Saturday, January 30, 2010

A sick joke, right?

The CBC would like us (apparently everyone, including lowly bloggers) to pay to "license" content we (in Canada) already paid for?

There are a variety of reactions I have to this, but they all involve profanity and anatomically questionable imprecations.

Oh man

Thursday, January 28, 2010

So, what do I like about the iPad?

...I'm going to shut up about this, but I feel like I should point out that I'm not exclusively a hater.

1) The design really is slick. If it were possible for me to make a baby with this thing, I'd be all over it like a fat kid on a smartie.

2) The dock-keyboard combination is more difficult than it needs be, but is otherwise a good solution to the whole problem of IDing what, exactly, this device does: a little bit of everything, and it can be a desktop if you need it too.

3) People are complaining about the screen size, but it wasn't that long ago that I thought widescreen monitors looked weird, and it works for reading pages, so I say yay to that.

4) Highest kudos to Apple for not reinventing the wheel with the ebook format. Seriously, I complain about Apple selling locked down crippled toys for the rich, but going with ePub is a really good move. Good to see the ebook industry starting to seriously consolidate around a format for text, finally.

About books: here's the deal. I'll buy a high-end e-reader when someone offers me the following service. I box up and mail to you all of my old paper books, and you mail me a DVD-ROM with all of them in unlocked, DRM-free ebook files. I'll buy two ereaders if that's what it takes. But the attachment I have not just to books, but to a library I can lend out to friends, is pretty substantial.

Anyone think we'll see anything like that?

Further thoughts on the iPad

1) I felt momentarily bad when, after hearing the word "iPad" I immediately thought of feminine hygiene products. It turns out the entire Internet thought the same thing. Relief.

2) Jobs took a swing at netbooks in his speech yesterday, but seems to have not considered that the reason the market for a device between a laptop and a smartphone is so small is because the niche itself is so small. If I were in the market for a new laptop, I'd at least take a look at a netbook. If I were in the market for a new cell phone, I'd look at an iPhone or Droid. If I were looking at a tablet PC, I'd have to be looking for a tablet PC, and thus far I can't see why I'd prefer something as disabled as the iPad to a laptop.

3) I've been hearing about the death of the desktop OS for, oh, 15 years or so. I'm not yet 29. Draw your own conclusions.

4) Games are a nice value-add, but I'd bet not even a "casual gamer" is going to buy this for the games. They've already got Popcap and the Wii, for much less money.

5) I can't say how this will play with the general consumer, but Lord Almighty could Apple not have opted for simplicity, just once? The "dock" for something like this need not be anything more than a 4-port USB hub. But no, we've gotta have twee little connectors for everything.

Wednesday, January 27, 2010


So Tablet Jesus descended from the heavens today, and it seems like kind of a damp squib.

I keep waiting for someone to make a tablet that will work well, but it won't be Microsoft, and
Apple annoys me by making a tablet that's far more locked down than anything Gates would dare ship. There's a lot that I almost like about the iPad, but I can't get past the deliberate, malicious crippling.

In about 6-9 months, there'll be a passel of Android-powered devices of similar price and capability. We'll see how they run, and if they're any less hegemonic.

God knows I'm not a representative sample. Maybe 18 months from now we'll all be running the damn things.

Tuesday, January 26, 2010


a. Of or relating to the ancient city of Byzantium.
b. Of or relating to the Byzantine Empire.
c. Highly complicated; intricate and involved.
The way I was taught the history of the Fall of Rome in high school could be summed up in two sentences: Rome (the Western Empire) fell in 472 when the Goths came over the hills. Constantinople (the Eastern, or Byzantine Empire) lasted another 1000 years, until the Turks took it in 1453. The real picture, fittingly, is much more complicated, intricate, and involved than that.

I wrote last week that there was some merit to thinking about a "Byzantine scenario" where parts of the global economy collapse, while other parts do relatively well. Just in time, I finished reading The Coldest Winter, David Halberstam's book on the Korean War, and picked up The Inheritance of Rome where I'd left it -- the beginning of Chris Wickham's chapters on the Eastern Empire. What's clear, even from Wickham's survey account of Byzantine history, is that there's actually little solace to take: it turns out it's actually quite difficult to maintain the functions of your state while the international order is collapsing. But let me get to that in a minute.

What caused the Fall of Rome in the West? Well, if you're an anthropologist like Joseph Tainter you can argue a number of historical structural trends converging in the late 5th century make the complexity of Roman society unsustainable. If you're Richard Nixon, you blame the gays. Wickham argues that, at the beginning of the 400s, there was actually little reason to believe that Rome was approaching the end of days: the Crises of the 300s were behind it, the state was functioning moderately well, and an observer without the privilege of knowing how it all turned out could be forgiven for not guessing what was coming. (Remember Namantianus!) Wickham's entire book is devoted to avoiding the trap of seeing the events of the past as prologue for the present: these things happened for their own reasons, with actors involved pursuing their own interests, and not because they were fated to or because there was something better waiting to happen in the future.

Wickham argues that what really caused the collapse of Rome in the West is quite prosaic: the Vandals, having moved through Italy into North Africa, declined the honour of providing Rome with free grain, as the African provinces had for centuries. This sudden shock to the Roman system leads to a precipitous, and not at all surprising, decline in both tax revenues (the tax in this case being grain itself) and people choosing to live in Rome itself. This all happens in the 440s, and Rome never really recovers.

The seizing of the African provinces was as much a problem for the Eastern Empire as it was for the west though. As it became clear that Italian Romans (as opposed to the Byzantine Romans) were unable to recapture Carthage and the other rich provinces of North Africa, the Eastern Empire moved. The Emperor Justinian sent his armies west, and his General Belisarius recaptured North Africa and moved across the sea to take back Italy. Between 533 and 550, the Byzantines were rebuilding the Roman Empire with Constantinople the new core. By 550, the Empire looks very familiar:

It's basically the Roman world save France and the bulk of Spain.

Alas, it was not to endure. Various new kingdoms existed in France and Germany, all of whom were willing to fight to take a chunk of Italy back from the Byzantines. The Roman structures had collapsed so thoroughly that it was impossible to put them back together in any sustainable fashion -- though Wickam doesn't present any evidence that the Byzantines tried to do that. They weren't looking to rebuild a powerful Rome, they wanted the centre of the world to stay in Constantinople. Meanwhile, in the North, South, and East, Byzantium's borders were being threatened by any number of invaders. First the powerful Persian Empire in the east fought for control of Mesopotamia and Syria, and briefly held Jerusalem but was eventually defeated in an early example of, er, a Crusade. Just as soon as the Persians were beaten, the up and coming Arab armies swung through Mesopotamia, Syria, Egypt, and North Africa and absolutely devastated Constantinople's tax base and its ability to feed itself.

Within a century of the Empire's height under Justinian I, the city of Constantinople would see its population cut by 3/4, and it was sacked by Arab armies between 674 and 678. (It's a mark of how the Mediterranean world had collapsed, that even at 25% its previous size Constantinople was still the largest city in Europe.) The economy of the Byzantine region collapsed, and between 700 and 800 or so it seems like there was precious little coinage minted. Armies were localized, and the Empire was geared entirely towards self-defense. What tax there was, was raised in kind. Armies were paid with food, not money. What happened first in Rome, came later in Constantinople, but the results were the same: cut off from the richest source of revenue, the empire suffered demographic and economic collapse. The only difference is that in the East, the forms of the state continued, albeit radically different.

Of course, food isn't just revenue: it's energy. What happens to societies when the richest, lowest-cost sources of energy they've been using to subsidize the structures of power and finance collapse? It's worth pointing out that the Vandals were willing to sell the grain to Rome -- they just weren't willing to give it away as Rome had expected for so long. All that occurred, in modern terms, was that Rome would have to pay the real, unsubsidized cost for the energy it needed.

Oil is the obvious thing to compare to food here, but another good one would be food: Americans eat massively subsidized, protected food that is physically dependent on increasingly-precious oil and increasingly-precarious federal finances. And even with all this support, America suffers with some of the highest levels of working poor in the developed world. While on average Americans could afford to pay more for food, the reality is that the continuing inflation in food prices is making malnutrition a real mass concern. Both of the struts that support the American food supply are imperiled, and America could really use a Belisarius of some kind to help keep its system in check.

The problem is that not every society is fortunate enough to have a Belisarius when they need one.

Monday, January 25, 2010

Called it

Scene: My father and I, at dinner. His Blackberry vibrates.

DAD: Huh. Obama's gonna propose a 3-year spending freeze.

Me: Meaning, freezing everything except the military.

Dad: *Skeptical glance*

Me: What else will get through the Senate?

Later, at home
On a conference call last night, the administration announced that its upcoming budget would freeze non-security discretionary spending between 2011 and 2013. That's like freezing non-defense discretionary spending, but it also exempts the Department of Homeland Security and the Veteran's Administration from the cuts.
So it's actually even worse than I thought -- the Generals and drug cops still get every demand met, while everyone from teachers to astronauts has to do without.

Craptacular. I feel oddly prescient for doing without the privilege of voting for Obama tonight.

Saturday, January 23, 2010

Saturday afternoon rant

Dear Golden Globes judges: Seriously? Avatar? Best film?

Not only was Avatar not the best film of the year. (Of the nominees I've seen, I'd say Up in the Air was easily better than Avatar.) Not only was it not the best CGI film of the year. (That would be Up.) It wasn't even the best film about oppressive corporations involved in extraterrestrial mining. (That would be Moon.)

Just a bag of fail on the part of the Golden Globes people -- something that the Oscars are all too likely to repeat.

Friday, January 22, 2010

The thing about easy confidence is that, well, it's easy

I swear I don't just react to Matthew Yglesias for my blog ideas, but this sat poorly with me:
...the point is that it would be really bizarre for the United States to enter a sustained period of decline. It’s not just that “people have said this before and it didn’t happen” it’s that nothing like that has ever happened. To think about it another way, it’s true that America’s infrastructure is crumbling, but in 1946 Germany’s entire infrastructure had been pulverized by explosives and a huge proportion of its surviving machinery literally picked up and relocated to the Soviet Union. But they just built new stuff. And dysfunctional though our politics may be, they built new stuff and saw rising living standards even in East Germany and I’m fairly confident we can maintain a “better than the GDR” standard of governance.
Now, we know that Matthew Yglesias travelled to Russia in the late 1990s. The question I have is, did he open his eyes much while he was there?

By 1999, the Russian economy had contracted by almost 50% in two years, territory under Moscow's control was 25% less than it had been a decade earlier, and the state was struggling to maintain even basic powers of taxation, with renewed secession movements all over the place. And what's really shocking is how little of that was predictable even a decade before those changes began. Even the mid-1980s saw few serious observers thinking that the USSR would collapse. As an instructor of mine (who had worked in one of Canada's intelligence services) once said: "People ask me how we were all surprised by the collapse of the USSR. Well, it surprised the fuck out of them, so I'm not sure I was supposed to see it coming!"

The point is that a spell of bad governance can, in fact, unravel a state in an incredibly short time. And people living through it will tell you, if you're willing to listen, how surprised they were at how quickly it happened.[1]

Now, there's the rejoinder that Russia has since enjoyed some decent growth and a return of relative stability, so maybe Yglesias is right -- though even without total state dissolution, I think post-Soviet Russia could be seen as a collapse scenario.

But Russia, and Yglesias' example of Germany, both recovered in the context of a global economic system that was growing, and where it was possible for a country to export its way to growth. The collapse of the US, if it comes, will necessarily come together with the collapse of the American-led global system. And any hypothetical US collapse would almost certainly be in the context of a global economy that was shrinking, or a system that had become unimaginably violent. To put it another way: Germany was rescued by the Marshall Plan [2] and Russia was rescued by rising oil and gas prices (c/o China). If the wheels come off the American economy, who would have both the resources and the inclination to rescue the US?


Ah, that's what I thought.

Last and least, I take issue with the argument that there's a bright line dividing modern and pre-modern economies when it comes to how quickly they can come apart. Humans are humans, and still need food, shelter, security, and all it really takes is for more and more people to be unable to secure those things through usual channels before they start to try to secure them other ways. Or, more succinctly: in 100 years, The Wire will be watched as a literary example of state failure.

[1] I don't know about you, but I would argue strongly that America has since the end of the Cold War had more years of bad governance than good.

[2] This is kind of what irks me the most about Yglesias' post -- if you read Marshall's speech announcing the plan for reconstruction, it's clear that the German economy didn't simply recover after the war -- it was in the process of falling further apart after the war ended, only to be reassembled by the Allies. Ditto for many other European countries. To say that "rich countries never collapse, even in the case of ruinous war" is to basically argue that the Marshall Plan was redundant or unnecessary. I don't think Yglesias believes that, but this is what you get when you make pronouncements without thinking them through.

Tuesday, January 19, 2010

Quick hits

  • I have no particular fondness for her, but in an odd way I'm happy to see Ambrose back in a high-level cabinet post.  More than any other minister I can think of, she didn't deserve to be demoted.  I believe in Ministerial responsibility as much as any fan of Westminster, but for an Environment minister to clean out the Augean mess this government has made out of that file is asking a lot.  The Environment Minister of the Government of Canada will start effectively managing environmental problems after there's a change in governing party -- or at least a different Prime Minister -- and not before.
  • The fate of health care reform in the United States Congress is a nice test case for the ultimate cynics like me: a clear, unambiguous problem that can be solved at negative cost, and yet is now in jeopardy because the governing party has gone from 60 seats to 59.  The problem, as always, is that regardless of the party labels the real majority in the Senate is, and will continue to be, for the status quo.
  • Speaking of preserving privilege, Simon Johnston has an interesting contrast between what the US forced developing countries to go through during the Asian Crisis of 1997 and what the US has done in the Crisis of 2008.  Inconsistency!

Monday, January 18, 2010


The Internet-based community that's grown up around Peak Oil has produced some really phenomenal writing, some of which I've tried to highlight at this blog.

That said, there are also some arguments that simply shouldn't be made, like arguing that America is less vulnerable to severe oil shocks because it's "monoethnic" in contrast to the deeply divided Europe. Not that Europe isn't divided, but if your understanding of the United States is that it's monoethnic, or that ethnic fault lines haven't caused numerous crises within America's politics, you really ought to put your head down on your desk and think about what you've just said.

That said, the idea of a new Byzantium, where some parts of the global system stay intact when others collapse utterly deserves some thought.

Scenes from a media meltdown

Exhibit A:
Jan. 18 (Bloomberg) -- A group of investors led by a retired Canadian senator, an editor and a media consultant plans to bid for three daily newspapers owned by Canwest Global Communications Corp.

“I believe in the future of the newspaper business,” Jerry Grafstein, the retired senator, said in an interview today. Grafstein, with Quebec editor Beryl Wajsman and consultant Raymond Heard, plan to bid with other investors for the National Post, Montreal Gazette and Ottawa Citizen.
Exhibit B:
the company itself is in transition, waiting for regulators in Washington to approve a sale of NBC Universal from General Electric to Comcast, the nation’s largest cable operator. By the time G.E. finally decided to wash its hands of NBC late last year, the network ranked low on the list of those parts of the company most valuable to Comcast, which will swallow the network mainly so it can acquire the company’s money-making cable channels, like USA, Bravo, Syfy.
So Izzy Asper's dream of balancing Canada's media hegemony away from the Ontario-Quebec core is basically dead, as investors carve Canwest in to its most lucrative parts. Meanwhile, NBC -- the company that defined successful broadcasting for most of my life -- is being bought by a cable company (itself unthinkable even five years ago) so that Comcast can get at the real moneymaker: niche programming for nerds and latte-sipping aesthetes.

So, a question for consideration: how soon will it be before NBC shuts off its over-the-air transmitters and becomes cable-and-satellite only? Even now, actual broadcasting is maintained largely because it gives networks a number of regulatory guarantees, namely that cable companies are required to carry their signal in its local market. This kind of privilege becomes irrelevant when cable providers own the networks themselves, presumably.

The Canadian experience of Bell owning CTV was relatively brief, so we never got an answer to this question. Assuming the NBC-Comcast sale goes better, we'll see.

"Guided by our values..."

We invoke the name of Jesus Christ to blow away the heathens:
Coded references to New Testament Bible passages about Jesus Christ are inscribed on high-powered rifle sights provided to the United States military by a Michigan company, an ABC News investigation has found.

The sights are used by U.S. troops in Iraq and Afghanistan and in the training of Iraqi and Afghan soldiers. The maker of the sights, Trijicon, has a $660 million multi-year contract to provide up to 800,000 sights to the Marine Corps, and additional contracts to provide sights to the U.S. Army.

U.S. military rules specifically prohibit the proselytizing of any religion in Iraq or Afghanistan and were drawn up in order to prevent criticism that the U.S. was embarked on a religious "Crusade" in its war against al Qaeda and Iraqi insurgents.
Frankly, I'm less concerned about the "crusade"-iness of all this than just the plain ickiness of tying Jesus to assault rifle parts. It's as if these people don't even read the Bible, as they quote directly from it.

Thursday, January 14, 2010

Clearly, this is sustainable

Americans have stopped getting fatter!  Huzzah!

...because they've literally reached the point where their bodies cannot support extra weight.  Fortunately for us all, this point is well short of the threshold for imploding on themselves and creating a black hole that would destroy all creation.

Wednesday, January 13, 2010

Blu-ray: still not replacing DVD

From the WSJ, last month:
The studios resolved their next-generation DVD format war almost two years ago. So far, though, the take from Blu-ray has been underwhelming. The high-definition home-video format, now four years old, will produce just $1.3 billion in revenue to studios this year, says Tom Adams, president of Adams Media Research. That’s about 14 percent of anticipated sales of regular DVDs this year, and half what the older format produced in its fourth year, in 2000.
I continue to believe that the adoption of Bluray is going to be extremely disappointing to companies like Sony, who bet a lot of money on convincing consumers to replace their whole DVD libraries with new BR discs. Except, of course, that this kind of thing almost never happens. (Except with the Beatles.) What drove DVD sales was that a combination of aspects that made DVDs a more useful, desirable product that consumers wanted to build new libraries.

I had a small collection of VHS tapes. I have a collection of DVDs that can't possibly be healthy for me. I would never have realistically built as large a collection of VHS tapes, but DVDs made it much easier.

Then there's this:
...shoppers are also flocking to models that cost a bit more, . . . for their ability to stream content from the Internet, including movies, television shows and music from services like Netflix Inc., Google Inc.’s YouTube and Pandora Media Inc.
So people are finally starting to buy BR players (still not enough, though!) but the ones they're buying are specifically the ones that are also compatible with the next video delivery system, the Internet.


That's a shame

Boy, NBC really shit the bed with this whole Leno/Conan thing.

Consider: a struggling (dying, even) industrial titan tries to hold on to market share by riding a legacy asset all the way to the bottom, instead of changing things up and possibly succeeding in a new way. Remember, Leno's new show was supposed to be "DVR-proof", in the same way that new CDs and DVDs are always supposed to be "Internet-proof".

It's never asked, when stupid executives say these stupid things, why exactly investors should throw money at companies determined to make their content phobic to some of the most rapidly-adopted consumer technologies in history.

Now, if you wanna be really depressed, consider that every other powerful institution in the universe is run by people of precisely this average level of intelligence.

Monday, January 11, 2010

Spot the error

Livio Di Matteo in last week's Toronto Star:
The patterns of economic history may be about to repeat themselves in Ontario's north providing an economic boost for the entire province. Ontario's north is still a vast storehouse of forest and mineral wealth, and continued growth in the economies of China, India and Brazil will eventually generate an upturn in resource prices, which will spark a boom in resource commodities.

In the James Bay Lowlands, in Ontario's so-called "Ring of Fire," there are more than 100 mining companies with holdings. The entire area north of 50 is an untapped region of forest, mineral and hydroelectric power wealth whose development will require the building of roads, communications infrastructure and power transmission lines. The export of the resources will rejuvenate Ontario's transportation system, including the ports of the Great Lakes-St. Lawrence Seaway.
Well, I'd quibble about the utility of the St. Lawrence Seaway (seems more likely that meeting commodity demand in Asia would, I dunno, head to the Pacific coast) but fine, you've intrigued me.

Then there's this:
Ontario's government recognizes that the north's economy is poised to undergo dramatic changes in the near future and to that effect has commissioned a Northern Growth Plan. However, the plan is not a panacea because governments cannot ultimately plan economic growth, which is largely the outcome of market forces, though they can help facilitate and accommodate it.
But you just said
The entire area north of 50 is an untapped region of forest, mineral and hydroelectric power wealth whose development will require the building of roads, communications infrastructure and power transmission lines.
At least two of those three are only built by the Government of Ontario, at the scale we're talking about here. The choice to build publicly-funded roads and transmission lines is, ahem, economic planning whether we call it that or not. And if you think that private industry is able or willing to build that kind of infrastructure in this province on its own, you're clearly insane. If the examples of the 407 or Bruce Power are anything to go by, private business in this province likes to wait until the people of Ontario have paid to build assets, and then snap them up during the most convenient recession for pennies on the dollar, only to sell services back to Ontarians for extortionate prices.

There's a liberalism of the mind at work here, where we have to vociferously insist that we're not talking about industrial policy even when we're clearly proposing industrial policy. It boggles my mind.

I should say that, gratuitous ideological signalling aside, I actually think Di Matteo's argument is relatively sound. Certainly, building economic opportunity outside of the south in this Province makes a lot of sense, if only to try and take pressure off the increasingly-congested and dysfunctional GTA.

Saturday, January 09, 2010

What, exactly, is the newspaper for?

An object lesson in media dysfunction for the weekend:

1) Rex Murphy promotes scientifically illiterate talking points, as part of his ongoing efforts to make the Canadian audience stupider.

2) The publisher of the Globe and Mail responds -- to his employee undermining the public purpose of the institution he works for -- with the mildest imaginable reprimand: Rex Murphy could keep his high-profile column in one of Canada's highest-profile newspapers, but would move from Saturday to Monday. [1]

3) Rex Murphy throws a hissy fit, takes his ball and goes home.

4) Home, in this case, being the National Post, for whom no climate denialism can be too illiterate or hysterical.

So who looks worse in this whole exchange: Murphy, for abdicating even the fig leaf of being an honest participant in the public sphere; The Globe, for accommodating Murphy and attempting to go along with his crap for too long; or the Post, for once again having open arms for flat-earthers?

My vote is Murphy, but YMMV. Nevertheless, this is a good time to raise the question of why newspapers think technological fixes (paywalls! e-readers! barcodes!) will save them when their problems are farces like this: a newspaper exists, nominally, to be a place for honest debate and dissemination of facts. Murphy was lying [2], on TV and in his newspaper column. But he couldn't be fired. No, that wouldn't do. So instead he was going to be moved to a marginally less prominent position. Instead, a different newspaper will give him a prized position for him to spread more lies.

I'm an enormous consumer of news. But why, in 2010, would I bother paying for either of these newspapers?

[1] It's possible to imagine milder reactions, but I daresay anything milder than this couldn't possibly be called a "reprimand" in the usual sense of the word.

[2] Spare me the hair-splitting over whether he knew he was wrong, etc. Murphy either knew he was lying or didn't care to find an honest answer.

Wednesday, January 06, 2010

I see nothing that troubles me in that example

Jim Fallows of the Atlantic has a nice long piece about people, ahem, like me who worry too much about the decline of American power. Fallows is of course correct that this is an old song, and the verses don't even change that much. (Hey kids, remember Japan?) But he and I agree that while America could be saved by the things that make it great, it is doomed by its politics.

Fallows uses this line at one point to provide some context:
Nearly 400 years of overstated warnings do not mean that today’s Jeremiahs will be proved wrong. And of course any discussion of American problems in any era must include the disclaimer: the Civil War was worse.
Ah. Um. Yes, that sure puts me at ease. The fact that American politics has already collapsed once, in a fashion so complete and violent that it was the most deadly human conflict in history until 1914, sure proves the pessimists wrong. This system is clearly up to the challenges of the 21st century, despite the fact that it really wasn't up to the challenges of the 19th.

With optimists like this, I should hang up my laptop.

Tuesday, January 05, 2010

States can have Alzheimers, apparently

Jared Diamond's book Collapse is subtitled "How societies choose to fail or succeed", but if you actually read the book, the argument is that societies fail by avoiding tough choices and not making necessary changes. So, it's not that the Greenland Norse woke up one morning and said "Gee, I think I'll starve to death", but rather (Diamond argues) he woke up and refused to recognize that the climate in Greenland was changing for the worse, and that major lifestyle changes (becoming more like the Inuit) would be necessary to persevere.

The larger argument, for modern society, is that building state capacity to deal with social problems is not only about proposing and adopting smart policies. It is an inherently politicized process, and one that requires we challenge entrenched interests and abandon previously-held beliefs that are crippling our ability to react today.

In that vein, I suggest you read Kevin Drum's piece in Mother Jones about the finance lobby's successful efforts to not only avoid any accountability for the smoking ruin they made through 2008, but actually increase their dangerous activities.
Unlike most industries, which everyone recognizes are merely lobbying in their own self-interest, the finance industry successfully convinced everyone that deregulating finance was not only safe, but self-evidently good for the entire economy, Wall Street and Main Street alike. It's what Simon Johnson, an MIT economics professor and former chief economist for the IMF, calls "intellectual capture." Considering what's happened over the past couple of years, we might better call it Stockholm syndrome.

Like all the other products of the industry's three-decade lobbying spree, the change to the net capital rule ended up in disaster when the overleveraged financial system nearly collapsed on itself. By October 2008, even former Fed chairman Alan Greenspan, one of the country's biggest cheerleaders for self-regulation, was admitting the obvious: There was a "flaw" in the free-market worldview. "Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity, myself especially, are in a state of shocked disbelief," he said in testimony before the House oversight committee.

If the case against self-regulation was strong then, it's stronger now. Far from being chastened by last year's meltdown, banks are back to their old tricks. The sliced-and-diced mortgage securities that caused so much trouble during the credit bubble are being re-sliced and -diced via something called a RE-REMIC (resecuritization of real estate mortgage investment conduit)—and business is booming. At Goldman Sachs, leverage in the first half of 2009 was at its highest level in its history. Even more astonishingly, the Wall Street Journal estimates that overall pay on Wall Street will rise to record levels in 2009, higher than at the height of the bubble. It's as if the global collapse that nearly destroyed them has been completely forgotten.

Meanwhile, Daniel Davies gives us a perfect quote to explain at least one aspect of the North American liberal Stockholm Syndrome:
the production of more or less mendacious intellectual smokescreens for policies which favour the interests of rich and powerful men isn’t a sort of industrial pollution from the modern economics profession – it’s the product.
The purpose of that quote is to lead us to an article by James Galbraith, writing about the economists who correctly predicted the crisis we are still living in, and how they did it. One trick seems to be not having any particular theory. But what struck me in the article was this particular line:
In the present crisis, the vapor trails of fraud and corruption are everywhere: from the terms of the original mortgages, to the appraisals of the houses on which they were based, to the ratings of the securities issued against those mortgages, to gross negligence of the regulators, to the notion that the risks could be laid off by credit default swaps, a substitute for insurance that lacked the critical ingredient of a traditional insurance policy, namely loss reserves. None of this was foreseen by mainstream economists, who generally find crime a topic beneath their dignity. In unraveling all this now, it is worth remembering that the resolution of the savings and loan scandal saw over a thousand industry insiders convicted and imprisoned. Plainly, the intersection of economics and criminology remains a vital field for research going forward.
A thousand bankers in jail? It reads like something from another age -- like Spartacus' defeated soldiers crucified on the road to Rome. The idea that we might actually punish the people responsible for our current predicament is so totally foreign to us that it might as well be ancient history.

Every time the continued power and influence of the United States is raised in discussion, there's an easy, complacent dismissal of the idea that the US could possibly collapse in any meaningful way. But America has lost, and continues to lose, the capacity to deal with difficult problems. Not because institutions have been disbanded, or because any of the absolute measures of power have declined: America has, if anything, many more jail cells in 2010 that could theoretically hold bankers. It's just that nobody of any consequence thinks that there's a snowflake's chance in hell of that ever happening. This, despite the fact that the crisis the bankers brought on has literally erased the last decade of economic growth in America -- while it might be nice for us all to be a decade younger, instead we've all become a decade poorer.

People like myself hoped that Barack Obama's election would herald an end to the age of self-loathing government -- that the Democrats, with both houses of Congress and the Presidency, would be able to actually reverse the mental deterioration of American state capacity. Indeed, Obama's acceptance speech at the 2008 DNC held this critical passage:
Tonight, I say to the American people, to Democrats and Republicans and Independents across this great land - enough! This moment - this election - is our chance to keep, in the 21st century, the American promise alive. Because next week, in Minnesota, the same party that brought you two terms of George Bush and Dick Cheney will ask this country for a third. And we are here because we love this country too much to let the next four years look like the last eight. On November 4th, we must stand up and say: "Eight is enough."...

For over two decades, [McCain]'s subscribed to that old, discredited Republican philosophy - give more and more to those with the most and hope that prosperity trickles down to everyone else. In Washington, they call this the Ownership Society, but what it really means is - you're on your own. Out of work? Tough luck. No health care? The market will fix it. Born into poverty? Pull yourself up by your own bootstraps - even if you don't have boots. You're on your own...

Ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves - protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools and new roads and new science and technology.

Our government should work for us, not against us. It should help us, not hurt us. It should ensure opportunity not just for those with the most money and influence, but for every American who's willing to work.

That's the promise of America - the idea that we are responsible for ourselves, but that we also rise or fall as one nation; the fundamental belief that I am my brother's keeper; I am my sister's keeper.
In August of 2008, Barack Obama's followers filled an arena to hear him speak, and heard those words, and believed them. But in January 2010, it feels like a long time ago, in a galaxy far, far away.

Sunday, January 03, 2010

New Year Roundup

--Spent the last 2 days (yes, two days) clearing out the hard drive on my desktop -- and freed over 100 gigabytes in the process. Intriguingly, about 3.5 gigs of that was stuff I'd accumulated during my half-dozen years at a pair of Universities. Two gigs of PDFs and other associated text files alone, another gig or so of audio files.

--Winter finally seems to have arrived here in TO, so Vicki and I spent the morning watching the last few episodes of Season One of The Wire -- and holy hell is it as good as everyone says. Friends are lending us season two tomorrow, so blogging might equal no.

--Voyager probes: Best. Spacecraft. Ever. Those things are old enough to have kids in high school, and they're still telling us new things about the universe.

--Neat find, via David Pogue (via my dad): Readability. Really, really useful especially if you find yourself reading long blocks of text off the computer screen.