A little historical perspective on the conflict in Gaza

At first blush, what follows may not seem like a very pro-pie set of statements. Many, including me, have resoundingly criticized Israel's approach to their issues with the Palestinians, including the decision to cut off relations following the electoral victory of Hamas. After all, as Ismail Haniya pointed out, their position on Israel is not all that different from Sharon's towards Palestine before he took power. The decision to give greater weight to Hamas' misdeeds than its social services and pragmatic anti-corruption positions will likely go down in history as a mistake. Sharon did more for a Palestinian state that Rabin, and the Western press at least has always been happy to make a sharp distinction between Fatah and its Al Aqsa wing. The Soviet Union held the destruction of capitalism and worldwide imposition of Bolshevism among its goals, we signed multiple treaties with them. As Thomas Barnett frequently points out, it is engagement, not isolation, that leads to behavior changes. However, for all that is was a series of diplomatic mistakes that led us to this point, it's time to ask where we go from where we are, rather than where we ought to be.

Perhaps the historical comparison isn't perfect, but replace "Olmert" with "Churchill" and "Beersheba" with "London", and all the talk about proportional response to one side sending rockets into the other's cities is really pretty clear: firebomb their cities and kill off all the draft-age men
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This is a point which the Economist does not make in their recent Leader on the subject. Unlike the US which has the luxury of distance in defeating an adversary that doesn't follow the normal rules of war, Israel is fighting its neighbors who have effectively declared total war. Worse, it is also fighting a proxy war against the Iranians, and perhaps the Russians, both of whom are probably very interested in seeing the capabilities of the next generation of smart bombs.

It is worth saying right now that I do not lightly condemn everyone in the world's most densely populated area to death, and in fact sincerely hope it does not come to that. Hamas won the latest Palestinian election on an anti-corruption platform, with their populist and foolish stance on Israel a little crowd pleaser to warm up a rally, much like a Sarah Palin rally beginning with someone shouting "Barack HUSSEIN! Obama" to an all-white crowd of neophobes. However, any government committed to the destruction of another state must be met with force sufficient to end that threat.

The use of consistently better intelligence and smaller, smarter warheads was supposed to make war cleaner, shorter and less damaging. However, as the last 50yrs have shown, Clausewitz was right: "The military power must be destroyed, that is, reduced to such a state as not to be able to prosecute the war." Hamas has made it clear that as long as its people are able, it will send rockets into Israel. The question then, is how to change that. History teaches that direct occupation by Israel can prevent the firing of rockets, but an incursion at this point invites a repeat of 2006. Looking at the history of proxy wars, being the state not buffered by a proxy means being on the losing side, whether it's the US, USSR or Israel. Once an industrialized power has to commit its troops to fighting a vastly larger population with a dedicated core willing to see everyone around them die, it has lost. The only victory I know of in such a circumstance, and it's a shaky one at best, is the use of locals to fight on your side.

Okay, so who's Israel going to arm and send into Gaza to clean out Hamas? Well, there's a tricky question. As mentioned above, it's the Western press that regularly differentiates between Fatah and its Martyr's Brigade, not the Israelis. Collaborating with Israel is effectively a death sentence in Palestine, making an "awakening" rather unlikely, unless it's funded by Saudi Arabia. Again, do you really want a potentially hostile power building an army on your doorstep just because they're less hostile right now?

Sadly, the long-term PMCIN increasing options are limited to several very bad ones. One is to begin firebombing the Gaza Strip in response to rocket attacks, since no Gazans means no rockets. In addition to terrible humanitarian consequences, that hurts Israel's relations with the world that does not want to see first world countries engaged in mass killing. Another is to simply continue with the air strikes, as they cost Israel almost nothing, and after a while it will simply become background to other problems on the world stage. A more creative option might be to try and co-opt Russian support by offering to bomb the hell out of Iranian oil terminals in exchange for them suspending nuclear help (boosting oil prices while forcing the Iranians to ship their oil through Russia).

History provides no examples that I know of where the legit combatant state only attacked the proxies and won. So, if you really want a "proportional response" from Israel at this point that meets both Clausewitz's and Just War Theory's requirements, look to the skies over Iran and Syria. If there were ever a time for a US-led diplomatic mission to both, it would be now.

Okay, let's raise the quality of the debate

Clearly the RNC, or at least its candidates for chairman have not been reading this blog. If they had, they would know better than publish things that confirm the worst stereotypes about the modern GOP.

Bear in mind that Pie and Policy is all about satire, but here we insist that it be in good taste. A Democrat publishing a similar song about imbred Bible-thumpers would be similarly tastless, but at least they can still boast a "Bubba" as one of their most powerful figures. Seriously, why stoop to that level when there's bailouts, social issues you can still win competitive races with, and a whole host of little scandals to play around with. Something chock full of race-baiting titles is just announcing to the world you don't plan to rule outside the South. Barry Goldwater and William F. Buckley must be looking down on this shaking their heads sadly.

Pro-pie response to recession

To review briefly, the PMCIN metric looks at three conditions to assess pie making capacity:

(1) The farming, manufacturing and shipping capacity to deliver pie-making supplies.

(2) Sufficiently well distributed income such that everyone can afford these on top of bare minimums.

(3) Sufficient leisure time to allow people to make and enjoy their pie each week.

In light of these, Pie and Policy salutes Pella and AK Steel for the very pro-pie step of increasing employee leisure time without, hopefully, reducing their incomes below the PMCIN=1 level. If you know anyone who's been affected by this, please let me know. I'm writing from the position of one who took a 60% pay cut to get a better job, and have avoided consumer credit like the plague, so the idea of a day off in exchange for a 20% pay cut without loss of benefits sounds like a really good deal to me.

Again, this is a good argument for some kind of national health care plan that decouples health benefits from one's current employer.

A counterpoint to the "paradox of thrift"

In Keynesian economic theory, demand is king. To the extent people making personal decisions want to buy enough, that's good. However, if people do not want to buy their own industrial output, that's bad, and the government should step in to give people money to buy stuff. Thus, from a Keynesian perspective, the housing bubble was a very good thing, because it generated enormous demand for people to buy goods, and the only acceptable government response to the end of the borrowing binge is to step in and borrow considerable amounts of money itself.

The genius of Adam Smith, however, was that he found a model for ordering an economy in which everyone acting in their own best interest lead to prosperity. It is never in one's best interest to borrow money on a depreciating asset unless you expect to generate revenue from it, such as corporate jets purchased by Netjets or cars used for taxis. Otherwise, you're acting against your own best interest, and a society that encourages such behavior is essentially imposing a highly regressive credit tax on its citizens. A government that borrows heavily to support consumption moves this tax to its younger workers.

So, this is arguably the central problem of industrialization: when each individual can produce far more than he can consume, how many people can you practically employ? In a profligate society, waste drives employment, because people choose to consume more than they need. In a thrifty society, any economic activity must have greater value for the buyer than the opportunity cost of spending money. Thus, anything manufactured has to have some kind of value beyond simple entertainment. This is why notoriously thrifty societies like Japan and Korea are leaders in service robots, self-cleaning toilets, and small cars. Also, they push the market for electronic entertainment because if you want their cash, your game had better be very good.

Thus, the paradox of thrift should not be seen as saying that we must avoid becoming thrifty at all costs. It means accepting the difference between economic growth and quality of life. PMCIN is here to help with that.

Some questions for the new Secretary of Transportation

First, some background:
Once again, the head of the Transportation Department has been handed to a member of the losing party as a sign of bipartisanship. This is probably as good an explanation of the current state of our highways, bridges and air traffic control network as one can ask. The planned upgrades discussed in both links have been discussed in some form for as long as I can remember. Somehow, the opposition member's portfolio never seems to get the attention or funding the job deserves.

So, Mr. LaHood, or anyone on the transition team, I wish you the very best of luck, but I would like answers to the following:

(1) Illinois has proven to be a leader in public-private cooperation on projects such as toll roads, do you plan to export this model around the country, and if so in what capacity?

(2) We hear about many "shovel ready" projects, but the road construction workforce is currently tapped out and aging rapidly. How do you plan to train workers on a time scale compatible with economic stimulus while insuring the quality of new infrastructure?

(3) What priority will be placed on upgrading the national air transportation system? Where do you plan to source the money for it?

(4) What role do you see general aviation playing in the future of the country's overall transportation architecture?

(5) Where do you see the role of the Transportation Department relative to the other departments like Energy, Commerce, Agriculture and Interior? In particular, how does your status as the only Republican in the group effect that relationship?

(6) Newt Gingrich pointed out during the Jack Abramov scandal that large budgets draw corruption like flies to meat. How do you plan to balance accountability with the need to fund projects rapidly?

Who's running the Senate GOP?

I'd started working on a little post about Navy procurement, a topic I rant about frequently in person, but I really can't say anything better than a host of milbloggers like Galhran. Suffice to say it would be nice if someone could tell the US taxpayer exactly who we think we are fighting, and how the Navy plans to adapt to a world in which the line between police work and military action is very blurry. Juan Garcia, Obama's reported pick for SecNav, is not that man. Bob Work, the director of the SSGN program, or anyone who served on a surface vessel off Africa or the Middle East and thus has some idea of what it's like to deal with low intensity conflict would be a far better choice.

Instead, the news this week offers up two great examples of how not to run a country. First of all, we have the Lumbering 2 (Ford looks to be in good shape over all) screaming for enough money to stave off bankruptcy until the most optimistic projections suggest the economy might start to improve. Fat chance of that, says Honda's president, and without a clear restructuring program, there's no reason to throw money down a hole. However, Chrysler and GM apparently did present an acceptable restructuring plan to Congress, at least by Congressional standards, but it failed because the unions would not accept a pay cut fast enough. As I've said before, the only way the GOP is going to claw its way back to relevance is if it can offer a credible benefit to workers who have not, and likely will not, directly benefited from "trickle down" economics.

Pointing out to voters that the Democrat-designed bailout leaves GM and Chrysler's overpaid management in charge of the ships they ran aground scores positive political points. The fact that an Obama administration would begin with government money being used to lay off workers by buying out contracts would sell really well in the Rust Belt, something like "we want to make it easier to employ people, they gave millionaires billions of tax dollars to lay people off!" So, allowing for a moment that Republicans in the Senate are not uniformly fools, why did they not take to opportunity to say this? More importantly, why does GM need to guarantee cost parity with Toyota? If we apply that logic, then why not demand average wages in Berkley, CA be the same as South Bend, IN? Or that call centers in Oklahoma City, OK pay the same as Bangalore, India? An effective opposition is good for governance, but a "straw man" opposition like this is bad for everyone.

The white elephant in the room, implicit in a somewhat more cogent statement from Senator McConnell, the minority leader, is that health care in this country is too large a burden to place on employers. The UAW is right to resist taking payment for their retirees in GM stock, because that paper is almost completely worthless today, and no one I've seen is willing to bet their health and pension on the company remaining solvent in the long run. GM and Chrysler need to enter bankruptcy to let them shed their unproductive dealerships and brands, hand a portion of their retiree benefits over to the federal government, and renegotiate its various labor contracts to get the cost structure and flexibility it needs to survive as a leaner, stronger company. With guaranteed health care, those workers will suffer much less than they are set to now.

The WSJ's suggestion that the Pelosi-Reid team wanted this bailout to make sure they could specify what kind of cars GM built is hogwash, or at least mostly. They want certain environmental standards met, but then so does everyone who doesn't wear a "Drill, Baby, Drill" shirt or count on oil stocks to buoy a portfolio. Oil is currently priced below the cost of exploration required to maintain current output, and some kind of carbon tax is on the way, so we're looking at a long term demand for efficient and flex-fuel vehicles. However, the very necessary and painful restructuring of the Lumbering 2+Ford will probably cost around 1.5million jobs and make it much harder to keep Indiana and Michigan blue.
The implications of all of this for pie making are actually quite simple. A very large amount of fruit is grown in Michigan, and so things that reduce the pollution load and cost of living there are generally pro-pie. An auto industry that has to restructure in the face of a thriftier nation will put a lot of people out of work, but they will be needed to fix decaying infrastructure and for projects like insulating cities. Some, hopefully many, will turn to farming and biofuels projects, which are labor intensive if they are to have low impact on the environment. This is not a "high growth" strategy, but PMCIN=1 prosperity doesn't require constant spending growth, just a stable society that adapts as necessary.

A way to guarantee that starting a small business won't cost your family its health insurance is a big step in that direction. It will also help make American manufacturing competitive because a cost that is now on our labor will be spread over the whole economy, as is the case in all other developed countries.

Whole wheat crust

As part of the Victory Pie!, I promised to post my whole-wheat crust recipe. Here it is:

Ingredients:

1 1/2 Cup unbleached all-purpose flour
1 1/2 Cup whole wheat flour
1/2 Cup (1 stick) unsalted butter
1/2 Cup vegetable shortening
1t salt
1T sugar
1/2 Cup very cold water

Procedure:

1) In a medium or large bowl, combine the dry ingredients and mix well.

2) Cut the butter stick into 1/4" segments, scatter them over the dry ingredients and cut in with a pastry blender.

3) Scatter the shortening over the mix, cut with pastry blender until you have pea-sized bits

4) Slowly add the water a few tablespoons at a time while scraping the walls and bottom of the bowl with a fork. Stop adding water once the dough can be compressed into a ball easily.

5) Form two balls. If you're making a double crust, make one slightly larger for the bottom, otherwise keep them about even and freeze the one you're not using (or make two pies). Knead each ball several times and wrap in plastic or waxed paper and refridgerate for at least 1hr, preferably overnight. A frozen crust will take about 2hrs to thaw properly on the counter in a 60-65F kitchen, less time during the summer.

A pie-centric approach to unions and healthcare

I haven't had time to read the full details of the GM restructuring plan, but, much to my surprise, I find myself generally agreeing with Michael Moore on the subject. Batteries, I think we will find, are not a good large-scale means of energy storage for transportation, but the Volt's serial hybrid model is about the most efficient system possible for a car. And seriously, who asks for $34billion of government money to lay people off as unemployment is hitting numbers that haven't been seen since the 1970s? Okay, I said this wasn't a post about why we shouldn't hand GM and Chrysler money outside of a Chapter 11 restructuring, so I'll stop now.

This post is about two issues that are central to the Lumbering 3 bailout, and will be even more central when the new Congress gets started next year. The first topic is health care, the cost of which has been skyrocketing and is among, if not the top, issues in labor disputes in the last few years. The other is the horribly named Employee Free Choice Act, designed to force 70's style union-management relations on small manufacturers.

The problem with both is that they fundamentally misunderstand what a "job" is in the modern context, much like a 30 year mortgage is probably the wrong standard housing contract for a population that moves every seven years or so. When manufacturing made up 35% of the economy, it was very likely a person would graduate (or not) from high school, get trained to use a particular machine in a particular factory, and expect to use that machine or derivatives of it for the next thirty years, followed by retirement with a decent, employer-funded pension. At the same time, a legacy of the wage control policies of WWII, the employer would provide for the health care of the worker's family. In this environment, the worker is almost completely powerless without a strong union, because after a few years his only skill is the use of one particular machine, and it is unlikely any of his company's competitors will hire him when there's a steady stream of young workers coming out of the high schools. Nationally, politicians have the choice of dealing with strong unions or face massive unrest. It's no accident that the industrial world split between heavily unionized and communist economies in the first half of the previous century.

The downside of this high school-to-grave, rigid relationship between employer and union member is that it requires a world that doesn't change substantially for roughly 30yrs, plus another 10-30yrs of continued business success to handle pensions. This assumes that the company makes a product that will be popular enough to collect its current market share and profit margin for roughly 60yrs, in clear violation of the basic principle of zero long-term economic profit (basically: if an industry is making more profits than others, competitors will enter it until it doesn't). So, taking steps to keep UAW workers safely cocooned in their factories is ultimately a serious disservice to them and the labor movement at large.

Instead, Congress and the AFL-CIO should have a listen to the Planet Money podcast from last week entitled Cousin Knows Best. It discusses how a young man's flexibility and an environment with multiple competing employers has done more to put him on a path to PMCIN>=1 prosperity than a college degree in a non-technical field would have. Thus, we should not think of unions primarily in terms of getting contracts that guarantee people shackled to one company get decent pay and benefits, they should instead position themselves to be the preferred source of highly qualified labor.

As a model, I would take something like the Sheet Metal Worker's Local #20 in South Bend, IN, where I trained as a welder in a previous life. The members there do very good work installing ducting and making making parts on contract for various companies, and run (or at least ran) a well-equipped training facility that also provided their members a venue to demonstrate their skills to potential alternative employers. For them, prosperity depends not on a single company, factory or even business model, but on a steady supply of innovative companies that need to move air or build things out of metal. The point is that long term prosperity requires not contracts with vertically integrated oligarchs, but smart, capable and flexible people who can choose between employers, rather than between working and striking.

To facilitate this, we need some form of national health care that follows workers between jobs. Towards that end, I like what I understand of the Obama plan, and tapping Daschle for HHS is a step in the right direction. Most of the big expenses discussed in the Lumbering 3 bailout hearings, the Boeing strike and other recent "industrial actions" involve rapidly rising health care costs that companies can no longer afford. Instead, the best thing for labor would be a situation in which workers are not bound to their jobs by the fear of someone in their families getting sick, and where employers can hire more cheaply (thus giving employment options).

For much the same reason that a desire for peace requires preparations for war, the desire for sustainability requires flexibility. Unions that provide high quality, reasonably flexible workers with a specific skill set (like framing rooms in buildings, regardless of the material) will serve their members better than ones that demand rigid contracts that ignore the actual forces markets will bring to bear. The best thing a Democratic administration and Congress can do to facilitate this is come up with a health care system that controls costs and provides coverage that is not necessarily tied to employers.

Pie for (Almost) All

As promised back at the beginning of October, here is a pie for everyone with common food allergies and vegans. Obviously, one can't really promote a "PMCIN of 1 per capita, forever" strategy without pies that can be eaten by most everyone. We also understand that this does not work for people with a fructose intolerance, but don't worry, the P&P kitchens are hard at work finding something for you, too.

Also, this is a plug for the need for small businesses, and a financial and regulatory environment in which they thrive, since some of these products are not available in large chain stores.

Without further ado: Pie for all!

Crust:
1 Cup rice flour
1 Cup tapioca flour
1T Granulated sugar
1t salt
1/2 Cup shortening
1/2 Cup cold water

Mix the dry ingredients in a large bowl. Cut in the shortening until it's about the size peas. Add the water a little at a time, being sure to lift the stuff off the bottom. Form into two balls, one slightly larger than the other (the bottom), and chill for 1+hr.

Roll out the bottom crust and line a 9" pie pan with it. Roll out the top crust and have it ready. Heat the oven to 400F.

Filling: (note, any fruit filling will work)
5 Cup peeled and chopped apples
1 Cup cranberries
2T lemon juice
1/3 Cup brown sugar
2T cornstarch
2T granulated sugar

Combine the fruit and lemon juice, let sit for 10min. Stir the cornstarch and sugar in a small bowl, then add to the fruit. Pour and scrape the mix into the pie dish, cover with the top crust. Poke holes around the edge of the pie with a fork, you'll check doneness later by looking for bubbling fluids here.

Place in the heated oven for 30min, rotate, reduce temp to 375F, and continue baking until the juices thickly bubble through the vent holes. Let cool at least 2hr before eating.

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I wrote this whole entry about 3x faster than my usual "bulleted" approach, does it read well? Comments appreciated.

Product Review: Bob's Red Mill Gluten-Free

As one might expect, I made several pies this weekend, including the first version of my "pie for (almost) all" (recipe tomorrow, no, really, I mean it). Towards the end of the weekend, someone suggested I try the pie crust recipe on the back of Bob's Red Mill GF Baking Mix.

From that, I have a couple of thoughts:

(1) Unlike my other Gluten Free (GF) pie crusts, this one was not a sticky mess to roll out. In fact, I couldn't get it to stay together at all, despite repeated kneading and re-rolling.

(2) The recipe on the bag suggested 2cups of flour for the crust, usually enough for a standard double crust. However, given the problems getting this to hold together, I wound up using all of it to line a deep dish pan for a "browned butter pecan pie" straight out of Ken's book. The pie was very good, and I can't wait to make it in a better crust.

(3) The problem with using biscuit mixes for pastries is the baking soda/powder they contain. When baked, these ingredients puff, given an interesting texture that I might try for a more cobbler-like pie, but the effect is very similar to serving pie filling on a half-charred biscuit.

(4) An upshot of the biscuit-crumbliness (that's a real word) is that it lets pie fillings that drip (i.e. all of them) find their way to pan, where they burn to the bottom, making it more difficult to remove slices.

Bob's Red Mill makes some good stuff, but they overstretched by suggesting you could make a pie out of their biscuit mix.

Victory Pie!

This is what I had intended to do as an "Endorsement Pie" before the election, but my First Lego League team based at the seriously pro-pie Robinson Community Learning Center is headed to the state tournament after rocking and rolling the regional qualifier, and since the entire team really looks up to our president-elect, a little rebranding was in order.

This is basically an apple pie with crumb topping, with a few blueberries and cranberries added for decoration. Here I explicitly call for a mix of apple types to drive home the idea of delicious diversity.

Ingredients:

1 Whole wheat crust (recipe later)

Filling:
8 apples, including some golden delicious, jonagold, Granny Smith and Fuji apples
1/2 cup brown sugar
1 T lemon juice
2 T granulated sugar
2 T cornstarch

Topping:
1 cup good oats (Quaker or Aldi's store brand)
3/4 cup white flour
1/2 cup brown sugar
1 t salt
1/2 cup (1 stick) unsalted butter
1/2 cup blueberries
1/2 cup cranberries

Procedure:

1) Get the crust into the pan, put it in the freezer for 15min, and set the oven to 425deg.

2) Mix brown sugar, lemon juice, and apples. See any of the fruit pie recipe's steps 2 and 3 for the rest (I've written it about 7 times already)

3) Place pie in hot oven for 30min. Meanwhile, make the topping by mixing the dry ingredients thoroughly, then cut in the butter. If the berries are frozen, help them thaw by placing them in bowls near the oven exhaust.

4) Pull the pie out of the oven. Pour the crumb part of the topping over the pie so it makes a pile in the center. Spread this around with your hands to make a roughly even layer. Now distribute the blueberries and cranberries to form the arc and stripes of our pie-loving president-elect's campaign logo.

5) Reduce the temperature to 400F, return the pie to the oven for about 25min. It's probably wise to place a pan under the pie to catch boiling apple drippings.

6) Let cool at least two hours, preferably six or more.

If you make one, please take a picture for me. For some reason, the kids (and parents) weren't willing to wait for my camera battery to charge.

A pie-centric opposition to the GM bailout

I think this the official end of any possibility of my involvement in a senior post in the Obama administration, and one gets the feeling that this is just writing against the inevitable, but here's perhaps the only pie-centered story of what the GM bailout will likely mean for our economy.

The economy of Anytown, in our story, depends on both Pie Widget Maker and Auto Parts Supplier. While the bank rescue successfully prevented a massive run and general financial collapse, the deleveraging of the town continues. Pie Widget Maker is still waiting on the loan to buy the new Widget Stamper, and sales are down.

However, PWM is a responsible, well run company and has quite a bit of capital tucked away. They also recognize that as people do more of their cooking at home, they'll come to appreciate the joys of home baked pies. Some may even open restaurants or bakeries, and so there is a good chance for a market in both home-size and professional tools for better pie making. In particular, a self-leveling "pie rotisserie" could vastly improve the quality of pie making, especially for people with older houses that have sagged a bit. To build these, PWM will need to hire engineers with expertise working with moving parts in hot environments, get equipment appropriate for working with such metals, and some experienced machinists as well.

Anytown Auto Parts Supplier has all of these, since brake rotors and suspensions are not all that different from what's needed for the next quantum leap in pie technology. However, their factory is booked solid with orders from Lumbering Motors, a huge company that makes very anti-pie products that have fortunately gone entirely out of fashion. They have also been poorly run for a couple decades, and so find themselves teetering on the edge of bankruptcy. If they collapse, then AAPS will be in a struggle for its own survival, forced to find new business and lay off employees.

So now, if you're a concerned citizen of Anytown, USA, it's probably time to write your congressmen. But what to say? The owners of AAPS want the Lumbering 3 to get an unlimited supply of tax dollars because they bought into those bad bets, and won't be able to make their boat payments otherwise. PWM's owner has already picked out the cream of AAPS' workforce, and is hoping to grab some of their equipment in the liquidation sale. But for the rest of Anytown, the choice is less clear. Obviously, the short term answer is to pump money in from their kids' salaries and more prosperous parts of the country to keep the Lumbering 3 lurching along. However, the long term picture is trickier, and supporting the auto maker rescue means betting that they will start making worthwhile products. The last company to be "rescued" bounced from foreign hands to private equity and now back to the bailout bin, leading one to think the problem is their business model, not market conditions. So, they're kids will end up paying for a mess and using lower quality transportation than they would otherwise.

Clearly, this blog is in favor of an orderly unwinding, possibly under the protection of Chapter 11, of GM and Chrysler. If they've developed worthwhile intellectual property towards the development of next generation vehicles, sales of those patents will go a long way towards making their creditors happy. It is almost certain that the new owners will make better use of them than the current ones. This will probably result in a significant reduction in PMCIN in the short term, but pulling down two companies that could not turn a profit in the best of times is the right choice for the long term health of the economy.

In order to make the most of this, it's time for two other big changes: (1) a national health care system and (2) substantial financial regulation. The first is a long overdue reform of a system that has always provided universal coverage in the form of emergency room visits, and while the devil is in the details, the Obama plan is probably a good start. At the very least, giving potential entrepreneurs the freedom of knowing that they are not putting their asthmatic kid at terrible risk by starting a new company would be good. It would also nix one of the major issues in most labor disputes recently. The second would hopefully kill off the notion of "financial innovation" of the type we've seen over the last thirty years, meaning students with strong science and math backgrounds would be more tempted to enter the "real" economy than the murky world of hiding spreading risk around.

Here's to hoping.

What to drive on the Road to Serfdom

It's been coming for a while now, but the Great Lumbering 3 Bailout is slowly gathering steam. Slowly, at least, relative to the rate at which GM is burning cash. Congressional Democrats have made their desires known, and even seem to be maneuvering to cut opposition off at the knees. Obviously, a blog promoting a very Jeffersonian version of prosperity will have a slightly anti-car bias, but this willingness to throw money at executives and unions in order to preserve a manifestly bad business model doesn't bode well for innovation in the economy.

Here's to hoping that an Obama administration will actually nationalize the company and turn it into something that doesn't require most Americans to borrow half or more of their incomes to buy something that loses value. If he's serious about wealth redistribution, stopping that process by which money goes from middle class paychecks to bank profits would be a great first step. There are a lot of business models that might work, and since we seem to be trading suburbs for city life anyway, this would be a great time to invest.

Curiously, there has been almost no commentary on this from the GOP base, at least that I've seen. The sum total is here: http://www.gopusa.com/forum/showthread.php?t=55220 where frustrated conservative inveighs against it, while the forum admin admonishes him for not fully supporting the GOP. There's a longer post coming on how the GOP came to associate protecting suburban prosperity with being patriotic, but that's for later.

Bicycle Poetry

Trek 700
Before you I didn't ride
I just commuted

I haven't posted nutrition information for these pies for a reason, and one might wonder about the wisdom of promoting PMCIN in the face of an obesity epidemic. Instead, I recommend pies as the ultimate in biofuels.

Obama, the pro-pie candidate.

Pie and Policy endorses Barack Obama as the most pro-pie candidate in this election. We really can't say it better than the Financial Times, Economist, Christopher Buckley, or Colin Powell. However, I would like to add here that the McCain campaign has done a good job of insulting his supporters in the science community by, in assending order of annoyance:

(4) They actually failed to send a representative to a "techonology policy smackdown" conducted by the BBC/PRI The World.

(3) Their answers to the Science Debate 2008 questions to not track with much of what has been said elsewhere on the campaign trail, especially the "spending freeze" proposal.

(2) The American Physical Society tried to do a similar, physics-focused debate section in their monthy magazine. Only Obama's campaign sent a representative, and this is read by people who develop nuclear weapons, nuclear power and a host of other defense technologies.

(1) The American Insitute of Aeronaughtics and Astronaughtics submitted an aerospace-focussed qustionaire to both campaigns, and while McCain's camp did respond, it failed to provide answers to two questions, while the Obama camp gave reasonable answers to all of them. These should be the "reddest" of all academics, and it's read by most everyone in the "reddest" of all industries. That lack of attention speaks to either sloppiness or genuine disinterest.

I'll post the recipe for "Obama Apple-Blueberry Pie" this evening. And Mr. Obama, if you read this, I accept your sweet potato pie challange.

Towards an effective opposition

The Grand Old Party (GOP), which is, in fact, younger than its main opponent, is in for a heck of an internal fight. One the one hand, the often subtle anti-intellectualism of the "base", has now become explicit. On the other, the Wall Street Journal, long the home of the "country-club" Republicans, is publishing op-eds that are clear in their distaste for what is to come.

There is a battle underway for the soul of the Republican party, and the results have significant implications for the US PMCIN. The current banking crisis is starting to relax a bit, but the pretty massive recession promised by the end of the refinance boom is going to come right as we transition from one fairly radical approach to fiscal and regulatory management to another. On top of that, those who seized this power, and fought for a unitary executive, are about to have it crammed down their throats. At least the FBI will have "terrorists" who look like their agents.

Here at Pie and Policy, we have a very clear stake in the "country club", "elite" and "moderate" GOP'ers winning this battle. Divided government, with an effective opposition party in Congress, forces the national debate to a higher level. Note that I say "effective", not one that is easily distracted. On the other hand, united government tends to bring out the worst in the ruling party, regardless of which party holds the reigns.

Towards that end, here's some thoughts into what the GOP can do to get set to take advantage of the mess that the Democrats will be in come 2010:

(1) Tone down the "Party of God" nationalist shtick. After Abu Graib, 8 years of growing income disparity and a major financial crisis only about 22% of the country sees "America the way [Mrs. Palin] see[s] America." Instead, play up the "Party of Personal Responsibility" that brought us the 104th Congress.

(2) Embrace sustainability as a policy goal. There are hundreds of business opportunities available, many with strong export potential, that either limit environmental harm, like solar cells and algae farming , or turn waste into fuel, like digesters that convert manure into methane. All mined fuels, fossil or nuclear, are finite, and societies that depend on them will fail eventually. Provide clear leadership on a path to (1) energy independence (2) complete sustainability in the next half century without picking winners before the technology hits the market. Be willing to call for small scarifies in the name of efficiency, maybe even victory gardens.

(3) Push trade hard. Brazil should not have a more liberal (as in "freedom loving") trade policy than the US. Emphasize how Brazilian sugar cane, tended by Caterpillar and John Deere equipment, can help us get away from Venezuelan (and soon Cuban) oil. Make it clear that Columbia wants our engines, solar panels and biotech products as much as we want their coffee. The list goes on, and the ability to work with center-right Democrats on this will go a long way to restoring the party's credibility.

(4) Show unions some love. This is a simple strategic move, since unions are often the best funded and staffed parts of Democratic campaigns. However, with the right candidate, they can lean towards the GOP. I personally recommend focusing on training, health care and mediation standards.

(5) Push for "transparency" instead of "regulations" in finance. They are, in fact, largely the same thing, but using that language appears more sensible, and keeps the negotiations focused on protecting markets from bad actors, rather than mandating certain behaviors.

(6) Call for a "BRAC" style approach to Medicare and Social Security reform. This has the advantage of possibly working, and lets the bloc that calls for it to punt the really tough questions.

(7) Narratives! Put a human face on all of these points. You're up against the best orator in a generation whose story is n0thing less than extraordinary. His backers in Congress, on the other hand, are less popular than W. Show how your options will help real people (not mythic plumbers), use the PMCIN metrics, and make it clear that you want a stable, sustainable and prosperous America.

(8) Accept the party's split. Americans will only tolerate a center-left government if the alternative is uncomfortably right-wing. There are implacable members of the party who fervently desire to pretend that Bush, Santorum and Palin enjoy widespread support. Where such folks can win local elections, it's no good trying to interrupt that. But do not let them define the party. For years, the Democrats had a list of points potential candidates must support to get national support, and they're set to sweep the nation because they gave it up in favor of pragmatism. Now, GOP, it's your turn.

Philo-crusted Pear-Apple Pie

Credit for the idea of this recipe goes to my dear friend Virgil, who posted the germ of the recipe as a comment at the beginning of October (the post on narratives and upcoming projects). His, and his lovely wife's, recipe calls for a free-form peach and black grape pie, which sounds fabulous. Unfortunately, fresh peaches and grapes are gone until next August in the Great Chilly North.

Of course, I don't keep phyllo dough on hand, but I do make a lot of bread (the kind with flour, not flax fibers). The recipe didn't look too tough, and I was trying to think of some way to celebrate an apparent outbreak of sanity in the part of the world from which phyllo hails (you go girls!). We also had a couple pears and apples that needed to be cooked badly.

Ingredients:

Phyllo dough: 2C sifted flour, 1 egg, 1/2 cup water, 5 1/2T butter, 1t salt, some honey

Filling: 3 crisp apples sliced thin; 2 pears sliced thin; 3T brown sugar; 1T lemon juice; 1T granulated sugar; 2T cornstarch

Assembly:

(1) Sift the flour into a bowl, make a small well in the center. Add the egg, water, 1/2T melted butter, and salt and mix thoroughly, then knead until smooth and elastic. Cover with a small amount of flour and a damp towel for 15min. Preheat the oven to 350F.

(2) Combine the sliced apples and pears in a bowl, add brown sugar and lemon juice, stir. Allow to sit for 10min while mixing the granulated sugar and cornstarch in a small bowl.

(3) Melt 3T of butter in another small bowl. Roll out the Phyllo until it's about 1/2" thick and spread the butter over it (this will make a small mess). Cut the dough into three sections, stack them and re-roll. Knead in any butter that has escaped. Form into a ball, then separate into two roughly equal balls. Roll out one ball until it's roughly a 14" circle. Get this into a 9" pie plate and leave the overhang, you'll need it shortly.

(4) Mix the cornstarch/sugar mix into the fruit and stir thoroughly. Scoop the larger sections of pear and apple into the pie plate. Roll out the other ball into a ~14" circle, place this on top of the larger chunks of fruit. Pour the remaining fruit and juices onto this layer, then fold all of the overhanging sections in to cover the pie as best as possible.

(5) Melt the remaining butter and some honey in a small bowl and brush the top of the pie with the delicious mixture. Place in the oven for 30min, rotate 180deg and continue baking until the top is golden brown, about 30min.

(6) Remove and let cool for a couple hours.

Pie on the national stage

Props to JD for the link, I couldn't be happier to see pie called out on the national stage.

When economists dream

I apologize to my readers for the largely negative tone this blog has taken lately. It's an intense campaign year, and the country really is about to choose a fundamentally new direction. While I believe the US is going to make the most pro-pie choice, I'd like to engage in a little alternative history of what might have been a more pleasant, interesting and competitive presidential campaign.

Our story begins around 3am, in small-town Ohio, August 29th, 2008:

A private jet lands at a small town airport. It's publicly available flight plan shows that it launched from Santa Barbara airport, with four people aboard. Two shadowy, slender adults deplane with three largish, hairy dogs and quickly climb into a waiting black Chevy Suburban. The overnight watch at the FBO calls a friend, who calls a friend, and is suddenly the most photographed fuel guy since a high school kid filled Bob Hoover's gasoline powered airplane with Jet A.

That afternoon, at a McCain rally nearby, a larger portion of the stage is covered by curtains than usual. McCain, feeling the bounce of his VP pick finally being announced, takes the stage triumphantly. After a brief stump speech about the things the Dems didn't say at their convention he says, "My friends, I've found the best running mate for these troubled times. He's a man who needs no introduction, except I think I can say for sure that neither of us will take a day off!"

The crowd gives an obligatory cheer, then falls silent. A stage worker wheels a chalkboard out from behind the curtain, and a lean man in a cheap suit walks up to it, pulls out a piece of chalk, and begins in a perfect deadpan, "In 1930, the Republican-controlled House of Representatives," while the crowd goes absolutely wild.

The deadpan, somehow given extra life by the distortions of the sound system, continues, "in an effort to alleviate the effects of the... Anyone? Anyone?... the Great Depression, passed the... Anyone? Anyone? The tariff bill? The Hawley-Smoot Tariff Act? Which, anyone? Raised or lowered?... raised tariffs, in an effort to collect more revenue for the federal government. Did it work? Anyone? Anyone know the effects? It did not work, and the United States sank deeper into the Great Depression. Today we have a similar debate over this." From there, Ben Stien goes on to describe the scary similarities between today and 1929 and 1930, then gives a cutting comparison the Obama tax and trade plan to Hoover's tax plan and the Hawley-Smoot Tariff Act. He goes on to describe McCain's tax plan as letting people win his money through hard work, but calls Obama's "Take Ben Stien's Money."

The campaign from there gets really interesting, because Ben's a very safe conservative, but articulate and intelligent. The chalk-board gimic, far from getting old, gets adopted by some of the Obama partisans in an effort to appear smarter and more on top of the dangerous situation than the opposing Ivy-league trained economist. Identity politics get kicked to a back burner while historical examples and economic theory fills the airwaves. The Obama campaign would even have to go on the offensive at some point, with Deadpan Ben being as much a go-to guy on economic issues as Helicopter Ben. With much cajoling, a last minute "economics debate" is arranged between Warren Buffet and Mr. Stein. After Lehman fails and the wheels really come off, Ben addresses the Republican Study Committee and sends them all to the principal's office.

I'll stop here. I doubt this scenario would have changed my vote, but it certainly would have made the decision tougher. At it is, there's two weeks to the election, and unless something rather impressive happens, the Republicans are in for an embarrassing slap in the face. So, Mr. Stein, Governor Jindal, the original John McCain, if you're reading this, please save the GOP from what it's become. I'll bake each of you a pie.

Red October Berry Pie

The farmer's market had raspberries, inexplicably for October. I think it's a sign.

To recap:

(1) The People (US Treasury Dept.) have seized the means of production (banks).

(2) The party that aims for a unitary executive inveighs against elite greed while celebrating the virtues of the proletariat. The other promises to make it make it much easier for the central planning authority to direct production of individual factories.

(3) Today, Helicopter Ben went before the planning commission to recommend further "stimulus" help make sure we don't leave our Road to Serfdom too quickly.

Well, this particular kulak thinks we ought to celebrate the inevitable march of history. I propose a raspberry-rhubarb pie, but inflated (you know, like the currency will be).

Ingredients:

Basic flakey crust, double

filling:
~5 cups rhubarb, chopped into 1/2" chunks
1 1/2 cup and 2T granulated sugar
~2 cups raspberries, preferably fresh (like from the farmer's market the day before)
2 T lemon juice
3 T cornstarch

glaze:
1/4 cup milk
2T sugar

Procedure:

1) Roll out the bottom crust and get it into a 9.5" pie pan. Preheat the oven to 400F.

2) Combine rhubarb, 1 1/2 cup sugar, raspberries and lemon juice in a large bowl. Let sit for 10min while combining cornstarch and sugar in a small bowl.

3) Roll out the top crust, then pour the filling into the bottom shell. Moisten the rim of the bottom crust, put the top crust on.

4) Mix the glaze ingredients together and brush over the top, poke some vent holes, and place in the oven for 30min. Rotate 180deg, reduce temp to 375F and bake another 1/2hr. (it helps to put a foil-lined cookie sheet under the pie in the second step)

5) Let cool for at least 2hr and enjoy with your comrades.

Calling the events of this month "the October Revolution" is, in many ways, a discredit to those who actually suffered under real Communism. It also smacks of "reducio ad hiltarium", or at least a specious slippery-slope argument. However, any move in that direction should evoke a very strong response, and calling Republicans commies when they adopt populist policies is kinda fun. It also explicitly avoids pointing out their move towards the group that the original reds claimed to hate most.

Consumer Credit: the scenic road to serfdom

Recently, I've been rereading F. A. Hakek's The Road to Serfdom, after reading it eons ago in high school. The central premise, based on the author's experience as an economist in Austria in the 1930s, is that collectivism leads to tyranny. When the government has more than a taxation stake in the economy, it becomes interested in the performance of individuals in their own work. Thus, screwing around at work or otherwise limiting productivity doesn't just hurt a single employer, it's a crime against the state.

Today, a significant portion of banks in Western countries are owned by their respective governments. In the UK, Gordon Brown has even mandated, or at least encouraged, that banks continue to lend at 2005 levels. Freddie Mac and Fannie Mae, and thus now the US government, hold 60% of home loans in the United States. Shopping, we were told, is patriotic.

Consumer debt in this kind of environment, one that has existed since the 1930s somewhat, and more so since the late 1980s Savings and Loan Crisis, is nothing less than highly regressive taxation. And consumers who default hurt not only themselves and their lenders, but the state. Capitalism cannot function when banks do not trust their borrowers to pay them back, and going to the government till for redress means that it is the government's job to determine who exactly pays back that loan.

Today, we're doing that by spreading the bad loans around the whole tax base. We're also taking steps to keep questionable companies afloat, and considering others to prop up housing prices. All of these require that people have jobs that they know won't go away, so that it becomes safe to lend them money.  A particularly terrible piece of legislation that's likely to go through next year will make it much easier to form a union, and for that union to have a federal mediator force new terms on the company.  We've nationalized the banks and the Lumbering 3 (soon Lumbering 2?), made highly-unionized extractive industries a national priority, state governments are the major sources of long-term capital, and now we're looking centralize the authority to define the relationship between labor and production.  I may have to bake a Red October pie to celebrate. 

Half-baked Alaska Pie

No political blog is complete without a little satire.  Here at Pie and Policy, we aim to keep ours in good taste (unlike, say, this pun).

Pictured here is the Half-baked Alaska Pie as we suggest serving it: with a small glass of water between it and a white Russian.  

Ingredients:

Crust: Basic pastry crust

Carmel layer: Harry and David's Butterscotch Sauce

Ice Cream Layer: ~1/2 quart chocolate ice cream

Meringue Layer: 4 large egg whites
1/4 t cream of tartar
1/2 cup confectioners sugar
1/2 t vanilla extract
pinch of salt

Procedure:

1) Pre-heat the oven to 400F.  Roll out the pastry and get it into a standard 9" pie pan.  Line the pastry with aluminum foil and fill the dish with pinto beans (these are cheaper than pie weights, increasing your PMCIN PIE).  Place the pie shell into the oven and bake 10min.  Remove, wrap the foil around the beans and save for later use (pumpkin pies, which are coming soon, require pre-baked shells).  Let the half-baked pastry cool.

2) Once the shell is cool enough to handle, line it with your favorite carmel sauce.  Harry and David's works well, or you can melt caramels with some water to make your own.  Place this in the fridge for roughly 30min, and put the ice cream in the fridge to soften.

3) Use an ice cream spade or sturdy spoon to make an even layer of ice cream in the shell.  Place the partly filled shell back in the fridge for 2-3hrs (I skimped on this and it wasn't such a hot idea).  

4) Pull the eggs out of the fridge and make a fabulous dinner for 5-8 people.  After dinner, break out the drinks and dash off to the kitchen to make the meringue:

Turn on the broiler to low

Beat the egg whites until the hold soft peaks

Slowly beat in the sugar

Add the cream of tartar, salt and vanilla and beat a little more, the meringue should be big and fluffy.

5) Place the pie under the broiler, and check every minute or so to see when it starts to turn brown on top.  When the top is a sort of dirty blonde, pull it out and serve immediately.

Makes you wonder

I'm not sure how it happened, but somehow I wound up on the GOP USA list serve. Perhaps half of the emails have condensed versions of their website news and commentary, which occasionally is interesting, even insightful. Most of the rest fall into the nakedly spam or "donate to our cause" category. But once in a while, there's a real gem.

I hadn't heard of the Google 2030 Energy Plan before I got that little bit of invective. On whole, I think it's interesting and ambitious, although I have doubts about being quite so willing to pick winners on such things as transportation fuel. But it proposes no specific legislation, so why tell Congress to reject it? Check out the comments, it's an interesting discussion.

French-style Apple Pie

I offer this recipe to thank Congress for telling private investors around the world not to take on the Lumbering 3, even if their own rules prevent them from actually giving the companies money in time to keep them out of bankruptcy. One might hope for something more Progressive from the world's largest and most innovative economy. Instead, let's all hoist the tricolor, don our berets and enjoy the culinary lessons our quasi-socialist buddies can teach us. (In fairness, Sarkozy's trying his best to get France out of that rut, and may even succeed.)

Anyway, the pie is once again an alteration of one of Ken's recipes. This time it's s a purpose-made apple-custard pie.

Ingredients:

1 Basic flaky crust (can substitute gluten free pastries)

3 large apples, peeled, cored and cut into thick slices
2 t unsalted butter
2 t + 1/2cup granulated sugar
1/4cup + 2t apricot brandy
1 1/4 cup whipping cream
3 large eggs
1/2 t vanilla extract
pinch of salt

Making it:
1) Roll out the crust and get it into a 9 1/2" deep dish pie pan, partially prebake it at 400F for about 12min, remove and allow to cool on a wire rack. Leave the oven on at 350F.

2) Saute the apples in the butter over medium heat for about 3min, stir often, adding the 2t sugar in the last minute. Add the 1/4cup brandy and boil off the liquid, then let the mixture cool on a plate.

4) Heat the cream in a small saucepan until it just starts to steam (if the room is humid), about 2-3min. Beat the eggs until frothy in a largish bowl, and slowly add the warm cream while stirring vigorously. Once you've added about half the cream, mix the vanilla, salt and 2t brandy to the cream and continue adding the mixture to the egg mixture.

5) Place the apples in the pie pan. Add about 1/2 cup of the cream mix, lift the apples so the mix gets under them, and then add the rest. Hopefully the apples won't float (mine did, but still tasted great).

6) Bake for 50min at 350F. Let cool for 2hrs on a rack, then place in refridgerator overnight before serving. Extremely tasty, use with caution.

Narratives and upcoming projects

First, I haven't forgotten my promise to put more pie recipes up, but the non-baking parts of my life have priority at the moment. Anyway, here's what to expect in the next month:

(1) French-style Apple Pie: In celebration of the $25b "loan" to the Big 3, we'll celebrate the tastier side of partially-privatized socialism.

(2) Pie For (almost) All: A growing number of friends and relatives have food allergies. I think I can bake a pie that all but the fructose-intolerant can enjoy.

(3) Half-Baked Alaska Pie: A typical Baked Alaska type pie features a prebaked crust, an ice cream base layer and meringue top. For this one, I'll partially pre-bake the crust and get the meringue to be cooked golden on top, but white elsewhere. I recommend serving it with a small cup of water and a white Russian.

Also, the narrative below contained one huge factual error: Anytown Bank would have made no guarantees about the quality of the securities they were selling. Instead, their losses would come from buying similar securities from other banks to provide revenue that would go into AB's capital base, enabling it to lend more (and collect more security-selling fees).

The whole point of writing it out in narrative form is to provide context. Humans love narratives, even post-modernists who smash them. Sound bites only have meaning if everyone understands what the words mean. My own professional life has suffered greatly from such a misunderstanding, and today when we throw around words like "bail-out", "fiscal responsibility", "liberal", "conservative" and so on they evoke strong emotional reaction that mostly serves to polarize the audience. So, if you hope to get my attention, try to tell me a story. Please, put the words you are using in context so that I understand what you mean by them.

The MOAB, in narative form

Alright, I promise some really special and original pie recipes for everyone who's had to put up with this. Heck, I think I have few enough readers I can send you all baked goods if you ask (radio stations bribe their audience, why can't I?).

So, in narrative form, how the banking crisis happened, and how the MOAB just might fix it:

Step 1)
Anytown USA, late 2006:
Bob and Sally move into Anytown USA and buy a house in a new subdivision on 10th Street. Everyone is happy, because they used their $70k combined income at Pie Widget Maker to get a mortgage for $250k on a house that the previous owner bought 5yrs ago for $200k. Anytown Bank, which originated their loan, also issued a couple dozen other loans, effectively depleting the $10m it was allowed to make based on its $1m in deposits and capital. However, Anytown is growing like a weed, and needs someone to offer more loans so that people can buy the new houses being built on 11th Street. So Anytown Bank (AB) offers Wall Street Bank (WSB) the income from $500k these loans if WSB will just give AB the cash value of the loans plus a small fee, with a promise that AB will make WSB whole if the mortgages foreclose and the value of the homes goes down. AB can't find well qualified buyers for the houses on 11th street, but decides to offer "sub-prime" mortgages, fully expecting them to refinance into standard mortgages or sell before anything goes wrong.

Step 2)
Anytown USA, late 2007/early 2008:
Something went wrong. The people who bought up the properties on 11th street were not able to turn their widget-sales jobs into something that would justify owning $250k homes. Also, the market was finally saturated, and no one wanted to move to 11th ST because housing and gasoline had become too expensive to justify the long commute to Main Street. In the meantime, Pie Widget Maker, a small company on Main Street that employs Bob and Sally, begins developing the SuperCrust Widget.


Step 3)
Anytown USA, Sept/Oct 2008:
The subprime security issued by AB and held by WSB blew up in both of their faces. WSB had taken it and sold shares in that income to many customers, along with insurance policies in case the subprime holders or AB defaulted, only to discover that the insurance company didn't have enough assets (this is what brought down Fannie/Freddie and AIG). AB was forced to bring all of it's mortgage backed securities "on balance sheet", meaning that instead of having a fresh $10m to loan, it has to hope that the securities it issued haven't lost more than $1m, or the bank becomes insolvent (kickin' it WaMu-style, in other words). The SuperCrust Widget, incidentally, was a big hit at the Pie Convention, and Main Street's biggest employer needs $300k for the machine and materials to make enough to satisfy its customers. Sadly, AB can't issue any loans because its capital, which should have been freed up by securitization, is instead being held hostage by the threat of defaulting on its obligations.

So, what are the subprime houses on 11th St worth? How about the houses on 10th St, where Sally and Bob are working hard to pay their mortgage? Because of new accounting rules, AB is required to "mark to market", express how much capital is has relative to obligations, which means AB's accountants need to pick a number. If they pick one that's too high, they will be accused of fraud. To low, and the bank goes WaMu.

Everyone knows that the $250k houses on 10th St are beyond the means of all but the president of Pie Widget Maker, who sensibly lives on 1st St in a small house. If AB was able to sell half of the foreclosed homes for $100k, does that mean all of its securities are worth 40% of their original value? If the median income of Widget Stampers is $35k, then a pair of them ought to be able to afford $210K, implying that the homes are worth 84%.

The answer to that question, then, really lies with Pie Widget Maker. If they can get their new machine up and going, they can hire, say, six more Widget Stampers. If they can't get the loan for the new machine, then they will only be able to pay their existing Widget Stampers like Bob and Sally for as long as the current product lines and production facilities last, in which case any property in Anytown is basically worthless in the long run.

So, if the Treasury Department steps in and buys up the securities issued by AB at a price that leaves them alive and able to lend a little, this story has a happy ending. The new Widget Stampers move into homes on 11th ST, and in turn justify opening a 24hr Pie House there, which employs a couple more people, and so on. Housing prices stabilize after falling a bit more, and the Treasury Dept. can sell the securities on once someone is willing pay a good price for them. By taking an equity stake in AB, they heartily discourage risk, and make sure the next shareholder's meeting includes plans to avoid exposing the bank to that kind of risk again. In the end, the equity (stock) in AB and mortgage-backed securities will be sold by the Treasury, in this case at a tidy little profit.

Conclusion:
We will not avoid a couple years of hard times. No matter what, some businesses and banks will fail. My favorite thing about the Paulson plan is that its relatively small magnitude will most heavily favor smaller banks with fewer shareholders (and thus less resistance to dilution of shares) that can turn around and make small business loans. We need this to happen, and we need to do things to encourage production rather than consumption. Markets, like people, can be irrational, and the most rational thing to do now is help everyone settle down. Pain will come, but it need not be a collapse.

My flip-flop: Go Hank Go!

As mentioned below, I think that it's important to be willing to change one's mind as evidence emerges about what shapes one's opinions. In my case, I can now offer tentative support to the Bernanke/Paulson plan. A few key points:

(1) Mortgages have had the implicit backing of the government since the 1930's. Specifically, the mortgage-interest tax credit substantially reduced the cost of borrowing, and so there was huge incentive in the tax code to move unsecured debt into the mortgage market. Thus, the US voters helped caused the problem, and profited via much the same mechanism of leverage as the Wall Street banks.

(2) The $700billion will not all be spent at once, and as long as the Treasury takes an equity stake, it will not cost $700billion in the long term. The equity stake rule will keep some banks away, but after WaMu's failure, shareholders faced with insolvency or dilution will probably choose dilution. For banks that don't, the vulture capital is more likely to clean up the mess if they know other members of the sector are stable.

(3) The Great Depression did not turn around until the gov't bought bad loans from banks and helped convince people to start investing in small endeavors again (this is very pro-pie).

(4) This effort will not be able to restore 2005, and as long as the money is doled out slowly shouldn't have too much effect on inflation. Especially since there will be a general recession over the next year or so as our credit-fueled retail economy winds down and housing returns to price levels that the median wage earner can afford.

The Republican Caucus should be allocated enough money to build themselves a woodshed to take each other out behind. Their "insurance plan" basically tries to get the US governement involved in the industry that brought down AIG and which Berkshire Hathaway won't touch. If we knew what these were worth, then maybe, but the problem is that we don't. The "insurance plan" is exactly the transfer of wealth from taxpayers to Wall Street that the Hank Plan looked like at first.

Incidentally, the Democrats should use the woodshed until they learn not to pass their highly inflationary "stimulus" legislation. We need public works in this country, not an unemployment dole.

MOAB Haiku

The Mother Of All Bailouts (MOAB, an acronym more commonly used for large fuel-air bombs) inspires me to write poetry:

Please take equity
if toxic paper you buy
forget exec pay

Calculating PMCIN

While Pie Making Capacity In Nation (PMCIN) is an interesting idea, it's still half-baked. Statistics can tell you anything if you torture them enough, and we could easily manipulate this measure to be essentially another version of gross domestic product (GDP) or to promote outright communism.

The key is the assumptions about what constitutes pie making capacity. Here, I will assume the maximum personal input estimate (PIE) is 1 per adult per week. Thus, the maximum PMCIN/wk, the default estimate, will be the population of the country.

The following is intended to be the minimum requirements for good pies. I know there's a technically savvy reader who's just itching to write scripts to grab these numbers and compute PMCIN on a daily basis.

Inedible contributions:
An oven and a counter top
Price: Average rent / 2 (assume 2 adults per household)
There's many sources for this, I'd like to average the first page of Craig's List "appartments/homes for rent" since that is the most open and accurate measurement tool.
(although gov't cost of living data is acceptable. Given that rent reflects actual cost of housing and mortgages are a mess, we'll only use rental prices for this statistic.)

Cooking implements:
Price: determined from an average of the 10 highest product rating results on Google Shopping, divided by 52, implying annual replacement
9" glass pie pan, 9 1/2" pie pan, 18" rolling pin, 1 set glass mixing bowls, 1 set measuring cups, 1 2cup glass measuring cup, 1 large cookie sheet, 1 set measuring spoons, pie bird,

Consumables:
Pie and Policy believes in seasonally appropriate cooking, and so will use a "basket" of three pies to determine the cost of a pie with seasonally appropriate filling. This also allows us to use in-season farmer's market costs, thus increasing PMCIN.

However, I will only use a basic crust, since the ingredients reflect the costs of making other types of crusts, and these don't tend to change with seasons. I'll also assume a double crust.
3 cups flour (.3lb, so 1/15th of a five lb bag)
1/2 cup unsalted butter (1 stick, divide package cost by 4)
1t salt (call it 1/60th of a 26oz package)
1T sugar (call it 1/100th of a 5lb package)

The rest, as I said, depends on the season and the farmer's market. I will start keeping a record of the cost of my fillings, and then annualize them. A good starting assumption, though, is roughly $6.oo/pie. That's at the high end, and I'll give more accurate numbers with future recipes.

A brief comment on the Mother of All Bailouts

The world probably doesn't need another blog post about the current crisis and the possible "mother of all bailouts".  There is, however, no more pressing issue in policy today, and so I would be remiss not to say something.  Briefly, Sec. Paulson has said that instead of just putting band aids everywhere, we need a comprehensive solution.  However, his $700billion request, on top of the ~$200billion that Treasury has paid out and I think ~$600billion that the Fed has loaned have done nothing except prolong the day of reckoning.  The $62trillion dollar, completely unregulated market for credit derivatives grew when nearly everyone either repaid their loans or sold collateral at a profit.  This new federal money, like all that before it, will be swallowed up without a burp, much like the "economic stimulus" checks from earlier this year.  

Meanwhile, it does nothing to address the cause of the crisis, which is the unsustainable mode of credit-fueled living in this country.  If the problem is that people cannot pay their mortgages, how does buying securities so that banks out can issue new ones solve the problem?  Housing, by any historical standard, still has about 10% to fall in most cities before it's affordable to the median wage earner.  Many of the credit derivatives that are just now getting attention are based on loans to retailers, and will turn sour if spending this Christmas does not increase substantially over last year.  We are, in short, screwed no matter how much debt King Hank leaves us.  I leave you with a brief haiku:

Since collapse it must

Let us get on with it

Fix bridges not banks

hooray for flip-floppers!

I'm trying to maintain a roughly 1:1 ratio of pie recipes to policy posts. This isn't about any particular policy, but then the last recipe wasn't a pie. Consider this little morsel a byproduct of policy debates.

The motivation is this: a friend posted a rather partisan castigation of the American voting public on Facebook. The reply thread was hotly partisan, and her next post was effectively an apology for letting people know what her opinions are, because "I won't change mine and you won't change yours."

This, I believe, is exactly the problem with political "debate" today. One of the reasons Pie and Policy exists is to provide a way of evaluating the impacts various policies have on a quirky (but delicious) measure of sustainable prosperity. I hope for vigorous debates about things like taxes, regulations and lattice-vs. crumb- toppings. At all times, please try to keep focused on the (hopefully) shared goal of making the world tastier.

And please, give politicians a break if they change their minds. The world is a rapidly changing place, and being willing to adapt intelligently is much better than staying the course at all costs. As long as you can agree with the reason for the change, it isn't a bad thing.

*Apple Peel and Peanut Butter Oatmeal

This isn't a pie, but it makes use of the byproducts of one.  

Ingredients:

For overnight soaking:

Peels and core bits (remove stems and seeds) of a pie's worth of apples

1T lemon juice

Enough water to cover the apple bits

For breakfast:

The peel mixture

2 cup water

1 cup old fashioned oats (quick works too)

1/4 cup wheat germ

2T peanut butter

Proceedure:

While pie is baking:

(1) Chop the apple peel into tiny bits, remove the stems and seeds from the cores.  Place in a container, add lemon juice and just enough water to cover.  Refridgerate overnight.

The next morning:

(2) Combine peel mixture and 2 cups of water in a saucepan and bring to a boil.  Reduce heat and simmer about 10min.  

(3) Stir in oats and wheat germ, then increase heat a bit.  Cook according to oat package directions.  Stir frequently to prevent burning to the bottom.

(4) Turn off heat and stir in peanut butter. 

And, yes, when we open the Fuzzy Wups BBB&B (bed, breakfast, bakery and brewery), this will be on the menu in the fall, possibly with fresh ground cinnamon and nutmeg.  Suggestions are welcome.

Blackberry custard and soft apple pie

Alternative title: "Bear Stearns Rescue Pie", since it's a partial recipe of expensive ingredients backed up by a traditional apple pie made from sub-prime apples.  I'd make a Lehman Brother's pie, but I can't get past just baking an empty crust.  

Really, tho, this recipe came about because I loaned my deep dish pie pan to a couple who had just had a very cute and smart baby.  It had a lattice top cherry pie in it, but we couldn't find a time that worked for us to return it, especially since they went on a road trip a couple weeks later (yes, you did read that right, no, they didn't think it was flippin' insane).  In that time, I made a Blackberry Silk Pie, thinking it would go into a normal pan, but instead had about two cups left over since I only had standard 9" pans.  

This has kept remarkably well in the fridge since early August, but rather than push our luck, I thought I would try and get some milage out of the softer, less pie-worthy apples that came in the mixed 25lb (~11kg) bag I bought for $5.00.  The main problem with these is that they turn to mush in the oven, rather than holding the texture that is the key to good apple pies.  However, custard pies aren't supposed to have that texture, and the blackberry custard filling is very similar to some fruit dressings I've seen served with apples.  

Crust:

Basic flakey, or your favorite alternative pastry

Apple Filling:

5 cups apples, peeled and cored*

1T lemon juice

1/3 cup + 2T sugar

1T cornstarch

Custard filling:

~2/3 cup fresh blackberries (not the RIM type)

1/3 cup sugar

1 large egg at room temp

1T cornstarch

1 cup heavy cream

1/4t vanilla extract

(1) Combine berries and 1T of the sugar in a food processor and whirl until smooth, about ~30s.  In a medium bowl whisk eggs until frothy, add remaining sugar and cornstarch and blend well.  Thoroughly mix in cream, vanilla and berries.  Set aside.

(2) Roll out the pastry into a 13" circle, get it into a deep dish pie pan by your favorite method.  Place in freezer and preheat oven to 400F

(3) Mix the apples, 1/3 cup sugar and lemon juice together.  Let sit for ten minutes, then stir in cornstarch and 2T sugar.  Fold into chilled pie shell.

(4) Place the pie in the oven for 2omin, then remove and add the custard.  Reduce oven temp to 325 and return to the oven for ~40min, until the custard sets.  

(5) Cool in the refridgerator with a covering of tented Al foil

I'm writing this before I know how the pie turns out.  I'll leave a comment tomorrow one I've tasted it.

Where pie and policy meet

I'm a big fan of the Economist, in particular the "Leaders" section, because it contains insightful, well written commentary with clearly stated biases.  Calling itself the "mouthpiece of global capitalism", it's very clear that the editors are center-right social libertarians.  All of their writing has this "spin", because it is impossible for humans to express things both well and blandly.  Anyone who claims to be unbiased or speaking from a "no-spin-zone" is either delusional, dishonest or completely amoral (for instance, how does one have a "fair and balanced" discussion of torturing kittens when the words themselves are repulsive to anyone with a moral compass).   

In that vein, the following must be said now:  The pie recipes in this blog tend to favor a "cooking as resource enhancement" rather than "cooking as high art" approach.  The policy posts reflect my economically libertarian, environmentally cautious, socially liberal and fiscally conservative beliefs.  However, to try and avoid getting into very esoteric discussions of easy credit as regressive taxation or the impact of various tax policies on farm production, this blog will use pies as a rubric to determine whether or not a policy is good.  The central belief of this blog is that all people should have the means and time to make at least one homemade pie per week, all around the world, forever.  

With help from the comments, my goal is to develop a "pie making capacity in nation" (PMCIN, pronounced "pumpkin") index to look at how countries compare and how policy proposals influence the important things in life.  Good pie making requires a confluence of productive fruit, dairy and grain farms; reliable ovens accessible to everyone (i.e. affordable, quality housing); good quality bakeware and spices, and the small businesses to manufacture and sell them; a free and open press to promote the publication of recipes, even bad ones; and a populace with at least 2-4 hours per week of leisure time and the desire to be moving during it.  These in turn require a clean environment so that the farms can produce.  They are helped by marriages (or at least couples, or more, since we're equal opportunity here) that stay together, increasing the household PMCIN.  Labor laws that limit worker hours and improve safety increase PMCIN, but going too far with these and making it difficult to fire people hurts small businesses, reducing PMCIN.  Global warming is very destructive to fruit and grain production, particularly in the leading industrialized nations (negative Gr8-PMCIN?) and so anything that can help reduce it is good.  Easy consumer credit is bad, as it almost always in people having to work longer hours and have less disposable income, in addition to the fact that it is typically spent on anti-pie things like large televisions or cars.  Education leads to greater understanding of chemistry and history, and thus higher quality pies.  Starting families, businesses and farms requires the kind of stability that can only be ensured by an effective military, as anyone in Iraq or Georgia would be happy to tell you.  

Over the next few weeks I'd like to work on this half baked idea.  If you live close by, come on over, since I'm researching the requirements of an average PMCIN of 1pie/week by 1st hand experience, and the result is more than I should eat myself.  Ideas for pie-charts are also welcome.

-tba

Watermellon rind and dried fruit pie

I grew up in the desert southwest, and learned to view cooking as the fine art of salvaging food that was about to rot and grown in hard conditions. Capsaicin (the happy juice in chiles), for instance, is both a cheap high and a broad spectrum anti-microbial. Spicy foods both distract the eater from the quality of the ingredients and make it safe to eat. Refried beans is just cooked beans with the quickly rotting water replaced by slowly rotting fat. French onion soup is a combination of the last things to go bad on your average French farm. And so on.

Thus I was kind of shocked to read Ken's comments on selecting fresh, ripe fruit at its peak and baking it into pies as quickly as possible. I had long thought of pies as a way of preserving fruit, eeking out an extra week or so of edibility by coating it in sugar, itself a preservative in high concentrations, and heating it until everything died. This recipe is an adaptation of one of the few in Ken's book that seems to share this philosophy. Seriously, tho, you should buy Mr. Haedrich's book so I'm not the only one I know making these.

Before you begin, throw a large party and serve watermellon. Save the rinds.

Crust:
Basic flaky double crust

Filling:
3 cups watermellon rind, green part removed and chopped into squares
1/4 cup sugar
1/2 cup mixed dried fruits (no bananas)
1/2 cup chopped pecans
3T brown sugar
2T brown rice vinegar (cider might work better)
1/2 t cinnamon
1/2 t ground cloves
1/4 t nutmeg

Glaze:
1 egg
1 t sugar

Proceedure:

1) Recover from the hangover following the party. Watermelon daquaris are really good, but they tend to overstay their welcome. Rolling out a crust when you can't see straight is a bad idea.

2) Place the chopped rind and sugar in a saucepan, barely cover with water and bring to a boil. Let simmer 20min while you roll out the bottom crust and place it in a 9" pan. Once ready pour into a colander and let cool. Set the oven to 400F

3) Mix the filling ingredients in a bowl, turn into the pan, roll out the top crust and press it on.

4) Brush about half the egg over the top crust and sprinkle the sugar.

5) Place in the oven for 30min, rotate it 180deg and lower the temp to 375

6) Remove and let cool on a wire rack for 55min.

Normally, we don't eat half the pie the first night it's made, but we made an exception for this one. Also, since you can't split an egg, you might as well make two . . . (I made a pear pie as well, but that one came straight from Ken's book)

First post, and firing of the bazooka

Several folks have asked me about starting a blog after posting a couple pie recipes, and since I don't think I'll have enough original pie recipes to make this worth reading, I'll flesh it out with commentary on current events.

This is my take on the Freddie/Fannie take over and where this credit crisis is going:

Banking policy since the 1980s has made it far too easy to loan money,
and voters rewarded pols who encouraged this. I don't think any major
changes at the federal, state or local level followed the Savings and
Loan meltdown.

Thus, knowing that the federal goverment would reward those who made its
people feel rich (i.e. "live the American dream"), Freddie and Fannie
bought up pretty much all of the good mortgage debt and packaged it,
leaving only riskier stuff for private banks. The big Wall Street
firms got in on the act by packaging and reselling the crap, knowing
from history that the US taxpayers elect leaders who provide a backstop to the reckless providers of cheap capital (and therefore jobs). Underpinning this has been a worldwide desire to join the party, most notably in China, where cheap American credit has fueled double-digit export increases over the last twenty years.

The current crisis, however, may be game-changing:
http://www.iht.com/articles/2008/09/05/business/05yuan.php

I asked someone who does corporate finance for a living if this was
significant. The reply: "let's not go there." The current
generation of Chinese leaders knows that they rely on two pillars for
legitimacy: (1) nationalism and (2) prosperity. For now, and possibly
for a while yet, they don't have the military punch for serious
foreign adventures, which limits their ability to appeal to
nationalism, since that almost always requires a foreign enemy and occasional combat. The second requires a very robust export market, involving a weak yuan and percolating markets in the US. However, the lower level functionaries
and their managers, who make the place work on a day to day basis, are
apparently getting sick of roughly -10% return on investments they're
forced to make. Back in 2006 I think I wrote something to the effect
of a "death pact" that Sec. Paulson had signed with Chinese finance
ministry, one in which they would continue to loan us money we paid
them for stuff they made. Everyone survives as long as the mighty US
consumer is able to spend >100% of income. The wheels are now
officially off and we're entering uncharted territory.

Right now, both candidates are trying to sell plans to put the wheels
back on rather than buy a new car. I'll definitely give Obama a
slight edge in this debate, as one of the real problems is too much
money trying to find somewhere to get a return, and so pulling more
into the Treasury from top earners is fair. Beyond that, we need an expanded
export market ASAP, and anti-trade Dems ain't gonna get that done. Small businesses are bad for unions, and a lot of what I'm hearing about shoring up the housing market sounds distressingly similar to a planned economy.

We need to start producing things ourselves and stop asking for gov't help propping up our lifestyles. F. A. Hayek wrote a book about the other option.