Science Asks: Why Can't We All Just Get Along? - The Atlantic

I've been eagerly awaiting the publication of Jonathan Haidt's new book, The Righteous Mind, which I plan on reviewing here (one of these days). In the meantime here is a good summary of Haidt's approach. Science Asks: Why Can't We All Just Get Along? - The Atlantic

Why liberals can't understand conservatives – Telegraph Blogs

Why liberals can't understand conservatives – Telegraph Blogs

This article touches on ideas that will be discussed in Jonathan Haidt's soon to be released book, The Righteous Mind. I am looking forward to reading it and reviewing it here. In the meantime Ed West gives a nice preview.

A Lesson for Krugman, et al, about Canada’s Real Fiscal Restraint vs. the United Kingdom’s Faux Austerity « International Liberty

A post well worth reading.

A Lesson for Krugman, et al, about Canada’s Real Fiscal Restraint vs. the United Kingdom’s Faux Austerity « International Liberty

Review - Reckless Endangerment:How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon Review

After the financial collapse as I expected a flood of books swept the market to explain why it happened. Some were written by people on the right and some by people on the left. If you’re interested in reading a book that explains how the housing bubble burst and, more important, how it was inflated in the first place from a non-ideological source I recommend Reckless Endangerment. The authors do a good job of detailing how the people within Fannie Mae cooked the books and used various means to ensure folks who normally wouldn’t qualify for loans got them. It also details how some within government, both Republicans and Democrats, defended Fannie Mae.

Gretchen Morgenson, the lead author, is a business reporter and writes the Fair Game column in The New York Times. She won a Pulitzer Prize in 2002 for her coverage of Wall Street. Her co-author, Joshua Rosner is a partner at Graham Fisher & Co., an independent research consultancy.

Morgenson and Rosner report how Barney Frank and Chris Dodd vigorously defended Fannie/Freddie against various people who questioned the economic wisdom of what they were doing.

It’s not a perfect book but it details the greed that drove the key participants within these organizations. It’s ironic because the only time I recall the media or liberals use the word greed was to chastise Wall Street’s role, not those within government and the Government Sponsored Enterprises, Fannie Mae and Freddie Mac. As the authors say:

We found that this was a crisis that crept up, building almost imperceptibly over the past two decades. More disturbing, it was the result of actions taken by people at the height of power in both the public and private sectors, people who continue, even now, to hold sway in the corridors of Washington and Wall Street.

Reckless Endangerment is a story of what happens when unfettered risk taking, with an eye to huge personal paydays, gains the upper hand in corporate executive suites and on Wall Street trading floors. It is a story of the consequences of regulators who are captured by the institutions they are charged with regulating. And it is story of what happens when Washington decides, in its infinite wisdom, that every living, breathing citizen should own a home.

They don’t use these terms but Reckless Endangerment exams the perils of crony capitalism. I’d also reverse their order of cause and effect: government policies to encourage home ownership lead to the formation of GSEs which blend the private and public sectors.

Reckless Endangerment shows that the seeds were set several decades before 2008. The change in the tax code in 1986 eliminated the interest deduction on debt except for mortgages thus setting the stage for making housing “Americans’ most favored asset.” Then in 1994 President Clinton launched the National Partners in Homeownership, a private-public cooperative with one goal: raising the numbers of homeowners across America. As they point out this cooperative had a problematic feature: it teamed regulators with the organizations they were supposed to be policing.

The book then shifts to the role of James Johnson who took over Fannie Mae and began relaxing loan underwriting standards. In addition the executive pay structure changed. “Compensation became tied almost solely to earnings growth.”

[CBO study revealed that] the companies passed on to borrowers only about two thirds of the billions in benefits they received. Fannie and Freddie kept $2.1 billion for themselves and their shareholders. … [It became clear] how Fannie Mae could pay its executives as much as they did. Equally evident: Holding on to so much of its subsidy let Fannie Mae fund its elaborate self-preservation scheme, make its massive charitable contributions, pay for it extensive ‘political outreach,’ and hire academics to write favorable studies about its role in the mortgage market.

Federal investigators later found that you could predict what Fannie’s earnings-per-share would be at year-end, almost to the penny, if you knew the maximum earnings-per-share bonus payout target set by management at the beginning of the year.

Towards the end of the book Morgenson comments on the attempt to “fix” the earliest abuses by passing the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. “The irony of having two of the nation’s most strident defenders of Fannie Mae sponsoring the new reform act was lost on few of those who knew the sordid Fannie story.”

While Reckless Endangerment nicely reports on the shenanigans of those in government, the GSEs and on Wall Street it suffers from a lack of a clear understanding of free market economics. Nor does it address the philosophical premises that support the efforts to expand home ownership. For a nice analysis with a philosophical explanation check out Altruism: The Moral Root of the Financial Crisis by Richard M. Salsman. I would add that those who pushed for home ownership did indeed justify it by pointing out that people who normally couldn’t afford homes now could but a number of those advocates obviously had purely self-promoting reasons for doing so such as the Fannie Mae execs who reaped huge bonuses for their “selfless” work. So you end up with deadly recipe for disaster: altruistic justification for bad policies, profit taking by those who administered the GSEs, politicians who made political hay with their support, financiers who sold derivatives that rested on an inherently faulty foundation, regulators and financial rating agencies who turned a blind eye and finally (as covered in the book) academics who cooked their numbers in their analyses to hide the flaws.

I’d like to say we (speaking collectively) learned a lesson from all of this but based on the passage of the Dodd-Frank bill plus other more recent developments I’m afraid we’re no better off than we were before the 2008 crash. In other words Reckless Endangerment continues.

Bad-Faith Journalism - WSJ.com

Bad-Faith Journalism - WSJ.com


This article by James Taranto touches on PolitiFact's "fact checking" and how some on the Left respond with violent ad hominem attacks to PolitiFact's occasional conclusion in which they actually agree with a comment on the Right. The nerve!

The Moral Foundations of Occupy Wall Street - Reason Magazine

Jonathan Haidt, author of one of my favorite books, The Happiness Hypothesis, applies his theory of moral foundations to the Occupy Wall Street movement. I’ve provided some quotes below. I like his approach.

My colleagues and I found that political liberals tend to rely primarily on the moral foundation of care/harm, followed by fairness/cheating and liberty/oppression. They are very concerned about victims of oppression, but they rarely make moral appeals based on loyalty/betrayal, authority/subversion, or sanctity/degradation. Social conservatives, in contrast, use all six foundations. They are less concerned than liberals about harm but much more concerned about the moral foundations that bind groups and nations together, i.e., loyalty (patriotism), authority (law and order, traditional families), and sanctity (the Bible, God, the flag as a sacred object). Libertarians, true to their name, value liberty more than anyone else, and they value it far more than any other foundation. (You can read our complete research findings at www.MoralFoundations.org.)

So what is the mix of moral foundations at Occupy Wall Street (OWS)? In my visit to Zuccotti Park, it was clear that the main moral foundation of OWS is fairness, followed by care and liberty. Loyalty, authority, and sanctity, by contrast, were very little in evidence.

Many pundits have commented on the fact that OWS has no specific list of demands, but the protesters’ basic message is quite clear: rein in the influence of big business, which has cheated and manipulated its way to great wealth (in part by buying legislation) while leaving a trail of oppressed and impoverished victims in its wake.

Will this message catch on with the rest of the country, much of which also values the loyalty, authority, and sanctity foundations? If OWS protesters engage in acts of violence, flag desecration, destruction of private property, or anything else that makes them seem subversive or anti-American, then I think most Americans will quickly reject them. Furthermore, if the protesters continue to focus on the gross inequality of outcomes in America, they will get nowhere. There is no equality foundation. Fairness means proportionality, and if Americans generally think that the rich got rich by working harder or by providing goods and services that were valued in a free market, they won’t support redistributionist policies. But if the OWS protesters can better articulate their case that “the 1 percent” got its riches by cheating, rather than by providing something valuable, or that “the 1 percent” abuses its power and oppresses “the 99 percent,” then Occupy Wall Street will find itself standing on a very secure pair of moral foundations.

I particularly like what he says in the last paragraph about fairness. I’ve touched on this subject earlier in December in response to Obama’s speech in Kansas. 

Repo Men - Kevin D. Williamson - National Review Online

This scathing article by Kevin Williamson targets Obama and his Democrat colleagues for their profiteering from intimate connections with Wall Street while pontificating how they're protecting the little guy, us 99% to use the Occupy Wall Street lingo. Republicans aren't spared his scorn either. And rightfully so (no pun intended). Just a warning. If you suffer from high blood pressure be sure to take your medication before reading this expose.


Williamson's points support what I said in my previous post: http://thinkingobjectively.blogspot.com/2011/09/palins-political-observations-plus-my.html