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?