No Solyndra, No Sam Colt

Republicans in Congress were outraged when one of the companies that received a government guaranteed loan under Obama’s stimulus failed. The company in question was called Solyndra, and it made a special tubular solar “panel” that was designed to work in conjunction with white roofs, which are replacing dark roofs on commercial buildings across the nation. White roofs are highly reflective, and the Solyndra “panel” was supposed to be able to absorb both direct and reflected light. Solyndra received a $535 million loan guarantee from the Department of Energy, as part of a program under the Obama stimulus (called the American Recovery and Reinvestment Act) designed to promote “green technology.”

The failure of Solyndra outraged Conservatives on two levels: first because government money was used to support “green” technology, and second because it was part of the hated Obama stimulus. Republicans tried to use it as an example of the failure of both of these programs. In response they proposed a bill to prevent government funding of similar programs, which they called the “No More Solyndras Act.”

Conservatives act as if government funding of new technology is some liberal scheme, that Obama is somehow an outlier, and that these are somehow new programs. But the reality is that the government has long funded business, particularly in cutting edge technology that could not get financing elsewhere. Thomas Jefferson, for example, was fascinated by the idea of interchangeable parts, particularly for weapons. He was certainly not alone. Interchangeable parts for a musket or cannon would mean that the weapon could be quickly and easily repaired on the battlefield. At the time all weapons were hand made, and if a part broke a replacement part needed to be hand made by a gun smith. It was an expensive and time consuming process, and militaries around the world were trying to develop weapons with interchangeable parts. If the triggers and firing mechanisms were interchangeable the weapon could be quickly, and cheaply, repaired.

In 1799 the inventor Eli Whitney gave a presentation of his precisely crafted gun components to Vice President Thomas Jefferson. Jefferson was impressed. He believed that Whitney had perfected the interchangeable part and pushed a bill through Congress to purchase guns from Whitney. But Whitney never succeeded in producing a large quantity of guns with truly interchangeable parts. Despite this failure, the government continued to fund weapons manufacturers who were trying to produce weapons with interchangeable parts. By the 1820’s a gun maker named John H. Hall was producing weapons at the government owned Harpers Ferry Armory that were passably interchangeable. But the real success came with Sam Colt, who mass produced a repeating revolver with precise and fully interchangeable parts. Colt struggled for years to sell his weapon. He sold a few to the Texas Rangers in the 1840’s but was unable to convince the U.S. Army to buy his weapons. In a fortuitous stroke of luck, as tensions with Mexico increased, a Texas Ranger was in Washington talking about problems with Mexico, when he happened to mention that the best weapon the Rangers had when fighting Indians was a Colt Revolver. Based on this praise the army placed an order for one thousand Colt pistols. The era of machine made weapons with fully interchangeable parts began.

I suspect that if the current crop of conservative Republicans had been in Congress in the early 1800’s they would have cut off government funding after the Whitney’s failure, and would have attempted to prevent such funding in the future. Would they have proposed a bill titled “No More Eli Whitneys?” I suspect so. But without Whitney there may have been no Hall, and no Sam Colt.

The Barr Report August 29

The Belated Barr Report Aug 29

Representative Barr wrote a lengthy Op/Ed that was published in the Herald Leader this past Monday. It is available here.

Barr was responding to news reports from the New York Times that noted that he was one of the most prolific fundraisers on the House Financial Services Committee. The report was rebroadcast by the Herald Leader, and is available here.

I was surprised by the length of the response, and my initial impression was to paraphrase Hamlet: “Me thinks the Representative doth protest too much.” He was clearly stung by the criticism, and his need for a lengthy response seemed to indicate that the criticism hit close to the mark.

His response was voluminous, but I want to address two specific things that he discussed.

The first was that additional financial reforms were needed because Dodd-Frank failed “to fix Fannie May and Freddie Mac, the giant government-sponsored enterprises whose reckless policies were at the epicenter of the 2008 subprime mortgage crisis.” This is a common conservative trop, repeated often by Republican politicians, but not supported by any reputable economists. There is no doubt that government support of mortgages helped some people qualify for mortgages that were not qualified, but the main culprit in the collapse was the esoteric financial instruments known as derivatives, which allowed banks to move mortgages off their balance sheet and magically transform them from a debt to an asset.

The New York Review of Books has a lengthy analysis of Fannie and the Crisis. Did Fannie Cause the Disaster?

The Atlantic Magazine notes that the housing crisis occurred at the time that Fannie and Freddie’s market share of high risk mortgages dropped. For the Last Time, Fannie and Freddie Didn’t Cause the Housing Crisis

The best and most data filled (through links) analysis is from the Rortybomb blog: What Can We Say For Certain Regarding the GSEs?

Fannie and Freddie accounted for less than 5% of the subprime losses, and 84% of subprime loans were issued by private lending institutions. Certainly federal support for mortgages had a minor contributing role, but to say it was the main cause is to ignore the effects of the free market and to clearly expose your anti-government bias.

The second issue regards the Dodd-Frank bill which was supposed to reform the financial services industry in the aftermath of the crash. There are numerous criticisms of Dodd-Frank, most involving the way it has restricted commercial lending on the local level. This is a serious concern and needs to be addressed. But Barr’s proposed bill (which he mentions in his article) addresses consumer lending practices, which were (1) at the heart of the collapse, and (2) not the main complaint by banks and the financial industry about Dodd-Frank.

The conservative commentator Michael Barone had an interesting analysis based on a book review at the National Review Online [http://www.nationalreview.com/articles/336977/dodd-frank-s-problems-and-potential-solutions-michael-barone] The problem with Dodd – Frank is that is creates a separate set of rules for big banks and smaller banks. It allows larger banks to borrow at a lower rate than smaller banks, and creates a system to bailout larger banks that is not available for smaller banks. The idea is that large banks have such a major impact on the economy that their failure would harm the overall economy; i.e. they are too big to allow to fail.

Other criticism of Dodd-Frank is that it is a massive warren of regulation that make it hard for financial institutions to know what is allowed and what is not. See http://www.economist.com/node/21547784

These regulations create a far bigger burden on small banks than on large financial institutions that have massive legal teams to interpret the rules, and highly paid lobbyists to modify them in their favor. It is fairly well documented that these regulatory burdens put more directly harm the lending practices of small and regional banks that large banks, and that this mostly impacts commercial lending than consumer lending.

Finally, here’s a good Forbes Article with an overview of the problems and possible solutions to Dodd-Frank, and there is nary a mention of problems in consumer lending.
http://www.forbes.com/sites/tedkaufman/2013/07/17/an-unhappy-birthday-for-dodd-frank-as-momentum-builds-for-the-next-meltdown/

Tolerance is Good for the Economy

Tolerance is not only good for the soul, but its good for business and good for the economy.

There was a brief news story in the business section of the Herald-Leader this morning that said that a majority of businesses now provide domestic partner benefits. (It was in the print edition, but apparently not available on-line.)

This statistic appears to include all businesses, but it mirrors the numbers for Fortune 500 Companies. According to the Human Rights Campaign, 62% Fortune 500 companies offer domestic partner health benefits, 57% prohibit discrimination based on gender identity, and 88% prohibit discrimination based on sexual orientation. LGBT Equality at the Fortune 500

The HRC notes that the higher up on the Fortune 500 rankings, the more likely the company is to provide comprehensive benefits for LGBT employees.

And in related news, on Monday, Walmart announced that it would begin providing all health and other benefits to domestic partners of employees, including same sex partners. Walmart to offer same-sex domestic benefits

These companies do this because its good for business. It allows them to attract and retain the best employees, and allows them to market their products and services to the widest possible range of consumers. They do it because tolerance is good for business.

What is the Tea Party’s End Game?

I’ve been watching the news lately with a mix of fascination and horror. Many “Tea Party” conservatives are trying to kill Obamacare, and are threatening to shut down the government to do it. The latest tactic is to threaten to refuse to raise the debt ceiling. It appears that they may be willing to do anything to get their way, including damaging the government and harming the nation. This makes me wonder, what is their end game? What is their ultimate goal? They talk about “limited government” but what does that mean? Where does limited government end, and what is allowed under their view of limited government?

Conservatives used to talk about national defense, but many Tea Party members are isolationists and don’t think we should be involved overseas. Senator Rand Paul wants to eliminate nearly all foreign aid, and shrink the military. Conservatives used to believe in strong national defense, but apparently this new breed of conservatives doesn’t believe in that.
Conservatives also used to believe in “law and order.” But this new breed wants to strip the national government of much of its ability to engage in many domestic law enforcement activities.

Conservatives say they believe in Federalism, but then when a state enacts a policy they don’t like, they howl. But isn’t that Federalism in action? Isn’t the idea of federalism that states should be allowed to govern as they see fit, without interference from the national government? Isn’t it federalism in action when a state, say California, enacts strict green-house gas regulations, or another state, say Washington, passes a law allowing recreational use of pot? It is federalism at its finest (I want to day highest, but that would be a bad pun) but the Tea Party is incensed.

I think the reality is that they don’t want government to doing anything. They don’t like any external force engaging in communal activity that may impact their lives. Some conservatives seem to disparage any group or communal activity, and many Tea Party members share this view in spades. And that makes me wonder, what is their end game? If they win on Federalism, and government devolves to the states, will they then take their fight against government to the state level and try to devolve government to the localities? And what happens then? Will they stop towns and cities and counties from enacting legislation to benefit the community?

When does it stop? When they have eliminated all government? Is that the limit? Do they want to limit government, or eliminate it entirely?

Condescension

Usually by about the middle of October of an election year I feel like I’m going insane. I hear things on TV that have no relationship to reality. Lots of things. Most of those things are political advertisements. But there’s also a great deal of discussion in the news media about the election and the campaigns that have no relationship to reality. Political writers and commentators talk about what candidates are saying, and the ads they run, as if there is some substance or some value to the message conveyed, when in fact there is not. There are literally a gazillion examples, but here’s one from my Congressional district from the 2012 Congressional campaign.

The election pitted the incumbent, Ben Chandler, against a Republican challenger named Andy Barr. Barr ran a couple of ads with a guy dressed like a coal miner who was talking about how the coal industry has been shrinking and mining jobs have been lost, all because of what the ad (and conservatives) call “Obama’s war on coal.” The ad was shrill and silly and completely missed the reality of job losses in the coal industry: the steep decline in the price of natural gas. I rolled my eyes at the ad. It was typical Republican nonsense. But then Ben Chandler ran a competing ad where the “miner” in the ad is circled, and the word “liar” is written next to it. It turns out the guy in the ad is not really a coal miner, but a coal company executive. It also turns out that the guy has a miners’ certificate because he actually worked in the mines during college. So he’s sort of a coal miner. He doesn’t work in the mines now, but he is in the coal industry, he did work as a miner, and he still has his certificate. So clearly he’s not a liar, but just as clearly the Barr campaign fudged a bit by implying that he is a miner.

That became one of the major issues in the campaign. Not the decline in mining due to changing economic conditions. Not the need for environmental regulations. Not what to do long term for Eastern Kentucky counties beset with job losses. All the media could talk about was Barr’s use of the sort-of-miner in his ads, and Chandler’s claim that they guy was a liar. And because the media was talking about it, that was about all the campaigns talked about as well. Nothing of substance; it was all nonsense, all the time. And it was insulting.

The ads treated the voters as if they were idiots. Both campaigns avoided discussion of the difficult issues, and instead ran stupid and demeaning ads. And they repeated the stupidity in sound bites and slogans. My only conclusion is that both campaigns actually thought the voters were idiots.

The term is condescension. Those ads were condescending. They talked down to the voters. They treated the public like they were unable to understand a serious discussion of serious issues.

I’m sick of political campaigns being condescending. I’m tired of politicians running ads that act like people are ignorant and ill informed. I’m tired of the sound bites, the silly slogans and the misleading commercials. Its all so condescending.

Why can’t politicians treat us – the voters, the public – like adults? Could it be that they don’t think we are smart enough to understand?

The Destructive Duality

The American government is frozen because the two parties are completely at loggerheads. Neither is willing to work with the other or willing to compromise in any way. The two party completely distrust each other. Each party seems convinced that the other is nefarious, engaged in politics and championing policies that are harmful to the nation.

In order to address the nation’s problems we first need to figure out a way to get our politics unstuck. But in order to do that, we need to understand how it got stuck in the first place. How did politics become so divisive?

First, I should note that there have always been times when politics was nasty. Often the periods of extreme nastiness corresponded to eras when the nation felt it was at a crossroads. The first truly nasty election was in 1800, when the first big battle over the direction of the government, between the John Adams and the Federalists, who believed in a strong and activist national government, and Thomas Jefferson and the Democratic-Republicans, who believed that government should occur mostly at the state level, and that the national government should leave the states largely alone. Throughout history the most raucous politics occurred during periods when there were serious differences in the views of how government should work.

(Curiously politics tends to be less bitter and divisive when the nation faces real existential crises, like during wartime.)

We are clearly in the midst of such a period, as some Republicans try to dismantle government, and as both parties try to figure out how to deal with the future. But one new element seems to be a visceral suspicion of the motives of the other party. I call this the destructive duality. It is a duality because we have two parties fighting it out, and it has become destructive because both largely refuse to work with the other.

The destructive duality starts with the fact that we have two – and only two – major political parties. So every political issue because a head to head fight between Democrats and Republicans. Then you add to that our cultural fascination with competition and conflict. Our elections are “first past the post” and winner-take-all, elections, and most campaigns are fought as one candidate against another. Most often this is Democrats versus Republicans, and occasionally it is liberals versus conservative, but mostly today, despite the rhetoric, it is moderates versus conservatives. And so most political discussions are framed as Democrats versus Republicans, and issues get framed as having a Democratic solution and a Republican solution. Our cultural fascination with conflict and a belief in the value of competition ads a nasty element, and makes elections frantic and mean.

The next component involves the way people think about their beliefs. Most people tend to believe that their ideas are right. That is why they believe them. Most political parties, their candidates, and their partisans, start with the idea that their political ideas are right. They believe that of all the ideas out there, of all the possible options, theirs is the best, it is the most correct, it is, in a word, right. So Democrats think that their ideas, their policy choices, the programs they endorse, create, fund, and support, and the best. These, Democrats believe, are the best solution to the problem, they are good for the nation, and good for the people. Republicans, likewise, think that their ideas, policies, programs, etc., are right. That makes sense. But over the years each side has also come to believe that the other side is wrong. This is largely a product of the dominance of our two major parties. Because we have only two major parties, we discus political ideas in the framework of only two possible positions, the Democratic position and the Republican position. The reality is, of course, that there are any number of possible ideas, views, policies, positions, programs, etc., but that tends to be ignored, and we (meaning the media) present most every idea as if it is a choice between two, and only two, positions. And those two positions are the Democratic position and the Republican position. And since each side is convinced that their ideas are right, the only logical conclusion is that the other side’s ideas are wrong.

Far too often this simplistic view is then taken to the next step. If an idea is wrong, isn’t it, almost by definition harmful? If the right solution is good, doesn’t that mean that the wrong solution is bad? In the real world it doesn’t because there are many possible solutions. But in the warped world of American politics, where there are only two possible alternatives, if one is right the other must be wrong, and if one is good then the other must be bad. And if an idea is bad, doesn’t that mean, almost by definition, that it is harmful? Again, this is almost logically follows. So, in the warped world of American politics, each party has come to believe that the other party isn’t just presenting an alternate solution to a problem, it is actually presenting a solution that is wrong and harmful. There is one more step: what kind of person actively supports, endorses, and advocates for policies that are wrong and harmful? The answer is almost inescapable. A bad person promotes ideas (policies, programs, etc.) that are wrong, bad and harmful.

If Republicans, for example, are convinced that tax cuts will always help the economy, the corollary is also probably true, no tax cuts may hurt the economy, and tax increases will certainly harm the economy. And so Republicans become convinced that Democratic politicians who are preventing tax cuts, or proposing tax increases, are actually – and purposefully – trying to harm the economy. This is but one example, but many Republicans have come to believe that most Democrats are prompting policies that will harm the nation.

For many Republicans it is so obvious as to be painful that welfare harms the recipients, and abortion harms the nation. It is clear beyond words that liberal policies have harmed the nation in the past, and liberals continue to promote similar policies. Women’s liberation destroyed the family, and now liberals are advocating for gay marriage. Liberals have pushed policies that have hurt the country, and they keep doing it. (Liberals, of course disagree.) What kind of political party advocates policies that are bad, that are wrong, and that are harmful to the nation? Why a party that is bad and destructive. And how should you react to a party that is promoting things that will harm the nation? The answer is obvious, you stop them at all costs.

If you listen to the rhetoric of some of the more extreme politicians, or partisan commentators, you hear this message loud and clear. Listen to Rep. Louis Gomert of Texas, or conservative commentators like Sean Hannity or Ann Coulter. They are clearly convinced that Democrats are a danger to the nation. Many Republicans believe this, and so refuse to work with Democrats on anything in Congress.

This view causes people to distrust not only the actions of their opponents, but also their motives. In this view a bad person is capable of anything, willing to lie, cheat or steal to achieve their nefarious ends. Even when they seem to be acting responsibly, there is always the possibility that they are trying to dupe you. So every word and deed is mistrusted.

I use Republicans as an example, but the reality is that there are Democrats who view Republicans in the same light. I think there are more conservatives who think this way than liberals, but there is no doubt that some extremely partisan Democrats feel this way. I know because I’ve worked with them. But again, I think it is more prevalent among conservatives. There are a couple of reasons it is more prevalent among conservatives. The first reason is that conservatives tend to view recent history as the story of the fall from grace, and that fall was hand delivered by liberals. Liberals don’t view the modern world in the same light. On the whole they think that the modern world is a pretty good place, and they certainly don’t blame conservatives for every ill facing the nation. Conservatives feel like liberals have destroyed their world (see the Roots of Conservative Rage) and they are not happy about it. The second reason is that conservative media feeds this narrative. Conservatives have hours upon hours of commentators blasting away at liberals. They have talk radio, with dozens of prominent hosts. They also have FoxNews, and a host of television commentators. Liberals, on the other hand, have never had successful radio programs (although there are a few out there) but they do have MSNBC.

This idea – that the other side is bad, evil, and must be stopped – has always been around to one degree or another. But the problem today is that this has become the dominant view. One reason for this is the rise of partisan news outlets, first conservative talk radio, then FoxNews, and now MSNBC. Demonization is their stock in trade. Each focuses on the idea that those with different views are not merely people with different ideas, but people with bad and potentially destructive ideas.

The other reason is far more troubling, and that is that the ostensibly “non-partisan” news media has effectively lost the ability to think rationally. The “main stream media” present almost every issue as if it were a battle between two sides, when the reality is that most issues don’t break down that way. Take, as but one example, the issue of global climate change. More often than not the MSM (Sarah Palin’s Lame-Stream Media) will have a story and present a climate scientist, and then a conservative (politician, economist, commentator, etc.) for “balance.” They want to present balance even when there is no disagreement. The do this, in part because conflict sells. So if you can present an idea as a simple, head to head conflict, you can get people riled up, and get ratings. The news no longer (or rarely) looks at nuance, they rarely dig deep into ideas and try to present them as complex issues. And they virtually never present more than two possible solutions to any problem. So the news media is deeply complicit it the national descent into triviality and stupidity.

And so we have the destructive duality. Democrats present their ideas without wavering, and Republicans do the same. Each presents the other as stupid at best, and criminal at worst. Each side is convinced that the other is wrong, their ideas bad, and their policies dangerous. And so they refuse to budge. How can you compromise with a party that is hell bent on destroying the nation? You can’t.

There are many recent examples that prove the point. Take the debate over setting the maximum rate for student loans. The Democratic and Republican positions barely differed, yet it took months of acrimony to reach an agreement.

So how do we deal with this destructive duality? The easiest first step is to understand it, and see through it. Parse the partisan rhetoric, and laugh at the silly duality. Once you understand it, almost every political statement becomes amusing. Mitch McConnell says basically two things: liberals are evil, and conservatives are here to save the world. Both are absurd caricatures.

Another step, if you are in politics, is to avoid it when you can. Treat your opponent as someone with a different view of how to solve a problem, not as someone with a bad or destructive view. Present your ideas as one choice among many, and treat your opponent’s ideas seriously.

But these two steps only get you so far. The real problem is that our “culture” treats every issue in a simplistic way, and as a destructive duality. Virtually every issue is presented as liberal versus conservative, or Democratic versus Republican. And this has become destructive because it has impacted our ability to think critically. Real issues are more complex. There are many causes and many possible solutions. By ignoring this, the destructive duality has impacted our ability to reason, and to solve problems.

We need to figure out a way to get past this. We need to figure out a way to convince the public, the media, and the major political parties, that every issue is not a battle between liberals and conservatives, or between Democrats and Republicans. We need more than this simplistic and destructive duality.

Perhaps the best way to do this is to allow for the participation of viable third parties. If the debate in Congress is over a Republican proposal, a Democratic proposal, and a Tea Party (or a Green Party) alternative, it will be obvious that the choice is not between left and right, and hence not a choice between right and wrong, or good and bad, but a choice between policy alternatives. In my view the only way to break the destructive duality is to bring third (and fourth and fifth) parties into our political system. This is why I’ve developed a proposal to allow multi-seat districts. It will allow more parties, and more ideas, in to politics. It will destroy the destructive duality and break the back of political gridlock.

Science and the Economy

Science is the foundation of the modern economy. Scientific advances fuel economic growth, and have since James Watt applied Boyle’s law to create a working steam pump. But today  conservatives are so opposed to any government spending that they will deprive the American economy of fuel.

Here’s a truly distressing news story that proves this point. Conservatives are leading the charge to cut federal support for scientific research for two reasons: first, they don’t like science, and second, they have no clue about the importance of government support of science.

Read it and weep:  Sequestration Ushers in Dark Ages For Science.

What Rhymes with Coblenz?

People have a hard time pronouncing my last name. The o is long, sort of like co-pay or co-pilot.

There are some stupid political attach ads in the Kentucky Senate race asking “what rhymes with Grimes?’ and “what rhymes with Mitch?”

OK. So what rhymes with Coblenz? The only thing I could come up with that rhymes with Mike Coblenz is Micky Dolenz.

Campaign Head shot

Mike Coblenz

Micky Dolenz

Micky Dolenz

The Barr Report Aug 11

Financial Services Committee Edition

Representative Andy Barr made the front page of the New York Times. For Freshmen in the House, Finance Panel is a Money Seat. The Herald-Leader also reprinted portions of the story. Committee seat has Andy Barr surrounded by industry cash.

The article notes that members of the Financial Services Committee are prolific fundraisers, particularly from the financial industry. I should note that this applies to both Republicans and Democrats. The Democrats raise less than the Republicans, but the Democrats on this committee still raise far more that Democrats on other committees.

That’s right, the Congress members who are charged with drafting laws to regulate the financial industry raise huge amounts of money from the financial industry. And Mr. Barr apparently leads the pack.

The article notes that Mr. Barr introduced a measure that would eliminate the requirement that banks verify that the people they are loaning money to have the ability to repay the money. That provision was part of the Dodd-Frank bill that was enacted in 2010 in the wake of the financial meltdown of 2007 and 2008. That provision was included in Dodd-Frank because most economists and regulators believed that one of the reasons for the financial melt-down was that banks were giving out loans to people who could not afford to repay them. One of the reasons that banks did this was that they were able to sell those loans to other financial services companies, and those companies bundle those loans and sold them as an investment vehicle called a Derivative. When the loans went bad, as surely they would when you lend money to people who can’t pay, the derivative market crashed, and nearly brought down the entire banking system.

But banks don’t like having to spend time and money investigating whether or not the people seeking loans have the ability to repay those loans. One would think that this would be a minimum level of prudence, but apparently the banks don’t like it.

Representative Barr is certainly a friend to the banking industry, and they are friendly in return. In just six months Mr. Barr has raised roughly $150,000 from them. Curiously, just after hosting a meeting with credit union lobbyists, Mr. Barr promised to protect a federal tax break work over $500 million a year to the industry.

I know there are wide spread complaints from both banks and small businesses that some provisions of Dodd-Frank have made it difficult to loan money. This is a situation that must certainly be addressed, but I haven’t heard anyone suggest that the problem is verifying the ability of individuals to repay mortgage loans.

It would be nice if our representatives would make the news for good things, not slightly icky things. I realize that Mr. Barr is just playing the game, but the game stinks.