Krugman’s Problem: Naked Partisanship

Knowledge Isn’t Power”
Paul Krugman
February 23, 2015

Paul Krugman has written a thoughtful piece about the link between education and inequality in The New York Times. I do not agree with all of it, but his core point – that educational reform is no panacea for the issue of growing inequality – is well taken.

A friend of mine from the Left wondered why his op/ed wasn’t being given more attention. I told her it was simple: Krugman held his audience right up until the end, when he said:

It’s not hard to imagine a truly serious effort to make America less unequal. But given the determination of one major party to move policy in exactly the opposite direction, advocating such an effort makes you sound partisan. Hence the desire to see the whole thing as an education problem instead. But we should recognize that popular evasion for what it is: a deeply unserious fantasy.

There is no reason to turn this discussion into a GOP-bash, but Krugman apparently cannot resist. Problem one is that he is wrong: support for corporate tax holidays, corporate welfare, and and a tax-free Wall Street demonstrably extends deep into the ranks of both parties on Capitol Hill – rhetoric to the contrary notwithstanding.

But the larger problem is Krugman’s desire to define the policy discussion in partisan terms. Turning honest debates about policy into opportunities to score partisan points does neither the debate nor the country any service. It forecloses opportunities to build bi-partisan coalitions around policy. And that is important: history has proven that we do not solve problems in America by giving one party or another dominance over government. We solve problems by forging debates and policies that rise above partisanship and engage the nation as a whole.

I have met Paul Krugman, and find him both intelligent and personable. It is a pity he finds it more important to employ his thinking as a means to divide the nation rather than to appeal for a debate about policy that transcends ideological squabbling. By doing so, he has made himself part of the problem, not part of the solution.

The SEC Fails America, Again

The SEC Caves on China – WSJ.

From The Wall Street Journal:

U.S. stock-market regulators say they promote transparency and fair play, but this month the Securities and Exchange Commission quietly carved out a China-size exception: When Chinese companies list on U.S. markets, basic auditing rules won’t apply.

Why would the SEC agree to this? Again, the Journal:

Why? Because China’s government doesn’t want them to, and Washington bent to Beijing’s pressure.

I think that answer is, at best, is partly correct. The other bit – and the bit that the WSJ would never cop to – is that Wall Street is terrified that if it does not provide an exemption for Chinese auditors, the deal flow from China to the US exchanges and investment banks will dry up.

Let’s not kid ourselves. The chairman of Goldman Sachs and the President of the NYSE carry far more weight in the White House and on the Hill than Xi Jinping ever will.

We here at the Bull Moose have deep objections to gratuitous regulation. But there are some places where regulation is essential, and the SEC is in business to protect individual investors and, on their behalf, the transparency of the markets. They have failed here, and in so doing they have undermined everyone’s market on behalf of a small number of privileged players.

More demonstration – if any were needed – that as Republicans we should not automatically align ourselves with ideals, policies, and leaders who place the interests of corporations ahead of the individuals who own and work for them.

The Fed is Afraid of Goldman. This is Bad.

United States of Bankers
Rod Dreher

The American Conservative
September 29, 2014

One of those stories where the pull-quotes speaks for themselves, demanding no narration.

The American Conservative is all over the story of how the Feds are terrified to regulate Goldman Sachs et al. NPR is all over it. Pro Publica is all over it.

Time to wake up, folks. Forget the non-issues being used to divide the nation. The Right, the Left, and everyone in between need to get together and put an end to the corporate capture of the organs of our government.

And if you don’t think that’s an issue that every American should be screaming about, you had best explain yourself. Use the space below.

Democracy, Policy, and the Experts

The Death Of Expertise
Tom Nichols
The Federalist
January 17, 2014

The Internet has been accused of many things. It has been condemned as a destroyer of value. It has been reviled as the hiding place of gangsters and perverts. And now, in the pages of The Federalist, self-styled social science and public policy expert Tom Nichols accuses it of destroying expertise.

Nichols’ point, brutally summarized, is that by appearing to make everyone’s opinion of equal value, the Internet is slashing the value of an expert’s opinion to essentially zero. That’s dangerous, he says. To kill expertise is to reject knowledge and how we gain it. It is to raise the value of the opinions of people like Jenny McCarthy over those of doctors.

All agreed: we don’t want experts to go away. They offer tremendous value in society, and we would be lost without them.

And he is so very, very right when he notes:

People in political debates no longer distinguish the phrase “you’re wrong” from the phrase “you’re stupid.” To disagree is to insult. To correct another is to be a hater. And to refuse to acknowledge alternative views, no matter how fantastic or inane, is to be closed-minded.

All Hail the Expert

If this were as far as he took his argument, he would have won the day. Unfortunately, after a good start, Nichols goes off the rails in some important ways that hint at a larger, darker agenda.

He deems as “sanctimonious” and “silly” the idea that every person has a right to his or her own opinion. He launches into a screed against the incompetent taking part in discussions in the public arena. How dare, he suggests, that people who “can barely find their own nation on a map” have strong views on going to war? How dare those who cannot name their legislator have an opinion about how Congress handles a piece of legislation?

How dare, he asserts, anyone have an opinion on a field in which he is not an expert? Only experts, he implies, should be allowed to be heard on anything, unless, of course, the electorate become experts themselves. He doesn’t want a technocracy, mind you:

But when citizens forgo their basic obligation to learn enough to actually govern themselves, and instead remain stubbornly imprisoned by their fragile egos and caged by their own sense of entitlement, experts will end up running things by default. That’s a terrible outcome for everyone.

The threat: either people get a lot smarter about policy, or the experts are going to take over. We’ll let you have your opinions, but we control will remain in the hands of the people trained to run things.

It is sad that Nichols did not quit while he was ahead, making a case that we need to use care where we tread. In suggesting that we have a binary choice between everyone getting a lot smarter really quickly on the one hand, and letting the experts run things on the other, he is being disingenuous: the only likely outcome of those two is technocracy. And so what this article becomes is a case for the experts to take over.

Who is an Expert?

The reasons to distrust this reasoning are manifold. Let us dispose of the easy ones right away.

First, anyone who declares himself an expert is, in my opinion, immediately suspect. If someone who is in a position to know declares you an expert, you may well be one. If you declare yourself an expert, your status is suspect. Declare yourself a specialist or a professional if you must, but allow others do declare you an expert, a master, an authority.

Second, if we grant that he is an expert, his argument on behalf of the primacy of experts is self-serving, and thus suspect. In this, he is little different from the journalists decrying the Internet because it means we are reading less journalism. I feel bad for them, but the horse has left the barn, and experts, like journalists and the rest of us, are all facing a different world.

Trusting Experts

So, let us say that Nichols is an expert, and that he is being selfless. Handing over our policy decisions and our fates is a path fraught with problems. Primary among those “who gets to decide who the experts are?” Expertise is subjective, and the determination of whether someone is an expert demands other experts in that field. Who then appoints those people? This works us into a circular argument, and we wind up with a lot of people claiming expertise, but no objective way of making that determination.

I spent two decades working in China, and three decades studying it. Am any more or less an “expert” in China business than a newly-minted Harvard Ph.D. who did his dissertation on my field? Or than a journalist who has covered business in China for twenty five years? Says who? And why? You see where this is taking us. Multiply this problem by hundreds of fields, and the issue of determining expertise becomes non-trivial.

Once we have decided who the experts are, which ones do we trust? Any competent trial lawyer or white-shoe K Street lobbyist will tell you that on any issue, there are experts, but that often no two experts will reach the same conclusion, and often their conclusions will be diametric. Brookings, RAND, Heritage, CATO, and the Progressive Policy institute are all staffed by experts, but if you got all of their experts on any given issue in a room, you would have a war. Who decides among them and their recommendations?

Further, a reliance on experts implies that there are only two classes of people in any given field of knowledge: experts, and laymen, and only the former have value. This is poppycock. Apart from those with the highest level of mastery are polymaths (who are deeply conversant in multiple fields, though not necessarily expert in more than one;) apprentices, students, enthusiasts, buffs, and talented amateurs. People at any of these levels can make profound contributions to their fields.

Three examples jump to mind. Alan Hale and Thomas Bopp proved the value of amateur astronomy when they discovered the comet that was later named after them. A clerk in the German patent office turned astrophysics upside down when he wrote a short paper describing a general theory of relativity. And corporate finance executive Edward Miller, Jonathan Parshall, a software executive, and Anthony Tully, an IT support specialist each conducted research and wrote books that have forced us to reevaluate the history of World War II in the Pacific.

Broad-based Problems, Narrow Solutions

But among all of these, the biggest problem is the nature of expertise itself. Experts are expert, by definition, because they spend their lives focused on a narrow enough field that they are able to achieve a greater degree of knowledge than most others in their field. For that reason, they are excellent at answering specialized and narrow questions. Unfortunately, their expertise is of declining value as they touch on questions that have implications far beyond their narrow field of expertise, and it is axiomatic that many of the most vexing problems faced by government go far beyond an expert’s ken.

Elizabeth Coleman, who retired from the presidency of Bennington College last year after a quarter century in the role, frames the problem with experts more eloquently:

Over the past century the expert has dethroned the educated generalist to become the role model of intellectual accomplishment. While expertise has had its moments, the price of its dominance is enormous. . . . Questions such as “What kind of a world are we making?”“What kind should we be making?” “And “What kind can we be making?” move off the table.

These are precisely the kinds of questions our polity faces today.  You can substitute “nation” if you think “world” is too arrogant, but the issue stands. These are not the kinds of questions Mr. Nichols and his fellow experts are best suited to answer. They are the kind left to the rest of us.

The Tyranny of Experts

Which brings us to the final problem. Nichols contends that the idea that we all have a right to our own opinion is silly and sanctimonious. He is wrong. Giving us each the right to our own opinion, to express it, and to be proven wrong or vindicated is an essential part of the American democracy. To suggest otherwise steps beyond the arrogance of a learned man in awe of his credentials: it is to place us on the road to a technocratic tyranny where we are all the docile wards of the incredibly smart.

Aldous Huxley would have recognized what Nichols is suggesting, as would anyone who has read Huxley’s Brave New World. It is a world where because all men are not equal, their say in the way the world is run is not equal. That may appeal to the elitists. But that is not democracy, that is not the way the founders of the United States meant this country to be, and it is not a country that I would want to live in, either as an expert or a layman.

Let us keep this in mind: experts have value in that they should always be invited to inform the broader debate. Laymen need to think more critically and question the definitive statements of those who are not deeply knowledgable in the field in question. When faced with an expert versus a layman, deference should be paid to the point of view of the expert, but critical deference should be paid to all.

But experts should never be allowed to dominate that debate or, even worse, by dint of their knowledge be allowed to circumvent it. They are our servants. We shall not be theirs.

Fixing inequality with wisdom

Inequality: Growing apart
The Economist
September 21, 2013

The editors at The Economist make a thoughtful case for how America can recover its promise of equal opportunity while addressing the growing inequality in our nation’s economy. And they manage to do so without pandering to liberal anti-capitalists who want to sock it to the rich, or the Tea Party reactionaries who see any government involvement in the economy as The End of Liberty in Our Time.

They call, in effect, for a radical simplification of the US tax code, eliminating loopholes that exclusively benefit the wealthy, and plowing the resulting windfall into early childhood education.

It is a thoughtful piece and worthy of a wider debate. Tax code reform is long overdue, and the nation spends too much treasure chasing revenue.

At the same time, we need to look carefully at how to spend the money on restoring opportunity. Simply running an aqueduct of cash into schools, for example, will not end their dysfunction. We need a vehicle that works before we fuel it.

But the editors are looking the right way. A simpler tax system and a hyper functional education system are two essential keys to fixing America’s ills.

President Dwight Eisenhower delivers his farew...
President Dwight Eisenhower delivers his farewell address. (Photo credit: Wikipedia)

“As we peer into society’s future, we — you and I, and our government — must avoid the impulse to live only for today, plundering for our own ease and convenience the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage.”

– Dwight D. Eisenhower, Farewell Address, January 17, 1961

Thanks to Dennis Prager for this one.

Taxes on Talent

“How Much Does an A-list Actor Make… and Spend?”
Claude Brodesser-Akner

While we’re out there campaigning for everyone to pay their fair share of taxes, let us not forget that our dear friends in Tinseltown often live in their own tax-sheltered Nirvanas.

Think about that the next time you allow a celebrity of any political stripe urge you to vote on anything. And talk a look at the graphic in this superb Vulture post.

The Growing Consensus for Bank Break-Ups

The Conservative Case For Bank Break-Ups – The Dish
Andrew Sullivan

The Daily Beast

Reading Mr. Sullivan this morning, there appears to be a growing conservative groundswell behind the idea of breaking up America’s “too-big-to-fail” mega-banks, specifically BankAmerica Corporateion, JPMorgan Chase & Company, and Citigroup Inc. Not only does Sullivan like the idea, proposed by MIT professor Simon Johnson at Bloomberg, but also Erick Erickson from The Red State endorses it, as does Michael Brendan Dougherty at The American Conservative.

Where I part ways with these gents is that they are approaching this more as a campaign tactic than a matter of principle. And a matter of principle it is (or should be) for every Republican with a functioning cerebral cortex.

The case, as I see it, is this:

1. The mega-banks have become so large that they stifle competition in the marketplace. That’s monopolistic, and that’s not legal.

2. The mega-banks have become so large that they have the ability to manipulate policy. That’s anti-democratic.

3. The mega-banks have become so large that they operate above market forces. This explains why they can charge high fees and behave in a way that earns them preposterously low consumer satisfaction ratings.

Republicans are pro-business. This is not the kind of business I think most of us signed-up to get behind. The simple reason to break up these banks is to make them subject to market forces, customer demand, and the rule of law.

Surely we can all get behind that?

Why We Shouldn’t Spend Public Funds on Formula 1 Races

Formula 1™
Formula 1™ (Photo credit: LGEPR)

Video – Daughters of Formula 1’s Bernie Ecclestone Spend $150 Million for Two Houses –

The tabloid press (including, interestingly, the Wall Street Journal) has been making a load of hay about how the two daughters of Formula 1 mogul Bernie Ecclestone are spending tens of millions of dollars buying up trophy real estate around the world.

To some, the very idea of two single twentysomethings using trust fund monies to buy $80 million homes is repugnant. We at the Bull Moose have nothing against wealthy young people spending their cash, because we believe that it is better for all of us that they should spend it rather than sit on it.

Where we have an issue is that to some degree those fortunes were built with public subsidies. Promoters are keen to hide government assistance, but two examples are  notable. The U.S. Grand Prix, to be held in Austin beginning this year, is getting a $25 million annual gift from the people of Texas for the next 10 years. The Singapore Grand Prix is carried by a $90 million annual shot-in-the-arm from the republic’s government. In the case of Austin, the money raised from the taxpayers goes directly to Ecclestone’s F1 organization as a “sanctioning fee.”

Again, we have no issues with racing events or of Ecclestone’s fortune. But if these events cannot be supported by private funds, they should not be held. That goes for the Olympics, the World Cup, the Major League All Star Game, and the Republican and Democratic National Conventions.

Innovation in Finance

Paul Volcker, former head of the Federal Reser...
Paul Volcker, former head of the Federal Reserve Board . (Photo credit: Wikipedia)

A great quote from Brian Collins’ article “The Great Shock” in the October 17, 2011 edition of the Los Angeles Review of Books.

What clearly separates Volcker from many of those advising the current President (Rubin, Geithner, Summers, et al.) is his riposte to financiers who defend deregulation as a great innovation of the times. “The only financial innovation I recall in my long career,” Volcker responded, “was the invention of the ATM.”)

Deregulation is no more innovation in finance than it is on a school playground. The minute you take the rules away, people are going to get hurt. Will some do very well? Absolutely. But that same dynamic worked in the jungle as well, and I’m in no rush to go back there.

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