Having an FDR Christmas

crossposted at http://dagblog.com

Exactly three weeks before Christmas, my bank failed.

Everything's fine, at least for humble depositors like me. The FDIC seized my bank and sold it to another, presumably more stable and reliable, bank. My deposits were very, very comfortably under the $250,000 insurance limit. My checks and ATM card still work, and I don't even need to change them for new ones with the new bank's name. The new, out-of-town bank is keeping the old bank's name and running it as a division of the new bank. I can still buy groceries. I had to find out about the bank failure reading Atrios.

Things aren't so good for my local economy of course, or for my city. That my bank failed is both a symptom of how hard times are for Cleveland, and a sign that they'll get better very slowly. The new bank is going to be prudent making loans on its new turf, I'm sure, and the local bank's failure doesn't make us look like the best place to bet. And there shouldn't be much doubt that the whole country is still in a very large recession, or to drop the euphemisms, a depression. I know, the 1930s were much worse. That's why the 1930s are called The Depression and this is just a depression. But believe me, this town is depressed. My local bank went down with five others last Friday, making that 130 bank failures in the U.S. so far this year. Even if no more banks fail for the rest of the year, that's two and a half bank failures a week. Forget what's going on with the too-big-to-fail leviathans; while we were watching them beach themselves and thrash, the rest of the fish that make up the ecosystem were dying.

Still, despite the grim news, I can pay my rent, bake cookies for my students, and do some Christmas shopping. I can fly for the holidays, and for the major annual conference in my field, which takes place at the end of December. When I get to town for that conference, I can pay for my hotel and my meals. And then I can celebrate the first of the year by paying my rent again. So I'm doing pretty well for a guy who had his savings in a bank that just went under. But there's no question that my Christmas comes benefit of the FDIC. If it weren't for the New Deal I'd be enjoying a really old-fashioned holiday, the kind Bob Cratchit and John Boy Walton used to have. And by "enjoy" here, I mean "not even remotely enjoy."

When you hear conservatives talking about the evils of liberalism, government regulation and imminent socialism, this is what they're talking about: the kind of basic common-sense protections and regulations that the New Deal instituted seventy-five years ago. Even during this economic crisis, when it should be clear to everyone that the financial sector long ago abdicated any sense of responsibility or reality, it's still fashionable to talk about the New Deal as old-fashioned excess, the kind of forgivable error that our silly old grandparents made because they had not yet learned better, as we have. Of course, such creaky old socialist programs don't really work, and they impede the magically efficient forces of the market.

The next time you hear someone talk like that, just remember: they're drunk.

If it weren't for the New Deal and its stifling, market-inhibiting FDIC insurance, this is the Christmas I would have. My savings (and my checking account) would have disappeared Friday evening, taking my most recent paycheck with it. (I get paid twice a month; my bank failed on the fourth of the month, only a couple of days after my last direct deposit.) I wouldn't be paid again until the fifteenth.

My checks would have bounced, including my rent check if the landlord hadn't cashed it yet (again, the bank failed just after the beginning of the month), or if it hadn't cleared. Since it usually takes a day or two to clear a check, let's say that my rent would certainly have bounced. My phone bill, student loan payment and credit card bill would almost certainly have resulted in more bounced checks. I would have only the money in my wallet, which I would be hoarding very carefully, until my next paycheck. And when the fifteenth rolled around, I'd have to find a new bank, deposit my money, wait for my deposit to clear, and wait for the new bank to issue me checks and an ATM card. That would pretty much keep me from having any money I could use until nearly the end of the month. (There is, ahem, a national holiday in there somewhere, when the banks are closed.) Otherwise, I could get my checks cashed at the usurious check-cashing rates, and pay the premiums for money orders to pay bills. In any case, I'd be starting in the hole. Credit cards would not be an option; I would certainly have missed payments, not only stalling the credit line but earning myself some fees and penalties. If they were an option, they'd be a horrible one, since I'd be faced with the task of building back some savings to replace my lost money. Christmas presents would be out of the question. So would airplanes, let alone professional travel with its hotel expenses.

That would all stink for me, but it wouldn't be a big help for the rest of the economy either. The thrift forced upon me by the loss of my savings would take money out of the rest of the economy: the Christmas shopping I didn't do, the groceries I didn't buy at my local supermarket, the gas I didn't buy and the hotel reservation I didn't keep and the airport sandwich I couldn't afford. My landlord would be out rent, at least until I managed to scrape the arrears together. How's that for market efficiency? Now multiply it by every depositor my bank had, and then consider the customers of the other five banks that failed last Friday. The New Year starts to look pretty grim for whole communities.

That is what a deregulated, laissez-faire economy looks like. An economy free to lay itself waste every so often, in irrational spasms. And if it doesn't remind you of the smooth rational graphs in Econ 101 textbooks, that's because it doesn't resemble them. Market efficiency is no more natural than a navel orange is. It results from grafting and gardening.

So let me say a few kind words for old-fashioned 1930s liberalism, the parts that have yet to be dismantled or "modernized" away. Those vestiges of our big-government past are what's keeping the wheels on the wagon today. Without them, we'd be much deeper in the mud, and further from the shovel. And I don't see how many of the modern, what's the phrase?, "innovations" of the past thirty years have helped much. So while our leaders in Washington debate timid half-measures in timid tones, afraid that half of half a loaf might be going too far, they would do well to remember who got us out of the last mess like this, and how. We need to face a basic reality: this Christmas has been brought to you by the Ghost of Liberalism Past, FDR.

God bless us, every one. We're going to need it.

Mister Hope Is Secretly Mister Reliable

crossposted at http://dagblog.com

The day before President Obama announced his Afghanistan strategy, Politico published John F. Harris's very important and newsy thumbsucker about the peril that "anti-Obama storylines" pose to Obama's Presidency. The first sentence of the article is, no kidding, "Presidential politics is about storytelling."

Storytelling. Huh. And here I thought it was about the economy and the two wars.

The Obama Presidency could easily founder. But failure is more likely to come from the Afghan highlands or the malarial swamps of Wall Street than from catchy Beltway meta-narratives. I know the media is always telling us how appearance is reality. But actually it only looks like it.

Narratives aren't primarily ways to understand a politician or a campaign. They are ways to misunderstand it. Indeed, that is what Harris is pushing: seven largely inaccurate perceptions that could lead to Obama failing even if he does the right things for the country. It's a strange thing to find such a topic cool or interesting, but Harris's admiring connoisseurship shines through the piece. He feels a bit like those kids who spend their free time crafting the nastiest computer viruses they can: all the pleasure lies in the craftmanship and destructive power of the meme.

For what it's worth, one of the narratives into which the press will inevitably conscript Obama is Icarus Falls to Earth, in which the shining idealist Obama is grounded by hard reality. In fact, they started writing this story the night he won the Iowa primaries. But it won't be true, because that pleasingly formed but misleading narrative is grounded upon the pleasingly formed but misleading narratives fostered by Obama's own campaign: the notion that he was Mr. Hope and Captain Change, the candidate of revolutionary optimism.

Barack Obama is, whatever else you make of him, an incredibly unlikely youth leader. And while he was clearly popular with the young and had a fabulous ground organization, he wasn't the leader of anything like a youth movement per se. He is not, like most youth movement leaders, a firebrand. He's more like your studious buddy that your parents liked, because he was a safe driver and might be a good influence on you. He's the motorcycle-less boyfriend your parents hoped you would marry: Mr. Reliable. Least of all is Obama anything approaching a revolutionary. And that was extremely evident during the election. He did campaign on Hope and Change, as campaign themes, but his promises were about sane, pragmatic policy adjustments, optimistic but very much grounded in reality. The real Barack Obama isn't going to fall to earth because he's always been standing on it. If he fails, it will be from an excess of caution.

Will this shock the voters? Not really. I suspect that the truth we haven't told, the story hiding behind the story of Mister Hope, is that Obama won in large part because he is so satisfyingly boring and calm, so capably reassuring. Even his soaring rhetoric isn't flashy or "exciting." It's resolutely reasonable and calm: a triumph of oratorical serenity. Voters know this, and feel this. The election was conducted at a time of national emergency, and Barack Obama is essentially the guy you trust to make medical decisions for your parents. He never seems rattled; he's able to take in complicated information under pressure, and then ask the necessary questions and make the necessary decisions. John McCain, who works very hard to project a youthful, devil-may-care attitude, is a great candidate for a bored and jaded electorate, but a bad match for an anxious one. Obama, on the other hand, can be downright soothing.

If the Republicans want to beat him, this is what they have to remember. They have to do more than beat Obama up. They have to provide an alternative, and that alternative has to feel safe. If the Obama Presidency fails, it almost certainly means that the country will sink deeper into crisis. And while voters would want to punish Obama for that, what they would want most of all is someone to fix things. That person needs to feel reliable, capable, and calm, to be someone voters trust instinctively. The Republicans will need their own Obama, but first they need to figure out who Obama is.

Patrick Kennedy's Orders from the Vatican and the Abuse Scandal

cross-posted at http://dagblog.com

The Bishop of Rhode Island has told Congressman Patrick Kennedy not to take Communion at Mass any more. They are now publicly feuding about whether or not the bishop ordered his priests not to give it to him. Forty-nine years after JFK promised not to take orders from the Church hierarchy, that hierarchy is sanctioning his nephew for not taking orders. The nominal issue is abortion. The underlying issue is the Church's sexual abuse scandal.

It's no accident that the vogue for Catholic bishops denying American Catholic politicians Communion, or announcing publicly that Catholic politicians should not take Communion, began in 2004, during the first national election after the abuse scandal came to light in the Archdiocese of Boston during 2002 and 2003. Nor is it any accident that the first major target of ecclesiastical ire, Senator and then-Presidential-candidate John Kerry, was from the Boston Archdiocese, where the . It might seem strange that the Catholic hierarchy would decide to strike the tone of moral condemnation shortly after epic revelations of child abuse and serial coverups, but at least some of the hierarchy reputedly came away from the national scandal furious that the Church had not been given more political cover by Catholic politicians. And the fall of Bernard Cardinal Law, who has since risen again in Rome, seems to be regarded by at least some bishops as a grievance.

To be fair, the Church has put some needed and belated reforms in place, as a safeguard against future child abuse. But those reforms do not extend to the mindset of the Catholic magisterium, which is very much a top-down, self-replicating hierarchy, and which has become far more traditionalist and far more centrally controlled during the Papcies of John Paul II and Benedict XVI. (John Paul served so long that most Catholic bishops, and virtually all of the power players, were appointed or advanced by him, and reflect his own conservative and hierarchical mindset.) They certainly don't want anything like the scandal to happen again, and of course think child molestation is terrible. But the idea that their own autocratic approach to leadership, their lofty unaccountability, might be near the root of the problem is beyond them. The tacit principle that the bishops are to judge and not to be judged is deeply embedded in the institutional culture of the current Church. They mourn the suffering of the victims, but are still far from anything like insitutional humility or repentance.

This can be gleaned from the pattern of high-profile Church promotions since 2003, in which bishops who were fairly unresponsive to the abuse victims have been advanced, and many who were sympathetic to the victims have not. The most glaring example is Bernard Cardinal Law, leader of the conservatives among the American bishops, who presided over Boston's pervasive enabling of sexual predators and was forced to resign in 2002. In 2004, just before some American bishops decided John Kerry wasn't fit to take Communion, Law was appointed to a lucrative and prestigious sinecure in Rome (as cardinal archpriest of a basilica), and given even more administrative power in the Vatican than he had held before. In 2005, during the election of Benedict as Pope, someone apparently cast a vote for Law. As in, a vote for Law to be Pope. It came on the last ballot, when the winner was clear, and was therefore a strictly a symbolic vote. But since Cardinals may not vote for themselves, the symbolic gesture was not Law's own. (But could easily have been a gesture by Benedict XVI himself, who could only vote symbolically by the same rule.)

If Benedict and his Vatican have been warm and forgiving toward Bernard Law, they have been just the reverse to the Boston Catholic politicians who preferred the law rather than Law, and most of all to the Kennedys. Benedict was notably chilly after Ted Kennedy's death. And in 2005 the Vatican even took the spiteful step of overturning Joe Kennedy's annulment, granted in 1996. (This doesn't affect the legality of Kennedy's second marriage, which is governed by civil rather than canon law, and so late after his remarriage it's primarily a symbol of displeasure.) Time magazine even allowed one Vatican official to trash Ted K anonymously after the funeral:

One veteran official at the Vatican, of U.S. nationality, expressed the view of many conservatives about the Kennedy clan's rapport with the Catholic Church: "Why would he even write a letter to the Pope? The Kennedys have always been defiantly in opposition to the Roman Catholic magisterium." (Magisterium is the formal term for the authority of Church teaching.)

and

"Here in Rome, Ted Kennedy is nobody. He's a legend with his own constituency," says the Vatican official. "If he had influence in the past, it was only with the Archdiocese of Boston, and that eventually disappeared too."

That blind quote is absolutely delusional as an assessment of Kennedy's political influence, except his influence with the Catholic hierarchy itself. And the blindness of the quote is an enormous problem, since the American official at the Vatican is either Bernard Law's close colleague and compatriot or else Bernard Law himself. But the talk about lack of influence makes sense if the Mystery Cardinal is thinking of Kennedy's inability to shield the Boston Archdiocese from the consequences of its misdeeds.

Of course, the idea that Catholic politicians could protect the hierarchy from the abuse scandal is deeply unrealistic. Any elected official who seemed to sympathize with the coverup, even remotely, would be political toast. But it's only slightly more realistic to insist that pro-choice politicians, elected by pro-choice voters, abandon their supporters because a bishop told them to. But abortion isn't the whole story here. The point is for Patrick Kennedy, and other politicians like him, to be taught obedience.

Palin Mania and the Triumph of Narrowcasting

Sarah Palin may be very unpopular by any traditional polling standard. However, pundits are eager to explain that the important thing isn't how many people like her, but rather the intensity of her followers' enthusiasm for her. Sure, she may poll like Herbert Hoover in 1932, but the thirty-to-forty percent of the country that approves of her includes a hard core of fanatical support. That intensity, we are repeatedly assured, will give her political power, no matter how many people oppose her. Sarah Palin is officially popular, whether the rest of us like it or not.

Palin is popular in the way Star Trek and Buffy the Vampire Slayer are popular. Not many people watched them, or ever did, but their tiny audiences are loyal and enthusiastic enough to make those shows into profitable franchises. Not profitable enough to keep Star Trek on NBC's prime time, of course, but profitable enough for a cable-TV environment with dozens and dozens of channels. Palin, like Buffy the Vampire Slayer, is a phenomenon in a fragmented media world where broad audience appeal is no longer necessary.

If the current media is fascinated with her, that's because they are themselves the creatures of the new and more fragmented national media, where the goal is not broadcasting but narrowcasting: getting a minuscule slice of the audience pie. CNN, Fox, and MSNBC have small audiences. Several of their, ahem, "major stars" draw audiences in the hundreds of thousands; the most successful get a few million viewers. The talk may be about, say, Katie Couric's ratings being low, and Bill O'Reilly's being high, but bad Katie Couric ratings are still easily higher than good O'Reilly ratings. Of course, it's relative. Cable news is only expected to pull in half a million to three-and-a-half million, and network news is still expected to pull in between six and ten million. Of course, the exact demographic slice of viewers CNN or FOX or MSNBC pulls in may be more lucrative for advertisers. Of course, the small cable audience may be growing by double digits and the big network audience is declining from its old eight-figure ratings. It is very natural for media figures, like the media executives to whom they answer, to view popularity in this sophisticated, relative framework. But relative popularity is only relative. Ignoring order-of-magnitude differences in popularity numbers is a mistake. The top news program in America is still 60 Minutes, which rates on a scale that dwarfs MSNBC, CNN, and Fox combined.

The news media, taking its cues from the entertainment media of which it is a component rather from the world it ostensibly covers, has grown to overvalue the same secondary numbers and measures of "intangibles" that determine news products' values to the corporations that own them: momentum, enthusiasm, brand loyalty, growth. And those measures have their importance, but older, less sexy forms of measurement shouldn't be ignored. Obama's poll numbers may have slipped, relatively speaking, but the difference between fifty-something job approval for Obama and around fifty percent disapproval for Palin is, ah, not trivial.

On the other hand, one can make enormous piles of money in the current media environment by getting the attention of only part of one percent of the national audience. Narrowcasting is how big media conglomerates make their profits. Sure, there may not be that many Star Trek fans as a percentage of the population, but by current standards you can have very successful Star Trek films and excellent DVD sales. You can make excellent money with prime-time soap operas for teens on, say, the CW network, because a small slice of faithful female teenaged viewers is enough to sell advertising. Palin evidently sold 700,000 copies of her book last week, which is an enormous and lucrative number in absolute terms but still represents than 0.25% of the population buying her book. (Okay, let's say everyone lends it to three friends who read it diligently. We're up to a whole percent.)

Narrowcasting expalins why the newer media covering politics tend toward hyper-partisanship. It's not that there's a broad appetite for talk-radio ranting. In fact, those ranters turn most of the audience off. The point is that the radio host, cable news head, angry columnist or partisan blogger is only shooting to reach a minority in the first place; getting a small segment of the population to pay faithful attention is all you need. Cable news has precisely the same business model as the Science Fiction Channel: the people who want to watch this are a tiny minority, but they have an enormous appetite for it, and so that tiny slice is profitable.

To a narrowcaster, Palin Mania looks stupendous. The fans are so hard core! She's so fresh! And twenty percent of the country looks enormous when reaching only six-tenths of a percent suffices to print money. But American politics is still first-past-the-post, and that means national politics demands keeping support wide as well as deep. Presidential politics is inevitably broadcast politics: old school, like the MGM Lion, Cary Grant, and NBC Blue.

Palin's Window of Opportunity

So, the rollout of Sarah Palin's book has led to a flurry of speculation about whether she will someday run for President. That conversation, in itself, is evidence of how little the American political media listens to what it's saying.

Palin is an unpopular politician who badly botched her Vice-Presidential run. But on the other hand, she badly botched her Vice-Presidential run and is unpopular. She will never make a serious run for the White House, because she can't.



Is she running? Or just cashing in on the media ride? The answer, of course is both and neither. Palin's job is now Potential Presidential Candidate. Her media value depends on the perception that she may be running. It is in the media's direct interest to keep her valuable, so that Sarah-related stories and interviews get lots of lucrative attention. Naturally, they encourage the speculation that she's a candidate. And that's in Palin's interest, too, because she profits directly from that media value.

Palin is going to make a lot of money for as long as the press treats her like a serious political player. But her ability to command top prices ends the moment it becomes clear that she isn't running for President. It also ends if she actually runs.

If Palin runs, she will cease to be a potential contender and become just another defeated candidate. Her national stature will vanish. And after she gets drubbed at the polls, her standard speaking fee will plummet. She'll still be highly paid, but not at anything like the rates she currently demands; you don't get a $5 million book deal after you've been humiliated in New Hampshire.

Maybe Palin understands this consciously, and maybe she does not. (For the record, I believe that Sarah Palin is crazy like a fox. A delirious, rabies-maddened fox.) But she has a window of opportunity in which to build a large personal fortune. The amount of money she makes while that window is open will probably determine her lifetime wealth. When she runs for President, or refuses to run, the window will close. So it's time for her to make her money now.