Wednesday, April 27, 2016

Authoritarianism is not a new, untested concept < faanta_stat >

Authoritarianism is not a new, untested concept in the American electorate. Since the rise of Nazi Germany, it has been one of the most widely studied ideas in social science. While its causes are still debated, the political behavior of authoritarians is not. Authoritarians obey. They rally to and follow strong leaders. And they respond aggressively to outsiders, especially when they feel threatened. From pledging to “make America great again” by building a wall on the border to promising to close mosques and ban Muslims from visiting the United States, Trump is playing directly to authoritarian inclinations.

Not all authoritarians are Republicans by any means; in national surveys since 1992, many authoritarians have also self-identified as independents and Democrats. And in the 2008 Democratic primary, the political scientist Marc Hetherington found that authoritarianism mattered more than income, ideology, gender, age and education in predicting whether voters preferred Hillary Clinton over Barack Obama. But Hetherington has also found, based on 14 years of polling, that authoritarians have steadily moved from the Democratic to the Republican Party over time. He hypothesizes that the trend began decades ago, as Democrats embraced civil rights, gay rights, employment protections and other political positions valuing freedom and equality. In my poll results, authoritarianism was not a statistically significant factor in the Democratic primary race, at least not so far, but it does appear to be playing an important role on the Republican side. Indeed, 49 percent of likely Republican primary voters I surveyed score in the top quarter of the authoritarian scale—more than twice as many as Democratic voters.

Political pollsters have missed this key component of Trump’s support because they simply don’t include questions about authoritarianism in their polls. In addition to the typical battery of demographic, horse race, thermometer-scale and policy questions, my poll asked a set of four simple survey questions that political scientists have employed since 1992 to measure inclination toward authoritarianism. These questions pertain to child-rearing: whether it is more important for the voter to have a child who is respectful or independent; obedient or self-reliant; well-behaved or considerate; and well-mannered or curious. Respondents who pick the first option in each of these questions are strongly authoritarian.

Based on these questions, Trump was the only candidate—Republican or Democrat—whose support among authoritarians was statistically significant.

So what does this mean for the election? It doesn’t just help us understand what motivates Trump’s backers—it suggests that his support isn’t capped. In a statistical analysis of the polling results, I found that Trump has already captured 43 percent of Republican primary voters who are strong authoritarians, and 37 percent of Republican authoritarians overall. A majority of Republican authoritarians in my poll also strongly supported Trump’s proposals to deport 11 million illegal immigrants, prohibit Muslims from entering the United States, shutter mosques and establish a nationwide database that track Muslims.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Sunday, April 24, 2016

Mussolini 2.0

The Country Sees ‘Fascist Undertones’ In Donald Trump’s Campaign: New Survey
And just about as many say he encourages violence at his rallies.

Republican presidential candidate Donald Trump waves as he speaks to supporters at his primary election night event this week in Florida.

Half of America believes Donald Trump’s campaign exhibits fascist undertones, with only 30 percent disagreeing, according to a new HuffPost/YouGov poll. The sentiment isn’t contained to Democrats, who unsurprisingly are willing to agree with a negative statement about their political rivals. Forty-five percent of independents also say Trump’s campaign has echoes of fascism, as do a full 28 percent of Republicans.

About half the country believes Trump encourages violence at his campaign events, with just 34 percent saying he doesn’t. The rest aren’t sure. Meanwhile, 27 percent of Republicans say it’s acceptable to “rough up” protesters at political events.

The survey comes in the wake of dozens of arrests and physical altercations tied to Trump’s campaign rallies, including clashes after an event was canceled in Chicago.

Trump, who once offered to pay his supporters’ legal fees if they “knock the crap out of” potential tomato-throwers, has since sought to downplay the frequency of such problems.

“The press is now going, they’re saying, ‘Oh, but there’s such violence.’ No violence. You know how many people have been hurt at our rallies? I think, like, basically none except maybe somebody got hit once,” the businessman said last week in North Carolina.

Most Americans, though, have a very different impression. Two-thirds say there’s more violence at Trump’s events than at those for other candidates, with 62 percent saying the clashes are part of a broader pattern rather than isolated incidents.

That level of agreement on such a politically charged question is itself unusual. It far outstrips, for example, the fraction of the public that sees a broad pattern of police violence against black men.

It even extends somewhat to the GOP: A 55 percent majority of Republicans consider Trump’s events unusually violent, and 61 percent believe the violent clashes are part of a bigger pattern.

Who’s To Blame?

The data indicates that people generally consider protesters and the media to be most responsible for the uptick in violence, even if they also agree that Trump fans the flames. Fifty-four percent say protesters shoulder “a lot” of the blame, 41 percent say Trump’s supporters do and 47 percent say Trump himself does.

Only 23 percent of Republicans, though, say Trump is largely responsible, with barely one-quarter believing that he encourages violence.

Republicans place even less blame on Trump’s supporters, as just 18 percent say they bear a lot of responsibility. In contrast, half place that level of blame on “the mainstream media,” and 78 percent put that degree of fault on protesters.

While some of the GOP response is likely due to rallying around the party’s front-runner, Republicans are also less amenable toward protesting in general. They’re 20 points less likely than Democrats to say it’s acceptable for protesters to turn up at candidates’ rallies, and nearly twice as likely to say it’s all right for those protesters to be thrown out.

The fact that such violence is continuing to happen — and that it seems to be at least condoned by the Trump campaign — is enough to give pause to much of the public regarding the nature of Trump’s candidacy, the survey finds.

A lot of the talk about Trump’s post-primary prospects revolves around his ability to reverse the overwhelmingly negative impression he’s so far made on most of the country.

In recent speeches, he has previewed some arguments he would make in the general election. Many, like focusing on people left behind by the economy, are relatively moderate, and have the potential to resonate across party lines. Convincing voters that he has the temperament to take office — or, at the very minimum, that he’s not a would-be fascist — may be the tougher sell.

The HuffPost/YouGov poll consisted of 1,000 completed interviews conducted March 14-16 among U.S. adults, using a sample selected from YouGov’s opt-in online panel to match the demographics and other characteristics of the adult U.S. population.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Thursday, March 31, 2016

Krugman on the Modern GOP

"What is the modern GOP? A simple model that accounts for just about everything you see is that it’s an engine designed to harness white resentment on behalf of higher incomes for the donor class.

What we call the Republican establishment is really a network of organizations that represent donor interests because they’re supported by donor money. These organizations impose ideological purity with a combination of carrots and sticks: assured support for politicians and pundits who toe the line, sanctions against anyone who veers from orthodoxy — excommunication if you’re an independent thinking pundit, a primary challenge from the Club for Growth if you’re an imperfectly reliable politician.

To a very casual observer, it may look as if this movement infrastructure engages in actual policy analysis and discussion, but that’s only a show put on for the media. Can you even imagine being unsure how a Heritage Foundation study on any significant issue will come out? The truth is that the right’s policy ideas haven’t changed in decades. Paul Ryan’s innovative idea on Medicare — let’s replace it with vouchers! — is the same proposal Newt Gingrich offered in 1995.

So why are we seeing a crackup of this system now? It’s not because events have called the orthodoxy into question; that has never mattered in the past. On the contrary, failed predictions have never caused even the slightest change in claims: the same people who predicted that Bill Clinton’s 1993 tax hike would kill jobs and that Obamacare would be an economic disaster are making confident predictions about the salutary effects of tax cuts now.

The problem, instead, seems to be demography — an increasingly diverse population means that the party needs to go beyond white resentment, but the resentful whites are having none of it. Oh, and the base never cared about the ideology.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Tuesday, February 23, 2016

Sea levels are rising, faster than last 2800 yrs

Sea levels on Earth are rising several times faster than they have in the past 2,800 years and are accelerating.

Couple this with two facts:
2. A species that evolved to prioritize short-term threats is pretty much doomed to ignore a long-term threat until it is too late.

"...and I'm just gettin warmed up!" -- Mother Nature

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Monday, February 08, 2016

CEO Guide to Fraud for Fun & Profit

"Fun" being a euphemism for avoiding jail...

How to commit fraud and get away with it: A Guide for CEOs

Shorter Version A strategy to maximise bonuses and avoid personal culpability:
  • Don’t commit the fraud yourself.
  • Minimise information received about the actions of your employees.
  • Control employees through automated, algorithmic systems based on plausible metrics like Value at Risk.
  • Pay high bonuses to employees linked to “stretch” revenue/profit targets.
  • Fire employees when targets are not met.
  • …..Wait.

Longer Version

CEOs and senior managers of modern corporations possess the ability to engineer fraud on an organisational scale and capture the upside without running the risk of doing any jail time. In other words, they can reliably commit fraud and get away with it.
Imagine that you are the newly hired CEO of a large bank and by some improbable miracle your bank is squeaky clean and free of fraudulent practises. But you are unhappy about this. Your competitors are making more profits than you are by embracing fraud and coming out ahead of you even after paying tens of billions of dollars in fines to the regulators. And you want a piece of the action. But you’re a risk-averse person and don’t want to risk spending any time in jail for committing fraud. So how can you achieve this outcome?
Obviously you should not commit any fraudulent acts yourself. You want your junior managers to commit fraud in the pursuit of higher profits. One way to incentivise this behaviour is to adopt what are known as ‘high-powered incentives’. Pay your employees high bonuses tied to revenue/profits and maintain hard-to-meet ‘stretch’ targets. Fire ruthlessly if these targets are not met. And finally, ensure that you minimise the flow of information up to you about how exactly how your employees meet these targets.
There is one problem with this approach. As a CEO, this allows you to use the “I knew nothing!” defense and claim ignorance about all the “deplorable” fraud taking place lower down the organisational food chain. But it may fall foul of another legal principle that has been tailored for such situations – the principle of ‘wilful blindness’“if there is information that you could have know, and should have known, but somehow managed not to know, the law treats you as though you did know it”. In a recent essay, Judge Rakoff uses exactly this principle to criticise the failure of regulators in the United States in prosecuting senior bankers.
But wait – all hope is not lost yet. There is one way by which you as a CEO can not only argue that adequate controls and supervision were in place and at the same time make it easier for your employees to commit fraud. Simply perform the monitoring and control function through an automated system and restrict your role to signing off on the risk metrics that are the output of this automated system.
It is hard to explain how this can be done in the abstract so let me take a hypothetical example from the mortgage origination and securitisation industry. As a CEO of a mortgage originator in 2005, you are under a lot of pressure from your shareholders to increase subprime originations. You realise that the task would be a lot easier if your salespeople originated fraudulent loans where ineligible borrowers are given loans they can’t afford. You’ve followed all the steps laid out above but as discussed this is not enough. You may be accused of not having any controls in the organisation. Even if you try hard to ensure that no information regarding fraud filters through to you, you can never be certain. At the first sign of something unusual, a mortgage approval officer may raise an exception to his supervisor. Given that every person in the management hierarchy wants to cover his own back, how can you ensure that nothing filters up to you whilst at the same time providing a plausible argument that you aren’t wilfully blind?
The answer is somewhat counterintuitive – you should codify and automate the mortgage approval process. Have your salespeople input potential borrower details into a system that approves or rejects the loan application based on an algorithm without any human intervention. The algorithm does not have to be naive. In fact it would ideally be a complex algorithm, maybe even ‘learned from data’. Why so? Because the more complex the algorithm, the more opportunities it provides to the salespeople to ‘game’ and arbitrage the system in order to commit fraud. And the more complex the algorithm, the easier it is for you, the CEO, to argue that your control systems were adequate and that you cannot be accused of wilful blindness or even the ‘failure to supervise’.
In complex domains, this argument is impossible to refute. No regulator/prosecutor is going to argue that you should have installed a more manual control system. And no regulator can argue that you, the CEO, should have micro-managed the mortgage approval process.
Let me take another example – the use of Value at Risk (VaR) as a risk measure for control purposes in banks. VaR is not ubiquitous because traders and CEOs are unaware of its flaws. It is ubiquitous because it allows senior managers to project the facade of effective supervision without taking on the trouble or the legal risks of actually monitoring what their traders are up to. It is sophisticated enough to protect against the charge of wilful blindness and it allows ample room for traders to load up on the tail risks that fund the senior managers’ bonuses during the good times. When the risk blows up, the senior manager can simply claim that he was deceived and fire the trader.
What makes this strategy so easy to implement today compared to even a decade ago is the ubiquitousness of fully algorithmic control systems. When the control function is performed by genuine human domain experts, then obvious gaming of the control mechanism is a lot harder to achieve. Let me take another example to illustrate this. One of the positions that lost UBS billions of dollars during the 2008 financial crisis was called ‘AMPS’ where billions of dollars in super-senior tranche bonds were hedged with a tiny sliver of equity tranche bonds so that the portfolio showed a zero VaR and delta-neutral risk position. Even the most novice of controllers could have identified the catastrophic tail risk embedded in hedging a position where one can lose billions, with another position where one could only gain millions.
There is nothing new in what I have laid out in this essay – for example, Kenneth Bamberger has made much the same point on the interaction between technology and regulatory compliance:
automated systems—systems that governed loan originations, measured institutional risk, prompted investment decisions, and calculated capital reserve levels—shielded irresponsible decisions, unreasonably risky speculation, and intentional manipulation, with a fa├žade of regularity….
Invisibility by design, allows engineering of fraudulent outcomes without being held responsible for them – the “I knew nothing!” defense. of course, they are also self-deceived so this is really true.
But although the automation that enables this risk-free fraud is a recent phenomenon, the principle behind this strategy is one that is familiar to managers throughout the modern era – “How do I get things done the way I want to without being held responsible for them?”.
Just as the algorithmic revolution is simply a continuation of the control revolution, the ‘accountability gap’ due to automation is simply an acceleration of trends that have been with us throughout the modern era. Theodore Porter has shown how the rise of objectivity and bureaucracy were as much driven by the desire to avoid responsibility as they were driven by the desire for superior results. Many features of the modern corporate world only make sense when we understand that one of their primary aims is the avoidance of responsibility and culpability. Why are external consulting firms so popular even when the CEO knows exactly what he wants to do? So that the CEO can avoid responsibility if the ‘strategic restructuring’ goes badly. Why do so many firms delegate their critical control processes to a hotpotch of outsourced software contractors? So that they can blame any failures on external counter-parties who have explicitly been granted exemption from any liability, 

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Saturday, January 30, 2016

Trump phenomenon explained:"bitch-slap politics"


It's about dominance displays, about showing, rather than arguing, that one's opponent is weak. It's done not through critique but through attack — personal attack — demonstrating that the target will not or can not defend him or herself. The attack doesn't make the point, it ***is*** the point. It's "bitch-slap politics."

This kind of dominance symbolism is pervasive in GOP politics. It's not new with Trump at all. Most successful Republican politicians speak this language. And yet somehow for most it is nonetheless a second language. But it's Trump's native language. ... Wherever it comes from, he seems to intuitively get that for this constituency and at this moment just demonstrating that he gets his way, always, is all that really matters. Policy details, protecting the candidate through careful press releases and structured media opportunities ... none of that matters.

Though it makes pundits somewhat uncomfortable to admit it, most voters — especially the politically disengaged working-class whites Trump is attracting — don't know much about "issues" and don't have well-defined political philosophies.

When they witness political debate, they aren't really analyzing and assessing arguments. They are reading the subtext, attuned to who's aggressive and who's defensive, who's strong and who's weak, who seems like a leader and who doesn't.

Trump instinctively gets this. His innovation, if you can call it that, is to abandon the text altogether, bringing the subtext to the surface. "Toughness" is no longer a side dish, it's the main dish, the only dish. Trump will win because Trump wins.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Wednesday, July 15, 2015

Greek 101

there’s a broader lesson from Greece that is relevant to all of us — and it’s not the usual one about mending our free-spending ways lest we become Greece, Greece I tell you. What we learn, instead, is that fiscal austerity plus hard money is a deeply toxic mix. The fiscal austerity depresses the economy, and pushes it toward deflation; if it’s accompanied by hard money (in Greece’s case the euro, but a fixed exchange rate, a gold standard, or any kind of obsessive fear of inflation would do the trick), the result is not just a depression and deflation, but quite likely a failure even to reduce the debt ratio.
For comparison, look at everyone’s favorite example of successful austerity, Canada in the 1990s. Canada came in with gross debt of roughly 100 percent of GDP, roughly comparable to Greece on the eve of the financial crisis. It then proceeded to do a pretty big fiscal adjustment — 6 percent of GDP according to the International Monetary Fund’s measure of the structural balance, which is about a third of what Greece has done but comparable to other European debtors. But unemployment fell steadily. What was Canada’s secret?
The answer was, easy money and a large currency depreciation.  These offset the drag from austerity, allowing growth to continue. 

So why Tsipras is caving in to the austerians now is just plain baffling. Everyone with half a should understand by now: Austerity Does Not Work (OK, maybe when offset by massive monetary easing and currency devaluation but those are NA here).

In the pantheon of legacy-destroying and utterly baffling moves, Tsipras has joined Blair at the top of the pile.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Saturday, March 14, 2015

America as Failed State

"leaders in both war parties are now looking at ways to get around the Pentagon spending limits in order to satisfy the insatiable appetite of the military industrial complex and their agents in Congress who want to bring home the weapons production bacon - the only real job creation program in the nation anymore.

One likely mechanism to get around sequestration is to use the Overseas Contingency Operations funds, or OCO, which isn't subject to the sequester. This process allows Congress to appropriate more money for war spending - outside of the traditional Pentagon annual appropriations which are impacted by sequestration.

All of this means that further vicious attacks will be made on social programs like food stamps, education, health care, infrastructure repair and more. We'll see more calls for local privatization of water and sewer systems, schools, roads and bridges and the like. Basically the continued hollowing out of the public sector. The standard of living will continue to plummet and practically the only jobs for young people will increasingly be in the military sector.

This is what is happening today in many other western client states where this formula of austerity cuts and militarization go hand-in-hand. The Democrats, the so-called party of the 'little guy', are meekly agreeing to this as they have become full partners in this decimation of the nation."

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Tuesday, March 10, 2015

Warming could hit rates unseen in 1,000 years

We are standing on the edge of a new world where warming is poised to accelerate at rates unseen for at least 1,000 years.

That’s the main finding of a paper published March 9 in Nature Climate Change, which looked at the rate of temperature change over 40-year periods. The new research also shows that the Arctic, North America, and Europe will be the first regions to transition to a new climate, underscoring the urgent need for adaptation planning. Historical records show temperatures have typically fluctuated up or down by about 0.2 °F per decade over the past 1,000 years. But trends over the past 40 years have been decidedly up, with warming approaching 0.4 °F per decade. That’s still within historical bounds of the past—but just barely.

By 2020, warming rates should eclipse historical bounds of the past 1,000 years—and likely at least 2,000 years—and keep rising.
Faster and faster. That's called "acceleration".

Prediction by extrapolation is chancy; extrapolating accelerating phenomena is just a fool's game.

..."and I'm just gettin warmed up!" -- Mother Nature

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Friday, February 13, 2015

Boehner's achievements to date

Over fiveYears Ago, John Boehner promised to be "Laser Focused on Jobs and the Economy" 'jobs will be our top priority"
So what has the GOP House been up to?
House Bills passed:
46 Bills on Abortion
113 Bills on Religion ( anti gay)
73 Bills on Family Relationships ( anti gay)
36 Bills on Marriage ( anti gay)
72 Bills on Firearms
604 Bills on Taxation ( more obscene tax cuts for the rich)
437 Bills on Govt Investigations ( cost $14 million for nothing).
Bills attempted and failed to be passed even by the GOP:
33 attempts to Defund Obamacare.....Failed ( cost to the American tax payer $50 million)
15 attempts to Cut Funding for Planned Parenthood......Failed
3 Attempts to Cut Funding for VA Hospitals.......Failed.
GOP blocked bills:
Blocked bill to aid Small Business
Blocked Unemployment extension ( a loss of 250,000 peripherally related jobs)
Blocked Bank Reform Bills
Blocked Campaign Finance Reform and open Contributions Law
Blocked MULTIPLE Jobs Bills
Blocked Infrastructure Bill ( the nations crumbling infrastructure has a failing "D" rating)
Blocked Ending Tax Breaks for companies that Outsource Jobs ( blocked the "Bring the jobs back home measure)
Blocked Wall Street Reform
Blocked Energy Legislation
Blocked Mine Safety Bill
Blocked Oil Spill Liability Cap increase
Blocked Bill to lower Oil Company Tax Breaks ( 4 billion a year in tax payer subsidies )
Blocked Bill to impose charging American Oil Companies on Oil achieved in the Gulf
Held government hostage, economy lost $24 billion
Blocked Veterans jobs bills
Blocked Veterans benefits
Blocked Veterans health bills
Succeeded in cutting food stamps to 90,000 vets
Filibustered VA hospital funding
Filibustered 3 million unemployment extensions costing 250,000 peripherily related jobs, throwing families out of homes.
Number of TRUE Jobs Bills even allowed to come to a vote in the House....NONE.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Monday, December 22, 2014

Pope issues blistering critique of Vatican

Pope Francis issued a blistering critique Monday of the Vatican bureaucracy that serves him, denouncing how some people lust for power at all costs, live hypocritical double lives and suffer from “spiritual Alzheimer’s” that has made them forget they’re supposed to be joyful men of God.

Francis’ Christmas greeting to the cardinals, bishops and priests who run the Holy See was no joyful exchange of holiday good wishes. Rather, it was a sobering catalogue of 15 sins of the Curia that Francis said he hoped would be atoned for and cured in the New Year.

He had some zingers: How the “terrorism of gossip” can “kill the reputation of our colleagues and brothers in cold blood.” How cliques can “enslave their members and become a cancer that threatens the harmony of the body” and eventually kill it by “friendly fire.” About how some suffer from a “pathology of power” that makes them seek power at all costs, even if it means defaming or discrediting others publicly.

...Dead pope walking!

Wednesday, December 03, 2014

TJ on patience in the face of setbacks

Thomas Jefferson, from a letter he sent in 1798 after passage of the Sedition Act:

"A little patience, and we shall see the reign of witches pass over, their spells dissolve, and the people, recovering their true sight, restore their government to its true principles. It is true that in the meantime we are suffering deeply in spirit, and incurring the horrors of a war and long oppressions of enormous public debt......If the game runs sometimes against us at home we must have patience till luck turns, and then we shall have an opportunity of winning back the principles we have lost, for this is a game where principles are at stake."


Saturday, July 19, 2014

Santelli vs Liesman per Krugman

Addicted to Inflation

The first step toward recovery is admitting that you have a problem. That goes for political movements as well as individuals. So I have some advice for so-called reform conservatives trying to rebuild the intellectual vitality of the right: You need to start by facing up to the fact that your movement is in the grip of some uncontrollable urges. In particular, it’s addicted to inflation — not the thing itself, but the claim that runaway inflation is either happening or about to happen.

To see what I’m talking about, consider a scene that played out the other day on CNBC.
Rick Santelli, one of the network’s stars, is best known for a rant against debt relief that arguably gave birth to the Tea Party. On this occasion, however, he was ranting about another of his favorite subjects, the allegedly inflationary policies of the Federal Reserve. And his colleague Steve Liesman had had enough. “It’s impossible for you to have been more wrong,” Mr. Liesman declared, and he went on to detail the wrong predictions: “The higher interest rates never came, the inability of the U.S. to sell bonds never happened, the dollar never crashed, Rick. There isn’t a single one that’s worked for you.”
You could say the same thing about many people. I’ve had conversations with investors bemused by the failure of the dollar to crash and inflation to soar, because “all the experts” said that was going to happen. And that is indeed what you might have imagined if your notion of expertise was what you saw on CNBC, on The Wall Street Journal’s editorial page, or in Forbes.

And this has been going on for a long time — at least since early 2009. Yet despite being consistently wrong for more than five years, these “experts” never consider the possibility that there might be something amiss with their economic framework, let alone that Ben Bernanke, Janet Yellen or, for that matter, yours truly might have been right to dismiss their warnings.

At best, the inflation-is-coming crowd admits that it hasn’t happened yet, but attributes the delay to unforeseeable circumstances. Thus, in recent Congressional testimony, Lawrence Kudlow, also of CNBC, warned about “excess money and a devalued dollar.” However, “Miraculously, both actual and expected inflation indicators have stayed low.” It’s not something wrong with my model. It’s a miracle!
At worst, inflationistas resort to conspiracy theories: Inflation is already high, but the government is covering it up. The sources purporting to document this cover-up were thoroughly debunked years ago; among other things, private indicators of inflation like the Billion Prices Index (derived from Internet prices) basically confirm the official numbers. Furthermore, inflation conspiracy theorists have faced well-deserved ridicule even from fellow conservatives. Yet the conspiracy theory keeps resurfacing. It has, predictably, been rolled out to defend Mr. Santelli.

All of this is very frustrating to those reform conservatives. If you ask what new ideas they have to offer, they often mention “market monetarism,” which translates under current circumstances to the notion that the Fed should be doing more, not less.One member of the group, Josh Barro — who is now at The Times — has gone so far as to call market monetarism “the shining success of the conservative reform movement.” But this idea has achieved no traction at all with the rest of American conservatism, which is still obsessed with the phantom menace of runaway inflation. 

And the roots of inflation addiction run deep. Reformers like to minimize the influence of libertarian fantasies — fantasies that invariably involve the notion that inflationary disaster looms unless we return to gold — on today’s conservative leaders. But to do that, you have to dismiss what these leaders have actually said. If, for example, people accuse Representative Paul Ryan, chairman of the House Budget Committee, of believing that he’s living in an Ayn Rand novel, that’s because in 2009 he said that we are “living in an Ayn Rand novel.

More generally, modern American conservatism is deeply opposed to any form of government activism, and while monetary policy is sometimes treated as a technocratic affair, the truth is that printing dollars to fight a slump, or even to stabilize some broader definition of the money supply, is indeed an activist policy.

The point, then, is that inflation addiction is telling us something about the intellectual state of one side of our great national divide. The right’s obsessive focus on a problem we don’t have, its refusal to reconsider its premises despite overwhelming practical failure, tells you that we aren’t actually having any kind of rational debate. And that, in turn, bodes ill not just for would-be reformers, but for the nation. 

A version of this op-ed appears in print on July 18, 2014, on page A23 of the New York edition with the headline: Addicted to Inflation

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Tuesday, February 18, 2014

History Channel show to give Greensburg UFO believer new platform

It's come to this: "the Dec. 7, 1941, invasion of Pearl Harbor
that launched World War II" in an article about a History Channel show.  How sad. 

History Channel show to give Greensburg UFO believer new platform


"The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Tuesday, December 31, 2013

Hottest November Ever


The globally averaged temperature for November 2013 was the warmest for November since record keeping began in the late 19th century, and was the 345th consecutive month with a global temperature above the 20th century average.

..."I'm just gettin warmed up!" -- Mother Nature

BOHICA, Jersey shore

According to a new study, the New Jersey shore will likely see a sea level rise of about 1.5 feet by 2050, and about 3.5 feet by 2100, at least a foot higher than the average global sea level rise over the rest of the century. Using a middle-range scenario for future sea level rise, the study found that by 2050, flooding caused by a 10-year storm, which has a 10 percent probability of occurring each year, would exceed all historic storms in Atlantic City.

 ..."I'm just gettin warmed up!" -- Mother Nature


Saturday, July 27, 2013

Gerrymandering and extremism

The House is supposedly the chamber with proportional representation yet the GOP holds a very large majority despite having polled over a million votes less than the loyal opposition. This is a very obvious symptom of the gerrymandering elephant in the room. The less obvious symptom is the extremism that safe-seat gerrymandering promotes: Only 64 of the 435 House races were decided within a 10 percentage-point margin. Of all incumbents vying to retain their seats in the general election, just 21 were defeated. (By comparison, 79 House races had margins of victory less than 10 percent in 2010 and 54 incumbents lost.) Meaning most races were decided in the primaries. And we've what happens to moderates in primaries, especially in the Tea Party era GOP. Until you rip redistricting from the grasp of politicians, gerrymandered extremist politics will be the rule, not the exception. ... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Friday, March 15, 2013

Fiscal Impasse 101

The Morning Plum: The GOP’s self-defeating strategy in fiscal fight
The real reason for the fiscal impasse is hiding right there in plain sight, and it can be summed up in two sentences:

1) Obama can’t sell entitlement cuts to his base, or indeed Democrats in general, without Republicans agreeing to new revenues, and has offered them a straightforward compromise — one that would anger the base on both sides — based on the premise that total victory for the GOP is not an acceptable or realistic outcome.

2) Republican leaders can’t even begin to acknowledge that Obama has offered them a real compromise, because they can’t sell their base on the idea that the President is being flexible, let alone get them to seriously entertain accepting any compromise with him, because the base sees total victory over Obama as the only acceptable outcome.

In essence, a variety of political constraints prevent Republican leaders from acknowledging the reality of the situation. That makes any reality-based dialog impossible. The press has largely failed to reckon with this basic disconnect, which is why the discussion continues to spin its wheels around irrelevant questions, such as whether the president’s outreach is “sincere” enough, as if hurt feelings have anything at all to do with the stalemate, or whether Democrats have gone quite far enough with their offer to Republicans, when the latter won’t even say whether there’s any compromise they could accept.

...rinse, repeat

Saturday, January 05, 2013

Republican gerrymandering makes the difference in the House

Dana Milbank: Republican gerrymandering makes the difference in the House - The Washington Post
The final results from the November election were completed Friday, and they show that Democratic candidates for the House outpolled Republicans nationwide by nearly 1.4 million votes and more than a full percentage point — a greater margin than the preliminary figures showed in November. And that’s just the beginning of it: A new analysis finds that even if Democratic congressional candidates won the popular vote by seven percentage points nationwide, they still would not have gained control of the House.

Saturday, June 09, 2012

... Did Republicans deliberately crash the US economy? Be it ideology or strategem, the GOP has blocked pro-growth policy and backed job-killing austerity – all while blaming Obama by Michael Cohen June 9, 2012 Senate Republican Leader Mitch McConnell of Ky., House Majority Leader-elect Eric Cantor of Va., and House Speaker-designate John Boehner of Ohio, leave a news conference, on Capitol Hill in Washington Tuesday, Nov. 30, 2010, where they talked about their meeting at the White House with President Obama. (AP Photo/Alex Brandon)The Republican party congressional leadership (left to right): Senate Republican minority leader Mitch McConnell, House majority leader Eric Cantor, and House speaker John Boehner, after the 2010 midterms. Photograph: AP Photo/Alex Brandon So why does the US economy stink? Why has job creation in America slowed to a crawl? Why, after several months of economic hope, are things suddenly turning sour? The culprits might seem obvious – uncertainty in Europe, an uneven economic recovery, fiscal and monetary policymakers immobilized and incapable of acting. But increasingly, Democrats are making the argument that the real culprit for the country's economic woes lies in a more discrete location: with the Republican Party. In recent days, Democrats have started coming out and saying publicly what many have been mumbling privately for years – Republicans are so intent on defeating President Obama for re-election that they are purposely sabotaging the country's economic recovery. These charges are now being levied by Democrats such as Senate majority leader Harry Reid and Obama's key political adviser, David Axelrod. For Democrats, perhaps the most obvious piece of evidence of GOP premeditated malice is the 2010 quote from Senate minority leader, Mitch McConnell: "The single most important thing we want to achieve is for President Obama to be a one-term president." Such words lead some to the conclusion that Republicans will do anything, including short-circuiting the economy, in order to hurt Obama politically. Considering that presidents – and rarely opposition parties – are held electorally responsible for economic calamity, it's not a bad political strategy. Then again, it's a hard accusation to prove: after all, one person's economic sabotage is another person's principled anti-government conservatism. Beyond McConnell's words, though, there is circumstantial evidence to make the case. Republicans have opposed a lion's share of stimulus measures that once they supported, such as a payroll tax break, which they grudgingly embraced earlier this year. Even unemployment insurance, a relatively uncontroversial tool for helping those in an economic downturn, has been consistently held up by Republicans or used as a bargaining chip for more tax cuts. Ten years ago, prominent conservatives were loudly making the case for fiscal stimulus to get the economy going; today, they treat such ideas like they're the plague. Traditionally, during economic recessions, Republicans have been supportive of loose monetary policy. Not this time. Rather, Republicans have upbraided Ben Bernanke, head of the Federal Reserve, for even considering policies that focus on growing the economy and creating jobs. And then, there is the fact that since the original stimulus bill passed in February of 2009, Republicans have made practically no effort to draft comprehensive job creation legislation. Instead, they continue to pursue austerity policies, which reams of historical data suggest harms economic recovery and does little to create jobs. In fact, since taking control of the House of Representatives in 2011, Republicans have proposed hardly a single major jobs bill that didn't revolve, in some way, around their one-stop solution for all the nation's economic problems: more tax cuts. Still, one can certainly argue – and Republicans do – that these steps are all reflective of conservative ideology. If you view government as a fundamentally bad actor, then stopping government expansion is, on some level, consistent. So, let's put aside the conspiracy theories for a moment, and look more closely at how the country is faring under the GOP's economic leadership. As Paul Krugman wrote earlier this week, in the New York Times, while a Democrat rests his head each night in the White House, the United States is currently operating with a Republican economy. After winning the House of Representatives in 2010, the GOP brokered a deal to keep the Bush tax cuts in place, which has reduced the tax burden as a percentage of GDP to its lowest point since Harry Truman sat in the White House. At the insistence of the White House, Congress also agreed to extend unemployment benefits and enact a payroll tax cut – measures that provided a small but important stimulus to the economy, but above all, maintained the key GOP position that taxes must never go up. But as Congress giveth, Congress also taketh. The GOP's zealotry on tax cuts is only matched by its zealotry in pursuing austerity policies. In the spring of 2011, federal spending cuts forced by Republican legislators took much-needed money out of the economy: combined with the 2012 budget, it has largely counteracted the positive benefits provided by the 2009 stimulus. Subsequently, the GOP's refusal to countenance legislation that would help states with their own fiscal crises (largely, the result of declining tax revenue) has led to massive public sector layoffs at the state and local level. In fact, since Obama took office, state and local governments have shed 611,000 jobs; and by some measures, if not for these jobs, cuts the unemployment rate today would be closer to 7%, not its current 8.2%. In 2010 and 2011, 457,00 public sector jobs were excised; not coincidentally, at the same time, much of the federal stimulus aid from 2009 ran out. And Republicans took over control of Congress. These cuts have a larger societal impact. When teachers are laid off, for example (and nearly 200,000 have lost their jobs), it means larger class sizes, other teachers being overworked and after-school classes being cancelled. So, ironically, a policy that is intended to save "our children and grandchildren" from "crushing debt" is leaving them worse-prepared for the actual economic and social challenges they will face in the future. In addition, with states operating under tighter fiscal budgets – and getting no hope relief from Washington – it means less money for essential government services, like help for the elderly, the poor and the disabled. This is the most obvious example of how austerity policies are not only harming America's present, but also imperilling its future. And these spending cuts on the state and local level are matched by a complete lack of fiscal expansion on the federal level. In fact, fiscal policy is now a drag on the recovery, which is the exact opposite of how it should work, given a sluggish economy. This collection of more-harm-than-good policies must also include last summer's debt limit debacle, which House speaker John Boehner has threatened to renew this year. This was yet another GOP initiative that undermined the economic recovery. According to economists Betsey Stevenson and Justin Wolfers, "over the entire episode, confidence declined more than it did following the collapse of Lehman Brothers Holdings Inc in 2008." Only after the crisis did the consumer confidence stabilize, but employers "held back on hiring, sapping momentum from a recovery that remains far too fragile." In addition, the debt limit deal also forced more unhelpful spending cuts on the country. Since that national embarrassment, Republicans have refused to even allow votes on President Obama's jobs bill in the Senate; they dragged their feet on the aforementioned payroll tax and even now are holding up a transportation bill with poison-pill demands for the White House on environmental regulation. Yet, with all these tales of economic ineptitude emanating from the GOP, it is Obama who is bearing most of the blame for the country's continued poor economic performance. Whether you believe the Republicans are engaging in purposely destructive fiscal behavior or are simply fiscally incompetent, it almost doesn't matter. It most certainly is bad economic policy and that should be part of any national debate not only on who is to blame for the current economic mess, but also what steps should be taken to get out from underneath it. But don't hold your breath on that happening. Presidents get blamed for a bad economy; and certainly, Republicans are unlikely to take responsibility for the country's economic woes. The obligation will be on Obama to make the case that it is the Republicans, not he, who is to blame – a difficult, but not impossible task. In the end, that might be the worst part of all – one of two major political parties in America is engaging in scorched-earth economic policies that are undercutting the economic recovery, possibly on purpose, and is forcing job-killing austerity measures on the states. And they have paid absolutely no political price for doing so. If anything, it won them control of the House in 2010, and has kept win Obama's approval ratings in the political danger zone. It might even help them get control of the White House. Sabotage or not, it's hard to argue with "success" – and it's hard to imagine we've seen the last of it, whoever wins in November. « "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Saturday, May 12, 2012

WSJ promotes higher taxes on the rich!?!?

The share of pre-tax income accruing to the top 1% of earners in the
U.S. has more than doubled to about 20% in 2010 from less than 10% in
the 1970s. At the same time, the average federal income tax rate on top
earners has declined significantly. Given the large current and
projected deficits, should the top 1% be taxed more? Because U.S. income
concentration is now so high, the potential tax revenue at stake is

But will taxable incomes of the top 1% respond to a tax increase by
declining so much that revenue rises very little or even drops? In other
words, are we already near or beyond the peak of the famous Laffer
Curve, the revenue-maximizing tax rate?

The Laffer Curve is used to illustrate the concept of taxable income
"elasticity,"—i.e., that taxable income will change in response to a
change in the rate of taxation. Top earners can, of course, move taxable
income between years to subject them to lower tax rates, for example,
by changing the timing of charitable donations and realized capital
gains. And some can convert earned income into capital gains, and avoid
higher taxes in other ways. But existing studies do not show much change
in actual work being done.

According to our analysis of current tax rates and their elasticity,
the revenue-maximizing top federal marginal income tax rate would be in
or near the range of 50%-70% (taking into account that individuals face
additional taxes from Medicare and state and local taxes). Thus we
conclude that raising the top tax rate is very likely to result in
revenue increases at least until we reach the 50% rate that held during
the first Reagan administration, and possibly until the 70% rate of the
1970s. To reduce tax avoidance opportunities, tax rates on capital gains
and dividends should increase along with the basic rate.

Friday, April 06, 2012

A Republican meteorologist looks at climate change

April 2, 2012 By Paul Douglas Paul Douglas, a Minnesota meteorologist and author, writes a regular weather feature in the Star Tribune. This article first appeared Thursday on the Huffington Post. I'm going to tell you something that my Republican friends are loath to admit out loud: climate change is real. I'm a moderate Republican, fiscally conservative; a fan of small government, accountability, self-empowerment and sound science. I am not a climate scientist. I'm a Penn State meteorologist, and the weather maps I'm staring at are making me very uncomfortable. No, you're not imagining it: we've clicked into a new and almost foreign weather pattern. To complicate matters I'm in a small, frustrated and endangered minority: a Republican deeply concerned about the environmental sacrifices some are asking us to make to keep our economy powered-up. It's ironic. The root of the word conservative is "conserve". A staunch Republican, Teddy Roosevelt, set aside vast swaths of America for our National Parks System, the envy of the world. Another Republican, Richard Nixon, launched the EPA. Now some in my party believe the EPA and all those silly "global warming alarmists" are going to get in the way of drilling and mining our way to prosperity. Well, we have good reason to be alarmed. Weather 2.0.: "It's a new atmosphere floating overhead." These are the Dog Days of March. Ham Weather reports 5,299 records in the last seven days — some towns 20 to 35 degrees warmer than average; off-the-scale, freakishly warm. 17,360 records since March 1. Sixteen times more warm records than cold records since March 1. The scope, intensity and duration of this early heat wave are historic and unprecedented. And yes, climate change is probably a contributing factor. "Climate is what you expect, weather is what you get." 129,404 weather records in one year, nationwide? You can't point to any one weather extreme and say "that's climate change". But a warmer, wetter atmosphere loads the dice, increasing the potential for historic spikes in temperature and more frequent and bizarre weather extremes. You can't prove that any one of Barry Bond's 762 home runs was sparked by (alleged) steroid use. But it did increase his "base state", raising the overall odds of hitting a home run. A warmer atmosphere holds more water vapor, more fuel for floods, while increased evaporation pushes other regions into drought. Larger view Here's what I suspect: the patient is running a slight fever. Symptoms include violent tornado sneezes, severe sniffles of flooding and raging rashes of jaw-dropping warmth. It's 85 in March. What will July bring? It's as if Mother Nature seized the weather remote, clicked America's seasons on fast-forward, turning the volume on extreme weather up to a deafening 10. This isn't even close to being "normal". Weather Underground's Dr. Jeff Masters put it best: "This is not the atmosphere I grew up with." Some TV meteorologists, professionals skilled at predicting short-term weather, are still in denial. Why? Some don't like being upstaged by climate scientists. We've all been burned by weather models, and some (mistakenly) apply the same suspicion to climate simulations. Others can't or won't take the time to dig into the climate science. "It's all political," one local TV weather friend told me recently. No, it's science. But we've turned it into a political football, a bizarre litmus test for conservatism. Weather and climate are flip-sides of the same coin; you can't talk about one without understanding the other. Acknowledging that the atmosphere is warming doesn't make you a liberal. My climate epiphany wasn't overnight, and it had nothing to do with Al Gore. In the mid-'90s I noticed startling changes in the weather floating over Minnesota. Curious, I began investigating climate science, and, over time, began to see the thumbprint of climate change — along with 97 percent of published, peer-reviewed Ph.D.s, who link a 40 percent spike in greenhouse gases with a warmer, stormier atmosphere. Bill O'Reilly, whom I respect, talks of a "no-spin zone." Yet today there's still a very concerted, well-funded effort to spin climate science. Some companies, institutes and think tanks are cherry-picking data, planting dubious seeds of doubt, arming professional deniers, scientists-for-hire and skeptical bloggers with the ammunition necessary to keep climate confusion alive. It's the "you can't prove smoking cigarettes causes lung cancer!" argument, times 100, with many of the same players. Amazing. Schopenhauer said "All truth goes through three stages. First it is ridiculed. Then it is violently opposed. Finally it is accepted as self-evident." We are now well into Stage 2. It's getting bloody out there. Climate scientists are receiving death threats and many Americans don't know what to believe. Some turn to talk radio or denial blogs for their climate information. No wonder they're confused. "Actions have consequences." We are accountable. Trust your gut — and real experts. We should listen to peer-reviewed climate scientists, who are very competitive by nature. This is not about "insuring more fat government research grants." I have yet to find a climate scientist in the "1 Percent", driving a midlife-crisis-red Ferrari into the lab. I truly hope these scientists turn out to be wrong, but I see no sound, scientific evidence to support that position today. What I keep coming back to is this: all those dire (alarmist!) warnings from climate scientists 30 years ago? They're coming true, one after another — and faster than supercomputer models predicted. Data shows 37 years in a row of above-average temperatures, worldwide. My state has warmed by at least 3 degrees F. Climate change is either The Mother of All Coincidences — or the trends are real. My father, a devout Republican, who escaped a communist regime in East Germany, always taught me to never take my freedom for granted, and "actions have consequences." Carbon that took billions of years to form has been released in a geological blink of an eye. Human emissions have grown significantly over the past 200 years, and now exceed 27 billion tons of carbon dioxide, annually. Larger view To pretend this isn't having any effect on the 12-mile-thin atmosphere overhead is to throw all logic and common sense out the window. It is to believe in scientific superstitions and political fairy tales, about a world where actions have no consequences — where colorless, odorless gases, the effluence of success and growth, can be waved away with a nod and a smirk. No harm, no foul. Keep drilling. In 2007, before it became fashionable to bash climate science, I had the honor of welcoming Iraqi war veterans back to Minnesota for a banquet. The keynote speaker was my personal hero, Sen. John McCain. At dinner I asked him, "is it possible all this warm, freakish weather is one great big, cosmic coincidence?" He rolled his eyes, smiled and said "Paul, I just returned from the Yukon. The Chief Elder of a local village presented me with a 4,000 year old tomahawk that had just melted from the permafrost. The short answer? No." How did we get from there — to here, with many in my party in perpetual denial? Is it still Al Gore? Fear of a government land-grab? My party needs to step up and become part of the solution, which — later this century — will probably generate more jobs, growth and GDP than legacy, carbon-based industries. I just hope our grandkids aren't having the same "debate" about the science. "You're obsessing," my dear wife of 28 years complained recently. "People don't like having this rammed down their throats." Fair enough. I'm genuinely concerned, because I'm in touch with America's leading climate scientists. They are beyond concerned; bordering on apoplectic. We fiddle while Rome burns. Biblical scripture: "We are here to manage God's property." I'm a Christian, and I can't understand how people who profess to love and follow God roll their eyes when the subject of climate change comes up. Actions have consequences. Were we really put here to plunder the Earth, no questions asked? Isn't that the definition of greed? In the Bible, Luke 16:2 says, "Man has been appointed as a steward for the management of God's property, and ultimately he will give account for his stewardship." Future generations will hold us responsible for today's decisions. I understand this: capitalism requires growth. Growth requires energy. Anything that gets in the way of insuring an uninterrupted flow of (carbon-based) energy must be inherently evil, right? Many in my party have an allergic reaction to regulation, but do we really want to go back to the '60s, a time of choking smog and combustible rivers? There's a palpable fear that Big Government will ultimately prevent the energy industry from extracting (and burning) trillions of dollars of carbon still in the ground; the fuel we think we need to keep America competitive, growing and healthy. Proven U.S. reserves of carbon-based fuels are estimated to be 586 GtCO2, according to the Congressional Research Service. Think Progress's Brad Johnson calculates America has roughly $10 trillion worth of carbon resources still left in the ground (coal, gas and oil). "If we are to avoid the catastrophes associated with greater than 2 C warming, sovereign states and public corporations must strand 80 percent of proven global carbon reserves, a loss exceeding $20 trillion," he said in an e-mail. This is what the fight is about. Big Energy wants to keep us addicted to carbon-based fuels indefinitely; shareholders want to keep the money spigot flowing, and lock in future profits. Surprised? Me neither. But in business, as in life, you hedge your bets. We can slowly, methodically, reduce our reliance on carbon-based fuels, while investing in carbon-clean alternatives. That doesn't mean government picks winners. That's anathema to free enterprise. Climate change: The ultimate test of capitalism. "Let the markets work." I'm a hopeless serial entrepreneur. The eight Minnesota companies I've created ultimately employed a couple hundred professionals. Where others see chronic problems I see opportunity. One of my companies is Smart Energy, with a new level of wind forecast accuracy for global wind farms. Last summer, in response to the most severe two years since 1816, my partners and I launched a new, national cable weather channel ("WeatherNation Television") — to keep Americans updated with 24/7 storm reports. "Global Weirding" has arrived. Why bother? Because it's the right thing to do. And because going green will generate green. As in profits. We won't drill our way out of this challenge; we'll innovate our way into a new, lower-carbon energy paradigm. Something we're pretty good at. We should take another look at newer, safer forms of carbon-free nuclear energy. The Chinese are doing some things with molten salts and thorium. "Fast neutron" reactors burn "waste" and it burns up the resultant plutonium, eliminating the so-called terrorist effect, said Don Shelby, former WCCO-TV anchor and energy reporter. "If the U.S. would allow some reprocessing and enrichment, you could put all of the nuclear waste of the country in a shoebox and never dig another ounce of uranium for 100 years. But before nuclear energy can be considered viable we have to solve the waste problem," he added. I was 30 miles downwind of Three Mile Island the day we had a near-meltdown in 1979. My thinking has evolved since — there's probably a place for (safe) nuclear power. Amazingly, America already has the technology and creative minds necessary to ensure future growth and more jobs, without treating Earth like a battered ATM card. We can tackle this problem, like we've tackled every other problem in our nation's history. But do we have the political will? Washington D.C. is broken, utterly incapable of dealing with long-term threats. Compromise is seen as weakness; our natural resources put at risk by political paralysis. Will getting serious about climate change require a third political party: a pro-jobs, pro-clean-energy Common Sense Moderate Middle — to prove that America can move forward and thrive, without trashing the land and air we value? Perhaps. Will it take a series of climate catastrophes to shake some of us out of our perpetual-denial-bubble? I hope not. The climate is warming. The weather is morphing. It's not your grandfather's weather anymore. The trends are undeniable. If you don't want to believe thousands of climate scientists — at least believe your own eyes: winters are warmer & shorter, summers more humid, more extreme weather events, with more frequent and intense rains. For evidence of climate change don't look at your back yard thermometer. That's weather. Take another, longer look at your yard. Look at the new flowers, trees, birds, insects and pests showing up outside your kitchen window that weren't there a generation ago. This is a moral issue. Because the countries least responsible will bear the brunt of rising seas, spreading drought and climate refugees. Because someday your grand kids will ask, "What did you know...when...and what did you do to help?" We've been binging on carbon for 200 years, and now the inevitable hangover is setting in. Curing our addiction to carbon won't happen overnight. But creative capitalism can deal with climate change. I'm no fan of big government or over-regulation. Set the bar high. Then stand back and let the markets work. Let Americans do what they do best: innovate. "The mother of all opportunities:" Turning America into the Silicon Valley of clean energy. We can figure this out. Frankly, we won't have a choice. But I'm a naive optimist. We can reinvent America, leaving us more competitive in the 21st century, launching thousands of new, carbon-free energy companies — supplementing, and someday surpassing anything we can expeditiously suck out of the ground and burn, accelerating an already-warming planet. We won't have to bury our heads in Saudi sand indefinitely — we'll never "frack" our way to a sustainable future. It's time for a New Energy Paradigm. There's no silver bullet. But there's plenty of (green) buckshot, if we aim high and point America in the right direction. Keep drilling, but have a Plan B, C and D. We need real leadership, and a viable, bipartisan blueprint for inevitable energy independence from President Obama and Congress. Yes, health care is important. So is the long-term health of our air, land and water. There are steps all of us can take today. I own one hybrid, another on order. I bought a home a mile away from my office, to reduce my carbon footprint (and preserve some sense of sanity). But there's more I can do. Let's challenge ourselves to reinvent our own energy ecosystems. America 2.0.: "The best way to predict the future? Invent it." I don't pretend to have the answer key. But the same Tenacious, Fast-Forward, Can-Do American Spirit that built the transcontinental railroad, the Internet, lasers and the first artificial heart — sending men to the moon in a breathtakingly short period of time — will ultimately figure this out. My youngest son is graduating from the Naval Academy in May, and then heading to Pensacola. He'll be flying choppers or jets; F-18s that can already run on biofuels. The Navy is serious about renewables and alternative fuels. Because it's the best way forward — protecting our troops, securing supply lines, creating economies of scale that will make biofuels more competitive, leaving the Navy less vulnerable to price shocks in the oil markets. Hedge your bets. Put fewer troops at risk. Think ahead. Only the paranoid survive. ... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Monday, February 27, 2012

Differences in Child Well-Being by State

The index is composed of 25 indicators clustered into seven different domains or dimensions of child well-being. These are the same seven domains used every year in the construction of FCD‘s CWI. The seven domains are: 1. Family Economic Well-Being 2. Health 3. Safe/Risky Behavior 4. Education Attainment 5. Community Engagement 6. Social Relationships 7. Emotional/Spiritual Well-Being Key findings from this study include: > The six states with the best child well-being scores are New Jersey, Massachusetts, New Hampshire, Utah, Connecticut, and Minnesota. > The six states with the worst scores are New Mexico, Mississippi, Louisiana, Arkansas, Nevada, and Arizona. ... Notice a trend? "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Saturday, January 07, 2012

PoliticFact Sells Out

In 2009, PolitiFact awarded its annual Lie of the Year distinction to the claim that the Affordable Care Act included death panels. In 2010, Lie of the Year went to Republicans for saying the Affordable Care Act was a "government takeover of health care." This year, Democrats got the distinction for saying that Paul Ryan’s budget would "end Medicare." Paul Ryan actually campaigned to get PolitiFact to name "end Medicare" their Lie of the Year. Guess what? PolitiFact caved in. And yet Ryan is one of the prime offenders behind the 2010 Lie of the Year -- that the Affordable Care Act was a "government takeover" of the health-care system. Some real fact checking is order: Medicare is currently a public, single-payer, defined-benefit health-care system. Ryan’s budget would turn it into a defined-contribution system relying on private insurers. Sure, it would still be called Medicare, and it would still offer some amount of health-care coverage to seniors over age 65. The resemblance is superficial. I’m not really interested in debating whether this actually ends Medicare, or merely ends Medicare as we currently know it. I would say the Ryan budget contained one of the year’s major lies: Its savings relied on either capping Medicare’s rate of cost growth at inflation -- which every serious health-care policy expert will tell you is completely impossible. Its savings were thus illusory. Whether the Ryan budget ends Medicare, it doesn’t end the deficit. The meta-point here is that we’re seeing, in real time, why the "fact checker" model is probably unsustainable. A few weeks ago, the conservative Weekly Standard published a cover story called "Lies, Damned Lies, and ‘Fact Checking’". Subhead: "The liberal media’s latest attempt to control the discourse." Over at Big Government, John Nolte put it more bluntly: "MSM fact-checkers are an absolute cancer on our political process, a cynical and partisan conceit created by the left-wing media that allows them to arbitrarily judge what is and is not the truth, all in an effort to bring down Republicans and boost Democrats." Steve Benen, Paul Krugman, and others speculate that PolitiFact’s decision to choose a claim associated with Democrats as ‘Lie of the Year’ was a tacit answer to these attacks. ‘See? We’re not liberal! We’re defending Paul Ryan!’ If they had chosen one of their other Lie of the Year contenders -- for instance, the claim that the stimulus created "zero" jobs -- they might have lost the right forever. And that, ultimately, is the problem with the fact checker model. They have no actual power, so their only influence comes from the public’s sense of their legitimacy. And about half of the public leans towards one party and about half of the public leans toward the other. That means PolitiFact and these other outlets need to find some uneasy balance between the parties, too. But that just means the parties will have plenty of opportunities to decide that these are hackish, partisan operations. Conservatives got there a few weeks ago, and now liberals are following. The likely result is that these outlets will be listened to when one side or the other finds it convenient and ignored otherwise. Rather than policing the political discourse, they’ll just become one more bludgeon within it. Much as politicians have figured out how to game the he-said, she-said conventions of news reporting, they’re figuring out how to game the fact checkers. And so the umpires become unwitting players in the very game they’re trying to referee. ... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Thursday, December 29, 2011

2012 will only rearrange the deck chairs

The boat will still be sinking, just a bid more rapidly I suspect. Case in point, consider the global devastation of the northern pine forests:

Trees are effectively the greatest CO2 warehouses ever created. For every metric ton of wood grown, 1.5 metric tons of CO2 is absorbed and one metric ton of oxygen is released.

...instability has reverberated on every forested continent as elevated temperatures in the past 40 years of just over 0.5 degrees Celsius on average are killing mature trees by the billions. In B.C., the mountain pine beetles have killed half the commercial forests in the last 15 years. Instead of absorbing CO2, these massive graveyards of dead trees are releasing 250 million metric tons of CO2 into the atmosphere...

It doesn't even begin to end there; the spruce beetles in the far north of the province into Yukon and Alaska have taken full advantage of warming temperatures by speeding up their life cycles, which formerly took two years and now occurs within one year.

In Kluane National Park and Reserve, Yukon spruce beetles have accomplished something never recorded in modern or past times. Since the cold ecological constraint has been removed, spruce beetles have killed over 350,000 hectares of white spruce. Before this, the largest spruce attack was a modest 247 hectares in 1977.

The long-lived, thrifty high elevation forests of white bark and limber pines of B.C. have also been decimated by mountain pine beetles because, again, the cold-temperature barrier precluding attacks is no longer in situ. Mortality in parts of northern B.C. ranges from 72 per cent to 80 per cent.
These forests are crucial habitat for grizzly and black bears, and of paramount importance to retain winter snow-fall, slowly release spring melt back into the water cycle and replenish the Pacific Ocean, its salmon, eagles, wolves, bears and orcas.

Death rates of white bark and limber pines across the western United States are as high as 90 per cent.
The sentinels of the high country have become the tsunami sirens of global warming, showing ecologist, climatologist and physiologists that a warming world is irrevocably altering the landscape across the entire mountainous region of western North America.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Sunday, November 27, 2011

The age of asymmetric polarization

When politicians and their supporters believe the other side is pursuing policies that would destroy all they cherish, compromise becomes not a desirable expedient but "almost treasonous," to use the phrase tossed about by Gov. Rick Perry of Texas.

Under these circumstances, taking enormous risks with the country's well-being, as House Republicans did in the debt-ceiling rumble, is no longer out of bounds. It's a form of patriotism. When your adversaries' ideas are so dastardly, it's better to court chaos, win the fight, and pick up the pieces later.

And to make matters worse — and more confusing — the two sides are not equally distant from the political center. We are in an age of asymmetric polarization.

Precisely because they believe in both the government and the marketplace, Democrats are always more ready to compromise. Obama's economic address in September was seen as tough and firm because he finally called Republicans in Congress out. Progressives liked the new fortitude, and also the relatively large sums of money Obama would mobilize to jolt the economy back to vibrancy.

But there was nothing remotely radical (or even particularly liberal) about Obama's ideas: tax cuts, many of them business-friendly, and new spending for such exotic projects as, well, schools and roads. As the president said, his proposals had all drawn Republican support in the past.

He was, however, talking about a Republican Party that existed before it was taken over by a new sensibility linking radical individualism with a loathing for government that would shock Hamilton, Clay, Lincoln and, for goodness' sake, Robert Taft.

... my bumper sticker: Pod People Have Stolen My Party. ... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm

Tuesday, October 11, 2011

As California Goes (Bust), so Goes the Nation
California and Bust
by Michael Lewis Photograph by Art Streiber Read Later

On August 5, 2011, moments after the U.S. government watched a rating agency lower its credit rating for the first time in American history, the market for U.S. Treasury bonds soared. Four days later, the interest rates paid by the U.S. government on its new 10-year bonds were plummeting on their way to record lows. The price of gold rose right alongside the price of U.S. Treasury bonds, but the prices of virtually all stocks and other bonds in rich Western countries went into a free fall. The net effect of a major U.S. rating agency’s saying that the U.S. government was less likely than before to repay its debts was to lower the cost of borrowing for the U.S. government and to raise it for everyone else. This told you a lot of what you needed to know about the ability of the U.S. government to live beyond its means: it had, for the moment, a blank check. The shakier the United States government appeared, up to some faraway point, the more cheaply it would be able to borrow. It wasn’t exposed yet to the same vicious cycle that threatened the financial life of European countries: a moment of doubt leads to higher borrowing costs, which leads to greater doubt and even higher borrowing costs, and so on until you become Greece. The fear that the United States might actually not pay back the money it had borrowed was still unreal.

On December 14, 2010, the television news program 60 Minutes aired a 14-minute piece about U.S. state and local finances. Correspondent Steve Kroft interviewed a private Wall Street analyst named Meredith Whitney, who, back in 2007, had gone from being obscure to famous when she correctly suggested that Citigroup’s losses in U.S. subprime bonds were far bigger than anyone imagined, and predicted the bank would be forced to cut its dividend. The 60 Minutes segment noted that U.S. state and local governments faced a collective annual deficit of roughly half a trillion dollars, adding that another trillion-dollar gap existed between what the governments owed retired workers and the money they had on hand to pay them. Whitney pointed out that even these numbers were unreliable, and probably optimistic, as the states did a poor job of providing information about their finances to the public. New Jersey governor Chris Christie concurred with her and added, “At this point, if it’s worse, what’s the difference?” The bill owed by American states to retired American workers was so large that it couldn’t be paid, whatever the amount. At the end of the piece, Kroft asked Whitney what she thought about the ability and willingness of the American states to repay their debts. She didn’t see a real risk that the states would default, because the states had the ability to push their problems down to counties and cities. But at these lower levels of government, where American life was lived, she thought there would be serious problems. “You could see 50 to a hundred sizable defaults, [maybe] more,” she said. A minute later Kroft returned to her to ask when people should start worrying about a crisis in local finances. “It’ll be something to worry about within the next 12 months,” she said.

That prophecy turned out to be self-fulfilling: people started worrying about U.S. municipal finance the minute the words were out of her mouth. The next day the municipal-bond market tanked. It kept falling right through the next month. It fell so far, and her prediction received so much attention, that money managers who had put clients into municipal bonds felt compelled to hire more people to analyze states and cities, to prove her wrong. (One of them called it “the Meredith Whitney Municipal Bond Analyst Full Employment Act.”) Inside the financial world a new literature was born, devoted to persuading readers that Meredith Whitney didn’t know what she was talking about. She was vulnerable to the charge: up until the moment she appeared on 60 Minutes she had, so far as anyone knew, no experience at all of U.S. municipal finance. Many of the articles attacking her accused her of making a very specific forecast—as many as a hundred defaults within a year!—that failed to materialize. (Sample Bloomberg News headline: meredith whitney loses credibility as muni defaults fall 60%.) The whirlwind thrown up by the brief market panic sucked in everyone who was anywhere near municipal finance. The nonpartisan, dispassionate, sober-minded Center on Budget and Policy Priorities, in Washington, D.C., even released a statement saying that there was a “mistaken impression that drastic and immediate measures are needed to avoid an imminent fiscal meltdown.” This was treated in news accounts as a response to Meredith Whitney, as she was the only one in sight who could be accused of having made such a prediction.

But that’s not at all what she had said: her words were being misrepresented so that her message might be more easily attacked. “She was referring to the complacency of the ratings agencies and investment advisers who say there is nothing to worry about,” said a person at 60 Minutes who reviewed the transcripts of the interview for me, to make sure I had heard what I thought I had heard. “She says there is something to worry about, and it will be apparent to everyone in the next 12 months.”

Whatever else she had done, Meredith Whitney had found the pressure point in American finance: the fear that American cities would not pay back the money they had borrowed. The market for municipal bonds, unlike the market for U.S. government bonds, spooked easily. American cities and states were susceptible to the same cycle of doom that had forced Greece to seek help from the International Monetary Fund. All it took to create doubt and raise borrowing costs for states and cities was for a woman with no standing in the municipal-bond market to utter a few sentences on television. That was the amazing thing: she had offered nothing to back up her statement. She’d written a massive, detailed report on state and local finances, but no one except a handful of her clients had any idea what was in it. “If I was a real nasty hedge-fund guy,” one hedge-fund manager put it to me, “I’d sit back and say, ‘This is a herd of cattle that can be stampeded.’ ”

What Meredith Whitney was trying to say was more interesting than what she was accused of saying. She didn’t actually care all that much about the municipal-bond market, or how many cities were likely to go bankrupt. The municipal-bond market was a dreary backwater. As she put it, “Who cares about the stinking muni-bond market?” The only reason she had stumbled into that market was that she had come to view the U.S. national economy as a collection of regional economies. To understand the regional economies, she had to understand how state and local governments were likely to behave, and to understand this she needed to understand their finances. Thus she had spent two unlikely years researching state and local finance. “I didn’t have a plan to do this,” she said. “Not one of my clients asked for it. I only looked at this because I needed to understand it myself. How it started was with a question: How can G.D.P. [gross domestic product] estimates be so high when the states that outperformed the U.S. economy during the boom were now underperforming the U.S. economy—and they were 22 percent of that economy?” It was a good question.

From 2002 to 2008, the states had piled up debts right alongside their citizens’: their level of indebtedness, as a group, had almost doubled, and state spending had grown by two-thirds. In that time they had also systematically underfunded their pension plans and other future liabilities by a total of nearly $1.5 trillion. In response, perhaps, the pension money that they had set aside was invested in ever riskier assets. In 1980 only 23 percent of state pension money had been invested in the stock market; by 2008 the number had risen to 60 percent. To top it off, these pension funds were pretty much all assuming they could earn 8 percent on the money they had to invest, at a time when the Federal Reserve was promising to keep interest rates at zero. Toss in underfunded health-care plans, a reduction in federal dollars available to the states, and the depression in tax revenues caused by a soft economy, and you were looking at multi-trillion-dollar holes that could be dealt with in only one of two ways: massive cutbacks in public services or a default—or both. Whitney thought default unlikely, at least at the state level, because the state could bleed the cities of money to pay off its bonds. The cities were where the pain would be felt most intensely. “The scary thing about state treasurers,” she said, “is that they don’t know the financial situation in their own municipalities.”

“How do you know that?”

“Because I asked them!”

All states may have been created equal, but they were equal no longer. The states that had enjoyed the biggest boom were now facing the biggest busts. “How does the United States emerge from the credit crisis?” Whitney asked herself. “I was convinced—because the credit crisis had been so different from region to region—that it would emerge with new regional strengths and weaknesses. Companies are more likely to flourish in the stronger states; the individuals will go to where the jobs are. Ultimately, the people will follow the companies.” The country, she thought, might organize itself increasingly into zones of financial security and zones of financial crisis. And the more clearly people understood which zones were which, the more friction there would be between the two. (“Indiana is going to be like, ‘N.F.W. I’m bailing out New Jersey.’ ”) As more and more people grasped which places had serious financial problems and which did not, the problems would only increase. “Those who have money and can move do so,” Whitney wrote in her report to her Wall Street clients, “those without money and who cannot move do not, and ultimately rely more on state and local assistance. It becomes effectively a ‘tragedy of the commons.’ ”

The point of Meredith Whitney’s investigation, in her mind, was not to predict defaults in the municipal-bond market. It was to compare the states with one another so that they might be ranked. She wanted to get a sense of who in America was likely to play the role of the Greeks, and who the Germans. Of who was strong, and who weak. In the process she had, in effect, unearthed America’s scariest financial places.

“So what’s the scariest state?” I asked her.

She had to think for only about two seconds.

California Iron Man

At seven o’clock one summer morning I pedaled a $5,000 titanium-frame mountain bike rented in anxiety the previous evening down the Santa Monica beach road to the corner where Arnold Schwarzenegger had asked me to meet him. He turned up right on time, driving a black Cadillac S.U.V. with a handful of crappy old jalopy bikes racked to the back. I wore the closest I could find to actual bicycle gear; he wore a green fleece, shorts, and soft beige slipper-like shoes that suggested both a surprising indifference to his own appearance and a security in his own manhood. His hair was still vaguely in a shape left by a pillow, and his eyelids drooped, though he swore he’d been up for an hour and a half reading newspapers. After reading the newspapers, this is what the former governor of California often does: rides his bike for cardio, then hits the weight room.

He hauls a bike off the back of the car, hops on, and takes off down an already busy Ocean Avenue. He wears no bike helmet, runs red lights, and rips past do not enter signs without seeming to notice them and up one-way streets the wrong way. When he wants to cross three lanes of fast traffic he doesn’t so much as glance over his shoulder but just sticks out his hand and follows it, assuming that whatever is behind him will stop. His bike has at least 10 speeds, but he has just 2: zero and pedaling as fast as he can. Inside half a mile he’s moving fast enough that wind-induced tears course down his cheeks.

He’s got to be one of the world’s most recognizable people, but he doesn’t appear to worry that anyone will recognize him, and no one does. It may be that people who get out of bed at dawn to jog and Rollerblade and racewalk are too interested in what they are doing to break their trance. Or it may be that he’s taking them by surprise. He has no entourage, not even a bodyguard. His former economic adviser, David Crane, and his media adviser, Adam Mendelsohn, who came along for the ride just because it sounded fun, are now somewhere far behind him. Anyone paying attention would think, That guy might look like Arnold, but it can’t possibly be Arnold, because Arnold would never be out alone on a bike at seven in the morning, trying to commit suicide. It isn’t until he is forced to stop at a red light that he makes meaningful contact with the public. A woman pushing a baby stroller and talking on a cell phone crosses the street right in front of him and does a double take. “Oh . . . my . . . God,” she gasps into her phone. “It’s Bill Clinton!” She’s not 10 feet away, but she keeps talking to the phone, as if the man were unreal. “I’m here with Bill Clinton.”

“It’s one of those guys who has had a sex scandal,” says Arnold, smiling.

“Wait . . . wait,” says the woman to her phone. “Maybe it’s not Bill Clinton.”

Before she can make a positive identification, the light is green, and we’re off.

His life has been a series of carefully staged experiences. He himself has no staged presentation of it, however. He is fresh, alive, and improvisational: I’m not sure even he knows what he will do next. He’s not exactly humble, but then, if I had lived the life he’s lived, I’m not sure I would be, either, though I might try to fake humility more often than he does, which is roughly never. What saves him from self-absorption, aside from a natural curiosity, is a genuine lack of interest in personal reflection. He lives the same way he rides his bike, paying far more attention to what’s ahead than what’s behind. In office, he kept no journal of any sort. I find it amazing, but he now says he didn’t so much as scribble little notes that might later be used to reconstruct his experience and his feelings about it. “Why would I do that?” he says. “It’s kind of like you come home and your wife asks you about your day. I’ve done it once and I don’t want to do it again.” What he wanted to do after a long day of being governor, more or less, was to lift weights.

We’re just a couple of miles in when he zips around a corner and into a narrow alleyway just off Venice Beach. He’s humoring me; I’ve been pestering him about what it was like for him when he first arrived in America, back in 1968, with little money, less En­glish, really nothing but his lats, pecs, traps, and abs, for which there was no obvious market. He stops beside a tall brick wall. It surrounds what might once have been an impressive stone house that now just looks old and bleak and empty. The wall is what interests him, because he built it 43 years ago, right after he had arrived and started to train on Muscle Beach. “Franco [Columbu, like Schwarzenegger a former Mr. Olympia] and I made money this way. In bodybuilding there was no money. Here we were, world champions of this little subculture, and we did this to eat. Franco ran the business. I mixed the cement and knocked things down with the sledgehammer.”

Before he stumbled while running downhill with a refrigerator strapped to his back, Columbu was the front-runner in the 1977 contest for the title of the World’s Strongest Man, so there was some distinction in being hired by his operation, as Schwarze­neg­ger was, to be the muscle. They had a routine. Franco would play the unreliable Italian, Arnold the sober German. Before they cut any deal they’d scream at each other in German in front of the customer until the customer would finally ask what was going on. Arnold would turn to the customer and explain, Oh, he’s Italian, and you know how they are. He wants to charge you more, but I think we can do it cheaply. Schwarzenegger would then name a not so cheap price. “And the customer,” he says now, laughing, “he would always say, ‘Arnold, you’re such a nice guy! So honest!’ It was selling, you know.”

He surveys his handiwork. “It’ll be here for a thousand years,” he says, then points out some erosion on the top. “I said to Franco we ought to come back and fix the top. You know, to show it was guaranteed for life.”

A poor kid from a small village in Austria, the son of a former Nazi, hops on a plane to America, starts out laying bricks, and winds up running the state and becoming one of America’s most prominent political leaders. From post to wire the race takes less than 35 years. I couldn’t help but ask the obvious question.

“If someone had told you when you were building this wall that you would wind up governor of California, what would you have said?”

“That would be all right,” he said, not exactly catching my drift.

“As a boy,” I said, taking another tack, “did you believe you’d lead something other than an ordinary life?”

“Yes.” He didn’t miss a beat.


“I don’t know.”

“No one has had this kind of crazy, wild ride,” he says as we speed away from the brick wall, but in a tone that suggests the ride was an accident. “I was influenced a lot by America,” he said. “The giant six-lane highways, the Empire State Building, the risktaking.” He still remembers vividly the America he heard and read about as a boy in Austria: everything about it was big. The only reason he set out to grow himself some big muscles was that he thought it might be a ticket to America.

If there had not been a popular movement to remove sitting governor Gray Davis and the chance to run for governor without having to endure a party primary, he never would have bothered. “The recall happens and people are asking me, ‘What are you going to do?’ ” he says, dodging vagrants and joggers along the beach bike path. “I thought about it but decided I wasn’t going to do it. I told Maria I wasn’t running. I told everyone I wasn’t running. I wasn’t running.” Then, in the middle of the recall madness, Terminator 3: Rise of the Machines opened. As the movie’s leading machine, he was expected to appear on The Tonight Show to promote it. En route he experienced a familiar impulse—the impulse to do something out of the ordinary. “I just thought, This will freak everyone out,” he says. “It’ll be so funny. I’ll announce that I am running. I told Leno I was running. And two months later I was governor.” He looks over at me, pedaling as fast as I can to keep up with him, and laughs. “What the fuck is that?”

We’re now off the beach and on the surface roads, and the traffic is already heavy. He veers left, across four lanes, arrives on the other side, and says, “All these people are asking me, ‘What’s your plan? Who’s on your staff?’ I didn’t have a plan. I didn’t have a staff. I wasn’t running until I went on Jay Leno.”

His view of his seven years trying to run the state of California can be summarized as follows. He came to power accidentally, but not without ideas about what he wanted to do. At his core he thought government had become more problem than solution: an institution run less for the benefit of the people than for the benefit of politicians and other public employees. He behaved pretty much as Americans seem to imagine the ideal politician should behave: he made bold decisions without looking at polls; he didn’t sell favors; he treated his opponents fairly; he was quick to acknowledge his mistakes and to learn from them; and so on. He was the rare elected official who believed, with some reason, that he had nothing to lose, and behaved accordingly. When presented with the chance to pursue an agenda that violated his own narrow political self-interest for the sake of the public interest, he tended to leap at it. “There were a lot of times when we said, ‘You just can’t do that,’ ” says his former chief of staff, Susan Kennedy, a lifelong Democrat, whose hiring was one of those things a Republican governor was not supposed to do. “He was always like, ‘I don’t care.’ Ninety percent of the time it was a good thing.”

Two years into his tenure, in mid-2005, he’d tried everything he could think of to persuade individual California state legislators to vote against the short-term desires of their constituents for the greater long-term good of all. “To me there were shocking moments,” he says. Having sped past a do not enter sign, we are now flying through intersections without pausing. I can’t help but notice that, if we weren’t breaking the law by going the wrong way down a one-way street, we’d be breaking the law by running stop signs. “When you want to do pension reform for the prison guards,” he says, “and all of a sudden the Republicans are all lined up against you. It was really incredible, and it happened over and over: people would say to me, ‘Yes, this is the best idea! I would love to vote for it! But if I vote for it some interest group is going to be angry with me, so I won’t do it.’ I couldn’t believe people could actually say that. You have soldiers dying in Iraq and Afghanistan, and they didn’t want to risk their political lives by doing the right thing.”

He came into office with boundless faith in the American people—after all, they had elected him—and figured he could always appeal directly to them. That was his trump card, and he played it. In November 2005 he called a special election that sought votes on four reforms: limiting state spending, putting an end to the gerrymandering of legislative districts, limiting public-employee-union spending on elections, and lengthening the time it took for public-school teachers to get tenure. All four propositions addressed, directly or indirectly, the state’s large and growing financial mess. All four were defeated; the votes weren’t even close. From then until the end of his time in office he was effectively gelded: the legislators now knew that the people who had elected them to behave exactly the way they were already behaving were not going to undermine them when appealed to directly. The people of California might be irresponsible, but at least they were consistent.
Home of the Free . . . Lunch

A compelling book called Cal­ifornia Crackup describes this problem more generally. It was written by a pair of journalists and nonpartisan think-tank scholars, Joe Mathews and Mark Paul, and they explain, among other things, why Arnold Schwarze­neg­ger’s experience as governor was going to be unlike any other experience in his career: he was never going to win. California had organized itself, not accidentally, into highly partisan legislative districts. It elected highly partisan people to office and then required these people to reach a two-thirds majority to enact any new tax or meddle with big spending decisions. On the off chance that they found some common ground, it could be pulled out from under them by voters through the initiative process. Throw in term limits—no elected official now serves in California government long enough to fully understand it—and you have a recipe for generating maximum contempt for elected officials. Politicians are elected to get things done and are prevented by the system from doing it, leading the people to grow even more disgusted with them. “The vicious cycle of contempt,” as Mark Paul calls it. California state government was designed mainly to maximize the likelihood that voters will continue to despise the people they elect.

But when you look below the surface, he adds, the system is actually very good at giving Californians what they want. “What all the polls show,” says Paul, “is that people want services and not to pay for them. And that’s exactly what they have now got.” As much as they claimed to despise their government, the citizens of California shared its defining trait: a need for debt. The average Californian, in 2011, had debts of $78,000 against an income of $43,000. The behavior was unsustainable, but, in its way, for the people, it works brilliantly. For their leaders, even in the short term, it works less well. They ride into office on great false hopes and quickly discover they can do nothing to justify those hopes.

In Paul’s view, Arnold Schwarzenegger had been the best test to date of the notion that the problem with California politics was personal, that all the system needed to fix itself was an independent-minded leader willing to rise above petty politics and exert the will of the people. “The recall was, in and of itself, an effort by the people to say that a new governor—a different continued from page 183 person—could solve the problem,” says Paul. “He tried every different way of dealing with the crisis in services. He tried to act like a Republican. He tried to act like a Democrat. He tried making nice with the legislature. When that didn’t work he called them girlie men. When that didn’t work he went directly to the people. And the people voted against his proposals.”

The experiment wasn’t a complete fail­ure. As governor, Schwarzenegger was able to accomplish a few important things—reforming worker compensation, enabling open primaries, and, at the very end, ensuring that legislative districts would be drawn by an impartial committee rather than by the legislature. But on most issues, and on virtually everything having to do with how the state raised and spent money, he lost. In his first term Schwarzenegger had set out to cut spending and found he could cut only the things that the state actually needed. Near the end of his second term, he managed to pass a slight tax increase, after he talked four Republicans into creating the super-majority necessary for doing so. Every one of them lost his seat in the next election. He’d taken office in 2003 with approval ratings pushing 70 percent and what appeared to be a mandate to fix California’s money problems; he left in 2011 with approval ratings below 25 percent, having fixed very little. “I was operating under the commonsense kind of thing,” he says now. “It was the voters who recalled Gray Davis. It was the voters who elected me. So it will be the voters who hand me the tools to do the job. But the other side was successful enough for the voters to take the tools away.”

David Crane, the former economic adviser—at that moment rapidly receding into the distance—could itemize the result: a long list of depressing government financial statistics. The pensions of state employees ate up twice as much of the budget when Schwarzenegger left office as they had when he arrived, for instance. The officially recognized gap between what the state would owe its workers and what it had on hand to pay them was roughly $105 billion, but that, thanks to accounting gimmicks, was probably only about half the real number. “This year the state will directly spend $32 billion on employee pay and benefits, up 65 percent over the past 10 years,” says Crane later. “Compare that to state spending on higher education [down 5 percent], health and human services [up just 5 percent], and parks and recreation [flat], all crowded out in large part by fast-rising employment costs.” Crane is a lifelong Democrat with no particular hostility to government. But the more he looked into the details, the more shocking he found them to be. In 2010, for instance, the state spent $6 billion on fewer than 30,000 guards and other prison-system employees. A prison guard who started his career at the age of 45 could retire after five years with a pension that very nearly equaled his former salary. The head parole psychiatrist for the California prison system was the state’s highest-paid public employee; in 2010 he’d made $838,706. The same fiscal year that the state spent $6 billion on prisons, it had invested just $4.7 billion in its higher education—that is, 33 campuses with 670,000 students. Over the past 30 years the state’s share of the budget for the University of California has fallen from 30 percent to 11 percent, and it is about to fall a lot more. In 1980 a Cal student paid $776 a year in tuition; in 2011 he pays $13,218. Everywhere you turn, the long-term future of the state is being sacrificed.

This same set of facts, and the narrative it suggested, would throw an ordinary man into depression. He might conclude that he lived in a society that was ungovernable. After seven years of trying and mostly failing to run California, Schwarzenegger is persuasively not depressed. “You have to realize the thing was so much fun!” he says. “We had a great time! There were times of frustration. There were times of disappointment. But if you want to live rather than just exist, you want the drama.” As we roll to a stop very near the place on the beach where he began his American bodybuilding career, he says, “You have to step back and say, ‘I was elected under odd circumstances. And I’m going out in odd circumstances.’ You can’t have it both ways. You can’t be a spoiled brat.”

The odd circumstances were the never-ending financial crises. He’d come to power in the bust after the Internet bubble; he’d left in the bust after the housing bub­ble. Before and after our bike ride, I sat down with him to get his view of this second event. It was in the middle of 2007, he said, when he first noticed something was not quite right in the California economy. He’d been finishing up budget negotiations and arrived at a number, however phony, where the budget could be declared balanced. An aide walked into his office to give him a heads-up: the tax receipts for that month were less than expected. “We were all of a sudden short $300 million in revenue for the month,” says Schwarzenegger. “I somehow felt, Uh-oh. Because there was something in the air.” Soon after that he visited the George W. Bush White House, where he gave a talk that was, as ever, upbeat. “At the end of it this guy—he was the guy who was in charge of housing, I forgot the name. Great guy. For some reason or other he was very honest with me. I don’t know why. He probably didn’t think I’d go out and blab, which I didn’t. He says, ‘That was a great speech you gave, but we’re heading to a major problem.’ I said, ‘What do you mean?’ He said, ‘I looked at some of the numbers, and it’s going to be ugly.’ That’s all he said. He wouldn’t elaborate.” A housing-price decline in the United States meant a housing-price collapse in California, and a housing-price collapse in California meant an economic collapse and a decline in tax revenues. “The next month our revenues came in short $600 million. By December we were short a billion.”

At some point in our talks I asked Schwarze­negger how much time he had spent, as governor, grappling with the on-the-ground local implications of the big state crisis. The question pretty clearly bored him. “I’m not into the local stuff,” he’d said. “I was born for the world.”
City of Broken Dreams

About an hour into the weekly meeting of the San Jose City Council, I find myself wishing that I, too, was born for the world. A hundred citizens yawn and text as the council honors National Farmers Market Week; the few people who seem to be paying attention get up and leave after the honor is bestowed. The council commemorates August 7 as Assyrian Martyrs Day, “honoring the massacre of three thousand people in August 1933, and recognizing 2,000 years of persecution of Assyrian Christians.” Maybe 30 people turn their attention from their cell phones to the ceremony, but then they, too, rise and exit the chamber. A mere handful of people are left to hear the San Jose city manager offer the latest bleak financial news: the state of California was clawing back tens of millions of dollars more, and “140 employees have been separated from the city.” (New times call for new euphemisms.) A pollster presents his finding that, no matter how the question is phrased, the citizens of San Jose are unlikely to approve any ballot measure that raises taxes. A numbers guy gets to his feet and explains that the investment returns in the city’s pension plan are not likely to be anything near as high as was assumed. In addition to there not being enough money in this particular pot to begin with, the pot is failing to expand as fast as everyone had hoped, and so the gap between what the city’s employees are entitled to and what will exist is even greater than previously imagined. The council then votes to postpone, for six weeks, a vote on whether to declare the city’s budget a “public emergency,” and thus to give to the mayor, Chuck Reed, new powers.

Following each motion an obese man not so much dressed as enshrouded in blue-jean overalls maximizes his right to be heard for five minutes on every subject: over and again he rises from the front row of the audience, waddles to the podium, and delivers sophisticated-sounding but incomprehensible critiques of everything. “The absolute reduction in competence of government is predicated on what happened today . . . ”

The relationship between the people and their money in California is such that you can pluck almost any city at random and enter a crisis. San Jose has the highest per capita income of any city in the United States, after New York. It has the highest credit rating of any city in California with a population over 250,000. It is one of the few cities in America with a triple-A rating from Moody’s and Standard & Poor’s, but only because its bondholders have the power to compel the city to levy a tax on property owners to pay off the bonds. The city itself is not all that far from being bankrupt.

It’s late afternoon when I meet Mayor Chuck Reed in his office at the top of the city-hall tower. The crowd below has just begun to chant. The public employees, as usual, are protesting him. Reed is so used to it that he hardly notices. He’s a former air-force officer and Vietnam-era veteran with an intellectual bent and the clipped manner of a midwestern farmer. He has a master’s degree from Princeton, a law degree from Stanford, and a lifelong interest in public policy. Still, he presents less as the mayor of a big city in California than as a hard-bitten, upstanding sheriff of a small town who doesn’t want any trouble. Elected to the city council in 2000, he became mayor six years later; in 2010 he was re-elected with 77 percent of the vote. He’s a Democrat, but at this point it doesn’t much matter which party he belongs to, or what his ideological leanings are, or for that matter how popular he is with the people of San Jose. He’s got a problem so big that it overwhelms ordinary politics: the city owes so much more money to its employees than it can afford to pay that it could cut its debts in half and still wind up broke. “I did a calculation of cost per public employee,” he says as we settle in. “We’re not as bad as Greece, I don’t think.”

The problem, he explains, pre-dates the most recent financial crisis. “Hell, I was here. I know how it started. It started in the 1990s with the Internet boom. We live near rich people, so we thought we were rich.” San Jose’s budget, like the budget of any city, turns on the pay of public-safety workers: the police and firefighters now eat 75 percent of all discretionary spending. The Internet boom created both great expectations for public employees and tax revenues to meet them. In its negotiations with unions the city was required to submit to binding arbitration, which works for police officers and firefighters just as it does for Major League Baseball players. Each side of any pay dispute makes its best offer, and a putatively neutral judge picks one of them. There is no meeting in the middle: the judge simply rules for one side or the other. Each side thus has an incentive to be reasonable, for the less reasonable they are, the less likely it is that the judge will favor their proposal. The problem with binding arbitration for police officers and firefighters, says Reed, is that the judges are not neutral. “They tend to be labor lawyers who favor the unions,” he says, “and so the city does anything it can to avoid the process.” And what politician wants to spat publicly with police officers and firefighters?

Over the past dec­ade the city of San Jose had repeatedly caved to the demands of its public-safety unions. In practice this meant that when the police or fire department of any neighboring city struck a better deal for itself, it became a fresh argument for improving the pay of San Jose police and fire. The effect was to make the sweetest deal cut by public-safety workers with any city in Northern California the starting point for the next round of negotiations for every other city. The departments also used each other to score debating points. For instance, back in 2002, the San Jose police union cut a three-year deal that raised police officers’ pay by 18 percent over the contract. Soon afterward, the San Jose firefighters cut a better deal for themselves, including a pay raise of more than 23 percent. The police felt robbed and complained mightily until the city council crafted a deal that handed them 5 percent more premium pay in exchange for training to fight terrorists. “We got famous for our anti-terrorist-training pay,” explains one city official. Eventually the anti-terrorist-training premium pay stopped; the police just kept the extra pay, with benefits. “Our police and firefighters will earn more in retirement than they did when they were working,” says Reed. “There used to be an argument that you have to give us money or we can’t afford to live in the city. Now the more you pay them the less likely they are to live in the city, because they can afford to leave. It’s staggering. When did we go from giving people sick leave to letting them accumulate it and cash it in for hundreds of thousands of dollars when they are done working? There’s a corruption here. It’s not just a financial corruption. It’s a corruption of the attitude of public service.”

When he was elected to the city council, Reed says, “I hadn’t even thought about pensions. I can’t say I said, ‘Here is my plan.’ I never thought about this stuff. It never came up.” It wasn’t until San Diego flirted with bankruptcy, in 2002, that he wondered about San Jose’s finances. He began to investigate the matter. “That’s when I realized there were big problems,” he says. “That’s when I started paying attention. That’s when I started asking questions: Could it happen here? It’s like the housing bubble and the Internet bubble. There were people around who were writing about it. It’s not that there aren’t people telling us that this is crazy. It’s that you refuse to believe that you are crazy.”

He hands me a chart. It shows that the city’s pension costs when he first became interested in the subject were projected to run $73 million a year. This year they would be $245 million: pension and health-care costs of retired workers now are more than half the budget. In three years’ time pension costs alone would come to $400 million, though “if you were to adjust for real life expectancy it is more like $650 million.” Legally obliged to meet these costs, the city can respond only by cutting elsewhere. As a result, San Jose, once run by 7,450 city workers, was now being run by 5,400 city workers. The city was back to staffing levels of 1988, when it had a quarter of a million fewer residents. The remaining workers had taken a 10 percent pay cut; yet even that was not enough to offset the increase in the city’s pension liability. The city had closed its libraries three days a week. It had cut back servicing its parks. It had refrained from opening a brand-new community center, built before the housing bust, because it couldn’t pay to staff the place. For the first time in history it had laid off police officers and firefighters.

By 2014, Reed had calculated, a city of a million people, the 10th-largest city in the United States, would be serviced by 1,600 public workers. “There is no way to run a city with that level of staffing,” he said. “You start to ask: What is a city? Why do we bother to live together? But that’s just the start.” The problem was going to grow worse until, as he put it, “you get to one.” A single employee to service the entire city, presumably with a focus on paying pensions. “I don’t know how far out you have to go until you get to one,” said Reed, “but it isn’t all that far.” At that point, if not before, the city would be nothing more than a vehicle to pay the retirement costs of its former workers. The only clear solution was if former city workers up and died, soon. But former city workers were, blessedly, living longer than ever.

This wasn’t a hypothetical scary situation, said Reed. “It’s a mathematical inevitability.” In spirit it reminded me of Bernard Madoff’s investment business. Anyone who looked at Madoff’s returns and understood them could see he was running a Ponzi scheme; only one person who had understood them both­ered to blow the whistle, and no one listened to him. (See No One Would Listen: A True Financial Thriller, by Harry Markopolos.)

In his negotiations with the unions, the mayor has gotten nowhere. “I understand the police and firefighters,” he says. “They think, We’re the most important, and everyone else goes [gets fired] first.” The police union recently suggested to the mayor that he close the libraries for the other four days. “We looked into that,” Reed says. “If you close the libraries an extra day you pay for 20 or 30 cops.” Adding 20 more police officers for a year wouldn’t solve anything. The cops who were spared this year would be axed next, in response to the soaring costs of the pensions of city workers who already had retired. On the other side of the inequality is the taxpayer of San Jose, who has no interest in paying more than he already does. “It’s not that we’re insolvent and can’t pay our bills,” says Reed. “It’s about willingness.”

I ask him what the chances are that, in this pinch, he could raise taxes. He holds up a thumb and index finger: zero. He’s recently coined a phrase, he says: “service-level insolvency.” Service-level insolvency means that the expensive community center that has been built and named cannot be opened. It means closing libraries three days a week. It isn’t financial bankruptcy; it’s cultural bankruptcy.

“How on earth did this happen?” I ask him.

“The only way I can explain it,” he says, “is that they got the money because it was there.” But he has another way to explain it, and in a moment he offers it up.

“I think we’ve suffered from a series of mass delusions,” he says.

I didn’t completely understand what he meant, and said so.

“We’re all going to be rich,” he says. “We’re all going to live forever. All the forces in the state are lined up to preserve the status quo. To preserve the delusion. And here—this place—is where the reality hits.”

On the way back to the elevators I chat with two of Mayor Reed’s aides. He’d mentioned to me that, as bad as they might think they have it in San Jose, a lot of other American cities have it worse. “I count my blessings when I talk to the mayors of other cities,” he’d said.

“Which city do you pity most?” I ask just before the elevator doors close.

They laugh and in unison say, “Vallejo!”
Living on the Default Line

Welcome to vallejo, city of opportunity, reads the sign on the way in, but the shops that remain open display signs that say, we accept food stamps. Weeds surround abandoned businesses, and all traffic lights are set to permanently blink, which is a formality, as there are no longer any cops to police the streets. Vallejo is the one city in the Bay Area where you can park anywhere and not worry about getting a ticket, because there are no meter maids either. The windows of city hall are dark, but its front porch is a hive of activity. A young man in a backward baseball cap, sunglasses, and a new pair of Nike sneakers stands on a low wall and calls out an address:

“Nine hundred Cambridge Drive,” he says. “In Benicia.”

The people in the crowd below instantly begin bidding. From 2006 to 2010 the value of Vallejo real estate fell 66 percent. One in 16 homes in the city is in foreclosure. This is apparently the fire sale, but the characters involved are so shady and furtive that I can hardly believe it. I stop to ask what’s going on, but the bidders don’t want to talk. “Why would I tell you anything?” says a guy sitting in a Coleman folding chair. He obviously thinks he’s shrewd, and perhaps he is.

The lobby of city hall is completely empty. There’s a receptionist’s desk but no receptionist. Instead, there’s a sign: to foreclosure auctioneers and foreclosure bidders: please do not conduct business in the city hall lobby.

On the third floor I find the offices of the new city manager, Phil Batchelor, but when I walk in, there is no one in sight. It’s just a collection of empty cubicles. At length a woman appears and leads me to Batchelor himself. He’s in his 60s and, oddly enough, a published author. He’s written one book on how to raise children and another on how to face death. Both deliver an overtly Christian message, but he doesn’t come across as Evangelical; he comes across as sensible, and a little weary. His day job, before he retired, was running cities with financial difficulties. He came out of retirement to take this job, but only after the city council had asked him a few times. “The more you say no, the more determined they are to get you,” he says. His chief demand was not financial but social: he’d take the job only if the people on the city council ceased being nasty to one another and behaved civilly. He actually got that in writing, and they’ve kept their end of the bargain. “I’ve been in a lot of places that have been in a lot of trouble, but I’ve never seen anything like this,” he says. He then lays out what he finds unusual, beginning with the staffing levels. He’s now running the city, and he has a staff of one: I just met her. “When she goes out to the bathroom, she has to lock the [office] door,” he says, “because I’m in meetings, and we have no one else.”

Back in 2008, unable to come to terms with its many creditors, Vallejo declared bankruptcy. Eighty percent of the city’s budget—and the lion’s share of the claims that had thrown it into bankruptcy—were wrapped up in the pay and benefits of public-safety workers. Relations between the police and the firefighters, on the one hand, and the citizens, on the other, were at historic lows. The public-safety workers thought that the city was out to screw them on their contracts; the citizenry thought that the public-safety workers were using fear as a tool to extort money from them. The local joke was that “P.D.” stands for “Pay or Die.” The city-council meetings had become exercises in outrage: at one, a citizen arrived with a severed pig’s head on a barbecue grill. “There’s no good reason why Vallejo is as fucked up as it is,” says longtime resident Marc Garman, who created a Web site to catalogue the civil war. “It’s a boat ride to San Francisco. You throw a stone and you hit Napa.” Since the bankruptcy, the police and fire departments have been cut in half; some number of the citizens who came to Phil Batchelor’s office did so to say they no longer felt safe in their own homes. All other city services had been reduced effectively to zero. “Do you know that some cities actually pave their streets?” says Batchelor. “That’s not here.”

I notice on his shelf a copy of Fortune magazine, with Meredith Whitney on the cover. And as he talked about the bankrupting of Vallejo, I realized that I had heard this story before, or a private-sector version of it. The people who had power in the society, and were charged with saving it from itself, had instead bled the society to death. The problem with police officers and firefighters isn’t a public-sector problem; it isn’t a problem with government; it’s a problem with the entire society. It’s what happened on Wall Street in the run-up to the subprime crisis. It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences. It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.

Having failed to convince its public-safety workers that it could not afford to make them rich, the city of Vallejo, California, had hit bottom: it could fall no lower. “My approach has been I don’t care who is to blame,” Batchelor said. “We needed to change.” When I met him, a few months after he had taken the job, he was still trying to resolve a narrow financial dispute: the city had 1,013 claimants with half a billion dollars in claims but only $6 million to dole out to them. They were survivors of a shipwreck on a life raft with limited provisions. His job, as he saw it, was to convince them that the only chance of survival was to work together. He didn’t view the city’s main problem as financial: the financial problems were the symptom. The disease was the culture. Just a few weeks earlier, he had sent a memo to the remaining city staff—the city council, the mayor, the public-safety workers. The central message was that if you want to fix this place you need to change how you behave, each and every one of you. “It’s got to be about the people,” he said. “Teach them respect for each other, integrity and how to strive for excellence. Cultures change. But people need to want to change. People convinced against their will are of the same opinion still.”

“How do you change the culture of an entire city?” I asked him.

“First of all we look internally,” he said.
Too Fat to Fly

The road out of Vallejo passes directly through the office of Dr. Peter Whybrow, a British neuroscientist at U.C.L.A. with a theory about American life. He thinks the dysfunction in America’s society is a by-product of America’s success. In academic papers and a popular book, American Mania, Whybrow argues, in effect, that human beings are neurologically ill-designed to be modern Americans. The human brain evolved over hundreds of thousands of years in an environment defined by scarcity. It was not designed, at least originally, for an environment of extreme abundance. “Human beings are wandering around with brains that are fabulously limited,” he says cheerfully. “We’ve got the core of the average lizard.” Wrapped around this reptilian core, he explains, is a mammalian layer (associated with maternal concern and social interaction), and around that is wrapped a third layer, which enables feats of memory and the capacity for abstract thought. “The only problem,” he says, “is our passions are still driven by the lizard core. We are set up to acquire as much as we can of things we perceive as scarce, particularly sex, safety, and food.” Even a person on a diet who sensibly avoids coming face-to-face with a piece of chocolate cake will find it hard to control himself if the chocolate cake somehow finds him. Every pastry chef in America understands this, and now neuroscience does, too. “When faced with abundance, the brain’s ancient reward pathways are difficult to suppress,” says Whybrow. “In that moment the value of eating the chocolate cake exceeds the value of the diet. We cannot think down the road when we are faced with the chocolate cake.”

The richest society the world has ever seen has grown rich by devising better and better ways to give people what they want. The effect on the brain of lots of instant gratification is something like the effect on the right hand of cutting off the left: the more the lizard core is used the more dominant it becomes. “What we’re doing is minimizing the use of the part of the brain that lizards don’t have,” says Whybrow. “We’ve created physiological dysfunction. We have lost the ability to self-regulate, at all levels of the society. The $5 million you get paid at Goldman Sachs if you do whatever they ask you to do—that is the chocolate cake upgraded.”

The succession of financial bubbles, and the amassing of personal and public debt, Whybrow views as simply an expression of the lizard-brained way of life. A color-coded map of American personal indebtedness could be laid on top of the Centers for Disease Control’s color-coded map that illustrates the fantastic rise in rates of obesity across the United States since 1985 without disturbing the general pattern. The boom in trading activity in individual stock portfolios; the spread of legalized gambling; the rise of drug and alcohol addiction—it is all of a piece. Everywhere you turn you see Americans sacrifice their long-term interests for short-term rewards.

What happens when a society loses its ability to self-regulate, and insists on sacrificing its long-term interest for short-term rewards? How does the story end? “We could regulate ourselves if we chose to think about it,” Whybrow says. “But it does not appear that is what we are going to do.” Apart from that remote possibility, Whybrow imagines two outcomes. The first he illustrates with a true story, which might be called the parable of the pheasant. Last spring, on sabbatical from the University of Oxford, he was surprised to discover that he was able to rent an apartment inside Blenheim Palace, the Churchill family home. The previous winter at Blenheim had been harsh, and the pheasant hunters had been efficient; as a result, just a single pheasant had survived in the palace gardens. This bird had gained total control of a newly seeded field. Its intake of food, normally regulated by its environment, was now entirely unregulated: it could eat all it wanted, and it did. The pheasant grew so large that, when other birds challenged it for seed, it would simply frighten them away. The fat pheasant became a tourist attraction and even acquired a name: Henry. “Henry was the biggest pheasant anyone had ever seen,” says Whybrow. “Even after he got fat, he just ate and ate.” It didn’t take long before Henry was obese. He could still eat as much as he wanted, but he could no longer fly. Then one day he was gone: a fox ate him.

The other possible outcome was only slightly more hopeful: to hit bottom. To realize what has happened to us—because we have no other choice. “If we refuse to regulate ourselves, the only regulators are our environment,” says Whybrow, “and the way that environment deprives us.” For meaningful change to occur, in other words, we need the environment to administer the necessary level of pain.

In August 2011, the same week that Standard & Poor’s downgraded the debt of the United States government, a judge approved the bankruptcy plan for Vallejo, California. Vallejo’s creditors ended up with 5 cents on the dollar, public employees with something like 20 and 30 cents on the dollar. The city no longer received any rating at all from Moody’s and Standard & Poor’s. It would take years to build the track rec­ord needed to obtain a decent rating. The absence of a rating mattered little, as the last thing the city needed to do was to go out and borrow money from strangers.

More out of idle curiosity than with any clear purpose, I drove up again to Vallejo and paid a call on the fire department. In the decay of our sense of common purpose, the firefighters are a telling sign that we are approaching a new bottom. It isn’t hard to imagine how a police department might wind up in conflict with the community it’s hired to protect. A person who becomes a police officer enjoys the authority. He wants to stop the bad guys. He doesn’t necessarily need to care for the people he polices. A person who becomes a firefighter wants to be a good guy. He wants to be loved.

The Vallejo firefighter I met with that morning was named Paige Meyer. He was 41 years old. He had short salt-and-pepper hair and olive skin, with traces of burn marks on his cheeks. His natural expression was a smile. He wasn’t particularly religious or political. (“I’m not necessarily a God guy.”) The closest thing he had to a religion, apart from his family, was his job. He was extremely proud of it, and of his colleagues. “I don’t want this to sound arrogant at all,” he said, “but many departments in nicer communities, they get a serious fire maybe once a year. We get them all the time.” The Vallejo population is older and poorer than in many surrounding cities, and older still are the buildings it lives in. The typical Vallejo house is a charming, highly flammable wooden Victorian. “In this town we fight fires,” says Meyer. “This town rips.” The department was shaped by its environment: they were extremely aggressive firefighters. “When I came to this department you rolled to a fire,” he said. “You were not going to see an exterior water stream from this department. We’re going in. You have some knucklehead calling in with a sore throat—your giddyup is not so fast. But I’ll tell you something about this department. They get a call that there’s a baby choking or a 10-year-old not breathing, you better get out of the way or you’re going to get run over.”

As a young man, to pay his way through college, Meyer had worked as a state-beach lifeguard at lakes in central California. He assumed that there would be little drama in the work but people would turn up, get drunk, and attempt to drown. A few of the times he pulled people from the water, they were in bad enough shape that they needed paramedics; the fire department was there on the spot. He started talking to firefighters and found that “they all absolutely loved what they did. You get to go and live and create a second family. How can you not like that?” He came to Vallejo in 1998, at the age of 28. He had left a cushy job in Sunnyvale, outside San Jose, where there aren’t many fires, precisely because he wanted to fight fires. “In other departments,” he says, “I wasn’t a firefighter. The first six months of the job here, I was out at two in the morning at a fire every other week. I couldn’t believe it.” The houses of Vallejo are mainly balloon-frame construction. The interior walls have no firebreaks: from bottom to top, all four walls carry fire as efficiently as a chimney. One of the rookie mistakes in Vallejo is to put the fire out on the ground floor, only to look up and see it roaring out of the roof. “When we get to a fire we say, ‘Boom! Send someone up to the attic.’ Because the fire is going right to the attic.”

Meyer actually had made that rookie mistake. One day not long after he’d arrived, he jumped off the truck already breathing air from a tank and raced into what appeared to be a burning one-bedroom apartment. He knocked down the door and put the attack line on the fire and then wondered why the fire wasn’t going out. “It should have been getting cooler, but it was getting hotter and hotter.” Right in front of his face, on his plastic mask, lines trickled down, like rain on a windshield. The old-school firefighters left their ears exposed so they could feel the heat: the heat contained the critical information. Meyer could only see the heat: his helmet was melting. “If your helmet starts to shrivel up and melt, that’s not cool,” he says. A melting helmet, among the other problems it presents, is an indication that a room is about to flash. Flashing, he explains, “is when all combustible materials simultaneously ignite. You’re a baked potato after that.” He needed more water, or to get out, but his ego was invested in staying inside, and so he stayed inside. Moments later a backup arrived, with another, bigger hose.

Afterward, he understood his mistake: the building was three stories, built on a slope that disguised its size, and the fire had reached the attic. “I’m not saying that if the backup hadn’t come when it did I’d be dead,” he says, but that’s exactly what he is saying. The scar on his face is from that fire. “I needed to learn to control my environment,” he said. “I’d had this false sense of security.”

When you take care of something, you become attached to it, and he’d become attached to Vallejo. He was extremely uncomfortable with conflict between his union and the citizens, and had found himself in screaming matches with the union’s negotiator. Meyer thought firefighters, who tended to be idealistic and trusting, were easily duped. He further thought the rank and file had been deceived both by the city, which lied to them repeatedly in negotiations, and by their own leadership, which harnessed the firefighters’ outrage to make unreasonable demands in the union-negotiated contract with the city. What was lost at the bargaining table was the reason they did what they did for a living. “I’m telling you,” Meyer says, “when I started, I didn’t know what I was getting paid. I didn’t care what I was getting paid. I didn’t know about benefits. A lot of things that we’re politicizing today were not even in my mind. I was just thinking of my dream job. Let me tell you something else: nobody cared in 2007 how much I made. If I made six figures they said, ‘Shit, man, you deserve it. You ran into a burning building.’ Because everyone had a job. All they knew about our job is that it was dangerous. The minute the economy started to collapse, people started looking at each other.”

Today the backup that may or may not have saved him is far less likely to arrive. When Vallejo entered bankruptcy, the fire department was cut from 121 to 67, for a city of 112,000 people. The department handles roughly 13,000 calls a year, extremely high for the population. When people feel threatened or worried by anything except other people, they call the fire department. Most of these calls are of the cat-in-the-tree variety—pointless. (“You never see the skeleton of a cat in a tree.”) They get calls from people who have headaches. They get calls from people who have itches where they can’t scratch. They have to answer every call. (“The best call I ever had was phantom-leg pain in a guy with no legs.”) To deal with these huge numbers of calls, they once had eight stations, eight three-person engine companies, a four-man truck company (used only for actual fires and rescue calls), one fireboat, one confined-space rescue team, and a team to deal with hazardous materials. They now are down to four stations, four engines, and a truck.

This is particularly relevant to Paige Meyer because, two months ago, he became Vallejo’s new fire chief. It surprised him: he hadn’t even applied for the job. The city manager, Phil Batchelor, just called him to his office one day. “He didn’t ever really ask me if I wanted the job,” says Meyer. “He just asked how’s the family, told me he was giving me the job, and asked if I had any problem with that.”

He didn’t, actually. He sat down and made a list of ways to improve the department. He faced a fresh challenge: How to deliver service that was the same as before, or even better than before, with half the resources. How to cope with an environment of scarcity. He began to measure things that hadn’t been measured. The No. 1 cause of death in firefighting was heart attacks. No. 2 was truck crashes. He was now in charge of a department that would be both overworked and in a hurry. Fewer people doing twice the work probably meant twice the number of injuries per firefighter. He’d decided to tailor fitness regimes to fit the job. With fewer fire stations and fewer firefighters in them, the response times were going to be slower. He’d need to find new ways to speed things up. A longer response time meant less room for error; a longer response time meant the fires they’d be fighting would be bigger. He had some thoughts about the most efficient way to fight these bigger fires. He began, in short, to rethink firefighting.

When people pile up debts they will find difficult and perhaps even impossible to repay, they are saying several things at once. They are obviously saying that they want more than they can immediately afford. They are saying, less obviously, that their pres­ent wants are so important that, to satisfy them, it is worth some future difficulty. But in making that bargain they are implying that, when the future difficulty arrives, they’ll figure it out. They don’t always do that. But you can never rule out the possibility that they will. As idiotic as optimism can sometimes seem, it has a weird habit of paying off.

... "The era of procrastination, of half-measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences." - Winston Churchill, The Gathering Storm