The Reality-Based Community

CalPERS has filed suit against the three big bond ratings agencies for "negligent misrepresentation".

Barry Ritholtz plausibly interprets the motive as vengeance, not money: the suit is timed to put the agencies in the dock when their shenanigans are coming under scrutiny in Obama's regulatory reform. He's also right that CalPERS, with its $180 bn under management and deep expertise, is a scary enemy. It surely has more esprit de suite than Sarkozy, who fulminated for a while then dropped the issue.

I'm no expert on this, but the key reforms to stop the endemic conflicts of interest in the current system look obvious:

* Ratings should be paid for by bond purchasers, not issuers; for example the fees could be levied by exchanges as a precondition for listing, and recouped from buyers.

* At least double the number of players to break the cosy oligopoly of three. One new agency should be based in Europe and one in Asia. The fastest way in the US is to nationalize the three, break them up, and reprivatize as mixed public/private agencies with a public-interest function, like the exchanges. But what's to stop CalPERS from setting one up, alone or with other pension funds?

* Ratings agencies should be barred by law from giving any advice to individual bond issuers.

Any views from people who know more about this?

1. We need a climate change bill. Waxman-Markey as passed by the House is pretty lame; as passed by the Senate it will be much worse. Maybe it could be rescued in Conference, but maybe not, and the Conference Report needs 60 votes to beat a Senate filibuster.

2. We need a health care bill, and — for no good substantive reason — it needs to be "paid for." (No one bothered to "pay for" the Bush tax cuts or the War in Iraq, and for that matter no one has to "pay for" the uncontrolled escalation in the budgetary costs of Medicare, Medicaid, and Federal employee [and contractor] health coverage that will result if health care reform doesn't happen.)

3. Finding a combination of new revenues and cost-savings that will make the bill "budget-neutral" in the eyes of CBO and that will also pass the Senate may well result in an inadequate set of health care reforms.

4. But health care can be done under Budget Reconciliation, which precludes a filibuster. The Senate Dems have already agreed not to do Waxman-Markey in that way.

5. A greenhouse gas tax is just as good as a well-designed cap and trade, and much better than the mess likely to emerge out of Waxman-Markey.

6. A greenhouse gas tax can raise quite a bit of revenue.

7. That revenue could be used to help "pay" for health care reform. And a revenue measure is clearly relevant to Budget Reconciliation.

8. So, having scared all the rich folks by threatening an income tax surcharge to pay for health care reform, the Conference that handles Budget Reconciliation can pull a rabbit out of a hat by substituting a greenhouse gas tax for part of that surcharge and using the surplus to craft a better health care plan.

I have no estimate of how likely this is to actually happen, but I don't think it's a remote outcome. I very much doubt that Harry Reid is as much of a softie as his critics make him out to be. When you have a solid majority and a way to get around a filibuster, there's no need to bluster.

Footnote Doubling Federal alcohol taxes would pull in about $90 billion over 10 years, which is 9% of the total budget offset required. It would also directly reduce health care costs, and reduce the homicide rate by something like 6%.

One of the uglier acts of organizational vandalism engaged in by the vertical barbarians who took over the House of Representatives in 1994 was the destruction of the Office of Technology Assessment, which used to give the Congress the same sort of expert, nonpartisan advice about technology issues that the CBO provides on budgetary matters. Gingrich's wrecking crew hated OTA partly because it had blown the whistle on the technically absurd claims made on behalf of the "missile defense" scam, but mostly because they regarded it, with good reason, as the brainchild of Ted Kennedy and an employer of Kennedy supporters.

I had hoped that the Reconquista of 2006 might bring back OTA (and repair the damage done to the Congressional Research Service), but so far there's been no progress, despite the desperate need for technology assessment in connection with, inter alia, health care and climate change.

However, I think it would be rather difficult at this juncture for the Republicans to make too much of a stink if the Senate Majority Leader proposed the establishment of the Edward M. Kennedy Office of Technology Assessment.

Russell Baker, reviewing a book by the eminent historian Edmund Morgan which touches on the aftermath of the Salem witch trials (NYRB, paywall):

Five years later [in 1697] the General Court of Massachusetts, deciding that the state had executed innocent people, did something that today would be utterly inconceivable. It appointed a day of public fasting during which the people were to ask forgiveness for what they had done. Samuel Sewall, one of the Salem judges, stood in church with bowed head while a minister read his statement begging forgiveness of God and man and asking that "the blame and shame of it" be placed on him.

The Salem penance was incomplete. Sewall was only one of seven judges, the false accusers were not prosecuted, and the influential Mathers did not join in. But when all's said and done, Puritan Massachusetts did submit itself to a painful public catharsis; and that was the end of (serious) witchcraft trials in the colonies. In contrast, Obama's Administration and Congress are playing for time and hoping they can get away without one.

But there are times when only a scarlet letter will do.

T

The latest Washington Monthly carries my account of Honolulu's Project HOPE, which is probation done right. I claim that it points the way to having half as much crime and half as many people in prison.

HOPE probationers get arrested less than half as often, and for less serious crimes, than those under traditional probation. The reason may be that the HOPE participants are getting off drugs, which makes them less likely to steal to support their habits and more likely to get and keep jobs. Or it may be simply that they are leading more structured lives. In any event, it’s clear that HOPE reduces crime among those assigned to it.

In addition, HOPE has achieved something rare in the American criminal justice system, proving that it is actually possible to enforce the conditions of "community corrections" programs: probation and its cousin, parole. (Probationers are offenders who have been placed under supervision instead of being sent to prison; parolees are monitored in the community after serving part of their prison term.) This discovery has major policy implications. After twenty-five years of "tough on crime" orthodoxy, American politicians are urgently searching for workable alternatives to mass incarceration. The fiscal crisis has state governments scrambling to pay for prison systems that take a bigger share of state budgets than anything but health care and education. Senator Jim Webb is seeking to enact major criminal-justice reforms, reasoning that a system that holds one in 100 adults behind bars and has a 60 percent recidivism rate could probably be improved. Yet while mass incarceration has been under criticism, scant attention has been devoted to the inadequacies of the alternatives, probation and parole. In every state those systems are woefully underfunded and overburdened, unable to enforce their own rules or to prevent most of their clients from sliding back into criminal life. All of the other "community corrections" options—drug diversion programs, treatment courts, community service, home detention—depend on the probation system for their enforcement. As long as probation remains ineffective, any requirement imposed on an offender by the court is, in reality, no more than a helpful hint.

Without a functioning community-corrections system, the current enthusiasm for prison reform is likely to wither and fade. That’s what makes Judge Alm’s Hawaiian experiment so important. The biggest and cheapest opportunity to lower both incarceration and crime rates is to transform probation from a minor nuisance to the probationer into a real system of "outpatient corrections," capable of monitoring and reforming the behavior of vast numbers of offenders.

The book from which the article is drawn, When Brute Force Fails, is rocketing up the best-seller lists. A month ago, it was #1.2 million and change on Amazon; now it's up to #172,536. Having covered 85% of the distance to #1 in a month, WBBF will no doubt be well into negative numbers by fall. Amazon is helping by pricing the opus at $20.21, 33% off the cover price.

Reportedly, Turkish PM Erdogan has labelled as genocide the recent events in Xinjiang, and the Chinese he demanded he take back his words.

This is mildly amusing given how Turkey reacts to discussions of the Armenian genocide by the Ottoman empire.
See for example wikipedia

Three readers took issue with my worry about museums keeping the wolf from the door by renting their space for parties and events. In fact, I'm pretty ambivalent about this; as Mark has pointed out here, museums are a better first date than almost anywhere and should be open many more evenings. Movies and shows prevent conversation for most of your time together, dinner is vacuous and you're trapped looking at each other, bars and clubs are too noisy to talk. At a museum, you get a constant flow of interesting things to talk about without having to recite autobiography, it's quiet, the atmosphere isn't heavy with premature sexual tension, the lights are on, and there's a cafe to have coffee and a nosh.

In fact, I wonder that museums haven't become a favored place for educated young people to meet strangers : you're assured that anyone there is enough like you to be worth at least some schmoose, it's safe, and all the stuff in the previous paragraph. As a former museologist, I always watch the visitors as much as the displays and I see surprisingly little of this. I bet the typical single museum visitor in his or her twenties would be more amenable to chatting with a stranger than the strangers seem to fear: try it! If you go alone to a bar and come up empty, you've wasted the evening and hurt your liver. If you go alone to a museum and don't meet anyone, you still meet Vermeer or a real gigantotherium. The principle is analogous to Edith Stokey's recipe for how to never ever wait in line: carry a book!

The rental events have a lot going for them. They bring in people who wouldn't otherwise attend, they use the space when it would otherwise be empty, they provide class to the organization meeting in them, and they are nicely decorated, whether with art or dinosaur skeletons. As long as the event isn't rowdy and risky to the collection, a low risk in most cases, I guess this is a good idea. The singles nights at the California Academy of Sciences, by all reports, are a great success, and one of the best parties of my life was a wedding at the Brooklyn Botanic Garden.

I'm a little concerned that the core mission of museums will be diluted and displaced: whatever social capital they can create by assisting social intercourse of all sorts, museums are about science, history, and art at a level of engagement more serious and more demanding than restaurant decor. But I think the risk is manageable. What I deplore is that we undersubsidize museums inexcusably (and have too few of them), so they (i) have to resort to sometimes questionable methods of paying the bills (ii) are starving. A museum that's not full is a classic declining marginal cost enterprise, like a park or a tram: an additional visitor imposes only a tiny bit of wear and tear on the floors, so marginal cost pricing (a super-solid criterion for good policy) implies a zero admission price (like the British and US national museums) and public subsidy. Like a park. A museum that is congested is a signal to build more museum, and get stuff out of the basement and on view.

Not as you would expect the Bishop of Barchester, but the usually lucid British Orthodox Chief Rabbi Sir Jonathan Sacks (London Times, June 26):

..what has gone wrong in society as a whole? I believe we have lost our traditional sense of morality...
When it comes to personal behaviour we have now come to believe that there is no right and wrong. Instead, there are choices. The market facilitates those choices. The State handles the consequences, picking up the pieces when they go wrong. ...
Concepts like duty, obligation, responsibility and honour have come to seem antiquated and irrelevant. Emotions like guilt, shame, contrition and remorse have been deleted from our vocabulary, for are we not all entitled to self-esteem? The still, small voice of conscience is rarely heard these days. Conscience has been outsourced, delegated away. So, in place of an inner code, we have regulatory authorities.

Sacks' claim that "we have now come to believe that there is no right and wrong", that most people have lost a moral frame of reference, is absurd.

The Monterey Bay Aquarium is one of the real jewels in the Bay Area's cultural/educational crown. My wife and daughter-the-middle-school-math-and-science-teacher and I spent the day there, revisiting a place we knew well when the kids were younger. It seemed that Cannery Row has become at least thirty percent more schlocky and touristy over the last decade, but this is not necessarily a bad thing: I loved Coney Island back in the day and there's a place in the world for penny-squashing machines.

This aquarium is distinguished by an emphasis, going back to its founding, on the biology of the Monterey Bay region: it has coral reef displays and some exotic critters from far away, but the big installations are local (kelp forest, sea otters, tidepool environments, and the like). There's a tank of jellies (what we used to call jellyfish) that is so hypnotic and relaxing I wasn't sure I could walk back to the car after sitting in front of it, and a big new section on seahorses. Go there, it's wonderful. But the visit on the whole made me sad, for three main reasons.

Right at the door: admission is $30 for adults and $18 for kids (organized school groups are free, and there are the usual quantity-discount memberships). This has two bad effects. First, it's just a very expensive family educational experience, pretty much excluding anyone below the upper middle class and excluding lots of people who should see this stuff. Second, as the aquarium is obviously challenged to cover its costs, it creates an incentive to attract bodies however possible (is selling itself as a party venue a good way for aquarium management to spend its time?) [UPDATE: more on this here]. Some practice responding to this pressure for attendance is unexceptionable; almost every sign and label was in English and Spanish, both languages the same size. But (granted, this was on a nice summer Sunday) it was something of a challenge to get close enough to the displays to really see them because of the crowd. And some of the developments in exhibit design are not positive, like the idea of playing mood Muzak in the exhibition areas. Which leads me to:

The scientific content of the displays, especially the labels, was dumbed down dramatically from what it used to be, and further from what I came to expect in a science museum roaming the American Museum of Natural History as a child. I went from tank to tank, read everything on the very large-type labels, but could rarely find out where the creature inside lived in the world, whom it eats, who eats it, or whom it's related to. I learned the octopus is super smart as animals go, but not why being smart is especially useful for it. The jellies are a major draw, but I could not find out how the cells around the perimeter of the bell communicate with each other to contract all at the same time, nor how nourishment is transported from the gut to the rest of the animal, nor whether it's light-aware and if so, by what mechanism. I looked for a book about them in the shop, but the shop is much more about chotchkes (my daughter found a beautiful necklace) and has only a smattering of books; the only one concerning the jellies was a manual about how to keep them in a home aquarium. The result of this radical editing of what a natural history museum or zoo used to make available is to turn the whole aquarium into something more like an entertainment display of weird stuff and less like a really informative enterprise. OK, maybe the web is a better way to make real information available than text labels, but why should I have to wait until I get home, and remember all these questions, rather than having terminals set up right there?

Finally, I was astonished, literally at the point of tears, to see the degree to which almost every exhibit now has to highlight the terrible destruction we have brought to oceans that always seemed too big to damage. Sharks, coral reefs, mammals, turtles, birds (an albatross was introduced to us, and the talk featured a plastic container of at least a pint filled with the plastic, bottle caps, and other trash removed from the stomach of one albatross), you name it: endangered, threatened, dying. How did we get to the point where a balanced presentation of ocean science is mainly about loss, waste, and human misbehavior? What are kids to think about this?

There seems little doubt that various Bush-Cheney appointees did things they could go to prison for in the name of the "war on terror," from torture to illegal surveillance of Americans citizens to misinforming the Congress. And it seems equally obvious that it would be both improper and politically unwise for Barack Obama to call for the prosecution of members of the previous administration; those judgments are properly made by prosecutors, not by the President.

In the case of torture, any exercise of prosecutorial discretion in favor of torturers might run afoul of our obligations under the Convention Against Torture. That makes it unsurprising that Attorney General Holder, in the face of the President's expressed preference for looking forward rather than back, is reported to be on the verge of naming a torture prosecutor.

A truth commission might be able to provide accountability without causing a partisan firestorm, but we've never done such a thing here and of course the Republicans would be reluctant to admit that their conduct requires the same sort of treatment as that of the Communists in Eastern Europe and the military dictatorships of Latin America.

On the other hand, if prosecutions were to start, it would be perfectly appropriate for the President to ask the Congress to establish a truth commission with the power to provide immunity from prosecution in return for truthful testimony. And the Republicans facing charges might help persuade the Republicans not facing charges that such a compromise would be better, from their perspective, than the alternative.

I have no independent basis for thinking that anyone in the current administration, including the President, has such an outcome in mind. but if that were the plan it would be consistent with everything we know about the Obama operating style.

I guess we can stop telling fairy tales about the climate change bill improving in the Senate. To the contrary, the corn/agriculture/ethanol Democrats, having thrown the science under the bus in the House, are preparing to back up and run over it again, just to be sure.

The Iowa Democrat, a major advocate for ethanol, also wants to expand opportunities for the corn-based version of the fuel. He said he would like to include language that would raise the amount of ethanol that can be blended into gasoline from 10 percent to 15 percent -- a change the ethanol industry has been lobbying for but auto manufacturers have been hesitant to embrace and environmental groups have balked at. "EPA's got to get over their absolute rejection of ethanol. They've just got to get over it," Harkin said. "And we're going to force them to get over it."

No wonder Obama's climate initiative at the G-8 was dissed. He promised policy would be constrained by reality as science observes it, but apparently that was, let's say, aspirational, and he went to l'Aquila with empty hands, in fact with a generally weak environmental record going back to the transit-stingy stimulus.

Has anyone seen John Holdren doing any actual science advising, by the way?

Virginia Postrel, who donated one of her kidneys to Sally Satel, has a long article up about kidney-donation policy. She's thought about this more thoroughly than I have,

If you doubt that the current system is a catastrophic failure, Postrel provides the basic data:

In the United States, more than 80,000 people are on the official waiting list, all hoping that someone will die in just the right circumstances and bequeath them the “gift of life.” Last year, only 16,517 got transplants: 10,550 with the cadaver organs allocated through the list, and 5,967 from living donors. More than 4,000 on the list, or about 11 a day, died. And the list gets longer every year.

And she blasts my favorite dream: solving the problem by making consent to post-mortem harvesting "opt-out" rather than "opt-in." Turns out the numbers don't work:

The best estimate is that there are between 10,500 and 13,800 brain-dead potential organ donors each year. More than half already become donors, and not all their kidneys can be used. If every single person who died the right way became an organ donor, an optimistic estimate would be that 7,000 more kidneys a year would be available for transplant. Since the list is now increasing by 6,000 a year, that would be enough to end it—in 80 years.

The new (to me) idea in the essay is what Postel calls a "donor chain" but which might as well be called "organ brokerage." There are people willing to donate a kidney to save a relative or friend who wouldn't be willing to do it to save a stranger. (Kant would disapprove; Hume would approve. That's why I wish contemporary ethicists started with Hume rather than Kant.) But sometimes the willing donor isn't a "match" for the person he or she wants to save.

However, no one really cares who gets his particular kidney, as long as the person he cares about gets someone's kidney. Pairwise trading would be simple: I give my kidney to your friend and you give yours to my cousin. When the numbers get larger, so does the complexity of the trade, but the principle is the same; I give a kidney to someone and someone else gives a kidney to the person I care about. The National Kidney Registry is designed to facilitate the process.

Postrel argues - convincingly to me - for a repeal of the law against cash payments to organ donors. Since transplant is actually cheaper than dialysis, and since dialysis is a federal entitlement, there's no need to make the recipient pay, and therefore no issue about rich people crowding to the head of the line. But that's the next step. The first step is to expand the utilization of the Kidney Registry; a little bit of money spent on publicity might go a long way.

Surely Postrel is right that the issue suffers from an unjustifiable lack of urgency. Ten peoplea a day are dying unnecessarily. For some reason, people who get outraged about the ethical problems surrounding paid donation don't seem to regard those needless deaths as an ethical issue calling for urgent action.

My outrage yesterday at Congressmember Schiff derived from some sloppy writing in the AP story about the Blue Dog "revolt" on health care reform. Schiff did NOT sign the Blue Dog letter and in fact strongly supports a robust public option. Good for him. Schiff's communications director wanted a retraction, and I am glad to provide it.

The AP story:

1) reported that the Blue Dogs wrote a letter saying that they could not support the current plans for health care reform;
2) Schiff is a member of the Blue Dogs; and
3) the story quoted Schiff along with the unfortunately-named Blue Dog Marion Berry, who DID sign the letter.

I inferred from this that Schiff signed the letter, which I think was reasonable. Was Schiff set up by his ostensible Blue Dog friends, or the AP reporters? I don't know, but it's good to set the record straight -- especially when it is good news.

[Full text of the AP story at the jump.]

See post above. Schiff did not sign the "Blue Dog" letter, and did sign a letter calling for the inclusion of a public option.

In 1998, Democrats scored a coup by persuading state Senator Adam Schiff, a former federal prosecutor, to run again incumbent Republican James Rogan in a hotly-contested Congressional race here in Los Angeles. At the time, it might have been the most expensive Congressional race in history. And it was bitter: I know, because I walked precincts for Schiff and maxed out to him in contributions. Given California's strong blue trend, his seat is a safe one now.

Schiff seems to be out front and center on it. And unlike, say, Democrats from swing districts, Schiff is safely nestled in Los Angeles, Burbank, Glendale and Pasadena. Many of the people in his district could use a more efficient and affordable health care system. But he's way past that now -- that was for when he actually had to care about the people in his district. I hope he's happy.

In my first-ever RBC bleg, I'm wondering if anyone knows of a first-rate, systematic work on military leadership. I need it for a class on leadership and coordination that I'll be teaching next fall. I have other kinds of leadership mostly covered.

I'm looking for work on leadership narrowly understood: techniques for getting groups of soldiers to move, quickly, in the same direction, under dangerous or uncertain conditions, at the right time--and conditions under which different techniques work or don't. Morale and related topics might well be relevant; work on seizing the initiative almost certainly is; general strategy probably isn't. I'm looking for a something systematic: war stories are fine if they illustrate points, but I don't want mere biography or collection of cases with no framework to make sense of it. Finally, I've seen a lot of work on military leadership for ROTC students and such that stresses professionalism and military discipline. That's not really what I'm after either. There's a difference between a professional soldier who will bring no discredit on the Army and a leader, and a difference between leadership and training.

A book would be best, but an article or set of articles would be OK failing that.

And by the way, I already know about Schelling. Wonderful stuff, but there's already too much of his work in the class.

Thanks in advance!

The mail continues to run heavily against my position on detaining al-Qaeda and Taliban fighters. There's a tendency to attribute the crimes of BushCo to the American government as an institution, and therefore to assume that any power that was abused from 2001-2008 will continue to be abused under the new management. That seems to me an anjustified assumption.

However, I'm getting some support. A reader with JAG experience writes:

I generally agree with you on the question of preventive detention. I think it is absurd when I hear people assert that if you can't convict someone of a crime by proof beyond a reasonable doubt using the normal rules of evidence in a criminal trial, then you can't hold them as a combatant detainee. That is patently false under the law of war, and the ACLU, which I often have a lot of respect for, is ignoring the law in favor of an ideological predisposition in much of the same way as President Bush did (albeit without torturing anyone in the process).

You may be familiar with these distinctions, but I thought I'd pass them along because the topic of detainee classification is very poorly understood outside of the world of international law scholars and JAG officers. If you are a POW, it is because you have observed certain rules during the war laid down in the Third Geneva Convention of 1949 (e.g., you carried your arms openly, did not target civilians, wore some kind of distinguishing insignia, refrained from committing acts of perfidy, etc.).

Under Geneva III, there are three basic categories for classifying someone during a war: a) civilians; 2) lawful enemy combatants (also known as POWs), and; 3) unlawful enemy combatants. The status determination hearing is where a "regularly constituted tribunal" is supposed to decide which of the three categories the evidence shows you belong to as a detainee.

Civilians (those who took no part in the armed conflict) obviously have to be released; holding someone determined to be a civilian is clearly preventive detention. Lawful enemy combatants are people who have a lawful right to engage in warfare. They can be prosecuted only for violating the laws of war (committing war crimes, crimes against humanity, etc.), but they don't have to be prosecuted. Their mere status as enemy combatants is sufficient to hold them until the end of the conflict. Unlawful enemy combatants are those who engaged in armed conflict but who didn't follow the rules (note, though that this means that they weren't following the rules when they were caught).

Being an unlawful combatant has consequences, but contrary to John Yoo's assertions, it doesn't mean that you can be tortured. Rather, the biggest consequence is that you can be prosecuted for engaging in the armed conflict. That is to say, lawful combatants are allowed to shoot at enemy soldiers - that's the point of war. Because they don't follow the rules, unlawful combatants aren't allowed to shoot at soldiers and can be prosecuted for attempted or completed murder if they do.

Again, though, criminal prosecution in these cases is optional, not mandatory. Granted, getting a criminal conviction is nice because it means that you can put them in a real prison and hold onto them even after the armed conflict ends. But until it ends, the only thing necessary to hold onto someone is a status determination by a regularly constituted tribunal.

There are a lot of legitimate questions here that people like the ACLU could be raising. For example, is it possible for someone in Yemen to be an active participant in an armed conflict taking place in Afghanistan so that the Yemeni can be considered anything other than a civilian subject only to regular criminal law? Are the status determinations themselves sufficiently fair to allow us to make sound assessments? The ACLU isn't selecting its criticisms so carefully, though. Instead, they want everyone to have a criminal trial.

I, too, think that a law enforcement model is probably better for combating terrorism than a war model. Nevertheless, that doesn't mean that we have to reject the laws of war when we are actually at war as in Afghanistan and Iraq. Suggesting that we do is not only a loser with American public opinion, its a loser under the law.

The key issues, in my mind, are:

1. Status hearings that honestly try to separate fighters from non-fighters.
2. Restriction of the "combatant" designation to members of named groups in actual armed conflict with the U.S., not some vague category of "terrorists."
3. Restriction of the period of confinement to the period of actual armed confict with the group to which the detainee belongs.
4. POW treatment for all detainees except those convicted of war crimes.

If anyone has evidence that the Obama Administration has the wrong position on any of those issues, I'd like to hear about it.