Britain's riots - Thatcher's grandchildren

This column on Bloomberg news by Pankaj Mishra is the best thing I have read on the British riots. An excerpt:

Britain, of course, is the original home of the free market. As the first country to industrialize, and to have an enormous comparative advantage, it inevitably adopted laissez- faire policies in the mid-19th century. The harsh effect this had on the working classes and the poor was gradually softened by such Victorian institutions as compulsory education, trade unions and social-service societies. The political and economic catastrophes of the first half of the 20th century buried the idea of the self-regulating market; and a new national consensus was built around the welfare state after World War II.

This all changed starting in the 1980s as successive British governments, Labour as well as Conservative, struggled with high inflation, falling industrial productivity and conflict. The illusion that the nation could be saved only through immersion in a self-stabilizing market economy hardened into a revolutionary ideology, embraced by both major parties, that has shaped today’s Britain.

In that sense, if Tony Blair and David Cameron are “sons of Thatcher,” as the journalist Simon Jenkins puts it, the rioters of today are the grandchildren.

A little realism on the right

David Frum has been something of an apostate on the right for some time now, but imagine the teeth gnashing this quote about the post-2008 financial and economic crisis must have engendered:

When people tell me that I’ve changed my mind too much about too many things over the past four years, I can only point to the devastation wrought by this crisis and wonder: How closed must your thinking be if it isn’t affected by a disaster of such magnitude? And in fact, almost all of our thinking has been somehow affected: hence the drift of so many conservatives away from what used to be the mainstream market-oriented Washington Consensus toward Austrian economics and Ron Paul style hard-money libertarianism. The ground they and I used to occupy stands increasingly empty.

If I can’t follow where most of my friends have gone, it is because I keep hearing Susan Sontag’s question in my ears. Or rather, a revised and updated version of that question:

Imagine, if you will, someone who read only the Wall Street Journal editorial page between 2000 and 2011, and someone in the same period who read only the collected columns of Paul Krugman. Which reader would have been better informed about the realities of the current economic crisis? The answer, I think, should give us pause. Can it be that our enemies were right?

To see what the Susan Sontag question was and for the rest of the item, read the blogpost, Were Our Enemies Right? here.

U.S. debt downgrade

Paul Krugman gets it right on the U.S. debt downgrade:

....It’s a strange situation.

On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation. And yes, it is the madness of the right: if not for the extremism of anti-tax Republicans, we would have no trouble reaching an agreement that would ensure long-run solvency.

On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?

Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.

More than that, everything I’ve heard about S&P’s demands suggests that it’s talking nonsense about the US fiscal situation....

In short, S&P is just making stuff up — and after the mortgage debacle, they really don’t have that right.

It is critically important to remember, as Krugman notes, the scandalous role of the ratings agencies in the subprime mortgage mess, which is all well-documented in Michael Lewis's marvelous book The Big Short.

I passed my copy on and don't have it to quote from but read this excerpt from an interview with Michael Lewis by Terence McNally (the TM in the excerpt below):

ML: The sub-prime mortgage bonds were rated triple A by Moody's and Standard and Poor's. Why? Well, they could give you an argument, but in retrospect, it looks like a very foolish argument.
TM: It looks worse than foolish to me, it looks corrupt.
ML: When you think about corruption, there's the simple kind where I give you $1000 to interview me on the radio so it will promote my book. That's corrupt and we both know it. But there's a different sort of corruption where we're all part of a system that is rewarding us very well to pay attention to certain things and not pay attention to others. We're paid to have blind spots. There's an awful lot of that kind of corruption in the financial system because people's incentives are all screwed up.
Ratings agencies were paid by the people who issued the bonds to put the triple A rating on them. Their incentive is to please the people who are issuing the securities. They can't at the same time independently judge the securities.
TM: Arthur Andersen went out of business for doing basically the same thing with Enron. How could someone not see that they were recreating something which had already failed in a huge way?
ML: Some people did see...The people I find most riveting are the people who saw the magnitude of the coming disaster. They were sane men in an insane world. They would call Standard and Poor's and Moody's and say, "How are you rating these things? Our models show that if house prices even go flat, all these bonds will be worthless." To the question of what happens to these bonds if house prices go down, Standard and Poor's would say, "We actually don't know because there's no place in our model to put a negative number."
TM: Obama, Geithner and the administration are putting out plans for new regulations. This isn't in there?
ML: No. It should be illegal for issuers to pay raters for ratings. It's a bribe. Instead the administration says they're going to give the regulators more authority to evaluate ratings agencies. That doesn't do anything; they already had that authority.

The Turmel Tempest

It is a classic example of a huge fuss being generated in the media over an issue that adds up to nothing.

The fuss has been fed by political opponents who should know better but apparently don't.  For example, Bob Rae was reported to have said today:

What kind of federalism is it that leads someone to join two other parties, both of which are committed to the independence of Quebec, the sovereignty of Quebec and in the case of Quebec Solidaire a socialist Quebec?

Globe blogger and long-time NDP activist Gerald Caplan points out:

...Quebec is different from the rest of Canada in ways we often ignore. Ms. Turmel is one symbol of this difference. For Ms. Turmel -- Québécoise, Canadian, federalist, trade union leader, New Democrat -- to carry a Bloc card for a few years was no big deal.

Some thought that lesson was learned election night. The reason so many Québécois could move en masse from the Bloc to the NDP was not just because Mr. Layton was a great guy to have a beer with. He also shared and represented their values. Mr. Layton was progressive, a social democrat, committed to social justice. So were many Bloc voters who didn’t want Quebec to separate. Those were the social values that the two parties shared and that allowed the massive voting switch once it was clear that the Bloc was an exhausted force.

Maclean's writer Martin Patriquin provides some useful insights. “… it’s amazing how few people have clued into this headsmackingly obvious point, but Turmel willingly ripped up her Bloc Québécois membership card to run for a dyed-in-orange federalist party [emphasis in original]. That alone should be evidence enough that her sovereigntist credentials weren’t quite Parizeau-calibre. If anything, Turmel’s (temporary) ascension to the head of the party, like the NDP’s overwhelming victory in May, is proof positive that detaching the left from the sovereigntist movement isn’t as impossible as it once was. How far we’ve come.”

One should add that not only did Turmel spurn the Bloc, she did so to run for a party that historically had never had much electoral success in Quebec. So she supported a federalist party in a circumstance where she might have reasonably expected that to be a political liability.

The fact that many in Quebec such as Turmel spurned the pro-independence party for a federalist party should be celebrated not mocked. Turmel is a long-time NDP member and supporter, her true allegiance. Her opponents in any case include many with previous sovereignist backgrounds: Liberal Jean Lapierre, who served in Martin's cabinet, was a co-founder of the Bloc, and Maxime Bernier, who is now back in Harper's cabinet, worked for PQ Premier Bernard Landry, a very serious supporter of Quebec independence.

Turmel represents exactly what we want to see Quebecers do about federalism, Mr. Rae, embrace it.

U.S. debt crisis - the real blame belongs with the establishment "centrists"

There are two critical aspects to the U.S. debt crisis. One is that the confrontation is real and may not be resolved quickly, although the pressure to do so will grow exponentially from here on out. The real blame for all this lies with the deficit-phobic Washington centrists. The best explanation for how we got here is outlined in this blogpost by Jon Chait of The New Republic fittingly titled: The Debt Ceiling Crisis And The Failure Of The Establishment, which, as Chait puts it, underestimated " the loony determination of the Republican right".

The other tragic aspect is that the whole debate is wrong-headed and focused on the wrong problems, the debt and deficit, instead of the right ones, short and long-term unemployment and badly skewed income distribution. A not unreasonable discussion of these can be found in this column by former Obama and Clinton advisor Laura D'Andrea Tyson on the jobs deficit.

How soon we forget

"Majority backs Harper’s plan for Senate elections and term limits, poll finds" says the headline on the Globe story.  Great news for Harper and company, right?

However, this Nanos poll from just a month ago tells us that Senate reform is the public's lowest priority, right at the bottom a list topped by health care, about the same level as strengthening the military, traditionally something that doesn't garner much support.

When it comes to polls, context and wording is everything, something you don't see much in the daily press.

Manitoba NDP has a realistic chance to win

With the notable exceptions of Alberta and Newfoundland and Labrador, few provincial governments keep the same partisan colour beyond two terms in government.  The Manitoba NDP has now made it through three terms, so it should be due to lose the next election. Polls over the past couple of years have been pointing in that direction. However, the NDP has continued to lead in the City of Winnipeg in most surveys to date, including polls that give a substantial overall lead to the PCs (this March poll from Probe for example). TC has been convinced for some time that a change in government was coming. Now I am not so sure.

An Angus Reid online poll released on June 7 that measured premier popularity put Greg Selinger's approval rating at 48%, second highest in Canada behind just Saskatchewan's Brad Wall and a gain of 20 points since the previous survey in November 2010. Perhaps this is due to his handling of the flood situation.

A Probe Research poll released on June 29 reported an overall dead heat between the NDP and the PCs at 44% with the Liberals a quite distant third at 9%. This represented a 9 point boost for the NDP.  More importantly it would easily give the NDP a fourth majority despite the overall closeness in the vote.

TC estimates it would deliver 34 seats to the NDP, 21 to the PCs and 2 to the Liberals. The key to this is the historically efficient vote pattern the NDP has achieved since it first won office in 1969.  Simply put, the NDP's margins in the city are smaller than the huge margins run up by the PCs in rural southwestern and southeastern Manitoba - more seats for exactly the same share of the vote. The final factor is that the NDP has had a virtual lock on the small northern ridings since its initial breakthrough 42 years ago.

Using the Probe poll numbers TC can estimate a vote share for every riding. With exactly the same overall vote, the NDP wins its ridings by an average margin of 25.4%, while the PC wins their seats by an average of 36.9%. Therein lies the difference. In the March 2011 Probe poll the PCs had an overall lead of 47% to 35% but still trailed the NDP by six points in the City of Winnipeg. It would have yielded a bare majority for the PCs. But you can see their problem.

The election could still go the other way, but the NDP's structural advantages and Selinger's growing popularity may well give it an unprecedented fourth term.