Tuesday, August 31, 2010

TR, The New Nationalism, 100 Years Ago Today

A hundred years ago today in the heat of the last day of August 1910 in Kansas Teddy Roosevelt gave his New Nationalism speech, a cornerstone of the Progressive views, assisted in a manner by Herbert Croly:

Teddy Roosevelt

Osawatomie, Kansas

August 31, 1910.

We come here to-day to commemorate one of the epoch making events of the long struggle for the rights of man - the long struggle for the uplift of humanity. Our country - this great Republic - means nothing unless it means the triumph of a real democracy, the triumph of popular government, and, in the long run, of an economic system under which each man shall be guaranteed the opportunity to show the best that there is in him.

That is why the history of America is now the central feature of the history of the world; for the world has set its face hopefully toward our democracy; and, O my fellow citizens, each one of you carries on your shoulders not only the burden of doing well for the sake of your own country, but the burden of doing well and of seeing that this nation does well for the sake of mankind.

Of that generation of men to whom we owe so much, the man to whom we owe most is, of course, Lincoln. Part of our debt to him is because he forecast our present struggle and saw the way out. He said:
"I hold that while man exists it is his duty to improve not only his own condition, but to assist in ameliorating mankind." And again: "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration."

"Capital has its rights, which are as worthy of protection as any other rights....

Nor should this lead to a war upon the owners of property. Property is the fruit of labor; . . .

property is desirable; is a positive good in the world."

"Let not him who is houseless pull down the house of another, but let him work diligently and build one for himself, thus by example assuring that his own shall be safe from violence when built."

At many stages in the advance of humanity, this conflict between the men who possess more than they have earned and the men who have earned more than they possess is the central condition of progress. In our day it appears as the struggle of freemen to gain and hold the right of self-government as against the special interests, who twist the methods of free government into machinery for defeating the popular will. At every stage, and under all circumstances, the essence of the struggle is to equalize opportunity, destroy privilege, and give to the life and citizenship of every individual the highest possible value both to himself and to the commonwealth. That is nothing new. …

Practical equality of opportunity for all citizens, when we achieve it, will have two great results. First, every man will have a fair chance to make of himself all that in him lies; to reach the highest point to which his capacities, unassisted by special privilege of his own and unhampered by the special privilege of others, can carry him, and to get for himself and his family substantially what he has earned. Second, equality of opportunity means that the commonwealth will get from every citizen the highest service of which he is capable.

No man who carries the burden of the special privileges of another can give to the commonwealth that service to which it is fairly entitled.
I stand for the square deal. But when I say that I am for the square deal, I mean not merely that I stand for fair play under the present rules of the games, but that I stand for having those rules changed so as to work for a more substantial equality of opportunity and of reward for equally good service. …

When I say I want a square deal for the poor man, I do not mean that I want a square deal for the man who remains poor because he has not got the energy to work for himself. If a man who has had a chance will not make good, then he has got to quit. …

For every special interest is entitled to justice, but not one is entitled to a vote in Congress, to a voice on the bench, or to representation in any public office. The Constitution guarantees protections to property, and we must make that promise good But it does not give the right of suffrage to any corporation. The true friend of property, the true conservative, is he who insists that property shall be the servant and not the master of the commonwealth; who insists that the creature of man's making shall be the servant and not the master of the man who made it.

The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being.
There can be no effective control of corporations while their political activity remains. To put an end to it will be neither a short nor an easy task, but it can be done.

I believe that the officers, and, especially, the directors, of corporations should be held personally responsible when any corporation breaks the law.
Combinations in industry are the result of an imperative economic law which cannot be repealed by political legislation. The effort at prohibiting all combination has substantially failed. The way out lies, not in attempting to prevent such combinations, but in completely controlling them in the interest of the public welfare.

For that purpose the Federal Bureau of Corporations is an agency of first importance. Its powers, and, therefore, its efficiency, as well as that of the Interstate Commerce Commission, should be largely increased. We have a right to expect from the Bureau of Corporations and from the Interstate Commerce Commission a very high grade of public service.

We should be as sure of the proper conduct of the interstate railways and the proper management of interstate business as we are now sure of the conduct and management of the national banks, and we should have as effective supervision in one case as in the other. The Hepburn Act, and the amendment to the act in the shape in which it finally passed Congress at the last session, represent a long step in advance, and we must go yet further.

The absence of effective State, and, especially, national, restraint upon unfair money-getting has tended to create a small class of enormously wealthy and economically powerful men, whose chief object is to hold and increase their power. The prime need is to change the conditions which enable these men to accumulate power which is not for the general welfare that they should hold or exercise. We grudge no man a fortune which represents his own power and sagacity, when exercised with entire regard to the welfare of his fellows. …

No man should receive a dollar unless that dollar has been fairly earned. Every dollar received should represent a dollar's worth of service rendered - not gambling in stocks, but service rendered. The really big fortune, the swollen fortune, by the mere fact of its size acquires qualities which differentiate it in kind as well as in degree from what is possessed by men of relatively small means. Therefore, I believe in a graduated income tax on big fortunes, and in another tax which is far more easily collected and far more effective - a graduated inheritance tax on big fortunes, properly safeguarded against evasion and increasing rapidly in amount with the size of the estate.

The people of the United States suffer from periodical financial panics to a degree substantially unknown among the other nations which approach us in financial strength. There is no reason why we should suffer what they escape. It is of profound importance that our financial system should be promptly investigated, and so thoroughly and effectively revised as to make it certain that hereafter our currency will no longer fail at critical times to meet our needs.

But I think we may go still further.

The right to regulate the use of wealth in the public interest is universally admitted. Let us admit also the right to regulate the terms and conditions of labor, which is the chief element of wealth, directly in the interest of the common good. The fundamental thing to do for every man is to give him a chance to reach a place in which he will make the greatest possible contribution to the public welfare. Understand what I say there.

Give him a chance, not push him up if he will not be pushed. Help any man who stumbles; if he lies down, it is a poor job to try to carry him; but if he is a worthy man, try your best to see that he gets a chance to show the worth that is in him. No man can be a good citizen unless he has a wage more than sufficient to cover the bare cost of living, and hours of labor short enough so that after his day's work is done he will have time and energy to bear his share in the management of the community, to help in carrying the general load.

The national government belongs to the whole American people, and where the whole American people are interested, that interest can be guarded effectively only by the national government. The betterment which we seek must be accomplished, I believe, mainly through the national government.
The American people are right in demanding that New Nationalism, without which we cannot hope to deal with new problems.

The New Nationalism puts the national need before sectional or personal advantage. It is impatient of the utter confusion that results from local legislatures attempting to treat national issues as local issues. It is still more impatient of the impotence which springs from over division of governmental powers, the impotence which makes it possible for local selfishness or for legal cunning, hired by wealthy special interests, to bring national activities to a deadlock.

This New Nationalism regards the executive power as the steward of the public welfare. It demands of the judiciary that it shall be interested primarily in human welfare rather than in property, just as it demands that the representative body shall represent all the people rather than any one class or section of the people.
One of the fundamental necessities in a representative government such as ours is to make certain that the men to whom the people delegate their power shall serve the people by whom they are elected, and not the special interests. …

The object of government is the welfare of the people.

The material progress and prosperity of a nation are desirable chiefly so far as they lead to the moral and material welfare of all good citizens. Just in proportion as the average man and woman are honest, capable of sound judgment and high ideals, active in public affairs - but, first of all, sound in their home life, and the father and mother of healthy children whom they bring up well - just so far, and no farther, we may count our civilization a success.

We must have - I believe we have already - a genuine and permanent moral awakening, without which no wisdom of legislation or administration really means anything; and, on the other hand, we must try to secure the social and economic legislation without which any improvement due to purely moral agitation is necessarily evanescent. …

You must have that, and, then, in addition, you must have the kind of law and the kind of administration of the law which will give to those qualities in the private citizen the best possible chance for development. The prime problem of our nation is to get the right type of good citizenship, and, to get it, we must have progress, and our public men must be genuinely progressive.

Sunday, August 29, 2010

Manners and the Modern

The NY Times today had an article on the acceptance of using the respectful term ma'am, the female version in the US of the term Sir. If one has been in the military, around the military, in a town south of the Mason Dixon Line, even in parts of New York City, one called a woman Ma'am out of respect. It was "Yes Ma'am", "No Ma'am", "Thank you Ma'am".

The Times recounts some Professor at Penn State, that institution located in the mid section of Pennsylvania, that town of State College PA which roasts at well over 100 F all summer and the heat may stress the brain a bit, and the Times states:

"... a professor of psychology, linguistics and women’s studies, will soon be greeting her undergraduate students with the usual brief spiel. “I get up and say, you can call me Dr. ..., or professor, or .... if you like, but do not call me Mrs.,” she said. “I am not Mrs.... I kept my name when I got married and my husband kept his name.” ... There is one other honorific that Dr. ... dislikes and that she dearly wishes she could bar from the classroom: ma’am. Whenever a student says, “Yes ma’am” or “Is that going to be on the test, ma’am?” Dr. ... says she cringes and feels weird. Yet because ma’am, unlike Mrs., isn’t factually incorrect, Dr. ... resists the urge to scold. “My first take has got to be, this person is just trying to be polite,” she sighed."

It seems clear there is a problem here, a cultural problem perhaps. Many students today have been brought down to the point where they feel on a par, equal footing, with anyone and everyone and I suspect the good professor is one who may have been an advocate of that. In the old days I was called Professor, still am by foreign students, and Doctor when at the hospital, and I call colleagues in an open environment likewise. I know Jon, and David, but I call them Doctor in front of others, as is done likewise. The good professor doth protest a bit too much. I have no problem with Sir, I know the culture and I find it quite respectful.

And yes for the Brits, Ma'am is the Queen, and one should not use the term otherwise, but alas for the Times we are in the US and to my knowledge we have gotten rid of the royalty... I think.

Of all the things to protest... on the other hand I recall a 1965 version of Harrisons' I had for years and then finally dumped, had one of the earlier chapters on how to deal with patients. You call them by Mr. or Mrs., even Sir or Ma'am, but never by their given name, Joseph, Jonathan, Richard, or Terrence. Today we all find that at many physicians offices there is the nearly illiterate receptionist who shout out "Terrence" as if you were at Joe & Pat's Pizza on Staten Island, or the local Chevy service area. You see culturally there are certain people when called by their given formal name may have PTSD flashbacks to mothers who called that out only when dispensing with tons of guilt for some indiscretion, real or otherwise.

So to the good lady Professor, get over this, it reminds me of Senator Boxer and her rant to the General at a Senate Hearing. Freud would most likely find deeper meanings in all this concern.

Saturday, August 28, 2010

Comte, Croly, and Progressives

Positivist Republic by Gillis Hart is an exceptionally well written and crafted book which blends together the ideas of Auguste Comte and the many Progressives in the United States at the turn of the 19th and 20th century.

Hart starts with a review of the time and circumstances surrounding Comte and the Progressive era. On p. 8 he details in his view what the driving forces were:

"Beyond the problem of industrial strife, lay a more fundamental question about the survival of liberal democracy. A comparatively "free market" had produced a huge concentrations of capital that were not responsive to the public will. This problem underlay the monopoly issue that dominated American politics between 1880 and 1917. Some intellectuals, and not only the most radical, viewed the giant trusts as subversive of a democratic and egalitarian society."

Hart seems to over emphasize several issues here. First the Trusts were a significant factor in certain sectors but the banks were often even more so. The Trusts were a new innovation in some sense which allowed certain people of groups to concentrate in specific industries market dominance. However those industries has a propensity for accumulation of power. Look at steel, telegraph, railroads, and the like. The Government actually facilitated this accumulation by allocating rights of way and as with say AT&T actually giving it a monopoly in 1913 and further giving AT&T protection from any antitrust protection, not removed until 1996! Thus the Government was in part as much a part of the problem as were the Trust Barons. In contrast many other new industries developed and thrived albeit not as trusts but in competitive markets. One need look no further that to Edison and his competitors.

There is another phenomenon occurring at the same time as the Trusts. Universities were exploding, post the land grant deployments, and intellectuals were now cropping up at a rapid pace. They were for the most part academics with low salaries but with access to channels of communications which were not there before the Civil War.

They had both the time and the means to look at the Trusts as unbalancing what they felt was a needed egalitarian society, a society where they should be as equal as any of those who are part of the Trust money flow. To some degree there was clear resentment of monetary success to those in the business world. It is interesting to contrast that to today where academics, and the resulting public intellectuals who are their spokespersons, often have means of income which is orders of magnitude beyond anything that their equivalents a century ago could ever have thought of.

Hart starts with Comte, who in some ways was a bit extreme since he established his own humanistic church as the new means of creating a replacement for the religions which he had disavowed. Hart states on pp 4-11 the following starting with three defining questions:

"The first of these defining questions was a fundamental philosophical problem that had broad implications for both religion and social theory. After the Civil War many intellectuals sought a new rigorously naturalistic foundation for their worldview, one not tied to the pious Common Sense realm of the past. ... A second related question animated the intellectuals who are the subject of this study. As the corporate economy grew dramatically many asked how economic progress could be reconciled with social order and concern for the commonweal. ... The third and final question that defined the community of discourse under discussion involved its social position and its members self-understanding. The broad social and intellectual forces just outlined were also producing a "crisis of professional authority" ... Comte's philosophy of science and social theory spoke in a singular way to the questions shared by many Gilded age intellectuals. Indeed the three defining questions or concerns just outlined ... constituted the very core of Comte's system."

The above can be stated a bit more simply. Hart is not the clearest of writers but he manages to get his points across albeit with a bit of excess flourish. The issues stated above which Hart focuses on are:

1. Science was becoming a clear process which the intellectuals of thought and politics desired to bring into their way of doing things. Thus we see Spencer and Darwin, the survival of the fittest, even though that is a bit of a stretch given what we know today. Comte wanted to base all of his ideas and procedures on just this set of scientific ideas.

2. The intellectuals may actually have looked at the trusts and the wealth created and may have been jealous. From this we get social justice, albeit one could argue that it was already present from the time of Aquinas, it managed to gets is real start with this perception of an inappropriate distribution. Unlike the socialists who wanted to take over the actual business in toto, the Progressives using the ideas of Comte saw government as the ideal means of control.

3. Intellectuals were starting to feel their muscle. They were no Kant walking as a thinker around and over the bridges in his local town up there on the Baltic. They had friends in high places, they had positions to speak from, they had audiences who would listen and they saw that they could exert power and influence. Now any third rate intellectual could find a platform and state a position. There became a power in numbers, and furthermore by all agreeing with one another there became single voices. The intellectuals had what the wanted, their fifteen minutes of fame and more.

As Hart quotes Comte on p. 12:

"The Positivist Philosophy offers the only solid basis for that Social Reorganization which must succeed the critical condition in which most civilized nations are now living."

Continuing on p. 14 Hart states:

"Comte claimed to have uncovered the law of historical development that governed the growth of human society."

This is almost an Asimovian comments, some grand idea of having a single many suddenly understanding the laws of society and being able to understand it trajectory, as was done in Asimov and the foundation series.

Hart continues:

"This grand science of history underlines Comte's break with strict empiricism. Evidently some general theory arising from reason was required to make sense of human history."

Thus Comte was to some degree a Hegelian in that he saw a path in history and a teleological one at that and again he battles over empiricism and rationalism. He was tainted by a semblance of knowledge of the explosion in science and saw that as a tool set for his ideas. Comte thus reached out to what he saw as science and from this and his desire to understand history, even better predict it, from this came sociology. As Hart states on p. 15:

"The Comtean hierarchy ranked mathematics first (as the most general and independent), followed by astronomy, physics, chemistry, biology, and the "Queen of Sciences", sociology."

It was Comte who established sociology who gave it meaning and who instigated many others in its pursuit.

Hart finishes up with some more details on Comte and the proceeds to detail the Comtean progression in the United States. This includes the development of the "The Church of Humanity", his humanistic analog in New York, the discussion of Wakeman. Ward, Small and Ross, and then finally Herbert Croly, most likely the most influential in today's world of neo Progressives.

The Croly discussion is on pp 183-209 and is exceptionally well done and clear. Croly's father had been a strong adherent of Comte and Croly took on that mantle for the early period he was at Harvard before his psychiatric problems started. Croly seems to have maintained a strong Comtean influence however for the remainder of his life as one sees reading Hart.

Hart does discuss the anti-individualism of Croly and Comte on p. 193:

"Progressives hoped to build national institutions upon a naturally harmonious national community. Many Progressives assumed that the interdependence and cultural consensus was basic to the social organism. ,,, Like good Comteans many Progressives especially the "group theorists" stressed social functions or duties over individual rights."

Thus the group mentality, and group with a national focus, was at the heart of classic Progressive thought as it is in current neo-Progressive thinking. In contrast the Progressive thought saw the individualism as an anathema. (One should read Steven Lukes book, Individualism as a reasonable set of insight to the ideas of Individualism).

Hart then discusses the Croly group when the started and worked on The New Republic, "TNR". The three most prominent ones in Hart's mind were Croly, Walter Lippmann, and Weyl. Hart states on p. 195:

" The editors of the New Republic were ... Comtean "in their vision and cultural emphasis. The three shared an important set of assumptions that were generally consistent with the positivism of Croly ... all three were strongly critical of Marxian socialism and classical liberalism."

The classical liberalism was the liberalism of the Founders. Yet Croly disliked the Founders, and like Beard and many others of his time he looked at them as subjects to run away from. As hart states on p. 197:

"To current the United States's "erroneous democratic theory" and address its concomitant problems Croly articulated an answer in The Promise that also betrayed his organicism. Croly proposed a spirit of democratic nationalism as "the road whereby alone the American people can obtain political salvation.""

Hart goes on to discuss the Croly theory of the Administrator, that super executive, who would control everything, a scientific individual who would have the tools to make rational and correct decisions. This was a natural Comtean extension (see p. 208) but after the presidency of Wilson it appears as if Croly found his theory has flaws. Wilson was a disaster and was not the Progressive that Croly had thought when he first supported him.

This book is an excellent blending of the continental philosophy of Comte, who himself is a blend of post Revolution France the nascent beginning of science. It may help to give some insight into what Progressives thought the way they did. It does not, however, explain, the Progressive dislike, disdain, and in some cases hatred of the Founders.

Friday, August 27, 2010

Herbert Croly: A Biography

Shaping Modern Liberalism by Stettner is an exceptionally good biographical work addressing Herbert Croly. Croly is in many ways the father of modern day Progressivism. The book covers the extent of Croly's life and develops his works quite well. An excellent addition to this work is Positivist Republic: Auguste Comte and the Reconstruction of American Liberalism, by Harp.Positivist Republic: Auguste Comte and the Reconstruction of American Liberalism, 1865-1920

The author sets the tune well on p. 3 by stating:

"Progressives such as Croly sought primarily to use government - particularly the national government and even more particularly the national executive - to control the power of business. They sought to assert the public interest against the trusts and to regulate and destroy the concentration of economic power."

It should be understood that during the late 19th century that there were massive trusts, albeit representing but a small fraction of all businesses. They may be counted in less than hundreds and even less than dozens for the most significant one. Yet for those like Croly, and Teddy Roosevelt was part of this group, they became the focus of all that was wrong in America.

Croly founded the magazine The New Republic, TNR, which has managed to survive to the present. The author on p 5 indicates the disillusionment that Croly and his associates, including Walter Lippmann, Felix Frankfurter, Learned Hand and John Dewey were to have with Wilson and Wilson's repressive response to the War.

The author states:

"The recognition that the government could oppress individuals politically, as the classical liberals had argued, while at the same time liberating them from economic and social oppression, forced Croly to reemphasize the importance of individual freedoms that had been present but deemphasized in his earlier books."

Indeed, in his earlier works Croly was anti the Founders and perforce of that against the individual qua individual. The Progressive saw society as a collection, and amalgam, and the single individual had no positive value and in fact the individual to the Progressive had negative value. The individual took from society and had costs which were against the building of a unified group. Thus for Progressives they sought and continue to seek positive rights, the giving from government and eschew the negative rights, the protections from government. But when Croly saw what Wilson had done, how Wilson had arbitrarily denied the rights of speech and assembly, that changed Croly from the 1920s onwards. However that is discussed by the author but often is lacking from the view of Croly as a Progressive.

Thus this biography sets Croly up between these extremes.

On pages 21-22 the author discusses Croly's influence by his father and in turn that of Comte on his father. Comte, the father of sociology, was a post Revolution Frenchman who discovered science, as it was in the early 19th century and tried to use this as a means to establish an alternative to religion. Croly's father adopted Comte and this in turn was an influence on Croly. However after almost two years at Harvard Croly slowly lost that influence and in fact seemed to see Comte and his views as dated.

The author states on p 22 in a succinct comment what seems to have been the main driving point for the Progressives:

"The Jeffersonian heritage of minimal government needed to be abandoned. David Croly (Herbert Croly's father) presumably urged Herbert to adopt these similar views during their conversations in the last years of his life."

One of the lingering questions is what were the factors which drove people like Croly's father, and then Croly, to support ideas which were the contradistinction of what had been at the founding of the country a mere hundred years earlier. It would have been useful for the author to explore this in some detail and the life of Herbert Croly would clearly have been an excellent vehicle. This leaves the reader to infer from the tale as it evolves.

Croly had continuing difficulties at Harvard, and on p 25 there is a description of his "nervous breakdown" and that the time thereafter for almost a decade are somewhat shrouded. One may in today's world ask what specific psychiatric disorder if any he may have suffered from and it could be conjectured that perhaps he was bipolar. He was back and forth at Harvard for several years around the turn of the century and was finally was awarded a degree by Harvard in 1910, albeit in what may be considered an honorary manner having still not completed all of his courses.

Croly was an admirer with mixed feeling of Teddy Roosevelt, TR. On p 38-39 the author states:

"...it was in his praise of Roosevelt and his linkage of Roosevelt to Hamilton that Croly coined the famous "new Nationalism" phrase which Roosevelt later used in turn to describe his own program...In Croly's analysis, Roosevelt was "Hamiltonian with a difference." "

The author continues on p 40:

"He pronounced that Jefferson did "possess one saving quality which Hamilton himself lacked; Jefferson was filled with a sincere, indiscriminate and unlimited faith in the American people."

Croly almost despised Jefferson, he saw in Hamilton the strong central government figure who Croly apparently wanted as a leader. In some ways Croly seems to have initially seen that in TR but that was to mellow.

On p 42-43 the author quotes Croly in a manner which is an excellent view of his principles of social justice. Croly states:

"The democratic principle requires an equal start in the race, while expecting at the same time an unequal finish. But Americans who talk in this way seem wholly blind to the fact that under a legal system which holds private property sacred there may be equal rights, but there cannot possibly be equal opportunities for exercising those rights. The chance which the individual has to compete with his fellows and take a prize in the race is vitally affected by material conditions over which he has no control...Those who have enjoyed the benefits of wealth and through education start with an advantage which can be overcome only by very exceptional men."

Yet it was those very exceptional men who had created what became the Trusts which in turn Croly and the Progressives shout out about. It is the individualism which allowed the United States to move from a backwater agricultural country to a world leader which he also bemoans. Croly and the Progressives in general seem to want to level the field, and in turn to wash out those very exceptional men.

There is an excellent discussion of positive rights and negative rights and Croly and Comte on p. 51. Croly as with all Progressives saw the evil in negative rights since they took power from the central government that they felt was necessary for it to accomplish its goal and that positive rights were part of the plan to level the playing field. Positive rights were social justice and were affected by forms of redistribution.

Croly was opposed to the classic individualism which made the United States what it had become. On p 53 the author states:

"Croly ... renounced the traditional American ideal of an isolated individual, armed with rights and facing a hostile world. Rather he described a human being who was social and shared a common national purpose...."

The author continues his discussion of individualism on p 97 where he states:

"Croly is much more concerned to discuss the related concept of individualism. We saw that in The Promise he had held to a core notion of individualism while attempting to reconcile the concept with nationality and the national democratic ideal. Progressive Democracy continues that commitment to individualism, now in the context of a progressive democratic ideal. ... Croly stresses an "interdependence" between individual and society ..."

There is a clear conflict between classic individuals and what we now see as neo-individualism. In the evolving neo individualism there is a premise that the sole function of the government should be to protect the individual through its negative rights. In contrast as evolved with the Progressives and now the neo Progressives is the evolution of society as compared to individual, positive as compared to negative rights, and social justice and redistribution as compared to property rights in a Lockean sense.

The author then takes the reader through the period of 1912 and the support of Wilson, the 1914 founding of The New Republic and its great influence on Democratic politics, the evolution of Croly's thinking, and his death in 1928. The author provides an excellent comparison of Croly's thought and the program and principles of the New Deal under FDR.

This is an exceptionally good work of a man who had tremendous influence on the politics of the United States. Croly not only had influence by his writing, his TNR publications, but via the people who he had surrounded himself with such as Walter Lippmann and others.

This should be a must read for any who are attempting to understand in some historical context where we are as a country today. It allows one to assess the central divide between individualism and progressivism. The author has achieved an exceptional step forward in this deeply necessary set of explanations.

Just What Does This Mean for Health Care?

In reading the positions of the current Administration regarding the recent health care bill I was struck by one written by the WH Chief of Staff's brother and a few others. It appeared in the Annals of Internal Medicine and is worth a read not for the content but for what I would consider some of the worst Pollyanna writing I have ever experienced.

Let me address the table as an example. Here is the Table and my comments:

How the Affordable Care Act and the American Recovery and Reinvestment Act Are Likely to Affect the Practice of Medicine:

1. Focusing care around exceptional patient experience and shared clinical outcome goals.

Just what does exceptional patient care mean? It is never defined and cannot be achieved. It takes the use of the word quality to a new extreme. If you cannot measure it then it does not exist and in turn you can never achieve it.

2. Expanding the use of electronic health records with capacity for drug reconciliation, guidelines, alerts, and other decision supports.

Expanding means what? A capacity means nothing unless it effects a change, an improvement. At least Blumenthal tried to quantify it. This makes no sense at all. What do they mean by drug reconciliation, how about effectiveness, safety, and the like.

3. Redesigning care to include a team of nonphysician providers, such as nurse practitioners, physician assistants, care coordinators, and dietitians.

This will mean the added costs to the system which will drive the rate of increases to multiples of any inflation, if we even see that any time soon. What of individual responsibility. What of the obese patient who continues to snack, to smoke. What are their responsibilities? Adding non physicians will add frankly a drag on the system, it adds all too often people with an entitlement mentality and an attitude. Give me a good head nurse anytime, even better that a dozen residents, but please hold back on the hordes.

4. Establishing, with physician colleagues, patient care teams to take part in bundled payments and incentive programs, such as accountable care organizations and patient-centered medical homes.

Here we go with the bundled payments. Solving this problem is a nightmare. Frankly we should not be sending obese diabetics top endocrinologists to begin with. The same is true for most cardiologists. However when we have a PIN prostate problem no internist will be able to deal with it, it is fundamentally surgical. Besides these are all just words, the authors seem to mumble on with the catch phrases which have become the mantra of the current Administration's health care disaster.

5. Proactively managing preventive care—reaching out to patients to assure they get recommended tests and follow-up interventions.

Try and get a patient who has been morbidly obese for 25 years to get the weight off. Any practicing physician has battled with this problem for years. The same is true for the smokers. You tell them, you warn them, they see the consequences but the costs just keep adding up. At what point is it their problem and not the systems? What of the woman who just does not want the mammogram, we know she should but she is terrified. That is a classic practicing physician problem.

6. Collaborating with hospitals to dramatically reduce readmissions and hospital-acquired infections.

Frankly this is the hospital problem almost always. It is a slip up in procedure, failure to wash hands, and the like. The recent H1N1 non-epidemic was an example. For the first time last winter there were hand sanitizers at every corner in every building I went to, The Brigham, Children's, MIT, just everywhere. I bet that was a factor. So get the staff on the institution to do the same.

7. Engaging in shared decision-making discussions regarding treatment goals and approaches.

This works well in an academic institution and in most large scale hospitals but it just does not function is the stand alone practices no matter how large. There just is not enough time. Does the urologist coordinate with the internist and then deal with the cardiologist and so forth, no way, they are all at sixes and sevens. The processes are defined and followed and the results transferred if the system works. Otherwise we all too frequently rely on the patient as the communicator.

8. Redesigning medical office processes to capture savings from administrative simplification.

This is a good one! In 1971 when I got out of school a typical internist might have a nurse/office manager. Two people, that's all. Fast forward and with all the rules and regulations they now need a staff of five or six per physician at some time. Why, the Government rules and regs! How does an internist make any money after the low balling on reimbursements and the need for massive overhead. The problem is not a redesign of process it is a redesign of mandated overhead. One would assume that the authors never went to a normal physician's office.

9. Developing approaches to engage and monitor patients outside of the office (e.g., electronically, home visits, other team members).

More money, more overhead. Yes we can deal with many problems with not visiting. Here I am thinking of video patient contact. I have been trying that since the mid 80s, it has pros and cons. As for monitoring patients there is the Holter monitor and the like. We can monitor blood glucose, we can do all sorts of things but we would have to look at the overall cost effectiveness a term the authors seem to leave in the dust.

10. Incorporating patient-centered outcomes research to tailor care appropriate for specific patient populations.

It is always useful to do research and research focused on patient centered outcomes is motherhood and apple pie. But how does that conflict with the CCE/CER efforts. Here we have the problem of averages versus outliers. When a patient comes down with cancer they always ask, sooner or later, "What are my chances Doc?" The true answer is "You will live or die. You have no chance just the result." However that just would not work but it is the truth. Each patient, person, is different. There is always the melanoma patient who has a regression, never thought that would happen, but that is one in a very large number, but it exists. So how do we really define outcomes for persons who are patients. Carefully and with dignity.

The problem I have with this Table is the way they generalize and seem to fail to understand the real world. That is the problem of the entire health care package delivered by the current Administration.

Thursday, August 26, 2010

Croly: Progressive Democracy

Herbert Croly was one of the most significant figures in the beginning of the Progressive movement. His presence is still felt today in many ways including the ongoing work of the magazine he founded, The New Republic. His first book, The Promise of American Life, was somewhat of a lecture or sermon delineating his ideas.

In contrast the book he prepared in 1914, Progressive Democracy, was a clearer and more forthright expression of his Progressive views. In a manner this book, Progressive Democracy, is also the handbook for current day neo-progressives as well. To understand the current day politics it help significantly to read Croly and especially Progressive Democracy.

What makes the current version of Progressive Democracy so useful is the Introduction by Sidney Pearson, emeritus Professor at Radford University in Virginia. Pearson has done a superb job in not only articulating the key points of Croly but also in connecting these points to the text.

Croly was the son of an intelligent and aggressive English born woman who was a reporter and writer and quite progressive in her own right and an Irish born father who was also a reporter and writer, Croly's father was a strong follower of Comte and as such had eschewed any religious ancestry he may have brought with him to America. Comte had established a "church" with structure but with no nexus to the then existing religious institutions. This influence of a "logical" religion seems to have had a strong influence on Croly.

Croly entered Harvard and over a period of many years was in and out and he never managed to complete his course work. It was in 1911 after the success of his first book that he was awarded his undergraduate degree by Harvard. Croly had several psychiatric issues while a student and one may conjecture that they were of a bi-polar nature given his later behavior in life.

In 1914 Croly obtain substantial financing to start The New Republic, TNR, the bastion for Progressive thought. It was at TNR that Croly brought in people of the likes of Walter Lippmann and others. TNR has remained a strong progressive beacon in the world of the written word.

Croly and the Progressives, then and now, differed greatly from the Founders in their view of how the country should be governed. They were anti-individualists and believers of the group or the community. Much of this can be related to Comte as well. It is essential to read Croly in context.

Now Pearson starts his introduction by stating on several occasions the eschewing and even total rejection of the Founders and their beliefs. Specifically Pearson state:

p. xii "The socio political science of the Progressive Movement and Croly's place in it are best understood as a critique of the political science of the Founders...It was the conscious aim of Croly and the Progressive Movement to establish American government on fundamentally different principles than those of the original founders..."

Pearson continues:

p. xiii "They were a new species of democratic philosopher in America: "progressive liberals" in their own self interpretation and consciously in opposition to many of the fundamental principles of republican government as the Founders had used the term. Croly in particular saw his social-political science as architectonic..."

Pearson also sets up one of the key elements of the Progressives, the movement from equality politically to equality socially. He states:

p. xiv "Citizens could and should be politically equal, at least within their communities defined by their citizenship, but private property and property rights prevented social equality..."

Thus in many ways Croly and the Progressives, then and now, eschew Locke and the concept of property and the individual. Their view of equality is equality in a social context and redistribution is the key to that equality. Croly objects to all the Founders and especially Jefferson.

Pearson makes an interesting point on p xxv where he states:

"Dating the origins of the Progressive critique of the American Founders and their political science is imprecise at best, but a convenient reference point is Woodrow Wilson's "Introductory" to his Congressional Government (1885)."

It is Wilson, who approach the government and body politic from a Hegelian manner, rejecting the English school of Locke and the French school of Montesquieu, seeks a Hegelian central government with a social structure focused on the group and not the individual. Further, in a strange manner Wilson then rejects the Montesquieu approach of multiple conflicting branches of Government and in his work describes a strong Legislative branch as is in the case of the UK. Of course Wilson would reject that in favor of the Executive branch in control when he became President.

Pearson then follows through with an detailed analysis of Progressive Democracy. He makes a detailed analysis of the entire core and then relates it back to Croly page by page. As such this Introduction is more useful than the text itself. Croly is somewhat rambling in his style.

Croly states (pp 148-149):

"The ideal of individual justice is being supplemented by the ideal of social justice...The inevitable result of this transformation or enlargement of the ideal of justice has been the increasing circumspection in the use by the courts of their discretionary authority."

Here Croly has articulated the key Progressive action step of using the courts to realign the law and in turn realign society. Croly saw that the legislature would be resistant and that the executive could be cumbersome but that the courts could cut through the old fashioned structure of the Founders like a hot knife through butter.

Croly like the Progressives overall desired a fully democratic government, not a representative one. On p 262 he states:

"It is just beginning to be understood that a representative government of any type becomes in actual practice a species of class government."

On p 211 Croly returns to his drive for the establishment of social justice, namely equality of everything. He states:

"The ideal of social justice is so exacting and so comprehensive that it cannot be progressively attained by any agency save by the loyal and intelligent devotion of popular will."

The view of Croly then to the individual and property, the cornerstones of the Founders view of a good government were at odds. As Pearson states on p xli:

"... Croly aimed at ... a system whereby property would be regulated by the government for the common good of society as a whole. (p 120 Croly) "A genuinely national system must possess unity as well as inclusiveness; and the unity can be obtained only by the active cooperation of its different parts for the realization of the common purpose."

Croly was a Progressive not a socialist, he did not want the government to own everything just control it, and the people who effected any form of commerce.

Finally the point of most criticality is the Croly view of the Executive, the construct of the entity called the "Administrator". On pp xlii-xliii Pearson lays this out and he then refers to the section in Croly for detail. Croly as a believer in Comte, sees science, whatever that means, since he clearly had no scientific training, nor was science even at a point where it could achieve what they sought, but it was a factotum to justify their actions. Pearson quotes Lippmann in this regard:

"we have a right to call science the discipline of democracy"

Political science, this was to be a true science, a science of administering a government, a chose few representing all people in a government where social justice and equality of property was the goal.

Pearson states (p xlvii):

"...Croly's vision shared much in common with the positivism of Auguste Comte that had figured so prominently in the life of his parents and his early education. In Croly's version of secular humanism, the City of Man would replace the City of God as the end point of progress."

Progressive Democracy has insight into the Progressive agenda of this day. The staff of TNR still refer back to Croly, they look to him as both mentor and visionary. Thus Progressive Democracy more than many other works has compelling timeliness for today.

Wednesday, August 25, 2010

What the NY FED Does with our Money

The NY FED, along with the other FEDs, have their staff economists write papers on the economy. A month or so ago we had the flap with the economist in Richmond who had all folks a twitter when he bemoaned the fact that there were people, like me I would gather, who comment on the economy sand PhD in economics.

Of course if you read this from time to time you would know my feelings about a field of study which appears to have near zero consistency in opinions amongst its practitioners and further has demonstrated zero predictive capability. Astrologers are often better, but they have been outlawed in many cities.

Now the NY FED has published a paper entitled, "Is Economics Coursework, or Majoring in Economics, Associated with Different Civic Behaviors?"

The paper states:

The number of economics courses completed is significant for five of the seven economic
attitude items, but not with the items on government deficits and smaller government.

Those who completed more economics courses were more likely to agree that tariffs reduce economic welfare and less likely to think that trade deficits adversely affect the economy. The more economics courses taken the less likely respondents were to believe that government should regulate oil prices, and the more likely they were to believe that the minimum wage increases unemployment.

Finally, the more economics courses taken the less likely respondents were to believe that the distribution of income should be more equal.

In sum, economics classes favored less regulation or government intervention affecting prices for specific goods and services, including wages and salaries.
But there was notably less association between economics coursework and beliefs about the optimal size of government or government deficits – perhaps because ideology plays an even greater role on those questions....

Most previous studies that look at the link between education and civic behavior simply include a control for the amount of education a person has. This implies “being educated” influences a person’s civic behavior, but it ignores the possibility that the content of what a person is learning might also influence behavior.

Our analysis shows several statistically and economically significant associations between coursework in economics, or majoring in economics or business, and later civic behavior, including party affiliation, making donations to political parties, and volunteerism. We also find that the choice of major is a significant predictor of voting in the 2000 presidential election. We find that the labor market decisions of business and economics majors are similar. We find a similar result for civic behavior.

However, business majors are less likely than General majors to participate in time consuming activities such as voting in the 2000 Presidential election or volunteering, and when they volunteer they volunteer for fewer hours than do General majors.

Economics majors instead are not less likely than General majors to engage in these behaviors. Our estimates reveal the somewhat surprising result that the attitudes of business students on public policy are more similar to General majors than to Economics majors...

Unfortunately, we cannot say if our results reflect what individuals have learned in these courses and majors, or if the relationships identified here are due to self-selection among college graduates into different college majors and economics course taking. Furthermore, we cannot say if those in different majors perceive the costs (value of time) or the benefits of these activities differently. But our results clearly suggest there is more to the story than simply “being educated” – so that what people study in college, or what they choose to study, is associated with their civic behaviors many years after they graduate.

Interesting, but what do they contribute to society in terms of value creation. What about engineers, scientists, physicians and of course lawyers!

This is interesting but one wonders why the FED spends our money on studies like this?

The Economic Indicators are Really Mixed

First the CPI and PPI. They continue to increase albeit with a recent flattening out. If we look at the annualized percent rate of increases we obtain the following:

We see the dip during the peak of the recession and we see a somewhat flat but positive growth. This implies a certain positive inflation in costs. Recall the the PPI leads the CPI at leads in general terms.

Sumner as what I assume is a Keynesian has recently stated:

OK, I’m ready to throw in the towel. I just made the mistake of checking Drudge. His website is frequently shameless, but you have to admit he often picks up the zeitgeist. All the news about the economy is dreary. Then I looked at Bloomberg and here are the latest TIPS spreads:

5 year conventional T-bonds 1.33%, Indexed bonds 0.08%, TIPS spread 1.25%

10 year conventional T-bonds 2.50%, Indexed bonds 1.03%, TIPS spread 1.47%

Both have been falling like a stone. This suggests that a sharp slowdown in NGDP growth is very likely. Until now I’ve tried to remain an optimist, disappointed in the pace of recovery, but assuming that we were at least muddling forward. But it is now clear that we are no longer recovering.

So let’s put this fiasco into perspective. What can we compare it to? As far as I know, there are four great recessions/depressions with near zero rates...

Milton Friedman once noted that ordinary people were shocked when told that unelected Fed officials were free to simple double the money supply anytime they wished. I think the same thing is true of changing the value of the dollar, as when FDR arbitrarily decided each dollar would be worth 60 cents (in gold terms.) People seem OK with interest rate targeting, but anything else seems radical. But interest rate targeting doesn’t work anymore. So we are stuck.

Nick Rowe uses the analogy of balancing a long pole in your hand. If you want the top to go left, you move your hand right. By analogy, if the Fed wants inflation/growth (and long term rates) to go up, they lower the fed funds rate. But if you bump up against a tall wall, then you may not be able to move your hand in the direction required to move the pole in the other direction. You are stuck. The only solution is to rely on some other method–such as directly grabbing the top of the pole.

The Fed needs to raise NGDP growth by some method other than lowering nominal rates. It is up against the wall. That means they need some other policy tool. It might be the printing press (QE), negative IOR, price level or NGDP targets, dollar devaluation, etc. But it can’t be done by manipulating the fed funds rate. And for some reason the Fed seems paralyzed....

What Sumner seems to be saying is that we are headed for deflation if not in it already. The CPI and PPI indices seem to belie that but as we have shown a day or two ago the yield curve is starting to flatten near zero. The long term expectations are that things will just get worse and that with deflation long term the 30 year Treasuries will actually yield much higher than the indicated rates. On the other hand, we also looked, at the same time, at the CBO report and that assumed even in the worst case the inflation at a modest rate to achieve the maximum debt to GDP percent which kept the US from becoming Greece.

Thus if we are truly seeing deflation and deflation long term then the CBO must recalculate but worse the debt we are piling on gets even bigger and debt as a percent of GDP explodes!

Before looking at indices we look at consumer debt. The most recent numbers are below. Frankly the large jump is not understood. Perhaps it is a result of the new Financial Bill but we are examining this blip.

Now back to some statistics. Consider the indices below:

These are industrial indices indicative of future economic growth. The recession is clearly documented in all. However there is both a flattening and some downturns which should raise concerns.

Tuesday, August 24, 2010

This Is Serious: Moldova

The Telegraph in the UK reports the seizure of 4 pounds of enriched uranium in Moldova (the small country between Romania and Ukraine). This is bomb grade material.

The paper states:

Police found 1.8 kilograms (four pounds) of the substance Uranium-238 in a garage in the capital Chisinau where it was under guard and in a special container, according to the interior ministry.

Enriched uranium is a vital ingredient for both civil nuclear power generation and military nuclear weapons.

Chisinau is 90 miles from Odessa and the Black Sea. The Telegraph concludes:

The source and intended destination of the uranium was not immediately clear. Experts have repeatedly expressed fears over traffickers obtaining nuclear materials from the former Soviet Union with the aim of selling them on to rogue groups in the hope of making a so-called dirty bomb.

The US confirmed what the material was. This is enough for a small weapon or a large dirty bomb. Coverage seems to be lacking in the US. Perhaps we should be concerned?

Two Interesting Reports

The CBO released an update on its estimates on how well the Stimulus did in stimulating the economy. Needless to say the results have been lowered. That is less of the story than is the approach used. They employed multiples. We show the range below:

These are the range of values used by the CBO. They vary to a substantial degree from low to high. This is also a reflection of the tremendous lack of understanding of macro economics. You could not design a bridge this way.

CBO States:

A key advantage of the model-based approach used in this analysis is the ability to provide estimates of the total effects throughout the economy of the government spending, transfer payments, and tax cuts resulting from ARRA. By focusing on the net change in employment, that approach captures both the jobs created and the jobs retained as a result of ARRA. A key disadvantage of the model-based approach is the considerable uncertainty about many of the economic relationships that are important in the modeling.

Because economists differ on which analytical approaches provide the most convincing evidence about such relationships, they can reach different conclusions about those relationships. In addition, each study involves uncertainty about the extent to which the results reflect the true effects of a given policy or the effects of other factors.

This just emphasizes the continuing lack of certainty of any type in these numbers.

At the other extreme is a report by the Kauffman Foundation explaining the importance of startups in job creation. They show a chart as follows:

New businesses, the entrepreneur creates more jobs than any other type of company. And there was not a word about this in either the Administration's approach or the CBO report. These two reports are issued within hours of each other. It is as if you are from different universes. Nothing this Administration has done even recognizes the facts of the start up. No wonder, you have no people who have ever done this. No one has most likely even run a lemon aide stand!

Perhaps as the Hill reports:

Boehner wants President Obama to ask for and accept the resignations of Treasury Secretary Timothy Geithner and Larry Summers, head of the National Economic Council. Firing his economic team is one of five actions Boehner argues the president should take to right the economy...In his speech, Boehner criticized the administration's economic team for lacking private sector experience, saying employers and small businesses are "rightly frustrated" by the administration. "The lack of real-world, hands-on experience shows in the policies of this administration," Boehner said.

It is that very real world knowledge which is showing in their inability to deal with this issue. The classic example was that of Ms. Romer who when she was outside of the Government apparently had one set of multipliers and then when inside changed them to meet the needs of the Administration.

Peer Review and the Internet

There is an interesting article today in the NY Times on the peer review process and the Internet. In a way this article hits two issues; peer review and the change in what we see in publishing.

Let me begin by saying I have been involved in various forms of peer review for almost fifty years. It is a cumbersome, inefficient, and often ineffective process. It is ego driven and does not stop truly bad results, just look at the wealth of academic fraud. In the time of Einstein, there was a community which for the most part knew each other and the reviewer was known to the person who submitted the document.

Look at Watson and Crick, the paper was published in weeks. Look at today, and articles have dozens of authors, all seeking credit, and reviewers no really being able to vet out the facts in any of the papers and generally looking for the name of some credible author so that they can pass on the paper by saying Prof so and so was an author. In fact that is the way these papers are now put together, some student writes it, so junior faculty tags their name to it and that person may get a senior faculty member on the paper as well.

Thus the process of peer review in my opinion as currently handled has become ineffective and frankly counter productive.

Now with the Internet there is a way to post a proposed paper and have real time dynamic review, but one must be careful.

My suggestions are as follows:

1. All reviewers must use their real names. They should not be anonymous, they should put their reputations on the line as much as the author does. Thus the posting of draft paper on the Internet today invite comments. Comments from known entities are well accepted even if highly critical. Comments from some unknown commentator who calls themselves "INOITALL" and the like are a waste. The problem with the Internet etiquette is the fact that one can be a total unknown. That may also have been the problem with anonymous peer reviews. Only the editor knew. In anonymous Internet reviews, no one knows.

2. Draft papers can be submitted since work in progress has value and it establishes precedent if done correctly. Here we have an interesting issue. The Internet allows for the posting of drafts, and drafts have certain qualities. First they get out early. Second they show how the thought process has progresses. I think this is often more important than the result. Third it gets the results out earlier and gets a conversation started. However it may attract some of the less ethical to steal ideas. Yet one need only read the Watson book and the dealing with the Pauling efforts on DNA, that was a rush and Watson and Crick did whatever to beat Pauling.

3. Finalized papers, namely ones to be deemed "published" can also have the trail of comments and corrections. That is often invaluable. he changes and corrections would have to be tagged with who contributed it. The dialog between reviewer and author would become also invaluable. The resulting Wiki like dialogues would be as much a part of the publication as the paper itself. In effect the journal would be like a Wiki, the final paper, the tagged discussion, and links to older docs.

4. This would be workable for papers and books as well. I know that many authors want the hard copy but with e books exploding and the need to have an electronic copy, this would be an attractive alternative. E publishers get the books out cheaply and in shorter time. The problem I see here is that I have never really found reviews useful yet I could not live without an editor. Editors correct many of the personal quirks in one's writing and a good book like a good writer is often dependent upon a great editor! How that works is an interesting challenge. Then there is the compensation issues, well I never got rich on my prior books, but as an academic that was not the purpose. For those academics with their 15th editions of introductory economics or whatever who have made a fortune cornering a market, well I would guess there could be alternatives. My suggestion here is for the truly academic publishing business.

What I find interesting is that when one uses the Internet to post working papers, if some anonymous critic does not like your position in a working paper they make a comment like "well this was not peer reviewed". Well if these unknown critics were to send an email with their concerns a dialog would result. I have often found that authors whose books I have read and commented upon will respond, they like it, as I do myself.

The worst thing in the Internet world as well in the peer review world has been the anonymous nature of the review process. If one must post their identify on a paper then one should post their identity on a review.

Thus this finally leads to the question of how will this change publishing papers and books. I believe that for papers there will be an all electronic world shortly. All my current journals I access in electronic form only. My medical journals sit on a coffee table and they arrive solely because they have drug ads in them. I never read a hard copy of the paper. The same is the case with the more classic journals which I get just electronically. Why not converts the entire process to an all electronic process. From submission to publication.

The Times states:

That transformation was behind the recent decision by the prestigious 60-year-old Shakespeare Quarterly to embark on an uncharacteristic experiment in the forthcoming fall issue — one that will make it, Ms. Rowe says, the first traditional humanities journal to open its reviewing to the World Wide Web.

Mixing traditional and new methods, the journal posted online four essays not yet accepted for publication, and a core group of experts — what Ms. Rowe called “our crowd sourcing” — were invited to post their signed comments on the Web site MediaCommons, a scholarly digital network. Others could add their thoughts as well, after registering with their own names. In the end 41 people made more than 350 comments, many of which elicited responses from the authors. The revised essays were then reviewed by the quarterly’s editors, who made the final decision to include them in the printed journal, due out Sept. 17.

The Shakespeare Quarterly trial, along with a handful of other trailblazing digital experiments, goes to the very nature of the scholarly enterprise. Traditional peer review has shaped the way new research has been screened for quality and then how it is communicated; it has defined the border between the public and an exclusive group of specialized experts.

I believe that mixed will also go by the wayside. There should be standards, there should be editors of some degree, but they should be minimal as gatekeepers.

The Times does emphasize my point as follows:

Each type of review has benefits and drawbacks...The traditional method, in which independent experts evaluate a submission, often under a veil of anonymity, can take months, even years.

And as I stated above the process seems to work well with working papers in many fields:

In some respects scientists and economists who have created online repositories for unpublished working papers ... have more quickly adapted to digital life. Just this month, mathematicians used blogs and wikis to evaluate a supposed mathematical proof in the space of a week — the scholarly equivalent of warp speed.

The article ends with:

To Mr. Cohen, the most pressing intellectual issue in the next decade is this tension between the insular, specialized world of expert scholarship and the open and free-wheeling exchange of information on the Web. “And academia,” he said, “is caught in the middle.”

This statement begs the question, where is the wall of the Academy in the Internet age. One need not be part of some walled edifice to publish. One may have ideas of merit and one may then more readily share those ideas with others. Did Einstein need the walls of a University in 1905 when he did his most creative papers, no he was still at the patent office. The often chilling arrogance of the Academy can be broken down, and a mass of ideas can flow much more readily.

As a final comment, this potential change can also be a globalizing mechanism as well. The walls of the Academy will no longer be limiting.

Sunday, August 22, 2010

An Interesting Quote for the Day

In a section of the book on The Scottish Enlightenment, by Broade, and in the section by Oz-Salzberger, there is a quote as follows (pp 160-161):

"...Adam Smith...(in speaking of politicians, in his Wealth of Nations) "that insidious and craft animal, vulgarly called a statesman or politician, whose councils are directed by the momentary fluctuations of affairs..." Vulgarity ... a byword for conceptual fuzziness, for short term unpredictability, for weaknesses hindering actors and observers alike from approaching politics as a science..."

It is clear that Adam Smith observed in his day what one may have always observed and may continue to do so.

Friday, August 20, 2010

A Simple Calculation Leads to Nonsense

This broadband Internet Neutrality thing has really gotten out of hand. In the BBC today they state:

"The government says 100 million Americans do not have broadband."
Let us just do some simple math.

1. The current population of the US is just about 308 million. Yes just over 300 million.

2. The average number of people per HH is 2.4 so that we have about 123 M HH.

3. If 100 M do not have broadband that means 82% of the US does not have broadband or the penetration is only 18%.

4. Now with 18% penetration we are thus ranked with Mauritania. Not that I have anything negative to say about Mauritania, I have been told my French has their accent, by those in Paris.

This makes no sense. The BBC continues:

From the perspective of net neutrality supporters, news of another "set of secret negotiations" is worrying. The FCC said America is ranked 15th in the world for high speed net access

"Industry talks that don't have any public process or consumer interest are not likely to result in good policy making that promotes the public interest," Aparna Sridhar, policy counsel for Free Press told BBC News.

"Developing meaningful open internet rules is a job that is best done at the FCC with full public input from a diverse variety of stakeholders and not limited corporate closed door meetings."

That was a view backed by another advocacy group, Media Access Project.

"These 'negotiations' are illegitimate," said Andrew Jay Schwartzman, the project's senior vice president.

How can something be illegitimate if there is no law. There is not even an antitrust issue, there is no price fixing!

Now one more nit. They, whoever they have become, want this "free" Internet to apply to wireless. Perhaps they have never heard of Claude Shannon and the capacity theorem. I bet they have not. You can just get some much data through a foxed amount of spectrum. What do these characters want, for God to change the laws of physics?

Yield Curve: August 2010

The above is the yield curve over the past few months. The most recent values are lowered to a level which we have not seen in ages. The 30 year yield is approaching 3.5%.

The details below show how we have seen the yield drop over a longer period.

Clearly the short term is low but what is interesting is that the 30 year yield seems to be reaching an all time low. The question of course is who is buying the Treasuries, the FED as well as what other entities. We will be doing a more detailed analysis on this issue as well.

This is the spread for the 30 year to 30 day Treasuries and it clearly points out the recent trend.

Note especially the recent drop of the spread. We look below at the 90 day and 10 year spread, the more standard measure and it also has reached an all time low. There appears to be some slight recovery over the past few days but that may just be a statistical anomaly.

The following is an interesting graph because the spread has gone below our lowest expected point!

Unfunded Mandates

One of the most serious concerns regarding the economy is the ultimate costs of the health care bill. To those unfamiliar with Washington the legislation just mandates the controlling governmental agency to write the administrative law implementing the bill. Just reading a bill tells you truly little. It is what gets mandated by the administrative process which causes the ultimate concern. Then the courts get in and that is when things get interesting. But the courts are for another day.

In a recent Kaiser posting they speak of the start of the game with Medicaid funding. The Bill mandates greater Medicaid funding but the cost is on the states except for the current Stimulus hand out which is really just more debt.

As Kaiser states:

The funds, which upped the federal contribution toward the cost of Medicaid, were first authorized using stimulus dollars. The higher matching rate was originally slated to expire at the end of 2010, but lawmakers interrupted their August recess to approve an extension of enhanced funds, albeit at a lower rate, through June 2011. While states got an increase of 6.2 percent in the federal match for their Medicaid programs using the stimulus dollars, they will see only a 3.2 percent match increase in the beginning of 2011 before it drops to 1.2 percent in April and eventually ends in June.

But the Governors are questioning and to induce them to agrees with the administration the Secretary of HHS is telling them to "fish or cut bait", take the money on Washington's terms or pay out of your own pocket. As the Secretary states:

Last week, President Obama signed into law the Education Jobs and Medicaid Assistance Act, which will provide states and territories with an estimated $16.1 billion to support their Medicaid programs. This new federal funding can stave off the deep cuts to Medicaid that many had feared, and sustain jobs in hospitals, health centers, and communities across the country. They will also support Title IV-E foster care programs. These funds are only available for your state if you request them within 45 days of enactment, or by September 24, 2010.

That also means take the terms. As Kaiser summarizes:

By telling governors they have until Sept. 24 to ask for the funds, Sebelius is forcing the hands of these officials, particularly those Republicans who have been vocal about their distaste for additional deficit spending. Initially, many governors, Republicans and Democrats alike, urged Congress to approve the extension of the enhanced match, but some Republican governors, such as Minnesota’s Tim Pawlenty, roundly criticized the funding. Others, such as Mitch Daniels of Indiana, and Haley Barbour of Mississippi, initially signed a letter with 40 state executives asking for this Medicaid assistance, but later changed their position. That's not to say they won't take the money: A Daniels spokesman told the Fort Wayne Journal Gazette that the governor will cash any check the federal government sends Indiana. Barbour, however, says he doesn't want the money, The Hill reported.

This is like forcing the use of heroin and paying you to use it then complaining when you become addicted. These Federal handouts end soon, or must, as we have already shown in the CBO analysis. However the states will be left with the costs. So if you think Federal taxes will rise just wait for the state costs.

This is just the beginning.