Saturday, July 31, 2010

The Stimulus Worked

I just wanted to point the interested reader to this just released report that explains in pretty good detail why and how government intervention saved our economy and ended the Great Recession:

"When we divide these effects into two components - one attributable to the fiscal stimulus and the other attributable to financial-market policies such as the TARP, the bank stress tests and the Fed's quantitative easing - we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 11/2 percent points lower, and adding almost 2.7 million jobs to the U.S. payrolls. These estimates of the fiscal policy are broadly consistent with those made by the CBO and the Obama administration...

The US economy has made enormous progress since the dark days of early 2009. Eighteen months ago, the global financial system was on the brink of collapse and the US was suffering its worst economic downturn since the 1930s. Real GDP was falling at about a 6% annual rate, and monthly job losses averaged close to 750,000. Today, the financial system is operating much more normally, real GDP is advancing at a nearly 3% pace, and job growth has resumed, albeit at an insufficient pace."

And just so you don't get into a trap of comparing Reagan's rapid recovery to this one, Megan McArdle has some comparisons:

"And in exchange, they risk empowering a Republican Senate majority--if not in 2010 (which I think is very unlikely) then in 2012. It's absolutely true that Reagan and others had less popularity at this point in their presidency than Obama. Unfortunately for Obama, financial crises take a long time to recover from. The recession that ate away the popularity of Reagan was a classic monetary contraction that led to a boom as soon as Fed Chair Paul Volcker loosened his iron grip. There's a very good chance that in two years, Obama is still going to be trying to explain why unemployment is above 8% and GDP is kind of anemic. If that's the case, the Republicans will hold the house and the senate at the end of 2012."

Friday, July 30, 2010

Immigration Law Sanity

Robert Robb has done a nice job interpreting the court decision here.

"Instead, state legislators sought to set up separate state immigration crimes and a separate state system of punishment. Instead of turning over immigration violators to federal officials, they could be charged, prosecuted and incarcerated in the state system.

This was a dumb idea on two fronts. First, it clearly infringed on federal prerogatives regarding the regulation of immigration and invited the legal challenge Bolton has preliminarily upheld. But more importantly, why should state taxpayers pick up the tab for prosecuting and incarcerating illegal immigrants? Why is that a good idea?

Legislators then compounded their poor judgment with even poorer execution.

The most egregious example of SB 1070's poor draftsmanship was the adoption by reference of the federal requirement that immigration papers be carried at all times. Bolton enjoined that provision, but needn't have bothered. The bill itself nullifies the violation by saying that it doesn't apply to anyone in the United States legally – in other words, to anyone who would have papers to carry in the first place.

The most consequential instance of poor draftsmanship is the provision forbidding the release of anyone 'arrested' until their immigration status is determined. Taken literally, which is the way legislation should be interpreted, this would have outlawed the cite-and-release approach law enforcement takes for most minor offenses. Such people are technically “arrested.” Mercifully, Bolton enjoined this provision before the havoc and confusion it would have wreaked was unleashed."

If there was ever a reason not to vote for Janet Brewer, this was it. In my cynical view, it seems that while the Arizona state budget is going down the toilet and our schools are in desperate need for an overhaul, she decided to play political games with a complex and difficult to solve immigration issue that only served as a distraction.

Terry Goddard deserves more than a second look:

Notes on Fiscal Stimulus

I believe the fiscal stimulus worked, better than people think. I think the monetary measures and the bank interventions by the Fed were infinitely more important, but the stimulus worked and was also important. It could have been better. If it would have been a 100% transfer of federal dollars to the states, enough to counter the susbstantial state spending cuts, we would be in much better shape now. But we would be in much worse shape without the measures our government did do. Isn't this obvious? Any resident of Arizona should say so in that without the money from the federal government our state would have been forced into some pretty severe cuts sending more people to the unemployment lines and degrading further already slumping state services.

You can make valid points that beyond the money to the states, the stimulus was of dubious value, the fed cannot just ramp up government projects, these things take way too long to have noticeable effects, and worse, to the degree you do rush them out, you are likely ending up funding stuff with of dubious value all while incurring long term additions to our debt.

And don't get me started about the tax cuts that were a pretty significant portion of the stimulus that somehow Obama gets no credit for from the Republicans. Tax cuts are stimulant - but do nothing to help people who have lost their jobs. The rest saved portion of the increased income or paid down debt - which is good overall, but doesn't do much to boost our economy right now. Especially since an increased savings rate is not translating to increased investments. Its just money sitting in the bank putting nobody back to work.

Well, if you really believe in countercyclical stimulus (and you should), then you need to do better about planning ahead as noted here.

" Beyond that, it seems to me that fiscal stimulus will work well in countries where it is believed that fiscal stimulus will work well.

What do I mean by this? Well, one obvious point is that a country that understands stimulus should experience an immediate jolt to confidence when stimulus is enacted. But other factors are likely to be more important. A country committed to stimulus will take care to prepare to use stimulus. It will construct a system of automatic stabilisers that provide immediate countercyclical aid as an economy deteriorates. It may have a backlog of needed infrastructure projects at the ready, which can be rushed into action as conditions warrant. A country generally sceptical of stimulus, on the other hand, will reach for it in an emergency and find that it is unprepared. Automatic stabilisers will be too small and will require constant Congressional maintenance. Too few projects will be shovel-ready. The need to legislate will lead to inclusion of pork items that aren't particularly stimulative. Stimulus will be less targeted, timely, and effective as a result."

What's frustrating to me is that we have a Republican party who wants to stimulate when our economy is booming and undertake austerity in a time of recession. It would have been like Joseph counseling the pharoah to just throw wild corn parties the first seven years, and hold tight to whatever was left during the second seven. Cynical?

The Republican party instituted the "Bush Tax Cuts" when we had low Clinton deficits and low unemployment. This extra cash helped to feed what would turn into a housing bubble (which low Greenspan interest rates also helped to inspire).

But if you believe we need government investments in our infrastructure (remember the falling bridge or the levies that failed), if you care about clean water that predictably flows from our pipes, and parks and libraries and innovation, then why not stock pile cash and projects during the booms and wait for the inevitable bust to take advantage of available labor?

Call me the anti-Republican (not necessarily a Democrat).

Thursday, July 29, 2010

Good Kindergartend Teachers are worth $320,000/year

Wow, just wow.

When I read stuff like this, I want to know what makes a good kindergarten teacher a good kindergarten teacher. Our oldest is already passed that stage and you're hoping she's well on her way, I'm sure she is - Sara was teaching her... But at the time I kinda thought, no big deal, its only kindergarten. But our son is going to be starting kindergarten, and now I really want to know.

Any ideas?

Sunday, July 18, 2010

My Speech on Flow for ToastMasters

On June 7 in the 2010 finals series between the Celtics and the Lakers, three point sharp shooter Ray Allen broke a NBA finals record when he hit 8 3 pointers for the game, 7 in the first half. By any measure, during that game Ray Allen was in the zone. This feeling that you can do no wrong, that all you need is a little space to get off your shot and you know its going in. Being a Phoenix Suns fan, the Lakers are my natural enemies so I was rooting for the Celtics this series. And I kept waiting for Ray Allen to have another seminal performance in the series. Although he had some decent games, he was never able to repeat that experience.

Being in the flow is such an exhilarating experience. This moment when you're doing something just beyond your natural abilities and you're able to perform the task with excessive focus and concentration and your natural surroundings seem to fade away. And some performers seem to find that place within themselves almost at will.

To continue the basketball analogy, Michael Jordan is often cited as the greatest basketball player of all time, a player who was almost every game unstoppable. Incidentally, he was also a player who had this ability to get into the zone almost at will.

Why do some people have this ability to get into this state much easier and with greater frequency than others? Looking at this from another perspective, there's been a lot of study in psychology about how to help people obtain happiness and fulfillment in their lives. It has been found that people report a much higher rates of fulfillment when they are able to experience this flow state on a regular basis.

In fact a whole branch of psychology known as positive psychology has been created to study this state generally being defined as being in a flow state. It has been found that to get into flow certain properties of the activity have to be present. Also, certain personality characters tend to be present for people who are able to get into flow regularly. Knowing these characteristics may give us a hint on how can have these experiences on a more regular basis.

But first, what is flow:
"It is a single-minded immersion and represents perhaps the ultimate in harnessing the emotions in the service of performing and learning. In flow the emotions are not just contained and channeled, but positive, energized, and aligned with the task at hand. "

The psychologists Csíkszentmihályi identifies the following ten factors as accompanying an experience of flow:[3][4]

1. Clear goals (expectations and rules are discernible and goals are attainable and align appropriately with one's skill set and abilities). Moreover, the challenge level and skill level should both be high.[5]

2. Concentrating, a high degree of concentration on a limited field of attention (a person engaged in the activity will have the opportunity to focus and to delve deeply into it).
3. A loss of the feeling of self-consciousness, the merging of action and awareness.
4. Distorted sense of time, one's subjective experience of time is altered.
5. Direct and immediate feedback (successes and failures in the course of the activity are apparent, so that behavior can be adjusted as needed).
6. Balance between ability level and challenge (the activity is neither too easy nor too difficult).
7. A sense of personal control over the situation or activity.
8. The activity is intrinsically rewarding, so there is an effortlessness of action.
9. A lack of awareness of bodily needs (to the extent that one can reach a point of great hunger or fatigue without realizing it)
People become absorbed in their activity, and focus of awareness is narrowed down to the activity itself, action awareness merging.
10. Not all are needed for flow to be experienced.

These personality traits include curiosity, persistence, low self-centeredness, and a high rate of performing activities for intrinsic reasons only. People with most of these personality traits are said to have an autotelic personality.

There have been times where I've experienced flow. Growing up, basketball was my favorite sport. And when I've played on the playground with friends I remember having some of those experiences - losing track of time, playing at the peak of my ability, and have feelings of deep enjoyment.

However, when I tried out for my school teams - when I had chances to perform before an audience of my peers - when, at least in my mind, the outcome of my performance may affect my social standing. I got anxious and my performance suffered tremoundously.

This experience highlights some of the barriers of flow - when you're doing something for an external benefit - to meet someone elses expectation. or what you're trying to do is too difficult for your abilities causing anxiety. When you're distracted - maybe you're thinking of whose watching you. Or you're worried about how you might be graded or judged. Or you really don't enjoy what you're doing. Or you have something on your mind in another part of your life that hasn't been dealt with.

I've recently have been exposed to this research on flow and I've wanted to see how I could apply some of the lessons I've learned in many aspects in my life. At PayPal, I've found that things liek long buidl times, excessive interruptions, too much blending of my personal life and work - are all impediments to flow. In computer programming, being in hackmode is also synomous with flow. Being in a job that's challenging and interesting, being able to turn off distractions. Making sure there's enough time allocated at home to deal with home family life so that you have enough space at work to do work. These are some of the challenges and ideas I've come up with to make my job at PayPal more fulfilling intrinsically.

Why do I want to feel flow in my job and in my life?

Because "To be caught in the ennui of depression or the agitation of anxiety is to be barred from flow. The hallmark of flow is a feeling of spontaneous joy, even rapture, while performing a task."

And those are feelings I want in my life as much as possible.

Saturday, July 17, 2010

Liberty and Tyranny

There's been a lot of fear and loathing from the tea party crowd about the growing Obama-lead tyrannical government whose sole objective is to rob our freedoms based on sinister, power-hungry motivations. The problem is these elements of the Republican party refuse to believe that the world has changed from Reagan's 1980's. They don't realize that largely George Orwell's 1984 was wrong - there is no big brother. In fact the opposite has been true, technology and globalization has actually reduced the power of government and other large institutions.

Our biggest threats to our freedom is not too much governmental power. Our biggest threat is that our government is on the verge of losing its grip. Some of its most egregious forms of overreach consistently include futile attempts to reclaim control over areas where it really has none. Whether it be North Korea's attempt to stay afloat as its people starve or Iran's crackdown after an obvious fraudulent election. Or our own attempt to "control" our border in the face of an increasing violent civil war in Mexico.

I hope its obvious that sources of tyranny does not only come from above. There are plenty examples of bondage coming at us from below - tyranny can be a grass roots phenomenon.

Obvious examples of this is the food industry, marketing addictive food loaded with high sugar, fat and salt. Video games or facebook (yes, I'm guilty) can take over our lives. And the illicit but still legal (albeit regulated) pornography, gambling, tobacco or alcohol industries cab be addictive and destructive. Not mention the massive drug cartel industries and all of the havoc it is causing. A million little ways to bind us down to bad habits restricting our liberty. Addiction is a brilliant marketing strategy. These industries are really difficult to regulate or control because the products are so appealing to so many people and this demand brings plenty of supply with very high profits.

Well, what about China, an emerging economic force still clinging to communism. But our biggest security threats are not coming from China - a country that has shifted toward a more open, free market political and economic environment. Instead our threats come from terrorists living in caves, in pathetically poor countries with weak (or nonexistent) governments plotting very low tech attacks against the US behemoth. Or shadowy drug cartels in Mexico and Latin America whose profits from the drugs are marked in the billions and who continue to persist despite escalations from both the Mexican and the US government.

Being a Mormon, I find the Book of Mormon's warnings are particularly relevant in this climate. The Book of Mormon details the downfall of two civilizations not through some cold war style big government controlling its people, but by the weakening of government over time because of the wickedness of its people collectively. The most serious dangers were criminal ones - secrete mafia societies - Gadiantons, etc. who prospered and gained power compromising the strength of the government ruling those societies. What destroyed those civilizations wasn't oppressive government from above. It was chaos and civil war. People lost their trust in one another. Industry collapsed and their governments did too.

In my view, there are real dangers on both sides of the extremes. Government that is too strong allocates its resources too inefficiently. It can divert resources to the politically connected, people lose incentives to work or to get educated. Society suffers. Government that is too weak is also dangerous. It fails to provide basic infrastructure - transportation, schools, health care, emergency utilities and security. These basic institutions fail to provide a climate of security that an economy vitally needs to grow. Individuals and communities lose their ability to trust in complete strangers and begin to divide up into tribes of trust.

Let me repeat that last point because it means something to me - people lose their ability to trust in complete strangers. I work at PayPal owned by eBay whose business model completely rests on the idea that complete strangers are trustworthy. Of course eBay builds into its model some enhancers to that trust - but its core business ethic from the beginning is that "People are basically good". But I think without a strong and effective government, I'm not so sure eBay is possible. Or PayPal.

And more prescient to me individually, access to good education and health care is vital for personal and collective liberty. The more education a person has, the more freedom they acquire. Government cannot force a person to educate themselves, but they can build up a community where more people are more likely to do just that. Access to health care is also vitally important to liberty. Having a daughter with diabetes brings this home to me. She can live a completely normal (although more inconvenient) life because of advances in medicine - and the fact that insulin is partially subsidized to make it affordable. That's freedom.

The ability to trust in institutions for clean water, food and clean air is vital for personal and collective liberty.

We can get hung up with questions on whether government is in the best position to provide everything that enhances liberty and regulate those areas that don't. But at the very least, I want politicians who understand this concept. That tyranny is not just a problem of too much government, its a problem with too little. I want politicians who understand that government's primary role is to ensure and enhance individual liberty and that sins of omission destroy liberty every bit s much as sins of commision.

Its easy to take the extreme view that government should be as small as possible. Cut taxes and spending and enhance freedom. This is wrong and simplistic.

Getting government right is hard. There are no easy solutions. We need a well informed electorate who are willing to discuss the big ideas. We need politicians who are truly accountable. We should be quick to distrust dogma or pure ideology.

I want politicians who take the long view.

Saturday, July 10, 2010

Harry Mitchell for Congress

I just returned from a luncheon with Harry Mitchell hosted in someone's home in Tempe. I've never personally met our congressman until today, but I came away pretty impressed. As most of you who know me realize, I'm pretty uncomfortable usually in these sorts of gatherings - with strangers (I did have two friends who were there, the friend who invited me and her husband). But I've been trying to push out of my comfort zones lately, and I'm very passionate about politics.

Also, I had a couple of objectives. Mainly, I wanted to thank Harry Mitchell personally for his vote for our health care bill. He waited until very late in the process before announcing how he would vote. I sent him an e-mail before he did so, urging him to vote for the bill, and he came through, he voted for it. And he took a political risk doing so since he represents a district with more registered Republicans than Democrats.

He also spent some time speaking to the group and taking questions, and there were a lot of them. I had some questions of my own, but there were just sooo many hands up, I just listened.

Here are my take-aways:

1) I know this is probably a prerequisite for any successful politician, but I was extremely impressed that he remembered my name (this is something I'm horrible at) and he did so after a very brief and, from my part, awkward introduction. I briefly introduced myself as he was passing by. Then, a short time later, I was standing near the food spread, and he said, "excuse me Scott, I would like another piece of this ...". Later, when I thanked him for his vote, I told him that I had a personal interest in this issue. I mentioned that my daughter is diabetic and that our current system doesn't deal with people with chronic disease very well. I felt this bill was a big improvement and a good step in the right direction (ok, I wasn't nearly this eloquent). Later, in his speech to the general audience, he referenced me, again by name, when explaining his position on health care. I was impressed with that.

2) He comes across as very humble. He's almost 70, but seems and acts a lot younger. He's been married over forty years. Grew up in Tempe, AZ, was a school teacher at Tempe High. Was the mayor for 8 years. And now, he's finishing up his career as a Congressman. He has no agenda (it seems) other than serving Tempe.

3) He wants desperately to rise above partisanship. He wrote an op ed against Obama's lawsuit on Arizona (I'm torn on this). He has a moderate view on both health care and immigration - he wants to enforce our borders but he also wants comprehensive reform. He supports preserving Bush's tax cuts on estates and on capital gains (I disagree with him most strongly on the estate tax cuts, but I also disagree with him on the capital gains tax cuts). But he has a strong record of being a moderate, working across party lines, and really seems disgusted with the polarization going on in Congress right now.

I don't know much about the Republicans competing in the primaries yet, but I hope to soon. But he definitely deserves another term in Congress.