Today I took my second trip to the Cato Institute. After sitting through an hour of interns spewing out talking points on why the free market economy works, I thought that this visit much produce some sort of higher level of intellectual stimulation. The event today featured economist John R. Lott, who wrote a book entitled Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't. If the theories he decries are "half-baked," than his theories are moldy at best. His book is intended to be a response to Freakonomics by Steven Levitt. Freakonomics was a book based on vague, statistic free theories that supposedly should make us think about the "hidden side of everything." Freedomomics, instead of being a rebuttal, took the same anti-analytical approach, but produced much more disturbing outcomes. 

    The thesis of the book is that in the long-run, the free market will produce the best possible outcomes for our economy, and incentive is essential. In essence, he stated that the higher things cost, the less likely people are to buy them. We must, then, maintain the incentives of the market. This is typical of free market economists: a vague theory not supported by hard evidence, which can be proven false by a college aged pseudo economist like myself. 

    He gave several examples of how government involvement can inhibit the benefits of the incentive-based market system. He talked about the current debate about Prescription drugs. He chastised Democrats for trying to let the Government negotiate for lower drug prices. In his view, the enormous profits of the drug industry are necessary. He believes that if making drugs weren't so profitable, there would not be incentive to make them, and as a result, people would die. This may be one of the shallowest arguments of all time. First of all, the drug companies profits do not come from drugs that produce the highest social benefit. Viagra may be profitable, but it is not going to save anyone's life. Secondly, even if the free market were to produce optimal societal results, many of these results would not come in the short-run. For example, it may not be profitable now to treat childhood obesity, but it will eventually save society some money. Therefore, while the market is determining the optimal outcome, many children will get fat in the mean time. 

    He really lost me when he started spewing out incredibly vague, unsubstantiated and toothless theories about crime. His first assertion, is that concealed carry laws lower crime because they make criminals worried about people having hand guns. Of course he fails to mention that criminals do not have the perfect information to make these rational decisions, and are certainly not rational economic actors. He then pathetically tries to assert that criminals will be less likely to commit crimes if we have tougher prison sentences and larger fines, because they know committing crimes will be more "costly." I don't even want to respond to that. Basically, if people like him spent more time investing in the real reasons crime exist (failing schools, lack of upward mobility, lack of institutional support), then people like John Lott wouldn't have to devote time to this garbage.

    There are two incredible shortcomings in Lott's arguments, as were pointed out by EPI's Jared Bernstein. First, as mentioned above, all of these theories assume that there is perfect information, which there almost never is. Secondly, and perhaps more importantly, Lott does not understand the economics of externalities. The idea behind externalities is that firms will produce so it is most profitable for them. This level of production is rarely the optimal level of production for society. Bernstein listed a couple of examples. The first was education. It would be very profitable for all schools to be private, but then those on the lower end of the spectrum, due to the rampant inequality of opportunity in our country, would not be able to afford them. Therefore, the Government must step in and create strong public schools so that all children have the chance to share in the American dream. The second example is the Environment. Protecting the planet is not profitable for most corporations, which is why they still produce excesses of fossil fuels and gas guzzling cars. While the market may correct this problem in the long run, global warming will have already taken its toll.

    I am probably missing many other ridiculous things this guy said, but the thrust of my argument is that these smug economists use vague theories to show that a system which benefits them directly, is also somehow beneficial to society as a whole. This is, unfortunately, just not the case. He implies causations from loose correlations, and he does not take into account institutional structures that prevent a truly "free" economy from existing. Most absent from the book is data to show what is actually happening, which is that our so called "free" economy produces winners and losers, and that many Americans are not able to reap the rewards of their hard work.

    Karl Rove is resigning. What a day for the American people. The man most responsible for the deep divisions in our country which have caused political stalemate for the past 7 years is gone at the end of the month. It is my hope that he will be remembered for his morally bankrupt political strategies, and the damage he did to our political system.

    Rove's political strategy can be described as "divide and conquer." He would find weakness in an opponent's strength (such as Kerry's war service), and somehow gain political mileage out of it. He also is known for using issues that should have been non-partisan, like the  War on Terror, into winning issues for the Republican Party. After 9/11, his strategy was to advocate as extreme policies as possible. This would force the Democrats to oppose legislation such as the Patriot Act, and the creation of the Homeland Security Department, and Rove could then turn around and label the Democrats as "soft on defense." He also played on prejudice by advocating a constitutional amendment to ban gay marriage to turn out evangelical Christian voters.

    The goal of politicians should be to bring out the greatness of the American people. Rove did the exact opposite, by playing on our fear and prejudice for political gain. I hope he can do what former Republican consultant Lee Atwater did, admit his sins and seek forgiveness from the American public.

    See you in hell, turd blossom. 

      As you can guess, I'm no fan of Newt Gingrich. I think he is an ethically challenged, overly partisan hack whose basic policies center around the idea of "blame the victim." I found myself surprised, then, to be in complete agreement with him the other day on the current state of Presidential campaigns.  He called the modern campaign "insane" and further stated: "What's the job of the candidate in this world? The job of the candidate is to raise the money to hire the consultants to do the focus groups to figure out the 30-second answers to be memorized by the candidate. This is stunningly dangerous."

    The debates, besides the one at the AFL-CIO the other day (which I actually enjoyed) , are  not good for the American people. Each candidate gets to give an answer that consists of a soundbyte not related to policy, and is then quieted by an aggressive Anderson Cooper. In the post-game spin room, which Triumph the Insult Comic Dog called "poop valhalla," campaign spokesmen all claim that their candidate "won" while the mainstream media discusses who "looked most confident up there" and who was the "best dressed."

    Meanwhile, candidates start campaigning 2 years before the election, meaning many of them evade their duties in Congress and spend their time seeking large donations from people for whom they will grant favors if they win the White House.

    Newt is right. This is not healthy. His prescription is to eliminate campaign finance laws, so that candidates can get larger corporate donations and wouldn't have to worry as much about fundraising. I think we should do the exact opposite, for starters. Here are ways we can improve the integrity of Presidential campaigns:

-Public Financing: To end the problems of corporate influence, and the absurd notion of $1=one vote, we should outlaw campaign donations, and provide public financing. Now, so called "free speech" advocates will claim that this violates peoples first amendment rights, because, of course, money=speech (in case you didn't know, rich people have more "speech" than the rest of us). Assuming that candidates are most accountable to their donors, don't we want them to be accountable to the taxpayers and not the hedge fund managers?

-Debates of substance: The debates should be longer, and should have fewer candidates. No, we shouldn't exclude the Ron Paul's or the Mike Gravel's, but we should divide the candidates randomly so that debates can be with four candidates instead of eight. This way, candidates will have more time to debate policy, and won't be forced to reduce everything to a quick soundbite.

-Regional Primaries: There should be four regional groups which should alternate having the first primary every election cycle. This way, small homogenous states like Iowa and New Hampshire won't have disproportional influence in who our nominees are. 

-Whip the media into shape: We need to get the mainstream media to not constantly focus on the "horse race," the everyday ups and downs of political candidates. The media has a responsibility to focus on the policy differences of the candidates, and not inconsequential superficialities. Therefore, after the debate, Chris Matthews needs to be put in a dark, sound proof room, away from any cameras.

-Get rid of campaign spokesman: God, these people are so annoying. You can pretty much predict what they're gonna say: "While candidate X is working on behalf of the American people, candidate Y is playing partisan politics." Really? What a shocker! I don't understand the point of these people. They are doing a disservice to America by constantly spinning the twists and turns of the campaign to their candidates' favor. I say these people should end up in the room with Chris Matthews. They can talk about why their candidate won the debate, and luckily, no one will be able to hear them.

    Last Friday, some of us CAP interns took a break from our grueling work to attend a meet-and-greet with interns from the CATO institute and the Competitive Enterprise Institute. Both of these organizations are libertarian, although CEI is a bit more on the conservative side on issues such as Global Warming and Trade. My first impression was not good. For an organization like CATO, which advocates no government involvement in the market so that we can all accumulate as much wealth as possible, I was very disappointed that the best they could give us was Domino's Pizza. The interns, though, were very welcoming and willing to talk to us, which was greatly appreciated. After mingling for awhile, we went into a conference room to discuss the issues of the day. We started with Iraq, where there was pretty widespread agreement that the war was disastrous and that we need to pull out as quickly and safely as possible. I was heartened that these people on a different end of the political spectrum than my own shared my opinions on this disastrous war. 

     Soon, however, the agreement came to a screeching halt when discussing issues of economics, poverty and welfare. Many CAP interns (myself included) were arguing that there is an inequality of opportunity in our society, and therefore, a redistribution of wealth and resources is necessary for the common good. I also argued that it was workers who were generating the economic growth. Productivity has risen in the last 25 years, while real wages have fallen.

    Our ideas were met with scorn by these laissez-faire activists. All of them argued that the free market would actually be better for the poor, because rich people would accumulate more wealth, and therefore would create more jobs. They were perplexed that we could even be questioning these sacred ideas. I won't dignify their arguments by presenting them here, except to say that one kid seriously defended the use of sweat shop labor. Without it, he said, "workers would have NO options." They also used common red herrings about how welfare payments create a "culture of laziness" and that we are rewarding " failure."

    The main point here, is that Supply Side, You're On Your Own Economics is a fun theory that can be useful when you want to find an excuse to keep all of your money. But any analytical mind would look at what actually happens in America, and other more free market countries, and see that these policies are contributing to vast inequities that threaten our country's great goal of opportunity for all. Businesses, in a time of less regulation, actually reinvest their earnings in other businesses or their own stock. These patterns are clear from any data since Supply Side Economics took hold in the 1980's. Additionally, poverty has increased and real wages have decreased. We need to fundamentally change the structures and limitations of our country that give some people unlimited opportunity, while others, to no fault of their own, have to struggle simply to provide food for their families. This is fundamentally wrong, and no cute little theory about "trickle down" economics can change the underlying problem.  

     Even though it was fun and interesting to engage in a dialogue with these peoples, all of us CAP interns left pretty angry, wondering how people could possibly have such a narrow view of the world.

    Congressional conservatives (definetely among the most babyish, annoying bunch you could find) and the President are relying on American's ignorance to gain a political advantage. These shameful folks have realized that they cannot win on the substance of issues, so they have to result in red herrings that fool the American people by either lying to them outright, or deceptively misleading them. 

    Two examples in the last week prove just how low Conservatives will go. National Republican Congressional Committee Chairman Tom Cole (R-OK), talked about how he plans to highlight the Democrats' tax increases during the fall recess. The Washington Post Reported the other day:

"To Republicans eyeing the upcoming election season, the details of the tax increase was not at issue. A tax increase is a tax increase. "We can just say they're raising taxes because people have such a low opinion of the Democratic Congress that they are certainly willing to believe that they are raising their taxes," Cole said. "

Of course, just saying that the Congress is raising taxes apparently makes it so, despite the fact that under the current budget resolution, not one tax is raised. (The conservatives claim that since Bush's tax cuts are set to expire in three years, that the Democrats' budget represents the largest tax increase in American history). Other proposed increases in other bills include those on equity fund managers (invariably multi-millionaires), smokers and oil companies.

The second example occurred yesterday at the White House when President Bush derided the Speaker of the House for saying that the 22 billion difference between the President's budget and the Congressional budget is "insignificant." Bush said, "Only a lifetime Washington politician would believe $22 billion is insignificant." What a great applause line. Except for those of us who care about the truth, the difference represents .7% of the $3 trillion budget. The administration and congressional conservatives are hoping that Americans are ignorant enough that they will take these baseless assertions and adopt them as the truth. 

     This, of course, is not surprising for a party that:

    -Called a bill making it easier for unions to organize, " taking away a worker's right to secret ballot.

    -Called a minimum wage increase , " a rebuke of small business"

    -Called a bill to limit the tours of duty for our soldiers "undermining the work of our generals in the field"

     Frank Luntz must be so proud.

 Yesterday, it was reported that 73 Americans died in combat operations in Iraq during July. The right-wing hailed this news, because it was the lowest death count in 8 months. At what point, as Americans, did any of us become satisfied at a death count in the 70's?

    The truth is, the right wing looks for any excuse to tout "progress" in the surge, so that they can justify continued support. Just the other day, two closet neo-cons from the Brookings Institution wrote an op-ed in the NY Times about how they visited Iraq and determined that the "surge" is working. Their evidence seemed to be the high morale of the troops, the decrease in casualties, and the situation on the ground in Anbar province. Again, the right wing was eager to report how these "war critics" were reporting progress. 

First of all, these people are not the "war critics" they claim to be. Both of them were proponents both of the war itself and the surge.  Second of all, these so called analysts don't understand the fundamental truth in Iraq: There will never be a point where we will have "won." I don't care that we have this messiah General Petraeus (who actually is a political appointee with a pretty clear agenda). The hatred among rival factions in Iraq, and against perceived US aggression runs so deep that whatever the US does, short of obliterating the entire region, will not cause the "victory" that right wingers constantly talk about. 

Today, we find out that not only is the Iraqi parliament taking the month off, but the Sunni minority is leaving the government in protest of Prime Minister Maliki. If that were not enough, this morning gave us a stark reminder of how perilous Iraq actually is. 67 People, and 3 American GIS were killed by a truck bomb in Baghdad, the very place where the surge is supposed to be succeeding. 

It boggles my mind that people who have been so wrong at every point in this disastrous conflict are still seen as credible. The war is a disaster. The surge has not only failed to quell the violence, but has produced no political progress. Hopefully, we'll get to a point where we don't have to hear rightists celebrating a death count of 73, and the masters of war will once again realize that even Jesus could never forgive what they do.