The Economy, The Field, Insurers Give Republicans Cover, Obama and the Failure of Technocracy, Roger Scruton and Stewardship, Brandenburg Gate, Milton Friedman
The Transom: News and Notes From Around the Web
THE ECONOMY:
 
Two decades of accumulated prosperity: poof. http://vlt.tc/bh1  “The recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday. A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss. Families’ income also continued to decline, a trend that predated the crisis but accelerated over the same period. Median family income fell to $45,800 in 2010 from $49,600 in 2007. All figures were adjusted for inflation.” Fed survey is here. http://vlt.tc/bh2
 
Public employment and the recession. http://vlt.tc/bh8  “If state and local governments had followed the pattern of the previous two recessions, they would have added 1.4 million to 1.9 million jobs and overall unemployment would be 7.0 to 7.3 percent instead of 8.2 percent.” More here. http://vlt.tc/bh9  But the impact, overwhelmingly hitting teachers and local government workers, is on a much larger pool of state officials – sometimes to keep pace with population, but often in states where the rolls of employees have swelled far beyond what was necessary. Here’s a graph comparing state, local, and federal employment: http://vlt.tc/bhi  Is this is what modern federalism looks like?
 
Working class struggle. http://vlt.tc/bhs  “Between 2007 and 2010, working-class people – those in nonprofessional occupations who lack college degrees – saw their median earnings fall 4.6 percent, according to a study of U.S. census data prepared for Bloomberg News by Sentier Research of Annapolis, Maryland. Over the same period, earnings for college-educated professionals or managers rose 1.9 percent. Working-class males were especially hard hit, with median annual earnings falling 6.6 percent, more than three times the 1.9 percent loss suffered by all employees, according to the study, an effort to quantify the recession’s impact on labor.”
 
Strings attached for Spailout. http://vlt.tc/bh3  “Spain must submit to close scrutiny of its financial sector by European institutions and the International Monetary Fund as a condition for any bailout, European officials said Monday, countering Madrid's suggestions that the country could escape the tough oversight other rescue recipients have faced… "Whoever gives money, never gives it for free," European Commission Vice President Joaquín Almunia said, adding that the EU's executive branch would play a central role in monitoring the bank-restructuring plans. "There are people coming here [to Spain] to make sure the money will be properly used," he said. Any loans would also be subject to Spain's hitting previously agreed macroeconomic targets. Spain has committed itself to narrowing a budget deficit of nearly 9% of gross domestic product last year to 5.3% this year and 3% in 2013, although the commission has signaled it may give Spain more time to hit these targets.”
 
Is Italy next? http://vlt.tc/bh4  “Italy’s main stock index was Europe’s worst performer on Monday, a day when United States stocks were also dragged down and investors flocked yet again to the safe harbor of American and German government bonds… The main fear is that Italy cannot grow its way out of a recession fast enough to pay a mountainous national debt. Other concerns include the fact that Italy, with the third-largest euro zone economy after those of Germany and France, will have to shoulder a large portion of the bailout bill even as it grapples with its own sharp economic downturn. Because Italy does not have enough economic growth to generate the money itself, the government will probably have to borrow it at high interest rates, adding to an already heavy debt load.” More: no Thatcher for Europe today. http://vlt.tc/bi5 
 
Tick tock of the NASDAQ/Facebook fallout. http://vlt.tc/bhq  “To Ms. Schapiro, the disorder of May 18, although mostly confined to one stock and one exchange, was reminiscent of the May 2010 "flash crash," when the Dow Jones Industrial Average dove more than 600 points in five minutes and some stocks erroneously fell to a single cent. Since that event, a net $371 billion has been withdrawn from U.S. stock funds by small investors, according to EPFR Global Inc., a Cambridge, Mass., firm that tracks investment funds. Stock-trading volume through discount brokers and exchanges has declined. The troubled IPO appears to have fueled this trend. In the three weeks ended Wednesday, small investors pulled a net $4.9 billion from U.S. stock funds—including $3 billion in the week following the Facebook IPO. Excitement about the chance to get a piece of Facebook "drew them in, and then it spat them out," said Brad Durham, a managing director of EPFR.”
 
The explosion of government under Bush-Obama. http://vlt.tc/bi7  “Mr. Bush and Republicans in Congress capitulated to and even promoted each and every government bailout and populist redistribution canard put before them. It's a long list, starting with the 2003 trillion-dollar Medicare prescription drug benefit and culminating with the actions taken to stem the 2008 financial meltdown—the $700 billion Troubled Asset Relief Program, the bailout of insurance giant AIG and government-sponsored lenders Fannie Mae and Freddie Mac, the ill-advised 2008 $600-per-person tax rebate, the stimulus add-ons to 2007's housing and farm bills, etc. The script had it that greedy right-wingers were the cause of our collapse, and deficit spending and easy money the answer. The numbers are mind boggling. From the second quarter of 2007, i.e., the first full quarter of a Pelosi-Reid dominated Congress and a politically weakened President Bush, to the second quarter of 2009 when President Obama assumed office, government spending skyrocketed to 27.3% of GDP from 21.4%. It was the largest peacetime expansion of government spending in U.S. history.”
 
RELATED: Romer: the Fed’s the only option. http://vlt.tc/bhf  JP Morgan knew the risks. http://vlt.tc/bi2  Europe still doesn’t get it. http://vlt.tc/bi3  Gold investors run to the exits. http://vlt.tc/bi4  The thing about this is: those homes were never worth that much anyway. http://vlt.tc/bgo  Pensions gone wild. http://vlt.tc/bi8  The bailout only buys time. http://vlt.tc/bi9 Dodd-Frank’s liquidation plan. http://vlt.tc/bia  The ghost of GM past. http://vlt.tc/bib  Baby boomers and the vacancy chain. http://vlt.tc/bi6 
 
THE FIELD:
 
Team Obama plans to right the ship with – wait for it – another speech. http://vlt.tc/bho  “President Barack Obama will use a campaign policy speech Thursday to contrast his preferred approach for the country's economic future with ideas proposed by his likely Republican opponent, Mitt Romney, people familiar with the speech said. Mr. Obama's address in Cleveland, described by his aides as a "framing" speech, isn't expected to include any major new proposals. While some of his political advisers had pushed for that, his economic team made clear they don't see many fresh options, particularly when Congress hasn't passed the bulk of a jobs bill that the president unveiled nine months ago, according to people familiar with the discussions.”
 
Chicago out with another Massachusetts hit. http://vlt.tc/bhp  “When Mitt Romney was governor, Massachusetts was number one – number one in state debt,” the narrator says. “At the same time, Massachusetts fell to 47th in job creation, one the worst economic records in the country.”
 
Obama’s allies join forces. http://vlt.tc/bhr  “Two fresh examples debuted this week, as Priorities USA Action and the labor giant SEIU announced they would jointly commit $4 million to Spanish-language television ads blasting Mitt Romney as hostile to working people. As those ads are hitting the air, a coalition of five environmental groups is preparing to launch an almost two-month campaign to boost Democratic Rep. Martin Heinrich in the New Mexico Senate race. So far, the organizations involved — the League of Conservation Voters, the Sierra Club, Defenders of Wildlife, the National Wildlife Federation and the Natural Resources Defense Council Action Fund — are splitting the cost evenly, according to a strategist familiar with the campaign.”
 
Romney plans a bus tour through the blue states. http://vlt.tc/bhx “Since effectively nailing down the Republican nomination for president in mid-April, Mitt Romney has had to balance his time on campaign trail with jaunts to numerous fund-raising events across the country. But that is to change Friday, when Mr. Romney trades his jet for a bus for five days of barnstorming across six states that has all the appearances of an unofficial kickoff to the general election… The itinerary begins at the same New Hampshire farm where Mr. Romney first announced his candidacy and continues through Pennsylvania, Ohio, Wisconsin, Iowa and Michigan.”
 
I’ve criticized aspects of Romney’s education positions – which I think are designed in such a way as to cause upheaval without necessarily competition-driven improvement among schools (and will accelerate the problem of overdiagnosis of educational disabilities, in order to access Romney’s individual subsidy) – but this critical NYT piece includes several interesting nuggets. http://vlt.tc/bh5  “One notable skeptic is Margaret Spellings, a former education secretary under Mr. Bush, who this year was an informal adviser to Mr. Romney. She said she withdrew once the candidate rejected strong federal accountability measures. “I have long supported and defended and believe in a muscular federal role on school accountability,” Ms. Spellings said. “Vouchers and choice as the drivers of accountability — obviously that’s untried and untested.” I never did get along with Spellings – now I know why.
 
Boston is in Chicago’s head. http://vlt.tc/bh6  “Axelrod, the most visible face on the calm, cool, and collected Obama campaign had been rattled at a press conference two weeks ago on the steps of the Massachusetts State Capitol blocks from Romney headquarters when he faced bubbles and chants of “Solyndra.” President Barack Obama’s senior adviser and political guru responded to moderator John Heilemann’s poll of the room that all but four people in attendance voted for Obama in 2008 by saying: “We have a very nice room here…not like those folks up in Boston.” Later, joking about hypothetical Romney trackers in the audience recording his every word, Axelrod added, “At least they’re letting me speak.” Axelrod’s unprompted asides suggested Romney’s in-person and social media guerilla campaign is taking hold — at least in the cubic foot of space above Axelrod’s shoulders.”
 
A profile of Spencer Zwick and the Zwick-Romney firm. http://vlt.tc/bhj  “The number one thing is that he’s got such a good relationship with the candidate himself,” said Woody Johnson, the owner of the New York Jets football team and head of Romney’s fundraising in the New York region. “It’s just his proximity to Mitt.” It’s also a connection that has made millions for Zwick. His fundraising consulting firm, SJZ LLC, has collected nearly $7.5 million from Romney’s presidential bid, making it the campaign’s third highest paid vendor. In April, the company received $900,000 from the campaign, 7.16% of the total expenditures. In addition to that firm, Zwick in 2008 began meeting with major campaign donors about a month after Romney ended his first White House quest to raise money for a private equity fund Zwick was starting with Romney’s son, Tagg. Two of the early $10- million-dollar investors were Romney and his wife, Ann. When it opened, the firm was headquartered in the same office building as the Romney campaign offices and press aide Eric Fehrnstrom at times helped with media strategy. Solamere Capital, named after a wealthy Utah ski area where the Romney’s have a vacation home, is in line to collect at least $16.8 million in fees over the next six years, according to a filing with the Securities and Exchange Commission. When it came time to select a speaker for the company’s first investor conference, the choice was obvious: the former Massachusetts governor… Zwick, too, is in constant contact with supporters. The father of three young boys travels constantly and is notorious for responding immediately to emails – even those sent at one or two in the morning, say donors. “You e-mail him, you have an e-mail back in five minutes. Maybe ten,” said Bobbie Kilberg, a long-time Republican fundraiser from Virginia.”
 
RELATED: Was Obama right to go for health care in 2009 instead of a second stimulus? Sean Trende says he could’ve. http://vlt.tc/bhz   The six trillion dollar difference. http://vlt.tc/bhn  Obama says he was too busy to go to Wisconsin. http://vlt.tc/bhy  The White House’s car wreck. http://vlt.tc/bhh  Fundraising like mad. http://vlt.tc/bit  Wal-Mart moms. http://vlt.tc/bis
 
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DO WE NEED A SLACKER MANDATE?:
 
Not if trends like this continue. http://vlt.tc/bgx  “UnitedHealth Group Inc., Aetna Inc. and Humana Inc. plan to retain some benefits created by the U.S. health-care overhaul even if the Supreme Court strikes down the law. The exception: Those involving people with pre-existing illness. Customers of UnitedHealth, the largest U.S. health insurer, can keep children on plans until age 26, get free preventive care and won’t face lifetime benefit limits, the Minnetonka, Minnesota-based company said yesterday in a statement. The insurer also won’t rescind policies except for cases of fraud and will retain a simplified appeals process for denials. Aetna, the third-largest health insurer by market value, said today it would cover preventive services, let young adults stay on their parents’ plans and continue outside reviews of coverage denial appeals.”
 
This is a gift to Capitol Hill Republicans, who had been at odds over the proper response to the slacker mandate and other aspects of the law under a partial strikedown of PPACA at SCOTUS. Republicans remain more confident about their policy answers to the pre-existing condition question than they do for these other portions of the law, which went into effect in 2010. http://vlt.tc/bgy
 
OBAMA AND THE FAILURE OF TECHNOCRACY:
 
Peter Suderman on Noam Scheiber. http://vlt.tc/bhw  “Sometimes the arguments hinge on wonky debates about the merits and effectiveness of some particular policy. But often they are driven by personality conflicts and petty squabbles. Scheiber portrays the Obama team as more cliquish than a middle school, fraught with seating-chart slights and tennis-camp snubs, where policy is frequently determined by meaningless personal byplay. When the stimulus package is being put together, Rahm Emanuel’s brother, Ezekiel, who worked as a White House health care adviser, sees an early list of spending options and expresses dismay that it lacks a wow factor; he laments that there’s nothing as exciting as, say, a bullet train between New York and Washington, D.C. None of the economists on the team thinks such trains make effective stimulus, but when the bill passes, it includes $8 billion in funding for high-speed rail. Obama, meanwhile, is reported to have pushed Christina Romer to check and recheck numbers on potential jobs from clean energy, despite being repeatedly informed that public subsidies for the sector would produce minimal employment gains. The numbers side with Romer: According to Department of Energy data, $38.6 billion in federally guaranteed green energy loans have produced just 3,545 permanent jobs.”
 
“Yet their own daily experience with the arbitrary and irrational nature of the policymaking process does nothing to convince the assembled experts of their own fallibility. They accept such absurdities as the price of the process. Each of the episodes that Scheiber relates takes a similar shape: An economic problem arises or is identified. The Obama team decides to solve it. Players go back and forth over various mechanisms they believe might address the issues. Something is done, or nothing is done, but few of the problems ever really go away. The stimulus does not lift the economy out of a recession; financial regulation leaves the overall structure of the financial sector essentially the same; millions of homeowners still owe more than their homes are worth. Yet when the next problem appears on the horizon, the debates begin again.”
 
ROGER SCRUTON ON STEWARDSHIP:
 
One of the leading voices on conservatives and conservation. http://vlt.tc/bgs  “Mr. Scruton essentially bases his case for a conservative environmentalism on two sentiments: not only the love for home (the community you come from, the one you bequeath) but also the love of beauty (whether a gorgeous vista or simply a country road unspoiled by litter). So-called deep ecologists, by contrast, argue that humans, after satisfying their essential needs, have no rights beyond those of any other species, and certainly no warrant to destroy the habitats of other creatures. Arne Naess, the deep ecologists' founding philosopher, believes, as Mr. Scruton puts it, "that the earth will be restored to its true place in the scheme of things only . . . when the human population has dwindled and our trespasses have ceased.”
 
“Such broad, apocalyptic thinking, Mr. Scruton claims, cannot stir ordinary mortals to think constructively about conservation. It is hard to care about a tiny fish you'll never see on the other side of the planet, especially if the planet is doomed anyway. But you probably do care about whether garbage piles up on the side of the country lane you stroll along on Sunday. And local volunteerism is far more likely to solve the problem than federal (or even local) laws. For philosophical guidance, Mr. Scruton says that we should turn to Edmund Burke and his view of society as an association of the dead, the living and those yet to be born. "No large-scale project will succeed if it is not rooted in our small-scale practical reasoning," Mr. Scruton writes. "For it is we in the end who have to act, who have to accept and co-operate with the decisions made in our name, and who have to make whatever sacrifices will be required for the sake of future generations.”
 
FEATURE:
 
Twenty five years ago today. http://vlt.tc/bhc
      
BUILD ME UP, BUTTERCUP:
 
Sleeping cats. http://vlt.tc/bih
 
JOB LISTING:
 
Politico fellowships. http://vlt.tc/bie
 
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ITEMS OF INTEREST:
 
What the Afghanistan drawdown requires. http://vlt.tc/bhm
 
Latest violence in Syria. http://vlt.tc/bhu
 
Pakistani probe finds former ambassador to the U.S. sought help to avoid coup. http://vlt.tc/bgv
 
Petraeus at Langley. http://vlt.tc/bhd
 
Commerce Secretary John Bryson takes medical leave. http://vlt.tc/bgt
 
Angus King’s meandering moderation. http://vlt.tc/bgu
 
Eric Cantor rewards personal loyalty with ads. http://vlt.tc/bif
 
Ezra Klein criticizes Bobby Jindal’s red meat. http://vlt.tc/bh0 
 
Bob Kerrey, the Nebraska populist with no popular constituency for his ideas outside of media. http://vlt.tc/bgz 
 
Mickey Kaus disagrees with Ron Brownstein on polarization. http://vlt.tc/bhl
 
Myths of Wisconsin. http://vlt.tc/bht
 
Here’s a perfect example of how judicial nominations are now inherently politicized. http://vlt.tc/bh7
 
FEC: Campaigns can raise money via text messages. http://vlt.tc/bhk
 
Bloomberg’s nanny state doesn’t work. http://vlt.tc/bha  “Intractable obesity rates in...Bronx suggest [Bloomberg's] previous initiatives have not been enough to change unhealthy behaviors.”
 
Richard Epstein on the Supreme Court’s intellectual laziness. http://vlt.tc/bhe  
 
The hospital at home movement. http://vlt.tc/bgw 
 
Supporting an exchange in Oklahoma is bad for your political career. http://vlt.tc/bir
 
Obamacare’s cronyist foundation. http://vlt.tc/bil
 
GOP Governors for Big Wind. http://vlt.tc/bim  Thanks, Karl Rove! http://vlt.tc/bin
 
RFK Jr. says wife abused him. http://vlt.tc/bio
 
Essentially, only Orthodox Jews have any significant number of children: 74 percent of all Jewish children in New York City are Orthodox. http://vlt.tc/bgp
 
Can big data end traffic jams? http://vlt.tc/bhv
 
Great moments in government waste. http://vlt.tc/big 
 
The conflict within the new atheism. http://vlt.tc/bgr
 
You are an unpaid Facebook worker. http://vlt.tc/bhg
 
Charlize Theron’s evil queen period. http://vlt.tc/bip
 
World War Z in trouble. http://vlt.tc/biq
 
“No arrests have been made in the case.” http://vlt.tc/bij
 
Nickelback concert description. http://vlt.tc/bii
 
Ten bets you’ll never lose. http://vlt.tc/bik
 
Lilah the Inventor. http://vlt.tc/bid
 
PODCAST:
 
Spailout. http://vlt.tc/bgq
 
THE TRANSOM RECOMMENDS:
 
The Lion The Beast The Beat, Grace Potter and the Nocturnals, $10. http://vlt.tc/bdm 
   
QUOTE:
 
“I do not believe that the solution to our problem is simply to elect the right people. The important thing is to establish a political climate of opinion which will make it politically profitable for the wrong people to do the right thing. Unless it is politically profitable for the wrong people to do the right thing, the right people will not do the right thing either, or if they try, they will shortly be out of office.” – Milton Friedman
This collection of news and notes from around the web is edited by Benjamin Domenech, research fellow at The Heartland Institute, co-host of Coffee & Markets, and editor in chief of The City. The views expressed within are his alone, and do not necessarily reflect the views of his employers.
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