Monthly Archives: April 2010

My friend and esteemed science writer Matt Ridley has a new book coming out: The Rational Optimist. I’ve seen a review copy and it’s as good as I predicted. I’ll say more about it when it’s published next month. This is from the blurb on Amazon’s UK site.

Over 10,000 years ago there were fewer than 10 million people on the planet. Today there are more than 6 billion, 99 per cent of whom are better fed, better sheltered, better entertained and better protected against disease than their Stone Age ancestors. The availability of almost everything a person could want or need has been going erratically upwards for 10,000 years and has rapidly accelerated over the last 200 years: calories; vitamins; clean water; machines; privacy; the means to travel faster than we can run, and the ability to communicate over longer distances than we can shout.

Yet, bizarrely, however much things improve from the way they were before, people still cling to the belief that the future will be nothing but disastrous. In this original, optimistic book, Matt Ridley puts forward his surprisingly simple answer to how humans progress, arguing that we progress when we trade and we only really trade productively when we trust each other. The Rational Optimist will do for economics what Genome did for genomics and will show that the answer to our problems, imagined or real, is to keep on doing what we’ve been doing for 10,000 years — to keep on changing.

Meanwhile, Matt has begun blogging. See his comment on a recent NYT piece about the global decline in maternal deaths, which noted that this good news was not universally welcomed.

[S]ome advocates for women’s health tried to pressure The Lancet into delaying publication of the new findings, fearing that good news would detract from the urgency of their cause, Dr. Horton [Lancet's editor] said in a telephone interview.

“I think this is one of those instances when science and advocacy can conflict,” he said…

“People who have spent many years committed to the issue of maternal health were understandably worried that these figures could divert attention from an issue that they care passionately about,” Dr. Horton said.

Echoes of Climategate.

My friend Jonathan Rauch provokes me by praising David Frum. I have hesitated to comment on the AEI scandal because there are conflicting accounts of what happened (see, for instance, Charles Murray; Frum’s response). I find it hard to believe the defamatory account which Frum is allowing to circulate. (He never directly affirms it: “draw your own conclusion” is his mode of complaint.) The institute does not strike me as a thought-police kind of place. It has many unruly scholars, toeing nobody’s line but their own. Even if the reasons for Frum’s ejection were defensible, however, its timing, coming shortly after he attacked the Republican party over its healthcare defeat, drawing hostile comment in the WSJ and elsewhere, was lamentable: it has created an impression of censorship and was a disaster for the institute.

As for the merits of Frum’s line, I agree with him of course that the Republican party needs more thinkers and more moderates. I also agree it needs a positive agenda, and one that computes, fiscally speaking. So far the nearest thing it has is Paul Ryan’s blueprint–which the party leadership has not embraced, which voters would likely reject out of hand if they understood it, and which does not, as it stands, solve the fiscal problem.

Having said this, I find Frum’s position on healthcare difficult to understand.

So far as taxes and public spending are concerned, the US has been singular in two respects. It has not provided a public guarantee of health insurance, and it has not collected a value-added tax. This pairing of exceptions is no coincidence. Now that the first has been (mostly) legislated away, time may be running out on the second. With recent celebrity endorsements from the likes of Paul Volcker and Alan Greenspan, the idea of a VAT is gaining momentum, and opponents are gearing up to oppose it.

This primer on VAT from Robert Carroll and Alan Viard (h/t Greg Mankiw) is useful and even-handed. If you need to collect revenue, it says, a VAT is a good way to do it. Once it’s there, on the other hand, you can raise it rather too easily to collect even more. That is something for conservatives to worry about. Liberals are more concerned about regressivity. A VAT exempts new savings, so the rich pay proportionately less. There are ways to mitigate that drawback, according to the Tax Policy Center’s Eric Toder and Joseph Rosenberg. Payroll taxes are more regressive than a VAT. Using a VAT in part to substitute for payroll taxes could make the system as a whole more progressive.

Another paper by the TPC asks whether the present income tax code is capable of bridging the fiscal gap by itself. The answer is no, certainly not if tax increases were confined to the highest-paid households, as Obama has promised. Spending cuts and new revenue sources are going to be required.

Addressing the Southern Republican Leadership Conference last week, Newt Gingrich, former Speaker of the House of Representatives and a possible presidential contender in 2012, called Barack Obama the most radical president in US history and assailed his administration as a “secular, socialist machine”. Something is seriously amiss with an opposition that regards this as a proper line of attack.

Continue reading “In search of a moderate Republican”

No golden age of American liberty. David Boaz, Reason. (Thanks, Browser.)

Consider a VAT. Isabel Sawhill, Brookings. Paul Volcker agrees, much to WSJ’s disgust. My thoughts on the matter: here, here and here.

The new paternalism. Glen Whitman, Cato Unbound. Lead essay in a Cato symposium on Sunstein and Thaler’s “liberal paternalism“. Thaler responds. Bryan Caplan’s pithy comment sums up my on view on the idea.

Peter Galbraith, former deputy of the UN mission in Kabul, who was fired from that post over a quarrel about vote-rigging in last year’s elections, lays out the case against Hamid Karzai in the Washington Post. The piece is strong on what’s wrong with Karzai, but not so helpful on what to do about it. The recommendations start out timid and end up despairing, with nothing in between.

The Obama administration should put the United States squarely on the side of democracy in Afghanistan. First, U.S. officials should stop saying, as Gibbs did Tuesday, that Karzai is in office as a result of legitimate democratic elections… As Congress considers appropriations for the Afghanistan war, it should attach a rider making any U.S. financial contribution to the parliamentary elections contingent on Afghanistan establishing genuinely independent election bodies that have no Karzai appointees… As bad as it would be to not hold parliamentary elections, fraudulent elections could plunge Afghanistan into a civil war…

U.S. troops do not have the credible Afghan partner that is essential for the success of Obama’s counterinsurgency strategy. And because U.S. troops cannot accomplish their mission in Afghanistan, it is a waste of military resources to have them there.

President Obama should halt the surge in Afghanistan and initiate a partial withdrawal — not as a means to pressure Karzai but because Karzai’s government is incapable of becoming a credible local partner.

Would fair elections, desirable as they may be, yield different or better partners? I’m not sure whether Galbraith wants “partial withdrawal” unless the parliamentary elections are clean, or partial withdrawal regardless. (And if Galbraith is right about the current hopelessness of the war, why only “partial”?)

Outright defeat seems a poor alternative to making the best of the bad partner the US undeniably has in Karzai. Brookings scholars Bruce Riedel and Michael O’Hanlon argue that the US has no choice but to work with Karzai, and that the prospect is far from hopeless. The FT agrees, while calling for a stronger push towards devolution of aid efforts to provincial leaders.

How disappointed [with Karzai] the US is entitled to feel… is debatable. What did anybody expect? Mr Karzai’s ability to do business with the country’s countless factions, including elements of the Taliban, was why the US backed him in the first place. Yes, the election was rigged – but the US allowed it to be. Yet the news on corruption, and on Afghan capacity-building, is not all bad. There has been modest but measurable progress, and Mr Karzai has stood behind some effective subordinates.

Anyway, if not Mr Karzai, who? The US gets the worst of both worlds when it installs a flawed leader, assents to his rigged re-election, then undermines him in public. Mr Karzai is their man and, for now, he is all they have got.

See also this report by Edward Luce and Daniel Dombey on Galbraith’s claim that the Karzai is a drug user–which I had taken to be a joke, but which the White House felt obliged to call an “outlandish allegation” for which there is “no evidence”. Obviously, that makes you wonder. The piece describes tensions within the administration over Afghan policy.

Larry Summers is not long for the White House, says Josh Green. As Josh notes, I expressed some scepticism–puzzlement might be a more apt word–about his earlier Atlantic profile of Tim Geithner (it’s a fine article, by the way: be sure to read it). This was not because I was surprised to learn of tensions in Obama’s over-populated team of economics stars. That had always seemed likely. And it was not because I question Geithner’s abilities (presentational talents aside), which the piece rightly celebrates. I just found it hard it to believe that Summers would accept being sidelined to the extent the article suggested he had been. My thinking was, if it really is that way, why is Summers still there?

Perhaps I am about to get my answer. If he does go, the administration will be losing an extraordinary talent. And I wouldn’t be inclined to blame Summers for the fact that it did not work out. Josh says:

Summers always seemed a bad fit for NEC director because the job entails dispassionately presenting the president with the counsel of his competing economic advisers. Summers doesn’t do “dispassionate” and he didn’t want to limit himself to fielding others’ advice–he had plenty of his own to offer.

Hiring Larry in the hope he would be a self-effacing conduit for others’ ideas, if that is what happened, was absurd.

Weak government may be the best bet. Anatole Kaletsky, Times. Further to my previous post, on divided government. Kaletsky argues that a hung parliament can best address Britain’s problems.

The Chinese case for a stronger currency. The Economist. Some Chinese officials and scholars are advocating currency reform. “[T]heir efforts to sell their ideas will come to nought if they are crowded out by imported arguments from America.” Geithner makes an unscheduled visit to Beijing on Thursday.

Greenspan defends his role. James Politi and Alan Rappeport, FT. If you haven’t done so already, read Greenspan’s Brookings paper. (Did I fail to link to this at the time? Sorry. It’s very good.)

In an exchange on the Brookings website, Jonathan Rauch makes the case for divided government, and in a characteristically crisp way:

The health care bill’s enactment was a triumph for President Obama and one of America’s great stories of political true grit. But Obama cannot rest on his laurels, and the country cannot afford a power nap. The remaining challenges are daunting: the economy (especially employment); financial reform; energy and the environment; above all, an impending fiscal train wreck.

In the face of those challenges, here is a two-word prescription for a successful Obama presidency: Speaker Boehner.

Jonathan has advanced the merits of divided government before. See “The curse of one-party government“. (This earlier excellent piece seems to be behind NJ’s formidable pay barrier.) As a bipartisan fetishist I usually agree with him on this subject. At the moment, though, I have my doubts.

[T]he country’s biggest problems are too large for one party to handle, at least in any consistent way. The Democrats did pass health reform on a party-line basis, a remarkable accomplishment, but they did it by the skin of their teeth and with a Senate supermajority which has evaporated. That is not a trick they can keep performing.

Given the Democratic majorities when they embarked on healthcare reform, not to mention strong initial support in the country, it would have been more remarkable if they had failed. But I agree that they nearly did, which tells you something. I also agree that a genuinely bipartisan bill would have been better for the country. But the crucial issue for the next few years is fiscal control. The US is going to need higher taxes (as Jonathan himself has argued). I think the Democrats are more likely to raise taxes if they retain their Congressional majorities than if they have to share power with Republicans. These days, I think, a fiscal conservative leans liberal.

Bel Sawhill’s comment on the Brookings exchange is intriguing. “Why not try a third party?” she asks. The gap between Democrats and Republicans keeps getting wider. That space in the middle looks increasingly vacant. But if it would take electoral reform to achieve this breakthrough, as she suggests, what are the chances of that?

Before much longer, of course, Britain might once again be trying an experiment along these lines.

Curbing risk on Wall Street. Oliver Hart and Luigi Zingales, National Affairs. Two eminent economists add to an already vast body of commentary, and deserve thanks for doing so. This is one of the clearest statements I have so far read on the nature of the problem, and how best to address it.

Interview with Larry Summers. Martin Wolf and Chris Giles, FT. “I think the progress [on deficit reduction] in the health bill is often underestimated…”

A shooting in Zambia. Jeffrey Goldberg, New Yorker. How long have you got? More than 16,000 words on the killing of elephants and humans in Zambia. See if you can stop reading once you start.

Summary of new health reform law. Kaiser Family Foundation. A useful reference. It’s all so simple!

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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