Follow this link to the blog posting Giving Up on Policymakers by Mark Thoma, an economist in Eugene, Oregon (Awr’-i-gun, not Or-a-gone’).

He starts off by saying:

I’ve been pushing hard for more help for labor markets for quite awhile — at times I’ve thought it was a bit repetitive, but necessary — but it’s probably time for me to give up and accept that we are going to have a slower recovery than we could have had with more aggressive fiscal policy. Unless there is a dramatic reversal of recent indications that we are at the beginning of a recovery, Congress is not going to provide anything more than token help from here forward.

He has a very good analysis of why fiscal stimulus is needed, in general.  However disappointed he may be, he has to recognize political reality.  The uproar from the economically uneducated would be deafening if the President and Democrats in Congress tried for another large stimulus.

The economically uneducated (which appears to be a huge segment of our society) thinks that cutting taxes and the deficit is a better solution.  Just staving off this ruinous idea is an accomplishment of the President in and of itself.

In a democracy, politicians can’t just institute any old policy they want, and expect to stay in power for long.  If what they want to do is right, then they must first educate the electorate.  Such education does not last long, so it must be continuously reinforced.  This is what President Obama is doing for Health Care Reform.

It would sure be helpful if the President wasn’t the only one trying to educate the electorate.

Mark Thoma tries to do his part with his blog.  I try to do the same with mine.

I also try to recognize who is on the same side as I am.  I believe more in praising them for what they have accomplished rather than constantly carping about what they have not accomplished.

On the pronunciation of Oregon, try this audio ->

This audio comes from reference.com.

My signature is among the ones discussed in the video.

Follow this link if you’d like to help congressional candidates how fought for health reform.

Follow this link to the VoteVets.org page where you can support the the airing of the above ad.

I frequently hear and read remarks that we cannot afford the expensive Health Care Reform bill.

I find this argument incomprehensible when faced with the fact that the bill will cut the deficit over its first 10 years.  The cut in deficit will be even greater in the ensuing ten years and beyond.  How can we not afford to do something that will save us money?

I think one problem is the way the money is discussed by the media and the pundits, and even by proponents of the legislation.

You will see articles about the fact that the bill will cost $788 billion in its first ten years.  This seems unaffordable.  Then you read that the deficit will be cut by $143 billion over the time period.  These numbers come from the Congressional Budget Office report H.R. 4872, Reconciliation Act of 2010 (Final Health Care Legislation).

If you look at those numbers without thinking too much, you might think something like the cost of $788 billion dwarfs the savings of $143 billion.  Think a little more and you will realize that $143 billion is not the amount saved, but it is the difference between the amount saved and the cost.

The amount saved by the bill must be $931 billion. Spending $788 billion on something that saves $931 billion leaves you a net savings (spending reduction) of the $143 billion labeled as a deficit reduction.

The headlines should be

Health Care Reform Saves $931 billion

In the article under that headline it could say taking costs into account the net savings is $143 billion.

Follow this link to the blog posting by Clay Shirky. I found the link to this item on the Facebook page of my friend RogerG.

There is great food for thought about the role of complexity in the downfall of both businesses and civilizations.

In the Shirky post, he discusses the book The Collapse of Complex Societies written by Joseph Tainter and published in 1988.

Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.

The ‘and them some’ is what causes the trouble. Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn’t these societies just re-tool in less complex ways? The answer Tainter gives is the simplest one: When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.

Maybe this explanation is more understandable than the way I put it in electrical engineering terms. In the electrical engineering world there is something known as an operational amplifier.  It has extremely high gain from the input to the output.  It is also very unstable in its isolated incarnation. Engineers add negative feedback around the amplifier which cuts down on the gain, but adds stability and accuracy.  So negative feedback is a good thing, but there is only so much gain in the original amplifier that you can trade for other good characteristics.

I have always likened running the economy to this amplifier example.  When allowed to run free, it produces tremendous wealth, but it is also susceptible to wild fluctuations.  Put in some regulation, you give up a little wealth production, but you diminish the oscillations.  If you go too far with regulation, you have no more wealth production and the system is economically stable around the poverty level.  Though, at this point, it is probably not politically stable.

My friend RogerG thinks,

Isn’t North Korea a counterexample? It’s been stable for decades despite all manner of destabilizing factors.

To further clarify his comment, he added:

My comment referred to this text in your blog: “If you go too far with regulation, you have no more wealth production and the system is economically stable around the poverty level. Though, at this point, it is probably not politically stable.”

Which brings me to comment on the feedback analogy as applied to the political system for this example. Allowed to run free, the political system operational amplifier would be unstable. Put in massive negative feedback of a million man army to suppress dissent and you can have stability in the political system.

However, what you see is the adding of more and more complexity in every domain. This is also a perfect example of the inflexibility brought on by this complexity. The book by Joseph Tainter was an archaeological study. Decades of time in the Korean example is not much time on an archaeological scale.

Follow this link to The New York Times column by Russ Douthat (can that be his real name? Does it sound like doubt that?).

He analyzes the reasons for CNN’s falling ratings, claiming that in trying to have disinterested anchors present unbiased news, they are losing their audience. He thinks that Wolf Blitzer falls into the disinterested anchor category.  Maybe Wolf is disinterested, but I also think he is none too sharp.

I can’t decide if I quite buy his suggestions for real discussions between opposing points of view. Perhaps he is on to something.  What do you think?

He mentions William F. Buckley, Gore Vidal, and Norman Mailer as examples of what might work.  He also mentions Jon Stewart as a good example.  He failed to mention Charlie Rose.

I might agree on William F. Buckley if you restrict the example to his early years.  At the end, William F. Buckley was no better than some of the people that Douthat decries.

I wonder if some good investigative journalism might give a boost to CNN?  I don’t fancy the kind of gotcha stories that 60 Minutes, Dateline, or Geraldo Rivera focus on. Perhaps a better example would be the kind that Bill Moyers does.

What I want to see on the news are anchors and reporters who are smarter than I am.  I don’t get what I want from reporters who don’t think to ask the obvious questions.  The ones who merely give you the “he says and she says”, or ask inane questions instead of meaty ones just don’t cut it with me.

What especially irks me are reporters who either pretend to be or are just some dumb regular person. Sometimes they like to act humble and claim they are incapable of understanding what they are reporting on.

I don’t need a reporter to tell me a subject is so complicated that the reporter can’t understand it.  If that is true, get someone who does understand to report on it.  If the reporter is bored by the repetition of a long political campaign, get someone who isn’t bored and boring.

The recent news that Caterpillar is taking a $100million dollar charge and AT&T is taking a $1billion charge because of changes in health care does not pertain to the current health care bill, as I understand it. This has to do with the Drug Insurance plan passed under George Bush.

Under that plan, subsidies and tax advantages were introduced to prevent companies like Caterpillar and AT&T from dropping their drug coverage. Those subsidies and tax write-offs are expiring, hence the accounting charges.

The accounting charges are just changes in the way companies have to account for future liabilities. There is no cash involved in the write-downs.

These are one time charges that the stock market regularly ignores in evaluating a company’s worth.

$1 billion sure sounds like a lot of money, but it turns out to be only a small part (0.6%) of AT&T’s market capitalization of $155.34billion.

That would lower AT&Ts stock price by $0.17 of its current $26.30 price if the stock market decided not to ignore one time charges like this.

Follow this link to the story in Rolling Stone. The sub-title to the article is How the nation’s biggest banks are ripping off American cities with the same predatory deals that brought down Greece.

This is a good story to read if you believe that local government control is better than any interference from the federal government. (Well, maybe not. It’s not clear what you will think after reading this.)

If you are easily offended by some 4 letter words, then the story is not for you.

In case you opt to skip this incredible story (not April 1st anymore), here is the closing of the article:

And even if the regulators manage to catch up with them billions of dollars later, the banks just pay a small fine and move on to the next scam. This isn’t capitalism. It’s nomadic thievery.

Follow this link the article in the Chicago Tribune that is A look at how the new law will affect four people in different circumstances.

This shows that you can find an occasional story that tells you about the benefits of the health care reform bill instead of focusing only on the costs.

Follow this link to the UPI story that quotes Christina Romer as saying:

Romer said she thinks the United States will experience “a different kind” of economic recovery from this recession.

“I think it’s not going to be one where consumers come roaring back as the engine of growth,” she said. “It’s going to need to come from our exports.

Who could have imagined that? Not Nightly Business Report which is constantly saying that they don’t know where the recovery is going to come from. Maybe you could have read it here or in the Worcester T & G from that renowned economist, Steve Greenberg.

See my previous post, Capitalism Is The Path To Prosperity, where  on January 24, 2010, I said:

… Since the local consumers have finally realized that they cannot count on rising real-estate values as extra income, they are cutting back on purchases to pay off debts. If they won’t provide the purchasing power to stimulate demand, exports are our next best bet.