Archive for February, 2008

Democrats Will Improve Our Image Abroad?

Friday, February 29th, 2008

It looks like they are making the problem worse:

Candidates rebuked for attacks on Nafta

Mexico and Canada on Wednesday voiced concern about calls by Barack Obama and Hillary Clinton to renegotiate the North American Free Trade Agreement, as the Democratic presidential hopefuls compete to adopt the most sceptical stance towards free trade ahead of next week’s Ohio primary election.

In a televised debate on Tuesday night, Mr Obama and Mrs Clinton both threatened to pull out of Nafta if elected president unless Canada and Mexico agreed to strengthen labour and environmental standards.

Arturo Sarukhan, Mexico’s ambassador to the US, told the Financial Times that the US, Canada and Mexico had all benefited from Nafta and warned against reopening negotiations.

“Mexico does not support reopening Nafta,” he said. “It would be like throwing a monkey wrench into the engine of North American competitiveness.”

Mexican diplomats believe a renegotiation could resurrect the commercial disputes and barriers to trade that the agreement itself was designed to overcome.

Jim Flaherty, Canada’s finance minister, also expressed “concern” about the remarks by the Democratic candidates.

“Nafta is a tremendous benefit to Americans and perhaps the [candidates] have not had the opportunity to familiarise themselves with the benefit to Americans and the American economy of Nafta,” he said.

The full article from the Financial Times can be found here.

Tufts professor Daniel Drezner comments: “I’ve said it before and I will say it again: Democrats cannot simultaneously talk about improving America’s standing abroad while acting like a belligerent unilateralist when it comes to trade policy.”

Update: The economist has more.

The Humble Obama

Thursday, February 28th, 2008

Noam Scheiber of The New Republic writes:

Despite Obama’s reputation for grandiose rhetoric and utopian hope-mongering, the Obamanauts aren’t radicals–far from it. They’re pragmatists–people who, when an existing paradigm clashes with reality, opt to tweak that paradigm rather than replace it wholesale. As Thaler puts it, “Physics with friction is not as beautiful. But you need it to get rockets off the ground.” It might as well be the motto for Obama’s entire policy shop.

Sociologically, the Obamanauts have a lot in common with the last gang of Democratic outsiders to make a credible run at the White House. Like Bill Clinton in 1992, Obama’s campaign boasts a cadre of credentialed achievers. Intellectually, however, the Obamanauts couldn’t be more different. Clinton delighted in surrounding himself with big-think public intellectuals–like economics commentator Robert Reich and political philosopher Bill Galston. You’d be hard-pressed to find a political philosopher in Obama’s inner wonk-dom. His is dominated by a group of first-rate economists, beginning with Goolsbee, one of the profession’s most respected tax experts. A Harvard economist named Jeff Liebman has been influential in helping Obama think through budget and retirement issues; another, David Cutler, helped shape his views on health care. Goolsbee, in particular, is an almost unprecedented figure in Democratic politics: an academic economist with a top campaign position and the candidate’s ear.

One major reason for these differences is the candidate himself. Cutler told me Obama is adamant about consulting bona fide experts. “The staff kept saying, ‘What he wants to know is that he’s really talking to experts in the field. When you go see him, you know, make it clear that you’re an expert.'” When it comes to economics, it’s very difficult to achieve expertise without an academic background. It’s a field that prizes rigorous results, supported by reams of painstakingly sifted data. (Though Reich was labor secretary, he was trained as a lawyer, not an economist.) Cutler, for example, has made his name with a series of detailed econometric studies suggesting that, contrary to the conventional wisdom on the left, Americans actually have quite a bit to show for the trillions they spend on health care….

…The Obamanauts are decidedly non-ideological. They occasionally reach out to progressive think tanks like the Economic Policy Institute, but they also come from a world– academic economics–whose inhabitants generally lean right. (And economists at the University of Chicago lean righter than most.) As a result, they tend to be just as comfortable with ideological diversity as the candidate they advise.

The full article can be found here.

If I had to give the most important quality I look for in a president elect it would be humility. There is nothing more destructive, IMHO, than intellectual arrogance in a president.

Ludwig Von Mises said it best with this:

Scarcely anyone interests himself in social problems without being led to do so by the desire to see reforms enacted. In almost all cases, before anyone begins to study the science, he has already decided on definite reforms that he wants to put through. Only a few have the strength to accept the knowledge that these reforms are impracticable and to draw all the inferences from it. Most men endure the sacrifice of the intellect more easily than the sacrifice of their daydreams. They cannot bear that their utopias should run aground on the unalterable necessities of human existence. What they yearn for is another reality different from the one given in this world…They wish to be free of a universe of whose order they do not approve. (emphasis added)

Hillary Clinton and John McCain strike me as intellectually arrogant. Many people – even people who are ideological allies – testify to Hillary Clinton’s arrogance and lack of economic understanding (see here, here and here).

Similarly, John McCain seems ideological and not given to contrary opinion. When you factor in his own admission that he “knows alot less about economics” (see here and here) with his age, it paints a picture of a man on a mission to follow an aggressive agenda…no matter what the costs.

Obama, on the other hand, strikes me as humble and willing to follow what works. I must admit, as a self described rightie, Obama is making it very difficult for me to vote against him.

Revealed Preferences

Wednesday, February 27th, 2008

The Washington Times writes:

RICHMOND — State lawmakers can rule out Virginian’s offering up more of their hard-earned money to fix the $1.4 billion budget shortfall Gov. Tim Kaine announced this week.

At least that is what a peek at the so-called “Tax Me More Fund” suggests.

Since its inception in 2002, the fund has collected a total of $10,217.04.

Megan McArdle writes, “This is what economists call “revealed preference”. What most of us are really in favor of is higher taxes on other people. If we wanted higher taxes on ourselves, we’d give the money to charity”.

More here, here, here, here, here and here.

Do Incentives Matter In Public Schools?

Tuesday, February 26th, 2008

Will vouchers help improve non-voucher schools as well? Opponents of vouchers say no, but a recent study says yes:

…we find that schools that received a grade of “F” in summer 2002 immediately improved the test scores of the next cohort of students, and that these test score improvements were not transitory, but rather remained in the longer term. We also find that “F”-graded schools engaged in systematically different changes in instructional policies and practices as a consequence of school accountability pressure, and that these policy changes may explain a significant share of the test score improvements (in some subject areas) associated with “F”-grade receipt.

Economist Alex Tabarrok summarizes the findings thusly:

Thus, this paper shows two things. First, that the test scores of the students in the public schools improved when vouchers gave the schools better incentives to perform. Second, at least some of the improvement comes from changes in how students are taught.

What did the schools do differently you ask?

…we find that schools receiving an “F” grade are more likely to focus on low-performing students, lengthen the amount of time devoted to instruction, adopt different ways to organize the day and learning environment of the students and teachers, increase resources available to teachers…

It is not true that “nothing can be done to improve the schools.” Incentives matter.

The full link can be found here.

Quote Of The Day

Monday, February 25th, 2008

“Punishment has its origins in the demand for justice, and justice is demanded by angry, morally indignant men, men who are angry when someone else is robbed, raped, or murdered, men utterly unlike Camus’s Meursault. This anger is an expression of their caring, and the just society needs citizens who care for each other, and for the community of which they are parts. One of the purposes of punishment, particularly capital punishment, is to recognize the legitimacy of that righteous anger and to satisfy and thereby to reward it. In this way, the death penalty, when duly or deliberately imposed, serves to strengthen the moral sentiments required by a self-governing community.” — Walter Berns, professor of government emeritus at Georgetown University in the Weekly Standard on the intimate connection between the death penalty and religion, and the necessity of the death penalty

“Buy American” Is Alot Like Racism

Friday, February 22nd, 2008

So argues University of Rochester Economics Professor Steven E. Landsburg. Do you agree or disagree? If you disagree, I’d be interested in knowing why.

The Record On Pork

Thursday, February 21st, 2008

And the difference the candidates make:

Sen. Hillary Rodham Clinton helped secure more than $340 million worth of home-state projects in last year’s spending bills, placing her among the top 10 Senate recipients of what are commonly known as earmarks, according to a new study by a nonpartisan budget watchdog group.

Working with her New York colleagues in nearly every case, Clinton supported almost four times as much spending on earmarked projects as her rival for the Democratic presidential nomination, Sen. Barack Obama (Ill.), whose $91 million total placed him in the bottom quarter of senators who seek earmarks, the study showed.

Sen. John McCain (Ariz.), the likely GOP presidential nominee, was one of five senators to reject earmarks entirely, part of his long-standing view that such measures prompt needless spending.

Link via Greg Mankiw here.

Education Revolt In Watts

Wednesday, February 20th, 2008

There is no area in more desperate need of school choice than the ghettos of the United States. With high levels of gangs, drugs, and crime, just basic security concerns are enough to push parents to seek alternative venues. Yet even in these dire circumstances, the teachers union continues to stand in the way of any school choice program, even great charter schools like green dot.

More on the green dot charter schools and the wonderful work they are doing for inner city children can be found here. The video can be found here.

Quote Of The Day

Tuesday, February 19th, 2008

“The number of poor people who can’t afford food for their children is a lot smaller than it used to be — thanks to capitalism. Capitalism didn’t create malnutrition, it reduced it. The globalization of capitalism from 1950 to the present has increased annual average income in the world to $7,000 from $2,000. Contrary to popular legend, poor countries grew at about the same rate as the rich ones. This growth gave us the greatest mass exit from poverty in world history. The parts of the world that are still poor are suffering from too little capitalism.” — Bill Easterly, professor of economics at New York University

Quote Of The Day

Friday, February 15th, 2008

“All of our present liberalish billionaire populists who critique capitalism and want higher taxes—Soros, Buffet, Gates, Trump, etc.—beat the system years ago, once railed against government intrusion into markets and competition, and now, billions later, feel themselves exempt. So in Carnegie fashion, they sense before the twilight it’s time for a little magnanimity, one that will have absolutely no effect on their billion-dollar lifestyles….And if one high-profile magnate is making $70 million a year in interest, whether he pays $25 million or the higher $35 million is not as important as the sense of status and acclaim that greets his strikingly liberal positions on making the rich (i.e., those greedier families, making say $300-500,000,) pay their fair share—or else!” — Victor Davis Hanson

Quote Of The Day

Thursday, February 14th, 2008

“The main constraint on prices in Europe is that the buyers have monopsony power. Changing what America pays will not alter the demand side of the equation. European governments might realizing that they have been free riding on our drug payments, and decide to raise the prices that they pay in order to support more R&D. But the political incentives all run the other way, and I see no evidence that the EU governments are excited about spurring private sector innovation by offering high profits on life-saving drugs. So the most probable outcome of introducing monopsony power here is that the market for drugs shrinks to the point where it will support few-to-no new drugs. This result will be sufficiently removed in time from the decision to monopsonize purchasing that the politicians will escape most of the responsibility. And even if the public realizes that it has forgone future discoveries for the sake of a few dollars now, and wants to undo this, the fact that everyone is monopsonizing will make it difficult to enact such a change: no one wants to be the patsy, even if they themselves are made better off by paying higher prices and getting new drugs in return. Witness the insistence on multilateral trade deals, even though all the evidence suggests that unilaterally lowering your trade barriers makes your nation unambiguously better off.” — Megan McArdle, on pharmaceutical drugs and what switching to a european style healthcare system would do to innovation…more here.

Quote Of The Day

Wednesday, February 13th, 2008

“But there seems to be little political pressure for such reforms. The costs of the social disorders that afflict poor blacks are incurred mainly by poor blacks themselves, and poor blacks do not vote very much. Moreover, blacks support the Democratic Party so overwhelmingly that Democrat politicians have little incentive to expend their necessarily limited political capital on policies that might benefit blacks at the expense of groups that are in play between the two parties, such as public school teachers”. — Richard Posner

Quote Of The Day

Tuesday, February 12th, 2008

“There was very little civil rights law before Title VII; nevertheless the black-white income differential narrowed more rapidly in that benighted era than it has since. It is possible that antidiscrimination laws do not benefit their intended beneficiaries, because they give the beneficiaries a sense of entitlement and victimhood, foster tokenism, increase employers’ costs, cast a shadow over the real achievements of outstanding members of the “benefited” group, create an unhealthy preoccupation with racial and ethnic identity, and cause white backlash. It is also possible that the sexual revolution of the 1960s promoted the break-up of the black family–of the white too, but the whites were in a better position to adapt. To the extent that the “Great Society” programs of the 1960s and the social disorder of the same period are correlated phenomena, together constituting a lurch to the Left, the net effect on black progress may have been negative”. — Richard Posner, writing about The Black-White Income Differential

Why The Slowing Of Black Progress?

Monday, February 11th, 2008

Gary Becker’s answer:

Why did the progress of blacks stop well short of achieving full equality with whites, and is the slowdown during the past 20 years in black progress only temporary, or is it an indication of what the racial situation will be during the next few decades? The sharp slowdown is surprising mainly because institutionalized and personal discrimination against African-Americans has continued to fall into this century. Probably the most important offset to the decline in discrimination is the rapid growth since the 1960’s in the fraction of black children raised in households with only one or no parents-these households also grew among whites, but at a much slower pace. Moreover, white single parent households mainly arise from a divorce between parents who had their children while married (or while living together), whereas never-married and quite young mothers raise many black children.

In addition, there is social pressure on young blacks growing up in segregated neighborhoods to engage in crime, including selling drugs, and to not “act white”, where acting white sometime is taken to mean studying hard and investing in one’s human capital. These pressures act more on black boys rather than girls, which help explain why the achievements of black women are much closer to those of white women than is the gap between black and white men.

It is too early to tell whether these and other forces that have prevented blacks from achieving full parity with whites are temporary or more long lasting. A disturbing fact is that growing up in families that invest less in their children casts a long shadow since children brought up in these families tend also to invest less in their children. This process gets to be repeated to some degree over subsequent generations.

This is one of the reasons why I am not a liberal. The problems of poverty today are not discriminatory in nature, they tend to be cultural and family related, problems that are far better addressed on the right than on the left. Arnold Kling has more here.

Who Is More Electable…Obama or Clinton?

Friday, February 8th, 2008

Gerry Vázquez asks an important question, “Is Obama really bulletproof against the rightwing smear machine? And is Hillary Clinton really as easy to take down as the rightwing radio screechers suggest?”

Democrats are likely to win the presidency in November for two reasons: Independents going Democrat and Republicans staying home.

Hillary Clinton, to a much greater degree than Obama, reverses these two trends. Independents, given Hillary’s high negative polling, are less likely to vote for her compared to Obama.The right despises her, significantly more so than Obama – making many Republicans vote against her who would have otherwise stayed home.

There are really two things that give the Republicans a chance to win this election: Nominating the most moderate Republican – which they have already done given McCain – and get the most polarizing figure on the Democrat side, making Hillary the most favorable candidate.

The Republicans, by sacrificing ideology for more electability, seem serious in wanting to win in November – Democrats, by favoring Hillary over Obama, do not.

And it seems like I am in good company, as Karl Rove agrees with my assesment, see here.

Update: CNN poll agrees.

Quote Of The Day

Friday, February 8th, 2008

“Why the Latino support for Hillary? Much of the Hispanic community casts votes quite traditional of immigrants. The memory of who has been good to them stretches back far and lives vividly in their minds. Bill Clinton’s unflinching support for NAFTA, jamming it through Congress despite his party’s opposition, and his prompt action in bailing out Mexico when the Tequila currency crisis of the 90s threatened their economic stability and sent unemployment soaring are all still likely very much in the minds of today’s Mexican-American voters. For Puerto Ricans, Bill Clinton’s pardon of the FALN terrorists, originally intended to win their votes for Hillary’s Senate race, are probably still important. And Dominicans probably still remember Bill’s commitment to saving Haiti by sending in American forces and stopping instability from overtaking the island the two countries share.” — Dick Morris, Bill Clinton’s  former political advisor