Sun-hong’s online journal


January 16, 2009 Op-Ed Columnist Forgive and Forget? By PAUL KRUGMAN
January 16, 2009, 3:02 pm
Filed under: Uncategorized

Last Sunday President-elect Barack Obama was asked whether he would seek an investigation of possible crimes by the Bush administration. “I don’t believe that anybody is above the law,” he responded, but “we need to look forward as opposed to looking backwards.”

I’m sorry, but if we don’t have an inquest into what happened during the Bush years — and nearly everyone has taken Mr. Obama’s remarks to mean that we won’t — this means that those who hold power are indeed above the law because they don’t face any consequences if they abuse their power.

Let’s be clear what we’re talking about here. It’s not just torture and illegal wiretapping, whose perpetrators claim, however implausibly, that they were patriots acting to defend the nation’s security. The fact is that the Bush administration’s abuses extended from environmental policy to voting rights. And most of the abuses involved using the power of government to reward political friends and punish political enemies.

At the Justice Department, for example, political appointees illegally reserved nonpolitical positions for “right-thinking Americans” — their term, not mine — and there’s strong evidence that officials used their positions both to undermine the protection of minority voting rights and to persecute Democratic politicians.

The hiring process at Justice echoed the hiring process during the occupation of Iraq — an occupation whose success was supposedly essential to national security — in which applicants were judged by their politics, their personal loyalty to President Bush and, according to some reports, by their views on Roe v. Wade, rather than by their ability to do the job.

Speaking of Iraq, let’s also not forget that country’s failed reconstruction: the Bush administration handed billions of dollars in no-bid contracts to politically connected companies, companies that then failed to deliver. And why should they have bothered to do their jobs? Any government official who tried to enforce accountability on, say, Halliburton quickly found his or her career derailed.

There’s much, much more. By my count, at least six important government agencies experienced major scandals over the past eight years — in most cases, scandals that were never properly investigated. And then there was the biggest scandal of all: Does anyone seriously doubt that the Bush administration deliberately misled the nation into invading Iraq?

Why, then, shouldn’t we have an official inquiry into abuses during the Bush years?

One answer you hear is that pursuing the truth would be divisive, that it would exacerbate partisanship. But if partisanship is so terrible, shouldn’t there be some penalty for the Bush administration’s politicization of every aspect of government?

Alternatively, we’re told that we don’t have to dwell on past abuses, because we won’t repeat them. But no important figure in the Bush administration, or among that administration’s political allies, has expressed remorse for breaking the law. What makes anyone think that they or their political heirs won’t do it all over again, given the chance?

In fact, we’ve already seen this movie. During the Reagan years, the Iran-contra conspirators violated the Constitution in the name of national security. But the first President Bush pardoned the major malefactors, and when the White House finally changed hands the political and media establishment gave Bill Clinton the same advice it’s giving Mr. Obama: let sleeping scandals lie. Sure enough, the second Bush administration picked up right where the Iran-contra conspirators left off — which isn’t too surprising when you bear in mind that Mr. Bush actually hired some of those conspirators.

Now, it’s true that a serious investigation of Bush-era abuses would make Washington an uncomfortable place, both for those who abused power and those who acted as their enablers or apologists. And these people have a lot of friends. But the price of protecting their comfort would be high: If we whitewash the abuses of the past eight years, we’ll guarantee that they will happen again.

Meanwhile, about Mr. Obama: while it’s probably in his short-term political interests to forgive and forget, next week he’s going to swear to “preserve, protect, and defend the Constitution of the United States.” That’s not a conditional oath to be honored only when it’s convenient.

And to protect and defend the Constitution, a president must do more than obey the Constitution himself; he must hold those who violate the Constitution accountable. So Mr. Obama should reconsider his apparent decision to let the previous administration get away with crime. Consequences aside, that’s not a decision he has the right to make.



Reckonings; Power and Profits By PAUL KRUGMAN
January 11, 2009, 3:43 am
Filed under: Uncategorized
January 24, 2001

Reckonings; Power and Profits

”Let them eat cake!” cried the new president’s friend, a key campaign supporter who was also a prominent advocate of bakery deregulation, not to mention the owner of a chain of cake shops.

O.K., not exactly. Kenneth Lay, chairman of Enron, was a prime mover in George W. Bush’s presidential campaign; he has also been an influential voice in favor of electricity deregulation, and Enron is profiting handsomely from the electricity it sells in California. But what he actually said was that California’s power consumers ”need to see the price signals [that is, pay much more] and start modifying behavior to reduce demand until we get new supplies.” He also rejected the plea of California officials for a federally imposed cap on wholesale electricity prices, arguing that this would merely ‘’start spreading the shortage around.” And his friend the president has echoed his views.

Full disclosure: Before this newspaper’s conflict-of-interest rules required me to resign, I served on an Enron advisory board that turns out to have been a hatchery for future Bush administration officials. (What was I doing there? Beats me.) I can’t say that I got to know Mr. Lay well, but I presume that he is an honorable man. He was, I assume, sincere in those remarks — which one can’t say about everything one has heard from former members of that board — and he also, one must admit, has a point. But in a deeper sense he is missing the point.

It’s true that the California power system lacks adequate conservation incentives. The regulated prices paid by homes and businesses do not rise or fall with the wholesale price. So even in a situation of severe shortage, with wholesale electricity selling for many times its normal price, individuals have no incentive to cut back; that is why there are blackouts.

Why didn’t California deregulate the whole shebang? For a very good reason: The distribution of power, its actual delivery to your house, is still a ”natural monopoly” — you can’t have multiple power lines running down each street. It would have been bad economics and worse politics to give the utilities that distribute electricity free rein to exercise their monopoly power. Someone should have warned that the system needed nonetheless to give consumers an incentive to conserve during power shortages; but the enthusiasts for deregulation led state officials to believe that power would be so abundant that such technical details wouldn’t matter.

Clearly, it’s a priority for California to revise that pricing system. But even so, there is a very good case for a wholesale price cap; far from ‘’spreading the shortage,” such a cap would probably increase short-term supplies, and provide some much-needed financial relief.

The most pressing problem, after all, is not the blackouts but the imminent bankruptcy of the utilities; their financial distress also indirectly contributes to the blackouts, because of the difficulty they have in paying suppliers. And the wild wholesale market also, arguably, leads to another source of reduced supply: power-generating companies have a clear incentive to produce less than they can, because doing so drives up the prices they get on what they do produce. A temporary price cap would both take off some of the financial pressure and reduce the incentives to ”game the system.”

And there’s a deeper principle involved, too.

Nobody to the right of Ralph Nader denies that prices have to be allowed to serve a role as ‘’signals” of shortage or abundance, that the profit motive is what makes our economy run. But even now the public rightfully draws a line, fuzzy but real, between profits and profiteering. Natural gas prices that rise in a cold winter are acceptable; $10 a gallon for bottled water after a hurricane is not.

And one can sympathize with the many people in California who feel that what is happening to them falls on the wrong side of that line — that the Houston-based companies that helped sell naive officials on the glories of a deregulated market are now saying: ”Sorry, it hasn’t worked out the way we promised, but tough luck — you’ll pay the cost for our mistake, and we’ll profit. And don’t even think about alternatives — our friend the president won’t let you try them.” It’s not entirely fair — but it’s not entirely unfair, either.

Houston, you have a problem.



Reckonings; Jerking The Other Knee By PAUL KRUGMAN
January 11, 2009, 3:36 am
Filed under: Uncategorized

January 21, 2001
Reckonings; Jerking The Other Knee

Remember the knee-jerk liberals? Washington used to be full of people who viewed greedy businessmen as the root of all evil, who thought that a new government program was the answer to every problem. Some of them wielded influence in the early Clinton administration. But after the defeat of the health care plan, they were sent into exile. Bill Clinton became a pragmatist, someone who appreciated the virtues of the market without deifying it and understood the limits of government without demonizing it.

Out with the old knee-jerks, in with the new. The new guys in town are knee-jerk conservatives; they view too much government as the root of all evil, believe that what’s good for big business is always good for America and think that the answer to every problem is to cut taxes and allow more pollution.

In a way, the controversy over John Ashcroft has actually obscured the picture. With all eyes focused on the startling prospect that a champion of the religious right will become attorney general, George W. Bush’s hard line on other issues has not been fully appreciated.

One of those issues is, of course, the question of whether we ought to have a huge tax cut tilted toward the affluent. Many pundits thought that Mr. Bush would scale back his tax plan. Not a chance; instead, his people have only intensified their push, insisting that the tax cut is needed to prevent a recession.

To his credit, the nominee for treasury secretary has been a less than enthusiastic team player. In his Senate hearing, Paul O’Neill came remarkably close to damning the whole sales pitch with faint praise. ”I’m not going to make a huge case that this is the investment we need to make sure we don’t go into a recession,” he conceded. ”But I don’t know why we wouldn’t want a tax cut now. It wouldn’t hurt.” The good news here is not that Mr. O’Neill knows that his boss is making a bogus argument; Mr. Bush’s inner circle knows that too. It is that the new treasury chief has some scruples about saying things that he knows to be untrue. I wonder how long that will last.

Meanwhile, the clear and present danger to the economy is not the putative recession, but the power crisis in California. Mr. Bush made his first remarks on the subject last week, and they were revealing.

First, he rejected summarily the idea that the federal government might impose a temporary cap on wholesale electricity prices. One wouldn’t have expected him to endorse such a cap just yet. Although there is actually a very good case for a price cap as an emergency measure — under current circumstances it would probably lead to increased production — that case takes some explaining. But it is a bit surprising that Mr. Bush would so thoroughly foreclose his options, especially when one bears in mind the political embarrassment that the profits from those soaring prices go in large part to generating companies based in, yes, Texas.

Even more surprising was Mr. Bush’s decision to use the occasion of the Western power crisis mainly as an opportunity to criticize environmental regulations, declare that when it comes to restoring salmon he won’t give a dam, and call for oil drilling in wildlife refuges. It’s true that federal (not state) air-quality rules are among the factors limiting power production in California. But they are not central to the crisis, and Alaskan oil has nothing at all to do with it. One can only conclude that just as Mr. Bush sees the economic slowdown as an opportunity to sell tax cuts, he sees the power crisis as an opportunity to sell weakened environmental protection.

There will soon be other economic tests for the new administration. How, for example, will it deal with the prospect of a series of airline mergers — mergers that will further reduce competition in an industry where monopoly pricing is already a big problem? Somehow I have a feeling that I know the answer.

So in case you imagined that given the fact that the other guy got half a million more votes something bipartisan might be about to happen, forget it. Even before taking office Mr. Bush has made a number of policy decisions, and on not one of them has he deviated an inch from a knee-jerk conservative position. Were you expecting something different?

* Copyright 2009 The New York Times Company
* Home
* Privacy Policy
* Search
* Corrections
* XML
* Help
* Contact Us
* Work for Us
* Back to Top



Reckonings; No Tipping, Please By PAUL KRUGMAN
January 8, 2009, 4:39 pm
Filed under: Uncategorized

April 12, 2000
Reckonings; No Tipping, Please
By PAUL KRUGMAN

More than 20 years ago I fell in love, as young social scientists will, with nonlinearity — and in particular with the idea that large effects could have small causes. I was inspired by the economist Thomas Schelling’s classic little 1978 book ”Micro motives and macrobehavior,” with its illustrative models of how seemingly trivial individual concerns (such as a mild desire to have some neighbors similar to yourself) could lead to extreme social outcomes (such as complete racial segregation). And I dreamed of a theory of everything — of fashions and fads, booms and slumps, economic miracles and social catastrophes.

So when I read ”The Tipping Point,” the new best seller by Malcolm Gladwell, I sighed for my lost innocence. Mr. Gladwell is a very good writer, but he is also lucky: he has not yet been forced to confront the sad truth that it is far easier to tell nonlinear stories than to confirm them, let alone use them as a basis for action.

For those who haven’t yet heard about it, ”The Tipping Point” — subtitled ”How little things can make a big difference” — has a pretty good chance of becoming one of those books that, arriving at just the right moment, reinforce a new public mood. After decades of disillusionment with social engineering, of backlash against the Great Society and all that, there is a new mood of social activism abroad in the land; and Mr. Gladwell offers hope that ”tightly focused, targeted interventions” might work after all. So his book might be to the next decade what Michael Harrington’s ”The Other America” was to the 1960’s.

Mr. Gladwell’s main idea is an analogy between social movements and epidemics. With stories that range from the sudden resurgence of Hush Puppies as fashion footwear to the recent decline in New York’s crime rate, he argues that behavior patterns, like viruses, can spread from a few individuals through a large population. (Oddly, he makes no mention of the biologist Richard Dawkins, whose analogy between ”memes” — infectious ideas — and viruses had, I thought, itself spread widely even among the literati). And a small change in the environment, which makes a particular behavior pattern just a bit more likely to persist in one individual or be adopted by another, can sometimes cause sudden, large social change.

It’s an idea that, in some broad and general sense, is certainly true. And if you have never thought about such things before, it can be mind-opening. But a word of caution: If you accept Mr. Gladwell’s conclusion that the analogy between epidemics and social change offers ”a reaffirmation of the potential for change and the power of intelligent action,” you are likely to be bitterly disappointed.

Why do I say this? Because when it comes to the idea that big events can have small causes, economists — who ought to have a simpler problem, because they deal with the cruder emotions — have been there and done that, repeatedly, for 60 years or more. And by and large the theories haven’t worked.

For example, surely the spread of the Great Depression from Wall Street to the world at large was a sort of epidemic; more recently, the 1997-98 crisis in Asia was almost invariably described with terms like ”financial contagion.” Everyone who thinks about it seriously realizes that such crises must involve some kind of self-reinforcing process. But the ingenious ”nonlinear business cycle theory” that briefly flourished in the 1940’s turned out to be no help in predicting or preventing future recessions. I have a personal stake in believing that the currency crisis models some of us devised in the midst of Asia’s turmoil will have a better fate; but history is not on my side.

Another example: Economists once thought that a brief ”big push,” perhaps concentrated on a few key sectors, could jump-start a stagnant economy into rapid modernization. But none of the deliberate efforts to engineer an economic takeoff delivered on their promise; when economic miracles like Korea’s sudden surge in the 1960’s (or our own recent productivity revolution) occurred, they have always come as a surprise.

I’m not saying that ”focused, targeted interventions” aren’t worth trying. But don’t count on much success. Little things can indeed make a big difference; but they’re usually not the things you were watching, or the difference you expected.