VerSteeg's bad analysis

Deputy Editor of the Post Editorial Page, Jac Wilder VerSteeg, writes:

The drumbeat of "worse than economists expected" negatively affects the nation's psyche and further depresses the economy. If economists had been better at predicting just how bad things were going to be, things wouldn't have gotten as bad as they have.

What the economy needs, obviously, is economists who will start expecting that the economy will be much worse than economists expect. Only then can we expect the economy to get better.

Seriously? Economics is a social science. As with all sciences, there are disputes. The disputes in some areas of economics are particularly difficult since you can't easily conduct experiments in many cases. This leads to the use of historical data, with the problem being that historical data might include some variables that you are under (or over) accounting for. Hence, the difficulty in agreeing upon controversies within the discipline.

Disagreements, however, are not resolved with this "throw the baby out" line of thinking. And they are definitely not improved by lazy columnists who complain about vague job titles (such as "economist") without explaining the differences that exist within the universe of opinions within those titles. The internet helps those of us in the public interested in learning more (hello Dean Baker, Dani Rodrik, and Brad Delong), but of course some Post Editors have a problem with bloggers too.

Compensation structures

The media keeps repeating the automobile industry's convoluted hourly compensation claims (ie the average hourly compensation for a worker is $60 an hour). Dean Baker notes:

It would be helpful if the NYT and other media outlets would revert to normal English usage in discussing the compensation of auto workers. Ford is welcome to keep their books anyway they like, but payments that do not go in any form to current workers, like the cost of retiree health benefits, do not fit the definition of compensation. UAW auto workers are reasonably well-paid, but their compensation package is not as generous as this measure of "compensation" implies.

I actually like the creativity of this "pay Person X, but label Person Y as recipient" approach. I am waiting for executive compensation to be rolled into the worker's numbers so that the media will report that some metal stamper is earning $300/hour.

Responding to other people's commentors

SFDB had a long comment string on Monday for one of the posts. The comments were dominated by a back-and-forth with a number of questions being asked. One of the questions stood out, and I want to take a moment to think on the point being raised. One comentor asked, will the money injections into the financial system lead to hyper-inflation?

Now, I want to start off by saying that I'm not an economist. What I am is someone interested in finding out answers that affect us all. Probably the easiest to uderstand description of the processes going on (in terms of buying and spending in the economy at a broad level, not particular to the details of this crisis) is this Slate piece by Paul Krugman from 1998. Now, Krugman is reviled by the right. Hopefully, this won't stop readers, because the article I am linking to is practically non-political.

I say practically, because to any lay reader, the political positions laid out are almost imperceptible. Even you can perceive them, it is important to understand that the verdict is out on the dynamic of a market like this from loud partisans on the right and the left. No one has said it as clearly as the very right-wing American Enterprise Institute, inflation is better than deflation.

Quantitatively ease away, Mr. Bernanke.

Dumb move

Post on Politics reports that the Democratic National Committee has decided on a slogan for their Limbaugh billboard. I don''t understand why the DNC forced this thing down our throats. It's hard to argue for a more data-intensive, policy-based approach to politics when your side is caught up wasting money on this kind of juvenile stunt.

Blue Dog buildup

The Hill reports:

Leaders of the centrist Democratic coalition have expanded their membership to 56 members, balancing the group’s desire for influence in the caucus against the need to remain exclusive.

Under the 20 percent cap that was in place during the 110th Congress, they would have allowed only 51 members. That number was reached last week, causing many, including the National Republican Congressional Committee (NRCC), to speculate that they’d reached their limit.

This would be the same Blue Dog coalition that helped to cover up illegal activity by the Bush administration, complained about the stimulus, and all but oppose EFCA. Now, I don't know if it is honest disagreement or if it is a power play to counter a popular president, but either way we should be aware about which of our public officials identifies themselves with this label.

Understanding the mechanics

I simply cannot overestimate the importance of understanding the mechanics of any particular regulatory or governing structure. It is step one. Step two, understanding the ways that stakeholders may use and/or abuse the system, needs to come after one understands the processes of government.

I like Eye on Miami, but gimleteye does not seem to be clear on how the Department of Community Affairs (DCA) operates when it comes to local decisionmaking.

Herald editorial writer Myriam Marquez says the [DCA] "keeps locals honest". The truth is murkier: local power brokers and their political hirelings, like the unreformable majority of the Miami Dade County Commission, continually shove-off zoning decisions that offend their campaign contributors, allowing the state 'to decide'. Once the public is gamed at the local level, then the blood sport moves to Tallahassee, where powerful lobbyists (we know who they are, and so do you, if your read our blog) strong-arm and otherwise pressure agency staff to do the wrong thing. They put enormous pressure on DCA by getting other agencies, from FDOT to the US Fish and Wildlife Service of the US Army Corps of Engineers , to do their bidding: some government agencies are just very, very cheap dates.

The DCA reviews Comprehensive Plan amednments. The way this works is that the DCA has a copy of the local government's approved Comp Plan. They then look at the State's criteria (FS 163 and FAC 9J-5) for a Comp Plan change alongside the amendment. If they determine that the amendment can be changed per the State's criteria, they then see if the amendment complies with the local government's own Comp Plan. DCA will do this for the land use portion of the amendment, but since amendments have effects on other portions of the Comp Plan other agencies will review sections relevant to their own expertise.

This is how local governments are kept honest...to their own Comp Plans. I am not going to say that gimleteye is wrong about the corruption. I am saying that the DCA is not where the buck stops. It stops with the writers and stewards of the Comp Plans, themselves.

Having said that, my position is that the DCA needs to stay.

Bai on political science

Reporter Matt Bai wrote a review (reg. req.) of a book called "The Myth of Digital Democracy", by Matthew Hindman. Bai writes that thesis of the book is that, "[a]ccording to Hindman, American politics and media, far from being democratized in any way, are still controlled by a relative handful of activists and gatekeepers." Now, I haven't read this book so I can't speak how accurately Bai describes the main topic within the book. I would like to take a second to note some statements about differences between political journalists and political scientists.

Bai says:

Academics who study politics often consider those of us who write about the field to be superficial, simple-minded and–the greatest indictment of all– unscientific. We interview three people in an Iowa diner and act as if we have penetrated the very soul of America. (Such allegations are, sadly, true enough.) Hindman’s book is permeated by just this kind of mild contempt for political journalists, who, in his view, have mindlessly extolled the democratizing virtues of the Internet while not possessing the basic intellectual skills necessary to quantify their assertions.

On the other hand:

[P]olitical writers don’t think so much of political scientists, either, mostly because anyone who has ever actually worked in or covered politics can tell you that, whatever else it may be, a science isn’t one of them. Politics is, after all, the business of humans attempting to triumph over their own disorder, insecurity, competitiveness, arrogance, and infidelity; make all the equations you want, but a lot of politics is simply tactile and visual, rather than empirical. My dinnertime conversation with three Iowans may not add up to a reliable portrait of the national consensus, but it’s often more illuminating than the dissertations of academics whose idea of seeing America is a trip to the local Bed, Bath & Beyond.

I emphasized the two sections about because I think that they point out a key issue. A democracy is not a sporting event. We need to treat it as an important sociological reality as opposed to a narrative that reads well. Furthermore, even in sports, the turn towards quantitative analysis leads to an increase in successful outcomes. I am not sure what the benefits are of denying the value of statistics in political endeavors. I am sure that David Plouffe could enlighten you on the benefits of accepting the value of statistics, though.

Look, math is hard. Statistical analysis is hard. Doing these things well can result in complicated, nuanced understandings that may be difficult to adequately describe in a newspaper. Demonizing the math, though, only leads Americans down a roads in which we understand the dynamics less and we rely on the media elite more. If the internet democratized anything, it was the political media landscape. Today, we don't have to rely on editors dictating what we need to know on the basis of what they think will sell more newspapers. Any additions to that small group of, potentially conflicted, information providers, be they minimal additions or not, is a good thing.

Regulators...mount up

Yglesias writes about the structural problems with those trying to regulate the financial markets:

It’s just very hard to imagine, in the United States political system as it works, civil servants really being able to crack heads and prevent wealthy individuals from doing something that they want to do and that appears to be benefiting a fairly wide group of other people.

This is a good restatment of the problem. So what is his proposed solution to this?

[A] President interested in building a new effective regulatory system would need to do something to make...a new, more consolidated agency. With a new name and a new logo. And you’d need to bring in a few people from the outside to head it up initially, who are seen as respected and having clout. But beyond the first wave, you’d want to professionalize the organization and not have very many political appointees. And in the early years, you’d need to make a conscious effort to show that well-meaning politicians are deferential to the regulators and take their ideas seriously—to establish the presupposition that anyone who doesn’t treat the regulators somewhat deferentially is dodgy and untrustworthy. (emphasis mine)

This seems like a plan that would be destined to fail because it involves politicians consistently deferring to the appointee. But they have no real stake, in the short-run, with this deference. The do have an immediate stake in defering to political donors. Which is to say, that the problem, more globally, is the influence of campaign contributions.

Furthermore, it seems to me that "regulators" are never going to have the same weight with politicians as "law enforcement officers". If these people are already charged with enforcing the law, why not change their titles and place them in the appropriate department, the DOJ?

Rise and Shine

Photo by Flickr user mikegoldberg used under CC license.