The Long View 2003-10-06: Bad Timing

Here is a pretty good prediction John made about Arnold Schwarzenegger. Not that it was very hard.


Bad Timing

 

Here is what California Governor Gray Davis had to say about the pre-election-day blizzard of sexual-harassment allegations against Arnold Schwarzenegger:

"Taken together, I believe those stories do raise serious questions about his ability to lead this state," Davis said, adding that it's up to the authorities to decide whether to investigate or prosecute the sexual misconduct allegations.

These things are much better managed in New Jersey. When the classic party machines were still working, you could be sure the county prosecutor would be convening a grand jury on the day before election day, to look into the challenger's newly discovered malefactions. Etiquette dictated that an indictment not actually be brought; it was enough that an insurgent candidate's name appear in the same story as speculation about the length of a possible prison sentence. Even in these degenerate days, the party in power generally has the sense to pace its revelations of the opposition's atrocities.

In the case of the California recall election, it might have been very damaging to broadcast, in the last week before the voting, that Schwarzenegger was a lecher, or that he was a crypto-Nazi, or that he was a Robert Mapplethorpe pinup. To broadcast these things almost simultaneously (the Mapplethorpe allegations surfaced a bit earlier) smacks of wretched excess. The Davis people were constrained by the brief length of the campaign, of course. Still, by launching so many accusations at once, they may have committed the public-relations equivalent of "fratricide," which is what happens when you throw multiple bombs against a target and one bomb destroys the rest before they can explode properly. We will know tomorrow whether the error was fatal.

As for the sexual harassment allegations against Schwarzenegger, I have no reason to doubt they are true. (The Nazi allegations imploded when John Butler, the producer to whom Schwarzenegger made the comments, found his notes and reported that he had misquoted Schwarzenegger earlier.) Long before the recall campaign, the word on Schwarzenegger was that he was a very bright man with a penchant for cruel practical jokes, and that he did tend to get physical with women who had not asked him to. Whatever he did to them, however, none of them thought it outrageous enough to bring charges. It sounds as if he is not a misogynist, but a bully. In this he is different from Bill Clinton, who apparently confined his abusive behavior to women.

In any case, one thing we may know tomorrow is whether we will finally be shut of sexual harassment allegations as a political tool.

* * *

Writing in the Fall issue of The National Interest, the strangely inescapable Niall Ferguson argues, in an article with Laurence J. Kotlikoff, that the United States is cosmically bankrupt, and that this condition could manifest itself very quickly.

The piece in question is entitled "Going Critical." The summary line says, "Long before the American Empire becomes overstretched abroad, it will implode economically at home." To some extent, the authors just rehash familiar complaints about unfunded entitlements. Citing a study by two other economists, Jagadeesh Gokhale and Kent Smetters, they say this about the next 30 years:

Suppose the government could, today, get its hands on all the revenue it can expect to collect in the future, but had to use it, today, to pay off all its future expenditure commitments, including debt service. Would the present value (the discounted value today) of the future revenues cover the present value of the future expenditures? The answer was a decided no: according to their calculations, the shortfall amounts to $45 trillion.

Reasoning like this is why no one talks to economists. I have not seen the study in question, but I suppose it's subject to the same "butterfly effect" that characterizes every other calculation that involves long-term compounding. Very small changes, in either the base numbers or the assumed rates of return, will provide wildly different answers. That's how huge projected fiscal surpluses can turn into huge projected deficits in the wink of an eye. Of course, the projections for the federal budget are a model of certainty compared to the liabilities at issue here. Off-balance-sheet liabilities are off the balance sheet in part because they are harder to quantify. Federal revenues are just as speculative. The situation could be worse than Ferguson & Kotlikoff say, but a 30-year projection will tell us little either way.

They seem to know this, too. The point of the article is that the dollar could collapse simply on the perception that the fiscal condition of the United States government is unmanageable. The collapse could be occasioned by a political incident as easily as by bad economic news:

In Germany in May 1921 -- to give an extreme example -- it was the announcement of a staggering postwar reparations burden of 132 billion deutschmarks that convinced investors the government's fiscal position was incompatible with currency stability. The assassination of the liberal foreign minister, Walter Rathenau, in July of the following year delivered the coup de grace, sending both interest rates and exchange rates skyrocketing.

Supposedly, the peculiar vulnerability that the US faces is that its budget deficit is being funded by foreign lenders, who might all take it into their heads to sell those US bonds for euro-denominated instruments. This seems to me to be unlikely on several counts. Sell them to whom? Replace them with what? Nonetheless, some such scenario is often met with these days. The political crisis of the Clinton impeachment did not spark a financial crisis, but one must wonder whether this would be true today in the face of another event of that sort.

* * *

In its Sunday edition, The New York Times did not neglect presidential candidate Wesley Clark's caution against taking special relativity too literally. Aside from the title of the piece, Beam Us Up, General Clark, the Times resisted the temptation to wax merry over the incident. At any rate, it resisted the temptation to be funny on purpose. The paper's willingness to take a broad view of physics in no way implied any willingness to suspend gender-blender language policy. In the course of a discussion about worm holes as a possible way around special relativity, the article observes:

Nobody knows whether such things are actually possible in the real world. One obstacle is the "grandmother paradox," which raises the theoretical possibility of going back in time and killing your own grandmother.

Ah yes: the "Grandmother Paradox." The interesting question is whether this distortion of common usage comes from the author, Dennis Overbye, or some zealous copyeditor. 

Copyright © 2003 by John J. Reilly

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