"It gets late early around here." - Yogi Berra
September 30, 2011
POLITICS: Reagan Did Not Wait Until The Last Minute
The 2012 presidential election season has not been a normal one in many ways. History teaches us that every election season brings something new we haven't seen before - but also that progress in electioneering, as in most walks of life, is more gradual than people are wont to predict. The candidate who says "this time, everything is different" or "the old rules don't apply" or promises "new politics" or "fundamental change" is almost always selling a bill of goods to his or her supporters, and often to himself or herself. As conservatives, with a belief in experience as mankind's best and only teacher, we should know better. One need only look back to 2010, when a popular wave brought victory mostly to candidates with the attributes and experience of traditonally successful candidates (Marco Rubio, Pat Toomey) and defeat to candidates who were genuinely unorthodox or similar to past losing campaigns (Sharron Angle, Carly Fiorina, Christine O'Donnell). The terrain shifted and new opportunities were created, but the basic rules of the game remained the same.
Even now, with the leading GOP contenders pouring money and manpower into the early primary states and the filing deadlines only a month away, we still have pundits and eager activists telling us that it's not too late for new candidates to jump in. Please, Sarah Palin. Please, Chris Christie. Etc. It's certainly true that a late entrant could yet generate enough support to shake up the fundamental dynamics of the race. It's even possible that Rick Perry and Mitt Romney will prove vulnerable enough that a new entrant could still win. But let us not kid ourselves: the old rules still matter. It would be deeply unprecedented for a candidate in the modern (post-1972) age of presidential primaries to win the nomination without having laid any foundation of a national organization as late as the October before the primaries.
Some would have you believe that Ronald Reagan, who officially declared himself a candidate in November 1979, ran such a race. This is nonsense and historical ignorance.
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Let me offer as Exhibit A an excerpt here from a portion of page 613 of Steven Hayward's magisterial book The Age of Reagan, which documents the rise of Reagan from 1964 to 1980, and which I highly recommend. Hayward describes how Reagan began to plan for his run with a meeting of his senior staff in September 1976:
Hayward goes on to detail other steps Reagan took to prepare, such as beginning in 1978 to have aide Martin Anderson prepare task forces of issue experts to brief Reagan (Hayward notes that by the time of the 1980 election, there were a total of 461 people, experts in numerous policy areas, on these various issue task forces), and dinner parties with leading figures on the Right to drum up support. Ben Domenech cites Reagan's 1978 foreign policy debates with William F. Buckley.
Nor was Reagan coy or private about his preparations to be the next Commander-in-Chief. How do I know? Because one of the many ordinary citizens to whom he signalled his interest in running was my father, the recipient of this letter in the fall of 1978, now reprinted at page 517 of Reagan: A Life in Letters:
I'm only scratching the surface here of the labors Reagan undertook to prepare himself and the public for his candidacy, to travel around the world meeting with foreign leaders and inspecting U.S. military installations, and to build a professional campaign staff, fundraising apparatus and ground organization. The point is that anyone who tells you that Reagan simply came out of the blue in the fall of 1979 wasn't there and hasn't bothered to learn the history from anyone who was.
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September 27, 2011
POLITICS/BUSINESS: Job Creation and the Rich: The Facebook Story
President Obama is on the prowl for new targets for (1) raising more tax revenue and/or (2) demonizing "the rich" for campaign purposes. Among Obama's proposals, besides raising taxes on high-income individuals generally, is to more than double the tax rate paid by many private equity and venture capital investors from 15% to 35%, by reclassifying sales of their businesses (or shares in their businesses) as ordinary income rather than capital gains (more detail here and, drawn from prior versions of the proposal here and here). A common trope being retailed in some form or another by Obama and his allies is that taxing the wealthy and private equity and venture capital has no impact on job creation. As is common to liberal arguments, rather than argue that they are proposing a worthwhile tradeoff, liberals deny even the possibility that their policies involve any tradeoffs whatsoever. As well they might: the voters are hardly going to accept anything right now that impedes the growth of private sector businesses and jobs.
Now, there are a lot of economic angles to this argument, which have been ventilated in more detail elsewhere. But a concrete example may be useful in illustrating how wealthy individuals, private equity and venture capital contribute to the growth of businesses and jobs: the story of Facebook.
Facebook, as you may recall, was largely the brainchild of 20-year-old Harvard student Mark Zuckerberg, and - to simplify a story that has involved a lot of acrimony and litigation - was founded by Zuckerberg and his roommate Dustin Moskovitz in February 2004 to provide a way for Harvard students to interact online. The company was not created in response to any consumer demand to spend money on such a product (seven years later, it still doesn't cost you anything to have a Facebook account, and the company's revenue comes mainly from advertising and similar streams). It was created because the founders thought it was a good product and that creating it would generate its own demand (the antithesis of demand-is-everything Keynesian economic theory). They were right - they got 1,200 subscribers within 24 hours, and the user base of Facebook has grown like wildfire for years since, to over 800 million today.
But while they were not exactly paupers - each invested about $1,000 at the start, and later $10,000 - there were limits to how far Zuckerberg and Moskovitz could spread their business idea without investment. Enter the money. First came Eduardo Saverin, also a Harvard student, the son of a wealthy Brazilian businessman; Saverin had reportedly made some $300,000 investing in oil futures, and put a stake in Facebook to become one-third owner and the company's first CFO. That got the venture off the ground, born from the start in commodity trading profits. (Saverin was later bought out to resolve litigation)
Just four months after the company's founding, in June 2004, it got a major investment: $500,000 from Peter Thiel. Thiel had been running his own multibillion-dollar hedge fund since 1996, and had made $1.5 billion in 2002 from taking PayPal (which he founded) public and selling it to eBay. Once again, an investor flush with cash from hedge fund profits and the sale of a new business provided the rocket fuel that allowed Facebook to take off from dorm-room startup to major online network. (Thiel reportedly received a 7% stake in the company, now worth well over a billion dollars).
As a startup, Facebook needed constant inflows of cash. The company moved its headquarters to Palo Alto around the time Thiel invested, and spent $200,000 in mid-2005 to buy facebook.com (its prior domain name was thefacebook.com). It cost money from the very beginning to defend against lawsuits. And the company seems to have lost millions in its first two years of operations.
Yet the product itself grew and grew, expanding overseas by the fall of 2005, and the constant inflow of capital kept it able to sustain that growth. Venture capital firm Accel Partners put $12.7 million into Facebook in April 2005, followed by Greylock Venture Capital, which invested $27.5 million that same year. By 2007, Microsoft invested $240 million in exchange for just a 1.6% stake in the company, implying that the whole enterprise was now worth $15 billion. Today, Facebook has over 2,000 employees, and expects to grow that to 9,400 employees by 2017.
Anecdote is not the singular of data, and like most stories of individual companies you can overdraw the policy implications from Facebook's growth. Yes, Facebook is an extreme example. Yes, Facebook grew in the shadow of the Bush tax cuts of 2001 and 2003, but it also grew up in high-tax states like Massachusetts and California, and of course I couldn't tell you the particular tax rates paid by the various wealthy investors in the company. But Facebook's story, and thousands of others like it (if less dramatic) illustrate three timeless truths:
(1) Growing businesses need capital;
(2) Capital for risky startup ventures - especially ones with as steep an upward growth trend as Facebook - tends to come primarily from wealthy individual investors and from the venture capital and private equity vehicles they fund (the business career of Mitt Romney is full of examples of this); and
(3) The more of that capital you have, and the better the after-tax returns it can earn, the more seed corn there is to grow still more of those businesses.
You would think that President Obama - who at least in 2008 drew a lot of support from Zuckerberg and his Silicon Valley ilk - would appreciate this concept. But Obama remains the same man who in the primary debate in 2008 in Philadelphia told Charlie Gibson that he wanted to raise the capital gains tax "for purposes of fairness" regardless of whether it brought in more revenue. Even as the economy has stagnated and dragged down his own political fortunes with it, Obama seems unwilling to even consider the importance of private capital in any recovery. Investors in new businesses, consider yourselves unfriended.
September 19, 2011
BASEBALL: Today's Fun Fact
Curtis Granderson is currently leading the AL in RBI, but has not been intentionally walked this season, not even once. The only previous player to lead the league in RBI without drawing an intentional walk, since IBB started being tracked in 1955? It shouldn't surprise you: Roger Maris in 1961 (well, it did surprise me a little, since Mickey missed 9 games that year). Besides those two, the only other player to hit 40 homers without an intentional walk is Alex Rodriguez at age 22 in 1998, when he stole 46 bases and hit in front of Griffey, Edgar and Buhner.
Also if you're wondering, only three players have drawn 100 walks in a season without the aid of an intentional pass. The leader is Rickey Henderson in 1998, when he slugged .347 as a punchless 39-year-old but led the league with 66 steals - the classic guy you would rather make hit. The other two? Randy "Moose" Milligan in 1992 (who mostly batted ahead of the fearsome Joe Orsulak - I think it was more a comment on how bad a year Milligan had), and Chone Figgins in 2009. The top 11 are ten guys who slugged below .400, and Maris.
September 17, 2011
BLOG: Open Thread 9/17/11
Just a placeholder, for tonight.
September 14, 2011
POLITICS: The Broader Meaning of NY-9
Last night's victory for Republican Bob Turner in NY's 9th Congressional District was not as resounding as the 22-point blowout in Nevada's 2d District, a district that is much more likely to play a role in contested Presidential and Senate races next year. And it shouldn't be oversold, for some of the reasons Nate Silver identifies. But Sean Trende's analysis is nonetheless a must-read regarding the broader trends it represents.
Also on a demographic note, this Atlantic article (aside from the error of forgetting - as I noted in the comments - that Rick Perry's 2006 race was not his most recent election) is a good roundup of why Perry is the GOP candidate who offers the best hope of capturing a competitive share of the Hispanic vote, as he has traditionally done in Texas.
UPDATE: Closing comments due to a spambot invasion, which tends to happen when the blog isn't updated frequently enough.
Posted by Baseball Crank at 9:00 PM | Politics 2011 | Politics 2012 | Poll Analysis | Comments (5) | TrackBack (0)
September 12, 2011
BASEBALL: Cy Verlander
POLITICS: Today in Social Security Debates
Stanley Kurtz has a detailed post on the distinguished history of comparisons between Social Security and a Ponzi scheme, dating back to an influential 1967 article by liberal Nobel Prize winning economist Paul Samuelson, and running through multiple other liberal commentators as well as scores of establishment-conservative think tank papers. Via the comments here, Alex Tabarrok at Marginal Revolution adds more, including Paul Krugman.
September 11, 2011
September 9, 2011
BASEBALL: A.J. The Wild Man
A.J. Burnett has thrown a league-leading 23 wild pitches this year in 172.1 innings pitched, one of the grislier stats in an increasingly ugly season. How historic is that?
Well, among pitchers who have qualified for the ERA title since 1893 (the dawn of something like modern pitching, when the mound was moved back to 60 feet 6 inches), Burnett's rate of one wild pitch per 7.493 innings pitched would be the highest by a fairly significant margin:
Red Ames' 30 wild pitches qualifies as the post-1893 record. Needless to say, Nolan Ryan in 1981 is the only one of these guys to win the ERA title. (For curiosity - Sandy Koufax in 1958 would have made this list at #9 if he'd thrown just a few more innings). Among pitchers who threw at least 15 wild pitches but didn't qualify for the ERA title, here's the top 10; Burnett would rank 12th:
As you might imagine, this was the only season of Stu Flythe's major league "pitching" career; he was not one of Connie Mack's finer discoveries. Bobby Witt's near-legendary rookie season missed by just a few innings topping Burnett.
It would not be useful to chart the guys with higher rates from the pre-1893 era, when you had guys with no catcher's mitts or shin guards catching pitches thrown from 50 feet, often from a standing position several feet behind the plate. A few high points: Mark Baldwin threw the MLB-record 83 wild pitches (in 513.2 innings, one per 6.19 innings pitched) in 1889; Jim McElroy in 1884 threw 46 wild pitches in 116 innings, one every 2.52 innings pitched, the worst rate for anybody with 100 or more innings. A 19-year-old pitcher named Dan Collins threw 12 wild pitches in 11 innings in 1884; the only other guy to match that in more than 3 innings pitched was Rich Rodas, who threw 5 wild pitches in 4.2 innings for the Dodgers in 1983.
PS - A look at wild pitches on a per-pitch basis here. Funny fact: I saw a tweet linking to that a few days ago, favorited it (I have trouble clicking through links when reading Twitter from my Blackberry so I tend to favorite things to read later) and completely forgot about it until after I wrote this post and started getting a nagging feeling I'd seen something about Burnett's historic wildness before.
UPDATED after the season: AJ improved just a bit to finish with 25 wild pitches in 190.1 IP, still easily the record (one every 7.61 IP, or every 33.48 batters faced). In the postseason he added 1 more in 5.2 innings, facing 24 batters.
Posted by Baseball Crank at 4:00 PM | Baseball 2011 | Baseball Studies | Comments (3) | TrackBack (0)
POLITICS: Obama Vindicates Rick Perry on Social Security
The major controversy right now in the GOP presidential primaries is over Rick Perry's contention that Social Security is a Ponzi scheme that can't deliver on its promises under its current structure. Mitt Romney doesn't exactly dispute this - in fact, Romney himself said the same thing in his book, but then Romney always did like to attack other Republicans for things he himself has said or done - but Romney's argument is that you can't say these things out loud and win elections.
Well, President Obama last night handed Perry a huge gift, by providing a vivid illustration of how Perry is right about Social Security.
Here is what the President said:
[The American Jobs Act] will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services...
The cut affects the 46 percent of all Americans who pay payroll taxes but do not qualify to pay federal income taxes. In the bipartisan deal last December to keep the Bush-era tax cuts in place for another two years, lawmakers signed off on a proposal to reduce the percentage of taxes that workers pay towards Social Security from 6.2 to 4.2 percent. That rate is set to go back up to previous levels on Jan. 1, unless Congress acts.
Now, as an initial matter, the problem with temporary cuts in the payroll tax is that they don't provide much incentive to hire new permanent workers. This is a recurring issue with Obama's proposals, like how he tried to use temporary stimulus payments to induce states to take on more permanent obligations under Medicaid, a deal a number of Governors rejected. If I'm a business owner, this sort of payroll tax cut may persuade me to hire more temporary or seasonal workers, but I'd be leery of creating new permanent positions knowing that the tax will pop back up as soon as we're past the 2012 election. There's certainly a good case to be made for slashing the payroll tax in the long haul - which would require fundamentally reworking how Social Security is funded - but as an economic matter a temporary payroll tax holiday is mostly a gimmick that will offer only a very limited bang for its buck.
Which brings us to the fiscal impact. If you take at face value the defenders of the Social Security status quo, their theory is that Social Security is not supposed to be a welfare program but a pension plan: workers pay into the system, which places their wages in a "trust fund" and later pays them back a defined benefit. As Perry - and Romney, in his book - notes, the system doesn't actually run that way. The only "assets" in the trust fund are "I owe me" bonds reflecting that the taxpayers will be asked to come up with revenues in the future, the same kinds of "my own debts are my assets" accounting that got Enron in trouble; meanwhile, the government spends the money as soon as it comes in, and hopes that it will continue getting enough future payroll tax revenue to pay future benefits. This is the textbook definition of how a Ponzi scheme operates and precisely why such schemes - as we saw with Bernie Madoff - inevitably go bust when they can't keep expanding.
Social Security already has that problem, as the most recent Trustees Report makes clear:
Social Security expenditures exceeded the program's non-interest income in 2010 for the first time since 1983. The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years.
With retirees living longer and benefits having been expanded in various ways over the years, the number of current workers supporting each current retiree has plunged dramatically since the program was established, a problem that will only get worse with declining birthrates and the Baby Boom generation entering retirement age. In other words, the conditions for ever-widening Social Security deficits are upon us already and will, by design of the current system, only get worse. The bill for the longstanding pattern of both parties on Capitol Hill raiding the program's surplus income to spend on other things has come due.
And with this crisis upon us and only designed to grow, what does President Obama propose? An even bigger bite out of the income of a program already in deficit:
Obama plans to cut revenues by $245 billion, or 36%, of the entire annual revenue (projected at $687 billion) of the so-called trust fund. Being that he will ostensibly slash half of payroll taxes, that number is surely too low...
This is the point in the storyline where a guy like Madoff gets led out in handcuffs. Let Obama make the argument that extending the temporary payroll tax cut is an economic necessity; we can have the argument about whether this is the best way to cut tax burdens on businesses and workers. But what he can't do is pretend is that Social Security is sacrosanct when just last night he went before the nation and proposed gutting its only source of funding just as it's plunged into the red. The next time Governor Perry lays out his case against the flim-flam accounting behind Social Security and its manifest inability to pay for its own promises, he will have fresh ammunition direct from the man he hopes to face in the general election.
Posted by Baseball Crank at 10:09 AM | Politics 2011 | Politics 2012 | Comments (45) | TrackBack (0)
September 8, 2011
POLITICS: Is It Debatable?
My takes on last night's GOP primary debate (I saw all but the very end).
-Short answer? The debate reinforced, rather than changed, my impression of each of the eight candidates on stage. Which is usually what these debates do, but there's always the odd night when somebody really makes a good impression or shoots themself in the foot.
-Globally, the bad news for Mitt Romney is that this debate really did not do anything to alter the current dynamic, which started to set in as Michele Bachmann's poll numbers began tanking (she's now trailing Ron Paul in the RCP poll average) and is likely to remain true unless Sarah Palin jumps in the race: we're headed for a two-man race without any real competition for Rick Perry from the right, and that's a fight Romney can't win. He needs conservatives divided while he solidifies the smaller wing of the party.
-Two notes on MSNBC, which really should not be hosting a GOP debate (Ben Domenech aptly compared this to having Derek Jeter questioned by an audience of Red Sox fans). One, I made some jokes at first on Twitter, but the more I thought about it, the more offended I was at the use of Jose Diaz-Balart from Telemundo, who was brought out to ask an immigration question and then politely told by Brian Williams to go away once the immigration discussion was over. It's really offensive to treat a presumably legitimate journalist as if he's only allowed to care about one issue because of his ethnicity. We have long since passed the point where black journalists like Bernard Shaw and Gwen Ifill are treated as able to question candidates on the full spectrum of issues - but MSNBC was unsubtly pushing the assumption, much beloved by Democrats, that this is the only issue of interest to Latino voters. (Rick Perry, who won about 38% of the Hispanic vote in 2010 in a state with a huge Latino population, intends to challenge that assumption.) MSNBC should be ashamed of its treatment of Diaz-Balart.
The other low point came when
-The contrast between the three Governors (Perry, Romney and Huntsman) and the other candidates could not have been more evident - it was obvious that they came off as presidential in a way that the non-executives did not. Huntsman put in a solid performance, but unfortunately for him, it was in pursuit of an inherently doomed strategy of irritating and condescending to Republican primary voters (this is why RCP shows him in ninth place with only half of Santorum's support and a third of Cain's or Newt's, eighth if you don't count Palin, who gets polled despite not being a candidate). He's only missing the big eyeglasses to be John Anderson.
-Relatedly, the three Governors are the only ones on the stage who have ever won a statewide election, and Romney's one win was nine years ago, by a plurality against a hapless opponent. Experience in appealing to an un-gerrymandered electorate does matter.
-Perry's goal in the debate, it being his maiden voyage in this race, had to be not so much to win the debate as to win by not losing, and he did that. He didn't do anything scary or have any terrible gaffes, although he was definitely rusty at times compared to the other candidates, who have been at this for a while now. His most controversial moment, of course, will be his jeremiad against Social Security as a "Ponzi scheme" (which is definitionally true) and a "monstrous lie" to young workers, but that was also stylistically his high point - Perry was vigorous and passionate and even a little eloquent. Romney obviously hopes that Perry's candor will sink him, but at the end of the day, my guess is that what will matter is not Perry's diagnosis of the problem (as Moe Lane notes, Ron Johnson did just fine in 2010 running on a similar theme in Wisconsin) but the solutions he proposes, and we haven't reached that stage yet. Most of the other things Perry said that would turn people off are pretty much the standard things that cause Democrats to not vote for Republicans. Given Perry's moderate record on immigration, he probably helped himself by openly challenging whether the President knows better than he does the state of the border areas in South Texas.
-Romney's assault on Perry over Social Security (which, as was pointed out on Twitter, was an echo of George Romney's criticisms of Barry Goldwater back in the day) is not without risks of its own. If Romney wins this race by using the Democrats' "Mediscare" playbook (something Karl Rove has been doing already), he'll have fatally compromised his ability in office to do anything about entitlements, which in turn seriously limits his options in taking on spending and debt. Also my guess is that the more he pushes back against having an adult conversation about entitlements, the more he guarantees that he won't get the support of people like Paul Ryan, Chris Christie and Mitch Daniels, none of whom want to be in this race but all of whom have flirted with it precisely because they want that discussion to happen.
-Perry is, for better or for worse, running on his state. Romney is running against his.
-Bachmann and Cain are strong presences on stage, but they sounded like exactly what they are - a backbench legislator and a businessman/activist/talk radio host - rather than like serious presidential contenders. Bachmann's best moment in the debate, chiding Romney for overlooking the extent to which repeal of Obamacare requires legislation, made her sound like a legislator - and then she compounded that by stressing her introduction of a bill that went nowhere, a reminder that while Bachmann is a spokeswoman for a faction of the party, she has no actual accomplishments to run on.
-Newt sounded like he was running for RNC Chairman, or at least Chairman Emeritus. He's a wonderful debater, and has earned his status as one of the party's elder statesmen, but at this point, escaping this race with his dignity intact seems to be his main goal. Newt 2012 in a nutshell came with his answer to a question about writing the forward to Perry's book: "If he wants to write another book, I'll write another forward."
-I found it sort of amusing that both Newt and Santorum were touting the job-creation figures of the nation in the 90s, essentially running the campaign Al Gore refused to run in 2000, when he ran away from a Clinton third term to run as a business-bashing populist.
-Ron Paul sounded like a crazy old man with batty ideas who thinks the 80s were "a bad scene." Bogus.
-Easily the night's biggest loser was Rick Santorum, who just has no reason to be there, and it shows. Perry didn't even pretend to know who Santorum was, referring to him at one point as "that other person."
-Even if I never did love the guy as a candidate, I still kind of miss Tim Pawlenty. This interview with Colbert captures Pawlenty's low-key, self-deprecating demeanor, which unfortunately is not what people want in presidential candidates these days. And if we were going to have people on the stage with no chance, it's a shame one of them wasn't John Bolton, who would have elevated the discussion on national security. But eight candidates is really too many anyway.
September 6, 2011
POLITICS/BUSINESS: Green Jobless
Great nutshell summary of why government-funded "Green Jobs" have failed yet again, and why this should tell us something about the kinds of people who could be surprised by this. Like Joe Biden: "One role of government is to go where venture capital won't."
Posted by Baseball Crank at 3:35 PM | Business | Politics 2011 | Science | Comments (13) | TrackBack (0)
September 2, 2011
BLOG: Holiday Weekend Open Thread
I've been traveling all week and am looking forward to some family time, so probably no blogging before Tuesday.
Enjoy the weekend.