The Great Debate

“Act and learn” versus “debate and wait”

By Mohamed El-Erian and Michael Spence
The opinions expressed are their own.

In formulating policy, the process and the mindset can have a significant impact on the success or failure of outcomes. How you do it can be as or more important than what you do.

In today’s western economies, this observation may go a long way in explaining why policy outcomes have consistently fallen short of what policymakers themselves have expected, let alone what is needed to address important and growing economic challenges.

Signs of disappointing policy outcomes are, unfortunately, all around us. Over the last two years, American policymakers have failed miserably to lower persistently high unemployment despite a series of stimulus measures, fiscal and monetary, conventional and unconventional. In Europe, the debt crisis has spread despite numerous summits, declarations, policy actions and political changes.

In both cases, policymakers identified and sometimes mis-identified the problems and took highly publicized steps to solve them. Considerable financial resources and political capital were deployed. The credibility of policymakers (and policymaking itself) was placed on the line. Yet to no avail. The identified problems not only persisted, they deepened.
When one compares policymaking episodes around the world – successful and less so – it seems clear that there is more at play than the content of policies. The mindset of policymakers and the process of policymaking seem to also have a lot to do with the disappointing outcomes. Indeed, one often hears policymakers point to political dysfunctionality as being the major hindrance to good outcomes.

In the US, it is the highly polarized nature of the political discourse and the associated lack of a “center.” In Europe, it is the need to get universal approval from the seventeen members of the Eurozone in what is often a cumbersome process that pits European necessities and realities against national interests and individual political party posturing.
As valid as the political constraints may be, we believe that there is something even more fundamental at play. It is not just about politics. In the last few years, the policy mindset has been unhelpful and, as a result, the sequencing outmoded.

from Katharine Herrup:

Opportunity nation?

America’s biggest race is just beginning. It's the race to create equal opportunity in our nation once again and to restore the belief that the American Dream can still be achieved.

Disillusionment, despair and unemployment hold court these days in a country that was once thought of as a place where dreams could be turned into reality. But the reality right now, despite unemployment numbers dropping by a statistically insignificant .1% on Friday from 9.1% to 9%, is that job and life opportunities are dismal, even non-existent for many, in what once was thought of as the land of endless opportunity.

So what does opportunity look like these days in a country that’s barely recognizable anymore?

Occupy the mortgage lenders

By Simon Johnson
The opinions expressed are his own.

Participants in the Occupy Wall Street movement are right to argue that the big banks have never properly been investigated for the mortgage origination, aggregation, and securitization behavior that was central to the financial crisis – and to the loss of more than eight million jobs. But, thanks to the efforts of New York’s attorney general, Eric Schneiderman, and others, serious discussion has started in the United States about an out-of court mortgage settlement between state attorney generals and prominent financial-sector firms.

Talks among state officials, the Obama administration, and the banks are currently focused on reported abuses in servicing mortgages, foreclosing on homes, and evicting their residents. But leading banks are also accused of illegal behavior – inducing people to borrow, for example, by deceiving them about the interest rate that would actually be paid, while misrepresenting the resulting mortgage-backed securities to investors.

If these charges are true, the bank executives involved may fear that civil lawsuits would uncover evidence that could be used in criminal prosecutions. In that case, their interest would naturally lie in seeking – as they now are – to keep that evidence from ever seeing the inside of a courtroom.

from Newsmaker:

Wait, now the right hates General Electric?

By James Ledbetter
The opinions expressed are his own.

For many years, the River Café, an elegant restaurant that sits just below the Brooklyn Bridge, had a plaque on its wall declaring, in effect, “If you work for General Electric, go eat somewhere else.”

This unusual exclusion policy had a simple explanation: for three decades, two GE plants in upstate New York dumped as much as 1.3 million pounds of polychlorinated biphenyls (PCBs) into the Hudson River, poisoning the fish supply that River Café depends on. The effect that this contamination had on wildlife—and on anyone who ate too much fish caught in the Hudson—was severe enough to create one of the largest Superfund projects in the history of the Environmental Protection Agency.

The Hudson pollution was not unique; the bend of the Housatonic River in Connecticut where I grew up was frequently unswimmable, because of PCBs floating down from a GE plant in Pittsfield, Massachusetts. Another aqueous assault, another massive taxpayer-funded cleanup. (Update: A GE spokesman tells me that the company paid for the cleanup of both rivers. Of course, there were also costs to taxpayers, but this is an important distinction.)

Will the Bush team kill Perry’s campaign?

By Joshua Spivak
The opinions expressed are his own.

Rick Perry’s quick ascent to the top tier of Republican Presidential candidates has been met with the expected sniping from other Republicans. What has been unexpected, though, is the source of the attacks against the Texas Governor. Criticism is not just coming from other candidates or interest groups, but, from former members of President George W. Bush’s team. In fact, they are the ones leading the charge against Perry. And, if history is any judge, this could be a real cause for concern for Perry’s election prospect.

Recently, Bush’s biggest supporters, including campaign strategist Karl Rove, have not been afraid to take swings at Perry. The anti-Perry movement actually began in 2010, when Bush supporters, including George H.W. Bush, Vice President Dick Cheney and Secretary of State and the leader of W.’s 2000 legal team James Baker, all lined-up behind Senator Kay Bailey Hutchinson in her failed campaign to topple Perry from the governor’s mansion. Perry’s triumph in 2010 led the Bush team to tamp down their criticism, but it is starting up again. Lately, Rove has called Perry “unpresidential.”

George W. Bush has shied away from the attacks so far, but there is an unmistakable sense that he is strongly opposed to Perry. What makes this all the more surprising is that Perry arguably owes his political success to Bush. Perry was Bush’s elected Lieutenant Governor during Bush’s second term as Governor of Texas, and Perry stepped up to the Governor’s mansion thanks to Bush’s 2000 election.

The “missing battle” of 9/11

By Andrew Hammond
The opinions expressed are his own.

Almost 10 years after 9/11, the United States has a new window of opportunity to regain the initiative in the “missing battle” of the campaign against terrorism. That is, a sustained soft power effort to win the battle for hearts and minds in predominantly Muslim countries.

The US and wider Western response to the September 2001 attacks has been dominated by counter-terrorism and military might. While key successes have been achieved, including the unseating of the Taliban regime in Afghanistan, an overwhelming emphasis on hard power has fueled controversy across much of the world.

Even former US Defense Secretary Donald Rumsfeld acknowledged the problem when, in 2006, he asserted that the United States “probably deserves [only] a ‘D’ or a D-plus’ as a country as to how well we’re doing in the battle of ideas” [in the anti-terrorism campaign], and that “we have to find a formula as a country” for countering the jihadist message.

Traveling men: Kucinich and running for Congress in a new state

By Joshua Spivak
The opinions expressed are his own.

With Ohio set to lose two Congressional seats in the new reapportionment, the state legislature is apparently set to redistrict Dennis Kucinich out of the House and into political oblivion. Which means Congress’ most prominent left-wing member is looking for an innovative way to stay in office: reports have claimed that Kucinich is considering moving to a very liberal area in Washington State to run for a newly created seat in that state.

There is an excellent chance that this is nothing but talk. The reality is that Kucinich, who has represented Cleveland since 1996, would have a very high hurdle to clear if he in fact wanted to move. But it wouldn’t be an unprecedented one. And he would be joining some illustrious predecessors in making the leap.

In the nineteenth century, numerous members of Congress moved to new states to try their hand at continuing in office — though they usually ran after at least one term out of Congress. The most noteworthy example probably is Senator James Shields, who served Senate terms for three different states — Illinois, Minnesota and Missouri. Other big names from American history decided to run in a new state, too. Congress’ most famous, Daniel Webster, first served two terms in the House as a member of the New Hampshire delegation before moving across the border to find lasting fame and fortune in Massachusetts as both a Congressman and Senator. In the same vein, Sam Houston served as Governor of Tennessee before becoming a legend and serving as both Senator and Governor of Texas.

from Bernd Debusmann:

A counter-productive WikiLeak


Bernd Debusmann is a Reuters columnist. The opinions expressed are his own.

WASHINGTON -- Now that WikiLeaks has begun releasing a quarter of a million classified U.S. State Department cables from embassies around the world, a new era is dawning. Political change and reform are inevitable world-wide and at long last, there's a chance for peace and stability in the Middle East. Really.

This is how Julian Assange, the Australian founder of WikiLeaks, views the effect of the dispatches that lay bare the inner workings of U.S. diplomacy, provide frank and often titillating detail of the shortcomings and foibles of foreign leaders, report on the breath-taking scale of corruption in such places as Afghanistan and Russia, and note that -- surprise, surprise -- Arab leaders in particular tend to say one thing in public and quite another in private.

"The...media scrutiny and the reaction from government are so tremendous that it actually eclipses our ability to understand it," Assange said in an interview with Time magazine on day 3 of the data dump, which began on November 28. "I can see that there is a tremendous re-arrangement of viewings about many different countries. And so that will result in a new kind of harmonization ... "

Rangel punishment unlikely to satisfy anyone

The likely result of House Ethics Committee’s conviction of Congressman Charles Rangel on ethical violations charges will probably mollify no one. The first reports of possible punishment include censure or a letter of reprimand. While these are considered harsh punishments in Congress, it is doubtful that the public at large agrees. The general populace, noting that others could face criminal liability for the same actions, sees censure as a slap on the wrist. Anything less than expulsion would appear to be another example of endemic and increasing corruption in government — and indictment of a system that looks to protect its own members.

While this is an understandable view, it misses out on the harder line Congress on corruption problems in a post-Watergate world. While they might not be a guard dog of rectitude, this is still a marked change from the past. Financial indiscretions use to be all but ignored. Senator Daniel Webster and others were famously on the payroll of the Bank of the U.S. Congress also saw a huge, though by now long forgotten, scandal in the 1870s. The Credit Mobiler scandal, which was outgrowth of the building of the first Transcontinental Railroad and involved bribing numerous members of Congress and the Administration, resulted in two Censures. The Vice President, Shuyler Colfax, was not renominated, but his replacement was also implicated in the scandal. Other pre-Watergate financial scandals were quickly papered over and forgotten.

Due to both a more active press looking into stories of political corruption and stricter campaign finance rules, there is little question that Congress has been more willing to hold members responsible for ethical violations. In the history of the House, only two representatives have been expelled for non-treason reasons. Both were post-Watergate. One was in 1980, Michael Myers who was convicted in the Abscam sting, the other was James Traficant in 2002, after being convicted of 10 different counts of criminal behavior. Censure and reprimands have also gone up. Despite being thought of as a wrist-slapper, the House has also been more active in ethics investigations of its top leadership. In 1989, Jim Wright resigned under an ethical cloud for using bulk book sales to get around a limit on speaking honorariums. Newt Gingrich was reprimanded for using a college course for political purposes.

Helping Haiti: Stop the handouts


By Danielle Grace Warren
The opinions expressed are her own.

The people of Haiti have a name for the earthquake that rocked their country: Goudougoudou, an onomatopoetic creole nickname invented for the earthquake meant to emulate the sound of the earth rumbling, the buildings falling. There are numbers for it, too: 230,000 deaths, 59 aftershocks and 1.5 million people who remain displaced nearly a year later.

While over a billion dollars in US aid was promised was for rebuilding Haiti is tied up in the umbilicus of Washington, Port au Prince residents are settling between piles of debris — 98% of which still has not been removed. Haitians pick through the rubble for building scraps to reinforce torn tarpaulin.

Many who were displaced by the disaster and came to the Haitian capital for aid have tried to re-settle in the small towns and villages of their birth. But they have been forced to return to the capital yet again since it is still where most of the food and aid in the country can be found.