Putting it in Perspective

From Andrew Sullivan comes an encouraging story of finding perspective on things and people:

Several years ago I began doing very well. My friend and I started our own law firm. I bought a large house, too large a house, and paid far too much for it; but things were good and I wanted to give my kids a backyard room to run around in. So my girlfriend, kids and I moved from our downtown rental apartment to the suburbs. My law partner and I took on a case against a bank that grew into a huge case. The bank hired a large, aggressive law firm to grind us down but we kept winning, picking up more and more clients and winning important rulings that pointed to what appeared to be an inevitable win if we could withstand the cost and time, which rose to several hundred thousand dollars out of our pockets and many hours spent not working on other cases. We started leaning on our credit cards pretty hard.

Then we got a call from our adversary; the bank had filed for bankruptcy protection. It was devastating; our multi-million dollar case was now worth next to nothing.

We managed to eventually pay the firm’s bills and always managed to keep our employees paid and insured, but that meant that we would often go without any pay ourselves for months at a stretch. My formerly good credit plummeted and I got behind on my mortgage and credit cards. The bank I was paying my mortgage to had already gone under itself. I was utterly miserable; my girlfriend wanted to help but she didn’t make enough to make a real difference and we decided to keep her credit strong rather than put both of us in a hole. So I just stopped. I didn’t pay my mortgage and waited to be foreclosed. I tried, but there was no way to sell the house in this market. I saved what money I was able to pay other bills that had been piling up and to prepare to move. Eventually the bank filed a foreclosure. We told the bank to take the house which took them almost seven months to do.

What came from it turned out to be liberating. I got rid of or refrained from everything that I didn’t need or that cost a lot. I am now somewhat happy for the first time in a long while. My girlfriend had hated where we lived and it was a much longer commute for both of us. My kids didn’t really use the backyard. We moved back downtown into a small but very nice apartment, at a quarter the cost. The building is a very social place; I had barely known my previous neighbors. I am now an eight block walk to my office so even gas is barely an expense any more; and my girlfriend and I had forgotten how much we enjoy living downtown generally. I can sleep better with the stress lowered; the kids even claim they sleep better because the sound of the cars and the general hum of the city. Now I am trying to slowly build up my credit. I spend a lot less than I used to because I don’t buy things I don’t absolutely need and will never extend myself again.

An Economics of Jesus?

I have been thinking, reading and on rare occasions writing about what an economics grounded in the gospel might look like. In some senses, this is obvious. But surely what we are called to by Jesus and those who followed him is much more difficult in this sense than in any other.

I found the following comment on a blog post from Jesus Manifesto that I think puts the whole issue in perspective:

The fact that God is sovereign means that I can reject injustice and the fruits of injustice even when the wisdom of "this world" deems it irrational. I can have faith that God is working things out for the good of those who love Him. The question is "what does loving Him look like?" and I think the point of this article, is that loving God looks little like what we have been doing and attempting to twist into a blessing.

Surely, honest discipleship entails working out the meaning of this and following it.

You Must be Joking

I had no idea this one was still alive.

The NYT is reporting this morning that Europe is nearing a deal with Microsoft on browser choice of Windows users.

Really?

Earth to Europe: you can download Mozilla or Chrome or even Opera and set it as your default browser. You have always been able to do this. While you're at it, you can download Thunderbird and set it as your default. And rather than lay out big dollars for MS Office, you can download and install OpenOffice. Your computer will not stop working. Black helicopters will not hover overhead. And the Microsoft police will not show up at your door.

If you want to be truly subversive, you can even dispense with Windows altogether and install Ubuntu. For free!

If European bureaucrats have nothing better to do than fight last decade's war, than citizens are truly getting very little value for money. I had no idea this was still going on.

Sullivan on Theodicy

Our bible study group is currently working through Job and particularly how this work relates to the problem of theodicy. So I found this comment by Andrew Sullivan particularly compelling:

Obviously, my case of letting go to God reflects a Christian understanding of what one's response to suffering could be. This does not deny suffering, or its hideous injustices, or the fact that so many in the animal world suffer without any such relief or transcendence.

For me, the unique human capacity to somehow rise above such suffering, while experiencing it as vividly as any animal, is evidence of God's love for us (and the divine spark within us), while it cannot, of course, resolve the ultimate mystery of why we are here at all in a fallen, mortal world. This Christian response to suffering merely offers a way in which to transcend this veil of tears a little. No one is saying this is easy or should not provoke bouts of Job-like anger or despair or isn't at some level incomprehensible. The Gospels, in one of their many internal literal contradictions, have Jesus' last words on the cross as both a despairing, "My God! My God! Why have you forsaken me?" and a letting go: "It is accomplished." If you see this as less a literal error than a metaphorical truth (i.e. if you are not a fundamentalist), you realize that God's only son experienced despair of this kind as well. And resolution.

My own reconciliation with this came not from authority, but from experience. I lived through a plague which killed my dearest friend and countless others I knew and loved. I was brought at one point to total collapse and a moment of such profound doubt in the goodness of God that it makes me shudder still. But God lifted me into a new life in a way I still do not understand but that I know as deeply and as irrevocably as I know anything.

Bittman on Labeling Lunacy

The NYT's Mark Bittman has been writing and blogging for a week now on Smart Choices labeling that started appearing on food products about a month ago. It would seem obvious that this is far more marketing tool than consumer advice. As so many have noted, if Fruit Loops clears the bar, how much can this mean?

Not only does the labeling pander to the food industry, but it is also heavily skewed in favor of carbs and against fat of whatever type. As it becomes increasingly clear that the North American obesity epidemic is a carbohydrate and processed food phenomenon, a food labeling initiative that encourages both is hardly helpful.

For those who feel overwhelmed by this, it is useful to recall Michael Pollen's simple advice: eat food (and not food-like products), not too much and mostly plants. And less refined is always better.

The Current on Welland

For the past two days, CBC's The Current has been airing a documentary on the small Niagara city of Welland.

This is a city where I lived as a child. In the late 1950s and early 60s, it was a thriving steel and manufacturing centre, with plentiful factory jobs and a robust economic base. When I moved back to Niagara in 1996 to teach at Brock University, it was a depressing model of rust-belt hopelessness. East Welland, where most of the plants had been located, had become a vast slum. The only thriving businesses appeared to be cheque-cashing stores and pornography.

Over the past decade, it has only gotten worse. The only growth business now is, according to the show, addiction treatment. As Robert Stone wrote so eloquently thirty-five years ago, when people encounter despair and hopelessness, they are naturally going to want to get high. It is not a drug problem -- it is a hope problem.

In a country that has just allowed the technological foundation of Nortel to move offshore when options existed, it is difficult to envision a rebirth of industrial centres like this. But we should remind ourselves that in the U.S. similar urban areas such as Pittsburgh, Cleveland and Indianapolis have done just that.

Some Common Sense from Roubini

Amid the ideological mudslinging about debts, recovery and inflation, here is some common sense from the person who has called this one right from the very start.

Here is Roubini's policy prescription from a brief article at Project Syndicate:

Clearly, the current fiscal path being pursued in most advanced economies – the reliance of the United States, the euro zone, the United Kingdom, Japan, and others on very large budget deficits and rapid accumulation of public debt – is unsustainable.

These large fiscal deficits have been partly monetized by central banks, which in many countries have pushed their interest rates down to 0% (in the case of Sweden to even below zero), and sharply increased the monetary base through unconventional quantitative and credit easing. In the US, for example, the monetary base more than doubled in a year.

If not reversed, this combination of very loose fiscal and monetary policy will at some point lead to a fiscal crisis and runaway inflation, together with another dangerous asset and credit bubble. So the key emerging issue for policymakers is to decide when to mop up the excess liquidity and normalize policy rates – and when to raise taxes and cut government spending (and in which combination).

The biggest policy risk is that the exit strategy from monetary and fiscal easing is somehow botched, because policymakers are damned if they do and damned if they don’t. If they have built up large, monetized fiscal deficits, they should raise taxes, reduce spending, and mop up excess liquidity sooner rather than later.

The problem is that most economies are now barely bottoming out, so reversing the fiscal and monetary stimulus too soon – before private demand has recovered more robustly – could tip these economies back into deflation and recession. Japan made that mistake in 1998-2000, just as the US did in 1937-1939.

But, if governments maintain large budget deficits and continue to monetize them as they have been doing, at some point – after the current deflationary forces become more subdued – bond markets will revolt. When that happens, inflationary expectations will mount, long-term government bond yields will rise, mortgage rates and private market rates will increase, and one would end up with stagflation (inflation and recession).

So how should we square the policy circle?

First, different countries have different capacities to sustain public debt, depending on their initial deficit levels, existing debt burden, payment history, and policy credibility. Smaller economies – like some in Europe – that have large deficits, growing public debt, and banks that are too big to fail and too big to be saved may need fiscal adjustment sooner to avoid failed auctions, rating downgrades, and the risk of a public-finance crisis.

Second, if policymakers credibly commit – soon – to raise taxes and reduce public spending (especially entitlement spending), say, in 2011 and beyond, when the economic recovery is more resilient, the gain in markets’ confidence would allow a looser fiscal policy to support recovery in the short run.

Third, monetary policy authorities should specify the criteria that they will use to decide when to reverse quantitative easing, and when and how fast to normalize policy rates. Even if monetary easing is phased out later rather than sooner – when the economic recovery is more robust – markets and investors need clarity in advance on the parameters that will determine the timing and speed of the exit. Avoiding another asset and credit bubble from arising by including the price of assets like housing in the determination of monetary policy is also important.

Getting the exit strategy right is crucial: serious policy mistakes would significantly heighten the threat of a double-dip recession. Moreover, the risk of such a policy mistake is high, because the political economy of countries like the US may lead officials to postpone tough choices about unsustainable fiscal deficits.

In particular, the temptation for governments to use inflation to reduce the real value of public and private debts may become overwhelming. In countries where asking a legislature for tax increases and spending cuts is politically difficult, monetization of deficits and eventual inflation may become the path of least resistance.

Sterile debates about debt and deficits are worse than useless. All industrialized nations, including Canada, have used fiscal policy (deficits) to avoid economic catastrophe. The key, as Roubini is kind enough to point out, is how (and if) we exit from this.

The Nouveau Poor

As always, the Onion gets it:


Report: Growing Ranks Of Nouveau Poor Facing Discrimination From Old Poor

Given this and the Daily Show, do we really need network news?

Illich on Health Care

I was scouting around tonight looking for Ivan Illich's writings on renunciation and found this on health, illness and mortality and the freedom to address these on our own terms:

Illich states the following:

"I demand certain liberties for those who would celebrate living rather than preserve "life:"

- the liberty to declare myself sick;

- the liberty to refuse any and all medical
treatment at any time;

- the liberty to take any drug or treatment of my
own choosing;

- the liberty to be treated by the person of my
choice, that is, by anyone in the
community who feels called to the practice of healing, whether that person be an
acupuncturist, a homeopathic physician, a neurosurgeon, an astrologer, a witch
doctor, or someone else;

- the liberty to die without diagnosis.

I do not believe that countries need a national "health" policy, something given to their citizens. Rather, the latter need the courageous virtue to face certain truths:

- we will never eliminate pain;

- we will not cure all disorders;

- we will certainly die.

Therefore, as sensible creatures, we must face the fact that the pursuit of health may be a sickening disorder. There are no scientific, technological solutions. There is the daily task of accepting the fragility and contingency of the human situation. There are reasonable limits which must be placed on conventional "health" care. We urgently need to define anew what duties belong to us as persons, what pertains to our communities, what we relinquish to the state. ..."

We need to ask ourselves in other words what we have received in return for ceding power and vast resources to a medical monopoly that orders so much of our lives.

Freedom, as Illich so passionately argued, begins with renunciation of needs. How much are we enslaved by our need to escape the limits of fragility and mortality? And how much of life do we miss in trying to perfect and prolong it?

The New Literacy?

From the Stanford Study of Writing comes news that the internet isn't lobotomizing us electronically after all. As Clive Thompson of Wired reports, young people are writing more than ever before as their communications become ever more text based. And the same is true those no longer in school. Key passage:

"I think we're in the midst of a literacy revolution the likes of which we haven't seen since Greek civilization," she says. For Lunsford, technology isn't killing our ability to write. It's reviving it—and pushing our literacy in bold new directions.

The first thing she found is that young people today write far more than any generation before them. That's because so much socializing takes place online, and it almost always involves text. Of all the writing that the Stanford students did, a stunning 38 percent of it took place out of the classroom—life writing, as Lunsford calls it. Those Twitter updates and lists of 25 things about yourself add up.

It's almost hard to remember how big a paradigm shift this is. Before the Internet came along, most Americans never wrote anything, ever, that wasn't a school assignment. Unless they got a job that required producing text (like in law, advertising, or media), they'd leave school and virtually never construct a paragraph again.

But is this explosion of prose good, on a technical level? Yes. Lunsford's team found that the students were remarkably adept at what rhetoricians call kairos—assessing their audience and adapting their tone and technique to best get their point across. The modern world of online writing, particularly in chat and on discussion threads, is conversational and public, which makes it closer to the Greek tradition of argument than the asynchronous letter and essay writing of 50 years ago.

In his recent book, A Better Pencil, Dennis Baron argues that computers and related communications technologies have enhanced both our opportunities and abilities to write. If we take the time to think about this, far more of our communication takes place through writing, and perhaps even more important, we are less and less consumers of the written word and more and more producers. This is undoubtedly a good thing.

Bill Kristol -- Meritocrat

Via Andrew Sullivan, this apocryphal story of rags to riches (sort of) from Paul Campos of the Rocky Mountain News:

"I remember back in the late 1990s, when Ira Katznelson, an eminent political scientist at Columbia, came to deliver a guest lecture. Prof. Katznelson described a lunch he had with Irving Kristol during the first Bush administration.

The talk turned to William Kristol, then Dan Quayle's chief of staff, and how he got his start in politics.

Irving recalled how he talked to his friend Harvey Mansfield at Harvard, who secured William a place there as both an undergrad and graduate student; how he talked to Pat Moynihan, then Nixon's domestic policy adviser, and got William an internship at the White House; how he talked to friends at the RNC [Republican National Committee] and secured a job for William after he got his Harvard Ph.D.; and how he arranged with still more friends for William to teach at Penn and the Kennedy School of Government.>

"With that, Prof. Katznelson recalled, he then asked Irving what he thought of affirmative action. 'I oppose it,' Irving replied. 'It subverts meritocracy.' "

What can I say?

Moral Hazard and Future Crises

In a column in yesterday's Washington Post, Simon Johnson and James Kwak argue rightly (and obviously) that the greatest lasting impact of the financial crisis that began with the Lehman collapse a year ago is the moral hazard greatly increased if not created by public bailouts. For Johnson and Kwak, there are three sources of moral hazard:

First, bank employees and managers had asymmetric compensation structures. In good years, they stood to make huge amounts of money; in bad years, even if the bank lost money, they would still make healthy sums. This gave employees the incentive to take excessive risks because they could shift their potential losses to shareholders.

Second, shareholders had the same payoff structure. Banks are highly leveraged institutions; every dollar contributed by shareholders is magnified by 10 to 30 dollars from creditors. This meant that in good years, shareholders benefited from profits that were juiced by leverage, but should things go wrong, they could shift their potential losses to creditors. As a result, paying bank executives in stock did not mitigate their behavior; in fact, the most senior executives at both Bear Stearns and Lehman had and lost enormous amounts of money tied up in their companies.

Third, creditors had only limited incentives to watch over major banks. Ordinarily, creditors should demand high interest rates on loans to highly leveraged institutions. However, the expectation that large banks would not be allowed to fail made creditors more willing to lend to them.

Not mentioned is the increased capacity of financial institutions to hide non-performing assets through accounting rule changes. There is little incentive to declare market values and/or take write-downs when the assurance of public rescue exists. Bonuses and dividends continued to be paid, tacitly backed by the public purse.

Nor is Canada immune from this. Recall that our banks were able to unload $65 billion of questionable loans on the federal government, encouraging them in the future to reap the profits of such loans while offloading losses on the public.

The Jimmy Carterization of Obama?

It is hard to disagree or even begin to argue with Willem Buiter's FT column this morning on the disappointments of the Obama administration. The honeymoon is over. It is no longer enough to not be George Bush. Not only has Obama failed to deliver on moral reconciliation following Bush or on a real change of direction in foreign policy, his administration seems to have completely dropped the ball on financial reform. As Buiter notes

The US officials supposed to lead the systemic reforms of the domestic and international financial system are the same people who failed to recognise the emerging disfunctionalities that produced the crisis, who indeed were responsible for creating some of these disfunctionalities, who failed to prevent the crisis, who re-fought the battle of the 1930s (and insist on taking great credit for doing so) and left us with the moral hazard nightmare legacy of the end of the first decade of the twenty first century.

On the fiscal side, Barack Obama is presiding over the biggest peace-time government deficits and public debt build-up ever. According to my back-of-the-envelope calculations there is about a 10 percent of GDP gap between the medium and longer-term spending plans of the Obama administration and the taxes the Congress is willing and able to impose. The reality that you cannot run a West-European welfare state (with decent quality health care, decent pre-school, primary and secondary school education for all), rebuild America’s crumbling infrastructure, invest in the environment and fulfill your post-imperial global strategic ambitions while raising 33 percent of GDP in taxes, has not yet dawned on the Obama administration or on the American people at large.

Even more damning for Buiter is that in the face of continued economic stagnation, the administration seems to be abandoning commitments to open trade -- the very thing that deepened and cemented the depression eighty years ago.

This is an administration that appears to want to please everyone even at the expense of a coherent policy direction.

Of Accountants and Dead Parrots

Holding forth on the causes of last years financial crisis has lately become something of a cottage industry. Developments in economics and finance are usual suspects as are incentive structures that encourage excessive and even foolish risk-taking. Without doubt there is some truth in all of these claims.

Last Thursday, Floyd Norris reminded us of a much more pedestrian cause: changes to accounting standards that allowed financial institutions to appear healthier than they really were and that allowed them to take positions that they otherwise would not have been able to. As Norris tells it

The accountants let us down.

That is one of the clear lessons of the financial crisis that drove the world into a deep recession. We now know the major banks were hiding dubious assets off their balance sheets and stretching rules if not breaking them. We know that their capital was woefully inadequate for the risks they were taking.

Efforts are now being made to improve the rules, with some success. But banks have persuaded politicians on both sides of the Atlantic that the real problem came not when their financial inadequacies were obscured by bad accounting, but when they were revealed as the losses mounted.

“There were important aspects of our entire financial system that were operating like a Wild West show, huge unregulated opaque markets,” said the man whose job was to write the accounting rules, Robert H. Herz, the chairman of the Financial Accounting Standards Board.

“The crisis highlighted how important better transparency around that system is,” Mr. Herz added in an interview this week. “I would hope that would be a major lesson learned or relearned.”

Unfortunately, some seem to have learned exactly the opposite lesson. Accounting rule makers at FASB and its international equivalent, the International Accounting Standards Board, have been lambasted for efforts to improve transparency by forcing banks to disclose what their dodgy assets are actually worth, as opposed to what the banks think they should be worth.

Both boards have tried to resist, but have been forced by political pressure to back down on some specifics. In the case of FASB, the retreat took a few weeks after Mr. Herz was ordered to act at an extraordinary Congressional hearing. The international board was given a long weekend to retreat, with the European Commission threatening to impose its own rules if the board did not cave in. Both boards tried to reduce the damage by forcing more disclosures, but it is unclear how much good that will do. Neither was willing to defy the politicians.

As so many have argued for so long, changes to fair value accounting methods largely concealed the condition of the financial sector. As Norris notes

The banks have argued that market values can be misleading, and that their own estimates of the eventual cash flow from assets are more realistic than what they — or others — will now pay for those assets. The rules already allowed them to ignore so called “distress sales” in assessing fair value, but the banks pushed to broaden that exemption in the United States, while in Europe they got the regulators to allow them to retroactively stop calculating market value for assets they said they did not intend to sell.

Behind the scenes, there is a battle pitting securities regulators — who instinctively favor disclosure — against banking regulators, who fear there are times when disclosure could make a bad situation worse.

The securities regulators argue that accounting should do its best to report the actual financial condition of a company. If the banking regulators want to allow banks to use different rules in calculating capital — rules that would not require marking down assets, for example — then they can do so without depriving investors of important information.

But that information could scare those investors, and set off the kind of panic that brought down Lehman Brothers a year ago.

It is the job of banking regulators to keep their institutions healthy, and that effort can only be helped by accounting that reveals problems early. But if the banks do get into trouble, some regulators would prefer to maintain the appearance of prosperity while efforts are made to fix the problems quietly.

The brings to mind the Monty Python classic about the dead parrot



As with the parrot, no amount of subterfuge will permanently disguise the facts.

Panitch on the Relevence of Marxism

I finally had a chance to view Leo Panitch's Big Ideas lecture from earlier this year on marxism in light of the financial crisis. There is not much I can add to what I said earlier. But I can recommend this video for those who want a cogent analysis of what we have been through over the past year and what it means for progressive politics.



Enjoy!

How We Treat the Least of These

From Matt Talbot at Vox-Nova.com comes this story taken from an investigative report produced by the Government of Ireland.

In Ireland, there is a system of Catholic-run schools for the children of the poor, and these schools were the scenes of utter depravity between the 1930s and 1990s.

One victim’s memory of sadistic torture at the hands of a nun:

I was hit for having red, curly hair. You had to have straight hair like Our Lady. This sister was a monster. She’d drag you into the office and take her long cane and just beat you and beat you. She had a bamboo cane four feet long. She’d be frothing at the mouth. She’d say, “You curled your hair last night,” and when I’d say, “Yes, I curled it,” she’d stop. She had castor oil, she would press it into my head, to make my hair straight. My face would be swollen from the beatings, the oil would be running down my face.

This next testimony is especially appalling:

I was an animal lover. There were wild cats and kittens going around starving, and I used to sneak them into the dormitory. i had a kitten. This nun called me one night. She said, “You see that kitten you have there?” She got me out of bed by the hair and brought me down, they had one of those stoves that you put coal in the top. She said, “Take that top off.” I had to go up on my knees. I had to put the cat in there and put the lid on it — and the screams. Then she said, “Go back to bed.” The next morning, she got me out of bed and she made me rake that fire out. I think I was about twelve at the time.

I am used to praying for God’s mercy on the souls of sinners, especially me. I prayed that God may be merciful to the man who paralyzed, and ultimately killed, my late older brother.

There are, however, some offenses that make such prayers very, very hard to offer. For a representative of Mother Church, a person whose job it is not just to teach the faith, but to model in some way God’s loving relationship with his children, to force an animal-loving, born-into-poverty little girl to burn her kitten to death is definitely in that fucking category. It would have been bad enough for the sister to kill the kitten; for her to make the little girl do it…like I say: incandescent rage.

Like others, I am left speechless. I am aware that the Catholic Church has no monopoly on such evil. As a member of the Body of Christ, however, I feel compelled to respond to this. These children and the world desperately need to witness a church leadership publicly admit complicity and seek forgiveness. And we all need to shine a light on this; evil only flourishes in darkness.

Maybe more important, I have to examine my willingness to quite often look the other way, keep quiet, offer excuses or simply not see what I do not want to see, both for myself and others. Yes I must forgive or ask for forgivenness, as impossible as that may often seem. But I cannot forgive, or seek forgiveness for, that which I do not acknowledge.

Barlow about 9/11 on 9/11

Via today's BoingBoing comes a statement by John Perry Barlow made on the afternoon of September 11, 2001, which says, in part

This morning's events are roughly equivalent to the Reichstag fire that provided the social opportunity for the Nazi take-over of Germany. I am *not* suggesting that, like the Nazis, the authoritarian forces in America actually had a direct role in perpetrating this mind-blistering tragedy. (Though their indirect role deserves a much longer discussion.) Nevertheless, nothing could serve those who believe that American "safety" is more important than American liberty better than something like this. Control freaks will dine on this day for the rest of our lives. Within a few hours, we will see beginning the most vigorous efforts to end what remains of freedom in America. Those of who are willing to sacrifice a little - largely illusory - safety in order to maintain our faith in the original ideals of America will have to fight for those ideals just as vigorously.

And rather than pointing at the U.S., we should remind ourselves first that our Prime Minister in waiting has spoken and written extensively on his approval of what followed and that both his party and the Conservatives have participated in 9/11 inspired horrors such as the Arar affair.

Those who would trade freedom for security get neither.

Captain Jack, Deficit Hawk

If you need proof that when it comes to Canadian politics there is no there there, look no further than the NDP's dear leader.

In the face of news that the Harper tories plan to raise the EI payroll tax, the most regressive tax in the federal government toolkit, to fight the deficit, the NDP leader is criticizing the government on the higher than expected deficit. Earth to Jack, in the face of last years economic cataclysm, every major economy is facing higher than expected public sector deficits. Canada is in fact in better shape than most.

The key question moving forward is how, as the economy improves, deficits will be reduced and who will bear the cost of doing this. Raising EI premiums by billions places the burden squarely on those who were worst hurt, people with incomes under $40 thousand per year -- i.e. the working poor. Way to be tories. Way to be Jack.

A 21st Century Priesthood

Frank Furedi has a very perceptive piece in The Australian, examining the role of experts. For Furedi, the problem is not the role of expertise or its dominant role in addressing technical problems. It is instead the politicization of expertise or the privileging of a particular type of knowledge and of individual over all others.

Key quote

The exhortation to defer to experts is underpinned by the premise that their specialist knowledge entitles them to a higher moral status to the rest of us. For example, Ken Macdonald, former director of public prosecutions in Britain, pushed for the right to use expert witnesses to help boost the low conviction rate in rape trials. Former Home Office minister Joan Ryan, a junior Home Office minister at the time, backed him, arguing that expert evidence in court could "address myths about rape and its victims". The assumption seems to be that ordinary jurors lack the intelligence to grasp how rapists and their victims behave, which is why courts need the expert psychologist to put them right.

In previous times, pronouncement about who was evil or who had sinned was the prerogative of the priest. With the end of deference to the church such mystical powers have become associated with the authority of the professional expert witness. The call for ordinary jurors to ignore their intuition and subjugate themselves to the superior insight of the expert is seldom characterised as what it really is, a new form of non-traditional deference. According to this perspective, the prejudices and myths of ordinary jurors need to be overcome through the intervention of the enlightened views of the expert.

It is necessary to state at the outset that any civilised 21st-century society is likely to take expertise seriously. The efficient functioning of such a society depends, to a significant extent, on the quality of contribution made by its experts. Anyone who is ill or confronted with a technical problem will turn to an expert.

The problem is not the status of the expert but its politicisation. All too often experts do not confine their involvement in public discussion to the provision of advice. Many insist that their expertise entitles them to have the last word on policy deliberation. Recent studies indicate that in public debates those whose views run counter to the sentiments of scientific experts find it difficult to voice their beliefs.

Interestingly, I have just finished reading Terry Eagleton's Faith, Reason and Revolution, which looks at the complex interplay between secularism and faith. It is impossible to to his argument justice in a short blog post, but his work certainly suggests that far from overturning the power of an established priesthood we have in so many ways merely replaced it with another.

Challenging the Medical Guild: Speaking Truth to Power

Kudos to Matt Yglesias for being one of the very, very few to suggest that the root of problems with publicly provided health care is the monopoly power of doctors.

It is inconceivable that we will achieve real patient centred care or cost containment until we wrest power and the rent-seeking incentives that go with it from the medical profession. Doctors have no more right than any other group to control over their clients lives or the public purse.

Douthat on the Slippery Slope of Assisted Suicide

NYT wunderkind and infrequent columnist Ross Douthat has a worthwhile take on voluntary suicide as a segue to much more egregious practices. As Douthat argues

What’s at stake is the right to voluntary euthanasia, not the sort of involuntary plug-pulling that some Republicans have claimed is concealed in the finer print of the current health care reform proposals. But you don’t have to share Sarah Palin’s death panel fears to see perils lurking at the intersection of physician-assisted suicide and health care reform.

Consider the words of a prominent oncologist, bioethicist and health care wonk, critiquing assisted suicide in 1997, just before a Supreme Court ruling on the issue. “Once legalized,” this writer warned in the pages of The Atlantic, “euthanasia would become routine. Over time doctors would become comfortable giving injections to end life and Americans would become comfortable having euthanasia as an option.” From there, it would be an easy slide to euthanizing the incompetent: “Comfort would make us want to extend the option to others who, in society’s view, are suffering and leading purposeless lives.”

Comfort — and budgetary constraints. Euthanasia would be much more likely to pass from an exception to a rule, the bioethicist argued, “in the context of demographic and budgetary pressures on Social Security and Medicare as the Baby Boom generation begins to retire, around 2010.”

And of course in Canada, where the publicly funded healthcare system is already overwhelmed, this is much more likely to be true.

The real fear, of course, is that an unaccountable medical guild will increasingly make these decisions on their own. Witness events in New Orleans following Hurricane Katrina. Perhaps the most important and least understood of needed changes in health care delivery is the need to hold physicians to far more effective account, both for decisions made and resources used. Few if any politicians have the courage to take on the medical establishment. Until they do, efforts to take control of our health care system will remain largely cosmetic.

The Fat Lady Hasn't Sung Yet

From Bloomberg today comes a report that some key hedge funds are suggesting that far from being over, recent market gains represent a temporary uptick in what remains a bear market and lingering recession. Key for these influential players is the remaining problems with bank balance sheets resulting from changes to fair value accounting rules earlier this year.

As the report notes

The Financial Accounting Standards Board voted in April to relax fair-value accounting rules. The change to mark-to-market accounting allowed companies to use “significant” judgment in gauging prices of some investments on their books, including mortgage-backed securities that plunged with the housing market.

Banks are reporting better earnings because they haven’t been forced to account for their losses yet . . .

It seems that the downturn and underlying factors driving it are not so much resolved as forgotten. The news cycle has moved on but the problem remains.