One Month to Go

It is exactly one month to the Minnesota’s first August primary which takes place on August 10. Frantic are the candidates for the governor’s race (especially DFL) who are securing absentee ballots for voters away on that date. They are also making their last minute pitches to remind their supporters to vote for them, or convince likely voters to convert to them.

Where do we stand today? Emmer for the GOP and Horner for the Independence Party are still the favorites for their parties. For the DFL, Dayton retains his lead, Kelliher second, and Entenza third. But Entenza is the biggest wild card. Recent polls have him gaining the most–largely out of Kelliher’s numbers–and his recent television ads, including a new one on education that features him and Robyn Robinson, are getting better and more frequent. His money and ads seem to be working.

But a few questions surround Entenza. It is yet to see if the ads and new poll numbers translate into real turnout on primary day. This is the groundwars battle and it is not clear where he stands compared to Dayton and Kelliher who have more connections to unions that might be able to drive turnout. Additionally, Dayton’s decision to release his taxes and Entenza’s refusal, the latter’s income from his wife in healthcare and the environment, are raising troubling questions about potential conflicts of interest. I also continue to find that regular DFLers (party folks) continue to see Entenza as having other ethical questions. I spoke at an event Thursday heavily populated by suburban (DFL) Jewish women. They all expressed concern about Entenza’s ethics but several also expressed concern that when several of them had talked to him in the past they said “he looked right though them” and did not really listen to them.

But conversely, Entenza may also be the best candidate to take on Emmer. Emmer needs to be pressed on many issues about taxes, spending, and host of other issues. Entenza may be the best at going for Emmer’s juggler and in debating. Entenza has good speaking skills and knows the issues well. He is a better debater than Dayton and is clearly more aggressive than Kelliher. Both may be critical skills in what will be a difficult general election.

Overall, while right now the smart money is on Dayton for August 10, Entenza is a good long shot for both then and the general election if he makes it that far. He still needs to address concerns about ethics and listen to what these DFL women are saying.

Welcome to Hooverville

Whatever the fate the of financial reform bill in Congress, it does little to fix the short term problems with the US economy. Last Friday the news of weak job production followed up stories of declining consumer confidence and weakening new homes sales. Couple these together with signs of increased mortgage foreclosure and all the signs of a double-dipped recession are becoming more clear and real.

So what are Obama and Congress doing about all this? Not much. Obama proposes an anemic jobs bill that Congress cannot pass, new action to extend unemployment insurance is stalled, and there is pressure among deficit hawks to cut government spending now, well in advance of the economy sustaining itself. It seems as if the lessons of John Maynard Keynes have been lost as many rush to join Hoovernomics. Soon I bet we will pass a new version of Smoot-Hartley and we will be completely back to Depression era economics.

It is bad enough that the individual states are hurting recession recovery by cutting spending in order to maintain balanced budgets. These moves, while they sound fiscally smart, actually counteracted the federal stimulus law adopted last year. Instead of creating new spending they merely forestalled state budget cuts which are now coming in force this year.

These cuts will undo or undercut whatever good the federal stimulus did. Now with pressure mounting on the federal government to tackle deficits first, any effort to stimulate the economy at the time it most needs a second bounce will also be damaged. The assumption seems to be worries about inflation and belief that cutting spending and taxes now will free up capital for the private sector to grow. This is still the same old pie in the sky supply-side economics hope and belief that has not worked in the past.

There have been too many roads not taken since 2008 to help the economy. First there was the $150 or so billions stimulus in the spring, 2008. That measure failed as it was too small and too diffuse. I argued then the $150 was a waste and measures should have been taken to directly help the residential mortgage market.

TARP helped banks but did little to address the underlying problems with the mortgage market that caused all the problems. We have yet to address mortgage speculation, subprimes, defaults, and falling or negative equity. Both the short term and long term health of the economy needs to stabilize this market. Several times I have argued that this is a core issue and there still seems to be no clue or effort to address this problem.

The weak housing market is paralleled by a weak jobs market. There is no question that a real job bill (not just milk toast tax breaks for businesses) are needed. My laundry list of legislation for both the mortgage and labor market includes:

• Immediate moratorium on residential foreclosures for one year
• Require banks to renegotiate loans
• Federal support to reduce principal on many residential mortgages
• Federal jobs bill that consists of direct hiring for public works projects (A WPA for 2010 that is not just roads and highways).

My overriding goal? Keep people in their homes and get them to work. These are both good individual goals and socially smart in that they benefit us all. They address personal problems and market failures. Both require serious government investments in the short run before we worry about the longer term problem of deficits and inflation which are still distant issues.

Alas, if we do not do this, as I suspect we will not, we will remain trapped in Hooverville and in the economics that exacerbated the first Depression and which is in danger of doing the same here.

Thoughts on Kagan and the Confirmation Process: Creating Potted Plants

So what did we learn about Elena Kagan during her confirmation hearings? Precious little beyond the vaguest of generalities is my impression.

For three days the Senate Judiciary Committee held confirmation hearings for Kagan. I listened to most of them and commented on them for Minnesota Public Radio (you can listen to the interview here). There were two items that most struck me about the hearings. First, that the hearings were not about Kagan. Second, Kagan gave us no more than textbook answers or that any opinion she held or view expressed was disavowed.

The hearings were really perfunctory. Kagan was going to be confirmed. Her appearance was a pretext for other political agendas. Thus, speeches by the Senators were previews of the 2010 election, or efforts to make news back home, or posturing for constituencies. But bring together that this is an election year, she does not change the balance of power on the court, she worked in the Obama administration, and she said nothing, the combination is a recipe for the hearings to be political posturing. That is what we received. This is no different than many other hearings in the past, but some thought it would be different given Kagan’s criticism of vacuous confirmations in the past.

Kagan recanted on her demand for candor. Some of this is understandable, potential justices have to be wary of saying too much, less they prejudge cases that compromise their integrity. This is a legitimate concern. But there is also the political demand to say very little to make it possible for senators to vote for you–or at least not against you. And then there is a demand to be open and answer questions in order to educate the public and allow the Senate to do its constitutional duties. All three need to be balanced and the trend now seems to be to say little.

But having said that, what struck me as odd was the number of times, when pressed about an issue or asked about a case or something she wrote, Kagan said that she had not read the decision, that she was simply working for the president, or the views did not express her own. She also seemed to say she did not have opinions on certain subjects or that her mind was open. I find all of this hard to believe. She is a well educated ivy league law professor, former Harvard Law School dean, and solicitor general. She could not have gotten that far without forming her own opinions on many legal matters.

I teach law. I read cases and opinions and I am expected to have digested them. I would be remiss if I did not. I find it hard to believe she has not read or formed opinions about so many of the things she was asked about. It reminds of how when Clarence Thomas, when asked at his confirmation hearings, whether he had read Roe v. Wade (the abortion case), and he said he had never discussed it in law school. This is hard to believe given that Roe was decided while he was in law school! Thus, for Kagan, as well as Thomas, they seemed not to be doing something that I would expect of every good lawyer or law professor–read, think, and form opinions about the law.

Moreover, Kagan gave textbook answers to so many questions. These were answers we teach in law school as almost rote answers. For example, always try to avoid deciding a constitutional question and decide on statutory grounds. If making a statutory decision, do xyz. Kagan repeated this mantra.

My criticism is not totally on Kagan but on the process of judicial selection. The confirmation process is a charade, but judicial elections are equally empty in terms of what we learn about judicial candidates. I am not sure there is a good way to select judges in ways that provide meaningful information about them, whatever “meaningful” should signify. We want accountability but in a democracy that is majority rule balanced by respect for minority rights, and where judges are supposed to assist or take a primary role in striking that balance, I am not sure what judges should be allowed or encouraged to discuss.

But one thing is certain. In 1986, in commenting on the Bork confirmation, Judge Richard Posner said judges are not potted plants. They are learned, have views, and exercise discretion. Supreme Court Justices should not be potted plants, but the confirmation hearings encourage them to act like that.

Final note: One caller to MPR asked me if I was troubled about the fact that all the justices now are east coast, Ivy League Harvard types. Even though I am from NY, I said yes. While the nine justices do differ in many ways, they (and the Obama and before that the Bush administration) represent a narrow band of elites. Senator Feingold caught it well on Tuesday when he asked Kagan how she could understand the plight of those in Stevens Point. She said she could. I doubt any of the justices or most of the Obama or previous Bush Administration could. Senator Franken caught it well when he discussed how the Court has a real impact on the lives of real people. His speech was a plea that we need to remember real people. I fear this Court and Ivy covered world from which they come cannot do that.

The Timidity of Reform

But will it work? This is what someone asked me last Friday after Congress sealed the deal on the financial reform package for the banks. My simple answer is that there are some nice reforms here, but much like the health care law, the economic stimulus bill, and the other reforms of the Obama Administration, this too was short of real reform, demonstrating once again the timidity of this president and Congress in addressing real reform that matters.

Economically, there are multiple problems with the US and world economy. One way to slice it is to look at short and long term needs. Short term the problems in the economy are the high unemployment figures, the still depressed real estate market, and slow economic growth. Longer term the problems are many, including financial institution instability, energy consumption, and a looming debt crisis.

The bank and financial regulation bill agreed upon last week addresses some of the longer term problems, but not all of them, and does little for the short term. Long term the best potential features of the bill are the Volker Rule to limit bank speculation and the creation of the consumer credit protection agency. At present the agency looks weak but perhaps over time it can use its administrative rule making to actually do real work to help consumers.

Having said the good things, the bill falls short on real reforms. Real reform should have reinstated Glass-Steagall, imposed more requirements on banks holding capital to cover losses, extended more regulations to cover non-bank financial institutions, and made it illegal for institutions to do hedge funds that bet against their investors.

It might have also made sense to consider policies that make it illegal for FDIC entities to speculate on Wall Street, something similar to a Glass-Steagall requirement. Finally, limits on compensation packages for officers to depress financial incentives to speculate make sense. All of these ideas would help, as would be preventing banks from selling office mortgages that finance (so that they have to bear the risk of their loans). However, even with all these reforms, it is still not clear banks will serve the public interest. Remember, they are private for-profit entities that are not there to serve the public good. This is the purpose of government regulation.

Government regulation is meant to address market failures and correct externalities and moral hazards that the free market cannot address. Beginning in 1978 the USA has been on a deregulatory path, placing firm belief in the market over the government. The Reagan-Thatcher era is famous for this. Obama took office with the promise of change, and he has made some, but they have not signaled the full repudiation of the Reagan Era. Ronald Reagan is dead, but we do not see a real return to regulatory behavior anywhere near the like of the New Deal or close to the scope of what is needed for the economy.

The 2009 economic stimulus was too small and we are now paying the price with a sluggish economy on the verge of a second recession. We never addressed the core problem with the economy–the collapsed residential home market–and now it is slipping again and defaults continue. The health care bill ensures more but does little to address cost containment or quality. Consistently, Obama and Congress have gone less the distance to fixing the problems.

Thoughts on the Minnesota DFL Gubernatorial Race

The race to the August 10 Minnesota primary is less than 50 days but more than an eternity away. While there are many primary contests on August 10, the eyes are really on the DFL gubernatorial primary featuring party-endorsed Margaret Anderson-Kelliher, Mark Dayton, and Matt Entenza. By saying the primary is less than 50 days is to note how little time there is to roll out ads, mobilize supporters, raise money, and secure name recognition, 50 days is also an eternity when it comes how polls can shift and fortunes to change politically in such a brief period of time. Fifty days is a long time politically, especially this year.

Where does the DFL gubernatorial primary stand? In some ways, the primary has already started–the absentee ballots are being mailed now. But recent polls confirm that Dayton is still in the lead. However the biggest surpriser was Entenza–dramatically increasing in the polls to the mid 20s, with stronger support among independents compared to his rivals. Entenza’s rise in the polls seems to have come at the expense of Kelliher, who now seems weaker than she did a few weeks ago. Entenza’s rise seems less due to Robyn Robinson who gave him a 24 bump in the polls, but more due to an extensive television campaign and a heavy mail program. His constant barrage of ads seems to be working to give him name recognition, forcing Dayton also to hear the airwaves with his first ad. The good news for Entenza and Dayton is that the ads seem to be working to garner attention and help in the polls the bad news for Kelliher is that lacking money, she is being hurt by her absence from television.

The Horserace
But Entenza is also doing something very smart. I live in Entenza’s old legislative district and have received about six mailings so far. I have been told he is not just hitting up his old district but doing mailings across the state in critical areas. Neither Dayton nor Kelliher are doing this. This target marketing makes sense. When, according to my estimates, it will take only about 90-95,000 votes to win the primary, heavily targeting and mobilizing among markets where one has high degrees of support makes sense. Entenza seems to be smart in understanding the niche approach to running that the other candidates do not seem to be showing. Whether this will pay off remains to be seen, of course.
As I have argued before, the issues determining victory for August 10 are connected to several issues. Name recognition, money, connection to organized interests, and actual delivery of voters on August 10 are the variables that will affect success. In a primary with low turnout, moving small numbers of people will be key to success and the above four factors will be decisive.

What do you think?
Entenza and Dayton have now been running ads for a few weeks. I think Dayton’s first ad was excellent in terms of being inspiring, telling a good story, and having a good message to appeal to many constituents. Entenza’s BP environmental ad was also good in terms of capitalizing on a recent issue. However, I am curious to see what you think about the ads? Do you like them? Are they working? How do you think the candidates are doing? Please share your thoughts. I would love to have a conversation here.

Apologies
My apologies for an extended hiatus from the blog. Between travels to Moscow, Russia, home remodeling projects, and finishing another book the blog was the casualty. More frequent blogs will again return.

Thoughts on Moscow

Last week I was in Moscow, Russia for three purposes. The first was to give a paper at Moscow State University, the second was to give a talk at the American Corner, the third to see friends, the sites of the city, and to see how the city has changed over the last three years.

The paper that I gave was entitled “The Crisis of Public Administration in a Post-Global World.” The basic thesis was that the global financial collapse and the attendant state bailout of banks had effectively killed off the legitimacy of market fundamentalism and theories of the minimal state that had commenced with the arrival of Thatcher in the UK and Reagan in the USA. This paper was part of the a larger conference on public administration held annually at Moscow State University. I have now been to the conference twice, both times having a great time.

The second part of the trip was to give a lecture at the American Corner, Moscow. The US State Department has American Corners around the world, providing cultural information to audiences in different countries. In the past I have given talks at the American Corners in Hungary and Slovakia. My talk in Moscow was on Obama and the 2010 elections. The audience had about 45 in attendance, mostly including students as well as a mixed crowd. They asked good questions about America, expressing skepticism about our financial regulatory reform and the seriousness of the USA in pursuing environmental policy and changes. In effect, they asked where was the US in providing leadership in addressing global warming, for example.

The third and most fun part of the trip was seeing friends, sites, ands how the city had changed. Moscow felt safer to me now than the first time, and even more western than before. Capitalism has changed Moscow, with it being more European in its feel, and less isolated. US business seems generally lacking here, with Germany and the UK more dominant. Perhaps the reason is that the USA is unwilling to change how it does business to access Moscow. I say an article in Russia that indicated that the US chicken or poultry business refused to change the way it operated. Specifically, it used chemicals to clean poultry that were banned in Russia. US business seems unwilling to change to gain accommodate and gain access. It seems as if we think everyone should accept our standards and follow our lead. Such arrogance does little help foster trade.

The one funny thing while in Moscow. I was with two students and we were thirsty and needed a snack. They wanted to go to the new Starbucks that had opened. It was in a new business complex featuring Price Waterhouse. The building was new and built were an old traditional Russian building had stood. This Starbucks was the trendy place for the youth and trendy. As I sat there the background music was Gershwin, Sinatra, and Ella Fitzgerald. The music was the American songbook.

As we toured the city I saw some old and new sites. Of course Red Square was a stopping point, as was Pushkin Square. I also visited the Tretyakov State Gallery–the best collection of Russian Art in the country. I especially liked the Russian Impressionism.

Beyond the tours I visited old friends–Ana and Ana–and met new ones such as Kate, Dunya, and Daria. All were my interpreters or translators. All were or are students at Moscow State University. I had a terrific time with them all.

Overall, Moscow was fun. The larger meaning to this blog entry, if any, is simply that Moscow and Russia are politically and economically important players. The real revolution here will occur when the young students take over and the old generation dies off. The new generation, born after the breakup of the USSR, is full of hope, new attitudes, and a spirit of change and freedom that will really change this country. I had this same feeling in Armenia and Hungary too. Revolution is generational.

Matt Entenza, Robyn Robinson, Celebrity Politics: Throwing the Hail Mary?

So Matt Entenza selected Robyn Robinson of FOX 9 to be his running mate? How interesting. What does all this mean?

When Jesse Ventura was first elected one of my graduate students and I wrote an article describing how he was an example of what we called a “politainer.” A politainer is one who combines entertainer status with politics. Jesse represented the real emergence of the convergence of politics and entertainment–or politainment. Politainers use their celebrity status and multi-media venues (and their brand) as a way to gain name recognition and market themselves both politically and personally. Politainers also have an advantage in using their celebrity status to get valuable name recognition.

For Entenza/Robinson, each of the two has a good reason in being joined to the other. Entenza gets instant recognition and buzz for his campaign, something he clearly needs. It may not matter that RR is a political novice. What he is buying is buzz. In the end, it is unclear if the choice of lt. governor really affects how citizens vote. The issue for Entenza is to get name recognition, get the public talking and to think about the campaign, and then do other ads and GOTV to get people actually out to vote for you.

For RR, she is in a no lose deal. If she wins, she is lt. governor and able to use that status to help her market her new jewelry business. If she loses, again, the campaign helps her with the marketing of her name and brand.

The real danger for Entenza is if RR flops and people say her choice smacks of desperation or it speaks badly of him as governor to select a political novice. I think RR is smarter than Palin, but the latter is one of the few examples where a number 2 on the ticket hurt who was number one.

Are Minnesotans any more likely to pick politianers than those in other states? I am not sure that is true. But if it is, maybe it says something about Minnesotans who are normally reserved that they are attracted to candidates with a lot more personality than we see in most of us. Or perhaps it speaks to how these candidates are very familiar faces and we vote based on our comfort level of supporting those we already know. Or perhaps the success speaks to how bad the major political parties have been in terms of recruiting a new generation of dynamic candidates who look fresh. Thus, you cannot look to the junior varsity bench but instead recruit from the outside. Her selection may speak more to the lack of depth of good political candidates than does anything else.

And if elected, what now? What does she do or what are her qualifications? This is what we need to hear. However, if she is truly irrelevant as lt. governor that again speaks to the need to eliminate that position as a waste of taxpayer dollars.

Whatever the reason, I will not argue that popularity of politianers in MN is part of our political culture. That answer does not tell us anything. Appeals to political culture are like saying there is something in our drinking water.