Is It Time To Listen to Paul Ryan?

Paul Krugman, in a New York Times OP-ED piece (here) goes through the five excuses most commonly given for doing nothing as the US economy continues to perform poorly. And. in another blog post (here), Krugman points out that the academic research on the supposed "expansionary" effects of austerity is based on a "statistical illusion".

Of course, austerity is what Wisconsin's favorite son has been preaching since he assumed leadership of the House Budget Committee. Here is Krugman's smack down of arguably one of the world's all-time great conservative philosophers (Krugman actually implies that conservative philosophy might be delusional):

Excuse No. 2: Fear the bond market.

Two years ago The Wall Street Journal declared that interest rates on United States debt would soon soar unless Washington stopped trying to fight the economic slump. Ever since, warnings about the imminent attack of the “bond vigilantes” have been used to attack any spending on job creation.

But basic economics said that rates would stay low as long as the economy was depressed — and basic economics was right. The interest rate on 10-year bonds was 3.7 percent when The Wall Street Journal issued that warning; at the end of last week it was 3.03 percent.

How have the usual suspects responded? By inventing their own reality. Last week, Representative Paul Ryan, the man behind the G.O.P. plan to dismantle Medicare, declared that we must slash government spending to “take pressure off the interest rates” — the same pressure, I suppose, that has pushed those rates to near-record lows.

Just Walk Away

BEHIND THE CURTAIN - Email from a top Democratic aide, re last night's White House meeting: "First off, a number of folks in the room were struck by the fact that Cantor did virtually all of the talking for House Republicans, while Boehner basically just sat there. Second, Reid expressed frustration that every time we try to do something big on the deficit, Republicans walk away from the table. He cited the fiscal commission (when the 7 Republican cosponsors voted against the commission's findings), Coburn walking away from the Gang of 6, Cantor walking away from the Biden talks, and now Boehner walking away from the big deal in the latest round. Differences over substance aside, his point was about process - we're never going to get anything big done for the country if Republicans keep walking away from the table every time talks get serious."

--Another top Dem. aide emails: "To date, Congressional Republicans have voted no on the Simpson-Bowles commission, pulled out of the Gang of Six, abandoned the Biden-led talks, and rejected the President's 'grand bargain'-style offer. The more they keep rejecting compromises for averting a default, the more likely the public is to hold them accountable for the consequences."

--From the White House pooler, WashPost's Scott Wilson: "Pool escorted into Cabinet Room at 6:10pm. POTUS at center, flanked by Sen Reid and Speaker Boehner. Clearly a 'no ties' memo went out; all had open collar shirts and blazers. Sen McConnell had a canary yellow polo-style shirt on, Rep Cantor sported plaid. Pool only allowed to stay in for seconds, literally. A pool member shouted, 'Mr. President, can you get a deal done in 10 days?' POTUS responded, 'We need to.' ... Meeting has ended (at roughly 7:30pm). Aides estimate it lasted approximately 75 minutes."

--Carrie Budoff Brown and David Rogers: "The president argued several times that negotiators should work toward a $4 trillion package for reducing the deficit rather than the smaller one favored by Republicans, calling on them to stand up to their base to get it done. He said both parties would suffer politically, but they need to do something substantial, said a third Democratic official familiar with the meeting. 'If not now, when?' the president said to the group." http://bit.ly/pIN0mz

Dealing With Your Critics

Jean Cocteau died of a heart attack in 1963, at age 74, within hours of learning of the death of his close friend Edith Piaf. His epitaph reads, "I stay among you." "Listen carefully to first criticisms made of your work," he advised writers and artists. "Note just what it is about your work that critics don't like — then cultivate it. That's the only part of your work that's individual and worth keeping.

Rep. Ryan Gets a Sobering Lesson From the Netherlands

Rep. Paul Ryan, R-WI, is a conservative philosopher of the first rank. He doesn't really have to pay attention to anything that happens in the Netherlands when deducing policy recommendations from the postulates of privatization (the Netherlands, really, they smoke pot legally in coffee shops).

Unfortunately, whether it's from smoking too much weed or drinking too much neoconservative Kool-Aid, the Dutch decided to take Mr. Ryan's advice and privatize their mixed health insurance system in 2006. The rationale was that competition would reduce health care spending, enhance consumer choice and improve quality of care. In 2011, the Dutch now know that privatization was a failure.

A recent study in the New England Journal of Medicine (here) found that (1) competition has not slowed the growth of health care spending (national health expenditure is increasing faster than the rate of inflation and total costs of health insurance have increased 40% due to increases in administrative costs), (2) the number of uninsured have increased as have the number of "defaulters"--people who haven't payed their mandatory health insurance premiums for more than 6 months, (3) competition has not provided more choice (four insurance conglomerates control 90% of the insurance market, only about 4% of people change plans and 65% are dissatisfied with their coverage), and (4) the Netherlands still relies heavily on regulation (the government must still enforce global budgets, price controls and patient cost sharing).

Quoting from the study:

The myth that competition has been key to cost containment in the Netherlands has obscured a crucial reality. Health care systems in Europe, Canada, Japan, and beyond, all of which spend much less than the United States on medical services, rely on regulation of prices, coordinated payment, budgets, and in some cases limits on selected expensive medical technologies, to contain health care spending. Systemwide regulation of spending, rather than competition among insurers, is the key to controlling health care costs.

What the authors of the study don't acknowledge is that scientific data has nothing to do with policy deductions made from philosophical first principles.

To Serve Man

Yesterday and today, the SyFy channel is running a Twilight Zone marathon. One episode we saw last night (To Serve Man in the clip above) involves an Alien invasion, the inept U.S. military, an arrogant scientist (Lloyd Bochner) and his bombshell assistant (Susan Cummings). The Aliens (Richard Kiel) at first appear altruistically motivated. They leave a book written in their language that is eventually decoded by the bombshell assistant. She first gets the title "To Serve Man" and then figures out what the rest of the book is about to create the surprise ending.

This is all pretty much fun and is considered one of the best Twilight Zone episodes. More information about the Twilight Zone and its creator, Rod Serling, are worth a quick read.

Frankly, Barney, It's Hard to Believe Any Politician

Tonight, the PBS News Hour (here) aired a review of the Book Reckless Endangerment by Joushua Rosner and Gretchen Morgenson (see Robert Reich's review here). In the clip above, Barney Frank (D-NY) responds to some of the criticisms leveled at him by the book.

I've already commented on Fannie and Freddie's role on the Subprime Mortgage Crisis (here) and I guess I agree with Paul Krugman's early assessment (here). Fannie and Freddie are a convenient target that deflects criticism from the private sector, so this debate will continue as a very aggressive, concerted attempt to rewrite history.

Well-known economist Joseph Stiglitz also comes in for criticism in the book (here) and from the right wing (here) for an early study he did of Fannie and Freddie (here). Stiglitz has recently changed his opinion of Fannie and Freddie (here). All of this is fascinating reading!