Mitt Romney's Tax Deduction for Rafalca

The controversy over Mitt Romney's tax returns seems to have died down. Romney resolutely refused to reveal more than two years' returns and -- as he probably expected -- the media, unable to rattle the Romneys, eventually got bored, lost interest, and moved on to other matters. One of the odder aspects of the controversy was the matter of the tax deduction that Romney took for the $77,731 costs of the care and upkeep of Rafalca, the mare that competed in dressage at the London Olympics and is owned by Ann Romney and a few of her associates.

After the initial breathless reports, it turned out that the actual tax savings for Romney in 2010 was a mere $49 -- see the last line in the screen shot of Romney's tax returns in this video. However, as Janet Novack, who writes in Forbes magazine on tax issues, has reported, the $49 tax reduction that the Romneys have received in 2010 was just the beginning:

The Romneys will likely get to claim all the horse losses later, even if they never make a dime from Rob Rom—in other words, the taxpayers will end up subsidizing Mrs. Romney’s love of dressage, only on a deferred basis.

The Romneys had relatively low income in 2010 from "passive activity" (don't ask!), which explains the small deduction they received in 2010. But, if and when they earn income from "passive activity" in the future, the rest of the $77,731 deduction will come through. Here's Janet Novack again:

But you don’t forfeit the passive losses you can’t use. Instead they’re “suspended” and can be carried forward and used in future years to the extent you have income from other passive activities. Moreover, when you sell all of a money losing passive investment, any unused losses from it are liberated and can be claimed against non-passive taxable income. If Mitt wins and Ann sells her share of Rob Rom, their suspended horse losses could, for example, be deducted against Mitt’s $400,000 Presidential salary.

Aside from the media controversy over the exact amount of the tax deduction received for the Romney horse, the media coverage has focused on what all this says about the Romneys' wealth and taste for the high life. But, as far as I know, nobody has remarked on whether it was proper or ethical for the Romneys to claim this deduction.

It is clear that the Rafalca deduction was legal. But was it ethical? How can one even figure out if the deduction was or wasn't ethical?

I believe that it was not ethical for the Romneys to take this tax deduction. Look, we all know that tax codes -- long and detailed though they are -- are never written in such detail as to fully and accurately reflect the views of the legislators who are ultimately responsible for the tax code. Given that there is many a slip between cup and lip in the writing of the tax code, it is incumbent upon every taxpayer to ask himself or herself honestly, "I know that it is legal for me to take tax deduction X. But do I honestly believe that the legislators -- who probably gave some pretty rough directions to the tax law specialists who actually drafted the tax code -- really wanted someone in my position to get this tax break?" And if the honest answer is "No," then it is morally necessary that we not claim the tax deduction, even though claiming it would be legal.

To me at least, it is quite clear that US lawmakers did not intend the tax code to be used by a family with net worth upwards of $200 million to claim a tax deduction for a dressage horse's care and upkeep. I am pretty confident that even the Romneys would actually agree with me on this issue. Who wouldn't?

It is a pity that Mitt Romney seems to see the tax code as something to be gamed. Life is not merely about staying within the law; we make ethical choices at every step.

The Medicaid Contrast

I have blogged before about the puzzling lack of attention to Romney-Ryan's swingeing Medicaid cuts in the current US presidential campaign, especially in contrast to the saturation coverage of Medicare. But lately things are looking up. There is now real hope that the Obama campaign, the media, and the electorate will begin to raise tough questions on Medicaid that Mitt Romney, Paul Ryan, and like-minded Republicans will have to answer.

Bill Clinton, in his terrific speech this Wednesday at the Democratic National Convention, ripped into the Romney-Ryan Medicaid cuts and -- realizing that the needs of the poor, who do not vote, tend to take a backseat to the needs of the elderly, who do -- made a masterly attempt to get elderly voters to wake up and notice how they too -- and not just the poor -- would be squeezed by the proposed cuts.

They also want to block grant Medicaid and cut it by a third over the coming decade. Of course, that will hurt poor kids, but that's not all. Almost two-thirds of Medicaid is spent on nursing home care for seniors and on people with disabilities, including kids from middle class families, with special needs like, Downs syndrome or Autism. I don't know how those families are going to deal with it. We can't let it happen.

The press, led by Abby Goodnough and Nina Bernstein of The New York Times, has begun paying more attention.

At The Washington Post, Sarah Kliff has documented Bill Clinton's point that a big chunk of Medicaid spending goes to providing long-term care for the elderly. Ezra Klein of The Washington Post has pointed out -- with a very nice chart -- that the big difference on healthcare policy between Obama and Romney is actually on Medicaid, not Medicare:

First thing you should notice: The difference on Medicare isn’t that large. It’s 0.75 percent of GDP. And note that the spending path Ryan wants to hold Medicare to — GDP+0.5% — is the exact same spending path that Obama wants to hold Medicare to.

The difference for Medicaid and other health programs — including the Affordable Care Act — is much larger. In fact, at 2.25 percent of GDP, it’s three times as large as the cut to Medicare. So that’s the first thing you need to know: Ryan’s main cut isn’t to health care for old people. It’s to health care for poor people.

Now it's up to Obama to stop pussyfooting around. He needs to pick up the Medicaid issue and go on the attack.

Update, September 8, 2012: Sarah Kliff further documents and emphasizes that Medicaid is not 'only' for the poor; it is a sizable middle-class entitlement as well.

Lies, Damned Lies, and the Romney-Ryan Speeches

I tuned into the Republican convention last Wednesday evening hoping to catch Paul Ryan's acceptance speech. Newt and Callista Gingrich were at the podium. After taking a few stupid swipes at Obama -- I don't even remember the particulars, given that I was pretty well stunned by what came next -- they brought up welfare reform. Callista praised the bipartisan welfare reform that was enacted by Bill Clinton and Newt Gingrich in 1996. Newt followed her by slamming President Obama for "gutting" -- a violent imagery that has been widely adopted by Republicans in the current campaign -- the work requirements that were a central part of the 1996 welfare reform.

I was unprepared for this. So unprepared, in fact, that I was overcome by a sense of shock. My automatic brain kicked in, and before I knew it I had turned the TV off.

The gutting-of-the-work-requirement canard had so widely and for so long been fact checked and declared to be false that I could not imagine that a former Speaker of the US House of Representative would repeat it before a prime time nationwide TV audience. I guess I must have sub-consciously said to myself, "Man, this guy must think the country is really stupid." And that outrage must have made me reach for my remote -- reflexively, like someone snaping their fingers away from an unexpectedly hot stove top.

As I write this, I can recall in my mind's eye the faces of Callista and Newt, looking straight at the camera ... and lying. (And "lying" implies knowingly telling something untrue, I should add. These are political people; they read the papers; they weighed every word they were going to say on that podium.) I still can feel a chill, of the kind one feels when one looks directly at someone and knows that the other person is lying to them.

And yet, in a way, this ugly episode also shows how quick people are to forgive these politicians. I remembered later that I had known full well what a scumbag New Gingrich was. I had blogged about his scuzzy character before. And still, by the time I saw him last Wednesday on TV, I had forgotten all about it!

Meanwhile, Callista and Newt are not alone. Just as a fish rots from the head down, it is Romney and Ryan who are setting the pace in the lying department. Here are two dissections of their acceptance speeches in Tampa. Romney's performance was something to behold. He spoke as if he was constantly fighting back tears, pained to his core by what Obama was doing to America. But I have been following the current election campaign somewhat closely and I could see Romney piling on the lies one after the other. And he even got the more-in-sorrow-than-in-anger tone just right. After a lifetime of making sales pitch after sales pitch, the master prestidigitator was making the sales pitch of his life. The point was to get the votes of the undecided and women voters, many of whom still think well of Obama. To accomplish this, it was crucial to apply the light touch. The tone was all important. The substance was not important at all.

Callista and Newt send a chill up my spine even now when I conjure up their faces in my mind's eye. But Romney and Ryan are better at faking sincerity. They can tell their lies with with a terrific sense of passion. They are smart and well informed chaps. They know that they are lying when they are lying. But they are able to grit their teeth and just get on with it. They have an incredibly deep sense of contempt for the intelligence and informed-ness of the good folks in flyover country, who do not read The New York Times. And they know that -- thanks to their overwhelming advantage in Super PAC funding -- they are about to start an avalanche of lies on TV screens all across the battleground states that will render the press naysayers comprehensively defenestrated. As I have written before, the tsk-tsk-ing from the media fact checkers will simply not matter in this plutocratic age when money will buy you a permit to lie. Michael Cooper in today's The New York Times seems to have sensed this:

The growing number of misrepresentations appear to reflect a calculation in both parties that shame is overrated, and that no independent arbiters command the stature or the platform to hold the campaigns to account in the increasingly polarized and balkanized media firmament. Any unmasking of the lies or distortions, the thinking goes, rarely seeps into the public consciousness.

(The reference to "both parties" comes from this: "The Obama campaign, for its part, ran a deceptive ad saying that Mitt Romney had “backed a bill that outlaws all abortion, even in case of rape and incest,” although he currently supports exceptions in cases of rape, incest or when the life of the mother is at risk." Ideally, the Obama ad should have clarified that Romney has flip-flopped to a new current position. But it is true that Romney has in the past opposed "all abortion, period" and has said, to Mike Huckabee, that he supports a constitutional ammendment, no less, stating that life begins at conception. See this video for the controversial ad and commentary from The Rachel Maddow Show on MSNBC.)

Finally, on the subject of lies, I saw Dinesh D'Souza's documentary, "2016: Obama's America" this afternoon -- in my local multiplex! More about this atrocity at a later date.

Romney's Dog Whistle

Thomas Edsall has a terrific piece today in The New York Times's Campaign Stops blog. Edsall's blog post took me by surprise. He argues that Romney and Ryan are employing a strategy that carefully combines their ads on the seemingly unrelated issues of welfare and Medicare to deliver a racially divisive message intended to rile up white voters to vote against Obama.

I have blogged about Romney-Ryan's lies on welfare and Medicare. The lie that Obama is gutting the work requirement in welfare is quite clearly intended to be racially polarizing. After all, in a tough economy with eight percent unemployment, people who are fortunate enough to have jobs won't generally blame those receiving government assistance as being lazy moochers. So, Romney's attack is probably not aimed at Obama's re-distribution from the rich, in general, to the poor, in general. The only 'benefit' that I can see from Romney-Ryan's welfare attacks on Obama is to get poorer whites to cast aside their doubts about the guy from Bain Capital -- with accounts in Switzerland, the Bahmas, and the Cayman Islands -- and fight 'Obama's racial agenda.'

Now Edsall is arguing that Romney-Ryan's Medicare attacks serve the same racially polarizing purpose. As Edsall writes:

Medicare recipients are overwhelmingly white, at 77 percent; 10 percent of recipients are black; and 8 percent Hispanic, with the rest described as coming from other races and ethnicities.

So, even though not a single Medicare benefit has been cut by Obamacare; even though new benefits, such as a significant filling of the doughnut hole in Medicare Part D, have been added; and even though the Medicare trustees have said that Obamacare extends the financial viability of Medicare, Romney and Ryan have unleashed a barrage of lies to scare Medicare beneficiaries about Obamacare. Romney and Ryan have seen the large proportion of whites among those currently in Medicare and cynically detected an opportunity. As Edsall explains, unable to make a substantive anti-Obama case to senior citizens, Romney and Ryan are trying, using carefully suggestive ads, to gently coax Medicare recipients, who are mostly white, into seeing Obamacare as a race war being waged against them.

Romney, apparently, has lost confidence in his initial assessment that, the Obama economy being as bad as it is, hammering on unemployment would be enough to get him to the White House. So he is now moving on the welfare and Medicare fronts. He does not have to win on those issues; he only needs to make some headway at the margins, in battle ground states such as Florida.

Romney understands that the Republican party has gained a big advantage among poorer whites, in spite of the pro-poor redistributive policies of the Democrats, by exploting racially charged rhetoric in election campaigns. (Why poor whites would favor Republicans even though that party has consistently fought Democrats' measures to help the poor has been a puzzle for political scientists since at least the publication of Thomas Frank's "What's the Matter with Kansas? The only explanation that makes any sense to me is that poor whites have been persuaded to vote against their self interest by means of racially divisive attacks that claim that Democrats' policies take from whites to give to blacks.)

Meanwhile, as I have argued before, media fact checking by Politifact and various other organizations has not slowed down the Romney onslaught one bit. Romney and his superPACS will keep flooding the TV screens in battleground states with their lies and the media's fact checking will look increasingly like a cruel joke. This kind of fact checking effectively restrains the poorly-funded liar, without putting any real restraints on the well-funded liar.

Update, August 28, 2012: David Firestone draws attention to an interview with Mitt Romney in which he defends his attacks on Obama's welfare policies and says that Obama granted the welfare waivers to “shore up his base.” This is a classic liar's strategy: tell racially cynical lies over and over to gin up hatred among a section of the electorate, brazen it out when challenged, and, finally, assign your own ugly motives to your opponent.

Plutocracy and Lying in Election Campaigns

Lately, I have blogged quite a bit about plutocracy in today's America. But looking at Mitt Romney's saturation lying about (a) President Obama sending welfare checks to people without requiring them to work, and (b) President Obama slashing Medicare benefits, I now think I may have underestimated the pernicious effects of plutocracy, especially when the plutocrats overwhelmingly favor one side over the other in an electoral battle.

A negative feature of plutocracy is that, in a battle for the votes of the unengaged sections of the electorate, the side that has a cash advantage can easily grab a larger share of the finite space for campaign commercials on prime-time TV. Therefore, plutocracy makes it impossible for the contest to be decided solely on the fundamental merits of the contending candidates, their records, and their policy proposals -- on a level playing field, so to speak.

This case against plutocracy is, I take it, pretty obvious and uncontroversial.

But today I would like to take the argument further. I would like to argue that plutocracy damages democracy by encouraging falsehood.

Consider a fight between two candidates, one favored and the other loathed by the rich. For no particular reason, let's call them Mitt and Barack, respectively. Imagine that each candidate is at a fork in the road, contemplating whether or not to be truthful in their TV ads. There are pluses and minuses, pros and cons to lying.

The question is: How do Mitt and Barack's incentives -- to tell lies in their TV ads -- change if Mitt, the plutocrats' darling, raises more money than Barack, thereby increasing his cash advantage?

If you tell lies in your campaign commercials, you may face a backlash from your opponent, who may run ads of his own exposing your false claims, and from the media, who may give your ad a "four Pinocchios" or "pants on fire" rating.

However, the intensity and column inches of criticism devoted by the media to a campaign ad depends on the falseness of its content and not on how much money was raised by the person who "approved the message." Therefore, although both Mitt and Barack would face equal press hostility for a given level of mendacity in their campaign ads, Mitt would be in a much better position because he would be able to overwhelm and drown out the media criticism by blanketing the airwaves with his ads.

Therefore, if Mitt extends his financial lead over Barack, Mitt's incentive to lie will increase. The cost of lying decreases when a candidate gains a bigger share of the finite TV space. It's easier to get away with lies when one can blanket the airwaves.

The incentives are reversed for Barack. If Mitt rakes in more cash and extends his money lead over Barack, any false claims by Barack would face a more fearsome backlash from Mitt, not just because Mitt now has a louder megaphone, but because, reliant more than ever on falsehood, he would want to establish moral equivalency: "Don't blame me for lying," Mitt would want to say. "The other guy is doing it too."

Moreover, Barack would have fewer resources to drown out any criticism coming from the media of any lies in his ads. This is another reason why Barack will stick more closely to the truth as Mitt extends his financial lead over Barack.

Indeed, the media's fact-checking of campaign ads may play a surprising and unintended role. It may weaken the financially weaker candidate's ability to lie (because he can't drown out media criticism) without affecting the financially stronger candidate (who can). In a battle of lies, it may be better if both sides are able to lie equally easily. In a plutocracy, it might be better if the media stop fact checking campaign adds and just let everybody rip.

To summarize, when campaign war chests become more unequal, you can expect the plutocrats' favorite to rely more on lies and you can expect the plutocrats' pariah to increasingly stick to the truth. However, the latter's greater reliance on truth will matter less and less to the overall story as he suffers a relative disappearance from the finite TV ad space. So, overall, as plutocracy intensifies, the truth will lose its ability to influence elections.

Healthcare Policy Debate in the U.S. Election Campaign

Paul Ryan's mendacity on his policy priorities continues. When asked why he retained Obama's cuts to Medicare in his proposed budget, he said, as Peter Landers and Colleen McCain Nelson report today in The Wall Street Journal's Washington Wire blog, "It was already in the baseline. We would never have done it in the first place." meaning that the Medicare cuts in Obamacare were taken by Ryan as a fait accompli, something that could not be changed. And yet, "Mr. Ryan assumed in his budget that the Obama law’s subsidies for lower-income people to buy health coverage would be repealed." In other words, Obamacare is immutable when it helps Ryan evade responsibility for his budget, but can be picked and chosen from otherwise!

By the way, the $716 billion cuts to Medicare in Obamacare that Romney and Ryan are cynically exploiting to snooker voters in Florida and elsewhere were obtained by squeezing the providers of medical care -- doctors and hospitals -- and not by reducing benefits. A lot of that spending squeeze was focused on Medicare Advantage, a misconceived George Bush program that allowed retirees to leave Medicare for private health insurance plans at the government's expense. The hope was that the entry of private insurance would reduce the cost of healthcare for the elderly. Unfortunately, study after study found that Medicare Advantage spent a lot more than regular Medicare without delivering better health outcomes. This was why it made sense to cut the flow of Medicare money to the private insurers in Medicare Advantage.

And these are the cuts that Paul Ryan once included in his budget but is now running away from.

While the Romney-Ryan attacks on the $716 billion "cuts" in Obamacare have received saturation coverage -- with little or no reminder that Medicare benefits have been kept intact -- there has been almost no coverage of the massive cuts to Medicaid, the healthcare program for the poor that is run jointly by the federal and state governments, in Paul Ryan's famous budget. Why is this so? Why does Medicare get all the attention and Medicaid none? Today, David Wessel highlights Ryan's Medicaid cuts in his blog post but, alas, not in his column -- on the same general topic -- in The Wall Street Journal. The poor have a pitifully faint voice in corporate media today, and absolutely none in Murdochistan.

Finally, Wessel's column in the WSJ has a chart on government spending, as a share of GDP that can be seen without a subscription. Note the massive increase in government spending during the George Bush years and the smart decline under the Democrats, Clinton and Obama.

Try finding any praise for Obama from "fiscal hawks" on this count. You won't see it. Anywhere.

But once in a while, when the gate keepers are not looking, the truth has a way of sneaking in, as in Wessel's chart.

Update, August 20, 2012. Paul Krugman makes the point in my opening paragraph in his New York Times column today: "Mr. Ryan includes the $716 billion in Medicare savings that are part of Obamacare, even though he wants to scrap everything else in that act."

Update, August 18, 2012. Tomorrow's New York Times carries a long-ish editorial making a sober and strong case against Romney-Ryan's desperate lies on Medicare.

Italy's Universities: An Escapee's Account

I have just read the Preface of A Capitalism for the People: Recapturing the Lost Genius of American Prosperity by Luigi Zingales. Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance and the David G. Booth Faculty Fellow at the University of Chicago Booth School of Business, writes that, disgusted by the nepotism and cronyism in the academic sector in his native Italy, he moved to the United States, only to find alarming signs of the same diseases spreading within American capitalism.

While I look forward to reading Zingales' proposals for encouraging meritocratic competition in American capitalism, I thought I would reproduce here his striking description of the stifling of talent in the culture of Italy's academia:

I am an immigrant to the United States. I came here in 1988 from Italy because I was trying to escape a system that was fundamentally unfair. Italy invented the term nepotism and perfected the concept of cronyism, and it still lives by both. You are promoted based on whom you know, not what you know. Americans were recently exposed to the corruption of the Italian system by Silvio Berlusconi, the tycoon-turned-politician who ran the country for nearly two decades. While Berlusconi represented an extreme, even by Italian standards, he was not an accident but the product of a degenerate system. I emigrated to the United States because I realized that it offered me an inestimably brighter future than my native country. And when I got to America in 1988, I wasn't disappointed; I experienced for the first time the inebriating feeling that any goal was within my reach. I had finally arrived in a country where the limits to my dreams were set only by my abilities, not by the people I knew.

Wherever you stand on the political spectrum, whether you're a conservative Republican or a liberal Democrat or somewhere in between, I would gently suggest that you have no idea what it's like to live in a country where there is virtually no meritocracy and competition is considered a sin. Even emergency-room doctors in Italy are promoted on the basis of political affiliation instead of ability. Young people, rather than being told to study, are urged to "carry the bag" (fare il portaborse) for powerful people, in the hope of getting back some favors. Mothers push their daughters into the arms of the rich and powerful, seeing it as the only avenue of social promotion. The talent selection process is so broken that you easily find very smart people employed in very menial jobs and very mediocre people in powerful positions. Until 1990, companies in Italy could openly and legally collude to defraud their customers; they still collude today, but they are less open about it. The best way to get rich is to be politically connected and receive a government contract.

The only protesters against this system came from the radical Left, which was less interested in changing the system than in replacing it with a socialist one. In a country full of privileges based on birth, the Left, instead of fighting for equality of starting points, fought to eliminate all selection mechanisms, viewing them as discriminatory against the have-nots. One consequence of this was that universities were not selective in admissions. Regardless of your grades, you could get into any college you wanted, forcing all colleges toward lower standards. The unintended consequence of this egalitarianism was that it produced an undifferentiated mass of mostly ignorant graduates. Companies seeking workers resorted to hiring on the basis of the only system that works in the absence of credible sorting: personal connections.

While in college in Italy, I developed an interest in economics and hoped to study it at the graduate level and to become an academic. For the average college graduate in the United States, such a goal might require practicing for the GREs and analyzing various rankings to figure out what the best graduate programs were. Not in Italy. Many people, including my father, told me that if I wanted to have a university career, I had to pay my dues to some local professor—to carry his bag—which meant essentially working for free not only on his academic projects but also on his consulting ones. I decided instead to apply to universities in the United States. But even that plan did not seem promising, because I was unable to secure a letter of recommendation from the most famous professor at my college. When I had asked him to supervise my undergraduate thesis, he had declined, saying that he lacked the time—despite my excellent grades, and despite the fact that he had found the time to supervise a classmate of mine, who had the support of an influential person. When I later approached this professor for a recommendation, his secretary told me that he wrote letters only for the people he had advised. Thus, I was out of luck. I studied extra hard for the admissions tests, however, and I made it into MIT. In spite of my less than positive experience, I considered returning to Italy upon receiving my PhD from MIT. At the very time the University of Chicago was hiring me, an Italian professor asked me to withdraw my application from national competition for Associate Professor in Italy. I knew it was a long shot, but if I made it in Chicago as an assistant could I at least try to compete for a position as an associate in Italy? The worst that could happen to me was that my application would be discarded, right? No. I was told that they would write a terrible report on me that would stay on my record forever. The real reason—I suspect—was that in spite of my young age I had a better record than the local candidate who had paid his dues (after all, my father was right). They did not want me in the race, so they resorted to not-so-veiled threats.

I realized Italy was not for me. After six years, I received tenure at the University of Chicago. In Italy, the process would have taken more than twice as long. I was able to build a career without needing to trade on family connections—or, worse, flattering people just because they had seniority. I owe more than my success to this country: I owe my life. I would not have survived the humiliations and frustrations of the Italian system.

I had no idea that this was what Italy was like.

For what shall it profit a man ...

Thomas Edsall picks up the story of Sheldon Adelson, a major donor to the election campaigns of Mitt Romney and other Republicans. In addition to the issues that I have blogged about before, Edsall points out that Mormonism, the religion Mitt Romney follows, has a stated position against gambling, which is the source of Adelson's lucre.

And this is as good a place as any to recall that Sheldon Adelson had financially supported Newt Gingrich against Mitt Romney in the Republican primaries. In particular, Adelson paid for "When Mitt Romney Came to Town," an anti-Romney film.

Update, August 17, 2012: An editorial in The New York Times laments Paul Ryan's genuflection at the court of Sheldon Adelson, and provides a good summary of the various investigations into Adelson's gambling empire. Forget Democrats and their supporters, I am surprised that Republicans have so far been so quiet and unquestioning about their candidate's wooing of a guy like Adelson.

Doesn't Anandabazar Patrika do any fact checking any more?

Although India has a reasonably free press, I remain disenchanted with the quality of journalism in India. Most reports are superficial descriptions of newsy events, supplemented by transcriptions of pronouncements by this or that minister or bureaucrat. There's minimal or non-existent in-depth field or street reporting that illuminates for Indian readers the deeper layers of the reality of life in India. Every report reads like something dashed off in response to an editor's demands by someone in a rush to catch the early bus home. It is rare to read something that bears the stamp of a journalist who desperately wants to tell the story and passionately believes in and takes pride in his or her work.

This post, however, is about something more basic: simple fact checking.

On August 1, 2012, my hometown Bengali newspaper, Anandabazar Patrika, published an editorial-page essay by Sunil Gangopadhyay, a legendary poet and writer of novels, short stories, and travelogue, whom I much admire. The essay begins with a recent incident in Guwahati, in eastern India, in which a teenage girl was sexually assaulted in a busy street by several men. A videographer had recorded the entire assault and had posted the video on YouTube. Not unexpectedly people began raising questions about the videographer's responsibility: should he not have thrown his camera at the attackers and tried to rescue the girl? After this preface, Sunilbabu's essay goes on to further explore the issue of conscience at one's work. At one point he brings up the story of a famous photograph by the photojournalist Kevin Carter:

আমেরিকার বিখ্যাত ফোটোগ্রাফার কেভিন কার্টার গিয়েছিলেন সুদান। এই দুর্ভাগা দেশটায় যে কত কাল ধরে দুর্ভিক্ষের মতন অবস্থা আর আত্ম-হানাহানি চলছে তার ঠিক নেই, প্রতি বছরই এর জন্য বহু মানুষ মরে।

মাঠের মধ্যে পড়ে আছে একটি কঙ্কালসার শিশু। অনাহারে, অবহেলায় সে প্রায় মুমূর্ষু। আকাশে উড়ছে অনেক শকুন। শকুনরা সাধারণত মৃত প্রাণীদের মাংস খায়, এই শকুনগুলো কি ছেলেটির মৃত্যু পর্যন্ত অপেক্ষা করবে ধৈর্য ধরে, না কি নেমে আসবে আগেই? অদূরে একটা ঝোপের মধ্যে ক্যামেরা বাগিয়ে অপেক্ষা করছেন কেভিন কার্টার। অনেক সময় কোনও বিরল দৃশ্য ক্যামেরাবন্দি করার জন্য ফোটোগ্রাফারদের অপেক্ষা করতে হয় ঘণ্টার পর ঘণ্টা, এমনকী দিনের পর দিন।

বেশ কয়েক ঘণ্টা পরে আকাশ থেকে নেমে এল কয়েকটা শকুন, গুটি গুটি পায়ে তারা এগোল শিশুটির দিকে। সে তখনও বেঁচে আছে।

শকুনরা এক জীবন্ত শিশুর মাংস খুবলে খুবলে খাচ্ছে, এ রকম ছবি আগে কে দেখেছে? এই অসাধারণ কৃতিত্বের জন্য কেভিন পান পুলিৎজার পুরস্কার। তবু বহু মানুষের প্রশ্নের বাণ বিদ্ধ করেছে তাঁকে। তিনি কি শুধুই এক জন ফোটোগ্রাফার? এক জন বিবেকসম্পন্ন মানুষ নন? ছবি তোলার বদলে ছেলেটিকে তুলে, কিছুটা স্নেহ, কিছুটা সেবা, কিছু খাদ্য ও ওষুধের ব্যবস্থা করলে সে হয়তো বেঁচে যেত। মানবিকতা সেটাই দাবি করে। সম্ভবত সেই সব প্রশ্নে ক্ষতবিক্ষত হয়েই কেভিন আত্মহত্যা করেন এক বছর পর।

Here's my rough translation from Bengali:

Kevin Carter, a famous American photographer, had gone to Sudan. This luckless country had suffered from famine-like conditions and civil war for a long time, with many people dying every year.

A skeletal child lay in a field. He was close to death from hunger and neglect. Vultures were circling the sky. Although vultures typically feast on the dead, would these vultures wait for the boy to die, or would they move in for the kill before he died? In a nearby bush Kevin Carter waited with his camera at the ready. In many cases, photographers have to wait for hours, even days, to capture a rare event.

After several hours a few vultures descended from the sky and quietly advanced towards the child. He was still breathing.

Vultures feeding on a living child, who has seen such a photograph before? For this extraordinary achievement Kevin Carter received the Pulitzer prize. And yet he was troubled by the many accusatory questions that people asked. Is he merely a photographer? Is he not a human being with a conscience? Instead of taking pictures, if he had rescued the child, treated him with affection, provided some food and medicines, the boy may have lived. Humanity demands that. Possibly wracked by such nagging questions Kevin took his own life a year later.

Immediately upon reading this tragic passage, I opened up a new tab in my browser and Googled "Kevin Carter." It took me barely a few minutes to find a whole bunch of factual problems with the essay's discussion of Kevin Carter and that famous photograph.

He was South African, not American. The photograph was not of several vultures feeding on a still-breathing boy -- see his obituary in The New York Times. It was of a solitary vulture apparently stalking a hunched-over skeletal girl.

It is not even clear whether the girl died that day. Here's a quote from Carter's obituary in The New York Times:

The reaction to the picture was so strong that The Times published an unusual editors' note on the fate of the girl. Mr. Carter said she resumed her trek to the feeding center. He chased away the vulture. ...

Afterward, he told an interviewer in April, he sat under a tree for a long time, "smoking cigarettes and crying."

There is no indication that Carter took his own life out of remorse for his behavior on that fateful day in the Sudan. He had spent his whole life photographing in crisis after crisis, war zone after war zone. According to the web site of a documentary on him, "He was the first to photograph public execution by way of "necklacing": setting fire to a gasoline-filled tire around a person's neck." And, returning to the New York Times obituary, here's another shocker: "A few days after his Pulitzer was announced in April [1994], Mr. Carter was nearby when one of his closest friends and professional companions, Ken Oosterbroek, was shot dead photographing a gun battle in Tokoza township."

Any of these events -- or the cumulative burden of these and other events -- could have pushed Kevin Carter over the edge. The Wikipedia entry on Kevin Carter has this quote from Carter's suicide note:

"I am depressed ... without phone ... money for rent ... money for child support ... money for debts ... money!!! ... I am haunted by the vivid memories of killings and corpses and anger and pain ... of starving or wounded children, of trigger-happy madmen, often police, of killer executioners ... I have gone to join Ken [recently deceased colleague Ken Oosterbroek] if I am that lucky."

That same Wikipedia entry also provides an alternative account -- by Joao Silva, a Potuguese photojournalist -- on the circumstances surrounding the famous photograph.

According to Silva, Carter and Silva travelled to Sudan with the United Nations aboard Operation Lifeline Sudan and landed in Southern Sudan on March 11, 1993. The UN told them that they would take off again in 30 minutes (the time necessary to distribute food), so they ran around looking to take shots. The UN started to distribute corn and the women of the village came out of their wooden huts to meet the plane. Silva went looking for guerrilla fighters, while Carter strayed no more than a few dozen feet from the plane.

Again according to Silva, Carter was quite shocked as it was the first time that he had seen a famine situation and so he took many shots of the children suffering from famine. Silva also started to take photos of children on the ground as if crying, which were not published. The parents of the children were busy taking food from the plane, so they had left their children only briefly while they collected the food. This was the situation for the girl in the photo taken by Carter. A vulture landed behind the girl. To get the two in focus, Carter approached the scene very slowly so as not to scare the vulture away and took a photo from approximately 10 metres. He took a few more photos before chasing the bird away.

Two Spanish photographers who were in the same area at that time, José María Luis Arenzana and Luis Davilla, without knowing the photograph of Kevin Carter, took a picture in a similar situation. As recounted on several occasions, it was a feeding center, and the vultures came from a manure pit waste:

"We took him and Pepe Arenzana to Ayod, where most of the time were in a feeding center where locals go. At one end of the enclosure, was a dump where waste and was pulling people to defecate. As these children are so weak and malnourished they are going head giving the impression that they are dead. As part of the fauna there are vultures go for these remains. So if you grab a telephoto crush the child's perspective in the foreground and background and it seems that the vultures will eat it, but that's an absolute hoax, perhaps the animal is 20 meters."

In short, according to this alternative account, the girl in the picture was hungry and skeletal, but in no danger from the vulture. The parents of the children at the feeding camp had briefly put their toddlers down to get food from the United Nations plane. The vulture was 20 meters away and was drawn by waste, not the children. And in any case, Carter chased the bird away.

It is abundantly clear that Sunil Gangopadhyay never even saw the photograph he was writing about and never bothered to do the slightest bit of research about Kevin Carter. He probably heard an embroidered account from someone and felt confident enough to use it, unverified, in his column. His irresponsibility and laziness may have been compounded by his fame. The editor at Anandabazar Patrika in charge of Sunilbabu's column probably could not even think of wielding the red pencil on anything penned by the great man. If the same account had come in from an unknown, some fact checking may well have happened. But in a demoralized culture nobody talks back to the Big Man.

I believe the Anandabazar Patrika owes its readers an apology for its lousy or non-existent fact checking, inexcusable in the Internet age. And Sunil Gangopadhyay owes his readers and all admirers of Kevin Carter an apology for besmirching Carter's name.

Guerrilla Plutocracy

Today's New York Times has an alarming report by Jonathan Weisman on a new development -- new to me at least -- in the annals of plutocracy in the United States. In this new phenomenon, guerrilla-style hit-and-run organizations pop up, pretend to be apolitical to get tax-exempt status, raise anonymously donated cash, spend the money on election attacks (always against Democrats), and then, faced with challenges from the Federal Election Commission and the Internal Revenue Service, quietly shut down and disappear into the dark.

“I still don’t know who they are,” said John Spratt, the former chairman of the House Budget Committee, who lost his 2010 re-election bid after facing a deluge from one such group (called "Hope, Growth and Opportunity"). “It’s a classic case.”

Weisman also discusses what Republican senators did yesterday to preserve the ability of their patrons to help them without having to display their dirty hands.

Efforts to require more public accounting of campaign money hit a new roadblock Monday evening in the form of a Republican filibuster that stopped the Senate from formally debating it. The measure fell 9 votes short of the 60 required to clear the procedural hurdle, with no Republicans voting in favor.

Senator Mitch McConnell, the leader of the Republicans in the Senate, had earlier supported the need for disclosure, but now thinks differently.

Finally, from now on, I don't want to hear the idiotic notion that "both sides do it." The Democrats are clearly making a good-faith effort to get donor disclosure. Their motives are probably simple self-preservation, but they still are angels compared to the Republicans, who do not even have the decency to allow the issue to be debated on the Senate floor.

The Intensifying Stench of Plutocracy

I have blogged before about Sheldon Adelson, the gambling-industry billionaire, and his massive financial support for Mitt Romney against Barack Obama. But in that blog post I may have incorrectly assigned a mono-causal explanation for Adelson's jihad. Adelson may be a more complex fella than I had thought. Yes, a big reason for his campaign donations to Romney is his conviction that Romney is better for Israel than Obama. But now it seems that Adelson may have a more prosaic reason for his anti-Obama crusade: He wants a federal investigation into possible violations by Adelson's Las Vegas Sands casino empire of the Foreign Corrupt Practices Act to quietly go away, and there's no better way to get that goal accomplished than by getting a business-friendly Republican-controlled Justice Department in Washington, DC.

Please see this ProPublica report on the Adelson investigations. (The report is also available on the web site of PBS's Frontline program. Please also see this video from yesterday's The Rachel Maddow Show that discusses the ProPublica report, beginning at 1:31.) I have reproduced sections of the report below; my own insertions are in brackets [].

***

A decade ago gambling magnate and leading Republican donor Sheldon Adelson looked at a desolate spit of land in Macau and imagined a glittering strip of casinos, hotels and malls.

Where competitors saw obstacles, including Macau's hostility to outsiders and historic links to Chinese organized crime, Adelson envisaged a chance to make billions.

The Macau bet paid off, propelling Adelson into the ranks of the mega-rich and underwriting his role as the largest Republican donor in the 2012 campaign, providing tens of millions of dollars to Newt Gingrich, Mitt Romney and other GOP causes.

Now, some of the methods Adelson used in Macau to save his company and help build a personal fortune estimated at $25 billion have come under expanding scrutiny by federal and Nevada investigators, according to people familiar with both inquiries.

Adelson instructed a top executive to pay about $700,000 in legal fees to Leonel Alves, a Macau legislator whose firm was serving as an outside counsel to Las Vegas Sands.

The company's general counsel and an outside law firm warned that the arrangement could violate the Foreign Corrupt Practices Act.

An email by Alves to a senior company official, disclosed by the Wall Street Journal, quotes him as saying "someone high ranking in Beijing" had offered to resolve two vexing issues — a lawsuit by a Taiwanese businessman and Las Vegas Sands' request for permission to sell luxury apartments in Macau. Another email from Alves said the problems could be solved for a payment of $300 million.

According to the documents, Alves met with local politicians and officials on behalf of Adelson's company, Las Vegas Sands, to discuss several issues that complicated the company's efforts to raise cash in 2008 and 2009.

Soon after Alves said he would apply what he termed "pressure" on local planning officials, the company prevailed on a key request, gaining permission to sell off billions of dollars of its real estate holdings in Macau.

[Here Alves seems to be using his political and legislative clout to help advance the commercial interests of Las Vegas Sands. And if Adelson's $700,000 payment is reward for such political maneuvering, rather than mere legal work, then it would be a violation of the Foreign Corrupt Practices Act.]

[Las Vegas Sands] is under criminal investigation for possible violations of the U.S. anti-bribery law.

Alves met with prominent Macau officials on Las Vegas Sands' behalf, emails show. When Adelson made a three-day trip to Beijing, Alves accompanied him, billing more than $18,000 for his services.

Alves promoted himself to Adelson as someone "uniquely situated both as counsel and legislator to 'help' us in Macau," according to an email written by a Las Vegas Sands executive.

The then-general counsel of Las Vegas Sands warned that large portions of the invoices submitted by Alves in 2009 were triple what had been initially agreed and far more than could be justified by the legal work performed.

"I understand that what they are seeking is approx $700k," the general counsel wrote to the company's Macau executives in an email in late 2009. "If correct, that will require a lot of explaining given what our other firms are charging and given the FCPA," the Foreign Corrupt Practices Act.

Adelson, described by Forbes Magazine as the largest foreign investor in China, ultimately ordered executives to pay Alves the full amount he had requested, according to an email that quotes his instructions.

Alves holds three public positions. He sits on the local legislature. He belongs to a 10-member council that advises Macau's chief executive, the most powerful local administrator. And he's a member of the Chinese People's Political Consultative Conference, a group that advises China's central government.

[Given the nature of work Alves was doing and Alves's official positions, and given the amount he was paid, it is hard to argue that Alves was being paid for regular legal work.]

Several Las Vegas Sands executives resigned or were fired after expressing concerns about Alves' billings. These include Las Vegas Sands' general counsel and two top executives at Sands China, its Macau subsidiary.

[Las Vegas Sands' contacts with Macau firms call 'junkets' are also being investigated by Nevada officials. Many people from mainland China travel to Macau to gamble. But the Chinese government does not allow the transfer of funds from China to Macau for the purpose of gambling, which is illegal in China. So, how do the visiting Chinese do their gambling in Macau? Here's how: Las Vegas Sands lends money to the 'junkets'. These 'junkets' in turn lend that money to the visiting Chinese gamblers so they can do their gambling. Back in China, the 'junkets' collect repayment of the money that the visiting Chinese gamblers had borrowed and ship the collected money back to Macau. All this is illegal and the junkets are well known as connected to criminal organizations.]

Among the junket companies under scrutiny is a concern that records show was financed by Cheung Chi Tai, a Hong Kong businessman.

Cheung was named in a 1992 U.S. Senate report as a leader of a Chinese organized crime gang, or triad. A casino in Macau owned by Las Vegas Sands granted tens of millions of dollars in credit to a junket backed by Cheung, documents show.

Another document says that a Las Vegas Sands subsidiary did business with Charles Heung, a well-known Hong Kong film producer who was identified as an office holder in the Sun Yee On triad in the same 1992 Senate report.

[William] Weidner [president of Las Vegas Sands from 1995 to 2009] resigned from the company after a bitter dispute with Adelson [over the company's links to the junkets].

Allegations about the company's dealings with Alves as well as its purported ties to organized crime are prominently mentioned in a 2010 lawsuit filed by Steven Jacobs, former CEO of Sands China.

In the suit, Jacobs contends he was fired after multiple disputes with Adelson, which included the continued employment of Alves and the company's dealings with junkets.

[J. Alberto Gonzalez-Pita, general counsel at Las Vegas Sands headquarters in Nevada, also resigned soon after the payment to Alves was made.]

Update: The Wall Street Journal has now picked up the trail. See "Sands Probed in Money Moves" by By KATE O'KEEFFE, ALEXANDRA BERZON, JUSTIN SCHECK and JAMES V. GRIMALDI, August 3, 2012. This new federal probe is distinct, however, from the Macau issues discussed above: "The U.S. attorney's office in Los Angeles is examining the casino company's handling of money received several years ago from a Mexican businessman later accused of drug trafficking and a former California executive subsequently convicted of taking illegal kickbacks, according to the people involved." It seems a safe bet that Mr. Adelson would want someone in the White House who would make these investigations go away.

Ladies and Gentlemen, The White Rabbits!

Here's a live performance by a Brooklyn, NY band that I have high hopes for.

And here's the studio recording of the same song. (Sotto voce: What would I do without YouTube? And, how come it is still free?)

Mass Deportation and Slave Labor in Post-WWII Europe

This post is about a valuable article that I just read and was surprised by: "The European Atrocity You Never Heard About" by R. M. Douglas, The Chronicle of Higher Education, June 11, 2012.

Contrary to what I had believed, mass expulsion and slave labor, far from coming to an end in Europe with WWII, continued during 1945-50, overseen by the victorious allies. An estimated 500,000 or more uprooted Germans died in this little-known episode. Stalin, who can always be relied upon to do the ghastliest thing imaginable, compensated the Poles for the Polish areas he had grabbed for the Soviet Union by grabbing German land, emptying it of Germans and passing it on to Poland. Both Poland and Czechoslovakia sought ethnically homogeneous countries and wanted their German citizens driven out without recompense and often to their deaths. The Brits and the Americans either stood by or actively helped. Atlee, the British Prime Minister, opined that the mass expulsion of Germans "would be worthwhile in the end" and the Americans did not want to alienate Poland and Czechoslovakia for fear of pushing them into Stalin's embrace.

Unfortunately, although Prof. Douglas makes clear that "tens of thousands perished as a result of ill treatment while being used as slave labor (or, in the Allies' cynical formulation, "reparations in kind")" in notorious concentration camps such as Auschwitz and Theresienstadt, he is not specific enough about this serious atrocity. Who was in charge? What work were the captives doing? Under what conditions?

The article makes no mention of anybody being prosecuted for the crimes described in it. I feel a slight shiver every time my mind drifts back to the possibility that this atrocity may be one of the very few in modern history in which the perpetrators got away absolutely scot-free.

Update, August 10, 2012: See the review by Andrew Stuttaford in The Wall Street Journal, August 10, 2012, of "Orderly and Humane: The Expulsion of the Germans after the Second World War" by R. M. Douglas.

An Easy Solution to Blogger's Block

The New Yorker, July 2, 2012.

Plutocracy: J. P. Morgan Edition

Q: What does J. P. Morgan's campaign contributions to members of the Senate Banking Committee buy?

A: Superobsequious, epic-scale ass kissing of Jamie Dimon, the Morgan CEO, at a hearing that was supposed to investigate why the bank royally screwed up its derivatives bets earlier this year.

In this excerpt from yesterday's "The Daily Show," Senator Johanns (R, Nebraska) says to Dimon, in an appropriately awe-struck voice, "You are ... HUGE!"

And in this excerpt we see why its great being a Republican Senator.

The U.S. Senate is sometimes described as the "world's greatest deliberative body" -- not least by itself. But in a plutocracy, it was inevitable that, sooner or later, comedians would call its members yankers to get easy knee-slapping guffaws from the entire country.

Plutocracy: Sheldon Adelson, Again

Q: How tacky is this unending spectacle of America's plutocrats being fellated by her presidential candidates?

A: So tacky that the cast of Jersey Shore has just endorsed public financing of U.S. elections. (rim shot)

Look at this list of the top donors to SuperPACs: there's not one beneficiary that's a Democrat! But, not to worry, this might be a temporary phenomenon. Over time the Democrats will get better at the art of fellating the rich and some rough parity in campaign funding will eventually be established, I think.

The top donor in the list is Sheldon Adelson, the casino magnate. I have blogged about Mr. Adelson before. Mr. Adelson is interesting because his case makes clear that America's plutocrats aren't exclusively focused on pocketbook compulsions --- sometimes they go with their hearts!

Adelson had backed Newt Gingrich, to the tune of $21 million, against Mitt Romney in the Republican primaries. Take a good look at the half-hour anti-Romney film produced with Adelson's cash, "When Mitt Romney Came to Town". You'd think the film was made by Bolsheviks! (See also yesterday's episode of The Daily Show, 5:54.) It is a three-hanky tear jerker about the devastation wrought by Bain Capital, the private equity firm, under Mitt Romney.

So, is Adelson a bleeding-heart liberal? Not really. After all, he was supporting Newt Gingrich, who was, if anything, further to the right of Romney. Moreover, with the primaries over, Adelson has just written a check for $10 million to the same Mitt Romney he had savaged earlier for being a heartless capitalist.

So, what's going on here? What was "When Mitt Romney Came to Town" all about?

About nothing, really. The Bolshie rhetoric was just campaign strategy. As Wyatt Andrews' report suggests, Adelson's gifts, first to Gingrich and now to Romney, were all about his understanding of which candidate was good for Israel. In the primaries, he supported Gingrich because he liked Gingrich's views on Israel and on Palestinians; the anti-Bain Capital fulminations were just a smokescreen. Now that the primaries are over, Adelson is supporting Romney over Obama, not because he thinks Romney will be better than Obama for the poor people he cares so much about, but because he thinks Romney would be better for Israel. According to an article in today's Wall Street Journal, "Mr. Adelson, a leading member in the Republican Jewish Coalition, has publicly called Mr. Obama's support of Israel too weak."

Mystery solved!

The sad thing is that, while Adelson can throw cash at his preferred candidate, the campaign ads he pays for can't say out loud why he prefers that candidate. His proxies are reduced to making up lie after lie. First his money said that Romney was a heartless capitalist, and now his money will say Obama is a vicious socialist. The real reason behind Adelson's attacks will have to remain unsaid. Adelson is doing what he is doing out of love. But it is a love that can't speak its name.

Update, June 16, 2012: Sheldon Adelson has popped up on Senator John McCain's radar. Also, see this video.

Update, June 24, 2012: Whoa, an editorial in today's The New York Times says basically what I said in my post!

We're All Keynesians, Even Mitt Romney!

Check out this interview of Mitt Romney by Mark Halperin of Time.

Halperin asks: You have a plan, as you said, over a number of years, to reduce spending dramatically. Why not in the first year, if you’re elected — why not in 2013, go all the way and propose the kind of budget with spending restraints, that you’d like to see after four years in office? Why not do it more quickly?

Romney replies: Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course.

How very sensible! How very Keynesian! But, here's the thing, Gov. Romney: If you agree that spending cuts will throw an economy into recession, would you not also agree that spending increases will pull an economy out of recession? You do? Then why do you not loudly oppose congressional Republicans who have stymied each and every Obama stimulus proposal? And why do you believe what you say you believe about the macroeconomic effect of government spending if you believe -- as you have been saying -- that Obama's stimulus was a failure?

It is becoming increasingly difficult to believe anything Romney says. When he's talking to Tea Party lunatics, he's all Mr. Austerity, and when there is a need to sound halfway sane -- as when talking to a Time magazine reporter -- he morphs into a lucid Keynesian! During the interview Romney repeatedly brags about his 25 years in business. It is now becoming clear that the only thing he learned from his years in business is how to make a sales pitch: let's just tell them what they want to hear!

And no matter how Keynesian Mitt Romney sounds in the Time interview, don't expect any let up in GOP propaganda that Obama's stimulus, tiny as it was relative to the size of the American economy, was a bust. Here's E. J. Dionne in his recent Washington Post column:

Yet the drumbeat of propaganda against government has made it impossible for the plain truth about the stimulus to break through. It was thus salutary that Douglas Elmendorf, the widely respected director of the Congressional Budget Office, told a congressional hearing last week that 80 percent of economic experts surveyed by the University of Chicago’s Booth School of Business agreed that the stimulus got the unemployment rate lower at the end of 2010 than it would have been otherwise. Only 4 percent disagreed. The stimulus, CBO concluded, added as many as 3.3 million jobs during the second quarter of 2010, and it may have kept us from lapsing back into recession.

So when conservatives say, as they regularly do, that “government doesn’t create jobs,” the riposte should be quick and emphatic: “Yes it has, and yes, it does!”

Indeed, our unemployment rate is higher today than it should be because conservatives blocked additional federal spending to prevent layoffs by state and local governments — and because progressives, including Obama, took too long to propose more federal help.

A Food Stamps System for India

Vikas Bajaj has an excellent report, on India's public distribution system (PDS) for staple foods, in today's New York Times (As Grain Piles Up, India’s Poor Still Go Hungry). It's a stupid and criminally wasteful system that defies reform even though most economics undergraduates would know how to fix it.

As the article makes clear, the national government buys foodgrains from farmers -- at prices high enough to keep the farmers' lobby happy -- and stores the food in warehouses. Each state government collects its share -- which is based on the number of poor people in the state -- and distributes the food at subsidized prices through what are called "ration shops". A great deal of the food rots or is eaten by vermin in the government's warehouses. Many poor people do not get acccess to the subsidized food because of administrative inefficiencies.

In Bajaj's article, Ashok Gulati, a highly-regarded agricultural economist, identifies the obvious solution to the system's problems: just adopt an American-style food stamps system. Give cash to the poor and let them buy food in the open market. This would directly meet the goal of helping the poor. Moreover, the increased purchases of food by the poor would raise food prices, thereby meeting the government's other goal of helping farmers get a good price for their crops. (Of course, farmers could be given direct subsidies too, if necessary.) In this system a lot of the waste that comes with the government's lackadaisical approach to food storage would come to an end.

It's all ridiculously simple. And it is not just a theory. Many countries -- rich and poor -- have effectively used the food stamps solution. And yet, how can one explain the fact that "most officials [including K.V. Thomas, the food minister!] say they are worried that if India switched to food stamps, men would trade them for liquor or tobacco, depriving their families of enough to eat"?

My hunch is that it is futile to argue supply-and-demand with a bureaucrat; there is no way to convince him/her that a big and sprawling government fiefdom needs to be dismantled and replaced by the market mechanism. This is basically the Upton Sinclair syndrome: "It is difficult to get a man to understand something, when his salary depends upon his not understanding it!"

But to take the specific argument about liquor and tobacco, men could just as well grab the foodgrains handed out by the government under the current PDS, sell it for cash, and then buy liquor or tobacco with the cash. Moreover, it is a bit disappointing that Bajaj does not go into the factual basis, if any, of this offensive and misandrist generalization, especially given that important public policy is being justified on the assumption that it is true. Finally, the question is not whether the food stamps solution is perfect. The question is whether it is superior to the current system.

Trailer for Tarantino's "Django Unchained"

When I first found out that Quentin Tarantino was making a revenge film with slaveowners in the American Deep South as his villains, my reaction oscillated between relief ("Finally! Yesss!") and indignation ("What took you so long? What took Hollywood so long to see those homegrown plantation creeps as worthy villains?"). I had long felt that there needed to be a temporary moratorium on Nazis, Russians, etc., as Hollywood movie villains and that Hollywood's attention needed to turn to homegrown baddies. I had felt that there was a need for some effective, pulpy, trashy movies that brought down cathartic fictional vengeance on slaveowners and, even more urgently, on those who were responsible for the genocide of the Native Americans of North America. I had half hoped that some German or French filmmaker would deliver even if Hollywood didn't. But those foreign filmmakers turned out to be far too serious and sophisticated to cater to my base expectations. Anyway, I am psyched to see Tarantino's Django Unchained when it comes out this Christmas.

Plutocracy: Scott Walker Edition

The campaign leading up to yesterday's election on the recall of Republican Governor Scott Walker of Wisconsin -- which Walker won -- was marked by an unusually large disparity in campaign spending by the contenders. According to this chart in today's New York Times, Scott Walker spent $29.3 m or ten times the $2.9 m spent by Tom Barrett, his Democratic opponent. (If you count spending on behalf of the candidates by groups other than the campaigns themselves, the disparity is smaller: $45.6 m for Walker and $17.9 m for Barrett. However, it is not clear to me why, in the New York Times's chart, the $4.5 m spent by "Wisconsin for Falk," a group that supported Kathleen Falk, Barrett's primary challenger, is counted as spending on behalf of Barrett.) As E.J. Dionne argues in today's Washington Post, Walker's huge advantage in early spending was critical as "nearly 9 in 10 people said they had made up their minds before May, according to exit poll interviews." Barrett closed the spending gap somewhat towards the end, but by then it was too late.

The point of plutocracy is to drown out opposing views by buying up as much as possible of the finite windows into voters' minds. Voters aren't dummies, but they are busy, they have lots of stuff to do and to think about; so it is understandable that they may let others do their thinking for them. If a candidate can't make a clear case and can't remind the voter of her counter-argument every time an opponent makes a pitch, then the opponent gets a free pass into the voter's heart. (There may be limits to this line of reasoning, however. Some day we may find out what today's North Koreans, who have little or no access to opinions other than those of the state, really think and believe.)

Therefore, in today's America, with its high and growing inequality of income and wealth, one can expect the left to get ever more insistent on the need for Robin Hood policies, thereby inviting an ever greater financial disadvantage -- and, therefore, continued lack of success -- in election campaigns. At some point, the left may simply give up, seeing no way to influence the voter. At that point, America's political system will have all the moral majesty of Saudi Arabia's.

Right now, the role of spending disparities is somewhat dampened by the fact that money for a candidate tends to follow the electorate's enthusiasm for the candidate. This is why Barack Obama managed to raise a huge amount of money, mostly in small contributions, to fight his 2008 campaign. This rough parity between the distribution of genuine political support across candidates -- by which I mean the notional political support that candidates would receive in a hypothetical world in which all candidates spent equally -- and the distribution of campaign spending across candidates, means that the latter can't prevail over the former: money can only amplify what would have happened anyway. But this situation is likely to end as economic inequality increases in America.

When economic inequality rises beyond some threshold -- a threshold that I am unable to pinpoint, sorry! -- the distribution of campaign spending across candidates will cease to reflect the distribution of genuine political support. When that happens, money will do all the talking, and candidates with views not held by the plutocrats will simply give up and withdraw. And, as I said earlier, at that time we'll feel as free as the people of Saudi Arabia.

The rise of Scott Walker in Wisconsin also heralds the death throes of labor unions and collective bargaining in America. But, in truth, the time to fight for union rights has long passed. Unionization rates have been falling for decades. At this point, something like 6 percent of private-sector workers belong to unions. Naturally, most people see unionized public-sector workers going on strike to extract concessions and say, I don't have collective bargaining rights. Why should these public-sector workers have rights that I don't have? And why should they be able to use those rights to extort juicy pay packets, gold-plated pensions, and easy working conditions, all at my (that is, the tax payer's) expense? (By the way, when John and Jane Doe expresses these sentiments, don't expect Fox News or the people on the right to decry their thinking as the "politics of envy.")

If the American left wanted to preserve collective bargaining rights, the time to act was long, long ago, before the slide in unionization rates began. Now, the battle is over and public sector unions may as well just pack it in.

Et tu, Hindu!

The screenshots below were downloaded shortly before 5:00 pm New York time today from the web site from The Hindu, a prominent Indian daily with an occasional interest in American residents of Indian origin. When I clicked on the link highlighted by the red arrow in the first screenshot I got the article in the second screenshot.

They clearly need to teach their bots about context.

(Click on screenshots to enlarge.)

Plutocracy: Newt Gingrich Edition

Here's more evidence that the US is now a full-fledged plutocracy. The only puzzle is whether Newt is catering to the plutocrat or whether the plutocrat is merely buying an amplifier for things that Newt truly, madly, deeply believes in. But, whatever the truth of the matter, this whole thing blows. Warning: By the end of the video you may throw up on the device you are watching it on.

Pamela Adlon on "Fresh Air"

In today's episode of National Public Radio's Fresh Air, Terry Gross, the host, interviews actress Pamela Adlon. Adlon is a pretty good actress in TV comedies, and she is a supremely talented mimic with a virulently infectious sense of fun. I found the interview hugely entertaining till literally the final second. Highly recommended!

New Year Six Pack

Today's New York Times has an article in which six prominent economists, who are also regular columnists for the paper, make policy suggestions for the new year. It's a tolerable enough list of proposals, but I can't imagine them dominating the policy debate in 2012.

In an effort to reduce the sense of economic uncertainty in the minds of people, the Fed has said that it will keep the Fed Funds Rate close to zero until at least mid-2013. Gregory Mankiw wants the Fed to do more. He wants the Fed to clearly state under what economic conditions it would eventually start raising the FFR. This, he thinks, will give people a clearer view of the future, and, thereby, help the economy because people do not spend when they are uncertain about the future. (But, conceding the weakness of current macroeconomics, he also admits that it would be hard for the Fed to satisfy his wish.)

Christina Romer makes the important point that short-run fiscal stimulus -- payroll tax cuts and an increase in infrastructure spending, paid for with money borrowed by the government -- will be more effective in bringing unemployment down quickly if it is combined with a long-run plan to do the opposite (raise taxes, cut spending, pay back the government's debts). Although she does not spell it out, I suppose her reasoning is like this: Money borrowed today will have to be paid back. So, in the future, taxes will have to go up and spending will have to be cut (barring the fairy tale scenario of blistering economic growth enabling debt repayment without the need for tough choices). If a long-run debt repayment plan passes Congress, people will have a clear idea about how things will unfold. Without such a plan, people will fear that the government will go through a great deal of chaos before the inevitable debt repayment takes place. And people will be more likely to spend their money freely today under the former scenario rather than the latter. That is why, to keep the people spending their money today, it is important to keep them calm about the future. And that is why, a plan to borrow trillions for stimulus spending today will work best if it combined with a plan to do the opposite in the future. (Note that although Mankiw is talking about the monetary policy of the Fed and Romer is talking about the fiscal policy of the government, they are both emphasizing the need to keep people's expectations calm and relaxed.)

Tyler Cowen argues that although the European Central Bank's newfound willingness to print euros and lend those euros freely to Euro zone banks has solved the euro zone's short-run problem, the 2011 crisis will eventually return if economic growth does not pick up. The argument is obvious and unsurprising.

Robert Frank rehashes an argument he has been making for quite a while, most recently in his new book "The Darwin Economy." As more money ends up with the top one percent, they spend the bulk of that money on fancier homes. As the happiness of people depend not on what they have but on how what they have measures up to what others have, the bottom 99 percent also end up running after fancier homes in fancier school districts. We all end up with more expensive homes, but we feel no happier: if some people at a football match stand up to get a better view, eventually so will everybody else, and instead of better views all that people will get in the end are achy feet. Frank's argument is persuasive, but he has been flogging this theme for a long time, perhaps out of frustration that policy makers have not followed his presciption (of a progressive consumption tax) to attack the problem that he has identified.

Robert Shiller proposes changes in the tax deduction for mortgage interest payments so that poorer people would be better placed to benefit from it. That's fine: who could argue against making the tax system more helpful for the poor? But he spoils it for me by saying unpersuasive things to glorify government efforts to encourage home ownership: "Homeownership fosters citizenship, builds stronger families and communities, encourages active participation in the economy and, ultimately, bolsters economic confidence." Where's the evidence for these big claims? How do you measure citizenship, the strength of families and communities, etc.? And how do you know that these alleged benefits outweigh the costs of having people's incentives distorted by this particular tax break? The argument in favor of ending the tax deduction for mortgage interest, once and for all, is pretty clear.

I am a big fan of Richard Thaler and I have used "Nudge" by Thaler and Sunstein as a textbook in my behavioral economics course. Here he goes over a few well worn ideas to encourage -- but not compel -- people to make healthier choices in their daily lives.

Update (January 3, 2012): Greg Mankiw's wish for the new year seems to be coming true:

Now the Fed will include projections about the “expected target federal funds rate in the fourth quarter of the current year and the next few calendar years, and over the longer run,” according to notes from its Dec 13. meeting released by the Federal Open Market Committee on Tuesday. It will also include projections about “the likely timing of the first increase in the target rate given their projections of future economic conditions.”

It remains to be seen whether the annotations accompanying these interest rate forecasts will provide some clarity on what it is that the Fed tries to stabilize: Is it inflation? Unemployment? Growth rate of nominal GDP?