If my neighbor is inclined to love me, I should hope that ...

So, in a local election in a corrupt city, a "reform" candidate appears and syphons away 2.5% of the vote. By a smaller margin than the "reform" candidate's total, the primary (corrupt) candidate does not get a clear majority, and the election is forced into a run-off. To effectively compete in the run-off, the (corrupt) candidate raises another million dollars, and ends up owing even more (corrupt) favors to her backers. The net result of the reform candidate's campaign is a degradation of the quality of life for the community, as a new set of favors is called in from the (corrupt) candidate. Should the reform candidate have precipitated a sequence of events that everyone knew would make things worse? Debate, discuss.

And so on for the next 99 years

If I doubted the wisdom of selling Indiana toll roads to Australian public companies, a recent trip to Michigan confirmed my worst fears. On a Saturday morning, usually a time of easy unobstructed traffic, there was a massive traffic jam at the toll plaza. After waiting more than half an hour, we saw that, rather than having eight computerized lanes for processing traffic, there was just a single person person, manually processing a single lane of cars, each paying thirty five cents.

My memory turned back to other times when the toll plazas had experienced computer failures. Before the Australians took over, employes would simply wave the traffic through. Every driver was probably a voter, and with the toll authority was under the nominal control of the government, the staff could expect a severe reprimand if they wasted a half hour of a customer's time in order to collect a thirty five cent toll. A foreign corporation, of course, wants to maximize revenue in every way possible, and the only alternative available to those who don't like the way they run their business is to lobby our government to build another toll road or highway.

Housing Crisis

So let's quickly review the current financial crisis.

First, the yield curve got crushed because (a) the Chinese appetite for ten year paper, and (b) the positive carry trade (borrowing money short term and lending it long term, borrowing money at the prime right and lending it at a consumer rate).

Second, Congress changed the bankruptcy laws to make it difficult for people to ever really get rid of their debts.

Third, the Federal Reserve used the housing boom to keep the total economy happy while some sectors were in recession.

Fourth, because people looked at their mortgage payments as a percentage of income, they were willing to pay twice as much for a house if they were paying half as much interest.

Fifth, because of the artificially flattened yield curve feeding into a speculative frenzy, the cost of housing in the entire continental united states roughly doubled (the logic of which went something like, "when long-term interest rates went from ten to five, and the short-term rate went from eight to two, housing prices doubled; if long-term rates go from five to zero, and short-term rates go from two to minus six, they should double again").

Sixth, we are on the brink of several technological innovations that will radically reduce the cost of housing (Japanese customizeable modular homes, built by robots).

So we now have roughly a trillion dollars of debt in excess of value on real estate, to be serviced by a shrinking middle class who won't be able to make their payments and won't be able to discharge the debt either. Even if they are able to make their payments, mortgages at double the value of their assets will decrease workforce mobility. If this doesn't sound like an opportunity for the Democrats, I don't know what an opportunity for the Democrats would look like. All they would have to say is, "ya know, America is an exciting place and the land of second chances. The Bush Bankruptcy reform was unAmerican. Let's wipe out those silly mortgages and get on with our lives."

What will happen, though, is we will probably have a massive federal bailout for the banks, and an underclass that is still servicing debts from this binge in twenty years. The good news, though is that housing will be cheap....

AFL/CIO debates

At the AFL-CIO debate, the only credible candidates were Biden and Kucinich. Sunday's New York Times had an article about how dual income couples are in a desparate need of an extra wife to take care of the home front. Could this be the first wave of a broader acceptance of Mormonism, as we head into the inevitable Romney Presidency?

My favorite moment in the debate had Hillary going into schoolteacher mode about how it was fine for a college professor to talk about big ideas, but irresponsible for a Presidential candidate to destabilize Musharref's regime by discussing the possibility of bombing Al Qaeda in Pakistan. Obama offered a weak self-defense and Biden became so frustrated that he interrupted the flow of debate and explained to both of them that it was, in fact, "the law of the land" that we would act on actionable intelligence. So it is as politically preposterous to say that that it is irresponsible when someone presents the law of the land as a hypothetical scenario, as it is politically uninformed to not even know the legislation that the executive branch is charging with executing.

I went there hoping to like Obama more, but as the evening wore on, his platform increasingly consisted of saying that would bring intelligent and reasonable people together and ask them to be intelligent and reasonable. In contrast to Teddy Roosevelt's "speak softly and carry a big stick", he promised "government by seminar", where he would drone on in his semi-autistic monotone until everybody capitulates to reason. In the debate, he presented his willingness to have face-to-face talks with terrorists and murderers as proof of his openness and commitment to reason, but after a few hours in a room with Obama, Kim Jong Il would be begging us for a trip to Guantanamo and a few days of waterboarding.

On a deeper level, though I love the idea of Unions, it insults my intelligence to hear them prattle about their desire a middle class life, while relegating the developing countries to abject poverty. The unions were in a position to achieve global political transformation and an increase in the global standard of living, but their membership settled for a ranch house and a now-rusted station wagon. After selling out the rest of the world, they now feign outrage when global economic forces diminish the price they can command in the marketplace.

The traditional rhetoric of unions says that if they don't hang together they will hang separately, so, after splitting into smaller and smaller units, their eyes are bulging with betrayal as the noose is tightened around their necks. I was happy when Kucinich promised to enforce political rights and polution standards with our trading partners, but I wonder if the applauding audience was ready for the fifty percent decline in purchasing power that would be the result of a boycot of Chinese goods.

And why do unions insist on pretending as though the theory of suplus value has any relevance in the modern technological manageral corporation? When union guys attribute the increase in productivity of the last thirty years to "workers", it is kind of like building sand's self-esteem by telling it that it is just misunderstood glass.