Treasury Secretary Paul O’Neill joins the attack on Citigroup and Paul Rubin. I thought this kind of thing would be confine to the Andrew Sullivans, but the administration is getting in on the act. If Citigroup runs into a crisis of confidence, it will be interesting to see how O’Neill reassures the markets.

As I predicted, Mickey Kaus has come back at the NYT report on no-parent families. Let’s see how I scored. I said:
I await Mickey Kaus’ response proving that
(i) the numbers are wrong
Kaus obviously doesn’t believe them, but admits this “needs further study”
“I need to make some calls before deciding if she’s stumbled on to a small, troubling trend in a positive overall picture — or if there’s even less to her story than that.”
(ii) the NYT has misinterpreted them
He argues this on everything from the data itself to the expert responses cited in the report
(iii) in any case, it’s a good thing for children to be separated from welfare-dependent parents.
“”No parent household” or “urban children living without a parent” makes you think these children are running around in empty houses without adult supervision, which they aren’t. They’re typically raised by their grandparents, which (as Wendell Primus notes) can be a good thing — if, say, their mother is a crackhead whose problems were only smoked out when she was required to seek work.”
My score 2.5 out of 3. I confidently expect quibbles about the numbers to make it 3 out of 3 within the week.

The outcome of the NZ election is certainly worth two cheers. Labour was deservedly returned. The much-maligned multi-member proportional (MMP) system worked well, producing an outcome that reflects the wishesof voters. Finally, New Zealand has clearly put the era of radical free-market reform behind it. The National Party vote plummeted to a historic low of 21 per cent. Despite the collapse of the National vote, and the opportunistic adoption of a law-and-order platform, the true heirs of the free-market radicalism of the 1980s and 1990s, ACT NZ, went nowhere, getting only 7 per cent. This has led to suggestions from within the party that its leader, Richard Prebble is a liability, because ‘many would-be voters associate him with the Rogernomics policies of the 1980s.’ Presumably the suggestion is that ACT NZ should dump its economic line and stick to law-and-order .
The potential gains from this approach can be seen in one of the more negative outcomes of the election, the resurgence of anti-immigrant demagogue Winston Peters and his NZ First party. This is part of a more general shift where the political right is downplaying economic policy in favor of appeals to racial and cultural prejudice. In some cases, the same free-market policies are pursued but more cautiously. However the natural outcome is an economic policy based on opportunistic handouts. This shift has been made successfully by John Howard, and is also evident in the right wing of the Australian blog world.
Finally, what are the prospects for NZ Labour’s second term? Tim Colebatch sees Clark as leading a directionless, though competent, managerial government similar to that of Steve Bracks, and he’s not alone in this view. I’m currently reviewing a book by NZ academic Jane Kelsey who takes much the same line. But there’s a difference between caution and aimlessness. With the opposition in tatters, and evidence of pressing need everywhere, I think Labour will have little alternative but to spend more in areas like health and education. The model for all of this is the Blair government, which, like Clark, began by claiming to represent the ‘Third Way’, but has been mugged by reality, which dictates that the only way to substantially improve public services is old-fashioned ‘tax and spend’. My impression is that, despite its caution, NZ Labour is aware of this, and will take the necessary steps.

The outlines of the US election in November are now clear, at least in relation to domestic issues. The Democrats will try to tie the Bush administration to corporate corruption, focusing on the administration’s obvious links to criminal or dubious energy enterprises like Enron, Halliburton and Harkon. Meanwhile, a Republican counterattack will focus on the Clinton administration’s ties to Wall Street. The principal target here is Robert Rubin, and his employer Citigroup,, but inevitable collateral damage extends in one direction to Greenspan and the Fed (charged with inflating the bubble) and to other big Wall St firms like JP Morgan Chase, who assisted Citigroup as Enron enablers. Andrew Sullivan is leading the charge, but there are plenty of others following. In the spirt of bipartisanship, I propose a compromise. Why don’t we just agree that corruption is endemic and that both parties are guilty.

A great piece from Benjamin Barber (Jihad vs McWorld) who argues that “Capitalism is not too strong; democracy is too weak’.
‘Business malfeasance is the consequence neither of systemic capitalist contradictions nor private sin, which are endemic to capitalism and, indeed, to humanity. It arises from a failure of the instruments of democracy, which have been weakened by three decades of market fundamentalism, privatization ideology and resentment of government.’

According to the NYT, a previously unnoticed side effect of welfare reform is the No-Parent Family, that is, children living without either parent. I await Mickey Kaus’ response proving that
(i) the numbers are wrong
(ii) the NYT has misinterpreted them
(iii) in any case, it’s a good thing for children to be separated from welfare-dependent parents.

Thomas C Greene in The Register has the most interesting take yet on the Berman cyber-vigilante bill currently before the US congress at the behest of the RIAA and MPAA. As he points out, all bloggers are publishers, and this will license us to hack the sites of anyone we ‘reasonably suspect’ of violating our copyrights.

My response to an interesting piece by David McKnight on the future of Labor, originally published in the SMH. David’s piece broadly “Third Way” in tone, and relies heavily on the resilience and dynamism of ‘capitalism’ (I plan to explore this ambiguous term in later postings. The big problem is that sometimes capitalism is used in a way that includes ‘mixed economies’ where the goverment may control 50 or 60 per cent of GDP and at other times used to exclude them. The piece is in the form of a Word document Here’s my reply.

It seems to me that it is social democracy, rather than capitalism, that has displayed remarkable resilience over the past two decades. The obituaries have been read by Thatcher, Keating, Roger Douglas and many others, but they are gone and the welfare state remains largely intact. In quantitative terms, the ratio of public expenditure to GDP is at or near its all-time high in most OECD countries.
Moreover, in the countries where free-market liberalism had its biggest successes, the UK and New Zealand, it is now in retreat. The conservative parties, and their records in office, are discredited and Labour governments are raising taxes and increasing public spending. This is much against the inclination of people like Tony Blair, but it is happening nonetheless. Observers on all sides in the UK agree that the Third Way is dead and that New Labour has reverted to old-style social democracy.
Privatisation is the one policy where Thatcherism had a lasting impact. But the tide has already turned against privatisation. Renationalisation, which was unthinkable five years ago, is now on the agenda in many countries. Similarly, deregulation is being replaced by reregulation.
The big exception to all this has been the US, which apparently prospered by pursuing free-market policies including big cuts in welfare. But it is now clear that much of this prosperity was illusory. As the boom unravels, the real weaknesses of the US economy will emerge, much as they have done in Japan over the last decade. At the same time, the massive growth in inequality there reinforces the relevance of the old-style Left-Right division.

Nice Work by David Lodge. As usual with Lodge, its a comedy of juxtaposition, a la Changing Places. A radical feminist/postmodernist English lecturer, specialising in ’19th century industrial novels’ becomes the ‘shadow’ of the managing director of an engineering firm.

More on AOL, this time a critique of the once-fashionable notions of ‘synergy ‘ and ‘convergence’. As I observed recently about ‘financial market discipline’, Rob Walker says ‘it will probably be a long time before we hear anybody boasting about “synergy” again.’
Still, I’m going to try for a little bit of synergy and link to my website where I discussed the merger when it took place