Jim Nichols

Writer, Blogger, Candidate for GA State House 

A moment to pause...

 

Just got off work... making a pit stop at home and then I'm out the door to campaign for Kasim Reed (and Amir too!) in the Atlanta run-off (with a stop for 2 hours at GSU for class). 

But I just had to take a moment to pause, take a deep breath and reflect on my gratitude.

During my time in politics I've met many people who have humbled and inspired me through their time, commitment, and sacrifice.  These, too few and far betweens, give me the inspiration and determination to work harder.  They've picked me up when I have fallen, and been a guide to me when I was unsure of how to move forward.

Of those people, my gratitude must both start and end with my wife.  I'm privileged to be in a place where I have the opportunity to be involved in the political process.  But I would not be in this place without my wife who quietly sits behind the scenes unnoticed, taking it all in stride.

For those who don't know much about the inner workings of campaigns, political parties, and legislative advocacy I think a reference to the theatre is in order.  I'm sure you all know what its like to watch a play--but some of you may never have had a chance to go back stage to watch everyone working and running around like crazy for the show to go on.

As a playwright I can tell you that what the audience sees on stage; the words, magic, and wonder of the performance--wouldn't be possible without those behind the scenes keeping the wheels turning.  Without those behind the scenes, the enjoyment, entertainment, and artistic value you gain would have never occurred.  And its not glamorous work! 

The same is true when it comes to success in politics and government.

Election days are good days--as we are lucky to have a safe, stable, and functional government as violece is all too common for most of the world.  Living in an open society is a luxury that many do not have. 

But good government doesn't just happen, its a constant struggle that takes work.  And though people don't know it, my wife sacrifices a lot for me to have the opportunity to be engaged in the process of government and governing.

Anyways I just had to take a moment to pause to say thank you Deana... you sacrifice so much to make this a better world. I'm headed out the door and won't be home till after you are in bed, but I just wanted to pause and say thank you.

For all the days when I kiss you goodbye before you're up and kiss you goodnight after you've gone to bed; for all the campaign contributions you've coughed up at the expense of nice dinners and other things you deserve; for the last minute events and unexpected crisis'; for the love, support, and feedback that helps me keep plugging away--I am so very grateful. 

You've even learned to feign a smile when I look over at you and say..."ummm  babe, looks like there is going to be a run off--i'm going to have to scrap some of our upcoming plans."

Last year in the run up to Obama's election I turned to my then fiance as we were trying to set a date for the wedding and said, very hesitantly, "umm... can we put off the honeymoon till after the election?"

She smiled and said yes...giving me the, "how did I end up with a politico" eyes that she does so well(see above).  I knew right then and there that I was marrying the right person---and I think that moment is why I never had a single butterfly on our wedding day.

To all the spouses who have to put up with us politico's thank you-.  Though others never see your sacrifices, or thank you for them, know that you are contributing something of great value to our society. provides all of us a stronger democracy.

Anyways, i'm out the door (and yes, babe, I grabbed the deposits that I was supposed to take to the bank yesterday and am taking them now).

P.S. Deana, I promise: its all over tonight!  Polls close at 7pm.  You have some "us times" coming to you ASAP

p.p.s. errrr... when I said "over"... I should have said "kinda over".... but I promise only 335 days till November 2010 election and then its over!

p.p.p.s I"m going to stop digging a bigger hole with this "its over line" and just leave it on, thank you!

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Notes on Natural Monopoly

Natural Monopoly
 
A natural monopoly exists when economies of scale provide a large cost advantage to having all of an industry's output produced by a single firm
 
  •    the source of this situation is one where there are large fixed costs
  • ex. local utilities --water, gas, electricity, local phone, cable
 
Breaking up a natural monopoly in such a situation (where one large producer has a lower average total cost than smaller producer) would raise the average total costs --> raising the price for the consumer
 
Profit maximizing monopolists act in a way that causes inefficiencies--it charges consumers a price that is higher than marginal cost and therefore presents some potentially beneficial transactions
  • large profits at consumer expense brings up a question of equity as well
 
What can be done?
 
There are two common policy solutions for a Natural Monopoly
 
1)  Public Ownership -- the good is supplied by the government or by a firm owned by the government
 
In many countries it is the preferred answer to the problem of a natural monopoly
 
  • examples
    • before 1984 in Britain telephone service was produced by British Telecom
    • before 1987 British Airline travel was provided by British Airways
    • US--Amtrak, US Postal Service, Some cities such as Los Angeles have publicly owned electric power companies
 
The advantage of public ownership is that a publicly owned natural monopoly can set prices based on the criterion o efficiency rather than profit maximization
  • In a perfectly competitive industry, profit-maximizing behavior is efficient because producers set prices equal to marginal cost
 
Experience suggests that public ownership can work badly in practice--publicly owned firms are often less eager than private companies to keep costs down or offer high-quality products;too often they end up serving political interests providing contracts or jobs to people with right connections
 
2) Regulation
 
The more common solution in the U.S. is to leave the industry in private hands and subject it to regulation
 
Most local utilities like electricity, telephone service, natural gas... are cover by price regulation which limits the prices they can charge.
  • putting a price ceiling on a competitive industry can lead to shortages, black markets, and other side effects
  • a price ceiling on a monopolist doesn't necessarily do so--in the absence of a price ceiling, a monopolist would charge a price that is higher than the marginal cost of production
  • even if forced to to charge a lower price the monopolist can break even on total output as long as the price is above the marginal cost; the monopolist still has an incentive to produce the quantity demanded at that price 
 
 In the first example we have a company that faces a demand curve D, with an associate marginal revenue curve MR.  We will assume that the marginal cost is constant--so that MC is a horizontal line.  The average total cost curve (ATC) is the downward-sloping because the higher the output the lower the average fixed cost [*you can tell that this is a natural monopoly because the average total cost curve is downward sloping over the range of output relevant for market demand] 
 
The unregulated natural monopoly chooses the monopoly output Q: M and charges the price P: M.  Since the monopolist receives a price greater than ti average total cost it earn a profit.  The profit is equal to the producer surplus in the market--the green shaded area.  Consumer surplus is blue shaded area.
 
Next we show regulators imposing a price ceiling at P: R.
 
  
At this price the quantity demanded is Q: R.
 
The firm ignores the Marginal Revenue curve and is willing to expand output to meet the quantity demanded because the price it receives for the next unit is greater than the marginal cost and the monopolist breaks even on total output. 
 
With price regulation in this scenario the monopolist produces more at a lower price.
 
The monopolist won't be willing to produce at all if the imposed price means producing at a loss--the price ceiling has to be set high enough to allow the firm to cover its average total cost. 
 
In this example any lower price and the firm would lose money because the price is as low as possible--we are at a price ceiling where the average total cost curve crosses the demand curve.  P*:R is the best regulated price possible. 
 
The welfare effects of this regulation can be seen by comparing the shared areas in both figures--consumer surplus is incurred by the regulation with gains coming from two sources
  • profits are eliminated and added instead to consumer surplus
  • the larger output and lower price leads to an overall welfare gain--increasing total surplus
 
Consumers are better off, profit are eliminated, and overall welfare increases.
 
The biggest problem with regulation natural monopolies is that regulators don't have the information required to set the price at the exact level desired--where the demand curve crosses the average total cost curve. 
  • sometimes its set too low creating shortages
  • sometimes set too high
 
Regulated monopolies like publicly owner firms tend to exaggerate their costs to regulators and provide inferior quality to consumers

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When the Republican far right wing is focused upon the center is ignored

I've said it before and I'll say it again--we need more moderate Republicans.  Many of the problems we face in terms of getting things done, passing legislation, and fixing our budget issues as a state and a nation; all of these hurdles come for the most part from the Republican party having been taken over by ideologues who promote a far right agenda.

Former Chair of the Henry County Republicans Charles Mobley was dead on when he spoke about Rep. Steve Davis' radical agenda.  In Mobley's words, Davis panders to the far right, stating that "when the Republican far right wing is focused upon the center is ignored."

Republican Trea Pipkin almost won in the 2008 Republican primary.  Many, like myself crossed over to vote in this very important election.  As Trea stated last year--,
 Steve Davis' failed leadership is so apparent to Henry County families with his recent vote on the amended state budget. He opposed the 2008 Amended Budget but sent out emails to Henry County taking credit for the vital funding contained in that budget. If Steve wants to oppose the budget on philosophical grounds, that's his right. But it's insulting to take credit for securing funding that he voted against.

The voters are not as stupid as Steve apparently assumes they are. They know when their leaders have failed them, and that's why people from all parts of this county and this district are rallying to my campaign.
Davis has had the opportunity to lead--and during his tenure the fiscal health and long term prosperity of citizens in this state have dramatically declined.  

Davis is a good man and has worked hard for the citizens of this district.  But sometimes you just aren't the right man for the job.  When it comes to supporting good policies and fighting for the citizens of this district--Davis is out of his league. 

From the economy to our children's future--citizens of the 109 and across this State deserve more than a career politician that promises leadership.  We need new energy, new ideas, and a new generation of leadership at the Gold Dome.

I need your help!
--
James A. Nichols IV
cell: (770) 312-6736
www.JimN2010.com
www.JimNichols4.com

"Nothing in the world can take the place of Persistence. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination alone are omnipotent. The slogan 'Press On' has solved and always will solve the problems of the human race."     ---Calvin Coolidge (1872 - 1933)

"I have come to the conclusion that politics are too serious a matter to be left to the politicians."    Charles De Gaulle (1890 - 1970)

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links to recent Georgia news

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goodnight blog world...

"Insanity in individuals is something rare - but in groups, parties, nations and epochs, it is the rule." --Friedrich Nietzsche
 
"A happy life consists in tranquility of mind."  Cicero
 
"A life spent making mistakes is not only more honorable, but more useful than a life spent doing nothing."  George Bernard Shaw
 
"Think of all the beauty still left around you and be happy."  Anne Frank

     
Click here to download:
goodnight_blog_world....zip (9038 KB)

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Ezra Klein: You can't cut the deficit without a bill that cuts the deficit:

Ezra Klein stating the obvious (but not so obvious to Republicans... why we need more moderate republicans!)
 David Broder has a column today expressing skepticism that health-care reform will really cut the deficit. But he doesn't provide much evidence for the charge.

The specific budget gimmick mentioned in the column is that Reid has delayed the subsidies "from mid-2013 to January 2014 -- long after taxes and fees levied by the bill would have begun." But not that long. The excise tax, for instance, begins in 2013. More to the point, it's not clear what Broder's complaint is. Reid delayed the implementation of the subsidies in order to ensure the bill's deficit neutrality in the first 10 years, which is what Broder wants. Why attack him for it? Then we get this:

There is plenty in the CBO report to suggest that the promised budget savings may not materialize. If you read deep enough, you will find that under the Senate bill, "federal outlays for health care would increase during the 2010-2019 period" -- not decline. The gross increase would be almost $1 trillion -- $848 billion, to be exact, mainly to subsidize the uninsured. The net increase would be $160 billion.

Huh? The net increase of $160 billion in the first 10 years is part of CBO's analysis, not a caveat to it. It doesn't mean the bill doesn't cut the deficit, it just means that overall spending is larger before you add revenues into the equation. Moreover, the CBO continues: "during the decade following the 10-year budget window, the increases and decreases in the federal budgetary commitment to health care stemming from this legislation would roughly balance out."

In other words, the revenue and the savings grow more quickly than the costs. Extend that line out further and, yes, federal spending on health care falls as a result of this bill. In other words, the bill satisfies Broder's conditions. But he doesn't come out and say that.

Instead, he pivots to the now-traditional argument that Congress won't be able to stick to the savings and revenue measures in this bill. That, however, is another way of saying that Congress can't cut health-care costs and the American government will go bankrupt. For one thing, that's not a very good reason not to at least try and avert that outcome. But if Broder's position is that we face certain fiscal collapse, then the only real question is whether we would prefer that 30 million Americans had insurance in the meantime, or went uninsured over that period.

More broadly, I'm confused by the budget hawks who that take the line: "This bill needs to cut the deficit, and I don't believe Democrats will cut the deficit, but since the actual provisions of the bill unambiguously cut the deficit, then I guess Congress won't stick to it."

People who want to cut the deficit should support this bill, and support its implementation. The alternative is no bill that cuts the deficit, and thus no hope of cutting the deficit.

Revenue and Health Care Costs... conservatives are roadblocks to fiscal sustainability...
Please tell me it was just a political statement...
 

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Give us fiscal austerity, but not quite yet:

Martin Wolf in the Financial Times:
While the increase in the debt ratio is very large in both [Britain and the U.S.], the levels expected to be reached by 2014 are not historically exceptional, particularly for the UK.... [T]hose past record levels did not create insuperable problems. In the 19th century, both countries grew out of their debt satisfactorily, with price stability. In the second half of the 20th century, they did so again, though inflation then helped.

This is not surprising. Assume that the real rate of interest is 2.5 per cent. Then the servicing costs, in real terms, of a debt burden of 100 per cent of GDP is just 2.5 per cent of GDP – almost a bagatelle. Assume, too, that the trend rate of growth equals the real interest rate (a not unreasonable assumption). Then the requirement for debt stability is a balanced primary budget (that is, before interest payments). Again, this is hardly crippling.

So what is the problem? It is that people may lose confidence that the governments will ultimately bring deficits under control.... [C]utting peacetime deficits is hard: every pound or dollar comes with a lobby group attached. Merely promising to cut deficits lacks plausibility....

Yet even if the fiscal rope is not infinitely long, slashing deficits now would be wrong. It is extremely likely this would tip economies back into recessions, as happened in Japan in the 1990s. Furthermore, the results would also probably include expansion of quantitative and credit easing by central banks. Yet those policies, too, risk undermining credibility....

So what should be done? I agree fully with the remark by Dominique Strauss-Kahn, managing director of the IMF, in London this week that “it is still too early for a general exit” from accommodative policies.... What is needed, instead, are credible fiscal institutions and a road map for tightening that will be implemented, automatically, as and when (but only as and when) the private sector’s spending recovers.... There are losses to be shared, much of which will fall on public spending, taxation, or both. Once it becomes evident that neither of these countries can rise to the challenge, fiscal crises are inevitable. It would only be a question of when.

 

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Why Are Good Policies Bad Politics?

As many of you know--we're trying to change this... but...
 
Economist Brad Delong on good policy as bad politics

Those who claim that America has a debt problem, and that a debt problem cannot be cured with more debt, ignore (sometimes deliberately) that private debt and US Treasury debt have been very different animals – moving in different directions and behaving in different ways – since the start of the financial crisis.

What the market is saying is not that the economy has too much debt, but that it has too much private debt, which is why prices of corporate bonds are low and firms find financing expensive. The market is also saying – clearly and repeatedly – that the economy has too little public US government debt, which is why everyone wants to hold it.

To see more on this problem...

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Bashing Reagan on Social Security: Don't Go There

Bruce Webb over at Angry Bear
News that the Republicans are pushing two bills that would establish a 'Bi-Partisan Commission' to 'reform' Social Security and Medicare are stirring up a debate which mostly had run cold. And one myth is bubbling back to the surface, the one that claims that Reagan simply used the Greenspan Commission to generate "huge surpluses" for Social Security to fund tax cuts for the wealthy. Never happened. There were no huge Social Security surpluses under either Reagan or Bush I, instead the 1983 reform set in place a mechanism that would slowly rebuild the Trust Funds back to their mandated level. And it worked, in 1993 Clinton entered office with Social Security sitting with a Trust Fund ratio of just over 100 meaning that it met the Trustees' test for actuarial balance. But the overall outlook for Social Security actually deteriorated from 1993 to 1996 and the large surpluses that started in 1997 and accelerated through 2004 were neither planned for or anticipated by the 1981-83 Commission. They happened and on paper largely pre-funded Boomer retirement but this was not the product of any pre-existing plan. Inspect the numbers for yourselves.

This myth is particularly dangerous because it plays into the movement conservative message that you can NEVER trust big government, maybe ESPECIALLY when it is in Republican hands. Every second spent bashing Reagan or Bush II over Social Security is a second devoted to selling the message that 'Big Government is the Problem'. Yes for those of us who are accused of being infected with BDS or delight in mocking St. Ronnie all of this is good fun. But it is unproductive good fun if your intent is to keep Social Security out of the hands of the vultures. Reagan in 1981 and Bush in 2001 and 2005 DID try to kill Social Security. They failed, every penny is STILL exactly where it is supposed to be. Insisting that they some how succeeded in raiding the pantry just plays into opposition hands. Knock it off. If that is you want that retirement check.

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Short Memories: Republicans and Civil Rights

Economist Brad Delong sends us over...

Underbelly: Short Memories: Republicans and Civil Rights: Short Memories: Republicans and Civil Rights There's a curious case of memory loss that seems to be afflicting both left and right this morning over the history of civil rights legislation. Link, (link). Start with Republican Rep. Virginia Foxx of North Carolina:

Just as we were the people who passed the civil rights bills back in the '60s without very much help from our colleagues across the aisle," said Fox. "They love to engage in revisionist history.

Shift now to Democratic Rep. Dennis Cardoza of North Carolina:

Today, what I’m hearing on the floor really takes the cake. The gentlelady from North Carolina, in her statement just now, indicated that the Republican GOP had passed the Civil Rights Act legislation with almost no help from the Democrats. I can’t believe my ears. It was the Kennedy and Johnson administration where we passed that Great Society legislation. It was over the objections of people like Jesse Helms from the gentlewoman’s state that we passed that civil rights legislation. John Lewis…

In response, Republicans gleefully jumped on the fact that Cardoza was wrong about Jesse Helms: he wasn't even in the Senate until 1972.

But on the larger issue--comments are still pouring in and I won't pretend to be keeping up with them; still, the fact is that Foxx actually had a kind of a point here. What she was really talking about the Civil Rights of 1957, which was passed on the initiative of the Eisenhower Administration, over the dead-body opposition of the Senate Democratic leadership--and only after the Democrats had so gutted it as to leave it largely meaningless.

How fast memories fade: recall that the pre-1960 Democratic party was a monstrous two-headed beast with liberal (sometimes radical) union members, blacks and intellectuals on one side and reactionary So;uthern whites on the other. It was the Republicans who still carried a progressive tradition on civil rights, going back to the founding of the party at the beginning of the Civil War.

Eisenhower himself, as many have observed, wasn't deeply hostile to blacks, but he just didn't get it: the real motivation came from the "northeast" wing of the party, notably Attorney General Herbert Brownell. Leading the Senate opposition was Majority Leader Lyndon Johnson. As others have remarked, this created thre ironic mirroring in which the forces in fazvor of enhanced civil rights were led by a man who had no particular taste to it, while the opposition came from one southerner whose attitude towards racial minorities was one of genuine compassion.

When he signed the Civil Rights Act, Johnson famously said he figured he'd delivered the south to the Republicans for a long time to come. That was the year Rep. Foxx turned 21.

Update: I am catching offline flac for having saddled Lyndon Johnson with the onus of "leading the Senate opposition." The point is made that Johnson was in fact the person who jammed the bill through. ITechnically correct, but am unrepentant. I don't doubt the sincerity of Johnson's compassion for blacks. But he had two choices: one, let the bill fail, at the behest of the old bulls who still dominated the august body (e.g., Johnson's personal mentor, Richard Russell of Georgia). And two, strip it naked and deprive of all nourishment and push it forth into a hostile world. Johnson knew he couldn't make his bones as a Presidential candidate in 1960 without a civil rights scalp in his belt. So he chose the path of betrayal.

I am, at the end of the day, something of the Johnson fan. He certainly is the most interesting president of my lifetime (or perhaps a close second, behind Richard Nixon). But there is no point in obscuring how many grandmothers he had to pitch under how many speeding locomotives to get where he wanted to be.

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