Audit Notes: Direct Democracy, Obama’s Caution as Achilles Heel, Japan

Up here in Seattle, The Stranger is doing a good job keeping an eye on how industry is flooding the state with money to pass a ballot initiative this fall.

The state is in budget crisis, like most others, and the legislature passed a temporary tax on junk food (it is slated to expire in 2013). Two cents for every twelve ounces of Coke, and applying the states sales tax, which normally doesn’t apply to food, to candy and bottled water.

The push, which The Stranger reports is the most in Washington ballot-initiative history, has two backers, if you’re feeling generous: The American Beverage Association—and everybody else. The ABA has dropped in $10 million so far. A whopping $225 came from non-ABA contributors. That’s not a misprint. The opposition? It’s being outspent 34 to 1.

In recent years, the ABA has increased lobbying exponentially to combat attempts to raise soda taxes. In 2008, it spent about ­ $1 million, according to expenditure trackers at, but last year, responding to taxes on sugary drinks that it has tried to defeat, lobbying contributions shot up to over $19 million. The ABA may see Washington State’s new soda tax as a dangerous pre­cedent, one it can’t afford to let stand.

Martin Wolf continues to be the sharpest commentator on the financial and economic crisis. He notes today that Obama’s failed presidency, if it comes to that (and it’s sure looking that way right now), will be because of his innate caution: He failed to act boldly enough.

Wolf says that Obama’s policies, as well as those of the late Bush administration, and the doings of the Fed, staved off an utter collapse, one that would have rivaled the Great Depression. And the critical point here is that spending that $800 billion in stimulus money didn’t actually cost us $800 billion. It boosted employment, which sends tax money back to the government, and GDP by several points. That saved hundreds of billions of dollars:

The implication that the modest stimulus package of February 2009 – a mere 5.7 per cent of 2009 GDP, spread over several years – made a positive contribution is supported by the analysis of the Congressional Budget Office: it argues that in 2010, US GDP will be between 1.5 per cent and 4.1 per cent higher and the unemployment rate between 0.7 and 1.8 percentage points lower, as a result of the package.

But the stimulus wasn’t overwhelming enough to push unemployment down by several points. That’s allowed opponents to deceptively argue that it didn’t do anything.

Wolf doesn’t say this, but the stimulus also wasn’t optimally designed to boost employment immediately. Robert Shiller wrote in The New York Times a few weeks ago that too much of the money went toward capital-intensive projects:

Big new programs to create jobs need not be expensive. Suppose the cost of hiring a single employee were as high as $30,000 a year, several times typical AmeriCorps living allowances. Hiring a million people would cost $30 billion a year. That’s only 4 percent of the entire federal stimulus program, and 0.2 percent of the national debt.

Why don’t we just do it?

In other words, you could have created (and still could create) jobs for all 15 million unemployed people in the country for $450 billion a year, or a little more than half the cost of the stimulus package. Have them clean up parks, teach kids to read, have artists document the country, whatever. But they didn’t do that.

— Finally, The Wall Street Journal has a terrific ahed today. The headline pretty much sums it up:

Only in Japan, Real Men Go to a Hotel With Virtual Girlfriends

Dating-Simulation Game a Last Resort For Honeymoon Town and Its Lonely Guests

I like the double entendre the WSJ hands us at the end of this paragraph:

Since the marriage rate among Japan’s shrinking population is falling and with many of the country’s remaining lovebirds heading for Hawaii or Australia’s Gold Coast, Atami had to do something. It is trying to attract single men—and their handheld devices.

But jokes aside, in the end, this is a sad story:

In Atami, the Love Plus+ fans—mostly men in their twenties and thirties—stand out. Unlike the deeply tanned beach crowd wearing very little, they are often pasty and overdressed for the heat in heavy jeans and button-down shirts.

Tatsuya Fukazawa, a 19-year-old college student, was visiting Atami for the first time on a recent weekend. In a small waist bag, he carried his Nintendo DS. Once he turned on the device, his virtual girlfriend Manaka Takane—a Libra who enjoys making pastries—greeted him in a syrupy sweet voice.

“There isn’t a lot of romance in my life and this helps me cope with some of the loneliness,” said Mr. Fukazawa with a chuckle.

Has America ever needed a media watchdog more than now? Help us by joining CJR today.

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.