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18 Jan 2010 06:07 pm
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TrackBack URL for this entry:http://meganmcardle.theatlantic.com/mt-42/mt-tb.cgi/20296
Once the capital is truly gone, you should forget about it--not double down in an attempt to "get your money back".
A rather ironic position for you to take, given your opposition to loan cramdowns.
Except that most loan cramdowns are an attempt to double down in an attempt to get the house back, instead of walking away. The loan cramdowns so far have mostly been insufficient to keep people actually in the homes, and when they fail, people are left worse off than if they had just conceded the money and home as lost and started renting instead.
Given how common the sunk cost fallacy is, it's not clear to me that it is a fallacy, as far as political costs go.
Perhaps we should think better of a politican who cuts his loses and moves on. But in fact, we have all sorts of ideas about honor and saving face and respect for those who fight to the last man, etc. And given that voters do have those ideas, even if they rationally shouldn't, it might well be game-theoretically rational and politically expedient to live up to them.
Got Payoff A and B mixed up?
The French health care system seems to work pretty well.
I'm told that the Singapore one is pretty good. And Iceland's. Doubtless there are other good ones. And the Democrats are tearing themselves to bits to pass a lousy one? Is this wise?
Meagan, what would happen if the GOP were this close to restoring laws against abortion, which would be similarly unpopular, and then stepped back and chose not to? The answer is obvious: they would lose their base, possibly for good. Sure, the GOP, in my hypothetical, would suffer at the next election for flouting the public will, but they would get past that: people who are fanatically pro-Choice would never be voting for them anyway and the majority of voters who don't consider abortion rights THE single issue would find themselves voting GOP again in future years over other issues they do care passionately about. The Democrats are in the same position. Healthcare reform has been every bit as much a core Democrat agendum as abortion restriction is for the GOP-- even more so because it's of much longer standing and while you can find pro-Choice Republicans you will look long and hard to find a Democrat who doesn't agree with the baic principle of universal healthcare. So either the Democrats betray their base, with long-term catastrophic results, or they tick off a large set of independents who will in time get over it. (And for those who will say "No, the voters will never get over it"-- come on, please name one unpopular policy or action a party did that the electorate didn't eventually get over. The country elected Ronald Reagan and a GOP Senate just a few years after Watergate, and it seems ready to forgive and forget the sundry Bush 43 fiascos after an even briefer span)
Except, I'm not sure how thrilled the Democratic base is with this health care bill, which many have derided as a corporate payoff and is unlikely to bring true reform without the public option.
If the base were firmly lined up behind this bill you might have a point. But I'm not sure that is the case.
A very nice point. But there are yet more complications. I know a lot of serious Dems - people who are part of the base - who just don't follow the details of politics that closely, and think that the health care bill is a good one. I think that much more of the base is in this position. On the other hand, they'll probably buy the inevitable spin if it doesn't pass (it wasn't a good bill anyway). This stuff is very difficult to predict.
Shouldn't this particular payoff matrix have 4 cells? You can vote for or against, and the bill can pass or not.
Well, maybe just a third. It's unlikely there will be enough "vote against a bill that passes" on the Democratic side with the bill still actually passing. But good point, it seems the main choice should be between voting against, and "not throwing good money after bad", or voting for and passing a bill, and "doubling down".
That was my first thought too.
I think Megan is mistaken on this. If the Republicans can run on torture -- that is, rather than disowning the torture committed during the Bush Administration, they now actively endorse the use of torture in more and more instances -- than I don't see why Democrats can't run on hav9ng supported healthcare reform.
Gene,
"Torturing" terrorists is popular with the American people. Screwing up the health care system isn't. So your analogy fails.
(What was the result of that poll? 58% of Americans thought it would be a good idea to waterboard the EnuichBomber?)
My analogy may not hold, but your quotes around torturing are stupid. If anything, the quotes should be around terrorists, since most of the people that were tortured were so-called "illegal" combatants, which means that they were not fighting for a recognized state. Plus the ones that werte just pulled off the street in sweeps.
It seems that the Republicans lost in 2006 and seeded their defeat in 2008 for that reason.
If you phrase say, national security vs. death panels, it comes across quite differently.
Derek
Except that most loan cramdowns are an attempt to double down in an attempt to get the house back, instead of walking away.
The point of cramdown is for the banking system to take a reality check by accepting that they can't get all of the money back through foreclosure, as a result of their rotten underwriting. Accordingly, they should stop strangling the economy, and instead move forward by creating debt loads that can be serviced. It's the equivalent to bankruptcy.
The concept of the sunk cost fallacy is sound. The refusal to apply such a basic tenet to an obvious economic problem is foolish and driven by ideology, rather than by sound financial logic. I'm surprised to see Ms. McArdle tout an idea in one context that she completely ignores in another, which leads one to believe that she is either unable to connect the dots or else hopes that you won't.
Trying to collect money that doesn't exist clearly doesn't make any sense, unless your goal is to try to perpetuate a cover up to hide the fact that the free market blew it, big time. Financial innovation wasn't, and it's time to admit it instead of continuing with the obfuscation.
But emotionally, we are usually unable to handle this decision. When we've just suffered a big loss, we are panicking and desperate for some way to undo it. Walking away means acknowledging the loss. As long as we're still pouring more capital in, we can tell ourselves that there's still some way to at least get back to the break even point.
This is why you should make people put money down if you don't want them walking away from their mortgages.
What I find weird about the Democratic discussions of a possible Brown victory is this. Here they are, supposing that Brown might win, and asking what they can do to pass a health care bill anyway. Can they get the House to go for the Senate bill, completely unmodified, with none of its defects cleaned up? Can they block Brown from taking office long enough to push health care through? Can the Senate refuse to seat Brown entirely? Can they pass a truncated bill through reconciliation? Which of these methods of getting something passed has a downside with voters that's not too big to endure?
But what they don't seem to be getting is that it looks as if it's the very willingness to use any means whatever that is the biggest turnoff for voters. They see senators getting hundreds of millions for their states, or labor unions and government employees getting a massive tax break that private citizens . . . the people Murray Rothbard called "net taxpayers" . . . aren't eligible for. And that looks like corruption and special privilege and favors for special interest groups. Certainly there are people like me who want free market health care, and there are people like the progressives who want total government funded health care, but I don't think most people hold either position, or know all that much about the ins and outs of health care policy. But everyone can see the wheeling and dealing, and the readiness to force through legislation that only one party supports, and the indifference to bad and dropping polls and public hostility . . . and I think that's producing more anger and more willingness to vote the rascals out than we would ever see otherwise. And yet the Democrats are carrying on with their insider deals and thinking that if they just find the right one the public will be happy and forgive them.
Bizarre.
They care, quite a lot, about passing a healthcare bill. They know this is their best chance to do so in the next decade or two(it's been 16 years since the last attempt, recall). To be blunt, they're probably willing to pay the cost of pissing off the public monumentally if it actually gets them the bill.
That works, yeah, for a lot of the core Democratic progressives. But it doesn't make nearly so much sense for Democrats from the states that usually lean Republican. Quite a lot of them weren't big fans of the proposed changes in the first place, and had to be bribed or armtwisted to get their support. And yet now they're acting committed to it, and going along with all the machinations needed to enact it"”instead of telling the progressives, "No, it's time for you to back down." Are you telling me that Landrieu, Lincoln, or Nelson have spent the past 16 years dreaming of the day when they could pass a healthcare bill?
At a guess, I'd say that at least one of those three probably has. Possibly more. In the current political climate they'd probably go to their graves before saying so publicly, but even moderate Democrats are still Democrats, and we're talking about a policy that's utterly uncontroversial except among the hardest right-wingers in pretty much every other first-world country around. I doubt this is within a mile of the bill they dreamed about voting for, but Senators are used to holding their noses when they vote.
Also, even for the ones who don't want to pass it, they still have some factors to consider. If they're the guy who sinks this bill, they're going to earn the undying hatred of their party's base, which is never fun, and of their party's President, which is even less fun for many. They're giving up chances to get absurd concessions to their voters written into the bill like Nelson did. And they're already in such deep shit with the voters that one procedural trick(which is is all it'll take, they hope) will have a minor effect compared to what's already happened, whereas a well-received bill at least holds out hope for saving them in the long term. I doubt they're blind about the expense of doing this to their reputation, but they can see that and still think it's their best option.
Mr Cohn is ignoring the biggest problems that this represents for the Democrats:
1: A hated bill that fails pisses off people less than a hated bill that becomes law. (Last I checked the percentage of Americans "strongly opposed" to ObamaCare was roughly equal to the total "supports" percentage. With another 15% or so "opposed". That's "hated".
2: If the bill becomes law, people's taxes go up, but none of the "benefits" show up until 2013. I don't know about him, but as a supporter of the Republican Party, I'll be perfectly happy to have the next two elections dominated by voters pissed off about their taxes going up, and about all the problems "health care reform" will create for them, with no countervailing block of voters happy with the benefits they're currently getting from the law (since the benefits haven't kicked in yet).
OTOH, if you don't want Sarah Palin as President, with a 60+ Republican seat majority in the Senate, and a large Republican majority in the House, rolling back everything the Democrats did, and putting in hard core Republican free market reforms, then you might consider the above to be a, ah, suboptimal outcome. :-)
2: is what I thought of immediately after reading the 'remind the voters that in the future...'.
The GOP ads reminding voters they will be paying taxes on their health care benefits (after Obama ripped on McCain for suggesting such at tax; shades of 'They said if I voted for Goldwater my son would be sent to Vietnam...') for four years before seeing any 'benefits' from HCR practically write themselves.
Megan, I think you are right if you only consider voters as one set. But I think that what Mr. Cohn said would ring true if we take into account two different sets of pivitol voters in the upcoming election.
Set 1 would be those on the bubble who are affected by Republican attack ads and also possibly affected by positive Democratic ads about the health care bill.
Set 2 consists of voters with Obama "hangover." I think most people agree that the next election will have a much lower turnout, but I would take it a step further and say that it will be much lower dispraportianately for Democrats. I say this specifically because I think there will be less of an emotional charge in the next election. The only way to get Set 2 back in the mix is to get them riled up about something, and since Republicans won't really have any negatives to go off of, you would need to use Democrat positives.
I think you are right about Set 1 not being a lost cause for Democrats on the fence. But I think Set 1 will be marginal either way and Set 2 could wind up being much more significant
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