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Many people are concerned about income and wealth inequality. I am not concerned about economic inequality as such; I care about absolute poverty (how many people live in misery because of wretched physical conditions), and I care about a broad distribution of opportunity (everyone’s having a “fair shot” at economic success), but I don’t see it as a problem if someone earns vastly more money than someone else, just as I don’t see it as a problem that poorer people tend to have more leisure time than richer people. Only those consumed with envy could see economic (or leisure!) inequality simpliciter as a problem, right?

But I actually don’t think people on the left care about economic inequality or leisure inequality or inequality of looks or appealing personalities or anything else of value, in themselves, either. They care about economic inequality because they think it has negative consequences, particularly for political inequality, and because they think it is a symptom of some deeper problem. I disagree on the first count and agree on the second. Let me explain.

Does Inequality Have Bad Consequences?

The fear of the left is that in an unequal U.S., the rich will “buy” politicians to do what they want. As a result, we will get more pollution and more redistribution that flows from the middle class to the rich. The so-called “oligarchy study” (the term “oligarchy” never actually appears in the paper) went viral recently, showing that the preferences of wealthy Americans (and organized interest groups) matter for policy change in the U.S., while, controlling for the preferences of wealthy Americans, the preferences of other Americans make little difference. But wealthy Americans and average Americans actually have similar views on most issues, and where they diverge, the wealthy often have clearly superior views: less likely to loathe immigrants and gays, to fear free trade, to oppose marijuana legalization, and to be narrowly ideological. In addition, the wealthy tend to be more skeptical of taxation and welfare programs than the non-wealthy — your views on whether that difference is problematic may vary according to your views of the welfare state.

Still, let’s assume that the influence of the wealthy on U.S. politics is baleful; does that mean that growing economic inequality would reinforce that baleful influence? It remains unproven whether more inequality will mean that the rich pay more in campaign contributions and get more out in policy terms. The most likely explanation for why the rich are influential is simply that they have similar levels of education and status to politicians and move in the same social circles and care about the same sorts of things. Studies looking at how campaign contributions “buy access” to legislators generally come up with very weak results. To take just one policy example, federal air pollution regulations have always ratcheted up, and air quality in the U.S. is vastly improved relative to 50 years ago, in part due to regulation and in part to technological changes. Rising inequality certainly doesn’t seem to explain these trends.

A bigger problem with the U.S. political economy Continue Reading »

There has been no shortage of corporate enemies in the past few years. There appears to be an ongoing search for firms that can be targeted as representing all that is vile, evil and oppressive. There are some good companies out there, to be certain. For example, Ross Douthat (New York Times) describes one company that has been celebrated for its humane practices. The company

was hailed last year by the left-wing policy website Demos “for thumbing its nose at the conventional wisdom that success in the retail industry” requires paying “bargain-basement wages.” A retail chain with nearly 600 stores and 13,000 workers, this business sets its lowest full-time wage at $15 an hour, and raised wages steadily through the stagnant postrecession years. (Its do-gooder policies also include donating 10 percent of its profits to charity and giving all employees Sunday off.) And the chain is thriving commercially — offering, as Demos put it, a clear example of how “doing good for workers can also mean doing good for business.”

Of course, he is describing Hobby Lobby (“the Christian-owned craft store that’s currently playing the role of liberalism’s public enemy No. 1”). While Hobby Lobby appears to have taken the role of good corporate citizen seriously, one should not expect the empirical record to matter much.

One might argue that Hobby Lobby can’t assume the position of “liberalism’s public enemy No.1″ because it is already taken by the Koch brothers. Kenneth Vogel (Politico) has an interesting piece on the behind-the-scenes calculations involving the ongoing attacks by the Senate majority leader.  While Senator Reid’s wild claims (presented in 22 floor speeches since January) are described by staffers as Reid “getting out ahead of his skis,” Vogel describes

a highly unusual election-year campaign against a couple of relatively unknown private citizens whom Reid and his Democrats are seeking to make into caricatures of a Republican Party that, on issue after issue, caters to the very rich at the expense of everyone else.

For those who do not have Senator Reid’s expansive knowledge of Charles and David Koch, Politico has an interesting quiz that provides some useful and odd background information.

 

The “license Raj” is an epithet often used for India’s byzantine code of rules and regulations on businesses under the central-planning system finally dismantled in part in the 1990s. The Economist applies the term to the United States, which buries entrepreneurs under layers of federal, state, and local red tape. According to the Competitive Enterprise Institute, the gross cost of federal regulations alone amounts to about $15,000 per household per year, and that doesn’t include the accumulated debt of lost growth due to regulation, which may be much higher. And none of that includes the costs of state and local regulations, such as occupational licensing, which has increased dramatically in the last 60 years, now covering up to 35% of the workforce.

The Economist cites thumbtack.com surveys showing that small business owners care more about the burden of regulation than taxation (about two-thirds of them say that they pay their “fair share” in taxes, as opposed to more or less than their fair share). This preference comes as no surprise to me. Apart from the soul-deadening effects of endlessly parsing legalese and filling out form after form, regulation also tends to substitute the grand (or petty) design of a bureaucrat or politician for the price signals the market provides. When regulation limits competition under the pretense of ensuring quality for the consumer, incumbent producers benefit, but potential upstarts lose, and so do consumers. There is a net cost to society. When local governments require construction companies to obtain permits for every little thing they do, rather than simply requiring them to post a bond and pay for any damage they may cause to local infrastructure or neighboring buildings, less desirable construction happens, and the costs of regulatory compliance are also pure loss.

The thumbtack.com ratings of state regulatory environment correlate highly with both Chief Executive magazine’s survey of CEOs on state regulation and with the regulatory index found in Freedom in the 50 States. CEOs of large companies and small-business owners really want the same thing: a streamlined government that works. We’re not as bad as Argentina or Belarus, but here in the U.S., we suffer from plenty of kludge, and everyone pays the price.

I returned Sunday from the Porcupine Freedom Festival, and here’s a selection of PorcFest stories that have come out so far (I will continue updating this post over the next days and weeks – I know New York Times Magazine, Concord Monitor, and The Economist will have stories as well):

  • Union-Leader on the “DIY” theme
  • Yahoo.com: brief story on Bleish-Bush family
  • “Guns, Weed, and Bitcoin: Among the Freestaters” from Free Beacon – a fairly well-rounded piece, but mixes some ironic commentary in with the reporting and focuses on the outre
  • “Inside the Libertarian Version of Burning Man” – from the Washington Post, focuses very one-sidedly on the outre – yes, there was one guy in a loincloth, and apparently another guy had an extreme mushroom trip with no long-lasting ill effects, but what about the 200 kids and their families, the new technologies on display, the great speakers including overstock.com CEO Patrick Byrne, etc., etc.? And gotta love “majority white male.” I would guess only a very narrow majority of attendees fit both categories. Basically meant to make smug proggies feel superior to scary libertarians.
  • Update: The Economist story now out – short but largely fair, despite the silly headline, & well-written (“I’m an incrementalist,” explains Jason Sorens, the subdued intellectual who dreamed up the Free State Project while he was getting his PhD from Yale. Now a lecturer at Dartmouth College in Hanover, he is eager to use New Hampshire to test libertarian theories about enlightened self-interest and reciprocal altruism, small government and large networks of voluntary institutions. “We don’t have all the answers,” he says, “but it’s worth the experiment.”)
  • Update #2: Two Concord Monitor stories

This has not been a good Supreme Court term for the Obama administration. Damon Root (Reason) has a quick and delightful overview of some of the key decisions. The most recent defeat—the Hobby Lobby decision—can be viewed as a loss for the administration, but it may provide some political benefits with respect to fundraising and continuing the “war on women” meme, as Byron Tau (Politico) explains:

Shortly after the court’s 5-4 decision in Burwell v. Hobby Lobby, which said for-profit employers with religious objections can opt out of providing contraception coverage under Obamacare, the liberal fundraising emails went flying. Democratic candidates and liberal groups were seeking to collect scores of new email addresses and bank last-minute cash contributions in advance of the monthly FEC deadline at midnight Monday.

As Megan McArdle notes in the conclusion to her interesting discussion of the decision (Bloombergview):

Presumably, the administration hates this ruling–but at the same time, it has to love the passion that it has engendered. This is going to be fundraising gold for Democrats for the next two years. In a politics that cares more about symbolism than substance, that too was predictable. And it’s hard to avoid the conclusion that this was the prediction that mattered more. Politics may not be rational, but it still has its own remorseless logic.

Jeremy Peters and Michael Shear (New York Times) argue that this was also a decision that the conservative movement can run with: “The ruling comes as social conservatives have suffered setbacks on another high-profile social issue, same-sex marriage, and leaders predicted Monday’s decision would infuse Republicans with energy as they fight to take control of the Senate this year and reclaim the White House in 2016.” Their analysis suggests that the decision could contribute to a revivification of the culture wars that defined much of the politics of the past few decades.

I hope that Peters and Shear are wrong. Any efforts of Republicans and Democrats to reignite the tiresome culture wars will threaten to draw attention away from the far more pressing issues of late, e.g., the ongoing growth of executive power, long-term fiscal instability, the failure of immigration policy, targeted killings abroad, and the expansive violation of civil liberties in the name of national security. These are the kinds of issues that sizable parts of both parties and the public should agree are of sufficient importance to avoid any of the short-term tactical appeals offered by the culture wars.

Not a Bad Week…

It remains unclear where we are heading in Iraq and whether the IRS investigation will gain much traction. But this was a pretty good week for the Supreme Court.

Wednesday, SCOTUS decided unanimously that police need warrants to search cellphones. As the New York Times reported:

“While the decision will offer protection to the 12 million people arrested every year, many for minor crimes, its impact will most likely be much broader. The ruling almost certainly also applies to searches of tablet and laptop computers, and its reasoning may apply to searches of homes and businesses and of information held by third parties like phone companies.”

Andy Greenberg has a useful piece on the decision at Wired.

Thursday, SCOTUS decided unanimously that three of President Obama’s recess appointments to the National Labor Relations Board were unconstitutional. The New York Times editorial board was not happy (insert look of surprise here). Neither was Justice Scalia, who wrote:

“A self-aggrandizing practice adopted by one branch well after the founding, often challenged, and never before blessed by this Court—in other words, the sort of practice on which the majority relies in this case—does not relieve us of our duty to interpret the Constitution in light of its text, structure, and original understanding,”

While Scalia would have liked more, I still rank this a win.

The fact that both of these decisions were 9-0 and both moved the ball in the correct direction should give us some pleasure as we enter the weekend.

A few weeks ago I posted on the distribution of war surplus to state and local law enforcement agencies under the DOD’s Excess Property Program. This is all part of a larger trend detailed in the ACLU’s new report, War Comes Home: The Excessive Militarization of American Policing. From the executive summary:

This investigation gave us data to corroborate a trend we have been noticing nationwide: American policing has become unnecessarily and dangerously militarized, in large part through federal programs that have armed state and local law enforcement agencies with the weapons and tactics of war, with almost no public discussion or oversight.Using these federal funds, state and local law enforcement agencies have amassed military arsenals purportedly to wage the failed War on Drugs, the battlegrounds of which have disproportionately been in communities of color. But these arsenals are by no means free of cost for communities. Instead, the use of hyper- aggressive tools and tactics results in tragedy for civilians and police officers, escalates the risk of needless violence, destroys property, and undermines individual liberties.

The Guardian has a useful overview of the report, and notes:

The findings set up a striking and troubling paradox. The Obama administration is completing its withdrawal from Afghanistan, and the US is on the verge of being free from war for the first time in more than a decade; yet at the same time the hardware and tactics of the war zone are quietly proliferating at home.

This does not seem to be much of a paradox, given the focus on federal, state and local policy since 9/11, the heavy investment in “homeland security,” and the federal government’s practice of providing the surplus tools of war to “first responders,” often times for free. In some ways, this was all too predictable.

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