James Fallows

James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.

James Fallows: Economics

  • Smaller-Town Startups: 'Stopping the Brain Drain' in South Carolina

    'People say, this is my ticket Out.' Then, they want to stay.

    "Code academy" room for The Iron Yard, inside the Next tech-accelerator building Greenville SC.

    Yesterday PCH International -- the company from Shenzhen, in southern China, that is run by my friend Liam Casey and whose exploits the Atlantic has chronicled from 2007 to 2012 -- announced yet another acquisition. It's of the e-commerce site ShopLocket, and the logic of the deal was an extension of what I've heard from Casey all along. The main function of his company (and others) has been to shorten the distance -- in time, money, effort -- between the idea for a new product, and the reality of that product in a customer's hands.

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    You can read all about it in the announcement, but here's the connection to our American Futures journey. ShopLocket is a service for the "maker revolution" -- the small startups, all around the U.S. and elsewhere, that are producing new things, and that are using the advantages of today's distributed commerce to help small, new companies do what only big companies could do before. That is, they can more quickly and easily: get startup capital; refine prototypes for their products; find suppliers and subcontractors; line up distributors and test markets; respond to shifts in demand; and all the rest. This is what Liam Casey was describing to me a little over a year ago, and it's what you can read about on the ShopLocket site here.

    Which brings us back to the Greenville-Greer-Spartanburg area of "upstate" South Carolina. A big question we have been asking is why high-value companies end up where they do, and how and where new companies get their start. In Burlington, Vermont, this involved asking what Dealer.com was doing there. In Redlands, California, why the big geographic-software company Esri (our partner in the project) had started and --  more interesting -- stayed in a place far from existing software centers.

    In Greenville, we spent a very interesting afternoon at the locally well-known firm The Iron Yard, which was housed in a new tech-incubator building that said "NEXT" out front.

    Next Innovation Center at night, photo by Brad Feld.

    As my wife mentioned before, and as we're sure to mention many times again, just about everything in the Greenville area reflects the fruits of the "public-private partnerships" that have rebuilt the downtown, attracted international manufacturing firms, created surprising new schools, and in other ways tried to reposition the town as a modern technology/culture/good-life center.

    [Before you ask, I've received a lot of mail about Greenville's troubled past in race relations and other barometers of inclusiveness. Greenville County, for instance, was the very last one in South Carolina to observe Martin Luther King's birthday as a holiday.  We talked the past, present, and future of the area's "openness" with lots of people there and will say more about it in upcoming dispatches.]

    The Next project is run by the Greenville Chamber of Commerce, with "public-private" guidance from local officials, businesses, developers, and so on. But it is located separately from the main Chamber of Commerce building and is designed to look and feel like a Boston/SF/Shenzhen-style startup center rather than some normal civic building. When we visited there last week, John Moore, a Chamber executive who runs the Next project, told us that it tried to run lean startup-style too. "We had the advantage of starting with a blank sheet of paper," he said.

    The Iron Yard, discussed below, part of the Next complex.

    "Because there were no existing entities to protect their turf, we were able to leapfrog," Moore said -- much as some developing countries jump entirely past the wired-telephone stage to create nationwide wireless networks. "We went from the idea for the center, to finishing the building and opening it, to having it full, all within three years. If we'd had to start with a university or an existing city facility and tried to change its model, it would have been a lot harder and slower." 

    The purpose of Next is to make it easier for new companies to start in the Greenville area. Moore pointed out that this "upstate" region of South Carolina had become famously effective in recruiting big, established firms to set up operations there: GE, BMW, Michelin, and on down a long list. "We've been so good an attracting other companies that we may not have done enough to develop our own," he said. Thus Next and related enterprises -- which connect startups with angel investors, provide physical space to get started, offer advice from mentors and startup veterans, and generally supply the sort of surrounding entrepreneurial information and advantage that can come automatically from being in startup centers from Boston to SF. 

    Some of the startups with offices in Greenville's Next building.

    Has it made any difference? Can it make any difference, I asked Moore, given the scale and distance handicaps of a smallish place like Greenville?

    "If you'd asked me five years ago, during the toughest times economically, I would have said, I hope so," Moore told us. "We had eight software companies in our program in 2006. They hadn't known each other. Now we have 134 companies, all new, in all kinds of industries, from manufacturing to genomics to game software." He said that he expected 200 local startups to be involved with Next soon. The main building has space only for 20 to 24; the rest are part of a network for advice, financing, and other services. Moore said the companies Next is looking for are ones "that can compete on a global scale but are based here."

    "They're now coming without recruiting. It's become a kind of flywheel. The momentum, the acceleration -- it all shows the potential. But of course I'm from the Chamber of Commerce, so you'd expect me to say that!"

    Indeed, but then he put it in more tangible terms, gesturing to an office across the hall: "A few years ago, people like Eric Dodds would never have stayed here."

    The Iron Yard's Eric Dodds, via Global Accelerator Networks.

    Eric Dodds, whom we met at the Next building, is a co-founder and the chief marketing officer of The Iron Yard, a multi-purpose software startup based in Greenville and with operations in Spartanburg, nearby Asheville, NC, and other southeastern locations. You can read more about its operations here.

    Dodds grew up in Greenville, and always dreamed of getting away. "Boulder, Portland -- that's where My People would be." Then, after going to Clemson and working for national branding companies, he came back and noticed that the place where he started out had changed. The Iron Yard's co-founder and CEO, Peter Barth, grew up in Florida and had worked in New York and the Midwest and was planning to work in Charlotte. He stopped for lunch in Greenville, walked through its famously renovated downtown, and decided this is where he wanted to stay.

    The Iron Yard's CEO, via Vimeo.

    Some other time I'll go into The Iron Yard's whole business model, which is a combination of "code academy," business incubators, kids' classes, and other features. The code academy charges $10,000 for a three-month session, and offers a full refund if graduates can't get an appropriate job. "We can guarantee an entry-level job, but entry level in this field might be $65,000 or $75,000," Barth told us. So far they have not had to give any refunds. (More here and here.)

    The point for today is an effect we heard about time and again. This was a change in this area's ability to attract and retain people like Barth or Dodds -- whom you might normally expect to find in Boulder, Portland, Boston, and who might have expected to find themselves there.

    "Greenville is great once you get here, but it can be hard to get people to come and take a look," Peter Barth said.  Eric Dodds added, "It's been really interesting rubbing shoulders with people in our classes who say: 'I’ve gotten here, I’m going into your program, and this is my ticket Out.' Then after a while they say, 'I’ve seen this culture, I think I’m going to stay around here.' It’s been very interesting in stopping the brain drain."

    More on this theme, the dispersion of opportunity, in coming installments. And before this coming week's State of the Union address, a reminder that the resilient capacity of America is more evident and encouraging city-by-city than it seems in national discussions.

    As a closing bonus, in case you were wondering what the Blue Ridge Parkway looks like from above during the Polar Vortex era, here is your answer.


  • Thursday Late-Night Reader: Eight Ways of Thinking About China

    Can China hope to become ... the next Mexico?

    Updates from Greenville and "the upstate" of South Carolina coming soon. In the meantime, selected China readings:

    Amb. Jorge Guajardo (right), via WSJ.

    1) "Is China the Next Mexico?" Atlantic readers know Jorge Guajardo and his wife Paola Sada as former Guest Bloggers in this space. In China they have been known in recent years as the face of Mexico, since from 2007 through 2013 Jorge was the Mexican ambassador there. (That's him at the right, in a news picture during a tense Mexican-Chinese moment five years ago.) Now they are living in the United States, where Jorge has delivered a puckishly provocative speech.

    Its premise is not the tired one of whether Mexico might become the "next China" but rather the reverse: whether China has the hope of going through the political reforms that have transformed Mexico since the end of one-party rule. Very much worth reading, for its "who should be learning from whom?" approach. I hope they are studying this in Beijing.   

    Disclosures: Jorge and Paola Guajardo are close friends of our family. Also, the venue for the speech was the School of International Relations and Pacific Studies (IR/PS) at the UC San Diego, where I have visited many times and feel part of its diaspora.

    2) "A Field Guide to Hazardous China Cliches," by Benjamin Carlson in Global Post. Anyone writing or talking about China gets used to a certain rodomontade. China has not simply been around for a long time. It has a "5,000-year history," which must be referred to in exactly those terms. (I burst out into admiring laughter when, with my friend Michele Travierso, I walked into Turkey's pavilion at the Shanghai World Expo in 2010. The introductory plaque said something like, "For 6,000 years, civilization on the Anatolian plain..." ) China was not simply buffeted by the decline of the Qing dynasty at just the time of European colonial expansion. It suffered the "century of humiliation," which explains and excuses any touchiness now. 

    Ben Carlson, a former Atlantic staffer now based in Hong Kong (and a relative of mine), has a very nice brief checklist of these and other phrases to be aware of and avoid—or at least to surround in protectively ironic air-quotes if you have to utter them. As with one of the phrases he saves for later discussion: "Hurting the feelings of the Chinese people." Again very much worth reading. 

    3) "In China, Watching My Words." From Helen Gao—a Beijing native, Yale college alumna, and recent Atlantic staffer—a very eloquent NYT essay on how she has adjusted what she allows herself to say since moving back to China. This piece has gotten a lot of attention, and deserves it.

    4) "China's International Trade and Air Pollution in the United States." Here is the full-text version of a scientific study mentioned in an Atlantic Cities item recently. Most press coverage emphasized a kind of ironic backflip whammy: U.S. factories had outsourced much of their production to China. And—ahah!—the pollution was blowing right back across the Pacific to get them. (I discussed the ramifications of this coverage in an On the Media segment with Bob Garfield today.) 

    To me the real impact of the study was in charts like the ones below. Here is what they show, for the pollutants sulfur dioxide and nitrous oxides. (There are similar ones for CO2 and other pollutants.) In the left-hand column, that China is putting out a lot more than America is; and in the right-hand column, that the U.S. puts out more per capita, though by a declining margin. The middle column is the important one, showing that per unit of output, Chinese factories are still grossly more polluting than those in America (or Europe or Japan). Thus the economic logic of outsourcing, which is powerful, has also made the world's output more environmentally damaging than it was before. 

    This is a big gnarly issue, which I've tried to deal with here and here and here. But the importance of this study, in my view, is underscoring how important it is to the entire world to clean up those Chinese factories.

    5) Pollution take 5.5 years off every person's life. The study above got headlines for concluding that Chinese pollution (some driven by serving export markets) added one extra day, per year, to Southern California's smog burden.

    A study a few months ago by a Chinese-American team calculated that for the 500 million residents of Northern China, pollution was already taking five and a half years off the average person's expected life span. This is a genuine public-health and political emergency.

    6) The missing 1 trillion (or 4 trillion) dollars. Not to dwell on the negative, but reports here, here, and here detail some of the ways in which the people running China have tried to insulate themselves and their children from the environmental and other effects of actually living there. These reports are not positive indicators—any more than if the Obama family was moving all of its assets out of the U.S., to protect the daughters' future prospects.

    7)  Let's be realistic about China's ambitions, and problems. My line all along has been: Take China seriously, but don't be afraid of it. Take it seriously, because what happens there affects the entire world. Don't be afraid of it, because it has problems that already-rich and stable countries can barely imagine. More on this theme from the China Daily. And an interesting twist from Global Times. (Both papers are state-controlled; GT is often more fire-breathingly nationalist.)

    8) To end on a positive note, a Chinese lower-pollution car.

    That is all. Another Reader coming shortly, on Iran and related topics. Then: the story of Greenville, Greer, and environs.

  • All-American Detroit

    'Not only can I not help but love Detroit - I can't help but believe in that city too.'

    A reader who grew up on the East Coast, went to college at U Michigan, and now lives on the West Coast writes about the Detroit bankruptcy news:

    My only connection to Detroit was as a student in Ann Arbor - 40 miles west of the city, and attending school with a lot of kids who had grown up in its suburbs, and some who had grown up in the city itself. And because of that, I grew to love the city. I was aware of the urban blight, but it wasn't as in my face as for those who'd grown up with it. Instead my experiences were were heading downtown for a festival, a ballgame or a show. I saw the autoshow. I partied in Greektown. I saw Belle Isle during the day. Once we did a service trip to the Gratiot corridor to teach some kids about STEM and make it "cool" for them. And that's about it.
    So I'm not a Detroiter. But I can't help but love Detroit. Part of that is that I've always loved cars, and Detroit will always be the Motor City. But also, it does feel like an exaggeration of America - from its beginnings as a frontier outpost, to its rise as a very provincial, western city in the Gilded Age, to its explosion as the Motor City and the birthplace of the industrial middle class in the early 20th century, to its long, sad, slow racially-charged decline during the Cold War that saw its suburbs prosper, and its inability to change with the new world order over the last decade that saw its urban renewal feel like - well the perfect caricature of our new Gilded Age.
    And yet, there is hope. Detroit has begun to reinvent itself, both in the city and in the metro area as a whole. SE Michigan does have a ton of engineers and a high level of R&D dollars being spent. While the bankruptcy is sad, just as GM's bankruptcy on 1 Jun 2009 was, it'll be far sadder if Detroit can't continue to reinvent itself as it has from the darkest days of 2008-9. The bankruptcy is payment for the sins of the past - but this purgatory should lead Detroit on a path to success. There's no reason that Detroit can't mirror what North Carolina's Research Triangle did in the '90s and '00s. And considering how much Detroit has made America look at herself over its history - I think we should all be rooting for the Motor City to rocket forward from here.
    Not only can I not help but love Detroit - I can't help but believe in that city too.

    The "always darkest before the dawn" / "what doesn't kill me makes me stronger" creed of plucky bounceback can be overdone. Sometimes what doesn't kill you still cripples you or leaves you doomed and weak. But our national saga has often enough included stories of setback, grit, and recovery that this is a plausible response to the news -- and certainly is a more useful response than despair. "Detroit" the metonym,* which was all but counted out four years ago, now is in much better shape. It is useful to assume that Detroit the physical city could recover too.


    * Ie, as reference for the U.S. auto industry. For explanation of this little inside joke, see the first few paragraphs of my article on Jerry Brown.

  • Detroit's Distress, and the 'Curious Unevenness' of American Blessings'

    Indelibly American.

    With the city bankruptcy news, a reminder of the best Super Bowl commercial ever -- yes, including '1984.' From two years ago, with Eminem.

    I hardly know anything first-hand about Detroit, but this ad succeeded in making it seem indelibly American. In the automotive spirit, and while noting that Detroit's municipal bankruptcy filing came on the same day that the Dow Jones average hit an all-time high, I am also reminded of this passage from John Kenneth Galbraith's The Affluent Society:
    "The family which takes its mauve and cerise, air-conditioned, power-steered and power-braked automobile out for a tour passes through cities that are badly paved, made hideous by litter, lighted buildings, billboards and posts for wires that should long since have been put underground.... 

    They picnic on exquisitely packaged food from a portable icebox by a polluted stream and go on to spend the night at a park which is a menace to public health and morals. Just before dozing off on an air mattress, beneath a nylon tent, amid the stench of decaying refuse, they may reflect vaguely on the curious unevenness of their blessings. Is this, indeed, the American genius?"

    Indeed. And that was 55 years ago.

    Update: Want to know who the fabulous narrator of the "Imported From Detroit" ad is? It's this guy, Kevin Yon. Congratulations and thanks.

  • An Interesting Year-End 'Charitable' Possibility

    A private solution to public failures? A new group offers an innovative approach.

    I am living proof of the way tax codes change behavior. Unavoidably on December 31, I start thinking of all the worthy causes I "should" have been supporting during the year, and rush to mail out checks or send online contributions while they still "count" as deductions for the tax year that's about to end.

    Here is a last-minute possibility with interesting implications: a site called "Give It Back for Jobs" that lets you calculate how much you, personally, will save on taxes because of the recent extension of the Bush-era tax cuts, and then suggests that as a prod for contributions to organizations that will "promote fairness, economic growth, and a vibrant middle class."

    I won't get into the details of how the site's creators estimate each family's tax savings or how they choose worthy recipients. The interesting aspects are (1) the authors' awareness that this kind of guilt-trip/ noblesse oblige approach, which they call "political philanthropy," isn't really the ideal answer to a society that's becoming more economically polarized, but (2) their determination nonetheless to make what they can of its possibilities. As they say on the site:

    >>Americans who have the means should collectively give back our Bush tax cuts...  Such joint action by wealthy visitors to this site will begin to replicate good government policy, outside the government and free from the grip of obstructionists within it. Because contributions to all of the selected charities are tax deductible, donations made through this site draft the government as a partner in funding the projects that they support.<<

    In an op-ed yesterday in the LA Times, two of the sponsors -- Jacob Hacker and Daniel Markovits, both professors at Yale -- say more about the limits of this approach ("nothing can take the place of a just tax policy") but also its aspiration and rationale:

    >>When political institutions use taxes paid by all to bail out institutions that are perceived to benefit only the wealthy few, our sense of shared fate is threatened....

    To their credit, many of the most fortunate Americans believe they should contribute more. The Giving Pledge campaign, started by two of the nation's wealthiest citizens, Warren Buffett and Bill Gates, encourages the super-rich to donate half or more of their fortunes to charity.

    But that does not mean the rest of us have to sit by... Americans who can afford it should contribute the windfall that they receive because of the Republicans' obstructionist demands to charities that promote the programs -- job creation, housing, education and the like -- that they believe a just government should pursue.<<

    The big story of American society through my lifetime has been the thinning of the "middle" in all (non-anatomical) senses of the term. As America overall has become vastly richer, the median family income has stagnated or declined; as the possibilities for knowledge have expanded immeasurably, the middle-ground of agreed-on facts and values threatens to disappear. Those are topics for another time -- and about which Hacker has written extensively. (And, yes, of course, there have been other big stories during the Baby Boom era, including the changed possibilities for women and racial minorities -- but the retreat from Middle Class America is the one I think about most.) Take a look at the site, mainly because of the problem it's attempting to solve. And I'll try to remind myself to support causes I care about more often than on the last day of the year.

  • Asian Development Bank Meets the Smiley Curve

    Where does that iPhone come from? The answer is harder to tell, and more important, than you might think.

    [See update at the bottom]
    Smiley2.jpgThree years ago in "China Makes, the World Takes," I discussed the Irish-born China-based entrepreneur Liam Casey and his concept of the "smiley curve." This was the graph that traced the evolution of a modern product -- from corporate brand and product concept at one end of the "smile," through components and assembly at the bottom of the curve, and on to shipment, retail, and services on the other end. The big profits, he said, were on the two ends of the curve, which were the fields American, European, Japanese, and other rich-country companies dominated. The Apple brand, the Intel chips, Japanese and Korean components or display screens, plus the final retailers. The skimpiest rewards were at the bottom part of the curve -- simply assembling the product, which was done in China. That is why, he concluded, American customers might pay $1000 for a "made in China" laptop computer, but less than $100 of that would end up in any Chinese person's hands.

    Yesterday the Wall Street Journal had a story, by Andrew Batson, about a new study from the Asian Development Bank Institute that dramatized this issue. In normal US-China trade statistics, Yuqing Xing and Neal Detert of the ADBI said, the entire cost of the "made in China" product is counted as a Chinese "export" to America. This grossly distorts our picture of the trade relationships, they say -- making China's surplus look bigger than it "really" is, and disguising exports from Japan, Korea, and elsewhere, plus what is really "US" content.

    The Journal illustrated the pattern this way, through costing out the components of an iPhone. Using current counting techniques, in which the phone's entire value is assumed to be "Chinese," on its own it accounts for nearly $2 billion of the Chinese surplus with the U.S. But if it is allocated to its real sources, most of the surplus is from Japan (famous for its "failed" economy), and second-most from Germany. The US-China direct exchange is actually a small surplus for the US.

    The ADB study is here, and while it's not very long and doesn't pretend to be comprehensive, it suggests the increasing complications of international production chains. In a "nation-vs-nation" sense, these new figures make America (and, especially, Japan) look "stronger" and China "weaker" than we normally think. But the flow of money to Apple, Intel, Amazon, etc, with the shift of assembly jobs to China, may intensify rather than reduce the steady polarization of American economic life.

    And on that point, a few other references: a powerful Reuters special report that starts with yet another deindustrialized Michigan town and goes on to ask, "Is America the Sick Man of the Globe"?; a column from Michael Sekora, who worked on a "re-industrialization" effort called the Socrates Project under the first President Bush; and a very powerful op-ed by Alan Blinder, in the Wall Street Journal, on the emergence of a Dickensian economy -- in the grim, brutal sense. Eg:

    >>Wages. When it comes to wages, the basic story of recent decades is redolent of Scrooge. Real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels. Yes, that's right, no real increase in over 35 years. That is an astounding, dismaying and profoundly ahistorical development. The American story for two centuries was one of real wages advancing more or less in line with productivity. But not lately. Since 1978, productivity in the nonfarm business sector is up 86%, but real compensation per hour (which includes fringe benefits) is up just 37%. Does that seem fair?<<

    It is hard to me to read any of this data and, at the same time, consider the latest changes in the estate tax or other benefits at the top end. Some time some leader will succeed in making most Americans see that a more polarized, more Gilded Age social-economy is worse all around. I think most people sense that, but the sense has been given no effective political voice. Here's Bill Moyers, making an attempt in a speech about the new plutocracy.

    UPDATE: My Atlantic colleague Derek Thompson reads this report in a different way. Here's where our interpretations diverge: We both see the ADB report as saying that high-tech wonders like the iPhone don't necessarily improve the US overall trade situation, since so many of the components and value come from overseas. But when it comes to the bilateral US-Chinese trade imbalance, the role of "made in China" products is grossly exaggerated -- again, since so much of what is counted as a "Chinese" export (including by Derek in his item) is actually from Japan, Germany, etc. Indeed, if we're thinking only of the US-China balance, the study shows that the iPhone creates a surplus for America.
    So, we agree in seeing the report as talking about a chronic trade problem for the United States -- but with the world as a whole, not specifically with China. This is all part of the Atlantic's big-tent philosophy.  

  • Peter Orszag: The Shoe That Didn't Drop

    If a scandal happens in Washington and no one notices, is it really a scandal? And other political koans.

    I made a mistake several days ago when lamenting Peter Orszag's decision to take a senior job with Citibank, reportedly for several million dollars per year, so soon after leaving a senior Obama Administration post. Over the past two-plus years, Obama (and GW Bush) policies played a crucial role in saving Citi -- and in not holding its executives (or other senior financial-world figures) accountable for polices that brought on the world financial crisis or reining in top-end pay as profitability has returned. Now a senior member of the Obama team -- Orszag was budget director -- was going straight to one of those top-end jobs, even as his former colleagues in the administration have their hands full fighting the social, economic, and political effects of the crisis on "ordinary" Americans who can't find jobs or are losing their homes.

    My mistake was not in pointing out this problem, nor in identifying it as the kind of thing that is notable precisely because no one even stops to remark on it any more. It was in the sentence that said, "Objectively this is both damaging and shocking." That's the difference between one-draft web postings and many-times-edited print articles. What I meant was, "Politically this is damaging and should be shocking." Because the real point is that official Washington should notice this instance of structural corruption -- but won't.

    If you're wondering just how taken for granted such arrangements are in today's Washington/ Versailles, here's a data point. The Washington Post, still aspiring to be official journal of politics, has not published a single story about Orszag's new job. Here is what its search function shows just now:

    "Please try another search" indeed. How about "things that are depressing"? To their credit, the Post's Ezra Klein and Ed O'Keefe each had one-line links on their sites, pointing to (respectively) the NYT "Dealbook" and Reuters stories on Orszag. (And those links come up if you search the Post's site for "Orszag Citigroup." Otherwise there appears to have been no "news" coverage by the Post. Klein also had this follow-up link to an item called "Our Peter Orszag Problem" on the Economist's site.) The gap between the things the Post considers "scandals," and a development like this, so taken for granted as not to merit mention, says too much about our politics.

    Or, consider a Google News chart of coverage of the story. There's a little flurry when the deal was announced (a "real" story would generate vastly more coverage), then... it goes away. Pathetically, the "C" on that chart is my own original item on the story -- with nothing in the mainstream press since then. The chart doesn't show mainstream press results after Dec 11, because there don't seem to be any.


    Here's a reader reaction:

    >>I think the situation is even worse than you suggest. Many of us who supported the idea of a bailout for the reason you suggest -- the likely negative consequences of not bailing them out were terrifying -- urged that the bailout be conditioned on major changes in the size and operations of the financial sector behemoths who'd become too big to fail. The Volcker rule was one example. Serious changes in compensation practices. Breaking up of these banks was possible and desirable. Strict regulation of derivatives. And so on.

    The final outcome, however, has been pathetically inadequate, if the goal was to prevent another crisis like 2008. And Orszag signing up with Citi for several million $ per year puts that policy failure in even worse light. What chance is there that the government will get tough on the big banks when key economic policy makers move back and forth between government and those banks?

    Two more reader reactions after the jump. Eventually I'll publish a few defenses of Orszag that have come in. Really, I don't have anything against him personally, though I think this was a big misjudgment. What I can't get away from is the two twinned aspects of taking this move for granted. From the "elite" level -- the editors who decide not to put it in the paper -- taking it for granted means: Sure, that's reasonable, what else would you expect? And from everyone else's level, taking it for granted means: Sure, that's how the world works. Them that has, gets. What else would you expect?

    More »

  • America Underestimates - and Misunderstands - Its Economic Strengths

    How can we respond to the rise of China, India and Brazil? Just look in the mirror.

    The brief column below appears in the December 11 issue of a National Journal supplement on The Next Economy, which includes a variety of articles on the longer-term challenges to U.S. economic strength. This summarizes themes I've gone into over the years, notably here and here and in various reports from China. But the lesson of modern life is that if a point is worth making once, it's worth making more than once. And I do think these points are worth making as often as anyone will listen, so that Americans appreciate the strengths they have and don't lightly or thoughtlessly dissipate them.


    I have spent much of the past quarter-century among people in other countries who want America's best jobs.

    In the 1980s, I met the designers and industrial engineers in Japan who dreamed that someday Toyota would overtake General Motors as the world's No. 1 carmaker--as it now has done. In the 1990s, I interviewed computer and mobile-phone makers in Singapore, South Korea, and Taiwan who aspired to move from their role as subcontractors to develop their own premium brands--which the likes of Samsung and LG have achieved. Over the past four years, I have visited companies in China that make everything from electric cars to electric airplanes and hope to create the high-paying, high-skill job opportunities that come with future technologies and industries. And then there's India ...

    How can Americans respond?

    More »

  • On John Kerry and Framing the Tax Argument

    A powerful presentation ... which perhaps the White House should have listened to

    On Sunday I mentioned that John Kerry had given other Democrats a lesson in how to stand up against the Republicans' insistence on bonus tax cuts for people in the top 2 percent of the income distribution. For another Democrat who figured out how to make the case, see this earlier item, about White House economist Austin Goolsbee, with his visual-mnemonic device. (That's a static screen shot; playable video of Goolsbee is here.)

    Thumbnail image for Goulsbee.png

    Now it appears that Kerry's (and Goolsbee's) eloquent hardline was for naught. I can't pretend to assess fully the impending deal on tax cuts at the moment. But here are several reader messages about the general question of framing the discussion.

    First, from a reader who thought I was putting Kerry down when I said that the effective presentation had come from "John Kerry, no less." I'm not sure what I meant by that, but here's the reader's point:

    >>Kerry's reputation as an uninspiring speaker is undeserved. From the time he first gained national prominence, I have been enormously impressed by his ability to frame issues and forcefully advocate sensible liberal positions (not an oxymoron!). He's also an entertaining speaker with a wry sense of humor. Even his famous remark about voting for the $87 billion before he voted against it, which probably cost him the presidency, represented only 5 seconds of a 2-minute remark that actually made an excellent point when played in full.

    That said, I too am guilty of piling on, at least indirectly: whenever I am trying to explain to someone why I can't stand Joe Buck and Tim McCarver, I say that their pompous style reminds me of what a broadcast would be like if John Kerry were calling play-by-play. But of course I'm only talking about the caricature, not the real John Kerry. <<

    For the record, I have written at length about Kerry's rhetorical skills, in this 2004 cover story. After the jump, two other suggestions about how the Democrats could/should have framed the discussion. I guess worth reading as prep notes for 2012.

    More »

  • An Effective Presentation of the Dems' Tax-Cut Case

    John Kerry makes the Administration's case

    By John Kerry, no less. On Meet the Press today. (Clip may start with an embedded ad):

    Note to Administration officials: make these points, and just keep making them. The Administration is offering a plan with tax cuts for everybody, and the Republicans are saying no -- to that, and to extended unemployment benefits during a time of record joblessness -- unless there is a hugely expensive extra tax cut for the very people who are least likely to spend the extra money they get.

    Repetition and consistency of message have become great strategic strengths of the right. On Fox, from Rush, from the Republican leadership, you hear the same themes day after day. They allow their audience to "frame" each day's items in the news. "Oh, I see, the Democrats are supporting 'job-killing tax hikes' once again." Democrats, by contrast, can seem embarrassed and and afraid of seeming "unoriginal" if think they are making points that are "obvious," or that they've already made. But this is one to hammer home until it's absolutely clear:

    "You care about unemployment? We're committed to extending benefits that can help families stay above water, hold onto their houses if possible, and have at least some spending power as they keep looking for work. You need a tax break in a recession? We agree -- we want to cut taxes for every household in the country. And that's why we're in a fight with the Republican minority that is determined to stop tax relief for you, and deny help to families who've lost jobs, unless we give huge extra tax cuts for the people who've already enjoyed the greatest tax-cut benefits and are least likely to spend that money to keep the economy strong. We're saying: tax cuts for everybody on income up to $250,000 -- and for money above that, to control the deficit, let's go back to the rates of the 1990s, when the economy boomed. They're saying: no tax cuts for anybody, unless there's a special bonus for people at the very top.

    We're all for compromise -- but not with bad, destructive, budget-busting ideas. That's why we're drawing the line here."

    I mention this both because I think Kerry's argument is right on the merits, and because it's worth recognizing political arguments presented competently.

  • Where Did Our Debt Come From?

    A handy visual guide to the politics of over-spending

    Thumbnail image for SpinneyTime.jpg

    Chuck Spinney, who spent his career as a budget analyst in the Pentagon -- that's him, on the cover of Time for his defense-reform work in the Reagan era -- has an idea about the answer. The green in the chart below shows periods when America's overall federal debt burden shrank; red, when it grew. Spinney, by the way, is no one's idea of a standard liberal. He's more a deficit hawk than anything else, meaning both that he's hard-line against excess spending and that he's pro-defense but cheap. He explains the chart he has prepared:

    >>Obama inherited a federal deficit that was spinning out of control (mostly because of decreased tax take and increased expenditures for automatic stabilizers, e.g. unemployment insurance), and pressure is growing to cut Social Security (perhaps the most efficiently run program in government) while placing Defense (one of the most inefficiently run programs) off limits. These political pressures are not new and in fact have been building up for years. So, as a first cut into a complex issue, perhaps it is time for the angry masses to ask which political party put them into the fiscal straight jacket that is setting them up for this horrible choice?

    A. Democrats?
    B. Moderate Republicans?
    C. Right Wing Republicans?

         Green => Reductions in the burden of Gr. Fed. Debt (as measured by the debt to GDP ratio)
         Red => Increases in the burden of Gr. Fed. Debt <<

    To be clear: the middle column is how much overall federal debt grew, or shrank, as a share of gross domestic product during each administration, and the right-hand column is the average annual rate of growth or reduction during that administration. As Spinney said in a note to me, "The idea of this column is simply to show the average annual change for the period covered in the first column -- so you can compare one term administrations to two term administrations in terms of their annual performance.  The first row of the second column says, for example, that the average debt burden ratio declined by 4.7% during each year of the Truman administration."

    When the economy is growing faster than the debt, that administration looks "green." When it isn't, red. The chart may give a slightly unfair boost to Harry Truman, whose administration coincided with the end of huge outlays and borrowing for World War II. Otherwise...
  • On DFHs, PTBs, and 'Framing' the Coal Question

    Is it anti-environmentalist to say we need to live with "clean coal"?

    The estimable environmental writer David Roberts, of Grist, has posted an item that is gracious about many aspects of my current cover story on the inevitability of coal -- but that challenges its basic premise, or framing. Read it for yourself, but essentially he's saying that the piece is positioned as takedown of the DFHs who are working for a clean-energy, renewable-sources future, rather than of the establishment Powers That Be who are complacent about climate issues and profitably happy with the coal-based status quo:

    >>Which is worse? Sounds to me like the PTBs are in a position to do serious damage to America's energy future. The DFHs, not so much. So why does Fallows frame his piece as a rebuke to the latter?<<

    With respect, and with solidarity and amity toward Roberts on the larger points, I think he is responding to something I didn't write. In particular:

    1) To the extent there is explicit framing in the article, it's America-v-China, not DFHs-v-PTBs. That's how the article starts; that's how it ends. You can look it up.

    2) It is framed that way because that is how I learned about the topic and decided to write the article in the first place. At no point did I think, "Gee, it's time to set those DFHs straight." Instead, starting nearly four years ago in China, I started down the following path of logic and observation:

    China is growing like crazy (as everyone knows); it has unbelievable pollution problems (ditto); and it is even more reliant on coal than you can imagine if you're not there. Then I started to meet, interview, and learn about people on both the Chinese and the US side who were working hard to "decarbonize" China's energy system. Their activities are not at all something "everyone knows." My usual impulse for writing a big story is to explain a development I've learned about that is not yet part of common knowledge. That's exactly how this piece came about. One of its argumentative cores -- that, barring some huge disruption to modern economic/ industrial life, you simply can't imagine a lower-carbon future without serious attention to cleaner use of coal -- emerged from meetings with and observations of the Chinese, American, Canadian, etc officials in this field.

    3) Nothing in the article is hostile to or dismissive of the need to pursue all clean-energy technologies simultaneously. Instead it's full of statements like this:

    >>This is not an argument against all-out effort on all other fronts, from conservation and efficiency to improved battery technology to wind- and solar-power systems to improved nuclear facilities. Amory Lovins, of the Rocky Mountain Institute, has argued for years that designing buildings and transportation systems to waste less energy from the start is by far the cheapest way to reduce damaging emissions (a position reinforced by influential studies from McKinsey & Company). "Good ideas about climate change are not in competition with one another," Roger Aines, a climate scientist at Lawrence Livermore National Laboratory, told me when I visited this summer. "We need every possible solution, and then we need more."<<

    You can find many more on that theme.

    4) I do quote some people on the inescapability of coal, for instance the Chinese-American geologist Ming Sung in this passage:

    >>"People without a technical background think, 'Coal is dirty! It's bad,'" I was told in Beijing by Ming Sung, a geologist and energy expert who was born in Shanghai, worked for decades in America and became a citizen, and has now returned to China. "But will you turn off your refrigerator for 30 years while we work on renewables? Turn off the computer? Or ask people in China to do that? Unless you will, you can't get rid of coal for decades. As [U.S. Energy Secretary] Steven Chu has said, we have to face the nightmare of coal for a while."<<

    But that is not an out-of-nowhere challenge to the renewable-energy industry. It rounds off a section about the rising demand for energy in China and elsewhere, the factors making it difficult to shift from coal, and the international-equity point about the awkwardness of profligate Westerners telling poor Chinese and Indians to cut back. It's a step in the argument, not a "framing" step against DFHs.

    5) The basic framing of the article is the same as that of most articles I do, namely: here's something I think most people don't know, and whose importance I'll try to explain. In my experience, "most people" who take climate issues seriously assume that coal is unambiguously the enemy. What I'd learned over these past years in China convinced me that coal is an enemy but an unavoidable one, and that while working on every other front we'll be better off if we try to clean up coal too, rather than assuming it away.

    6) There is a related line of criticism, coming from, among others, Kevin Drum of Mother Jones. It boils down to: Ok, where are the successful examples of this "clean coal" future? In a sense this is like people who objected to my "future of the news" article this summer by saying: Ok, where's the specific future business model that will keep journalism solvent?

    The point of the news article was, People are working very hard to solve that exact problem -- if they already had the answer, it wouldn't be a problem any more -- and the fact of their efforts and experiments is important and not widely enough known. By analogy, in this article: the fact that people are working hard on this problem is important, if they already knew the answer it wouldn't be a problem any more, and -- the international aspect -- energy companies the world round realize that China will be the laboratory where these experiments are conducted. The China-centric nature of these efforts creates some opportunities for US companies, and poses some long-term challenges, as the article sets out. But I was trying to describe an ongoing, all-out, happening-now effort to work out cleaner solutions, even though the final results of that effort can't yet be known.

    ALSO: As noted earlier, I've corrected two fact points in the online version of the article, one about the details of the Duke Energy-Huaneng interactions, the other about how the Texas Clean Energy Project is designed to attain its low-carbon goals. I'm chagrined when anything is wrong, but we try our best -- and then correct as needed.

  • Animals in the News Dept: Boiling Frogs, Rapping Pandas

    Someone figures out the boiling frog conundrum

    1) For years I have lamented the difficulty of finding a substitute for the ever-popular but scientifically ignorant "boiling frog" parable. At last there's hope! In his latest excellent Supreme Court dispatch, Garrett Epps shows the way to use the image, with all its familiar resonance, without doing violence to hundreds of years of development of the scientific method. The item begins as follows as is worth reading in full:

    >>As everyone knows, if you put a frog into a pan of cool water and heat the water very very slowly on the stove, there will come a moment when the frog says, "Croak me, this is HOT!" and will hop away--thereby demonstrating again, if further proof was needed, that amphibians are smarter than humans. As for us, during times radical but incremental change, we tend to sit around flipping our lips with our fingers without noticing a thing.<<

    2) Last week I mentioned Taiwan's NMA studios as the up-and-coming Asian challengers to Jon Stewart, the Onion, etc in comedy stylings on the news. Their latest installment is a Rap Battle video explaining the oncoming currency negotiations at the G20 meetings. This one pits a gangsta-style Barack Obama against Hu Jintao and a posse of ominous rapping pandas, who contend over the proper valuation of the Chinese RMB, who's really responsible for economic crises, etc. I don't agree with every bit of the economic message -- after all, this is a posse of rapping pandas -- but it's undoubtedly more informative about the basics than most American news items on this topic:


    Bear in mind (so to speak) that NMA comes from Taiwan, so can afford to be disrespectful to both sides of a US-PRC tussle in a way that its mainland Chinese counterparts could not.

    3) Bonus animal point: because this is a family-rated website, I will offer no more than a vague allusion here. If you happened to be following tabloid sports news out of Australia yesterday, especially personnel issues for the Canberra Raiders of the National Rugby League, you could not help but wonder whether Rick Santorum was a prophet ahead of his time. [Update. Le me spell this out, since some readers have written in with hurt feelings: The preceding sentence is written in sarcastic mode, and I did not and do not endorse the Santorum "slippery slope" argument. Sorry to have left any room for misunderstanding in what was just a lame joke. Ah, the language barriers that occur even within one language.]

  • The Mid-Term Elections, in One Chart

    The three most important principles in politics? The economy, the economy, and the economy.

    Last week Andrew Sullivan posted a chart, from Calculated Risk, suggesting why "the economy" was such a negative for Obama and the Democrats, despite the avoidance of true Great Depression-scale catastrophe and some recent minor improving trends. Jerry Howard writes with this elaboration:

    >>I've added a few milestones that I think help explain the President's challenge with the public perceptions around the economy, and why the Fox News crowd and others have successfully assigned him with the a chunk of the blame. It's not fair, or right, but the timing of events has helped the right willfully obscure what really happened, and why it happened. [Click for larger]<<


    Yes, of course, many other things were going on, but this is a very useful basic guide to why the Administration's "it could have been worse" entreaties fell flat. And also, of course, why this is a bad time to kick off a new austerity drive. (This annotated version of the chart may have appeared elsewhere, but I hadn't seen it before.)
  • Policy Corner: How to Think About 'Stimulus'

    Would stimulus by any other name be as effective?

    One of many victories for Republicans over the past year has been to convert the word "stimulus," in its economic sense, into a term of abuse. In ye olden days, it was a neutral description of public spending used to offset a fall in private demand. Now it's shorthand for government excess and waste.

    The conundrum ahead is how the Administration will present a case for further stimulus "expansionary fiscal policy" if it appears that the overall economy is in danger of contracting again -- and what the results will be if the Congressional Republicans oppose such efforts, under any name.

    For a primer on what that will mean, see this special dispatch for the Atlantic, by the veteran economic analyst Robert A. Levine. He was the deputy director of the Congressional Budget Office during the Ford and early Carter Administrations, has been associated with RAND for years, and wrote this article for the Atlantic about Bill Clinton's anti-deficit efforts. Digest of his argument -- which, conveniently, is also the headline of the article: "The United States Can Prevent Economic Disaster, But It Won't." Useful policy background.


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