Archive for November, 2011

Once upon a time, local governments accounted for the lion’s share of economic policy-making in the United States. Before World War I, not only was the federal government’s economic policy-making activity strictly limited to areas such as international trade, management of federal lands, trust-busting, and food and drug regulation, but state governments themselves were also internally decentralized. In 1913, local government own-source revenues (revenues raised autonomously by local governments, thus excluding grants) as a percentage of total state and local revenues (including federal grants to state and local governments) stood at a whopping 82%, according to my calculations based on historical Census Bureau data. If we assume that revenues track economic policy activity closely, this figure implies that four-fifths of all state and local economic policy activity occurred at the local level.

Today, of course, local governments are quite limited in their economic policy autonomy, with the most important remaining policy role left largely to local governments being K-12 education. Local revenue decentralization (the variable described in the last paragraph) was just 38% in 2008. This chart shows the evolution of local revenue decentralization over time for the U.S. as a whole:

So who killed local autonomy in the U.S.? The answer is: (more…)

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Events in Europe should give us pause, as Eric Dash and Nelson D. Schwartz note in “Crisis in Europe Tightens Credit Across Globe.” (NYT)

Europe’s worsening sovereign debt crisis has spread beyond its banks and the spillover now threatens businesses on the Continent and around the world. From global airlines and shipping giants to small manufacturers, all kinds of companies are feeling the strain as European banks pull back on lending in an effort to hoard capital and shore up their balance sheets. The result is a credit squeeze for companies from Berlin to Beijing, edging the world economy toward another slump.

The deteriorating situation in the euro zone prompted the Organization for Economic Cooperation and Development on Monday to project that the United States economy would grow at a 2 percent rate next year, down from a forecast of 3.1 percent growth in May.

There is little reason to believe that we are even close to seeing the end of the economic crisis that began in 2007-08. While commentators in the US will focus on how the poor economic performance will impact on Obama’s reelection efforts, Gideon Rachman (FT) asks whether a modern version of the 1930s would lead Europe back to a dark era of nationalist parties and conflict.

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From The Hill:

Maxine Waters in line to take over from Frank on Financial Services.

I shudder at the thought.

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Top Thinkers

FP has released its list of the top 100 thinkers—something I always find enjoying reading.  Pileus readers may be pleased that the list includes Ron Paul, Paul Ryan, and Tyler Cowan.

For those who enjoy these types of things, are there any glaring sins of omission?

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Consider the source of the comment, but a New York Times report yesterday on the Eurozone crisis had this gem:

Bernard Connolly, a persistent critic of Europe, estimates it would cost Germany, as the main surplus-generating country in the euro area, about 7 percent of its annual gross domestic product over several years to transfer sufficient funds to bail out Europe’s debt-burdened countries, including France.

That amount, he has argued, would far surpass the huge reparations bill foisted upon Germany by the victorious powers after World War I, the final payment of which Germany made in 2010.

How can Germans accept this possible outcome to the Eurozone crisis?  And why should they given a chief cause of the problem is fiscal irresponsibility on the part of others within a currency union that isn’t optimal?  Unfortunately, it looks like it is very much the case that we’ll all suffer – not just Germans.  So the question is what is the least bad option that appreciates the problem of creating further moral hazard and the dangers (to liberty and economic welfare) from centralization (for those who favor even greater tightening of the European Union by centralizing fiscal policy) and other “solutions” being offered around the globe.

For the approximately 1,000,000th time, I wonder WWFD (What Would Friedman Do?).  Milton, not Tom, of course!

Not surprised to see Tyler also has something to say about this and some interesting links.

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In case you think only “isolationist” thinkers are opposed to using military force against Iran due to its nuclear weapons program, it is noteworthy that a slim majority (52%) of national security experts polled by National Journal believe that strikes should “not be carried out under any circumstances, despite a recent U.N. nuclear-watchdog report providing evidence of Iran’s ongoing pursuit of nuclear weapons.”

It might seem frightening that 48% don’t rule out strikes except that the question is worded in such a way that it doesn’t mean they favor using military force as the best policy option in the near term.  For example, one respondent who favored a coalition approach provided the caveat that “We are a good distance away from this being necessary.”

In case you are curious, here is a list of the experts polled – it isn’t exactly filled with Ron Paul-types!: (more…)

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Republican Presidential candidate Jon Huntsman during the foreign policy debate this past week:

His — history will tell. We missed the Persian spring. The president failed on that front. We go into Libya, where, to my mind, we don’t have any definable American interests. We’ve got Syria now on the horizon, where we do have American interests. It’s called Israel. We’re a friend and ally. They’re a friend and ally. And we need to remind the world what it means to be a friend and ally of the United States.

And we have nuclearization in Iran. Centrifuges spinning. At some point, they’re going to have enough in the way of fissile material out of which to make a weapon. That’s a certainty.

We had a discussion earlier tonight about sanctions. Everybody commented on sanctions. Sanctions aren’t going to work, I hate to break it to you. They’re not going to work because the Chinese aren’t going to play ball and the Russians aren’t going to play ball.

And I believe Iran has already — the mullahs have already decided they want to go nuclear.


They have looked at North Korea. They’ve got a weapon. Nobody touches them. They like [sic] at Libya. Libya gave up their weapon in exchange for friendship with the world. Look where they are.

So I say let’s let history be our guide. We saw the end of the Ottoman Empire in 1919. We saw the region transform and make itself into something different. We saw changes in 1947.

I think we do our national interests a disservice by jumping in too soon and taking up sides with people we don’t fully understand, Islamist groups, pan-Arab groups.

Our interest in the Middle East is Israel. And our interest is to ensure that Israel — that Iran does not go nuclear.

Interesting.   Several comments and questions:

1.  Unfortunately, Huntsman did not have a chance to specify exactly how the U.S. is going to ensure that “Iran does not go nuclear.”  He believes sanctions won’t work.  So what levers of statecraft would a President Huntsman use to meet this goal?

His earlier comment about missing the Persian Spring suggests he thinks one answer is that the U.S. could meddle more vigorously in the internal politics of Iran, help bring about regime change there, and then we can all live happily ever after.  But wouldn’t that require a pretty significant involvement that could seriously backfire?  Specifically, intervention along those lines only helps propel the sort of logic that Huntsman understands (with his comment about Libya) is behind Iran’s quest for nukes in the first place?  Moreover, Huntsman asks us to appreciate history – and wasn’t it American intervention in Iranian domestic politics that helped (and still helps) stimulate anti-U.S. opinion in Iran in the first place (see Mohammad Mosaddegh and the 1953 coup). And what about his line about being careful not to pick sides with people we don’t fully understand?  Lastly, if states have permanent interests regardless of regime type, isn’t it possible that a very different government in Tehran would still wish to acquire nuclear weapons given the geostrategic realities that face Iran?

Fortunately, Huntsman has been more clear about what he’d do about Iran in other forums – including in his October foreign policy address* – so we don’t have to guess.  Here, in bold unequivocal language, is what Huntsman said:

I cannot live with a nuclear-armed Iran. If you want an example of when I would consider the use of American force, it would be that.

Hard to see any wiggle room here.  He might hope for regime change leading to an end in Iran’s nuclear program.  He might hope for diplomacy doing what sanctions cannot.  But ultimately a President Huntsman would fight a war to prevent Iran from developing or acquiring a nuclear force.  This seems to be a bit incongruous with the rest of the speech, especially shortly after claiming “Simply put, we are risking American blood and treasure in parts of the world where our strategy needs to be rethought.” And unfortunately, his policy position does not leave room for the possibility of living with a nuclear Iran and relying on deterrence and diplomacy to keep the peace.

2.  Regardless of what one thinks of our relationship with Israel, Huntsman has an odd way of stating his view of it:  “Our interest in the Middle East is Israel.”  When I think of interests, I think of homeland security, economic welfare (for Americans), and even the preservation of the American way of life at home (including individual liberty) for lack of a better way of putting it.[1]  The American military, diplomacy, alliances, protection of freedom of the seas, etc. are possible ways/means to secure those interests.  But they are not interests themselves.  Now perhaps he meant that Israel’s security is a means for our other interests rather than an interest itself.  It is pretty common to use the language Huntsman did when we discuss our “interests” in a region or country.  Nonetheless, this kind of non-specific talk suggests that Huntsman may believe that the security of Israel or any other country is an end in itself.  And maybe he thinks that.  But otherwise it would be useful for Huntsman to tease out the logic here of how our relationship with Israel fits into our regional “interests” and how those particular means relate to securing our fundamental national interests.  I’m not saying it can’t be done, but since Israel seems to drive a lot of his approach to the Middle East, I’d like to see his argument more clearly articulated.

3.  States should change their minds and cut ties when their interests dictate.  See President Washington’s sound approach to France here on this point (sorry, fans of Jefferson, but he was bested here by Hamilton and the realists).  Nonetheless, I think Huntsman is right that our behavior vis-a-vis Qaddafi and Libya sends the wrong message to the world when he noted: “Libya gave up their weapon in exchange for friendship with the world. Look where they are.”  If you really care about non-proliferation and counterterrorism, it was the wrong move to help oust Qaddafi for the ultimately other-regarding or alliance-regarding (at best, and we were chain-ganged anyway) ends of U.S. intervention.  Washington dumped France for high gains.  We dumped Qaddafi for very little.

*This speech is one of the most interesting and insightful speeches of the primary season.  It can be read here in full.

[1] Similar to how SMU professor Seyom Brown discusses it on page 3-4 of Seyom Brown.  The Faces of Power.  New York: Columbia University Press, 1994.

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The hard-liner

One of the interesting stories to come out of the pathetic NBA lockout (apparently the sides have just reached an agreement, finally) is that the most hard-line of all the hard-line owners is NBA legend and current Charlotte Bobcats owner Michael Jordan.  He reportedly wanted players to accept a 37% share of basketball related income (down from 57%).

This has some folks feeling betrayed.  Jason Whitlock at FoxSports writes:

This is the ultimate betrayal. A league filled mostly with African-American young men who grew up wanting to be like Mike is finally getting to see just who Michael Jordan is. He’s a cheap, stingy, mean-spirited, cut-throat, greedy, uncaring, disloyal slave to his own bottom line.

Well, yeah.  But to state the obvious point that Whitlock fails to mention: this is why he was the most dominant NBA player…ever.

So, over the years we have learned that the smiling face that made so much money selling so many overpriced shoes and overpriced arena tickets to white people all around the world is, you see, a big jerk.  And, according to Whitlock, not only a jerk but a traitor to his race, particularly the misguided young stars who could benefit from his mentoring and example.

A good visual on why Jordan has rings and Barkley doesn't.

Charles Barkley (owner of zero rings) was famous in the day for saying, “I am not a role model.”   But the fact that he said it indicated a recognition that he had some regard for fans, kids, and people who want to look up to him, even as he was acknowledging that his behavior wasn’t role-model worthy.

Jordan has never held a similar regard for anyone.  His object has always been to destroy and conquer.   Without that drive, he wouldn’t have six rings.  A lot of the most successful players (Kobe Bryant, for instance) have a similar blood lust.  Lesser talents like Larry Bird succeeded because they had it, too.  Nice guys?  No.  My home town team was vanquished by Jordan twice, not because they had less talent but because Karl Malone definitely didn’t have it.

I’m a skeptic, though, that this blood lust will make Jordan a great success as an NBA owner (or businessman, in general).  Competitive drive is definitely useful in the business world, but capitalism is not a zero sum game.  What ultimately drives success is whether one can produce value, whether one can sell a product that people want to buy.  The drive to conquer competitors can lead to profits, but it can also lead to pettiness and myopia, which don’t make profits in the long run.  And making your employees hate you probably isn’t a long-run winning strategy, either.

But Michael Jordan a traitor?  We can only be betrayed by people who are our allies.  So, who is silly enough to believe that Jordan was ever on anyone’s team but his own?

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The latest from Egypt:

“I was in Tahrir Square during the 25 January revolution and I saw a lot of injured people, but this time I think there are more serious injuries,” says Dr Omar Qassar who is working on makeshift premises.

“I’ve seen two people hit by shotgun pellets in their chest and abdomen. One died before he got to hospital.”

“The tear gas is weird,” he adds. “In January it was much lighter. This stuff is very strong, just smelling it I get dizzy. We’ve seen a few cases of convulsions.”

Doctors have collected samples of the canisters, which bear the name of a US manufacturer, and sent them to laboratories for analysis.

And of course it’s the presidential candidate who wants to end the U.S. subsidies for foreign governments who’s crazy.

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Just kill the turkey, please

Pres. Obama has, for another year, partaken in the bipartisan tradition of pardoning the official White House turkeys.   He also has the tradition of trotting out his cute daughters to help in this annoying ritual.   They make for good photos.  Turkeys, on the other hand, look much better nicely browned and glazed.

And what is the thing with the hand? Is this some sort of ritual he learned form Jeremiah Wright or is he taining to be a Jedi Master?

Of all public traditions, this is among the silliest—and the most obscene.   Why not use this occasion to send a message consistent with the truth? Most people eat turkeys; the Obamas almost surely eat turkeys; and no amount of pretense or taxpayer expenses giving silly pardons is going to change that fact.

I would have more confidence in the future of our government if we could get a President who would go up to the official turkey and cut its damn head off!

Not pretty, but at least it would inspire a little confidence that our leaders are serious about solving problems rather than erecting pretty facades.

Happy Thanksgiving!

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If ‘status anxiety’ is as big a threat to individual well-being as many egalitarians seem to think then logically they should favour the equalisation of opportunities based on physical attractiveness as well as those based on income. Policies focussed solely on ‘correcting’ the income distribution may simply intensify the significance of physical attractiveness or other status markers unrelated to levels of material wealth. In the absence of income redistribution a person who is physically unattractive may be ‘compensated’ by their relative wealth, while someone who is relatively poor but physically attractive may be ‘compensated’ by their beauty. An exclusive focus on income redistribution in this case intensifies the importance of beauty as a status marker and does an injustice to the rich but ugly person.

This argument is not intended to be as flippant as it may seem. Sex is an important if not crucial part of most people’s lives. Indeed, survey evidence indicates that people often rank finding an attractive and satisfying partner equal to if not more highly in their happiness quotient than having a high-paying job. The determinants of whether one is sexually successful are, however, often the result of factors which are ‘not deserved’. Those fortunate enough to be born with genes for above average attractiveness are likely to have a greater choice of potential partners than those less well endowed – but they no more deserve these characteristics than does someone deserve the advantages from being born into a higher income home, having the intelligence quotient of Stephen Hawking or the football skills of Wayne Rooney. On egalitarian grounds, therefore, differences in attractiveness meet the usual criteria considered to warrant redistributive state action – they are an important factor influencing the quality of individuals lives and they are distributed in a manner which is to use Rawls’s terminology, ‘arbitrary from a moral point of view’. One might, therefore, seek to justify a range of policies to improve access to ‘sexual goods’. These could include the provision of vouchers to enable the less attractive to buy the experience of sex with someone who is physically more desirable or if the direct involvement of money payments for sex is thought to debase the nature of the act then people could secure these goods ‘free at the point of delivery’ from professional public service sex workers contracted by the National Health Service. Alternatively, the less attractive might be provided with subsidised access to cosmetic surgery, or the more attractive might be required to undergo some simple and relatively painless surgical procedures in order to ‘level the playing field’.

With the possible exception of Martha Nussbaum, who has argued that sexual fulfilment is a human right, most egalitarians would (thankfully) balk at such suggestions.* That they do so, however, reveals the root inconsistency of much egalitarian doctrine. So called ‘luck egalitarians’ are obsessed with ‘compensating’ people for inequalities which result from ‘chance’ rather than ‘choice’ – but if eliminating the effects of luck is the key to social justice then un-chosen differences in sex appeal which contribute to the chances of a fulfilled life should indeed be the subject of redistribution.

It will not do to claim that income redistribution is justified because it requires less invasive procedures – a lifetime of punitive taxation for a high income person may turn out equally invasive as taxing the beautiful or requiring that they undergo a one-off ‘de-beautifying’ procedure. Moreover, if we accept that sexual equalisation is in fact too intrusive to warrant state intervention this would be to concede that luck cannot be eliminated as a significant factor in peoples’ lives. It will be no comfort to the rich but ugly person to know that their wealth can be confiscated in the name of social justice but that their lack of sex appeal cannot be the legitimate subject of public policy because this would be ‘too intrusive’. All the egalitarian could say to such a person is that they are the unfortunate victims of the ‘wrong kind of luck’.

Robert Nozick’s ‘solution’ to the problem of unequally distributed status is a more persuasive one. Instead of choosing one dimension such as income on which to equalise people better to have a society characterised by many different dimensions against which one can judge success – income, sex appeal, intelligence, athletic prowess, aesthetic sense, degree of sympathy for other persons, etc., etc. In such a society people who fair poorly on some dimensions in relation to their fellows are likely to find a source of self esteem from other dimensions where they do better. For those unfortunate enough to score poorly on all the relevant dimensions then better to promote self esteem by telling them that they have done as well as they can – given their limited attributes. Hardly a perfect solution to the arbitrariness of life, but considerably more plausible than an egalitarian dystopia which does actually attempt to ‘compensate’ people for the many ways in which they ‘undeservedly’ differ , or one which fixes arbitrarily on material wealth as the only legitimate subject of distributive justice.

*Nussbaum would not support de-beautification of the attractive because this would breach the human right of bodily integrity on her ‘list’ of what is required for a flourishing human life.

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This is the underlying message from Bruce Bartlett (FT). Basic argument: unlike Europe, the US already has the policies in place to stabilize the debt-to-GDP ratio.  On the revenue side, the Bush/Obama tax cuts are scheduled to expire and the alternative minimum tax continues to affect more taxpayers. Absent an extension of cuts and annual fixes to the AMT, revenues would rise significantly.

On the spending side, consider Medicare. The sustainable growth rate formula was enacted in 1997 by Congress to constrain the growth of Medicare via controls on payments to doctors. Since 2003, “doc fix” legislation has been used to avoid imposing the cuts. This, combined with the forced $1.2 billion sequestration (thank you super committee) could help restrain budgetary growth.

When combined, Bartlett concludes that the 10 year impact would be to reduce the deficits by $5.5 trillion and save an additional $1 trillion in debt service, thereby stabilizing the debt-to-GDP ratio at 60 percent.  Obviously, there are better ways to stabilize the debt-to-GDP ratio, but they may be far more difficult politically than to simply stand back and allow existing laws to play out.

The “do nothing” Congress has become a talking point in recent weeks. What are the odds that Congress will “do nothing” if the end result is to bring us closer to fiscal stability?

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The New York Constitution prohibits pork-barrel spending and corporate welfare: government money for private projects. Here’s what the clause says:

[T]he money of the state shall not be given or loaned to or in aid of any private corporation or association, or private undertaking.

Couldn’t be clearer, right?

Wrong. The state supreme court today ruled – in a split decision – that this constitutional provision is unenforceable. The state can give money to whomever it wants so long as it is not “patently illegal” to do so.

In dissent, Judge Robert Smith wrote:

I have defended before, and will no doubt defend again, the right of elected legislators to commit folly if they choose. But when our Legislature commits the precise folly that a provision of our Constitution was written to prevent, and this court responds by judicially repealing the constitutional provision, I think I am entitled to be annoyed.


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As we watch the Supercommittee flounder (predictably) and the markets slide (predictably), at least we can take a mental health break and watch Bad Lip Reading’s take on Ron Paul.

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Even though I think former CJCS Admiral Mullen was out of his lane commenting on such a critical political issue while in uniform, Republicans who claim to be strong on national defense would still be wise to heed his words from last year that are still relevant to the budget fight: 

The most significant threat to our national security is our debt.   And the reason I say that is because the ability for our country to resource our military — and I have a pretty good feeling and understanding about what our national security requirements are — is going to be directly proportional — over time, not next year or the year after, but over time — to help our economy.  That’s why it’s so important that the economy move in the right direction, because the strength and the support and the resources that our military uses are directly related to the health of our economy over time.

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Nice to see our own Elizabeth Price Foley get such good press in George Will’s Washington Post op-ed on ObamaCare and the limits of Congressional power.  A choice section:

Silberman’s distinction between interpreting the scope of a government power and recognizing a right is spurious because rights begin where powers end.

So argues Florida International University’s Elizabeth Price Foley, constitutional litigator for the Institute for Justice. She is amazed by Silberman’s disregard of “the inherently symbiotic relationship between the scope of government powers and individual rights.”

She says Silberman has two false assumptions. One is that Congress compelling acts of commerce is “symmetrical” with prohibiting or regulating commerce. The other is that the lack of any principle to limit Congress when purporting to regulate interstate commerce is unimportant because it concerns only government power, not an important liberty interest of individuals.

Silberman’s supposed symmetry between compulsion and regulation ignores the momentous invasion of liberty by the former. If compulsion is authorized whenever Congress touches anything affecting commerce, this Leviathan power dwarfs all other enumerated powers.

Seventy-five years ago, the Supreme Court stopped defending many liberty interests it decided were unimportant. Since the New Deal, Foley says, the court has, without “textual or even contextual basis,” distinguished between economic and non-economic liberty. The latter has received robust judicial support. But economic liberty — freedom of individuals to engage in, or not engage in, consensual commercial transactions — has received scant protection against circumscription or elimination by government. This denial of judicial protection has served the progressive agenda of government supervision of economic life.

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AidData 2.0

For a few years now, I have been involved with a group of scholars developing the world’s best and most comprehensive database on foreign development assistance.  This project is known as AidData.org.

This week we are excited to launch AidData 2.0.  Here are a few of the highlights:

  • A brand-new AidData Research Brief series, which is designed to make research more widely accessible to policymakers, development practitioners, journalists, think tanks, and the general public.
  • AidData Raw, which is a new repository of stand-alone datasets that have not yet been vetted for inclusion in the main AidData database. AidData Raw includes geo-location, project evaluation, and non-DAC donor datasets, as well as links to the International Aid Transparency Initiative (IATI) registry of aid activities.
  • An extensive collection of replication datasets (and computer code) associated with influential aid allocation and aid effectiveness studies.
  • The much-anticipated AidData 2.0 Research Release, which includes all of the latest OECD CRS data, the extensive collections from non-OECD collections gathered previously, plus new data from India, Kuwait, Saudi Arabia, UAE, Islamic Development Bank, Arab Fund for Economic & Social Development, etc.
  • Two new datasets for researchers who study aggregate aid flows: one donor-recipient-year dataset (based on the AidData 2.0 Research Release) and one financing agency-recipient-year dataset (based on the AidData 2.0 Research Release).
  • New data coverage and completeness metrics to give users a “bird’s eye view” of the database
  • Sectoral dashboards (coming soon!) that present tabulations of aid data along a number of important dimensions.

Governments around the world have a long history of providing development assistance to developing countries, but data on that aid is often unavailable, hard to get, and scattered around the globe.  AidData 2.0 represents the best ongoing efforts to understand development assistance and to make data on aid freely and widely available to all.

[In an earlier post I highlighted an article of mine that uses AidData]

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The media has been having a field day with the anti-intellectualism exhibited by the top Republican candidates for President. Herman Cain’s recent claim (“We need a leader, not a reader”) is the most recent bit of evidence. Fair enough. But is there anything to suggest that the left has raised the intellectual bar? Not according to James Taranto (“The Brain-Dead Left”) in the WSJ .

Taranto considers the Left’s embrace of the OWS crowd and its efforts (usually ineffective) to extract a core message from their activities. He recounts a recent event where the protestors gathered around a CitiBank branch and screamed.

These are college students, acting like 2-year-olds throwing a tantrum. What does that tell you about their critical thinking skills–and about the standards of American higher education? The likes of the New York Times expect us to take such incoherent spasms of rage seriously as a political “movement.” What does that tell us about the standards of the liberal media?

He arrives at a simple conclusion: “The left’s embrace of a ‘movement’ based on nonsense is a symptom of its own intellectual bankruptcy.”  To be fair, movements don’t articulate arguments. Policy entrepreneurs articulate arguments and, if they have sufficient skill (e.g., Edmund Muskie), they may be successful in channeling a movement’s energy behind their proposals. But this has yet to happen with respect to OWS. Taranto suggests that this is because the left simply lacks the intellectual firepower.

Because so many intellectuals are on the left, the intellectual dissolution of the left over the past few decades has been easy to overlook. But really, with the exception of same-sex marriage, can you think of a single new idea that has come out of the left since Lyndon Johnson was president? The ObamaCare case illustrates the point beautifully: The so-called individual mandate was originally a conservative idea–though, to be sure, one of the worst conservative ideas ever. But whereas a progressive of Obama’s age is at least capable of borrowing bad ideas from the right, the next generation screams at banks.

Taranto seems to overstate his case. There have been some—not many—big ideas, albeit few that have gained traction. Yet, having spent some time examining the policy debates of the past several decades in the areas of macroeconomic, regulatory and social policy, there seems to be clear evidence that in the war of ideas, the left has played a diminished role. In areas like entitlement reform, for example, there are multiple arguments coming from the right. The best the left can do is tactically frame the proposals (e.g., as “risky privatization schemes”) and then deny that a problem exists.

Certainly, this is something relatively new. From the Progressive Era through the Great Society, the left was a source of intellectual dynamism, generating research and arguments that found an expression in core public policies and institutions. Certainly, many of the ideas were bad or naïve, but that’s beside the point. The turning point seems to come during the 1970s, when the de facto exclusion of conservative intellectuals from the nation’s universities led many to gravitate toward policy relevant research at think tanks. They were developing model regulations and policy proposals—and often disseminating them through popular venues—while tenured intellectuals chased Foucault and postmodernism and generated scholarship that was both opaque and designed to appeal to fellow academics.

If the right has prevailed in the war of ideas—and I think there is good evidence to support this contention—it has often failed in translating these ideas into public policy, even when it has prevailed at the polls. Yes, it succeeded in making the case for tax cuts and the elimination of AFDC, but this was low-hanging fruit. But on larger issues such as entitlement reform–those that would require that leaders play an educational role and impose politically unpopular solutions–the results have been minimal or the opposite of what one might have expected (e.g., the Medicare Modernization Act).

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Presidential candidate Mitt Romney isn’t running or even “walking” away from the health care plan he helped enact in Massachusetts while governor of that deep blue commonwealth.*  Indeed, he recently had this to say about it on Fox News:     

If it hurts me politically, it’s a consequence of the truth. I am not going to walk away from that. It’s right for states to come up with their own solutions. I doubt other people are going try and follow the one we put together. Maybe learn from our experience. Maybe come up with something better. But the wrong course is to have the federal government impose its will on the entire nation.

You gotta give Romney credit for being imaginative in trying to justify his past positions and policies.  The federalism spin on RomneyCare, in particular, nicely allows him to skirt the hypocrisy/flip-flop charge and to criticize the much-derided ObamaCare.  Indeed, if sincere, it isn’t a bad approach to American governance (except that few really believe it when it runs contrary to their policy views — see the Right on gay marriage, see the Left on abortion restrictions).

Now comes the “but.” 

But, even diehard advocates of federalism who are concerned about liberty should have serious doubts about Romney based on RomneyCare.  What Romney is saying by refusing to walk away from his program and its individual mandate is that he still believes the government should coerce individuals into buying something that they do not want or do not believe they need.  He just doesn’t want the federal government to do it. 

This position provides little consolation for those of us who do not want the government at any level to be able to coerce individuals into buying something as a condition of living (which is different from having to buy insurance as a condition of driving on public roads).  Note that I’m not making a constitutional argument since Massachusetts may well allow such things according to its constitution.  I’m simply concerned that Republicans may nominate someone who does not respect individual rights sufficiently to defend them in cases where a piece of parchment fails to forbid violations of those pre-political rights.  Romney’s stance suggests a type of collectivism that should be impugned, not embraced, by Republicans even if some of its members (and its arm, the Heritage Foundation) are willing to defend that repugnant idea. 

* However, he hasn’t exactly been standing up for his previous pro-choice position.

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More on Newt

I’ve never been much of a fan of Newt Gingrich, although I find him oddly entertaining at times. The more attention he gets, the more he speaks and writes. The more he speaks and writes, the greater the probability that he will slip off the rails. Now that he is rising in the polls, the critics are emerging from across the political spectrum. In a recent post, for example, Grover  reminded us of Newt’s embrace of governmental expansion and his desire to spend $20 billion to incentivize private space travel.

Of course, private space travel has always been one of Gingrich’s loves. As evidence of his tendency to slip off the rails, one can do no better that turn to his discussion of private space travel in his classic To Renew America (p.192).

I believe that space tourism will be a common fact of life during the adulthood of children born this year, that honeymoons in space will be the vogue by 2020. Imagine weightlessness and its effects and you will understand some of its attractions.

When I combine images of the former speaker and the attractions of weightless honeymoons, all I can do is recall the tagline from the movie  Alien. “In space, no one can hear you scream.”*

Steve Chapman presents a particularly entertaining critique of the former speaker in today’s Reason.  Here is but one taste of Chapman’s piece:

Other GOP candidates sound like they are merely campaigning for office. Gingrich, however, hurls verbal thunderbolts like Zeus, as the lights flicker and the earth shakes. Hopelessly in love with the sound of his own voice, he exhibits a stern, overbearing self-assurance that gives his pronouncements weight even when he is uttering nonsense.

Indeed, Chapman describes one of Gingrich’s recent pronouncements as “a riot of cliches, non sequiturs, and mystifying tangents.”

It seems unlikely that Newt will have much staying power. But for the time being, it may prove entertaining to hear him once again draw on his deep well of Toffleresque third wave thinking to defend positions he once rejected or reject positions he once embraced.

* Thanks to the Pileus readers who correctly noted that this line was NOT from 2001: A Space Odyssey.

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The drama continues as the Super Committee approaches its deadline next week. It seems as if much of the GOP rank-and-file would prefer $1.2 trillion in sequestration to additional taxation. Democrats, it would appear, would prefer sequestration over entitlement cuts without taxation. As a piece on Politico notes:

There isn’t a shred of bill language circulating publicly and no scent of a bipartisan deal before a Nov. 23 deadline to show the public how a panel granted such sweeping authority is trying to solve America’s great fiscal crisis.

Of course, there is no reason to believe that anything the Super Committee does will come even close to solving “America’s great fiscal crisis.”  As an analysis by the Peter G. Peterson Foundation notes regarding the Budget Control Act:

Before the BCA was enacted into law, federal debt was projected to soar to 187 percent of GDP by 2035, according to the Congressional Budget Office (CBO) current policy baseline.  After enactment of the BCA, the foundation projects that federal debt will reach 164 percent by 2035 and climb to 186 percent of GDP by 2038. In other words, the new law delays the long-run growth of debt by only 3 years.

As for sequestration, the cuts of some $54.7 billion per year in defense and $54.7 billion per year in domestic would not come close to a serious exercise in austerity. The $3.73 trillion in federal outlays (2012, estimated) would have to be slashed to $3.6 trillion, well above the $3.5 trillion of 2010.  It might prove fun for analysts to use the event to reinforce existing political narratives, but the magnitude of the cuts is rather underwhelming, particularly when one places it in context of the larger fiscal gap and the long-rune fiscal problems the nation is facing.

Of course, if we can’t find $109 billion in a $3.7 trillion budget, imagine the difficulties the future will hold.

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Recent polls have Ron Paul at 19% in Iowa (where turnout is traditionally low) and 17% in New Hampshire (where turnout is usually very high). And I found this interesting:

Paul’s contact rate with voters is the only one that matches Romney’s, at 52 percent in New Hampshire. The rate at which his campaign is able to bring those likely voters into the fold is 22 percent, half that of Romney at 44 percent. “A lot of people aren’t giving him the press that he needs,” said Kristine Haase, 26, a customer service representative in rural New Hampshire. “There’s more people supporting him then they really know.”

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Thinking about Gingrich?

1994 seemed like the start of a great era for limited government conservatives, and Newt Gingrich played a big part in giving many hope that the rhetoric of the Reagan Revolution would finally be matched with substantial policy changes.  But hope, as we now well know, doesn’t get you very far if you really want change.  The Gingrich-led revolution didn’t really happen (even if there were some important policy changes such as welfare reform), and Gingrich himself quickly fell out of favor and left the Speakership and the House.  It is now trite to note that his recent mini-burst in the polls is a bit surprising, and his resurrection as a national political power would be the most phoenix-like occurence since Tricky Dick somehow came back to prominence after losing both the 1960 Presidential election and the 1962 California governor’s race.

Given so many libertarian and conservatives are eager to see Anybody But Romney (ABR) win the nomination, they might be thinking about supporting Gingrich as Cain and Perry struggle to hold their favor.  Well, this informative piece in National Review by Katrina Trinko might give them some pause.  In it, Trinko notes 10 things about Gingrich conservatives ought to remember before getting too excited about Newt for President.  Here are three of them, but I recommend the entire piece:

Medicare Part D.  Gingrich supported Medicare Part D in 2003 — and the ensuing years haven’t made him any less supportive of the legislation. Asked in March if he regretted supporting the plan, Gingrich responded not with an apology, but with a ringing defense: “I feel strongly that the No. 1 purpose of health care is health, and Medicare was designed in the 1960s when pharmaceutical drugs were not a significant part of how you took care of people. And for us to have a government-run health plan that said we’re not going to help you with insulin but we’ll be glad to pay for kidney dialysis is an utterly anti-human provision. And so all I was in favor of was modernizing the system to recognize modern medicine.”

Ethanol subsidies. Here’s a distinction Gingrich probably won’t want to trumpet outside of the Hawkeye State: At a National Association of Manufacturers forum earlier this month, Gingrich was the only Republican present who supported ethanol subsidies (Rick Santorum, Michele Bachmann, Rick Perry, and Ron Paul also took part in the forum). Gingrich’s support for ethanol subsidies got him into a tussle with the Wall Street Journal earlier this year. “Even Al Gore now admits that the only reason he supported ethanol in 2000 was to goose his presidential prospects, and the only difference now between Al and Newt is that Al admits he was wrong,” wrote the Journal in an editorial lambasting Gingrich’s position on the issue.

The individual health-care mandate. During an October debate, Mitt Romney zinged Gingrich on this, saying, “Actually, Newt, we got the idea of an individual mandate from you,” after Gingrich had attacked Romney’s Massachusetts health-care law as a big-government program. Gingrich initially demurred, but was ultimately forced to concede that he had supported individual health-care mandates in the past. “Finally, we should insist that everyone above a certain level buy [health-care] coverage (or, if they are opposed to insurance, post a bond),” Gingrich wrote in his 2008 book, Real Change — just one of several quotes a May Huffington Post article unearthed that showed Gingrich over the years supporting an individual mandate or something very similar (such as the bond solution).

And let’s not forget that Gingrich wants to spend $20 billion of taxpayer money to incentivize private space endeavors to explore Mars.  Great, another subsidy for things that are best left entirely to the private sector since the public benefits (especially relative to opportunity costs) are rather dubious.

Despite this, is Gingrich Version 2012 the best option among the currently viable Republican candidates for those with limited government preferences?  Or should Republican primary voters reconsider Huntsman if Gingrich, Perry, and Cain fail to provide a credible alternative to Romney?

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A few days ago, Erick Erickson at Red State wrote a dispiriting assessment of Mitt Romney, saying that he will 1) win the nomination; 2) lose to Obama; 3) kill conservatism.

Now, the first of these will probably happen, the second might happen, and the third seems more than a bit of a stretch.  It is hard to imagine anyone from either party killing conservatism.  Apparently, Erick really doesn’t like Mitt.

I’m not a Romney fan, either, for a variety of reasons I won’t get into today.  But I’ve been wondering about bigger questions.  There is virtually no chance of electing a president who shares my political values, but how important is it to have a principled president?  I think it is clear to anyone paying attention that Romney is not a principle-driven candidate, unless one counts devotion to getting oneself elected as principle.  On the other hand, I don’t think many US presidents have been highly principled, meaning that their actions have been driven by, for instance, pragmatism, expediency, vanity, or personal aggrandizement,  rather than by principle.

Romney seems in the mold of previous GOP presidents such as Dwight Eisenhower, Gerald Ford or the first George Bush: smart, decent, patriotic men, but not men who had a passion for pushing forward a coherent view of what government should and should not do.  Even the recent Bush couldn’t go much beyond fuzzy notions of compassionate conservatism.   Bill Clinton was certainly not principled (no matter how one defines the term).  And as a result we got NAFTA, welfare reform, and a balanced budgets—a better set of outcomes than any nominal Republican has delivered.

Peter Beinart argues in The Daily Beast that

It doesn’t matter all that much what Romney really believes, or whether he believes much of anything. Romney will be a very conservative president because that’s the only kind of president a Republican can be these days.

…most of the decisions a presidential administration makes flow from the character of the party itself. And in today’s GOP, that character is very, very conservative. A particularly courageous or principled president could challenge his own party’s permanent infrastructure, even at the risk of courting a primary challenge, which in recent decades has guaranteed reelection defeat. But that’s the beauty of it, my conservative friends. If there’s one thing you know about Romney, it’s that he’s neither very principled nor very courageous. So you have nothing to worry about.

I don’t mean by using the term unprincipled that Romney lacks beliefs or moral values.  I think he values the kinds of things he excels at:  hard work, problem solving, organization, civility, flexibility, patience.  His ultimate ends, though, are vague and undefined.

But I’m not sure I care that much.  The real political constraints a President Romney would have to govern under (foremost among these getting legislation through Congress) are far more potent that the President’s political principles.  Even if Barry Goldwater were to rise from the dead to take the party to the White House, he wouldn’t govern much differently from the way Romney would govern.   The positions Romney has committed to, the ideas of those he would have to govern with, the agenda’s of the coming GOP Congress, the pressure of conservative media, and a host of other factors will put the next GOP President in a pretty tight box.

I might prefer that the person in that box were fighting for the things I believe in, but the actions he is actually able to take are constrained.  There are far worse things—for conservatism and for the country—than having a very smart, hard working, sophisticated, compassionate, experienced and basically decent guy in the White House.

I think, at his core, Romney is closer to Barry Goldwater than to Nelson Rockefeller, which is who many on the right fear he really is underneath that rugged jaw and furrowed brow.  But even if he ends up acting the part of an old- school GOP moderate, conservatism will live to fight another day.

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Given the IAEA’s report this week, we should ask ourselves the counterintuitive question (for most) of whether Iran’s development of nuclear weapons might actually be a good thing for the region.  Here is distinguished international relations professor and nuclear spread optimist Kenneth Waltz on the problem of radical states getting nuclear weapons in his important book with Stanford professor Scott Sagan, The Spread of Nuclear Weapons: A Debate:

Many fear that states that are radical at home will recklessly use their nuclear weapons in pursuit of revolutionary ends abroad.  States that are radical at home, however, may not be radical abroad.  Few states have been radical in the conduct of their foreign policy, and fewer have remained so for long.  Think of the Soviet Union and the People’s Republic of China.  States coexist in a competitive arena.  The pressures of competition cause them to behave in ways that enable them to get along.  States can remain radical in foreign policy only if they are overwhelmingly strong – as none of the new nuclear states will be – or if their acts fall short of damaging vital interests of other nuclear powers.  States that acquire nuclear will not be regarded with indifference.  States that want to be freewheelers have to stay out of the nuclear business.  A nuclear Libya, for example, would have to show caution, even in rhetoric, lest it suffer retaliation in response to someone else’s anonymous attack on a third state.  That state, ignorant of who attacked, might claim that its intelligence agents had identified Libya as the culprit and take the opportunity to silence it by striking a heavy a heavy conventional blow.  Nuclear weapons induce caution in any state, especially in weak ones.

And here is the key to Waltz’s optimistic view of the spread of nuclear weapons in general:

War becomes less likely as the costs of war rise in relation to possible gain.

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Events in the Eurozone are unfolding at a more rapid pace than ever, with even the normally staid Economist warning that the Eurozone might break up, with “horrible” consequences. Indeed, while a Greek default might not spell disaster for global finance and might not even require Greece’s exit from the euro, Italy is the third-largest sovereign debtor in the world. Interest rates on Italy’s ten-year debt have leaped past thresholds some economists consider “unsustainable.”

Arguably, Italy is, unlike Greece, not insolvent, merely illiquid. It enjoys a primary surplus (revenues minus non-interest expenditures). The problem is that interest-rate rises themselves will push Italy into bankruptcy, as it cannot afford to float new debt to pay off old debt. From one perspective, Italy is suffering from (irrational?) investor contagion, a speculative attack based on a self-fulfilling prophecy. Another point of view is that investors are rationally anticipating an ECB “firehose to the Italian treasury.” The firehose, of course, is merely default in another form – but it may allow Italy stay in the Eurozone and keep European taxpayers off the hook (even as consumers get the shaft).

Furthermore, the Italian crisis came about principally because the Greek crisis has forced investors to update (more…)

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Trouble for Santorum

Here is a paragraph from a piece in today’s Politico:

For Santorum, there is the prospect of damaging political fallout: On Wednesday, the Philadelphia Inquirer reported that, while serving in the Senate, Santorum sponsored Jerry Sandusky, the former Penn State defense coordinator at the heart of the scandal, for a “Congressional Angels in Adoption” award, citing his work with a nonprofit group he founded for foster children.

I am sure Santorum is feeling sickened by this, given his consistent embrace of social conservatism.

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The Question of Upward Mobility

Scott Winship has an interesting essay (lead story in this week’s print National Review but also available here) entitled “Mobility Impaired: The American Dream Must Move From the Bottom Up.” This is an issue that seems quite important to my students, many of whom are wondering whether the $50k+ per year education will bear fruit.

According to the research reviewed by Winship, there is clear evidence in the US of “pervasive upward absolute mobility” –albeit less mobility than in other wealthy democracies—but this is far less true when looking at the bottom:

What is clear is that in at least one regard American mobility is exceptional: not in terms of downward mobility from the middle or from the top, and not in terms of upward mobility from the middle — rather, where we stand out is in our limited upward mobility from the bottom. And in particular, it’s American men who fare worse than their counterparts in other countries. One study compared the United States with Denmark, Norway, Sweden, Finland, and the United Kingdom. It found that in each country, whether looking at sons or at daughters, 23 to 30 percent of children whose fathers were in the bottom fifth of earnings remained in the bottom fifth themselves as adults — except in the United States, where 42 percent of sons remained there.

The essay considers the role of education, divorce and race in mobility from the bottom and has some interesting reflections on the political and normative implications.

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Senator Chuck Schumer (D-NY) seems pretty convinced that the Super Committee is going to fail and the blame will fall with the Republicans. As he predicted recently:

“I don’t think the Super Committee is going to succeed because our Republican colleagues have said ‘no net revenues…When Democrats move too far left, we lose. We’re now — the basic mainstream of Democrats…we’re willing to move to the middle,” Schumer said. “They are not willing to do any revenues.”

There is news, contra Schumer, that Republicans on the Super Committee may be willing to accept some tax increases (or revenue enhancements, if you will). As NPR reports:

GOP aides said Tuesday that a plan floated by Republicans, including Tea Party favorite Sen. Pat Toomey of Pennsylvania, is one that would place sharp limits on the total amount of tax deductions and credits that a person could claim, in exchange for significantly lower income tax rates. At the same time, Republicans are willing to accept an about $300 billion net increase in individual income tax revenues.

Eliminating tax expenditures would simplify the tax code while reducing the role of the “hidden welfare state.” Despite the fact that the largest tax expenditures overwhelmingly benefit top earners, the Left so often opposes cutting expenditures (except those for “big oil,” of course), and fetishizes marginal rates. As the story notes: “Aides to supercommittee Democrats pushed back sharply, saying the GOP plan for a top individual tax rate of 28 percent would give wealthier earners large tax cuts while many middle income taxpayers would lose tax deductions important to them.”

Given the long-term debt problems, I am hesitant to support cutting marginal rates at this point. But one thing I know for certain, if you raise marginal rates without cutting tax deductions, credits, etc., you only increase the incentives for tax avoidance and the ultimate impact on revenues. Congress could claim that it had finally created jobs. Alas, they would be for accountants and tax attorneys.

I have to wonder (1) whether Toomey et al are serious about tax reform or simply engaging in tactical maneuvers; (2) whether any package that included tax increases would be DOA in the House and Senate, and (3) whether forced sequestration would prove more appealing to a majority of House Republicans than tax hikes without meaningful entitlement reform.

The next few weeks should provide answers to these questions.

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The Onion or Reality?

From the Heritage Foundation yesterday:

President Obama’s Agriculture Department today announced that it will impose a new 15-cent charge on all fresh Christmas trees—the Christmas Tree Tax—to support a new Federal program to improve the image and marketing of Christmas trees.

When I first read this story, I thought for a second it was an Onion-like spoof of the Obama Administration.  But I should have known better since this type of thing is standard operating procedure in the mixed economy we have had in the US for some time now.

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IAEA Report on Iran

The report is out.  Here is a link.  More on this soon.  Here is a key paragraph from the summary:

The Agency has serious concerns regarding possible military dimensions to Iran’s nuclear programme. After assessing carefully and critically the extensive information available to it, the Agency finds the information to be, overall, credible. The information indicates that Iran has carried out activities relevant to the development of a nuclear explosive device. The information also indicates that prior to the end of 2003, these activities took place under a structured programme, and that some activities may still be ongoing.

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I thought I would throw in a little economic research to support Grover Cleveland’s point:

Based on a panel of quality of life and business environment measures, households prefer MSAs in warm coastal areas and non-metropolitan locations, while firms prefer large, growing cities. In addition, cities with improving business environments acquire increasing shares of workers, especially workers with high levels of human capital; cities with improving consumer amenities become relatively more populated by retirees.

Further analysis of individual level migration decisions indicates that regardless of marital status, young, highly educated households tend to move towards places with higher quality business environments. This tendency is especially pronounced among highly educated couples who are more subject to job market co-location problems. In contrast, regardless of education, couples near retirement tend to move away from places with favorable business environments and towards places with highly valued consumer amenities. These patterns help explain why areas unattractive to both households and business have struggled, as with upstate New York, while the sun-belt and other regions are thriving.

From Chen and Rosenthal (2008). They argue that household-preferred areas will tend to have low wages and high rents, while business-preferred locations have high wages and high rents.

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More on Choice

A few thoughts on Grover’s posting and the related posts that will not fit in the comment box but might prove interesting since it really touches on a core question: is everything a choice?

First, everyone faces tradeoffs and every decision carries opportunity costs. We make explicit and implicit adjustments at the margin to try to find the optimal mix of the things we value. Excuse the autobiographical note, but I have tried to explain this very recently to one of my adult sons. I made a set of decisions, all of which carried tradeoffs. Yes, I chose a job in the Northeast, so there were constraints that might not have existed elsewhere.

  •  We wanted to live in a house that was walking distance from the university (here, we could afford a small house and one car, or we could have two cars but that would force us to rent and defer buying a house).
  • We didn’t want to send our kids to daycare. Thus, when my wife couldn’t be home, I was home and then I worked evenings and weekends to make up for lost time.
  • We wanted to be able to pay for our children to go to college without loans and save money for retirement, so we made due with a small house even when the sirens were calling us to buy up on very attractive terms.
  • Although there were opportunities to make more money in consulting, this would have required being away from my family—a tradeoff I was unwilling to make–so we made due with more time together, and far less disposable income.

There were always a set of things my family and I valued and, over the years, we have made adjustments at the margin to get what we viewed as the best possible mix. Because every choice carries tradeoffs, many of the decisions were not joyfully made (who doesn’t want a bigger house, faster cars, better stuff in general). Moreover, some of the decisions we thought were the best turned out to be poor decisions and there is no claim here that the decisions we made (and the values they represented) could or should be universalized. I fully understand the desire to live in a world without tradeoffs, but one of the big lessons of life is a simple one. Where there are choices, tradeoffs are impossible to avoid.

Second, life is path dependent in nature and often we do not realize that decisions made at time 1 are going to change the nature of the tradeoffs we face at time 2.  Young adults burdened with student debt quickly discover this truth, often to their dismay. Yes, one can always choose to do something else—who hasn’t had the dream of pulling up stakes and touring with a blues band? But obligations we voluntarily incur at time 1 limit the opportunity set available at time 2 (“Damn, that’s right, kids have to eat, student loans don’t go away, I can’t sell my house at a price that will cover the outstanding mortgage”).

As a side note, I think we often treat the issue of choice asymmetrically, viewing our triumphs as a product of the correct decisions we have made and the constraints as a product of larger environmental, social, or economic forces that are beyond our control. In reality, some of our triumphs are a product of decisions others have made (e.g., funding our educations, deciding to inculcate a particular set of values); some of the constraints are products of decisions we have made (“Hmmmm….I guess I should not have incurred debt to become a puppeteer or an attorney”). Unfortunately, I have the real sense that there are forces beyond our control that are becoming a larger part of the story and, for many, placing significant constraints on their agentic capacities.

This brings me to the third point: the decisions we make collectively—or at least, those that are made on our behalf—may dramatically limit the opportunities of those who follow us. Having just given a lecture on the structural debt and long-term unfunded liabilities, I find it particularly sobering that my students will likely be forced to devote half their incomes to taxation by the time they are my age as a result of the design of our entitlement programs, demographic trends, and the fecklessness of the bifactional ruling party. This will have long-term consequences for their disposable income, the rate of growth, etc., making the set of options before them far worse than those faced by earlier generations.

Policy decisions can also enhance opportunities (e.g., by facilitating growth, extending life expectancy, supporting universal literacy, etc). But any student of public policy and political economy know that claims to expand opportunities often fail to deliver (e.g., they are easily gamed and often serve as a cover for transfer-seeking behavior. How is that “ownership society” working?).

Bottom line: everything isn’t a choice, although much is. Where there is choice, tradeoffs are inevitable. Given that the decisions we make today will enhance or constrain the opportunities of those who follow us, we should be more diligent in considering issues of intergenerational equity.

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This might be obvious to our intelligent readers.  But it is worth noting since it is so frequently overlooked.  From Megan McArdle:

Living in a blue state is a choice.  If coming to New York meant that you had to put four people in a three bedroom apartment that’s uncomfortably far from a subway line, instead of buying a nice little condo in Omaha, this does not mean that you are not “really” better off than your counterpart in Omaha; it means that you have chosen to consume your extra wealth in the form of “living in New York” rather than in the form of spacious real estate, cheap groceries, and an easy commute.

There is a right to life but not a right to live anywhere you want regardless of your ability to pay.  And life is all about trade-offs – so our politics should be immune to those who would like others to bear the cost of their choices.  Yup, I’m tawking to many of yous guys in the Northeast ;-)

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Kevin Carson was good enough to drop by and comment on my posts about his book, Studies in Mutualist Political Economy (here and here). I copy the comments below with my responses:

(Kevin) Thanks again, Jason. In general, I don’t think any paradigms are falsifiable; you can add epicycles to anything. And I think a revived LTV contributes analytical insights that are obscured by vanilla-flavored marginalism (like the normal relationship between cost and price for reproducible goods, and the intersection of the Tuckerite theory of artificial property rents with the Ricardian theory of rents as a subtraction from wages).

I see the subjective mechanism for the LTV not so much as moral as — believe it or not — praxeological.

My response: (more…)

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Certainly those participating in the Occupy movement are a diverse group of individuals.  But stories like this from the Nation only suggest that a fair number of them have to be absolute fools or at best adult-sized children:

A few years ago, Joe Therrien, a graduate of the NYC Teaching Fellows program, was working as a full-time drama teacher at a public elementary school in New York City. Frustrated by huge class sizes, sparse resources and a disorganized bureaucracy, he set off to the University of Connecticut to get an MFA in his passion—puppetry. Three years and $35,000 in student loans later, he emerged with degree in hand, and because puppeteers aren’t exactly in high demand, he went looking for work at his old school. The intervening years had been brutal to the city’s school budgets—down about 14 percent on average since 2007. A virtual hiring freeze has been in place since 2009 in most subject areas, arts included, and spending on art supplies in elementary schools crashed by 73 percent between 2006 and 2009. So even though Joe’s old principal was excited to have him back, she just couldn’t afford to hire a new full-time teacher. Instead, he’s working at his old school as a full-time “substitute”; he writes his own curriculum, holds regular classes and does everything a normal teacher does. “But sub pay is about 50 percent of a full-time salaried position,” he says, “so I’m working for half as much as I did four years ago, before grad school, and I don’t have health insurance…. It’s the best-paying job I could find.”

The Occupiers are making it difficult to be generous to their plight.  Even if misled by “society”, parents, universities, guidance counselors, and other adults not thinking through the costs of such decisions, how can one be upset at the “system” when you go into debt to be a puppeteer or don’t exactly make a lot of money teaching drama in an elementary school!*

* To be frank, is it really the best use of scarce resources (money and student time) to even have a drama teacher at an elementary school?

HT: Reason

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One highlight of presidential elections is the forecasts and the technical debates over why one model is potentially superior to others. For those who are starting to think of 2012–and the forecasts–Nate Silver (“Is Obama Toast? Handicapping the 2012 Election,” NYT) provides an entertaining tutorial on forecasting and walks through a simple model which takes into account three factors: presidential approval in November 2011, economic growth in 2012 and ideology of the challenger. Bottom line:

With…Romney the more likely nominee, the odds tilt slightly toward Obama joining the list of one-termers. It is early, and almost no matter what, the election will be a losable one for Republicans. But Obama’s position is tenuous enough that it might not be a winnable one for him.

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  • Libertarianism.org – Finally! A non-technical, one-stop shop for the major ideas in the philosophical tradition of liberty. Cato Institute project.
  • Governance Without a State: Policies and Politics in Areas of Limited Statehood (Columbia UP) – File under “order in anarchy.” Mostly European scholars giving somewhat different takes than you get with the UK-US “economics of anarchy” research. Nothing blindingly new to students of Olson, Ostrom, and Axelrod, and many of the contributions simply address political economy issues in developing countries, not “failed states” or “anarchies” strictly defined, but the chapters by Schuppert and Chojnacki & Branovic are worth reading.

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Footballers and the Top 1%

I looked today at some data on the changes in top division/Premier League footballers (soccer players for Americans) pay between 1985 and 2010 here in the UK. According to figures compiled by the Professional Footballers Association average pay increased from £1000 per week in 1985 to £33,000 per week in 2010 – an increase of 3,300% over this period (see sportingintelligence.com). Needless to say, this means that ‘the gap’ between the wage of the average worker and that of these particular sports-stars has exploded over the last 25 years – much in the same way that ‘the gap’ between CEO pay and that of the average worker has mushroomed. Indeed, increases in CEO pay though far outstripping that of average workers have been lower than those enjoyed by top flight footballers.

These figures clearly put footballers in the ‘top 1%’ – but does anybody seriously believe that football players have achieved these gains at the direct expense of the average worker or that there is some sort of sinister elite conspiring to raise footballers pay? I think not. The reality is that a very large number of people who have seen only moderate increases in their wages/salaries over recent years have been willing to spend a higher proportion of their income watching football. Many average workers have willingly handed over a part of their salary to watch games – and many more have done so indirectly by boosting advertising revenue as TV coverage has expanded rapidly in recent years. The supply of top flight players has not increased significantly over time, but the demand for their ‘services’ has rocketed – and so as a consequence has their pay.

There is, of course, no difference in principle between this explanation of footballers pay and what has happened to CEO compensation. On the one hand, globalisation has expanded the demand for those who have the skills needed to manage increasingly global businesses but the talent pool of those available to fill these roles has not expanded at the same rate – result, rocketing compensation for corporate executives. I fully accept that in some companies there may be serious principal v agent/corporate governance problems which enable executives to pay themselves at the direct expense of share-holders -though not at the expense of ‘average workers’. I also believe that bankers who are in receipt of tax-payer bailouts are indeed the beneficiaries of an injustice – the corporatist/Keynesian injustice of not allowing those who have failed to go bust. In the majority of cases though, the likelihood is that rising CEO pay is no more the result of some corporate/elite conspiracy than is the pay of footballers. The pay increases are neither ‘just’ nor ‘unjust’– they are the result of what people are voluntarily willing to pay for services that they value more than the money needed to buy them.

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