Explaining Southern California's economy

Paul Krugman: The Playboy Interview that's not safe for Republicans

In this three photo combo, Professor of

PAUL J. RICHARDS/AFP/Getty Images

Paul Krugman supports Occupy Wall Street, but he has some ideas about its agenda.

I'm going to seriously date myself here, but last year when writing about the Occupy Movement and its intellectual allies, I chose the above photo of New York Times columnist and Nobel laureate Paul Krugman specifically because it reminded me of the famous Playboy Interview and its equally famous triptych photo layout for interviews of famous people. I mean, this was where Jimmy Carter confessed that he had lusted after women in his heart.

The Playboy Interview with Krugman is a real treat, and not just because he confesses that he lusts after some members of Arcade Fire in his heart. Here's a taste:

I’ve gotten some grief for my remark that if it were announced that we faced a threat from space aliens and needed to build up to defend ourselves, we’d have full employment in a year and a half. But that’s true. Why couldn’t we do that to repair our sewer systems and put an extra tunnel under the Hudson instead of to fight imaginary space aliens? Everybody in the world except us is doing a lot of investment in infrastructure and education. This is the country of the Erie Canal and the Interstate Highway System. The Erie Canal was a huge public infrastructure project financed with no private or public-private partnership. Can you imagine doing that in 21st century America? We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.

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How marketing saved bank overdraft fees

Mercer 8468

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New rules apply to banks for charging overdraft fees

Here's BusinessWeek on the Consumer Financial Protection Bureau's decision to instigate a new probe of bank overdraft fees:

In November 2009, the Federal Reserve moved to rein in the high fees that banks charged consumers who overdrew their accounts when making debit-card purchases or withdrawing cash from an ATM....

In theory, that should have dealt a major blow to the overdraft business.... [But] overdraft fee revenue to banks from ATM and retail purchases was still on track to top $16 billion last year, just a 16 percent drop from its peak in 2009, according to Moebs Services, a banking consultancy. The rates are still so high in part because many banks launched aggressive marketing campaigns to get customers to sign up, with letters, calls, and e-mails that at times were alarmist warnings of what would happen if you didn’t opt in.

Bankers, for their part, say it wasn’t marketing that led consumers to sign up—it’s because consumers want the ability to overdraw their accounts in a pinch. “This can be a way of getting piece of mind,” says the American Bankers Association’s Richard Riese. He says even if a consumer didn’t fully understand the overdraft fees when he signed up, he’d get notice of the fee on a monthly statement and could opt out at any time. “The light bulb would have gone off real fast if it wasn’t what they wanted,” he says.

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Are you ready for a flock of black swans?

"Black Swan" encapsulates in a ballet the improbable arrival of the rare bird — and event that's become a source of great concern to companies.

I just came across this Booz & Co. white paper by Matthew Le Merle, a partner in the firm's San Francisco office. Titled "Are You Ready for a Black Swan? Stress-Testing the Enterprise with Disrupter Analysis," it expands on Nassim Nicholas Taleb's book, "The Black Swan," in which Taleb outlined the dreaded black-sawn event. In a nutshell, a black swan shocking and impactful, but — and this is a big but — it's rationalized after the fact. If we had known X,Y,Z, we could have seen it coming.

The general assumption is that black swans are rare. At one point in human history, people weren't sure black swans even existed. However, in terms of the Talebian metaphor, black swan events are supposed to be infrequent. But La Merle points out that, for various reasons, we could be looking at a future that features flocks of black swans:

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Obama corporate tax cut: The fight over 3 percent

Obama Visits Master Lock Company, Discusses Economic Plan In Milwaukee

Scott Olson/Getty Images

MILWAUKEE, WI - FEBRUARY 15: U.S. President Barack Obama speaks to workers at the Master Lock factory on February 15, 2012 in Milwaukee, Wisconsin. Obama applauded the company, which he cited in his State of the Union address, for bringing back 100 jobs to the U.S. from China. (Photo by Scott Olson/Getty Images)

The Obama administration has come out with a proposed cut to corporate taxes, from the current 35 percent to 28. The White House says the cut would be "revenue neutral," meaning that whatever revenue is lost in that 7 percent solution would be made up by eliminating tax breaks and loopholes. 

Republicans are allowed to like this — but not too much. Their pool of candidates all want to cut corporate taxes as well, but by larger margins than Obama. Mitt Romney wants 25 percent, while Gingrich, Santorum, and Ron Paul all want to go lower. Paul, in fact, wants to cut corporate taxes down to 15 percent.

Romney's plan is the only realistic alternative to Obama's. Which raises the question: "Will Republicans and Democrats really fight it out over three percent?"

Of course they will, and it may come down to who's plan is really the more "revenue neutral." On its face, Obama's is, while Romney can't get his additional three percent without cutting spending. You can see the difference: Obama's plan gives with one hand but takes with the other; Romney's gives and then gives some more, by using corporate taxation — or lack of it — to reduce the size of government.

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Man defies Newt Gingrich, installs gun rack in Chevy Volt

First, Newt Gingrich insisted while on the campaign trail that you can't put a gun rack in a Chevy Volt, the gas-electric hybrid vehicle that Newt referred to as an "Obama car." 

Then General Motors, the company that builds the Volt, took the high ground in a post titled "We Did Not Engineer the Volt to Be a Political Punching Bag." The company — famously bailed out by a combination of the Bush and Obama administrations, the pushed through bankruptcy before emerging as a serially profitable enterprise — pointed out that you can put a gun rack in a Volt, but asked why you would want to. It's a durn sedan, after all.

The chap above set out to prove Gingrich wrong, quote literally. What's impressive here is not just that you can install a gun rack in a Volt, but that you can install one in about half an hour using $7 in materials.

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