Looking forward to a one-day Staycation

Something called Lake Superior State University in Northern Michigan has decided that there are too many words. So it's chosen to banish a few. Some of these are good, "Maverick" is silly, "Green" is meaningless, and the "Wall Street/Main Street" thing is overdone.

But I love "Staycation" as a word. It actually captures a concept that would require multiple words in one. I agree that coupling it with gas prices is silly. But taking time off from work, but staying in town rather than traveling is an idea worth noting. I mean, maybe in 2009 we'll replace it with "The economy," but for now it's a good word.

Maybe Deng Xiaoping was a Trotskyist After All

This seems to have turned into an economics blog, which was never at all my intent. One of the great mistakes of my college career was choosing to take Principles of Economics for a grade. It's not that I wasn't interested. But my professor was dull and had already been denied tenure, so he had checked out. In the meantime, it was a large lecture that met at 10:30 a.m. when I was spending most nights up until 3 or 4 on the school newspaper. Needless to say, it didn't work out that well. So for me economics is a hobby, and it's a hobby in the way watching the NFL is a hobby for a Detroit Lions fan. It's everywhere and for obvious reasons, I'm pessimistic about the whole enterprise. Unlike football, I only understand econ in crude, broad macroeconomic terms. I can't seem to stop writing about it though.

Tom Friedman is not pessimistic. He loves global capitalism, and not in the holding-his-nose way that he loved the invasion of Iraq. I think he honestly believes it is going to save the world, which is a less nuanced position than he used to have. The funny thing is that most true-believer capitalists don't really say that in public anymore. In fact, I think that link is a pretty good summary of the state of capitalism defense -- argue that markets are actually not free and then say capitalism is clearly not perfect and wasn't designed that way. Those are both reasonable arguments. I like capitalism. I mean you probably can't buy a remote control farting bear in a centrally planned economy. But I do believe that the burden of proof for justifying the success and continued use of an economic system always rests with the most well off. If there is going to be economic inequality built into a system, the richest people ought to find a way to have some real social utility.

Mao Zedong is someone who hated capitalism so much he took over a country to prove how much he hated it. A couple of weeks ago, Friedman argued that one of the guys who followed Mao, Deng Xioping, saved Communist Party in China by opening the country up to free markets. I am unable to truly evaluate this claim -- both the freedom of China's markets and the actual health of the country or the Communist Party. But given that we're in a world recession and the U.S. government is far beyond broke while the Chinese run a surplus, it appears that combining foreign investment with a state-run economy and repression of dissidents has proven to be a massively successful strategy. I mean, for the government. In fact, The Nation reports the following:

China has embraced what amounts to a beggar-thy-neighbor strategy that supports its growth by taking a larger share of a shrinking global pie. And that is what global depressions are made of. [snip] Over the past decade, investment and savings there have grown much faster than consumption. Consequently, China has an unusually high savings rate of nearly 50 percent, while consumption constitutes only 35 percent of the economy. A world economy simply cannot function when the second-largest economy (measured by purchasing-power parity) has such a lopsided imbalance between savings and consumption.

And yet, the article goes on to say, China refuses to do anything about that. It outlines issues Obama should press the Chinese on. I hope he uses his global popularity to broach these topics. But mostly I wonder why on earth would anyone take economic advice from the President of the United States? His government is $11 trillion in debt. Listening to an American (even one I support) tell you how to run your economy is like inviting Matt Millen into your front office to rebuild your football team.

What if China is actually the negation of 50 years of free market theory. One overarching argument for economic freedom is that it leads to political freedom. But it hasn't done that in China. How many political parties are there? How are the Tibetans and the Falun Gong faring? What concessions do Internet companies make to operate in China?

And who would be better at studying the negation of capitalism than a nominally Communist country? Maybe the Chinese government was just slowplaying us all along. After 20 years of picking and choosing its approach to globalization, China's government wealth is largely predicated on the deindustrialization of the U.S., which wiped out large numbers of jobs that paid demand-stimulating wages. Then it bought our debt to continue subsidizing consumption. Now the nation owns massive amounts of U.S. debt. I don't know what that means in practice, but I know the hoops my credit card company and Ford Credit can put me through if I fail to pay my bills, then I'm not particularly excited about the future.

Detroit Shoots the Moon!

By the end, I was rooting for Detroit to go 0-16. What good is being bad if you can't be historically bad?

Detroit football fans will always carry the 2008 season with us, the way we Tiger fans carry the 2003 team with us. It will be like starting over for the franchise. To fail so publicly is to require everyone within the organization to acknowledge what needs to be done. Lots of teams go 2-14 and 3-13. This is something special and a badge of honor for us fans if the Lions, like the Tigers, figure out a way to turn things around. I'm optimistic. No matter the outcome, next year will almost certainly be infinitely better than this one.

The feeling here is that Detroit should completely ignore its offense this winter and take care of its comically bad defense. The Lions were outscored by more than 15 points per game this season and allowed nearly 5 yards per carry. They need big bodies in the middle to force opposing offenses off schedule. They have three of the first 33 draft picks in April. There are pieces in place, just not many.

One Divides into Two

There's a great line in Michael Lewis's wonderful and much-cited piece on the End of the Wall Street. As he describes what is happening to Wall Street's investment banks, a hedge fund manager that saw this housing bust coming and bet accordingly explains it this way

"These guys are only beginning to understand how fucked they are. It’s like being a Scholastic, prior to Newton. Newton comes along, and one morning you wake up: ‘Holy shit, I’m wrong!’ 

I had to look up Scholasticism. But I think the point is true in a broader sense as well. Autoworker turned business writer John Lippert explains that the United States' recent conversion to socialism isn't particularly popular at the University of Chicago. This is a little like saying, a Red Sox banner isn't particularly popular at Yankee Stadium. It's not surprising that people who believe in pure free markets (whatever those are) would decry what amounts to more than $11.5 trillion in loan guarantees and other interventions worldwide over the past few months. Lippert's piece is most interesting when he starts addressing the ways economists are processing the changing landscape. Given the proliferation of "econo-blogs," it will be possible to get a good view at the sort of creative destruction this current crisis brings to the profession.

It's pretty clear that all of these philosophies contain their own internal contradiction. Marx's theoretical "Dictatorship of the proletariat," was, in practice, a dictatorship of the governing cadres. Marxism failed as a governing philosophy. But Marx's analysis of capitalism still holds up pretty well 150 years later. And most people who believe in mixed economies have a pretty realistic view of what can and can't be accomplished through intervention. The Chicagoists have never confronted their own contradictions. In theory, equating free markets with free people sounds good. Some have already made a convincing case that in practice it hasn't quite worked that way.

Ultimately, Marx saw cutthroat capitalism as one cause of economic crises (although in his theory, crisis is endemic to the system). Chicago ultimately sees that same brand of capitalism as the solution to problems. In the marketplace of ideas, Marx (minus the name) seems to be trouncing Chicago in explaining our current economic unpleasantness. It will be interesting to see where this argument goes, especially without Milton Friedman alive to make his own case. Perhaps there are people out there in blogland who would do it on this blog.

Ultimately, my point is this: Chicagoists may claim their beliefs are laws of nature, true and immutable. Frankly, so do the Marxists. What works on paper doesn't work in practicality. What I'm asking is I'm listening. But isn't it just as likely that a philosophy formed as an intellectual response to communism would overcorrect in the other direction?

From the sports desk

Yahoo! columnist Jason Cole has done the math and figured out 11 is greater than 8. And on the basis of that insight, he's decided that the NFL playoff system is unfair. And he finds that a member of the New England Patriots -- a team could miss out on the postseason at 11-5 while potentially 8-8 San Diego and potentially 8-8 Arizona go as Division Champions -- agrees. This is foolishness. If the Patriots were so worried about going to the postseason, they should have beaten the Jets at home a couple of weeks ago.

The NFL divisional races are as fair as they've ever been, a much better way of awarding playoff spots than anything else. This has the effect of skewing the wildcard races, but that's preferable to the alternative. The NFL regular season is actually eight different competitions with a wildcard thrown in for fun and profit. Cole's math is pretty elementary, and it breaks down very quickly. Here's the more advanced argument: Since going to four divisions, an NFL team plays 13 different opponents. It plays every team in its division twice, every team in another division of its conference once and every team in a division from the other conference once. There are only two non-common opponents. Comparing New England's season to Miami's or the Jets' is a fairly simple proposition, they played the same teams. Comparing the Patriots season to Indianpolis or Baltimore requires more questions. It's ultimately imperfect. Wildcards are good for making up numbers in the postseason. The rules are set down beforehand, with the tiebreakers in place. But of course its not fair. If you can't guarantee yourself a spot then you have to live with the consequences.

And as a service to Jason Cole, here's the actual unfairness argument. The NFC North (Detroit) played the NFC and AFC South this year. And just as in the auto industry, the South's plunder of Detroit has proven incredibly valuable. The NFC South could end up with both wildcard teams. Meanwhile, Indianpolis of the AFC South has clinched a wildcard. It's a structural unfairness, which means winning the division is incredibly valuable.

Yep, I'm Part of the Problem

So, Robin Van Persie just received a great long pass, broke in on goal, and rifled a shot past Pepe Reina to give Arsenal a 1-0 lead over Liverpool. I am supposed to be angry about this. As you may be aware I'm a Tottenham Hotspur fan. Historically, Arsenal are Tottenham's sworn death enemies. For decades, the teams' home grounds were separated by about four miles in North London and both are pretty storied clubs. I picked up English Soccer after World Cup 2006. I chose to follow Spurs because they seemed to have an inordinate amount of players that I liked in the tournament. Anna can attest that I'm pretty committed to it. And yet, without a historical attachment to the game, I learned my biases the wrong way.

For instance, I like Arsenal. They play a really appealing, fast game and their manager is shrewd in the Billy Beane sense. I also like Manchester United, who are also really fun and whose manager, Sir Alex Ferguson is a big-time Labour supporter. In the meantime I detest Liverpool. They play ugly soccer, their fans annoy me, and they're part-owned by Tom Hicks (who gave A-Rod the $250M contract that wrecked baseball for a while).

Some English fans complain about the increasing globalization of the game. And there's certainly a case to make that the EPL has become a global league that happens to be based in England. Arsenal was the first to embrace globalization, the first to field a line-up without any English players. But in the last few years, the top teams in the Premier League are increasingly filled with foreign players. The International TV rights are massively lucrative and currently recession proof. Foreign owners like Hicks have controversially bought teams as investments and run up large levels of debt. There is a proposal kicking around to add a 39th regular season game to the season and play it abroad. Some of these things are obviously detrimental and I feel as though I should speak out (or at least post lots of things about soccer to drive traffic). And yet, I'm a Spurs fan sitting here in Wisconsin of all places rooting for Arsenal; as our lawyer friends might say, I have no standing to make an argument.

Great, now fucking Robbie Keane (who I loved when he played for Spurs until August) has equalized for fucking Liverpool. Fuck those guys.

Dear Congresswoman Baldwin,

As part of its continuing efforts to leave the nation in smoldering ruin, the Bush Administration has passed a rule insuring the "right of conscience" for medical service providers. If I'm reading it correctly, it means that your doctor, nurse or pharmacist can deny you treatments they find objectionable. I assume we're talking about abortion and contraception (though I still hold out hope they're talking about penile implants). I expect the Obama Administration to roll this back as quickly as possible.

I'm more interested in a law in South Dakota, which requires doctors to read a state-mandated script to women seeking an abortion. Doctors at the state's one clinic are required to tell women that the procedure "will terminate the life of a whole, separate, unique living human being." Further:

Under the law, doctors must say that the woman has "an existing relationship" with the fetus that is protected by the U.S. Constitution and that "her existing constitutional rights with regards to that relationship will be terminated." Also, the doctor is required to say that "abortion increases the risk of suicide ideation and suicide."

Now the last part of that statement is demonstrably false. And the rest seems just unintelligible. Presumably they passed this law because they think women in South Dakota are just too stupid to understand what an abortion is. I mean, given how easy it is to get an abortion in South Dakota -- one Planned Parenthood Clinic in a state of 77,000 square miles -- its easy to see how a woman could just stumble in the door.

I'm stunned that this is constitutional, especially the part requiring doctors to lie their patients. But it raises a question: if a state can force doctors to say things they don't believe in, can they force other citizens to do the same? Can I write to my representative requesting she craft a law requiring people making economic layoffs to read a script explaining, "This company is committing legally protected economic violence to you and your family. Under other economic systems, including socialism and communism, there are fewer economic layoffs. By the way I made >last year and may receive a bonus for cutting your position." Then they'd have the option to sing the Internationale, though that wouldn't be required.

Rick Warren is an asshole, but I can't seem to get angry about it

Rick Warren is an asshole. There are bigger assholes, especially if you're looking in the realm of evangelical leaders, but none whose microphones carry quite as far. So, no, I don't like that Barack Obama has chosen Warren to give the invocation at the inauguration in January. But, I also don't like that there's an invocation at all. But I've spent the last few hours trying to get worked up over the Warren choice and am finding that I just can't.

We moved to Wisconsin before Prop 8 really heated up, so I can't really speak to his role in its passage. Warren was clearly on the wrong side of that. And he's compared abortion to the Holocaust, which is so offensive to me that I want to kick him. But my understanding of Warren is in totality is a little less cut-and-dry. When it comes to evangelical politics, he's basically the nicest guy in a room full of misanthropes. His politics are exactly what you would expect, but he's at least willing to entertain that notion that abortion isn't the only important issue in the world.

It's strange to be on this side of the argument. I've spent the last eight years feeling oppressed by the White Protestant "majority" that foisted George W. Bush on the country. The election results are different now, but the makeup of the country hasn't changed all that much. And it does behoove Obama to reach out to the people in Warren's orbit. I may find some of Warren's views repellent, but it's not we woke up on November 5 and he was out of the mainstream. He has his supports have to be accounted for. And actually, neutralizing some of the anger over Obama within Warren's extended congregation (20 million copies of The Purpose Drive Life have been sold) is actually something of an indeterminate valuable. This is a very public way to do that.

My fear with Obama is he's being too clever by half on this choice. The transition has generally been masterful over the past six weeks at breaking with the left symbolically without actually agreeing to sell out on anything substantive. It's annoying, because I thought him winning by such a large margin meant we didn't have to do that any more. But Obama never campaigned as a progressive, I was just was projecting. And I think in the Washington world the perception will make it easier to pass things like stimulus and health care. It is wrong to completely disdain symbolism in politics. And this pick feels dirty to me, but, I still can't work up the anger. Warren's positions on gay rights are ultimately doomed. Prop 8's supporters badly outspent a terribly disorganized anti campaign and still only managed 52 percent. They won this encounter, but it only means they are losing more slowly. Rick Warren is still an asshole, but if his presence on stage January 20 makes it easier to address core economic and health care issues, I'm willing to wear it. I certainly understand why other people are not.

How to save the economy

So the President said today: "I've abandoned free-market principles to save the free-market system."

Good to know that he's acknowledging it. I have become really fascinated with the notion of the "Chicago Road to Socialism" in the past couple of weeks, although Google reports that I'm outside the mainstream in that regard.

Hey Mickey: Look at the Economy, and tell me that weak unions are good for anyone

Mickey Kaus's reflexive anti-UAWism has me pretty riled up these days. And I'll address that in a moment. But first, baseball:

Things are going pretty well for baseball right now. The Tampa Bay Devil Rays (of all teams) played in the World Series this year and the sport is as competitive as it has ever been. I do question whether competitive balance is good for the long-term health of MLB -- baseball doesn't have a national following the way the NFL does, so one wanted to watch Rays-Phillies -- but in the short-term that fact seems to make people happy. This age began following the 2002 labor agreement. And that's telling.

From the advent of free agency in the 1970s, the owners had spent decades trying to re-impose the reserve clause on the players. They colluded to keep salaries low for a while. And then they spent a decade ragging on their own game and complaining that it was lousy because competitive imbalance (even though there were no repeat champs between 1979 and 1992 and the only team to win twice in that span was the small-market Minnesota Twins). Then they even threatened to contract two teams. Shockingly, people believed them about the game being in trouble. After the strike of 1994 wiped out the World Series, it took Cal Ripken (whose streak the owners tried to end with scabs) and steroid-fueled Home Run chase of 1998 to start to bring people back. it was touch and go for a while. MLB nearly sent its business the way of the NHL in order to save it from the evil union.

But a funny thing happened in the 2002 labor deal. They owners stopped doing that. They accepted that the MLBPA probably wasn't going anywhere, and instead of trying to destroy the union, they engaged it. Bud Selig and Don Fehr probably don't have dinner together if they can avoid it, but there is a real working relationship. And while the steroid issue exposed some fissures, and there always will be conflicts (hell, even the weak-ass NFLPA complains about stuff sometimes) between labor and management, things have been peaceful for the better part of a decade. For years the union said it would accept a drag on salary if the owners accepted revenue sharing. The owners nearly destroyed their business to avoid agreeing to that. But in the end, shared sacrifice led to a good outcome for everyone. The MLBPA is arguably the strongest union in the history of organized labor, and baseball is doing fine.

The UAW is a pretty strong union too, and far from perfect. But people like Mickey Kaus, who fanatically blame the UAW for the problems facing the American automakers are simply wrong. Kaus says the adversarial nature of Wagner Act unionism is what has destroyed Detroit. Kaus is wrong. Bad management has pushed GM and Chrysler to brink. See, as fun as it is to blame the big bad union, that's completely disengenuous. In labor relations, management always dictates the terms of the transaction. This is always true, no matter how strong a union is. Management can choose to fight or it can choose to partner. What I believe happened to the Big 3 is what happened to MLB between 1977 and 2002. They were so committed to fighting the union that instead of trying to repair their business when problems arose, they let the issues sit there so they could win arguments at the bargaining table. And that appears to have subsumed everything. I suppose you could argue that's a natural outgrowth of industrial unionism, and Kaus does that. But then you have to explain Ford's ability to cut plant-specific deals and Saturn, in which the UAW agreed to a new model that appeared to be on its way to profitability before GM management ruined it.

The difference between baseball and making cars is that the Japanese competition was never good enough to steal eyeballs. And if you don't think that's a real issue, talk to me about all the Americans who watch the Europeans leagues while ignoring their own (In other words, let's talk about me, Yay!).

Kaus closes by asking "how long will it be before General Motors realizes its interests are sharply different--and parts company with its union co-pleader?" Maybe he's right. After all, GM can go into bankruptcy and do the following

• Bail out of its UAW contracts and reorganize in a way that cuts thousands of jobs and slashes the wages and of those workers that stick around.
• Scale down, which destroys at least some jobs at the suppliers -- and maybe all of them because the suppliers were selling to GM on credit.
• Reorganize its distribution system, shutting down relationships with car dealerships, some of which also close, eliminating jobs (and all the other things that car dealerships support in their communities).

My reading of GM's actions is this: The company doesn't believe it will survive bankruptcy. It will struggle to get credit in this environment, and going into Chapter 11 may put the suppliers out of business. As some have suggested, Congress could pre-package the bankruptcy or guarantee the loans. But given how appealing the scenario above sounds, especially in the middle of a recession, it's hard to see why exactly anyone would endorse that.

If GM can't argue social utility -- autoworker wages essentially invented the American middle class and moved the wage structure upward for the entire nation -- then there's no compelling reason for the company to survive.