William Yale

A president needs empathy and emotional intelligence, so that he can prevail in political dealings with his own party and the opposition in Washington, and in face-to-face negotiations with foreign leaders, who otherwise will go away saying that this president is “weak” and that the country’s leadership role is suspect. He needs to be confident but not arrogant; open-minded but not a weather vane; resolute but still adaptable; historically minded but highly alert to the present; visionary but practical; personally disciplined but not a prig or martinet. He should be physically fit, disease-resistant, and capable of being fully alert at a moment’s notice when the phone rings at 3 a.m.—yet also able to sleep each night, despite unremitting tension and without chemical aids.

Ideally he would be self-aware enough that, in the center of a system that treats him as emperor-god, he could still recognize his own defects and try to offset them.

From James Fallow’s latest cover story on Obama in The Atlantic.

I’m taking a class on journalism that requires us to blog (not a journalism class, but a class on journalism). So I thought I would put those posts here too. Readings from the class will be referenced (but don’t worry, the references are quoted and explained).

In asking, “What is news?” I was reminded of a question recently posed in the form of a blog post by Arthur Brisbane, the New York Times Ombudsman: “Should The Times Be a Truth Vigilante?” Should newspapers point out that X politician made Y and Z false statements? The obvious answer is yes (Jim Fallows at The Atlantic generally summed up my views). Fallows’ critique of the media is common today, and has been common for a long time: that many journalists engage in superficial “horse race reporting” (where facts are presented without context and meaning) and “false equivalence” (where two opposing truth claims are treated as equally plausible). This critique is even mentioned in one of the readings, “If you call to mind the topics which form the principal indictment by reformers against the press, you find they are subjects in which the newspaper occupies the position of the umpire in the unscored baseball game.” (Lippmann, 50)

Some of our readings make the opposite case. According to Halberstam, news is not about providing context or explanation: “News reports, on the other hand, need not be explanatory and those explanations which do appear in news account are often adscititious intrusions.” (Halberstam, 13) Halberstam’s definition of the news would seem to rule out a lot of important news. Financial reporting on the recession, for example, would be useless without context and explanation of the causes and actors involved in the crash. Similarly, Halberstam’s emphasis on events as news would rule out most news stories concerning global warming, or other long-term patterns that impact us in dramatic ways.

I know that personally, I would like to believe that journalists exist as the fourth estate, uncovering malfeasance and inserting themselves into the political process in a way that makes everyone else more informed and better citizens. This sort of reporting would require context and explanation of events and long-term patterns. Lippmann argues strenuously against this idealistic vision: “If the newspapers, then, are to be charged with the duty of translating the whole public life of mankind, so that every adult can arrive at an opinion on every moot topic, they fail, they are bound to fail, in any future one can conceive they will continue to fail.” (Lippmann, 117-118) That might be a straw-man argument. I don’t think that the media, by fulfilling its public purpose, will hand down the truth from on high to the masses. Every person makes autonomous judgments. Rather, news media should seek to make people better-informed citizens, regardless of the political conclusions those people make. After all, Morson’s example of the degraded conditions at the Ridge Home nursing center could lead someone to conclude the government should improve the center, or that the government should abolish the center.

With the release of the Treasury Department’s new white paper on housing policy, the administration has restarted a national discussion on reforming the GSEs (government-sponsored enterprises, Freddy Mac and Fannie Mae). The long and short of it is that they distort the market for mortgages, and contributed to the collapse of the economy by backing risky mortgage securities that later blew up. (they are not however the root cause and creators of those exotic securities; you can thank Wall Street for that) Our bailout of Freddy and Fannie has cost the government far more money than the stimulus or TARP ever cost. This entire set-up is rather strange, given that these are for-profit corporations with an arsenal of lobbyists.

What’s the government’s plan? I got curious when I read Ezra Klein write this bit: “But the government isn’t looking to dramatically change the role they play in the housing market. They’re just looking to get away from poorly designed institutions like Fannie and Freddie.” This seems like a contradiction – and I think he misread the report, although I agree with everything else he wrote in that post. The government’s stake in the mortgage market is going to be substantially altered. As Daniel Indiviglio writes, the government will still subsidize a small portion of mortgages for the poor and veterans through FHA and VA programs, but under any of the options provided by the Treasury Department, the U.S. government will gradually exit the 85% percent of the market it had previously inhabited.

The plan makes GSEs less and less competitive with private sources of funding, gradually winding down its influence on the mortgage market. Fees guaranteeing mortgages will rise, more private capital would need to be raised to cover credit losses, and larger mortgages will not qualify for government-backing. Next, the plan offers three options for a limited government presence on the market: completely private, no government role of any kind; a crisis funding mechanism that is so expensive that during good times it is never used, and in bad times much cheaper to ease a credit crunch; and a catastrophic guarantee reinsurance program. Indiviglio describes this better than I can: “Mortgages would pay a premium to obtain this insurance, but the first losses (up to some specified percentage) would hit whoever held the mortgage asset, whether it be a bank or investor. If losses exceed that first loss piece, then the government would cover the remainder. The government would use the guarantee fees it obtained to do so. That way, theoretically, taxpayers would not be harmed. Think of this as a little like depository insurance, where there’s a fund in place paid for by insurance premiums that the government uses to cover losses.”

This is all good. When it comes to housing policy, one major question will shape how you view all related policies: is universal housing ownership a worthy goal of U.S. government policy? I would say: not in of itself. Owning a house is not a smart decision for every single person. It might be the American dream, but we do more harm than good when we try to force it on people. I would suggest everyone also take a look at the GSE section of the Roosevelt Institute’s 2009 report on financial reform, “Let Markets Be Markets”. There’s a very good lecture from Raj Date included. The full report is here (pdf).