Link here
The bills I’ve seen all phase-in in the future precisely in order to meet the goals of deficit neutrality without involving a mid-recession tax increase. Meanwhile, it seems extremely likely that the economy has already returned to growth. But evidently Lieberman’s been too busy talking to TV bookers to learn about the pending legislation.
Francois' response: Maybe it's not a fib, because it's unlike Matt to make shit up. But it's hard to believe that someone as well-informed as he is would believe that the bill phases in the changes in 2013 because they want to avoid a mid-recession tax increase. The purpose of having the bill take effect in 2013 is to muck around with the 10-year budget window, a point which Matt has posted about before, so he must know about it.
Also, I could be mistaken, but the revenue measures were supposed to take effect right away. It's the benefits that don't start until 2013. Otherwise, why would the CBO score a plan from 2009-2019 when not a single part of it even exists until 2013?
Monday, August 24, 2009
Matt on compromise
Link here
Now of course that leaves aside the question of whether the country can really be governed on this basis. Sometimes to advance a progressive agenda, you might need to embrace some politically dicey ideas. Then you might hope that you could acquire some political cover from members of the opposite party. Of course they won’t just do that to be nice, so you make some substantive ideological concessions to the right. You propose, for example, a health care package that would raise taxes and extend coverage to the uninsured (woo liberals!) but also slow the rate of growth in Medicare, hoping that some substantial number of conservatives will find the latter attractive.
Francois' response: Conservatives would love to cut Medicare. But so would liberals, because Medicare threatens the budget. Liberals aren't giving conservatives anything, they are just finding a small piece of common ground and then acting like they are making a concession.
If Democrats really want to tackle Medicare, then Republicans will cooperate. A bipartisan bill to cut Medicare, a standalone bill, would pass. And there's not a whole lot the elderly or the AARP could do about it. Where would they go?
But Democrats don't want to tackle Medicare without getting something bigger out of it: an expansion in coverage. This is a horrible deal for deficit hawks of either party, because if Medicare savings is $500 billion, and the bill costs $1 trillion, then we're out $500 billion. For deficit hawks, the status quo is better.
If liberals really want a compromise, and if health care for all is truly the defining Democratic priority for this century, then they should be willing to pay dearly for it: $500 billion out of Medicare, and $500 billion out of other domestic programs currently in the budget. No new taxes. That's a program that would draw many Republican votes. I personally would even agree to single payer for that, provided rules were put in place(like a spending cap with teeth) to prevent the spending from being jacked up later.
So how about? Single payer in exchange for $1 trillion in domestic spending cuts? How important is this to you guys, really?
Now of course that leaves aside the question of whether the country can really be governed on this basis. Sometimes to advance a progressive agenda, you might need to embrace some politically dicey ideas. Then you might hope that you could acquire some political cover from members of the opposite party. Of course they won’t just do that to be nice, so you make some substantive ideological concessions to the right. You propose, for example, a health care package that would raise taxes and extend coverage to the uninsured (woo liberals!) but also slow the rate of growth in Medicare, hoping that some substantial number of conservatives will find the latter attractive.
Francois' response: Conservatives would love to cut Medicare. But so would liberals, because Medicare threatens the budget. Liberals aren't giving conservatives anything, they are just finding a small piece of common ground and then acting like they are making a concession.
If Democrats really want to tackle Medicare, then Republicans will cooperate. A bipartisan bill to cut Medicare, a standalone bill, would pass. And there's not a whole lot the elderly or the AARP could do about it. Where would they go?
But Democrats don't want to tackle Medicare without getting something bigger out of it: an expansion in coverage. This is a horrible deal for deficit hawks of either party, because if Medicare savings is $500 billion, and the bill costs $1 trillion, then we're out $500 billion. For deficit hawks, the status quo is better.
If liberals really want a compromise, and if health care for all is truly the defining Democratic priority for this century, then they should be willing to pay dearly for it: $500 billion out of Medicare, and $500 billion out of other domestic programs currently in the budget. No new taxes. That's a program that would draw many Republican votes. I personally would even agree to single payer for that, provided rules were put in place(like a spending cap with teeth) to prevent the spending from being jacked up later.
So how about? Single payer in exchange for $1 trillion in domestic spending cuts? How important is this to you guys, really?
Saturday, August 22, 2009
Yglesias on supply side theory
Link here
Greg Mankiw links to this approvingly under the banner “We Are All Supply-Siders Now.” And it’s true that this is Piketty pointing to a “supply side” effect. On the other hand, the distinctive contention of the supply-siders is that lower taxes on the rich are the key to economic growth. In reality, economic growth was much stronger in the 30 postwar years than in the past 30 years of the low-tax era.
Francois' response: Focusing on tax rates is pointless. Despite the fact that the top tax rates in theory ranged from 70 to 91%, the government took in significantly LESS revenue during that period than they did later, when rates dropped into the 50s. Loopholes can make even 200% tax rates into 10% effective tax rates.
Growth was better then, in part because taxes and spending were LOWER. Plus of course there were a ton of other factors, but claiming that a horribly designed tax system was good for the country is just bogus. Any economist will tell you that a flatter system with few deductions is more efficient for gaining revenue and for promoting growth than a loophole ridden progressive monster of a tax system.
Greg Mankiw links to this approvingly under the banner “We Are All Supply-Siders Now.” And it’s true that this is Piketty pointing to a “supply side” effect. On the other hand, the distinctive contention of the supply-siders is that lower taxes on the rich are the key to economic growth. In reality, economic growth was much stronger in the 30 postwar years than in the past 30 years of the low-tax era.
Francois' response: Focusing on tax rates is pointless. Despite the fact that the top tax rates in theory ranged from 70 to 91%, the government took in significantly LESS revenue during that period than they did later, when rates dropped into the 50s. Loopholes can make even 200% tax rates into 10% effective tax rates.
Growth was better then, in part because taxes and spending were LOWER. Plus of course there were a ton of other factors, but claiming that a horribly designed tax system was good for the country is just bogus. Any economist will tell you that a flatter system with few deductions is more efficient for gaining revenue and for promoting growth than a loophole ridden progressive monster of a tax system.
Matt on long-term deficits
Link here
How to deal with long-term deficits is, of course, complicated and controversial. And yet it’s also in a way quite simple. We need to reform health care to slow the cost growth of Medicare and Medicaid. We need to steadily reduce defense spending as a share of GDP. We need higher taxes. And we need to reform the tax code to make it more efficient so that the higher taxes are economically viable. Given continued economic growth, future Americans will enjoy both more public services and more private consumption than current Americans.
Francois' response: First, reforming health care to cut costs is a dream. There are no cost-cutting measures in HR3200, and none are likely to survive. IMAC is the only way to cut costs and that's not going to pass in a million years now that the elderly know about it, even if they think it's a "death panel".
Second, while I'm all in favor of cutting defense spending, probably even more sharply than Matt, I would be appalled at the idea of cutting defense spending while leaving domestic spending alone. Defense spending is the one thing that citizens can never do for themselves. It's also the one thing that all the other programs depend upon, because without our independence and security, we can't have things like Head Start and food stamps. Ask Leon Blum about all the good social programs do when your country is occupied.
Third, higher taxes? Seriously? We're overtaxed as it is. Matt himself has admitted that you can't just tax the rich and get serious revenues. But the reason middle class tax increases are a political problem is because middle class people can't pay anymore than they do now.
Give up the dream, folks. If the state has a real budget crisis like California, the progressive project is over, finis, done, toast. We'll be electing a string of Calvin Coolidges and Grover Clevelands for the next century if that happens. "Economy" will be the end-all and be-all again.
In 1933, FDR saved capitalism from itself. In 2012, a Republican President may very well have to save progressivism from itself. Progressives are going to have to learn about a little thing called prioritization. Do you want people to be able to retire at 65? Do you want people to have generous health care coverage? Do you want kids to get a good education? Do you want poor people to have decent lives? Not all of those are possible right now. Maybe in the future, but not now. Pick 2 or 3 of those. If you try to do them all with $3 trillion in possible revenue, you'll bankrupt us all. Then where will your "social justice" be?
How to deal with long-term deficits is, of course, complicated and controversial. And yet it’s also in a way quite simple. We need to reform health care to slow the cost growth of Medicare and Medicaid. We need to steadily reduce defense spending as a share of GDP. We need higher taxes. And we need to reform the tax code to make it more efficient so that the higher taxes are economically viable. Given continued economic growth, future Americans will enjoy both more public services and more private consumption than current Americans.
Francois' response: First, reforming health care to cut costs is a dream. There are no cost-cutting measures in HR3200, and none are likely to survive. IMAC is the only way to cut costs and that's not going to pass in a million years now that the elderly know about it, even if they think it's a "death panel".
Second, while I'm all in favor of cutting defense spending, probably even more sharply than Matt, I would be appalled at the idea of cutting defense spending while leaving domestic spending alone. Defense spending is the one thing that citizens can never do for themselves. It's also the one thing that all the other programs depend upon, because without our independence and security, we can't have things like Head Start and food stamps. Ask Leon Blum about all the good social programs do when your country is occupied.
Third, higher taxes? Seriously? We're overtaxed as it is. Matt himself has admitted that you can't just tax the rich and get serious revenues. But the reason middle class tax increases are a political problem is because middle class people can't pay anymore than they do now.
Give up the dream, folks. If the state has a real budget crisis like California, the progressive project is over, finis, done, toast. We'll be electing a string of Calvin Coolidges and Grover Clevelands for the next century if that happens. "Economy" will be the end-all and be-all again.
In 1933, FDR saved capitalism from itself. In 2012, a Republican President may very well have to save progressivism from itself. Progressives are going to have to learn about a little thing called prioritization. Do you want people to be able to retire at 65? Do you want people to have generous health care coverage? Do you want kids to get a good education? Do you want poor people to have decent lives? Not all of those are possible right now. Maybe in the future, but not now. Pick 2 or 3 of those. If you try to do them all with $3 trillion in possible revenue, you'll bankrupt us all. Then where will your "social justice" be?
Yglesias on rushing health care reform
Link here
Since late July, it’s been clear that the strategy for killing health care reform is to delay it first. And it’s clear that killing health care reform is the top priority of the Republican Party leadership.
Francois' response: It's true that Republicans want to delay it so that it will die. It is also true that Democrats want to rush it through Congress before the public has had time to digest what's going on. If the bill had public support, then it wouldn't matter how long it took to get it done. Heck, it doesn't go into effect until 2013! You can wait until 2011 to pass it if you want and still have plenty of time to lay the groundwork.
Matt's been bitching about the fact that the bill isn't being rushed fast enough, he's bitching that it can't be passed with only 50%+1 of the vote in Congress. Then he starts acting as if he's more pro-democracy than the rest of us while he's trying to get a bill passed that only 35-40% of Americans favor. It's all understandable though. Health care is a top priority for liberals and they have a lot of emotion invested in it. Even many of the good liberal commentators are losing their heads over it, saying things which they would normally know to not be true, and rationalizing breaking the rules to get it passed(like leaning on the parliamentarian).
The number one rationalization is that Republicans just want to kill any health care bill. Yes, some do. But some don't. There are votes that can be picked up. Why not call the GOP's bluff and bring the Demint bill to a vote? Or the Coburn bill? Both would be better than the status quo.
Is this about giving Americans better access to health care and cutting costs, or is it about a political victory? If so, then Democrats are behaving no differently from Republicans. They'd rather see no health care reform rather than Republican health care reform.
Since late July, it’s been clear that the strategy for killing health care reform is to delay it first. And it’s clear that killing health care reform is the top priority of the Republican Party leadership.
Francois' response: It's true that Republicans want to delay it so that it will die. It is also true that Democrats want to rush it through Congress before the public has had time to digest what's going on. If the bill had public support, then it wouldn't matter how long it took to get it done. Heck, it doesn't go into effect until 2013! You can wait until 2011 to pass it if you want and still have plenty of time to lay the groundwork.
Matt's been bitching about the fact that the bill isn't being rushed fast enough, he's bitching that it can't be passed with only 50%+1 of the vote in Congress. Then he starts acting as if he's more pro-democracy than the rest of us while he's trying to get a bill passed that only 35-40% of Americans favor. It's all understandable though. Health care is a top priority for liberals and they have a lot of emotion invested in it. Even many of the good liberal commentators are losing their heads over it, saying things which they would normally know to not be true, and rationalizing breaking the rules to get it passed(like leaning on the parliamentarian).
The number one rationalization is that Republicans just want to kill any health care bill. Yes, some do. But some don't. There are votes that can be picked up. Why not call the GOP's bluff and bring the Demint bill to a vote? Or the Coburn bill? Both would be better than the status quo.
Is this about giving Americans better access to health care and cutting costs, or is it about a political victory? If so, then Democrats are behaving no differently from Republicans. They'd rather see no health care reform rather than Republican health care reform.
Tuesday, August 18, 2009
Kevin Drum on Bernanke
Link here via Matt
Kevin Drum observes that Ben Bernanke’s reappointment seems extremely likely:
Ain’t the intertubes great? On a more substantive note, not a single one of the panelists was opposed to reappointing Ben Bernanke. Not even Dean Baker! Et tu, Dean? This suggests to me that Bernanke is a shoo-in for winning a second term. If you can’t even get a bunch of liberals at Netroots Nation to oppose him, what are the odds that anyone else is going to lead the fight?
Francois' response: I don't get what liberals are asking for here. Traditionally, liberals have wanted inflationary monetary policy, but they won't really say what they want now, just that they don't want Bernanke or another conservative. They want someone more liberal, like Summers. But they won't say what they actually want a liberal fed chairman to do. Could someone explain what they want the Fed to do differently?
A handy little flowchart that happens to be deceptive
The changes the administration is proposing to make to health insurance in the United States are more complicated than some alternative plans might be. But honestly they’re not that complicated when broken down in a smart way. This health reform flow chart is great:
Francois' response: problem is, that doesn't tell the whole story. No change to Medicare recipients? That will be a nice trick, $500 billion in cuts with no change to benefits. Don't get me wrong, I think it's possible, but Democrats aren't credible on Medicare savings because they've never tried to save serious money in Medicare before. Again, prove you can fix Medicare before messing around with a public option. Insurance reform, that's a good idea and long overdue. An exchange, also good. But no more government-run plans until they can control costs without damaging care.
Then there's the promise that if you already have insurance through your employer that there will be no change. The CBO says something else entirely. 6 million will lose their insurance.
This is why people believe Republican lies. Because Democrats aren't telling the whole truth.
Matt on parking subsidies
Link here
There’s a public agency of some kind, the Pittsburgh Parking Authority, which does things like brag that “across the board, our rates are lower than any nearby garage.”
There’s a public agency of some kind, the Pittsburgh Parking Authority, which does things like brag that “across the board, our rates are lower than any nearby garage.”
That, however, is the problem. There’s nothing wrong with parking garages—every city has them. And in particular a place like downtown Pittsburgh is going to have them. But a city will have parking garages because the ability to park in a downtown urban area is a valuable thing, it’s something people will pay money for. Consequently, some undeveloped land will be used as open-air parking lots and some developers may build above-ground parking structures and/or large buildings with an underground garage element. But there’s no reason for a city to be providing subsidized, below market rate parking facilities. You provide a public subsidy for something if you think there’s some reason to believe that the market output of the thing is below what’s socially optimal. But while there’s nothing wrong with people driving around, it’s certainly not more socially optimal to encourage additional driving. Subsidized parking is regressive (poor people are less likely to own cars), it causes additional traffic congestion (more cars on the round), it causes more pollution, and it promotes inefficient use of valuable land.
Francois' response: Okay, I know this is a boring subject, but my larger point won't be. This is what politics is, and liberals just won't get their heads around the idea that this is the nature of the beast. Parking is subsidized because that's a popular thing to do, more popular than feeding the hungry and housing the homeless. Cities aren't walkable because more voters drive cars than walk.
Matt understands the limitations of politics better than most, so I'd like to think that eventually we'll get to witness an amazing evolution into a libertarian blogger. I hope that happens, because there's really no logical way to square the realities of politics to liberal ideals of activist government. That doesn't mean that politics can never accomplish anything that improves people's lives. Obviously, that does happen sometimes. But liberals never take into account the "overhead" costs. The fact that if you want to deliver $1 in health care to a poor child, you're probably going to have to spend $2 on something less valuable from a policy perspective, but more desirable from a political perspective. This is how the sausage is made. Now I could be cynical and say that they just don't give a damn about all this because it's not their money.
Matt on the filibuster
Link here
So good on Rep Jay Inslee (D-WA) for speaking out:
So good on Rep Jay Inslee (D-WA) for speaking out:
The filibuster is so undemocratic it just defies defense. Particularly, as you said, it used to be this once-in-a-generation regional conflict issue that’s meant to protect the regions that has now prevented majority rule in this country. It’s a huge, insidious problem. I have to tell you in my conversations with senators, including in our party, I’ve gotten nowhere on this issue. When they get into that fine institution, they kind of like the idea one person can stop the entire country dead on its heels to keep a post office open in Schmuckbucket or wherever. I have to tell you, I’m very frustrated by it.
Francois' response: I think that one can make reasonable arguments against the filibuster, but this isn't one of them. Maybe it's just because I'm a conservative, but I don't like the idea of 50% +1 making major changes to this country, and I feel that way even when it's something I support. If you can't get a mere 60% support, don't try to make a big change. I happen to think that major, major legislation should be broadly supported by the public. Currently the health care bill is supported by 35% according to one poll, and more optimistic polls say 50%. And Democrats say that ramming the bill through by one or two votes would be democratic?
One thing that I wouldn't mind seeing changed, and this is inspired by a fantasy novel that I don't remember, is that filibusters could be limited only to such major changes. The trick would be finding as objective a way as possible to determine what's major and what's not. In the novel, two councilmen could demand a supermajority if a matter was deemed to be of major importance, but since politicians in the real world tend to be very loose about their morals, you'd have Robert Byrd and Jay Rockefeller calling cutting spending on a statue in Podunk, WV a "question of major importance".
But let's just dispense with this foolishness about the filibuster being undemocratic. Democracies don't exist to let slim majorities make major changes against the adamant opposition of the 49%. they exist to protect our rights. Liberals need to remember what our Constitution is for: it's to protect our liberties, not to deliver social services. Social services are the cherry on top. If your new program isn't supported by a broad majority, stuff the new program.
Matt on appeasement
Link here
In foreign policy, liberals often believe that disputes with foreign actors can and should be settled through negotiation and compromise. That’s because international relations isn’t a zero-sum affair. Conflict is costly to both parties, good relations bring benefits to both parties, so disagreement is generally amenable to compromise. Ideological disagreement isn’t zero-sum either. Neither conservatives nor progressives are wedded to principles that require defense of wasteful Medicare spending. But partisan politics is zero-sum. A “win” for the Democrats is a “loss” for Republicans. And I the predominant thinking in the Republican Party at the moment is that inflicting legislative defeats on Democrats will lead to electoral defeats for Democrats. That makes the GOP hard to bargain with.
Francois' response: First, let me thank Matt for tackling something that's been bothering me. Why do so many liberals preach diplomacy and gentle speech when it comes to Kim Jong Il, but preach scorched earth practices and throwing the word "Nazis" around when it comes to Republicans? The conclusion I drew was that Democrats and liberals especially are more concerned about dealing with their domestic opponents than foreign enemies. Perhaps that was uncharitable, but it was the impression I got. So kudos to Matt for coming up with a more charitable explanation.
Still, it's more complicated than that. Politics is a zero-sum game when it comes to elections. Someone wins, someone loses. But how a particular legislative battle will affect elections isn't really predictable. Democrats think that one of the big reasons for their loss in 1994 was the inability to pass health care reform. Okay, fine. Would Democrats have done better if they had passed a bill the public didn't support? I think they would have done a heck of a lot worse, actually.
I can see quite a few scenarios where Republicans work with Democrats to pass health care reform that would be beneficial to Republicans. I'm sure the more simple-minded among the GOP just want to beat the Democrats and call it a day. But even some hard core right-wingers like Tom Coburn and Jim DeMint have health care plans, and they are not just for show.
Let's say that after Democrats' bills go down to defeat, Republicans say, "Hey, let's do this again, but from a new starting point: the Coburn/Ryan bill". Baucus, Waxman, and all the other relevant committees get back to work and come up with a bill that progressives hate(and vote against), but Republicans generally like, and the public generally supports. The bill, now called Coburn-Kennedy or something, passes. Depending on how the press covers it and how well Republicans do at taking credit for it, it could help Republicans in 2010 to have a bill that was mostly written by Tom Coburn pass.
It's not like Republicans don't want to pass anything. Republicans just recently got two immigration enforcement bills passed, with most Democrats opposed. Republicans passed NAFTA despite Democratic majorities in 1993. Minorities can get things done in Congress, and they can benefit from those successes.
So assuming that the Republicans just don't want to pass anything is very likely mistaken. And this is EXACTLY how diplomacy fails in foreign affairs. Both sides assume the other isn't negotiating in good faith, so no negotiations take place. Democrats, even when the know a foreign dictator won't negotiate in good faith, still call for negotiation. Likewise, even though Democrats think Republicans won't negotiate in good faith, they should negotiate anyway. That's what their core values tell them to do, anyway.
In foreign policy, liberals often believe that disputes with foreign actors can and should be settled through negotiation and compromise. That’s because international relations isn’t a zero-sum affair. Conflict is costly to both parties, good relations bring benefits to both parties, so disagreement is generally amenable to compromise. Ideological disagreement isn’t zero-sum either. Neither conservatives nor progressives are wedded to principles that require defense of wasteful Medicare spending. But partisan politics is zero-sum. A “win” for the Democrats is a “loss” for Republicans. And I the predominant thinking in the Republican Party at the moment is that inflicting legislative defeats on Democrats will lead to electoral defeats for Democrats. That makes the GOP hard to bargain with.
Francois' response: First, let me thank Matt for tackling something that's been bothering me. Why do so many liberals preach diplomacy and gentle speech when it comes to Kim Jong Il, but preach scorched earth practices and throwing the word "Nazis" around when it comes to Republicans? The conclusion I drew was that Democrats and liberals especially are more concerned about dealing with their domestic opponents than foreign enemies. Perhaps that was uncharitable, but it was the impression I got. So kudos to Matt for coming up with a more charitable explanation.
Still, it's more complicated than that. Politics is a zero-sum game when it comes to elections. Someone wins, someone loses. But how a particular legislative battle will affect elections isn't really predictable. Democrats think that one of the big reasons for their loss in 1994 was the inability to pass health care reform. Okay, fine. Would Democrats have done better if they had passed a bill the public didn't support? I think they would have done a heck of a lot worse, actually.
I can see quite a few scenarios where Republicans work with Democrats to pass health care reform that would be beneficial to Republicans. I'm sure the more simple-minded among the GOP just want to beat the Democrats and call it a day. But even some hard core right-wingers like Tom Coburn and Jim DeMint have health care plans, and they are not just for show.
Let's say that after Democrats' bills go down to defeat, Republicans say, "Hey, let's do this again, but from a new starting point: the Coburn/Ryan bill". Baucus, Waxman, and all the other relevant committees get back to work and come up with a bill that progressives hate(and vote against), but Republicans generally like, and the public generally supports. The bill, now called Coburn-Kennedy or something, passes. Depending on how the press covers it and how well Republicans do at taking credit for it, it could help Republicans in 2010 to have a bill that was mostly written by Tom Coburn pass.
It's not like Republicans don't want to pass anything. Republicans just recently got two immigration enforcement bills passed, with most Democrats opposed. Republicans passed NAFTA despite Democratic majorities in 1993. Minorities can get things done in Congress, and they can benefit from those successes.
So assuming that the Republicans just don't want to pass anything is very likely mistaken. And this is EXACTLY how diplomacy fails in foreign affairs. Both sides assume the other isn't negotiating in good faith, so no negotiations take place. Democrats, even when the know a foreign dictator won't negotiate in good faith, still call for negotiation. Likewise, even though Democrats think Republicans won't negotiate in good faith, they should negotiate anyway. That's what their core values tell them to do, anyway.
Matt on inequality
Link here
This trend has a variety of underlying causes, some of which are worth changing and others of which (better global communications leading to a bigger superstar effect) are basically good. Be that as it may, using the tax code to take some of this wealth and transform it into more and better public services for the broad mass of people would do a lot of good.
Francois' response: It's a nice sentiment, but again, what do you do in a recession when that revenue you've been relying on from the top .01% drops like a stone?
Again, you can tax them more if you like, but put that money in a rainy day fund. Spending it is folly, because it won't be there when the Dow drops.
When the Dow drops,
Your revenue will fall,
And down will come your services,
Poor folks and all
This trend has a variety of underlying causes, some of which are worth changing and others of which (better global communications leading to a bigger superstar effect) are basically good. Be that as it may, using the tax code to take some of this wealth and transform it into more and better public services for the broad mass of people would do a lot of good.
Francois' response: It's a nice sentiment, but again, what do you do in a recession when that revenue you've been relying on from the top .01% drops like a stone?
Again, you can tax them more if you like, but put that money in a rainy day fund. Spending it is folly, because it won't be there when the Dow drops.
When the Dow drops,
Your revenue will fall,
And down will come your services,
Poor folks and all
Paul Krugman educates me
Link via Matt
I'd always disagreed with liberals on how to interpret FDR's decision in 1938 to cut back on spending, which plunged us back into depression. Liberals interpret this to mean that the economy was going much better and then FDR cut spending and it just went down hill. The lesson? Never cut spending, I guess. The lesson I drew is that stimulus is worthless except as a means to alleviate some pain. It's a pain killer for the economy, not a cure. It's not like FDR could just spend forever and bankrupt the country. It also proves that FDR didn't fix the economy at all. He just put it on life support, and as soon as he pulled the plug, vital signs crashed again. Which is entirely predictable in hindsight: FDR's team hadn't a clue about economics. They'd bought into Keynes theory too much.
But what I didn't understand is why if the New Deal failed why did WWII succeed? Was it more spending? Yeah, it was, but why would that bring the economy back? It's still just government spending propping things up, and because of the war there was no growth in the private sector since it was mainly churning out stuff for the War Dept.
Thankfully, Krugman finally answers the question:
Absent a strong demand for exports, the most plausible way for a country to crawl out of this kind of recession is for households to keep paying off debt until they can afford to spend again. Indeed, as Paul Krugman argued in a recent lecture series at the London School of Economics, the reason the United States didn’t slip back into depression after World War II–something many economists feared at the time–is that, 15 years after the initial crash, people had finally put their finances in order.
And that's why current stimulus plans aren't going to accomplish squat. The economy needs to deleverage first. Since the most leveraged people are people who actually pay taxes, tax cuts would serve to speed deleveraging better than anything else, despite the fact that tax cuts have a lower multiplier. But fixating on multipliers misdiagnoses the problem. Growth is great, but growth driven by public spending won't solve much. We need to deleverage, and giving people more of their money back instead of burdening them with high taxes would speed that process along faster than giving more public jobs to workers who aren't leveraged that much to begin with.
I'd always disagreed with liberals on how to interpret FDR's decision in 1938 to cut back on spending, which plunged us back into depression. Liberals interpret this to mean that the economy was going much better and then FDR cut spending and it just went down hill. The lesson? Never cut spending, I guess. The lesson I drew is that stimulus is worthless except as a means to alleviate some pain. It's a pain killer for the economy, not a cure. It's not like FDR could just spend forever and bankrupt the country. It also proves that FDR didn't fix the economy at all. He just put it on life support, and as soon as he pulled the plug, vital signs crashed again. Which is entirely predictable in hindsight: FDR's team hadn't a clue about economics. They'd bought into Keynes theory too much.
But what I didn't understand is why if the New Deal failed why did WWII succeed? Was it more spending? Yeah, it was, but why would that bring the economy back? It's still just government spending propping things up, and because of the war there was no growth in the private sector since it was mainly churning out stuff for the War Dept.
Thankfully, Krugman finally answers the question:
Absent a strong demand for exports, the most plausible way for a country to crawl out of this kind of recession is for households to keep paying off debt until they can afford to spend again. Indeed, as Paul Krugman argued in a recent lecture series at the London School of Economics, the reason the United States didn’t slip back into depression after World War II–something many economists feared at the time–is that, 15 years after the initial crash, people had finally put their finances in order.
And that's why current stimulus plans aren't going to accomplish squat. The economy needs to deleverage first. Since the most leveraged people are people who actually pay taxes, tax cuts would serve to speed deleveraging better than anything else, despite the fact that tax cuts have a lower multiplier. But fixating on multipliers misdiagnoses the problem. Growth is great, but growth driven by public spending won't solve much. We need to deleverage, and giving people more of their money back instead of burdening them with high taxes would speed that process along faster than giving more public jobs to workers who aren't leveraged that much to begin with.
Matt on a really bad conservative lie
Link here
It’s too bad that repeated, endless, flagrant dishonesty doesn’t do much of anything to damage a politician’s ability to be taken seriously as a sober-minded centrist deal-maker, or Chuck Grassley would be in a world of pain: Sen. Edward M. Kennedy would be refused treatment for his brain tumor in England — at least according to one of the allegations lobbed at Britain’s state-funded health-care service recently by critics of President Obama’s proposed health-care reforms.
Francois' response: The sad part about this lie is that Grassley missed out on making a really good point.
Ed Kennedy is receiving proton beam therapy treatments. The NHS does not cover proton beam therapy treatments. Kennedy would have to get chemo if he lived in Britain.
It’s too bad that repeated, endless, flagrant dishonesty doesn’t do much of anything to damage a politician’s ability to be taken seriously as a sober-minded centrist deal-maker, or Chuck Grassley would be in a world of pain: Sen. Edward M. Kennedy would be refused treatment for his brain tumor in England — at least according to one of the allegations lobbed at Britain’s state-funded health-care service recently by critics of President Obama’s proposed health-care reforms.
Francois' response: The sad part about this lie is that Grassley missed out on making a really good point.
Ed Kennedy is receiving proton beam therapy treatments. The NHS does not cover proton beam therapy treatments. Kennedy would have to get chemo if he lived in Britain.
Andrew Sabl on Medicare
I think it has to do with the dynamics of self-interest and self-deception. Some of the most virulent opponents of health reform are the elderly, who already have government-provided health insurance. While some may be too silly to know that that’s what they have, a great many assuredly do know it, and are happy to pull up the ladder behind them. Medicare is already very successful and very generous. Under universal coverage, it’s unlikely to get much better (except for prescription drug coverage, but not all the elderly take a huge number of pills). And it could, for all one knows, get worse. To avoid that risk, better that some youngsters go without.
This reasoning, though, is brutal–too brutal to acknowledge. While we’re a pretty selfish country, “I’m all right, Jack” is not an argument people comfortably make when others’ lives are at stake. But “if this passes, they’ll euthanize me and my friends” is another kind of argument altogether. It’s false, but easy to seize on as a morally comfortable pretext for opposing a bill that threatens one’s self-interest.
Francois' response: I'd already figured this out. I've been saying for years that the elderly will never support universal health care because it would necessitate cutting Medicare. Matt and the President are optimistic that Medicare can actually be improved while still saving money. But as Megan McCardle has pointed out many times, why have you been waiting so long? Fix Medicare to prove to all of us that the government can run an inexpensive, effective medical payment service before asking us to trust you with health care for all.
For the elderly, the response is entirely rational and expected. A program paid for by all, but which benefits only a minority, can be pretty much as generous as it wants to be. A program paid for by all and that benefits all can't be as generous.
Plus, the elderly don't trust the government. Few people do, actually. Medicare and Social Security aren't examples of a benevelont government generously showering goodies on old people. They were meant to buy votes, and they did. Problem is, once the bill came due, Democrats would be in a fix. And so they are. They need a way to cut costs, but they know that politically, cutting Medicare as a standalone bill is impossible to pass. So they've been trying to do it under the guise of reforming the whole system. Why they thought this ruse would work, I have no idea. I knew it wouldn't, and I'm not a full time beltway pundit. But I do know a lot of elderly people, having been raised by my grandparents. I knew what Medicare was before I knew how to count to 100.
Best Yglesias post of the week
Link here
I’m actually one of the rare outliers who thinks the NHS is a pretty great model and the British are on to something. And try as I might, I can never find anyone who agrees with me. That said, the case for the NHS is quite strong. As Ezra Klein says, the UK method saves a ton of money:
I still don't know why Matt thinks the British model is better than the various continental European models, and unfortunately he doesn't explain that. Hopefully in a future post he'll make his case for British superiority over France or Germany.
I’m actually one of the rare outliers who thinks the NHS is a pretty great model and the British are on to something. And try as I might, I can never find anyone who agrees with me. That said, the case for the NHS is quite strong. As Ezra Klein says, the UK method saves a ton of money:
But the British system is extremely cheap. Uncommonly cheap. Weirdly cheap. About 41 cents for every dollar we spend per capita cheap.
Now it’s definitely true that to an extent the Brits are getting what they pay for here. If you look it up, the research shows that British health care is not especially effective by international standards. That said, the difference is subtle enough that you actually do need to look up the research. It’s not as if people in the UK are just dropping dead of the plague all the time. To the casual observer, it all looks about fine, and the 59 cents on the dollar they’re saving is quite a lot. The fact of the matter is that health care is not an especially important determinant of health outcomes. Genetic predisposition is hugely important, and we can’t do anything about it. The biggest issue is “behavioral patterns” which are hard to change. But even “social circumstances” and “environmental exposure” (which is really a kind of social circumstance) swamp health care as a factor.
Which is to say that if you were actually able to get British levels of care for British price levels you could redirect that other 59 cents to trying to improve the social circumstances of the poor, trying to reduce exposure to health hazards, and building infrastructure (trains, sidewalks, bike paths, even the dread parks) suited to less sedentary lifestyles. We’d be much better off that way. The collective social determination of the industrialized west to dedicate large and increasing volumes of resources to trying to be healthier makes a lot of sense, but dedicating vast sums of money toward health care services just isn’t a particularly smart way of accomplishing that.
I still don't know why Matt thinks the British model is better than the various continental European models, and unfortunately he doesn't explain that. Hopefully in a future post he'll make his case for British superiority over France or Germany.
Monday, August 17, 2009
Matt on rationing
Link here
Similarly, your kid is entitled to go to a public school. They’ll teach him reading and writing and some science and history and probably Spanish or French or some such. But in the vast majority of places, you can’t have your kid taught Japanese at taxpayer expense. Again, though, we don’t live in a dystopian universe of “language rationing” in which it’s impossible to learn Japanese, you’d just have to pay someone else to do it. We of course could ban the market in private foreign language instruction, but it’s not clear why we would do that, and the existence of public sector provision of Spanish language instruction doesn’t in any sense imply a ban on the teaching of other foreign languages. What’s more, even if you’re incredibly troubled by the fact that today’s poor children don’t have the chance to learn Japanese in public school it’s still the case that eliminating public schools and lowering taxes isn’t going to leave those kids any better off. They still won’t know Japanese and now they also won’t be able to read.
Francois' response: that's a great point, but there's a key difference. If there's one thing I've found from talking to Canadians and Brits and Swedes about health care, it's that since medicine is complex, they are ignorant about what's covered and what's not. Most just assume that it's all covered. Which is convenient for the governments involved, but is really deceptive. It would be like the government telling citizens that all the learning they'll ever need they can get from public schools, so people don't bother to read books(or blogs).
But public schools don't work that way. The available curriculum is easy to find and is available to all to see what they have and what they don't. So you know that if you want your kid to have Japanese lessons for an upcoming trip, then you need to pay for those yourself. Likewise, with private insurance, you can go on the internet and they'll tell you what is covered and what is not as it pertains to RX drugs. I've tried to do this for NHS or Canada's Medicare. I've failed. That doesn't mean it's not available, but it does mean that someone can't just casually log on to the website and find out what is covered easily.
In order for that analogy to hold up, Democrats need to lay out, in writing, what is covered and what is not on a public plan. Otherwise, they are tricking people into thinking they are getting the best health care possible when in fact there might be better treatments available that aren't covered. One of the advantages of a system where everyone has different insurance, is that doctors generally prescribe whatever is best. If the insurance company comes back with a "hell no", then they can look for an alternative, or the consumer can figure out how to get the money. In a system like the NHS, the doctors operate from a presumption that what the NHS covers is what the patient can get and often don't tell them all their options. They use the guidelines as a bible. The same thing would happen under a public plan if it became the predominant form of insurance.
Similarly, your kid is entitled to go to a public school. They’ll teach him reading and writing and some science and history and probably Spanish or French or some such. But in the vast majority of places, you can’t have your kid taught Japanese at taxpayer expense. Again, though, we don’t live in a dystopian universe of “language rationing” in which it’s impossible to learn Japanese, you’d just have to pay someone else to do it. We of course could ban the market in private foreign language instruction, but it’s not clear why we would do that, and the existence of public sector provision of Spanish language instruction doesn’t in any sense imply a ban on the teaching of other foreign languages. What’s more, even if you’re incredibly troubled by the fact that today’s poor children don’t have the chance to learn Japanese in public school it’s still the case that eliminating public schools and lowering taxes isn’t going to leave those kids any better off. They still won’t know Japanese and now they also won’t be able to read.
Francois' response: that's a great point, but there's a key difference. If there's one thing I've found from talking to Canadians and Brits and Swedes about health care, it's that since medicine is complex, they are ignorant about what's covered and what's not. Most just assume that it's all covered. Which is convenient for the governments involved, but is really deceptive. It would be like the government telling citizens that all the learning they'll ever need they can get from public schools, so people don't bother to read books(or blogs).
But public schools don't work that way. The available curriculum is easy to find and is available to all to see what they have and what they don't. So you know that if you want your kid to have Japanese lessons for an upcoming trip, then you need to pay for those yourself. Likewise, with private insurance, you can go on the internet and they'll tell you what is covered and what is not as it pertains to RX drugs. I've tried to do this for NHS or Canada's Medicare. I've failed. That doesn't mean it's not available, but it does mean that someone can't just casually log on to the website and find out what is covered easily.
In order for that analogy to hold up, Democrats need to lay out, in writing, what is covered and what is not on a public plan. Otherwise, they are tricking people into thinking they are getting the best health care possible when in fact there might be better treatments available that aren't covered. One of the advantages of a system where everyone has different insurance, is that doctors generally prescribe whatever is best. If the insurance company comes back with a "hell no", then they can look for an alternative, or the consumer can figure out how to get the money. In a system like the NHS, the doctors operate from a presumption that what the NHS covers is what the patient can get and often don't tell them all their options. They use the guidelines as a bible. The same thing would happen under a public plan if it became the predominant form of insurance.
Matt on Lindsey Graham and government run insurance
Link here
Lindsey Graham talks to Ezra Klein about his opposition to the creation of a “public option” for people currently languishing on the individual health insurance market:
My belief is that no private-sector entity can survive over a long period of time competing against the government. The public option will be written by politicians. It will be generous. Nobody in my business worries about the bottom line. Eventually, the public option will dominate the marketplace because the political forces in the public sector are different than the economic forces in the private sector. Eventually, the private sector will give way.
Ezra asks the natural followup question: If government provision of health insurance is so terrible, why not scrap Medicare?
Francois' response: Now we're talking about single-payer. I thought single-payer was off the table? It would be mighty dirty and dishonest to use a public option as a trojan horse, something which liberals vociferously deny in mixed company(but not in purely liberal company).
I'm fine with a public option, but it must play on the same field as the private companies, not enjoy special advantages dictated by law. And it must not be bailed out if it fails.
But then again, it's all academic now. There will be no public option. There aren't enough votes and the President is no longer committed to it.
Matt on lying
Link here
If you want to defeat a legislative proposal, the absolute best messaging tactic you can adopt is just to lie about. Mainstream media coverage of your lies will often treat them as credible simply because the lies are being offered. At worst, the occasional “fact check” item will slap you on the wrist, but inevitably will need to come up with some way to define the other side as being just as bad. Under no circumstances will you get headlines like “Senator So-and-So Lies About Health Care.” And so doubts get planted in people’s minds.
Francois' response: Okay, this is just a theory, but I think lies would actually result in penalties in the realm of public opinion if one side was pretty consistently honest and the other side wasn't. When it comes to health care, a lot of Republicans are telling a lot of lies. But it's not working because the media isn't treating them as credible. The lies are working because Democrats are hiding things.
I'm sure people who follow politics are aware of the concept of getting out in front of a negative story. Health care reform, at least the parts of it that Democrats generally agree on, has very real tradeoffs. Many legitimate points have been made by conservatives and libertarians about how health care reform will lead to some people losing their insurance, paying higher taxes, and experiencing the same rationing that they experience with private insurance if they end up on the public plan. Instead of engaging with these arguments, Democrats are being cute and trying to deny that there are any tradeoffs associated with health care reform at all. Somehow they will cut Medicare by $500 billion, tax only the rich, and provide outstanding quality health care, better than what they get now, to all. That's just not credible and no one is buying it.
So since Democrats are hiding things, when Republicans make up stuff about what they are hiding, people believe them. If the Democrats were out in front, explaining how the tradeoffs would be offset by the benefits, rather than denying the tradeoffs completely, then Republicans couldn't gain the same traction with falsehoods.
Democrats aren't defining the terms of the debate skillfully. They threw out a fantasy and then acted surprised when the people didn't believe the fantasy. If they'd defined the tradeoffs early and minimized their significance, then the debate would have gone better for them.
If you want to defeat a legislative proposal, the absolute best messaging tactic you can adopt is just to lie about. Mainstream media coverage of your lies will often treat them as credible simply because the lies are being offered. At worst, the occasional “fact check” item will slap you on the wrist, but inevitably will need to come up with some way to define the other side as being just as bad. Under no circumstances will you get headlines like “Senator So-and-So Lies About Health Care.” And so doubts get planted in people’s minds.
Francois' response: Okay, this is just a theory, but I think lies would actually result in penalties in the realm of public opinion if one side was pretty consistently honest and the other side wasn't. When it comes to health care, a lot of Republicans are telling a lot of lies. But it's not working because the media isn't treating them as credible. The lies are working because Democrats are hiding things.
I'm sure people who follow politics are aware of the concept of getting out in front of a negative story. Health care reform, at least the parts of it that Democrats generally agree on, has very real tradeoffs. Many legitimate points have been made by conservatives and libertarians about how health care reform will lead to some people losing their insurance, paying higher taxes, and experiencing the same rationing that they experience with private insurance if they end up on the public plan. Instead of engaging with these arguments, Democrats are being cute and trying to deny that there are any tradeoffs associated with health care reform at all. Somehow they will cut Medicare by $500 billion, tax only the rich, and provide outstanding quality health care, better than what they get now, to all. That's just not credible and no one is buying it.
So since Democrats are hiding things, when Republicans make up stuff about what they are hiding, people believe them. If the Democrats were out in front, explaining how the tradeoffs would be offset by the benefits, rather than denying the tradeoffs completely, then Republicans couldn't gain the same traction with falsehoods.
Democrats aren't defining the terms of the debate skillfully. They threw out a fantasy and then acted surprised when the people didn't believe the fantasy. If they'd defined the tradeoffs early and minimized their significance, then the debate would have gone better for them.
Matt on taxing the rich
Link here
...we actually have a well-established method of taking market distributions of income and trying to transmogrify it into a more just, useful, and welfare-enhancing deployment of social resources—taxes and public services. The world of finance has been the main driver behind the growth in inequality at the extreme high end, and establishing additional tax brackets with higher rates would help lean against that trend. So would something like the Obama administration’s proposal to curb the extent to which high-income individuals can shelter income from taxes through itemized deductions.
Francois' response: There's a few problems with taxing the rich, especially bankers, but first let me propose a really simple solution. Rather than adding new tax brackets and making the system even more complicated, thus causing even more billions to be put to unproductive use complying with tax law, how about we concentrate on the last part of Matt's paragraph there, limiting itemized deductions? Better yet, why not eliminate deductions entirely and just have one or two tax brackets with only a standard deduction? How much do the rich currently pay in real terms, 18%? What gets me about that is that that's just an average. Some rich folks pay a lot less than that. Some pay a lot more. There's nothing fair about that. Two people making $1 million/yr should pay the same amount. Above a certain income level, people don't need special deductions for kids, or whatever. Really, I don't think middle class people do either. Just build that into the standard deduction, rather than giving people breaks just because they chose to have a family while penalizing people who chose not to.
So if the rich pay an average of 18% and you feel that's too low, instead of creating 50% tax brackets that most rich people will avoid, why not just have a 25% bracket with no deductions once you get over $100,000 in income?
In an earlier post Matt talked about efficiency. Well, when it comes to flatter taxes we do have solid empirical results: Russia, Lithuania, and Slovakia. When they instituted flat taxes, their revenues skyrocketed despite much lower rates. Compliance rates increased dramatically. Part of that is because a complex system where people with the same income pay vastly different amounts creates a society where everyone is sure that everyone else is cheating. 33% of Americans cheat on their taxes in one way or another. In Russia prior to the implementation of the flat tax, tax avoidance was a national pastime. If everyone knows everyone is paying the same rate, people pay up.
I don't know that a flat tax is better for the economy. There's no evidence that it is. But it is certainly better if you want revenues. And since Matt has made the point that progressivism is better served on the spending side than the revenue side, this should be an idea he can get behind.
Besides, taxing rich people creates an unreliable revenue stream. Middle class taxes create a reliable, stable, revenue stream. That doesn't mean you should tax the hell out of the middle class while letting the rich skate. But it does mean that if you know your revenue model is highly dependent on how rich people do in the investment markets, you'd better not spend all that money in good times, because when a recession comes, you're screwed.
...we actually have a well-established method of taking market distributions of income and trying to transmogrify it into a more just, useful, and welfare-enhancing deployment of social resources—taxes and public services. The world of finance has been the main driver behind the growth in inequality at the extreme high end, and establishing additional tax brackets with higher rates would help lean against that trend. So would something like the Obama administration’s proposal to curb the extent to which high-income individuals can shelter income from taxes through itemized deductions.
Francois' response: There's a few problems with taxing the rich, especially bankers, but first let me propose a really simple solution. Rather than adding new tax brackets and making the system even more complicated, thus causing even more billions to be put to unproductive use complying with tax law, how about we concentrate on the last part of Matt's paragraph there, limiting itemized deductions? Better yet, why not eliminate deductions entirely and just have one or two tax brackets with only a standard deduction? How much do the rich currently pay in real terms, 18%? What gets me about that is that that's just an average. Some rich folks pay a lot less than that. Some pay a lot more. There's nothing fair about that. Two people making $1 million/yr should pay the same amount. Above a certain income level, people don't need special deductions for kids, or whatever. Really, I don't think middle class people do either. Just build that into the standard deduction, rather than giving people breaks just because they chose to have a family while penalizing people who chose not to.
So if the rich pay an average of 18% and you feel that's too low, instead of creating 50% tax brackets that most rich people will avoid, why not just have a 25% bracket with no deductions once you get over $100,000 in income?
In an earlier post Matt talked about efficiency. Well, when it comes to flatter taxes we do have solid empirical results: Russia, Lithuania, and Slovakia. When they instituted flat taxes, their revenues skyrocketed despite much lower rates. Compliance rates increased dramatically. Part of that is because a complex system where people with the same income pay vastly different amounts creates a society where everyone is sure that everyone else is cheating. 33% of Americans cheat on their taxes in one way or another. In Russia prior to the implementation of the flat tax, tax avoidance was a national pastime. If everyone knows everyone is paying the same rate, people pay up.
I don't know that a flat tax is better for the economy. There's no evidence that it is. But it is certainly better if you want revenues. And since Matt has made the point that progressivism is better served on the spending side than the revenue side, this should be an idea he can get behind.
Besides, taxing rich people creates an unreliable revenue stream. Middle class taxes create a reliable, stable, revenue stream. That doesn't mean you should tax the hell out of the middle class while letting the rich skate. But it does mean that if you know your revenue model is highly dependent on how rich people do in the investment markets, you'd better not spend all that money in good times, because when a recession comes, you're screwed.
Matt on social conservatives and homosexuality
Link here
I think this explains a lot about the appeal of anti-gay crusades to social conservative leaders. Most of what “traditional values” asks of people is pretty hard. All the infidelity and divorce and premarital sex and bad parenting and whatnot take place because people actually want to do the things traditional values is telling them not to do. And the same goes for most of the rest of the Christian recipe. Acting in a charitable and forgiving manner all the time is hard. Loving your enemies is hard. Turning the other cheek is hard. Homosexuality is totally different. For a small minority of the population, of course, the injunction “don’t have sex with other men!” (or, as the case may be, other women) is painfully difficult to live up to. But for the vast majority of people this is really, really easy to do. Campaigns against gay rights, gay people, and gay sex thus have a lot of the structural elements of other forms of crusading against sexual excess or immorality, but they’re not really asking most people to do anything other than become self-righteous about their pre-existing preferences.
Francois' response: that's an amazing observation and why I love Matt's blog so much. I'd never thought of it that way but it makes a heck of a lot of sense. I respect Christianity a great deal. But I never understood the fixation on homosexuality. Yes, it is a sin, but is it a greater sin than stealing, adultery, eating pork, violating the Sabbath, or grabbing a man by the balls if you're a woman?
But Matt makes it clear. Avoiding those personal failings are hard. Avoiding having sex with the same sex if you're heterosexual is ridiculously easy. So you can be self-righteous at no cost to yourself.
One thing I will add on homosexuality though. I'm an atheist. I don't consider homosexuality to be morally wrong. But I think that when Christians try to say that homosexuality is not a sin, they are directly contradicting the Bible. They are making up their own religion. IMO, religion is only valuable to the extent that a person really believes that the moral code didn't emanate from themselves, but from a higher power. Once people start picking and choosing from the Bible, it's no stretch to start believing that stealing is okay, adultery is okay, bearing false witness is okay. It's the flip side to the fact that homosexuality isn't a greater sin than any other sin. It also means it's not a lesser sin either. So once you're okay with homosexuality, from a Christian perspective, what's stopping you from being okay with adultery? Might as well join me and become an atheist then, because you're just making stuff up.
I think this explains a lot about the appeal of anti-gay crusades to social conservative leaders. Most of what “traditional values” asks of people is pretty hard. All the infidelity and divorce and premarital sex and bad parenting and whatnot take place because people actually want to do the things traditional values is telling them not to do. And the same goes for most of the rest of the Christian recipe. Acting in a charitable and forgiving manner all the time is hard. Loving your enemies is hard. Turning the other cheek is hard. Homosexuality is totally different. For a small minority of the population, of course, the injunction “don’t have sex with other men!” (or, as the case may be, other women) is painfully difficult to live up to. But for the vast majority of people this is really, really easy to do. Campaigns against gay rights, gay people, and gay sex thus have a lot of the structural elements of other forms of crusading against sexual excess or immorality, but they’re not really asking most people to do anything other than become self-righteous about their pre-existing preferences.
Francois' response: that's an amazing observation and why I love Matt's blog so much. I'd never thought of it that way but it makes a heck of a lot of sense. I respect Christianity a great deal. But I never understood the fixation on homosexuality. Yes, it is a sin, but is it a greater sin than stealing, adultery, eating pork, violating the Sabbath, or grabbing a man by the balls if you're a woman?
But Matt makes it clear. Avoiding those personal failings are hard. Avoiding having sex with the same sex if you're heterosexual is ridiculously easy. So you can be self-righteous at no cost to yourself.
One thing I will add on homosexuality though. I'm an atheist. I don't consider homosexuality to be morally wrong. But I think that when Christians try to say that homosexuality is not a sin, they are directly contradicting the Bible. They are making up their own religion. IMO, religion is only valuable to the extent that a person really believes that the moral code didn't emanate from themselves, but from a higher power. Once people start picking and choosing from the Bible, it's no stretch to start believing that stealing is okay, adultery is okay, bearing false witness is okay. It's the flip side to the fact that homosexuality isn't a greater sin than any other sin. It also means it's not a lesser sin either. So once you're okay with homosexuality, from a Christian perspective, what's stopping you from being okay with adultery? Might as well join me and become an atheist then, because you're just making stuff up.
Matt on tax policy and growth
Link here
One issue in this neighborhood that I think is interesting is simply the fact that even though it seems like tax policy ought to be an important determinant of economic growth, it’s pretty hard to find evidence for this proposition. In general, the policy determinants of growth are hard to find. And I think this is particularly true with taxes. If you look across the main OECD countries, you see much more diversity in tax systems than you do in growth outcomes. The overall levels of revenue are quite different, and the design of the systems are different as well, but the outcomes are extremely similar.
Francois' response: Matt's observation seems right to me. Economies are complex things. It seems to me that governments can certainly screw them up(see Third World dictatorships), but can't really make them grow.
That being said, taxes do have an effect, it's just that the effect gets lost in the noise of other, more important factors, like monetary policy, spending policy, what's going on in the private sector, the policies of our trading partners, and the occasional natural disaster or epidemic. But you can pick out specific instances of tax law changes changing behavior. Making housing exempt from most capital gains taxes certainly had the effect of moving capital to the real estate market. Treating short term capital gains nearly the same as long term capital gains encouraged short term investing, which led to three bubbles since the 90s. High taxes do often cause brain drain, while low taxes often encourage people to move to low tax areas. At the margins, of course, not mass movements, but then the economy, like baseball, is a game of inches. If GDP growth is -1% instead of 1%, that's a huge difference in people's lives. But if Microsoft decided it didn't want to be in California anymore due to tax policy and instead moved to Florida, that would change California and Florida significantly.
So it's important not to overestimate the effect of taxes, which conservatives do way too much, but you don't want to dismiss them either. Economic theory is almost never entirely wrong, it's just that the effects are often greater on paper than in real life. But they are there.
One issue in this neighborhood that I think is interesting is simply the fact that even though it seems like tax policy ought to be an important determinant of economic growth, it’s pretty hard to find evidence for this proposition. In general, the policy determinants of growth are hard to find. And I think this is particularly true with taxes. If you look across the main OECD countries, you see much more diversity in tax systems than you do in growth outcomes. The overall levels of revenue are quite different, and the design of the systems are different as well, but the outcomes are extremely similar.
Francois' response: Matt's observation seems right to me. Economies are complex things. It seems to me that governments can certainly screw them up(see Third World dictatorships), but can't really make them grow.
That being said, taxes do have an effect, it's just that the effect gets lost in the noise of other, more important factors, like monetary policy, spending policy, what's going on in the private sector, the policies of our trading partners, and the occasional natural disaster or epidemic. But you can pick out specific instances of tax law changes changing behavior. Making housing exempt from most capital gains taxes certainly had the effect of moving capital to the real estate market. Treating short term capital gains nearly the same as long term capital gains encouraged short term investing, which led to three bubbles since the 90s. High taxes do often cause brain drain, while low taxes often encourage people to move to low tax areas. At the margins, of course, not mass movements, but then the economy, like baseball, is a game of inches. If GDP growth is -1% instead of 1%, that's a huge difference in people's lives. But if Microsoft decided it didn't want to be in California anymore due to tax policy and instead moved to Florida, that would change California and Florida significantly.
So it's important not to overestimate the effect of taxes, which conservatives do way too much, but you don't want to dismiss them either. Economic theory is almost never entirely wrong, it's just that the effects are often greater on paper than in real life. But they are there.
Matt on the Senate
Link
Alec MacGillis has a great piece in the Post on the evils of the U.S. Senate. Probably little of it will be strikingly new to anyone who’s read my extensive whining on this subject, but this bit of history—how the GOP manipulated the entrance of new states into the union in order to artificially preserve control of the senate—isn’t as well-understood as it should be:
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It turns out that if territories had been turned into states in order of their population, rather than in order of the partisan needs of the Republican Party, that control of the legislature would have looked quite different in the late nineteenth century.
Francois' response: Gerrymandering is a fact of politics and this is just a more sophisticated type of gerrymandering. Much like Democrats trying to get DC turned into a state, something which is blatantly unconstitutional.
Besides, would Matt really have preferred the Democrats of that time over the Republicans? Seems to me that the Republicans were much more progressive on the issues that mattered most in that time than the Democrats. The Democrats may have been less pro-business, but would any progressive place business regulation and progressive taxation ahead of civil rights? Seriously? I guess some would, since the party still lauds homophobes like Robert Byrd for his progressive economic record, but to me it's an example of misplaced priorities.
Alec MacGillis has a great piece in the Post on the evils of the U.S. Senate. Probably little of it will be strikingly new to anyone who’s read my extensive whining on this subject, but this bit of history—how the GOP manipulated the entrance of new states into the union in order to artificially preserve control of the senate—isn’t as well-understood as it should be:
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It turns out that if territories had been turned into states in order of their population, rather than in order of the partisan needs of the Republican Party, that control of the legislature would have looked quite different in the late nineteenth century.
Francois' response: Gerrymandering is a fact of politics and this is just a more sophisticated type of gerrymandering. Much like Democrats trying to get DC turned into a state, something which is blatantly unconstitutional.
Besides, would Matt really have preferred the Democrats of that time over the Republicans? Seems to me that the Republicans were much more progressive on the issues that mattered most in that time than the Democrats. The Democrats may have been less pro-business, but would any progressive place business regulation and progressive taxation ahead of civil rights? Seriously? I guess some would, since the party still lauds homophobes like Robert Byrd for his progressive economic record, but to me it's an example of misplaced priorities.
On bubbles
There's been a lot of posts on Matt's blog recently, as well as on Brad Delong and Kevin Drum's blogs, about bubble. How to detect them, what to do about them.
Now I'm not a financial expert. At best, I'm financially literate and not a bad investor. I saw the stock market bubble and the housing bubble before they popped, as well as the oil bubble. When things get insanely overpriced, it's not hard to tell. The only part that's impossible is figuring out when investors will finally realize how fast prices have outpaced value and start selling. But from the perspective of policymakers, they don't need to know that. They just need to know that a market is fundamentally overpriced by quite a bit. You don't know precisely when a bubble starts or when it's going to end, but you know when one is going on once it's really gotten inflated.
But that's not really relevant either. What causes bubbles? Is it that investors aren't aware of them? Many investors aren't, but I think most investors are. They just assume it will make them big profits and they'll get out and some other sucker will be holding the bag, usually inexperienced investors who hear during the height of the bubble how they can make massive returns with little risk. So it's probably not ignorance. It's greed.
So how do you deal with that? I have an idea: why not jack short term capital gains rates to 50%? And to encourage investment for the long term, reduce long term capital gains to a nominal amount like 10%, or even 5%. If you're worried about that being regressive since rich people tend to be more likely to have long term investments, you could just keep the current long term capital gains rate on people making more than $250,000 and reduce the capital gains rate to 10% for everyone else if they hold an investment for at least five years.
Something that was particularly to blame for the housing bubble was the recent favorable treatment of capital gains on the sale of a primary residence. Taxes change incentives. Especially for smaller investors, what could make more sense than to invest in your home, since when you sell it, you don't pay capital gains taxes unless your profit is $250,000 or more if you're single? Since it also applied to second homes, it encouraged house flipping. That not only encouraged people to overpay for housing, it also led people to put all their eggs in the real estate basket. The favorable treatment of capital gains on housing should be eliminated, or at least require that the home be owned for longer before sale.
Now I'm not a financial expert. At best, I'm financially literate and not a bad investor. I saw the stock market bubble and the housing bubble before they popped, as well as the oil bubble. When things get insanely overpriced, it's not hard to tell. The only part that's impossible is figuring out when investors will finally realize how fast prices have outpaced value and start selling. But from the perspective of policymakers, they don't need to know that. They just need to know that a market is fundamentally overpriced by quite a bit. You don't know precisely when a bubble starts or when it's going to end, but you know when one is going on once it's really gotten inflated.
But that's not really relevant either. What causes bubbles? Is it that investors aren't aware of them? Many investors aren't, but I think most investors are. They just assume it will make them big profits and they'll get out and some other sucker will be holding the bag, usually inexperienced investors who hear during the height of the bubble how they can make massive returns with little risk. So it's probably not ignorance. It's greed.
So how do you deal with that? I have an idea: why not jack short term capital gains rates to 50%? And to encourage investment for the long term, reduce long term capital gains to a nominal amount like 10%, or even 5%. If you're worried about that being regressive since rich people tend to be more likely to have long term investments, you could just keep the current long term capital gains rate on people making more than $250,000 and reduce the capital gains rate to 10% for everyone else if they hold an investment for at least five years.
Something that was particularly to blame for the housing bubble was the recent favorable treatment of capital gains on the sale of a primary residence. Taxes change incentives. Especially for smaller investors, what could make more sense than to invest in your home, since when you sell it, you don't pay capital gains taxes unless your profit is $250,000 or more if you're single? Since it also applied to second homes, it encouraged house flipping. That not only encouraged people to overpay for housing, it also led people to put all their eggs in the real estate basket. The favorable treatment of capital gains on housing should be eliminated, or at least require that the home be owned for longer before sale.
Sunday, August 16, 2009
Matt on the NHS
Link here
The NHS is developing a simple blood test that could save the lives of hundreds of unborn babies who are put at risk when doctors try to establish whether they are developing healthily in the womb, the Guardian has learned.
The test could put an end to the use of invasive procedures such as amniocentesis, which cause some women to miscarry.
Yes this seems like an interesting story about a potentially useful medical innovation. But the discerning reader will note that this is all allegedly happening in the United Kingdom, and funded by the National Health Service. The NHS, however, is a socialistic system and the UK a socialist land. And everybody knows that under socialized medicine, medical innovation will cease. Therefore, the story must be made up.
Francois' response: Critics of the NHS don't claim that medical innovation will cease, but that it would slow because the government can't create usable, safe drugs and treatments on its own. This is, as reported, a simple blood test. Which is great, and makes one wonder why no one else thought of it. But it's still simple and hard to screw up. Now if NHS cures Stephen Hawking's ALS, then they'll show me something. But I think it's safe to predict that the next big advance in treating ALS will originate right here in the US.
What is this blog?
Yglesiaswatch is going to be similar to sites that fact check and criticize blogs by Andrew Sullivan, Glenn Reynolds, and Paul Krugman. But this blog will be different in an important way. Those other sites exist to attack and humiliate those prominent bloggers. Matt Yglesias is actually an amazing blogger and one of the best thinkers on the web, and he explains his ideas in a conversational tone that makes him a pleasure to read.
So why have a blog called "Yglesias Watch"? A few reasons. First, I'm a libertarian conservative. Although I love Matt's blog and have been reading it since 2002, I disagree with him very often. Every once in awhile, I do think he gets a fact wrong or misinterprets data. So I'd like to use this blog, as opposed to his very busy comments thread to take issue with him when he's wrong.
Secondly, Matt's blog covers a wide range of subjects, many of which don't really get covered much on other blogs. Many of his posts are fascinating and I'd love to expound on those.
Third, I have another blog, Francois World, and frankly I just don't post enough because I'm more inspired to write in response to what others write than I am to make original posts of my own. When I do have an idea for something to discuss in an original post, it will still go on that blog. But since I find myself writing a lot about Matt Yglesias' posts, I figure he should get proper credit and his own dedicated blog.
Fourth, we're in the middle of some exceptional policy debates the likes of which haven't been seen in my lifetime. We've got economic plans, financial regulation, health care, the environment, immigration reform, and two wars going on. During the Bush years, the discussion got kind of stale. Now there are a lot more points of view, so I figure I might actually be able to contribute something that no one else is.
To conclude, while this blog will be 90% about Matt Yglesias, I will occasionally respond to other blogs or link to them when the subject matter is incredibly interesting.
So why have a blog called "Yglesias Watch"? A few reasons. First, I'm a libertarian conservative. Although I love Matt's blog and have been reading it since 2002, I disagree with him very often. Every once in awhile, I do think he gets a fact wrong or misinterprets data. So I'd like to use this blog, as opposed to his very busy comments thread to take issue with him when he's wrong.
Secondly, Matt's blog covers a wide range of subjects, many of which don't really get covered much on other blogs. Many of his posts are fascinating and I'd love to expound on those.
Third, I have another blog, Francois World, and frankly I just don't post enough because I'm more inspired to write in response to what others write than I am to make original posts of my own. When I do have an idea for something to discuss in an original post, it will still go on that blog. But since I find myself writing a lot about Matt Yglesias' posts, I figure he should get proper credit and his own dedicated blog.
Fourth, we're in the middle of some exceptional policy debates the likes of which haven't been seen in my lifetime. We've got economic plans, financial regulation, health care, the environment, immigration reform, and two wars going on. During the Bush years, the discussion got kind of stale. Now there are a lot more points of view, so I figure I might actually be able to contribute something that no one else is.
To conclude, while this blog will be 90% about Matt Yglesias, I will occasionally respond to other blogs or link to them when the subject matter is incredibly interesting.
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