Would Barack Obama be better than Jimmy Carter?

I know several Bush voters who are thinking about voting for Obama if he is the nominee. Besides Ann Coulter, I haven't come across any Bush voters who are voting for Clinton if she is the nominee.

But Obama's soaring rhetoric is a double-edged sword for me. On one hand, it unites the country, rather than playing the politics of division. On the other, it can mask serious deficiencies in foreign policy.

Which brings me to the comparison with Jimmy Carter. James Taranto has great food for thought:

Time reported contemporaneously on the interview under the assumption that Carter was simply pandering to the kind of man who reads Playboy. Yet it really does seem to shed some light on Carter's worldview more broadly, and on liberal sanctimony more generally.

Carter focuses on one particular sin--pride--and suggests that it is more problematic than lust or even adultery. In this telling, we all are subject to lust, even Jimmy Carter. Some of us succumb to it, and some do not. If you are one of those who do not, it is a sin for you to think that makes you a superior man.

So far, so good. But the Carter of the Playboy interview does not measure up to his own standard. He begins by acknowledging his own lustfulness, but then describes a hypothetical man who "leaves his wife and shacks up with somebody out of wedlock" and one who "screws a whole bunch of women." Carter's protestations notwithstanding, there is no escaping that this comparison is highly favorable to him.

Why does Carter feel it necessary to contrast others' reprobate behavior with his own relatively innocent conduct? Not, he asserts, because he thinks he is better than anyone else, but precisely because he thinks he isn't. Not only does he live a sexually upright life, but he isn't proud of it. He wants everyone to know that he has risen above the sin of pride. But that proves that he has not.

Carter's formulation of morality is entirely self-centered. For his purposes, the adulterer and the lothario exist only as instruments, enabling him to display his own ability to be nonjudgmental. What does not figure into Carter's equation at all is the wife and children the adulterer betrays, or the string of women the lothario uses. It is a morality in which intention counts for everything and consequences for nothing.

This is where the analogy to a certain kind of liberal foreign policy becomes clear. The idea is that America (or another Western country, usually Israel) is not perfect, and therefore has no business passing judgment on the affairs of its adversaries. All nations, like all men, are predisposed to sin, and the greatest national sin of all is for a dominant power to exhibit pride. By this reasoning, it is morally worse for an American leader to call (say) the regimes of North Korea, Iran and Saddam Hussein's Iraq "evil" than it is for those regimes to undertake actions that deliberately hurt or endanger innocent people.

When applied to public as opposed to private morality, this kind of above-it-all attitude, this self-regard masquerading as humility, provides an excuse for inaction in the face of evil. To be sure, sometimes inaction is a wise course, because available actions would only make matters worse. But this is a practical question--one of consequences, not intention.

To make the perfect the enemy of the good, to make a principle of responding to evil with inaction, is a dangerous way to approach the world. That should have been the lesson of the Carter presidency. It is a lesson American voters would do well to keep in mind as November approaches.

Worst case? If 4 years of a Carter bust can bring about 20 years of a Reagan-Bush-Clinton boom, I think it's a good trade. Of course, in the long run we're all ... you know, not around here anymore.

I have no idea who I am voting for. Consequences are important--book smart is nothing compared to market smart (i.e. my teachers and students loved me, but I couldn't feed my family).

I'd rather be governed by a wise Turk rather than a foolish Christian--Martin Luther

UPDATE: James Dobson and Rush Limbaugh are anti-McCain Bush voters, too.

Quotes of the day

Sadly, much of the history written in the past 14 months had redounded to the salvation of parties who will be tempted to make the same mistake again.--Holman Jenkins

I have seen the motto, "In essentials unity; in nonessentials charity," and I have looked for its incarnation in men and churches without finding it, one reason being that Christians cannot agree on what is and what is not essential. Each one believes that his fragment of truth is essential and his neighbor’s unessential, and that brings us right back where we started. Unity among Christians will not, in my opinion, be achieved short of the Second Advent. There are too many factors working against it. But a greater degree of unity might be realized if we all approached the truth with deeper humility. No one knows everything, not saint nor scholar nor reformer nor theologian. Even Solomon in all his glory must have overlooked something.--A.W. Tozer

We must recognize Israel's achievements under difficult circumstances, even as we strive in a positive way to help Israel continue to improve its relations with its Arab populations, but we must not permit criticisms for improvement to stigmatize Israel. As I would have noted at Rosh Hashana and Yom Kippur, but which is appropriate at any time of the year, I offer an Al Het (a plea for forgiveness) for any words or deeds of mine that may have done so.--Jimmy Carter

Isn't that nice. Oh, in a not-at-all related story, Jimmy Carter's grandson is running for Congress in a Georgia district that has a significant (at least for Georgia) Jewish population. ... The only thing worse than no apology is a convenient apology. Funny, I didn't think I could like Jimmy Carter less, I guess I was wrong.--Patrick Archbold

Sometimes—like during the economic horror show we have just lived through this past year—I think the point is simply to endure.--Epicurean Dealmaker

Investors who seek triple-A debt are running out of options. Yet another top-rated class of debt is on the hit list now that Standard & Poor’s may downgrade covered bonds — a type of mortgage-backed security popular in Europe. Soon there will be little AAA debt left outside the world of government and quasi-government debt. That’s putting safety-oriented investors in a bind.--AGNES CRANE and UNA GALANI

... we don't like to buy stocks that have already rallied, and we don't like to sell stocks that have already fallen - our instinct is to do the opposite - buy low, sell high. So that's why I mentioned Newton's First Law of Motion to describe the big move in stocks this year. An object in motion tends to stay in motion - like the stock market since the march lows - until an outside force acts on it. I've been thinking that the outside force will be "reality" - the reality that things are not really getting better - that we (As a country) have pretty much spent all the money we have and all the money we borrowed already. The reality that unemployment overrides existing home sales in terms of importance in the economy, and that you can't tax and spend your way back to prosperity. Perhaps the outside force will be the eventual inevitable Federal Reserve interest rate hike needed to remove the massive fiscal stimulus that's been enacted.--Kid Dynamite

Jimmy Carter, international criminal?

James Kirchik writes:

The origins of this law lie in the activities of Dr. George Logan, a Quaker pacifist doctor who tried to lessen tensions between the French Revolutionary government in Paris and the Federalists then leading the nascent American Republic, who tilted towards Britain. Logan traveled to France with an approving letter signed by Thomas Jefferson, and was accepted by the French government as a legitimate representative of the United States. Then-President John Adams condemned Logan for his rogue diplomacy, and decried the “temerity and impertinence of individuals affecting to interfere in public affairs between France and the United States.” One can only wonder what Adams would think of Jimmy Carter, who has brazenly announced his intention to meet with Hamas leader Khaled Meshal in Damascus later this week.

Hamas, unlike Syria, is not a country — an entity with territorial integrity, recognized by the international community as the legitimate authority of a nation-state — but a terrorist group. I’m no lawyer, but it appears that a strong case can be made that Jimmy Carter has been in constant violation of a federal statute ever since he left the White House.

Maybe we get Eliot Spitzer to work off some of his sentence on prosecuting this case.

So Obama will talk with any dictator

but it doesn't mean that he will be speaking honestly:

The accommodating Canadian Embassy nonetheless tried to smooth things over yesterday with a statement saying that "there was no intention to convey, in any way, that Senator Obama and his campaign team were taking a different position in public from views expressed in private, including about NAFTA." Which is too bad, because the apparent revelation that Mr. Obama doesn't believe his own trade rhetoric is the best news we've heard about the Illinois Senator's economic policy.

In Mr. Goolsbee's defense, we too have recognized a language barrier separating the U.S. and Canada, particularly when we enjoy watching NHL games on television. In their understated manner, Canadian analysts describe blows to the head as "messages" and sticks to the face as "taking liberties." So perhaps Mr. Goolsbee's obligatory nod toward the benefits of trade was interpreted in Canada as a passionate defense of free markets.

Like I said, Barack Obama is starting to remind me of Bill Clinton.

UPDATE: And, as Bret Stephens reminds, Jimmy Carter:

In 1977, Jimmy Carter told Americans to get over their "inordinate fear of communism." This year, expect to be told to get over your "inordinate fear" of terrorism.

Two years after he expressed a merely ordinate fear of communism, the Soviet Union invaded Afghanistan. "History teaches, perhaps, very few clear lessons," Mr. Carter said in his response. "But surely one such lesson learned by the world at great cost is that aggression, unopposed, becomes a contagious disease." Mr. Carter learned that the hard way. Let's hope Mr. Obama won't have to learn the same lesson, the same way.

Oh, yeah.

UPDATE: More cred issues:

"When it came time to make the most important foreign policy decision of our generation the decision to invade Iraq Senator Clinton got it wrong," Obama said.

He said that Sen. Jay Rockefeller, a fellow Democrat from neighboring West Virginia, had read the intelligence estimate as a member of the Senate Intelligence Committee and had voted against the war resolution.

Rockefeller, who is now chairman of that committee, endorsed Obama on Friday and campaigned with him on Saturday.

Just one problem: As blogress Clarice Feldman points out, and as the Senate roll-call confirms, Rockefeller voted for the war. We guess it was too good to check!

Michael Kinsley applies Greenspan's Aristotelianism on Greenspan

and gets interesting results:

You could describe what Volcker did as officially accepting the theory of monetarism, or as contracting the supply of M1. Whatever. But put bluntly, what he did was to purposely engineer the deepest decline since the Great Depression in order to wring inflation — and the expectation of future inflation — out of the economy. This set the stage for the generation of prosperity that Greenspan presided over.

Greenspan deserves enormous credit for staying the course. And yet — as he himself tells it in this book — he also helped Ronald Reagan in 1980 to demagogue economic policy as a way of attacking Jimmy Carter. He wrote a speech for Reagan blaming Carter for “one of the major economic contractions in the last 50 years.” Reagan changed that to “a new depression — the Carter depression.” Within a week, this had turned into: “A recession is when your neighbor loses his job. A depression is when you lose yours. And recovery is when Jimmy Carter loses his!” Greenspan says, “What attracted me to Reagan was the clarity of his conservatism.”

As Greenspan surely knows but doesn’t admit, Reagan achieved this appealing clarity by ignoring the “objective reality separate from consciousness” that Greenspan used to treasure. And Greenspan does the same. Early in Reagan’s administration, as a member of the president’s economic advisory board, he supported Reagan’s tax cuts “if spending was restrained” and if the Fed kept money tight. Volcker’s Fed continued to do its bit but Reagan, famously, did not, leading to enormous deficits. Greenspan says, “Congress shied away from the necessary restraints on spending.” But the data — those good old data — show that the budgets Reagan proposed were only slightly smaller than the budgets Congress eventually passed.

The data also show that George W. Bush has done a better job than Reagan did at controlling government spending. Spending has averaged 19.7 percent of G.D.P. during Bush’s first six years — Iraq war and all — while it was 22.4 percent during Reagan’s eight years. (If you assume a year’s lag between policy and result, it’s 22.3 percent.)

Half this book — the half that is getting no attention — isn’t memoir: it’s what Greenspan calls “detective stories”: just Alan riding the data wherever it takes him, having the time of his life, trying to solve all the world’s economic puzzles, like why it took so long for computers to affect productivity, why incomes are becoming more unequal and what to do about it, the energy crisis, immigration, entitlements and so on. Not all of this is wildly original, but there are great nuggets and aperçus. And it is all written in English and fully comprehensible.

More Krugman deconstructed

Krugman has been deconstructing himself a lot lately, but when he tries to revise Carter / Reagan history, I'd like to post some points by Tom Firey:

In short, Krugman makes four criticisms: Reagan’s policies resulted in (1) stagnant middle-class incomes, (2) an increase in the poverty rate, (3) stagnancy in productivity growth, and (4) stagnancy in “American business prestige.”

Are those claims true and do they show that Reagan’s economic policies “did fail”? Let’s look at the data. (Hyperlinks connect to the relevant federal data sets.)

From 1981 to 1988 (which roughly corresponds with Reagan’s tenure), median real family income grew 11.1 percent while real household income grew 10.3 percent. Those growth rates are in the top third of the 30 eight-year periods from 1968–1975 to 1998–2005.

Poverty topped out at 12.3 percent for families and 15.2 percent for individuals in 1983. From there, though, poverty under Reagan moved downward steadily, reaching 10.4 percent for families and 13.0 percent for individuals in 1988.

Krugman is correct that the data show productivity growth under Reagan was around 1.4 percent a year, not much higher than the previous period 1973–1979 (1.2 percent) and a little less than the subsequent period 1990–1995 (1.5 percent). Those numbers are all considerably lower than the 2.8 average annual increase for 1947–1973 and the 2.5 percent for 1996-2000.

Krugman does not mention the productivity rate for 2000–2006; at 2.7 percent, productivity growth is even higher under the George W. Bush administration than it was in the best of the Clinton years. Again, curiously, Krugman does not credit G.W. Bush with being even more successful economically than Reagan or Clinton.

This raises a question: If the average productivity growth rate increased over the last five years of the Clinton administration, and that growth continued (at a slightly higher rate) through the first five years of the G.W. Bush administration, then does policy (or politics) have much to do with productivity?

Krugman’s claims about the Reagan record are misleading and, in the case of middle-class income, outright false. But more significantly, the concept underlying Krugman’s column is facile.

and his colleague Daniel Griswold:

Krugman wrote in a January 21 column for the New York Times that the economic record of President Reagan was one of failure. The Reagan years did encompass a recovery from a steep recession, he acknowledges, but then, “By the late 1980s, middle-class incomes were barely higher than they had been a decade before — and the poverty rate had actually risen.”

Let’s bore in on the poverty numbers and the operative phrase “a decade before.”

As everyone knows, Reagan was in office for exactly eight years, from January 1981 to January 1989. To compare his last full year in office (1988) to “a decade before” would take us back to 1978, a period that would include the last two years of Jimmy Carter’s single term. Those two years, it turns out, were absolutely brutal for America’s poor.

The last half of Carter’s tenure was marked by double digit inflation, record high interest rates, and a sputtering economy that fell into recession in the first half of 1980. That stagflationary mix caused the poverty numbers to soar. From 1978 to 1980, according to the Census Bureau, the number of Americans living below the poverty line rose by 4.8 million and the poverty rate jumped from 11.4 to 13.0 percent.

The poverty rate continued to climb under Reagan as the nation labored through a steep recession in 1981-82, a recession largely caused by the Federal Reserve Board’s efforts to slay the Carter-era inflation. After peaking at 15.2 percent in 1983, the rate declined steadily through the rest of Reagan’s time in office. By his last year in office, the poverty rate was exactly the same—13 percent—as it was in Carter’s last year in office. That’s nothing to crow about, but neither is it an increase or an obvious sign of failure.

To compare the last year of Reagan’s presidency to 1978 has the effect of saddling the Reagan record with the last half of the Carter presidency—a neat statistical trick worthy of the current presidential campaign season.

C'mon, Professor. Even Carter's aides have embraced the truth.

A doping athlete gives up his awards; why not Jimmy Carter his Nobel?

I was just thinking about him last week. (Via Stephen Green):

Reuters reports that Carter called Washington's use of the term "genocide" was both legally inaccurate and "unhelpful."

"There is a legal definition of genocide and Darfur does not meet that legal standard. The atrocities were horrible but I don't think it qualifies to be called genocide," he said. Washington is almost alone in branding the 4 1/2 years of violence in Darfur genocide. Khartoum rejects the term, European governments are reluctant to use it and a U.N.-appointed commission of inquiry found no genocide, but that some individuals may have acted with genocidal intent. Carter, whose charitable foundation, the Carter Center, worked to establish the International Criminal Court (ICC), said: "If you read the law textbooks ... you'll see very clearly that it's not genocide and to call it genocide falsely just to exaggerate a horrible situation I don't think it helps."

Brahimi's and Carter's comments come at the end the Elders' two-day mission to Sudan. Voice of America reports that during their visit, the Elders found that "people in Darfur were desperate for protection, despite the Sudanese government's insistence that the situation in the region is getting better."

Some people they visited slipped them notes full of allegations of rape and other abuse by militias aligned with the Sudanese government. The wife of former South African President Nelson Mandela, Graca Machel, told of her meeting with women in Darfur. "The first thing they told us they need security," she said. "They need security. They gave us examples of what happened to them, even graphically, to show how women are being raped, are beaten and are brutalized. I think because they thought we may not get a clear translation, they went at length of using gestures to show us how brutal it was, the kind of assault they are subjected to."

This really angers me--folks thinking that Jimmy is helping people. He is helping people get killed.

Don Surber is more sanguine on McCain than me

He posits:

Congratulations, John McCain.

The baggage we know well. From the Keating Five scandal to campaign finance deform to immigration amnesty, McCain has a lot of baggage. But he also carries his own luggage, does he not?

There is a lot to be said for humility and he’s been knocked down a few times. I see he has regained his legs each time.

Many conservatives no doubt will freak.

My wise counsel in this is the philosopher who pens under the pseudonym Basil.

Bush was not his first choice in 2000. Dole was not his choice in 1996. Reagan was not his first choice in 1980.

I can do him one better: I voted for Carter. Maybe I should wear a T-shirt: “What do I know? I voted for Carter.”

Basil advises people keep their options open: “So, now that Fred’s out, it looks like I’m going to end up voting for someone who wasn’t my first choice.”

That’s how the game is played. You try your best, you lose, you shake the winner’s hand, and you play again.

You do not take your ball and go home.

Look at Al Gore. Rather than gracefully accept a close defeat in 2000 and come back later, he got all angry and sued. Look at him now. He has all these awards but he knows he’s a fraud. He knows global warming is a myth. If he really believed that crap, he would not burn up 20 times the electricity of mortal men.

But hey, what do I know? I voted for Carter.

History may provide some guidance. In 1932, FDR was all the rage. But 28 years later, JFK did not run as an FDR Democrat. He said it was time for a new generation.

It has been 28 years since Reagan was nominated.

What he stood for as president included being pro-life, pro-gun, limit the government, cut taxes, cut spending, help the truly needed, and stand up to communism. At various times in his life, Ronald Reagan stood at the opposite ends of some of those positions.

But he learned. And by age 70, Ronald Reagan was finally a Reagan Republican.

I'm thinking about voting for Obama. While he could end up like Jimmy Carter (my least favorite president of my so-called life), his oratory sets higher aspirational goals. Plus, Austan Goolsbee is pretty good for an advisor, and I think he understands economic policy better than he lets on (given his voter base).

I'm just worried that, like Carter's appeasement approach to foreign policy, Obama could reflate global threats against democratic nations.

UPDATE: McCain is looking to punish my family and friends? This is the worst thing I've read today:

I think there are some greedy people on Wall Street that perhaps need to be punished.

Quotes of the day

... it’s likely [Sean Parker's] greatest contribution to Facebook was his creation of a corporate structure—based on his Plaxo experience—that gave Zuckerberg complete and permanent control of the company he founded.--Steven Bertoni

After eight years, I’ve performed more than two thousand operations. Three-quarters have involved my specialty, endocrine surgery—surgery for endocrine organs such as the thyroid, the parathyroid, and the adrenal glands. The rest have involved everything from simple biopsies to colon cancer. For my specialized cases, I’ve come to know most of the serious difficulties that could arise, and have worked out solutions. For the others, I’ve gained confidence in my ability to handle a wide range of situations, and to improvise when necessary. As I went along, I compared my results against national data, and I began beating the averages. My rates of complications moved steadily lower and lower. And then, a couple of years ago, they didn’t. It started to seem that the only direction things could go from here was the wrong one. Maybe this is what happens when you turn forty-five. Surgery is, at least, a relatively late-peaking career. It’s not like mathematics or baseball or pop music, where your best work is often behind you by the time you’re thirty. Jobs that involve the complexities of people or nature seem to take the longest to master: the average age at which S. & P. 500 chief executive officers are hired is fifty-two, and the age of maximum productivity for geologists, one study estimated, is around fifty-four. Surgeons apparently fall somewhere between the extremes, requiring both physical stamina and the judgment that comes with experience. Apparently, I’d arrived at that middle point. ... I watched Rafael Nadal play a tournament match on the Tennis Channel. The camera flashed to his coach, and the obvious struck me as interesting: even Rafael Nadal has a coach. Nearly every élite tennis player in the world does. Professional athletes use coaches to make sure they are as good as they can be. But doctors don’t. I’d paid to have a kid just out of college look at my serve. So why did I find it inconceivable to pay someone to come into my operating room and coach me on my surgical technique?--Atul Gawande

... when you see a fabricated, unverified quote attributed to you in a book that claims to be a historical description of an important policy meeting with the President, it sticks with you. Mr. [Ron] Suskind’s earlier book about the Bush Administration was an inaccurate and unfair depiction of the President and the advisors for whom I worked, and of the White House in which I worked. It was clearly fed by a disgruntled former Presidential advisor [Paul O'Neill] promoting himself and pushing his own agenda. I will assume the same about his latest. Amazon should move it to the Fiction category.--Keith Hennessey

The [Obama] administration was supposed to have the economic dream team. Couldn't they have spared a moment to sit down with the folks at [the Department of Energy] and explain the concept of sunk costs?--Megan McArdle

How does the surgeon with broken hands fix his own hands? If congress is able and willing to vote to circumvent itself, then it is not really in need of circumvention. If it can't circumvent itself, but circumvention really is necessary, then what? Perhaps Mr Orszag imagines CIA director David Petraeus setting up a number of independent panels and commissions after mounting a successful military coup? I would suggest a constitutional convention. Anyway, in the absence of a plan for implementation, Mr Orszag's article is a bit like telling a kid failing at basketball to get taller.--W.W.

Yale? Seriously? Yale?--Greg Mankiw

Chinese, Japanese, Vietnamese ... Iceberg, Roseberg, Steinberg ... Harvard, Yale, Princeton, it's all the same to me.--a punchline + a Cav addendum

But surely if, say, President Jimmy Carter was as smart and as full of correct foresight as he would have had to be in order for sensible people to take seriously his late-1970s pronouncements on the future of America’s energy economy, he could have made a personal fortune, starting at 12:01pm on 20 January 1981, launching and running an energy company (or, more precisely, a synthetic-energy company). Yet he didn’t even try. He selfishly denied to Americans – indeed, to the world – the blessings of synfuels. Sure, he did other things. Built houses for poor people. Visited foreign leaders. But does the value that Mr. Carter supplied to the world through these deeds come close to the value that Mr. Carter would have supplied had he actually founded and successfully run a company producing ‘alternative’ energy? Doubtful. And what of Pres. Obama? Even if he wins a second term in the White House, he’ll be only 55 years old when he leaves office. Will he found and run a health-insurance company? How about a ‘green’ energy firm? Or will he, perhaps, found and run a firm specializing in offering middle- and low-income Americans better and more fully disclosed access to consumer credit? Will he create a successful automobile firm? I’ll bet (seriously) a good deal of money that he’ll do none of these things. He’ll not even try. And for good reason: not only does he know nothing about these matters, he knows nothing about finding investors willing to stake their own funds, or about finding skilled workers and managers willing to cooperate together in such upstart enterprises, so that such enterprises become realities with real prospects for success. He knows no more about the economic matters upon which he pronounces than does a soap-opera actor portraying a physician know about cardiology or obstetrics.--Don Boudreaux

Predicting toxic drug effects in humans - now, that's something we could use more of. Plenty of otherwise viable clinical candidates go down because of unexpected tox, sometimes in terribly expensive and time-wasting ways. But predictive toxicology has proven extremely hard to realize, and it's not hard to see why: there must be a million things that can go wrong, and how many of them have we even heard of? And of the ones we have some clue about, how many of them do we have tests for?--Derek Lowe

Had we lived, I should have had a tale to tell of the hardihood, endurance and courage of my companions which would have stirred the heart of every Englishman. These rough notes and our dead bodies must tell the tale.--Captain Robert Falcon Scott, journaling his failed expedition to the South Pole

Maybe that is what a recession is. Not a macroeconomic accident in which all of us suddenly decided to spend less and consequently have been unemployed more. But a period in which the up escalators are less crowded and the down escalators have more people than usual.--Arnold Kling

I suspect the biggest source of inflation fears has been Chinese investors. The regime there has been on a treadmill to Hell, needing to create millions of jobs each year to avoid having its populace revolt. To create those jobs it has to keep its exports cheap, which requires it keep its currency artificially low. It does this by printing money, quite literally. Anyone holding lots of Chinese currency would understandably want to hedge against inflation. But China has been putting the brakes on inflation. It is allowing its manufacturing sector to slow down — we've now had three consecutive months of contraction in Chinese manufacturing. The government is quite audibly fighting inflation. So perhaps the demand for gold from Chinese investors is retreating now that the economy appears to be slowing.--John Carney

Bloomberg published a nice piece earlier this week which supports my long-held belief that the term “investment banking management”—like “military intelligence” or “legal ethics”—is, in the trenchant phrase of Raymond Chandler,¹ “an expression which contains an interior fallacy.” In other words, an oxymoron.--ED

Basel III involves complex risk weighting that is easily open to manipulation and regulatory arbitrage. Covered bonds, a structured finance arrangement popular in Europe, get a much lower risk weighting than other debt securities — which means banks that already own them (the Europeans) will have an advantage over those that don’t (the Americans).--John Carney

... overpaid and underperforming government employees are a drag on productivity, and especially on fiscal outlooks when economies are weaker. This helps explain why many state and local governments of the US, and governments in countries like Greece, are encountering serious obstacles to improving their fiscal houses as they respond to the Great Recession.--Gary Becker

[My plan to raise taxes on higher incomes] is not class warfare. It's math.--President Obama

Class warfare isn't leadership.--John Boehner

The President’s goal of raising taxes undermines his goal of increasing investment and growth.--Keith Hennessey

You know those Christian versions of mints, with bible verses on them? They're called Testamints. Well, someone's gone and created some popsicles with Christian messages on them. The name of the product? Test-icles.--James Williams

What worked to pull us out of the Recession of the Seventies?

Peter Ferrara recounts:

The first was across-the-board reductions in tax rates to provide incentives for saving, investment, entrepreneurship and work.

The second component was deregulation to remove unnecessary costs on the economy.
...
Third was the control of government spending. In 1981, Reagan forced through Congress not only his famed, historic tax cuts, but also a package of budget cuts close to 5% of the federal budget -- equivalent to roughly $150 billion today.
...
The fourth component of the Reagan recovery plan was tight, anti-inflation monetary policy, which was spectacularly successful.
...
We know such policies work because they turned around in just two years an economy far worse than today's. We were suffering from multiyear, double-digit inflation, double-digit unemployment, double-digit interest rates, declining incomes, and rising poverty. In fact, what we suffer with today is not the worst economy since the Great Depression, but the worst economy since Jimmy Carter -- the last time liberals were dominant politically and intellectually.

WSJ reporters say economy is strong

By PETER FRITSCH and KELLY EVANS

For all the concern, the world today is better equipped to swallow expensive oil than it was when Jimmy Carter was installing solar panels and a wood-burning stove in the White House.

The main reason has to do with what some call the Wal-Mart effect. For every extra dollar taken from drivers' pockets at the pump in the form of higher prices in recent years, low-cost exporters from China and elsewhere have put roughly $1.50 back in the form of cheaper retail goods. Even at today's near-record prices, U.S. households today spend less than 4% of their disposable income at the pump, vs. over 6% in 1980.

Current prices are also a reflection of a strong economy, not an oil embargo or war in the Middle East. Since a market-share war between Saudi Arabia and Venezuela flooded the market with oil and drove prices to below $11 a barrel in 1998, oil prices have risen nearly eight-fold. During that run, the global economy grew roughly 5% each year.

Strong growth in places like China helps take some of the edge off the oil-price blow for U.S. and European companies such as Detroit's Big Three auto makers. Many emerging markets are hitting a "takeoff" stage, where per-capita income reaches a level that sparks serious auto demand, says Ellen Hughes-Cromwick, Ford Motor Co.'s chief economist. Growth in emerging markets is a "structural development" that is "less sensitive to oil-price changes," she says.

Why prop up a dictator?

in today's WSJ:

Even as the Venezuelan strongman was threatening war last week against Colombia, Congress was threatening to hand him a huge strategic victory by spurning Colombia's free trade overtures to the U.S.

This isn't the first time Democrats have come to Mr. Chávez's aid, but it would be the most destructive. The Venezuelan is engaged in a high-stakes competition over the political and economic direction of Latin America. He wants the region to follow his path of ever greater state control of the economy, while assisting U.S. enemies wherever he can. He's already won converts in Bolivia and Ecuador, and he came far too close for American comfort in Mexico's election last year.

Meanwhile, Colombian President Álvaro Uribe is embracing greater economic and political freedom. He has bravely assisted the U.S fight against narco-traffickers, and he now wants to link his country more closely to America with a free-trade accord. As a strategic matter, to reject Colombia's offer now would tell everyone in Latin America that it is far more dangerous to trust America than it is to trash it.

The bottleneck is Speaker Nancy Pelosi, who is refusing to allow a vote under pressure from her left-wing Members. These Democrats deride any link between Hugo Chávez and trade as a "scare tactic," as if greater economic prosperity had no political consequences. "President Bush's recent fear-mongering on trade shows just how desperate he is to deliver one final victory for multinational corporations," declared Illinois Democrat Phil Hare, who is one of Ms. Pelosi's main trade policy deputies.

These are the same Democrats who preach the virtues of "soft power" and diplomacy, while deriding Mr. Bush for being too quick to use military force. But trade is a classic form of soft power that would expand U.S. and Latin ties in a web of commercial interests. More than 8,000 U.S. companies currently export to Colombia, nearly 85% of which are small and medium-sized firms. Colombia is already the largest South American market for U.S. farm products, and the pact would open Colombia to new competition and entrepreneurship.

Which brings us back to Mr. Chávez and his many Democratic friends. Connecticut Senator Chris Dodd's early support helped the strongman consolidate his power. Former President Jimmy Carter blessed Mr. Chávez's August 2004 recall victory, despite evidence of fraud. And then there are the many House Democrats, current and former, who have accepted discount oil from Venezuela and then distributed it in the U.S. to boost their own political fortunes. Joseph P. Kennedy II and Massachusetts Congressman Bill Delahunt have been especially cozy with Venezuela's oil company. If Democrats spurn free trade with Colombia, these Democratic ties with Mr. Chávez will deserve more political scrutiny.

Quote of the day

When I go to a dictatorship, I only have to talk to one person and that's the dictator, because he speaks for all the people.--Jimmy Carter

David Broder on John McCain

Really excellent:

We suspected, and soon confirmed, that he had limited interest in, and capacity for, organization and management of large enterprises. His first effort at building a structure for the 2008 presidential race collapsed in near-bankruptcy, costing him the service of many longtime aides. From beginning to end, the campaign that followed has been plagued by internal feuds and by McCain's inability to resolve them.

The shortcoming was intellectual as well as bureaucratic. Like Jimmy Carter, the only Naval Academy graduate to reach the Oval Office, McCain had an engineer's approach to policymaking. He had no large principles that he could apply to specific problems; each fresh question set off a search for a "practical" solution. He instinctively looked back to Theodore Roosevelt and the Progressive era, with its high-mindedness and disdain for the politics of doling out favors to interest groups. But those instincts coexisted uneasily with his adherence to traditional, Reagan-era conservatism -- a muscular foreign policy, a penchant for tax-cutting and a fondness for business …

His vice presidential choice, his best opportunity to put his stamp on the future, was made, typically, more on instinct than careful appraisal. McCain saw Sarah Palin as reinforcing his own reformer credentials. The convention embraced her, not as a reformer but as the embodiment of beliefs precious to the religious right. And the mass of voters questioned her credentials for national leadership.

The campaign has been costly in terms of McCain's reputation. He has been condemned for small-minded partisanship, not praised for his generous and important suggestion that the major party candidates stump the country together, conducting weekly joint town hall meetings -- an innovation Obama turned down.

The frustration for McCain and his closest associates is their belief that he is ready to practice the kind of post-partisan politics the country wants -- which they believe Obama only talks about.

Should McCain still win the election, it will demonstrate even more vividly than the earlier episodes in his life the survival instincts and capacity for overcoming the odds of this remarkably engaging man. If he becomes president, the country would have to hope this campaign has honed his leadership skills.

Jimmy Carter's greatest success

now tainted with failure.

Yesterday or Today?

Senator Henry Jackson lashes oil companies for earning "obscene profits" and U.S. News and World Report notes "Oil industry officials claim that they recieved this ultimatum from the Energy Secretary: 'Support the Administration's proposed tax on crude oil-- or else face tougher regulation and a possible drive to break up the oil companies."

Sound like something being talked up rather recently? Yes, but the above exchange is from the late 1970s in the Jimmy Carter era. The major difference between the reactions of the oil executives before Congress now and then: the oil executives then took the lashing; the oil executives now were not afraid to stick up for private enterprise. A very interesting note, one of the few people to publicly stick up for private enterprise and opppose the government's intentions was.....if you guessed Donald Rumsfeld, Congratulations! I am reading "Free to Choose" by Milton Friedman and all of the above info comes from his book. It is eerily relevant even to this day.

David Rubenstein says private equity is now in the Purgatory Age

Rubenstein, of Carlyle Group and Magna Carta fame, just spoke at Wharton's Private Equity conference today in Philadelphia. He likened the Eighties buyout era, in all its RJR glory, to the Bronze Age. The Nineties were the Silver Age of expansion, ending due to the tech bubble bursting. We just finished up the Golden Age.

Now we are in the Age of Purgatory. It started with a bang, too.

Hopefully we will speed through it.

Rubenstein struck me as incredibly grounded and poised. As he dealt with the protesters and shared some of his humble beginnings, I sensed a great deal of authenticity. When, as a former aide, he admitted that Jimmy Carter wasn't qualified for office, I knew this was a man who could confess, repent, and win.

UPDATE: Guy Hands of Terra Firma says that his summer prediction of $3 trillion of liquidity drain and $300 billion of bank losses was too optomistic. This probably made him a little grouchy.

The first shall be last

and the last first:

[President Obama's] disapproval rating is a bit higher than average (24 versus 16 percent).

The least popular president one month in: Ronald Reagan (55 percent).

The most popular president one month in: Jimmy Carter (71 percent).

Gasoline prices: the latest case for more limited government

[Congress] has made it impossible for U.S. producers of crude oil to tap significant domestic reserves of oil and gas, and it has foreclosed economically viable alternative sources of energy in favor of unfeasible alternatives such as wind and solar. In addition, Congress has slapped substantial taxes on gasoline. Indeed, as oil industry executives reiterated in their appearance before the Senate Judiciary Committee on May 21, 15% of the cost of gasoline at the pump goes for taxes, while only 4% represents oil company profits.

If Congress really cared about the economic well-being of American citizens, it would stop fulminating against IOCs and reverse current policies that discourage, indeed prohibit, the production of domestic oil and natural gas. Even the announcement that Congress was opening the way for domestic production would lead to downward pressure on oil prices.

There is an historical precedent for such a step: Ronald Reagan's deregulation of domestic crude oil prices at the beginning of his first term. At the time, thanks to the decision by the Organization of Petroleum Exporting Countries (OPEC) to curtail output, the price of oil was at a level that in real terms is only now being matched. Domestic price controls ensured that the OPEC cartel would face little or no competition in the production of oil.

Price controls were exacerbated by other wrongheaded policies stimulated by the two "energy crises" of the 1970s. One of the most egregious was the infamous "windfall profits" tax, designed to punish oil companies for alleged profiteering. But since it applied to even newly discovered oil, its main impact was to discourage the exploration and drilling that would have increased oil supplies.

Although the energy problems of the 1970s were traceable to government policies, Reagan's decision to deregulate oil prices was ridiculed by policy makers, especially those who had served in the previous administration. For instance, Frank Zarb, who had been Jimmy Carter's "energy czar," predicted that decontrolling the price of crude oil would lead to gasoline prices of $10 a gallon. Instead, the world price of oil plummeted, helping to fuel the extraordinary economic growth of the 1980s.

Reagan's deregulation of crude oil prices created incentives for domestic producers to invest in exploration and to increase production. The threat of increased output by non-OPEC producers destroyed the discipline among OPEC members necessary to restrict production to maintain high prices. Facing the likelihood that an increase in supply would lead to lower future prices, OPEC producers increased output in the hopes of maximizing profits before prices fell. The cascading effect caused oil prices to tumble.

As in the 1970s, U.S. energy policies have essentially restricted the exploitation of domestic sources of energy. Curtailed supplies have combined with rapid, world-wide energy demand to increase the price of oil and other sources of energy. This provides leverage to foreign producers and threatens U.S. energy security. Freeing up domestic energy resources will do today what President Reagan's decision to deregulate oil prices in 1981 did then: cause oil prices to fall, thereby enhancing U.S. energy security.

The Nobel brand is losing its luster

There have been a few Peace Prize recipients who have made (or left) the world a more dangerous place (off the top of my head, I am thinking El-Baradei, Kofi Annan, Jimmy Carter, and Yasser Arafat).

But now, it's spreading to an Economics Prize recipient (via Don Boudreaux). Tyler Cowen does the Nobel-worthy book review, and ends with:

Ms. Klein also tellingly remarked, "I believe people believe their own bullsh**. Ideology can be a great enabler for greed."

When it comes to the best-selling "Shock Doctrine," that is perhaps the bottom line on what Klein herself has been up to.