Bailout Ben Baffles Backbiters By Bagging Barak's Blessing

My position on the next Fed Chair has been: A.B.S. - anybody but Summers. Or Geithner, for that matter, but adding him to the acronym made it sound awkward. I side with those that say that Bernanke's role in creating the crisis and incompetence at detecting it outweighs his successful (so far) actions in helping to contain the fallout. But the two most obvious candidates would have been worse. Summers is a jerk and Geithner is a toady, and both had a hand in creating this mess, too. At the same time I admit that I don't really have any alternatives to suggest, except Yellin, who I vaguely remember saying some sensible things at some point. Hardly a resounding endorsement, eh? Well, it's Bernanke we're getting, like it or not. Let's hope he has some good ideas about unwinding the First National Hedge Fund Federal Reserve's balance sheet when the time comes.

Pulling a Nader

There was yet another dust-up over the role Ralph Nader in the 2000 election at BJ a few days ago. I didn't feel like jumping into the fray, so I'm putting my thoughts down here instead.

There are four reasons why Nader and - more importantly - Naderites should be ashamed of what happened in 2000.

First, until the election system is changed, voting for a third party candidate helps the other side. This is a straight-up math problem, and is easy to understand. Let's say there are three candidates: Far Left (FL), Center Left (CL), and Center Right (CR). If FL gets 3% and CL gets 48%, CR wins with 49% - despite more people preferring a left-leaning candidate. Unless there's a certainty of a blowout, voting for a third party candidate in an important election is dangerous and shouldn't be done. Now, if the election system was different - if runoffs were held, or IRV was used - then voting for a third or thirteenth or thirtieth party would be fine, as long as the leading candidate was supported in the runoff or included somewhere in the ranking of candidates. Multi-member districts or proportional representation would change the calculus, too, but neither exist to a significant degree in the US.

Second, voting is not an act of self-expression; it is about controlling the government and the resources it commands. It's about power. Some people like to feel they have a clean conscience by voting for a "pure" candidate instead of a moderate they feel is or will be too compromised. That kind of thinking is pure narcissism. It's been clear for a long time that bad elected officials can and do hurt a lot of people. Personal satisfaction can't possibly outweigh the harm that others might experience.

Third, executive positions matter. The POTUS really is the most powerful person in the world. He's in charge of the world's most powerful military. He sets the priorities for the spending of trillions of dollars. He can have a long-lasting impact on the legal environment based on who he nominates to the SCOTUS and the lesser courts. And so on. State executives matter, too, though by varying amounts. Ahnuld has had devastating impacts on California, while Douglas has merely kept Vermont in a holding pattern at a time when progress is needed. And what Bush has done at the federal level is tragic. So, even if the choice is between a bad candidate and a horrible candidate, every effort needs to made to put the least bad candidate into the office.

And finally, the two parties really are different. They may not be sufficiently different for some people, but the logic of the election system pushes the parties into being coalitions. The Democrats are an especially broad coalition, which frustrates the left wing of the party and dulls the party's effectiveness. But the notion that there is essentially no difference between the two promotes apathy and depresses voter turnout. Nader pushed this message in 2000, which also reinforced the media's habits of mindless even-handedness and general laziness. And by being a third party candidate he distracted from a feasible way of making the Democrats more progressive: working hard in primaries. The social conservative movement understood this. It took over many local and state parties, forcing candidates to at least give its issues extensive lip service, even though they never got around to passing much legislation to change things.

One standard retort of Nader defenders is that it was Gore's fault that he lost the election because he ran a mediocre campaign. This is partially true: Gore made mistakes by running away from Clinton and with Senator Droopy Dog, among other things. If he had run a better campaign, throwing away votes wouldn't have mattered. But this doesn't absolve Naderites of failing to notice it was a close election, or the signs that Bush would be awful, or how the electoral math works. For that matter, Gore's effectiveness as a candidate doesn't absolve non-voters of their laziness or stupidity, either.

The past is the past and personally I am not angry with people who voted for Nader. But I do get rather frustrated when people fail to learn from history. I think the arguments above make for a pretty convincing case that voting for Nader was a mistake. And if I can figure them out, then so should most other people.

Gerrymandering and Arrogance

I ran across a couple of rants over the weekend that will save me the effort of documenting my thoughts on the two subjects. One is this article on how dysfunctional the US Senate has become. As a small state resident it's theoretically against my interests to argue for reform of the Senate, but as a progressive reform would clearly result in legislation more to my liking. Another is this article on the hubris of Cerberus, which clearly never should have bought Chrysler to begin with. However, to be fair, I think the newly independent Chrysler was doomed from the start because it was saddled with an awful product lineup thanks to years of mismanagement by Daimler. Even if Cerberus had executed perfectly, the business cycle would have caught up to it before any new products made it to market. At the time of the sale, I hoped Magna would buy Chrysler because it was a manufacturing company that already assembled Chryslers in Europe. The conventional wisdom was that Cerberus really wanted Chrysler Financial, and that sounded to me like Cerberus was going to just slash costs and then dump the car-making business. I thought Magna would take the product side more seriously (though I had no proof of that). Anyway, that's all ancient history - except the products, which still kinda suck.

Bribes for Clunkers

The 'Cash for Clunkers' program (a.k.a. the wittily named Car Allowance Rebate System) has been declared a resounding success, with buyers and dealers loudly requesting more. Congress has satiated them for the time being with an additional $2B allocation on top of the original $1B. Even the net gas mileage improvement has been higher than expected.

But is the program really a success, meaning has it increased the common good? Or are the politicians just bribing voters with other people's money? Consider:

• Has new demand been created or have sales been pulled forward? Pulling sales forward with ridiculous financing is part of the reason vehicle demand slumped so much in the first place. We won't know for 3-6 months whether the demand is lasting.
• Was it wise to target only fuel economy or should have non-CO2 emissions been considered as well? New cars emit substantially lower amounts of toxic emissions (SOx, NOx, particulates, hydrocarbons) than before 1994-7, when the Tier 1 emissions standards were phased in. And there were other emissions milestones before that. Perhaps a different calculation could have been used for older cars.
• Should every trade-in be destroyed, or should they each be analyzed and then sold or donated. Obviously, the latter. There's not much point in crushing a car that is in decent shape. If the vehicle has a fuel economy rating close to or above the median, it should be re-used. (Remember the 3 Rs - reduce, reuse, recycle.)
• What will be the effects on the auto repair industry? The repair and aftermarket parts industry had been doing relatively okay because people were fixing old cars instead of buying new. Has demand just been shifted around?
• What about the used vehicle market? The program might not be taking the very worst vehicles off the streets. Instead, it might be catching vehicles one step up from true beaters. These are cars that people who can afford a new car have been willing to drive until they were offered free money. Poorer people with worse cars are being bypassed.
• Would spending $1B or $3B in a different way have a better effect? Could more oil be saved by building more roundabouts? Could more oil be saved by weatherizing homes heated with oil, or converting them to natural gas? Could the money be given to federal and state governments to upgrade their fleets? Or to transit agencies to buy more and more efficient buses? How much of the money will "leak" over the borders?

As I opined elsewhere on the tubes, I didn't really mind the program as long as it was temporary. To me, the main goal appeared to be to help dealers and, by extension, manufacturers, by clearing inventory. Adding another $2B to the program will make it hang around much longer, and the unintended consequences will increase to a point where they really should be taken into consideration.

But they won't be. Who can argue with success, or the illusion thereof?

Update 2009-08-11: Some non-mendacious funkiness with the reported numbers has given a slightly distorted view of what vehicles are selling. Explanation here.

Get Me Rewrite

According to this article, calling a constitutional convention in California has a broad base of support already. But this diary at Calitics shows that the concept of a clean constitution hasn't been widely adopted. Despite the post's title, the author lists a number of changes that are quite closely tied to the existing framework. Now, IANAL, so I don't know if a clean constitution is possible. An entirely new constitution may invalidate a huge number of existing laws, leaving governmental processes in limbo until the code can be re-passed with proper grounding in the new constitution. But we're bloviating on the intertoobs here, so arguendo is more or less a given.

What would I like to see in Cali's new constitution? Here are some of the elements:

• A 2/3 requirement for constitutional amendments. Either voters or the legislature could put items on the ballot. No other referendums.
• Same day voter registration.
• Instant runoff voting.
• Voting on paper and tallied using publicly available software and hardware mechanisms. Automatic recounts at 0.5% margin of victory.
• A House with 2 year terms elected from districts of about 125,000 people. This would result in about 300 representatives now, and about 400 when the population reaches 50 million. Representatives would be limited to 8 full or partial terms. All legislation would start in the House. Bills rejected by the Senate could be passed with a 3/4 majority in the House alone.
• A Senate with two overlapping classes of senators each with 4 year terms elected from regional multi-member districts. Each district would have a minimum of 2 senators, and the districts would have a minimum population of 750,000. Senators would be limited to 4 full or partial terms. The House majority leader would break ties in the Senate. (Acceptable alternative: two member districts consisting of 6 representative districts)
• Majority voting in each chamber, with a typical veto override clause. No line item vetos. No omnibus bills.
• A redistricting process similar to that used in Iowa. The regions for the Senate would follow Census Bureau definitions where they greater than 750,000.
• State-wide elections for Governor, Lt. Governor, Atty. General, Treasurer, and Sec. of State. Terms would be for 4 years. Officials would be limited to 2 terms in each office and 5 terms total.
• Appointment of top executive branch officials with approval by the Senate.
• Appointment of all judges with approval by the Senate. Judges at the highest level would be limited to 1 full or partial term calculated as the number of justices times 2 (9 justices = 18 year terms). Replacements would serve until the next scheduled appointment of that seat.
• The Senate could remove any statewide official or state judge with a 2/3 vote for any reason. No recall process.
• Strong counties and weak municipalities. Counties would have a county-manager style of government.

There are a few policy-esque issues I wouldn't object to being in the new constitution.

• Explicit reservation of all water issues to the state.
• K-12 education would be funded by the state and administered by counties. Counties could further delegate operations. No funding levels or methods specified.
• The state would fund and administer a system of higher education. Each level could develop endowments as appropriate. No funding levels or methods specified.

And that's it. All the other stuff - motor vehicle fees, property tax calculations, marine resources, medical research, intragovernmental borrowing rules - all of it should go overboard and be reimplemented as laws.

A closely related issue is redrawing counties. This would be even more controversial than a constitutional convention. But, really, a lot of California counties make no sense. San Bernardino and Riverside are just far too large, extending all the way from L.A.'s outer suburbs to the Arizona line. Others like Alpine and Sierra are ridiculously underpopulated. Yet another group are ones like Placer and Kern that range across geographically distinct and not well connected areas. Los Angeles County manages to be overly large, geographically disconnected, and over-populated. A neutral commission should be appointed to redraw the counties based on population, size, and geography. For instance, Riverside might be split into 3 parts - one west of San Gorgonio pass, one at the north end of the Coachella Valley, and one east of the Chuckwalla Mountains in the Colorado River valley (this piece would need to be merged with parts of Imperial and San Bernardino). Alpine should be merged with the western parts of Eldorado, Placer, and Nevada counties to form a new county. And so on. One can easily imagine how contentious the process could be. Communities or neighborhoods near borders might want to be in the other county; the residents might or might not want them. Residents of small counties accustomed to their independence (real or imagined) would object to being merged; other areas would want to break free of a entity perceived as too large or otherwise undesirable. This is why the reallocation would have to be done by a neutral commission operating on clear principles.

Update: Rough Senate allocation: LA region - 48, Bay Area - 20, San Diego - 8, Sacto - 6, everybody else - 18.