November 05, 2004

Reality Bites

Many bloggers are saying that it will be good for Bush and the Republicans to own the problems they've created, and that's probably true in the long run. The now infamous Ron Suskind piece in the NY Times quoted a Republican explaining that they create their own facts, which the rest of us can examine as judiciously as we like while they invent reality before our eyes.

The problem with reality, though, is that it resists tampering with a vengeance. The Soviet claims that they could crush America any time they wanted were finally put side by side with the fact that their economic system was bankrupt. Chairman Mao's insistence that you could so ignore thousands of years of agricultural practice and pay no price had to square with the famine deaths of millions. Saddam Hussein's saber-rattling assertions that his army would defeat America came crashing down around his head when the invasion of Kuwait was repelled, and later as the tanks rolled into Baghdad.

The far right conservatives would like to believe that actions only have the consequences you meant them to have. We all believed that once, most people get over it on some level.

They think you can outlaw abortion, and it will just magically disappear. They believe you can tick off every ally you ever had and entrench your enemies, and those countries will go on supporting your wars, go on investing in your country just as they did before. They say that deficits don't matter. They think they can raise the flag of immigrant bashing, and still remain the top destination for the world's trove of bright post-graduate students and tech workers. They ignore the lesson that social tolerance breeds economic success. Or maybe they don't care, at least not now.

By example:

Today's Seattle P-I quoted Nandan Nilekani, described as the "chief executive of Infosys Technologies, a company in India that provides software outsourcing services" as saying of Bush's win that it was "great news for the offshoring industry."

As Ampersand notes, abortion increases under pro-life legal regimes. Abortion rates are lowest in regions like Scandanavia, where the procedure is legal and the social safety net is strong. Rates are highest in regions like South America, where it's illegal practically everywhere, and the social safety net can hardly be said to exist.

The dollar is down based on what's perceived to be a low-growth economy with persistently bad unemployment news, widening current account deficits, and high oil prices. It hit a 12 year low against Canada's dollar. But hey, who's up for another tax cut?

America has taken a brave, if unintentional, step towards facing up to the results of believing things that aren't true. To fully explore the meaning of the term 'unintended consequences.'

Many of you, dear readers, may be feeling vindicated by this diatribe. Don't. Over here on the left, we also believe things that aren't true, and we'll be facing the consequences of that for the next four years at least. Most of our entrenched fallacies have to do with how we perceive other people.

By example:

A couple weeks ago I was sitting in the cafeteria and a conservative extremist I knew from a journalism class walks over to say hello, fresh from his Campus Crusade for Christ meeting. (Not making this up.) I was studying for organic chemistry, and he looks at the book and asks if organic chemistry has anything to do with cellular biology. I didn't really know what to say to that but, well, technically some of the compounds we discuss in the book are involved in cellular processes. Mostly though, it has to do with industrial carbon compounds. From there, the conversation degenerated into a discussion of evolution.

I confess, I didn't make a very convincing case. It takes a full academic year to get enough grounding in biology that the evolutionary process really begins to click. You have to explore the role of single celled organisms, the symbiotic relationships that define life as we know it, the progression of life onto land as UV rays were blocked by the gradually forming ozone layer, the co-evolution of plants and the animals that rely on them, and the environmental causes of natural selection. None of that time was spent discussing how to convince non-believers that evolution is true.

He kept asking for evidence, but all I had was the multiple semi-nuclei in single-celled cryptomonads, the 'unnatural' composition of an atmosphere that could only be created by photosynthesis over millions of years... well, you see the problem.

The issues are complex, they involve dynamic systems with a multitude of moving parts over billion year timeframes. If anyone figures out how to capture the pageant of life on Earth in simple soundbites, they should go apply their talents to easy things, like explaining the tax system.

My mistake, and a major mistake of the left, has been to believe that facts speak for themselves. Nothing could be further from the truth.

Facts need champions and evangelists every bit as much as lies and half-truths. In most ages, including the present, facts are in even more need of people who will go out and advocate for them. Mind you, not people who will just repeat or recite them. I mean people who are fully prepared to debate the truth with those who spend all their free time trying to prove that 1 + 1 = 3. The difference is vast.

The leaders of the Democratic party and the various progressive movements like to accumulate facts, but they rarely connect the dots in a way that resonates with the unconverted. I've got a big stack of mailers from environmental groups full of such interesting tidbits that I loathe putting them in the recycling bin. The mailers my Republican grandmother gets tell her that the U.N. will take over the U.S. in partnership with the Democrats, taking away their hunting rifles and right to attend church along with it. People who work to educate themselves understand the significance of the mailers I get, everyone can understand the significance of the mailers she gets without any particular effort.

We have four years to get our game together, and that's a fact I think everyone can appreciate.

Posted by natasha at November 5, 2004 01:13 AM | US Politics | Technorati links |

This is tangental, but the dollar being down isn't entirely bad; if that continues, it will help even out the trade deficit, and also help reduce unemployment in the US.

Posted by: Ampersand at November 5, 2004 01:38 AM

That may well be true. But it worsens the current account problem, and makes it more difficult to attract outside investment.

It also presents a particularly knotty problem involving China. They peg their currency to the dollar, so when we go down, they go down. For obvious reasons, their goods never become more expensive relative to ours, which would be the natural way to put a brake on buying too many imports. For reasons which aren't clear to me at all, this also has to do with their government buying our debt hand over fist. While I don't fully get why the two are related, I can't imagine anyone not understanding why it's bad to be in debt to China.

So really, this is a very mixed proposition. It isn't good to have an excessively high currency valuation, but it's likewise bad for it to be too low.

Posted by: natasha at November 5, 2004 01:48 AM

Nice essay, Natasha. It think we do have to worry that our government does not deal in reality. Facts do not matter when they don't fit one's framing metaphor.

Posted by: Mary at November 5, 2004 06:21 AM

Natasha and Mary have hit the nail on the head. It's all about how the conversation is framed and who does the framing. The work for Democrats is to first understand this and then to develop frames of our own. Fear trumps facts because it resonates at a deeper level of our needs hierarchy (Maslow). Specifically, the need for physical well-being (terrorist threat) and the need to belong (patriotism) have to be met before the need to know can be satisfied. Fun links, for those of use ready to know ;-)

Posted by: Norman at November 5, 2004 09:13 AM

I just had to comment on this issue on the dollar and how trade deficits influence it..

First of all, it makes no sense to compare trade deficits between specific countries. In a global economy the premise itself is just wrong. Think of it on a local level. You purchase items from a market every month, and never sell them anything in return. You have a perpetual and ever growing trade deficit with your local market, yet it's not a bad thing. Likewise, you can have trade deficits with many countries and it doesn't matter a hill of beans as long as the total value you are exporting as a country is more than the total value you are importing from all countries.

Now you might say what about the deficit we have with the world as a whole. As long as you keep producing goods and services that other countries want, they are willing to finance your imports by accepting your dollars. If the deficit gets too high it becomes a risk.

One thing a lot of people forget is that tons of the dollars we pay people to import goods and services comes right back to us through investments in US businesses. This is not reflected in the trade deficit numbers. For primarily this reason trade deficits are not usually as bad as a lot of people think, because they are misrepresented in light of the whole economic picture. As long as our economy is productive and growing, and we have businesses we can sell to other countries, we can maintain trade deficits forever.

Also, a lower dollar helping exports in the short run is also wrong. It sounds right, but only when you look at one side of the equation. All it really means is that we sell more because with the dollar being lower in value, other countries can buy more products or services for the same dollar. It doesn't generally help a business any to sell twice as much at half the price. As a country what you want is to export as little as you can, and import as much as you can (buy low, sell high).

Posted by: Snacktime at November 5, 2004 04:35 PM

Snacktime - The issue with China is that they're responsible for a significant amount of imports to this country, such that it makes sense to take their currency peg into account.

I've never heard any serious economist suggest that a country should want to buy more than they sell. But beyond that, your point about reinvestment is completely off. The dollar is falling in part because investment in the US has presently declined. Other countries are being asked to invest in an economy with a deficit that the people in power show no sign of caring about, low interest rates, etc. If the IMF were to come in and be put in charge of one of their famous structural adjustment programs, it would insist on immediate steps to correct these issues. Their remedy might be ill-advised, but the basic problems would hardly be in doubt.

Posted by: natasha at November 6, 2004 10:23 AM

Investment by other countries in US businesses has let us maintain trade deficits for years without negative consequences, because that investment balances out the value of what we give versus what we receive. That means we can import more than we export, which is good. We simply provide value to other countries through investment rather than exports.

I did not say that if the economy weakens that can be maintained. Obviously a strong economy and investment climate are a prerequisite. I was only saying that is how it has worked in the past, and how we can keep doing it in the future if we keep a strong economy.

Regarding China, I still don't think you understand. There is absolutely no relation to their dollar being pegged to ours and our trade deficit with them. To make that stick you have to assume that the dollars they get from us in trade can only be spent by purchasing goods back from us, which isn't true. The price of our dollar does indeed effect them, but it has nothing to do with the balance of trade between the US and China.

Posted by: Snacktime at November 6, 2004 04:40 PM

What it has to do with our balance of trade is that as the dollar drops relative to other currencies, goods from other countries become more expensive. Except goods from China, which remain cheap.

And the U.S. is no longer being viewed as the investment it once was. You shouldn't think that there will never be consequences for fiscal irresponsibility just because there haven't been yet. Things which can't go on forever usually don't.

Posted by: natasha at November 6, 2004 05:14 PM

I think I lost my thoughts halfway through my last sentence on China. China is effected of course by tying to the dollar. What I was trying (badly) to say is that we should not be concentrating on our trade deficit with China. That is not the solution. By pegging a currency to the dollar, you create something that is artificial, and eventually the market has to correct it. The political solution would probably be tarrifs and more trade restrictions, which in the long run will just make it worse.

I don't understand your last statement though. Trade deficits only reflect part of the overall trade between countries and are misleading. What matters is all the value produced, not just the value we count as trade. If an investment by a country into a US business returns the same value as goods and services they could have purchased, it's the same difference. Of course investments can stop returning real value, and the type of investment matters (financing consumption versus financing growth of business). But that is another issue altogether.

Posted by: Snacktime at November 7, 2004 01:58 AM