[37] David Lipsky's great sad biographical piece about DFW, the most thorough so far, is now online.

Why blogs are good: Today I learned two things I didn't know. From Matt Yglesias:

Probably the greatest blow Ronald Reagan struck against American liberalism was changing tax law so as to index income tax brackets to the Consumer Price Index. Before that, each and every year inflation created a small tax hike. Consequently, the default scenario was for revenue to grow. That created a situation where for three decades following the end of World War II, politicians steadily increased the volume of public services while also offering the occasional tax cut. And until the economic malaise of the 1970s, voters liked the outcomes just fine. But by seizing the opportunity provided by the 1980 election to change this, Reagan was able to shift the structure of American politics in a fairly significant way.
And from James Surowiecki, whose new blog is a bit less hand-holdy than his "Financial Page" columns:
Felix [Salmon] argues that Japan’s experience should make U.S.investors wary of buying stocks now ... because “the lesson of Japan is that even cheap stocks can continue to decline for decades." Actually, that’s not the lesson of Japan. The lesson of Japan is that a country’s stock market is not going to rise over time if, over time, its companies fail to create economic value for their shareholders. Felix says that “Japanese companies are well-run.” But in fact they’re not well run, at least by the standards that are relevant to shareholders—return on equity, profitability, growth, and managing cash flow in a shareholder-friendly way. By these standards, Japanese companies have historically been run badly, and while they’ve improved some in recent years, they’re still far behind American firms on all of these metrics.


Nate Silver, yesterday:

The closest recent parallel I can find to the Ted Stevens situation is that of former Ohio governor Bob Taft, who in August, 2005 was convicted on misdemeanor charges of failing to disclose gifts and golf trips paid for by lobbyists... He went from a 34-55 (-21) in a University of Cincinnati poll taken in April 2005 to a 26-65 (-39) in the same poll in August 2006, a net decline of 18 points.

Let's assume that Stevens will also suffer a decline in his net approval score of 18 points. Since he's at roughly 50/50 now, that would put him in the range of 40 percent approve, 60 percent disapprove. Our regression model uses approval ratings for incumbent senators as one of its inputs, and thinks a decline of this magnitude would cost a senator about 6 points in the polls ... actually, 5.8 points. So what we're going to do is apply a 5.8 point penalty to Stevens' numbers in Alaska.

Eric Kleefeld, today:
The first public poll of Alaska conducted entirely after GOP Sen. Ted Stevens was convicted on all counts in his corruption trial shows a probable Democratic pickup in this deep-red state -- but Stevens is doing surprisingly well for a newly-minted convicted felon.

The new numbers from Rasmussen: Dem candidate Mark Begich 52%, Stevens 44%, with a ±4.5% margin of error. Three weeks ago, Uncle Ted had taken a 49%-48% edge over Begich. So apparently getting convicted of a felony a week before the election can be quantified as taking five points off of a candidate's poll numbers.

Upshot: Nate Silver is a genius, with a margin of error of +/-1%.


I have long advocated federal control of the election system. Now election law expert Richard Hasen makes the case in Slate. He doesn't mention my suggestion that the whole thing be run by the Postal Service, which is generally efficient (it's the only federal agency that makes a profit) and has offices and employees in every zip code in the country.

I'm not sure if Hasen is being coy or naive when he writes:

There's something in this for both Democrats and Republicans. Democrats talk about wanting to expand the franchise, and there's no better way to do it than the way most mature democracies do it: by having the government register voters. For Republicans serious about ballot integrity, this should be a winner as well. No more ACORN registration drives, and no more concerns about Democratic secretaries of state not aggressively matching voters enough to motor vehicle databases.
The trouble is, there is no such thing as a Republican serious about ballot integrity. It's like being worried about elephant attacks in large cities: it's not a serious concern. In fact, nationalized voting has something to offer Democrats, and something to offer people serious about democracy, but nothing to offer Republicans who use "ballot integrity" as a cover to pass laws that make it harder to vote.

John Heilemann's election coverage for NYMag has been all-star, and this week's cover story's his best yet: informed (and deeply reported) speculation on the character of the forthcoming Obama administration.


Thomas Friedman can be a shallow thinker, but I've rarely seen him write anything as straight-up wrongheaded as this. His argument is that the government's injection of equity into the banks is probably necessary, but it's also dangerous, because ... well, here's why it's dangerous:

Let’s imagine this scene: You are the president of one of these banks in which the government has taken a position. One day two young Stanford grads walk in your door. One is named Larry, and the other is named Sergey. They each are wearing jeans and a T-shirt. They tell you that they have this thing called a “search engine,” and they are naming it — get this — “Google.” They tell you to type in any word in this box on a computer screen and — get this — hit a button labeled “I’m Feeling Lucky.” Up comes a bunch of Web sites related to that word. Their start-up, which they are operating out of their dorm room, has exhausted its venture capital. They need a loan.

What are you going to say to Larry and Sergey as the president of the bank? “Boys, this is very interesting. But I have the U.S. Treasury as my biggest shareholder today, and if you think I’m going to put money into something called ‘Google,’ with a key called ‘I’m Feeling Lucky,’ you’re fresh outta luck. Can you imagine me explaining that to a Congressional committee if you guys go bust?”
(Is there anything more perfectly Friedmanesque than the way he (a) works in a reference to the "I'm Feeling Lucky" button, and (b) misstates what it does?)

This story and the threat it raises -- future Googles stifled in their cribs by risk-averse government bureaucrats -- has no connection to reality. When Larry and Sergey wanted money to start Google they didn't go to a bank and take out a loan. First they found an angel investor named Andy Bechtolsheim, who'd made his money as a cofounder of Sun Microsystems. Then they went to John Doerr of Kleiner Perkins and Mike Moritz of Sequoia Capital, the two most famous venture investors in Silicn Valley.

In other words, they raised money by selling equity rather than by borrowing. This is how startup financing works, for obvious reasons: Almost all startups fail. So a bank that lent money to guys like Larry and Sergey would see default rates that would make subprime mortgages look blue-chip. A venture investor, on the other hand, gets a share of the upside; he's happy to watch nine startups fail as long as the tenth is Google.

(Venture firms are currently reducing their investments in response to the bleak economic picture, and that might slow the parade of new Googles, but it has nothing to do with government ownership of the banks.)

OK, ignore the Larry-and-Sergey story. Does Friedman have a deeper argument? I guess it's that banks with public equity will be more risk-averse in lending, because ... well, he doesn't really say why. Oh, OK, he says they'll have to justify each failed loan to "a Congressional committee," which given the number of loans involved is absurd on its face. Is that just a cutesy way of saying that they'll have to justify their balance sheets as a whole? If so, what makes Friedman think a Congressional committee would be more risk-averse than private shareholders?

The problem in the economy is that, right now, private lenders are maximally risk-averse: until last week they weren't lending at all. The government took positions in banks precisely to encourage them to make riskier loans than they were making under private ownership. It doesn't seem to be working, but (pace Friedman) that's not because those bold risk-taking bankers are being stymied by government bean-counters. It's because the banks don't want to make any loans at all, and (so far) the government isn't forcing them to.


Yglesias says the NYT's speculations on the composition of the Obama administration are ill-founded: "the Fed Chairman is more important than the Treausury Secretary," so there's no reason Paul Volcker, Robert Rubin, or Larry Summers would want to run Treasury.

But isn't the Treasury Secretary more important now that: (a) s/he's in charge of a big chunk of the banking industry; and (b) the economy's in too deep a hole to be rescued by monetary policy? The next administration's response to the recession is going to have to involve substantial fiscal stimulus (unless the next administration is staffed by lunatics), and you'd imagine the Treasury Secretary would be heavily involved in that.

In a way the Treasury Secretary is like one of those hammers kept behind a thin pane of glass -- most of the time it's just sitting there, but it's really important in an emergency.

(Perhaps RoBros legal advisor and former Treasury intern Ty Alper could weigh in.)


Whoa: Earnings from the news operations of the New York Times (i.e. the newspapers as opposed to the company's other holdings), third quarter of last year: $79 million. Third quarter of this year: $37 million.


Goofy post by the usually-acute Noam Scheiber, arguing that Obama's position in the polls is more tenuous than it appears.

I can imagine a losing scenario that doesn't involve outside events. It goes something like this: Obama wins all the Kerry states plus Iowa and New Mexico, giving him 264 electoral votes, then narrowly loses the rest of the red states where he's currently competitive. According to the latest RCP averages, the next most competitive red states, in descending order of favorability to Obama, are: Virginia, Colorado, Ohio, Missouri, Nevada, Florida. Let's focus on Virginia, since it represents the knife-edge between winning and losing--the potentially decisive red state where Obama's currently got the biggest lead.
And then Scheiber lists a bunch of reasons why Virginia might diverge from the rosy national trend: McCain could throw a lot of resources at it; state polls are a few days behind national polls; maybe there's a Bradley effect. "There's no reason to think [McCain] couldn't lose the popular vote by 2-3 points but still win Virginia by 1." He calls this list "the caveats that keep me up at night."

Noam, dude, get some sleep. It's true that Virginia -- or any of the six borderline states that Scheiber lists -- could be a few points off the national average in either direction. Polling is an inexact science, and things change in two weeks. But Scheiber acts as though, once Virginia falls, every other swing state must fall in the same direction. But of course, if Virginia is a few points off the national average, that makes it the exception. And if Virginia goes to McCain, Obama only needs one of the other states on Scheiber's list. (Nevada makes it a tie, which likely goes to the Democrats.)

Put it another way: given Scheiber's starting scenario (Obama wins the Kerry states plus Iowa and New Mexico), McCain needs to win Virginia, Colorado, Ohio, Missouri, Nevada, and Florida. If he does that, it won't be thanks to a flukey dice roll and some bad polling; it'll be a palpable, dramatic, nationwide turnaround.

Brookswatch! (Let's just make it a regular feature and be done with it.) So today David Brooks checks in on Patio Man, a character who typefies the rising exurban middle class. Weirdly, I don't find the Patio Man concept particularly annoying, for two reasons: (1) Brooks doesn't overuse his coinages the way his colleague Tom "flat world/petro-authoritarianism/green-collar jobs/etc. etc. etc." Friedman does; and (2) Brooks's attention to the actual conditions of life in the exurbs is a useful counterweight to the Palinites' fetishization of an entirely invented "Main Street." Also, to be honest, maybe I'm soft on Patio Man because today he's leaning Democratic:

But deeper down, there are some shifts in values. Americans, including suburban Americans, are less socially conservative. They are more aware of the gap between rich and poor. They are more open to government action to reduce poverty....

But the shift in public opinion is not from right to left, or from anti-government to pro-government, it’s from risk to caution, from disorder to consolidation....

Democrats have done well in suburbia recently because they have run the kind of candidates who seem like the safer choice — socially moderate, pragmatic and fiscally hawkish. They, or any party, will run astray if they threaten the mood of chastened sobriety that has swept over the subdivisions.
But look at Brooks's weird swerve in the last paragraph:
Patio Man wants change. But this is no time for more risk or more debt. Debt in the future is no solution to the debt racked up in the past.
If Patio Man really believes this, Patio Man is obviously wrong. (Even the Committee for a Responsible Federal Budget, whose raison d'ĂȘtre is to fight deficit spending, agrees that the present situation urgently requires deficit spending.) It wouldn't be too surprising for Patio Man to be wrong about this: he probably hasn't read Keynes, and he has a tendency to overgeneralize from family budgeting to fiscal policy. ("Debt in the future is no solution to debt in the past" might make sense when it comes to Patio Man's own finances, but the rules that apply to a suburban family don't necessarily scale to the level of the federal government.) But does David Brooks agree with Patio Man on this? If not, shouldn't he come out and say so? If so, shouldn't he go down the hall and ask Paul Krugman for some very remedial tutoring?

Via Alex Ross, the musical majesty of Sarah Palin:


Jacob Weisberg argues that the financial collapse is final proof of the bankruptcy of libertarianism.

Andrew Sullivan posts this anecdote from a reader:

I voted for McCain in the primary. As a political reporter and columnist in Michigan, I have the news on in our house with some frequency. That's how my now 6-year-old got to know Barack Obama. And she loved him. She asked to tag along when I went to cover his events. Maybe it's the smile, the calmness. But she felt very assured by the idea of this man being president, long before I was ready to switch my vote.... And I've found that Obama has the same effect on lots of kids, whether they come from liberal or conservative homes.

I think these kids are canaries in the coal mine. They're obviously responding not to policy differences but affect and manner and body language. It reminds me of Malcolm Gladwell's article about Cesar Millan, TV's "dog whisperer." Ignore for a moment the controversy over Millan's training philosophy: Gladwell's point was that both dogs and people respond instinctively to his movements, his commanding and trustworthy physicality. Obama seems to have some of this same quality. Thank God he's on our side.

Via Krugman, a little FT piece on the relevance of J. M. Keynes to the present crisis. Plus here's Krugman's own introduction to the 2006 edition of The General Theory of Employment, Interest, and Money.


Talking about last night's debate, Michael Tomasky sounds like the bumbling cartoon detective who considers every possible explanation except the obvious one.

By 53-22%, 638 uncommitted voters polled by CBS chose Obama as the winner. CNN was a little closer, 58-31%.... I actually don't understand it. I didn't even think Obama was quite on his game. He should have gotten much the better of the economic-crisis debate, but it seemed to me that McCain represented his proposals slightly better than Obama represented his.... Maybe it's just about McCain. Maybe he just looks like he's ready for the glue factory.... Or, maybe it's the politics. Maybe 90% of the people who are usually swing voters are just so disgusted with the Republicans that they're not going to entertain the idea of voting for McCain under any circumstances.
Or maybe it's that voters, unlike pundits, don't watch debates as though they're scoring gymanstics events. Maybe voters are less concerned with who represented his proposals better than they are with what those proposals actually, you know, are. Maybe they prefer the guy who does an OK job describing a policy that will get them health insurance over the guy who does a slightly better job describing a policy that won't get them health insurance. Just an idea.

Obviously I haven't been tracking Watchmen's progress into mainstream awareness, but surely this represents a new level of cultural penetration. A woman writes in to "Dear Prudence," Slate's advice column, about her insensitive-genius boyfriend. She ends with, "Am I being unreasonable for wanting a little bit of slack, or should I just accept that I'm dating Dr. Manhattan and let it go?" Emily Yoffe responds, "Mr. Spock and Dr. Manhattan are effective characters because while they seem human, their lack of emotion and empathy means they aren't quite."

What's startling is that no one feels the need to explain who Dr. Manhattan is.


What would a Smurf Asterix look like? This, apparently. If my French still works, it was designed by Albert Uderzo himself, to evoke the soft and always smiling Peyo he knew. (Uderzo drew the Asterix comics; Peyo was the creator of the Smurfs; beyond that you're on your own.)


Very sad story about David Levine, the genius New York Review of Books caricaturist. Levine did so many incredible drawings for so long that I took him 100% for granted, and when another illustrator's work started showing up in the NYRB last year it made me weirdly queasy. The story's not complicated or surprising: Levine is 81, and his eyesight's going. He spent his whole life as a freelancer and doesn't have a pension. Go to his gallery on the NYRB site and type in the name of a writer or a politician from the last 50 years. Try the really famous ones -- try Joyce. (There's eight.) Check out Philip Roth: how does he feel to see himself captured like that, eleven times, from 1969 to 2000? Who will replace David Levine?

Barack Obama has been president for negative-21 days, and David Brooks can already see the backlash.


Newly minted Nobelist Paul Krugman wrote this in 1992, an account of his intellectual heuristics.

I have no sympathy for those people who criticize the unrealistic simplifications of model-builders, and imagine that they achieve greater sophistication by avoiding stating their assumptions clearly. The point is to realize that economic models are metaphors, not truth. By all means express your thoughts in models. But always remember that you may have gotten the metaphor wrong, and that someone else with a different metaphor may be seeing something that you are missing.


Two weeks ago, Thomas Friedman wrote: "What would impress me from Obama? How about this: ' ... I’m going to keep Treasury Secretary Hank Paulson on the job for a while. I am impressed with his handling of this crisis.'”

This was a classic bit of MSM false equivalence: Friedman had just urged John McCain to take certain un-Republican positions, so he's contractually obligated to ask for some equivalent un-Democratic statement from Obama. But imagine if Obama had taken Friedman's advice and tied himself to Paulson, who in mid-September was largely untested. From today's NYT:

The Treasury Department’s surprising turnaround on the issue of buying stock in banks, which has now become its primary focus, has raised questions about whether the administration squandered valuable time in trying to sell Congress on a plan that officials had failed to think through in advance.
It has also raised questions about whether the administration’s deep philosophical aversion to government ownership in private companies hindered its ability to look at all options for stabilizing the markets.
Some experts also contend that Treasury’s decision last month to not use taxpayer money to save Lehman Brothers worsened the panic that quickly metastasized into an international crisis.


Dean Reynolds, self-important douche.


Five months ago, This American Life did a great episode explaining the mortgage crisis. This week's episode (iTunes, web) explains the bigger financial crisis; it's even better. Unless you work in finance or economics, I guarantee that you will be smarter after listening to it.

Norman Ornstein: "Two key words have been largely missing from the debate over our financial crisis: moral hazard."

Google: "
Results 1-10 of about 13,400 over the past month for 'moral hazard' 'financial crisis.'"


Sorry, it's still going on: Here's a memorial song. Pretty. Here's a lovely memorial tattoo. Here's a report on the memorial service, beginning with Jonathan Franzen in tears.