Update no.478

Update from the Heartland

No.478

7.2.11 – 13.2.11

Blog version: http://heartlandupdate.blogspot.com/

To all,
The follow-up news items:
-- The U.S. Transportation Department reported on its 10-month study of unintended high-speed acceleration in Toyota automobiles [430, 448]. With the technical assistance of NASA, the USG eliminated the electronic engine control system as the cause of the accelerations and concluded the two mechanical defects previously identified -- sticking accelerator pedals and gas pedals that can become trapped in floor mats -- are the only known causes, and both issues were the subject of large recalls by Toyota. The company paid an enormous price for hysteria.
-- In the category of “be careful what you wish for,” after weeks of protests [477], President Muhammad Hosni Sayyid Mubarak of Egypt turned over all power to the military on Friday evening and left Cairo. Mubarak and his wife, Suzanne, flew by helicopter to their resort home in Sharm el-Sheik. The Armed Forces Supreme Council led by Field Marshal Mohamed Hussein Tantawi Soliman either executed or are the benefactors of what amounted to a bloodless coup d’état. The Council moved quickly to restore order and return Tahrir Square to its pre-protest condition. The military dissolved parliament and suspended the constitution, meeting two key demands of pro-democracy protesters. According to the latest Council communiqué, the military will run the country for six months, or until presidential and parliament elections can be held (expected by or in September 2011). The rumblings of democracy and people seeking freedom continue to spread across the Middle East as the suppressed and restive citizens of Tehran defied the mullahs of the Islamic Republic of Iran. I do not expect Egypt to repeat 1979, but I suspect the country will move toward greater religious influence, which in turn I truly hope I am wrong.

Three recent newspaper articles helped bring the situation in North Africa and the Middle East into focus for me – one is a journalistic offering and the other two are Op-Ed’s.
“N.Y.U. Report Casts Doubt on Taliban’s Ties With Al Qaeda”
by Carlotta Gall
New York Times
Published: February 6, 2011
http://www.nytimes.com/2011/02/07/world/asia/07afghan.html
and
“Democracy supporters should not fear the Muslim Brotherhood”
by Abdel Moneim Abou el-Fotouh
Washington Post
Wednesday, February 9, 2011
http://www.washingtonpost.com/wp-dyn/content/article/2011/02/09/AR2011020905222.html?wpisrc=nl_opinions
and
“What the Muslim Brothers Want”
by Essam el-Errian, Op-Ed Contributor
New York Times
Published: February 9, 2011
http://www.nytimes.com/2011/02/10/opinion/10erian.html?_r=1&nl=opinion&emc=tya1
The issue for me has never been religion or even political affiliations. Like virtually every human being on the planet or who has ever existed, my wants & needs are actually very simple; I was to live in a safe, secure environment where people respect and treat others as they wish to be treated, and prosper so that our children can enjoy a better life than we had. In my travels across the Big Blue Marble, I have found commonality and unanimity regardless of language, ethnicity, religion, cuisine or condition. Was the Afghan Taliban linked to al-Qaeda? The answer depends upon definitions and perspective. Is serious concern, perhaps verging on fear, of events in Egypt rational? Again, the answer depends upon definitions and perspective. We tried and supported (perhaps tacitly) a revolution we thought would depose a repressive, autocratic dictator, and lead to democracy and freedom of choice in the Middle East. What we actually got was an oppressive theocracy bent on sponsoring surrogates to export their evangelical jihad to their neighbors and literally across the globe. So, why is the United States walking a very thin, precarious line between freedom and democracy, and stability and cooperation? To me, the answer lies three decades past. In short, better the devil you know. The Muslim Brotherhood asks us not to fear them for the future of Egypt. Unfortunately, they are asking us to buy a pig in a poke. We do not fear the Taliban, the Muslim Brotherhood or even al-Qaeda. We do fear the violence they export to their neighbors and to us. I want the People of Egypt (and all of mankind) to enjoy the rich rewards and pleasures of freedom, but I cannot tolerate those who seek to impose their will on others and are willing do use violence to achieve their objectives. I could have supported the theocracy of Iran as the free choice of the Iranian people, or the virulent fundamentalism of the Taliban as the free choice of the Afghan people, but I cannot and never will accept those who seek to export their evangelism by violence. I know Muslims will not appreciate the example, but Israel is a reasonable model –secular, democratic governance with a strong religious tone. Frankly, the prominence of religion in Israel is higher than I care for, but the same can be said for Kansas. Yet, Israel has never sought to impose its state religion on others [I note with specific intent the contradiction in the persistence of their settlement construction on the West Bank, AKA Palestinian territory]. Anyone can try to dilute, deflect, or discourage our fear of the popular uprising in Tunisia, Yemen, Egypt, Jordan, and elsewhere, but it will not be successful. The adverse, destabilizing, destructive and corrosive consequences of the Islamic Republic of Iran are all too real and fresh in my mind and others. If the Muslim Brotherhood wants the West to accept them, they must extend themselves to convince us they are not just another flavor of fundamentalist jihadists bent upon domination by their religion and ideology.

In the wake of Florida v. HHS [477], I read Ayotte v. Planned Parenthood [546 U.S. 321 (2006); no. 04-1144] – a pivotal contributor to Judge Vinson’s ruling. Associate Justice Sandra Day O'Connor delivered the opinion for a unanimous Court in a succinct, direct opinion, which substantiated Judge Vinson’s decision regarding the principle of severability and his declaration of unconstitutionality against the whole of PPACA due to the essential integration of the “individual mandate.” However, it was the happenstance of separate congressional action that triggered this opinion segment. The newly invigorated and inspired Republican-controlled House of Representatives chose to impose its moral agenda on We, the People, as they introduced and pushed H.R.3 – the No Taxpayer Funding for Abortion Act. Why is it that we seem to have such a driven penchant for making private decisions we do not like illegal, as if making it a crime will solve the problem? I want all abortions to be relegated to the scrapheap of archaic medical procedures whose day of relevance has past. I have never been an advocate for abortions. Nonetheless, I am even less a proponent of the State taking control of a woman’s body to dictate what can and cannot be done by a medical professional to treat her condition. Making a very private choice illegal simply is NOT the way to end abortions. HR.3 penalizes the women most in need of our support and assistance. I urge all citizens to communicate with their representatives to reject the foolish symptomatic HR.3 legislation. Let us focus on the root cause(s) rather than the symptoms. Our objective should and must be children who are loved, nurtured and cherished . . . not the domination of our particular ideology.

News from the economic front:
-- The People's Bank of China (PBOC) – the PRC’s central bank – announced it will raise the one-year yuan lending rate to 6.06% from 5.81%, and the one-year yuan deposit rate to 3.00% from 2.75%. The PBOC raised its benchmark rates for the first time in nearly three years on 19.October, and once again on 25.December.
-- The Obama administration has taken the first steps reportedly intended to remove Fannie Mae and Freddie Mac from the mortgage lending business. The administration’s proposal lays out three options for what could take the place of the two mortgage giants and setting the stage for a lengthy debate over the nation's US$10.6T mortgage market. Fannie and Freddie have accounted for nine of 10 new loan originations in the past year.
-- The Japanese government reported the country’s 4Q2010 Gross Domestic Product (GDP) decreased 1.1% in annualized, seasonally adjusted terms, slowing sharply from a revised 3.3% rise in the previous period. Prime Minister Naoto Kan and his government grapple with prolonged deflation, a staggering public debt, the end of auto subsidies depressing car purchases, a new tobacco tax hit cigarette sales, and the strong yen contributed to an export slump. As a consequence, the PRC replaced Japan as the world's second-largest economy, ending Japan’s 42-year reign in that position.

Comments and contributions from Update no.477:
A regular contributor sent no comment, just a link to this essay:
“Does Behavioral Economics Undermine the Welfare State?”
by James Kwak
The Baseline Scenario
Posted: February 6, 2011 at 1:09 pm
http://baselinescenario.com/2011/02/06/does-behavioral-economics-undermine-the-welfare-state/
My response:
I eagerly await your opinion of the Kwak essay?
First, although Kwak does not explicitly say it, the generalizations of Caplan & Beaulier are offensive prima facie and far too simplistic to be helpful. I have many thoughts after I read Kwak’s words . . . where do I begin?
We have discussed various aspects of this question . . . although in the guise of other topics. “Behavioral economics” boils down to attitude or personal, private thought, i.e., what motivates any particular individual? Much of what Kwak chooses to note from Caplan & Beaulier are symptomatic rather than fundamental, it seems to me. I can think of examples that cross virtually every line they have drawn.
After reading Judge Vinson’s reasoning regarding the “individual mandate” in Florida v. HHS [477], I was struck by the same impression as I was reading Kwak. The government cannot dictate or even ascertain what an individual citizen is thinking of, worried about, motivated by, or desirous of relative to the government’s motives or objectives, or even another person’s thinking. If the government cannot figure it out, none of us can. Case in point, we think we know our wives, but do we really? So, any intention to dictate what another person is going to do, given certain stimuli is destined to failure or disappointment in a free society. Further, as in Florida, once a state or citizen has fed at the public trough, it is extremely difficult, if not impossible, to wean them off public assistance; it is true for farm subsidies, welfare checks, earmark funding, all of it.
Rather than the presumption of knowledge and understanding explicit in Caplan & Beaulier [at least as represented by Kwak], my suggestion / recommendation for government is focus on factual public actions. They may have a point that offering welfare recipients choices may well be counter-productive; I just cannot support their reasoning to get there.
As you well know by now, my attitude toward addicts, alcoholics, nicotine-fiends, pedophiles, or any anti-social compulsive behavior rests upon acceptance and tolerance of their personal choices, while eliminating the potential for collateral damage to other uninvolved or innocent people. Some citizens are homeless by choice rather than circumstance. Some people choose not to have health insurance . . . for any one or combination of myriad reasons. Our task as a society is to filter and stratify those who need public assistance, so that we can respond accordingly.
Also, as we have discussed, poverty is irrelevant. Neither Amazon Indians or Bedouin herders have or use money; thus, by our definition, they are poor and in need of public assistance. We establish better criteria and metrics to accommodate a citizen’s freedom of choice. One thing that is certain for me, public assistance should be constructed to be productive to public ends, to be effective for the individual, and above all, to be time constrained to outcomes.
. . . to which I received this contribution:
“What Kwak argues is that ‘behavioral economics,’ as proposed in the article, is a set of unsupported and/or misused assumptions that add up to a Theory X approach not just to workers but to people in general. He says, and I agree, that this approach of assuming that poor people are lazy and are poor because they chose to be is wrong much more often than it's right and is simply a set of assumptions used to save money for the owners of conservative politicians. See also the article on ‘culture of cruelty’ that I sent a while back.
“I have yet to see any study or to experience any homeless people who agree that they are homeless by choice. Somebody somewhere might be so opposed to the health care system that they do not want health insurance, but I have yet to meet them or see a study supporting that idea either. What evidence supports your statements? My personal experience fails to support your additional assertion that people who have received assistance cannot be removed from that state. I and others I know have worked very hard and risked our health via the health insurance issue to leave the public assistance rolls. (By the way, calling that ‘feeding at the public trough’ is seriously insulting to me and to others who have received various forms of assistance. Do you apply that to the various military contractors?)”
. . . my response to round two:
Although we are looking from different perspectives, I believe we are agreed on Kwak’s assessment of Caplan & Beaulier. Such generalizations from any perspective are rarely accurate or applicable at the individual level. As previously noted, I do not share the “culture of cruelty” notion as a descriptor of American society or even the conservative segment.
A philosophical thread in my Anod’s series of novels is what I call the “lottery syndrome.” In short, how many people would continue to work if they won the lottery, i.e., acquired substantial individual wealth? I contemplate the evolution of free societies like ours in the environment of rapidly expanding technological sophistication and use of automation.
Freedom works both ways. I struggle with both sides – private freedom of choice and accountability for one’s choices. The notion of the “culture of cruelty” hypothesis seems to rest upon an assessment of entitlement, i.e., every human being, or at least every American, is entitled to a certain threshold standard of living as defined by liberals; thus, anything below the threshold is intentionally inflicted cruelty. I do not want anyone to suffer, but I also do want the fruits of my labor to be abused by someone else who chooses not to contribute to society. How do we help those who want and need assistance to become productive from those who feel entitled to a good life without contribution?
I am not aware of any studies either regarding homelessness, rejection of health care, poverty or other social topics. I imagine they exist if I took the time to go search for them. I simply try to think through the variations and options.
No insult or disparagement intended. I just hope you recognize that you are not representative of all people who are classified as poverty-stricken or have risen above the notional poverty level. I also trust you recognize there are bad people in the region of what we call poverty. The point Caplan & Beaulier were trying to make, in my humble opinion, was some folks do not respond well to public assistance – my usual example being the NYC crack-addicted prostitute who keeps popping out children so she can collect more welfare money to feed her habit. That is abuse . . . in a myriad of ways. So, how do we help good citizens like you without contributing to the abuse of that woman in NYC?
BTW, yes, I do apply the same descriptor to military contractors, mega-farms, politicians, lobbyists, and many other less worthy entities who “feed at the public trough.”
. . . round three:
“I learned some time ago the pitfalls of unassisted logic. Therefore, I seek evidence about anything important to me. I also make a point of knowing how to evaluate that evidence for reliability in terms of the methods used to gather it, potential conflicts of interest, and correlation versus cause and effect. This gives me and others much more confidence in my outcomes.
“In terms of the issues of homelessness by choice and refusal to accept health insurance, I have only personal experience to support my opinions. It should go without saying that I do not accept unsupported opinions, especially as seen on TV and other mass media. Within the next few days, I'll take a look at my college's student research resources for a clearer idea about research on these issues. I suspect that research is sparse or nonexistent because of the obvious drawbacks to these conditions.
“I have talked to at least a dozen members of AA and one in Al-Anon who have been homeless in missions or by sleeping outdoors. Each of them saw homelessness as a very undesirable condition, although the Al-Anon person noted that it was less stressful that contact with his dysfunctional family. None of these people thought a mission or outdoors was a good place to live. My personal experience supports that. Of course, I know people online (and a few I've met in person) who live in RVs or motor vehicles. Some of those living in vehicles share the view of themselves as homeless and in deep trouble; others who fit the definition, see themselves simply as not tied down. Those who fit the definition but reject it include include RVers with quarter-million-dollar rigs and a variety of working IT people. We need to change our definition of ‘homeless’ to exclude them, not our attitude about those who are legitimately homeless.
“In the case of health insurance, I long ago lost track of the number of uninsured people I know. I have not talked to anyone who does not want health insurance, and I know of nobody who would rather ‘rip off the system’ than pay for medical care. I know people who will do whatever they must do in order to get care, but all see insurance coverage and/or Medicare as a much more desirable option. I am currently in that situation, and I see it as dramatically undesirable. While people who prefer not to have health insurance may exist somewhere, I confidently dismiss them as a factor in my opinions.
“I have been playing the ‘big’ lottery when I could afford it and remember to buy the ticket for over thirty years, and I have put serious thought into what I would do if I won. I probably would not do ‘productive’ work until I got my fill of travel, but even then I would occasionally need things to do. Eventually, I would find a fulfilling way to spend my time, which would mean somehow contributing something useful to the world. I never knew whether I was ordinary or an outlier until I began watching a TV show called Lottery Changed My Life. They profile lottery winners, as one might expect. The point that applies here is that most of them work. If they have jobs they like when the win, they stay on. If not, they get something they like better or, more often, create their own businesses. Those who don't work, a minority, typically spend their time with family or volunteering.
“I do not see the ‘culture of cruelty’ as directly hateful, but as a means of justifying runaway greed and the unwillingness to face others' distress. It has become entirely too easy to claim that justify mistreatment of other by saying, essentially, that they would not appreciate being treated as worthwhile human beings anyhow. In a social species, this is dangerous to the species. We need other people. If my prior examples of lions and wolves fail to move you, consider elephants. They have no natural predators and need no help finding food, but yet they take good care of one another. This is because they are social animals. So are we.”
. . . my response to round three:
“Unassisted logic” . . . ay. Well played! I try to collect factual evidence to support my opinions, however time and capacity do not always allow the process. My opinions are not always factually substantiated, but that does not hinder my penchant for rendering opinions. As always, you are welcome and encouraged to discount my opinions accordingly.
As with so many of the social issues we discuss, definitions and perspective are essential. I bow to your experience and research; I have neither. To understand, allow me to ask . . . If a man gambles away his income, his savings, his home, did he choose to be homeless? I think you hit the point precisely; we need to change our definition of homeless. By our current definition, an Amazon Indian or a Bedouin herder are homeless; they are poverty-stricken; yet, they are happily content. As we have discussed before, we tend to view others from our experience, our standards, our perspective (which I might add has led us into the labor situation we have today).
As with so many human conditions, cause & effect cannot be ignored. A person who does not own a home, and has no job or other means of support, has no ability to acquire sustenance and protection, which includes health insurance for medical & dental coverage in case something goes wrong. As a personal level, I’m not sure this is particularly different from the corporate bailouts of the last recession – we are paying for their mistakes. Freedom is choices AND accountability for those choices.
As suggested earlier, the filtration process needs to be refined. I understand mistakes. We all make mistakes. My concern remains abuse. I think most Americans would eagerly and enthusiastically assist those who truly and want help. I hold no compassion nor interest in support those who abuse our generosity. Likewise, I hold no animosity toward those who choose to gamble, consume drugs, alcohol, tobacco, prescription drugs, or snort bath salts, glue, or any other intoxicant; but, when an individual’s indulgences, proclivities or personal choices causes any harm, injury or even threatens another human being, then the line has been crossed. So, how do we filter the abusers from the worthy?
Re: the individual mandate. Despite the liberal condemnation of the judge’s ruling in Florida v. HHS [477], the individual mandate is unconstitutional and simply wrong. There must be a better way. I want all citizens to have access to proper health care, but dictating to all citizens is counter-productive. Yet, overhead charges for unrecoverable Emergency Room expenses in every hospital is equally not acceptable.
To be candid, at my age, I would retire and write full time, if Jeanne bought my freedom with her winning lottery ticket. It seems to me, the key is enjoying what we are doing.
In 1867, Karl Marx published Das Kapital: Kritik der politischen Ökonomie, in which he describes the injustice of capitalism and urged the oppressed masses rise up and take what is rightfully theirs. I do agree with you that as social animals we should take care of one another – protection of the collective. Again, the difficulty remains, where do we draw the line? Does a man who dropped out of high school, who may work at an entry level job as a manual laborer, deserve the same benefits and standard of living as a doctor or lawyer who works through six to ten years of post-secondary education? Where do we draw the line? How do we draw the line? How to we fulfill the relationship between contribution and reward? Communism is a magnificent ideal, just not a practical system of governance in a free society.

My very best wishes to all. Take care of yourselves and each other.
Cheers,
Cap :-)