Tuesday, May 29, 2012

THE PRAIRIE EDITOR: Recalls, Precinct Caucuses And Other Forms of Political Mischief

In a few days, Wisconsin is going to have its second recall vote within a year.
On June 5, Governor Scott Walker and four Republican state senators are
being challenged in a recall election using a provision peculiar to the Badger
State and a few other states. If we can believe latest polls, all the incumbents
will be reaffirmed in their offices, and an attempt by disgruntled Wisconsin
union members to veto Mr. Walker's historic defeat of the state employees
union in concert with the Republican legislature, will fail. Of course, the
votes have not yet been cast and tallied, so supporters of Mr. Walker and
his colleagues cannot take anything for granted (one of the senate recall
races, furthermore, is relatively close).

The recall campaign has not gone well. The unions' own gubernatorial
candidate lost to Democratic Milwaukee Mayor Tom Barrett (who was
defeated by Walker in the most recent general election) in the primary.
Many of Governor Walker's reforms are already producing positive results,
and the Walker campaign is understandably not shy about touting his
successes. Many Wisconsin voters, including Democrats and independents
still not enthusiastic about the governor, are getting tired of these recalls and
the activity associated with them. Republicans have labeled some of this
activity outright "thuggery."

Beyond the specifics in this Wisconsin recall, there is the general principle
of allowing a minority of voters to put a whole state, or even a senate
district, through an expensive and disruptive recall election of an official
so soon after that official was properly elected in a regular election. Most
terms of office are either for only two or four years. Why would it be
good public policy to change these constitutionally determined terms
simply because a group of voters who did not have a majority are unhappy?

In nearby Minnesota, another peculiar election structure has intruded itself
into the 2012 elections. At the Republican state convention, Ron Paul
supporters elected enough delegates for Paul to send to the GOP national
convention twice as many or more than Rick Santorum who won the
non-binding Minnesota primary earlier in the year. The Paul state convention
delegates were selected at precinct caucuses around the state, caucuses that
usually have 1-3% of a political party's voters participate. Thus, fringe or
weaker candidates have often been endorsed in both Democratic and
Republican conventions, and then were subsequently defeated in the state
primary or the general election.. The most recent example of this was the
current Democratic (called the DFL in Minnesota) Governor Mark Dayton who
defeated the DFL-endorsed gubernatorial candidate in the 2010 DFL primary,
and went on to be elected. (Governor Dayton, to his credit, had long opposed
the precinct caucus system in Minnesota.) For almost 40 years, the precinct
caucus system has enabled fringe interest groups, none of whom could muster
a majority in their own right, often to sabotage, in effect, the two major political
parties at election time.

National political observers have watched precinct caucus states disrupt
presidential campaigns. Perhaps the most notable example occurred in 2008
when Hillary Clinton basically ignored most of the states who chose their
delegates at precinct caucuses, and soon fell mortally behind Barack Obama
who organized them and won most of their delegates. Mrs. Clinton then went
on to win most of the large primaries, but it was too late. If there had been only
primary states, Mrs. Clinton almost certainly would have been nominated, and
would today be president of the United States. (I know a lot of Democrats who
then and now would have preferred that outcome.)

The basic principle here is not about political personalities, however. The
underlying principle is the fundamental ideal of majority rules that has guided
U.S. politics since its founding. (To be sure, at the beginning there was not
full voter suffrage, but today there is, so the principle is even more important
than ever.)  Nor is it about Democrats or Republicans. Both parties suffer from
the "mischief" I have mentioned. If the Wisconsin governor were a Democrat
facing a recall by a Republican special interest group, I would be saying the
same thing, and supporting the Democrat.

There are many ways to tamper with the fundamental principle of one-person,
one-vote, and today there are many who would, in the name of idealism, put in
electoral structures than enable small groups who cannot win a majority on
their own to impose their will on an unconsenting majority. Two of the worst
examples of this kind of political mischief already exist in the recall and the
precinct caucus system.

Not just Republicans, but even Democrats and independents who did not vote
for them two years ago, thus have a stake in Governor Walker and his colleagues
surviving next week.

Copyright (c) by Barry Casselman. All rights reserved.

Friday, May 25, 2012

THE PRAIRIE EDITOR: Be Wary Of All Polls This Far From An Election

Most in the media today rely on polls for their analyses of upcoming
elections. This has been commonplace for many years, and lacking
other "objective" tools, it is understandable that, under the pressure of
needing to say something about an election contest, they make as
much use of them, particularly so far in advance of actual voting, as
they do.

The problem with this is the deteriorating reliability of most polling.

Some of this is the responsibility of the pollsters themselves who feel
they are required to "adjust" or "tweak" raw polling data to draw
legitimate conclusions. It is in this "fine print" of polling where most
polls fall woefully short. What are these adjustments? They include
categorizing (such as "registered voters" and "likely voters.") They
also include a subjective (and often prejudicial) decision of how many
Democrats, Republicans and independent or non-affiliated voters (or
how many men and women) to count. Sometimes, certain pollsters
(perhaps especially those who are working for a particular candidate,
political party or cause) also make "intuitive" adjustments based on
nothing more than predetermined attitudes and outcomes. In particular,
there are polls being published in some media which sample an
unjustifiable imbalance between respondents of various political

There are also increasingly factors affecting the reliability of polling
which are beyond the control of pollsters. Skepticism about polling has
led many voters either to refuse to be polled or to deliberately deceive
the pollsters. The rise of many interest groups who feel pollsters are not
reliable has increased the decline of participation in polls. When pollsters
who are gathering their data from random samples, the accuracy model
of their polls is really based on  receiving a response from the initial
voter queried. As pollster increasingly need to go back to a second,
third or more pool of voters, the accuracy of the poll is statistically
decreased, sometimes considerably.

Pollsters vehemently defend the use of smaller samples, especially on
statewide and national polls, as reasonably accurate. But with the factors
mentioned previously increasing rapidly, smaller polls are often
incredibly flawed, If you read or hear that a poll has an accuracy of
plus-or-minus 3, 4 or 5%, you should be very skeptical. Most polls with
samples under 1000, and with subjective "adjusting", really have an
accuracy much less, sometimes as much as 10% or 15%.

Most pollsters will acknowledge that their polls are  inexact and "only a
snapshot in time," but the actual use of polls, especially by many
journalists, is much more than that when they make pronouncements
about who is going to win or lose (or who is "safe" or not) far in advance
of an actual election. The best journalists (and there are many) always
make it transparent how provisional most polls are, and how easily their
numbers could change.

Those pollsters who deliberately manipulate their polls to a
predetermined outcome can and do hide their distortions behind the fact
that there is no objective way to prove they are wrong, other than by the
results of an election itself. One benefit of the plethora of polls today is
that any poll which is an "outlier" becomes easily suspect.

Polls taken just before an election, that is, two or three days before the
actual voting, thus tend to be more accurate. This is obviously
because, whatever "tweaking" a pollster has previously done in a race
must now minimized so that the final polls resemble the actual
voting. A notorious Minneapolis Star Tribune poll, taken just before the
election of statewide races in 1978, was so far off it was a national
embarrassment to the newspaper. Only later did the pollsters revealed
they had "doctored" their results. Polling is a business, and these kind of
experiences soon put irresponsible pollsters out of business.

The bottom line is that polling is a legitimate and necessary tool in
analyzing voter sentiment, but that the assumptions of a poll, often
disguised or buried, are vital to the accuracy of any poll. Polls taken
too far in advance of an election are more a curiosity than anything that
should be take seriously. Journalists who employ them too much instead
of using demographic trends, economic conditions, recent voter history,
carefully vetted biographies and developing circumstances. etc., are
simply being lazy.

A lot of polling has taken place in the 2012 election so far, at the state,
congressional and presidential levels. Much of it, especially the polling
taken early in a particular contest, has been off the mark. The volatility
of the electorate in the U.S. these days means that dramatic last-minute
changes in voter behavior take place. The recent nomination of a GOP
senate candidate in Nebraska, someone who had trailed two much
better-known opponents until the final days of the primary campaign,
is not an isolated phenomenon in current and recent campaign cycles.
This, in a variety of races and political levels, is occurring with notable

I particularly call attention to the polls of individual senate races
across the country, and of the presidential race, It seems to me that the
outcomes predicted by many of these polls are, for a variety of reasons
(many of which I have mentioned), misleading. As the summer passes,
and the autumn campaign begins in earnest, this will become
increasingly clear.

Copyright (c) 2012 by barry Casselman.  All rights reserved.

Tuesday, May 22, 2012


My grandfather Morris Masiroff emigrated from Czarist Russia when he
was a young musician more than 100 years ago. He had been drafted into the
Russian army, and served for a time as the conductor of one of the Czar's
military bands, but after a series of violent pogroms, he, like so many of his
co-religionists, fled Russia and sailed to the United States, settling briefly
in New York City. There, he became a street peddler. My grandmother, who
he had known back in Russia, where she lived in a neighboring village,
emigrated separately with her four sisters to New York a few years before,
and there she was reunited with my grandfather and they married. At some
point, they moved to Erie. PA (for reasons I do not know, or if I once did,
I have forgotten). It was precisely the turn of the century, and my grandfather,
a clarinetist and a composer by profession, opened a small furniture store,
expanded from his selling goods on the street. (This story was repeated, in
assorted forms, in hundreds of cities and towns, and more than many hundred
thousand times over the next few decades.)

For a musical artist, my grandfather (whom I do not remember; I was two when
he died) obviously had some business skills as well in a very volatile and risky
period of American capitalism, and he managed not only to survive, but to grow
his business over the years until it occupied the floors of two five-story buildings
on opposite sides of upper State Street, Erie's main downtown thoroughfare.
He made it through a financial Panic in 1907, a World War from 1917-18
and then the stock market crash in 1929. His business went on, however,
and he put his money in as safe a place as you seemingly could in those days,
The Second National Bank of Erie. By 1933, however, the Depression was
worsening, and many banks were teetering. "Runs" on many banks were common
(where panicky depositors lined up to withdraw their savings). When there was a
run on the Second National Bank, thinking this was America and not Russia, my
grandfather did not get in line to try to withdraw his money. In a short time, the
bank ran out of funds to pay depositors, and it closed its doors forever. All his
money was lost There was no bank insurance and no recourse. Not all the banks
closed, and not all the deposits were lost, but in February and March, 1933, the
nation came close to the collapse of its entire banking system. On March 4, 1933,
a new president of the United States was inaugurated, and one of the first things
he did was close all the banks in America for a few days, "a bank holiday," he
called it, and through his inaugural speech and aggressive action in his first hours
and days in office, restored enough public confidence to re-open the banks
without further panic.

Today, there is in the United States a Federal Deposit Insurance Corporation
(FDIC) that guarantees, as a form of insurance, all deposits under $100,000 in
U.S. banks (this limit has been expanded to $250,000 per account until the end
of 2013). When banks have failed since 1934, no depositors have lost any money
(shareholders in the banks, however, presumably did). Of course, this guarantee
is not quite as absolutely certain as some might think. It assumes that the
guarantor, the U.S. government and treasury have enough money ("full faith and
credit") to back up the losses. The recent bailouts of major U.S. banks, following
the mortgage banking crisis, were not bailouts of depositors in those banks. They
were bailouts of the shareholders and the creditors of those banks.

I have told the story of my grandfather because, with the increasing reports of
panic in Europe, and runs on some of its banks, as the European Union faces a
continuing economic crisis, I think it may be useful to remember a time when, in
the U.S., bank runs and panics were very real and very devastating.

I don't know how he did it, but my grandfather somehow survived the loss of all
his money in the Second National Bank of Erie. I think I remember hearing he
took on a partner in the business who invested some cash.  It was a difficult time
to be in the furniture bsinesss, or any retail business, and his furniture business
was not an upscale one. It sold furniture to blue collar and working poor families
in Erie, and often on credit that was not paid for an extended period of time. His
willingness to extend credit beyond normal limits created a very special loyalty
for thousands of his Erie customers, most of whom did ultimately pay their bills
during those difficult Depression days. After it was over, and World War II' was
over, most of them, now earning good money in the post-War period, came back
again and again to buy their furniture. from Masiroff's. When I was a teen-ager
and worked in the family business (first as a janitor, but later as a salesman),
I heard numerous stories from customers who told me how Masiroff's helped
them through bad times, and now they would buy their furniture and appliances
at no other store. Younger customers would tell me time and again how their
parents and grandparents insisted they buy their furniture only at Masiroff's.

(By the 1970's, however, family furniture stores, and many other family businesses,
were replaced by chain stores and discount stores if they did not adapt. My uncle,
my grandfather's only surviving son, managed the store for the family, but he did
not adapt. The business was liquidated at pennies on the dollar.)

In Germany and France today, the governments are in a position to stabilize their
banking systems, even in the present period where most of the nation states of the
European Union have a common currency, the euro. Great Britain, wisely it now
seems, did not accept the euro, even though it joined the EU. Smaller European
nations, however, are in deep trouble. There is now an expectation that Greece
will withdraw from the euro, and reinstate its former currency, the drachma.
Anticipating this, many Greeks are beginning to withdraw their euro deposits from
Greek banks, and depositing them in banks in Germany, Switzerland and France.
They have assumed that, at the moment Greece withdraws from the euro, their
accounts will automatically become drachmas that will quickly lose their value in
relationship to the euro of the rest of Europe. This scenario could then be repeated
in Spain, Italy, Portugal and other smaller EU countires. These countries and their
treasuries might not have the reserves to back up their local banks. Like my
grandfather, the citizens of these countries could be wiped out financially, and this
could lead rather quickly to a virtual collapse of most of the European economy.

This is, of course, the worst case outcome. Europe still has a very large economy,
and Germany, most of Scandinavia, France and Great Britain still have very
significant financial resources. The worldwide Depression of the 1920's and 30"s
was preceded by the collapse of a speculative "bubble," but the true impact of
disaster occurred because of the disappearance of credit in the money supply. In
Europe, especially in Weimar Germany (a brief republic), extraordinary inflation,
accompanied by massive unemployment, wiped out the post-war economies.
In Russia, a decadent absolutist monarchy was also briefly replaced by a liberal
regime, but the Russian economy had, at that time, little heavy industry, few
entrepreneurs, no available capital, much actual starvation, no history of
democracy, and was thus easy prey to an insurgent predatory communist takeover.

2012 is not 1932, but the basic conditions of human life remain unaltered. In a
healthy democratic capitalist society, bad times are transformed into good
times again. A healthy society not only provides for its poorest members, it
provides opportunity for all its members to succeed and thrive.  Only a very
few centenarian Americans alive today remember well those scary times in
1931-33 when the U.S. banking system teetered on the edge of collapse, and real
revolution was in the air. What would have happened if Franklin Roosevelt had
not brought calm and then confidence back to the banking and free market
system? The answer is that a political and economic system we now take for
granted might have collapsed into anarchy, and who knows what after that.

The worst case is what did happen in parts of Europe then, and the cost was
hundreds of millions of lives, unspeakable violence and human depravity.

Many more persons now live in Europe, and their standard of living, even in
the poorest of countries, is many levels above the poverty and despair that
existed only 80 years ago. When I read about runs on the banks in Europe,
however, I think about how unsympathetic and impersonal history can be
when political and economic leaders behave badly.

I'm just saying.

Copyright (c) 2012 by Barry Casselman.  All rights reserved.

Sunday, May 20, 2012

THE PRAIRIE EDITOR: Not With A Bang, But A Downgrade

If it weren't so disastrous a strategy, President Obama's urging Europeans
to abandon current attempts at "austerity" in favor of returning to their old
policies of creating more public debt through "job creation" spending, would
be laughable. Mr. Obama, now finding his soul-mate in new socialist French
President Hollande and his economic ideas, is not without a political purpose,
however. He is trying to hold off the collapse of the euro currency, and
possibly the European Union itself, at least until the U.S. presidential election
in November. A European economic catastrophe would have much impact on
the U.S. economy in the long run, and it would dash any chance of U.S.
economic recovery in the short tun, the latter almost certainly precluding
Mr. Obama's already problematic re-election.

Mr. Obama's recommendation to Europe could be likened to a proposal that,
after the Titanic had struck the iceberg that cold night in the north Atlantic,
the Titanic crew should have destroyed the few lifeboats they had for the
purpose of making firewood.

After more than a century of central government entitlement spending in the
various European nations, and after two horrific world wars of violence and
self-destruction, "austerity" is a complicated public policy to follow in Europe.
To be fair, European politicians, especially in the smaller member nations
which have more limited resources, have a genuine dilemma. It is especially
difficult, and its measures are especially painful and shocking to those
populations which know no other way of life. When you fully realize that
one-quarter of adult employable Spaniards are out of work, for exaample,
you have some true perspective on the extent of the economic crisis on that
side of the Atlantic.

Compared to Greece, Spain, Portugal and Italy, the French are much more
capable of enduring a program of austerity. The French economy is not in as
bad shape as many others on the Continent. But, for now, the French seem
turned in the wrong direction. Germany is the strongest economy in the
European Union. Chancellor Merkel is being heavily pressured to abandon
austerity measures, not only from the Obama administration, and her EU
partners, but from restless German voters, some on the left and some of whom
no longer want to bail out the rest of Europe.

The indelibly simple reality of world economics today, however, and especially
in Europe, is that forms of "austerity," sacrifice, "biting the bullet," and
adjustments of entitltements, are the only way out of the economic crisis. The
longer it takes to happen, the more severe it will be on the populations of Europe
and its member nations. The idea that the problem can be solved by "job creation"
and more public spending is delusional. It is also a residue of the socialistic ideas
born in Europe almost two hundred years ago, and practiced there to various
degrees and in various forms since.

These ideas clothed in the language of idealism, compassion and egalitarianism
(e.g..,"redistribution of wealth,") have in practice brought  to Europe cynicism,
violence, suffering and depravity for more than a century.

Copyright (c) by Barry Casselman.  All rights reserved.

Wednesday, May 16, 2012

THE PRAIRIE EDITOR: The Tea Party Has Slumbered, But It Did Not Sleep

The upset victory of Deb Fischer in the Nebraska Republican U.S. senate
primary, following so closely Richard Mourdock's upset victory in the
Indiana Republican U.S. senate primary (over 6-term incumbent Richard
Lugar), indicates that the phenomenon of the 2010 elections, the Tea Party,
has not been entirely sleeping in the 2012 cycle.

The Tea Party is not a centrally controlled, or easily defined, grass roots
movement. I've heard it said that 47 different organizations are considered
part of the Tea Party. It has no official leaders or spokespersons. After its
huge influence in the 2010 elections, it was expected to play a major role in
2012, especially in the GOP presidential contest. However, the Tea Party,
as such, was overshadowed in 2011-12 by the libertarian Ron Paul candidacy,
Newt Gingrich's resurgency, and finally, the emergence in the later primaries
of GOP social conservatives. The eventual presumptive nominee, Mitt Romney,
was not a Tea party figure. There was much talk that the Tea Party, a c
onservative grass roots economic movement, had evaporated or been put to
sleep. Two prominent Tea party figures, Sarah Palin and Michele Bachmann,
had either not entered the presidential contest, or soon failed in it.

A left wing grass roots movement, Occupy Wall Street, had arisen after 2010,
and enjoyed a brief notoriety, When the Occupy movement tried to revive
itself in early May, its efforts fizzled. So, too, thought many was the fate of
the Tea Party.

The big difference between the Tea Party and Occupy Wall Street (and its
various "Occupy" progeny) is that the former is a popular conservative
voter movement, and less an ideological phenomenon than a response to real
economic conditions in the nation, while the latter is a radical ideological
movement of activists who have no real voter base.

There has been much hand-wringing over the defeat of long-time U.S.
Senator Richard Lugar of Indiana. Mr. Lugar had many years of
distinguished service in the senate, including his time as chairman of the
powerful foreign relations committee, but at 80 years of age, and holding
some foreign policy views no longer in the conservative mainstream, it
was time for him to retire. A seat in the U.S. senate is not a dukedom, nor
is this institution similar to the British house of lords. Each election is
intended to be a renewal of the right to hold office. Mr. Lugar overstayed
his welcome in his own party. He will be replaced by an experienced
political figure who holds views much closer to the emerging new conservative
legislative philosophy.

The same seems to be true of  Nebraska state legislator Deb Fischer who came
suddenly from behind to defeat frontrunner state Attorney General Jon Bruning,
the candidate of the old conservative establishment.

In Utah, long-time Senator Orrin Hatch has, for now, avoided a similar fate
by paying attention to Utah Tea Party issues, but he still faces a primary and a
Tea party-backed opponent.

In Wisconsin, GOP icon Tommy Thompson, long-time governor, failed to
win party endorsement recently, and he now faces a primary challenge from
a Tea Party favorite.

I have suggested for almost a year now that the Republicans are almost certain
to win back control of the U.S. senate from the Democrats in 2012. This was
based on the fact that twice as many Democrats are up for election this year,
and that many of them are vulnerable. Since that time, a few surprises (such as
the unexpected retirement of Maine's Olympia Snowe) have occurred, but the
basic circumstance is mostly unchanged. In fact, as of late, there seems to be
even more a voter trend to the Republicans.

The four U.S. senate races previously mentioned, even if all the incumbents
and GOP establishment figures are defeated by Tea Party challengers, should
be in Republican hands in January, 2013. But the philosophy of the new and
GOP-controlled senate would be quite different. This is what Tea Party voters
are fighting for, a renewed set of conservative operating principles.

The national elections of 2010 brought the legislative momentum of the Obama
administration to a halt, but it did not replace the radical Obama agenda with a
conservative one. That requires both the presidency and control of both houses
of Congress. The focus, for Tea Party activists in 2012, is the campaign for
control of the U.S. senate.

That is why, from seeming to slumber, the Tea Party grass roots movement has
now reawakened.

Has this movement found in their senate candidates of 2012 more consistently
appealing figures than in 2010 (when several eccentric Tea Party senate
candidates lost)? Can the Tea party movement muster a strong enough subset
of the GOP senate to assert their economic views during the next adminsitration?

The answers to these questions will come from remaining primaries and the
autumn election contests. It is one of the most intriguing aspects of the 2012
campaign season, hitherto preoccupied with the GOP presidential nomination,
which will play itself out to an historic and momentous election day.

Copyright (c) 2012 by Barry Casselman. All rights reserved.

Saturday, May 12, 2012

THE PRAIRIE EDITOR: France And West Virginia

     "Sensational" breaking news recently included datelines from France
and West Virginia. The former was the defeat of incumbent French President
Sarkozy by his socialist opponent in France's presidential election, and the
latter was the news that a criminal felon residing in a U.S. penitentiary had
received 41% of the vote in the West Virginia Democratic primary against
President Obama.

How are these events related?

They are part of a general political trend these days in which voters are
demonstrating how unhappy they are with current economic conditions AND
how current politicians are dealing with the problems arising from these
worldwide and local political crises.

These two events perhaps got more headlines than other similar events, but it
can also be noted that Greek voters rejected their current leadership and Indiana
voter rejected long-time U.S. Senator Lugar, a fixture in Washington, DC for
decades. in his attempt for re-election. There are numerous other similar
examples occurring at all levels of government here and abroad.

Of course, not all of these events are of equal importance and validity. The
narrow loss by M. Sarkozy and a more one-sided loss by the Greek government
have been written off as voter rejection of recent government attempts at
"austerity" as an approach to solve European debt crisis problems. But what
will be the result of turning away from even the modest "austerity"that was
attempted by the French and Greek governments now thrown out by their voters?

Virtually all of Western culture, in Europe and North America, has been
indoctrinated with the notion that citizens are entitled beyond "life, liberty and
the pursuit of happiness" to certain material benefits, including healthcare and
old age pensions. Many Western societies also guarantee post-secondary
school education. Each of these "entitlements" is very expensive, and requires
government revenues to pay for them. In the past, the notion was promulgated
that the cost of these entitlements could be paid for by charging them to future
generations in the form of accumulating government debt.

In prosperous times, and while these entitlement programs were in their initial
phases, this seemed to be a workable system. It did not take long, however, for
outflows to dramatically exceed inflows, and periodic "repairs" to entitlement
systems took place. These "repairs" have not fixed their systems, however. They
have, in most cases, only put off the time when draconian actions will have to
take place to "save" the entitlement (if they can be saved at all).

In Europe, more than the U.S., perhaps, the belief that entitlements did not have
to be paid for took greater hold. Many government entitlement programs were
created in Europe long before they were initiated in the U.S. Instead of applying
measures to limit the accumulating debt (that paid for current entitlement
payments), the Europeans did the opposite. They shortened the work week,
increased benefits, cut the retirement age, and universalized healthcare.

There are laws of financial gravity, however, and it was only a matter of time
before the financial system, which is based on the principle that what is
borrowed will be paid back, would be able to bear no more debt. That is
exactly where most of the nations on Europe and North Ameria have come to
in the present crisis. The solution to this ongoing crisis in Europe has been
essentially to use government funds to bail out the banks and other
institutions which hold this debt. But in order to have the government funds
to do this, the governments have to raise their revenues through taxes. Raising
taxes, however, discourages businesses from expanding and hiring new
workers. In fact, in an economic decline, businesses reduce their operations
and lay off workers. Individuals facing higher taxes reduce their spending,
which in turn, reduces demand and cause production to go down. These are
fairly universal economic truths.

Spain today has almost one-quarter of its working age population unemployed.
Other member of the European Union have varying amounts of very high
unemployment. The obvious solution to these conditions is for the member
governments to reduce the amounts of the entitlements they have been paying
out, and to reduce government spending. Being Europeans, however, the natural
impulse of EU politicians is also to raise taxes. With such high levels of
unemployment, and European taxes already prohibitive, increasing tax revenue
is not a fruitful path to restoring economic health.

That will not stop the politicians, however. It certainly will not inhibit M.
Hollande, the new French socialist president. You can count on the European
crisis, therefore to continue (and get worse).

As for Richard Lugar, at 80 years of age, he ran one race too many.

Copyright (c) 2012 by Barry Casselman.  All rights reserved.

Sunday, May 6, 2012

The "Slow" Phase of The 2012 Campaign

We now enter the traditional "slow" phase of a presidential and natioonal
campaign. The two nominees are known. The challenger now slowly proceeds
to the auditioning and vetting of a vice presidential choice (the media makes
too much noise about this; vice presidential choices are rarely dispositive).
The final nominees are selected for various competitive U.S. house and senate
races. First ads are run by both sides, and speeches made by both candidates,
attempting to establish campaign themes for the November campaign. The
close watch of economic conditions in the nation increases as unemployment,
stock market prices, consumer sales, manufacturing production numbers
and real estate values take on more and more importance. The likelihood that
dramatic and surprising international events is heightened.

This phase will likely last until the two national conventions. The Republican
convention will begin in Tampa in late August. The Democratic convention
opens in Charlotte in early September. The conventions themselves no longer
provide much news and drama. They are elaborate public relations tableaux
by each party to influence voters after the political doldrums of the summer.
The media will labor mightily to produce "breaking news," and both liberal and
conservative pundits will stretch their imaginations to provide some interest in
their columns, but barring the unforeseen (always possible in our 24/7 world),
it will be fairly boring over the next four months.

Important matters will be attended to, of course, as the two national presidential
campaigns and the two national committees furiously attempt to raise money for
their efforts. Both parties will also be acquiring and building voter lists, and
preparing for the onslaught of advertising and political propaganda which they
will unleash on the public in September and October

The political skills of the Obama team were established in their successful
campaign of 2008. The political skills of the Romney team have yet to be seen,
although they have acted promptly and well in the opportunities presented to
them since Mr, Romney clinched his party's nomination.

It would seem to me that the entire presidential campaign season is too long
these days, but it was shorter this year than in 2007-08 when the campaign
seemed interminable. (At least in that cycle there was genuine suspense
in the choice of nominees of both parties since no incumbent was running.)
The "slow" phase of the campaign may also appear too long,  and during it
many of the headlines will be faux efforts, but the stakes are always high in a
race for president and for control of the Congress.

The latter may seem to get less attention in a presidential year, but the stakes
are almost always no less than the contest for the White House, This year in
particular, control of the Congress and the choice of the person who will
function in the Oval Office in January, 2013, will perhaps be of more
consequence than in other cycles. By the time we have concluded the "slow"
phase of 2012, this should become more and more obvious.

Copyright (c) 2012 by Barry Casselman.  All rights reserved.

Friday, May 4, 2012

The Cofferdam Approach To The Economy

     My home town has been an historic and major inland shipbuildng port for
two centuries. Oliver Hazard Perry's fleet, which won a decisive victory on
Lake Erie in the War of 1812 ("We Have Met The Enemy And They Are
Ours"), was built in Erie, PA, and later the first iron-hulled warship, the
Wolverine,, was built in Erie several decades later. Over the next hundred
years, ships of all sizes were built by various boat builders at the port of Erie
which also had the first lighthouse on the Great Lakes, and still has a major
U.S. Coast Guard station. A few years ago, this industry was revived locally,
and currently huge freighters, tugboats and smaller ships and boats are built
and repaired in the city. My own interest in ships has kept me (now living far
away) abreast of this industry, and in the course of my reading about it, I
came across a term I did not previously know--- a cofferdam.

A cofferdam (sometimes just called a coffer) is a temporary structure built over
water which enables ship repair to take place in a body of water on dry land.
Usually using a steel enclosure, the water is removed and the space filled with
dirt. It's an expensive process, but it is done when putting a ship in drydock is
unfeasible or, as is often the case, even more expensive than a cofferdam. If
you live in a port city, especially on a Great Lake or near a major river, you
have probably seen a cofferdam. The cofferdam. being temporary, is removed
after use.

It has occurred to me that the way politicians are dealing with the current
economic crises, is very much like using a cofferdam. Unfortunately, while the
cofferdam is a practical and necessary device in ship repair, I think the fiscal
cofferdams appearing in the US. and Europe these days function in an opposite
manner. The U.S. economy, including Social Security, Medicare and Medicaid,
the private pension fund system, mortgage banking system, healthcare financing
system and other major economic structuress are in need of historic and very
major repair. The great ship which is our economy really should be taken into
drydock for serious and critical work. Putting an economic ship into drydock ,
however, involves delays, dislocations and other "inconvenient" problems, but
unless you want a ship eventually to sink, it must be done.

Our politicians don't want to face the hue and cry that would come from the
citizenry (and voters) if they put the U.S. in the absolutely necessary (in my
opinion) drydock to get the job done right.

So the politicians avoid the drydock and construct economic cofferdams that
only provide short-term and superficial repair. An even more egregious example
of this is the behavior of politicians in the European Union today. Their debt
problems are perhaps even more immediate and serious than ours, but instead
of facing up to imminent dangers of delay, European leaders are constructing
cofferedams everywhere on the continent..

Much has been made in recent weeks and months as the centenary of the
sinking of the Titanic in 1912, a disaster which a hundred years later still grips
worldwide fascination, was observed.  Our cruise ships today are much larger,
and much safer, but recently one of them in the Mediterranean struck a rock,
and sank, turning on its side,  killing more than 30 persons. 

An economy is a vastly large ship. When in need of major and critical repair,
too much is at stake to simply construct a temporary cofferdam and just patch
up the problem.

Commodore Perry, who commanded that key naval battle of Lake Erie in 1813,
and who had personally supervised the construction of the U.S. fleet in Erie, PA
two hundred years ago, had the most famous naval battle flag in Ameerican
history. Its words still ring out today: "Don't Give Up The Ship!"

Copyright (c) 2012 by Barry Casselman.  All rights reserved.

Wednesday, May 2, 2012

"Minnewisowa" One More Time

    The term "Minnewisowa" was invented and introduced in the 2004 presidential
campaign cycle. "Minnewisowa" is a portmanteau neologism which stands for the
electoral combination of Minnesota, Wisconsin and Iowa, three contiguous
midwestern states with similar demographics,  and which together have 26
electoral votes. They are  also perennially "swing" states that can go either into
the Democratic or Republican column on Election Day.

In 2004, Iowa voted for George W. Bush, while Wisconsin and Minnesota cast
their electoral votes for John Kerry. In 2008, all three voted for Barack Obama.
But in 2012, all three, especially Iowa and Wisconsin, are up for grabs.

In fact, party registration in Iowa has for the first time in a long while gone from
a lead for Democrats to a lead for Republicans. First reported more than a month
ago, that lead (while small) has doubled in the latest report.

Wisconsin is a special case this year. A recall election of Governor Scott Walker
has been called primarily by union supporters who opposed Walker-signed
legislation that limits the power of government employee unions. An earlier
recall effort failed to change the balance of power in the state legislature, but
Wisconsin Democrats have come back to challenge not only Walker but several
state senators. A lot is at stake for both sides, and any outcome is possible. But
the risk for Democrats if they fail in this second recall effort, as they did in the first,
is that it may cost President Obama the state in his re-election effort here about
four months later.

Minnesota leans Democratic this year, and the state Republican Party is mired in
scandal and financial problems. The Minnesota governor is a Democrat (called
DFLer in the state), and the legislature is Republican. There are few Minnesota
close congressional elections this year, and the incumbent DFL U.S. Senator Amy
Klobuchar has little prospect of a serious opponent. But the forces which propelled
such a high DFL turnout for Mr Obama in 2008 are not present this year, and the
presidential election could be closer than the ten-point margin in the last cycle.

If Mitt Romney could win Iowa and Wisconsin in 2012, that alone would be a net
gain of 16 electoral votes from 2008. Combined with the current Republican lead in
Indiana and good prospects for the GOP in Ohio (both these states voted for
Obama in 2008), this region could produce just under half the electoral votes the
GOP nominee would need to overtake the incumbent president. Most of the other
(and larger) half could come from the combined electoral votes of Virginia, North
Carolina and Florida, three southern states which also voted Democratic in 2008.

It's too early to make predictions about all of this, but the electoral college
vulnerability of Mr. Obama is already present in the above-mentioned states, not
to mention about a half dozen others.

"Minnewisowa' went solidly for Mr. Obama in 2008, signaling his decisive
nationwide victory. A change in voter sentiment in this three-state "swing bloc,"
could signal political trouble for the Democratic president four years later.

Copyright (c) 2012 by Barry Casselman.  All rights. reserved.