How Can Things Be So Different?

The one promise that President George W. Bush made during his re-election campaign that made me enthusiastic about voting for him was that he said he would reform Social Security so that people could direct some of their money into private accounts.  To this day, I don't know why so many people oppose this--no one has to redirect their Social Security funds, but it's an option.

In the days just after his re-election, he tried to make good on his promise, but the Democrats demagogued the issue, as they tend to do (even Biden did so in the VP debate this year), the public soured, Republicans didn't push, and the whole endeavor died.

The weird thing is, back then, I don't remember anyone saying, "George W. Bush campaigned on this, and he won, therefore we should do it," which seems to be the argument for raising taxes today.  In another example of inconsistency (note: I'm not calling this hypocrisy), in 2005, with a Republican President that the left despised, mandates and campaign promises meant nothing.  In 2012 with a Democrat President that the left adores, the exact reverse.

Tax Cuts for the Wealthy!

When I was an undergrad, many years ago, my friends and I would watch The Simpsons before going to dinner.  This being during the 2004 election, we were subjected to scores of political ads.  In every Democrat ad, the candidate would complain about the "Bush Tax Cuts for the wealthy."  Typical of undergrads, we turned this often repeated claim into a subject of mockery.

Now that the tax cuts are set to expire, it can only be those that help the wealthy that expire, not the ones that benefit the non-wealthy.  Now, that I'm older and more knowledgeable, I know that less than 25% of the tax cuts went to the wealthy, and it would be too painful to let them expire for the overwhelming majority of the country. 

There are so many ways to look at who benefited the most from the tax cuts, and Democrats have switched descriptions from then until now, and both times they've succeeded.  This is one quality I do not have, which suggests I can never be a politician.  Of course, if I were a politician, I would try to point this out, how Democrats used to be opposed to these tax cuts, but now they support most of them.

With all this in mind, I read David Henderson's post on the subject, and I decided to find some documentation, so here is what Krugman used to say versus what he says now.

"The Bush tax cuts have, of course, heavily favored the very, very well off." --Bush's Own Goal (08-13-2004)

"Budget office numbers show that most of Mr. Bush's tax cuts went to the best-off 10 percent of families, and more than a third went to the top 1 percent."  --Checking the Facts, In Advance (10-12-2004)

"While the central thrust of both the 2001 and the 2003 tax cuts was to cut taxes on the wealthy, the bills also included provisions that provided fairly large tax cuts to some--but only some--middle-income families." --The Sweet Spot (10-17-2003)

"Or consider the 2003 tax cut.  It was also heavily tilted toward the affluent."  Flags versus Dollars (11-7-2003)

And in this video (around the 7 minute mark), Krugman says most of the tax cuts can survive, "Just a small piece is going to be taken away."  Of course he isn't saying it directly, but the implication is that only a "small piece" of the tax cuts went to the very wealthy.

Addendum: It occurs to me another explanation for the switch could be a different definition of rich.  Clearly, Obama's definition is $200-250K or more.  Maybe Democrats had a lower threshold a decade ago.

Questions I Wish the Media Would Ask

"President Obama, in their latest proposal the Republicans have indicated that they're willing to increase revenues by closing loopholes.  I realize that you don't think their math checks out, but if they offered $1.6T by closing loopholes that affected only the rich, would you take it?"

This is a hypothetical question such as that asked of Republicans "Would you support a deficit deal overwhelmingly weighted towards spending cuts even if it had some revenue increases?" which Democrats/Liberals love to throw around.

The question is meant to reveal whether President Obama cares about revenues or cares about tax rates.  For the life of me, I can't figure out why he is so adamantly in favor of higher tax rates (as opposed to just increased tax revenues).  Which he seems to be. "Although Mr. Obama [said] a deal is not possible without an increase to the tax rate for those making over $250,000."

Why?

If it's just because he doesn't think it's possible to extract that much money without raising tax rates on the wealthy, then I don't understand his strategy, he could just say, I want $1.6T in revenues and I don't care how you get it (as long as it comes from people making more than $250,000).  Why would he need to add another stipulation?

Anybody have an idea?

Bad Research - Why the Poor Favor Democrats

I'm currently working on my Ph.D., and it's shoddy "research" like this that drives me batty.  Granted I haven't read the actual research, only the story about it so maybe the authors are just mentioning the pieces they think the readers want to hear.

They argue that low income voters support Democrats because low income voters prosper when the President is a Democrat.  Many commented on the story that we don't know if they included transfers in income or not or really any kind of detail at all.  But I think this misses an important point.  Past studies have shown that the economy itself does better when the President is a Democrat, which they point out here, too.  Additionally, this means high income earners also prosper during Democrat administrations.  So by their own logic, shouldn't high income earners vote Democrat?  Why don't they.

What would have been more convincing is if they had discussed gains relative to high income earners.  As it is, we don't know if low income earners prosperity increases similarly, more than, or less than high income earners in each type of administration.  Even though, that analysis itself is probably too simplistic, it's worlds better than the analysis provided.

If Libertarians Ran the Media

Then instead of this story being titled "HHS: Obama health law saved seniors $5B on prescription drug costs" it would be titled "Cuts to Medicare Advantage and Wealthy People Pay for More Drugs for Seniors"

Again, the left ignores one of the principles of economics--nothing is free.

More Redistribution

Josh Barro throws in his two cents about how Republicans need to embrace redistribution.  This is a pretty good read, but it again offers scant rationale that income inequality is a bad thing.

[The problem with rising inequality is] that [the low-income earners] can't keep pace with the rising costs of health care, education and (in certain parts of the country) housing. There's also no reason to think that, whatever standard of living we start from, an economy where nearly all the improvements accrue to a small fraction of families is either politically sustainable or morally acceptable.

The first sentence isn't a criticism of inequality at all, only a criticism of low-income people not having enough income to support basic needs.  If people can't afford necessities, that's a problem, and it's solution may be redistribution, but income inequality did not cause that problem, too low income did (admittedly this is a subtle difference, but a difference none the less).

The second sentence argues that inequality is both politically unsustainable and morally unacceptable.  He may be right with regards to the former, especially if Democrats and liberals continue to demagogue and convince low income people that they're being cheated.  On the latter, however, this is tantamount to arguing that even though someone, say Steve Jobs, may have done nothing illegal or immoral to earn a lot of money, just the fact that he did so was immoral.

Is that what we are to believe?

This Is Fairness?

Republicans received a lot of criticism for signing on to Grover Norquist's No Tax pledge, and they recently have been inching away from it.  Democrats complained that the deficit couldn't be fixed unless Republicans agreed to put revenues on the table.

However, President Obama made basically the same pledge.  Obama said he would not raise taxes on households making less than $250,000, which are 98.5% of households.

So if you say taxes can't rise on anyone, you're deeply irresponsible and unserious.  If, instead, you say we have to raise $1.6T worth of taxes from 1.5% of households, then you're enlightened.

I prefer taxes not be raised at all, but I care more about the deficit than taxes, so I'm willing to stomach an increase.  But the pain should be distributed so that even the middle class shares in it; it can't all just be on high income earners, which is what Democrats have proposed so far.

Redistribute!

Romney is Wall Street's Worst Bet Since the Ben on Subprime

Obama's Economic Philosophy in 8 Charts

There are two posts on Wonkblog that basically argue the same thing, and I think non-Democrats can learn from this perspective.  I know it's got me thinking about what's making the other side tick.

Basically they're pointing out that the distribution of wealth is becoming less equal than before, and Obama and the Liberals task is to keep things more even.  That's really their driving force, and it amounts to being very pro-redistribution.  They even broadly acknowledge that this is because of economic forces, not political deal-making, that it's a problem whose source is uncontrollable.

What they don't do, as far as I can see, is explain why income equality is a bad thing in and of itself.  I would propose that we ensure that everyone's basic needs are met and try to do so in a way that protects people who need protection without trapping them at the bottom of the income distribution or benefitting people who don't need that help.

If people need help, then by all means, we should provide it, but if the only problem is that some people have way more money than others even though no one's in need, why does that call for redistribution?

Majority of People Want Someone Else to Pay

I'm very tired of Democrats pointing out that a majority of people want to raise taxes on high incomes.  Is that really a surprise?  Some of those people are likely dispassionate and believe it's good policy, but most of the people who support that do so for selfish reasons.

Read this article.  Have you ever seen any proposal to reduce the deficit that was popular besides increasing taxes on high income?  No one wants to cut Medicare, Medicaid, Social Security, raise any other group's taxes.

I really wish these polls would ask different questions that are more informative, such as "What percentage of the nation's revenues should come from each quintile?"  or "Is there any tax rate that you believe is too high for anyone to pay, ie, should the government tax anyone at a 95% rate?  If so what is that number?"

Democrats Love Higher Premiums

Maybe if Republicans want to start winning more elections they should take a page out of the Democrat playbook.

From the New York Times, "The White House and some economists say such Medigap insurance encourages the overuse of medical care because beneficiaries are shielded from most co-payments and other costs."

When Republicans complained about free contraceptives (among other coverage requirements that Obamacare will implement), the Democrats argued that Republicans want to ban contraceptives.  The Republicans should now talk about how Democrats don't want seniors to have adequate health care, but they won't.

This is more evidence that Democrats hate free markets.  When insurance companies don't have policies they like, they force them to include them and make the insured pay for these policies.  When insurance companies do have policies that people are buying and therefore must prefer, then Democrats want to punish them and again make the insured pay higher premiums.  Why are Democrats so enamored with higher premiums?

What is the Market Price for Labor?

Adam Hartung tries to convince us that unions didn't drive Hostess out of business.  Look, generally a company goes out of business because it's not making profits.  There are two sides to the coin, revenues and costs; if the revenues can't cover the costs--bingo--bankrupt.  Mr. Hartung argues that Hostess saw problems from both sides, no one was buying their products, they didn't adapt, and costs of materials were rising.

He then argues that the unions were only working for "market prices."

In a last, desperate effort to keep the outdated model alive management decided the answer was another bankruptcy filing, and to take draconian cuts to wages and benefits.  This is tantamount to management saying to those who sell wheat they expect to buy flour at 2/3 the market price – or to petroleum companies they expect to buy gasoline for $2.25/gallon.  Labor, like other suppliers, has a “market rate.”  That management was unable to run a company which could pay the market rate for its labor is not the fault of the union.

This is doesn't seem right.  It's hard to reconcile the idea of unions and market prices.  Unions exist to increase wages from the market prices.  Imagine if there wasn't a union in this case.  Then Hostess would have slashed salaries.  If Hostess's salaries were below the real market price, then employees would leave.  Hostess would then either raise salaries again or try to get by with fewer workers.  They may still have gone bankrupt; we'll never know, but that's how the market is supposed to work.  The union, though, was pushing to keep the wages up, which doesn't reflect the "market price."

The analogy Mr. Hartung is flawed.  It's more like the wheat sellers or oil producers all getting together and agreeing on a minimum price for Hostess instead of competing with each other to sell to Hostess.  Additionally, they would tell Hostess that it can't purchase less of their products than they have in the past but they still need to pay the same amount.

Let Hostess Go Bankrupt

Hostess Going Out of Business

When will the government swoop in to ensure that Hostess doesn't go bankrupt?

I bet they do nothing, but why?  Is it because there are fewer voters?  Is it because Texas is a red state?  Is it because Hostess is an evil company that makes unhealthy foods which Democrats disapprove of and are trying to restrict anyway?  Is it respect for how the free market operates? Hah!

Paul Krugman's Zombie Ideas

Paul Krugman frequently complains about his philosophical opponents bringing up arguments that (he believes) have been refuted, but Paul Krugman and many Democrats do the same thing.  In his op-ed today, he suggests, as a way to reduce the deficit, "Give Medicare the ability to bargain over drug prices."  Democrats have been making this argument for years.  Too bad the CBO said it wouldn't make any difference to the deficit.

Why do they keep bringing it up when it won't make any difference?  Because they're not actually talking about negotiating prices.  The CBO's report is specific to allowing Medicare to sit at the table with Prescription Drug Plans and Prescription Drug companies.  Because Medicare has no leverage, it wouldn't be able to reduce the prices.

What the Democrats actually want is for Medicare to just say they're only going to pay X% of what the private plans pay, just like they do with the rest of Medicare.  Yes, the immediate effect would be to lower costs, but it's not clear if private prices would rise to compensate.

The trick here is that Democrats are misidentifying their position as allowing Medicare to "negotiate" when really what they want is to set prices.

Affirmative Action

Michael Kinsley doesn't agree with Stuart Taylor and Richard Sander's book about affirmative action.  He admits that he has no way to dispute the facts that Taylor and Sander lay out, but that he just feels it's wrong.  Kinsley summarizes the book extremely well, and basically summarizes my opinion of why affirmative action is not a good policy.  (Basically, affirmative action causes a mismatch between students and institutions so students go to schools they're not prepared for which causes their education to suffer; they would be better off succeeding in a worse school than failing in a better school).

The crux of Kinsley's opinion comes in two paragraphs:

Even if massive numbers of minority students who wouldn’t otherwise make the cut are getting into Duke, that doesn’t mean they won’t be able to hack it there, or would be happier at Wake Forest or the University of Richmond. All of Sander and Taylor’s data can’t capture the myriad reasons students apply to one place or another, find happiness or not, do their homework or not, drop out or go on to engineering school.

The idea that a minority student who can get into Harvard, by favoritism or otherwise, would actually be well-advised to turn it down in favor of, say, Ohio State -- not because he thinks Ohio State is just as good or better but precisely because he thinks Ohio State is a lesser school -- strains credulity. But that is the advice Sander and Taylor are giving him. Check with me before you take it, please.

The first paragraph basically says that their theoretical model can't capture the details of what's going through applicants' minds.  Granted.  But does that matter?  Does it refute the fact that Taylor and Sander have (I presume) provide statistics that show that affirmative action students are more likely to drop out?  That's what matters!

The second paragraph provides no argument whatsoever.  It basically simplifies the authors' point and presents it in a way that is emotionally unappealing.  "Your advice is to go to worse schools?  Are you crazy?!"

I wonder if Taylor and Sanders provide research on this issue beyond hard statistics.  Liberals always say their pro-science where conservatives are anti-science.  What does the science say here?

What's Wrong with Fact Checkers

Fact-checking is an excellent idea in theory, but in practice, it's been less useful.  The problem is two-fold: 1) sometimes the arguments are so nuanced that it leaves much up to interpretation and 2) the people doing the fact-checking bring their own biases into it.

Two examples from last night's debate.

Navy Debate

Many people think Obama's best line was during the discussion of the Navy.  Romney said the Navy was smaller than since 1917 and the Navy is requesting more ships.  The larger point was about how the cuts to military spending will impede our ability to defend ourselves.  Obama countered that of course we have fewer ships than we used to, the military has advanced technologically, and we no longer need the same military as we had 100 years ago.

So what do the fact-checkers check?  The claim that the Navy has the fewest ships since 1917.  The fact is basically correct, although the actual minimum was hit in 2007.  They concentrate on this fact and then criticize the point because the ships are different, and it's basically a stupid point to make (which it is).  The more important point was that Romney said the Navy itself thinks it needs more ships and the Defense Secretary said these cuts would be devastating.  Why not concentrate on these points?  They better get to what Romney was trying to argue.

Massachusetts Education Policy

For some reason, President Obama and Governor Romney were disputing Romney's policies on education in Massachusetts.  Romney claimed that students had great results, and Obama said that Romney had nothing to do with it.  Then Romney talked about how he enacted a law allowing good students to go to college for free.  Obama said he didn't do that, either. 

So the fact-checkers check the first fact but not the second.  Of the three I looked at, none even mentioned the second point Romney made.


Factcheck.org
Politifact
Washington Post

How Government Harms Consumers

I was talking with a friend of mine a couple of weeks ago.  This friend manages an expanding, regional chain of gas station convenience stores.  Our discussion was not a political one. He was telling me how his employer discovered that operating car washes can generate as much revenue as their largest convenience store so they had decided to start experimenting with car washes.

Enter special interests.  Unfortunately for them (and consumers), there was already an established chain of car washes in the area owned by someone with strong ties to government.  Well, the company decided that the bureaucratic expenses would be too high, and decided not to expand.

This is the kind of story that makes conservatives so distrustful of government.

Here's an even worse example of the same phenomenon.

Unsustainable Monopolies

Sometimes people complain about corporations or countries lowering their prices because they believe those corporations/countries will use the lower prices to drive everyone out of the market and then raise their prices and collect the windfalls.  (Free Market) Economists counter that the higher prices will then attract those that left back into the market.

Here's an example of that happening.

Candy Crowley Failed

In addition to bad fact-checking, Candy Crowley failed in other aspects of her job.

Probably the most important part of a moderator's job is to guarantee both sides are treated equally. How is it that in each debate, the Democrat gets more talking time than the Republican?  Last night, Romney frequently talked over Obama and Crowley.  It sounded like he was taking extra time, but it turned out that Obama had 9% more talking time than Romney.  Breitbart pointed out that Crowley interrupted Romney 28 times vs. 9 for Obama.  Why is that?  Especially given the fact that Romney had the floor for less time.  What's going on.

Secondly, there were several instances when the candidates didn't answer questions.  Both candidates were guilty of this.  I'd like to see a debate where the moderator cuts them off after thirty seconds if they're not answering the question.  (But when all the moderators are sympathetic to Democrats, maybe I should just be happy that they have as little power as they do).

Also, some of the questions were horrible.  That woman who asked about women being paid 72% of what men are being paid.  I don't think either candidate answered this question, but it was just a misinformed question.  Studies have shown that most of the discrepancy is due to different careers, backgrounds, and life choices, and when you account for all of that, the discrepancy is only ~5%.  A good answer would have mentioned all that and said, "If a woman has the exact same job as a man and is paid less, then something needs to be done about that.  There's already a method to fix this through the court system.  The problem is that no one knows what others make, and this is a cultural problem.  We need to develop methods to help increase knowledge of salaries so that people can compare their salaries."

Vice Presidential Debate

Vice President Biden won the VP debate, and I think he won it, in large part, by being a demagogue.

After Ryan explained his views on privatizing Social Security, Biden said, "You saw how well that worked."  This is how Democrats debate privatizing Social Security--they make it sound risky and scary.  "Look what happened when the market crashed! That is what Republicans want to happen to your retirement!"

If I were debating Biden, I would have asked if he had any of his retirement in investments or if he was depending solely on Social Security.  Then said, "what we need is a plan that allows for more returns but still maintains a minimum benefit."  I am puzzled as to how Republicans can't win this argument.  It's a choice! Nobody has to put their money in the stock market!

Purpose of Debate Moderator

Before last night, if asked, I would have said I was in favor of fact-checking during a debate.  I think it would push candidates to make sure they got their facts right.  Someone might argue that candidates can fact check each other, but anyone watching the debate and following the post-debate fact checks will realize that all of the candidates have some combination of outright lies/misrepresentations, flip-flopping, inaccurate statistics, and true statistics that tell only part of the story.

If anything, the moderator should point out outright lies/misrepresentations.  The problem with the moderator not doing it is that it's left up to news organizations to do, but I doubt that these conclusions have nearly as much impact as during the debate.  Crowley's siding with Obama on Libya was immensely damaging to Mitt Romney (she also said Romney was correct on another point, but the effect was that Romney was mostly wrong and Crowley was throwing him a bone).  It turns out Romney was right and Crowley and Obama were wrong.  If you look at the transcript, the closest you can get to Obama's argument was that he implied that it was a terrorist attack.  He didn't explicitly call it one.  Dan Gainor hit the nail on the head when he said, "the actual presidential transcript makes it clear that Obama was doing his best to include the word 'terror' without actually saying the incident was a terror attack."

If Crowley hadn't interjected herself, I bet the polls would have indicated a tie.  If moderators don't know the facts, they shouldn't say anything.  They're less informed than I would have expected.

Filibuster Now! Filibuster Forever!

George Will has frequently argued that the filibuster fits into the framer's idea for the government--that it move very slowly.

I have a different take, though it's also pro-filibuster.  If 60 senators can't agree on something, maybe it's not that good for the country.  The only time the filibuster is an issue is when legislation can get 50 votes but not 60.  Then liberals decry the filibuster because nobody can get anything done.

Many liberals would like to eradicate the filibuster altogether.

How about a compromise.  First, I would hope we could agree that laws that will have enormous impacts on the US economy should probably be subject to something more difficult than a simple majority.  If not, every time parties change we could see an unhealthy pendulum swing.  That kind of uncertainty can't be good for the economy.

How about we eliminate the filibuster, but amend the Constitution to say you need 60 votes in the Senate and 60% of votes in the House to pass legislation that will last more than 10 years.  Then, if you have 50 votes, you can at least implement what you like, though only temporarily.  But if you have a popular, good idea, it could be implemented on a permanent basis.

Challenge Accepted

In this blog entry I challenged Liberals to admit Obama's failings on civil liberties before they vote for him. Conor Friedersdorf at The Atlantic has done me one better.

He admits the failings, far more descriptively and coherently than I, and admits it's a strong enough reason not to vote for him.

I strongly encourage everyone to read his post. I underestimated how much damage President Obama actually did to civil liberties.

"I don't see how anyone who confronts Obama's record with clear eyes can enthusiastically support him." I wholeheartedly agree with this statement, and the statement that follows.  I can imagine people supporting Obama, but those who do should do so with reservations and disappointment not enthusiasm.

I've actually wrestled with voting for Gary Johnson as well.  When I lived in New Mexico (not during his tenure), I was told by both Democrats and Republicans how much they respected him and how well he governed.  I don't think I'd vote for him for President, though, because I just can't get behind libertarian foreign policy.  For Governor or Senator, he'd be a terrific candidate.

Assorted Links

There have been a few terrific pieces I've read in the past few days. 

Media ignore Independents this Election Cycle - This is hopeful.  If Romney is doing this well with Independents, I find it incredibly hard to believe that he's very far behind.  Even the polls showing him far behind concede he's doing well with Independents!

Obama's Dereliction of Duty - I have no desire to be disrespectful, and this headline seems more inflammatory than I am comfortable with, but he brings up a terrific point.  Namely, that President Obama, by just briefly popping in to the UN summit, is being a pretty bad President. Foreign Policy should probably be a major focus of any president, especially when there are so many things going on.  Meeting with other leaders is paramount.  Obviously they want to meet with him, but he says if he sees one, he has to see ten. What a cop-out! Ask yourself a question, what's the more likely reason he's not seeing leaders--he is unable to say yes to a few select ones without saying yes to hordes of them or because he'd rather be campaigning?  From my point of view, it is obviously the latter.  If anyone did a study, I imagine they would find that President Obama has spent more time campaigning than any other first-term president in history.

How the AARP Made $2.8 from Obamacare - What an article! Reading this really makes you understand just how self-interested these organizations are and how corrupt the whole system is!

Romney's Real Taxes

The reported percentage of Mitt Romney's income that he paid in taxes was 14.1%.

This leaves out corporate taxes he pays. The CBO imputes some of the taxes paid by corporations to the stockholders of those corporations because it comes out of their dividends.  This figure does not include that.

Also, about his charitable deductions. He paid about $4 million of $14 to charities.  I don't know which charities.  But it seems to me, that Liberals should count that money as taxes. Actually, from their point of view, it's probably better. I suspect that Liberals' main priority is helping the poor, or those momentarily down on their luck. Isn't that what charities do? In a sense, Romney is bypassing defense, infrastructure, parts of Medicare, public research, and sending it directly to those who need it most.  If Liberals were consistent, they would focus on how much better it is that he donates it to charity than to government.

Reidiculous

"Meanwhile, at first glance, it appears that Harry Reid’s infamous source alleging that Romney paid nothing in taxes for 10 years was incorrect."

Brad Plumer

"That makes Reid’s behavior here shameful. His defense is that he was just passing along what he’d heard, and all Romney had to do to prove him wrong was release the returns. But Reid isn’t some campaign flack, or even a congressional backbencher. He’s the majority leader of the United States Senate. There’s a dignity that comes with that office, or there should be."

Ezra Klein

Let's review. The most prominent Democrat in the Senate, on the floor of the Senate, makes an unsubstantiated accusation that the Republican nominee for President has paid zero dollars in taxes for at least one of the last twenty years. He offers no evidence to back up his claim. The Republican nominee's accountants say he has never paid below 13% of his income in taxes over the same time period.
I'm stupefied. Democrats often talk about the lack of civility in the public discourse, then one of their leaders does something like this and no one cares.  Granted, a few have called him out on it, but it's nowhere near the outcry we'd hear of a Republican did the same thing.

This whole double-standard argument is becoming extremely over-used.  But what else can we say?  The media are just so biased!  Try to imagine if you were transported to five years ago, and offered this hypothetical situation.  Would people believe it was possible?  I'm sure I wouldn't.

This campaign has seen depressing behavior reminiscent of the 1820s and 30s.  What some regard as the worst era in our history for campaign underhandedness. Indeed, making up accusations was a tried and true method of attack.

Stimulus Fails Again - International Edition

I don't understand how all of that oil money can be going into the Venezuelan economy, but it's not growing as fast as its neighbors.

Maybe there's no Spanish word for Keynesian?

Don't Look Here, Look There!

I guess liberals are starting to realize that the US has the most progressive tax system in the world.

I remember not too long ago when Greg Mankiw made the same point to see a pretty shrill reaction from the liberals. (He has a post cited, and I'm pretty sure I read stronger reactions, particularly on Ezra Klein's site, but now I don't seem able to find them).

Then Ezra Klein responds that though it's true that 47% of people don't pay any federal income tax, we should ignore that statistic and focus on total taxes (federal income, federal payroll, state income, state sales, everything). 

There are several reasons why that idea is misguided. First of all, when we as a nation discuss taxes, we invariably are talking about the Federal marginal income tax rate.  Can you remember any discussion of payroll tax rates?  Bush Tax Cuts were about marginal income rates, returning to the Clinton era rates--marginal income rates.  These are the rates everyone focuses on! 

We focus on them for a reason.  The federal income taxes pay for all the programs that are meant to benefit us collectively as a nation--defense, infrastructure, research.  The payroll taxes are designed to fund our retirement.  Ostensibly, these taxes are a type of insurance.  They were designed and promoted on an individual basis (the more you pay into Social Security, the more you get out.)

States, on the other hand, are operated independently of the Federal government.  As far as I know, governors and Congressmen don't cooperate to determine the best overall rate.  If they did, then maybe Ezra Klein would have a point.

But they don't. So national policy-makers discuss what they can change, which are the marginal rates for federal income.  Klein would have legislators in DC say, "Well, 35% is high, but some states have low rates so we're not going to change it."  I think that's wrong.

We're talking about what liberals call "public goods." Goods that they believe only government can provide.  That's what income taxes pay for.  Is it really unfair to ask at least 75% of the population to contribute something?

Wonks vs. Wallets?

This Romney quote sure is generating a lot of discourse! Megan McCardle argues that this issue represents a schism between conservative intellectuals and donors. I think that's a stretch.

She says that both the Earned Income Tax Credit and the child tax credit are very popular among Republican wonks.  I agree the EITC is about the best method we have of helping the poor, but I'm not sold on the child tax credit.  The point is, however, that 47% of the country paying zero net taxes (or less) is too high.  I propose that the largest percentage of people who pay no taxes should be 25.  At least 75% of people should make some contribution to the national government (which doesn't include payroll taxes because those are nominally individual-based).

She also says it's foolish to tax Social Security benefits. "...it hardly makes sense to send them benefits, and then tax it all back."  Ah, our old friend the straw man.  Who said anything about taxing it all back?  Should it be treated as normal income?  If someone makes $50,000 in Social Security income (for example), should it be treated as normal income?  I would argue it should be treated either as normal income or investment income.  Either way, some tax should be paid on it.  Just because the government pays it out, doesn't mean it shouldn't be taxed!  Employees of the government are taxed?  Does it make sense to pay them and then tax it all back?

Voting for Free Stuff

While Romney's recently unearthed comments about the 47% were clearly awkward and inaccurate (obviously there are many affluent people who pay taxes that will vote for President Obama) and his explanation in my opinion was pretty weak, I wholeheartedly agree with the sentiment.  Specifically, one way Democrats attract votes is by redistribution--providing benefits to some people and imposing costs on others.

The birth control debate over the summer is an example of that.  Democrats wanted women to have free access to birth control. Now, they didn't directly raise taxes to accomplish this, instead, costs will be imposed through premiums.  Then when Republicans argued with the policy, Democrats started their "war on women" meme.  "Republicans don't want to give you free stuff, therefore Republicans don't want to help you. They hate you." Democrats are very practiced and adept at these skills.

(Broken) Windows Fallacy

Some have already pointed this out, but these stories about how the iPhone will boost GDP have left out part of the picture.

I'm going to grant that all of their math is correct, because that's not the problem.  The problem is that some of that money may have been spent on something else.  Let's say you buy an iPhone.  Where did the money come from?  Is that money you would've spent on clothes or a new TV?  If so, it will have no effect on GDP because it would've boosted it anyway (clothes and TV both affect GDP just as iPhones do).

Did you save the money to purchase the iPhone?  If so, then yes there may be a boost in this quarter's GDP, but that's only because you spent it this quarter instead of last quarter.  So last quarter's GDP fell by the exact amount that this quarter's rose.

Did you work more hours to enable you to buy it.  This is the only case that actually improves GDP, because you added value to the economy by working which you otherwise would not have done.

What about the fact that most of the money comes from the carriers in the form of a subsidy? Well, I'm not sure how phone subsidies enter the GDP, it seems odd because people are paying their monthly bill (which I believe goes into GDP) and that money is used for the phone subsidy.  What matters is, if the subsidy weren't spent this quarter, it would be spent sometime; firms can't afford to let money just sit around.

Paul Krugman weighs in

Reasons to be Depressed

I'm finding myself fairly depressed these days.  Mostly it's because of the election, but it's not the only cause. It's depressing that from my point of view, President Obama is doing a terrible job: the economy's been spinning its wheels for 3 years and foreign events are horrendous. It's depressing that four Americans, including the ambassador were murdered, and the biggest story was how Romney reacted.  I haven't read his reaction, maybe it was poorly planned, but that is clearly not the most important thing that has happened. It seems like the media are unwilling to challenge President Obama on these things.

I have no doubt, and I don't believe anyone can have any doubt, that if President Bush (or candidate Romney) had said he didn't consider Egypt an ally, for days we'd hear about how inexperienced, ignorant, foolish he is.  But when President Obama says it--nothing.  How can that be possible?  How can the media be so negligent?  How can any moderate still want to vote for this man?

On top of these issues, liberals keep up their unflinching war on liberty.  George Will documents one battle in New Mexico. Michael Bloomberg wages another.  They're relentless!

People Respond to Incentives

One of the many complaints I have about the Democratic platform is how they complain about people not finishing high school or going to college while simultaneously pushing policies that make life easier for those people.  It's like they don't understand that these people are just responding to incentives.  If you increase welfare, make it easier to get free healthcare, foodstamps, etc., then people have less incentive to finish high school or go to college.

In Michelle Obama's speech last night.  She said "Like so many American families, our families weren't asking for much...They simply believed in that fundamental American promise that, even if you don't start out with much, if you work hard and do what you're supposed to do, then you should be able to build a decent life for yourself and an even better life for your kids and grandkids." [Emphasis mine]

Do you think she believes "what you're supposed to do" includes finishing high school?  If it doesn't, then what does it mean?  If it does, then should we make welfare programs contingent on a diploma?

Here's a counter-argument.

A Depressing Campaign

So far this campaign has been really depressing to me.  Either, as I have matured, I have become more cognizant of how campaigns are run, or President Obama's campaign has been unimaginably cynical.  Here's a list of campaign developments that I think Democrats should be ashamed of.

1. Senate Majority Leader Harry Reid claiming via anonymous source, with no evidence whatsoever, that Governor Romney had paid no taxes for the past 10 years.
2. Stephanie Cutter insinuating that Romney is a felon.
3. Ad insinuating that Governor Romney was responsible for a woman dying from cancer.
4. Democrats claiming that Republicans are conducting a war against women.

As I see it, the problem is two-fold.  First it's depressing to me, that these arguments succeed at all.  To do that, voters must be much more sensitive to this demagoguery than I had ever thought before, much more credulous.  Secondly, the Obama campaign is much more eager to exploit the public's credulity than I expected.  This is not the sort of high-minded campaign Obama promised.  He is not a new type of politician.  It's depressing, too, that he still has many supporters that don't realize that.

Poisoning the Well

Democrats love talking about Mitt Romney's taxes, but really, they're irrelevant.  They'd only be relevant if someone suspected Romney of breaking the law.  No one has suggested that Romney has done anything illegal.  All he's done is take advantage of the tax code.  Clearly Republicans and Democrats have different opinions when it comes to the tax code, but surely that debate can go forward without focusing on one man's taxes.

Some have suggested we need to know which loopholes Romney used so we can make sure those loopholes aren't expanded if he reforms the tax code.  First of all, which loopholes he used does not help anyone decide whether he should be President or not, which is what we're discussing.  Secondly, those loopholes exist whether or not he took advantage of them.  The benefits and costs of loopholes have nothing to do with whether Romney used them or not.

This is another example of how Democrats are trying to debase the tenor of the campaign.  Instead of focusing on the issues and the details, they'd rather curry jealousy and hatred of a wealthy man, who though he pays a large amount of taxes, and does so legitimately, pays a small percentage of his income.

They'll Be Sorry

I've noticed a trend.

Step 1: Democrats do something unprecedented.
Step 2: Republicans, who have never contemplated that action before, not only do it, but take it to new heights.
Step 3: Democrats complain that Republicans are abusing the process.

Examples: Filibustering court nominees for political purposes, using filibusters to prevent major laws.

My prediction is that Democrats breaking this precedent will come back to bite them.

A Challenge to Liberals

I would like to propose a requirement for all who support President Obama's re-election.

Preface: President Obama's term in office has been marked by unprecedented infringements on civil liberties and a strengthening of the executive office. 

Civil Liberties (for more details see this Salon.com article):

• He has argued that the government has the power to detain anyone (citizen or not) without due process if they're a suspected terrorist.
• He has argued that the government has the power to kill anyone (citizen or not) abroad without any trial if they're a suspected terrorist.  (and he has acted on this)
• He has extended the government's power to spy on its citizens without a warrant. Therefore where liberals complained Bush went too far, Obama has gone even farther.

Executive authority:

• Has said he will not defend certain legislation in court (DAMA)
• Has said he will not enforce certain provisions of Federal Law (selective enforcement of immigration laws).
• He has nullified certain laws that he disagrees with by granting waivers (in the case of welfare reform, he nullified the central provision which the author argues was illegal)

All that he has done, he has done for temporary benefit (whether it benefits him politically or the country's welfare is up to interpretation).  But all of them, I believe, is in the long-term very bad for this country.  They each set disastrous and frightening precedents.  Imagine what a Republican could do with these!

My proposed requirement for those who want to vote for Obama is that they must admit that he has done all of these things (which is indisputable).  They then have to either argue that they approve of all of these moves or they must say that despite these troubling actions, they believe Romney will do worse.

The Old Switcheroo

Ask yourself how many times you've heard Democrats/liberals/the media say the Republicans have put forward no plan on health care.  I've heard this many, many times.  But then, out of the blue, in an effort to discredit Republicans from another angle, Dylan Matthews at Wonkblog says "In early 2009, Ryan introduced the Patients’ Choice Act as an alternative to the administration’s health-care reform efforts."  [Emphasis my own].  Hmm, that doesn't fit with what I've heard before.

This is a lot like the years of Democrats' talking about how the Bush tax cuts only benefited the rich and hurt the poor.  That's all I heard during the 2002-2004 elections.  But now Democrats want to extend the tax cuts for the middle class.  Why?  For years, they had no tax cut, now it's too important to lose!  Republicans should call them on this.  Get together a collection of Democrat quotes about the Bush tax cuts being only for the wealthy, then force them to admit that they were beneficial to the middle class.

Democrat: We must extend the tax cuts for the middle class and discontinue those for the rich.
Republican: Are you saying it would be detrimental to let the tax cuts expire for the middle class?
Democrat: Of course, the middle class are hard-working and being left behind.
Republican [Option 1]: So all those times when President Obama said we can't return to the failed policies of the past, he means all those policies except the tax cuts, which George W. Bush pushed and Republicans passed?
Republican [Option 2]: So if it's detrimental to allow them to expire now, it must have been a beneficial law that Republicans and President Bush passed 10 years ago.  Are you crediting Republicans with a good policy?

Ban Everything!

This Buckyballs controversy raises several interesting questions about how far government should go to protect consumers.

I want to draw attention to Betty Lopez's statement, though. She says "Any child's life is worth more than $50 million."  This is one of those statements that is hard to dispute without sounding callous, but let me try the ad absurdum approach.

Do you think Betty Lopez has a number where she would no longer make this statement?  Do you think she would say, "Any child's life is worth more than $1 billion"?  I can imagine her saying "No amount of money is worth a child's life."  Which is true in a sense.  Anyone willing to sell their child for any amount of money deserves scorn.

However, think of all the lives we could save by banning bicycles.  In essence, you're arguing Buckyballs' case.  We don't want to ban bicycles because the benefits of bicycles are much greater than the regretful children's deaths.  We've already made those decisions.  Any activity can lead to death, but that's not the argument we should make.  We should compare the benefits and costs of banning and regulating.  Ms. Lopez's statement is much too universal for me.

Congress's Selective Polarization

Peter Orszag argues that the Postal Service should be privatized.

I wholeheartedly agree. There's really no reason for the government to provide a service that the private sector has demonstrated that it can easily handle (Fed Ex, UPS).

I also agree that if people are worried about service to rural areas, I'd be willing to discuss some kind of subsidy for them only.

I want to draw attention to his opposing arguments, though. He has provided what he believes are the best counter-arguments to his proposal and attempts to dispel them.

Congress could simply unshackle the agency. Legislation is currently pending in both the Senate and the House that would give Postal Service management additional flexibility. In an increasingly polarized Congress, however, it is not clear if or when this legislation will be enacted. And even if it were passed soon, it would probably provide only temporary help. 

Wait, so we can't settle for relaxing the burdens on the postal service through legistlation because the political process is stymied, but how exactly will the postal service be privatized?  Don't we need legislation for that as well?  Will the same political process that is too polarized to provide management extra flexibility magically hold hands and usher through the privatization?

A Rambling, Incoherent Mess III

Apparently, I'm not the only one who was bothered by this speech.  Some have even pointed out how poorly constructed it is.  But I'll push on anyway.

In Part III, we look at this paragraph.

If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business -- you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.

In the first three sentences, President Obama seems to be echoing John Donne.  Have you ever heard anyone argue that any rich people have never interacted with another human being, either directly or indirectly?  Of course everyone had teachers, of course, they must have purchased something at some point manufactured by someone else.  These points are not in dispute!  It's another Obama strawman.

Then he transitions from interactions with private citizens to interactions with groups.  Notice, first it was 'you had a teacher,' then 'you used roads.'  Then, the great leap.  Because you've used resources that others provided, you accomplished nothing.  You deserve no credit for what you've done with those resources.  The people who provided the resources deserve the credit. 

Keep in mind that many of those resources were privately provided, too.  The takeaway must be that all products, all innovations are ultimately because of roads and bridges and teachers, things provided by government.  The government is responsible for everything in our lives.  One could make the argument that nothing in government would be possible without successful people paying taxes, which is also true but completely contradictory.

The point is that these resources provided by the government are generally equally available to all citizens.  But it's select citizens who are smart, work hard, and sometimes inspired that take those resources (along with goods and services provided by the free market) to offer a new product and service that everyone else values.  This is how they become successful.

Lastly, the government did not create the internet so that businesses could make money off of it.  The Department of Defense created the internet to aid their communications. Businesses saw the potential of the internet and invested in it, developed it, and profited from it.  If corporations had not invested in the internet, there would be no internet, I doubt its potential could have been realized.

Alternatively, if the government hadn't invested in the internet, I believe it still would have eventually developed. It was too profitable not too, and the idea wasn't so complicated that no one would have thought of it.

Hypocritical Outrage

Perhaps you've heard that several leading Democrats are outraged that the US Olympic team is wearing uniforms manufactured outside of the US.  To make matters worse, they were manufactured in China!  Oh the humanity!

Greg Mankiw rightly points out that it's very likely that the very people complaining are probably themselves wearing clothes manufactured outside of the US.

I'd like to take this point several steps further.  Every Democrat that has complained about this situation, should be challenged to purchase only products manufactured in the US.  No foreign cars, clothes, electronics.

This will include Harry Reid, Nancy Pelosi, Sherrod Brown, Kirsten Gillibrand, and Bernie Sanders.

Below are quotes from these hypocrites.  I encourage you to replace 'Olympic Uniforms' with any product conceivable.

“There is no reason why U.S. Olympic uniforms are not being manufactured in the U.S. This action on the part of the U.S. Olympic Committee is symbolic of a disastrous trade policy which has cost us millions of decent-paying jobs and must be changed.”

-Bernie Sanders

“We have people in America, in the textile industry, who are desperate for jobs. What the Olympic Committee did is absolutely wrong.”

-Harry Reid 

A Rambling, Incoherent Mess II

Part II in the analysis of this speech.

Let's take the remarks in blocks.

...if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something -- there are a whole bunch of hardworking people out there.

I suppose President Obama is suggesting that the successful people he knows, when asked to explain their success, propose it is either because they are smart or they work hard or some combination of the two. President Obama then argues that it can't be because they are smart because "there are a lot of smart people out there." Is that an argument? Intelligence can't explain success because many people are intelligent? Does he mean that there are many intelligent people out there who aren't successful?
I think most intelligent people are successful. I'd like to see data that refute that. I'm sure some intelligent people make bad choices or have bad luck, but by and large smart people enjoy successful lives. Is President Obama really "struck" by people believing that they owe their success to intelligence? Isn't one of the main objectives of the Democrat Party to increase access to education? If intelligence doesn't promote success, why bother with education?

Maybe he meant the super-successful can't explain their degree of success with intelligence alone. That may be true; many of the most successful people out there aren't the smartest people in the world. But I don't think they would submit the intelligence answer in the first place. Steve Jobs would be a good example. He was successful not because he was smart but because he had a sense of what consumers wanted and provided revolutionary products. By doing so, he both enriched himself and served consumers. If someone asked him to explain his success, do you really believe he would have said it was due to his intelligence?

I also don't think people would answer "because I worked harder than everybody else." Most people realize that there's an upper limit to how hard you can work, and many people hit that limit with little success. I'm confident that most successful people realize that. This is just another example of President Obama building straw men so that he can knock them down.

Most successful people do work hard. Many people who are not successful also work hard. Hard work alone does not explain success. Only in President Obama's mind (or speeches) does anyone argue differently.

Bizarro World of Welfare Reform

I've been trying to follow this Welfare Reform Issue.  I'm still not sure I totally understand both because it's kind of complicated and neither side has really comprehensively explained what's happening.  This is what I believe: Utah and Nevada want the Federal Government to relax some of the work requirements included in Welfare Reform.  These are the provisions that ensure that people who receive welfare are not just lying about watching TV.  They say, not that they want to allow this kind of sloth, but they want to be able to have their own definitions of work (like going to school).  The Obama administration replied it was willing to consider granting waivers if more information is given.

Cynical conservatives believe the Obama Administration is doing this to weaken the work requirements, while the Obama Administration claims it is trying to provide more flexibility but maintain the spirit of the law.

I guess only time will tell who is correct, but this story has two passages I find extremely interesting.

The first is a quote from George Sheldon, acting Assistant Secretary for the Administration for Children and Families at HHS. "Federal rules dictate mind-numbing details about how to run a welfare-to-work program. Many states report that their caseworkers are spending more time complying with federal-documentation requirements than helping parents find jobs."

Have you ever heard a Democrat decry a regulatory burden.  When Republicans complain about too many regulations choking the economy, generally, there's no response from Democrats.  Probably because Democrats believe in regulations but they poll poorly.  Maybe Democrats have decided regulations that restrain the private economy are good, but regulations that restrain the public sector are bad.

The article's authors, Louise Radnofsky and Janet Hook say "The outcry was a shift for Republicans, who have traditionally pushed for states to have greater control over how they spend federal dollars. The Obama administration has tried to portray many of its policies as giving states more latitude."

This is very interesting. I county myself as someone who "traditionally pushes for states to have greater control over how they spend federal dollars." How can I reconcile this seeming discrepancy?

If I'm pro-federalism (which I am), and anti state to state redistribution of taxes (which I am), then how can I disagree with these waivers? Well, if the Obama administration is sincere in wanting to relax the specific requirements but maintain the general work requirement, then I completely agree with what they're doing. Conservatives are worried that they are just using this as an excuse to increase the size of the program by increasing aid to those who don't work.

A Rambling, Incoherent Mess

I don't know if this speech was pre-written and read from a teleprompter or if President's Obama's remarks are extemporaneous.  What I do know is that this argument is poorly constructed.

It has three paragraphs; here's an outline of the argument.

• People aren't successful because they're smart.
• People aren't successful because they work hard.
• Successful people interacted with other people on the way to success.
• Successful people used communal infrastructure on the way to success.
• Example: The government created the internet.
• Successful people are successful because they have individual initiative and they work together.
• Example: Fire fighters work together.

I can't see how this meandering argument can do anything but create an impetus for applause.  Each point seems designed to engender an applause from a mindless audience.  'We work hard, we're smart and we're not very rich!  These rich people owe their success to us! Of course firefighters work together!'

In subsequent posts, I want to dissect this argument point by point.

What's Good Enough for Them

In Friday's edition of Left, Right, and Center, the representative for the Left, Robert Scheer was asked whether Obama or Romney was helped by the Supreme Court decision.  Robert Scheer's response (presented as a question directed to Romney by Obama)

(starting at 16:30) What you did for Massachusetts I did for the rest of the country. How could you disagree with that? How can you call that socialized medicine? How can you say that's an unfair intrusion into people's lives? If it was good enough for the people of Massachusetts, why is it not good enough for the rest of the country? And I've extended it to 30 million people. I think that's an argument Romney loses. I don't even know what the answer is.

The Right's representative, John Eastman, gave a political answer: it raised taxes, it takes away freedom, etc. Maybe the philosophical response doesn't poll well, but I wanted to make sure that people realize that people like me have a much stronger answer to this question.

The answer is that the people in Massachusetts aren't necessarily representative of the people in the rest of the country.  Whatever is the best solution for Massachusetts may not be the best solution for the nation as a whole.  That's why people like me are strong advocates of federalism.  Letting each state find its own solution.  A national solution for a problem as complex as health care will never be as optimal as different solutions tailored to different populations of the country.

Simultaneously a Tax and Not a Tax

There are several aspects of the Supreme Court's decision on the ACA that still perplex me.

What exactly is the difference between a tax and a fine?
Don't taxes have to be paid before they can be challenged?
Don't taxes have to begin in the House of Representatives?
What is the explanation for the Medicaid decision?

I find reading the direct opinions can be very illuminating.  For example, I read the Conservative bloc's opinion, and came away with the realization that really they made a very strong case that Congress believed the mandate was not a tax, but not such a strong case, that it Constitutionally wasn't a tax.

Today, I think I can answer the second question.

This issue is discussed by Chief Justice Roberts on page 11 of his opinion (17 of the pdf)

It seems the answer to why this is not a tax for the purposes of the Anti-Injunction Act but is a tax for Constitutional Purposes is that the Anti-Injunction Act was written by Congress.  So it applies only to things that Congress thinks is a tax.

It would be like if you and I had different definitions for the same thing, say a computer.  Then I said I will buy you a computer.  Do you expect what you consider a computer, or do you expect that I give you my version of a computer.

Since Congress passed the Anti-Injunction Act, and said taxes must be paid before they can be challenged.  Then they wrote the ACA which calls it a "penalty," so the Anti-Injunction Act doesn't apply to it.  I'll try to think of an analogy to make this clear.

Yay Federalism!

Sarah Kliff reports that if the Individual Mandate is struck down, California is going to move forward on its own with a single-payer system.

Although, I personally don't think this is the way to go, I couldn't be happier that California has the opportunity to craft a health care system that works for them and doesn't have to follow the rules that were reached by compromise between all the competing interests and philosophies of the entire nation.

Lives Must Be Saved

Families USA has recently suggested that invalidating the ACA will leave millions more uninsured which will result in more deaths.  Therefore, we should make sure that these people stay insured.  Of course, this isn't enough.  Even with the ACA, millions will remain uninsured.  That will result in even more deaths and can't be tolerated.  Obviously, an individual mandate isn't enough to keep these people insured and save their lives.  We must double-down on this insurance to make sure everyone can live an insured, healthy life.

With the wars in Iraq and Afghanistan winding down, we'll soon have soldiers without much to do.  I propose we create some units that will be sent to force the uninsured to purchase insurance.  The penalty for not having insurance in the ACA is clearly too weak.  Think of all the lives that could be saved by intimidating these at-risk citizens with guns and violence.

To save even more lives, we should seriously consider curtailing people's traveling rights.  Tens of thousands of people die each year in car accidents.  Perhaps we should institute a national 10 mph speed limit on all roads or restrict driving all together.

Overturning Precedents

Ezra Klein interviews James Simon

Here's what Simon says on invalidating the individual mandate

But then the question comes, once you get five votes, do you simply uproot 75 years of constitutional precedent? If you do that, you’re not showing judicial restraint. You’re a very, very activist court. And then the court makes itself an issue in any political campaign. If a doctrine as important as the Commerce Clause doctrine can be reversed by a single vote or even two votes, without much attention to precedent, then the court becomes another political branch of the government.

He's talking about overturning Wickard v. Filburn.  The case on which the modern interpretation of the commerce clause is based.  What he conveniently forgets is that Wickard v. Filburn itself overturned 150 years of precedent by expanding the ability of the Federal government so that the New Deal would be possible, along with Medicare, Social Security, etc.--the modern welfare state.

Notice also how in his responses, conservative justices are always described as ideaological and liberals justices are just liberal.  

Finally, in the final question, Ezra Klein worries about how the Supreme Court decided the 2000 election and then Bush went on to appoint two justices.  As I recall, both justices were appointed in his second term, which was not decided by the courts in any way.  Did Bush win an 8-year term in 2000 that I didn't know about?

The Constitution - A Crippling Burden We Can't Escape

Ronald Dworkin writes

If the Court does declare the act unconstitutional, it would have ruled that Congress lacks the power to adopt what it thought the most effective, efficient, fair, and politically workable remedy—not because that national remedy would violate anyone’s rights, or limit anyone’s liberty in ways a state government could not, or be otherwise unfair, but for the sole reason that in the Court’s opinion our constitution is a strict and arbitrary document that denies our national legislature the power to enact the only politically possible national program. If that opinion were right, we would have to accept that our eighteenth- century constitution is not the enduring marvel of statesmanship we suppose but an anachronistic, crippling burden we cannot escape, a straitjacket that makes it impossible for us to achieve a just national society.

I believe this is illustrative of how liberals think about these issues.  They believe the purpose of the Constitution is to provide technical rules (the President must be 35, there must be two senators per state, etc.) and that's all.  Congress and the President then have (nearly) unlimited power to do what they think is in the best interest of the public.

Dworkin offers his idea of what the government should be empowered to do: when they have a specific goal in mind, they should enact "the most effective, efficient, fair, and politically workable" solution as long as it doesn't "violate anyone's rights or limit anyone's liberty in ways a state government could not."

Of course, the former requirement is pretty meaningless when you think about it.  You'll never find a proposition that is simultaneously the most effective, efficient, fair, and politically workable.  Compromise among those four pillars would be necessary.  That would make any policy possible.

If that's what liberals want, then they should propose a Constitutional Convention and draw up a new Constitution that explicitly says so.  But right now, the Constitution says that powers not explicitly granted to the federal government are reserved to the states and the people.

I think it's important that we have a document that constrains the power in the federal government.  I feel that liberals would prefer that the government have few constraints so that it could ensure we live our lives how liberals want us to live them.

Hopeless?

It's pieces like this that make me wonder if the future is hopeless.  I'm not saying that the people who disagree with me are hopelessly ignorant; what I'm wondering is if the differences between us are irreconcilable.

Liberals passionately believe that the individual mandate is constitutional.  Granted many of them have no convincing reasoning, but many do.  Likewise conservatives passionately believe the opposite with a similar breakdown of quality of reasoning.  Though I believe I'm right, I think it's impossible that I could convince most of my educated opponents.

Likewise, I think it would be very difficult to convince me.

What's even worse, is when someone (on either side) minimizes the other side's point of view by saying "it's clear" or that they base their reasoning "on a principle as flimsy and manufactured as activity vs. inactivity."  When someone says that, they're not being open-minded, and debate is futile.

If we can't have an open and fair debate on issues, what hopes is there for democracy?

Government Needs to Increase Spending on X

Today X is research.

There is little evidence that government investment in research is beneficial.  Generally what advocates do is find something that was immensely beneficial (the internet, semiconductors, GPS) then talks about how the government funded it.  What they haven't proved to my knowledge was that these innovations would not have occurred had the government not acted.  I find it hard to believe that semiconductors wouldn't have caught on in the absence of government funding.

Government invest can be immensely beneficial if no private party stands to gain enough by his innovation but society's benefits would be enormous.

I do agree with the final paragraph that the government should make innovation in the pharmaceutical industry less costly.  But this is evidence that the government already impedes innovation.

Mandatory Voting Won't Solve Anything

Peter Orszag's column about mandatory voting gives me an excuse to bring up some other issues with voting.

For one, the participation paradox has always bewildered me.  The participation paradox is the argument that my vote has almost zero effect on the outcome, but has a positive cost, therefore if acting rationally, I shouldn't vote.  However, if everyone acted rationally (or if rationality wasn't randomly distributed among voters), then the system would collapse.

I didn't want to accept this.  What I recently decided, however, was that the number of people voting doesn't really make much of a difference as long as it's above a certain threshold.  That's because when the number voting is high enough, randomness takes care of the ignorance of some people, the passion of others.  I now believe that if everyone voted, the outcome would be similar to what it is now.  The extension of this thought is that if one party was successfully able to increase turnout among its adherents, the opposing party would adapt (maybe they'd become more passionate/worried or the party would increase voter-drive efforts), and the final result would return to equilibrium.

Therefore, there's no need to increase turnout to 90% like Orszag wants.

Insuring the Youth

Most of the people who doggedly follow health care reform know that one provision of the ACA forced insurance companies to allow young adults up to 26 to stay on their parents' insurance.  I find aspects of this bizarre.

First, it's probably the case that these people will have low health care costs.  Therefore, if they were participating in a perfect insurance market, the cost of insurance probably would have been low.  Why would it be in their interest to move to the parent's plan. Presumably, the cost of adding them to the parent's plan would be higher than the cost of individual care.  Therefore, they'd be subsidizing others.  Again, why is that in their interest?

Possible answers: parents would be paying, so it's cheaper for the children. But then, the parents could have paid anyway.  Still, I think that's the most likely explanation, as their are psychological reasons that'll push parents to pay when they're actually receiving the bill.

Secondly, why didn't the insurance companies do this in the first place?  If they weren't doing it before, that implies it wasn't in their interest.  But many companies have announced they'll maintain this policy even if the ACA is struck down.  What changed?  My best guess is that the insurance companies would have done this eventually, but the process was accelerated by the ACA.

Also, in this article at thehill.com, the author writes "Adding more young people to the insurance pool is popular in part because it helps lower premiums for everyone."  I think they meant to say "everyone else."  It costs more for the young people, of course.

From the Party that Brought you the Individual Mandate

Why do Liberals perpetually want to make you do things that may not be in your interest to do?

Today, former OMB director Peter Orszag made the case for mandatory voting laws - everyone must vote.  His motivations are unclear; he doesn't really say why we would be better off if that were the case.  I think it's just part of the psychological make-up of Liberals.  When they have a preference, they believe all people must share that preference and be forced to enjoy it.

His argument is extremely weak.  First he notes than mandatory voting increases voting.  Frankly, this is so obvious, I wonder why he even frames it as though it's unexpected.  Then he gets to the real arguments.

He suggests that compulsory voting will change the role of money in elections.  Money spent on turn-out-the-vote efforts would likely fall.  No argument with that.  But would the amount of money spent on elections in general fall?  That's not clear, and he doesn't argue either way.  I think it's likely that this money would just be moved to other categories.

He implies that there will be less negative advertising because the point of it is to discourage voting.  Maybe, but this is just speculation.  Maybe they'd need more negative advertising to push people from voting for their preferred candidate or encourage them to vote for a third-party.  Who knows?  If Orszag does, he gives very little information about how the money situation would change.

His next argument is that it would decrease polarization, which Liberals especially detest.  Why? Because the people in the middle are less polarized.  What exactly is the argument here? The political parties will have to moderate to attract voters?  But which causes which? Do they not vote because they're moderate or are they moderate because they don't care about politics.  It's not impossible that by forcing them to vote, they'll inform themselves and decide one party suits them better than another.  Uh-oh, now they're polarized.  Maybe the parties will double-down on polarization because they think it's more effective than moderation.  Again, Orszag offers no evidence (other than for the fact that only the most polarized vote).

He then says that most evidence shows that compulsory voting has no effect on electoral outcome, but one study finds it did make a difference.  Is this an outlier?  How was their method different?  Was it better than the historical studies?  Orszag doesn't say.

In the last paragraph, Orszag summarizes the arguments for compulsory voting.  1) "It would make our democracy work better, in the sense of being more reflective of the population at large." and 2) "It could allow the first president in history to be elected by a majority of American adults."

1) Is there any evidence that the voting percentages would be different if everyone voted?  Even the study he cited said only a handful of seats switched because of the law.  So instead of Obama winning 52.9% of the vote, maybe he'd win 53.4%.  That's not a big difference.  He doesn't argue that it would change outcomes, only that we'd get a better view of what adults want in general instead of voting adults.  Is this argument really the strongest one he could make?

2) Why should this be a goal?  Who cares about this?

In summary, after reading this opinion, I'm bewildered.  He has presented an extremely weak case for this issue, so weak, that it seems there must be something else motivating him that he doesn't discuss.  Peter Orszag, I've been told, is a pretty bright guy, and generally his opinions are much better thought out than this. Maybe this piece is an outcome of a lost bet.

Let's Grow Government!

I would like to propose a new rule.

Anytime someone says we spend less money on X or if we spend more money on X things would be better for a group of people, they should be required to propose where the money will come from.  Of course, liberals will always say they can get the money by raising taxes on the rich.

Do they have any other answer to that question?  One reason we have the budget problems we do is that people always propose new spending but reducing spending is incredibly difficult because no one compares the relative benefits of spending on X versus Y.  No one ever says spending money on X is more important than Y so let's shift government spending patterns.  Instead, they say it would be beneficial to spend on X so let's spend on X.

Seek First to Understand

Having debates with other people can be a very dangerous business. Generally, people are only so open to other viewpoints, and I think everyone has a point at which they're emotions take over.

I thought of a question today for pro-choice abortion people. This story sparked it.

The question: Is gender selection a legitimate reason to have an abortion?

Possible answers: Yes or No.

If the respondent says yes, then they're morally suspect, but consistent.

If the respondent says no, then they've admitted that abortions are not just a choice someone can make. Many pro-choicers say it's not the government's business what a woman does with her body, implying that the woman can have an abortion for any reason she wants.  This takes that stance off the table.

Democrats Against Science

I often hear liberals talk about how Republicans or Conservatives are anti-science, that they ignore what academia learns and publishes.  Here is Paul Krugman talking about Rick Perry and Mitt Romney, for example.

Now it seems, President Obama is smarter than the scientists! (Though probably many liberals believe he is one of the smartest men to walk the Earth.)

Obviously, the President just continues to eschew the truth so that he can politicize it, fundraise off it, and use it to build up votes.

How unpresidential.

Do As I Say Not As I Do

So, the US has imposed tariffs on Chinese-produced solar panels.

Why? Because China is subsidizing their production so much, that they can afford to sell their panels in the US for a lower price than US firms can sell them.  Therefore everyone buys the Chinese panels and the US firms suffer.  It's called dumping.

What's bizarre is that the US subsidizes its own production (has anyone heard of Solyndra?)  I guess this means we're not subsidizing as much as China.  However, I wanted to point out that if the purpose of the US subsidies is to promote the use of solar panels by lowering the price, how does it make sense to punish other countries from also subsidizing, further reducing the price?