The power of diversity

I was at a conference recently where one of the speakers showed a startling chart that showed that Fortune 500 companies that had more diversity on their boards of directors were likely to be more profitable than the rest.

I was curious and skeptical. I started researching the matter.  Here are some of the more interesting studies I found:

• This study by Deloitte suggests a very strong correlation between diversity and performance.
• This one suggests a U shaped relationship between diversity and financial performance.
• While this one in Wiley publications suggests that the relationship is much more complex and depends on circumstances.

The summary seems to be that there is insufficient evidence for a causal link between diversity and financial performance of companies. Overall, it would be hard to make a simple case that more diversity is always good, especially when its just gender or racial diversity and not thought diversity.

On the other hand, there seems to be directional evidence that there is some correlation between diversity and financial performance.  My hunch is that companies having diversity above a certain threshold are likely selecting talent from a larger and more diverse pool and are likely encouraging more thought diversity.  So, higher than a threshold diversity in upper management may be indicative of better human resource management practices in other areas, which in turn may be what is driving financial performance differences.

What is Obamacare?

The website healthcare.gov still only works intermittently.  Admittedly, its better, but it was down last night when I tried. 

Meanwhile, as the demonization of the law continues, I thought it might be useful to recap what exactly Obamacare does:

• It prevents insurance companies from discriminating based on age, gender or preexisting conditions
• It makes it illegal for insurance companies from cancelling your insurance because you are sick
• It mandates that you must be able to pick your primary care physician and Ob Gyn
• It mandates that kids can stay in their parents' plans till age 26
• It guarantees emergency care coverage
• It guarantees that there is no lifetime cap on your coverage - i.e. you can't be denied just because your treatment is too expensive
• It guarantees free preventive care - i.e. vaccinations, wellness visits, etc.
• It forces insurance companies to cap costs - only 20% of the total cost of insurance can be for non medical expenses
• It standardizes disclosures to make it easy for insurance plans can be compared
• It guarantees your right to appeal
• It standardizes plans ensuring that every plan covers:
• Ambulance
• Emergencies
• Hospital care
• Maternity and newborn care
• Mental health and substance abuse
• Prescription drugs
• Rehabilitation services
• Laboratory services
• Preventive, wellness and chronic disease management
• Pediatric services
• It creates health exchanges where you can compare and buy plans.
• It says, if you don't buy insurance, you have to pay $96 in taxes every year to cover the government's costs.
• It provides Medicare assistance based on income for poor people who can't afford the plan (but the Supreme Court has given states the right to opt out of this relief program)
• It mandates that employers with more than 50 employees should pay for their employees' healthcare (i.e. it says that if you can afford to have 50 employees, you have a responsibility to pay the employee enough to be able to afford insurance).

I listed these because in my limited experience, I have been unable to find anyone who has a major objection to any of these.  In fact, most people are surprised that these would need to be in a law.

Relationship between debt and interest rates

Paul Krugman has a very interesting chart in his blog that shows the relationship between interest rates and debt over the last 300 years in the UK.



The actual site has a fascinating analysis of what history has to tell us about financial crises.

Worth a read.

Why Obamacare failed?

OK ... I am being needlessly provocative.

The fact is that there are some really serious issues with the technology at rollout.  As Wonkblog is reporting, the website issues may actually be the least of the problems and that more serious issues lurk.  The story is that there is something called an "834 EDI transmission" which is what insurers use to communicate status about the insured.  For whatever reason, the Obacare website is messing this up.  It's misreporting information.  Unlike the website, which merely causes a delay, this mess could have really serious consequences like messing up people's insurance, so needs to be fixed quickly.

In, what appears to be abysmal planning, they didn't start integrated usability and functionality testing till as late as September 26, four days before launch.  The sum total is that it seems the coders were woefully behind schedule, unable to push back the launch date, they or the leadership made the call to launch without adequate testing.  This was highly unprofessional and ill advised.  Heads should roll.

One interesting factoid that I have not independently verified caught my eye - just how complex the Healthcare.gov site is.  The chart below shows the complexity as measured by lines of code.  I was astonished.  It's very badly written or much more complex than I imagined or both.  The point then is that when new versions are released, what is the likelihood of an error free release in any of the cases mentioned? Especially when all that code is being written from scratch, as is the case with Obamacare.

Healthcare.gov Lines of Code Comparison

LINES OF CODE FOR POPULAR SOFTWARE (IN MILLIONS)

SOURCES

1. Google Chrome - https://www.ohloh.net/p/chrome
2. Linux Kernel - https://www.ohloh.net/p/linux
3. Windows XP - https://www.facebook.com/windows/posts/155741344475532
4. Facebook.com (likely larger, does not include several backend components) - http://www.quora.com/Facebook-Engineering/How-many-lines-of-code-is-Facebook
5. OSX 10.4 - http://www.engadget.com/2006/08/07/live-from-wwdc-2006-steve-jobs-keynote/
6. Debian 5/packages - http://debian-counting.libresoft.es/lenny/index.php?menu=Statistics
7. Healthcare.gov - http://www.nytimes.com/2013/10/21/us/insurance-site-seen-needing-weeks-to-fix.html?pagewanted=2&_r=0

Are we all pop stars in the rough?

I came across this incredible post in the Huffington Post and couldn't resist sharing it.  The post is about a Youtube video of Britney Spears' isolated voice, i.e. without the music or Auto-tune.  Here is the video:
  

I knew, of course, that many pop singers are pretty bad singers who make it only because of Auto-Tune and suchlike software.  I also understand that this video takes Britney's voice from concerts where she has been dancing, is out of breath and likely not making much of an effort to sing.  Even with those caveats, it is pretty astonishing how few correct notes Britney hits.

Most of us struggle to sing well and most of us therefore harbor few illusions of being a pop star.  This video, apart from being a paean to Auto-Tune etc, suggests that may be we have been selling ourselves short.  May be we too have futures as pop stars!

In case you think this is the norm, here are some other popular singers of yesteryears who clearly don't suffer from the same shortcoming as evidenced by their isolated voice recordings:

Whitiney Houston:




The Beatles:

Freddie Mercury and David Bowie:

Nirvana / Kurt Cobain:

Amazing, right?

What the Tea Party believes

There is much being made about the debacle that was the Tea Party stand against Obamacare and the futile shutdown of government that they led.  However, while many are prognosticating the demise of the Tea Party, it hardly seems likely.  In the final vote to avert the debt default, 18 Senators (all Republicans) voted against the deal on debt and to reopen the government, and in the House a staggering 144 Congressmen (all Republican) voted against it.  Let's put that in perspective: 40% of the GOP in the Senate and 61.5% of the GOP in the House voted against a deal to avert the US defaulting on its debt.  Does that seem like a walk back from their core beliefs?

The power of the Tea Party to paralyze government made me wonder what does the Tea Party really believe in?

To answer that question, I started with what the Tea Party's own website says.  A lot of the language on the site is very inspirational.  The call to action on the site says: "We stand by the Constitution as inherently conservative. We serve as a beacon to the masses that have lost their way, a light illuminating the path to the original intentions of our Founding Fathers. We must raise a choir of voices declaring America must stand on the values which made us great. Only then will the politically blind see and deaf hear!"

The site lists 15 "non negotiable core beliefs." Here's a verbatim reproduction of the list:

1. Illegal aliens are here illegally. 
2. Pro-domestic employment is indispensable. 
3. A strong military is essential.
4. Special interests must be eliminated. 
5. Gun ownership is sacred. 
6. Government must be downsized. 
7. The national budget must be balanced. 
8. Deficit spending must end. 
9. Bailout and stimulus plans are illegal. 
10. Reducing personal income taxes is a must. 
11. Reducing business income taxes is mandatory. 
12. Political offices must be available to average citizens. 
13. Intrusive government must be stopped. 
14. English as our core language is required. 
15. Traditional family values are encouraged.

The website goes on to say: "The Tea Party includes those who possess a strong belief in the foundational Judeo-Christian values embedded in our great founding documents.  ...  Yes, we are a Christian nation. However, you do not have to be a Christian to enjoy freedom. The Tea Party welcomes all red-blooded U.S. Citizens."  

The statement about Christian nation didn't surprise me.  It isn't so vastly different from views held by most of the GOP.  It's a little misleading given the fact that when setting up the Republic the framers were very deliberate in not making the nation a theocratic state.  That is why, the US is not governed by the Bible but the Constitution.  

The idea of a Christian nation taken together with the Tea Party's core belief that "Intrusive government must be stopped" and that "Traditional values are encouraged" does seemingly create a problem.  The issue is that "traditional values" are a matter of personal choice as is one's religion. State religion or state imposed values are inherently intrusive.  So, how does the Tea Party reconcile these seemingly conflicting views?

It seems not very well.

You may remember that Tea Party darling and Virginia's gubernatorial candidate, Ken Cuccinelli had come out in support of a law that would require women seeking abortions to have medically unnecessary vaginal probe ultrasounds.  Public outcry had caused the measure to be dropped.  During the gubernatorial campaign, slammed by his Democratic opponent McAuliffe and others for his war on women, he has backed off his views.  He currently trails McAuliffe in the polls which pollsters attribute to his close association with Tea Party and the government shut down.  However, if you think the Tea Party is backing off its stances, you'd be mistaken.  In this article, Maggie Gallagher argues that the lesson is that Cuccinelli and others are erring by offering a truce on abortion etc. and that they would win if they only stood firm.

In other Tea Party news, a Tea Party leader and Sean Hannity are seriously contemplating filing a class action suit against homosexuals on the basis that homosexuals are more likely to contract AIDS.

Non interference by government it seems only applies to things they don't like.  When it suits them, the Tea Party is perfectly sanguine with government interference.

Another serious proposal by the Tea Party is that they should abolish the 17th Amendment, which allowed for the direct election of Senators.  This took my by surprise.  Why in the world would they be demanding this?  Let me reproduce some of the more notable arguments by eminent supporters of the Tea Party.  Here is Judge Andrew Napolitano on the subject:

I would repeal the 17th Amendment [which provides for the popular election of U.S. senators]. Can an amendment to the Constitution itself be unconstitutional? Yes, that one. If you read Madison’s notes from the constitutional convention, they spent more time arguing over the make-up of the federal government and they came up with the federal table. There would be three entities at the federal table. There would be the nation as a nation, there would be the people, and there would be the states. The nation as a nation is the president, the people is the House of Representatives, and the states is the Senate, because states sent senators. Not the people in the states, but the state government. When the progressives, in the Theodore Roosevelt/Woodrow Wilson era, abolished this it abolished bicameralism, the notion of two houses. It effectively just gave us another house like the House of Representatives where they didn’t have to run as frequently, and the states lost their place at the federal table. 

That was an assault, an invasion on the infrastructure of constitutional government. Even kings in Europe had to satisfy the princes and barons around them. And that’s how they lost their power, or that’s how their power was tempered. Congress believes it doesn’t have to satisfy anybody. Its only recognized restraint is whatever it can get away with.

Note, Judge Andrew Napolitano is arguing that the feudal power of barons and noblemen was necessary to temper the excesses of the King, therefore a less democratic Senate would temper the excesses of the President.  In another articulation of this view in the National Review, Charles Cooke is even more explicit in his condemnation of democracy.  He explains: 

... the United States is not in fact a democracy but a constitutional republic, and her virtues lie as much in her undemocratic institutions as in her ample provisions for self-rule — more, perhaps. ...

As Madison makes clear in the Federalist Papers, in order to defend the vertical checks and balances that allow America’s federal system to function, senators would be “elected absolutely and exclusively by state legislatures.” The Senate was not intended to be the people’s representative body, but that of the states. Lest the federal government “swallow up the state legislatures,” (if you are interested, here is Salon's counterargument)

How seriously are they about this?  Well, in the recent Texas Senate primaries, all but one of the GOP contenders agreed that they'd repeal the 17th amendment.  

I could go on with many more interesting points of view expressed by the Tea Party, but let me stop here and focus instead on two interesting themes that emerged for me.  

• Much of the Tea Party's rhetoric seems to be about an abridgement of liberties.  None of the leaders really explain what this means.  I have searched in vain for a cogent explanation.  What I have surmised from the articles, blogs and comments though is that much of this abridgement of liberties has to do with a paranoia about freeloaders and minorities, which they appear to use interchangeably. 

You see this paranoia in the list of core beliefs.  Three of the 15 core beliefs listed overtly deal with immigrants, one is a tautology about illegal immigrants, a second deals with pro-domestic employment (which is protectionist) and a third is about English being the language in the US and seems a direct jab at Hispanics.   

You can observe this paranoia in public statements by Tea Party representatives where they openly rail against freeloaders and minorities in lamenting the size of government, redistribution of wealth and government handouts, never mind that most of the Tea Party dominant states are the biggest net recipients of Federal handouts (i.e. they receive much more in benefits than they pay in).   

Even proposals that deal with more esoteric points of law, like their obsession with the repeal of the 17th amendment on closer examination appear to be designed to shift power from urbanized minority dominated urban areas to more homogenous and sparsely populated rural areas.  Tea Party supporters' comments in the blogs frequently reference "illiterate, ill informed, basement dwelling freeloaders and minorities who are stealing elections" as being the primary target of the repeal.

• To explain the second theme let me recount a recent conversation I had with a Tea Party supporter.  I was discussing climate change with a Tea Party supporter.  During the course of the conversation the person explained that the obsession with climate change was silly.  "If climate change is true and sea levels rise, hundreds of millions of people will be displaced or will die," he said, "So what? Stuff happens! Humans won't go extinct.  Some people will die and suffer, but most will just move. Things will be fine."  

In one respect, he's correct.  Global warming does not necessarily mean human extinction. In the worst case it means massive, destructive and very costly readjustments that would include wars, famines and mass migrations.  However, he is correct that humans as a specie, will likely survive.

What took me aback was the values underpinning his assessment.  His point was that bad stuff happens to people all the time.  As long as he isn't likely to be badly affected himself, he sees no reason why he should be inconvenienced to prevent a poor outcome for others, however likely or devastating that outcome may be.  The question he was asking himself is "what's in it for me?" In the case of solving climate change, his answer was resoundingly not much. So, he didn't see the point of panicking.   

Stepping back and glancing through the blogs and articles by Tea Party supporters, I can't help feeling that this value judgment is exactly what underpins all of the Tea Party.  The question the Tea Party always seems to be asking "What's in it for me?" 

If you take the two themes together, what you might conclude is that much of the Tea Party's platform can be explained by the thesis that: (a) they are always driven by "what's in it for me?" and (b) they do not include minorities, underprivileged, LGBT, feminists, non Christians, etc. in their version of "me" and so, they balk at anything that disproportionately benefits anyone not like them.  

Taken together this explains why the Tea Party is so sanguine about state governments, so vehemently for protecting liberties while using government's powers to restrict personal freedoms, how they can reconcile their opposition to some government spending while advocating profligate spending in other areas (witness the hundreds of billions in farm subsidies in the Tea Party inspired Farm Bill).  It is why some who support them suggest democracy as an ideal in other nations but lament the democratic Senate at home.

The Obama coalition is about a social compact where our rights are coupled with a responsibility to one another.  Its inclusive message has been incredibly successful in attracting women, LGBT, minorities, educated urban elite and the underprivileged.  This group is more diverse and faster growing than the traditional WASP demographic that has been the bastion of the GOP, leading many in the GOP to worry about the GOP's future.

Unsurprisingly, the Tea Party's target audience is the exact opposite - mostly WASP more predominantly rural, white and staunchly conservative Christian.  

The Tea Party's appeal to their target is very lofty.  As the Tea Party site puts it: "By joining the Tea Party, you are taking a stand for our nation. You will be upholding the grand principles set forth in the U.S. Constitution and Bill of Rights. ... Many of America’s dilemmas lay squarely on the shoulders of We The People. Meanwhile, economic issues burden small businesses. However, we must not define ourselves by the calamities in our lives, but by our resolve to pick up the pieces and move on. The power of a few can change a nation, save a people and illuminate a generation. Commonsense, Conservative, Constitutional Self-Governance Is Our Mode Of Operation.  ..."

Yet, under the veneer of lofty ideals, a closer examination suggests that the Tea Party platform is driven by Darwinistic groupism and survival instincts that draw their strength from a combination of self interest and a disregard or even antipathy to everyone not like them. 

Is the current Hyperbole and vitriol unique?

We are still in the midst of a shut down.  So, I'd like to take a moment to discuss some of the hyperbole coming out of the Right. Obamacare has been compared to the holocaust, end of days, etc. and in an interesting move, Ben Carson said that its the worst thing since slavery.

It seems surprising to say the least that this should be the reaction to a law that was passed by both Houses and signed into law by the President, upheld by the Supreme Court and which was the subject of a Presidential election, which the President and his party won - winning more than 50% of the Presidential vote, and more votes in both the Senate and the House.

The pundits have a lot of explanations, including personal animus to the President.  The fact though is that every social program in the US has met with similar animus.  Don't believe me?  Here is Bernie Sanders explaining it better than I could:

The staggering disregard for the country and the breathtaking political ineptitude of Ted Cruz and others is something new.  However, lest we forget, Clinton faced a barrage of continuous attacks and every major social legislation has been met with vitriolic hostility from the right.  So, we should have seen this coming.

A discussion on political frameworks

Recently, I was in a discussion with someone, a staunch GOP supporter who was arguing against climate change.  There were three arguments proffered by him:

• First, our observations are over too small a period to conclude anything about climate change.
• Secondly, normal fluctuations in climate are so large that its foolish to ascribe the current heating to humans.
• Thirdly, even if climate change is real, its hardly as calamitous as people make it out to be.

Is it time to panic yet?

So, as analysts expected, government has shut down.  Here are some interesting points to note:

• Government shut downs are not that unusual.  While this is the first since the mid 1990s, between the 1970s and 1990s, there had been 17 government shut downs.  Here is a complete list.  

• Since 1980, there was only one shut down that lasted for more than a week - the 1995 shutdown engineered by Newt Gingrich, which lasted 21 days.  During the shut down, the public had largely blamed Clinton but afterwards, Clinton's popularity soared.

• During the last 21 day shut down, more than 7 million tourists were turned away from National Parks, museums and monuments, there was a massive pall in tourism related industries and significant adverse impact on small businesses. The 1996 shut down probably cost $2B according to some estimates, which is actually not all that much in the grand scheme of things.  

• An agency by agency breakdown of impact of the government shut down suggests that a lot of the departments being shut down won't have much impact if this lasts a week, however, as time goes by, the absence of the departments is going to have an increasingly significant impact.  This means that the cost is not linear.  A three month shutdown for instance, could have exponentially more impact than a three week one.

• The biggest issue is that there is another deadline looming - the debt ceiling.  The debt ceiling has to be raised before October 17.  The general assumption is that the fight will be over before then, but what if it is not?  The doomsday scenario is that the GOP ups the ante and adds the debt ceiling to the mix.

Short story here is that the costs are likely low and while an inconvenience and while a few billion dollars is nothing to scoff at, the long run impact will be minimal at best as long as its resolved in the next month or so.

The doomsday scenario is that the GOP adds the debt ceiling to the mix.  We are 17 days away from that. The two longest shutdowns since the 1970s were both longer than 17 days.  If the debt ceiling is added to the mix, then the impact could be devastating.  

Impact of a government shut down

This is an excellent post by the Washington Post explaining the impact of a government shut down. Well over 800,000 people will be furloughed over the course of the next two weeks.  As the Post explains, a government shutdown would likely be expensive, costing at least $2 billion a month.

The government shutdown debate is distracting from the astonishing point.  Remember how the sequester was considered stupid and unthinkable less than a year ago? The continuing resolution being debated, essentially makes the sequester permanent.

Unfortunately, the continuation of the sequester likely cuts investment in science, research, technology and infrastructure in a way that might ultimately degrade the US superiority.  Also, Obama's decision to opt for furloughs rather than layoffs is going to mean that there will be a brain drain from government, essentially eroding the public sector's effectiveness for decades to come.  It might make sense for Obama to stop pretending the sequester is temporary and that sense will dawn, and instead actually cut services and lay-off people.  Obama's current approach punishes loyal employees and minimizes the impact on voters, thereby vindicating the GOP. 

Should Obama negotiate?

The latest news is that the GOP is proposing to hold the budget hostage to their demand that Obamacare be delayed by one year.  Wonkblog is celebrating as this makes it less likely that they will go the brink on the debt limit, which would be far worse.

On the other hand, a government shutdown is now nearly inevitable.  It isn't clear that there is enough time before Monday evening for the Senate to act.

If one were to consider this game of political chess, let's consider the positions of the various groups.

For the House GOP, this was likely their best option.  By proposing a one year delay of Obamacare they start looking reasonable.  They can argue that the issues with the implementation of Obamacare justifies such a delay - it's all to ensure smooth transition.  They are quite rightly banking on the assumption that most people will ignore the fact that these delays have been exacerbated by the fact that many states waited until the Supreme Court decision to act and that the House GOP has consistently been unwilling to provide the necessary funding to accelerate implementation.  So, while the GOP probably should share the blame in the current mess, they likely won't. In fact, Kathleen Parker's view is probably representative of how moderate GOP members will likely give the GOP a pass.

The question is, what's in it for the Democrats.  Well, not much.

1. It is not likely that a year's delay will make the law any more palatable and while some issues may be addressed, issues will likely remain so that the situation will be that we will go into the 2014 elections with Obamacare hobbled by a huge number of issues, while none of the benefits of the law will be apparent.  By contrast, if the law is not delayed, it is likely that most of the kinks will be worked out by early 2014, ensuring that Democrats will enter the 2014 elections with the best chance of touting the law's benefits - which are actually quite extensive.
2. What happens after one year?  The GOP failed to win the Senate, lost ground in the House and lost the Presidency in 2012.  In fact, the GOP received fewer votes than the Dems in the House in 2012. Yet, they are holding the country hostage to force a year's delay in Obama's signature achievement. How likely is it, then, that they will agree to implementation next year, especially when they will have an impending election and likely a stronger electoral position.
3. Implementing it now is likely the best chance the law has of surviving.  Once implemented, it'll be hard to unwind the law.  By the time the 2016 elections take place and the new President enters, the law would have been in operation for three years and the entire industry would be so intertwined with the law that wholesale changes would hurt rather than help.  Should the law be delayed though and if the GOP were to gain a majority in the Senate, it is possible that they could put enough obstacles in the way of the law to give them a fighting chance of repealing the law post 2016.
4. In terms of precedents, if Obama negotiates, it'll set a horrendous precedent.  It'll mean that the GOP could lose successive elections and yet, through a gerrymandered control of the House, blackmail the country to do its bidding.  A future liberal wing could potentially hold the country hostage to get its own way too.  It completely undermines the structure and meaning of the democratic process and the system of checks and balances.
5. Finally, the question for the Democrats is who will get the blame if government shuts down.  It's likely that the GOP supporters will blame Obama and the Democrats, but every polling firm is showing that Ted Cruz's crusade has effectively made this the GOP's baby.  So, the inevitable debacle from Obama's unwillingness to negotiate will likely hurt the GOP and help the Democrats. The Democrats therefore have nothing to lose and everything to gain by standing firm.

The question then is how quickly will the GOP capitulate.  Let's see.  The markets are betting soon. However, we are in nearly unprecedented territory here.  By framing the debate as an Obama vs the GOP issue rather than a focus on issues, the GOP has boxed itself into a position where any sort of climb down that appears to leave Obama unscathed will likely be unpalatable to its Tea Party wing.  As I explained in an earlier post, the fiscal policy objectives of the GOP have been largely met.  So, this really isn't about spending or debt.

We may be in for a game of chicken akin to Arthur Scargill's stand-off against Margaret Thatcher.  So, does Obama have the steel Maggie Thatcher did?

Strangely comforting shutdown

We are now two days from a total shutdown of the US government.  I exaggerate.  Turns out, Obamacare will be going strong.  As will Medicare, Medicaid and Social security.  A lot of defense and "essential services" will continue unabated.  As will departments that have their own sources of revenue such as the postal service and possibly the patent office.  However, most of the rest of the Federal government will effectively shut down next Tuesday, that is unless the GOP relents and negotiates seriously with Obama - something that seems increasingly unlikely.

To explain why this is comforting, one has to understand what John Boehner's alternative proposal was.  At the moment, the GOP is essentially planning to shut down government, but not default on debt.  John Boehner was trying to get his extreme right wing to relent on government in exchange for holding the world hostage on the debt.  If the GOP actually went the debt route, we would be entering uncharted territories.  Never before has any major country, let alone the reserve currency for most of the world, defaulted on debt.  The consequences ... well we have no idea what would happen.  However, no sane economist believes it would be anything other than a catastrophe.

Faced with a choice between a global catastrophe and a US only crisis, a crisis seems almost a relief.  This article in the New Republic summarizes it well.  Here's how they put it:

"First, the lunatics in the House were so determined to stage a confrontation with Obama that they were willing to shut down the government and court a massive backlash in public and elite opinion. Then, in an attempt to save them from this fate, their heroic and noble leadership tried to persuade them to defer these impulses and refocus them on a confrontation (the debt limit) that would have far more destructive consequences, and (in the case of default) earn them still greater amounts of scorn from the public and the media. When the lunatics didn’t go for that, Boehner then tried to bribe them with a laundry list of fantasy items, akin to bribing a 15-year-old male with endless supplies of pizza, video games, and Internet porn. But the lunatics still didn’t go for it because they really wanted to throw their tantrum now, not later, and anyway they weren’t sure Boehner was serious about the pizza and porn. And so, in the internal GOP conflict between pre-modern zealotry and cartoonish levels of cynicism, the zealotry appears to be winning out, to the serendipitous benefit of the rest of us."

What are they fighting for?

As the country heads, yet again, to a budget an impasse over the budget risking a possible government shut down and possibly, worse, a debt default, it is worth considering what this is all about.  As Ezra Klein explains, here is what has happened to deficits as a percentage of GDP:

Basically, post the sequester and the massive cuts Obama has agreed to, combined with an improving economy, slower than anticipated growth in medical costs and an end to the stimulus, deficits have shrunk back to pre-recession levels.  

It is important to bear this in mind as we look at the fight today.  There may be a longer term structural deficit problem, however: (a) that is not what the GOP is seeking to address, and (b) the most compelling issues today are not the deficit or debt.  In fact, by creating uncertainty around debt, the GOP may in fact create a problem where there is none today.

The GOP's latest laundry list of demands includes: "a one-year delay of the president’s health care law, fast-track authority to overhaul the tax code, construction of the Keystone XL oil pipeline, offshore oil and gas production, more permitting of energy exploration on federal lands, a rollback of regulations on coal ash, blocking new Environmental Protection Agency regulations on greenhouse gas production, eliminating a $23 billion fund to ensure the orderly dissolution of failed major banks, eliminating mandatory contributions to the new Consumer Financial Protection Bureau, limits on medical malpractice lawsuits and an increase in means testing for Medicare, among other provisions."  While many of these may be core to the GOPs policies, which of these, if any, are important enough to warrant risking the US credit rating or shutting down government?

Defunding Obamacare

The latest news is that the GOP is threatening to shut down government and default on the debt unless Obamacare is shut down or delayed.  Here are some interesting things to note:

• As Wonkblog explains, while there is a lot of hyperbole about the defunding of Obamacare, most of Obamacare funding actually has been separately appropriated as part of the Patient Protection and Affordable Care Act.  The Department of Health and Human Services has already been denied any funding to help implement Obamacare.  So, it is unclear whether the current budget debate will have any effect.  If the GOP takes this to the brink while "discretionary" government services would be shut down, Obamacare implementation will continue unimpeded. 

• A second interesting factoid is that the GOP budget actually assumes much of the benefits of Obamacare.  It appears that the House GOP budget leaves intact the tax increases assumed in Obamacare and the Medicare savings.  In fact, it also leaves the patient protection part untouched - i.e. it does not impact the coverage of preexisting conditions etc.  The tax and Medicare provisions though are particularly astonishing as the GOP budget would not balance, ever, without them.

• Is this sort of dysfunction and polarization the norm?  This article argues with some excellent data that the dysfunction is actually quite unusual for the recent past, although may have been more common pre 1930s.

• What would happen if the threatened shut down occurs.  Well, it depends.  The sequester has been managed in a particularly interesting manner by Obama where he has reduced long term discretionary investments and instituted furloughs instead of lay-offs and allowing the detrimental effects to flow to operations.  This has meant that the effects have been significantly more muted than predicted, although many economists fear, the long term damage as a result is far more serious.  It isn't clear whether Obama would exhibit the same sort of ingenuity on the shut down.  What is clear though is that the anticipated effects a debt default are far worse.  

• There is a case to be made that the debt ceiling is unconstitutional.  Congress authorized the spending.  Congress authorized the revenues.  The difference is paid with debt.  The 14th amendment states: "The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."  It isn't clear that Congress is empowered to question the validity of debt it authorized by law.

The African century

In this astonishing piece of analysis what the authors show is that the growth rate of the African population will mean that Africa and particularly Nigeria will become one of the most populous parts of the world, likely making it an engine of world growth in the next 100 years.  Of course, we should likely look at the specifics somewhat skeptically given the time horizon.  How likely is it that people sitting in 1913 could have accurately predicted the fate of the world in 2013?  Why do we think we are better?

Is the House really in the grips of conservatives?

Charles Krauthammer is lauding the principled House.  Kathleen Parker also calls the House principled, if a little misguided (like stubborn children refusing to come out of their rooms for supper, even though the alternative is going to bed hungry).

What's all this about?  Well, in an interesting move, after the GOP failed to pass the GOP led Farm Bill earlier, the House has passed the Farm Bill at a second attempt.  The Farm Bill, however, drops all financing of food stamps. The purported reason for this omission is that: (a) Food stamps are a waste, and (b) that its an unrelated measure so should be voted on separately.

Hmmm ... all seems very conservative and principled at first glance.  The problem, of course, as Gail Collins points out, the Farm Bill is not really very conservative and full of unnecessary wasteful handouts.  Here are some pertinent facts:

• The Farm Bill has contained the Food Stamps provision for the last 40 years,  This isn't a last moment afterthought.  It's basically the structure with 40 years precedent.  Conservatism is usually supposed to look for incremental change and not dramatic change.  This sudden separation of the two is pretty radical.
• The error rate and fraud in the agricultural subsidies is massive.
• The Farm Bill includes $147 million a year in reparations to Brazil to make up for the fact that the US was ruled to have violated the World Trade Organization through market-distorting effects of cotton subsidies..
• The House Bill actually increases the amount of subsidies for farmers and increases crop insurance.

Here's Gail Collins' humorous description of crop insurance:

"Crop insurance gets bigger under the new plan. Here’s how: You, the taxpayer, fork over the majority of the cost of the farmers’ policy premiums. (Up to 80 percent in the case of cotton.) Also, you spend about $1.3 billion a year to compensate the insurance agents for the fact that they have to sell coverage to any eligible farmer, whatever his prospects for success. Plus, if yields actually do drop, you have to compensate the insurance companies for part of the cost of claims."

Got all that?  So, the House protected us from the hugely deficit increasing entitlement program called Food Stamps, vowing to pass it separately, only to pass a Farm Bill that increases subsidies and crop insurance to farmers and has stupid unnecessary payments totaling million to keep illegally subsidizing farmers.  That's conservative?  I am not sure what principle Krauthammer and Kathleen Parker think the House adhere's to.

Meanwhile, David Brooks has a scathing piece in which he dissects and tears apart the arguments against the Immigration Bill that is stalled in the House.  As Brooks points out about the Senate Immigration Bill:

• Based on estimates from the Congressional Budget Office, the Senate bill would increase the gross domestic product by 3.3 percent by 2023 and by 5.4 percent by 2033. 
• A separate study by the American Action Forum found that it would increase per capita income by $1,700 after 10 years.
• According to government estimates, the Senate bill would reduce federal deficits by up to $850 billion over the next 20 years. 
• The Senate bill reduces the 75-year Social Security fund shortfall by half-a-trillion dollars.
• According to the C.B.O., the bill would reduce illegal immigration by somewhere between 33 percent to 50 percent.  It does not eliminate illegal immigration, but its much better than the do nothing policy at the moment. 
• Conservatives say they want to avoid a European-style demographic collapse. But without more immigrants, and the higher fertility rates they bring, that is exactly what the U.S. faces.

As Brooks points out, much of the argument on wage depression is wrong, ill informed and not conservative:

"conservatives are not supposed to take a static, protectionist view of economics. They’re not supposed to believe that growth can be created or even preserved if government protects favored groups from competition. Conservatives are supposed to believe in the logic of capitalism; that if you encourage the movement of goods, ideas and people, then you increase dynamism, you increase creative destruction and you end up creating more wealth that improves lives over all."

Hmmm ... seen in this light, can the GOP House's opposition be called very conservative?

Gerrymandering and the current Congressional gridlock

In a recent piece by Jamelle Bouie in The Washington Post, he wonders, "What explains the Republican Party’s intransigence?"  His piece argues two points.  The first point he makes is that it is at least partially due to gerrymandering.  Here's what he writes:

Politico points to gerrymandering as the source of this GOP strength, but that overstates the situation. There’s no doubt gerrymandering plays a part, but the GOP’s current majority has much more to do with geographic sorting and the natural malapportionment of the House. In short, because the Constitution provides a representative for every state, regardless of population, some smaller states have more relative representation than their larger counterparts.

For instance, California — with a population of 38 million — has nearly 717,000 constituents per representative. By contrast, Wyoming has one representative and a population of 576,000 — giving each Wyoming resident a little more representation than a given Californian. When you couple this with political geography — Democrats tend to live in urban centers, Republicans tend to live in rural counties and exurbs — you have a situation where the GOP begins the game with a small advantage that magnifies in situations like 2010, where a large chunk of the country had turned decisively against the Democratic Party. 

Hmmm ... what intrigued me was his claim that there is "no doubt gerrymandering plays a part".  I always get suspicious when people make such emphatic claims and then cite data that does not actually support their claim.

I was unable to get the exact Congressional district by district breakdown, but I did manage to find the 2012 apportionment of Congressional districts, and  2010 census data that was used to apportion the districts.  The chart below shows the resulting distribution of average population by Congressional district by state:

In this chart, red columns represent states where >50% of the congressional districts were won by the GOP in 2012 and blue lines represent states where >50% of the congressional districts were won by Democrats in 2012, with grey being states where they split it evenly.

Note in this chart the higher the average number of people per congressional district, the less each voter's vote counts.  So, lower is better.

Looking at this chart you'll notice that in fact, the GOP does not really have an advantage.  In fact, if you compute the weighted average of the number of voters in Congressional districts won by GOP vs Democrats, assuming the congressional districts are relatively evenly apportioned and are unbiased, you find that the Democrats land up with ~707K people per Congressional district vs GOP lands up with ~710K people per Congressional district, i.e. the Democrats have an advantage.

On the other hand, if you glance through this analysis of margins of victory by Ballotopedia and look at the margins of victory of Congressional seats, it becomes clear that the GOP has 204 seats they won by margins of 10%+ vs 168 such seats for the Democrats.  The system is rigged a little bit more in favor of the GOP than the Democrats.

So, how do we explain the fact that Democrats won more votes than the GOP in the House races and yet lost the House?  The answer is buried in Ballotopedia's analysis: "The average margin for Democratic victors was 35.7 percent, which is significantly higher than the Republican figure of 28.6 percent."

So, let's explain what's happening.  The Democrats win a lot of seats by landslide margins.  The GOP tends to win seats by slimmer but still comfortable margins.  The result is that the GOP wins more seats, while the Democrats waste votes.

Part of this may well be gerrymandering, and if so, it suggests that the GOP purposely designs districts to be less polarized for them than for the Democrats or that the Democrats design their districts to be more Democrat leaning than the GOP.

Another reason may well be a simple question of urban rural divide.  If you look below, you'll see urban areas are almost always Democratic.  If urban areas are overwhelmingly Democratic, short of breaking up urban areas and combining them intelligently with rural areas, the Democrats are likely to have a disadvantage.



In summary, gerrymandering may well be an issue, but its not the whole story.

Jamelle Bouie's other point is that the current climate of intransigence may have more to do with a culture in the GOP  that does not reward compromise, i.e. a culture of ideological purity.  There is no easy empirical way to prove this.  However, there are two considerations that suggest he may be right.  

If you have a safe seat, i.e. a seat that your party usually wins by 10%+ margin, then the key to victory may actually be winning the party's primary.  An example of this is Mark Sanford, who despite many a question about his conduct defeated his Democratic rival in the special election in 2013.  According to ballotopedia, in 2012 the GOP had 245 contested primaries vs 227 for the Democrats.  If you combine this with the fact I mentioned above, that the GOP has 204 safe seats to 164 for the Democrats, you;d conclude that the higher number of safe seats and more contested seats may be driving GOP representatives to be more extreme to pander to their primary voters.

Another interesting hypothesis is that a second more important factor may be at play - a lack of leadership and vision in the GOP.  

In the Democratic party, first with Clinton and then, even more so, with Obama, there has clearly been a national leader who can effectively speak for the party.  The biggest evidence of this has been Obama's ability to forge legislative coalitions to back his policies.  Obama has been able to ram through his agenda with his own party with very little dissent from his ranks.  In fact, Obama's signature accomplishment, The Affordable Care Act, should, by all accounts, never have passed muster with Democrats as it does not really meet the party's platform, yet, he has managed to get his party to sign on.

By contrast, the GOP has had no equivalent voice since Reagan.  Even George W Bush failed to get the necessary votes for his immigration reform initiative, despite his own party having majorities in both the House and the Senate.  That is not to say that the GOP is not disciplined.  However, the GOP discipline appears to be driven by ideology and bottoms up orthodoxy than by leadership which can help them accept difficult decisions.  Without a spokesperson whom the base can trust, the GOP is left to the whims and fancies of its most fanatical supporters.

Repeal of DOMA and immigration

By ruling Defense of Marriage Act (DOMA) unconstitutional in  United States v. Windsor, the Supreme Court has opened the door to the recognition of Gay marriage for the purposes of immigration.  The Huffington Post is reporting that the decision has enabled Bulgarian, Traian Povov, to get a greencard for being married to Julian March.  Meanwhile, a New York City judge halted the deportation of a gay Colombian man married to a U.S. citizen.  So, while state governments are not required to recognize gay marriages, for Federal law purposes, if you are gay and have a same sex marriage anywhere in the world, it seems the Federal government will recognize your marriage.  

The scandal that wasn't and the unproductive Congress ...

If you recall, there was a substantial amount of hullabaloo about the reported targeting of Tea Party groups by the IRS.  There were several GOP Congressmen and various media personalities who suggested that this was an impeachable offense by the White House.  Well, with much less fanfare, more information has surfaced, and it turns out that the "Be On the Look Out" (BOLO) lists the IRS used to target groups included descriptors such as “progressive,” “health care legislation,” “medical marijuana,” “paying national debt” and “green energy.”  Huh?  That doesn't sound very conservative.  Now, the Hill newspaper has quoted a spokesman for Treasury’s inspector general, Russell George as saying that the group was asked by Congressman Darrell Issa “to narrowly focus on tea party organizations.” The inspectors knew there were other terms, but “that was outside the scope of our audit.”  Hmmm ... so much of the outrage, it turns out, was manufactured.

Darrell Issa, as Dana Milbank explains here, has been on a crusade to prove that the Obama administration has done something criminal.  Unfortunately, nearly every investigation they have launched has fallen flat.  Dana's article has a long list of investigations.  Still, the House GOP seems obsessed with doing nothing but investigate Obama.  To see how little Congress has been doing, consider that as of June 29, 2013, the 113th Congress has passed 13 laws (averaging roughly 2 a month).  By contrast, in its two years, the 112th Congress, widely considered one of the most unproductive in history, passed 283 public laws (just under 12 a month).  As former GOP Congressman Ray LaHood laments, there are some 30-40 GOP Congressman who have been elected vowing to do nothing and they have successfully ensured that the Congress does practically nothing, except it seems vent over manufactured scandals.

In hilarious legal responses ...

I recently read an article citing one of the funniest legal responses I have ever read.

Jake Freivald of West Orange Count, New Jersey apparently started a very rudimentary site called westorange.info.  For reasons explained is this article, he got served with a cease and desist notice from the county which I have reproduced below:

Dear Mr. Freivald:

I am the Township Attorney for the Township of West Orange (“Township”). It has come to our attention that, on or about May 13, 2013, you registered and began to use the domain name “westorange.info” (the “Info Domain”). The Township interprets this action as an effort by you to confuse and conflate the Township’s official domain name and Web site with the Info Domain that you maintain.

The use of the Township’s name is unauthorized and is likely to cause confustion [sic], mistake or to deceive the public and may be a violation of the Township’s federally protected rights. The Info Domain falsely creates the impression that the Township is associated or affiliated with the Info Domain. At a minimum, this action has been taken with constructive knowledge of the Township’s name and Web site, and constitutes bad faith use of the Info Domain.

Accordingly, the Township demands that you cease and desist from use, ownership and maintenance of the Info Domain. The Township further demands that, within ten (10) days, the Info Domain be withdrawn from the current registrar, and that you cease all current and future use of the Info Domain, or anything else confusingly similar thereto.

The Township reserves all rights and remedies.

Please be guided accordingly.

Very truly yours,

Richard D. Trenk, Township Attorney

The response his lawyer, Stephen Kaplitt, gave has to be one of the most amusing responses I have ever read.

Stephen Kaplitt: Cease and Desist Response Letter

The local government overreach underlying this case reminded me of another incident in the late 1990s, where the State of Michigan reportedly threatened someone with a $10,000 fine per day because of unauthorized dam building on his property.  Unfortunately for the State of Michigan, the said dams were built not by the owner but by a pair of beavers.  The property owner's humorous reply that made the rounds on the internet was probably a bit of revisionist history, but as this story explains, the basic facts of the story are generally true.

Momentous decisions by the Supreme Court

This week, the Supreme Court handed out four very momentous decisions.

• Shelby County v Holder:  Section 4 of the Voting Rights Act on 1965 was designed to prevent discrimination in voting by requiring a list of state and local governments identified by Congress in the 1960s as having a history of voting discrimination to get approval from the federal government before making any changes to their voting laws or procedures.  In a 5-4 decision, the Supreme Court revoked section 4.

There is a lot of hand wringing about this decision.  The liberal consternation is because according to the 15th Amendment of the Constitution:

"Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.

Section 2. The Congress shall have power to enforce this article by appropriate legislation."

So, liberals suggest that this law, which passed with near unanimous support in Congress derives its legitimacy from section 2 of the 15th amendment.

The decision is best explained at this post.   

To understand the decision we need to understand that just a week before in the Pyrrhic 7-2 victory for liberals in Arizona v. The Inter Tribal Council of Arizona, Justice Antonin Scalia takes pains to explain that the right to decide who can vote rests with the states.  It's part of states' sovereignty.   

In this decision, what Justice Roberts seems to be arguing is that: (a) its extraordinary to override states' prerogative in a discriminatory manner, (b) the law was justified when passed because of extraordinary circumstances, (c) circumstances have changed to a point where the states being discriminated against can't actually be shown to be materially worse than many not under such scrutiny.   

So, in this analysis its irrelevant whether racial discrimination still exists, whether racial discrimination in voting still exists or even whether racial discrimination in voting more common in Section 5-covered jurisdictions than elsewhere.  Instead, to override state sovereignty, what needs to be shown is that the original rationale for section 4 still exists.

The way the decision is worded, it appears to leave preclearance as constitutional and restricts its challenge the formula.  One view, proffered by the Conservatives, suggests that the opinion dooms Section 5 as well, as it suggests that any form of preclearance is wrong.  My own reading is that it might not be exactly right.  If the standard being applied was uniform, based on recent data, and clearly designed to enforce the 15th Amendment it may not fall foul of the Conservatives.  So, arguably, if Congress passes a law that subjects any jurisdiction which breaches a certain threshold of discrimination to a preclearance standard may be constitutional.

• In a 5-4 decision in United States v Windsor, the Supreme Court ruled DOMA unconstitutional.  Under this ruling, wherever the words, husband, wife, spouse or marriage appears in Federal law, the Federal government must defer to the states' definition, i.e. if the states recognize gay marriage, so must the Federal government.  This does not, however, necessitate states which currently ban gay marriage to recognize gay marriage.

• In yet another 5-4 decision in Hollingsworth v Perry, Chief Justice Roberts was joined by Justices Breyer, Ginsburg, Scalia and Kagan in ruling that the proponents did not have standing to appeal the California Supreme Court's decision to rule the California's Proposition 8 banning gay marriage unconstitutional.  With this decision, as of August 1, 2013 gay marriage will be permitted in the District of Columbia and thirteen states: California, Connecticut, Delaware (where a new law takes effect July 1), Iowa, Maine, Maryland, Massachusetts, Minnesota (where a new law takes effect August 1), New Hampshire, New York, Rhode Island (also Aug. 1), Vermont, and Washington.

• In a 5-4 decision on Adoptive couple vs Baby girl the Supreme Court essentially ruled that the law in question, the Indian Child Welfare Act, was designed to protect existing families and not to protect the rights of absentee fathers.  In this case, since the father had not shown any interest in the child until much later, he had essentially relinquished his rights and there was no familial relationship to protect and so it wasn't covered by the Indian Child Welfare Act.  Justice Sotomayer, Ginsburg and Kagan dissented, pointing out the the court's ruling was too broad and would set unwanted precedents for exclusion. Justice Scalia also dissented pointing out that this was a case where there was a biological father who wanted to have a relationship with his daughter.  Now the drama continues as the father claims that the ruling means that others in the Cherokee nation have rights while the adoptive parents want the girl immediately.

It is fascinating to see the conservative justices try to explain their opposition to repeal of DOMA.  After all, DOMA infringes on state rights and is discriminatory.  On the liberal side, while I understand their consternation with the Shelby County v Holder, their argument would suggest that the 15th amendment gives the Federal government unfettered right to intervene in a discriminatory manner in voting, despite the fact that they unanimously agree in  Arizona v. The Inter Tribal Council of Arizona that its a state right.  Surely, that can't be right!  Remember Shelby County v Holder does not rule that the Voting Rights Act is unconstitutional. It does not even, as yet, rule the preclearance requirement in section 5 unconstitutional.  It merely suggests that using a formula for intervention based on the realities in 1960s is unconstitutional as it can't be sufficient justification for overriding state rights.

Immigration bill approved by the Senate

In a 68-32 decision, the Senate approved the immigration bill today.  However, prospects of passage through the House look bleak.  While 100% of Democrats voted for the bill, fewer than 1/3 of Republicans voted for it.  In fact, all five of the senior leadership on the GOP side voted against it.  Here is a list of who voted for and against the bill.

This is a summary of key provisions of the immigration bill.

If the bill is allowed to come to the floor of the House, there is a chance it might pass if the Dems are joined by sufficient GOP members.  The question is whether Boehner will allow the bill to come to the floor for a vote.