Category Archives: CONGRESS WATCH

Investing in the next generation

A bottom-up approach to creating better outcomes for children and youth
By Bruce Katz and Ross Tilchin – The American dream is built on the promise of upward social mobility. Over the course of the past 30 years, the vast majority of our population has seen mobility rates stagnate.1 For too many, the American dream has stalled.

Making greater and more effective investments in children and youth will be the best way to improve social mobility throughout the nation. Research has demonstrated the positive long-term effects of providing a specific set of coordinated interventions from “cradle to career.” Despite the conclusive evidence, our nation has been unable to provide those in need with access to the right kinds of services.

The time to act is now. The question is, who will lead the effort to expand these proven strategies? Over the past decade, it has become apparent that we cannot rely upon the federal government or the states. Washington and many state governments have been hijacked by partisanship, leading to paralysis on or hostility toward many of the policies and interventions necessary for improving outcomes for children and youth.

Locally driven approaches to investing in children and youth are a part of a larger national trend. Over the past decade or so, cities and metropolitan areas have risen to the forefront of national problem solving across a wide range of policy areas. more> https://goo.gl/pj8f25

Did Google and GoDaddy Set a Dangerous Precedent by Dropping a Neo-Nazi Website?

By Jack Denton – GoDaddy’s decision comes at a particularly fraught moment in the debate over whether freedom of speech can be reconciled with attempts to quell hateful discourse and actions. Additionally, with the Internet becoming the preferred mode of public discourse, abusive trolling and rampant falsehoods have led some to call for increased accountability from Internet service providers and social media companies for the content they host and support.

The central question of this debate continues to be: Is freedom worth its consequences?

Preventing people from reaching the Daily Stormer’s website does nothing to actually combat the ideas. There’s the old, famous saying that the remedy for bad speech is more speech—it’s not silencing the bad speech. Hate speech is legal in the United States. And people are going to continue to express themselves in awful ways, and cutting off the domain name isn’t helpful for the dialogue.

Any attempt to try to hold service providers responsible is absolutely bound to backfire. In the marketplace of ideas, we need to have exposure to all sorts of ideas. Good ones, bad ones, fake ones—all of them are valuable in their own way. The reader is the only one whose judgment matters.

The problems in Charlottesville were not problems of speech, they were problems of violence. more> https://goo.gl/YBkDkM

In 1939, I didn’t hear war coming. Now its thundering approach can’t be ignored

BOOK REVIEW

Don’t Let My Past Be Your Future, Author: Harry Leslie Smith.

By Harry Leslie Smith – Because I am old, now 94, I recognize these omens of doom.

Chilling signs are everywhere, perhaps the biggest being that the US allows itself to be led by Donald Trump, a man deficient in honour, wisdom and just simple human kindness. It is as foolish for Americans to believe that their generals will save them from Trump as it was for liberal Germans to believe the military would protect the nation from Hitler’s excesses.

Britain also has nothing to be proud of. Since the Iraq war our country has been on a downward decline, as successive governments have eroded democracy and social justice, and savaged the welfare state with austerity, leading us into the cul de sac of Brexit. Like Trump, Brexit cannot be undone by liberal sanctimony – it can only be altered if the neoliberal economic model is smashed, as if it were a statue of a dictator, by a liberated people. more> https://goo.gl/HaqHQ7

Are Index Funds Evil?

A growing chorus of experts argue that they’re strangling the economy—and must be stopped.
By Frank Partnoy – Index funds have grown exponentially since John Bogle founded Vanguard in the mid-1970s.

The top three families of index funds each manage trillions of dollars, collectively holding 15 to 20 percent of all the stock of major U.S. corporations. Best of all for their investors, index funds have consistently beaten the performance of stock-pickers and actively managed funds, whose higher fees may support the Manhattan lifestyle of many bankers, but turn out not to deliver much to customers.

Concerns about the potential dangers of shareholder diversification first surfaced back in 1984, not long after index funds themselves did. Julio Rotemberg, then a newly minted economist from Princeton, posited that “firms, acting in the interest of their shareholders,” might “tend to act collusively when their shareholders have diversified portfolios.” The idea, which Rotemberg explored in a working paper, was that if investors own a slice of every firm, they will make more money if firms compete less and collectively raise prices, at the expense of consumers. Knowing this, the firms’ managers will de-emphasize competition and behave more cooperatively with one another. more> https://goo.gl/AWXivG

Is America Headed for a New Kind of Civil War?

By Robin Wright – The more relevant question after Charlottesville—and other deadly episodes in Ferguson, Charleston, Dallas, St. Paul, Baltimore, Baton Rouge, and Alexandria—is where the United States is headed. How fragile is the Union, our republic, and a country that has long been considered the world’s most stable democracy?

The dangers are now bigger than the collective episodes of violence. America’s stability is increasingly an undercurrent in political discourse.

Based on his experience in civil wars on three continents, Keith Mines cited five conditions that support his prediction: entrenched national polarization, with no obvious meeting place for resolution; increasingly divisive press coverage and information flows; weakened institutions, notably Congress and the judiciary; a sellout or abandonment of responsibility by political leadership; and the legitimization of violence as the “in” way to either conduct discourse or solve disputes. more> https://goo.gl/W6awUm

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How Trump v Kim can wreck the world economy without a shot being fired

By Larry Elliott – The assumption underlying the muted response is that there will be no war between the US and North Korea, nuclear or otherwise, and that the smart investment play is to buy into any dips.

The markets are part right. It still looks unlikely that Trump will sanction a pre-emptive strike. Kim knows that, which is why he would be dumb to up the ante by aiming some missiles into the sea off Guam first.

But the financial markets – and the broader global economy – could still turn nasty in an repeat of what happened 10 years ago even without a shooting war.

For a start, the world has never really recovered from the last crisis. Growth rates have been weak and have only been possible because years of low interest rates and quantitative easing have encouraged consumers and businesses to rack up large amounts of debt. As the economist Steve Keen notes in his new book Can we avoid another financial crisis (Polity), many countries have become what he calls debt junkies.

“They face the junkie’s dilemma, a choice between going ‘cold turkey’ now, or continuing to shoot up on credit and experience a bigger bust later.”

Keen says the countries to watch out for have two characteristics: they already have high levels of personal debt and have relied substantially on credit as a source of demand in the past five years. Australia, Canada, South Korea, Sweden and Norway are all on his list of candidates to be future debt zombies. But so is China. more> https://goo.gl/f7WBnq

The Psychology of a Nuclear Standoff

By Tom Jacobs – The “nuclear taboo” has held for 70 years for two reasons, according to Jacques Hymans: “the enormity of the decision of use nuclear weapons,” and the unpredictability of the consequences of doing so. Nevertheless, he warns, these are dangerous times.

New nuclear states have always been highly interested in trying to use their weapons as means of compellence, i.e. threats to get some benefit. New leaders have also had such tendencies. This is understandable, because it takes time and experience to accept the counterintuitive reality that the biggest bomb in the world is mostly useless as a military weapon, and therefore also useless as a means of compellence. So, history teaches us that both the U.S. and North Korea at present are liable to try to push their nuclear luck. That makes for a dangerous situation.

The chances are higher that the U.S. will launch first. But this would be a terrible humanitarian catastrophe and the U.S. would lose Asia politically for a hundred years. more> https://goo.gl/CtHxCU

A decade after the crisis’ first tremor, are we ready for another?

By David Wessel – It was 10 years ago, on Aug. 9, 2007, that France’s BNP Paribas suspended withdrawals from three funds that held U.S. mortgages, a move seen in hindsight as the first tremor of the global financial crisis that shook the world economy.

So this seems a good moment to ask if we are ready for the next financial crisis. The short answer is: No.

Dodd-Frank created a way to “resolve” (that is, wipe out the shareholders, convert some debt to equity and sell off the pieces) of any future Bear Stearns, Lehman Brothers or AIG so that the Federal Reserve and other agencies don’t have to improvise the way it did in 2008 and we don’t suffer the aftershocks of a Lehman-style bankruptcy. This “orderly liquidation authority” is under assault from Republicans in Congress. My bet is that it will survive, but we really won’t know how well this new mechanism works until it has been tested.

The politics of responding to an economy-shaking financial crisis are never easy: What’s needed to protect the economy from another Great Depression will never be popular politically because it looks like bailing out the very folks who created the problem in the first place. more> https://goo.gl/btZKrd

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Remaking the Presidency

By Joseph P. Williams – The willingness to buck convention, smash important precedents and use Twitter like a shotgun has historians and analysts considering whether the impulsive CEO president, unbound by political customs and arguably unaware of limits to his authority, has redefined the office for his successor while tailoring it for himself.

“Trump was elected to blow up the office,” says Jeremi Suri, a historian and scholar at The University of Texas-Austin. Mission accomplished, Suri says – but at a price, for the Republican Party, the president’s own legacy and perhaps American democracy.

“You’re going to see something about presidential reforms coming out of this horrible period we’re in right now,” Suri says. Trump, he says, has destroyed “the myth of a true government outsider” running the country, and likely has paved the way for an experienced outsider, like a governor or low-profile congress member, to take his place.

In the next election cycle, “we’re likely to see a full sweep – a new Congress intent on curbing presidential power and recalibrating the checks and balances.”

“The Trump style of the presidency has only resonated with about 30 to 35 percent of the public,” says Jonathan Turley, who notes that a president’s public-approval rating is directly proportional to his or her leverage with Congress. That means Trump is operating at a power deficit, he adds, and therefore “I’m not sure that future presidents would view this administration as a model to replicate.” more> https://goo.gl/Dv7Dwn

Why a Consumption Tax May not Make any Sense at All

By Steve Roth – You often hear calls out there — mostly from Right economists but also from some on the Left — for a consumption tax in the U.S. As presented, it’s a super-simple idea: tally your income, subtract your saving, and what’s left is your consumption. You pay taxes on that.

We want to encourage thrifty saving and discourage profligate consumption, so what’s not to like?

Start with a simple pared-down household. The only accounting complication is that they own a house.

How much did this household “save”? Should the interest payments count as consumption? The principal payments almost certainly should not. But what about home maintenance? A new paint job increases your home’s asset value. Should you depreciate that asset value over some years? Or say you buy new appliances for your kitchen: You’re cash out of pocket, but your home is worth more. Are those purchases “consumption”?

This notion of some simple tally of your “saving” starts to look more complicated.

The tuition line raises a particularly vexing question, and brings us back to the second question: what economic effects would we see from a consumption tax, under various accounting and taxation rules? Clearly, if you tax tuition, you discourage education.

And consider more-prosperous families paying for private school. Are those families “consuming” more education than public-school families? Those households would be especially hard hit if tuition counts as taxable consumption — as would those private schools. Is that A Good Thing? more> https://goo.gl/LZSRZd