April 28, 2009

Would Torture Investigations Backfire?

Tyler Cowen gives a depressingly plausible explanation of why investigations of Bush administration officials who authorized torture, much less prosecutions, are unlikely:
I believe that a full investigation would lead the U.S. public to, ultimately, side with torture, side with the torturers, and side against the prosecutors. That's why we can't proceed and Obama probably understands that. If another attack happened this would be all the more true.

On top of everything else, major Democrats in Congress are likely complicit and the Democrats as a whole hardly made this a campaign issue in 2004; in 2008 the economy was their winning issue, not torture.


The American public, now having affiliated itself with torture, will be reluctant to condemn torture for some time to come. The "endowment effect" here seems to be strong.

An acquittal or mistrial would lose the chunk of world opinion that Obama has been winning back. And a trial might prompt another terrorist attack, if only to force acquittal and make America look bad once again.

Pushing for prosecution would more likely endanger rule of law than preserve it, which is a sorry state of affairs.
I don't share Cowen's pessimism about Americans, but I see his point: The coalition to make the United States do a full accounting for torture and indefinite detention since 9/11 doesn't yet have enough numbers to override the apparent desires of President Obama and the Congressional leadership to move on, to say nothing of the Republican Party's eagerness to declare waterboarding as American as apple pie. At the same time, that isn't to say that the coalition that does exist couldn't go after some low-hanging fruit; e.g., the impeachment of Jay Bybee or the firing of John Yoo.

But, while nailing Bybee, Yoo, et al (I assume an investigation of Bush and Cheney is highly unlikely) would be desirable, I ultimately think preventing torture from happening again is more important than pursuing investigations, especially if the latter come to nothing.* And that means discrediting the use of torture as an instrument of national security: The disturbing thing about the torture debate is how many people (and not only conservatives) seem willing to set aside morality in the hopes that torturing prisoners will keep them safe, given that torture has historically been used to extract false confessions, as Matt Yglesias and others have said ad nauseam. How you prove to the larger public not only the immorality of torture, but its uselessness, is a question I can't answer now. Certainly an improved security situation under the Obama administration would go a long way toward demonstrating that a humane foreign policy is a strong foreign policy. But I welcome reaction on this from those who know more about national security policy than I do.

* Of course, prohibiting torture and investigating the perpetrators of torture aren't mutually exclusive. But the danger of a full-scale investigation, as in Cowen's example, is that we as a country will not thus come to the consensus that torture is wrong and we shouldn't do it anymore. That consensus can possibly be achieved with the help of prosecutions, but prosecutions, by themselves, are not sufficient to achieve it.

More on Shrinking Cities

Both Ryan Avent and Matt Yglesias had posts this weekend on how to manage the decline of cities like Flint, Michigan, noting the difference between the situation of a place like Flint, where the entire region is shrinking, and places like Baltimore, which is an island of poverty amid a sea of relative prosperity. In short, whereas Baltimore could and ought to become a more integrated part of the regional economy, Flint has no recourse but to shrink to a more sustainable size. It's a good point to make; obviously, just as a growth policy has to be well suited to a particular region, so a shrink policy, as it were, has to have some flexibility with respect to local differences. That's why I think the idea of a federal land bank would be useful in this regard, as it would give cities in decline the resources to pull back development, while still having the decision-making in the hands of the communities affected.

April 24, 2009

Dealing with Shrinking Cities

The Washington Independent had an interesting series of posts this week on how the city of Flint, Michigan has been grappling with a shrinking population and the blight that that has been leaving in its wake. To some controversy, the city has been cordoning off abandoned areas and even actively tearing down decaying properties, letting nature come back in. It's a good example, I suppose, of making a virtue of necessity: Amid the devastation brought about the decline of manufacturing in Michigan -- exacerbated by the current recession -- the city is reconciling itself to its fate, and trying to do so in a controlled manner.

What interested me about this was the way it's being done, through the use of a land bank, or "a community development corporation on steroids," as Dan Kildee, chair of the Gensee County Land Bank in Flint, put it. Basically, a land bank is able to quickly acquire foreclosed or abandoned properties so that they can either be refurbished or razed, while avoiding legal hassles. This is the kind of innovation that I think will be useful when the economy recovers and oil demand comes roaring back: the viability of suburban and exurban housing took a major, and possibly fatal, hit from the combined force of the oil price boom and the collapse of the housing bubble. If we want to avoid the specter of suburban slums, then, state and local authorities will need some way to efficiently pull back development to sustainable levels. It seems the main obstacle to expanding the use of land banks, besides the process of setting them up, is financing: The municipalities most likely to need a land bank are the least likely to have the money to establish one. A federal land bank will probably be the best way to reach the communities most in need.

April 22, 2009

Markets in Everything

Now that the EPA has declared greenhouse gases a threat to public health and welfare under the Clean Air Act (as well as begun efforts to potentially restrict CO2-related ocean acidification under the Clean Water Act), we're due for a discussion of the relative merits of fighting climate change through command-and-control regulation, as the EPA would likely do, or through market-based mechanisms, as President Obama and Congress would want to do through a cap-and-trade system. As it happens, Robert Stavins provided a good starting point last week in a post that tried to explain why enthusiasm for market-based mechanisms like cap-and-trade has been on the rise among environmentalists. As glossed by Danny Morris over at Common Tragedies, Stavins' reasons are:
  1. Increasing pollution control costs
  2. Strong support from parts of the environmental community
  3. Market-based solutions were designed to reduce pollution
  4. Separate consideration of goals and policy instruments
  5. No status quo exists for unregulated pollutants, so there is not constituency to fight for them
  6. Political shift to accept markets as ways to solve social problems
  7. Luck put the right people in the right place
Both Morris and Tim Kidman's commentary on Stavins are worth reading, and I'm largely in agreement with them about the limits of applying economic theory to environmental problems. I would add that, in addition to markets not being a universal solution, market-based mechanisms like cap-and-trade aren't even markets. That is, it may be more accurate to say that a cap-and-trade system is a simulacrum of a market or, less charitably, an instance of "political capitalism," to use Will Wilkinson's phrase. Unlike ordinary markets, where there is no overarching goal except the interests of the individual participants, cap-and-trade has an explicit end: reduce pollution. While governments may set rules to ensure that ordinary market transactions are fair and efficient, they must design a pollution market from scratch -- after all, firms seldom reduce their pollution output voluntarily. And whereas ordinary markets generally tend to grow over time, cap-and-trade systems must get smaller and smaller (in terms of the volume of pollution credits traded) if they are to achieve their goals.

Seen in this light, the differences between a command-and-control approach and a market-based approach to dealing with climate change aren't quite so distinct from each other. Granted, if the EPA tries to regulate greenhouse gases using the Clean Air Act, it's going to produce much different results than, say, the Waxman-Markey cap-and-trade plan. But in both cases, the importance of having well-designed rules and a competent civil service enforcing them is manifest. And that, in turn, is not a guaranteed outcome.

April 18, 2009

A Modest Proposal Re: Secession

More interesting, I think, than Rick Perry's musing about the state of Texas seceding over President Obama's fiscal policies is Tom DeLay's musing over how secession might play out:
Texas was a republic. It joined the Union by treaty. There's a process in the treaty by which Texas could divide into five states. If we invoke that, and the last time it was voted on was 1985, the United States Senate would kick us out and nullify the treaty because they're not going to allow 10 new Texas senators into the Senate. That's how you secede.
That's completely off-base, as the link makes clear, but I actually would welcome splitting Texas into at least two new states, on one condition: statehood for Washington, DC. It would solve the problem with the current bill to give the District voting representation in Congress, which is that it only applies to the House and not the Senate. Republicans, of course, would never agree to the admission of two new Democratic Senators, which is what Senate representation for the District would entail; but if it included the creation of an East Texas and a West Texas, both of which would plausibly be Republican strongholds, it could work out well.

Now, if Texans wanted to go for all five states, that could be problematic for the purposes of a balanced Senate. Assuming that all five states would send Republican Senators to Washington -- unlikely, given that there are, in fact, a lot of Democrats in Texas and that new states centered around, say, Austin or San Antonio would have a high proportion of Democrats -- we might have to consider creating new states out of our largest cities. New York City, after all, is practically its own state already.

But of course, this all assumes that talk of subdivision, much less secession, isn't just the product of irresponsible conservative rhetoric, which we really shouldn't encourage.

April 16, 2009

Financial Innovation in Clean Energy

Yesterday I dinged a Slate article trying to find something good to say about Limp Bizkit* as "contrarianism run amok," a common criticism of the magazine. That said, Daniel Gross today makes a good -- and contrarian! -- argument that what is most needed to advance clean energy in this country is not new technology, as is often claimed, but new ways to finance it:
As Rive has discovered, the future of the alternative-energy industry now depends far more on financial engineering than mechanical engineering. Clean-tech trade publications are filled with breathless coverage of new innovations: thin-film solar technology, advanced batteries, cars powered by hydrogen fuel cells. But money has never been harder to come by, thanks to the struggling capital markets. "The alternative-energy sector is flat on its back," says David Crane, CEO of giant energy producer NRG. "There's no debt financing available from Wall Street." The Cleantech Group reported that in the first quarter of 2009, total green-energy-venture investments fell 50 percent from the first quarter of last year.

Government policy has traditionally played a part in kick-starting new technology, whether by providing land and financing for railroads or commissioning the first telegraph line. When the profit motive kicks in, the private sector begins to fund development. Both types of financial innovation will be needed for the fledgling alternative energy to thrive—and there are already signs of creative breakthroughs.
This is an important point to make; for all the (justified) outrage over Wall Street's use of "financial innovation" in the past decade, an effective climate policy needs to figure out new ways to getting money to alternative energy projects, which often have large upfront costs and, in the case of energy efficiency projects, long payback periods. The obvious tool for this, of course, is carbon pricing, but there are lots of things that we can pursue that get us to the same goal. One way to do this, besides the methods Gross mentions, is through feed-in tariffs, which have helped make a rather cloudy country like Germany a leader in solar power. We also need to reexamine traditional financial instruments and see if we can make them more energy-conscious, as it were. If I may plug my employer for a moment, rolling the costs of energy efficiency investments into people's mortgages would go a long way toward reducing the carbon intensity of the nation's housing stock.

At the same time, we would do well to be wary of too much, or the wrong kind of financial innovation in the alternative energy industry, just as we are of financial innovation more generally. To tie this in to my previous post on the subject, there's a case to be made that the various mandates and tax credits that have been used to subsidize alternative energy thus far have done more harm than good (see the textbook argument here, or the many biofuels debacles). Yet again, our financial system is hardly a free market -- especially these days -- and it's the responsibility of government to ensure that it is serving societal goals, a sustainable energy regime being among them.

* Speaking of Fred Durst, this blog (via Vulture) may be the best thing on the Internets today.

Quote of the Day

Brad DeLong, concerning George Will's tirade today against denim:
It is denim--not the bow tie and the silk shirt so beloved by George F. Will--that is the fabric of our society here in America. We dress as lumberjacks and gold miners because we remember and to remind us that it was lumberjacks and gold miners--not effete swells--who built this country.

April 15, 2009

More on the Green Economy

Perhaps the most consequential example of private interests potentially undermining environmental policy is the current push by utilities to have credits for a cap-and-trade system given away rather than auctioned, with the Obama administration even appearing to back away from support for the latter. Peter Barnes, inventor of the cap-and-dividend plan, dispatches the utilities' arguments for free carbon credits, then says:
So we may be heading for yet another giveaway of public wealth to private corporations—first banks, then auto companies, now utilities. The irony is that utilities aren’t failing and won’t be hurt by a carbon cap with auctions—they’ll surely pass permit costs through to customers. What we’re seeing here is simply a well-organized interest group trying to draw cash from the public till, and almost no one in Washington minding the store.
Quite so, although at least with free credits a cap-and-trade system can still work, even if it results in a massive transfer of wealth to utilities. The bigger problem may be the high proportion of carbon offsets in the Waxman-Markey bill currently under discussion. Not that offsets shouldn't ever be used, but given that there are no universally-recognized standards for offsets, and given the numerous fiascos over offsets in the recent past, they need to be severely limited in their use. Not only could an offset-riddled cap-and-trade system be inequitable, it could be completely ineffective as well.

April 10, 2009

The Party of Teabagging

To watch the conservative movement these days is rather bizarre, alternating as it does between borderline psychosis and a cluelessness that rivals Margaret Dumont in a Marx Brothers movie. For an example of the latter, there's the so-called Teabag movement, as explained by Rachel Maddow (via John Arovosis):

It's going to be a very funny four years.

UPDATE: Another data point, this time from the anti-same-sex-marriage crowd.

April 9, 2009

Notes on the Green Economy and Demosclerosis

Chris Hayes' exposé of how the paper industry has been abusing the alternative fuel tax credit has been making the Internet rounds lately, and with good reason: it provides a cautionary tale of how environmental regulations, however well-meaning, can be perverted by private interests. I've been trying to compose my thoughts on the matter, because I think it points to some really important things we need as a country to think about as we start to develop a response to climate change. In lieu of a proper response, however, let me throw out some points for consideration:
  1. Of all alternative energy sources, biofuels is the most problematic -- as environmentalists, for one, have been arguing for years. In fact, I dare say support for biofuels is stronger among greenwashers than among actual greens.
  2. The denialist right typically seizes on biofuels debacles such as this one and blows it up as emblematic of climate change policy in general; likewise with efforts by utilities and corporations to lard up cap-and-trade plans with offsets and free pollution credits. (See, for example, Will Wilkinson here and here.)
  3. There's a tinge of disingenuousness to right-wing arguments about the green economy, for three reasons:
    1. Right-wingers tend to think that climate change is not that big a deal, anyway, so they attack any effort to deal with the problem, regardless of the merits;
    2. They tend to view all government intervention in the economy as bad, so even economically sound ideas like a carbon tax (or cap-and-trade with auctioned credits) are opposed;
    3. They tend to not give regulatory capture issues with the fossil fuel industry the same level of scrutiny.
  4. That said, regulatory capture of the green economy is a legitimate issue -- put simply, climate change is too important to be left to the vagaries of interest-group politics.
  5. There's reason to despair of a really effective climate bill getting through Congress; demosclerosis is as endemic today as it has ever been. (The Waxman-Markey bill that debuted recently is, altogether, pretty good, as David Roberts notes; but its passage is far from a sure thing.)
  6. Some principles, however, can be derived from this episode for use as the debate heats up over a climate change bill:
    1. Better to tax pollution than to subsidize clean energy.
    2. Better to subsidize energy efficiency than to subsidize alternative energy sources.
    3. Better to subsidize alternative energy with clear benefits (solar, wind, geothermal) than those with dubious benefits (biofuels, "clean coal").
    4. Remember that the point of all this is to keep the planet from warming to catastrophic levels -- other goals (economic recovery, new jobs) are all secondary.
    5. The rules of good government are not suspended for the green economy; we should fear the rise of Big Wind just as we do Big Oil. (Of course, the worst offender, Big Biofuels, is also Big Ag, the product of decades of misguided agricultural subsidies; see point (a).)
    6. At the same time, changing the incentives to burn fossil fuels will inevitably mean that folks will learn to make a profit in that new environment. And that's OK; in fact, it should be encouraged. But it shouldn't be the goal.

April 7, 2009

Update on Elections in Macedonia

As expected, Gjorge Ivanov of the ruling VMRO party has won the presidency. It's a largely ceremonial post, but it signifies the triumph of nationalism in Macedonia -- which isn't really a good thing. The next step now is to see how the conduct of the election improves or hurts Macedonia's chances at EU and/or NATO membership.

April 6, 2009

Oil Price Spikes and the Recession

In the last two years we had two major economic shocks: The bursting of the American housing bubble and the resulting breakdown of the global financial system, and a historic spike in commodity prices, particularly for oil. For some reason, though, I've seen no one make the argument that the two may have been in some way connected. That's why I was so interested in a recent paper by James Hamilton (summarized here and here) that attributes almost all of the economic downturn in the last year or so to the run-up in oil prices. That seems rather odd, as even Hamilton acknowledges, but it leads naturally to a discussion of the link between the oil price boom and the credit crunch, as Justin Lahart does in a commentary on the Hamilton paper:
But then again, maybe what happened to oil prices had something to do with credit markets seizing up. The housing bubble saw people of lesser means traveling further afield to buy homes. That gave them long commutes that they were able to afford when gas was $2 a gallon, but maybe they couldn’t at $3. Housing in the exurbs got hit hardest, and one reason why is that high gasoline prices made it hard for people to lived in them [sic] to keep up with their mortgage payments, and hard for them to sell their homes without taking a steep loss. In some meaningful way, that has to have contributed to mortgage problems.
That's a very interesting theory, one that cries out for regression analysis. My sense, though, is that it wouldn't hold up to examination. Certainly higher gasoline prices make exurban housing less viable, but it's hard to see how the two spikes in 2005 and 2006 would have been enough to drive a critical number of homeowners into foreclosure, thus turning countless numbers of mortgage-backed securities and related assets into garbage. The sustained high prices in 2007 and 2008 no doubt hit particularly hard those having trouble making their mortgage payments, as well as those in exurban areas; but as a causal factor in the financial crisis broadly understood, I suspect high gas prices played, at best, a minor role. Remember, for one thing, that the housing bubble wasn't confined to exurban areas; even dense environments like Chicago and Baltimore got caught up in it as well. Besides, the nature of a bubble is that it is unsustainable: Gas going from $2 to $3 may have been enough to push a significant number of homeowners into foreclosure, but what really got this crisis going were the banks and hedge funds who made 20-to-1 or 30-to-1 leveraged bets on those mortgages and lost their shirts. In such an environment, any shock to the system, no matter how small, could bring everything crashing down. So if it had not been the oil price boom, it would have been something else.

Having said that, it's entirely fair to say that both the housing bubble collapse and the oil price boom have, rightly, called into question the bias in US housing policy toward sprawling, automobile-centric development. The days of cheap gasoline are no longer as assured as they once were, and we have seen that homeownership can be as much a curse as a blessing. We need to carry both insights with us going forward; but I am not sure of their applicability to resolving the current crisis.

April 1, 2009

For iPhone Users

I've added a link to the sidebar to allow you to read this blog in an iPhone-friendly format. I think it works, but if it doesn't, let me know.

UPDATE: Actually, Mofuse does a better job at this. Here's the link.