How well do we understand what is going on in Iran?

Not very well, according to a much-discussed article by Flynt Leverett of the New America Foundation and Hillary Mann Leverett, formerly of the State Department and the NSC, published just after the Iranian election.

Without any evidence, many U.S. politicians and “Iran experts” have dismissed Iranian President Mahmoud Ahmadinejad’s reelection Friday, with 62.6 percent of the vote, as fraud.

They ignore the fact that Ahmadinejad’s 62.6 percent of the vote in this year’s election is essentially the same as the 61.69 percent he received in the final count of the 2005 presidential election, when he trounced former President Ali Akbar Hashemi Rafsanjani. The shock of the “Iran experts” over Friday’s results is entirely self-generated, based on their preferred assumptions and wishful thinking.

Although Iran’s elections are not free by Western standards, the Islamic Republic has a 30-year history of highly contested and competitive elections at the presidential, parliamentary and local levels. Manipulation has always been there, as it is in many other countries.

But upsets occur - as, most notably, with Mohammed Khatami’s surprise victory in the 1997 presidential election. Moreover, “blowouts” also occur - as in Khatami’s reelection in 2001, Ahmadinejad’s first victory in 2005 and, we would argue, this year.

Like much of the Western media, most American “Iran experts” overstated Mir Hossein Mousavi’s “surge” over the campaign’s final weeks. More important, they were oblivious - as in 2005 - to Ahmadinejad’s effectiveness as a populist politician and campaigner. American “Iran experts” missed how Ahmadinejad was perceived by most Iranians as having won the nationally televised debates with his three opponents - especially his debate with Mousavi.

For this the Leveretts were roundly condemned as “apologists” for the Ahmadinejad regime, as “useful idiots“, and worse. But these attacks were not joined, and still have not been joined, so far as I can see, to an actual refutation of their points. There are strong statistical signs of manipulation and plausible allegations of rigging, but do we believe that Ahmadinejad would have lost a clean election? That is, do we believe that most Iranians want him out? The evidence is much less clear-cut (see here and here) than our conviction that Ahmadinejad is despicable. But then we knew he was despicable before the election. Continue reading "What do we know about Iran?"

Here is my review of a new history of the Supreme Court. The author argues, among other things, that the court has claimed too much power and needs to be reined back.

On one view of US history… the court has been instrumental in expanding the federal government. That is why many conservatives complain about “judicial activism”. But Burns is no conservative. In this book, he is a liberal on amphetamines. He sees a court that has used its power almost entirely to block liberal governments and the voters that elected them…

Tendentious though his reading of constitutional history may be, Burns is right about some important points. Supreme Court justices are indeed unelected and unaccountable politicians in robes, as he says – and this is a problem. But they come in all ideological colours. Some are conservatives, some are liberals, some have no fixed position – but few show restraint in overruling governments and the people they represent, even when the law is unclear. Big decisions often, indeed usually of late, turn on single-vote majorities. Narrow majorities are a sign that the law is disputed. In such cases, deference to the popular will should be the norm but rarely, if ever, is.

What Burns really wants, though, is not a self-effacing court but one that puts its shoulder to the wheel of progressive politics. With surprisingly little art, he disguises this as a call for judicial modesty. He says he wants a court that would not obstruct “the kind of transforming leadership that the empowerment of the majority should make possible”. But he wants it only when the empowering majority agrees with him.

Burns suggests a constitutional crisis.

His modest proposal is this. Mr Obama, if the court deems a law he has signed to be unconstitutional, should simply ignore that finding on the grounds that the constitution does not give the court power to decide what the law is. The president should then invite his critics to amend the constitution, if they can, to confer that power explicitly.

It would take courage, Burns admits: “There might even be demands for impeachment.”

Yes, just possibly. A bizarre recommendation, and a tendentious telling of the history, as I say. But still I found the book worth reading. It’s provocative and well-written, and gets a lot right.

The Obama administration’s proposals for US financial regulation are pretty good, as far as they go. The problem is they do not go far enough.

Great care and intelligence went into the plan announced last week. It makes no stupid suggestions; recall Sarbanes-Oxley, a recent instance of unguided regulatory backlash, and you see this is no small achievement. But the plan’s comprehensiveness is a bit of an illusion. It ignores many issues, and has more loose ends and suggestions for further review than actual innovations.

Also, as in other areas, the White House is unwilling to confront the political barriers to fuller reform. You can call this pragmatism, or you can call it timidity. A crisis of this order demands big new ideas, and the leadership to push them through. In finance, if not now, when?

The remainder of the article can be read here. Please post comments below.

Anyone at all interested in the US health debate will already have read Atul Gawande’s excellent New Yorker piece, which compares health spending in McAllen, Texas ($15,000 per Medicare enrollee in 2006) with spending in El Paso (only half as much, even though its relevant characteristics seem similar). His recent commencement address at the Pritzker School of Medicine is also very good. Both pieces serve to shift the focus away from the preoccupation with public v private insurance, because the enormous variations in health spending he discusses are within the public system. They also slightly dampen one’s hopes for comparative effectiveness research, all the rage just now, as a way to save money–unless it is used alongside changes in financial incentives. Changes in payment delivery are the key thing. How are doctors and hospitals reimbursed? That is what matters.

The Health Affairs blog has two posts for supplementary reading. One is about the Dartmouth research that provides the data for this kind of comparison (and which is facing criticism of late). The other is a roundtable on the Gawande article.

The administration’s proposals embody a series of compromises, some more defensible than others–but at least (compare with health reform) the White House has worked out a careful, detailed plan and is making the case for it.

Most of the key elements are, or should be, uncontroversial: stronger system-wide oversight, albeit with responsibility divided between the Fed and a new Financial Services Oversight Council chaired by the Treasury; more demanding capital requirements for banks and other financial firms; an FDIC-like early resolution regime for systemically important financial institutions; new consumer protections, to be designed and enforced by a new agency; stronger regulation of securities, with a requirement that originators of securitised loans retain a material interest in the asset; and moves to get standardised derivatives traded on exchanges rather than over the counter. Based on recent experience, each of these proposals meets a clear need.

That is a lot to be getting on with, but it is disappointing nonetheless that Obama has flinched from attempting a thorough overhaul of the regulatory structure. The multiplicity of overlapping regulators not only remains, it grows more complicated. The Office of Thrift Supervision disappears into the Office of the Comptroller of the Currency, for a loss of one regulatory entity. But banks, for instance, will continue to regulated by many different state and federal regulators. In the end, opportunities for regulatory arbitrage will not be significantly reduced. There had been talk of merging the SEC and the CFTC as well, but that will not happen either.

A main reason for this timidity appears to be Congressional prerogatives–the unwillingness of various committees to surrender their oversight powers. This fracturing of supervision will put an enormous burden on the Treasury and its new oversight council. Next time, that is where the buck will stop.

The oversight council is a political compromise in another sense. It would have been tidier to put its functions at the Fed, now that the central bank is to have bigger systemic-stability responsibilities. But many in Congress think that the Fed is already too powerful, and is being rewarded for failure. So with one hand the administration gives it new authority (with respect to individual systemically significant banks and non-banks) and with the other denies it or takes it away (through the Treasury-led council; through the requirement to “receive prior written approval from the Treasury for emergency lending under its ‘unusual and exigent circumstances’ authority”).

For the most part the plan is very good. If it can be implemented in this form–and depending on crucial details such as the precise form of the new capital requirements–the financial system will be safer. But the unmended complexity of the structure is going to be a serious problem. Getting the pieces to work well together will not be easy. And international co-ordination around the new rules, which the administration rightly wants to see improved, is going to be much more difficult than it should be. If getting domestic regulators to work together is going to be a challenge, I don’t give much for the chances of effective  co-operation across borders.

Of the commentary I have read so far on the plan, I recommend this note by Douglas Elliott at Brookings.

Obama’s hands-off approach to health care reform looks ever more questionable. I’m getting tired of listening to speeches that state uncontroversial goals–widen coverage, curb costs, free doctors from useless paperwork, improve medical outcomes–but have little or nothing to say on how these things might actually be done. It’s one thing to refrain from ramming a fully worked-out blueprint down the throat of a sceptical Congress, another entirely to step back altogether from fundamental questions of design and cost recovery.

Obama is failing even to express preferences. Aren’t hard choices supposed to be his specialty? To listen to the administration, one would suppose that there are no hard choices in health care, only easy ones: for example, to curb costs, simply widen coverage. Who really believes that? It is a dream world.

Yes, he has backed the public plan option, which seems to imply a view of some kind–but what does that proposal actually mean? As this new FT column of mine argues, it is surely disingenuous to say that a public plan can be just another competitior. How can just another competitor “keep them [the private insurers] honest”? If the public plan makes a difference it will be because of its market and political power, and because of its ablity to attract subsidy–in short, because it is not just another competitor. If in turn it exerts those pressures, Obama’s pledge that nothing will change for Americans who have private health insurance they like will be impossible to honour. Not even Obama can reform a system without changing it.

Incidentally, the headline on that column–”Medicare for all may be the best cure for the US”–was a little over-exuberant. The piece says that Medicare for all might be better than the current system, but that isn’t saying much. In fact I think a system based on well-regulated private insurers is still the best bet. That is unlikely to be where we end up if a public option is included and empowered to make a difference. The momentum in that case would indeed be toward Medicare for all. The main point of the article is that if Obama does want to shove the US in that direction–as many other Democrats plainly do–then he, and they, should say so and start making the case.

For more on the hard choices in health care reform, here’s another recent column I did on the subject for National Journal.

For the past few months, Barack Obama and his allies in Congress have been striding towards far-reaching reform of the US healthcare system without the public paying much attention. This is changing. Interested parties are studying draft legislation to see where they stand. In spite of the Democrats’ dominance in Washington, reform will not glide through unopposed.

Using a manoeuvre called reconciliation, the administration can get reform through Congress without a single Republican vote. But the Democrats themselves are divided.

They agree on several elements. At least to begin with, private employer-provided insurance will remain the norm. “If you like your present plan”, as most Americans do, “nothing will change”. New mandates, subsidies and a regulated insurance exchange would widen coverage, as in Massachusetts. But controversy surrounds three points: what the reform will cost, how it will be paid for and, especially, what role a new public insurance plan might play.

The nonpartisan Congressional Budget Office is known for its unhelpfully honest analyses. The agency is under attack on health reform even before it has released its numbers: Democrats think these will be unduly pessimistic. Some already want Congress to ignore the CBO and use “directed scoring” instead. (Under directed scoring, policies cost what you want them to.) Even on the administration’s own estimates, reform will cost more than $1,000bn (€714bn, £608bn) over 10 years. Standards have changed lately, but it is still a lot of money.

The remainder of the article can be read here. Please post comments below.

Barack Obama’s nomination of Sonia Sotomayor to fill the forthcoming vacancy on the Supreme Court could revive a quarrel about racial politics that once bitterly divided the country. Contrary to what you might think, this would be a good thing. It is time to revisit that quarrel, in a calmer and more enlightened frame of mind, and change the law.

Ms Sotomayor, by the way, is an outstanding nominee. Her personal history is textbook American dream – daughter of an immigrant factory worker, a child of the Bronx housing projects, educated at Princeton (summa cum laude) and Yale (editor of the Law Journal), and an eminent career in the law to follow. As the president pointed out, her legal experience matches or betters that of the other Supreme Court justices when they were nominees.

Her record is so impressive that it is inhibiting Republicans opposed to her nomination. And it should inhibit them, for heaven’s sake. It would be a scandal if this remarkable and impeccably well-qualified candidate were barred, when her judicial views are by no means immoderate or out of the liberal mainstream.

The remainder of the article can be read here. Please post comments below.