Archive for July, 2019
I’ve spent much of the past couple of years trying to explain my political philosophy. It’s hard to do, though, because it’s not particularly simple.
Oh, sure, to most conservatives I probably look like a raging liberal, looking forward to the day when government owns all forms of commerce in a nice, liberal utopia of collectivism. I suspect I look mighty conservative to hardcore liberal people. But all of that turns into caricature.
Part of the problem is that I’m forced to describe my political views through peepholes. It would take an entire book to describe it in its entirety. And so I end up feeling like I write “fan”, “wall”, “rope”, and “tree” articles when I’m trying to describe the elephant.
Today I’d like to come closer to writing an “elephant” article, drawing upon those previous ones.
I’m quite the fan (!) of free markets. A truly free market has the following characteristics:
- No barriers to entry or exit
- Perfectly available information to both buyers and sellers
- No affected parties in a transaction besides the buyers and sellers
A truly free market is sort of like the perfectly elastic bodies or perfectly frictionless surfaces in classical mechanics. They’re wonderful tools in academia to describe fundamental principles. And they make terrific starting points upon which to layer the imperfections of the real world, so as to address the inevitable additional complexity made necessary by those imperfections.
This means that there is no such thing as a truly free market, in the same way that there is no such thing as a frictionless surface. If we built machines with the assumption that there was no friction, the machines would not work. Similarly, when we build markets assuming that they are perfectly free, they don’t work, either. We should no more be surprised that the free markets fail us than we should be surprised that machines built for a frictionless world fail us.
At the same time, acknowledging that there is no such thing as a truly free market doesn’t invalidate the underlying theory, any more than introducing friction invalidates the law of inertia. Making markets work, then, requires acknowledging the higher orders of complexity that we are forced to layer upon the fundamental principles.
In many respects, then, good government regulation is oil for machines. It reduces the friction that comes from cost externalities, or imperfect information, or barriers to entry or exit. Let me provide some examples of each in turn.
I’ll take them in reverse, starting with barriers. Any time there is a natural scarcity of a resource, there are barriers to entry. The whole reason companies attempt to achieve monopolies is that they are inherently insurmountable barriers to entry for competitors, which allows for the business to capture a purely demand-based income. That is, the price is based entirely on the demand for the product, typically at the point where profits are maximized. When there are no barriers to entry, income is supply-based instead; prices fall to a point close to the marginal supply cost. As entry barriers rise, then, prices move along that continuüm between the marginal supply cost and the maximum profit price.
In my view, government should, then, aim to minimize barriers to entry, with the exception of intellectual property. Since the value is in the idea, rather than the product, it does make sense for there to be a temporary monopoly granted to the creator of the idea. But copyright law has gone too far when that monopoly is essentially granted in perpetuity. It makes a mockery of the fundamental behind it, which is to encourage exploring new ideas.
How can government do better in this area? How about prohibiting exclusive contracts? Every exclusive contract creates monopolies. They stifle competition. They ultimately cost consumers more for the same goods, which puts a drag on the economy. Our commerce laws should aim to minimize barriers to entry and barriers to exit markets. I recognize that this policy is viewed as hostile toward business. In a sense, that’s true. Businesses, like the people who run them, are lazy. They want to get profits with minimal effort. When a business is able to achieve a monopoly, there is no longer incentive to innovate. To the extent that monopolies are countered, profits are reduced. But we all get more for our money, and we get more rapid innovation. It’s a rising tide that ultimately lifts all boats.
That’s not to say that there is always value in fragmenting a market further. To a point, businesses can gain economies of scale and economies of scope by growing. In fact, those economies can lead to lower prices and greater value as well. But that exists only as long as competition remains high and barriers to entry and exit remain low.
And not all markets are able to support low barriers. For example, it isn’t cost-effective to run power lines for multiple power supply companies in most communities (although San Francisco has two completely separate power systems: a public one for government and a private one for the residents). Nor does it make sense to have multiple waste collection companies. So one entity ends up being granted a monopoly. Perhaps it’s government-run, or perhaps it’s a contracted private company. In those cases, though, government is obligated to manage the pricing and service, because there is no option for competition. Our government does us a disservice when we are unable to validate that we are getting the service we deserve at a fair price. And in order to do this we need access to free information.
And free information is the next pillar of a free market. If we cannot trust the item we are purchasing, and compare it to substitutes, we cannot have a free market. If we had unlimited time to comparison shop, and unlimited capacity to learn, we would have a much easier time making well-informed decisions. But we don’t. We are forced to take shortcuts. This is why we end up trusting specialists, whether they work for private industry or for government. It’s why we should feel threatened when politicians attempt to undermine our trust in specialists. Reducing our trust in specialists makes us poorer economically, because it makes us poorer in our economic decisions. It takes us away from freer markets. Government should be doing everything possible to encourage better information, particularly since many businesses benefit by avoiding disclosure. It’s poor information that led people to invest in real estate derivatives nearly a decade ago, and contributed mightily to our worst recession since the 1930s.
And it’s poor information that leads us to throw our global climate out of whack, which will hurt our society for generations to come…a huge cost externality.
I discussed cost externalities in “Blowing Our Inheritance”, where I described temporal costs — where one generation is forced to bear the cost that translates to another generation’s benefit. But these externalities show up all over the place. When I drive my car, I get the benefit of quickly getting to my destination. It’s a benefit to one person. The pollution I generate affects anywhere from thousands to billions of people (depending on the type of pollution). The costs may be infinitesimally small from my lone act of driving to the grocery store, but when you multiply that infinitesimally small number by a huge number of people performing the same action, the aggregate cost is significant. So we each gain a large amount of benefit from each action, while burdening the rest of the world a small amount, but collectively we may all be worse off in the end.
What if we had to pay money to everyone in the world for the burdens we cause? I’m not talking about a penny to each person each time we drive. That would be far too high a compensation. Imagine instead that we had to put our global cost into a bank account, and each of us got a check once a year to cover the cost of what was in the account, based on the particular burden we all bore from the collective pollution. Then everyone would pay for the burdens they create, and everyone would be compensated for the burdens they received. The closer we can come to achieving this, the better we address cost externalities and more accurately reflect the true economic value of a transaction.
Those externalities don’t exist solely as costs. They also can be external benefits. For instance, imagine a scenario where there is a major street running through a neighborhood. It has been cracked and potholed, and this has made travel down that street very uncomfortable…not to mention damaging to the cars that drive on it. The residents band together to pay to have the street repaved. You don’t live in that neighborhood, but you pass through it on that road every day as part of your commute. You get the external benefit of a smooth road, while the residents bore the cost of paving it.
It turns out that much of the Internet behaves in this fashion. We directly pay for very little of the network over which our communications run. We do, however, gain a great deal of external benefit by virtue of others paying for the bulk of the network.
Typically, it makes sense for us to collect those external benefits in cases where it is too onerous to directly charge for each use. In those instances, it makes more sense to aggregate the costs and distribute the collected money for the beneficial services. This is the primary basis for taxation. Enough of us want those benefits that we are willing to pay for them in a collective fashion, so as to reduce the friction that would otherwise arise if we had to individually pay for each instance of reaping the external benefit.
But how to tax us? Fairly, of course. But fair taxation means different things to different people. It can mean the same number of dollars per person, or the same percentage of income or wealth per person, or the same amount of marginal utility per person. I am a fan of the marginal utility model, but I suspect that’s because of the amount of time I’ve spent learning about economics. It’s not a concept that most people are able to understand without a lot of explanation. Typically, those who understand it and continue to oppose it subscribe to the belief that paying a lower marginal utility tax is just reward for the hard work that led to more wealth.
But there’s another way to view taxation. Taxes produce drag on the economy. Government spending that is covered by those taxes stimulate the economy. But different taxes produce different levels of drag for the same amount of tax revenue, just as different government spending stimulates the economy to different degrees. Therefore, another goal might be to maximize revenue per “unit of economic drag”. That would fund our government with minimal negative impact on the economy. This model ignores any degree of “fairness”, but it can make all of us better off than we would be in any of the ideally “fair” models. Would we be happier with more, even if the distribution was less equitable? Or would we prefer a more equitable distribution, even if it means every one of us is worse off in the end? It’s a good set of questions to ask, but nobody is asking it.
And, much as I wish it weren’t the case, not everything can be handled with a free market. Humans are particularly short-sighted, especially when they are younger. Monotreme would point out that it’s because of the underdeveloped amygdala, but I’m less concerned with the why than the what in this case. That shortsightedness puts us at a social crossroads.
The compassionate side of us doesn’t want us to subject people to extreme suffering, even if it comes from poor decisions earlier in life. We don’t want old people to be on the streets, picking their dinners out of garbage cans until they die of some easily curable malady. We don’t want young people to die after automobile accidents simply because they don’t have insurance to cover the medical costs incurred in the accident.
Yet, the personal responsibility side of us (to which I alluded on Saturday in “Self-Doubting Thomas”) makes us want people to be self-sufficient. We want more ants and fewer grasshoppers. Generally speaking, a society of ants will have a more robust economy than a society of grasshoppers. To the extent, then, that we shield people from poor decisions, we encourage more grasshoppers.
How do we, as a society, address this paradox? Poorly, to be perfectly frank. Grasshoppers tend to collect external benefits without contributing to cover the associated costs. But they do so whether they are shielded from their poor decisions or left to be subject to them. We could go Jonathan Swift on them, of course. But even the most callous among us seem unwilling to go to those extremes. This leaves us with unavoidable grasshopper costs. Our options are to focus on the lowest-cost ways of dealing with them (perhaps a return to the poorhouses of the 19th century?), or to accept the fiscal costs of dealing with them in a compassionate way. If we choose the latter, we must accept that it will almost certainly increase the number of grasshoppers. That simply becomes one of the costs of appealing to our sense of compassion.
Naturally, I lean toward that more compassionate model, in no small part because I recognize that it is nearly impossible to separate those who choose to be grasshoppers from those who have grasshopperness thrust upon them (e.g., those who grew up without the resources that would have led them to become ants, or had extreme circumstances that precluded anthood).
This becomes particularly important when dealing with healthcare, since it doesn’t fit well into any form of free market. This is why I noted, so long ago, that “Health Insurance Isn’t Really Insurance at All”. Healthcare is so complex, because it deals in so many submarkets, that we cannot hope to address the costs we have without teasing the separate parts from each other, and addressing them individually, but in a holistic fashion.
Ultimately, these principles are what led me to align with the Democrats. I don’t want socialism. I don’t want anything close to it. But I want to compassionately address our healthcare and the social safety net necessary to support our society’s compassion for our fellow humans. I want to achieve the goals of lower crime and better lives for Americans — not just today, but for generations to come — at the lowest net present cost possible. I want to encourage market competition so as to maximize economic Darwinism, but do so in a fashion that encompasses the total costs of the transactions, so that those engaged in commerce don’t benefit by stealing from those around them.
While I don’t believe that the entirety of the Democratic Party Platform aligns with those beliefs, far more of it does than does the Republican Party’s counterpart.
But what I long for most is for these issues to be discussed. We haven’t had many true political debates in the United States in my lifetime. It’s too easy to go for the cheap shot, and those who do receive too much benefit to stop doing it. It was my hope from the start that Logarchism could be a beacon of light, a place where the issues could be discussed without devolving into cheap shots. I think we’ve done better than most corners of the Internet, and I’m proud of that. But I’m also sorry that we haven’t been able to do more.
What does our future look like when we can’t look holistically at policy, when we must reduce everything to simple solutions to complex problems…simple solutions that we all know (or should know) won’t work? As we approach the 237th anniversary of the official signing of the Declaration of Independence, I fear for our country. We cannot solve anything if we are unwilling to consider, reconsider, and rethink that which we already “know”.
That is the real elephant in the room.
The late Congressman and Speaker of the House Tip O’Neill famously said, “All politics is local.” Even as the national Congress seems stalemated, unable to enact even such vital legislation as a jobs bill or firearm reform or a new immigration bill, locked in seemingly endless partisan obstructionism — even as inaction reigns supreme, state legislatures across the country are making progress, though too often the progress is in taking states backward.
There is some good news. Colorado will require more background checks for gun sales, and will outlaw high-capacity ammunition magazines. At least eighteen other states, however, have loosened firearms restrictions. As of July 1, for instance, Kansas will allow schools to arm employees with concealed handguns, and will ensure weapons can be carried into more public buildings.
Are there people who honestly believe that the way to reduce gun violence is to have more guns? Perhaps so; or perhaps much action in state legislatures is more partisan than rational.
The Pennsylvania state Senate negotiated with the state’s Republican Governor, Tom Corbett, to include the Affordable Care Act’s Medicaid expansion in next year’s budget. The measure passed in the Senate on Sunday night on a 40–10 vote. A key committee in the state House, however, stripped that provision on Monday from the version of the bill being considered there. This would make Pennsylvania the 22nd state to turn down these billions of dollars in federal aid money.
It is difficult to see why a state would reject the expansion of Medicaid, since it is being paid for through federal funds, and requires nothing from the states for the first three years. After that point, the portion paid by the federal government gradually reduces to 90 percent in 2020. Even with states picking up one tenth of the cost, they will save money, since giving adequate health care will mean lower costs for emergency rooms. A healthier citizenry means fewer missed workdays, fewer medical bankruptcies, and fewer unnecessary deaths — thus, higher tax collections. It’s a win-win, and should a no-brainer.
All is not lost for the Medicaid expansion. In Ohio, the Republican governor, John Kasich, vetoed language in the budget bill that would prevent him from moving forward with this provision of the ACA, though he did leave intact onerous new anti-abortion provisions. In Nebraska, 22 state Senators pledged to continue working on putting the expansion back into the state budget, after it having been stripped out of the current bill. In all, 23 states and the District of Columbia have approved these Medicaid provisions that will help millions of people earning less than 138 percent of the federal poverty line, or roughly $31,800 for a family of four.
Is there any excuse, other than ideology, for denying this coverage? Does withholding health care for poor people serve any legitimate purpose?
As mentioned, Ohio is about to institute severe — and so far, unique — abortion restrictions:
Clinics must have an agreement with a local hospital to transfer patients there in the case of an emergency, but public hospitals are barred from entering into those agreements… Another way the new law is unusual: the director of the state department of health, a political appointee, has the unilateral power to revoke variances given to clinics without a transfer agreement. The director also determines whether transfer agreements are satisfactory.
The new law also cuts funds for Planned Parenthood, requires transvaginal ultrasounds, and forbids most medical counseling that would discuss abortion.
In Texas, an anti-abortion bill was filibustered to death — by a real filibuster! — last week in an heroic effort by state Senator Wendy Davis. In response, the Republican Governor, Rick Perry, called a special session of the state legislature to reintroduce the measure:
The bill would ban most abortions after 20 weeks of pregnancy and would tighten regulations on abortion clinics and the doctors who work at them. Critics said the measure would have shut most of the abortion clinics in Texas.
Indeed, the bill would leave five clinics in operation for the entire, enormous state. Currently, there are about 40, so that’s closing 88 percent of them. At least thirteen states have passed new limits on abortions. A bill intended to close clinics in Alabama has been temporarily blocked by a federal judge.
It’s clear that most of these anti-choice laws would be ruled unconstitutional in light of Roe v. Wade. Or at least, they almost certainly would be by anything other than the Roberts court. A coin flip might be a relatively accurate predictor of what would happen if these laws are challenged today.
In other, non-health matters, in the wake of last week’s Supreme Court decision striking down an important provision of the Voting Rights Act, several states are considering (or have already enacted) restrictive new voting laws; Virginia, North Carolina, Pennsylvania, Alabama, Wisconsin, and Texas are among them.
On the plus side, new legislation in eight states will prevent businesses from demanding passwords to social media sites as a condition of employment. Though, on the downside, this means in at least eight states, such intrusive demands from employers were apparently common enough that the state legislatures felt compelled to enact such laws.
An excellent summary overview of the action in state legislatures can be found here. Some of the new laws will undoubtedly infuriate, some will delight, some will make one sit up in surprise. My personal favorite is that Kentucky has just repealed a Prohibition-era law banning election-day drinking.
Perhaps we all need that sort of release on election day, for America is that sort of nation — no matter your political point-of-view, every cycle brings plenty to celebrate and plenty to lament. At the least, this mix provides plenty of reason for people on all sides to remain active. Our multi-tiered system of government, with elected officials in cities, counties, states, and other regional and local jurisdictions in addition to federal, gives opportunity for both value and mischief of almost infinite variety.
On this July 4, as you watch the fireworks and celebrate another candle in the nation’s cake, take stock of what the nation is doing, where it’s been, where it’s going. Think about where you want it to go, and where you might be able to make a difference. A nation’s life is not a spectator sport.
In America, the people govern. The government is made up of citizens, not nobility ruling hereditary fiefdoms. More, the people chose representatives; even appointed officials are selected by representatives of the people. That is the whole point of America, the purpose of the nation, the reason it was created. To the extent that we relinquish our power to corporate interests, to monied mouthpieces, or to professional lobbyists, we fail to achieve our national purpose.
If you are dissatisfied with the direction of the nation, your state, your city, or your county, it is up to you to do something about that. If you don’t see changes you want, look in the mirror for the cause.
All politics is local. It starts in your home, and spreads from there.
In March 1991, Rodney King was beaten by officers of the Los Angeles Police Department. It was captured on videotape, one of the first viral videos of a new age, and it heated an unstable flammable mixture. The mixture smoldered during the year between the incident and the trial of the LAPD officers; when they were acquitted, oxygen got to the smoldering rags and the Los Angeles riots, the deadliest riots in the US in over 130 years, broke out in late April and early May 1992.
Too late, seeing what his traffic stop and beating had triggered, King pleaded with Los Angelenos: “Can we all get along?”
Looking at the current state of political discourse, I think the same thing.
I was amazed, dismayed, and ultimately saddened by the treatment of President Bill Clinton by his opponents. The Internet was still relatively new then. There was a World Wide Web, but it wasn’t in widespread use, and I got most of my online information from what were called “Usenet Newsgroups”. Anyone with a bit of computer savvy could set up one of these groups and say their piece. I had family in Mena, Arkansas, so I was more than a little surprised to find a group called (as I recall) alt.conspiracy.mena. I can’t find any trace of it now, but here’s a sample of the kind of things you’d find there.
Take the entire Vincent Foster suicide conspiracy theory. Based on a very thin line of “evidence”, it was the most vile, nasty, evil set of accusations I had ever seen. Even that thin reed was fortified by Rush Limbaugh and his ilk on talk radio and TV.
Again, after 9/11, my fervent hope was that we would band together as a nation and move forward based on our manifest common interest. Then President Bush send Colin Powell to present mostly fabricated evidence to the United Nations, and we were at war with Iraq, but at the same time we went back to our war of words (and sometimes bullets) in what now passes for “political discourse”.
Nate Silver’s FiveThirtyEight blog was a political breath of fresh air for me. I discovered it in early 2008, shortly after Nate established it, and I found there a community of people who actually amassed scientific and rational data to support their positions. Even the people I disagreed with seemed to be struggling to stack evidentiary bricks on their side and we on the liberal left attempted to do the same.
When Nate moved to the New York Times and became bound by the Old Gray Lady’s comment policy, we knew the jig was up. We tried, first at 538Refugees, then here at Logarchism, to recreate what was lost, but Nate’s blog had that indefinable quality that came from his personal and political nous and incredible intellect. We have since attempted to make the same match burn twice.
And so I still long for that place where we use logic, and data, and science, to feed our thoughtful, reasoned argument. A sort of political science forum with the emphasis on the “science”. A place where, as the old saying goes, “we can disagree without being disagreeable”.
Let’s be the change we want to see in the world. Let’s go out and make political discourse the way we want it to be. Slowly, surely, we will turn this wrecked battleship around and get back to where we need to be.
When we were children and encountered others in the rough-and-tumble of the playground who constantly whined about how mean and unfair everybody was, we had a sensible way of dealing with them. We taunted them by singing, “Nobody likes me, everybody hates me, I’m going to eat some worms…” These days it seems to me that our conservative friends could benefit from a bit of that same bracing grade-school remedy. Too many conservatives have become political paranoids who search out, collect and brood over any kind of negative press, however trivial, and catalog it in their minds as incontrovertible proof that the whole massive media industry is a bunch of big mean poopyheads who are all totally biased against them.
In the recent Presidential election their whining, grievance and delusions of persecution reached such a level that Republicans actually did start to eat worms. They were so upset by masses of polls showing the national unpopularity of their chosen candidate, they went out into their own back garden and dug up a mess of fat, slimy “unskewed” polls, which they all proceeded to chew and swallow with gusto. Sad and painful bellyaches inevitably followed… because paranoia makes people do really irrational and dangerous things.
The meme of “anti-conservative media bias” started decades ago with Richard Nixon, the ultimate political paranoid. By now it is virtually impossible to convince any conservative that liberals do not have a death-grip on all kinds of media, which they have spent years infesting with ineradicable left-wing bias. They believe this in spite of much evidence to the contrary including articles like this one pointing out various conservative advantages in the media, including the fact that that the highest-circulating newspaper in the nation is the staunchly conservative Wall Street Journal, the dominant cable network in the land is FOX News, and the top political talk radio programs, Limbaugh and Hannity, outdraw the opposition by practically an order of magnitude. But none of this is persuasive to conservatives, who perceive any negative report about a Republican politician (or any praise of a Democrat) as further evidence of rampant bias.
The Neiman Journalism Lab has done some fascinating work on the perception of bias. They think much of it comes from our reaction to branding, and they provide an illustration of how readers perceive bias differently when the same story is reported under a New York Times headline and then a FOX News one. The final determination of the researchers, unsurprisingly, is that the more strongly we identify with a particular group, the more likely we are to perceive a bias against that group. And since conservatives not only bond together more strongly than Democrats, but also are more likely to share a paranoid view of a world that is always changing too fast for their comfort, it is unsurprising that they would perceive massive systemic bias where it does not exist.
In fact, there are many media analysts and critics who feel that media in general, pummeled by these constant attacks from the right, is being too zealous with their efforts at “balanced journalism,” wherein they not only try to portray the view from both sides, but to balance a report of negative behavior from one party by searching out something equally damning from the other side. This was evident in the recent election when Republican Senate candidates Todd Aiken and Richard Mourdock made extremely damaging comments about rape. Conservatives complained that similar gaffes on the left were unfairly being ignored. In fact, there were no “similar comments” from the left to report. What was the media expected to do…dig up and publish unflattering high school yearbook photos of Democratic Senate candidates to provide “balance?”
At last it appears a few sensible Republicans, stung by election losses and worried about the image of their party, are finally showing signs of being ready to give up their fixation on “media bias” as the cause of all their troubles. Michael Potemra, right-wing commentator at the National Review, expresses the view that even some on the right are growing tired of the “media bias” excuse so often trotted out by disgruntled Republicans. Potemra ends his comments with this:
I once heard the conservative political philosopher Hadley Arkes, in a speech, refer to media bias as akin to the “law of gravity.” There was much wisdom in that comparison: To say that the law of gravity is the cause of plane crashes is not especially helpful, and if airlines got in the habit of relying on that explanation, we would have cause for worry.
The Republican aircraft may not yet be plummeting to earth, but it is certainly experiencing some scary turbulence. If their once-mighty plane does eventually crash, gravity will be a factor but it will not be the underlying cause. For that, Republicans will need to look elsewhere… not at “media bias” but at the ideological stances within their political movement that are currently making it so unpalatable to a majority of Americans. And if they want to avoid becoming subject to the downward pull of gravity and its inevitable result, they’ll need to work fast to figure out what those factors are.
And they really need to stop eating worms. That’s just nasty.