at the door of his gated community, suddenly big government is looking a whole lot better.”  Mr. Cohen, in “The Great Unraveling,” sees a time of weakness and hatred, disorientation and doubt, when nobody can see what disaster looms.  In “Criminal Card Games” Mr. Nocera says in the wake of the recent Home Depot breach, you have to wonder if data theft has become a condition of modern life.  Here, FSM help us, is Bobo:

Imagine two cities. In City A, town leaders notice that every few weeks a house catches on fire. So they create a fire department — a group of professionals with prepositioned firefighting equipment and special expertise. In City B, town leaders don’t create a fire department. When there’s a fire, they hurriedly cobble together some people and equipment to fight it.

We are City B. We are particularly slow to build institutions to combat long-running problems.

The most obvious example is the fight against jihadism. We’ve been facing Islamist terror for several decades, now, but every time it erupts — in Lebanon, Nigeria, Sudan, Syria and beyond — leaders start from scratch and build some new ad hoc coalition to fight it.

The most egregious example is global health emergencies. Every few years, some significant epidemic strikes, and somebody suggests that we form a Medical Expeditionary Corps, a specialized organization that would help coordinate and execute the global response. Several years ago, then-Senator Bill Frist went so far as to prepare a bill proposing such a force. But, as always, nothing came of it.

The result, right now, is unnecessary deaths from the Ebola virus in Africa. Ebola is a recurring problem, yet the world seems unprepared. The response has been slow and uncoordinated.

The virus’s spread, once linear, is now exponential. As Michael Gerson pointed out in The Washington Post, the normal countermeasures — isolation, contact tracing — are rendered increasingly irrelevant by the rate of increase. Treatment centers open and are immediately filled to twice capacity as people die on the streets outside. An Oxford University forecast warns as many as 15 more countries are vulnerable to outbreaks. The president of Liberia, Ellen Johnson Sirleaf, warned: “At this rate, we will never break the transmission chain, and the virus will overwhelm us.”

The catastrophe extends beyond the disease. Economies are rocked as flights are canceled and outsiders flee. Ray Chambers, a philanthropist and U.N. special envoy focused on global health, points out the impact on health more broadly.  For example, people in the early stages of malaria show similar symptoms to Ebola and other diseases. Many hesitate to seek treatment fearing they’ll get sent to an Ebola isolation center. So death rates from malaria, pneumonia and other common diseases could rise, as further Ebola cases fail to be diagnosed.

The World Health Organization has recently come out with an action plan but lacks logistical capabilities. President Obama asked for a strategy, but that was two months ago and the government is only now coming up with a strong comprehensive plan. Up until now, aid has been scattershot. The Pentagon opened a 25-bed field hospital in Liberia. The U.S. donated five ambulances to Sierra Leone. Coordination has just not been there.

At root, this is a governance failure. The disease spreads fastest in places where the health care infrastructure is lacking or nonexistent. Liberia, for example, is being overrun while Ivory Coast has put in a series of policies to prevent an outbreak. The few doctors and nurses in the affected places have trouble acquiring the safety basics: gloves and body bags. More than 100, so far, have died fighting the outbreak.

But it’s not just a failure of governance in Africa. It’s a failure of governance around the world. I wonder if we are looking at the results of a cultural shift.

A few generations ago, people grew up in and were comfortable with big organizations — the army, corporations and agencies. They organized huge construction projects in the 1930s, gigantic industrial mobilization during World War II, highway construction and corporate growth during the 1950s. Institutional stewardship, the care and reform of big organizations, was more prestigious.

Now nobody wants to be an Organization Man. We like start-ups, disrupters and rebels. Creativity is honored more than the administrative execution. Post-Internet, many people assume that big problems can be solved by swarms of small, loosely networked nonprofits and social entrepreneurs. Big hierarchical organizations are dinosaurs.

The Ebola crisis is another example that shows that this is misguided. The big, stolid agencies — the health ministries, the infrastructure builders, the procurement agencies — are the bulwarks of the civil and global order. Public and nonprofit management, the stuff that gets derided as “overhead,” really matters. It’s as important to attract talent to health ministries as it is to spend money on specific medicines.

As recent books by Francis Fukuyama and Philip Howard have detailed, this is an era of general institutional decay. New, mobile institutions languish on the drawing broad, while old ones are not reformed and tended. Executives at public agencies are robbed of discretionary power. Their hands are bound by court judgments and regulations.

When the boring tasks of governance are not performed, infrastructures don’t get built. Then, when epidemics strike, people die.

Next up we have Mr. Cohen:

It was the time of unraveling. Long afterward, in the ruins, people asked: How could it happen?

It was a time of beheadings. With a left-handed sawing motion, against a desert backdrop, in bright sunlight, a Muslim with a British accent cut off the heads of two American journalists and a British aid worker. The jihadi seemed comfortable in his work, unhurried. His victims were broken. Terror is theater. Burning skyscrapers, severed heads: The terrorist takes movie images of unbearable lightness and gives them weight enough to embed themselves in the psyche.

It was a time of aggression. The leader of the largest nation on earth pronounced his country encircled, even humiliated. He annexed part of a neighboring country, the first such act in Europe since 1945, and stirred up a war on further land he coveted. His surrogates shot down a civilian passenger plane. The victims, many of them Europeans, were left to rot in the sun for days. He denied any part in the violence, like a puppeteer denying that his puppets’ movements have any connection to his. He invoked the law the better to trample on it. He invoked history the better to turn it into farce. He reminded humankind that the idiom fascism knows best is untruth so grotesque it begets unreason.

It was a time of breakup. The most successful union in history, forged on an island in the North Sea in 1707, headed toward possible dissolution — not because it had failed (refugees from across the seas still clamored to get into it), nor even because of new hatreds between its peoples. The northernmost citizens were bored. They were disgruntled. They were irked, in some insidious way, by the south and its moneyed capital, an emblem to them of globalization and inequality. They imagined they had to control their National Health Service in order to save it even though they already controlled it through devolution and might well have less money for its preservation (not that it was threatened in the first place) as an independent state. The fact that the currency, the debt, the revenue, the defense, the solvency and the European Union membership of such a newborn state were all in doubt did not appear to weigh much on a decision driven by emotion, by urges, by a longing to be heard in the modern cacophony — and to heck with the day after. If all else failed, oil would come to the rescue (unless somebody else owned it or it just ran out).

It was a time of weakness. The most powerful nation on earth was tired of far-flung wars, its will and treasury depleted by absence of victory. An ungrateful world could damn well police itself. The nation had bridges to build and education systems to fix. Civil wars between Arabs could fester. Enemies might even kill other enemies, a low-cost gain. Middle Eastern borders could fade; they were artificial colonial lines on a map. Shiite could battle Sunni, and Sunni Shiite, there was no stopping them. Like Europe’s decades-long religious wars, these wars had to run their course. The nation’s leader mockingly derided his own “wan, diffident, professorial” approach to the world, implying he was none of these things, even if he gave that appearance. He set objectives for which he had no plan. He made commitments he did not keep. In the way of the world these things were noticed. Enemies probed. Allies were neglected, until they were needed to face the decapitators who talked of a Caliphate and called themselves a state. Words like “strength” and “resolve” returned to the leader’s vocabulary. But the world was already adrift, unmoored by the retreat of its ordering power. The rule book had been ripped up.

It was a time of hatred. Anti-Semitic slogans were heard in the land that invented industrialized mass murder for Europe’s Jews. Frightened European Jews removed mezuzahs from their homes. Europe’s Muslims felt the ugly backlash from the depravity of the decapitators, who were adept at Facebooking their message. The fabric of society frayed. Democracy looked quaint or outmoded beside new authoritarianisms. Politicians, haunted by their incapacity, played on the fears of their populations, who were device-distracted or under device-driven stress. Dystopia was a vogue word, like utopia in the 20th century. The great rising nations of vast populations held the fate of the world in their hands but hardly seemed to care.

It was a time of fever. People in West Africa bled from the eyes.

It was a time of disorientation. Nobody connected the dots or read Kipling on life’s few certainties: “The Dog returns to his Vomit and the Sow returns to her Mire / And the burnt Fool’s bandaged finger goes wabbling back to the Fire.”

Until it was too late and people could see the Great Unraveling for what it was and what it had wrought.

Cripes.  He needs to take a pill…  Here’s Mr. Nocera:

What is it going to take to get serious about data breaches?

I ask this question in the wake of the recent Home Depot breach, in which the “bad guys” — presumably cybercriminals in Russia — apparently penetrated the company’s point of sale terminals and came away with an untold number of credit and debit card data. (Home Depot acknowledges that all 2,200 stores in the United States and Canada were likely hacked, but hasn’t yet revealed the number of cards from which data were stolen.)

This, of course, comes after the Target breach of late 2013, in which some 40 million people had their credit card information stolen. Which comes after the Global Payments breach of 2012 and the Sony breach of 2011. All of which come after the T.J. Maxx breach of 2007, in which 94 million credit and debit card records were stolen in an 18-month period.

That’s right: Seven years have passed between the huge T.J. Maxx breach and the huge Home Depot breach — and nothing has changed. Have we become resigned to the idea that, as a condition of modern life, our personal financial data will be hacked on a regular basis? It is sure starting to seem that way.

The Home Depot breach came to light in the usual way. On Sept. 2, a reporter named Brian Krebs, who specializes in cybercrime and operates the website Krebs on Security, broke the news to his readers. Krebs, who is as deeply sourced as any reporter in the country, almost always breaks the news of a new breach. He also reported that the “malware” had been doing its dirty work at Home Depot since April or May. And he discovered that millions of card numbers were being sold on a website called Rescator.cc, which Bloomberg Businessweek recently described as the “Amazon.com of the black market.”

(Interestingly, they are being sold in batches under the names “American Sanctions” and “European Sanction” — an apparent reference to the recent sanctions against Russia.)

The company — “always the last to know,” Krebs says — hastily pulled together some security experts who, sure enough, confirmed the breach. In this instance, Home Depot released a statement saying that it was investigating the breach on Sept. 3, the day after the Krebs report, and confirmed the breach on Sept. 8. As these things go, that’s lightning speed.

Of course, in its materials, the company insists that it cares deeply about its customers’ data and will stop at nothing to plug the leak. But the damage has already been done. Home Depot also claims that debit card P.I.N.’s were not stolen. There is little solace in that, however; the crooks use weak bank security to change the P.I.N., after which they can use it. Sure enough, Krebs’s banking sources have told him that they “are reporting a steep increase over the past few days in fraudulent A.T.M. withdrawals on customer accounts.”

Why the rash of breaches? “It’s easy money,” said Avivah Litan, a security expert at Gartner Inc. “The criminals are distributing this malware, so why not use it? It’s like winning the lottery.”

Kurt Baumgartner, a senior security researcher at Kaspersky Lab, noted that months before the attack on Home Depot began, the F.B.I. alerted retailers about being more vigilant about point-of-sale cyberattacks. The Wall Street Journal reported over the weekend that Home Depot had, in fact, begun the process of strengthening its systems. But it moved so slowly that the criminals had months to vacuum card data before being discovered. Meanwhile, Bloomberg Businessweek found two unnamed former Home Depot managers who claimed that they were told to “settle for ‘C-level security’ because ambitious upgrades would be costly and might disrupt the operation of critical business systems.”

For years, the banks and the retail industry have spent more time accusing each other of causing the problem than seeking a solution. By October 2015, the United States is supposed to move to a more secure card system, using a chip and P.I.N. instead of a magnetic stripe, as Europe did years ago. But even that won’t put an end to data breaches. It will make it harder and more expensive for criminals to crack, but not impossible.

Which is why the federal government needs to get involved. With the banks and retailers at loggerheads, only the government has the ability to force a solution — or at least make it painful enough for companies with lax security to improve.

As it turns out, there are plenty of congressional initiatives to crack down on companies with weak data security, including a bill that was filed in February and co-sponsored by Senators Ed Markey of Massachusetts and Richard Blumenthal of Connecticut. When I asked someone in Markey’s office whether the bill was getting any traction, she replied, “It’s 2014.”

Apparently, we’re on our own.


Follow

Get every new post delivered to your Inbox.

Join 161 other followers