Fundamint

eBay Scandal Exposed!

2005-11-17T21:08:00.000-05:00

The online auction site eBay is one of the few internet startups to make it through the dot com bust, and has flourished over the years, posting consistently solid profits. What I am about to expose is so scandalous that I do not expect this success to continue; sell your stock and close your PayPal account, because this post will bring the mega-populist-crap-broker to its knees.

Here's how an auction works on eBay:

A person bids on an item by choosing a maximum bid amount, a1, at or above the current bid price plus some bid increment, bi.
eBay automatically counterbids for the original holder of the current bid (who bid a maximum of a2) until either bidder reaches their maximum bid amount.
The current bid becomes min(a1,a2) + max(|a1-a2|, bi).

What is implied by this description is plainly stated on the eBay website:

[1] The system places bids on your behalf, using only as much of your bid as is necessary to maintain your high bid position (or to meet the reserve price). [emphasis added]

This means that there is no penalty to the bidder for raising their maximum bid unless another bidder drives up the current bid. Here is another statement from eBay's help page:

A bidder may be outbid by less than a full increment. This would happen if the winning bidder's maximum bid beats the second highest maximum by an amount less than the full increment.

In this situation, the difference between the two maximum bids was less than the bid increment, so the current bid becomes the maximum of the two bids. This algorithm, however violates rule [1] because the autobidder will in fact bid "as much of your bid as is necessary" plus one-penny less than the bid increment. For example, if the current bid is $50, and the (secret) maximum bid is $70, and someone else bids a maximum of $80, the current bid will become $71, because the bid increment is $1 in this bid range. However, if the second bid was $70.50, the current bid would be only $70.50, and the second bidder would pay a lower price. In the first instance, where the second bid was $80, the autobidder bid more than the minimum amount necessary to maintain the high position, thus violating rule [1].

This may seem trivial, but imagine a more egregious case. In the same situation, imagine the second bid was placed at $70.50, running the current bid up to $70.50. Now the second bidder has the high bid, and would win if no one places a higher bid. The high bidder may decide to pad his (secret) maximum bid, as a precaution against a challenger, say by raising the maximum bid to $75. Under rule [1], this should never affect the current bid price; the bidder already has the high bid. On eBay, however, raising the maximum bid will actually raise the current bid price to the previous high bid plus the bid increment, in this example to $71. The high bidder can bid against himself! This is an erroneous implementation which violates the rules set forth by eBay and which are firmly established in auction everywhere.

This still may seem somewhat trivial (because it is), but be aware that bid increments are proportional to the size of the current bid, and they increase rapidly. For example, bid over $5000 have a bid increment of $100. This means that this bug could cause clearing prices to be off by as much as two percent. (For smaller prices, the percent can be even higher!)

Energy efficien....zzzzzzzzzzz

2005-11-13T11:58:00.000-05:00

Energy efficiency, or conservation, as it used to be called, is an topic that is so exciting, so sexy, so provocative that the New York Times usually leads at least one section from the Sunday edition with a human interest/pseudo-economic analysis of energy consumption. This week, the article was in the energy-efficiency-is-making-a-comeback-because-it-will-save-you-money style, one of my personal favorites because it combines optimism with weak-but-convincing economic evidence, leaving the reader distracted with thoughts of a utopia where bicycles rule the roads and all windows are double-paned.

Back in reality, the largest step toward increasing energy efficiency taken this year was a small provision in the Energy Policy Act of 2005, passed by Congress on July 29, 2005, which changed the effective dates of Daylight saving time: "Clocks will be set ahead one hour on the second Sunday of March instead of the current first Sunday of April. Clocks will be set back one hour on the first Sunday in November, rather than the last Sunday of October." (wikipedia) This could save as much as one percent of electricity consumption (correct me if I'm wrong; I can't remember the source) by reducing dependence on artificial lighting and other appliances. Not to trivialize this importance provision of the bill, but this is the best energy legislation that congress could come up with? They could save almost as much energy by not hauling the less-than-lean Dick Cheney around in Marine Two, a 1,560 horse power UH-60 Black Hawk, with cupholders.

But where congress has failed, Fundamint prevails. Fundamint knows that by combining econ 101 market theory with a dash of insight and a splash of simplification, many of the worlds problems can be solved in 1000 words or less. The world's energy woe is no exception.

The most fundamental of all economic theories is that if the consumer does not properly bear the costs associated with consumption, their will be an inefficient outcome in the market. This is why are public services are underfunded and why General Electric consistently outperforms the market. The point is that with the assumption that consumers behave in a self-interested manner (what economists call "rational"), they must pay at least the true cost of the goods they consume or else they will consume too much, resulting in efficiency lost. A good example of this is the all-you-can-eat restaurant: the customer does not pay for each marginal good consumed, so the customer has incentive to eat right up to the point where he feels sick. The tendency is for everyone to eat more than they would if they had to pay some cost for each marginal food item. In the end, this benefits the big eaters and punishes the healthy eaters, which is why it is such a bad system; the restaurant does not bear the cost of your poor health resulting from their harmful system, thus they are creating a negative externality (which is a whole other related topic).

You may be shocked to hear that this all-you-can eat system is prevalent elsewhere in society, and it could even be happening right in your own home. That's right, many apartment buildings include the cost of utilities in the price of the rent, decoupling the cost of energy usage and the consumer. With no incentive for the renter to conserve energy, far more electricity and gas is consumed than is efficient; what's a few more minutes in the shower, or listening to a few more minutes of your favorite radio program, when you don't have to pay it.

So fix it, you say? Require utilities to be metered and paid for by the renter? Here are the problems. First, most apartments which use this method are old and do have individual metering; adding this would be costly. Second, two of the largest energy consumers, heating and air conditioning, are often part of a central system, making it more efficient for the building and making it difficult to divide up expenses. The final, and more subtle problem is that charging renters for energy consumption would have the unintended effect of decoupling the owners from the cost of energy consumption. This means owners would have little incentive to make capital improvements to increase energy efficiency, such as upgrading appliances and improving insulation, an important component in reducing energy consumption. Renters, who do not stand to gain from long-term investment, would not undergo such improvements.

So how do we solve this mess? We make both renters and owners bear the costs of energy consumption. This is tricky because of our notions of fairness, but some reasonable solutions are possible. The simplest would be to create a hybrid system of the two extreme systems, where the renter and the owner each pay a portion of the utilities. Under this system, both parties has incentive to pursue efficiency, although not as strong as if each bore the full cost. The obvious pitfalls of this system is that owners' profits would be somewhat linked to the type of renter they have as a customer; this would discourage renting to families, and other high-energy users.

One method that could be employed to reduce this bias would be to require owners to disclose some measure of the energy efficiency of the rental unit, just as the fuel efficiency is shown on new cars, but still require the renter to bear the full cost of utilities. This would allow the renter to put a value on the energy efficiency of the unit, and the owner would thus have incentive to make investments to improve efficiency so as to make the unit more attractive to potential tenants. The efficiency measure could be done by the utility company, or perhaps more elegantly, by taking a long-run average of past utility costs, something already publicly available in some states.

Another method along the same lines, but providing greater incentive for owners to make investments, would be to have owners pay a percent of the long-run average of past utility costs, and the renter pays the balance. Under this system, both renters and owners have strong incentive to conserve.

Ultimately, there are many market mechanisms which can increase efficiency in energy consumption. Many can also speed technologies already in transition; for example, charging a gas tax proportional to the weight of the vehicle would amplify the existing costs of owning a larger vehicle, precipitating the transition from SUVs to hybrids. The difficulty with all these mechanisms, as we saw in the rental markets is that there is rarely a perfect system, and often transaction costs become prohibitive. Fortunately, technology is making many mechanisms cheaper and easier than we ever thought possible, putting our reveries within practical reach.

Bush's Quag-Mier

2005-10-22T23:26:00.000-04:00

You probably expected a trenchant article about the Harriet Miers confirmation. I've got nothing. I just liked the title.

Buddy Budgeting

2005-08-21T00:40:00.000-04:00

You don’t have to be a fervid egalitarian, or a New York Times regular, to know that the CEO of Walmart makes fourteen quadrillion dollars, or something like that. Actually, you may not know how much he makes, but you’ve probably heard that he takes home about 400-500 times what the company’s most subordinate subordinate does, and that probably even undervalues the CEO’s yacht-friendly pension.

This shouldn’t be surprising, considering that real wages for the poor and middle class have stagnated for the past forty years, while the upper-class have been abundantly successful in living up to their title. We all know of the flagrant inequality in wealth and income in this and other countries, but since the boom of the late nineties, the CEO has emerged as the American superstar, used ubiquitously to symbolize both the capitalist American dream and the paragon of prodigality.

But is their high pay actually an efficient market outcome, where the company is maximizing profit by paying a single critical employee millions of dollars, or could it be that the company is not acting rationally by hiring the CEO superstar?

The problem with executives in general is that it is often difficult to reward them appropriately: devising a pay package that aligns the goals of shareholders and executives is not an easy task, as has been painfully proved in the recent string of corporate accounting scandals. But even assuming executives have the proper incentives, how much are they really worth? Of course, this value is impossible to quantify, and depends greatly on the company and the specific role of the executive within that organization, but the disparate pay of executives even between similar companies suggests that companies aren’t doing the same cost-benefits analysis before hiring.

The board of non-executive directors is supposed to be an impartial agent, like an outside auditor. The problem is that directors are not outsiders. More importantly, they are often former or future executives themselves, and have a very real incentive to boost compensation for both non-executive and executive positions. The idea of tacit collusion of directors to maintain generous executive wages does not seem far fetched, especially when we acknowledge that executive pay makes up only a fraction of a percent (I made this statistic up, but it seems true; correct me if I’m wrong) of most companies’ expenses, rarefying the incentive (and shareholder pressure) to reduce them.

A recent study revealed what we all suspected: female executives make less than their male counterparts, but are compensated more equitably when their boss is a woman. Looking beyond gender, this same data could be used to see if executives are compensated using the buddy system: is pay positively correlated with the frequency and duration of past contact with board members? We associate mutual back patting with politicians; businessmen are too shrewd to put friends before profits. But why would we expect them to put shareholder income ahead of their own?

The Dance of Love

2005-06-22T11:27:00.000-04:00

Financial market are innately fickle beasts, precisely because no one person or group has control over them. Their movements are caused by changing expectations, herding, hysteria, and sometimes even economic data. While no one person can predict or control a substantial market, such as the Treasury debt market, certain powerful people seem to be trusted to "guide" the market. And while everyone is familiar with the Gospel of Greenspan, with his "irrational exuberance" and "conundrum," there are others, such as other Fed governors or high-level Treasury officials, who have a sharp effect on markets.

But there are others still, outside of the blind-trust beltway, who seem to guide with bias. For instance, yesterday Bill Gross, managing director of fixed income giant PIMCO, told reporters in a television interview that the Fed "will have to stop (raising rates) shortly" to sustain growth, and will have to start cutting rates after reaching the 3.5% target fed funds rate. While being pessimistic about growth is nothing new to bond traders, his remarks shook the market enough to shake headlines.

His comments paid off: within minutes, the price of Treasuries rose, with the ten-year note up 12/32. Let's do the math. Gross manages $450 billion in assets. Let's pretend that about half of that amount is tied up in long positions of Treasuries. If all that $200 billion in securities went up by the amount that the ten-year did, that's a gain of about $750 million.

Of course, PIMCO's returns are not simply linked to the price of Treasury securities, but I'm assuming they have a net long position. This is also very short term, and not something that can even be capitalized on, but don't think his traders didn't knew what he was going to say in advance.

Hyper-Rich Hysteria

2005-06-09T14:29:00.000-04:00

The Sunday New York Times went front-page last week with the shocking conclusion that the "Richest Are Leaving Even the Rich Far Behind." Looking past the duh-factor inherent in writing about the rich getting richer, David Cay Johnston made some interesting revelations about not just the rich, but the "hyper-rich," those in the top 0.1% and higher:

* Under the Bush tax cuts, the 400 taxpayers with the highest incomes - a minimum of $87 million in 2000, the last year for which the government will release such data - now pay income, Medicare and Social Security taxes amounting to virtually the same percentage of their incomes as people making $50,000 to $75,000.

* Those earning more than $10 million a year now pay a lesser share of their income in these taxes than those making $100,000 to 200,000.

That's right, our so-called progressive tax structure is actually resulting in an arc (because of tax shelters, deduction, etc); effective total income, Social Security, and Medicare taxation is regressive as income rises above $10 million, and virtually flat between $100,000 and $10 million. In fact, the highest taxed group, $1 to $10 million, is taxed at a rate only 1.7% percentage points higher than the $100,000 to $200,000 group, and still only 4.9% higher than those in the $50,000 to $75,000 range.

The main reason for this regressive taxation at the high high end is that many tax cuts have focused on investment returns which favor mostly the wealthy. Also, Johnston mentions but doesn't pursue the fact that "the very wealthiest find ways, legal and illegal, to shelter a lot of income from taxes." Stephanie Strom outlined one common method: the creation of "supporting organizations" which are a loosely regulated type of foundation, often abused as a tax shelter to the "charitable" donor. The key is that these organizations, unlike foundations, don't actually have to spend any of their endowment, but can serve almost as an investment vehicle for the founder.

The idea for Johnston's analysis must have surfaced because we are used to hearing about income statistics for the "top 1%" or even the "top 10%." He convincingly asserts that the top 1% group is by no means homogeneous: the top 0.1% accounts for almost half the income the top 1%! Perhaps even more amazing is that the top 400 households collect 1.1% of the nation's income. This may not sound like a lot, but that means this top 0.0003% is 45 times richer than the top 0.1%, and a whopping 917 times richer than the top 10%! To put that in comparison, the top 10% is a paltry 7 times richer than the bottom 90%.

Johnston explains this huge gap between the rich and hyper-rich has increased dramatically over time:

From 1950 to 1970, for example, for every additional dollar earned by the bottom 90 percent, those in the top 0.01 percent earned an additional $162, according to the Times analysis. From 1990 to 2002, for every extra dollar earned by those in the bottom 90 percent, each taxpayer at the top brought in an extra $18,000.

The ethical questions of income inequality aside, one fact remains: taxing the top income earners at a few percentage points higher would make up the $450 billion shortfall in the federal budget. That's kinda what John Kerry was telling people during the campaign, but somehow the extraordinary resources available at the top were not seen as a popular source of tax revenue.

Slate contributor Mickey Kaus, also the author of The End of Equality, completely misses the purpose of Johnston's article (which seeks to further divide the top 1%), arguing he "doesn't answer the important question...how much richer would they have gotten if they hadn't gotten the tax cuts?" I guess Kaus is more interested in the moral questions of equality, but Johnston does a better job of sticking to reporting. Kaus says Johnston wrongly asserts that "we really could reverse rising income inequality at the top by reversing the Republican tax cuts." Kaus doesn't even seem to care about the more practical question of how much those cuts have contributed to massive deficits.

The Tight Pants Paradox

2005-05-27T12:09:00.000-04:00

Now that there exists scientific evidence that parents give preferential treatment to their more attractive children, it has become apparent that further inquiry into the nature and characteristics of human aesthetics is both timely and necessary. In pursuit of this goal, we investigate the tight pants paradox.

Consider a person who wears pants of constant tension t. In order to solve for the perceived attractiveness function, B(.), we must first determine the relevent parameters. We assume there to be a natural beauty constant, h, which scales B(.) independant of clothing variation. Historically, the clothing-dependent factor of B(.) was assumed to be positively correlated with tension t, following the assumption that a person would self-regulate tension in order to match the purveyance of the buttocks and proximal structures with the desires of the agents of observation. These traditional assumptions would lead to the intuitive conclusion that B(h,t)=ht . While perhaps a reasonable approximation 50 or even 10 years ago, evidence suggests that this functional form is lacking an important term.

Assume a constant wardrobe, and consider a person who has optimized its body mass such that its attractiveness has been maximized, i.e. any other body mass would reduce their overall beauty. Now imagine if that person intentionally or otherwise increased its body mass by a small amount. This person is no longer at a global maximum, and thus has decreased in attractiveness, yet, paradoxically, the tension t of the person's pants has increased. We have shown that there must exist another factor, g>0, that negatively affects B(.). Finally,

B(h,t,g)=t(h-g) .

Grassroots Kyoto Protocol

2005-05-16T21:16:00.000-04:00

Although the Bush administration does not deny the existence of human-induced global warming, they have strongly resisted any attempts to do anything about it. Most notably, as one of his first acts as president, Mr Bush withdrew the United States from the Kyoto Protocol, an international treaty designed to reduce green house gas emissions among developed countries while (loosely) committing lesser developed countries to future abatement. Everyone pronounced the treaty dead (it requires ratification by countries accounting for at least 55% of world emissions), but amazing, in a dramatic buzzer-beater, Russia defied all odds and ratified the document. Well, actually they were pushed hard by Japan and Europe, two regions interested in saving the world.

But without the U.S., many have thrown up their hands; what's the point if the world's largest polluter won't even commit to the mildest reductions? In a movement that has been gaining force over the last five years, local leaders from around the country have begun to answer that question with bipartisan fervor. The Associate Press reports that 136 mayors have ratified their own little Kyotos in a direct rebuff to the president's inaction. They have capped emissions in their own cities, many of them large metropolises, including Seattle, Los Angeles, Salt Lake City, and New York. Even the governator is pushing for reductions in California, joining several Republicans, such as John McCain, in the fight.

Surprisingly, it seems people of both parties want the world to be saved:

Jerry Ryan, the Republican mayor of Bellevue, Neb., said he had signed on because of concerns about the effects of droughts on his farming community. Mr. Ryan described himself as a strong Bush supporter, but said he felt that the president's approach to global warming should be more like his approach to terrorism.
"You've got to ask, 'Is it remotely possible that there is a threat?'" he said. "If the answer is yes, you've got to act now."

If Nebraskan Republicans see this as a cut and dried issue, can Mr Bush be far behind?

Brokers break your bank

2005-05-10T15:41:00.000-04:00

I am currently looking for an apartment to rent, so I thought I’d take this time to share with you a couple of scams pulled off everyday by realtors and landlords, some of them otherwise honest people.

Scam: If you read the fine print of the lease, you'll probably find that you must vacate the apartment return the keys by 5pm on the final day of the lease. This trick cheats you out of the rest of the evening which you surely paid for. That's seven hours of rent that they've just scammed you out of! That may not sound like much, but if you pay $1200/month for rent, and you move out on April 30th, for instance, you have just lost 1200/30/24*7=$11.67! The landlord should take you out to dinner, and not just to Chipotle, but someplace with reusable dishes.

Solution: Read the fine print! If this condition applies, demand that the rent be prorated to compensate for those lost hours. Explain to them that the terms are unacceptable. Hire a lawyer if necessary.

Scam: Seldom do people move in and out on first or the last day of the month. Because rents are quoted in monthly terms, and payments are made on the first of the month, landlords do a trick they call "prorating" for the partial beginning and end months of the lease. This is really just a fancy word for "scam," as I will show.

Bear with me if you have only a second grade level math ability. The way this "calculation" is done is by taking the monthly rate and dividing it by 30. Where did this number 30 come from, you ask? Apparently, many years ago before the invention of the calendar, people believed that there were 30 days in a month. More recently, as computer technology advanced, people discovered that not all months are composed of exactly 30 days, in fact only five of the twelve are. Six more months have 31 days and of course February has 28, giving us a monthly average of about 30.33 days. This number, being most definitely greater than 30, yields a lower rent per day amount, which would be used to bill the renter for the partial month.

Let's do an example. Again, rent is $1200/month and you are moving out on the 20th of the month. Under the traditional scam method, the "prorated" rent is 1200/30*20=$800. Using the true average, the rent is 1200/30.33*20=$791.30, a savings of $8.70! (If you use the actual number of days in the month, your savings could be three times a big!) Ok, so this example is more in line with a Chipotle, but that's no pocket change. Remember, the pioneers bought Manhattan from the Indians for about $23.

Solution: Never move out except on the last day of the month, but if you have to, remember how many days are in a month. Unless it's February. Insist on the 30 day tradition if you're moving out in February.

Conservatives say lesbians and bunnys don't mix

2005-05-10T15:02:00.000-04:00

The New York Times reported last week that Kenneth Tomlinson, the chairman for the Corporation for Public Broadcasting, is concerned that the material on public radio and television is liberally biased, and that conservative shows need to be introduced. Supporters of Mr Tomlinson assert that the CPB has relied overwhelmingly on fact, reason, and science, and have not responsibly balanced this liberal reporting with fear mongering and emotional appeal.

Critics of public programming, most notably Education Secretary Margaret Spellings, have been pointing to the guest appearance of a lesbian couple on “Postcards from Buster”, a popular show which scores of children reportedly watch during the commercial breaks of General Hospital, saying that children should not be exposed to “the lesbian lifestyle,” which allegedly involves fire worship and a cartoon bunny (See picture below. Parental discretion is advised.). Conservatives argue that such imagery should not be on television, arguing that it ruins their fantasy of the pervasive lipstick lesbian.

(the denounced ones are in the upper right)

Others assert that the organization is a model of conservative values. “Hell, it’s got ‘corporation’ right in the name,” said a high-level staff member from CPB, who spoke on the condition of anonymity. “We work hard to keep a balance between nature shows with gratuitous animal sex and news shows which are about as exciting as watching a slug hibernate, which also happens to be part of our regular line up.”

If there is increased pressure to inject conservatism into the programming, he says all this could change. “You may soon be watching abstinence training for monkeys and news shows that will flame the 'liberal media,' leading of course to more lesbian fire worship and more flaming. Pretty soon, we'll be airing something people want to watch. We can't let this happen.”

Same diff

2005-05-03T10:55:00.000-04:00

Veteran New York Times columnist John Tierney argues paradoxically about the red-state/blue-state divide, or what he calls the "Democratic explanation" for how Mr Bush was re-elected, in his piece today. He explains the red-staters voted for the president because he is picked on by those Manhattan-Hollywood-types, just like they are. This Revenge of the Nerds story has obvious appeal, and he goes on to say that red-staters are not fundamentally different from blue-staters, because, well, we all watch TV.

So Mr Tierney asserts that red-staters have an image problem in the blue-states, and they have decided that the best way of dealing with this perception problem is to elect an exemplar (at least publicly) of the aforementioned stereotypes. Rather than attempting to debunk the red/blue divide, he apparently believes there was an organized and disciplined effort to attain the pinnacle of pettiness by releasing the "nanny-nanny-boo-boo" heard around the world. That'll show 'em.

Mr Tierney does make the important argument that people from across the country are not all that different, that is while he's not articulating the appeal of "more jobs, affordable houses and the lower taxes" in the Republican strongholds. As far as I can tell, he adamantly wants to dispel the myth that "red staters are hicks who have been blinded by righteousness." He leads into the piece with Laura Bush, the godly first lady, doing standup involving the president and "a horse's phallus," as well references to their frustratingly sexless marriage, to show that even devout Christians think about thumping something other than the bible.

While perhaps a good anecdote to support his case, he misreads Thomas Frank's "What's the Matter With Kansas?" so wildly that he undermines his credibility with a single pop culture reference. Contrary to Tierney's assertion, Mr Frank works hard to eradicate the stereotype of the "righteous hick," by showing how this small minority of zealots are gaining influence at the expense of the mainstream, and the twisted coalition between the "cupcake" Republicans of mainstream suburbia and the conservative evangelical moral militia. Mr Frank's goal was to change the perception of the red stater, arguing, as Mr Tierney does, that their difference from blue staters is imagined and a product of cultures' chief representative, the media.

I agree Mr Tierney, we're all the same, except for our differences.

Could Bush Steal Environmentalism?

2005-04-28T16:35:00.000-04:00

On March 5th, The Economist unexpectedly asked President Bush and his Republican cronies, why not go green? They suggest, “embracing greenery would be good for Mr Bush, good for the Republican Party, good for relations with Europe,” and perhaps help the President rebound from a career-low approval rating.

Why would the oilman from Texas suddenly add environmentalism to his agenda after years of apathy, if not outright neglect? It’s important to remember what Howard Dean and the Democrats identify as the their Big Three low-RI (Religiosity Index) issues for which they believe they have (or had) majority support among the electorate: foreign policy (or to the average voter, the Iraq war), Social Security, and the environment. (High-RI issues, such as abortion, same-sex marriage, prayer in schools, etc, are beyond the scope of this text.)

After 9/11, when the American populace was binging on Republican leadership, the Bush administration had no difficulty finding support for invading Iraq. As the guerrilla fighting dragged on for months after the end of “major combat operations,” and it was clear to even the staunchest war mongers that Iraq had posed less of a threat than a malswallowed pretzel, Democrats realized the support for the war was waning. Although never capitalizing on this during the election, the Democratic base came out strongly against the invasion.

Now, despite not finding WMDs or quickly stabilizing the country, people have new imagery coming from Iraq: elections, government, democracy. Whether perceived or real is hardly the point; Bush’s success in changing the rationale from pre-emptive self-defense to liberation of an oppressed people was no simple political move. As was documented in Control Room (a must-see documentary of Al-Jazeera and U.S. Central Command), the military PR was not focusing on the weapons threat. The enlightened Marine press specialist who starred in the film consistently emphasized liberation and the removal of a tyrant over the WMD threat, even as American troops had just begun to enter Baghdad, and well before the weapons were found to be just in Saddam’s head, suggesting perhaps at least the military knew that the self-defense defense was a sham.

History is written by the victor, and as the situation in Iraq improves, so will the American approval of the move to invade, despite the obvious holes in the original motivation and design. And whether you agree with this new justification or not, it leaves Bush on the winning side of this controversial issue.

Mr Bush is doing the same maneuvering on privatization of Social Security, initially coming out strong to create them, and now saying that private accounts are just one possible option to be part of Social Security reform. Without popular support for the plan to increase the risk held by beneficiaries in exchange for only slightly better potential returns, even some Republicans, led by Senator Gordon Smith of Oregon, are questioning the plan. With people feeling threatened by outsourcing and a shaky economy, the last thing anyone wants is to take on more risk to provide capital to major corporations. Private accounts will fail, but the President will end up winning for “taking on” Social Security reform, even though it is unlikely any legislation will be passed.

That brings us back to where we started, at the end of the Big Three: the environment. Conservation has become a priority for the liberal, and more importantly, the environmentalist has become tightly associated with liberalism and the Democrats. While almost everyone agrees with the pursuits of mainstream environmental organizations (nobody wants their kids to have pollution-induced asthma), they do not gain widespread support from both sides of the aisle. Although Republicans may say that this is because protective legislation stifles growth or infringes on property rights, the real problem with environmentalism today is its image (do you know when Earth Day is?).

Environmentalism is dead. Or at least that’s what two young eco-minded activists proclaim in their controversial and well-publicized essay, “Global warming politics in a post-environmental world.” Although the authors, Michael Shellenberger and Ted Nordhaus, received some criticism for choosing to release the paper at the meeting of the Environmental Grantmakers Association (as the name implies, this is where the money is), the essay was generally well-received as a wakeup slap across the face of environmentalists (rather than a more awkward jab to the gut). While their style and ideas may be controversial, the sentiments of Shellenberger and Nordhaus are not questioned within the community. (In fact, with their breakthrough essay, they join the elite ranks of other no nonsense, apolitical, business-friendly, eco-conscious, post-hippie, post-postmodern theorists and practitioners, such as Michael McDonough [no, not the former New York Fed President] and Michael Braungart who ask us to imagine a world where waste is nutrient, completing the big green circle to attain “Cradle to Cradle” living.) Instead of seeking small incremental victories with specific legislation, which they say has marginalized the movement, they believe only a grand cultural shift will pull us out of the global warming death spiral. Specifically, they want to “reframe” the issues to make them positive goals which acknowledge and cooperate with corporations and farmers.

Reframe? Where have I heard that before? That’s right, reframing the issue is the central theme to the Democrats comeback paradigm, introduced and promoted by the well-renowned Berkeley linguist and ad hoc Democratic spiritual adviser George Lakoff. Although slammed in two consecutive issues of The Atlantic, Lakoff’s new hit book, Don't Think of an Elephant: Know Your Values and Frame the Debate--The Essential Guide for Progressives, has given hope for liberals who feel the majority is being snookered by a persistent minority that controls the debate with talking points and The Factor. Less fluffy are Lakoff’s social models, laboriously constructed in Moral Politics, which thoughtfully support two extreme family models to describe conservatives and liberals: “strict-father” and “nurturant mother.” Importantly, the book is fairly convincing in demonstrating why each model supports certain issues, and why stances on issues as disparate as abortion and gun control are what they are for each side (somewhat of a Grand Unified Theory Of Disunity). Less convincing are the models application to real people; most people subtly combine aspects of each side in a way that is anything but transparent. Lakoff’s political objectives, however, are to show that liberals must understand how to talk to people, or more importantly how to frame debate in such a way that they cannot lose, something he feels they are on the stinky end of right now.

Putting the “neuroscientific hooey” of Lakeoffian framing aside, environmentalism is ripe for the picking and ready for a makeover. Neo-conservative politicians have shied away from the issue (that apocalypse thing will clean things up pretty good like, I reckon), but even 52% of evangelical Christians support strict environmental protection. And who better to sell a progressive energy plan to the Republicans than Mr Bush? The administration could promote it as a way to reduce America’s dependence on foreign oil while directing that spending to domestic businesses. He could even reduce the resistance from the biggest opponents, big oil companies, by promising steady cash flow from grant money for research and development, thus guaranteeing their financial success for several CEO-generations to come. Whether this is an economically sound idea does not matter significantly to the public, it has the auspice of a political winner: short-term growth with the long-term possibility of strengthening the nation.

Why would Mr Bush reverse course, you ask? Mr Bush wants to win widespread support without compromising his beliefs. Some issues, like abortion, are always divisive because there is no compromise. The environment is not one of those issues. The Democrats have fumbled and the Republicans can run with it, creating an effective environmental strategy on their terms. Mr Bush could unveil the compassionate half of his 2000 campaign slogan with policy too good for the environmentalists to refuse, creating new allies in places no one ever thought possible. He need not be remembered as the president who failed to act on one of the most important issues of this century, but could be seen as a pioneer (dare we say cowboy) in world preservation, all without having bowed on his social agenda.

But Mr Bush would have to gain support from his colleagues in the Congress, and old-thinking takes longer than four years to change. Even with many obstacles, Mr Bush could be successful were he motivated enough. His actions suggest he is far from making environmentalism a priority. The question is, Why not?

Did you get the memo? Shiavo lives on.

2005-04-07T16:48:00.000-04:00

Brian Darling is the real victim of the Schiavo case. Omigod, a senior policial figure writing an internal political memo! What's next, strategy meetings?

What's funnier yet is that America's "News"paper (visualization of patriotic picture of eagle near American flag left as an exercise to the reader), The Washington Times, went front page with a full blown Democratic finger-pointer. Oops.