Sins that cry out to heaven for justice

Instapundit on the Duke Lacross rape case:

SAW AN EXCELLENT PANEL THIS EVENING ON THE DUKE LACROSSE RAPE HOAX, featuring K.C. Johnson (author of Until Proven Innocent, with Stuart Taylor), James Coleman, Mike Gerhardt, Lyrissa Lidsky, and Angela Davis (no, not that Angela Davis), author of Arbitrary Justice: The Power of the American Prosecutor, which I bought on Kenneth Anderson's recommendation and which is excellent, especially as a companion to K.C.'s book. The discussion was excellent and very fair. Lots of talk about what Nifong got wrong, plus the important point that the kind of misconduct for which Nifong was disbarred and punished is committed regularly by prosecutors who almost always get off scot-free even when it's exposed. We really need a better mechanism for policing prosecutorial misconduct, and it's not clear what that should be -- independent audits of cases by a sort of inspector general? I'm not sure.

For a lot of conservatives, this case was about political correctness.  The horrifying thing is that the lacross players didn't get treated specially because they were white; it's only that because they're white and rich, we noticed.  When a poor black kid gets railroaded on a shaky eyewitness identification, who writes that story?  Without a good lawyer to defend them, how do they even find out how shaky the prosecution case is?  Prosecutors abuse their discretion every day, and we look the other way because most middle class people don't expect to end up in the justice system, so we write off the prosecutor's nearly god-like powers as the price of fighting crime. 

Learned behavior

Laura of 11D ponders this David Brooks op-ed and looks for a solution:

What's to be done about those gaps in parenting skills? The parents aren't crack addicts, so social services will never get involved. This is where the schools have to step in. They have to level out these differences. All day nursery schools. Free books for toddlers.Towns need to offer parenting classes and organize babysitting cooperatives. Churches have to organize parent groups.

The problem is, parents who let their kids cut summer school probably aren't going to force them to go to all day school programs.  Or read to them.  Or show up for parenting classes.  The parents are choosing to let the kids do what they want either because they don't value school, or because they are too stressed or exhausted or possibly too lazy to engage in the confrontation and micromanagement required to force their children onto a different path.

High income parents do these things because a) they view them as their own path to success b) their social circle values these activities, and punishes parents who do not do them and c) people with more satisfying jobs have more emotional energy for the unpleasant work of parenting--they have room left in the mental "chore" basket.  I don't know what sort of social program can change any of these factors.

More government genius

The market is collapsing because of excess housing inventory.  What do we need?  Obviously, more housing inventory.

Should female olympic athletes be tested for gender anomalies?

Jessica at Jezebel says no:

The testing was originally instituted in the 60s because communist countries were accused of trying to pass men off as women in order to dominate the Olympics, but as the website Feministe points out, "Note how Soundarajan is not identified as a male [in the New York Times]. The article uses feminine pronouns, for goodness' sake. Her only crime was being intersexed, having one of those genetic abnormalities that can cause the test to yield false results. In fact, it doesn't appear that there are any cases of this kind of screening revealing men cheating by pretending to be women at this level of competition at all."

Another reason this testing is fishy: the Olympic organizers aren't testing men for genetic abnormalities. Men with Klinefelter syndrome have two X chromosomes and Y, so are genetically more similar to women than the average man. Since scientists have already proved that these genetic differences give athletes no advantage, is there any way to call this situation anything other than outright discrimination?

This doesn't seem obviously unfair to me.  Women and men compete in different classes because if they didn't, there wouldn't be any female athletes at high levels.  Testosterone is crazy that way.  So there's no reason to worry that men with an extra X chromosome have an unfair advantage in their sport.  Call me when men start competing in rhythmic gymnastics.

That said, some of the conditions, like complete androgen insensitivity syndrome, convey no advantage on female athletes, as far as I know.  There's no reason that women should be bounced from the olympics for this.  On the other hand, the woman pictured on Jezebel has some fairly masculine features, which suggest that she's getting a testosterone boost.  

Save a dollar or save a life: choose one.

Tyler Cowen begs some intellectual honesty from his own side:

That said, people on my side of the issue should admit that we could lower overall health care costs (or at least slow their rise) by having a true single-payer plan and putting most doctors on fixed salaries in small cooperatives, thereby altering their incentives to spend on wasteful capital expenditures.  (How many years would it take for costs to fall?)  That's not, however, what we'll be getting, so beware the bait and switch.  Under any plausible health care reform scenario, health care expenditures in America will rise rather than fall.  If only we had a betting market on this...

Addendum: Here is Arnold's more direct reply. 

I'll bite:  nationalizing the health care system to an NHS style system would probably save money, at least in the short run.  Obviously, if you paid doctors at the GS-15 rate, the system would cost a lot less.

But this raises a lot of questions:

• Is it politically feasible to put doctors on a GS-15 salary?  I don't see it happening; just look at the way that the AMA has skewed Medicare reimbursement rates.  And even if we did, I expect that over time you'd see a rather dramatic departure of top talent from the medical sector.  Some doctors are purely motivated by a desire to serve humanity.  Most aren't.  The government has a problem attracting the highest caliber workers because high-caliber workers do not want to be paid on a civil service scheme--not only because of the low average wage, but also because the system is set up to reward seniority and credentials, not talent. 
  
• Are government systems good at innovation?  C'mon.  The only vaguely innovative government sector is defense, which achieves that innovation by wasting money by the barrelful.  Yes, yes, the VA computer systems.  Against which, I give you . . . the rest of the government.  I can make any idea look swell if I get to pick the single successful example and ignore the other failures.
  
• Will an American national health care system look anything at all like the idealized version debated on the pages of liberal policy magazines?  No.  It will look like Medicare.
• How much money do administrative costs suck out of our wallets?  There are a lot of administrative costs in the private sector.  Advocates for single payer like to argue as if the entire administrative overhead of private insurance companies is dedicated to denying valid claims and culling sick patients out of their files.  But given that administrative costs are only 15% of private spending, and that most administrative costs are boring things like negotiating with doctors and processing claims, any savings here is likely to be a rounding error in the budget.
• How much of our capital spending is actually wasteful?  Today's wasteful capital spending is tomorrow's cheap MRI.

Most important to refute is the notion, common among less savvy healthcare advocates, that you can lower the total cost by lowering the average cost.  If you add a bunch of healthy young people to Medicare, you will lower the average cost.  But you will not lower the total cost unless you manage to spend less money on either the healthy young people, or the sick old people. None of the health care proposals this time around have a plan to spend less money on the sick old people.  And the healthy young people don't cost that much money.  Even saving a significant amount on their prescription drug bills and administrative costs, which you won't, will not generate any noticeable amount of extra cash for Fogeycare.

Right now, just about half the healthcare dollars spent in America come out of government coffers.  This is expected, in the not-too-distant future, to open up unsustainable holes in the budget. Single payer will patch those holes only if we can generate a dollar in reduced spending on the currently uncovered for every new dollar we want to spend on the sickly.  The three general proposals to do so are:

1. Reduce administrative costs
2. Squeeze out pharma profits
3. Preventative care

With administrative costs only 15% of private spending, and pharma profits about 10% of the 10% of healthcare costs represented by drug spending, that had better be some amazing preventative care.  Unfortunately, there's little good evidence that preventative care actually saves money (it may save lives); for every kidney transplant you prevent, you spend a lot of money on diabetics who wouldn't have needed one.

The only way we are actually going to save money on the system is to do less stuff.  That is politically unpalatable.  About which I'm kind of glad.

Annals of polemicism

It's hard for me to read this without thinking of Ken Rogoff's immortal open letter to Joseph Stiglitz.  Consider this passage from Professor Cochrane:

As usual, academics need to waste two paragraphs before getting to the point, which starts in the first bullet. To really enjoy this delicious prose you have to first read it all in one place.

• Many colleagues are distressed by the notoriety of the Chicago School of Economics, especially throughout much of the global south, where they have often to defend the University's reputation in the face of its negative image. The effects of the neoliberal global order that has been put in place in recent decades, strongly buttressed by the Chicago School of Economics, have by no means been unequivocally positive. Many would argue that they have been negative for much of the world's population, leading to the weakening of a number of struggling local economies in the service of globalized capital, and many would question the substitution of monetization for democratization under the banner of "market democracy." 

 

Yes, there are people left on the planet who write and think this way, and no, I'm not making this up. Let's read this more closely and try to figure out what it means.

 

"Many colleagues are distressed by the notoriety of the Chicago School of Economics, especially throughout much of the global south, where they have often to defend the University's reputation in the face of its negative image."

 

If you're wondering "what's their objection?", "how does a MFI hurt them?" you now have the answer.  Translated, "when we go to fashionable lefty cocktail parties in Venezuela, it's embarrassing to admit who signs our paychecks." Interestingly, the hundred people who signed this didn't have the guts even to say "we," referring to some nebulous "they" as the subject of the sentence.  Let's read this literally: "We don't really mind at all if there's a MFI on campus, but some of our other colleagues, who are too shy to sign this letter, find it all too embarrassing to admit where they work." If this is the reason for organizing a big protest perhaps someone has too much time on their hands.

 "Global south"

I'll just pick on this one as a stand-in for all the jargon in this letter.  What does this oxymoron mean, and why do the letter writers use it?  We used to say what we meant, "poor countries. " That became unfashionable, in part because poverty is sometimes a bit of your own doing and not a state of pure victimhood.  So, it became polite to call dysfunctional backwaters "developing." That was already a lie (or at best highly wishful thinking) since the whole point is that they aren't developing.  But now bien-pensant circles don't want to endorse "development" as a worthwhile goal anymore.   "South" - well, nice places like Australia, New Zealand and Chile are there too (at least from a curiously North-American and European-centric perspective).  So now it's called "global south," which though rather poor as directions for actually getting anywhere, identifies the speaker as the caring sort of person who always uses the politically correct word.   

 

"The effects of the neoliberal global order that has been put in place in recent decades...."

 

Notice the interesting verb tense. Let's call it the "accusatory passive." "Has been put in place.." By who, I (or any decent writer) would want to know?  Unnamed dark forces are at work.

 

"Many would argue that they have been negative for much of
the world's population... weakening ... struggling local economies"

 

I can think of lots of words to describe what's going on in, say, China and India, as well as what happened previously to countries that adopted the "neoliberal global order" like Japan, Hong Kong, and South Korea. Billions of people are leading dramatically freer, healthier, longer and more prosperous lives than they were a generation ago.

 

Of course, we all face plenty of problems. I worry about environmental catastrophes, and their political, social and economic aftermath.  Many people are suffering, primarily in pockets of kleptocracy and anarchy.  Life's pretty bleak about 5 blocks west of the University of Chicago. In my professional life, I worry about inflation, chaotic markets, and their possible death by regulation. There is a lot for thoughtful economists and social scientists to do. But honestly, do we really yearn to send a billion Chinese back to their "local economies," trying to eke a meager living out of a quarter acre of rice paddy, under the iron grip of some local bureaucrat? I mean, the Mao caps and Che shirts are cool and all, but millions of people starved to death.

 

This is just the big lie theory at work. Say something often enough and people will start to believe it. It helps especially if what you say is vague and meaningless.

Why aren't there hordes of economists studying meaningful alternatives to market capitalism?  Because we've been experimenting with various other systems--both localism and extreme centralization--for over a century, and the experiment produces the same damn result every single time:  human lives that are nasty, brutish, and short.  And no matter what the professors who signed the Milton Friedman letter may believe, we haven't discovered any alternative to neoliberal policies, other than "be sitting on commodities during a boom", which is good luck, but not really good advice.  The problem with neoliberal policies was not that they drove people into poverty, but that they weren't nearly as effective at driving people out again as we once hoped.  Yet they are still more effective than anything else we've tried.

Neoliberal policies are hated in poor countries because they are associated with economic pain.  But the association in most peoples' mind runs the wrong way, as Ken Rogoff pointed out:

Governments typically come to the IMF for financial assistance when they are having trouble finding buyers for their debt and when the value of their money is falling. The Stiglitzian prescription is to raise the profile of fiscal deficits, that is, to issue more debt and to print more money. You seem to believe that if a distressed government issues more currency, its citizens will suddenly think it more valuable. You seem to believe that when investors are no longer willing to hold a government's debt, all that needs to be done is to increase the supply and it will sell like hot cakes. We at the IMF--no, make that we on the Planet Earth--have considerable experience suggesting otherwise. We earthlings have found that when a country in fiscal distress tries to escape by printing more money, inflation rises, often uncontrollably. Uncontrolled inflation strangles growth, hurting the entire populace but, especially the indigent. The laws of economics may be different in your part of the gamma quadrant, but around here we find that when an almost bankrupt government fails to credibly constrain the time profile of its fiscal deficits, things generally get worse instead of better.

People in Nigeria, for example, tend to blame the Western bailout in the 1980s for the economic misery that followed.  But the economic misery was the result of the collapse in oil prices; the fiscal reforms were aimed at keeping a bad situation from getting even worse.

The idea that Chicago should scuttle the Milton Friedman Institute because it makes other professors unpopular with economic illiterates is shameful, and moreover, something that I presume few of these "scholars" would tolerate if the ignorant were targeting their own fields.  That this should be coming out of a university with Chicago's reputation for intellectual rigor is mortifying.

Morality and animal welfare

Right after I got out of grad school, I had a fight with a friend about veal.  Said friend loved veal, and more importantly, wanted to cook veal for me; I refused to eat it, which made him mad. It was not, he pointed out, consistent to care about veal calves but happily eat industrially farmed chicken.

"You're right," I said.  "I'm going back to being a vegetarian."

Surprisingly, this did not fill him with the thrill of victory.  He just got madder. "I don't want you to stop eating chicken," he said, exasperatedly, "I want you to start eating veal!"

Little did I suspect that I would be having some version of this conversation every time I dared blog about being a vegan.

Is it possible to be a vegan without judging other people?  It had better be, because I just don't have time to pass judgment on the overwhelming majority of people in the world who eat animal products.  Obviously, having decided that it's morally wrong to eat animal products, I can't exactly say that I think it's perfectly okay for other people to do so.  On the other hand, I recognize that the universe is a complicated place, and my moral judgements are imperfect.

Or maybe a better way to say it is that there are moral judgements, and then there are moral judgements. I wish more people would stop eating meat, but I also think it is possible to be a perfectly good, moral human being and still eat meat, in a way that I don't think it is possible to be a good moral human being and still rape twelve-year olds.  I have judged the behavior and found it wanting, but I do not judge, in any way, the people who indulge in it.  I think there's something wrong with eating meat, but I don't think there's anything wrong with meat-eaters.

If it makes you feel any better, I do eat animal products occasionally, when I am travelling and can't get anything else--I think that animal suffering deserves considerable, but not absolute, weight in moral calculations about diet.  Given the evidence that vegan children tend to be shorter and have lower IQs than non-vegan children, if I had children I would probably raise them vegetarian rather than vegan.  And I wouldn't feel bad about it, either, any more than I feel bad about animal drug testing.

But this isn't enough for many of my critics, who want me to never mention being a vegan, lest they feel bad.  Even better if I stopped being a vegan entirely, so that they wouldn't suffer with the knowledge that someone, somewhere, is enjoying a hearty bowl of split pea soup with tofu croutons.  Like most vegetarians, I suspect that my angriest critics are those who, like me, feel that eating meat is wrong--and therefore want me to do it too, so that they don't have to think about their own choices.  

Well, apologies, but I think that I have a moral obligation to be a vegan.  And I blog about it because many of my readers are vegan, and they like to read about it.  And also, because I'd like people to know that if you are thinking about animal welfare, being a vegetarian or a vegan is nowhere near as hard as you think it is--believe me, I never thought when I tried veganism for Lent that I'd be able to stick with it, but it's surprisingly easy to keep up with.

But the one reason I am not blogging about it is to make people feel bad.  First of all, this never works--if you tell people they're evil, they just get defensive.  Second of all, unless you are willing to wall yourself up in a PETA compound, it is not possible to have anything approaching decent interaction with other humans if you spend all your time judging their eating habits.  But third, and most importantly, I don't think they're evil.  It's okay.  Eat your double bacon cheeseburger.  I'll still love you every bit as much.

GDP: A few pictures are worth a book

Check out these maps of GDP

When you see the map, it becomes radically apparent just how firmly Britain was the root of the Industrial revolution.  With the lone exception of Japan, the darkest places on the map are either next to Britain, or former British colonies.  And aside from Saudi Arabia and Chile, all the growth seems to spread outward from those Anglosphere points of infection.  Nowhere, not even Saudi Arabia, has the income density of Western Europe and North America.

This map tells pretty much the same story, but adds a lot of new information:

GDP again seems to spread out from the Anglosphere infection--but only where there are ports.  Ten thousand years or so after the first humans built sailing ships for trade, the coast still matters immensely.  In fact, there are only two prosperous landlocked countries of any size:  Austria and Switzerland.  And at roughly 8 million people apiece, neither of them is what you would call "large".  It's telling that three out of four of Europe's landlocked countries are best known for their bank secrecy laws--an export that requires little effort to transport.  The energy savings of moving goods by water is so immense that a good coastline is a really good substitute for rich neighbors--think Chile.  Meanwhile, those who wonder why Africa remains mired in poverty can observe how few dark spots there are along the coasts.  In part this is horrible institutions, but it's also due to the fact that Africa has very few good sites for ports--the best ones are on the north and south of the continent.

The final map shows growth:

Growth is inversely correlated with wealth, but positively correlated with having rich neighbors.

It's a pity that geography is so rarely taught in schools above the third grade level--there's an enormous amount to learn about societies just from looking at maps.

Update  In the comments, Susan of Texas informs me that schools have started teaching geography again.  I'm glad to hear that we're finally rectifying a tragic mistake.

I know I saw that recession around here somewhere . . .

The economy grew at 1.9% last quarter.  Two thoughts.  First, the American economy is simply amazingly resilient--1.9% is cause for exultant celebration in a lot of European finance ministries.  And second, Barack Obama's campaign team is probably doing some serious rethinking this morning.

More than just a motto?

You would think that a company whose motto is "Don't be evil" could produce a cookbook that didn't use foie gras twice on a slim 43 pages.  I don't think less of people who eat meat--I recognize that they're simply making a different moral judgement than I do.  But I draw the line at gavage, which, like bullfighting, seems to me to be purely unnecessary cruelty.

Your morning smile

Modern morals

I just watched Blue Lagoon for the first time.  It's hard to believe that it was controversial when it came out--the thing could be broadcast on the Hallmark Channel without raising many eyebrows.  A modern teenager would probably be more fascinated by the way Brooke Shields' hair stays firmly planted over her breasts whenever she goes topless than the nudity, which is more hinted at than actual. 

The really fascinating thing about the film is that it basically has no plot.  The elevator pitch for Blue Lagoon would be "You love the montage scene where the teenagers fall in love, right?  What if that were an entire movie?"  It's strangely compelling, but only if you watch it the way I did--with a book.

Trade: should America go bi?

Clive Crook has an excellent piece which I think raises an implicit question:  what are good trade liberalizers to think about bilateral deals?

The dispiriting thing is that the talks could founder over the refusal to compromise, when the costs of compromise were indeed so low. (The political costs, I mean. When a country binds itself not to resort to protection, the economic costs are not just low but negative.) Governments no longer judge a successful Doha Round to be capable of delivering them a net political gain. Since that was the reason for the WTO in the first place, the game appears to be up.

Multilateral trade liberalization brought the world an awfully long way after 1945, but that era has come to an end. The trade-reform agenda is unfinished--especially in the developing world--but future progress, if any, will come from unilateral unreciprocated liberalization, or from discriminatory bilateral (or plurilateral) agreements, or some blend of the two. There has been a lot of the first lately, which is good. The danger lies with the second. It is a trend that the United States pioneered with its proliferating (until recently) regional FTAs. A rationale often offered for that approach was that regional FTAs were building blocks for broader multilateral liberalization, with the WTO presiding over the subsequent assembly. Skeptics said no: regional FTAs would complicate the system and create frictions that would make broader trade reform more, not less, difficult. I'd say the skeptics have been proven right.

The FTA tendency is capable, given an enfeebled WTO, of eventually unwinding some of what has been achieved over the past half-century. (On this, see Jagdish Bhagwati's new book.) If a growing China, India and Brazil follow the US example and use their muscle to develop their own hub-and-spoke networks of trade preference, the eventual costs in forgone trade and income could be great. The logic of trade protection never sleeps.

With Doha breathing its last, bilateral deals, or regional trade agreements, are the best liberalizers can hope for (though even that hope may be pretty anemic).  The traditional stance of ardent free-traders such as Clive and myself has been to oppose bilateral deals on the grounds that they obstruct broad multilateral action.  Well, now that broad multilateral action seems to be out of the question, we have to decide:  are they better than nothing at all?

I'm not sure.  On the one hand, they break down local interest groups that obstruct trade.  On the other hand, they can divert trade flows in ways that are even more distortionary than broad tariffs.  And they will probably create their own new interest groups--clothing retailers with relatives in the Panamanian garment trade, say--that will fight just as fiercely as the loathesome sugar lobby does today.

In pure theory, probably not.  On the other hand, bilateral deals with America could help some poor people in Latin America right now.  How many eggs am I willing to break in the hope of someday getting an omelette?

Compromise at work

I'm a "nuke the fridge" girl, myself, but James Poulos has offered a happy compromise to one of the most burning issues of our time.

The death of Doha

What to say about the most recent collapse of the Doha Round?  I feel like I've just gotten out of one of those relationships where you both knew it was over a year before it finally ended--practically relieved, really.  It's been obvious to me since early 2007 that Doha wasn't going anywhere, and going through the motions had become a painful parody.  The forward motion on trade has ground to a halt, because most trade in goods and services has been liberalised in the Western world.  The remaining issues are either sacred cows, like agriculture, or require much deeper integration of sensitive areas like finance and law.   Moreover, we're now at the point where poor nations can no longer simply free ride on rich country liberalization; to get further benefits from trade, they need to prise open their own markets, and few places have a political system capable of attacking those entrenched interests.

It's a small world after all

Arnold Kling writes:

Marc Pesce delivers a few facts and a lot of breathless prose.

Somewhere in the last few months, half the population of the planet became mobile telephone subscribers. In a decade's time we've gone from half the world having never made a telephone call to half the world owning their own mobile.

...fifty thousand years of cultural development will collapse into about twenty...each behavioral innovation is distributed globally and instantaneously...Any fringe (noble or diabolical) multiplied across three and a half billion adds up to substantial numbers. Amplified by the Human Network, the bonds of affinity have delivered us over to a new kind of mob rule...the more something is shared the more valuable it becomes...All of our mass social institutions, developed at the start of the Liberal era, are backed up against the same buzz saw. Politics, as the most encompassing of our mass institutions, now balances on a knife edge between a past which no longer works and a future of chaos.

Pesce claims that cultural change is going to accelerate. I wonder what this means for educational and political institutions.

I wonder what it means for social institutions.  In the last few months, I feel as if I've started seeing the seeds of a radical shift in social networks, thanks to the nexus of Facebook and Twitter.  Now, Washington has always been, at least for the wonk population, a pretty small town:  a friend and I recently estimated the mean time from first date to showing up at a party and having someone you barely know ask where the other person is at about 10 days.  But Twitter, and to a lesser extent Facebook, have supercharged those networks. 

Last Friday, I was supposed to meet an old friend from New York at a bar at 11th and U Street at 7.  By 5:30, thanks to IM, I was already having drinks with another friend, so we wandered over early together.  By 7:30, two other DC friends had found out about us on Twitter and wandered over.  Julian Sanchez joined us from the Subway a block away, then Dave Weigel stopped by.  Several random friends drifted past and sat down.  By 11, drinks for two had turned into drinks for 12, basically all courtesy of Twitter.

Yes, yes, I might as well just get a latte and a copy of Finnegan's Wake tattooed onto my bicep.  But there's also the fact that Facebook is keeping me updated on people I haven't seen since high school.  The big city--hell, the whole coast--is starting to feel a lot more like a small town.  Last night, one of my friends said, "I love Twitter.  I go out a whole lot more because there's always something going on."

I suspect that Twitter, Facebook, and whatever comes after them will mean denser, richer social networks in the future.  Already, email is holding people together after college a lot more tightly than the people I graduated with--the last graduating class, basically, before the Web.  People know what's going on in the lives of a whole lot more people than the mobile coastal types of yesteryear. 

This has its downsides, of course, which is why so many people flee small towns.  I've encountered widespread regret that it's becoming impossible to have a small party anymore, because the people you didn't invite always find out.  Or unwanted guests show up to your intimate soiree.  Or the broadcast invitation puts two people together who really oughtn't to be in the same room under any circumstances--someone I know in New York recently discovered that her twitters were allowing an unwanted beau to quasi-stalk one of her friends.

We're going to need to re-evolve the manners that smoothed these ripples in an earlier, more intimate time--a sort of willful blindness to the social activity going on without you.

Your morning smile

Good news

Ta-Nehisi Coates is going to be joining the blogging team at The Atlantic.  I've made no secret of my belief that he's one of the most brilliant new bloggers out there, as well as a great person in realspace, so I'm pretty thrilled to welcome him aboard.  

The health of a nation

Brad DeLong has a very good post on health care that everyone should read.  It's too long and good for an excerpt to do it justice, so I'll focus on this part:

The fourth problem is a problem. (1) We as a country seem to believe in a relatively small government. (2) We also seem to believe that health care should be provided on the basis of how dire your need is rather than how thick your wallet is. (3) And we have good reason to suspect that our health care capabilities will become larger and better as time passes. (2) and (3) are inconsistent with (1). (1) and (3) are inconsistent with (2). (1) and (2) can go together only if (3) is false. I think that (3) is true. That leaves us with a societal choice to make: do we abandon (1) or abandon (2)? I favor throwing (1) over the side, but this is an important issue we can talk about.

I agree with the good professor that (3) should be off the table as an area to "improve" on.  But I think that at least some of the conflict between (1) and (2) comes from the way that America--and indeed, the rest of the industrialized world--approaches the problem of (2).  That is, we target welfare problems directly, with service provision or vouchers, rather than with a comprehensive income strategy. 

Imagine if, rather than giving people food stamps, Section 8 vouchers, welfare payments, public schooling, and so forth, we simply had an incomes program to boost the wages of those whose productivity is not up to providing them a basic, decent standard of living?  Leave the justice issues aside--I am not going to try, in this short post, to persuade commenters who disagree that all Americans should have the opportunity to avail themselves of things like housing and healthcare even if they haven't any particular skills.  Just accept for the nonce that politically, America is not going to let its poor, elderly and disabled sink into the muck of immiserated poverty, and focus on more efficient ways to do what we are so obviously determined to do.

This would have a couple of salutory effects.  For one thing, it would tie welfare to work (except for those who are genuinely too disabled to do anything.)  That would add at least some small boost to the labor force, and hence GDP, thus reducing the cost of caring for those who can't quite care for themselves.  It would also keep people on the employment train, a vehicle that can lead somewhere a lot better than a welfare check.

But that's not all it would do; it would put choice back in the hands of the consumers.  Do poor people want more car and less house?  Great; why not give them that choice if it doesn't cost us anything?  They could even (whisper it) save the money and do something really important with it at a future date. 

Now, healthcare is a special case, because unlike most of the other "basic goods" we think everyone should have, the costs can vary widely from person to person.  But there are ways to deal with this--alter the income transfer for different diseases, and then let people decide how to spend the money.  Maybe some of them will spend their healthcare money on a fabulous car and let their diabetes fester.  This violates a lot of intuitions:  the intuition that we only want to help people have medical care, not fabulous cars; the intuition that we have to protect people from themselves by ensuring that they spend the money on what they need, not what they want.

As a radical anti-paternalist, you can imagine I don't have much patience with the latter argument.  Who am I to say that your life is not better with a sports car and five years to live?  And to the former argument, I point out that in fact, you'll probably end up giving the wastrels less money if they do fritter it away.  Because once you've actually provided people a minimum income that is adequate to take care of their basic needs, there's no moral reason not to turn away those who decline insurance from the emergency rooms.  Giving people more choices also means allowing them to live with the consequences of those choices.

We'd also save money by targeting the programs to those who actually need them; I don't think I'm on particularly controversial moral ground when I say that Warren Buffett's secretary should not see her payroll taxes go to provide him healthcare.

This will not be perfect, of course.  We'd still need the annoying healthcare administrative apparatus to determine, for example, how much to pay for diabetes care.  But with a market in place, this isn't as hard as it is when the government is setting all the prices, because it won't be a brute force negotiation between providers and the government, with both lying and bullying the other.  We'll have prices from the private sector set by the competitive action of a lot of brains trying to determine a fair price.

But one of the things that everyone involved in the healthcare debate should get over is the notion that we will find a perfect system.  Every time I sit through another forum on health care policy, I am forefully reminded of Adam Smith's words in the Theory of Moral Sentiments:

The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder.

No matter what we do to our health care system, it will never much resemble the cool modernistic dreams of socialist realist fiction, where everything is effortlessly resolved by smugly serene Agents of the People.  Especially in America, the system will be chaotic, imperfect, and cost more than it could.  But this doesn't mean it will cost more than it should.  We are a phenomenally rich nation--the richest in the history of the planet (in our weight class, anyway).  We can afford to paper over the holes with money. 

Obama's economic plans: just say no (to much of it)

Turnabout being fair play, I now take this station break to be scathing on the subject of Barack Obama's economic plans:

Obama calls for more tax benefits to individuals but more taxes on high-income earners. He would keep in place some of the Bush tax cuts and institute a permanent R&D credit. He would increase the maximum capital gains tax rate from 15% to 25%, tax hedge funds managers' share of their clients' earnings as ordinary income rather than capital gains, and implement a payroll tax surcharge on people who earn more than $250,000 annually.

On trade, Obama suggests renegotiating the North American Free Trade Agreement, and implementing strong environmental and labor provisions in future trade deals. He wants to see a permanent renewable-energy tax credit to promote investment in wind and solar resources. He's in favor of legislation that would help workers join unions if they wish.

What do the two approaches have in common? Both could prove expensive. A recent study by the Tax Policy Center, a Washington think tank, says both candidates "have proposed tax plans that would substantially increase the national debt over the next 10 years"--Obama by $3.4 trillion, McCain by $5 trillion. The White House said Monday the federal deficit will reach a record $482 billion in fiscal year 2009--about $75 billion more than previously thought, thanks to the recent economic stimulus and economic downturn.

I hear disquieting rumors that Obama is not just saying he wants to revisit NAFTA in order to pick up a few votes--apparently he is really serious about this.  Nor is his support for letting employees bully their coworkers into joining unions exactly putting a spring in my step and a song in my heart. 

As if those things weren't enough, he wants to raise the capital gains tax.  There is a reason that most companies tax capital lightly--actually several reasons.  The first is that capital is mobile, and the second is that capital means new investment, which gives us shiny new things we like, such as fMRI machines and electric cars and yes, iPhones.  Savings represents a tradeoff between current and future consumption.  Given that peoples' time preferences are biased towards the present, we want to make the payoff to deferring consumption as attractive as possible.

Equity capital is taxed twice in this country--once when the company makes a profit, and a second time when the capital is distributed to its owners as dividends or capital gains.  The combined rate is 15% + 35%=50%, or a whole lot higher than the personal income tax rate.   This is not optimal for savings. 

Ah, you will say, but corporations actually spend an enormous amount of time structuring their income to avoid taxes, so the rates aren't that high.  But this is an equally big problem.  All of that activity is an economic loss--it consumes resources that could be put towards something useful, like erasing all traces of the Neil Diamond box set from the face of the planet.

I know what you are thinking, my little chickadees--the corporations shouldn't do that.  And perhaps you are right.  But when you set up systems that cost people a great deal of money, they will go and try to minimize their tax bill, no matter how earnestly you explain that they are shirkng their social duty.  And there is no government failure more dismal and glaring than the eternal attempts to "close the loopholes" in the corporate income tax.  That's because most of the loopholes are actually there to alleviate valid concerns.  Moreover, attempts to "close the loopholes" end up making the tax code vastly more complicated, which increases compliance expense, administrative expense, and uncertainty--and in many cases, actually create more loopholes than they closed.

Worst of all, the corporate income tax and the capital gains tax aren't really very good at doing what they are supposed to do, which is make sure that the bulk of our income tax burden falls on those who will miss the money the least.  Let me posit something which isn't very controversial among tax professors no matter what their political party:  you can't tax a corporation.  That's because corporations have no feelings, and no assets, of their own.  Ultimately, the money always comes from some person:  customers, employees, owners, or even suppliers.  But the corporate taxes are not targeted by need; they come from whoever the corporation can best squeeze the money out of.  The old lady in Dubuque with 100 shares of AT&T pays the same 50% rate on corporate profits as Warren Buffett. 

It would be much better to eliminate the corporate income tax and tax dividends and capital gains as ordinary income.  Barring that, raising the combined rate on corporate profits to 60% from 50% is a very, very bad idea. 

The rest of it doesn't wind me up particularly one way or the other--I don't think that higher marginal tax rates on the rich are going to plunge the economy into the next Great Depression, as McCain's team is implying, and I think the payroll tax should be rolled into the ordinary income tax, so raising the cap doesn't bother me particularly.  Of course, I'd rather see him get serious about entitlements, but that's a rant for another day; once we've spent the money, we've already effectively taxed, and I don't think these other mechanisms are notably awful ways to raise the necessary cash.  But the trade and capital gains components are bad enough to make me take a long, loving look at Bob Barr.

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It's not theft, it's public service

Who knows what evil lurks in the heart of man?

If James L. Harris really did what police say he did, then I would like to award him a Happy Mutant Criminal Award certificate. The 18-year-old is accused of stealing at least three Miami-Dade Transist buses, and driving them on their routes. Police say Harris wore a Miami-Dade Transit employee uniform, did not steal the fares, and returned the buses to the depot each night.

He's been charged with three counts each of third-degree grand theft and burglary of an occupied conveyance.

Why are they charging this guy?  It seems like they ought to hire him.  If only so that he can get the therapy he needs through Miami-Dade's no-doubt generous benefits package.

The meat of the issue

I stand vindicated.  Sort of:

Do you scoff at those pale Tofu dogs in the health food aisles of the supermarket? Are you one of those people who taunt vegans by talking about Big Macs? A new study suggests that you should think about biting your tongue: According to the researchers, how we feel about a sausage, regardless of whether it's soy-based or beef, says more about our personal values than about what the sausage actually tastes like. In fact, most people can't even tell the difference between an ersatz vegan sausage and the real thing. (It should be noted, though, that not all vegan products are equally deceptive: a soy hot dog, in contrast, only fooled 37 percent of subjects. And I'm guessing the soy ice cream fooled nobody.)

The clever experiment went like this: a large group of people were given a "human values" test which seeks to measure fifty six different values (loyalty, ambition, social order, etc.) Then, the subjects were asked to rate a variety of sausages. People who scored high on "social authority" - they believed it was important to support people in power - tended to label the "vegetarian" sausage as inferior, even when the vegetarian sausage was actually from a cow. Likewise, people who scored low on "social power values" tended to score the vegan sausage much higher than the beef sausage, even when they were actually eating meat. Instead of judging the food product on its merits, they ended up preferring the product that more closely conformed to their value system. The scientists also conducted a similar experiment with Pepsi. Sure enough, people who fit the Pepsi demographic - they think having an "exciting life" is very important - always preferred Pepsi, even when they were actually drinking a generic cola.

This research conforms to a growing body of evidence suggesting that our gustatory preferences are an incredibly subjective thing.

The thing is, I hate vegan sausage.  Of course, I wasn't super fond of non-vegan sausage, but vegan sausage is a mealy mess. 

On the other hand, this strikes me as broadly true.  I've cooked vegan food for a number of people who liked it as long as they didn't know it was vegan, but nonetheless look skeptical when another vegan meal is proposed.  Most of those people seem to have a sort of determination not to like anything except meat, as if one bite of tofu might send them skipping out into the woods to dance round the meadows with the twee fairies. 

Illusory

I've seen the optical illusions that pop up on the web occasionally, and marvel at them, but I've never encountered an auditory illusion before.

Your afternoon smile

Here.  No, I can't explain.  Just click.

Update  Okay, for those who totally didn't get the joke, perhaps this will explain:

Budget woes

For those of you who haven't heard, the deficit is projected to go up.  A lot.

The sluggish U.S. economy and the cost of this year's economic stimulus package will push the federal budget deficit into record territory in fiscal year 2009, the White House said Monday.

The Office of Management and Budget said it expects next year's budget gap to soar to $482 billion, $75 billion higher than its previous estimate. The deficit for the current fiscal year, which ends Sept. 30, is projected to come in at $389 billion, $21 billion lower than the administration's February forecast.

To be sure, the OMB is believed to bias its estimates upward, so that it can have the joy of a downward adjustment at the mid-session budget review.  Nonetheless, this sends a rather clear message:  danger, Will Robinson!

As luck would have it, I was on a conference call with the McCain campaign this morning while they talked about their plans to make American jobs grow.  As such things go, relieving the deadweight loss of income taxes is not a terrible strategy.  The devil, however, is in the details.  Particularly the details about where the money is coming from to pay for the tax cuts.

The majority of the federal budget is spent on a few things:  entitlements, defense, and interest on the national debt.  Which of these, I asked, as so many have before, is McCain going to cut?  Well, erm, none.  Not needed.  We'll get there by attacking wasteful spending.  Then sometime in the comfortably distant future, we'll reform social security and draw down spending in Iraq.  It's all in The Plan. The problem is, they can't find an independant institution to sign off on the coherence of The Plan.

Not that Barack Obama impresses me all that much more--HIS plans rely on some rather heroic assumptions about health care costs.  Either way, we're in for a bumpy ride.  Can America get a second job?

Insiderism

I love jargon.  Technical talk.  Extended abstruse conversations.

Okay, all that's normal for an economics blogger.  The thing is, I love them even when I have no idea what they are about.  I have sat riveted while two physics geeks wrote excitedly on napkins, exclaiming "Well then it's obvious that . . . " when all that was really obvious to me was that I shouldn't have bugged out of Physics 101.  There is something about the arcana of other people's knowledge domains that sends a shiver up my spine--the implication, perhaps, that there are still mysteries in the world which one might actually follow to a speedy and satisfactory conclusion.  Paging Ms. Christie . . .

All of which is to say, I loved this post.  I have no idea what any of it means.  But I sense, as through a glass darkly, that it is hilarious.  And that sense, even without the meaning, is deeply satisfying.

Do not go gentle into that Dark Knight

Tom Lee asks the important questions about the new Batman movie (warning:  spoilers!)

Continue reading "Do not go gentle into that Dark Knight" »

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More media me

I should have linked to this earlier, but Peter Suderman, David White and I talked about politics for Inside Washington Weekly on Friday.

The Society-Agent problem

I am of two minds linking this post, because it is nice to me, which is how I found it. (Yes, I google myself.  It's perfectly natural and healthy, folks.)  Still, I think it's important, so just ignore those bits and concentrate on this:

Here is what I think too many women who identify as feminist, including myself, too often overlook:

When you tell someone "it's not just you; it's millions of women," do not be surprised when that person gets hung up on "it's not just you," and takes no comfort from "it's millions of women."

Because I think when feminists talk to other women who are, at best, on the fence about feminism, they forget this. I know I forgot it. I forgot that one of the losses I had to grieve when I threw my lot in with feminism was the idea that I was special and that, as someone special, I could beat the system all on my own. I was cute enough. I was funny enough. I was a "guy's girl" enough. I was laid-back enough. I was smart enough. I liked fucking enough. I could totally do this, and just as soon as I did, oh, how I was going to have a good long laugh at all the pathetic loser women down there who couldn't.

Don't you wish your girlfriend was hot like me?

And not just that! I wasn't just saying goodbye to everything I was going to do; I was also having to scale back the credit I had enjoyed giving myself for everything I had done.

Did I leave an abusive relationship?-Yes, and go me.

Was I able to leave that abusive relationship because of work other women had already done for me?-Uh, well, okay, kind of-but wait, why can't we talk about my awesome courage some more first?

Was I able to leave that abusive relationship because of certain privileges I held, privileges of which I was completely unaware?-I don't think you heard me! I LEFT AN ABUSIVE RELATIONSHIP. IT WAS HARD. I DID A LOT OF WORK TO GET THERE. YOU CAN'T DENY MY ACHIEVEMENT LIKE THIS. I REJECT THIS JOY-KILLING NARRATIVE.

I also completely forgot how much importance this thing that you can call patriarchy or kyriarchy, I really don't give a shit which, places on individual women being special, standing out, being unique, being the exception, being the "atypical" girl, being a creature unlike any other.

So when you tell some woman, "You've got to get on board for the good of all of us," please do not forget that first, she's got to get okay about saying goodbye to a familiar pattern, that I'm-special pattern. Second, she's got to get okay with realizing that everything she has already accomplished to date may not be entirely the result of her innate and unique awesomeness. it may not even be entirely the result of her hard work and elbow grease. She may, in fact, have to share the good along wtih the bad.

If you don't hold out something for incentive here, if you don't suggest the possibility that smashing old patterns might even wind up benefiting her personally, odds are good that you can chalk another one up for the whatever-archy and subtract one for the cause. But at a minimum, if you're going to bother at all, then be prepared to sit there with her through a sort of mini-grief process, because hearing that it's not just you, when you've been taught to believe that it's all up to you, can be harder to accept than you might think. Obviously, this goes double for fans of Ayn Rand.

You lose something when you let go of an old pattern, and maybe you even needed to lose it, maybe that old pattern was hurting yourself and hurting others, too, but you still probably process breaking out of it as, initially, a loss, because that's what it is.

There's a temptation, when you embrace the idea of privilege, to go too far in the other direction--to write off everything as the product of forces beyond your control.  This makes social conservatives and a lot of libertarians crazy, and I can see why.  I think that conservatives tend to give themselves too much credit for doing things that were enabled by a solid middle-class upbringing.  As I wrote a number of years ago, it's easy and true to point out that poor teenagers wouldn't stay poor if they finished school, didn't have babies out of wedlock, and eschewed criminal activity--but how many of us had the courage to defy our parents and peers, drop out of high school, and sell drugs?  Every time I think about how much my parents did for me just by choosing a peer group that valued college, I close my eyes and thank my lucky stars.

The problem of poverty is not that it's impossible to get out of -- lots of people do.  It isn't even that you need to be some sort of superhero.  The problem is that poor kids have no margin for error.  I got to be a screw up who nearly flunked out of college, and thanks to parents and schools that cared desperately about my fate, nonetheless turn it all around, pull a 4.0 in my major, and graduate on time.  The first time a poor kid pulls that kind of crap, he's back at home looking for minimum wage work.

But if the right goes too far in congratulating people for pulling themselves up by their own bootstraps, I think the left often goes too far in crediting nebulous social forces over individual agency.  It's not only incorrect, but also, it seems dangerously passive.  Women have been encouraged to be passive for centuries.  It's good to recognize how much of what we achieve is possible because we stand, so to speak, on the shoulders of giants.  It's very good for women who find the more radical, humorless brand of activist kind of annoying (and I am often among this group) to recognize that their willingness to be radical, humorless, and not very well liked was a necessary component of the massive advances we won a few short decades ago.

But it's not good to tell yourself that really, it wasn't you, just your environment.  Luck plays a giant role in all of our lives, but we all know people who have grasped extraordinary luck with both hands and flung it away.  Women of my generation are phenomenally lucky to be able to walk out of an abusive relationship, not because some protective male relative has arranged it, but because we don't deserve to be beat on, and we don't have to endure it to secure social approval or economic security.  But we still have to walk the hell out, and lots don't.  Society can't make them walk out, though it still may be able to do something for their daughters.

So it seems to me that celebrating your courage and hard work is a fundamentally feminist action.  You don't need to deny the concept of privilege to recognize that we are not only products of society--that, in the words of Scout Finch, virtuous people are those who do the most, but those who do the best they can with what they have.  When you say I did this, you send the most important feminist message at all--that women have the power, and the right, to improve their lives.

White men can't dance

So speaking of guilty pleasures, one of mine is "So You Think You Can Dance", the dance version of American Idol.  I don't watch any of the other reality shows, the ones that bloggers proudly lay claim to, like Project Runway or Top Chef.  No, I just like watching people dance, mostly because I don't Think I Can.

What's struck me about this season is that with eight contestants left, three out of the four men were black.  For the last three seasons, the show has tended to be very, very white by the time it gets down to brass tacks.  This may be because the black dancers are very disproportionately hip-hop dancers, and don't have the technical skills of other contestants.  Or it may be racism.  Or it may just have been a fluke.  But it's interesting to see this turn around, at least temporarily.

That's so meta

Daniel Davies on PZ Meyers and the Cracker of Power.

To whom should corporate boards be responsible?

John Quiggin argues against the notion, popular at my alma mater, that a company's only duty is to maximize shareholder value.

So, presumably, the obligation to maximize profits is a matter of enlightened self-interest. Posner argues, plausibly enough, that a company that doesn't maximize profits is weakening itself in competition with other firms. To be more precise, the probability of bankruptcy or hostile takeover is presumably increased by deviations from profit maximization. But this doesn't mean that the probability of firm survival is maximized by maximizing profits. And there's no obvious reason why socially concerned managers couldn't conclude that the strategy that yielded them the best expected personal value, adjusted for the risk of corporate failure, was one in which the company pursued broad social goals.

Well, for starters, the managers aren't supposed to be maximizing their best expected personal value, which might well involve embezzling if they could get away with it.  They are supposed to maximize value for the people who hired them, i.e. the shareholders.  Now, one can hold arguments about whether the corporate board system has become dysfunctional, with CEOs manipulating the composition to give themselves excessively high pay.  But that would still be a violation of the board's responsibility to the owners--the other "stakeholders" have no just cause for complaint.  It is not enough to say that they have an interest in the outcome.  We make distinctions between positive and negative rights for good reason.  You have a very strong interest in the outcome of cancer research.  That does not give you any right to force cancer researchers to work on any terms you care to name.

But from a strictly economic perspective, this also misses the point.  Diminishing the fiduciary rights of shareholders raises the cost of capital to the firm, because it lowers their expected return.  America has extraordinary deep capital markets precisely because we reward shareholders for investing here.  Giving the "stakeholders" control over the process is a one-trick pony--you temporarily seize accumulated value for them, at the price of slowing capital accumulation, and hence productive investment, and hence growth, in the future.