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9.10.08

Politics exacerbates downturn to Louisiana's detriment

The good news for Louisianans is gas prices are falling. The bad news for Louisiana is gas prices are falling, and it’s probably only going to get worse given election dynamics.

People often forget that prices in a marketplace are set not just by changes in supply, but in changes in demand. Typically, demand is highest in summer and slacks off to the end of the year. So the decline in prices is not unexpected.

But demand also is a function of overall economic activity, and that is tapering worldwide in part to the overleveraged mortgage market now being addressed by world central banks. However, in the short term, perceptions spawned from all of the alarmist attention being paid to government interventions have taken over from reality and are changing people’s investing, borrowing and spending habits. This results in an artificial depressing of financial activity that contributes to the slowdown.

Worse, election-year dynamics are exacerbating this reaction. Democrats in particular such as presidential candidate Sen. Barack Obama have been hyping the circumstances because they believe it helps them electorally, something that in Obama’s case seem to work as he has been creeping up in polls resting on the Democrats’ case Republicans are to blame – the tremendous irony being it was Democrat policy that set the stage for problems in the mortgage industry.

This now is creating a vicious cycle that threatens to make matters worse than they should be. In another irony, even though it is a Democrat-led Congress that has more responsibility for and control over the economy than the Republican president, Democrats are benefitting electorally from the uncertainty which depresses things further. While some of the recent incredible decline in the equities market obviously is due to the ramifications of the credit crunch, a significant portion of it as well comes from the fact that as Obama rises in the polls and Democrat congressional gains look larger, investors understand that their articulated policies are going to cause economic damage to the country if enacted and therefore are reducing their commitments.

This is no surprise given these markets serve as leading indicators of future economic performance. But the danger is that declines in stock markets create a bigger crisis in the general public’s mind, which then seems to increase further Democrats’ chances of being elected, and then feeds itself as more informed investors continue to reduce equities commitments, and the cycle begins anew. Further, regardless of who gets elected they will talk down the situation as much as possible to increase perceptions of whatever beneficial effects products of their policies will have in the future, maintaining the cycle.

As a result, the slowdown could last some time, particularly if Democrats end up controlling both majoritarian branches of government. Oil prices will remain lower as a result and while that saves Louisianans money, it will have a negative impact on state finances. Now that roughly $82 estimate for the average price of a barrel of oil used by the state for budgeting purposes doesn’t seem so bad, but also predictions of any surplus may have to be trimmed. And going forward, any economic slowdown will make state budgeting more bleak.

8.10.08

Jindal spending statement consistent with conservatism

It’s all right to be clever, but when you are trying to be clever but aren’t clever enough, you don’t realize that your effort ultimately was not clever. Such is the fate with an editorial written by the Baton Rouge Advocate concerning Gov. Bobby Jindal.

While the piece lacks some clarity and coherence, the gist seems to be that The Advocate asserts Jindal, well known as a conservative, borrows from the left to argue for a public policy goal. When Congressional legislation recently passed to create a mechanism by which the federal government could fund potentially large financial concerns, Jindal decried the fact that while this was getting funded, progress was slower on emergency funding to assist the state in recovery from the September hurricanes.

Such a view by the editorialists misunderstands the nature and purpose of government. Jindal is criticized for comparing one kind of spending to another, in essence saying one purpose with less legitimacy gets money while another with more does not. It’s not exactly clear what it’s trying to state here, but it appears The Advocate equates use of a rhetorical strategy comparing different things and using spending on one to justify another is a kind of demagoguery, and one that has been used by the left in reference to the Iraq war.

But note the inherent assumption: it grants sufficient legitimacy to all spending claims. That is, if Democrats claim more ought to be spent on wealth transfer policies, a bedrock demand of liberalism, because so much is being spent to prosecute the war, then it presumes Jindal adopts the tactics of the left because he now is criticizing the bailout, which because it would assist first businesses that is argued is a hallmark of conservatism, in order to justify transfer of wealth to Louisiana, the syllogism works only if all instances of government spending are mere matters of policy choice within a framework that legitimizes any choice.

In fact, the argument breaks down precisely because that is untrue. While expenditures on disasters are a legitimate federal government purpose (see Art. IV, Sec. 4 of the U.S. Constitution, to protect states from domestic violence), as are those for the prosecution of war (Art. I, Sec. 8), and, even though it is a stretch through the “necessary and proper clause” (same passage), spending on wealth transfer programs can also be deemed a proper function of government constitutionally speaking. But arguably it stretches way too far that government should intrude so decisively into the economy as through the bailout plan. Thus, Jindal may argue that spending is occurring for an illegitimate and unwise policy rather than another that is legitimate and he thinks wise, a conceptual difference that appears to escape The Advocate.

Further, The Advocate does not seem to understand the place of “business” in conservatism. Advancing the interests of an institution known as “business” is not a principle of conservatism. Rather, conservatism concerns itself with advancing personal liberty and reducing government power to prevent that being an obstacle to this goal – a position that The Advocate appears to disagree with if it argues that spending on any purpose seems equally legitimate, as implied in its argument.

One manner by which liberty is advanced is by government noninterference in markets which may encourage the formation of entities involved in “business” but the object conservatism addresses is the individual and his autonomy, not that of corporations. So when Jindal or anybody else argues that a bailout is not a wise use of money, his objections from a philosophical stance are this action reduces liberty by transferring property – tax dollars – out of the hands of individuals when it is unnecessary. Thus, Jindal is not railing against “Wall Street” on the basis that is it “Wall Street,” but on the basis that government assistance on this scale and to this degree of intrusiveness violates individual liberty – not the argument being made by The Advocate.

Because The Advocate editorialists seem to believe that the exercise of any government power is permissible so long as there is some “good” from it, and because they misunderstand basic conservative principles, they draw entirely the wrong conclusions from Jindal’s statement. Asking government to spend money on a legitimate purpose of government instead of on a dubious purpose that decreases individual liberty very much is reflecting conservative principles, and does not mean “Comrade Bobby” should be “welcome[d] to the left.”

7.10.08

Racial voting carries Jefferson to likely nomination

Yesterday we learned why legally-challenged Rep. Bill Jefferson was able to come in first in the Democrat primary for his Second Congressional District seat. Here, we’ll see why he will win the runoff against former television reporter Helena Moreno in the Nov. 4 nomination runoff.

The first part is its usual, if not somewhat lamentable, self: race. Most analysts, drawing upon their experiences without resorting to detailed use of numbers, argue that there are too many black voters present for Moreno, who is Hispanic, to be able to defeat the black Jefferson. It’s just the way things are in and around Orleans Parish: in a black vs. non-black contest, non-blacks will vote largely for the non-black candidate, while blacks will vote overwhelmingly for the black candidate.

The numbers confirm this. Of the 492 precincts in the district, 93 or almost 19 percent have total registrations (not just Democrat and independent ones who were the only ones who could vote in this contest; several more would be added if Republicans were removed) of fewer than 2.5 percent white voters. They represented 10,569 of the 69,149 votes cast, or 15.28 percent votes cast. They may be used as a close proxy for the proportion of the black vote received by the candidates (but will slightly underestimate the black vote received by Moreno because in mixed-race neighborhoods there tends to be more crossover voting, and thereby will overestimate it for the black candidates).

Reviewing the results of these, Moreno cannot win. She received slightly less than 4 percent of the black vote. Jefferson got a little over 38 percent of this vote, with the other five black candidates obviously receiving the remaining 58 percent or so. Keep in mind Jefferson got about 25 percent of the overall vote, Moreno about 20 percent, and that the registration of blacks among Democrats and independents in the district is a little over 68 percent. (Interestingly, multiplying Jefferson’s share of the black share of the vote with the black proportion in the district puts him almost exactly at his percentage for the election, suggesting he received almost no non-black votes.)

Therefore, in order to win, assuming everybody who voted in the primary will turn out for the runoff and no non-blacks vote for Jefferson, he needs only 45 percent of the remaining vote to win of which it appears about three-quarters are black. Going by race alone, Jefferson is 30 points to the good.

One could argue that perceptions of corruption would trump racial voting in this case. But even if just 60 percent of black voters who voted for other black candidates in the primary put racial voting first, Jefferson wins. And the electorate well may be expanded in Jefferson’s favor with the presence at the top of the ticket of black Sen. Barack Obama. Further, the vanquished opponents could go into the tank for Jefferson, not endorsing her in the hope he wins and then resigns upon a future conviction, reopening the seat for them.

Moreno shouldn’t give up – anything could happen including underestimating public revulsion over Jefferson’s alleged misconduct. But some unusual things are going to have to happen for her to advance to the general election.

6.10.08

Jefferson success recipe: environment, opponents, luck

The most interesting question about how Rep. William Jefferson, despite federal corruption indictments, managed to lead a Democrat primary for reelection is not really how he did it, but why he was able to. It’s an answer not so much connected to Jefferson, but to a political environment largely untouched by modern forces.

We must recognize that Orleans Parish, which comprises the majority of the Second District, is the least mature political culture not only in the state, but perhaps in the entire nation. “Maturity” is a concept defined by how much of a role personalistic forces play in determining a vote decision. Thos forces are defined as qualities of candidate image – inferences about a candidate’s experience, leadership, and other personal characteristics – that voters make. The more that candidate image plays a role in voters’ decisions, the more personalistic and less mature is the political environment. By contrast, the more that impersonal institutions like political parties and that issue preferences play a role in the vote decision, the less personalistic and the more mature the environment is.

Note in the Orleans area, when reviewing this office and that of mayor, the second-level offices after the so-called starter level of city council, state legislature, and others, for decades not only are the winners of these experienced politicians, but almost all of the candidates contesting them have been and are people experienced in government. The one great exception going back well into the middle of the 20th century is current Mayor Ray Nagin (and technically former U.S. Rep. Lindy Boggs, but to be honest she received impetus to win office right after the tragic death of her husband former U.S. Rep. Hale Boggs).

This is because the political environment creates conditions that make these kinds of candidates successful. They must build a political base on their ability to satisfy individuals and small groups not on grand matters of policy but on their skill in passing along rewards – patronage, contracts, government programs, and the like – to these intermediaries who then, either substantively or symbolically, pass down a portion of these rewards to key constituencies that can be mobilized for elections to vote for the favored candidate.

This does not mean that election decisions aren’t made with other tactical considerations in mind – as my colleagues have demonstrated – nor that external institutions aren’t important. In fact, New Orleans is distinguished from almost every major city in the country in that a passel of “alphabet soup” political organizations for decades have played a major role in elections. But keep in mind that these organizations themselves are built around particular individuals (such as Jefferson) and historically have had difficulty in separating themselves from them as the founding force (and/or his family) detaches from politics. They are, in other words, an extension of personalistic politics.

This is why it is not surprising that former television reporter Helena Moreno would run well enough to make the runoff with Jefferson. Hers also is a personality-based candidacy – the familiar face she is from years of constant television appearances. While she has no political background, the same personalistic dynamic worked for her as an alternative (non-black, female, unconnected politically) for those Democrats and independents who disdained the existing political forces in the district.

Jefferson did well enough because he could, as he has done for over 20 years, operate well in this environment. But, more importantly, he did so better than the other politically-connected candidates in the contest – and in no small accident due to fragmentation among his presumed opposition.

One hallmark of political organization in New Orleans has been it ability to coalesce eventually around a very small number of leadership figures that had some ability to transfer power from one elite to another, a trait forced on it beginning nearly a century ago when the reformist machine of former Gov. John Parker began to try to eat into this power base, then in its trying to resist the encroachments of former Gov. Huey Long’s and his successors’ apparatus. After the era of former Mayor Ernest “Dutch” Morial this has become increasingly difficult to attain (for interesting reasons), most recently demonstrated not just by Nagin’s initial win but especially by his reelection, as Nagin has disrupted the process by not actively seeking to create and sustain an organization with a designated successors.

The failure of political figures in the black Democrat community (whites and Republicans at best now can only influence elections at the margins, not as central figures) opposing Jefferson to unite around a common leader, either to run against Jefferson or to back an opponent, allowed their conquering on this occasion through their division, as my colleague suggested. This crisis enabled Jefferson to use his depleted but still viable organization as well as the perquisites of incumbency to score enough support to vanquish the opponents that were mostly likely to beat him in a runoff.

In short, had a solitary black politician rose from the infighting to challenge Jefferson, not only would that person have made the runoff, but Jefferson might have been aced out of the runoff. Most of those who did not vote for Jefferson or Moreno would have voted for this person, but of those who would not have, more might have disproportionately voted for Moreno than Jefferson leaving her and the other in the runoff. Even if Jefferson had encountered perhaps only two or even three of these politicians he might have gone to a runoff but with one of them not Moreno where his chances of winning the nomination in a month would be greatly reduced. But four other major competitors than Moreno gave him a decent chance for survival.

But perhaps what sealed the deal for Jefferson was the intervention of a woman – Mother Nature. Hurricane Gustav disrupted the election and pushed it back a month. What was left of Jefferson’s organization plus the resources he could draw from his congressional post made him best equipped to handle this curveball. Without this stroke of fortune, more likely Jefferson would have been eased out of the runoff. While the environment gave Jefferson the framework to succeed, his opponents’ disunity and luck gave him the tools by which to do it.