Globalization

I. Obama Pressed on Immigration -  The latest news from this morning, the CHC is ramping up activity, and Simon explains how immigration reform can be used as a tool to improve the economy.

II. Happening in Our Own Backyard - A friend of mine from Nashville shared with me that the Lt. Governor of Tennessee had not taken any action for or against the "English Only" provision that was voted on in TN shortly after January 20th.  The Lt. Gov. was in D.C. for the inauguration, and as he was driving home, having just heard the President's moving speech on the dream that is America, on moving forward, on how "We are One,"  that "I am my brother's keeper," and that we are not the "native" or "foreign," "black" or "white" states of America, but rather the United States of America, he began hearing anti-immigrant talk radio as he crossed the state of Virginia.  And it hit him - how could he come from hearing his President's inspired words, then go home and ignore what was happening in his own backyard?  And he got home to rally against the "English-only" provision, which failed.  This lesson applies to all of us.

Two years ago, in Prince William County, Virginia - a mere 30 minutes away from the home of our President, Congress, and federal Judicial Branch - the County Council decided it was a good idea to turn citizens and local police into immigration officers.  Now Montgomery and Frederick County in Maryland are following suit.  Following the GAO report on 287(g) that we discussed last week, NPR had a great interview with the Frederick County sheriff, Charles Jenkins - who is encouraging this policy - and our friend Frank Sharry, of America's Voice.  How can we say that we support our country, our President, and his values if we don't fight against these laws?

Sheriff Jenkins argues this initiative is in response to an "increase in crime involving people in the country illegally," but as indicated during the interview, of the 337 arrests of undocumented immigrants in Frederick County, only 12 of those individuals had actual criminal records, and only 9 participated in gang-related activity.  These individuals should be arrested and prosecuted for their offenses as part of the normal county policing efforts, but there is no reason to pinpoint "immigrants" specifically.  Data demonstrate that native-born individuals are 5 times as likely as foreign-born to have a criminal record.  This effort is not a strategy to go after actual criminals, it is an effort to turn community police into deportation agents, which has unintended consequences.  We recommend Sheriff Jenkins take a good look at the counties that have already had experience with the 287(g) program, and learn from it. 

In Prince William County, Chief of Police Deane warned the County Council of these unintended consequences:

1. Community policing efforts in minority communities will end.  Best practices in policing indicate that effective policing is based on trust.  This trust is undermined when communities - particularly minority communities - feel they, or their friends and family, are in danger of being deported or persecuted.   

2. Sharp rise in unsolved crimes and underreporting of crimes in the minority population.  As stated by Frank - there is a reason 95% of police departments choose not to participate in this program, it undermines their policing efforts.  If police are seen as "la migra" or immigration enforcement, as opposed to protectors and partners in the community, this is the expected result.

3. Crime rates among youth will rise.  These programs lead to feelings of persecution and marginalization, which translates to frustration.

4. Rise of vigilantism.  These programs cause greater "citizen activism" and embolden those with anti-immigrant feelings to feel more comfortable acting out on those feelings.

5. A more radical population.  These programs cause a greater rift between immigrants, minority communities, and those who are very anti-immigrant.  Chief Deane noted that eventually both sides become increasingly polarized and harder to deal with.

6. Perceptions of racism will increase.  The reputation and perception of life in that County changes, as we saw with the exodus of many Hispanics from Prince William.

7. Higher taxes, skyrocketing expenses.

Sheriff Jenkins believes that he is, "not spending an enormous amount of resources on this program. I am simply performing this duty as an extension of law enforcement duties."  But participation in 287(g) necessarily requires additional processes and resources, which will be felt in the county, as happened in Prince William.  In a time of economic crisis, Prince William County had to cut back on their 287(g) initiative because of the unforeseen amount of resources that went into it.  Sheriff Jenkins might want to take a look at this presentation by Chief Deane before the Prince William County Board over one year after the implementation of the 287(g) program:

III. Immigration and Latin America - President Obama wants to develop a renewed and more engaged relationship with Mexico and our other neighbors in Latin America, but given some of last week's events, one understands why it becomes difficult for these countries to trust the U.S. government - and Democrats in particular.  Last week during the vote in the Senate approving the Omnibus spending bill, the U.S. government sent mixed economic messages and backed out on a major commitment under NAFTA.  The bill that passed on Tuesday would end funding for the cross-border trucking program that was signed into law in 1993 as part of the North American Free Trade Agreement.  Regardless of the success or flaws in this program, the bottom line is that the United States agreed to this pact, signed it into law, and is now going back on its obligations (it's reported that access to U.S. roads granted to Mexican trucks in NAFTA would be terminated).  Critics cite safety concerns, but a spokesman for the Mexican Embassy argues:

"During the cross-border trucking demonstration program's 18 months of operation, 26 carriers from Mexico -- with 103 trucks -- and 10 from the U.S. -- with 61 trucks -- crossed the border over 45,000 times without a significant incident," said spokesman, Ricardo Alday.

Mr. Alday adds, "Mexico would expect that at a time of global recession and economic distress, the U.S. would play by the rules, fulfill its international treaty obligations and ensure that bilateral trade is a level playing field, rather than erect trade barriers that undermine much-needed incentives to foster growth," predicting the action would increase consumer costs.  We can expect Secretary of State Clinton will have to address this issue while she's in Mexico next week.

This issue ties into immigration because Congress must come to the realization that we are indeed connected to the rest of the world, and to the Latin America region in particular.  As long as members of Congress like Sen. Byron Dorgan and others continue to use serious policy issues to do politicking, and as long as they scapegoat our neighbors for domestic problems, it will be impossible to have a political atmosphere that is rational and balanced enough to deal with major domestic problems, like the economic crisis and the broken immigration system.  This takes me to the next issue:

IV. Mexico is No Failed State- Much was said last week about reports and academic studies calling Mexico a "failed state."  First, let's return to our basic University level Theory of State and government classes:  a "failed state" is a term used by commentators to describe a state perceived as losing basic conditions of a sovereign government.  Per Noam Chomsky, these conditions include:

1. Loss of physical control of its territory - Last I checked, not a single mayor or Governor in Mexico has ceded control to organized crime.
2. Erosion of legitimate authority to make collective decisions. - Again, President Calderon, the Judicial branch and Congress are still carrying on with daily business.  
3. Inability to provide reasonable public services. - If anything, service providers in Mexico have improved, with new education and other service providers.
4. An inability to interact with other states as a full member of the international community.  Considering the U.S. Secretary of State is visiting her counterpart in Mexico next week, and given Mexico's active participation in everything from the UN, to the OAS, to the upcoming Summit of the Americas, this is evidently not the case.

Let's stop demonizing a country that is in fact our second largest trading partner, with whom we share much more than a border and economic ties.  We share ideology, common goals, strategic benefits, the fact is we share a people and many aspects of culture and customs.

If Mexico were a failed state, we'd have to apply the same title to the U.S., given the events of 2007 that revealed unexpected shocks - primarily the implosion of the U.S. subprime market, which burst housing bubbles worldwide, slowed trade, and sent currencies into tailspins.

V. Congressional Hearing on Border Crime - It is important that all our advocates for immigration reform refute these claims as quickly as they refute attacks on our immigrant population because as long as Mexico and Mexicans continue to be seen as harmful to the U.S., immigration will continue to be equated to "Mexicans," "security," "terrorism," and other "hazards," as was evidenced during last Thursday's hearing of the House Subcommittee on Border issues.  At Thursday's hearing, Chairwoman Sanchez asked Mr. Alonzo Pena, the Homeland Security Attaché at the U.S. Embassy in Mexico City, whether all of Mexico was truly as dangerous as reports make it seem.  Mr. Pena responded that his family had just vacationed in Mexico, and that while the border region and specific areas are dangerous, tourist areas and the country in general remains safe:

"While there is violence in Mexico, it is not, and I repeat not, an indication of the government of Mexico's inability to maintain control," he said. "Rather it is an indication of President Calderon's success in confronting transnational criminal organizations in Mexico."

I left the hearing very concerned that "immigrants" continue to be bundled into "border threats" and "other hazards."   Organized crime is organized crime, many times carried out by U.S. citizens on both sides of the border.  Organized crime is one thing, immigrants are an entirely different phenomenon.  The Administration and specifically the Department of Homeland Security must separate "immigrants" and "immigration" from "gangs" and organized crime.  The ICE gang unit should certainly seek out and persecute gang members, but the ICE gang unit should not constitute all of ICE's work, nor can it serve as the foundation of ICE's ideology and priorities.

We saw progress in that both ICE and ATF agents finally recognized the harm U.S. arms are causing as they're being shipped into Mexico.  But not once was drug prevention mentioned throughout the entire hearing as part of the strategy to combat organized crime.  It took Congressman Al Green to remind the panelists that this is not a border problem, or a U.S.-Mexico problem, but a "transnational problem," and a "growth problem," due to the increase in drug use in the U.S. When none of the panelists were able to provide the number of ICE/ATF employees dedicated to "following the money trail" of organized crime, Mr. Green reiterated: the Government of Mexico has asked for our help on two fronts: control the guns, and control the money, and U.S. authorities have so far been unable to do either.

Congresswoman Kirkpatrick accurately noted, as long as we don't address the issue of drug consumption, there will be "no appreciable change" in this situation, we'll just continue with "spurts of arrests."   Instead of fanning fears of destabilization in Mexico, people like Sen.Cornyn of Texas should instead focus on what Texas can do and what they can do to stop the elements that are feeding this violence: guns and drug consumption.

VI. In Case you Missed It - A fantastic New York Times interactive map that shows immigration trends and data, and the Los Angeles Time graphic showing a decrease in arrests of undocumented immigrants along the border (while border violence is on the rise, so let's stop blaming the immigrants).  

VII. UPDATE: A very fine border line between cartels, immigration debate.

Even as Wall Street surged yesterday, the New York Times reports that tremendous problems in the economy remain. The story has some bright points, like slightly increasing retail sales and credit rating downgrades to GE and Berskshire Hathaway that weren’t as bad as expected, but most of the news is pretty grim.

Falling stock and home prices have wiped out four years of gains in Americans' net worth since the start of 2008, according to new data from the Federal Reserve. Nearly half of those losses occurred over the last three months of the year, the biggest quarterly decline since recordkeeping began in 1952.

The new data underlined just how quickly wealth created during the biggest credit bubble in history has vanished, leaving Americans without the college funds, nest eggs and other reserves they had set aside.
...

Americans continue to turn to the government for help -- the number of people filing continuous claims for jobless benefits jumped last week to another all-time high -- and, according to a new survey, foreclosure filings increased last month, despite foreclosure moratoriums imposed by several states and major lenders.

Experts had been hoping filings would level off, or even decline. Lenders such as Bank of America, as well as Fannie Mae and Freddie Mac, which provide funding to banks to offer loans, temporarily halted foreclosures late last year, and some lenders extended their moratoriums through this month as they waited for the Obama administration to release details of its foreclosure prevention plan. That plan, unveiled last week, aims to help up to 4 million homeowners stay in their homes, but it could be months before there's any noticeable impact.

As the recession has deepened, consumers are also having a harder time paying off credit cards and auto loans. Commercial developers and businesses are also struggling to pay their debts. More defaults, combined with the credit crunch, are hurting corporate balance sheets.

Indeed, Wall Street’s collapse has eliminated tremendous wealth for everyday Americans, the effects of which have created a pretty scary feedback loop through the economy. The market will continue to fluctuate, perhaps wildly, over the course of the Great Recession – two of the ten largest leaps in the market came in the Great Depression, and one of the other two came in October. As the saying goes, "even a dead cat bounces."

From Treasury Sectretary Tim Geithner's remarks yesterday in advance of the G20 Summit in London:

The global recession is deepening. The International Monetary Fund (IMF) has estimated that the global economy is likely to contract by 0.5 percent in 2009. Unemployment is rising and world trade is likely to decline by at least 3 percent and probably more in 2009. Last week's jobs report showed that unemployment in the United States rose to 8.1 percent in February. In the fourth quarter of 2008 we saw the biggest quarterly decline in real U.S. exports since 1971. Our economy needs a revival of global growth to complement the stimulus we are injecting at home. U.S. exports, U.S. jobs and the health of the U.S. economy are inextricably linked to the health and stability of the global economy.

The G-20 countries must take strong macroeconomic and financial sector measures. In the United States, we moved quickly to pass the American Recovery and Reinvestment Act, which lays a foundation for economic recovery through a powerful mix of investments and tax cuts to create jobs and strengthen our long term growth potential. The G-20 countries have also put into place fiscal stimulus. We believe it is important for G-20 nations to commit to substantial and sustained actions for a period that matches the likely duration of the crisis. The IMF has called for countries to put in place fiscal stimulus of 2 percent of aggregate GDP each year for 2009-2010. This is a reasonable benchmark to guide each of our individual efforts. We think the G-20 should ask the IMF to report quarterly on countries' stimulus efforts scaled against the relative shortfall in growth rates.

Forceful financial sector actions are critical to rebuild confidence, restore market functioning, get credit flowing and bring stability to the global financial system. In the United States, we are implementing a series of aggressive initiatives to stabilize and strengthen our financial system to support economic recovery, and we look for complementary actions around the world.

It is important, as well, for each of us to reaffirm commitment to open trade and investment policies, which are essential to global economic growth and prosperity.

As Dr. Robert Shapiro wrote earlier today, only three countries - China, Spain, and the United States - have passed stimulus measures. As Geithner says, global action to stave off economic disaster couldn't be more important right now.

The leaders of the Republican Party (and plenty of their followers) continue on their strange path of denying the most basic economic logic in the midst of economic crisis and opposing whatever the President says or does. Happily, the Obama administration knows economics, and they seem to generally know themselves. Yet, they may still overestimate the extent of their powers, especially their ability to turn around the economy anytime soon without serious, new initiatives.

For a meltdown that follows none of the regular rules or patterns of garden-variety recessions, the stimulus we’re providing for consumers and the subsidies for housing and banking may well be insufficient to drive a respectable recovery in 2010 and even 2011. Yet, the President’s budget forecasts – and depends upon -- economic growth of 3.2 percent next year and 4.0 percent in 2011. This is a picture of a traditional, “V-shaped” recovery, like 1983-1984. It’s what happens when a deep recession suppresses the normal buying impulses of households and businesses until the early signs of recovery, when all of the suppressed demand comes back with a vengeance. The result is a strong bounce back, just of the sort assumed in the budget.

But this is anything but a traditional recession, and there’s little reason to expect a traditional-shaped recovery. The stimulus will help, as will another round likely to come this summer. They may well be enough to stop our decline, but alone they won’t sustain enough growth in demand to push the economy much out of the cellar. Here’s the crux of the problem facing the President’s economic team – and ultimately all of us: People are pulling back sharply on their spending not only because they’re afraid they might lose their jobs, or already have. In addition, they’re suffering the greatest wealth losses in their lifetimes, especially in the value of the homes that constitute most families’ biggest asset. That means that a real recovery may require a much more aggressive housing program to stem the decline in housing values as well move foreclosure rates back towards normal. If that’s beyond the administration’s reach, this recession could go on until the housing cycle unwinds on its own, or as long as another 18 to 24 months.

Besides consumers (and government), the only sources of demand in the economy are business investment and exports. We can forget about a revival of U.S. exports driving growth, at least for more than another year. That’s because much of the rest of the world is in worse shape than we are. Most of them are much more dependent on their own exports recovering than we are, so their recovery may depend on Americans buying their exports. On top of that, most countries still aren’t providing any large scale stimulus – we, along with China and Spain, are the exceptions. So, a revival of our exports will likely come only after our own consumer demand recovers, to help fuel demand in other countries for our exports. That, too, would put recovery as much as two years distant.

That leaves business investment to fuel a recovery in time to help support the President’s plans in education, health care, climate, and most other things. But what businesses are prepared to invest when consumers here and abroad are buying so much less of whatever those businesses produce? That’s particularly so when it’s as hard as it is today for most companies to borrow funds to invest. This brings us back to something else we already know: A real recovery will also require a much more aggressive banking strategy from the administration and Congress, to force the bad debts and bad banks out of the way so that normal lending can start again. Since so many of those bad debts involve housing, a revival of business investment will likely have to follow the stabilizing of housing values. Here, again, there’s little reason to expect this will happen in time to make help fund the administration’s budget proposals.

We all have to begin to think about what the policy and political landscape will be, if we don’t put in place more effective housing and banking programs than we now have, so we’re still mired in serious recession a good year from now. One change seems certain: Much of the political energy now fueling initiatives in health care, energy and climate would seep away. After another year of hard times with no relief in sight, the other thing that will matter to most voters and politicians will be the economic crisis that President Barack Obama was elected to end.

The President knows full well – or should – that containing health care and energy costs, especially those borne by businesses, will be critical to breaking the mold of the last expansion, when most people’s wages and incomes stagnated, or worse, even as productivity, growth and profits rose handsomely. The saddest implication of our present predicament is that another 18 to 24 months of serious recession could leave untouched the deep, underlying economic problem that the President and his party were really elected to solve.

Following yesterday's news that a "hire American" provision added to the stimulus bill is forcing investment banks to rescind job offers made to highly qualified immigrant workers, some banks have indicated that they want to return the stimulus money, as the strings attached are actually very bad for the bottom line.  Also today, the Dean and Assistant Dean of Dartmouth's Tuck School of Business explain why it's a terrible time to reject skilled workers: 

1. "Supporters say the law will help U.S.-born workers and stimulate our economy, but this is just wrong. The economy is not of fixed size, in which more foreign-born workers necessarily mean fewer U.S. workers. Productive foreign-born workers can help create more jobs here. Keeping them out damages us."

2. "Over 400 firms now face a sharply curtailed talent pool, precisely when they need visionary talent to rebuild amidst the world's most severe economic crisis in decades. Without the best talent, ultimately they'll create fewer jobs."

3. "There is also indirect, unforeseen damage that's beginning to appear in higher education.  If foreign-born students cannot legally work here after earning their degrees, fewer will enroll."

The bottom line is, foreign workers are needed if the U.S. is to remain competitive in a global, 21st century economy.  Data from the National Science Foundation reveal that in 2005, the foreign student population earned approximately 34.7% of the doctorate degrees in the sciences and approximately 63.1% of the doctorate degrees in engineering.  In 2005, foreign students on temporary resident visas earned 30.8% of the doctorates in the sciences, and 58.6% of the doctorates in engineering.  Not to mention, according to the Department of Labor and Congressional Research Service, the U.S. benefits from the intellectual property developed by foreign high skilled workers because their talent remains in the U.S. for the most part: Approximately 56% of foreign doctorate degree earners on temporary visas remain in the United States, with many eventually becoming citizens.  Adjustments from temporary visas to permanent status increased by 68% from 347,416 in 2003 to 583,921 in 2004. And it's estimated that by 2010, more than 50% of all employment-based workers would adjust from temporary to permanent status.  

But that won't happen if these employees continue to feel like second-class workers and citizens, constantly discriminated against for being foreign-born.

In addition to foreign workers' contributions to higher education, skilled immigrants have long contributed to American jobs and standards of living because they bring ideas for new technologies and new companies.  And importantly, they bring connections to business opportunities abroad, stimulating exports and affiliate sales for multinational companies.  A perfect example is Alice Su. 

Su grew up internationally between China, Hong Kong, Belgium, and worked in Japan. She did her undergraduate work in finance and electrical engineering at Wharton. She worked for four years at consulting firm Bain & Co. and the International Finance Corp. (the World Bank's private-sector investment arm) in Hong Kong, before coming back to Wharton for her M.B.A. in 2007.  But we don't want her knowledge and know-how helping OUR companies figure out how to improve OUR economy.  No thank you. Please, let's not think outside the box here.

Many in the scientific community maintain that in order to compete with countries that are rapidly expanding their scientific and technological capabilities, the country needs to bring to the United States those whose skills will benefit society and will enable us to compete. The underlying problem of foreign students in graduate science and engineering programs is not necessarily that there are too many foreign-born students, but that there are not enough native-born students pursuing scientific and technical disciplines. 

The Real Problem With Foreign Workers is that the current immigration system is broken, for them as well.  We should be focusing on how to fix the current flawed immigration laws that can sometimes hurt and hold back skilled workers when they work for U.S. firms, rather than focusing on putting up walls to keep out the best and brightest for the sake of demagoguery. 

This is not a particularly good idea:

Foreign Workers Banned From Wall Street

Alice Su, an M.B.A. student in Wharton Business School's class of 2009 and a resident of Hong Kong, turned down job offers and interviews because she'd been offered a coveted spot with the technology group at investment bank Merrill Lynch. But because of an amendment added to the stimulus legislation last month by Sens. Charles Grassley, R-Iowa, and Bernard Sanders, I-Vt., Merrill rescinded its employment offer.

The stimulus plan forbids banks that have taken Troubled Asset Relief Program money from hiring foreign workers who require visa sponsorship if they've laid off workers within the last 90 days. "There is no need for companies to hire foreign workers ... when there are plenty of qualified Americans looking for jobs," Grassley said at the time. The legislation amounts to a blanket ban on the hiring of foreign workers.

"I grew up internationally between China, Hong Kong and Belgium and worked in Japan. Nowhere else have I ever experienced this kind of discrimination," Su says.

Bad public diplomacy and bad economics all in one. Really a very impressive accomplishment that is probably even worse than "Buy American."

Update: Tuck Business School's leadership argues that it's a terrible time to reject skilled workers, and that doing so will have a negative effect on the economy and one of the the nation's greatest assets, its university system.

David Brooks today hammers the Republican Party for its wholly inadequate response to the Great Recession and to President Barack Obama's plans for economic recovery:

The Democratic response to the economic crisis has its problems, but let’s face it, the current Republican response is totally misguided. The House minority leader, John Boehner, has called for a federal spending freeze for the rest of the year. In other words, after a decade of profligacy, the Republicans have decided to demand a rigid fiscal straitjacket at the one moment in the past 70 years when it is completely inappropriate.
The G.O.P. leaders have adopted a posture that allows the Democrats to make all the proposals while all the Republicans can say is “no.” They’ve apparently decided that it’s easier to repeat the familiar talking points than actually think through a response to the extraordinary crisis at hand.

If the Republicans wanted to do the country some good, they’d embrace an entirely different approach.
…

If Republicans were to treat this like a genuine emergency, with initiative-grabbing approaches, they may not get their plans enacted, but voters would at least give them another look. Do I expect them to shift course in this manner? Not really.

Instead of offering reasonable policy choices, Republicans argue that we shouldn't do anything other than try to change a couple banking rules to restore lending. This, and many of Brooks' proposals, shows a deep misunderstanding about the causes of the Great Recession. There were fundamental problems in the American economy long before the financial meltdown, including the stagnation of wages and incomes for everyday Americans, despite strong productivity and GDP growth. This wage-productivity gap had never been seen before in American economics, and, unless policymakers move to create a 21st century economy, recovery will not come the way we'd like. This necessitates, unlike Brooks argues, bold action to restructure much of what was not working.

As an example of the backwards response that Republicans are exhibiting on the economy, enjoy U.S. Rep. Jack Kingston of Georgia on Morning Joe:

Visit msnbc.com for Breaking News, World News, and News about the Economy

Honestly, I’m not sure which part of his argument is more ridiculous, that the President can't walk and chew gum at the same time or that E-verify is more important to economic recovery than building a 21st century economy.

With new, frightening unemployment numbers out today, take a look at some of NDN's latest thinking on the economy. What government policies are needed to stabilize the financial sector? Why is the Republican minority so obstructionist? How should everyday Americans deal with their balance sheets?

• GOP Economic Policy as an Exercise in Grief Management: Denial, Anger & Rush Limbaugh by Dr. Robert Shapiro, 3/5/2009 - Shapiro puts on his psychologist hat and argues that the only explanation for the current Republican thinking on the economy is that they are angry and in denial about losing.

• Protect Savings, Prevent Bank Runs Now by Michael Moynihan, 3/3/2009 - Moynihan advocates for fully insuring deposits to prevent panic.

• Spend? Save? The debate continues by Simon Rosenberg, 2/11/2009 - Building on a previous post, Rosenberg follows the growing debate about whether American families should be focusing on saving.

• The Utter Bankruptcy of Today's Republican Party by Simon Rosenberg, 1/28/09 - Rosenberg argues that Republican opposition to the economic recovery package represents the ideological bankruptcy of the party.

• A Stimulus for the Long Run by Simon Rosenberg and Dr. Robert Shapiro, 11/14/2008 – This important essay lays out the now widely agreed-upon argument that the upcoming economic stimulus package must include investments in the basic elements of growth for the next decade, including elements that create a low-carbon, energy-efficient economy.

• Accelerating the Development of a 21st Century Economy: Investing in Clean Infrastructure by Michael Moynihan, 10/18/2008 – NDN Green Project Director Michael Moynihan outlines a strategy for investing in clean infrastructure that will help create long-term prosperity.

• Back to Basics: The Treasury Plan Won't Work by Dr. Robert Shapiro, 9/24/2008 - As the financial crisis unfolded and the Bush Administration offered its response, Shapiro argued that, while major action was needed, the Treasury's plan would be ineffective.

• Keep People in Their Homes by Simon Rosenberg and Dr. Robert Shapiro, 9/23/2008 – At the beginning of the financial collapse, NDN offered this narrative-shaping essay and campaign on the economic need to stabilize the housing market.

• Making the Struggle of Every Day People the Central Focus of the National Debate by Simon Rosenberg, 8/17/2008 - As the 2008 presidential campaign entered a crucial phase, Rosenberg argued that political leaders must focus on raising the wages and incomes of Americans.

In today's Wall Street Journal, Michael J. Boskin, former Chair of the Council of Economic Advisors for President George H.W. Bush and a Senior Fellow at the aptly named Hoover Institution, lays out a list of conservative talking points against the President’s budget. Dr. Robert Shapiro laid out a pretty compelling analysis of the problems with this type of thinking, but the real issue with the column is that, preceding the talking points, Boskin says this:

Obama's Radicalism Is Killing the Dow

A financial crisis is the worst time to change the foundations of American capitalism.

It's hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president's policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.

The column proceeds with the list of conservative complaints about the budget, and provides no substantive reason why President Obama’s allegedly flawed budget blueprint is specifically making the Dow tank.

I have another reason in mind why the Dow might be tanking. Let's try it on for size:

The economy is in the tank.

That's right, the actual state of the economy, including the massive financial and housing crises, is the actual force driving down the stock prices of the large companies that comprise the Dow Jones Industrial Average. It's not that Obama is some sort of radical. (Take a look at David Brooks today, who comes around on the notion that Obama and his people are pragmatists, even if he’s not fully on board with their brand of pragmatism.) Rather, it's that the American economy is in its worst shape since the Great Depression.

The causation (more on causation from Mankiw today) Boskin implies (and he's by no means the only one, the media – especially business media – is obsessed with attributing the ups and downs of the Dow to various policies or how confidently the President is speaking, or how much the budget weighs or quickly it can be deep fried), is largely misplaced, and ultimately dangerous. There are times when markets react to government policy, and that's been happening somewhat lately too, but, right now, the Dow is in the tank because that's where the economy is, and its not getting fixed by today's closing bell.