July 2004 Archives

Perhaps the reason for Clinton's reversion is that the old formula didn't actually work that well. As Auren Hoffman points out Clinton actually wasn't such a successful politician afterall. Can it be that while triangulation was a successful strategy for him personally it wasn't so great for the party? Excerpt:

When Clinton assumed the presidency in 1993 the Democrats controlled the executive branch, the senate, the house, the majority of the governorships, the majority of the state legislatures, and a majority of all elected officials nationwide.

When Clinton left office in 2001 the democrats had lost control of everything. They lost the presidency, the senate, the house, a majority of the governorships, a majority of the state legislatures, and a majority of all elected officials nationwide. In fact, Clinton presided over a dominant resurgence of the Republican Party (which is now in its tenth year).

I thought this graph from Clinton's DNC speech was a doozy:

"These policies have turned the projected 5.8 trillion dollar surplus we left-enough to pay for the baby boomers retirement-into a projected debt of nearly 5 trillion dollars, with a 400 plus billion dollar deficit this year and for years to come. How do they pay for it? First by taking the monthly surplus in Social Security payments and endorsing the checks of working people over to me to cover my tax cut. But it's not enough. They are borrowing the rest from foreign governments, mostly Japan and China. Sure, they're competing with us for good jobs but how can we enforce our trade laws against our bankers? If you think it's good policy to pay for my tax cut with the Social Security checks of working men and women, and borrowed money from China, vote for them. If not, John Kerry's your man."

The architect of the new Democrats apparently has decided to be an old Democrat again—his rhetoric reminds me of the standard faire of Democrats circa the Mondale campaign in '84: criticizing spending cuts and tax cuts, while fear mongering about deficits and social security--with some protectionism thrown in for good measure.

There’s a reason the Democrats moved on, how can Clinton so easily revert? Does he even believe what he’s saying? One has to pretend a fair amount to buy what he's selling:

Let’s pretend that despite his track record Kerry won’t actually INCREASE the deficit as will be the inevitable result of his election year pledges. (Or NOT: See this R21 post or this piece from the WSJ: “If we put the spending and tax sides together, the first budget that Mr. Kerry will submit would increase the deficit over 10 years by a minimum of about $1.2 trillion and, more likely, by well over $2 trillion. While a few smaller proposals from Mr. Kerry raise a little more revenue, they do not go anywhere near the level necessary to close the enormous gap between spending and taxes.”)

Let’s pretend that Bush’s tax cuts, and not huge structural problems and the baby boom, are the reason Social Security is so dysfunctional and in need of reform. (Or NOT.)

Let’s indulge in the fantasy that we can concentrate our tax policy on the prosperous and not retard prosperity and the even infinite progressivity in the tax code has no consequence (Or NOT or NOT again.)

Let’s pretend that China and Japan investing in the US is a bad thing. (Or NOT.)

Let’s pretend that we need protective trade laws to compete with Asia, not competitive regulatory and tax policy in this country. (Or NOT.)

And if you can pretend all of that, you can pretend that Clinton’s book actually belongs in the non-fiction section.

Some thoughts on the 9/11 Commission from Hoover's Charles Hill which I agree with. One could be forgiven for thinking, listening to the self-important commissioners, that we are talking about meteors, not terrorists, hitting the US. There is a sense that these attacks are an inevitable part of nature, and the best we can hope for is to improve our early warning system and play better defense. Feels like 1930s Europe as it contemplated Nazi Germany or the pre-Reagan Cold War, in which "detente" was the best most hoped for. Yes, American's should seriously ask ourselves whether we should have spent the 1990's adjusting to the post-Cold War world and developing a new foreign policy that actually listened to the terrorists screaming their battle cry as they took on the WTC in 1993, the Kobar Towers, the African embassies, the Cole and the like. But I think this was THEIR fault, not ours. And I think that we can win this struggle, though it may take decades. Excerpts:

The commission has succumbed to the temptation to react to any major governmental problem with a recommendation for structural or institutional remodeling. ...

Intelligence collection and analysis is a very imperfect business. Refusal to face this reality has produced the almost laughable contradiction of the Senate Intelligence Committee criticizing the Bush administration for acting on third-rate intelligence, even as the 9/11 Commission criticizes it for not acting on third-rate intelligence. ...

Focusing so relentlessly on the overriding importance of intelligence about 9/11 or weapons of mass destruction has obscured the reality that we are waging this war in the Middle East because decades of dysfunctional rule across the region have produced Islamist terrorism; Saddamist-style hijacked states; and regimes fearful of subversion, such as Saudi Arabia, whose policies have inflamed the situation and increased the danger to itself. We are at war in the Middle East to prevent its takeover by a revolutionary ideology that aims to destroy the established international system, the United Nations, international law, human rights and all. ...

The Commission is a centerpiece of a larger American self-obsession, all about what did we do wrong, what we should have known, how we must do better. Necessary, without doubt -- but media fixation and the 9/11 Commission's lust for the limelight have crowded out attention to the nature of the enemy we face. Instead, it's we who haven't caught bin Laden; our presence in Iraq has created an "insurgency"; and if only we could change our policies (e.g., pressure Israel), all would change for the better.

This is stunning:

"As many as 195,000 people a year could be dying in U.S. hospitals because of easily prevented errors, a company said on Tuesday in an estimate that doubles previous figures."

I have to believe that a large component of this is that very few people in this country actually directly contract for their medical services. Most healthcare is paid for by government or insurance, which is in turn paid for in large part by employers. Most people think this is a good and necessary thing, but few consider the unintended consequences of this approach. Few are willing even to honestly access, acknowledge, and properly weigh these costs against the presumed benefits of 3rd payer system. But it does have costs, and IMO those costs outweigh the benefits on the whole. Milton Friedman made the case for why in this interview. Here's an excerpt:

But the government has introduced the major complication. The major complication is caused by third party payments. The fact that you have more complexity in medicine is a good thing. During the whole of the past 100 years, life expectancy has been going up. It was going up before there were these government programs, it's been going up since. But life expectancy actually went up faster before these programs were introduced than since.

In 1946, just after World War 2, total medical expenditures was about 5% of national income. Today, it's 17%. And life expectancy increased far more rapidly in the 50 years before World War 2 than it is increasing today. I believe that the progress and the quality of medical care has increased independent of the amount we spend on it through government. The relationship between your father and the doctor he paid at the door could work well in our time. It doesn't work well when your father doesn't pay the doctor directly but calls in a third party, and some third party has to judge whether that medical procedure is necessary. That's what causes the complication.

There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, why then you really watch out what you're doing, and you try to get the most for your money.

Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I'm not so careful about the content of the present, but I'm very careful about the cost.

Then, I can spend somebody else's money on myself. And if I spend somebody else's money on myself, then I'm sure going to have a good lunch!

Finally, I can spend somebody else's money on somebody else. And if I spend somebody else's money on somebody else, I'm not concerned about how much it is, and I'm not concerned about what I get. And that's government. And that's close to 40% of our national income.

What hospital goes out of business for killing its patients? There needs to be a competitive market in healthcare services in which the END CONSUMER, not their proxies, are making the choice. We like to complain that the insurance companies don't make the right decisions on our behalf, and many are quick to demonize them. But it is a delusion that even if medical insurance companies were run by saints and angels that they could even muster the bureaucratic talents to make more appropriate decisions for people on their behalf more often than people could make them for themselves. The third party payer system in this country, indoctrinated by government, will inevitably, IMO, get worse results than if the end consumers, who might take greater note of which hospitals are the worst at killing people and use their power of the purse to go elsewhere, made those decisions on their own behalf.

Interesting discourse going on between Tony Perkins and Om Malik about what constitutes a blog and whether Michael Powell's columns on AlwaysOn constitute a blog or not. I can't resist adding my 2 cents.

First, Michael Powell is fantastic. I was privileged to spend some time with the Chairman and I think he is right on almost all of the issues. Lest this damn him in the eyes of my detractors, I ran into Marc Canter, a man I have respect for but who hardly can be said to share my political POV, and he too said that he’s a fan of Powell—we both want him to be President! I think a father/son presidential ticket in ’08 could be very hot (though, alas, it won’t happen.)

Second, Tony is to be commended for getting Powell to communicate in this way. It’s definitely a step in the right direction, regardless of how profound the content may or may not be to different people.

Third, there are millions of “blogs” out there and trying to come up with a set definition of what is and what is not a blog may be a lost battle—and I’m not sure it’s one worth fighting.

Fourth, Om has a point. Chairman Powell has done something unusual here which is that he has chosen to publish his views via a media brand, instead of via fcc.gov, or some forum that is impartial from a media perspective. This means that AlwaysOn will always have the “scoop” and be the primary media outlet for Powell’s posts, because they appear first on AO. This is good for AO, but it may prevent other media outlets from covering Powell’s posts because a media player has already reported it, in essence. I have to say I found it an odd choice for Powell to use AO rather than fcc.gov to house his “blog”—because it does indeed position Powell as an affiliate of a media brand, rather than an independent voice.

I think Tony has an interesting idea, which is sort of a hybrid of a media brand and a service provider for “bloggers.” Salon.com hosts users blogs and various other media folks are certainly evaluating whether to with blog tools and hosting. Certainly media sites that allow their users to comment or participate in discussion boards are doing much the same thing: providing a tool for their readers to “publish” online while being wrapped in or at least associated with a media brand.

However, IMO, we are in fish/fowl territory—that once you are associated with a media brand you are in essence a writer or columnist FOR that media brand, whether that column is in “blog” form or not. I think AO is in fact a media brand, and a good one, and therefore can’t really be an independent (ie media neutral) hosting service as well, unless it separated the two. Certainly the way AO has wrapped the Powell content in its site demonstrates that Powell is affiliating himself with a media brand, AO, in a way he wouldn’t be affiliating himself with, say Six Apart, if he were to use Movable Type. I don’t think there is anything wrong with this: Powell is better off that he was before because he has another platform to communicate his views, AO is better off because they landed some great, unique content, and the rest of us are better off because something useful now exists that didn’t before. Perhaps one could argue that it would be better for Powell to be independent from a media affiliation—but hey, Tony put a lot of effort in getting Powell to do this in the first place, I’m sure, so let him and AO benefit from that effort through this affiliation.

Let me point out that Tony has been very good at doing things that are neither fish nor fowl—and while folks can point out logical inconsistencies in it, I think it’s a useful form of innovation. When he was at Silicon Valley Bank he was part of a valuable kind of financing that was a blend of debt and equity, which although it was a hybrid was very helpful some important tech companies, such as Sybase. Certainly Red Herring was always in fish/fowl territory (excuse the pun). We never fully made up our minds when we launched whether it was a magazine or a newsletter, for example. We were always stretching it in unconventional ways that had logical inconsistencies, and rarely worried about the consequences. I think the name itself was a tacit acknowledgement--and perhaps a warning--that this contradiction existed. As a result of our reckless indifference to conventionality we did a lot of innovative things that more measured publishers may never have even thought of. And while that strategy didn’t always pay off, I think the company and the sector was better for it. I call this the Reece’s Peanut Butter Cup approach to innovation: sometimes combining two distinct things that don’t seem to belong together creates a whole better than the sum of its parts: peanut butter DOES go well with chocolate. Who knew?

In case you haven't seen this from JibJab.com already--it's worth the time.

If you aren't alarmed by the INDUCE Act by now, you should be. Here's a great overview by CEI on why this is a bad idea. Excerpt:

The INDUCE Act is the latest in a string of fast-tracked Senate proposals designed to give major media players more "power tools" to attack downloading, duplicating, and exchanging music and video files over the Web. However, this legislation is not confined to person-to-person (P2P) file exchanges: It would affect cable, PC, PDA, satellite TV and radio, photocopying, and other technologies that allow transmission of data—and threaten the emergence of future technologies. Had such a law been in place during the 1970s, we may not have PCs, CDs, and other technologies we now take for granted.

Carl J. Schramm, President and Chief Executive Officer of the Ewing Marion Kauffman Foundation, writes this great piece in Foreign Affairs - Building Entrepreneurial Economies, and makes the point that we are often too focused on macroeconomics when it comes to attempts to nurture capitalism in developing economies. We should be much more focused on encouraging entrepreneurialism.

Summary: The "Washington consensus" approach to development -- which urges other countries to emulate American capitalism -- misses one vital ingredient: the role that entrepreneurs play. Jump-starting growth in the developing world will require an understanding of the American entrepreneurial system, which involves four sectors of the economy.

Myron Magnet outlines why freedom, not dependency, is a better, more successful strategy when it comes to social policy. This is a great example of why the tagline of this blog is "Freedom Works." Excerpt:

All this was part of America's decades-long experiment with putting into effect the whole 1960s program for liberating the poor: not just the War on Poverty's generous welfare policies, but also leniency to criminals (so as not to "blame the victim"), lax educational standards aimed at not damaging ghetto kids' self-esteem (which also subverted the War on Poverty's Head Start program), and homeless policies based on the comical fiction that here was yet another class of victims of the system. When the results of such policies became unmistakably clear -- the underclass, a crime wave, decaying cities -- Americans, ever pragmatic and capable of learning from experience, did a U-turn, passing welfare reform and adopting tough-minded Giuliani-style policing in cities across the land. The result: a halving of the welfare rolls and the violent crime rate, and the lowest child-poverty rate ever.

The lesson after 40 years couldn't be clearer. Freedom works; dependency doesn't.

Americans are often derided by the rest of the world as cowboys--especially when lead by folks like Reagan and W--and yet this marvelous piece by Andrew and Judith Kleinfeld defends what it means to be a "cowboy." It is no coincidence that Silicon Valley is on the frontier of a frontier nation--and the boldness exhibited in our business culture owes much to the cowboy culture of America. A culture, this piece makes clear, that is foreign to many nations. Here's the conclusion, but the whole piece is worth reading:

When foreigners see us as cowboys, they are not mistaken. As a people, we still exhibit a high degree of courage, independence, aggressiveness, competence, and spirit. Diplomatic Europeans have responded to tyranny over the latest century mostly with accommodation, like the townspeople in "High Noon." Cowboy Americans, on the other hand, have hungered to confront and defeat tyrants, in real life as in legend. Our Western experience--love of freedom, little deference to wealth and status, an idealistic drive for justice, and a willingness to be ferocious toward these ends--continues to drive much of what is best about America.

So can they call us cowboys? You bet. Because we are. Our response ought to be that of the Virginian when he was described as a son of a bitch: "When you call me that, smile!"

From Tom Hazlett: Google's message for regulators. Excerpt:

They also underscore the limits of government regulation. By offering 2 GB for the price of 100 MB, the competitive rivalry now on display highlights the implausibility of administratively determined efficiency. The e-mail market looked perfectly functional and workably competitive to antitrust analysts prior to the recent seismic shifts. Innovation by decentralised entrepreneurs has revealed a new competitive equilibrium some orders of magnitude north. And these volcanic eruptions were triggered by Google, a company not known to be in the e-mail business.

The insight produced is not that markets out-perform Soviets, or that market entry can be surprising and tumultuous - all of which is true, but not news. The remarkable aspect of this emerging war over e-mail service is that it is fought at the core of markets judged by many to be wracked by monopoly, resistant to change and immune to challenge.

From Henry Miller: Businesses don't have social responsibilities; people do. Excerpt:

Businesses do not have social responsibilities; only people do. Inasmuch as corporate leaders work for the owners of the business, their responsibility is to pursue the best interests of their employers -- interests that relate primarily to making as much money as possible while conforming to the legal rules and ethical norms of society. By taking actions on behalf of the company that he arbitrarily decides are ''socially responsible,'' a corporate executive is, in effect, spending someone else's money by reducing returns to shareholders.

One of the easiest things to do is to spend other people's money on causes in which you believe; one of the most difficult, but most meaningful, is to spend your own money. If these executives donated even 5 percent of their salaries to such causes, they would be worthy of admiration, even if the causes were repugnant to some of us. ...

Neither free enterprise nor the human condition is likely to benefit if companies decide to follow Vasella's model. Their actions would, however, raise the cost of doing business, lower corporate productivity and feed the United Nations' predilections for meddling. By diverting resources away from productive uses, businesses would end up hurting many of the very people they claim to want to help.

I just spotted this fantastic interview with Nobel Prize-Winning Economist Milton Friedman on FOXNews.com.

After a fair amount of cajoling from your's truly, Sonia Arrison, the talented Director of Technology Studies at the Pacific Research Institute has finally started blogging: Sonia Says... Welcome to the blogosphere Sonia!

I was so busy the days and weeks after Reagan died that I wasn't able to post about it. Especially not to post anything that I thought could meaningfully add to the tremendous amount eloquent remembrances that rapidly followed his passing, such as from: Arnold Schwarzenegger, Andrew Sullivan, George Shultz, Dinesh D'Souza in Newsmax and The Washington Post, Thomas Sowell, Milton Friedman, Clark Judge, Annelise Anderson, Chester Finn, Peter Robinson here and here, Ed Meese, Charles Krauthammer, Ross Mackenzie, George Will, Jack Kemp, Lawrence Kudlow, Bruce Bartlett, Tony Blankley, and more from The Heritage Institute.

For me, I will say that Reagan was clearly the most influential political figure in my life. I am a product of the '80s and I think it would have been a much darker period without Reagan, who has been rightfully praised for his optimism. I have frankly been surprised by the tone of the eulogies. If you had asked me in 1988 how Reagan would be remembered in 2004 I would never have guessed that he would have over a 70% approval rating. I was certain that as communism passed from our short term memory we would forget the value of his contribution--I even believed that many would apologize for communism, as so many had before and during Reagan, and that praise for its egalitarian pretences would be on the rise by now. But it's not the case. Communism is a strange artifact of the past, almost a historical curiosity, so dead and buried that is unfashionable to condemn it, not because it doesn't merit condemnation but because it seems to be an absurdity with no chance of haunting us again. Might as well condemn the bogey-man. (China's not REALLY communist, we feel. North Korea and Cuba are aberrations.) Who talks of the 100 million lives lost to communism, from Stalin's purges to Mao's cultural revolution? Might as well be talking about Nero--it's all history.

That this would be the case in 2004 was unthinkable in 1988, inconceivable in 1980, and beyond any possible comprehension in 1964 when Reagan broke onto the national political scene with his speech at the Republican convention. We forget that Democrats AND Republicans felt Reagan was off his rocker for believing the Soviet Union could be toppled. I will always remember a faculty member of my high-school scoffing upon hearing that Reagan had called the USSR an "evil empire." I remember the protests when Reagan deployed Pershings to Europe. I remember a computer science class I took in college for which 25% of the grade depended on how thoroughly we could debunk the arguments and science in favor of the "Star Wars" missile defense system (which was just deployed in Alaska, despite hostility from the Clinton Administration) that Reagan proposed and detractors hated as being too inflammatory.

Most people have forgotten this--or never knew it. And while I think I was right that people have largely forgotten about the terror of communism, I was wrong to assume that this would have resulted in some sort of deluded nostalgia.

Reagan deserves the praise he received for being the great communicator, and it is heartening to hear this from some of his biggest detractors in the 1980s, even if those people transparently used that praise to simultaneously condemn the abilities of our current President. And who cares if some are damning him with faint praise and refuse to acknowledge the success of his substance but unable to avoid appreciating his style. Reagan never demanded praise for the success of his policies—success was enough—so why should we?

But while some have used Reagan make unflattering comparisons with Bush, I think flattering comparisons are in order. Reagan believed we were pitched in battle with a mortal enemy and wouldn’t accept the conventional wisdom that the war could not be won, and our enemies could only be contained. Bush as a similar vision when it comes to terrorism and Islamic fascism, jihadism, and tyranny. There are the same voices from left and right who believe this is a fight that is hopeless and not ours to wage. There are the same accusations of the President being a reckless cowboy, fixed in his belief systems while being intellectually incurious. What will be said of Bush 20 years from now? One gets the sense that this, not the latest poll, is what he most cares about—and that’s a good thing.

And of course, Reagan taught us that economic growth and the national economy were more important than the federal budget, and if the two should collide to pick the health of the former over the health of the latter. I fear his economic victories weren’t as convincing as his foreign policy ones were, as we still fight some of these battles today, but few expect our economy to abandon the post-Reagan era, with lower taxes, relatively low unemployment, and low inflation, for the stagflation of the pre-Reagan era.

Finally, I think Reagan should be admired as someone whose vision for the world eclipsed his desire for power. One gets the sense that the Clintons and the Bushes are in it for the job first, and the ideas come later. Reagan was in it for the ideas, and seemed to want the job because it was the best way to put the ideas into practice. And that he did.