Samuelson, etc.

Robert Samuelson is always fantastic for providing big-picture perspective on all matters economic. In some cases, like today's column, he's highlighting the fact that the 2008-2009 recession is not going to be a doomsday depression... he provides a moderating influence. In other cases - such as when he talks about the aging of the baby boom generation and it's effect on entitlements - his big-picture perspective is a call to action from the complacency that grips the country. Either way, he always has something good to say (even if I don't agree with it 100% of the time), and I thought I'd share today's article.

One thing he highlights that is important - the fundamentals of the American economy are strong. We have strong financial institutions (despite the credit crisis), strong housing markets (despite the subprime crisis), and strong labor markets (despite recent job loss). I think if anything is going to unleash a system-level crisis like the Great Depression, it will have to be external. Particularly it might be:

1. Depressions in other major economies (ie, China) that cannot deal with shocks like fuel price increases spreading to the U.S. The series of financial crises that wracked Mexico, Brazil, Russia, Indonesia, Thailand, and South Korea in 1997-98 demonstrated that as economies get more integrated, it's easier for them to spread ailments.

2. A loss of faith in the U.S. dollar, leading to massive dumping of dollar reserves by central banks around the world.

The scary thing is that (1.) both of these scenarios would come up on us fast, and (2.) they both will emerge outside the U.S. economy. BUT - we can do things to prevent both of them as well, and that's where policy should be directed.


In other news, this is a new Urban Institute Tax Policy Center report on the candidates tax plans. It projects that both candidates plans will continue fiscal deficits, but that McCain's will be substantially greater than Obama's. I was just at a release event for the report where the senior economic policy advisors for both campaigns commented on it - the Obama guy disputed the baselines that the TPC report compared their plans to, but came out with the same basic point - even if you use a more reasonable baseline, the difference between the McCain and Obama plans are maintained. I'm a little slow when it comes to tax policy, so I can't comment much more on that - but I've gotta say I was impressed with a lot that both sides had to offer. As Urban analyst Len Burman said at the event - both sides could benefit from borrowing a few policies from the other.

Some fun...

OK - I admit it's childish - but the "George W. Bush Sewage Plant" is pretty funny and very clever.

Nice tribute, 'Frisco!

Empire and Liberty

So I'm reading a book called "The Pentagon's New Map" by a guy that's worked in the Center for Naval Analysis and the Office of the Secretary of Defense... it's a very poorly written book but it has an interesting thesis that both intrigues and infuriates me. Basically, the author argues that the world is divided between "the Core" and "the Gap" - and that the primary difference between these two worlds is that acceptance of a certain "rule set". Most of the rule sets he talks about are security rule sets - rules of war and peace, etc. - but economic rule sets ultimately play a role as well. "The Gap" includes all the usual suspects - the Middle East, Africa, Southeast Asia excluding India and China, South America excluding Mexico, Argentina, Chile, and Brazil, etc. The author advocates an active and preemptive military policy in "the Gap" with the explicit goal of bringing them into the Core's rule set on security, the economy, good governance, etc. At times, he seems to advocate a loosely confederated global empire operating on the same basic principles. He makes this very explicit in one point, where he suggests that the U.N. operates very much like the world's legislative branch, and the United States federal government operates like it's executive branch. We use our military to execute the law of the land (in this case, the law of the planet), and put bad guys away.

At first glance, that's obviously scary - and it seems like a blank check for the military. But at some point, we will have a global polity - I'm convinced of that as well. We've seen tribes and city states organize from bands of hunters. These far flung groups have organized into clans and then nations, and now we're starting to see national confederacies emerge. I don't think its unreasonable to assume that we will have a single, sovereign, planetary government in fifty years or so. It may not happen - but its certainly conceivable. And if it did - how would that work? Probably in a way that's very similar to how "The Pentagon's New Map" is laying it out - with international bodies like the WTO, the ICC, and the UN laying out the rules of the game and the U.S. bringing belligerents into the fold.

With that in mind I'm going to offer two quotes from a Founding Father:

In 1780: "We shall divert through our own Country a branch of commerce which the European States have thought worthy of the most important struggles and sacrifices, and in the event of peace on terms which have been contemplated by some powers we shall form to the American union a barrier against the dangerous extension of the British Province of Canada and add to the Empire of liberty an extensive and fertile Country thereby converting dangerous Enemies into valuable friends."

And lest you think that was a slip of the tongue, in 1809 the same founding father repeated: "We should then have only to include the north [Canada] in our Confederacy, which would be of course in the first war, and we should have such an empire for liberty as she has never surveyed since the creation"... this was after his excitement about the prospect of obtaining Cuba for the United States.

Who was it? None other than the libertine Thomas Jefferson! The first was in a letter to George Rogers Clark, and the second in a letter to President Madison. This sounds pretty close to Hamilton (Jefferson's political rival) who advocated taking Spanish posessions in Mexico.

It seems so counterintuitive, but now that we're really forced to deal with the idea of empire we should think hard about what it means to be an "empire of liberty" and whether that even makes sense conceptually. Certainly we didn't have an issue with it throughout hour history, but since the closing of the frontier we've pretended that empire and America are antithetical. Are they? I don't know. Our founders consistently compared us to Rome, and at some point Rome made the leap from Republic to Empire. Interestingly enough, Rome's acquisiton of territory was not what made it an "empire" in the eyes of historians - I think we should take note of this. Rome became and empire when Julius Caesar crossed the Rubicon - when he entered the captiol and took power from the Senate.

These are dangerous times and we have an obligation to use our strength for the good. But we need to think hard about what we're doing. Where is our Rubicon? Who is our Caesar? What does the "American Empire" mean. Can we polinate the world with our "rule sets" and set the stage for a lasting, unified, powerful planet - or would this very act rob us of what makes us so unique? I don't know - and I don't think these choices will be made in the near future. But make no mistake - with the Soviets gone our generation is the first in American history to be confronted with Empire - and we're going to need to think about it and deal with it. Moreover - our generation is the first in the history of the species that is confronted with a Planetary Empire. What in the world do we do with that?

Swedenburg Rose

So several weeks back, Kate and I went to Swedenburg Estate Vineyard, and several other wineries in Middleburg, VA. We opened the first bottle from Swedenburg yesterday - a rose that I insisted on buying after we tried it. Normally I don't like roses much - they're basically like a white zinfandel for people not familiar with them. Usually not very exciting - they're not as crisp and fresh to me as a white, and they don't have the full experience of a red. This one was different, however - it had some strawberry notes (again something I usually don't like too much - strawberry flavored wine reminds me too much of "Arbor Mist"). In this case, I think the strawberry really complimented the alcohol that came out because it was so dry. That's the other problem I have with "berry notes" in wine. Usually you see it more with super-sweet wines, and its all just too much. But this wine was drier, so the strawberry went well with it. I liked it a lot.