Economy

Mission Affordabled: Why Obama’s Website Problems Aren’t “His Iraq”

AP Photo/J. Scott Applewhite
AP Photo/Jacquelyn Martin, File Y es, the Affordable Care Act website rollout has been a fiasco. And, as always happens when political catastrophe strikes, the wave of bad analogies has rushed in its wake. One in particular is gaining ground: Healthcare.gov is for Barack Obama’s presidency what the invasion of Iraq was to George W. Bush’s administration, complete with outraged liberal reactions to it . Here’s the funny thing: it’s a bad analogy, which could turn out to be accurate … but probably won’t. To start with, the fact that people died in Iraq, as opposed to the inconvenience involved in a malfunctioning website, doesn’t make it a bad analogy. The analogy has to do with presidential decisions; it’s about process, not outcomes, and there’s nothing at all wrong with that. No, what makes it a bad analogy is that Iraq War was misconceived from the start, and the actual events of the war, to a large extent, made obvious what some saw from the beginning. With the exchanges, on the...

Sorry, John Stuart Mill Was Not a Libertarian

Libertarianism as it exists in the United States is basically a mid-20th century American philosophy, at least in origin. Owing perhaps to a combination of bad introductory classes and an urge for a longer historical pedigree, libertarians often like to pretend that great canonical thinkers prior to that time were also libertarians. But as that is an obvious anachronism, it turns out to be untrue. There are some lesser knowns here and there along the trail who might come close, but basically none of the big old philosophical names can rightly be associated with this mid-20th century libertarianism. Previously, I pointed out John Locke’s anti-libertarian transgressions , in which he observed and prescribed a solution to the intense coercion of labor contracts made between those with very unequal bargaining strength, contracts he analogized to slavery. To suggest Locke was not a mid-20 century American libertarian was so infuriating that some rather amusing, but ultimately incompetent,...

The Key to the Broffordable Care Act's Success

Flickr/CNDOZ
W hen Barack Obama made the decision to design a universal health care program based on the private insurance market, he faced one key problem. If you require insurance companies to accept anyone regardless of pre-existing conditions—as everyone wanted—you face the threat of "adverse selection," in which only those who are sick (and therefore expensive) get insurance. Just as the system of car insurance needs those who go long periods without having an accident to pay premiums so there's enough money to fix the cars of those who do have accidents, the health-insurance system needs the currently healthy to keep paying to support the currently sick. The answer was the individual mandate, which pulls people into the system and expands the risk pool. And especially critical to expanding that risk pool is getting as many young, healthy people as possible to get insured. So it may have been inevitable that young people would become targets for both the law's advocates and its opponents. A...

The Hidden Indentured Class

Sex trafficking isn't our only problem—forced labor accounts for a significant number of the estimated 20,000 victims of human trafficking who enter the U.S. each year.

 

AP Images/New Mexico Attorney General's Office
AP Images/New Mexico Attorney General's Office A nna and her husband were supposed to be in the U.S. on their honeymoon. They arrived at Los Angeles International Airport in the spring of 2007 and found Daniel waiting for them with a sign bearing their names. Daniel was an acquaintance, someone Anna’s father-in-law—who lived in Houston—knew through church. He had offered to show them parts of Southern California before they continued on to Texas. It was an attractive detour for a Southeast Asian couple in the U.S. for the first time. From the airport, they drove to a restaurant for dinner and met some of Daniel’s family—a stop that felt warm and welcoming since they were all from the same country originally. “He was really nice and since we don’t know anybody—and we came from the same country,” Anna recalls, “that’s why we trusted to go with him.” But then, instead of playing tour guide, Daniel brought the couple to an elder-care facility he owned. He told them to work, care and cook...

Big Bank Punishments Don't Fit Their Crimes

AP Images/Richard Drew
With the Justice Department desperate to rehabilitate its image as a diligent prosecutor of financial fraud, securing headlines along the lines of “the largest fine against a single company in history” is a lifeline. In a tentative deal , the Department would force JPMorgan Chase to pay a $9 billion fine and commit $4 billion to mortgage relief, to settle multiple investigations into their mortgage-backed securities business. The bank stands accused of knowingly selling investors mortgage bonds backed by loans that didn’t meet quality control standards outlined in its investment materials. JPMorgan Chase wants to “pay for peace” in this deal, ending all civil litigation around mortgage-backed securities by state and federal law enforcement, though at least one criminal case would remain open. But for the Justice Department to truly start fresh, and fulfill their mission of stopping corporate fraud and preventing it from occurring again, they will have to compel JPMorgan to admit full...

Four Reasons We Don’t Need to Count Down to a January Shutdown

AP Photo/ Evan Vucci
AP Photo/J. Scott Applewhite T he government has re-opened, the debt limit disaster was avoided, and something resembling peace has broken out in Washington. The cynics, however, have been quick to note that all of this is only temporary, with the next shutdown deadline falling on January 15. This round of budget squabbling resolved basically … nothing, so another debacle is likely . Ted Cruz is already threatening a repeat of what he just put the nation through. Don’t count on a sequel to the 16-day hell we just witnessed, though. Barack Obama certainly doesn’t want a shutdown. And this time, Republicans probably won’t force one. Of course, government shutdown has always been a bad idea, as Republicans just spent three weeks proving. But the very fact that they did it despite knowing that it was a terrible plan (or at least most of them knowing it was a terrible plan) suggests it could happen a second time, at least unless something new has happened to change things. So why won’t it...

Beware a Grand Bargain

AP Photo/ Evan Vucci
W ill President Obama and the Democrats win a major battle only to lose the war? The longterm war that Republicans are fighting is a deadly serious struggle to destroy the most important and valued achievements of the New Deal-Great Society legacy, Social Security and Medicare. Wall Street billionaires like Peter G. Peterson and Stanley Druckenmiller have been softening the ground for decades by claiming that Social Security is bankrupting the country and destroying future prospects of America’s youth. So there is a kind of pincer movement between the scorched-earth Republicans of the Tea Party, willing to shut the government if they don’t get their way, and the more mannered Wall Street Republicans who want to gut social insurance for the alleged good of the country. It adds up to the same thing—cut or privatize the Democrats’ two crown jewels. What’s worse, even though Nancy Pelosi and Harry Reid were able to maintain 100 percent party unity in their House and Senate caucuses in...

Closing the Gender Gap in the Fed's Hallowed Halls

AP Images/Charles Dharapak
J anet Yellen, President Obama’s superb pick to be the next chair of the Federal Reserve, should have been a shoo-in all along. In fact, it was widely thought this past spring that, as vice chair of the Federal Reserve, she was the most likely candidate to replace Ben Bernanke when his term as chair was scheduled to end early in 2014. But in the months before October 9, when she stood beaming next to President Obama in the White House as he finally announced her as his pick to succeed Bernanke, a curious campaign had emerged to nominate Larry Summers, a close economic advisor to the president, for the position. The Summers push received copious media coverage, reportedly fueled by senior White House advisors. As summer reached its doldrums, journalists began reporting that high-level White House advisors worried that Yellen lacked “gravitas,” was too “soft-spoken,” or might not be good in a crisis. A few journalists pointed out that these coded words suggested sexism. (The gender...

A Spine Is a Useful Thing to Have

AP Photo/Charles Dharapak
AP Photo/ Evan Vucci H ow much damage have the Republicans done to themselves going into the elections of 2014 and 2016? And has President Obama resolved to hang tough, not just in this round, but in the one that follows and the one after that? The contrived shutdown crisis proved two things. It proved that Republicans are split down the middle between a lunatic, fundamentalist wing that prefers wreckage to governing and a pragmatic wing often allied with Wall Street. And it proved once and for all that being tough in the face of blackmail beats appeasement that only courts more rounds of blackmail. Business elites applied escalating pressure on the Republicans not to let the United States default on its debt. In the end, 144 House Republicans voted against the measure, and 87 voted for it. That 144, though, exaggerates somewhat the true strength of the Tea Party faction. Some of that vote was a protest against the failure of the Democrats to give anything in return. For now, public...

Tom Friedman’s Worst Column Ever

AP Photo/Mark Lennihan
Sometimes, Tom Friedman writes a column that is such complete baloney it makes you want to retch. Rather than risking soiling my shoes, here is a point-by-point rebuttal to Friedman’s opus du jour, titled: “ Sorry, Kids. We Ate It All .” Friedman’s column swallows whole the budgetary malarkey of the corporate Fix-the-Debt lobby and its Wall Street sponsors. Namely, the reduced horizons of the next generation are the result of the gluttony of old folks—and of unions. But what makes this piece especially appalling (and emblematic) is that the hero of Friedman’s piece is one Stanley Druckenmiller, a hedge-fund billionaire who has appointed himself as the Paul Revere of deficit reduction to warn America’s college students that The Seniors Are Coming. In passing, Friedman discloses that Druckenmiller is also “a friend.” So on top of the absurd logic of the piece, Friedman is guilty of a conflict of interest—using the most valuable real estate in American journalism to do a favor for a chum...

The Robot Invasion

Jason Schneider
I f you want a sense of where the nation’s job market is headed, a good place to stand is inside the half-mile-long Skechers warehouse in Moreno Valley, California, where box after box of shoes is stacked upon row after row of shelving, which soars some 40 feet in the air. Physically, the place is a wonder—quiet, sleek, and environmentally friendly (at 1.8 million square feet, it’s the largest officially certified “LEED Gold” building in the country). But what’s most remarkable about the $250 million structure, which opened in 2011, is how few people work there. The day I visited, a clump of men and women toiled away near a series of conveyor belts, filling small specialty orders. But machines—not human beings—were handling the bulk of the chores. “As you can see, there are no more people doing the retrieving,” Iddo Benzeevi, the chief executive of Highland Fairview, the firm that developed the site, told me. “It’s the computer doing it all by itself.” A driverless crane swung into...

Thinking the Unthinkable

Listen up, class. World War I never happened. It didn’t happen because nobody wanted it, and everybody grasped the horrific risks. In the event, the common European civilization was destroyed, three empires fell, 16 million people died, and 20 million were wounded. So World War I couldn’t happen because everyone knew how awful it would be. In August 1914, virtually all leaders anticipated a short set of skirmishes, a readjustment of borders as in other recent wars, and everyone would be home for Christmas. But, you know, stuff happens. Then there was the American Civil War. It didn’t happen either. Many Southern leaders knew that staying in the Union and accepting some limitations on slavery in the territories and new states would allow them to keep their “peculiar institution” and avoid the economic catastrophe of a war on their soil. Oops. Thus the Republican game of chicken with the debt default. It can’t happen because its consequences would be too unthinkable, right? The stock...

An Ignoble Prize

Eugene Fama, one of the winners of this year’s Nobel in economics, is the fellow who proposed that all markets are efficient all of the time—more precisely that market pricing accurately captures all available information and thus creates “correct” prices. Fama also insisted that there is no such thing as a price bubble. Somehow, the man missed one of history’s great bubbles and the collapse that followed—an epic case of markets getting prices wrong. He also missed the fact that markets have incorrectly priced carbon, leading to global climate disaster, which Lord Nicholas Stern correctly termed “history’s greatest case of market failure.” For this, they give the man a Nobel. What timing! The mind boggles in search of an apt comparison. It’s like giving a posthumous Nobel in physics to Ptolemy rather than Copernicus for demonstrating that the sun revolves around the earth. Or maybe in biology not to Gregor Mendel or Charles Darwin but to Trofim Lysenko, Stalin’s court geneticist, for...

Old Conservatives Can't Learn New Tricks

AP Photo/Alex Brandon
AP Photo/Alex Brandon I f President Barack Obama and congressional Democrats wanted to maximize the political advantage they're getting from the shutdown/default crisis, they'd agree to at least one part of the short-term deals Republicans have offered, raising the debt ceiling for only six weeks at a time. Then we'd have one default crisis after another, and the standing of the GOP would keep on its downward trajectory until—let's just pick a date at random here—November 2014. But Republicans won't do that; they're now insisting (and good for them) that the deal has to extend at least a year into the future so we don't have to keep going through this. If they get that deal, though, the issue will fade and voters could start to forget how reckless Republicans have been. They could forget, but I'm guessing Republicans won't let them. It isn't as though the ultimate conclusion of this crisis is going to result in a chastened GOP, ready to be reasonable and assure the public it can...

Notes from the Underground Economy

The Prospect talks to Sudhir Venkatesh about his new book Floating City: A Rogue Sociologist Lost and Found in New York’s Underground Economy .

Flickr/omar.hassawi
Floating City: A Rogue Sociologist Lost and Found in New York’s Underground Economy is a new book by Sudhir Venkatesh that explores the struggles and aspirations of disparate New Yorkers and shows how the city’s underground economy connects its inhabitants from all walks of life. In the book, Venkatesh introduces us to a range of characters: Shine, a crack dealer breaking into the high end cocaine market centered around the art galleries, bars, and clubs of the rich; Manjun, a porn store clerk who allows prostitutes to rent his back room; and Venkatesh’s friend, Analise—the beautiful daughter of a wealthy family—who confesses to him that she manages a group of high-end prostitutes that cater to the rich. In his previous work, Gang Leader For a Day: A Rogue Sociologist Takes to the Streets, which chronicles the lives of drug dealers in Chicago, Venkatesh found that people took pride in staying within their own communities. That’s not the case for the characters in Floating City —as the...

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