Tuesday, December 28, 2010

Are Men the New Ball and Chain?

A lot of women talk on TED right now.

This one Hanna Rosin goes on about how the global economy is shifting the power balance between men and women. Men are getting hit harder by the current recession; they are graduating at lower rates than men; women are taking more managerial positions; young women are now earning more than young men.

This TED talk, in some ways, blames old-school men-style thinking in the financial sector for the global financial meltdown. Well, not exactly, but they did start a financial company using feminine qualities that survived through the Icelandic financial crisis.

So, what do I, a man, make of all this? Well, I can't make broad generalities, but I can compare myself with, say, my wife. I definitely have qualities she doesn't have; there are definitely some things I can do that she can't or at least not as well. Definitely, the same thing can be said in reverse (and I'm hesitant to say, but I'm sure its true - that overall she brings more to the table than I do).

But are women going to be entering the work force while men stay home? Is that our future?

I like what I do on my job, and in some small ways, I think what I'm doing is important and I want to do more important work more often.

But, as I watch how hard my wife works with our kids and when I see the work she does in the community, I have to say, that the work she does is far more important for more people than the work I'm doing. The difference is that I get paid for it and she mostly doesn't.

And I would have to say, that the most important work (more or less) people don't pay (or get paid) for it or they pay far less for what they're getting than what its worth.

So if women are being lured into the workforce in greater percentages and if what they bring matter more in our current economy than what men bring. What will men be left doing? This isn't me asking by the way, Hanna Rosin herself asks it:

"I went to a men's group in Kansas and these were the same kinds of victims of the manufacturing economy that I spoke to you about earlier. They were men who had been contractors or they were building houses and had lost their jobs at the end of the housing boom. And they were in this group because they were failing to pay their child support. And the instructor was up there in this class explaining to them all the ways they had lost their identity in this new age. He was telling them they no longer had any moral authority, no one needed them for emotional support anymore, and they were not really the providers. So who were they? And this was really disheartening for them. And what he did was he wrote on the board $85,000. That's her salary. Then he wrote down $12,000 and that's your salary. Who's the man now? She's the damn man. That sent a shutter through the room."

Is this our future? Women taking over the work force and then hiring other women to take care of their children? While men, well? Sit in prison? Go off and fight wars?

Not sure what to think of any of this, but I think its something worth discussing.

Monday, December 27, 2010

Christmas: A Post Mortem

I really should have posted (read and absorbed) this article before Christmas, really before Christmas shopping, but its fun to consider it after the holidays as well. Its all about the economics of Christmas, a holiday that has widely been assumed to be a boon to our economy. Well, hate to break it to you, it turns out that its not.

"It suggests that in America, where givers spend $40 billion on Christmas gifts, $4 billion is being lost annually in the process of gift-giving. Add in birthdays, weddings and non-Christian occasions, and the figure would balloon."

The reason is simple. The amount of money the buyer spends on a gift is often greater than the amount that gift is worth to the receiver. This is especially true when there's a big age disparity between the receiver and the giver, and/or when they are not closely connected. This disparity in worth makes both the giver and the receiver poorer.

I'm sure you can relate, I know I can. I have received gifts that I did not really want, or didn't really want that badly. Of course and probably more often, I've given gifts that weren't really enjoyed by the recipient. And in these cases, we are all poorer. The giver spent money on something reducing her wealth. The receiver received something she didn't want. Lose/lose.

There are cases when this works out and the article lists some of them.

If the giver knows a lot more about something than the receiver and the receiver has an interest in it. My sister bought me a subscription to the New Yorker some years back and basically changed (after reading issue after incredibly written issue) my politics. My wife just renewed that subscription this year, saying "I'm so glad we have the New Yorker again in our house" - proving that this gift was just as much for her as it was for me. My sister already enjoyed this magazine, knew I would probably enjoy it as well, but knew I probably wouldn't take the step to purchase it - I was richer as a result.

The giver of the gift basically gives the recipient permission to consume something they probably would not have allowed themselves to consume otherwise, but still they desire it. Say, chocolate? Or some other indulgence - I gave my wife a massage one year which she thoroughly enjoyed but would never buy for herself.

Gifts that have incredibly high sentimental value qualify. My sister-in-law Suzie compiled the weekly e-mails my wife sends out to family and friends complete with pictures and a summary of the week (The Turley Family Newsletter) and published them in a book. It was incredibly generous - this kind of thing is not cheap - but it's a priceless to us. Yes, we came out of the holidays very rich.

Gift cards and/or money should be given if you truly cannot meet the qualifications above. I think overall, we did a pretty good job making our kids happy, and we actually received a lot of happiness from the gifts we received. We did get gift cards and our kids got money from the right relatives. Otherwise, the gifts qualified as thoughtful and appreciated.

So, maybe collectively, we can all do our part to reduce the over $4 billion loss to our economy each year by making Christmas economically more efficient.

By the way, Amazon is innovating around this economic principle, but is taking some heat for it. We'll see how that plays out.

Friday, December 24, 2010

I Love Christmas

No matter how stressful the holidays can be, I love Christmas. I love gifts - the giving and the receiving. I love the myths and the magic around the holidays - Santa Claus and the elves and how excited all this makes our kids. I love the movies and the songs and the candy and the food. And of course, I love the religious parts of the Christmas celebration, the holiness of that sacred night when a Savior was born.

It's easy to get all huffy about the commercialization of the holidays - I remember my parents giving me this lecture actually.

But being a parent, I love living vicariously through my kids I must say. I remember how fun it was on Christmas eve singing carols with my family and then I would go to bed early because I wanted Christmas morning to arrive as quickly as possible and how hard it was to go to sleep. I love the thought that my kids will be in the same situation I once was. My parents struggled with the holidays, but my older sisters often stepped in, and I really appreciate this gift from them.

I think its easy to get huffy about the holidays (watch the above video for a lot of extra huffiness) and I can relate to it - I got a little bit huffy about Disneyland a while back. But you know what turned me on to Disneyland, other than the general downright fun of it of course? It was while I was on the wildly fun "Souring Over California" ride and at the end, there's that famous Disneyland fairy that fly's over Disneyland while the fire works go off. In that one second, the whole thing clicked for me. The magic and the fun of Disneyland - all of the movies of Disney and the rides and the fun. I bought it into it.

I guess, more generally, I love commerce, yes I love the commercialization of Christmas and all of the holidays for that matter. At the heart of it, this is nothing more than what each of us collectively pours our heart and soul in to produce. Receiving a gift with joy is just celebrating the art produced by another person. Sure, a lot of this depends on what we bring to the holiday. And there's more than enough rope to hang yourself in our society. But when properly consumed, Christmas can be an incredibly uplifting holiday. Of course, it doesn't matter how much or how little money a person has, but its a holiday where we can enjoy a little excess no matter how small that excess may be. Or hopefully, if someone's a little short and literally has no excess, someone else will reach out and share what they have with another.

After all, we are all in this together. Let's celebrate and share with one another. But giving a gift requires a receiver - and both those who give a gift and those who receive it can find joy in these holidays and in these very exchanges this holiday promotes.

Seth Godin talks about gifts here.

"When done properly, gifts work like nothing else. A gift gladly accepted changes everything. The imbalance creates motion, motion that pushes us to a new equilibrium, motion that creates connection.

The key is that the gift must be freely and gladly accepted. Sending someone a gift over the transom isn't a gift, it's marketing. Gifts have to be truly given, not given in anticipation of a repayment. True gifts are part of being in a community (willingly paying taxes for a school you will never again send your grown kids to) and part of being an artist (because the giving motivates you to do ever better work).

Plus, giving a gift feels good."

Merry Christmas everyone.

Monday, December 20, 2010

Bradley Manning's solitary confinement

For those of you who don't know, Bradley Manning is the private accused of releasing secrete information to Julian Assange that was recently leaked to the press via wikileaks.

I posted the following links on facebook recently:

Glenn Greenwald's critique of the way the US Marine corp is treating Bradley Manning.

I'm not a big fan of Glenn Greenwald, he's not on my blog roll. He's been a pretty big critic of the Obama administration and the way he's continued Bush's war on terror. Its hard to disagree with Greenwald on most of his charges actually, but I'm just not a regular reader.

But here are two people who are on my blogroll who agree with Greenwald on this issue:

Megan McArdle.

"The way our society treats prisoners is shocking, and to me, frankly un-American. Extended solitary confinement, prison rape--we tolerate things that we would never allow if we thought there was any chance that they might happen to us. But since prisoners come from a different social class, and are often members of a racial minority, we ignore it. In fact, we joke about it. America wouldn't treat stray dogs the way it treats the millions of human beings it has incarcerated. This is not just a problem for them, though it is, horrifically so. It turns us into torturers and rapists, because we are the ones who pay for the system, and implicitly endorse its terrorizing prisoners."

Matthew Yglesias:

"But Manning hasn’t had a trial and hasn’t been convicted. Somewhat punitive post-arrest pre-trial measures are kind of a necessary evil, but the prolonged confinement of Manning under cruel conditions go well beyond the necessary into the straightforward evil."

I am a big fan of Atul Gawande who wrote this about solitary confinement which is an article practically impossible to pull out a single quote from. You must read the entire thing to appreciate the horrors of solitary confinement, but he clearly makes the case that solitary confinement is torture.

Posting these links on facebook led to a pretty lengthy discussion that I won't repeat here, but I think the main defense of Manning's treatment is that Manning is a really, really bad person and basically deserves what he gets. That the information he leaked has caused countless lives and real suffering in the world. Leaking this information is not a far cry from actually directly enabling suicide bombers, assisting in the sex trafficking trade, and directly killing American soldiers who are working in secret in the most dangerous places on earth because what he leaked seriously damaged the US military's ability to take down these secret networks and put American soldiers lives at risk. I won't dispute in a direct way any of this although it hardly answers the question why is solitary confinement necessary.

But, it leads me to a larger thought. Is what we're doing the best way to limit or end sex trafficking? Suicide bombers? Terrorists?

There's no doubt in my mind the US military has a key role to play in challenging the modern threats that exist in the world today. There's also no doubt that the US military and other military's around the world need to protect the information they have to keep their soldiers safe and to protect us more effectively.

But there are real limitations to what the military can accomplish in this regard. We are no longer facing a Cold War scenario where our most serious dangers consist of opposing world powers and the key to winning is based on how much more intelligence we have compared with to our enemies.

The world is much more messy now than it used to be. Information is now much more difficult to protect and its also becoming less relevant.

Terrorism, the sex and drug trades, suicide bombers. These are all symptoms of poverty and chaos. These are regions of the world where governments barely exist, where the economy barely functions, and people are marginalized because they lack opportunity, education, and access to functioning commerce. The power in these environments lie in secrete underground organizations - drug cartels, mafia organizations, and terrorists.

I'm not sure how or if it's even possible to eliminate these threats, but it seems in order to minimize them, we need more transparency, more trust in our institutions from those most effected by these horrors.

We also need to enable trade, build schools, and open borders. Allow people access to education wherever they can get it. And then do our best to build schools closer to where they live. If not in Afghanistan then in Pakistan or in Jordan or in Iraq.

The key in my mind is not more bombs and guns, it is more schools, more commerce, more free trade (not perfectly so), more open borders (not completely open). Allowing more people opportunity and in my mind giving them a greater chance to limit what ails the world than bombs and guns could do.

It seems to me that we need to build the trust and strong relationships with those who live in these regions. Keeping secrets may, in the end, hinder our ability to do this.

Saturday, December 18, 2010

Why Americans Don't Go Into Engineering

Ok, maybe they are, but anecdotally, they sure don't seem to be getting programming or IT jobs. I work at a pretty big dot com company, I got my masters degree in Computer Science at ASU and in both instances I was demographically very much in the minority. In my current position, I work primarily with people who have immigrated either from India or China and our company has a big development center in India many with whom I work pretty closely.

Well, not long ago I came across this article about the banking system in America.

Here, the article talks about the growth of America's financial system from 1/7th of the economy to about 1/3.

Since 1980, according to the Bureau of Labor Statistics, the number of people employed in finance, broadly defined, has shot up from roughly five million to more than seven and a half million. During the same period, the profitability of the financial sector has increased greatly relative to other industries. Think of all the profits produced by businesses operating in the U.S. as a cake. Twenty-five years ago, the slice taken by financial firms was about a seventh of the whole. Last year, it was more than a quarter. (In 2006, at the peak of the boom, it was about a third.) In other words, during a period in which American companies have created iPhones, Home Depot, and Lipitor, the best place to work has been in an industry that doesn’t design, build, or sell a single tangible thing.

In this paragraph, it talks about the wages, where financiers used to be paid on average the same as those with the same qualifications in other industries. Their wages have grown tremendously since.

From the end of the Second World War until 1980 or thereabouts, people working in finance earned about the same, on average and taking account of their qualifications, as people in other industries. By 2006, wages in the financial sector were about sixty per cent higher than wages elsewhere. And in the richest segment of the financial industry—on Wall Street, that is—compensation has gone up even more dramatically. Last year, while many people were facing pay freezes or worse, the average pay of employees at Goldman Sachs, Morgan Stanley, and JPMorgan Chase’s investment bank jumped twenty-seven per cent, to more than three hundred and forty thousand dollars. This figure includes modestly paid workers at reception desks and in mail rooms, and it thus understates what senior bankers earn. At Goldman, it has been reported, nearly a thousand employees received bonuses of at least a million dollars in 2009.

This paragraph talks about why many of our brightest are getting into finance over other fields such as say engineering:

Not surprisingly, Wall Street has become the preferred destination for the bright young people who used to want to start up their own companies, work for NASA, or join the Peace Corps. At Harvard this spring, about a third of the seniors with secure jobs were heading to work in finance. Ben Friedman, a professor of economics at Harvard, recently wrote an article lamenting 'the direction of such a large fraction of our most-skilled, best-educated, and most highly motivated young citizens to the financial sector.'

I don't think this is a full explanation. But when I talk to my Indian friends, there's this pipeline of young talent in India who attend college to pursue IT or CS degrees and the field is booming in select regions of India not to mention the many who come here to work for US companies - jobs Americans seem ever increasingly less interested in filling.

Again, I don't have a good explanation, but here's what I know from my own experience:

In the late 1990's the dot com, telecommunications industry, and computer industry simultaneously boomed and as a result everyone was getting into programming. As the decade drew to a close, there was a push to outsource manufacturing and eventually programming jobs overseas where the work force made significantly less money for the same work.

At the time, I was working in the defense sector and I knew many of my colleagues were in defense because it was an industry that could not get outsourced.

And it was true a lot of companies felt they could get something for cheap by just shipping jobs overseas. But I think now, companies are forced to go to India and China and other countries because there are simply not enough qualified workers here to fill the number of workers required to meet the labor needs.

It is true that Indian and Chinese workers in India and China have lower wages, but that won't be true indefinitely. As those countries develop, labor costs will rise.

And the software industry is not a race to the bottom industry. Just because a worker is paid a low wage doesn't mean he is cheap. It they don't produce that is a problem with far more consequences on the bottom line than if you paid for the brightest talent in the first place. So companies need to go where talent exists and then pay for that talent.

There's so much potential in engineering and science. So much we could develop and haven't. This is far from a zero sum game.

So, I'm not sure why Americans aren't interested in engineering? Is it because we don't enjoy math? Or that we get paid a lot more money moving money around the economy than we would building things? Or is it fear that we can't compete with the Chinese.

I'm not sure, but I'm afraid it's a problem.

Saturday, December 11, 2010

If You're Going to Vote Republican, You Better Act Like A Democrat

I just wanted to follow up on my last post, by inverting the phrasing a bit to show this this can go both ways. Since I vote Democratic, this post is directed toward those of you who vote another way. Because if you really want to cut government services to the poor and cut taxes for the rich, then you better help out the poor because the government sure isn't going to do it.

Ideally, the well off would find ways to associate with those who lack means. Sell your house buried within the confines of a well-off gated community and purchase something in a more integrated community. Sell your mansion and buy something more modest. Stop using your wealth to separate yourselves from other, but instead use it as a resource to uplift and build your community.

One tenant of the conservative movement as I understand it is that those who make the money are more inclined to use it in more useful ways then the government. Maybe so, but then prove it. Invest in the community, find ways to make sure education and health care access is ubiquitously available.

If we had the rich voluntarily pursuing greater equality in society, than government would have much less to do.

Monday, December 6, 2010

Vote Democratic, but act Like a Republican

I don't mean much by this title, so let's get this straight first. There are plenty of fine liberals and conservatives. I'm just having a little fun. I am actually playing off the phrase, "pray like everything depends on the Lord, then act like everything depends on you". I had a discussion the other day with a friend about the Obama health care bill - its an issue I care deeply about and I've followed fairly closely, so I have pretty strong opinions on it. But then he found out we were planning on home birthing our fourth baby (due in January).

He also knew that I have come down recently in favor of properly funding public schools even though we home school.

This was incongruous to him, and he wanted to use it as a reason to stop the debate on these points a lone. You see to him, I was voting Democratic but I was behaving like a Republican. I wanted big government (his words) but I was rejecting government in every meaningful way in my own life. I want government, but for others not for myself. In his words, he lost interest in this whole debate because he could no longer take my arguments seriously.

Of course, I see things a bit differently. I want just enough government, but I also want to do everything in my power to succeed. Even if we weren't home schooling, I would hope that my wife and I would be engaged as much as we possibly were able in our children's schooling. I would hope that our kid's teachers would welcome our involvement and our advocacy on their behalf. I would try to find teachers that would allow for that.

Same thing for health care, actually. Do I just want to turn my health over to some nameless doctor at some massive hospital institution? In my experience that's exactly what they want you to do. But in each of our births, we took control - self diagnosing my wife's choestasis in her first pregnancy convincing them to do the necessary blood work to prove she had it, which ultimately led to an early induction and possibly saved our oldest daughter's life?

I have discussed the economy on this blog and how I've wanted our government to handle the mess we're in, but our economy continues to be stuck in the mud (they just don't listen to me darn it).

But unemployment can be an opportunity or it can be devastating. When a person loses their job, its definitely devastating, but it might be the impetus one needs to launch into a new career, take a risk and start a business, retool one's network, get training they've been putting off. In fact, if every single person who lost their job, got out there and not only worked their tail off to find another, they continued to work whether it be pro bono, they continued to learn, they continued to serve, our recessions wouldn't be nearly so recessionary.

It's why I love Seth Godin's blog so much. Especially when he says stuff like this:

"We are surprised when someone self-directed arrives on the scene. Someone who figures out a way to work from home and then turns that into a two-year journey, laptop in hand, as they explore the world while doing their job. We are shocked that someone uses evenings and weekends to get a second education or start a useful new side business. And we're envious when we encounter someone who has managed to bootstrap themselves into happiness, as if that's rare or even uncalled for."

Or when we make excuses saying we can't really afford graduate school then I come across cheap and in many ways more appealing alternatives to graduate school.

So, I'm trying to stay focused on two tracks in my life. I want to do my part to encourage and promote good legislation because in many ways I know how much I depend on good governance. But I also want to work like mad in my career, in my church, and in my family to help myself and others support and sustain my government, my country, my community.

In the end, our country needs each one of us pulling the most out of ourselves to succeed.

A Republican Conservative is at heart a "supply sider". We need to make sure we produce as much supply as we possibly can, each one of us. So, that our lives and the lives of others around us are enriched.

Friday, December 3, 2010

What Could Have Obama Done Differently?

To be honest, I've been pretty supportive of Obama's first two years. On almost every issue, I've seen the merits of what he's done, and although I've almost always wished he would have done more, I've understood why in the political environment he was in, he didn't.

Admittedly having 60 seats in the Senate (well for like six months he had 60 seats, he didn't get to 60 until July 7, 2009 when Al Franken finally won his disputed Minnesota seat, and then he lost it again when Scott Brown won the Massachusetts seat on January 9th, 2010) and a Democratic controlled Congress gave him a pretty cushy political environment. Except that a substantial number of Democratic Senators and Representatives represented conservative states and districts and would only support moderate bills. Also, the Republican party decided pretty early on that it was in their best political interest to oppose Obama on everything, and not only oppose, but make him seem like the most liberal, socialist, anti-American person that ever lived.

The Republican party is the master of sound bites and they have a pretty effective media machine between AM talk radio and FOX news that can reiterate those sound bites virtually on command. Those soundbites are riveting and convincing - freedom, liberty, personal responsibility, so even in the minority they have a powerful voice and significant influence.

Obama did have the power to accomplish a lot, but there were real limitations to how big that "a lot" could realistically become.

Looking back on what he did accomplish, he was successful, but could he have done better? I don't think he could have passed more legislation through. He basically used every last bit of political firepower he had to do what he did. Passing immigration reform or an energy bill or something else wasn't happening. Getting a more expansive health reform bill wasn't happening, he was lucky to get what he got, and even still he was did it with the skin of his teeth.

But maybe his priorities weren't right. Maybe he should have went after a different combination of achievements that would have left our country in a better place two years later.

Enter this rather blistering analysis by the economist Brad DeLong.

DeLong is focused in this article on the state of our economy and here he agonizes over the senseless and avoidable almost 10% unemployment that we seem to be stuck in for almost two years now (and counting).

Most people don't realize how irrational this recession was to begin with:

"For one thing, the initial financial shock that set the downturn in motion was remarkably small. We got irrationally exuberant about the demand for housing and the trajectory of housing prices. We built five million houses extra - largely in the swamps of Florida and in the desert between Los Angeles and Albuquerque - that simply should not have been built. Their cost of construction was to a first approximation covered entirely by mortgage debt. And on average one of those five million houses the purchaser took out $100,000 in mortgage debt that simply will never be repaid: the buyer cannot afford it and the house is not worth it. That means that, as of the end of 2007, there were $500 billion of financial losses to be allocated: somebody's bonds and derivatives were going to pay off $500 billion less than people thought."

In one paragraph, DeLong makes a pretty convincing estimate of the real world value loss incurred by the housing bubble - $500 billion. That's a real, tangible financial loss that had to be absorbed by the world economy in some way. And that sounds like a big number, but...

"Now in a global economy with $80 trillion worth of financial wealth, a $500 billion loss due to irrational exuberance and malinvestment should not be a problem. Double it or quadruple it and it still should not be a problem. We have modern, sophisticated, highly liquid financial markets. We have originate-and-distribute-securitization to slice, dice, and spread risk broadly across the whole globe so that nobody bears any significant part of and so is ruined by any idiosyncratic risk like mortgage defaults..."

The real problem was not the housing bubble, the problem was the way our financial institutions behaved during the housing bubble, using it as a foundation to make profits on even greater leverage:

"Regulatory forebearance allowed investment banks to ramp up their leverage to unheard-of-levels--30 to 1?--on the grounds that the financiers' had their fortunes at risk and knew their business."...

"So when the $500 billion loss hit, it hit the capital of highly-leveraged financial institutions and transformed all the liabilities of America's banks from safe, secure, and liquid high-quality assets to unsafe, insecure, and illiquid low-quality assets."

"Thus an enormous worldwide flight to quality. A $500 billion fundamental loss triggers a $20 trillion decline in global financial asset values with a financial accelerator of 40 as everybody tried to dump their risky and build up the safe assets in their portfolios. And, as John Stuart Mill knew back in 1829, whenever you have a large excess demand in finance it will be mirrored by a large deficiency in demand for currently-produced goods and services and labor".

In real-world terms, people running scared turned something reasonably small into something really, really big. The reason, of course, is that people took massive bets trying to turn their housing profits into something much bigger. And our financial institutions just were not equipped to deal with it.

DeLong spends some time talking about what Paulson and Bush, regulators and financiers could have done to prevent the recession from ever occurring. If financiers would have managed the burst properly, they could have spread out the risk and contained the damage. They did not - I'm not sure why, and DeLong does not spend much time explaining.

Housing finance (Fannie and Freddie) could have been nationalized much earlier and then the government through Fannie and Freddie could have bought up bad mortgages and contained the mess before massive unemployment hit. This would have also contained the cost of the mess. As its gone longer and deeper, people lose their jobs, they also lost the ability to pay for homes they normally would have wanted to stay in. Keeping people working would have softened the blow and contained the cost.

They could have nationalized as many banks as necessary much earlier, which would have kept banking, borrowing, lending and investing moving, while preventing any major financial runs or panics (which did occur after Lehman collapsed).

DeLong points plenty of fingers at Obama. Obama did do a lot of what Delong suggests, but in each and every case, it was never big or forceful enough to make enough of a difference. The stimulus needed to be much bigger. The Fed basically stopped doing much after the initial disaster was averted (other than keeping interest rates to basically zero). They could have advertised defined inflation and price targets and aggressively pursued them. Many more targeted bank nationalizations could have been performed.

In all of these suggestions, you find that the principle outlined in "Bagehot's Rule":

"All seven of these tools are applications of Walter Bagehot's rule: the principal that the way to deal with a panic in which nobody is sure if contracts will be honored is for the government to make sure that contracts are honored by lending freely to anybody who asks. (But, Bagehot wrote, the lending should be 'at a penalty rate' -- financiers should never profit from the fact of government assistance to stem the panic. That is the second part of Bagehot's rule)."

But why was Obama so timid?

Basically to sum up both Bush's and Obama's response to the worst economic crisis since the Great Depression: They did just enough to avoid a Depression, but not nearly enough to either prevent the severe recession nor spur a vigorous recovery.

What Obama did do was he pivoted. He spent a lot of time, energy and political capital getting health care reform passed. Additionally, he spent the next year getting a significant financial reform bill passed. Health care in particular consumed his time and attention and left him little room to deal with the economy in any significant way.

Now, I support Obama's health care plan. It was no where near adequate. I'm doubtful it does enough to control cost - my primary concern, and more work is required.

But where does that leave us now. We have an economy with 10% unemployment. In 2014 (when Obamacare will finally be working in full), we'll have a health care system in place that should provide a better framework especially in a climate of high unemployment - its not so nearly dependent on employment provided health care.

But we are at serious risk of being stuck in a situation where high unemployment becomes the norm, and the next two years, we have a political climate that will probably make things worse. Cutting government spending does not make up for this massive demand shock (we have plenty of supply), and therefore if we do too much to try to balance our budget, we risk a double dip recession.

Furthermore, the massive losses in tax revenue due to this recession puts a huge strain on our ability to pay for our health care costs (which generally continue no matter how the economy behaves - sick people still need care). This reality gives more ammunition to those who would kill or severely roll back what Obama accomplished with his health care bill.

After reading through DeLong's critique and for these reasons I've outlined, I'm inclined to agree, maybe Obama should have done things differently.

Maybe he should have spent his entire first two years on nothing but foreign policy and the economy. He could have spent every last ounce of his political capital on getting the unemployment rate down. He could have put more pressure early on to get even the Republicans in Congress on board. He could have made recess appointments to get the Federal Reserve fully staffed - bypassing Senate confirmation procedures. Then with a fully staffed Fed, they could have been empowered (and pressured) to pull more levers to boost demand much more aggressively. He could pushed to nationalize more banks and then use that leverage to to institute stronger financial regulations to prevent future crisis of this magnitude.

Perhaps Greece and Ireland and Europe as a whole would have been in better shape.

All of this would have had real political cost. He would have been described as a dictator and a socialist at every turn. But unemployment would have been much lower. Republicans would still have won seats in Congress but not nearly as many.

More importantly, many more people right now would be working. I know personally qualified people who are unemployed right now and in very real ways are suffering.

I think Obama saw a unique opportunity to get health reform passed and he took it, but he sacrificed the economy in the process. Had he focused on the economy and sacrificed health care, would that have been a better calculation? Probably. But then health care reform would have been a goal for his second term - and far from a certainty.

Time will tell if this trade-off was worthwhile.